Bhawan Dass Dua, Kaithal V. ITO, Kaithal

ITA 629/CHANDI/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7071 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 23-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PDA
• Assessee Lawyers: PERMIL GOEL SHRI J S NAGAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 629/CHD/2014 ASSESSMENT YEAR : 2010-11 SHRI BHAGWAN DASS DUA, VS THE INCOME TAX OFF ICER, O/O CO-OP L/C SOCIETY, WARD-3, PEHOWA CHOWK, KAITHAL. KAITHAL. PAN : ABYPD8216A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PERMIL GOEL RESPONDENT BY : SHRI J.S.NAGAR DATE OF HEARING : 08.09.2014 DATE OF PRONOUNCEMENT : 15.09.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), KARNAL DATED 04.11.2013 RELATING TO ASSESSMENT YEAR 2010-11 AGAI NST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL : NET RATE APPLIED @ 12% IS VERY EXCESSIVE AND MAY P LEASE BE REDUCED. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST THE ESTIMATION OF NET PROFIT RATE TO BE APPLIED TO COMP UTE THE PROFITS OF THE BUSINESS. 2 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CIVIL CONTRACTOR. DURING THE COURSE OF ASSESSMENT PROCEED INGS, THOUGH ASSESSEE PRODUCED THE BOOKS OF ACCOUNT BUT DID NOT PRODUCE THE VOUCHERS OF THE EXPENSES CLAIMED IN THE PROFIT & LO SS ACCOUNT DESPITE SEVERAL OPPORTUNITIES GIVEN BY THE ASSESSIN G OFFICER. THE ASSESSEE WAS SHOW CAUSED AS TO WHY BOOKS OF ACCOUNT BE NOT REJECTED UNDER SECTION 145(3) OF THE ACT. 5. THE LD. AR FOR THE ASSESSEE STATED BEFORE THE AS SESSING OFFICER THAT NO VOUCHERS HAD BEEN MAINTAINED BY THE ASSESSEE. THE ASSESSING OFFICER, IN VIEW THEREOF REJECTED THE BOO KS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT AND APPLIED NET PRO FIT RATE OF 12% IN ORDER TO DETERMINE THE INCOME IN THE HANDS OF TH E ASSESSEE. 6. THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRM ED THE ORDER OF THE ASSESSING OFFICER IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN M/S PRABHAT KUMAR, CONTRACTOR OF SIRSA VS CIT [ ITA NO. 293 OF 2008 (P &H)]. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF COMMISSI ONER OF INCOME TAX (APPEALS). 7. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE APPLICATION OF NET PROFIT RATE OF 12% WAS EXCESSIVE AS THE ASSESSE E HAD ONLY DECLARED NP RATE OF 4.64%. 8. THE LD. DR FOR THE REVENUE STRESSED THAT THE ASS ESSEE HAD AGREED TO ESTIMATION OF INCOME IN HIS HANDS AND HEN CE, NO MERIT IN THE PLEA OF THE ASSESSEE. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS CARRYING ON THE BUSINESS OF CIVIL CONSTRUCTION. THE ASSESSEE, THOU GH HAD PRODUCED 3 THE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER B UT HAD FAILED TO PRODUCE ANY VOUCHERS IN RESPECT OF THE EXPENSES DEB ITED TO THE PROFIT & LOSS ACCOUNT. IN VIEW THEREOF, THE PROVIS IONS OF SECTION 145(3) OF THE ACT WERE APPLIED AND THE BOOKS OF ACC OUNT MAINTAINED BY THE ASSESSEE WERE REJECTED. CONSEQUENT THERETO, NP RATE OF 12% WAS APPLIED IN ORDER TO DETERMINE THE INCOME IN THE HANDS OF THE ASSESSEE. THE SAID RATE WAS APPLIED IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN M/S P RABHAT KUMAR, CONTRACTOR OF SIRSA VS CIT (SUPRA). THE CAS E OF THE ASSESSEE BEFORE US WAS THAT THE APPLICATION OF THE NET PROFIT RATE OF 12% WAS ON THE HIGHER SIDE WHEREAS THE CASE OF THE REVENUE WAS THAT THE ASSESSEE HAD AGREED TO THE SAID APPLICATIO N OF NET PROFIT RATE AND HENCE, NO MERIT IN THE APPEAL. FROM THE P ERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT IN VIEW OF NON-PRODU CTION OF VOUCHERS DURING THE ASSESSMENT PROCEEDINGS, THE LD. AR FOR THE ASSESSEE AGREED TO THE ESTIMATION OF INCOME IN THE HANDS OF THE ASSESSEE BUT DID NOT AGREE TO THE APPLICATION OF NE T PROFIT RATE OF 12%. THE ASSESSING OFFICER ON ITS OWN MOTION HAD A PPLIED NET PROFIT RATE OF 12% IN-TURN FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT. 10. WE FIND THAT SIMILAR ISSUE OF APPLICATION OF NE T PROFIT RATE AROSE BEFORE THE CHANDIGARH BENCH OF TRIBUNAL IN TH E CASE OF ACIT VS JANGIR SINGH MALHI IN ITA NO. 498/CHD/2013 AND V IDE ORDER DATED 15.07.2014, THE GP RATE WAS ESTIMATED @ 8%. THE RELEVANT FINDINGS OF THE TRIBUNAL WERE AS UNDER : WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E RECORD. THE ASSESSEE IS NOT IN APPEAL AGAINST THE REJECTION OF BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT AND IN VIEW THEREOF, WE UPHOLD THE REJECTION OF BOOKS OF A CCOUNT. ONCE THE BOOKS OF ACCOUNT HAVE BEEN REJECTED THEN T HE NEXT COURSE IS TO ESTIMATE THE INCOME IN THE HANDS OF TH E 4 ASSESSEE BY APPLYING SUITABLE NET PROFIT RATE. TH E ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD DECLARED NE T PROFIT RATE OF 3.5% AS AGAINST 4.4.% DECLARED IN THE PRECE DING YEAR. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT HAD APPLIED RATE OF 12% WHICH WAS REDUCE D TO 5% BY THE CIT (APPEALS). IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE HOLD THAT THE NET PROFIT RATE OF 8% BE APPLIED TO DETERMINE THE INCOME IN THE HANDS OF THE ASSESSEE AS THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTOR. IN VIEW THEREOF, THE GROUNDS OF APPEA L RAISED BY THE REVENUE ARE PARTLY ALLOWED. 11. THE FACTS OF THE PRESENT CASE ARE SIMILAR TO TH E FACTS BEFORE THE TRIBUNAL IN THE CASE OF ACIT VS JANGIR SINGH MA LHI (SUPRA) AND FOLLOWING THE SAME PARITY OF REASONING, WE DIRECT T HE ASSESSING OFFICER TO COMPUTE THE INCOME IN THE HANDS OF THE A SSESSEE BY APPLYING NET PROFIT RATE OF 8%. THE GROUNDS OF APP EAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH SEPTEMBER,2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15 TH SEPTEMBER,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR/ITAT/CHD