ACIT, Ajmer V. M/S AGARWAL CONSTRUCTION COMPANY, Ajmer

ITA 783/JPR/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99501 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 01-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B M VYAS; N RATHI S DH
• Keywords: Depreciation; Rule of consistency

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. 783/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2006-07 . THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, AJMER. CUKE VS. M/S. AGARWAL CONSTRUCTION COMPANY, 184, MAIN MARKET, NASIRABAD, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAKFA 1442 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA,(ADDL. CIT) /KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI B.M. VYAS & SHRI N. RATHI (ADVOCATES) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 22.09.2015. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 20/11/2015. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT (APPEALS), AJMER DATED 10.07.2012 FOR THE A.Y. 2006-07. THE G ROUNDS RAISED IN THE APPEAL ARE AS UNDER :- IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. CIT (A) AJMER HAS ERRED IN : 1) HOLDING THE CASES CITED BY AO ARE NOT COMPARABLE WITH THE CASE OF ASSESSEE; 2 ITA NO. 783/JP/2012 A.Y. 2006-07. ACIT VS. M/S. AGARWAL CONSTRUCTION CO. 2) HOLDING THAT AO SHOULD HAVE MADE ENQUIRY DIRECTL Y FROM NBCC LTD. WITHOUT REMANDING THE CASE WITH SPECIFIC DIRECTIONS ; 3) DELETING THE TRADING ADDITION OF RS. 43,04,507/- WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CAS E. 2. THIS IS THE SECOND ROUND OF LITIGATION. IN THE F IRST ROUND, THE APPEAL WAS DECIDED BY THE TRIBUNAL VIDE ITS ORDER DATED 31.03.2010 IN ITA NO. 810/JP/2009 WHEREBY THE ISSUE WAS RESTORED TO THE LD. CIT (A) WITH THE FOLL OWING DIRECTION :- 1) TO VERIFY THE RECONCILIATION OF ACCOUNTS SUBMITTED BY M/S. NBCC LTD., JAIPUR AT THE TIME OF HEARING OF THE APPEAL BEFORE THE TRIBUNAL FOR THE FIRST TIME. 2) TO VERIFY THE TRIBUNAL ORDER REFERRED BY THE AO AND LD. CIT (A) FOR THE A.Y. 2005-06 MENTIONING THE DATE OF ORDER AS 17 TH OCTOBER, 2008 AND 15 TH MAY, 2009 IN THEIR RESPECTIVE ORDERS. 3) THE VERIFY THE VARIOUS FACTS AS MENTIONED BY THE AO IN HIS ORDER FROM PAGES 1 TO 17. 4) THE LD. CIT (A) HAS NOT MADE ANY COMMENTS AS TO HOW SUCH COMPARABLE CASES MENTIONED BY THE AO IN HIS ORDER A RE NOT APPLICABLE. 3. PURSUANT TO THE ABOVE DIRECTIONS OF THE TRIBUNAL , THE LD. CIT (A) ASKED THE AO TO SUBMIT HIS COMMENTS. THE AO VIDE HIS LETTER DATED 04.07.2012 FURNISHED HIS COMMENTS AND THE SAME HAS BEEN CONSIDERED BY THE LD. CIT (A) IN HIS ORDER DATED 10.07.2012 WHILE DECIDING THE APPEAL. THE LD. CIT (A) AFTER CO NSIDERING THE VARIOUS DOCUMENTS 3 ITA NO. 783/JP/2012 A.Y. 2006-07. ACIT VS. M/S. AGARWAL CONSTRUCTION CO. FURNISHED BY THE ASSESSEE AND THE SUBMISSIONS MADE BY THE RIVAL PARTIES, DIRECTED THE AO TO DELETE THE ADDITIONS BY OBSERVING AS UNDER :- 5.8. I HAVE PERUSED RECORDS OF ASIAN CONSTRUCTION COMPANY AND JAIN CONSTRUCTION CO. ALSO FOR A.Y. 2006-07. THE RE SULTS OF THESE TWO CASES HAVE BEEN REFERRED TO BY AO ON PAGE NO. 7 OF THE ASSESSMENT ORDER. IT IS FOUND THAT IN THE CASE OF J AIN CONSTRUCTION CO. THE GROSS CONTRACT RECEIPTS ARE OF RS. 6,94,58, 461/- AND THERE ARE SUB CONTRACT RECEIPTS OF RS. 2,18,00,446/-. THE NET PROFIT OF RS. 53,29,267/- MENTIONED BY AO IN THE ASSESSMENT ORDER IN THE CASE OF JAIN CONSTRUCTION CO. HAS BEEN DECLARED ON TOTAL RECEIPTS OF RS. 9,12,58,907/- (6,94,58,461 + 2,18,00,446) AND NOT O N GROSS RECEIPTS OF RS. 6,94,58,461/- ONLY AS MENTIONED BY AO. THUS THE NP RATE OF 7.67% MENTIONED BY AO IN THE CASE OF JAI N CONSTRUCTION CO. IS FACTUALLY INCORRECT. 5.9. M/S. ASIAN CONSTRUCTION CO. HAS DECLARED CONTR ACT RECEIPTS FOR MAIN CONTRACTS AT RS. 8,22,95,408/- AND GROSS PROFI T OF RS. 82,58,672/- GIVING A GROSS PROFIT RATE OF 10.03%. T HE CONTRACT RECEIPTS OF THE CONTRACTS SUB LET HAVE BEEN SHOWN A T RS. 3,44,59,909/- AND THE GROSS PROFIT ON SUB-CONTRACTS HAS BEEN SHOWN AT RS. 7,73,778/- GIVING GROSS PROFIT RATE OF 2.24%. FURTHER THE ASSESSEE FIRM HAS DECLARED A NET PROFIT OF RS. 53,93,132/- ON NET RECEIPTS OF RS. 8,22,95,408/- AFTER DEDUCTING I NTEREST OF RS. 17,74,035/- AND REMUNERATION OF RS. 4,50,000/- PAID TO PARTNERS AND DEPRECIATION OF RS. 6,46,403/-. THUS THE NET PR OFIT RATE ON NET SURPLUS HAS BEEN DECLARED AT 6.55% ONLY. 4 ITA NO. 783/JP/2012 A.Y. 2006-07. ACIT VS. M/S. AGARWAL CONSTRUCTION CO. 5.10. APPELLANT FIRM DURING THE YEAR HAS DECLARED S UB CONTRACT RECEIPTS OF RS. 8,32,42,957/- OUT OF TOTAL RECEIPTS OF RS. 13,20,07,372/-. THUS NEARLY 63% OF THE RECEIPTS ARE IN THE NATURE OF SUB CONTRACT RECEIPTS. IN VIEW OF ALL THESE FACT S CASE OF APPELLANT IS NOT COMPARABLE WITH CASES OF JAIN CONSTRUCTION C O. AND ASIAN CONSTRUCTION COMPANY. 5.11. PRINCIPLE OF RES JUDICATA THOUGH NOT APPLICAB LE TO INCOME TAX PROCEEDINGS, PRINCIPLE OF CONSISTENCY IS APPLICABLE AND IN ABSENCE OF ANY CHANGE OF CIRCUMSTANCES OR NON CONSIDERATION OF MATERIAL FACTS OR STATUTORY PROVISIONS, AO CANNOT CHANGE THE STAND TAKEN IN EARLIER YEARS. 5.12. IN VIEW OF ABOVE MENTIONED FACTS AND RESPECTF ULLY FOLLOWING DECISIONS OF HONBLE ITAT IN THE CASE OF APPELLANT ITSELF FOR EARLIER YEARS AS MENTIONED ABOVE, AO IS DIRECTED TO DELETE THE TRADING ADDITION OF RS. 43,04,507/-. GROUND NO. 2 TO 4 ARE THUS ALLOWED. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. D/R ARGUED THAT THE EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUNT OF PAYMENTS MADE FOR STONE, BAJRI AND OTHER MATERIALS INCLUDING TRANSPORTATION THEREOF ON SELF MADE VOUCHERS AND ALSO NO PROPER ITEM-WISE, QU ANTITATIVE, QUALITATIVE WISE, AMOUNT-WISE STOCK REGISTER WAS MAINTAINED BY THE AS SESSEE. THUS OPENING AND CLOSING STOCKS ARE NOT VERIFIABLE. THERE WAS NO JUSTIFICATI ON FOR NOT MAINTAINING STOCK SITE-WISE. THE BOOKS OF ACCOUNTS OF THE ASSESSEE SUFFERED FROM VARIOUS DEFECTS AND DEFICIENCIES, THEREFORE, THE INCOME OF THE ASSESSEE CANNOT BE DED UCED CORRECTLY ON THE BASIS OF 5 ITA NO. 783/JP/2012 A.Y. 2006-07. ACIT VS. M/S. AGARWAL CONSTRUCTION CO. BOOKS MAINTAINED BY THE ASSESSEE. HE FURTHER DRAWN OUR ATTENTION ON THE FOLLOWING CASE LAWS REFERRED BY THE A.O. IN REMAND REPORT FILED BE FORE LD. CIT (A) ON REJECTION OF BOOKS RESULTS UNDER SECTION 145(3) OF THE IT ACT. M/S. SUBRAMANIUM BROTHERS VS. CIT 250 ITR 769 (MAD.) 158 ITR 623 (PATNA) 191 ITR 96 (MAD.) 235 ITR 264 (GUJ.) CIT VS. CHANDRA VILLAS HOTEL 164 ITR 102 (GUJ.) THE COMPARABLE CASES REFERRED BY THE AO I.E. JAIN C ONSTRUCTION CO. AND M/S. ASIAN CONSTRUCTION CO. ARE COMPARABLE AND SQUARELY APPLI CABLE ON THE CASE OF THE ASSESSEE. THEREFORE, HE REQUESTED TO CONFIRM THE ORDER OF THE A.O. 6. AT THE OUTSET, THE ASSESSEE SUBMITTED THAT THE T RADING RESULTS OF THE RESPONDENT ASSESSEE FIRM IN RESPECT OF GROSS RECEIPTS AND NET PROFIT RATE ARE BETTER THAN LAST YEAR AND SUMMARIZED AS UNDER :- ASSTT. YEAR GROSS RECEIPTS NET PROFIT % OF NET PROF IT 2005-06 64222982 1096910 1.71% 2006-07 132007372 3932360 2.98% THE AO HIMSELF ADMITTED IN HIS ORDER AT SECOND PARA GRAPH OF PAGE 18 OF ASSESSMENT ORDER DATED 24.12.2008 THAT DURING THE YEAR THERE I S DECREASE IN MOST OF EXPENSES 6 ITA NO. 783/JP/2012 A.Y. 2006-07. ACIT VS. M/S. AGARWAL CONSTRUCTION CO. INCURRED BY THE ASSESSEE IN COMPARISON TO THE PRECE DING PREVIOUS YEAR AND THE TRADING RESULTS DECLARED BY THE ASSESSEE FIRM ARE HIGHER AS COMPARED TO PRECEDING PREVIOUS YEAR. IN SUCH SITUATION TRADING ADDITION SHOULD NO T BE CALLED FOR IN VIEW OF DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS . GOTAN LIME KHANIJ UDHOG REPORTED IN (2002) 256 ITR 243 AND RELIED BY HONORABLE BENCH IN RESPONDENT CASE IN APPEAL NO. 992/JP/2006 DATED 31.01.2008 AT PAGE 5 OF THE ORDER FOR ASSTT. YEAR 2003-04. 6.1. THE HONORABLE BENCH IN APPEAL OF PRECEDING PRE VIOUS YEAR VIDE ITA NO. 1322/JP/2008 DATED 15.05.2009 AT PARA 9 OF THE ORDE R HAS GIVEN ITS FINDING AT AS REGARDS THE ESTIMATION OF INCOME, THE ASSESSEE HAS DECLARED BETTER RESULTS DURING THE YEAR AS COMPARED TO IMMEDIATELY PRECEDING YEAR AS O BSERVED BY THE LEARNED CIT (A). IN SUCH CIRCUMSTANCES AND FACTS OF THE CASE, WE FIND T O BE REASONED ONE. 6.2. THE HONBLE BENCH IN CASE OF DEPUTY CIT VS. MA NGLAM CEMENT LTD. REPORTED IN (2005) 92 TTJ (JP)(TM) 1 HAS HELD THAT THE PRINCIP LE OF CONSISTENCY IS APPLICABLE TO INCOME TAX PROCEEDINGS. EVEN OTHERWISE A DECISION OF A COORDINATE BENCH OF THE SAME STRENGTH IS REQUIRED TO BE ACCEPTED BY BENCH OF SAM E STRENGTH. 6.3. YOUR HONORS, THE GROSS RECEIPTS DECLARED BY TH E ASSESSEE IS ALTHOUGH CORRECT AND BY THE WAY IF IT IS TAKEN AT RS. 149654889/- THE RE VISED NET PROFIT RATE WILL BE 2.63% IN COMPARISON TO LAST YEAR DECLARED AND ACCEPTED AT 1. 71%. THE NET PROFIT RATE IS BETTER THAN LAST YEAR, THEREFORE, ON SIMILAR FACTS THE ISS UE STOOD CONCLUDED IN FAVOUR OF THE RESPONDENT ASSESSEE BY THE HONORABLE BENCH FOR LAST THREE YEARS. THERE IS NO MERIT IN 7 ITA NO. 783/JP/2012 A.Y. 2006-07. ACIT VS. M/S. AGARWAL CONSTRUCTION CO. THE GROUNDS AND ARGUMENTS PUT FORTH BY THE DEPARTME NTAL REPRESENTATIVE AND WE PRAY THAT DEPARTMENTAL APPEAL MAY KINDLY BE DISMISSED. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AFTER GOING THROUGH THE ORDER OF THE LD. CI T (A), WE FIND NO INFIRMITY WITH THE ORDER OF LD. CIT (A) DELETING THE ADDITIONS MADE BY THE A.O. THE CASE OF THE APPELLANT IS ALSO SQUARELY COVERED BY THE EARLIER DECISIONS OF T HE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NOS. 992/JP/2006 DATED 31.01.2008 FOR A.Y. 2 003-04, ITA NO. 734/JP/2007 DATED 24.04.2009 FOR A.Y. 2004-05 AND ITA NO. 1322/ JP/2008 DATED 15.05.2009 FOR A.Y. 2005-06. THE TRIBUNAL, IN THE CASE OF THE ASS ESSEE FOR THE A.Y. 2005-06 HAS DISMISSED THE APPEAL OF THE REVENUE BY OBSERVING AS UNDER :- 9. AS REGARDS THE ISSUE ON MERIT, THE AO HAS POIN TED OUT MANY DEFECTS IN ITS ORDER THAT THE ASSESSEE DOES NOT MAI NTAIN THE STOCK REGISTER AND MOST OF THE EXPENSES ARE UNVERIFIABLE AND, THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT (A ) WHO HAS RIGHTLY INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT . AS REGARDS THE ESTIMATION OF INCOME, THE ASSESSEE HAS DECLARED BET TER RESULTS DURING THE YEAR AS COMPARED TO IMMEDIATELY PRECEDIN G YEAR AS OBSERVED BY THE LD. CIT (A). IN SUCH CIRCUMSTANCES AND FACTS OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT (A) WHICH APPEARS TO BE REASONED ONE. THUS THE SOLITARY GROUN D OF THE REVENUE IS DISMISSED. 8 ITA NO. 783/JP/2012 A.Y. 2006-07. ACIT VS. M/S. AGARWAL CONSTRUCTION CO. THEREFORE, RESPECTFULLY FOLLOWING THE DECISIONS OF COORDINATE BENCH OF THE TRIBUNAL AS CITED ABOVE, WE CONFIRM THE ORDER OF LD. CIT (A) AN D THE APPEAL OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/11/2015. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 20/11/2015 DAS/ VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ACIT, CIRCLE-2, AJMER. 2. IZR;FKHZ @ THE RESPONDENT- M/S. AGARWAL CONSTRUCTION CO., NASIRA BAD. 3. VK;DJ VK;QDR @ CIT 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.783/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR 9 ITA NO. 783/JP/2012 A.Y. 2006-07. ACIT VS. M/S. AGARWAL CONSTRUCTION CO.