Sh. Alok Garg, New Delhi V. DCIT, Ghaziabad

ITA 7023/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3394 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 18-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 29-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: DR RAKESH GUPTA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDEN T & SHRI K.N. CHARRY, JUDICIAL MEMBER ITA NO.-7023/DEL/2014 ( ASSESSMENT YEAR: 2010-11) ALOK GARG C/O M/S RRA TAX INDIA, D-28, SOUTH EXTENSION, PART-1, NEW DELHI. AARPG7151K VS DCIT CIRCLE-1, GHAZIABAD ASSESSEE BY DR. RAKESH GUPTA, ADV. & SH. SOMIL AGARWAL, ADV. REVENUE BY SH. S.K. JAIN, DR ORDER PER K. NARSIMHA CHARRY, J.M. THIS IS AN APPEAL CHALLENGING THE ORDER DATED 15.10 .2014 IN APPEAL NO. 289/2012-13/GZB PASSED BY THE COMMISSION ER OF INCOME TAX (APPEALS)-GHAZIABAD. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S AN INDIVIDUAL DERIVING HIS INCOME AS CONTRACTOR AND ENGAGED IN TH E BUSINESS DATE OF HEARING 18.04.2017 DATE OF PRONOUNCEMENT 21.04.2017 2 ITA NO.7023/DEL/2014 UNDER THE NAME AND STYLE OF M/S ALOK BUILDERS AND D OING CONTRACT WORK MAINLY IN HIMACHAL PRADESH FOR NHPC LTD., NTPC LTD., HIMUDA DHARAMSHALA AND IN HARYANA FOR PWDB & R BRAN CH KAITHAL. FOR THE A.Y. 2010-11 RETURN WAS FILED DEC LARING THE TOTAL INCOME OF RS. 10,44,000/-. LD. AO IN HIS ORDER DAT ED 28/03/2013 OBSERVED THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE NOT RELIABLE AS SUCH HE ASSESSED THE INCOME OF THE ASSESSEE AT 4 1,09,614/- BY ESTIMATING THE PROFIT AT 8% OF THE TOTAL TURNOVER. THE APPEAL PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT (A) EN DED UP IN DISMISSAL AND IN CONFIRMATION OF THE ASSESSMENT ORD ER. 3. AGGRIEVED BY THE SAME THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING THE REJECTION OF BOOKS OF ACCOUNT AND E STIMATION OF PROFIT AT 8% OF CONTRACT RECEIPTS. 4. IT IS THE ARGUMENT OF THE LD. AR THAT IN RESPECT OF THE EARLIER YEARS NAMELY 2000-01, 2003-04, 2006-07, 2007-08 AND 2009-10 ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ACCE PTING THE PROFIT RATIO AT 3.31, 1.60, 2.63, 2.39, 2.30 AND 2. 46 RESPECTIVELY, AS SUCH IT IS NOT OPEN FOR THE REVENUE NOW TO STRAIGHT AWAY ESTIMATE THE PROFIT RATIO AT 8%. HE PRAYED THAT IT WOULD BE IN THE ORDER OF 3 ITA NO.7023/DEL/2014 THINGS IF PROFIT RATIO IS ESTIMATED AT 2.46 WHICH W AS ACCEPTED IN THE IMMEDIATELY PRECEDING AY 2009-10. PER CONTRA IT IS THE ARGUMENT OF THE LD. DR THAT THE AO HAS GIVEN THE COGENT REAS ONS FOR REJECTION OF THE BOOKS AND ESTIMATION OF 8% OF THE PROFIT RATIO. HE SUBMITTED THAT THE PROFIT RATIO SUGGESTED BY THE AS SESSEE AT 2.46 WHICH IS EQUIVALENT TO THE PROFIT RATIO OF THE AY 2 009-10 IS TOO LOW AND CANNOT BE ACCEPTED. ACCORDING TO THE LD. DR AT THE LOWEST THE PROFIT RATIO COULD BE AROUND 4%. 5. AT THE OUTSET WE FIND THAT THERE IS NO DENIAL OF THE COMPLETION OF THE ASSESSMENT U/S 143(3) OF THE ACT FOR THE YEA RS 2000-01, 2003-04, 2006-07, 2007-08 AND 2009-10 ACCEPTING THE PROFIT RATIO AT 3.31, 1.60, 2.63, 2.39, 2.30 AND 2.46. WITHOUT GOING INTO THE MERITS OF THE REASONS ASSIGNED BY THE AO FOR REJECT ING THE BOOKS OF ACCOUNT OF THE ASSESSEE, WE FIND THAT FOR ALL THE Y EARS STATED ABOVE THE DEPARTMENT CONSISTENTLY ACCEPTED THE PROFIT RAT IO IN THE BUSINESS OF THE ASSESSEE IS BETWEEN 1.60 AND 3.31 A ND AT NO POINT OF TIME ANY OBJECTION IS TAKEN BY THE AO ON THE GRO UND THAT IN THE KIND OF BUSINESS OF THE ASSESSEE AVERAGE RATE OF PR OFIT WOULD BE ANYTHING AROUND 8%. IN THE CIRCUMSTANCES, WE DO NO T FIND ANY 4 ITA NO.7023/DEL/2014 RATIONAL IN THE AO ESTIMATING THE PROFIT AT 8% AND THE CONSISTENCY OF THE NET PROFIT AS WAS ESTABLISHED BY THE ACCEPTE D BOOKS OF ACCOUNT IN THE BUSINESS OF THE ASSESSEE WAS SOMETHI NG BETWEEN 1.60% AND 3.31% AS SUCH TAKING A PRAGMATIC VIEW, WE FIND THAT 3% OF THE PROFIT RATIO OF THE CONTRACT RECEIPT WOUL D MEET THE ENDS OF JUSTICE. WITH THIS VIEW OF THE MATER, WE DIRECT TH E AO TO ESTIMATE THE PROFIT OF THE ASSESSEE AT 3% OF THE TOTAL TURNO VER. 6. IN THE RESULT, THE APPEAL IS ACCORDINGLY ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 21.04.2017 SD/- SD/- (G.D. AGRAWAL) (K. NARSIMHA CHARR Y) HONBLE PRESIDENT JUDICIAL MEMBER DATED: 21.04.2017 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NO.7023/DEL/2014 DRAFT DICTATED ON 18.04.2017 DRAFT PLACED BEFORE AUTHOR 18.04.2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 21.04.2017 KEPT FOR PRONOUNCEMENT ON 21.04.2017 FILE SENT TO THE BENCH CLERK 21.04.2017 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.