DCIT, Jaipur V. RAJ KUMAR GUPTA, Jaipur

ITA 851/JPR/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5361 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 15-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIKASH RAJBANSHI CA DHK
• Keywords: Business income; Depreciation; Opportunity of being heard
• Section: 143(3)

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. 851/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR. CUKE VS. RAJ KUMAR GUPTA, F-100, PANCH SHEEL MARG, C-SCHEME, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AHPPG 4958 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 856/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10. RAJ KUMAR GUPTA, F-100, PANCH SHEEL MARG, C-SCHEME, JAIPUR. CUKE VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AHPPG 4958 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI KAILASH MANGAL (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIKASH RAJBANSHI (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 22/02/2016. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 28/04/2016. VKNS'K@ ORDER PER T.R. MEENA, A.M. THESE ARE CROSS APPEALS ONE BY THE REVENUE AND THE ANOTHER BY THE ASSESSEE ARISE AGAINST THE ORDER DATED 21/10/20 14 PASSED BY THE LD 2 ITA NO. 851 & 856/JP/2014 DCIT VS RAJ KUMAR GUPTA CIT(A)-II, JAIPUR FOR A.Y. 2009-10. THE EFFECTIVE GRO UNDS OF BOTH THE APPEAL ARE AS UNDER:- GROUND OF REVENUES APPEAL:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD CIT(A) ERRED IN DIRECTING TO APPLY NET PROFIT RATE OF 5.5.% OF GROSS CONTRACT RECEIPTS INSTEAD OF 8% AS APPLIED BY THE A.O. BY IGNORING THE FACT T HAT THE HONBLE ITAT IN THE CASE OF VED PRAKASH PAREEK VS. I TO (39 TAX WORLD 176) AND SANTOSH KUMAR RAWAT VS. ITO IN ITA NO. 631/JP/2006 HAS UPHELD THE NET PROFIT RATE OF 8% AND 10% RESPECTIVELY. GROUNDS OF ASSESSEES APPEAL:- 1. THE LD. A.O. AND CIT(A) HAS ERRED IN LAW AS WELL AS IN FACT IN WRONGLY REJECTING THE BOOKS OF ACCOUNTS U/S 145(3) OF INCOME TAX ACT, 1961 APPLIED 5.50% NP RATE ON GROSS CONTRACTS RECEIPTS ON THE BASIS OF PREVIOU S A.O. ASSESSMENT ORDERS INSTEAD OF ACTUAL NP OF 2.48 % WITHOUT CONSIDERING OWN PAST HISTORY OF THE ASSESSEE. 2. THE LD A.O. & CIT(A) HAS ERRED IN LAW AS WELL AS IN FACT NOT ALLOWING DEDUCTION OF SALES TAX FROM NP RATE. ON LY INTEREST AND DEPRECIATION WERE ALLOWED AS DEDUCTIONS WHEREAS JURISDICTIONAL HIGH COURT HAS DULY ALLOWED DEDUCTION OF SALES TAX FROM NP RATE. 3. THE LD A.O. & CIT(A) HAS ERRED IN LAW AS WELL AS IN FACT MAKING FURTHER ADDITION IF RS. 4,96,000/- CONSIDERI NG THE MACHINERY RENT OF RS. 2,81,000 AND SALE OF MACHINERY RS. 2,15,000/- AS INCOME FROM OTHER SOURCES INSTEAD OF BUSINESS INCOME AND NOT 3 ITA NO. 851 & 856/JP/2014 DCIT VS RAJ KUMAR GUPTA CONSIDERING THE RELATED EXPENSES, HENCE MADE DOUBLE ADDITIONS. 2. THE REVENUES SOLE GROUND OF APPEAL IS AGAINST DI RECTING TO APPLY NP RATE OF 5.5.% OF GROSS CONTRACT RECEIPTS INSTEAD OF 8% APPLIED BY THE ASSESSING OFFICER WHEREAS THE ASSESSEES 1 ST GROUND OF APPEAL IS AGAINST CHALLENGING THE ADDITION CONFIRMED BY THE LD CIT(A) N.P. RATE @ 5.5% AGAINST THE NP RATE DISCLOSED BY THE ASSESSEE @ 2.48 %. THE ASSESSEE FILED RETURN FOR A.Y. 2009-10 ON 29/09/2009 DECLARI NG TOTAL INCOME OF RS. 16,90,770/-. THE ASSESSEE IS A CONTRACTOR AND DU RING THE RELEVANT PREVIOUS YEAR, HE WAS ENGAGED IN BUSINESS OF CIVIL CONTRACT WORK AS CONSTRUCTION OF ROADS, SIGNBOARD, FOOTPATH ETC.. TH E CASE WAS SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE LD ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HA S UNDERTAKEN CONTRACT WORK OF CIVIL NATURE FROM JAIPUR DEVELOPMEN T AUTHORITY (JDA), MINISTRY OF ROAD TRANSPORT HIGHWAYS, JAIPUR AND RIICO I LTD, BHIWADI, SAWAI MADHOPUR AND SITAPURA. THE NATURE OF CONTRACT I NVOLVES FOR RIICO MAINLY, SUPPLY AND FIXING OF SIGN BOARDS, DEMARCATI ON STONE AND TILES FLOORING IN THE OFFICE BUILDING IN THE INDUSTRIAL A REA, BHIWADI FIXING OF STEEL GRILL ROLLING SHUTTERS AND MISC. STEEL WORK, S UPPLY AND FIXING OF PROPERTY BOARD IN JDA REGION, CONSTRUCTIONS IMPROVE MENT OF ROAD AND 4 ITA NO. 851 & 856/JP/2014 DCIT VS RAJ KUMAR GUPTA FIXING OF STONE AND EDGE STONE ETC. THE TOTAL CONTRA CT RECEIPTS WERE AT RS. 7,30,24,506/- ON WHICH NP RATE OF RS. 18,18,465/ - WHICH GIVES NP RATE @ 2.8%, WHICH ALSO INCLUDED THE AMOUNT OF RS. 2, 81,000/- BY WAY OF MACHINERY RENT AND SALES OF RS. 2,15,000/-. THUS, TOTAL RS. 4,96,000/- WAS ALSO DECLARED AS INCOME OTHER THAN CONTRACT RECE IPTS. AFTER REDUCING THIS AMOUNT FROM THE TOTAL CONTRACT RECEIPTS, THE L D ASSESSING OFFICER FOUND NET PROFIT RATE @ 1.81% AFTER INTEREST AND DEP RECIATION FROM THE CONTRACT WORK. THE LD ASSESSING OFFICER GAVE REASONAB LE OPPORTUNITY OF BEING HEARD ON THIS ISSUE, WHICH WAS AVAILED BY THE A SSESSEE AND ARGUED THAT THE ASSESSEES NP RATE WAS @ 2.48% NOT CA LCULATED BY THE ASSESSING OFFICER @ 1.81%. THE ASSESSEE HAS SHOWN OPEN ING STOCK AT RS. 18,50,450/- AND CLOSING STOCK AT RS. 10,20,260/ -. THE LD ASSESSING OFFICER VERIFIED THE EXPENSES UNDER THE HEADS STONE GRIT AND BUILDING MATERIAL, SUB CONTRACTING CHARGES, WAGES AND SALARY, LABOUR MATERIAL EXPENSES ON SITE AND SALES TAX. THE LD ASSESSING OFF ICER OBSERVED THAT AS PER ATTENDANCE REGISTER, THERE WERE 33 EMPLOYEES AND AS PER ANOTHER REGISTER FOR EMPLOYEE THERE WERE 54 EMPLOYEES. ALL T HE EMPLOYEES WORKED THROUGHOUT THE YEAR, THERE IS NO CHANGE IN TH E NUMBER OF EMPLOYEES/LABOUR. NO NEW LABOUR HAD BEEN EMPLOYED DU RING THE YEAR UNDER CONSIDERATION. THE SALARY WAS RANGING FROM RS. 6,000/- TO RS. 5 ITA NO. 851 & 856/JP/2014 DCIT VS RAJ KUMAR GUPTA 15,000/- PER MONTH AND TOTAL PAYMENTS DURING THE YE AR UNDER THE HEAD WAGES AT RS. 30,96,740/-, ALL THE EMPLOYEES HAD BEE N PAID ON DAILY WAGE BASIS. THE ASSESSEE HAD DEDUCTED SALARY FOR THE HOLIDAYS INCLUDING SUNDAY. WHILE SOME EMPLOYEES HAD WORKED FOR TOTAL 30 DAYS FOR WHICH THUMB IMPRESSION AND SIGNATURE HAS BEEN TAKEN BY TH E ASSESSEE. THE CONTRACT WORK WAS RUNNING AT MORE THAN 7-8 PLACES AT A TIME IT WAS IMPOSSIBLE TO THE ASSESSEE TO MAINTAIN MONTHLY PAYM ENT REGISTER AT HEAD OFFICE JAIPUR BY OBTAINING THEIR THUMB IMPRESS ION AND SIGNATURE. HE FURTHER OBSERVED THAT PAYMENT OF WAGES WERE ABNORM ALLY HIGH, WHEN ALL THE EMPLOYEES/LABOUR HAVE WORKED PERMANENTLY THR OUGHOUT THE YEAR. THE ASSESSEE WAS LIABLE TO DEDUCT PF AND ESI IN RESPE CT OF SUCH EMPLOYEES, BUT ON THE BASIS OF SALARY REGISTER, NO PF AND ESI HAD BEEN DEDUCTED BY THE ASSESSEE. HE GAVE COMPARABLE CASE O F SHRI HARSH JAIN, MANUFACTURER OF OSWAL SOAPS. HE ALSO ANALYSED THE O PENING AND CLOSING STOCK OF DIFFERENT MM OF STONE GRITS AND BAJRI USED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. IT IS FURTHER HELD THAT THE ASSESSEE HAD NOT MAINTAINED REGISTER FOR OPENING AND CLOSING STOCK, PURCHASES MADE DURING THE YEAR, THEREFORE, SAME ARE NOT SUBJE CT TO VERIFICATION. HE ALSO FOUND VARIOUS DEFECTS UNDER THE HEAD SALES TAX EXEMPTION ACCOUNT. FINALLY WHATEVER DEFECTS FOUND IN THE BOOKS OF ACCOUNT, HE 6 ITA NO. 851 & 856/JP/2014 DCIT VS RAJ KUMAR GUPTA REJECTED THE BOOK RESULT U/S 145(3) OF THE ACT AND HELD THAT SOME CASES OF CONTRACTORS MAINLY RELATED TO THE CONSTRUCTION A ND REPAIR OF THE ROADS, HAS BEEN CONSIDERED, WHO HAD DECLARED NP RATE MUCH M ORE THAN THE ASSESSEE OR THEY HAVE BEEN ASSESSED AT N.P. RATE @ 8 % OF THE CONTRACTS RECEIPTS SUBJECT TO DEDUCTION OF DEPRECIA TION AND INTEREST. NAME OF THE CASE CONTRACT RECEIPTS N.P. DECLARED N. P. RATIO% K.B.S. ENTERPRISES RS. 7,24,96,206/- RS. 50,09,519/ - 6.91% MURARI LAL AGARWAL RS. 11,95,69,805/- RS. 63,86,671/- 5.34% SUDHIR DUTT SHARMA RS. 6,48,03,662/- RS. 51,84,293/- 5.02% RAM DAS GUPTA RS. 6,63,98,859/- RS. 48,60,396/- 7.3 2% HE FURTHER OBSERVED THAT THE LD CIT(A)-II, JAIPUR HAD CONFIRMED THE NET PROFIT RATE OF 8% IN THE CASE OF COLLECTOR RAM SHAR MA WHEREIN LD CIT(A) HAD CITED EXAMPLE OF DECISION OF HONBLE ITAT IN THE CASE OF VED PRAKASH PAREEK VS. ITO (39 TAX WORLD 176) AND SANTOSH KUMAR RAWAT VS. ITO WARD 5(1), JAIPUR IN ITA NO. 631/JP/2006 WHE REIN NET PROFIT RATE OF 8% AND 10% RESPECTIVELY HAD BEEN UPHELD. TH E ASSESSEE HAD HIMSELF CITED THE CASE OF CIT VS. G.K. CONTRACTORS ( 2009) 19 DTR 305 (RAJ), WHERE THE HONBLE COURT UPHELD THE NET PROFIT RATE OF 9% OF GROSS CONTRACT RECEIPTS SUBJECT TO ALLOWANCE OF BANK INTER EST, DEPRECIATION, INTEREST AND REMUNERATION TO THE PARTNERS. THE ASSES SEE ALSO CITED THE CASE OF JAIN CONSTRUCTION WHERE NET PROFIT RATE OF 1 2.5% WITH FURTHER 7 ITA NO. 851 & 856/JP/2014 DCIT VS RAJ KUMAR GUPTA DEDUCTION OF DEPRECIATION, INTEREST PAID TO THIRD P ARTIES HAD BEEN UPHELD BY THE HON'BLE HIGH COURT OF RAJASTHAN. AFTER CONSI DERING ALL THE FACTUAL AND LEGAL POSITION, THE LD ASSESSING OFFICER APPLIE D NP RATE OF TOTAL CONTRACT RECEIPTS @ 8% SUBJECT TO DEDUCTDION OF DEP RECIATION AND INTEREST TO BANK AND THIRD PARTY. IT IS FURTHER HEL D THAT IMMEDIATE PRECEDING YEAR OF THE ASSESSEE HAD NOT BEEN SCRUTIN IZED U/S 143(3) OF THE ACT. THUS, THERE IS NO PAST HISTORY IN THE CASE OF ASSESSEE. THE INCOME FROM THE SALE AT RS. 2,15,000/- AND MACHINER Y RENT AT RS. 2.81 LACS HAS BEEN ASSESSED AS INCOME FROM OTHER SOURCES BY THE LD ASSESSING OFFICER. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD ALLOWED THE APPEAL PARTLY BY OBSERVING AS UNDER:- 2.2 THE APPELLANT HAS FURNISHED A DETAILED REPLY RE GARDING THE DEFECTS POINTED OUT BY THE ASSESSING OFFICER IN THE BOOKS OF ACCOUNTS. HOWEVER, HE HAS NOT BEEN ABLE TO SPECIF ICALLY ADDRESS THE DEFECTS POINTED OUT BY THE ASSESSING OF FICER. I AGREE WITH THE ASSESSING OFFICER THAT THE CORRECTNES S AND THE COMPLETENESS OF THE ACCOUNTS OF ASSESSEE IS NOT SATISFACTORY AND THEREFORE, THE ACTION OF THE ASSES SING OFFICER IN REJECTING THE BOOKS OF ACCOUNTS U/S 145( 3) IS UPHELD. 8 ITA NO. 851 & 856/JP/2014 DCIT VS RAJ KUMAR GUPTA 2.4 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSES SMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE ASSE SSING OFFICER HAS STATED THAT PAST HISTORY OF THE ASSESSE E IS NOT RELEVANT SINCE THE CASE WAS NOT TAKEN UP FOR SCRUTIN Y. THE APPELLANT HAS SUBMITTED A COPY OF THE ORDER U/S 143 (3) FOR A.Y. 2008-09, IN WHICH THE NET PROFIT HAS BEEN ESTI MATED AT 5.5.% OF THE GROSS CONTRACT RECEIPTS BEFORE DEPR ECIATION AND INTEREST EXPENSE. IN MY VIEW, THE PAST HISTORY O F THE ASSESSEE IS A GOOD INDICATOR TO ESTIMATE THE NET PR OFIT. THEREFORE, THE NET PROFIT FOR THIS YEAR IS ESTIMATED AT 5.5.% OF THE GROSS CONTRACT RECEIPTS (OF RS. 7,30,2 4,506/-) BEFORE DEPRECIATION AND INTEREST. HENCE, THE ADDITI ON MADE BY THE ASSESSING OFFICER IS RESTRICTED ACCORDI NGLY AND THE BALANCE AMOUNT IS DIRECTED TO BE DELETED. TH ESE GROUNDS ARE PARTLY ALLOWED. 4. NOW THE REVENUE AS WELL AS THE ASSESSEE ARE IN APP EALS BEFORE US. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE LD ASSESSING OFFICER AND ARGUED THAT THE ASSESSING OFFICER HAS R EASONABLY APPLIED THE NP RATE @ 8% AFTER CONSIDERING THE VARIOUS COMPARABL E CASES AS WELL AS LEGAL POSITION ON THIS ISSUE. 5. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS SUB MITTED THAT THE ASSESSEE KEPT ALL VOUCHERS AND DOCUMENTS AND HAS RE GULAR BOOKS OF ACCOUNT SUCH AS CASH BOOK, LEDGER, BANK BOOKS ETC. AND AUDIT HAD BEEN 9 ITA NO. 851 & 856/JP/2014 DCIT VS RAJ KUMAR GUPTA CONDUCTED U/S 44AB OF THE ACT. ALL BOOKS AND VOUCHE RS WERE PRODUCED ON TIME TO TIME BASIS TO LD ASSESSING OFFICER. THE A SSESSEE HAD DULY APPLIED WITH ALL NOTICES AND SUBMITTED ALL THE DETAI LS AND DOCUMENTS AS REQUIRED BY HIM. HE HAS DRAWN OUR ATTENTION ON PAPER BOOK PAGE NO. 36 TO 44 TO PROVE THAT ALL THE REQUIRED DETAILS WERE FU RNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HE FURTHER ARGUED THAT STEEL PRICE HAD BEEN INCREASED MORE THAN THE BSR SCHEDULE RATES IN SPITE OF ALL CLARIFICATIONS. THE LD ASSESSING OFFICER HAD WRONGLY REJECTED THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT AND APPLIED NP RATE @ 8%. THE LD ASSESSING OFFICER EXAMINED THE STEEL PURCHASED WITH REFERENCE TO SIGNBOARDS AND GANTRY SIGNAGE. THE LD AR FURTHER SUB MITTED THAT THE ASSESSEE HAD NOT RECEIVED CONTRACT IN NUMBER OF SIG NBOARDS AND GANTRY SIGNAGE. THE NUMBER OF SIGNBOARDS MADE FROM THESE QU ANTITIES OF STEEL, RETRO REFLECTED SHEETS ARE DIFFERENT FOR DIFFERENT WORK ORDERS, THEREFORE, THE ASSESSEE COULD NOT BE ABLE TO MATCH THE STEEL P URCHASED WITH THE NUMBER OF SIGNBOARDS AND GANTRY SIGNAGE. THE ASSESSE E ALSO SHOWN RECEIPTS ON THE BASIS OF CONTRACT NOT ON THE BASIS OF NUMBER OF SIGNBOARDS AND GANTRY SIGNAGE. HE HAS DRAWN OUR ATTE NTION ON PAGE NO. 48 TO 79 OF THE PAPER BOOK TO CORRELATE THE QUANTIT Y OF STEEL PURCHASED AND NUMBER OF SIGNBOARDS AND GANTRY SIGNAGE WERE FAB RICATED. THE 10 ITA NO. 851 & 856/JP/2014 DCIT VS RAJ KUMAR GUPTA ASSESSEE PRODUCED LABOUR WAGES REGISTER BEFORE THE A SSESSING OFFICER. THE TOTAL COST IN PERCENTAGE WAS ABOUT 25 TO 35% DEPE NDING UPON WORK TO WORK. THE LD ASSESSING OFFICER ALSO VERIFIED THE COST OF TRANSPORTATION OF BAJRI/RETA AND IT IS FACT THAT COST OF TRANSPORT ATION OF BAJRI IS MUCH MORE THAN THE COST OF BAJRI, THEREFORE IT IS BUT NA TURAL TO INCUR EXPENSES ON TRANSPORTATION MORE THAN BAJRI PURCHASED. THE CLO SING STOCK OF RAW MATERIAL WAS TAKEN ON THE BASIS OF ONLY MATERIAL REM AINED AT THE SITE. THE LABOUR REGISTER WAS MAINTAINED AT THE HEAD OFFICE . THERE IS NO PRACTICE IN THE LINE OF BUSINESS THAT LABOUR REGIST ER IS TO BE MADE ON THE BASIS OF SITE WISE, WHICH IS ALSO NOT PRACTICABLE TO THE ASSESSEE. THUS, THERE WAS NO BASIS FOR REJECTING THE BOOK RESULT U/S 145(3) OF THE ACT. FURTHER THE LD ASSESSING OFFICER CONSIDERED THE RII CO, SAWAI MADHOPUR CONTRACT AWARDED TO THE ASSESSEE @ 10.62% ABOVE THE B SR AND 8.62% ABOVE THE G-SCHEDULE. HE ARGUED THAT THE PRICE OF T HE RAW MATERIAL HAS GONE UP MANY TIMES COMPARED TO F.Y. 2002-03 AND 200 3-04. THE PRICE OF IRON STEEL ALSO GONE UP MORE THAN 10% ABOVE THE BSR RATE OF 2003 AND 2004. HE HAS DRAWN OUR ATTENTION A COMPARATIVE C HART PREPARED FOR THE YEAR 2002-03 AND 2003-04 TO THE YEAR UNDER CONS IDERATION. THE ASSESSEES OWN CASE FOR A.Y. 2008-09 HAD BEEN ASSES SED U/S 143(3) OF THE ACT WHEREIN THE LD ASSESSING OFFICER ESTIMATED N P RATE @ 5.5% 11 ITA NO. 851 & 856/JP/2014 DCIT VS RAJ KUMAR GUPTA BEFORE DEPRECIATION AND INTEREST EXPENSES. SO THAT THERE IS A PAST HISTORY OF THE ASSESSEE. THE LD ASSESSING OFFICER CANNOT APP LY NP RATE @ 8% WITHOUT CONSIDERING THE PAST HISTORY OF THE ASSESSEE . HE HAS DRAWN OUR ATTENTION ON NP DISCLOSED FROM A.Y. 2006-07 TO 2009 -10 AND EVEN IN SUBSEQUENT YEAR UP TO A.Y. 2015-16 AND ARGUED THAT THE NP RATIO AFTER ADDING DEPRECIATION, INTEREST AND SALES TAX AS PER HON'BLE HIGH COURT ORDER AND AS PER PREVIOUS OWN ORDER, IT WAS 4.73% NP . THE ALLEGATION OF THE LD ASSESSING OFFICER THAT THE ASSESSEE WAS NOT H AVING ANY DETAILS OF OPENING AND CLOSING BALANCE AS THE ASSESSEE HAS SUB MITTED ALL THE RELEVANT RECORDS DURING THE COURSE OF ASSESSMENT PR OCEEDINGS. THERE WAS NO LEGAL AGREEMENT BETWEEN THE SUB CONTRACTOR. IT IS ON MUTUAL UNDERSTANDING BETWEEN THEM. SUB CONTRACT IS AN ESSE NTIAL PART OF THE BUSINESS. THE LD AR HAS DRAWN OUR ATTENTION ON FINDIN GS GIVEN BY THE ASSESSING OFFICER ON DEFICIENCY FOUND IN THE BOOKS OF ACCOUNT, SAMPLE WORKING AND NP RATE APPLIED. HE HAS FURTHER RELIED O N THE FOLLOWING CASE LAWS:- (I) YOG RAJ SONI VS ACIT (2007) 108 TTJ 0912. (II) ACIT VS D.M. BROTHRS (2010) 044 DTR 0013. (III) ACIT VS ITD CEMENTATION INDIA LTD. (ITA NO. 2 991 & 3669 (MUM) OF 2011 A.Y. 2004-05. (IV) CHANDIGARH TRIBUNAL (2010) 134 TTJ 0089. (V) PREM KUMAR VS. JCIT TAX WORLD VOL.NO. XXXV PAGE 283. 12 ITA NO. 851 & 856/JP/2014 DCIT VS RAJ KUMAR GUPTA THEREFORE, THE LD ASSESSING OFFICER WRONGLY REJECTED THE BOOK U/S 145(3) OF THE ACT AND APPLIED THE NP RATE AT HIGHER SIDE. HE FURTHER RELIED UPON THE VARIOUS CASES FOR REJECTION OF BOOKS OF ACCOUNT AND PRAYED TO ACCEPT THE ASSESSEES BOOK RESULT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. WHATE VER DEFICIENCY POINTED OUT BY THE ASSESSING OFFICER ARE SUFFICIENT TO REJECTION OF BOOKS OF ACCOUNT U/S 145(3) OF THE ACT. AS DISCUSSED ABOV E, WHICH HAS BEEN UPHELD BY THE LD CIT(A) ALSO. THE ASSESSEE HIMSELF A DMITTED THAT IN A.Y. 2008-09 THE ASSESSEES CASE HAS BEEN ASSESSED NP RA TE @ 5.5.% IN SCRUTINY, WHICH HAS NOT BEEN CHALLENGED BY THE ASSES SEE. THEREFORE, PAST HISTORY OF THE CASE SUGGESTS THAT THE NP RATE @ 5.5.% IS REASONABLE AS UPHELD BY THE LD CIT(A) BEFORE DEPRECIATION AND I NTEREST. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD CIT(A) AND REJECT THE A SSESSEES APPEAL ON REJECTION OF BOOKS OF ACCOUNT U/S 145(3) OF THE ACT AND NP RATE DISCLOSED BY THE ASSESSEE. IN THE RESULT, THE SOLE GROUND OF REVENUES APPEAL AND GROUND NO. 1 OF THE ASSESSEES APPEAL AR E DISMISSED. 7. THE GROUND NO. 2 OF THE ASSESSEES APPEAL IS AGAI NST NOT ALLOWING THE DEDUCTION OF SALES TAX FROM NP RATE. THE LD ASS ESSING OFFICER AS WELL 13 ITA NO. 851 & 856/JP/2014 DCIT VS RAJ KUMAR GUPTA AS THE LD CIT(A) HAD ALLOWED THE DEDUCTION OF DEPRECI ATION AND INTEREST WHEREAS THE ASSESSEE MADE GROUND BEFORE US TO ALLOW T HE DEDUCTION OF SALES TAX PAID FROM THE NP RATE. WE HAVE VERIFIED F ROM THE FORM NO. 35 AND FOUND THAT NO GROUND WAS RAISED REGARDING DEDUCT ION OF SALES TAX FROM THE NP RATE. IT IS NOT A TECHNICAL GROUND WHICH CAN BE RAISED BEFORE US. THE LD AR OF THE ASSESSEE SUBMITTED THAT THE HONBL E RAJASTHAN HIGH COURT IN THE CASE OF CIT VS BHAWAN VA PATH NIRM AN (BOHRA) & CO (2002) 258 ITR 431 (RAJ) WHEREIN FROM THE NET PROFIT, THE HON'BLE HIGH COURT ALLOWED THE DEDUCTION OF DEPRECIATION, INTERES T AND SALES TAX. THEREFORE, HE ARGUED TO ALLOW THE SALES TAX FROM THE NP. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND ARGUED THAT IN PAST, NO S UCH DEDUCTION HAD BEEN CLAIMED BY THE ASSESSEE AND ALLOWED BY THE ASS ESSING OFFICER, AS SUCH THERE IS NO PAST HISTORY ON THIS POINT IN THE ASSESSEES CASE. THE CASE LAW REFERRED BY THE ASSESSEE ARE NOT SQUARELY A PPLICABLE ON THE FACTS OF THE CASE. THE ASSESSEE ALSO NOT RAISED THI S ISSUE BEFORE THE LOWER AUTHORITIES, THEREFORE, THIS GROUND MAY PLEASE BE DISMISSED. AFTER CONSIDERING BOTH THE SIDES, WE DO NOT FIND AN Y MERIT IN THE CASE OF ASSESSEE, AS SUCH NO CLAIM HAS BEEN MADE BE FORE THE LOWER 14 ITA NO. 851 & 856/JP/2014 DCIT VS RAJ KUMAR GUPTA AUTHORITIES AND THERE IS ALSO NO PAST HISTORY IN TH E CASE OF ASSESSEE. THE CASE LAWS RELIED UPON BY THE ASSESSEE IS ALSO NOT SQ UARELY APPLICABLE. ACCORDINGLY, WE DISMISS THE APPEAL OF ASSESSEE ON TH IS GROUND. 8. GROUND NO. 3 OF THE ASSESSEES APPEAL IS AGAINST CONFIRMING THE ADDITION OF RS. 4,96,000/-, WHICH INCLUDES SALES AN D RENT OF MACHINE UNDER THE HEAD INCOME FROM OTHER SOURCES INSTEAD OF BUSINESS INCOME AND NOT ALLOWED THE RELATED EXPENSES FROM THE INCOME OF OTHER SOURCES. THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE ALREADY CLAIMED AND DEBITED EXPENSES INCURRED ON INCOME EARNED FROM THE SALE OR RENT OF MACHINERY AS A PART OF NORMAL BUSINESS OPERATION. H E FURTHER RELIED ON THE ORDER OF THE HONBLE RAJASTHAN HIGH COURT IN TH E CASE OF G.K. CONTRACTOR (2009) 19 DTR 305 (RAJ) WHEREIN IT HAS BE EN HELD THAT WHEN NP RATE HAS BEEN APPLIED IN THE CASE OF ASSESSEE BY THE ASSESSING OFFICER NO SEPARATE ADDITION CAN BE MADE. THE SCRAP GENERATED FROM THE MACHINES WAS BUSINESS INCOME, THEREFORE, THE INCOME ASSESSED FROM THE SALE AND RENT UNDER THE HEAD INCOME FROM OTHER SOURCES IS NOT JUSTIFIED. 9. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF T HE LD ASSESSING OFFICER. 15 ITA NO. 851 & 856/JP/2014 DCIT VS RAJ KUMAR GUPTA 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE NA TURE OF RECEIPTS IS FROM THE SCRAP SALE AND RENTAL INCOME FROM THE MACH INES, WHICH COMES UNDER THE HEAD INCOME FROM OTHER SOURCES. THE LD AR HAS NOT SUBSTANTIATED ANY ADDITIONAL EXPENDITURE INCURRED O N MACHINERY, WHICH HAS NOT BEEN DEBITED IN THE P&L ACCOUNT. IT MEANS T HE ASSESSEE ALREADY DEBITED THE EXPENSES FOR EARNING THIS INCOME. THEREF ORE, WE UPHOLD THE ORDER OF THE LD CIT(A), ACCORDINGLY, ON THIS GROUND , THE APPEAL OF THE ASSESSEE IS DISMISSED. 11. IN THE RESULT, APPEALS OF REVENUE AS WELL AS APP EAL OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/04/2016. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 28 TH APRIL, 2016 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE DCIT, CIRCLE-6, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- SHRI RAJ KUMAR GUPTA, JAIPUR. 3. VK;DJ VK;QDR @ CIT 16 ITA NO. 851 & 856/JP/2014 DCIT VS RAJ KUMAR GUPTA 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.851 & 856/JP/201) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR