DCIT, Sangrur V. M/s Harbhajan Singh & Co., Sangrur

ITA 689/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95524 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 01-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: AJAY JAIN
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 689/CHD/2014 ASSESSMENT YEAR: 2010-11 THE DCIT, VS M/S HARBHAJAN SINGH & CO., CIRCLE, GOVT. CONTRACTOR, SANGRUR. CLUB ROAD, SANGRUR. PAN: AADFH9441H & CO 36/CHD/2014 IN ITA NO. 689/CHD/2014 ASSESSMENT YEAR: 2010-11 M/S HARBHAJAN SINGH & CO., VS THE DCIT, GOVT. CONTRACTOR, CIRCLE, CLUB ROAD, SANGRUR. SANGRUR. PAN: AADFH9441H (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI MANJIT SINGH ASSESSEE BY : SHRI AJAY JAIN DATE OF HEARING : 02.09.2015 DATE OF PRONOUNCEMENT : 09.09.2015 O R D E R PER BHAVNESH SAINI,JM THE DEPARTMENTAL APPEAL AS WELL AS CROSS OBJECTION BY ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) PATIALA DATED 28.05.2014 FOR ASSESSMEN T YEAR 2010-11. 2 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED THE MATERIAL ON RECORD. 3. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS C ROSS OBJECTION AND SEEKS PERMISSION TO WITHDRAW THE SAME . HE IS PERMITTED TO WITHDRAW THE CROSS OBJECTION. THE SAME IS ACCORDINGLY, DISMISSED AS WITHDRAWN. 4. THE REVENUE ON GROUND NO. 1 CHALLENGED THE ORDER OF LD. CIT(APPEALS) IN DIRECTING THE ASSESSING OFFICER TO APPLY GROSS PROFIT RATE OF 7.5% INSTEAD OF 12% ADOPTED BY THE ASSESSING OFFICER. 5. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE IS A CIVIL CONTRACTOR. THE ASSESSING OFFICER REJECTED TH E BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE INCOME TAX A CT. THE REASONS FOR REJECTION OF BOOKS OF ACCOUNT ARE D ULY DISCUSSED IN THE ASSESSMENT ORDER. IN SHORT, THE R EASONS FOR THE SAME WERE THAT ASSESSEE HAS NOT MAINTAINED ANY PURCHASE REGISTER FOR THE MAIN ITEM OF RAW MATERIAL CONSUMED BY THE ASSESSEE I.E. BITUMEN, LDO, BAJRI, MITTI, BRICKER ETC. THE ASSESSEE DID NOT PRODUCE STOCK RE GISTER OF THE MATERIAL. NO DAY-TO-DAY RECORDS FOR ISSUE OF MATERIAL USED IN CONSTRUCTION HAVE BEEN MAINTAINED OR PRODUCED BEFORE ASSESSING OFFICER. NO GR REGISTER REGARDING FREIGHT CHARGES OR ISSUE OF RAW MATERIAL PRODUCED. NO MEASUREMENT BOOK FILED. NO DETAILS O F EXPENSES INCURRED WERE FILED. IT WAS ALSO NOTED TH AT 3 ASSESSEE INCURRED EXPENSES IN CASH FOR WHICH VOUCHE RS WERE NOT VERIFIABLE. THE HANDWRITING WAS SENT FOR EXAMINATION. THE ASSESSEE WANTED TO CROSS EXAMINE THE EXPERT BUT DID NOT AVAIL THE OPPORTUNITY. THE ASSE SSING OFFICER, CONSIDERING TOTALITY OF THE FACTS AND CIRCUMSTANCES, REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE PROFIT @ 12% OF THE GROSS RECEIPTS. THE DEDUCTION ON ACCOUNT OF SALARY AND INTEREST TO THE PARTNER WAS ALLOWED. HOWEVER, NO DEPRECIATION WAS ALLOWED SEPARATELY. THE ASSESSING OFFICER ALSO FOUND ENTRY OF RS. 1,07,75,154/- ON 02.04.2010. THE ASSESSEE SUBM ITTED THE SAME IS ACCOUNTED FOR IN THE BOOKS OF ACCOUNT, HOWEVER ASSESSING OFFICER DID NOT ACCEPT THE SAME A ND ALSO ADDED THE SAME AMOUNT IN THE GROSS RECEIPTS SH OWN BY THE ASSESSEE. THE ASSESSEE CHALLENGED THE FINDI NGS OF THE ASSESSING OFFICER BEFORE LD. CIT(APPEALS) AND D ETAILED SUBMISSIONS ARE REPRODUCED IN THE APPELLATE ORDER I N WHICH ASSESSEE BRIEFLY EXPLAINED THAT NET PROFIT RA TE OF 12% WAS WITHOUT CONSIDERING THE PAST HISTORY AND CONSISTENCY OF THE CASE. IN THE EARLIER YEARS, SCR UTINY ASSESSMENTS HAVE BEEN FRAMED IN WHICH THE ASSESSEE DECLARED NET PROFIT RATE OF 1.53%, 3.01% AND 4.28% IN PRECEDING ASSESSMENT YEARS 2007-08, 2008-09 AND 2009-10. THE ASSESSING OFFICER ASSESSED THE SAME U NDER SECTION 143(3) AND ACCEPTED NP RATE OF 2.25%, 6% LE SS DEPRECIATION AND 4.49% RESPECTIVELY. IT WAS SUBMIT TED THAT ASSESSEE'S BOOKS OF ACCOUNT ARE AUDITED AND AD DITION IS WHOLLY UNJUSTIFIED. THE LD. CIT(APPEALS) CONFIR MED THE 4 REJECTION OF THE BOOKS OF ACCOUNT CONSIDERING THE F INDINGS GIVEN B Y THE ASSESSING OFFICER. 6. THE LD. CIT(APPEALS), WITH REGARD TO ADDITION TO THE GROSS RECEIPTS IN A SUM OF RS. 1.07 CR DELETED THE ADDITION BECAUSE THE SAME AMOUNT WAS REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE LD. CIT(APPEALS), AS R EGARDS APPLICATION OF NP RATE FOUND THAT IN THE CASE OF TH E ASSESSEE ITSELF FOR ASSESSMENT YEAR 2008-09, ITAT CHANDIGARH BENCH AFTER REJECTION OF THE BOOKS OF AC COUNT AND CONSIDERING PAST HISTORY OF THE ASSESSEE HAS AP PLIED THE PROFIT RATE OF 6% INSTEAD OF 8%. THE LD. CIT(A PPEALS), CONSIDERING THE HISTORY OF THE ASSESSEE AND ORDERS IN THE CASE OF ASSESSEE FOUND THAT ASSESSEE HAS ALREADY SH OWN NET PROFIT RATE OF 6.5%, THEREFORE, INCREASE IN 1% WAS FOUND REASONABLE. THE DEDUCTION ON ACCOUNT OF SALAR Y AND INTEREST PAID TO THE PARTNER WERE ALSO ALLOWED AS W AS ALLOWED BY THE ASSESSING OFFICER. THEREFORE, NP RAT E OF 7.5% WAS APPLIED AGAINST THE RECEIPTS DECLARED BY T HE ASSESSEE. 7. AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT F IND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE REJECTION OF THE BOOKS OF ACCOUNT IS NOT CHALLENGED BY THE ASSESSEE BEFORE US AS THE CROSS OBJECTION HAVE BEEN WITHDRAWN BY THE ASSESSEE. IN ASSESSMENT YEAR 2008- 09, ALSO THE ASSESSEE HAS NOT PRESSED REJECTION OF THE BOOKS OF ACCOUNT BEFORE THE TRIBUNAL IN ITA NO. 183/2013 ORD ER DATED 15.04.2013. THEREFORE, THE ISSUE LEFT FOR 5 CONSIDERATION IS WHETHER APPLICATION OF NP RATE OF 7.5% BY LD. CIT(APPEALS) IS REASONABLE AND JUSTIFIED. IT I S WELL SETTLED LAW THAT FOR APPLICATION OF THE PROFIT RATE , HISTORY OF THE ASSESSEE AND CIRCUMSTANCES SHALL HAVE TO BE CONSIDERED. IN THE CASE OF THE ASSESSEE IN EARLIER YEARS, THE NET PROFIT RATE OF AROUND 6% OR LESS THAN 6% HA VE BEEN ACCEPTED EVEN IN SCRUTINY PROCEEDINGS UNDER SECTION 143(3) OF THE ACT FOR ASSESSMENT YEAR 2007-08 AND 2 009- 10 AS NOTED ABOVE. IN THE ASSESSMENT YEAR 2008-09, ITAT CHANDIGARH BENCH IN THE CASE OF THE SAME ASSESSEE, REDUCED THE PROFIT RATE TO 6% AS AGAINST 8% APPLIED BY THE LD. CIT(APPEALS) AND DEPRECIATION WAS ALSO ALLOWED SEPARATELY. THE ORDER OF THE TRIBUNAL DATED 15.04. 2013 HAS BEEN CONFIRMED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ITA 31/2014 DATED 13.11.2014 BY DISMISSING THE DEPARTMENTAL APPEAL. COPIES OF THE ORDER ARE PRODU CED ON RECORD. THEREFORE, CONSIDERING THE PREVIOUS HISTOR Y OF THE ASSESSEE AND IN THE LIGHT OF THE CIRCUMSTANCES, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(APPEALS) IN RESTRICTING THE APPLICATION OF NP R ATE OF 7.5% AGAINST 12% ADOPTED BY THE ASSESSING OFFICER. THE GROUND OF APPEAL NO. 1 OF APPEAL OF THE REVENUE IS, THEREFORE, DISMISSED. 8. ON REMAINING GROUND NOS. 2 TO 4, REVENUE CHALLEN GED THE ORDER OF THE LD. CIT(APPEALS) IN ALLOWING DEPRE CIATION. IT IS ALSO STATED THAT ORDER OF THE TRIBUNAL DATED 15.04.2013 IN ITA 183/2013 HAVE BEEN CHALLENGED BEF ORE 6 THE HON'BLE HIGH COURT. THE LD. CIT(APPEALS) FOLLO WING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT VS CHOPRA BROTHERS 252 ITR 412 AND OTHERS ALLOWED T HE CLAIM OF ASSESSEE FOR DEPRECIATION. IN ASSESSMENT YEAR 2008-09, THE TRIBUNAL VIDE ORDER DATED 15.04.2013 ALLOWED DEPRECIATION SEPARATELY EVEN AFTER APPLICAT ION OF NP RATE AND THE DECISION OF THE TRIBUNAL HAS BEEN CONFIRMED BY HON'BLE HIGH COURT BY DISMISSING DEPARTMENTAL APPEAL VIDE ORDER DATED 13.11.2014. THEREFORE, THESE GROUNDS OF APPEAL OF THE REVENUE H AVE NO MERIT, THE SAME ARE ACCORDINGLY DISMISSED. 9. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED. 10. IN THE RESULT, DEPARTMENTAL APPEAL AND CROSS OBJECTION BY ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH SEPTEMBER,2015. SD/- SD/- (ANNAPURNA MEHROTRA) (BHAVNESH SAI NI) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 9 TH SEPTEMBER,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH