DCIT, Jaipur V. M/S RISHABH CONSTRUCTION PVT. LTD., Jaipur

ITA 855/JPR/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7836 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 08-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 144

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JAIPUR BENCH JAIPUR BEFORE SHRI SHAILEND RA K UMAR YADAV, JUDICIAL MEMBER, AND SHRI B. C. MEENA , ACCOUNTANT MEMBER . ITA.NO. 855 /JP /20 1 2 (ASSESSMENT YEAR: 200 9 - 1 0 ) DCIT, CIRCLE - 5, JAIPUR APPELLA NT VS. M/S. RISHABH CONSTRUCTION PVT. LTD., S - 53 - 54, SHOPPING CENTRE, JANTA COLONY, JAIPUR RESPONDENT PAN: A A BCR0445E / BY APPELLANT : SHRI KAILASH MANGAL , D.R. / BY RESPONDENT : SHRI P. C. PARWAL, A.R. / DATE OF HEARING : 04 .1 2 .2014 / DATE OF PRONOUNCEMENT : 05 .1 2 .2014 I.T .A. NO. 855 / JP /2 0 1 2 A.Y. 200 9 - 1 0 ( D C IT VS. M/S RISHABH CONST. P. LTD. ) PAGE 2 ORDER PER SHAILENDRA KUMAR YADAV, J . M: THIS APPEAL HAS BEEN FILED BY THE REVENU E AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - II , JAIPUR , DATED 2 9 . 0 8 .201 2 FOR A.Y. 200 9 - 1 0 ON THE FOLLOWING GROUND: ON THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE AND IN LAW THE LD. CIT(APPEALS) HAS ERRED IN: - ( I ) DIRECTING TO ALLOW DEPRECIATION OF RS.29,65,596/ - AND FINANCIAL EXPENSES OF RS.1,23,49,966/ - FROM THE NET PROFIT RATE @ 8% ON CONTRACT RECEIPT APPLIED BY THE AO. 2. ASSESSING OFFICER D ISALLOWED DEPRECIATION OF RS.29,65,596/ - AND FINANCIAL EXPENSES OF RS.1,23,49,996/ - FROM NET PROFIT RATE @ 8% ON CONTRACT RECEIPT APPLIED BY ASSESSING OFFICER. IN APPEAL, CIT(A) DELETED ADDITION IN QUESTION. 3. SAME HAS BEEN OPPOSED BEFORE US ON BEHALF O F REVENUE, INTER ALIA, STATING THAT CIT(A) WAS NOT JUSTIFIED IN DIRECTING TO ALLOW DEPRECIATION OF RS. 29,65,596/ - AND FINANCIAL EXPENSES OF RS. 1,23,49,996/ - FROM NET PROFIT RATE @ 8% ON CONTRACT RECEIPT APPLIED BY ASSESSING OFFICER. ON OTHER HAND, LD. A UTHORIZED REPRESENTATIVE SUPPORTED THE ORDER OF CIT(A). I.T .A. NO. 855 / JP /2 0 1 2 A.Y. 200 9 - 1 0 ( D C IT VS. M/S RISHABH CONST. P. LTD. ) PAGE 3 4. AFTER GOING THROUGH RIVAL SUBMISSION AND MATERIAL ON RECORD, WE FIND THAT IN EARLIER YEAR, TRIBUNAL HAS UPHELD THE REJECTION OF BOOKS OF ACCOUNT IN CASE OF ASSESSEE STATING THAT ASSESSEE HAS NOT M AINTAINED STOCK REGISTER, DAY TO DAY CONSUMPTION RECORDS AND STOCK WAS VALUED ON ESTIMATED BASIS. ALL CONSTRUCTION EXPENSES I.E. HIRE CHARGES, LABOUR CHARGES AND WAGES, TRANSPORTATION EXPENSES, TRACTOR AND TRUCK EXPENSES WERE INCURRED THROUGH KACCHA BILLS AND THERE EXPENSES WERE NOT VERIFIABLE. SO, HAVING REJECTED THE BOOKS OF ACCOUNT, TRIBUNAL GRANTED RELIEF IN ASSESSEE S OWN CASE FOR A.Y. 2006 - 07 AND DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER: AFTER CONSIDERING THE RIVAL CONTENTION S AND ON PERUSAL OF THE MATERIALS A VAILABLE ON RECORD, WE ARE OF T HE VIEW THAT THE CONTENT ON THE LD DR THAT THE AO HAS NOT APPLIED SECTION 145(3) AND NOTHING HAS BEEN MENTIONED BY THE AO IN THE ASSESSMENT ORDER IN THIS REGARD IS NOT ACCEPTABLE FOR THE REA SON THAT THE AO HAS IMPLIEDLY INVOKED THE PROVISIONS OF SECTION 145(3) BY MAKING HEAD - WISE DISALLOWANCE. WE ALSO NOTED THAT NATURE OF THE ACTIVITY OF THE ASSESSEE IS SUCH THAT PROPER SUPPORTING VOUCHERS/BILLS OF ALL THE EXPEN SE S ARE NOT POSSIBLE. THE AO HAS MADE THE LUMP - SUM DISALLOWANCE TO THE EXTENT OF RS.1.60 LAKHS WITHOUT ANY BASIS OR WITHOUT MAKING ANY REFERENCE OF COMPARABLE CASES. THE AO HAS COMPLETELY DISREGARDED THE PROVISIONS OF SECTION 144 WHILE MAKING DISALLOWANCE OF VARIOUS EXPENDITURE CLAIM ED BY THE ASSESSEE. FROM THE ASSESSMENT ORDER, IT IS APPARENT THAT AFTER REJECTION OF BOOKS OF ACCOUNT, THE AO HAS ARBITRARILY AND WITHOUT CONSIDERING PAST HISTORY OF THE ASSESSEE MADE LUMP - SUM DISALLOWANCE AT A VERY HIGH FIGURE. HE COMPLETELY IGNORED TH E PAST HISTORY OF THE ASSESSEE S OWN CASE WHICH IS APPARENT FROM YEAR - WISE DETAILS IN THE I.T .A. NO. 855 / JP /2 0 1 2 A.Y. 200 9 - 1 0 ( D C IT VS. M/S RISHABH CONST. P. LTD. ) PAGE 4 FORMAT GIVEN IN TABLE IN THE FOREGOING PARAGRAPH. IT IS A SETTLED LAW THAT THE PAST HISTORY IS THE BEST GUIDE FOR APPLICATION OF NET PROFIT RATE AND THIS HAS BEEN HE LD BY THIS VERY BENCH IN ASSESSEE S OWN CASE IN DIFFERENT ASSESSMENT YEARS MENTIONED ABOVE. THE LD DR HAS ALSO FURNISHED THE COPY OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2007 - 08 IN ASSESSEE S OWN CASE PERTAINING TO SUBSEQUENT YEAR WHEREIN THE AO O N THE SAME FACTS WHERE THE EXPENSES WERE NOT VOUCHED ASSESSED THE INCOME OF THE ASSESSEE BY APPLYING THE NET PROFIT RATE OF 8%. THUS WHEN IN PAST AND IN SUBSEQUENT ASSESSMENT YEAR, THE INCOME IS ASSESSED BY THE AO BY APPLYING THE NET PROFIT RATE, THEN THE RE IS NO REASON TO DEVIATE FROM SETTLED HISTORY OF THE CASE. THE DECISION OF THIS VERY BENCH IN THE CASE OF COLLECTOR RAM SHARMA, SUPRA AFTER RELYING UPON DECISION OF JURISDICTIONAL HIGH COURT DELETED THE ADDITION. HOWEVER, VARIOUS CASES RELIED UPON BY T HE LD DR ARE NOT SUPPORTING THE STAND TAKEN BY THE LD DR BECAUSE OF DIFFERENT FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, IN VIEW OF THE ABOVE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD CIT(A) WHO HAS RIGHTLY APPLIED 8% NET PROFIT RATE BEFORE INTERE ST AND FINANCIAL EXPENSES IN THE TOTAL CONTRACT RECEIPTS. THUS THE APPEAL OF THE REVENUE IS DISMISSED. FOLLOWING THE SAME,CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW DEPRECIATION OF RS.29,65,596/ - AND FINANCIAL EXPENSES OF RS.1,23,49,996/ - FROM ESTI MATED PROFIT @ 8% ON CONTRACT RECEIPTS SUBJECT TO THE CONDITION THAT ASSESSED INCOME SHOULD NOT BE LOWER THAN THE RETURNED INCOME. THE DEDUCTION ON ACCOUNT OF DEPRECIATION/FINANCIAL EXPENSES FROM ESTIMATED PROFITS IS ALSO FORTIFIED BY THE DECISION OF HON BLE RAJASTHAN HIGH COURT IN CASE OF SHRI RAM JHANWAR LAL VS. ITO (321 ITR 400). NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLEDGE. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONING, CIT(A) I.T .A. NO. 855 / JP /2 0 1 2 A.Y. 200 9 - 1 0 ( D C IT VS. M/S RISHABH CONST. P. LTD. ) PAGE 5 WAS JUSTIFIED IN ALLOWING THE APPEAL OF ASSESSEE. WE UPHOLD THE SAME. 5 . AS A RESULT, APPEAL FILED BY THE REVENU E IS DISMISSE D . PRONOUNCED IN THE OPEN COURT ON THIS THE 5 TH DAY OF DECEMBER , 2014. SD/ - SD/ - ( B. C. MEENA ) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY S.K.SINHA COPY FORWARDED TO: 1. THE APPELLANT - D CIT, CIRCLE - 5 , JAIPUR 2. THE RESPONDENT - M/S RISHABH CONSTRUCTION P. LTD. 3. THE CIT 4. CIT(APPEALS) 5. THE DR 6. GUARD FILE (ITA NO. 855 /JP/ 201 2 ) BY ORDER A.R., JAIPUR.