M/S. SCC PROJECTS PVT. LTD., Indore V. THE ADDL.CIT RANGE-3, Indore

ITA 612/IND/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5638 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 17-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHMD JAVED
• Assessee Lawyers: C P RAWKA
• Keywords: Rejection of books of accounts; Depreciation; Wrong claim

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., .., % BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER SCC PROJECTS PVT. LTD. 206, MOURYA CENTRE, 16 RACE COURSE ROAD , INDORE PAN: AABCM 3529 L VS. ADDL. CIT RANGE-3, INDORE / APPELLANT / RESPONDENT / APPELLANT BY SHRI C. P. RAWKA, CA / RESPONDENT BY SHRI MOHMD. JAVED, SR. (DR) / DATE OF HEARING 04.10.2016 / DATE OF PRONOUNCEMENT 07-11-2016 / O R D E R PER O. P. MEENA, ACCOUTANT MEMEBR. THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND R EVENUE AGAINST THE SEPARATE ORDERS OF CIT (A)-I, INDORE; PERTAININ G TO THE ASSESSMENT YEAR 2009-10, 2010-11 & 2011-12 AND ARE BEING . . ./ I.T.A. NO. 612/IND/2013/88&144 &145/IND/2015 %' ' / ASSESSMENT YEAR:2009-10, 2010-11 & 2011-12 M/S. SCC PROJECTS PVT. LTD.: I.T.A. NO.88-144-145/ IND/2015-16/A.Y:10-11&11-12/ PAGE 2 OF 15 DECIDED BY A COMMON ORDER FOR THE SAKE OF CONVENIEN CE AS FACTS, CIRCUMSTANCES, SUBMISSIONS OF THE PARTIES BEFORE TH E TRIBUNAL ARE THE SAME REMAINED IDENTICAL IN ALL THESE APPEALS. 1. THE GROUNDS OF APPEAL ARE ALSO IDENTICAL BARRING TH E AMOUNT OF ADDITION SUSTAINED OR DELETED BY THE LD. CIT (A) AFTER UPHOLDING THE REJECTION OF BOOKS OF ACCOUNTS U/S. 145(3) OF T HE ACT. THE ASSESSEE AS WELL DEPARTMENT HAS RAISED FOLLOWING GR OUNDS OF APPEAL: I. I.T. A. NO. 612/IND/2013/AY2009-10-ASSESSEE `S APPE AL 1. THAT THE LD. CIT (A) ERRED IN LAW AND FACTS OF THE CASE AND CONFIRMED THE ADDITION MADE BY ASSESSING OFFICER AT RS. 75 LACS ON ACCOUNT OF REJECTION OF BOOKS OF ACCOUNTS U /S. 145(3) ON AD-HOC BASIS WITHOUT CONSIDERING FULL FACTS AND REA SONING. THE ADDITION THEREFORE, MADE BY THE ASSESSING OFFIC ER AND CONFIRMED BY CIT (A) IS VERY WRONG ON FACTS OF THE CASE. II. I.T. A. NO. 144/IND/2015/REVENUE APPEAL AY 2010-11. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW , THE CIT (A) HAS ERRED IN I IN DELETING ADDITION OF RS.72 LAKHS MADE BY THE AO WITH A VIEW TO COVER UP LEAKAGES OF PROFIT IN VIEW OF SHO RTCOMINGS FOUND IN THE COURSE OF ASSESSMENT IN THE ACCOUNTS O F THE ASSESSEE JUSTIFYING THE WRONG CLAIM OF EXPENSES AND RELYING ON SELF MADE VOUCHERS AS PRODUCED BY THE ASSESSEE IN THE CO URSE OF ASSESSMENT PROCEEDINGS. M/S. SCC PROJECTS PVT. LTD.: I.T.A. NO.88-144-145/ IND/2015-16/A.Y:10-11&11-12/ PAGE 3 OF 15 JUSTIFYING CASH PAYMENTS MADE BY THE ASSESSEE ON VA RIOUS HEADS OF EXPENSES , IN TOTAL CONTRAVENTION OF SPECI FIC PROVISIONS OF I T ACT 1961, WHICH COMPELLED THE AO TO REJECT THE BOOKS OF ACCOUNTS FOR THE YEAR UNDER CONSIDERAT ION BY INVOKING PROVISIONS OF SECTION 145(3) OF THE ACT. III. I. T. A. NO. 145/IND/2015/REVENUE APPEAL AY 2011-12 I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT (A) HAS ERRED IN I. IN DELETING ADDITION OF RS.24 LAKHS MADE BY THE AO WITH A VIEW TO COVER UP LEAKAGES OF PROFIT IN VIEW OF SHO RTCOMINGS FOUND IN THE COURSE OF ASSESSMENT IN THE ACCOUNTS O F THE ASSESSEE JUSTIFYING THE WRONG CLAIM OF EXPENSES AND RELYING ON SELF MADE VOUCHERS AS PRODUCED BY THE ASSESSEE IN THE CO URSE OF ASSESSMENT PROCEEDINGS. JUSTIFYING CASH PAYMENTS MADE BY THE ASSESSEE ON VA RIOUS HEADS OF EXPENSES , IN TOTAL CONTRAVENTION OF SPECI FIC PROVISIONS OF I T ACT 1961, WHICH COMPELLED THE AO TO REJECT THE BOOKS OF ACCOUNTS FOR THE YEAR UNDER CONSIDERAT ION BY INVOKING PROVISIONS OF SECTION 145(3) OF THE ACT. IV. I. T. A. NO. 88/IND/2015/ASSESSEE APPEAL FOR AY 201 1-12 (1) THAT THE LD. CIT (A) ERRED IN LAW AND FACTS OF THE CASE AND CONFIRMED THE ADDITION MADE BY ASSESSING OFFICER AT RS. 76 LACS OUT OF RS. 100 LAKHS MADE BY THE AO ON AD-HOC BASIS BY REJECTING OF BOOKS OF ACCOUNTS U/S. 145(3) THE ADDITION THEREFORE, MADE BY THE AO AND CONFIRME D BY THE CIT (A) IS TOTALLY WRONG ON THE FACT OF THE CAS E (2) THAT THE LD. CIT (A) ERRED IN LAW AND FACTS OF THE CASE AND CONFIRMED THE ADDITION ON ACCOUNT OF DIFFERENCE IN INTEREST M/S. SCC PROJECTS PVT. LTD.: I.T.A. NO.88-144-145/ IND/2015-16/A.Y:10-11&11-12/ PAGE 4 OF 15 INCOME AT RS. 4,58,118/- WITHOUT CONSIDERING FULL F ACTS AND REASONING. THE ADDITION THEREFORE, MADE BY THE AO AND CONFIRME D BY THE CIT (A) IS TOTALLY WRONG ON THE FACT OF THE CAS E 2. SINCE THE ISSUE RELATED TO REJECTION OF BOOKS OF AC COUNTS AND ADDITION ON ACCOUNT OF NET PROFIT IS COMMON FOR ALL THE THREE YEARS HENCE SAME IS BEING DISCUSSED TOGETHER. 3. SUCCINCTLY, FACTS AS CULLED OUT FROM THE ORDERS OF LOWER AUTHORITIES ARE THAT THE ASSESSEE IS A PVT. LTD. CO MPANY ENGAGED IN CONSTRUCTION ACTIVITY MAINLY ROAD CONSTRUCTION A T VARIOUS PLACES MAINLY AT INDORE, BIAORA, GUNA, BARELI, UJJA IN AND OTHER SMALL SITES. DURING THE COURSE OF ASSESSMENT PROCEE DINGS , THE ASSESSEE HAS FURNISHED A CHART SHOWING NET PROFIT R ATE AS UNDER : PARTICULARS ASSESSMENT YEAR (AMOUNT IN RS. LAKHS) 07-08 08-09 09-10 10-11 11-12 NET PROFIT BEFORE DEPRECIATION 502 446 521 536 529 ADD DEPRECIATION 131 177 413 212 201 NET PROFIT AFTER BEFORE DEPRECIATION 634 623 722 749 730 TURNOVER 6482 7016 8131 7410 10430 NET PROFIT RATE IN BEFORE DEPRECIATION % 9.78% 8.89% 8.88% 10.11% 7.01% NET PROFIT RATE AFTER DEPRECIATION IN % 7.75% 6.6% 6.42% 7.23% 5.07% 4. FOR THE AY 09-10, THE AO NOTED THAT THE ASSESSEE H AS DECLARED NET PROFIT RATE AFTER DEPRECIATION AND INTEREST @6. 42% OF ITS CONTRACT RECEIPTS IN COMPARISON TO 6.36% LAST YEAR. THE AO M/S. SCC PROJECTS PVT. LTD.: I.T.A. NO.88-144-145/ IND/2015-16/A.Y:10-11&11-12/ PAGE 5 OF 15 OBSERVED THAT THE TRADING RESULT IS BETTER BUT IT I S NOT ACCEPTABLE DUE TO FOLLOWING REASONS AS THE VALUATION OF WORK IN PROGRESS(WIP) IS BEING DONE ON ESTIMATE BASIS , EXPENSES ON VARIO US SITES ARE NOT PROPERLY VOUCHED, AND SOME OF THE VOUCHERS WERE FOU ND SELF-MADE AND PAYMENTS IS BEING MADE IN CASH, HENCE GENUINENE SS IS NOT VERIFIABLE. THE AO FOUND THAT ABNORMAL INCREASE OF 91.60% IN ASPHALT AND IN EMULSION EXPENSES OF 21.26% IN SUB C ONTRACT, 1165 IN LEGAL, PROFESSIONAL, AND 258% IN MESS AND R EFRESHMENT AS COMPARE TO PRECEDING YEAR. PROPER BILLS DO NOT SUPP ORT VOUCHERS AND PAYMENTS IS MADE IN CASH, HENCE GENUINENESS IS NOT VERIFIABLE. 5. THE LABOUR AND WAGES IS PAID THROUGH MUSTER ROLL BY TAKING SIGNATURE OR THUMB IMPRESSION FOR PAYMENT MADE IN C ASH AND 60% OF SITE SALARY IS BEING PAID IN CASH. THE ASSES SEE PURCHASED GRITTY, MURAM AND SAND OF RS. 321 LAKHS FROM UNREGI STERED DEALERS AND MOST OF PAYMENTS ARE MADE IN CASH HENCE NOT FULLY VERIFIABLE. CONSIDERING THESE DEFECTS, THE AO REJEC TED THE BOOKS OF ACCOUNTS U/S. 145(3) AND MADE AD-HOC ADDITION OF RS . 75 LAKH FOR A.Y. 07-08 TO COVER-UP ANY LEAKAGES OF PROFIT BECAU SE OF ABOVE SHORTCOMINGS. M/S. SCC PROJECTS PVT. LTD.: I.T.A. NO.88-144-145/ IND/2015-16/A.Y:10-11&11-12/ PAGE 6 OF 15 6. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE CIT (A) . THE LD. CIT (A) OBSERVED THAT THE VALUATION OF WIP IS DONE ON ESTIM ATED BASIS; THERE IS NO SCIENTIFIC METHOD BASIS FOR VALUATION H ENCE VERIFICATION FOR CORRECTNESS IS NOT POSSIBLE. SIMILARLY, EXPENSE S ON VARIOUS SITES HAVE BEEN INCURRED IN CASH, SELF-MADE VOUCHERS OF W HICH FULL DETAILS OF EXPENSES AND EVIDENCES WERE NOT AVAILABL E. THE LD. CIT (A) HAS ALSO SUPPORTED THIS VIEW BY PLACING RELIANC E IN THE CASE OF GOODYEAR INDIA LTD. 66 TTJ 164(DEL-TRIBUNAL) WHEREI N IT WAS HELD THAT EVEN IF AUDITOR HAS NOT MADE ADVERSE COMMENTS DISALLOWANCE OF SUCH EXPENSES HAS TO BE UPHELD. THE LD. CIT (A) ALSO NOTED THAT THERE IS ABNORMAL INCREASE IN VARIOUS EXPENSES LIKE 91.60% IN ASPHALT, 21.26% IN EMULSION, 116% IN LEGAL AND PROF ESSIONAL AND 258% IN MESS AND REFRESHMENT EXPENSES OF WHICH VOUC HERS ARE PREPARED IN CASH AND PAYMENTS MADE IN CASH HENCE NO T FULLY VERIFIABLE. THE LD. CIT (A) OBSERVED THAT IN THE C ASE OF INCREASE IN LEGAL AND PROFESSIONAL BURDEN ON THE APPELLANT TO S UBSTANTIATE FACTUM OF EXPENDITURE AND IT IS PERMISSIBILITY AS H ELD IN THE CASE OF ANNAMMA ALEXANDER 176 ITR 229(KER) AND S DEVRAJ 73 ITR 1 (MAD). MAJOR EXPENSES OF 182 LAKH IS PAID IN CASH A ND 60% OF SALARY ALSO PAID IN CASH , THE REGISTER WHICH ARE N OT CROSS VERIFIED BY THE AO. PURCHASES OF GITTI, SAND, MURRAM ALSO IN CASH FROM M/S. SCC PROJECTS PVT. LTD.: I.T.A. NO.88-144-145/ IND/2015-16/A.Y:10-11&11-12/ PAGE 7 OF 15 UNREGISTERED DEALERS. CONSIDERING THESE FACTS, THE LD. CIT (A) UPHELD THE REJECTION OF BOOKS OF ACCOUNTS U/S. 145( 3) OF THE ACT AND CONFIRMED THE AD-HOC ADDITION OF RS. 75 LAKHS M ADE BY THE AO. 7. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL FOR A Y 2009-10 AND FOR AY 2011-12 BEFORE THIS TRIBUNAL AND DEPARTMENT HAS FILED APPEAL FOR AY 2010-11 & AY2011-12. 8. THE LEARNED COUNSEL FOR THE ASSESSEE, SUBMITTED TH AT REJECTION OF BOOKS OF ACCOUNTS IS NOT JUSTIFIED AS FOR REJECTION THE AO HAS TO CONSIDER WHETHER THE ASSESSEE REGULARLY EMPLOYED A METHOD OF ACCOUNTING , WHETHER ANNUAL PROFIT IS PROPERLY DEDU CED FROM THE METHOD EMPLOYED, WHETHER ACCOUNTS ARE CORRECTLY MAI NTAINED AND COMPLETE, IF THE AO FOUND THE ABOVE QUESTIONS IN AF FIRMATIVE, THEN THE AO HAS TO COMPUTE PROFIT ON THE BASIS OF BOOKS OF ACCOUNTS AND CANNOT INVOKE PROVISIONS OF SECTION 145(3) OF T HE ACT AS HELD BY PATNA HIGH COURT IN CASE OF MOHAMMAD UMAR VS. CI T 101 ITR 525(PAT). THE LD. A. R. STATED THAT THE ASSESSEE IS CIVIL CONTRACTOR HAVING SCATTED WORK PLACES FEW HUNDRED KMS FROM EAC H OTHER. IT WAS SUBMITTED THAT SITE ENGINEERS /SUPERVISORS KEEP S RECORDS OF RAW MATERIAL CONSUMED AND PAYMENT OF WAGES AND AT THE YEAR END, THE SITE ENGINEER EVALUATES LAST WHICH ARE COMMUNICATED TO M/S. SCC PROJECTS PVT. LTD.: I.T.A. NO.88-144-145/ IND/2015-16/A.Y:10-11&11-12/ PAGE 8 OF 15 HEAD OFFICE WHICH IN TURN AGGREGATES THE FIGURE AN D COMPARES WITH RECEIPTS OF MONTH OF APRIL AND MAY OF SUBSEQUENT YE AR AND SAME IS ACCOUNTED FOR AS WIP . IT WAS SUBMITTED THAT PETTY EXPENSES ARE INCURRED IN CASH ONLY AND SAME IS SUPPORTED BY VOUC HERS BUT NONE OF EXPENSES ARE UN-VOUCHED THE INCREASE IN EXP ENSES RELATES TO RECEIPTS AND COMPLETION OF WORK, AND IF WORK REA CHED TO FINAL STAGE , THE EXPENSES HAVE TO BE INCREASED. THE KEEP ING OF MUSTER ROLL IS REQUIREMENT OF LABOUR LAWS. THE ASSESSEE HA S NO OPTION BUT TO MAKE PURCHASE OF GITTY, MURAM AND SAND FROM UNRE GISTERED DEALER FROM LOCAL AT FAR FLUNG PLACES AND IF THE SA ME WERE PURCHASED FOR REGISTERED DEALER, IT WOULD GIVE RISE TO COST TREMENDOUSLY, WHEREAS UNORGANISED SECTOR DELIVER GO ODS AT COMPETITIVE PRICE WITHOUT MUCH EXPENDITURE ON TRANS PORTATION. THUS, IT WAS SUBMITTED THAT THERE IS NO CHANGE IN M ETHOD OF ACCOUNTING SYSTEM. HENCE, REJECTION OF BOOKS OF ACC OUNTS IS UNJUSTIFIED. FURTHER, WITHOUT PREJUDICE TO ABOVE, I T WAS SUBMITTED THAT LUMP SUM ADDITION OF RS. 75 LAKH IS ARBITRARY AND UNJUSTIFIED, WHEREAS THE AO HIMSELF NOTED THAT NET PROFIT DISCLO SED DURING THE YEAR IS HIGHER THAN PRECEDING YEAR, THEREFORE, THER E WAS NO BASIS TO MAKE FURTHER ADDITION TO RETURNED INCOME. IN SUPPOR T OF HIS CONTENTION, THE LD. AR HAS RELIED ON FOLLOWING CASE LAWS: KARNATAKA M/S. SCC PROJECTS PVT. LTD.: I.T.A. NO.88-144-145/ IND/2015-16/A.Y:10-11&11-12/ PAGE 9 OF 15 FOREST INDUSTRY LTD. VS. CIT 201 ITR 674(KAR), VB G ADKARI VS. INCOME TAX OFFICER 59STC326 (MP) AND OTHERS. THE L D. CIT (A) AFTER ANALYSIS OF SUBMISSION, DELETED ADDITION OF R S. 75 LAKH IN AY 2010-11. HOWEVER, IN AY 2011-12 RESTRICTED THE ADDI TION OF RS. 76 LAKHS. 9. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF CIT (A) FOR ASSESSMENT YEAR 2009-10 , AND RELIED ON THE ORDER OF THE AO FOR ASSESSMENT YEAR 2010-11 AND 2011-12. IT WAS SUBMITTED THAT THE ISSUE MAY BE DECIDED BASED ON FINDING OF T RIBUNAL FOR ASSESSMENT YEAR 2008-09. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, HAVE GONE THRO UGH THE ORDERS OF THE LOWER AUTHORITIES, AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. WE FIND THAT THE AO HAS REJECTED BOOKS O F ACCOUNTS AS HE FOUND THAT THE VALUATION OF WORK IN PROGRESS(WI P) WAS BEING DONE ON ESTIMATED BASIS, EXPENSES ON VARIOUS SITES ARE NOT PROPERLY VOUCHED, AND SOME OF THE VOUCHERS WERE FOU ND SELF-MADE AND PAYMENTS IS BEING MADE IN CASH, HENCE GENUINENE SS OF THESE EXPENSES IS NOT FOUND VERIFIABLE. THE AO FOUND THAT ABNORMAL INCREASE OF 91.60% IN ASPHALT AND IN EMULSION EXPEN SES OF 21.26% IN SUB CONTRACT, 116% IN LEGAL, PROFESSIONAL , AND 258% IN MESS AND REFRESHMENT AS COMPARE TO PRECEDING YEAR. VOUCHERS ARE M/S. SCC PROJECTS PVT. LTD.: I.T.A. NO.88-144-145/ IND/2015-16/A.Y:10-11&11-12/ PAGE 10 OF 15 NOT SUPPORTED BY PROPER BILLS AND PAYMENTS IS MADE IN CASH, HENCE GENUINENESS IS NOT FOUND VERIFIABLE. THE LABO UR AND WAGES IS PAID THROUGH MUSTER ROLL BY TAKING SIGNATURE OR THUMB IMPRESSION FOR PAYMENT MADE IN CASH AND 60% OF SITE SALARY IS BEING PAID IN CASH. THE ASSESSEE PURCHASED GITTY, M URAM AND SAND OF RS. 321 LAKHS FROM UNREGISTERED DEALERS AND MOST OF PAYMENTS ARE MADE IN CASH HENCE NOT FULLY VERIFIABL E. IN VIEW OF ABOVE, AND CONSIDERING WE HOLD THAT REJECTION OF B OOKS OF ACCOUNTS U/S. 145(3) IS JUSTIFIED. 11. SO FAR AD-HOC ADDITION OF RS. 75 LAKH FOR A.Y. 09-1 0 IS CONCERNED WE FIND THAT THE ASSESSEE HAS FURNISHED A CHART DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS GIVING DETAILS OF NET PRO FIT RATE AS UNDER : PARTICULARS ASSESSMENT YEAR (AMOUNT IN RS. LAKHS) 07-08 08-09 09-10 10-11 11-12 NET PROFIT AFTER DEPRECIATION 502 446 521 536 529 ADD DEPRECIATION 131 177 413 212 201 NET PROFIT BEFORE DEPRECIATION 634 623 722 749 730 TURNOVER 6482 7016 8131 7410 10430 NP RATE BEFORE DEPRECIATION % 9.78 8.89 8.88 10.11 7.01 NET PROFIT RATE AFTER DEPRECIATION IN % 7.75 6.36 6.42 7.23 5.07 ADDITION CONFIRMED BY CIT (A) / TRIBUNAL 15 66.65 75 -72 76 NET PROFIT AFTER TRIBUNAL ORDER 649 689.65 NP RATE AFTER TRIBUNAL ORDER 10.06% 9.50% 12. FORM THE ABOVE CHART, IT IS SEEN THAT NET PROFIT RA TE DISCLOSED FOR ASSESSMENT YEAR 2009-10 IS 8.89% WHICH IS LESS THAN THE NET M/S. SCC PROJECTS PVT. LTD.: I.T.A. NO.88-144-145/ IND/2015-16/A.Y:10-11&11-12/ PAGE 11 OF 15 PROFIT RATE OF PRECEDING YEARS NET PROFIT RATE OF 8 .89%. WE FIND THAT TRIBUNAL HAS DECIDED THE APPEAL IN THE CASE OF THE ASSESSEE FOR AY 2007-08 AND AY 2008-09 IN I. T. A. NO. 204 & 205/IND/2012 VIDE ORDER DATED 22.08.2012, WHEREIN T RIBUNAL HAS ANALYSED THE NET PROFIT RATE DECLARED BY THE ASSES SEE. THE HONBLE TRIBUNAL OBSERVED AS IT IS CLEAR FOR THE ABOVE THAT TURNOVER OF THE ASSESSEE HAS INCREASED SUBSTANTIALL Y TO RS. 64.82 CRORES AND RS. 70.16 CRORES IN THE ASSESSMENT YEAR 2007-08 AND ASSESSMENT YEAR 2008-09 AS COMPARED TO THE TURNOVER OF RS. 37.31 CRORE IN THE ASSESSMENT YEAR 2006-07. AFTER C ONSIDERING THE ADDITION OF RS. 15 LAKHS AS CONFIRMED BY US, THE NE T PROFIT RATE FOR ASSESSMENT YEAR 2007-08 WORKS OUT TO BE 10.06% . IN THE ASSESSMENT YEAR 2008-09, SINCE THERE IS INCREASE IN TURNOVER TO RS. 70.16 CRORES, AS AGAINST TURNOVER OF RS. 64.82 CRORES IN THE PRECEDING YEAR, IT WILL BE REASONABLE TO UPHOLD THE ADDITION BY TAKING NET PROFIT RATE AT 9.50%. ACCORDINGLY, THE A SSESSING OFFICER IS DIRECTED TO RE-COMPUTE THE ADDITION BY TAKING NE T PROFIT RATE OF 9.50% ON THE TURNOVER OF RS. 70.16 CRORES AS AGAINS T DECLARED NET PROFIT RATE 6.36%. WE DIRECT ACCORDINGLY. 13. WE ARE THEREFORE, FOLLOWING THE RATIO LAID DOWN BY THE TRIBUNAL IN THE CASE OF ASSESSEE, ARE OF THE CONSIDERED OPINION THAT 9.50% NET M/S. SCC PROJECTS PVT. LTD.: I.T.A. NO.88-144-145/ IND/2015-16/A.Y:10-11&11-12/ PAGE 12 OF 15 PROFIT RATE AS UPHELD BY THE TRIBUNAL FOR ASSESSMEN T YEAR 2008-09 WOULD BE REASONABLE FOR ASSESSMENT YEAR 2009-10 AS TURNOVER FOR AY 2009-10 IS AT RS. 81.31 CRORES ON WHICH NET PROF IT RATE DECLARED IS AT 8.88% . THEREFORE, THE AO IS DIRECTE D TO RE-COMPUTE THE NET PROFIT BY APPLYING NET PROFIT RATE OF 9.50% ON TURNOVER OF RS. 81.31 CRORES. THIS GROUNDS OF APPEAL OF THE AS SESSEE IS PARTLY ALLOWED. 14. HOWEVER, FOR ASSESSMENT YEAR 2010-11 , WE FIND THAT THE TURNOVER OF THE ASSESSEE IS SHOWN AT RS. 74.10 CRORES AS AG AINST THE TURNOVER OF RS. 81.31 CRORES IN AY 2009-10, ON WHIC H NET PROFIT RATE DECLARED IS AT 10.11%. SINCE, THE ASSESSEE HAS SHOWN BETTER RESULT, HENCE, THE NET PROFIT RATE SHOWN IS UPHELD AS REASONABLE, AND ACCORDINGLY, THE DELETION OF ADDITION OF RS.72 LAKHS BY THE LD. CIT (A) IS UPHELD. ACCORDINGLY, REVENUE GROUNDS OF APPEAL IS DISMISSED. 15. SO FAR THE ASSESSMENT YEAR 2011-12 IS CONCERNED, AG AINST WHICH REVENUE AS WELL AS THE ASSESSEE IS APPEAL BEFORE US . WE FIND THAT TURNOVER FOR THIS YEAR IS AT RS. 104.30 CRORES; HEN CE, THERE IS SUBSTANTIAL INCREASE IN THE TURNOVER AS COMPARED TO AY 2010-11 WHERE TURNOVER WAS AT RS. 74.10 CRORES. THE ASSESSE E HAS DISCLOSED NET PROFIT RATE AT 7.01%, WHICH IS LOWER AS COMPARE TO M/S. SCC PROJECTS PVT. LTD.: I.T.A. NO.88-144-145/ IND/2015-16/A.Y:10-11&11-12/ PAGE 13 OF 15 PRECEDING YEAR, BUT WE FIND THAT THERE IS INCREASE IN TURNOVER. FURTHER, WE FIND THAT THE AO HAS MADE ADDITION OF R S. 1 CRORES FOR THIS YEAR, WHICH HAS BEEN REDUCED TO RS. 76 LAK H BY LD. CIT (A). IF WE ADD THE SAME TO NET PROFIT OF RS. 7.30 C RORES DISCLOSED, THEN NET PROFIT COMES TO 8.06 CRORES, WHICH WILL GI VE NET PROFIT RATE AT 8%. HOWEVER, WE FIND THAT LD. CIT (A) HAS CONSIDERED THE PECULIAR FACTS FOR THIS YEAR, AS THE SUB-CONTRACT R ECEIPTS ARE SHOWN AT RS. 42.33 CRORE AS COMPARED TO RS. 3.20 C RORES IN AY 2010-11 THUS THERE IS SUBSTANTIAL INCREASE IN SUB C ONTRACT RECEIPTS. WE FIND THAT LD. CIT (A) HAS CONSIDERED T HE NET PROFIT RATE AT 8.11% ON CONTRACT RECEIPT OF RS. 99.40 CROR ES, AND ACCORDINGLY UPHELD THE ADDITION OF RS. 76 LAKHS AFT ER ALLOWING REDUCTION OF 2% IN NET PROFIT IN SUB CONTRACT WORK RESULTING IN DELETION OF RS. 26 LAKHS ADDED BY THE AO. CONSIDERI NG THE FACTS THAT FOR THIS YEAR ARE DIFFERENT AS THERE IN INCREA SE IN TURNOVER, WHICH INCLUDES RECEIPTS OF RS. 42.33 CRORE IS MAINL Y DUE TO SUB CONTRACT THIS YEAR AS COMPARE TO PRECEDING YEAR ON WHICH PROFIT MARGIN NORMALLY, REMAINS LOW AS COMPARE TO OWN CONT RACT WORK. IN SUCH CIRCUMSTANCES, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT (A). ACCORDINGLY, THE APPEAL OF REVENUE AS WELL AS THE ASSESSEE IS DISMISSED FOR ASSESSMENT YEAR 2011-12. M/S. SCC PROJECTS PVT. LTD.: I.T.A. NO.88-144-145/ IND/2015-16/A.Y:10-11&11-12/ PAGE 14 OF 15 16. GROUND NO. 2 IN I. T. A. NO. 88/IND/2015 FOR AY 11- 12 OF ASSESSEE`S APPEAL RELATES TO ADDITION OF RS. 4,58,1 18/- BEING DIFFERENCE IN INTEREST INCOME. 17. WE FIND THAT NO SUBMISSION WERE MADE ON THIS GROUND THEREFORE, THE LD. CIT (A) HAS DISMISSED THIS GROUND. BEFORE U S ALSO NO SUBMISSION IS MADE. HOWEVER, WE FIND THAT THE ADDIT ION WAS MADE AS THERE WAS INTEREST RECEIPTS OF RS. 72,64,11 9/- WHEREAS THE ASSESSEE HAS OFFERED INTEREST RECEIPTS AT RS. 6 8,06,001/-. HENCE THE AO REQUIRED TO THE ASSESSEE TO EXPLAIN TH E SAME BUT NO REPLY WAS FILED HENCE ADDITION WAS MADE. BEFORE, U S NO SUBMISSION IS MADE. HENCE, THIS GROUND IS DISMISSED . 18. IN THE RESULT, APPEAL OF THE ASSESSEE IN I. T. A. N O. 612/IND/2013 FOR AY 2009-10 IS PARTLY ALLOWED. APPEAL FOR AY 201 0-11 OF DEPARTMENT IN I. T. A. NO. 144/IND/2015 IS DISMISSE D. THE APPEAL OF DEPARTMENT FOR ASSESSMENT YEAR 2011-12 IN I. T. A. NO. 145/IND/2015 AND APPEAL OF THE ASSESSEE FOR AY 2011 -12 IN I. T. A. NO. 88/IND/2015 IS DISMISSED. 19. THE ORDER PRONOUNCED IN THE OPEN COURT ON 07.11.20 16 SD/- ( . . ) (D.T.GARASIA) JUDICIAL MEMBER SD/- ( . . ) (O.P.MEENA) ACCOUNTANT MEMBER M/S. SCC PROJECTS PVT. LTD.: I.T.A. NO.88-144-145/ IND/2015-16/A.Y:10-11&11-12/ PAGE 15 OF 15 & / DATED : 7 TH NOVEMBER, 2016.OPM