M/S SAT KARTAR MINING & ALLIED SERVICES P. LTD., BILASPUR(CG) V. JCIT, RANGE 2, BILASPUR(CG)

ITA 86/BIL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2583 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 01-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V B SARGAR
• Assessee Lawyers: G S AGRAWAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.86/RPR/2015 ASSESSMENT YEAR : 2010-11 SAT KARTAR MINING & ALLIED SERVICES PVT. LTD., B-78, SHANTI NAGAR, AMERI ROAD, P.O. BILASPUR, BILASPUR (CG). VS. JCIT, RANGE- 2, BILASPUR (CG). PAN : AAKCS8152Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G. S. AGRAWAL, CA DEPARTMENT BY : SHRI V. B. SARGAR, DR DATE OF HEARING : 09-08-2018 DATE OF PRONOUNCEMENT : 17-08-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 23.03.2015 OF THE LD. CIT(A), BILASPUR (CG) RELATIN G TO ASSESSMENT YEAR 2010-11. 2. GROUND OF APPEAL NOS.1 AND 2 BY THE ASSESSEE REA DS AS UNDER :- 1. THAT UNDER THE FACTS & LAW, THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE OBSERVATION OF TH E LEARNED ASSESSING OFFICER THAT THE PROVISIONS OF SEC.145(3) WERE APPLICABLE FOR RE JECTION OF BOOK RESULTS AND ESTIMATING THE INCOME ON THE BASIS OF TURNOVER. PRAYED THAT PROVISIONS OF SEC.145(3) ARE NOT APPLI CABLE AND BOOK RESULTS BE ACCEPTED. 2. THAT UNDER THE FACTS & LAW, THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) FURTHER ERRED IN ESTIMATING THE NET PROFI T RATE AT 5% OF THE TURNOVER AS AGAINST 3.03% DECLARED BY THE APPELLANT, REJECTING THE EXPLANATION FILED. 2 ITA NO.86/RPR/2015 PRAYED TO ACCEPT THE BOOK RESULTS AND THE ADDITION BE DELETED. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PRIVATE LIMITED COMPANY ENGAGED IN TRANSPORT BUSINESS AND FILED ITS RETURN OF INCOME ON 30.09.2010 DECLARING TOTAL INCOME OF RS.27,25,030/- . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED THAT THE ASSESSEE HAS SHOWN GROSS RECEIPT FROM THE TRANSPORTING CONTRACTS AT RS.8,75,52,316/- AND HAS SHOWN NET PROFIT OF RS.26,27,611/- WHICH IS AROUND 3%. THIS ACCORDING TO HIM IS VERY MUCH ON THE LOWER SIDE AND THE ASSESSEE HAS GROSSLY INFLATED HIS VARIOUS EXPENSES LIKE TRANSPORTATION CHARGES, DIESEL & LUBR ICANT EXPENSES, SALARY & WAGES, REPAIR AND MAINTENANCE, ETC.. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT AND JUSTIFY THE VAR IOUS EXPENSES DEBITED IN PROFIT AND LOSS ACCOUNT. HE ALSO ISSUED SUMMONS TO ALL THE TRANSPORTERS AS PER ADDRESS GIVEN BY THE ASSESSEE. HOWEVER, THE REQUIS ITE INFORMATION IN THE SPECIFIED PERFORMA WAS NEITHER FURNISHED BY THE ASS ESSEE NOR ANY OF THE TRANSPORTERS AND THEY WERE NOT FOUND IN THE GIVEN A DDRESS ALSO AS PER THE REPORT OF THE INSPECTOR. AFTER CONSIDERING THE VARIOUS DE TAILS FURNISHED BY THE ASSESSEE AND OBSERVING THAT THERE ARE LOTS OF DISCREPANCIES IN BOOKS OF ACCOUNT, THE ASSESSING OFFICE REJECTED THE BOOK RESULTS AND ESTI MATED THE NET PROFIT AT 7% OF THE TOTAL CONTRACT RECEIPT. 3 ITA NO.86/RPR/2015 4. IN APPEAL, THE LD. CIT(A) WHILE UPHOLDING THE RE JECTION OF BOOKS RESULTS REDUCED SUCH NET PROFIT TO 5% OF THE TURNOVER. 5. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE NET PROFIT RATE ADOPTED BY THE LD. CIT(A) IS HIGHLY ARBITRARY AND NOT BASED ON THE PAST RESULTS. HE SUBMITTED THAT IN THE IMMEDIATELY PRECEDING ASSESSM ENT YEAR ON A TOTAL TURNOVER OF RS.4.54 CRORES, THE ASSESSEE HAD DECLARED NET PR OFIT OF RS.6.93 LAKHS WHICH COMES TO 1.5% AND AFTER CONSIDERING THE OTHER INCOM E THE NET PROFIT DECLARED DURING THAT YEAR WAS 1.8%. HE SUBMITTED THAT IN TH E ASSESSMENT YEAR 2008-09, THE ASSESSMENT ORDER WAS PASSED U/S 143(3) AND THE ASSESSING OFFICER HAD ACCEPTED THE BOOK RESULTS WITH NOMINAL ADDITION OF ONLY RS.70,000/-. REFERRING TO THE DECISION OF THE RAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF J. N. CONSTRUCTION VIDE ITA NO.270/RPR/2013 ORDER DATED 1 6.04.2018, HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE AND ACCEPTED THE BOOK RESULTS WHERE NET PR OFIT DECLARED BY THE ASSESSEE BEFORE REMUNERATION AND INTEREST TO PARTNERS WAS SH OWN AT 1.04%. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE LD. CIT (A) SHOULD BE SET-ASIDE AND THE PROFIT DECLARED BY THE ASSESSEE BE ACCEPTED. 4 ITA NO.86/RPR/2015 7. THE LD. DR ON THE OTHER HAND SUBMITTED THAT THE LD. CIT(A) HAS VERY REASONABLY REDUCED THE NET PROFIT FROM 7% TO 5% WHI CH UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE IS JUSTIFIED. HE SUBMITT ED THAT WHEN THE ASSESSEE WAS UNABLE TO JUSTIFY THE VARIOUS EXPENSES CLAIMED IN T HE PROFIT AND LOSS ACCOUNT BY PRODUCING PROPER BILLS AND VOUCHERS AND THE TRANSPO RTERS TO WHOM SUCH TRANSPORTATION CHARGE HAS BEEN PAID THE ASSESSEE CA NNOT CLAIM FURTHER RELIEF. 8. WE HAVE HEARD THE RIVAL ARGUMENTS MADE BY BOTH T HE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THE ASSE SSEE IN THE INSTANT CASE IS A TRANSPORT CONTRACTOR AND HAS DECLARED NET PROFIT OF RS.26,27,611/- ON THE TRANSPORT CONTRACT RECEIPT OF RS.8,75,52,361/-. TH E NET PROFIT SHOWN BY THE ASSESSEE COMES TO 3.03% WHICH WAS REJECTED BY THE A SSESSING OFFICER ON ACCOUNT OF VARIOUS DEFECTS IN THE BOOKS OF ACCOUNT PRODUCED BEFORE HIM AND THE ASSESSING OFFICER ESTIMATED THE NET PROFIT AT 7% BY REJECTING THE BOOK RESULTS. WE FIND LD. CIT(A) REDUCED SUCH NET PROFIT TO 5%. IT IS THE SUBMISSION LD. COUNSEL FOR THE ASSESSEE THAT IN THE PAST THE DEPAR TMENT HAS ACCEPTED THE BOOK RESULTS WITH MINOR DISALLOWANCE FOR ASSESSMENT YEAR 2008-09. FURTHER, IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, THE ASSESSEE HAD SHOWN 1.8% NET PROFIT AND THE SAME WAS ACCEPTED IN SUMMARY ASSESSMENT. I T IS ALSO THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN THE CASE O F J.N. CONSTRUCTION (SUPRA), THE 5 ITA NO.86/RPR/2015 TRIBUNAL HAS DIRECTED THE ASSESSING OFFICER TO ACCE PT THE BOOK RESULTS WITHOUT ANY FURTHER ADDITION WHERE THE PROFIT SHOWN BEFORE REMUNERATION AND INTEREST TO PARTNERS WAS SHOWN AT 1.04%. WE FIND SOME FORCE IN THE ABOVE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. IT IS AN ADMITTED FA CT THAT WHILE ESTIMATING THE NET PROFIT AT 7% THE ASSESSING OFFICER HAS NOT GIVEN AN Y COMPARABLE CASES. THE LD. CIT(A) WHILE DIRECTING THE ASSESSING OFFICER TO EST IMATE THE PROFIT AT 5% HAS ALSO NOT GIVEN ANY COMPARABLE CASES AND DISTINGUISH ED THE DECISION IN THE CASE OF G.N. CONSTRUCTION (SUPRA) CITED BEFORE HIM HOLDI NG THAT THE FACTS OF THAT CASE ARE DIFFERENT AND, THEREFORE, CANNOT BE A COMPARABL E CASE. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND KEEPING IN VI EW THE PAST RECORD OF THE ASSESSEE, WE ARE OF THE CONSIDERED OPINION THAT ADO PTION OF 3.2% NET PROFIT AS AGAINST 5% NET PROFIT ADOPTED BY THE LD. CIT(A) WIL L MEET THE ENDS OF JUSTICE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS OF APP EAL NOS.1 AND 2 BY THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. 9. GROUND NO.3 BY THE ASSESSEE READS AS UNDER :- 3. THAT UNDER THE FACTS & LAW, THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) FURTHER ERRED IN CONFIRMING THE DISALLOWA NCE OF RS.2,10,000/- U/S 40(A)(IA) RW SEC. 194I MADE BY THE LEARNED ASSESSING OFFICER NOT CONSIDERING THE DECISIONS OF VARIOUS BENCHES OF HONBLE TRIBUNALS INCLUDING THE JURISDICTIONAL TRIBUNAL AND ALSO REJECTING THE CERTIFICATE SIMILAR TO AS REFERRED IN SEC.201(1A) PROVISO. 6 ITA NO.86/RPR/2015 10. AFTER HEARING BOTH THE SIDES, WE FIND THE ASSES SEE HAS PAID RS.2,10,000/- AS HIRING CHARGES TO ONE SHRI DALJEET SINGH KALARA ON WHICH NO TDS WAS DEDUCTED FOR WHICH THE ASSESSING OFFICER DISALLOWED THE SAID AMOUNT U/S 40(A)(IA) OF THE I.T. ACT. THE LD. CIT(A) UPHELD T HE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAD LIABILI TY TO TAX DEDUCTED AT SOURCE ON PAYMENT MADE TO SHRI DALJEET SINGH KALARA AND, THER EFORE, ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DEDUCT TAX AT SOURCE , THE ASSESSING OFFICER WAS JUSTIFIED IN DISALLOWING THE EXPENDITURE. IT IS TH E SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN VIEW OF THE DECISION OF TH E HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P.) L TD. REPORTED IN 377 ITR 365 IF THE PAYEE HAS DECLARED SUCH AMOUNT IN HIS RE TURN OF INCOME AND PAID DUE TAX THEREON, NO DISALLOWANCE U/S 40(A)(IA) IS CALLE D FOR. HE, HOWEVER, AGREED THAT GIVEN AN OPPORTUNITY THE ASSESSEE IS IN A POSI TION TO FURNISH THE DETAILS SUBSTANTIATING THAT THE PAYEE HAS PAID THE TAXES DU E ON THIS AMOUNT. THE LD. DR WHILE SUPPORTING THE ORDER OF THE LD. CIT(A) HAS NO OBJECTION FOR RESTORING THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSEE TO SUBSTANTIATE SUCH CLAIM. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE, WE DEEM IT PROPER TO RESTO RE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE AN OPPOR TUNITY TO THE ASSESSEE TO 7 ITA NO.86/RPR/2015 SUBSTANTIATE WITH EVIDENCE TO HIS SATISFACTION THAT THE PAYEE HAS DECLARED THE AMOUNT AND PAID TAXES DUE THEREON. WE HOLD AND DIR ECT ACCORDINGLY. THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATIS TICAL PURPOSES. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH AUGUST, 2018. SD/- SD/- (SUCHITRA KAMBLE) (R. K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17-08-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., RAIPUR. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY ITAT, RAIPUR