ITO, CHURU V. M/s. Laxminath Infrastructure Pvt. Ltd., CHURU

ITA 63/JODH/2014

• Counselvise Citation: 6323314 RSA 2014
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 04-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Business income
• Section: 143(3); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 63/JODH/2014 (A.Y. 2010-11) THE INCOME-TAX OFFICER VS. M/S LAX MINATH INFRASTRUCTURE WARD - 1 (P). LTD. C 91, CHURU AGRASEN NAGAR, CHURU PAN NO. AABCL 3531 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJENDRA JAIN DEPARTMENT BY : SHRI N.A. JOSHI, DR. DATE OF HEARING : 01.05.2014 DATE OF PRONOUNCEMENT : 06.05.2014 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE FOR A.Y 2010-2011 AGAINST THE ORDER OF THE CIT(A)-III. JAIP UR, DATED 08.11.2013. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE-FIRM IS A CONTRACTOR AND FILED ITS RETURN FOR A.Y. 2010- 11 ON 13.10.2010 DECLARING BUSINESS INCOME OF RS. 4,11,575/-. THE CA SE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY ASSESSMENT WAS MADE U/ S 143(3) OF INCOME-TAX ACT, 1961 ['THE ACT', FOR SHORT] ON TOTA L INCOME OF RS. 60,16,570/-. THE TOTAL RECEIPTS OF BUSINESS FOR TH REE YEARS, NAMELY, 2008-09, 2009-10 AND 2010-11 ARE AS UNDER: A.Y. GROSS RECEIPTS GROSS PROFIT G.P. RATE NET PROFIT N.P. RATE 2008 - 09 52421931 1243874 2.37% ( - ) 1069439 0.0% 2009 - 10 131038421 3781629 2.88% 88872 0.06% 2010 - 1 1 69071257 3696900 5.35% 1275779 1.85% 2.1 THE A.O. FOUND THAT THE EXPENSES ARE NOT FULLY VOUCHED AND BOOKS OF THE ASSESSEE ARE DEFECTIVE FROM WHICH CORR ECT INCOME CANNOT BE DERIVED. ACCORDINGLY, HE REJECTED THE BO OKS OF ACCOUNT AND INVOKED THE PROVISIONS OF SECTION 145 OF THE AC T AND APPLIED NET PROFIT RATE OF 8.5% TO THE TOTAL RECEIPTS OF THE YE AR WHICH ARE AT RS. 6,90,71,257/- AND DETERMINED NET PROFIT AT RS. 5871 057/- AS AGAINST WHICH THE LD. CIT(A) HAS ADOPTED NET PROFIT RATE OF 6.5% AND HAS 3 DELETED THE TRADING ADDITION OF RS. 13,81,425/-. T HE LD. CIT(A) HAS ALSO TREATED THE INTEREST RECEIVED ON COMPULSORY FD RS AS ASSESSEES BUSINESS INCOME. 2.2 NOW THE REVENUE IS AGGRIEVED AND HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE TRADING AD DITION OF RS. 13,81,425/- BY APPLYING NET PROFIT RATE @ 6. 5%. 2. THE LD. CIT(A) HAS FURTHER ERRED IN TREATING THE INTEREST ON FDRS AS BUSINESS INCOME. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. BEFORE US, BOTH THE PARTIES HAVE REITERATED THEIR EARLIER ARGUMENTS. DURING TH E APPELLATE PROCEEDINGS, BEFORE THE LD. CIT(A), IT WAS SUBMITTE D THAT THE A.O. HAS APPLIED NET PROFIT RATE OF 8.5% AS AGAINST 1.85 % SHOWN BY THE ASSESSEE AND THE SAME IS HIGHLY ARBITRARY AND UNJUS TIFIED. IN FACT, THE ASSESSEE HAS DISCLOSED NET PROFIT RATE OF 1.85% IN THIS YEAR. AS PER THE PREVIOUS HISTORY OF THE ASSESSEE WHICH HAS BEEN EXTRACTED ABOVE, THE NET PROFIT RATE DISCLOSED IN THIS YEAR A S WELL AS GROSS 4 PROFIT RATE IS FAR BETTER THAN WHAT WAS DECLARED IN THE IMMEDIATELY PRECEDING YEAR. THEREFORE, BY RESPECTFULLY FOLLOWI NG THE SETTLED POSITION OF LAW, WE HOLD THAT EVEN AFTER REJECTION OF BOOKS OF ACCOUNT, THE PAST HISTORY OF THE ASSESSEE, IF AVAIL ABLE, IS THE BEST GUIDE TO DETERMINE THE NET PROFIT RATE. HOWEVER, T HE LD. CIT(A) AFTER REFERRING TO THE COMPARABLE CASES, HAS IGNORE D THE PAST HISTORY OF THE ASSESSEE AND HAS ADOPTED NET PROFIT RATE OF 6.5% ON THE BASIS OF COMPARABLE CASES AND HAS ARRIVED AT NE T PROFIT OF RS. 44,89,631/- AS AGAINST RS. 58,71,056/- DETERMINED B Y THE A.O. ACCORDINGLY, RELIEF OF RS. 13,81,425/- HAS BEEN ALL OWED. HE HAS ALSO TREATED THE INTEREST INCOME ARRIVED FROM INTEREST O N FDRS WHICH WERE COMPULSORILY TAKEN FOR TAKING CONTRACT WORK FR OM THE DEPARTMENTS WHICH REQUIRE FDRS TO BE DEPOSITED AS SECURITY FOR OBTAINING CONTRACT WORK. THIS INTEREST INCOME HAS BEEN TREATED BY THE LD. CIT(A) AS ASSESSEES BUSINESS INCOME FROM C ONTRACT WORK. THE REVENUE HAS CHALLENGED BOTH THE ACTIONS OF THE LD. CIT(A). EVEN OTHERWISE, BOTH THE GROUNDS OF THIS APPEAL STAND SQ UARELY COVERED BY THE ORDER OF THIS BENCH RENDERED IN THIS VERY CA SE, WHILE DECIDING THE APPEAL OF THE ASSESSEE WHEREIN, WE HAVE ACCEPTE D THE DECLARED TRADING RESULTS. 5 4. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 06 TH MAY, 2014. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 06 TH MAY, 2014 VL/- COPY TO: THE APPELLANT THE RESPONDENT THE CIT BY ORDER THE CIT(A) THE DR ASSISTANT REGISTRAR ITAT, JODHPUR