VIJAY GALAV, Kota V. ACIT, Kota

ITA 600/JPR/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4884 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 05-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: POONAM RAI D DHK
• Assessee Lawyers: D KUMAR
• Keywords: Depreciation

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 600/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 SHRI VIJAY GALAV 9F-14, MAHAVIR NAGAR III KOTA CUKE VS. THE ACIT CIRCLE- 2 KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ABRPG 5804 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY:SHRI D. KUMAR, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY :SMT. POONAM RAI, DCIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 01/12/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 07/12/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD. CIT(A)-, KOTA DATED 28-03-2013 FOR THE ASSESSMENT YEAR 2007-08 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. ITA NO. 600/JP/2013 SHRI VIJAY GALAV VS. ACIT, CIRCLE- 2, KOTA . 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN PARTLY CONFIRMING THE ACTION OF THE AO BY APPLYING NET PROFIT RATE OF 8.50% ON GROS S CONTRACT RECEIPTS (SUBJECT TO DEPRECIATION) ON THE PART OF THE CONTRACT WORK EXECUTED BY THE ASSESSEE HIMSELF. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN APPLYING NET PROFIT RA TE OF 6% ARBITRARILY ON GROSS CONTRACT RECEIPTS ON THE PART OF THE CONTRACT WORK EXECUTED THRUGH THE SUB-CONTRACTORS I GNORING THE PLEAS, EXPLANATION, SUBMISSIONS AND EVIDENCES B ROUGHT ON RECORD BY THE APPELLANT FROM TIME TO TIME. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) ERRED IN LAW IN NOT ALLOWING INTEREST PA ID TO THIRD PARTIES AMOUNTING TO RS. 5,57,548/- OUT OF THE NET PROFIT ESTIMATED BY HIM. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN NOT ACCEPTING THE CLAI M OF AGRICULTURAL INCOME OF RS. 1,47,975/- IGNORING THE PLEAS, EXPLANATIONS, SUBMISSIONS AND EVIDENCES BROUGHT ON RECORD BY THE APPELLANT FROM TIME TO TIME. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN ASSESSING RENTAL INCOME OF RS. 46,355/-. 2.1 APROPOS GROUND NO. 1, IT IS NOTED FROM THE ASSE SSMENT ORDER THAT THE AO HAD REJECTED THE BOOKS OF ACCOUNT OF THE ASS ESSEE ON THE GROUND THAT THERE WAS NO OPENING STOCK OR CLOSING STOCK W HICH MEANS ALL THE MATERIAL PURCHASED BY THE ASSESSEE DURING THE YEAR WERE CONSUMED. THE AO FURTHER OBSERVED THAT NO STOCK REGISTER HAD BEEN MAINTAINED BY THE ITA NO. 600/JP/2013 SHRI VIJAY GALAV VS. ACIT, CIRCLE- 2, KOTA . 3 ASSESSEE WHICH COULD AUTHENTICATE ASSESSEE'S CLAIM. THE AO FURTHER OBSERVED THAT NO SITE-WISE DETAILS OF STOCK HAD BEE N MAINTAINED BY THE ASSESSEE FROM WHICH THE CLAIM OF THE ASSESSEE COULD BE VERIFIED. THE AO CONCLUSIVELY OBSERVED THAT THE BOOKS OF ACCOUNT MAI NTAINED BY THE ASSESSEE WERE NOT COMPLETE. THUS THE BOOKS OF ACCOU NT OF THE ASSESSEE WERE REJECTED BY THE AO U/S 145(3) OF THE ACT WHICH HAS BEEN CONFIRMED BY THE LD. CIT(A). 2.2 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE LD. CIT(A) OBSERVED THAT T HE AO HAD GIVEN THE SPECIFIC DEFECT (BOGUS CREDITOR OF RS. 1.00 LAC IN THE CASE OF SHRI LAL GI MEDICALS) AND MOST OF THE EXPENSES WERE FOUND TO BE NOT VERIFIABLE. DURING THE COURSE OF HEARING, THE LD. AR OF THE ASS ESSEE REPEATED THE SAME ARGUMENTS AS TO THE REJECTION OF BOOKS OF ACCOUNT B Y THE AO BUT THE SAME WERE NOT CONVINCING. IT APPEARS FROM THE ORDERS OF THE LOWER AUTHORITIES THAT THEY HAVE RIGHTLY INVOKED THE PROVISIONS OF SE CTION 145(3) OF THE ACT FOR NON-MAINTENANCE OF BOOKS OF ACCOUNT. HENCE, I C ONFIRM THE ACTION OF THE LD. CIT(A) ON THIS ISSUE. THUS GROUND NO. 1 OF THE ASSESSEE IS DISMISSED. ITA NO. 600/JP/2013 SHRI VIJAY GALAV VS. ACIT, CIRCLE- 2, KOTA . 4 3.1 APROPOS GROUND NO. 2 AND 3 OF THE ASSESSEE, THE OBSERVATION OF THE LD. CIT(A) WITH DIRECTION TO THE AO TO TAKE INCOME FROM CONTRACT AT RS. 35,64,470/- IS AS UNDER:- IN MY OPINION AND CONSIDERING THE FACTS OF THE CA SE, IT IS CONSIDERED FAIR AND REASONABLE TO APPLY NET PROFIT RATE OF 8.5% ON SELF EXECUTED WORK (AS AGAINST 9% APPLIED BY AO) AN D NET PROFIT RATE OF 6% ON THE 6 SUB-CONTRACTORS (AS MENTION IN ASSESSING OFFICERS ORDER PAGE 6) MENTIONED BELOW:- S.N. NAME OF SUB-CONTRACTOR GROSS CONTRACT AMOUNT E XECUTED 1. DEV CONSTRUCTION 1066262 2. GUJARAT CONSTRUCTION 1748995 3. LALIT GUPTA 500408 4. NARESH SHARMA 2161963 5. SATYANARAYAN MALAV 5464218 6. UTTAM CONSTRUCTION 1943197 THIS WOULD BE FURTHER SUBJECT TO DEPRECIATION (AS H ELD BY ASSESSING OFFICER ALSO). THE INCOME FROM CONTRACT WORK IS ESTIMATED AS UNDER :- (I) ON SELF EXECUTED WORK @ 8.5% OF RS. 31,50,937/- (RS. 37069850) (II) ON 6 SUB-CONTRACTOR @ 6% OF RS. 7,73,103/ - (RS. 12885043/-) [AS AGAINST PROFIT OF RS. 5,09,707/- SHOWN BY ASSES SEE, DIFFERENCE OF RS. 2,63,396/- WOULD TAKE CARE OF ADD ITION PROFIT ON WORK EXECUTED BY DEV CONSTRUCTION AND SOM E ADDITIONAL PROFIT ON OTHER SUB-CONTRACTORS] (III) ON REMAINING SUB-CONTRACTORS OF RS. 6,68,01 2/- (RS. 19931076) RS. 45,92,052/- LESS: DEPRECIATION (-) RS. 10,27,582/- ITA NO. 600/JP/2013 SHRI VIJAY GALAV VS. ACIT, CIRCLE- 2, KOTA . 5 THE ASSESSING OFFICER IS DIRECTED TO TAKE INCOME FR OM CONTACT AT RS. 35,64,470/- THESE GROUNDS OF APPEAL ARE THEREFORE, PARTLY ALLOWED. 3.2 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE WITH REGARD TO THE C ONTRACT RECEIPT ON WHICH THE ASSESSEE HIMSELF HAS CARRIED OUT THE WORK, THER E IS NO SCOPE FOR ANY FURTHER DEDUCTION IN THE NET PROFIT RATE AS ADOPTED BY THE LD. CIT(A). THEREFORE, THE INCOME SHALL BE WORKED OUT ON THESE RECEIPTS @ 8.5% AS ADOPTED BY THE LD. CIT(A). HOWEVER, IN THE CASE OF SUB-CONTRACTORS, THE ASSESSEE HAD AGREED DURING ASSESSMENT PROCEEDINGS, WHICH IS EVIDENT FROM THE ORDER SHEET, THAT GROSS PROFIT RATE SHALL BE APPLICABLE AS PER SUB- CONTRACT AGREEMENT WITH THE SUB-CONTRACTORS. IT IS NOTED THAT THE ASSESSEE COULD NOT SUBMIT 06 SUB-CONTRACTORS AGREEMENTS BEFO RE THE AO, HOWEVER, THE SAME HAS BEEN SUBMITTED BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS NOT CONSIDERED THESE AGREEMENTS AND ADOPTED 6% FLA T NET PROFIT RATE ON THESE RECEIPTS. IN MY CONSIDERED VIEW, THE GROSS PR OFIT RATE ON THESE SUB- CONTRACTORS SHOULD HAVE BEEN WORKED OUT AS PER TERM S OF THE SUB-CONTRACT AGREEMENTS AS AGREED BY THE ASSESSEE BEFORE THE AO. . THEREFORE, I DIRECT TO WORK OUT INCOME AS PER CONTRACTS WITH SUB-CONTRA CTORS, IF THE AGREEMENTS FOUND IN ORDER. THEREFORE, THE MATTER IS RESTORED FOR THE SAME ITA NO. 600/JP/2013 SHRI VIJAY GALAV VS. ACIT, CIRCLE- 2, KOTA . 6 TO THE FILE OF THE AO. THUS GROUND NOS. 2 AND 3 OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE . 4.1 APROPOS GROUND NO. 4 OF THE ASSESSEE WHEREIN TH E LD. CIT(A) HAS DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER:- I HAVE ALREADY REDUCED THE NET PROFIT RATE FROM 9% TO 8.5% AND THEREFORE, THERE IS NO NEED TO ALLOW FURTH ER INTEREST PAID TO THIRD PARTIES. 4.2 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED FROM THE AVAILABLE RECORDS THAT THE ASSESSEE HAD AGREED IN THE ASSESSMENT PROCEEDINGS, WHICH IS EVIDENT FROM THE ORDER SHEET AS PRODUCED BY THE REVENUE IN ORIGINAL AND ALSO SHOWN TO THE LD. AR OF THE ASSESSEE DURING APPEAL PROCEEDINGS TH AT GROSS PROFIT RATE HAS TO BE ESTIMATED @ 9% ON THE CONTRACT WORKS CARRIED OUT BY THE ASSESSEE HIMSELF SUBJECT TO DEPRECIATION. IT IS ALSO PERTINE NT TO MENTION THAT THE ASSESSEE HAS CHALLENGED THIS ISSUE BEFORE THE LD. C IT(A) AND HE HAS GIVEN RELIEF OF 0.5%. IN VIEW OF THESE FACTUAL POSITIONS, THE ADDITIONAL CLAIM OF THE ASSESSEE THAT INTEREST PAID TO THIRD PARTIES SH OULD BE ALLOWED WHILE ESTIMATING THE NET PROFIT RATE IS UNJUSTIFIED. THUS GROUND NO. 4 OF THE ASSESSEE IS DISMISSED. ITA NO. 600/JP/2013 SHRI VIJAY GALAV VS. ACIT, CIRCLE- 2, KOTA . 7 5.1 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS NOT PRESSED THE GROUND NOS. 5 AND 6 WHICH ARE DISMISSED BEING NOT PRESSED. 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07 /12/20 16 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 07/12/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI VIJAY GALAV, KOTA 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE- 2, KOTA 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 600/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR