ACIT, Kurukshetra V. The Fatehpur Dhiman Co-op L &C Society Ltd., Kaithal

ITA 991/CHANDI/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73508 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 28-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.991 /CHD/2012 ASSESSMENT YEAR : 2009-10 THE A.C.I.T., VS. THE FATEHPUR DHIMAN CO-OP. CIRCLE KURUKSHETRA. L & C SOCIETY LTD., CHHATRAVAS ROAD, KAITHAL. PAN: AAAAF0462G AND C.O.NO.43/CHD/2012 ARISING OUT OF ITA NO.991/CHD/2012 ASSESSMENT YEAR : 2009-10 THE FATEHPUR DHIMAN CO-OP. VS. THE A.C.I.T., L & C SOCIETY LTD., CIRCLE KURUKSHETRA. CHHATRAVAS ROAD, KAITHAL. PAN: AAAAF0462G (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI J.S.NAGAR, DR DATE OF HEARING : 04.03.2014 DATE OF PRONOUNCEMENT : 06.03.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX (APPEALS), KARNAL DATED 31.07.2012 RELATING TO ASSESSMENT YEAR 2009-10 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE ASSESSEE HAS FILED CROSS OBJECTIONS AGAINST THE APPEALS FILED BY THE R EVENUE. 2 2. THE APPEAL OF THE REVENUE AND THE CROSS OBJECTIO NS FILED BY THE ASSESSEE WERE TAKEN UP TOGETHER AND ARE BEING DISPO SED OFF BY THIS CONSOLIDATED OR FOR THE SAKE OF CONVENIENCE. 3. THE NOTICE OF HEARING HAD BEEN SENT TO THE DECLA RED ADDRESS OF THE ASSESSEE BY REGISTERED POST AND THE SAME HAS BEEN R ETURNED BY THE POSTAL AUTHORITIES WITH THE REMARKS THAT DESPITE SEVERAL VISITS THE WHEREABOUTS OF THE RECIPIENT WERE NOT KNOWN . HOWEVER, WE FIND THAT THE ASSESSEE HAD FAILED TO GIVEN ANY ALTERNATE ADDRESS FOR COMMU NICATION AND AS THE ASSESSEE HAD FAILED TO APPEAR BEFORE US, WE DISMISS THE CROSS OBJECTIONS FILED BY THE ASSESSEE IN LIMINE. 4. NOW COMING TO THE MERITS OF THE ADDITION MADE BY THE ASSESSING OFFICER BY ESTIMATING THE INCOME OF THE ASSESSEE @ 12%. THE FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD NOT MAINTAINED COMPLETE DATA IN RESPECT OF ITS CONTRACT BUSINESS AND AS SUC H THE BOOKS OF ACCOUNT WERE REJECTED BY THE ASSESSING OFFICER AND THE BUSI NESS INCOME WAS WORKED OUT BY APPLYING NP RATE OF 12%. 5. THE CIT (APPEALS) ON THE OTHER HAND, APPLIED THE NET PROFIT RATE OF 8% TO ASSESS THE BUSINESS INCOME IN THE HANDS OF TH E ASSESSEE. 6. THE REVENUE IS AGITATED BY THE SAME AND HAS RAIS ED FOLLOWING GROUND OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN LAW IN DIRECTING THE AO TO WORK OUT THE INCOME AT NET PROFIT OF 8% INSTEAD OF RATE APPLIED BY THE AO @ 12% IN VIEW OF JURISDICTI ONAL HIGH COURTS ORDER IN THE CASE OF PRABHAT KUMAR CONTRACTOR OF SIRSA VS . CIT (323 ITR 675) WHICH IS BINDING UPON THE AO. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E RECORD. WE FIND THAT SIMILAR ISSUE OF ADOPTION OF NET PROFIT RATE T O DETERMINE THE INCOME IN THE HANDS OF THE ASSESSEE, WHERE THE BOOKS OF AC COUNT HAD BEEN 3 REJECTED, AROSE BEFORE THE TRIBUNAL IN SHRI SUKHWIN DER SINGH VS. ITO. THE TRIBUNAL IN SUKHWINDER SINGH VS. JCIT, KURUKSHE TRA IN ITA NO.1461/CHD/2010 VIDE DATED 24.11.2011 HELD AS UNDE R : 10. THE SECOND ISSUE TO BE ADDRESSED IN THE CASE I S THE APPLICATION OF NP RATIO. THE TRIBUNAL (SUPRA) IN A SSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2005-06 HAD DI RECTED THE APPLICATION OF NET PROFIT RATE OF 1.08% TO THE GROSS RECEIPTS OF RS.3.22 CRORES IN COMPARISON TO NET PRO FIT RATE OF 6.5% TO THE TOTAL RECEIPTS APPLIED BY THE ASSESSING OFFICER. THE CIT (A) DURING THE YEAR UNDER CONSIDERATION HAD REJECTED THE CLAIM OF THE ASSESSEE IN VIEW OF THE R ATIO LAID DOWN BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN CIT VS. M/S PRABHAT KUMAR CONTRACTOR (SUPRA) WHEREIN TH E RATE OF PROFIT @ 12% WAS APPLIED BY THE HONBLE COURT. 11. THE ASSESSEE IS A ROAD CONTRACTOR AND NOT CIVIL CONTRACTOR AS IN THE CASE BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT. THE ASSESSEE HAD DISCLOSED THE INCOME FOR THE YEAR UNDER CONSIDERATION AT NET PROFIT RATE OF 1.20% AND THE A SSESSING OFFICER FOR COMPUTING THE INCOME OF THE YEAR HAD AP PLIED NET PROFIT RATE OF 6.5%. THE BASIS FOR THE APPLICATION OF THE SAID NET PROFIT RATE BY THE ASSESSING OFFICER WAS SIMILAR RA TE APPLIED IN ASSESSMENT YEAR 2005-06 AND THE CIT (A) HAD PLACED RELIANCE TO THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ANOTHER CONTRACTOR IN CIT VS. PARBHA T KUMAR CONTRACTOR (SUPRA). THE CIT (A) HAD APPLIED NET P ROFIT RATE OF 6.5% IN VIEW OF THE RATE APPLIED BY THE HON'BLE PUN JAB & HARYANA HIGH COURT. IN THE FACTS OF THE CASE BEFO RE THE HON'BLE PUNJAB & HARYANA HIGH COURT, THE REASONS FOR THE AP PLICATION OF THE SAID RATE WAS THE UN-VERIFIABILITY OF THE WAGES CLAIMED AS EXPENDITURE. THERE IS NO MERIT IN THE STAND OF TH E CIT (A) THAT IN CASE OF CONTRACTORS, HIGHER RATE TO GROSS RECEIPTS IS TO BE APPLIED IN ALL CASES IN VIEW OF RATIO LAID DOWN IN CIT VS. PRABHAT KUMAR, CONTRACTOR (SUPRA). WE FIND THAT THE HON'BLE PUNJAB & HARYANA HIGH COURT IN RAJA RAM CONTRACTORS VS. CIT IN ITA NO. 689 OF 2009, DATE OF DECISION 7.4.2010, HAS UPHELD APPLICA TION OF NET PROFIT RATE OF 10% AS NET PROFIT RATE. IT HAS BEEN FURTHER LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT THAT WHERE THE BOOKS OF ACCOUNT HAVE BEEN REJECTED, THE ESTIMATION OF INCOME BY APPLYING OF FLAT RATE INHERENTLY INVOLVES AN ELEMEN T OF SUBJECTIVITY. 8. IN THE ENTIRETY OF THE ABOVESAID FACTS AND CIRCUMST ANCES, WE UPHOLD THE ORDER OF THE CIT (APPEALS) IN COMPUTING THE INC OME IN THE HANDS OF THE ASSESSEE BY APPLYING NET PROFIT RATE OF 8% TO THE G ROSS RECEIPTS. THE 4 GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED . 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED AND THE CROSS OBJECTIONS FILED BY ASSESSEE ARE ALSO DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 6 TH DAY OF MARCH, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 6 TH MARCH, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH