ACIT, V. Smt. Vijayalakshmi B. Akki,

ITA 675/BANG/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80639 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 10-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE , ACCOUNTANT MEMBER ITA NO. 675 / BANG/20 1 3 (ASSESSMENT YEAR: 20 08 - 09 ) ASST. COMMISSIONER OF INCOME - TAX, CI RCLE 2(1), HUBLI. APPELLANT VS. SMT.VIJAYALAXMI B AKKI, L/H OF LATE BASAVARAJ VEERAPPA AKKI, BETAGERI, GADAG. PAN:ABGPA4578C RESPONDENT AND CROSS OBJN.NO.100/BANG/2013 (IN ITA NO.675/BANG/2013) (ASSESSMENT YEAR: 2008 - 09) (BY THE ASSESSEE) ****** A SSESSEE BY: SHRI V.SRINIVASAN, CA RE VENUE BY: SHRI M.K.BIJU, JCIT(DR) DATE OF HEARING : 05 - 08 - 2014 DATE OF PRONOUNCEMENT: 14 - 08 - 2014 O R D E R PER SMT. P.MADHAVI DEVI, JM : THE APPEAL BY THE REVENUE AND THE CROSS - OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A), HUBLI, DATED 15 - 2 - 2013 FOR THE ASSESSMENT YEAR 2008 - 09. ITA NO . 675 & CO 100/BANG/2013 SMT.VIJAYALAXMI B.AKKI. PAGE 2 OF 5 2. IN THE REVENUE S APPEAL, THE ONLY GRIEVANCE IS THAT THE CIT(A) HAS ERRED IN RESTRICTING THE ESTIMATION OF NET PROFIT TO RS.2 1,31,880/ - AS AGAINST 8% OF THE GROSS RECEIPTS ESTIMATED BY THE AO WHILE THE ASSESSEE HAS RAISED CROSS - OBJECTION THAT THE NET PROFIT OF RS.21,31,880/ - IS ALSO EXCESSIVE . 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, WAS ENGAGED IN THE BUSINESS AS TRANSPORT CONTRACTOR. RETURN OF INCOME WAS FILED ON 30 - 9 - 2008 FOR THE RELEVANT ASSESSMENT YEAR DECLARING INCOME OF RS.9,77,370/ - . DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE OF THE INCOME - TAX ACT, 1961[HEREINAFTER REFERRED TO AS 'THE ACT'], THE ASSESSEE WAS REQUIRED TO FURNISH THE DETAILS AND ALSO TO PRODUCE BOOKS OF ACCOUNT ALONG WITH BILLS AND VOUCHERS. THE ASSESSEE FAILED TO FURNISH THE DETAILS AND THEREFORE THE AO INVOKED THE PROVISIONS OF SEC.44AD AND BROUGHT TO TAX 8% OF THE GR OSS RECEIPTS. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) STATING THAT THE PROVISIONS OF SEC.44AD APPLY TO CIVIL CONTRACTORS ONLY AND AS THE ASSESSEE IS NOT A CIVIL CONTRACTOR BUT A TRANSPORT CONTRACTOR , THE SAID PROVISION IS NOT APP LICABLE TO THE ASSESSEE S BUSINESS . HE SUBMITTED THAT TREATING 8% OF THE GROSS RECEIPTS AS NET PROFIT WAS HIGHLY EXCESSIVE AND IN NONE OF THE EARLIER YEARS, INCOME WAS ESTIMATED AT 8%. THE CIT(A) CONSIDERED THE ASSESSEE S CONTENTION IN DETAIL AND OBSERVED THAT ITA NO . 675 & CO 100/BANG/2013 SMT.VIJAYALAXMI B.AKKI. PAGE 3 OF 5 NET INCOME AS PER PROFIT & LOSS ACCOUNT OF THE ASSESSEE WORKS OUT TO 1.52% WHEREAS , THE INCOME ASSESSED BY THE AO WORKS OUT TO 9.52%, WHICH A TRANSPORT CONTRACTOR CANNOT EARN. HE HELD THAT THE AO HAS NOT GIVEN ANY REASON S FOR ESTIMATING THE NET PROF IT AT 8% OF THE TOTAL TURNOVER. HE, ACCORDINGLY, ESTIMATE D THE TOTAL INCOME AT RS.21,31,880/ - WHICH INCLUDES THE RETURNED INCOME. ACCORDINGLY, THE CIT(A) PARTLY ALLOWED THE ASSESSEE S APPEAL. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE IS IN AP PEAL BEFORE US AND THE ASSESSEE IS IN CROSS - OBJECTIONS STATING THAT THE ESTIMATION OF INCOME BY THE CIT(A) IS EXCESSIVE. BOTH THE PARTIES ADVANCED THEIR ARGUMENTS IN SUPPORT OF THEIR CONTENTION. 6. AFTER CONSIDERING THE RIVAL CONTENTIONS AND THE MATE RIAL ON RECORD, WE FIND THAT THE ASSESSEE IS NOT A CIVIL CONTRACTOR BUT A TRANSPORT CONTRACTOR. SEC.44AD APPLIES TO CIVIL CONTRACTOR WHEREIN IT IS PROVIDED THAT IF THE ASSESSEE, WHO IS ENGAGED IN CIVIL CONTRACTS, IS NOT MAINTAINING ANY BOOKS OF ACCOUNT, T HEN THE INCOME SHALL BE ESTIMATED AT 8% OF THE GROSS RECEIPTS. THE LEARNED COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO PAGE 30 OF THE PAPER BOOK FILED BY THE ASSESSEE BEFORE US TO DEMONSTRATE THAT IN THE EARLIER ASSESSMENT YEARS, THE NET PROFIT E STIMATED BY THE AO EVEN AFTER MAKING ADDITION S TO THE RETURNED INCOME ON DIFFERENT GROUNDS WAS AROUND 2.2 6% TO 2.79% ITA NO . 675 & CO 100/BANG/2013 SMT.VIJAYALAXMI B.AKKI. PAGE 4 OF 5 WHEREAS FOR THE ASSESSMENT YEAR 2008 - 09, THE INCOME ASSESSED BY THE CIT(A) AT RS.21,31,880/ - WORKS OUT TO 3.3% OF THE GROSS RECEIPTS . HE S UBMITTED THAT IN THE BUSINESS OF TRANSPORT CONTRACTOR, INCOME CAN NEVER BE AT 3.3% OF THE GROSS RECEIPTS AND IS ON THE HIGHER SIDE. 7. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDERED THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT IF TH E AO WAS NOT SATISFIED WITH THE NET PROFIT RETURNED BY THE ASSESSEE AND IS NOT SATISFIED WITH THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE, HE IS ENTITLED TO ESTIMATE THE INCOME BUT FOR SUCH ESTIMATION ALSO, HE HAS TO BRING ON RECORD COMPARABLE CASES TO ESTIMATE THE NET PROFIT AT A PERCENTAGE OF THE GROSS RECEIPTS. THE AO HAS FAILED TO DO SO AND NEITHER HAS THE CIT(A) BROUGHT ON RECORD ANY EVIDENCE IN SUPPORT OF HIS FINDING. HAVING REGARD TO THE NET PROFIT ESTIMATED BY THE AO FOR THE EARLIER YEARS, WE FIND THAT DETERMINATION OF ASSESSED INCOME AT 3.3% OF THE GROSS RECEIPTS IS ALSO ON A HIGHER SIDE. THERE IS NO DISPUTE THAT THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE IN SUPPORT OF HIS CLAIM OF EXPENDITURE OR INCOME. IN SUCH CIRCUMSTANCES, TH E AUTHORITIES HAVE NO OPTION BUT TO ESTIMATE THE INCOME BUT THERE HAS TO BE SOME BASIS FOR SUCH ESTIMATION ALSO. THEREFORE, DULY TAKING NOTE OF THE FACT THAT THE ASSESSING AUTHORITY HIMSELF HAS ARRIVED AT 2.79% FOR EARLIER ASSESSMENT YEARS 2006 - 07 AND AT 2.5% FOR ASSESSMENT YEAR 2007 - 08 , WE DEEM IT FIT AND PROPER TO ITA NO . 675 & CO 100/BANG/2013 SMT.VIJAYALAXMI B.AKKI. PAGE 5 OF 5 ESTIMATE THE NP AT 2.6 % FOR THE RELEVANT ASSESSMENT YEAR. THE APPEAL OF THE REVENUE AND THE CROSS - OBJECTIONS OF THE ASSESSEE ARE ACCORDINGLY DISPOSED OF. 8. IN THE RESULT, THE REVENUE S APPEA L IS DISMISSED AND THE ASSESSEE S CROSS - OBJECTION IS PARTLY ALLOWED. PRON OUNCED IN THE OPEN COURT ON 14 TH OF AUGUST , 201 4. SD/ - SD/ - ( ABRAHAM P GEORGE ) ( SMT. P.MA DHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE