Punjab-Haryana High Court
The Commissioner Of Income Tax-Ii vs M/S Amarjit Singh Bajwa on 14 March, 2013
Bench: Hemant Gupta, Ritu Bahri
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
I.T.A. No.10 of 2013 (O&M)
Date of Decision:14.03.2013
The Commissioner of Income Tax-II, Amritsar ...Appellant
Vs.
M/s Amarjit Singh Bajwa ...Respondent
CORAM:- HON'BLE MR. JUSTICE HEMANT GUPTA
HON'BLE MS. JUSTICE RITU BAHRI
Present:- Mr. Denesh Goyal, Advocate for the appellant.
HEMANT GUPTA, J.(Oral)
The present appeal under Section 260-A of the Income Tax Act, 1961 (for short, `the Act') arises out of an order dated 26.7.2012 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (for short, `the Tribunal') pertaining to assessment year 2006-2007. The revenue has claimed the following substantial questions of law:-
"1. Whether the Hon'ble ITAT is correct in law in upholding the order of the Ld. CIT (A) despite the fact that sufficient opportunities were given to the assessee by the Assessing Officer during the assessment proceedings.
2. Whether the Hon'ble ITAT was correct in law in confirming the order of the Ld. CIT(A) in deleting the additions of Rs.1,43,33,248/- on account of wages payable and Rs.68,000/- on account of salary payable, made by the A.O even when the identity, creditworthiness and the genuineness of the same could not be proved by the assessee?
3. Whether the Hon'ble ITAT was correct in law in confirming the order of the Ld. CIT(A) deleting the addition of I.T.A. No.10 of 2013 (O&M) -2- Rs.68,98,994/- made by the A.O on account of purchase of material even when the genuineness of the same could not be proved by the assessee which were duly proved by the A.O to be bogus and unverifiable.
4. Whether the Hon'ble ITAT was correct in law in confirming the order of the Ld CIT (A) even when the A.O was not allowed by the Ld. CIT(A) to represent the case on behalf of revenue?"
The said questions of law arise out of the fact that the assessee filed its return on 31.10.2006 declaring total income of Rs.27,07,570/-. The assessee is a civil contractor. Subsequently, the assessment case was taken up in scrutiny and the assessment was framed by the Assessing Officer making additions of Rs.1,43,33,248/- including a sum of Rs.68,98,494/- as bogus and unverified purchases. The Commissioner of Income Tax (Appeals), in an appeal filed by the assessee, vide an order dated 12.3.2009, accepted the appeal partly and applied 11% net profit rate on the contract receipts of Rs.4,49,17,526/-. The revenue and the assessee being aggrieved against the order, filed separate appeals before the Tribunal. The Tribunal accepted both the appeals on 5.6.2009 holding that the Assessing Officer has not rejected the books of account of the assessee and made the addition only on the basis of non-production of evidence supporting the claim of the assessee. The Tribunal found that the impugned order passed by the Commissioner of Income Tax (Appeals) is non-speaking order. Consequently, the appeals were accepted and the matter was remanded back to the Commissioner of Income Tax (Appeals) for fresh decision.
After remand, the Commissioner of Income Tax (Appeals) in its order dated 15.6.2010, considered the letter dated 1.4.2008 issued by I.T.A. No.10 of 2013 (O&M) -3- the Assessing Officer during the course of assessment proposed to reject the books of account and compute profit from contract business under Section 144 of the Act by applying net profit @ 8% of contract receipts. On the basis of the said letter, the Commissioner of Income Tax (Appeals) found that income is required to be estimated @ 8% of the contract receipts and the additions on any other issues cannot be made. It is the said order passed by the Commissioner of Income Tax (Appeals), which has been affirmed in appeal by the Tribunal.
Learned counsel for the appellant has vehemently argued that earlier Commissioner of Income Tax (Appeals) has applied 11% as net profit rate of the contract receipts but after remand, the Commissioner of Income Tax has applied 8% of the contract receipts as a net profit rate. It is pointed out that the communication of the Assessing Officer dated 1.4.2008 is only a proposal during the course of assessment proceedings and cannot be used against the revenue at the time of finalization of the assessment proceedings. It is contended that each assessment year is independent proceedings, therefore, the net profit rate applied in earlier years cannot be made basis to finalize assessment of year in question. Reliance is placed upon a judgment of this Court in Bandi Co-operative Labour and Construction Society v. Commissioner of Income Tax, [2008] 300 I.T.R. 107 (P&H) and a judgment of Rajasthan High Court in Commissioner of Income Tax v. Foss Electronic, [2003] 263 I.T.R. 125 (Raj.).
We have heard learned counsel for the appellant at length and find no merit in the present appeal. The Tribunal in the earlier appeal found that the books of account were not rejected by the Assessing Officer, I.T.A. No.10 of 2013 (O&M) -4- therefore, the best judgment assessment could not be framed by the Commissioner of Income Tax (Appeals). However, after remand, it has been found that in fact the Assessing Officer has proposed to reject the books of account and to compute income by applying net profit @ 8% of the contract receipts. Since the assessee has not maintained proper books reflecting the purchase of the material and the wages payable or paid, the revenue has no option but to frame best judgments assessment. It is not the case of the revenue that the assessee has not executed the work at all. In fact the order passed by the Assessing Officer shows the details of the work executed by the assessee.
Learned Tribunal has recorded a finding that the Assessing Officer in the following assessment year applied 8% net profit rate on contract receipt. There is no dispute to the argument that each of the assessment year is independent proceedings and the Assessing Officer is within its jurisdiction to frame assessment by applying net rate of profit which he found prudent. But if in the earlier assessment years as well as in the subsequent assessment year, a particular net profit rate has been applied, it is a prudent rate of income, which has been applied by the Commissioner of Income Tax (Appeals). Such finding cannot be said to give rise to any substantial question of law in the present appeal.
Dismissed.
( HEMANT GUPTA )
JUDGE
March 14, 2013 ( RITU BAHRI )
renu/Vimal JUDGE