Shri Arjun Bhowmik, Kolkata V. D.C.I.T Cir - 51,kolkata, Kolkata

ITA 767/KOL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75084 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 10-04-2013
• Court: TRIBUNAL
• Department Lawyers: SUCHETA CHATTOPADHYAY
• Assessee Lawyers: S K TULSIYAN
• Keywords: Business income; Business expenditure
• Section: 37; 144

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND . . . . ' '' ''# '#'# '#, $% ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI ABRAHAM P. GEORGE, AM] & & & & / I.T.A NO. 767/KOL/2013 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEAR: 2008-09 SHRI ARJUN BHOWMIK VS. DEPUTY COMMISSIONER OF I NCOME-TAX, (PAN: AGKPB7279C) CIRCLE-51, KOLKATA (,- /APPELLANT ) (./,-/ RESPONDENT ) DATE OF HEARING: 04.03.2014 DATE OF PRONOUNCEMENT: 13.03.2014 FOR THE APPELLANT: SHRI S. K. TULSIYAN, ADVOCATE FOR THE RESPONDENT: SMT. SUCHETA CHATTOPADHYAY, JCIT, SR. DR $0 / ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXII, KOLKATA IN APPEAL NO. 209/XXXII/10-11/CIR-51/KOL DATED 18.02.2013. ASSES SMENT WAS FRAMED BY DCIT, CIRCLE-51, KOLKATA U/S. 144 OF THE INCOME-TAX ACT, 1961 (HEREI NAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2008-09 VIDE HIS ORDER DATED 31.12. 2010. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO REJECTING THE BOOK RESULTS AND APPLYIN G GROSS PROFIT RATE AND ALSO MADE DISALLOWANCE OF BUSINESS EXPENDITURE. FOR THIS, AS SESSEE HAS RAISED FOLLOWING THREE GROUNDS: 1(A). THAT THE LD. CIT(A) ERRED IN DISMISSING THE ASSESSEES APPEAL SUMMARILY IN CONTRAVENTION OF THE PROVISION OF SECTION 250(6) OF THE INCOME TAX ACT, 1961. (B) THAT THE LD. CIT(A) ERRED IN NOT CONSIDERING EA CH GROUND OF THE ASSESSEES APPEAL AND DECIDING IT ON MERIT. 2. THAT, SINCE A WRITTEN SUBMISSION EXPLAINING THE VARIOUS GROUNDS TAKEN BY THE ASSESSEE WAS FILED BEFORE HIM AT THE TIME OF HEARIN G OF APPEAL, THE LD. CIT(A) ERRED IN NOT CONSIDERING THE ASSESSEES SUBMISSIONS BEFORE P ASSING THE APPELLATE ORDER. 3. THAT, THE LD. A.O. ERRED IN ESTIMATING THE ASSE SSEES INCOME FROM CIVIL CONSTRUCTION BUSINESS @ 8% OF HIS GROSS RECEIPT AND THEREAFTER A GAIN ADDING BACK HIRE CHARGES RS.14,78,355/-, TRANSPORTATION CHARGES RS.3,52,150/ -, SLURRY REMOVABLE EXPENSES RS.19,94,975/-, SUPERVISION CHARGES RS.3,15,000/-, LABOUR CHARGES RS.93,35,650/-, SITE EXPENSES RS.43,88,116/- AND LOAD TESTING EXPEN SES RS.8,03,838/- AND THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE SAID ADDI TIONS. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSEE IS IN THE BUSINESS OF CIVIL CONSTRUCTI ON. ADMITTEDLY, ASSESSEE IS NOT MAINTAINING 2 ITA NO.767/K/2013 SHRI ARJUN BHOWMIK , AY:2008-09 BOOKS OF ACCOUNT AND NO EVIDENCE IN SUPPORT OF BOOK S OF ACCOUNT WERE FILED. THE AO ESTIMATED THE PROFIT RATE IN THE ABSENCE OF BOOKS OF ACCOUNT @ 8% AND ESTIMATED THE NET PROFIT BYOSERVING AS UNDER: AS THE CASE IS GETTING BARRED BY LIMITATION I HAVE NO OTHER ALTERNATIVE BUT TO COMPLETE THE ASSESSMENT ON THE BASIS OF MATERIALS AVAILABLE ON RECORD. AS NO BOOKS OF ACCOUNTS, EVIDENCES ARE MAINTAINED PROFIT IS ESTIMATED @ 8% O N GROSS RECEIPT OF RS.5,91,26,166/- WHICH COMES TO RS.47,30,093/-. THE CASE IS HEARD A ND DISCUSSED . IN RESPECT TO THE ABOVE THE TOTAL COMPUTATION IS UNDER: GROSS PROFIT IS TAKEN AS DISCUSSED ABOVE. RS.47 ,30,093/- FURTHER, THE AO MADE DISALLOWANCES ON ACCOUNT OF HI RE CHARGES, TRANSPORTATION CHARGES AND SLURRY REMOVABLE CHARGES BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NON- DEDUCTION OF TDS. APART FROM THE ABOVE, THE AO ALS O DISALLOWED SUPERVISION CHARGES, LABOUR CHARGES, SITE EXPENSES AND LOAD TESTING EXPENSES. AGGRIEVED AGAINST THE ESTIMATION OF NET PROFIT AND DISALLOWANCE ON ACCOUNT OF VARIOUS EXPENSES, AS NOTED ABOVE, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFIRMED THE ADDITION BY DISMIS SING THE APPEAL OF ASSESSEE. 4. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE BEFO RE US STATED THAT HE HAS NO GRIEVANCE AS REGARDS TO ESTIMATION OF NET PROFIT @ 8% BUT HE IS AGGRIEVED ONLY BY DISALLOWANCES OF OTHER EXPENSES, WHICH ARE DIRECTLY RELATED TO RECEIPTS OF CONTRACT THAT MEANS BUSINESS EXPENSES. ACCORDING TO LD. COUNSEL FOR THE ASSESSEE NO DISALL OWANCE CAN BE MADE ONCE WHEN BOOK RESULTS ARE REJECTED AND NET PROFIT RATE IS APPLIED. IN TH E PRESENT CASE THE GROSS RECEIPT OF THE ASSESSEE IS AT RS.5,91,26,166/- AND AO HAS APPLIED NET PROFIT R ATE @ 8%. ON THE OTHER HAND, LD. SR. DR SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 5. WE FIND THAT THERE IS NO DISPUTE THAT THERE ARE NO BOOKS OF ACCOUNT AS THE ASSESSEE FAILED TO PRODUCE THE SAME. IT IS ALSO AN ADMITTED POSITI ON THAT ASSESSEE HAS ACCEPTED THE APPLICATION OF NET PROFIT RATE @ 8% ON THE GROSS RECEIPTS. THE DISPUTE ONLY IS AS REGARDS TO DISALLOWANCE ON ACCOUNT OF HIRE CHARGES, TRANSPORTATION CHARGES AND SLURRY REMOVABLE CHARGES BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. FURTHE R, DISALLOWANCE OF SUPERVISION CHARGES, LABOUR CHARGES, SITE EXPENSES, LOAD TESTING EXPENSES AT 50 %. WHETHER THE AO CAN DISALLOW THE EXPENSES WHICH ARE DIRECTLY RELATED TO GROSS RECEIP T OF THE ASSESSEE ON WHICH THE AO HAS ESTIMATED NET PROFIT BY APPLYING THE RATE OF 8%. I T IS A FACT THAT THE ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNT, IT MEANS THAT THE AO HAS NOT RELI ED ON BOOKS OF ACCOUNT FOR ESTIMATION OF PROFITS. THIS FACT IS ACCEPTED BY ASSESSEE AS WLL AS BY REVENUE. WE ARE OF THE VIEW THAT ONCE THE NET PROFIT RATE IS ESTIMATED THE AO CANNOT BASE HIS DISALLOWANCE ON THE SAME BOOKS OF ACCOUNT FOR THE PURPOSE OF DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT OR GENERAL DISALLOWANCES U/S 37 OF THE ACT. TH E ESTIMATION MADE BY AO OF NET PROFIT WILL 3 ITA NO.767/K/2013 SHRI ARJUN BHOWMIK , AY:2008-09 TAKE CARE OF EVERY ADDITION RELATED TO BUSINESS INC OME OR BUSINESS RECEIPTS AND NO FURTHER DISALLOWANCE CAN BE MADE. WE SEE FORCE IN THE ARGU MENT OF THE ASSESSEE THAT WHEN THE INCOME OF THE ASSESSEE WAS COMPUTED APPLYING GROSS PROFIT RATE AND NO DEDUCTION WAS ALLOWED IN REGARD TO THE EXPENSES CLAIMED BY THE ASSESSEE, THE RE WAS NO NEED TO LOOK INTO THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT OR SECTION 37 OF THE A CT. ACCORDINGLY, NO DISALLOWANCE COULD HAVE BEEN MADE IN VIEW OF THE ABOVE FACTS THAT ONCE THE PROFIT IS ESTIMATED BY APPLYING NET PROFIT RATE. ACCORDINGLY, WE DIRECT THE AO TO DELETE THE OTHER DISALLOWANCES AND RESTRICT THE ADDITION BY APPLYING NET PROFIT RATE @ 8% OF GROSS RECEIPTS. APPEAL OF ASSESSEE IS ALLOWED. 6. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 7. ORDER IS PRONOUNCED IN THE OPEN COURT ON 13.03.2 014. SD/- SD/- . . . . ' '' ''# '#'# '# , $% , (ABRAHAM P. GEORGE) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13TH MARCH, 2014 12 '3' 4 JD.(SR.P.S.) $0 5 . 6$ )7- COPY OF THE ORDER FORWARDED TO: 1 . ,- / APPELLANT- SHRI ARJUN BHOWMIK, 244, VIP NAGAR, KOL KATA-700 100. 2 ./,- / RESPONDENT DCIT, CIRCLE-51, KOLKATA. 3 . 0' ( )/ THE CIT(A), KOLKATA 4. 5. 0' / CIT KOLKATA <= .' / DR, KOLKATA BENCHES, KOLKATA / ./ TRUE COPY, $0'>/ BY ORDER, ' /ASSTT. REGISTRAR .