Income Tax Appellate Tribunal - Rajkot
Assistant Commissioner Of Income Tax, ... vs Shanti Construction Co.,, Junagadh on 24 November, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
RAJKOT BENCH, RAJKOT
[Conducted through E-Court at Ahmedabad]
(BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER
& SHRI S.S. GODARA, JUDICIAL MEMBER)
ITA. No: 419/Rjt/2013 & C.O. No. 07/Rjt/14
(Assessment Year: 2009-10)
The A.C.I.T., Circle-1, V/S M/s. Shanti Construction
Junagadh Co. 112, Shridhar Nagar,
Nr. Triveni Appt., B/h. Lal
Baug, Junagadh
PAN No. AAHFS4630F
M/s. Shanti Construction V/S
Co. 112, Shridhar Nagar, The A.C.I.T., Circle-1,
Nr. Triveni Appt., B/h. Lal Junagadh
Baug, Junagadh
PAN No. AAHFS4630F
(Appellant) (Respondent)
ITA. Nos: 618 & 619/Rjt/2014 &
C.O. Nos. 08 & 09/Rjt/14
(Assessment Year: 2010-11 & 2011-12)
The A.C.I.T., Circle-1, V/S M/s. Shanti Structure Pvt.
Junagadh Ltd. 112, Shridhar Nagar,
Nr. Triveni Appt., B/h. Lal
Baug, Junagadh
PAN No. AANCS5661D
M/s. Shanti Construction V/S
Co. 112, Shridhar Nagar, The A.C.I.T., Circle-1,
Nr. Triveni Appt., B/h. Lal Junagadh
Baug, Junagadh
2 ITA Nos. 419/Rjt/13, 618 & 619/Rjt/14
& C.O. No. 07/Rjt 2014, 08 & 09/Rjt/15
A.Ys. 2009-10 to 2011-12
PAN No. AANCS5661D
(Appellant) (Respondent)
Appellant by : Shri C. S. Anjaria, D.R.
Respondent by : Shri Vimal Desai, C.A.
(आदे श)/ORDER
Date of hearing : 21 -11-2016
Date of Pronouncement : 24 -11-2016
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:
1. ITA Nos. 419/Rjt/2013, 618/Rjt/2014 & 619/Rjt/2014 are appeals by the Revenue in respect of two different assessees directed against the separate orders of ld. CIT(A)-IV, Rajkot and C.O. Nos. 07/Rjt/14, 08/Rjt/2015 & 09/Rjt/2015 are cross objections of the Assessee preferred against the very same order of the ld. CIT(A).
2. All these appeals were heard together as they involved common issues and are disposed of by this common order for the sake of convenience.
3. At the very outset, the ld. D.R. stated that facts in underlined issues are identical in all the impugned appeals. Therefore, we have heard the ld. D.R. on the facts of ITA No. 419/Rjt/2013 pertaining to A.Y. 2009-10.
4. Assessee is in the business of Civil Construction being a Government Contractor. During the course of the scrutiny assessment proceedings and 3 ITA Nos. 419/Rjt/13, 618 & 619/Rjt/14 & C.O. No. 07/Rjt 2014, 08 & 09/Rjt/15 A.Ys. 2009-10 to 2011-12 the A.O. noticed that the assessee has not maintained certain supplementary books of accounts namely stock movement register, Logbook for vehicles, separate labour payment register. The A.O. also noticed that the assessee has purchased from unregistered dealers. The A.O. observed that even the work-in-progress has been valued on estimation basis.
5. Invoking the provisions of section 145(3) of the Act, the A.O. rejected the books of accounts and estimated the profit of the assessee as under:-
(a) 5% of contract receipts as sub-contract
(b) 8% of the contract receipts as main contractor
(c) 3% of the balance contract receipts for which assessee got the work done on contract basis from others and completed the assessment by making the impugned additions.
6. Assessee strongly agitated the matter before the ld. CIT(A) and strongly contended that in the books of civil contracts, it is impracticable to maintain quantitative details or stock register due to large number of items having small values at different sites. It was further contended that in the Tax Audit Report quantitative details are to be given in respect of manufacturing and trading concerns only. It was brought to the notice of the ld. CIT(A) that maintaining books, according to the A.O., is not only impracticable but also makes apportionment of common expenditure complex and unmanageable. Non-maintenance of Logbooks for vehicles would not justify the rejection of the books of accounts.
4 ITA Nos. 419/Rjt/13, 618 & 619/Rjt/14& C.O. No. 07/Rjt 2014, 08 & 09/Rjt/15 A.Ys. 2009-10 to 2011-12
7. After considering the facts and the submissions, the ld. CIT(A) observed that the quantum of URD purchases is marginal. The ld. CIT(A) further observed that the yardstick of section 44AD is expressly not applicable to the cases where receipts exceed Rs. 40 lacs, and there is no basis whatsoever for assumption of net profit in case of sub-contracted work and work executed as sub-contractor.
8. Drawing support from the findings given by the A.O. in A.Y. 2008-09, wherein a lump sum addition of Rs. 1.50 lacs was made, the ld. CIT(A) was convinced that a lump sum addition of Rs. 3 lacs would be appropriate in the given facts and circumstances of the case and accordingly directed the A.O. to restrict the addition to the extent of Rs. 3 lacs only.
9. Aggrieved by this, the Department is in appeal before us and the assessee has preferred cross objection.
10.The ld. D.R. strongly supported the findings of the A.O. Ld. counsel for the assessee reiterated what has been stated before the lower authorities.
11.We have given a thoughtful consideration to the orders of the authorities below. Provisions of section 145(3) are applicable when the Assessing Officer was not satisfied about the correctness or completeness of the accounts of the assessee or when the method of accounting have not been regularly followed by the assessee. Only then the A.O. may make an assessment in the manner provided in Section 144 of the Act. A perusal of 5 ITA Nos. 419/Rjt/13, 618 & 619/Rjt/14 & C.O. No. 07/Rjt 2014, 08 & 09/Rjt/15 A.Ys. 2009-10 to 2011-12 the impugned assessment order shows that nowhere the Assessing Officer has doubted the correctness or completeness of the accounts of the assessee. Merely because due to practical difficulty in the line of business, the assessee could not provide the stock movement register or vehicle log register would not ipso facto justify the action of the A.O. We further find that the A.O. has made a passing remark in respect of purchases made from unregistered dealers but has nowhere pointed out how the cost of the materials purchased appear to him to be inflated. The A.O. has also failed to bring on comparable cases to justify his method of estimation of profit. In our considered opinion, the approach of the Assessee Officer is not only erroneous but also against the facts of the case, keeping in mind the nature of business of the assessee. We, therefore, have no hesitation to say that there is no error or infirmity in the findings of the ld. CIT(A). Appeal filed by the Revenue is dismissed.
12.Since the lump-sum addition confirmed by the ld. CIT(A) would meet the ends of justice, we do not find any merit in the cross objections of the assessee. Accordingly, cross objections are also dismissed.
Order pronounced in Open Court on 24 - 11- 2016.
Sd/- Sd/-
(S. S. GODARA) True Copy (N. K. BILLAIYA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad Dated: /11/2016
Rajesh
Copy of the Order forwarded to:-