Shri Pappu Ram Vishnoi, JODHPUR V. Addl. CIT, JODHPUR

ITA 97/JODH/2013

• Counselvise Citation: 9723314 RSA 2013
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-10-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 01-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Rejection of books of accounts; Depreciation; Opportunity of being heard
• Section: 144

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 97/JODH/2013 (A.Y. 2009-10) PAPPU RAM VISHNOI VS ADDL. CIT, RANGE-1, M/S DARA CONSTRUCTION CO., JODHPUR. C/O. M/S. R.P. MUNDRA & CO., OUT SIDE SIWANCHI GATE, JODHPUR. PAN NO. ADCPR8034L (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAJENDRA JAIN. DEPARTMENT BY : SH. N.A. JOSHI- DR. DATE OF HEARING : 17/10/2013. DATE OF PRONOUNCEMENT : 18/10/2013. O R D E R PER HARI OM MARATHA, J.M. : THIS APPEAL OF THE ASSESSEE FOR A.Y. 2009-10 IS DI RECTED AGAINST THE ORDER OF LD. CIT(A), JODHPUR DATED 24/01/2012. 2. THE SOLE GROUND PRESSED FOR HEARING IS GROUND NO . (1) AS OUT OF THE TOTAL THREE GROUNDS TAKEN IN APPEAL GROUND NO. (2) WAS NOT PRESSED 2 BY LD. A.R. (SEE ORDER SHEET ENTRY) AND GROUND NO. 3 AND 4 DO NOT REQUIRE SPECIFIC ADJUDICATION BEING SIMPLY FORMAL I N NATURE. 2.1 FACTS APROPOS THE ONLY SURVIVING GROUND NO. (1) ARE THAT THE ASSESSEE CARRIED ON THE WORK OF A CIVIL CONTRACTOR AS PROPRIETOR OF M/S. DARA CONSTRUCTION CO., JODHPUR. FOR A.Y. 2009-10 HE FILED RETURN OF INCOME (ROI) ON 07/09/2010 DECLARING TOTAL INCOME O F RS. 1,08,64,330/-. THIS ROI WAS PROCESSED U/S 143(1) OF I.T. ACT, 1961 (THE ACT FOR SHORT) ON 31/12/2009. THE CASE WAS S ELECTED FOR SCRUTINY AND CASS AND DURING REGULAR ASSESSMENT PROCEEDINGS IT WAS NOTICED, INTER ALIA, THAT THE ASSESSEE HAS SHOWN TOTAL GROSS RECEIPTS FROM CIVIL CONTRACT BUSINESS AT RS. 27,05,64,150/-. AGAINST TH E ABOVE RECEIPT FOLLOWING EXPENSES HAVE BEEN SHOWN :- (I) ON ACCOUNT OF MATERIAL PURCHASED : RS. 10,21,82,897 /-. (II) ON ACCOUNT OF LABOUR : RS. 15,56,24,630/-. (III) OTHER EXPENSES : RS. 74,41,476/- (LIKE PETROL, DIESEL). THUS, TOTAL NET PROFIT HAS BEEN SHOWN AT RS. 1,08,6 4,329/-. THE ASSESSEE VIDE LETTER DATED 12/09/2011 WAS REQUIRED TO PRODUCE THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS TO PROVE THE ABOVE EXPENSES. WHEN, THE A.O. DID NOT RECEIVE ANY COMPLIANCE FROM ASSESSEES SIDE HE 3 WAS LEFT WITH NO OPTION BUT TO REJECT THE BOOKS U/S 145(3) AND TO MAKE A BEST POSSIBLE ASSESSMENT U/S 144 OF THE ACT BY MA KING ESTIMATION OF NET PROFIT BY ADOPTING RATE OF 12.50% OF THE GROSS RECEIPTS, WHICH HAS CAME TO RS. 3,38,20,519/-. THE N.P. RATE OF 12.50% IS SUBJECT TO DEPRECIATION AND INTEREST PAID TO THIRD PARTIES. TH E ASSESSEE HAS CLAIMED TOTAL DEPRECIATION OF RS. 10,43,684/- AND A .O. HAS ALLOWED ONLY RS. 8,29,446/- AFTER DISALLOWING RS. 2,14,238/ - WHEN THE ASSESSEE DID NOT PRODUCE PROOF OF NEW PLANT AND MACHINERY SH OWN TO HAVE BEEN PURCHASED DURING THIS YEAR AT RS. 23,96,126/- QUA W HICH DEPRECIATION OF RS. 2,14,238/- HAS BEEN CLAIMED. AFTER REDUCING ALLOWABLE DEPRECIATION OF RS. 8,29,446/-, THE A.O. HAS MADE T OTAL TRADING ADDITION OF RS. 2,21,25,744/-. 2.2 AGGRIEVED BY THE ABOVE ADDITION, THE ASSESSEE F ILED FIRST APPEAL BEFORE LD. CIT(A) WHO HAS ALLOWED A PART RELIEF. HE HAS UPHELD THE REJECTION OF THE BOOKS OF ACCOUNTS AND HAS ALSO UPH ELD THE ASSESSMENT MADE U/S 144 OF THE ACT. AS HE HAS FOUND THAT THE A .O. HAD GIVEN AMPLE OPPORTUNITY OF BEING HEARD BUT THESE WERE NOT AVAILED BY THE ASSESSEE. HOWEVER, THE LD. CIT(A) HAS ADOPTED A N.P . RATE OF 7.5% SUBJECT TO SALARY AND INTEREST PAID TO PARTNERS, DE PRECIATION AND INTEREST PAID TO THIRD PARTIES. 4 2.3 BEFORE US THE APPELLANT HAS NOT CHALLENGED THE FINDING REGARDING THE REJECTION OF BOOKS OF ACCOUNTS. IT WOULD BE WOR TH TO REPRODUCE GROUND NO. (1) OF THIS APPEAL WHICH READS AS UNDER :- THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN SUSTAINING THE NP RATE OF 7.50% SUBJECT TO DEPRECIATION AND INTEREST TO THIRD PARTIES ON TOTAL WORK RECEIPT AS AGAINST THE NP RATE OF 12.50% APPLIED BY A.O. 2.4 WE HAVE HEARD RIVAL SUBMISSION AND HAVE CAREFUL LY PERUSED THE ENTIRE RECORD. THE ASSESSEE IS AGGRIEVED BY THE ADO PTION OF N.P. RATE OF 7.50% SUBJECT TO OTHER BENEFITS AS MENTIONED ABOVE. THE LD. A.R. HAS ARGUED THAT IT IS ALRIGHT IF THE BOOKS ARE REJECTED IN THE GIVEN SCENARIO OF THIS CASE BUT THE MAIN PLANK OF HIS ARGUMENT IS THAT EVEN AFTER REJECTION OF THE BOOKS OF ACCOUNTS IT IS TRITE THAT THE PAST HISTORY OF THE ASSESSEE IS A GOOD GUIDANCE FOR PICKING A JUSTIFIAB LE RATE OF PROFIT. ACCORDING TO HIM IN THE IMMEDIATELY PAST ASSESSMENT YEAR, THE N.P. RATE DECLARED BY THE ASSESSEE WAS 5.01% AFTER CONSI DERING DEPRECIATION ETC. THE LD. A.R. HAS PRODUCED A WRITTEN SUBMISSION DEPICTING SUCH A COMPARISON IN THESE A.YS. NAMELY, 2007-08, 2008-09 AND 2009-10. WITH THE HELP OF VARIOUS DECISIONS IT HAS BEEN ARGUED TH AT THE N.P. RATE IN THIS YEAR BEING BETTER TO THE LAST YEAR NO TRADING ADDITION IS JUSTIFIED. THE LD. A.R. HAS ALSO PLACED LIST / NAMES OF SUCH C ASES ALONGWITH A COPY 5 OF ONE OF THE ORDERS OF JODHPUR APPELLATE TRIBUNAL. ON THE OTHER HAND LD. D.R. HAS SUPPORTED THE ORDER OF LD. CIT(A) 2.5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. IT IS WELL SETTLED POSITION OF LAW THAT WHEN THE BOOKS ARE REJECTED AND THE TRADING RESULTS ARE BETTER IN THIS YEAR THAN THE RESULTS OF EARLIER A.Y, THEN NO FURTH ER ADDITION CAN BE MADE. THE FACT THAT THE TRADING RESULTS OF THE YEA RS ARE AS UNDER: PARTICULARS A.Y. 2009-10 A.Y. 2008-09 A.Y. 2007-08 GROSS CONTRACT RECEIPTS 27,05,64,150 20,08,04,319 / - 6,82,42,864/ - ABSOLUTE NET PROFIT DECLARED 1,08,64,329 / - 77,09,858 / - 25,71,210/ - ABSOLUTE NET PROFIT RATE 04.02% 03.84% 03.77% INTEREST TO THIRD PARTIES 19,55,006 / - 16,42,893/ - 6,49,005/ - DEPRECIATION 10,43,684/ - 9,35,947/ - 7,75,808/ - NET PROFIT BEFORE TO CLAIM OF REMUNERATION, INTEREST TO PARTNERS, INTEREST TO THIRD PARTY AND 1,38,63,019/ - 1,02,88,698/ - 39,96,023/ - RATE OF NET PROFIT 05.12% 05.01% 05.86% 6 THEREFORE, IN VIEW OF THE ABOVE FACTS, WE CANNOT AP PROVE THE IMPUGNED TRADING ADDITION. THE ENTIRE TRADING ADDI TION DESERVES TO BE DELETED. WE ORDER DELETION OF THE ENTIRE TRADING A DDITION. ACCORDINGLY, WE ALLOW GROUND NO. 1 OF ASSESSEES AP PEAL. 3. GROUND NO 2 HAS NOT BEEN PRESSED BY THE LD. A.R. THEREFORE, THIS GROUND IS DISMISSED. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH OCTOBER, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18 TH OCTOBER, 2013 VL 7 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT BY ORDER 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR