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

ITA 737/CHANDI/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95473 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 13-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Depreciation; Opportunity of being heard; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO.737/CHD/2013 ASSESSMENT YEAR: 2007-08 M/S SUPREME CONSTRUCTIONS VS THE DCIT, 169-B, RAJ GURU NAGAR, CIRCLE VI, LUDHIANA. LUDHIANA. PAN: AASFS1789G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SING H RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 12.08.2015 DATE OF PRONOUNCEMENT : 13.08.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. CIT(APPEALS)-II LUDHIANA DATED 16.05.2011 FO R ASSESSMENT YEAR 2007-08. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. EARL IER THE APPEAL OF THE ASSESSEE WAS DISMISSED IN DEFAULT VID E ORDER DATED 10.10.2011. THIS ORDER WAS RECALLED WHILE AL LOWING MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE AND APPEAL WAS RESTORED FOR HEARING ON MERITS. 2 3. ON GROUND NOS. 1 & 2, ASSESSEE CHALLENGED THE OR DERS OF AUTHORITIES BELOW IN REJECTING THE BOOKS OF ACCO UNT WITHOUT CONSIDERING THE PAST HISTORY OF THE ASSESSE E. 4. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE FIRM DERIVES INCOME FROM BUSINESS OF CONSTRUCTION WORK. DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER EXAMI NED THE BOOKS OF ACCOUNT AND OTHER RELEVANT RECORDS AND FOUND THAT FOR A NUMBER OF PURCHASES ENTERED IN THE VOUCH ERS, THERE WERE NO SUPPORTING BILLS FOR VERIFICATION AND ASSESSEE DID NOT SUBMIT THE REPLY TO THE SHOW CAUSE NOTICE A S TO WHY BOOKS OF ACCOUNT BE NOT REJECTED IN THIS CASE. THE ASSESSING OFFICER FOUND THAT VARIOUS VOUCHERS AND SUPPORTING EVIDENCES HAVE NOT BEEN PRODUCED SO AS T O VERIFY THE GENUINENESS OF THE BOOK PROFITS DECLARED BY ASSESSEE. THE DETAILS OF THE SAME ARE NOTED IN THE IMPUGNED ORDER. THE ASSESSING OFFICER, THEREFORE, R EJECTED THE BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE AC T AND ESTIMATED THE PROFIT BY APPLYING PROFIT RATE @ 12% AND MADE THE ADDITION. 5. IT WAS SUBMITTED BEFORE LD. CIT(APPEALS) THAT HI STORY OF THE ASSESSEE HAS NOT BEEN CONSIDERED AND IN THE SIMILAR LINE OF CONSTRUCTION BUSINESS, RATE OF 10% MAY KIND LY BE APPLIED. IT WAS SUBMITTED THAT NP RATE OF 12% IS O N HIGHER SIDE. THE LD. CIT(APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE AND FOUND THAT NET PROFIT RATE OF 12% IS O N HIGHER SIDE AND ACCORDINGLY, RESTRICTED THE ADDITION BY AP PLYING NET PROFIT RATE OF 10% AGAINST 12% APPLIED BY THE A SSESSING 3 OFFICER. THIS GROUND OF APPEAL OF ASSESSEE WAS ACC ORDINGLY, ALLOWED. 6. THE LD. COUNSEL FOR THE ASSESSEE VERY FAIRLY CON TENDED THAT ON THE SIMILAR ISSUE, THE DEPARTMENTAL APPEAL HAS BEEN DECIDED BY ITAT CHANDIGARH BENCH IN ITA 722/CHD/2011 FOR SAME ASSESSMENT YEAR VIDE ORDER DA TED 27.11.2012. COPY OF THE ORDER IS PLACED ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNA L DISMISSED THE DEPARTMENTAL APPEAL AND CONFIRMED THE ADOPTION OF THE NET PROFIT RATE OF 10% ON THE NET R ECEIPTS. 7. AFTER HEARING RIVAL CONTENTIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. TH E ASSESSEE'S COUNSEL SUBMITTED BEFORE LD. CIT(APPEALS ) THAT IN VIEW OF THE PAST HISTORY OF THE ASSESSEE AND THE VIEW TAKEN IN THE COMPARABLE CASES, NET PROFIT RATE OF 1 0% MAY BE APPLIED AGAINST THE NET RECEIPTS FOR MAKING ESTI MATED ADDITION. 8. THE LD. CIT(APPEALS) ACCEPTED THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE AND APPLIED NET PROFIT RAT E OF 10% AND ALLOWED THE PART RELIEF OF THE ASSESSEE. THE T RIBUNAL WHILE DECIDING THE DEPARTMENTAL APPEAL ON THE BASIS OF THE SUBMISSION OF LD. COUNSEL FOR THE ASSESSEE, CONFIRM ED THE APPLICATION OF NET PROFIT RATE OF 10% AND DISMISSED APPEAL OF THE REVENUE. NORMALLY THE APPEAL OF THE ASSESSE E SHOULD ALSO BE TAKEN UP TOGETHER FOR THE PURPOSE OF DISPOS AL OF THE DEPARTMENTAL APPEAL. HOWEVER, THE FACTS AS NOTED A BOVE 4 CLEARLY SUGGEST THAT LD. CIT(APPEALS) APPLIED THE N ET PROFIT RATE OF 10% ON THE BASIS OF SUBMISSION OF THE LD. C OUNSEL FOR THE ASSESSEE. THEREFORE, VIRTUALLY LD. COUNSEL FOR THE ASSESSEE ADMITTED BEFORE LD. CIT(APPEALS) THAT REJE CTION OF THE BOOKS OF ACCOUNT IS JUSTIFIED AND THAT ENDS OF JUSTICE WOULD MEET IF NET PROFIT RATE OF 10% MAY BE APPLIED FOR MAKING ESTIMATED ADDITION. THEREFORE, THERE IS NO JUSTIFICATION TO INTERFERE IN THE ORDER OF THE LD. CIT(APPEALS) WHICH IS ALREADY CONFIRMED BY THE TRIBUNAL IN THE DEPARTMENTAL APPEAL VIDE ORDER DATED 27.11.2012. F URTHER, THE ADDITION APPEARS TO HAVE BEEN MADE ON AGREED BA SIS BEFORE LD. CIT(APPEALS). THEREFORE, APPEAL OF THE ASSESSEE WOULD NOT BE MAINTAINABLE ON THESE GROUNDS. 9. AFTER GOING THROUGH THE RECORD, WE FURTHER FOUND THAT PROPER OPPORTUNITY OF BEING HEARD HAVE BEEN GIVEN T O THE ASSESSEE BY THE LD. CIT(APPEALS) AND THE REASONS FO R REJECTION OF THE BOOKS OF ACCOUNT HAVE NOT BEEN MET BY THE ASSESSEE AT ANY STAGE. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES IN THE LIGHT OF THE ORDER OF THE TRIBUNAL IN DEPARTMENTAL APPEAL IN THE CASE OF THE SAME ASSE SSEE FOR SAME ASSESSMENT YEAR DATED 27.11.2012, WE DISMISS T HIS GROUND OF APPEAL OF THE ASSESSEE. 10. ON GROUND NO. 3, ASSESSEE CHALLENGED THE ORDER OF AUTHORITIES BELOW IN NOT ALLOWING DEPRECIATION AT R S. 4,38,357/-. THE LD. CIT(APPEALS) NOTED THAT DEPREC IATION IS ALREADY TAKEN CARE WHILE ESTIMATING THE NET PROFIT BY APPLYING NET PROFIT RATE OF 10%. THE LD. COUNSEL F OR THE 5 ASSESSEE RELIED UPON DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS BHULLAR BU ILDERS PVT. LTD. 286 ITR 686 IN WHICH HON'BLE HIGH COURT FOLLOWING EARLIER DECISION IN THE CASE OF CHOPRA BR OTHERS (INDIA) PVT. LTD. 252 ITR 412 HELD THAT ASSESSEE WO ULD BE ENTITLED FOR CLAIM OF DEPRECIATION EVEN IF NET PROF IT RATE IS APPLIED. FOLLOWING THE ABOVE DECISION OF THE HON'B LE HIGH COURT, WE SET ASIDE THE ORDERS OF THE AUTHORITIES B ELOW AND DIRECT THE ASSESSING OFFICER TO ALLOW DEPRECIATION TO THE ASSESSEE EVEN IF PROFIT IS ESTIMATED BY APPLYING N ET PROFIT RATE OF 10%. THIS GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 11. ON GROUND NO. 4, ASSESSEE CHALLENGED THE ORDERS OF AUTHORITIES BELOW IN NOT ALLOWING INTEREST PAID ON LOANS. SINCE INTEREST IS PART OF THE PROFIT & LOSS ACCOUNT AND HAS ALREADY TAKEN CARE WHILE ESTIMATING THE INCOME OF T HE ASSESSEE AND THAT LD. COUNSEL FOR THE ASSESSEE DID NOT MAKE ANY SPECIFIC SUBMISSION ON THIS ISSUE, WE DO NOT FI ND ANY MERIT IN THIS GROUND OF ASSESSEE. THE SAME IS ACCO RDINGLY DISMISSED. 12. ON GROUND NO. 5, ASSESSEE CHALLENGED THE ORDERS OF AUTHORITIES BELOW IN NOT ALLOWING SALES TAX OF RS. 13,05,261/-. SINCE SALES TAX IS COLLECTED BY ASSES SEE FROM THE CUSTOMERS AND WAS PAYABLE TO THE SALES TAX DEPARTMENT, THEREFORE, IT IS NOT ALLOWABLE DEDUCTIO N IN 6 FAVOUR OF THE ASSESSEE. THIS GROUND OF APPEAL OF T HE ASSESSEE IS ACCORDINGLY DISMISSED. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH AUGUST,2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13 TH AUGUST,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH