Dy.Commissioner of Income Tax, GONDA V. Shri Raghvendra Pratap Singh, Basti

ITA 750/LKW/2014

• Counselvise Citation: 75023714 RSA 2014
• Duration Of Justice: 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-04-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 25-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H RAHMAN
• Section: 145

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.750/LKW/2014 ASSESSMENT YEAR:2010 - 11 SHRI RAGHVENDRA PRATAP SINGH, KEWARI, MUSTAKHAN, BASTI. PAN:AUYPS7858J VS DY.C.I.T., CIRCLE - GONDA (RESPONDENT) (APPELLANT) SMT. PINKI MAHAWAR, D. R. APPELLANT BY SHRI H. RAHMAN, ADVOCATE RESPONDENT BY 23/04/2015 DATE OF HEARING 19 /06/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - II, LUCKNOW DATED 10/06/2014 FOR THE ASSESSMENT YEAR 2010 - 11. 2. IN THIS APPEAL , THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LD. CIT(A) - II, LUCKNOW HAS ERRED ON FACTS OF THE CASE AND IN LAW BY RESTRICTING THE ESTIMATION OF NET PROFIT OF RS.17,00,000/ - INSTEAD OF RS.33,85,318/ - AFTER RELYING UPON PAST HISTORY I.E. ESTIMATION OF NET PROFIT IN THE IMMEDIATELY PROCEEDINGS YEAS BECAUSE F ACTS OF THE CASE IN THE YEAR UNDER CONSIDERATION ARE TOTALLY DIFFERENT FROM FACTS IN IMMEDIATELY PROCEEDINGS ASSESSMENT YEARS. 2. THAT THE LD. CIT(A) - II, LUCKNOW HAS ERRED ON THE FACTS OF THE CASE AND IN LAW BY TAKING INTO CONSIDERATION THE BUSINESS RESUL TS DISCLOSED BY THE ASSESSEE IN THE YEAR UNDER APPEAL FOR DECIDING THE ESTIMATION OF NET PROFIT AS AFTER REJECTION OF BOOKS OF A/C, ANY BUSINESS RESULTS 2 PREPARED ON THE BASIS OF THESE BOOKS HAVE NOT LEGS TO STAND. 3. THAT THE LD. CIT(A) - II LUCKNOW HAS ERR ED IN LAW AND ON FACTS OF THE CASE BY TAKING INTO CONSIDERATION THE BUSINESS RESULTS FOR ASSESSMENT YEAR 2010 - 11 AS PAST HISTORY FOR COMPARING ESTIMATION OF INCOME OF THREE YEARS TO DECIDE ESTIMATION OF NET PROFIT FOR THE ASSESSMENT YEAR 2010 - 11. 3. LEAR NED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). HE ALSO SUBMITTED THAT IN EARLIER YEAR, THE PROFIT OF THE ASSESSEE WAS IN THE RANGE OF 2.06% TO 3.02% AND IN ASSESSMENT Y EAR 2009 - 10, THE ASSESSING OFFICER ADOPTED NET PROFIT RATE OF 5%, WHICH WAS REDUCED BY LEARNED CIT(A) TO 4% AND THEREFORE, IN THE PRESENT YEAR ALSO THE ORDER OF CIT(A) SHOULD B E CONFIRMED. R ELIANCE WAS PLACED BY HIM ON A JUDGMENT OF HON'BLE RAJASTHAN HIGH COURT RENDERED IN THE CASE OF CIT VS. INANI MARBLES P. LTD. [2009] 316 ITR 125 (RAJ). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE WAS DECIDED BY LEARNED CIT(A) AS PER PARA 11 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 11. GROUND WISE DISCUSSION IS AS UNDER: GROUND NO. 1 IN RESPECT OF N.P. RATE OF 8% I HAVE EXAMINED THE FACTS & CIRCUMSTANCES OF THE CASE. I HAVE CONSIDERED THE FINDING GIVEN IN ASSESSMENT ORDER PASSED BY THE A.O. AND WRITTEN SUBMISSION OF APPELLANT FILED DURING APPELLATE PROCEEDINGS. I AM OF THE CONSIDERED OPINION THAT ONCE THE BOOKS OF ACCOUNTS ARE NOT PRODUCED B EFORE A.O. DURING ASSESSMENT PROCEEDINGS, THERE IS NO WAY IN WHICH THE A.O. CAN SATISFY HIMSELF OF THE CORRECTNESS AND COMPLETENESS OF BOOKS OF ACCOUNTS. UNDER THESE CIRCUMSTANCES THE A.O. WAS JUSTIFIED IN REJECTING BOOKS OF ACCOUNTS U/S 145(3) OF I.T. ACT . HOWEVER WHILE REJECTING THE BOOKS OF ACCOUNTS U/S 145 (3) OF I.T. ACT AND CONSEQUENT UPON ESTIMATION OF PROFIT THE RATE 3 SHOULD NOT BE SUCH THAT IT PUTS AN ASSESSEE WHO IS MAINTAINING THE BOOKS OF ACCOUNTS BUT DID NOT PRODUCE THEM. THE RATE OF 8% ADOPTED BY A.O. IS, THEREFORE, EXCESSIVE AND ARBITRARY AND DOES NOT HAVE LINKAGE WITH THE NET PROFIT BEING SHOWN IN EARLIER YEARS WHEN THE BOOKS OF ACCOUNTS WERE NOT REJECTED. MOREOVER IN THE APPELLANT OWN CASE THE A.O. HAS APPLIED N.P. RATE 5% WHICH HAS BEEN REDU CED BY THE CIT (APPEALS) 4% IN A.Y. 2009 - 10, ON CONTRACT RECEIPTS. THE A.O. DID NOT ADVANCE ANY REASON FOR ADOPTING THE RATE OF 8% FOR ESTIMATION OF PROFIT ON CONTRACT RECEIPTS. NO COMPARISON HAS BEEN MADE WHICH SIMILAR CASES OF OTHER ASSESSEE, IN APPLICAT ION OF N.P. RATE @ 8%. EVEN THE A.O. HAS OVERLOOKED THE IMMEDIATELY PRECEDING ASSESSMENT YEARS HISTORY OF ESTIMATION OF INCOME. THE CONTRACT RECEIPTS OF APPELLANT HAS SUBSTANT IAL LY INCREASE D AS COMPARED TO EARLIER YEARS AND THE NET PROFI T DECLARED ON SUCH RECEIPTS HAS ALSO BEEN INCREASED. THE COMPARATIVE CHART OF CONTRACT RECEIPTS, EXPENDITURE, NET PROFIT AND PERCENTAGE OF NET PROFIT OF THREE YEARS IS AS UNDER: - ASSESSMENT YEAR GROSS RECEIPTS EXPENDITURE ON PURCHASE OF MATERIAL AND LABOUR PERCENTAGE OF EXPENDITURE ON MATERIAL AND LABOUR NET PROFIT RS. PERCENTAGE 2008 - 2 009 22858775 21437580 93.78 471215 2.06 3.02 3.50 2009 - 2010 37753502 34015440 90.09 1142592 2010 - 2011 43316484 37548425 88.73 1483584 THE ABOVE CHART T RANSPIRES THAT THE APPELLANT HAS SHOWN THE NET PROFIT SLIGHTLY HIGHER THAN ASSESSMENT YEAR 2009 - 10. THE CIT(APP E ALS) - II , LU CKNOW IN APPEAL NO.25/ 113/DC IT / GONDA/ LKO11 - 12 HAS CONFIRMED THE APPLICATION OF N.P. @4% ON THE GROSS CONTRACT RECEIPTS. CONSIDERING THE ABOVE FACTS & CIRCUMSTANCES OF T HE CASE , IT WOULD BE FAIR & REASONABLE IF NET PROFIT OF THE APPELLANT IS ESTIMATED OF RS.17,00,000/ - INSTEAD OF ESTIMATED BY THE A.O. OF RS.33,85,318/ - . THE INCOME ESTIMATED BY THE A. O. IS THEREFORE, CONFIRMED TO THE EXTENT OF RS.17 , 0,000/ - , WHICH GIVES A RELIEF OF RS.16 , 85,318/ - TO THE APPELLANT. GROUND NO. 1 IS PARTLY ALLOWED. 4.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), IT IS SEEN THAT A CLEAR FINDING HAS BEEN GIVEN BY LEARNED CIT(A) THAT IN ASSESSMENT YEAR 2009 - 10 4 ALSO, THE PROFIT WAS ESTIMATED BY CIT(A) AT 4% AS AGAINST 5% ADOPTED BY THE ASSESSING OFFICER IN THAT YEAR. HE HAS ALSO GIVEN A FIN DING THAT THE PAST HISTORY OF THE ASSESSEE SHOWS THAT THE PROFIT DECLARED BY THE ASSESSEE IN THOSE YEARS IS LESS THAN 4% AND IN THOSE YEARS, BOOKS WERE NOT REJECTED BY THE ASSESSING OFFICER. THE MOST IMPORTANT FINDING OF CIT(A) IS THAT IN ASSESSMENT YEAR 2 009 - 10, THE ASSESSING OFFICER ESTIMATED THE INCOME AT 5%, WHICH WAS R EDUCED BY LEARNED CIT(A) TO 4% AND NOTHING HAS BEEN BROUGHT ON RECORD SHOWING THAT THIS FINDING OF CIT(A) IS CHALLENGED BY REVENUE BEFORE THE TRIBUNAL AND THE SAME WAS DISTURBED BY THE T RIBUNAL. AS PER THE JUDGMENT OF HON'BLE RAJASTHAN HIGH COURT CITED BY LEARNED A.R. OF THE ASSESSEE, IT WAS HELD THAT TRIBUNAL IS JUSTIFIED IN APPLYING PROFIT RATE OF PRIOR YEAR. IN THE PRESENT CASE , THE CIT(A) HAS ADOPTED THE SAME RATE AS HAS BEEN ADOPTE D BY CIT(A) IN ASSESSMENT YEAR 2009 - 10 AND NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE FINDING OF CIT(A) IN ASSESSMENT YEAR 2009 - 10 HAS BEEN CHALLENGED BY THE REVENUE AND THE SAME WAS DISTURBED BY ANY HIGHER AUTHORITY. CONSIDERING THESE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) AND DECLINE TO INTERFERE IN THE SAME. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADA V) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19 /06/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR