ITO, Ludhiana V. M/s Supreme Constructions, Ludhiana

ITA 722/CHANDI/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64042 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 08-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J S NAGAR
• Section: 143(3); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 722/CHD/2011 (ASSESSMENT YEAR : 2007-08) THE INCOME TAX OFFICER, VS. SUPREME CONSTRUCTIONS , WARD VI(3), LUDHIANA. LUDHIANA. PAN: AASFS1789G (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI J.S.NAGAR, DR DATE OF HEARING : 20.11.2012 DATE OF PRONOUNCEMENT : 27.11.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, LUDHIANA D ATED 16.05.2011 RELATING TO ASSESSMENT YEAR 2007-08 AGAINST THE ORD ER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF A PPEAL: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LD. CIT (A)-II, LUDHIANA HAS ERRED IN ESTIMATING THE NET PROFIT ON THE NET ASSESSABLE RECEIPTS AT 10% AS AGAINST 12% ESTIMATED BY THE ASSESSING OFFICER THEREBY DELETING THE ADDITION OF RS.11,79,390/-. 3. DESPITE ISSUE OF NOTICE TO THE ASSESSEE ON DIFFE RENT DATES, NONE APPEARED ON BEHALF OF THE ASSESSEE, NOR ANY APPL ICATION WAS MOVED FOR 2 ADJOURNMENT. WE PROCEED TO DECIDE THE APPEAL AFTER HEARING THE LEARNED D.R. FOR THE REVENUE. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF CONSTRUCTION. DURING THE YEAR UNDER CO NSIDERATION, THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING I NCOME OF RS.15,80,430/-. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, ON EXAMINATION OF THE BOOKS OF ACCOUNT, THE ASSESSING OFFICER FOUND THAT NUMBER OF PURCHASES WERE NOT SUPPORTED BY PROPER BI LLS AND CONSEQUENTLY BOOKS OF ACCOUNT WERE REJECTED UNDER S ECTION 145(3) OF THE ACT. THE ASSESSEE WAS SHOW CAUSED TO PRODUCE THE V OUCHERS. HOWEVER, IN THE ABSENCE OF SATISFACTORY REPLY GIVEN BY THE A SSESSEE, ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER. THE ASSES SMENT WAS FRAMED BY THE ASSESSING OFFICER IN THE MANNER PROVIDED UNDER SECTION 144 OF THE ACT AFTER REJECTION OF THE BOOKS OF ACCOUNT. THE A SSESSEE DECLARED NET RECEIPTS OF RS.5.89 CRORES ON WHICH GROSS PROFIT OF RS.6,59,786/- AND NET PROFIT OF RS.2,20,427/-, DECLARING GP RATE OF 11.19 % AND NP RATE OF 0.37% OF THE NET RECEIPTS WAS DECLARED. THE ASSESS ING OFFICER APPLIED NP RATE OF 12% AND COMPUTED THE INCOME AT RS.70,76, 082/-. 5. BEFORE THE CIT (APPEALS) THE PLEA OF THE ASSESSE E WAS THAT CERTAIN SELF MADE VOUCHERS WERE MAINTAINED BY THE ASSESSEE WHICH REFLECTED THE DETAILS OF THE MATERIAL SUPPLIED ALONGWITH DRIVERS NAME, TRUCK/TROLLEY NUMBER AND THE SAID MANNER OF MAINTAINING THE VOUCH ERS WAS AN OLD PRACTICE, ACCEPTED BY THE DEPARTMENT FROM YEAR TO Y EAR I.E. SINCE 2001. THE ASSESSING OFFICER AFTER CONSIDERING THE REPLY O F THE ASSESSEE ESTIMATED THE NP RATE AT 10% AS AGAINST 12% ESTIMAT ED BY THE ASSESSING OFFICER AND COMPUTED THE INCOME OF THE ASSESSEE AT RS.58,96,690/-. 3 6. THE REVENUE IS IN APPEAL AGAINST THE SAID ORDER OF THE CIT (APPEALS). SHRI J.S.NAGAR PUT IN APPEARANCE ON BEH ALF OF THE REVENUE AND PUT FORWARD HIS CONTENTION. 7. AFTER PERUSAL OF THE RECORD AND AFTER HEARING TH E LEARNED D.R. FOR THE REVENUE WE FIND THAT THE ONLY ISSUE RAISED IN T HE PRESENT APPEAL IS AGAINST THE ORDER OF THE CIT (APPEALS) IN ESTIMATIN G THE NP RATE AT 10% OF THE RECEIPTS AS AGAINST 12% ESTIMATED BY THE ASS ESSING OFFICER. THE BASIS FOR REJECTION OF BOOKS OF ACCOUNT AND ESTIMAT ION ON NP RATE IN THE HANDS OF THE ASSESSEE IS NON PRODUCTION OF COMPLETE VOUCHERS/BILLS BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. IN THE ABOVE SAID CIRCUMSTANCES WHERE THE ASSESSEE HAS FAILED TO PROD UCE COMPLETE BOOKS OF ACCOUNT AND VOUCHERS, REJECTION OF BOOKS OF ACCO UNT IS MERITED AND ONCE BOOKS OF ACCOUNT ARE REJECTED, SUITABLE NP RAT E IS TO BE APPLIED IN ORDER TO DETERMINE THE PROFITS OF BUSINESS FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER IN VIEW OF TH E PECULIAR FACTS OF THE CASE HAD APPLIED NP RATE OF 12%, WHICH WAS RESTRICT ED TO 10% BY THE CIT (APPEALS). THE OBSERVATIONS OF CIT (APPEALS) IN PA RAS 4 AND 5 ARE AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE CONTENTION OF T HE LD. COUNSEL FOR THE APPELLANT AND PERUSED THE RELEV ANT RECORD. IT IS A CASE OF CIVIL CONTRACTOR, WHO IS EN GAGED IN THE BUSINESS OF ROAD CONSTRUCTION WORK. IT IS AN ADMITTED POSITION THAT IN SUCH LINE OF BUSINESS IN RESPECT OF EXPENSES INCURRED FOR THE PURCHASE OF CRUSHER, SOIL, STONE AND MITTI, ETC. WHICH IS NORMA LLY FROM LOCAL TRUCK/TROLLEY OWNERS, BILLS AND VOUCHERS COULD NOT BE RECEIVED. SUCH APPELLANT HAVE TO GET T HE SIGNATURES OR THUMB IMPRESSIONS OF THE PERSONS RECEIVING SUCH PAYMENTS AND THAT, HOWEVER, THERE CO ULD NOT BE ANY REGULAR BILLS ETC., FURTHER AS BROUGHT O UT IN THE SUBMISSIONS OF THE APPELLANT'S COUNSEL THE APPE LLANT IS CARRYING ON THIS BUSINESS , FOR THE LAST SO MANY YEARS AND THAT THE BOOKS OF ACCOUNTS ARE BEING MAINTAINED IN ' THE SIMILAR MANNER. AS BROUGHT IN THE SUBMISSIONS OF LD. COUNSEL, THE BOOKS OF ACCOUNTS, INSPITE OF SIMI LAR FACTS AND CIRCUMSTANCES, WERE NEVER REJECTED U/S 14 5(3) OF THE ACT IN THE PRECEDING YEARS INCLUDING ASSESSM ENT 4 YEAR 2004-2005 AND 2005-2006, WHERE ASSESSMENT HAD BEEN COMPLETED U/S 143(3) OF THE ACT BY MAKING CERT AIN ADHOC ADDITIONS ONLY. NON-AVAILABILITY OF REGULAR B ILLS IN RESPECT OF SUCH EXPENSES COULD BE A BASIS FOR FU RTHER INVESTIGATION OF A CASE OF CIVIL CONTRACTOR, BUT, I N MY OPINION ON THIS GROUND, PACCA PRINTED BILLS ARE NECESSARY FOR THE TRANSACTIONS MADE BETWEEN THE PAR TIES AND THIS IS THE VALID GROUND FOR THE BASIS FOR REJE CTING THE ENTIRE BOOKS OF ACCOUNTS OF SUCH AN APPELLANT. THEREFORE, APPARENTLY IT COULD NOT BE PRESUMED THAT THE EXPENSES CLAIMED BY THE APPELLANT UNDER ABOVE HEADS OF PURCHASES WERE GENUINE. IN VIEW OF THE ABOVE POSITI ON SHOWING THE PURCHASES MADE BY THE APPELLANT UNDER THESE HEADS, THE INFERENCE THAT THE BOOKS OF ACCOUN TS WERE NOT RELIABLE IN THE CASE OF A CIVIL CONTRACTOR . 5. THE GROUND OF APPEAL NO. 4 FOR THE APPLICATION O F 12% RATE OF NET PROFIT. SH. SINGLA SUBMITTED THAT A S PER LONG PAST HISTORY OF THE CASE AND IN VIEW OF COMPARABLE CASES IN THE SUCH LINE OF CONSTRUCTION BUSINESS THE RATE 10% MAY KINDLY BE APPLIED ON THE NET ASSESSABLE RECEIPTS AS THE12% N.P. RATE IS ON THE HIGHER SIDE WITHOUT ANY BASIS OR MATERIAL. AFTER CONSIDERING THE CONTENTION OF THE COUNSEL AND SUBMISSIONS FILED IN THIS REGARD AND ALSO VARIOUS JUDEGMENTS ON THIS ISSUE, I AM OF THE VIEW THAT THE NET PROFIT RATE OF 12% IS ON HIGHER SIDE, THEREFORE, TO MEET THE END OF JUSTICE, IT WILL BE FAIR AND JUS TIFIABLE TO RESTRICT THE NET PROFIT ON THE NET ASSESSABLE RE CEIPT AT 10% AS AGAINST 12% ESTIMATED BY THE A.O. THEREFO RE, TOTAL TAXABLE INCOME OF THE APPELLANT IS NOW COMES UPTORS.58,96,6907-(5,89,66,902 X 10/100) AS AGAINST RS.70,76,0807- AS COMPUTED BY THE A.O. VIDE HER ASSESSMENT UNDER APPEAL. 8. WE FIND MERIT IN THE CLAIM OF THE ASSESSEE THAT SIMILAR MANNER OF RECORDING TRANSACTIONS ON SELF MADE VOUCHERS HAVING BEEN ACCEPTED IN THE EARLIER YEARS, MERITS TO BE ACCEPTED IN THIS YE AR ALSO. HOWEVER, IN THE EARLIER YEARS, CERTAIN ADDITIONS WERE MADE IN T HE HANDS OF THE ASSESSEE IN VIEW OF NON AVAILABILITY OF REGULAR BIL LS IN RESPECT OF SUCH EXPENSES. IN ORDER TO PLUG ANY REVENUE LEAKAGE, WE ARE IN CONFORMITY WITH THE ORDER OF THE CIT (APPEALS) THAT THE ESTIMA TED NP RATE OF 10% IS TO BE APPLIED. THE LEARNED COUNSEL APPEARING BEFOR E THE CIT (APPEALS) HAD SUGGESTED THE ADOPTION OF RATE OF 10% ON THE N ET RECEIPTS. IN VIEW OF THE ABOVE SAID CONFESSION OF THE LEARNED A.R. FO R THE ASSESSEE DURING THE APPELLATE PROCEEDINGS, WE ARE IN AGREEMENT WITH THE ORDER OF THE CIT 5 (APPEALS) IN APPLYING THE NP RATE OF 10% TO THE NET RECEIPTS OF THE ASSESSEE AND COMPUTING THE TOTAL TAXABLE INCOME AT RS.58,96,690/-. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE THUS DI SMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH DAY OF NOVEMBER, 2012. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27 TH NOVEMBER, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH