The ITO, Ward-1, GANDHIDHAM V. M/s Manglam Developers, GANDHIDHAM

ITA 847/RJT/2010

• Counselvise Citation: 84724914 RSA 2010
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-04-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 15-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: SANJAY R SHAH

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT . .. . . . . . , , , , . .. . . . . . , , , , $ $ $ $ BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K . SRIVASTAVA, AM ITA NO. 847/RJT/2010 / ASSESSMENT YEAR 2006-07 ITO, WD-1 V. M/S. MANGLAM DEVELOPERS GANDHIDHAM G-3, MANGAL DARHSAN APARTMENTS PLOT -176, WARD-10A, GANDHIDHAM PAN:AAIFM5720D ITA NO. 741/RJT/2010 / ASSESSMENT YEAR 2006-07 M/S. MANGLAM DEVELOPERS V. ITO, WD-1 G-3, MANGAL DARHSAN APPART, GANDHIDHAM PLOT -176, WARD-10A, GANDHIDHAM PAN:AAIFM5720D DATE OF HEARING : 17-04-2012. DATE OF PRONOUNCEMENT : 27-04-2012. REVENUE BY:: S HRI M. K. SINGH, D.R ASSESSEE BY: SHRI SANJAY R. SHAH, C.A. . / / / / ORDER . .. . . . . . /D. K. SRIVASTAVA: BOTH THE PARTIES, NAMELY THE TAX COLLECTOR BEING THE REVENUE AND THE TAX PAYER BEING THE ASSES SEE ARE AGGRIEVED BY THE ORDER PASSED BY THE CIT(A) ON 21-01-2010 AND THEREFORE TH EY ARE IN APPEAL. BOTH THE APPEALS BEING CROSS APPEALS ARE BEING DISPOSED OFF BY A CONSOLIDATED ORDER. 2. IN ITA NO.847/RJT/2010, THE DEPARTMENT HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1 THE LD. CIT(A)-II, RAJKOT HAS ERRED IN LAW AND O N FACTS OF THE CASE IN RESTRICTING THE ESTIMATION OF INCOME TO RS. 6,19,584/- @ 2.92% AS AGAINST THAT OF RS.16,97,497/- ESTIMATED B Y THE AO @ 8%. 3. IN ITA NO.741/RJT/2010, THE ASSESSEE HAS TAKEN T HE FOLLOWING GROUNDS OF APPEAL:- 1. THE ASSESSMENT ORDER IS BAD IN LAW. 2. THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW A S WELL AS ON FACT IN MAKING ADDITION OF RS.16,97,497/- BY ESTIMA TING N.P. @ 8% OF THE GROSS RECEIPTS OF RS.2,12,18,642/-. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 6,19,584/- OUT OF THE SAID AMOUNT. ITA 847 &741/2010 2 4. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CIVI L CONSTRUCTION DURING THE YEAR UNDER APPEAL. THE ASSESSEE FILED ITS RETURN OF INCOME ON 22-05-2006 RETURNING TOTAL INCOME AT RS.1,67,958/-. AFTER PROCESSING, A SSESSMENT WAS COMPLETED ON 31- 07-2008 ASSESSING THE TOTAL INCOME AT RS.22,69,993/ -. 5. PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE A SSESSEE HAD RECEIVED A SUM OF RS.2,12,18,642/- UPON EXECUTION OF CIVIL CON STRUCTION WORKS DURING THE YEAR UNDER APPEAL. THE RATE OF NET PROFIT SHOWN BY THE A SSESSEE WAS FOUND BY THE ASSESSING OFFICER TO BE LOW. THE ASSESSEE WAS CALLE D UPON BY THE AO TO PRODUCE THE BOOKS OF ACCOUNT, VOUCHERS, ETC., IN SUPPORT OF THE ENTRIES MADE IN THE BOOKS, FOR VERIFICATION. IT IS THE CASE OF THE AO THAT THE BO OKS OF ACCOUNT AND RELEVANT VOUCHERS WERE NOT PRODUCED BEFORE HIM. HE THEREFOR E, APPLIED NET PROFIT RATE OF 8% AND ACCORDINGLY ADDED A SUM OF RS.16,97,491/-. BESI DES, UNEXPLAINED DEPOSITS AGGREGATING TO RS.3,75,000/- WERE ALSO ADDED. ON AP PEAL, THE LD. CIT(A) HAS DIRECTED THE AO TO APPLY NET PROFIT RATE OF 2.92% A S AGAINST THE 8% APPLIED BY THE AO. BOTH THE PARTIES ARE AGGRIEVED BY THE AFORESAI D ORDER OF THE CIT(A). 6. AT THE TIME OF HEARING, THE LD. AUTHORIZED REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT ALL THE TRANSACTIONS INCLUDING EXPEN SES ARE FULLY SUPPORTED BY VERIFIABLE VOUCHERS AND THE BOOKS OF ACCOUNT AND TH EREFORE BOTH THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN REJECTING THE NET PROFI T RATE SHOWN BY THE ASSESSEE. HE VOLUNTEERED TO PRODUCE THE BOOKS OF ACCOUNT TOGETHE R WITH BILLS AND VOUCHERS IN SUPPORT OF THE ENTRIES MADE IN THE BOOKS OF ACCOUNT , BEFORE THE AO. 7. WE HAVE HEARD BOTH THE PARTIES. PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE BOOKS OF ACCOUNT CLAIMED BY THE ASSESSEE T O HAVE BEEN MAINTAINED WERE NOT PRODUCED BEFORE THE AO FOR VERIFICATION AND EXA MINATION. THE ASSESSEE HAS VOLUNTEERED TO PRODUCE THE BOOKS OF ACCOUNT BEFORE THE AO TOGETHER WITH BILLS AND VOUCHERS IN SUPPORT OF THE ENTRIES MADE IN THE BOOK S OF ACCOUNT, FOR VERIFICATION AND EXAMINATION. IT IS THE CASE OF THE ASSESSEE THAT IT HAS MAINTAINED ALL THE BILLS, VOUCHERS IN SUPPORT OF EXPENSES AND THAT THEY ARE F ULLY VERIFIABLE. IN THIS VIEW OF THE MATTER, WE CONSIDER IT APPROPRIATE TO SET-ASIDE THE APPELLATE ORDER PASSED BY THE CIT(A) AND THE ASSESSMENT ORDER PASSED BY THE AO A ND RESTORE THE MATTER TO THE FILE OF THE AO FOR PASSING A FRESH ASSESSMENT ORDER DE-NOVO AFTER CARRYING OUT REQUISITE VERIFICATION AND EXAMINATION OF THE BOOKS OF ACCOUNT AND THE BILLS/VOUCHERS IN SUPPORT OF THE ENTRIES MADE IN THE BOOKS. WE ORD ER ACCORDINGLY. THE A.O. SHALL NOW IDENTIFY AND ALSO QUANTIFY HEAD-WISE EXPENSES W HICH ARE NOT AMENABLE TO VERIFICATION AND THEREAFTER PASS A REASONED ORDER I N CONFORMITY WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE AO SHALL BE FREE TO MAKE SUCH DISALLOWANCE OF EXPENSES OR TO APPLY SUCH RATE OF PROFIT OR TO MAKE SUCH ADDITIONS, WHICH ARE WARRANTED UPON EXAMINATION OF THE BOOKS OF ACCOUNT. THE RATE OF NET PROFIT TO BE APPLIED BY THE AO UPON EXAMINAT ION OF THE BOOKS OF ACCOUNT, ITA 847 &741/2010 3 VOUCHERS, ETC., MAY BE 8% OR A RATE HIGHER OR LOWER THAT 8% DEPENDING UPON THE RESULT OF THE EXAMINATION OF THE BOOKS, VOUCHERS, E TC., BY HIM. BOTH THE APPEALS SHALL BE TREATED AS ALLOWED FOR STATISTICAL PURPOSE S. ) + 27-04-2012 . ) THIS ORDER PRONOUNCED IN OPEN COURT ON 27-04-2012. SD/- SD/- ( .. / T. K. SHARMA) ( .. / D. K. SRIVASTAVA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER +/ ORDER DATE 27 -04-2012. /RAJKOT ) )) ) 12 12 12 12 32 32 32 32 / COPY OF ORDER FORWARDED TO:- 1. 6 / APPELLANT-. THE INCOME-TAX OFFICER, WD.1, GANDHI DHAM. 2. 186 / RESPONDENT-.M/S. MANGLAM DEVELOPERS,. GANDHIDHAM . 3. ; / CONCERNED CIT-I, RAJKOT.. 4. ;- / CIT (A)-II, RAJKOT.. 5. 2 1, , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , ASSTT. REGISTRAR/ , / ITAT, RAJKOT