DCIT, Jaipur V. KANHIYA LAL CHOUDHARY, TONK

ITA 732/JPR/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5423 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 31-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEENA JEPH
• Assessee Lawyers: K L MOOLCHANDAN I
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA- @ ITA NO. 732/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2010-11 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-7, JAIPUR. CUKE VS. KANHIYA LAL CHOUDHARY, NEAR BUS STAND, TODA RAISINGH, DIST.- TONK. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: ABAPC 0831 G VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : MRS. NEENA JEPH ( JCIT) FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI K.L. MOOLCHANDANI (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 10/02/2016 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 08/04/2016 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 09/05/2013 PASSED BY THE LEARNED CIT(A)-I, JAIPUR F OR A.Y. 2010-11. THE RESPECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1 WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, LD CIT(A), WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 32,24,536/- MADE BY THE A.O. ON ITA 732/JP/2014_ DCIT VS. KANHAIYA LAL CHOUDHARY. 2 ACCOUNT OF EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE ON WIND MILL PLANT. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT(A) WAS JUSTIFIED IN DELETING T HE ADDITION MADE ON ACCOUNT OF CREDIT CARD COMMISSION. 2. THE ASSESSEE IS A CIVIL CONTRACTOR. RETURN FOR A. Y. 2010-11 WAS FILED ON 15/10/2010 DECLARING TOTAL INCOME OF RS. 1,70,21 ,130/-. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE LD ASSESSING OFFICER ANALYSED THE TRADING RESULT OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND FOUND THAT THE NP RATE DISCLOSED DURING THE YEAR @ 6.66% AGAINST 6.34% IN 2009-10 BEF ORE DEPRECIATION. THE LD ASSESSING OFFICER OBSERVED THAT AFTER COMPARI SON MADE BETWEEN G.P. FROM A.Y. 2009-10 TO CURRENT YEAR, THERE IS A DECLINE IN THE GP, WHICH WAS 12.87%% IN A.Y. 2009-10 AND 11.82% IN THE Y EAR UNDER CONSIDERATION. THEREFORE, HE GAVE SHOW CAUSE NOTICE T O THE ASSESSEE AND ASKED TO GIVE THE DETAILS HEAD WISE, WHICH HAS BEEN SUBMITTED BY THE ASSESSEE AND REPRODUCED BY THE ASSESSING OFFICER ON PAGE 4 OF THE ASSESSMENT ORDER. AFTER CONSIDERING THE ASSESSEES REPLY, IT HAS BEEN HELD THAT THE ASSESSEE HAS NOT MAINTAINED STOCK REGISTER , STONE AND GRIT EXPENSES OF RS. 4.95 CRORES, PAID IN CASH, DIESEL P URCHASE FROM TWO FILLING STATION, WATERING EXPENSES OF RS. 3.75 LACS PAID IN CASH, TRANSPORTATION EXPENSES MADE IN CASH, AMOUNT WITHDRAWN FROM THE CASH BOOK AT RS. ITA 732/JP/2014_ DCIT VS. KANHAIYA LAL CHOUDHARY. 3 10.66 CRORES DURING THE YEAR OUT OF TOTAL DIRECT EX PENSES OF 16 CRORES AND SUB CONTRACT EXPENSES. THE AR OF THE ASSESSEE AGAIN FILED THE REPLY BEFORE THE ASSESSING OFFICER. AFTER CONSIDERING THE ASSESSEES REPLY, THE LD ASSESSING OFFICER APPLIED NP RATE OF 11% ON GROSS R ECEIPT AND ASSESSED THE ASSESSEES INCOME UNDER THE HEAD BUSINESS AND P ROFESSION AT RS. 2,58,87,911/-. THE ASSESSEE CHALLENGED THE ORDER OF THE ASSESSING OFFICER BEFORE THE LD CIT(A), WHO HAD ALLOWED THE PART RELIEF BY OBSERVING THAT THE BOOKS OF ACCOUNT REJECTED BY THE ASSESSING OFFI CER U/S 145(3) OF THE ACT IS VALID BEING THE DEFECTS POINTED OUT BY THE A SSESSING OFFICER. THE ASSESSEE EARNED NET PROFIT ON SUB CONTRACT RECEIPTS @ 5%, ACCORDINGLY UNDER THE HEAD SUB CONTRACT, THE ASSESSEE HAS CLAIM ED 95% OF TOTAL RECEIPT AS EXPENDITURE. HE FURTHER HELD THAT THE AS SESSEE HAS DEDUCTED TDS ON PAYMENT TO THE SUB CONTRACTOR. THE LD ASSESSIN G OFFICERS FINDING THAT THE ASSESSEE MADE MORE PAYMENT EVEN VALUE OF C ONTRACT TO THE SUB CONTRACTOR. THE ASSESSEES CLAIM WAS THAT IT HAS RUNN ING ACCOUNT WITH THE SUB CONTRACTOR. THERE WAS NO IOTA OF EVIDENCE TO PROV E THAT THE ASSESSEE HAS INFLATED THE EXPENSES. THEREFORE, HE APPLIED 5% NET PROFIT RATE ON THE SUB CONTRACT. THE LD ASSESSING OFFICER AFTER AP PLYING THE NP RATE @ 11% ON GROSS RECEIPTS ALLOWED DEPRECATION ONLY BUT P AST HISTORY OF THE ASSESSEE SHOWS THAT THE NET PROFIT @ 8 TO 9% HAS BEEN HELD FAIR AND ITA 732/JP/2014_ DCIT VS. KANHAIYA LAL CHOUDHARY. 4 REASONABLE BY THE HONBLE ITAT, JAIPUR BENCH. THERE I S NO DEVIATION IN THE FUNCTIONING OF THE ASSESSEE DURING THE YEAR UND ER CONSIDERATION COMPARED TO PRECEDING YEARS. HE FURTHER RELIED ON T HE DECISION OF HONBLE JAIPUR BENCH OF ITAT IN ASSESSEES OWN CASE FOR A.Y. 2009-10 IN ITA NO. 676/JP/2012 WHEREIN NP RATE @ 9% APPLIED BY THE LD CI T(A), WHICH HAS BEEN HELD REASONABLE AND FAIR BY THE HONBLE ITAT. T HE LD CIT(A) ALSO ALLOWED DEPRECIATION AND INTEREST PAYMENT FROM SUCH NET PROFIT RATE @ 9%. HE FURTHER CONSIDERED THE ASSESSEES OWN CASE DE CIDED BY THE HONBLE ITAT FOR A.Y. 2006-07 (2011) 136 TTJ 9 (JAIPU R) AND HELD 10% REASONABLE AND FAIR RATE SUBJECT TO DEPRECIATION AN D INTEREST TO THIRD PARTY. HE FURTHER CONSIDERED THE VARIOUS DECISIONS DECIDED BY THE HONBLE ITAT, JAIPUR BENCH IN THE CASE OF CONTRACTOR. 3. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD. ASSESSING OFFICER. A T THE OUTSET, THE LD AR OF THE ASSESSEE HAS REITERATED THE ARGUMENTS MADE B EFORE THE LD CIT(A). IT IS FURTHER SUBMITTED THAT DURING THE YEAR, THE A SSESSEE HAD SHOWN N.P. RATE @ 9.82% WHICH WAS COMPARATIVELY BETTER THAN THE N .P. RATE SHOWN AND ASSESSED IN PAST. WHILE CONSIDERING THE HONBLE ITAT DECISION IN ASSESSEES OWN CASE IN PRECEDING YEAR, THE LD CIT(A) WAS JUSTIFIED IN UPHOLDING THE NP RATE @ 10% AS AGAINST 11% APPLIED B Y THE ASSESSING ITA 732/JP/2014_ DCIT VS. KANHAIYA LAL CHOUDHARY. 5 OFFICER. HE FURTHER ARGUED THAT AFTER APPLYING THE NP RATE IN THE CASE OF ASSESSEE, THE LD CIT(A) AND HONBLE ITAT ALLOWED THIRD PARTY INTEREST BESIDES THE DEPRECIATION. THEREFORE, HE PRAYED TO CO NFIRM THE ORDER OF THE LD CIT(A). 4. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AS SESSEE HAS BEING ASSESSED BY THE ASSESSING OFFICER CONTINUOUSLY U/S 143(3) OF THE ACT AND THERE WAS AN ESTIMATED ADDITION ON THE BASIS OF N.P. RATE, WHICH WAS PARTLY CONFIRMED BY THE LD CIT(A) IN PRECEDING YEAR. PAST HISTORY OF THE ASSESSEE HAS BEEN SHOWING THAT THE BUSINESS RESULTS DURING THE YEAR UNDER CONSIDERATION AS COMPARED TO PRECEDING YEAR I S BETTER. THE TURNOVER OF THE ASSESSEE ALSO HAS GONE UP DURING TH E YEAR UNDER CONSIDERATION, THEREFORE, WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF THE LD CIT(A). THE LD CIT(A) ALSO ANALYSED THE SUB-CONTRA CT RECEIPTS AND NP RATE ON THE BASIS OF FACT AND FIGURE AND ALSO COMPA RED THESE RECEIPTS WITH THE PAST HISTORY AND HELD REASONABLE NP RATE @ 5%. A CCORDINGLY, ORDER OF THE LD CIT(A) IS UPHELD AND GROUND NO. 1 AND 2 OF TH E REVENUES APPEAL IS DISMISSED. 5. GROUND OF 3 OF THE REVENUES APPEAL IS AGAINST C HALLENGING THE RENT RECEIPTS OF JCB AND INTEREST ON FDR AS PART OF CONT RACT RECEIPTS. THE LD ITA 732/JP/2014_ DCIT VS. KANHAIYA LAL CHOUDHARY. 6 ASSESSING OFFICER HAD INCLUDED THE RENT OF JCB MACH INE AMOUNTING TO RS. 2,71,131/- AND INTEREST ON FDR AT RS. 45,20,000/- I N THE GROSS CONTRACT RECEIPTS AND NO SEPARATE ADDITION ON ACCOUNT OF JCB RENT AND INTEREST ON FDR WAS MADE BY THE ASSESSING OFFICER UNDER THE HEAD INCOME FROM OTHER SOURCES. THE LD ASSESSING OFFICER ONLY MADE AD DITION UNDER THE HEAD INCOME FROM OTHER SOURCES BEING NSC INTEREST A T RS. 88,00,448/-, THEREFORE, GROUND RAISED BY THE REVENUE FROM THE OR DER OF THE LD CIT(A) IS NOT SURVIVED AS THE ASSESSING OFFICER HIMSELF HA D ADDED BOTH THE RECEIPTS IN THE TURNOVER. THIS GROUND OF REVENUES A PPEAL DOES NOT SURVIVE AND ACCORDINGLY, THE SAME IS REJECTED. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 08/04/2016. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 08 TH APRIL, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE DCIT, CIRCLE-7, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- SHRI KANHIYA LAL CHOUDHARY, TONK. 3. VK;DJ VK;QDR @ CIT ITA 732/JP/2014_ DCIT VS. KANHAIYA LAL CHOUDHARY. 7 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 732/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR