GANESH KUMAR R. DIXIT, THANE V. ASST CIT 19(2), MUMBAI

ITA 6616/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2980 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 29-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 12-11-2013
• Court: TRIBUNAL
• Department Lawyers: SAMBIT MISHRA
• Keywords: Depreciation; Opportunity of being heard
• Section: 6; 144

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.6616/MUM/2013 ASSESSMENT YEAR 2008-09 MR GANESH KUMAR R. DIXIT PROP. OF M/S GANESH ENTERPRISES, SHOP NO.5, PEACE HEAVEN BLDG. MIRA BHAYANDAR ROAD, THANE / VS. ACIT-19(2), PIRAMAL CHAMBERS, MUMBAI ( !' # /ASSESSEE) ( $ / REVENUE) PAN. NO. AAEPD3428M !' # / ASSESSEE BY SHRI AASIFA KHAN $ / REVENUE BY SHRI SAMBIT MISHRA -DR $% & # ' / DATE OF HEARING : 27/10/2015 & # ' / DATE OF ORDER: 06/11/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 27/09/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THOUGH THE ASSESSEE HAS TAKEN GROUND WITH RESPECT T O NOT PROVIDING PROPER OPPORTUNITY OF BEING HEARD AND FUR THER THE ASSESSMENT WAS FRAMED U/S 144 OF THE INCOME TAX ACT , 1961 MR. GANESH KUMAR R. DIXIT ITA NO.6616/MUM/2013 2 (HEREINAFTER THE ACT), HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE SMT. AASHIFA KHAN, DID NOT PRESS GROUND NO.1 & 2 RA ISED IN THE APPEAL, THEREFORE, BOTH THESE GROUNDS ARE DISMI SSED AS NOT PRESSED. 2. THE ONLY GROUND REMAINED FOR ADJUDICATION BY US IS WITH RESPECT TO DISALLOWANCE WITH RESPECT TO LABOUR EXPENSES AMOUNTING TO RS.1,86,74,554/-, PURCHASES RS.28,56,5 45/- AND OTHER EXPENSES AMOUNTING TO RS.12,17,164/-. THE CRUX OF ARGUMENT ADVANCED ON BEHALF OF THE ASSESSEE THAT ASSESSEE IS ENGAGED IN LABOUR INCENTIVE WORK AS A CONTRACTOR . IT WAS PLEADED THAT NOTICES WERE SEND AT WRONG ADDRESS, HO WEVER, REMAND REPORT WAS SOUGHT FROM THE ASSESSING OFFICER BY FURTHER CONTENDING THAT THE NECESSARY BILLS AND VOU CHERS WERE PRODUCED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). IT WAS EMPATHETICALLY CONTENDED THAT IN EARLIER ASSESSMENT YEARS I.E. 2008-09 AND 2007-08, THE NET PROFIT WAS ASSESSED AT 6.34% AND 11.79% RESPECTIVELY, THER EFORE, A REASONABLE VIEW MAY BE TAKEN. 2.1. ON THE OTHER HAND, THE LD. DR, SHRI SAMBIT MI SHRA, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY CONTENDING THAT THE ASSESSEE DID NOT RESPOND TO THE NOTICES ISSUED TO THE ASSESSEE, THEREFORE, THE ASSESSING OF FICER HAD NOT OPTION BUT TO FAME THE ASSESSMENT U/S 144 OF TH E ACT BY FURTHER CONTENDING THAT THE ASSESSEE DID NOT PRODUC E THE NECESSARY BILLS AND VOUCHERS. THE IMPUGNED ORDER WA S DEFENDED. MR. GANESH KUMAR R. DIXIT ITA NO.6616/MUM/2013 3 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE DECLARED INCOME OF RS.12,82,4 50/- IN HIS RETURN FILED ON 29/09/2008. NOTICE U/S 143(2) WAS ISSUED ON 05/08/2009 WHICH WAS RETURNED BY THE POST AL AUTHORITIES WITH THE REMARK UNCLAIMED RETURNED TO THE SENDER. SINCE, THE ASSESSMENT WAS GETTING TIME BA RRED, THE LD. ASSESSING OFFICER COMPLETED THE ASSESSMENT EX-P ARTE, QUA THE ASSESSEE, AS PER THE PROVISIONS OF SECTION 144 OF THE ACT. THE ASSESSEE DECLARED SALES/GROSS RECEIPTS OF RS.3,13,60,371/- AND OTHER INCOME OF RS,58,922/-. ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT, ATTACHED WI TH THE RETURN, IT WAS NOTICES BY THE ASSESSING OFFICER THA T THE ASSESSEE HAS DEBITED VARIOUS EXPENSES. IN THE ABSEN CE OF GENUINENESS OF THE CLAIMED EXPENSES, THESE WERE DIS ALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE, THU S, THE ASSESSMENT WAS FRAMED ON A INCOME OF RS.3,18,98,380 /-. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCOME T AX (APPEALS), THE CONTENTION OF THE ASSESSEE WERE CONS IDERED, THE DISALLOWANCES MADE BY THE ASSESSING OFFICER WERE AF FIRMED, AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEF ORE THIS TRIBUNAL. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, L EADING TO ADDITION MADE TO THE TOTAL INCOME, CONCLUSION DR AWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSER TIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF KEPT IN JUXT APOSITION AND ANALYZED, THERE IS NO DISPUTE TO THE FACT THAT THE NOTICES MR. GANESH KUMAR R. DIXIT ITA NO.6616/MUM/2013 4 WERE SENT AT THE WRONG ADDRESS, THEREFORE, THE ASSE SSEE COULD NOT APPEAR BEFORE THE ASSESSING OFFICER, CONSEQUENT LY, THE ASSESSMENT WAS FRAMED U/S 144 OF THE ACT. FOR WANT OF GENUINENESS OF THE CLAIMED EXPENSES, THE LD. ASSESS ING OFFICER ADDED THE CLAIMED EXPENSES TO THE TOTAL INC OME OF THE ASSESSEE. THE ASSESSEE IS AN INDIVIDUAL AND DOING THE BUSINESS AS A CONTRACTOR IN THE NAME OF M/S GANESH ENTERPRISES. ADMITTEDLY, IN THE CASE OF THE CONTRAC TOR, IT IS A LABOUR ORIENTED WORK WHICH INCLUDES CABLE LAYING, D UCTING, GRAVING, FILLING, CONSTRUCTION OF TOWERS, ETC. WE H AVE PERUSED THE PAPER BOOK, THEREFORE, SUMMARIZING HEREUNDER TH E NET PROFIT RATION OF VARIOUS ASSESSMENT YEARS:- ASSESSMENT YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 PARTICULARS LABOUR CHARGES REALIZED 97,83,190 83,72,540 48,39,400 54,77,223 59,53,632 3 ,13,60,371 NET PROFIT AS PER P/L A/C 1,76,940 1,83,467 1,76,048 1,52,347 3,01,467 12,48, 816 ADD: INCOME TAX DEBITED TO P/L A/C 2,01,550 1,78,144 50,607 57,936 58,263 3,61,685 DEPRECIATION 8,178 6,542 5,234 4,187 92,949 61,208 FINANCE CHARGES 2,24,647 2,39,548 2,10,547 2,06,480 2,49,465 3,17,3 13 TOTAL NET PROFIT RETURNED 6,11,315 6,07,701 4,42,436 4,20,950 7,01,844 19,89, 022 NET PROFIT RATIO 6.25% 7.26% 9.14% 7.69% 11.79% 6.34% IF THE AFORESAID ANALYSIS IS KEPT IN JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPEAL, ONE FACT IS OOZING OUT THAT THE NET PROFIT RATIO IS FROM 6.25% TO 11.79% FOR DIFFERENT ASSESSM ENT YEARS. MR. GANESH KUMAR R. DIXIT ITA NO.6616/MUM/2013 5 IN EARLIER YEARS, THIS FACTUAL MATRIX WAS ACCEPTED BY THE DEPARTMENT. IT IS ALSO A FACT THAT THE ASSESSEE PR ODUCED THE AUDIT REPORT U/S 44AB OF THE ACT IN FORM NO.3CB AND 3CD ALONG WITH THE STATEMENT OF TOTAL INCOME, BALANCE S HEET AND PROFIT AND LOSS ACCOUNT (PAGES 1 TO 17 OF THE PAPER BOOK), MONTHLY SUMMARY OF LABOUR CHARGES PAID FOR THE PERI OD FROM 01/04/2007 TO 31/03/2008 (PAGE-18 OF THE PAPER BOOK ), DETAILS OF LABOUR CHARGES PAID TO UNSKILLED/TEMPORA RY WORKERS ON DAILY BASIS, AS PER THE JOB CARD MAINTAINED AT T HE SITE (PAGE 19 TO 40), COPIES OF SAMPLE VOUCHERS SHOWING THE PA YMENT MADE TO LABOURS (PAE 41 TO 74), COPY OF LEDGER ACCO UNT OF THE PURCHASE (PAGES 75 TO 86), DETAILS OF PARTYWISE PUR CHASES (PAGE 87), COPY OF CONFIRMATION, BILLS, DELIVERY CH ALLANS, COPY OF ACKNOWLEDGMENT OF RETURN OF INCOME ETC OF THE PURCH ASE PARTY (PAGES 88 TO 139), COPY OF BANK STATEMENT FOR THE P ERIOD FROM 01/04/2007 TO 31/03/2008 SHOWING THE PAYMENT MADE F OR THE PURCHASES (PAGES 140 TO 161), MONTHLY SUMMARY O F SALARY AND WAGES PAID FOR THE PERIOD FROM 01/04/2007 TO 31/03/2008 (PAGE 62), PARTYWISE DETAILS OF SALARY A ND WAGES PAID (PAGE 163) ETC. IN VIEW OF THESE FACTS, THE AS SESSEE, THOUGH, COULD NOT PRODUCE THE DOCUMENTS BEFORE THE ASSESSING OFFICER TO ASCERTAIN THE GENUINENESS OF T HE EXPENSES CLAIMED BY THE ASSESSEE BUT AT THE SAME TIME NO PUR POSE WILL BE SERVED TO SEND THE MATTER BACK TO THE FILE OF TH E ASSESSING OFFICER, THEREFORE, TO CUT SHORT THE LITIGATION AND FURTHER TO SAFEGUARD THE INTEREST OF REVENUE, WE HOLD THAT IT WILL SERVE THE PURPOSE, IF THE NET PROFIT RATIO IS ADOPTED AT THE RATE OF 10% OF THE RECEIPTS. EVEN OTHERWISE, AS PER THE PRO VISIONS OF MR. GANESH KUMAR R. DIXIT ITA NO.6616/MUM/2013 6 SECTION 44AD, THERE IS A PROVISION OF 8% OF THE TOT AL TURNOVER OR THE GROSS RECEIPT OF THE ASSESSEE, WHICH IS A SP ECIAL PROVISION FOR COMPUTING PROFIT & GAINS OF BUSINESS ON PRESUMPTIVE BASIS. THUS, WE DIRECT THE ASSESSING O FFICER TO CALCULATE THE INCOME OF THE ASSESSEE BY ADOPTING TH E NET PROFIT AT THE RATE OF 10% OF THE GROSS RECEIPTS/EXPENSES W ITH RESPECT TO LABOUR EXPENSES. OUR VIEW WILL ALSO IDENTICAL W ITH RESPECT TO PURCHASES AND OTHER EXPENSES (GROUND NO.4 & 5). THE LD. ASSESSING OFFICER IS DIRECTED ACCORDINGLY. IT IS MA DE CLEAR THAT OUR VIEW IS LIMITED TO THIS ASSESSMENT YEAR ONLY, B EING THE PECULIAR FACTS OF THE CASE, AND MAY NOT BE QUOTED F OR FUTURE REFERENCES. FINALLY, THE APPEAL OF THE ASSESSEE IS DISPOSED OFF IN TERMS INDICATED HEREINABOVE. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES, (A S AGREED BY THEM) AT THE CONCLUSION OF THE HEARING ON 27/10/201 5. SD/- SD/- ( RAJESH KUMAR ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER % MUMBAI; ( DATED : 06/11/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 1# ( *+ ) / THE CIT, MUMBAI. 4. 0 0 1# / CIT(A)- , MUMBAI 5. 3$4 .# , 0 *+' * 5 , % / DR, ITAT, MUMBAI MR. GANESH KUMAR R. DIXIT ITA NO.6616/MUM/2013 7 6. 6! 7% / GUARD FILE. / BY ORDER, /3+# .# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI.