Income Tax Appellate Tribunal - Agra
M/S Shri Siddheshwar Engineers India P ... vs Acit 5, Firozabad on 13 March, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AGRA (SMC) BENCH: AGRA
BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER
I.T.A No. 160/Agra/2015
(ASSESSMENT YEAR-2010-11)
M/s Sri Siddheshwar Engineers Vs.. ACIT- 5,
India Pvt. Ltd 886 Takia Azad Firozabad.
Gaan, Etawah.
PAN No.AAKCS2824B
(Assessee) (Revenue)
I.T.A No. 120/Agra/2016
(ASSESSMENT YEAR-2012-13)
M/s Sri Siddheshwar Engineers Vs.. DCIT- 5,
India Pvt. Ltd 886 Takia Azad Firozabad.
Gaan, Etawah.
PAN No.AAKCS2824B
(Assessee) (Revenue)
Assessee by Shri Anurag Sinha, AR.
Revenue by Shri Waseem Arshad, Sr.DR.
Date of Hearing 06.02.2018
Date of Pronouncement 13.03.2018
ORDER
I.T.A No. 160/Agra/2015
This is assessee's appeal for assessment year 2010-11, taking the following grounds:
I.T.A No. 160/Agra/20152 I.T.A No. 120/Agra/2016
"1. Because the order appealed against is bad in fact and in law.
2. Because the learned C.I.T. (Appeal) has fixed the N.P. (Net Profit) rate at 3% instead of 2.86% as shown by the appellant.
3. Because the learned C.I.T. (Appeal) has not considered the written submissions made before him in correct perspective.
4. Because the increase in Net Profit rate from 2.86% to 3% is erroneous, arbitrary, and unlawful, and instead on based on some relevant materials it is based on whims and fancies of the authority.
5. Because the precedent set by Jurisdictional Allahabad High Court in the case of 'Commissioner of Income Tax & Others Vs PNC Construction Company Limited' has been completely ignored by the learned C.I.T. (Appeal) while fixing N.P rate at 3% instead of 2.86 %.
6. Because the Supreme Court in the case of State of Orissa Vs Maharaja Sri B.P. Deo reported in AIR 1970 (S.C.) 670 has held that the assessment must be based on some relevant material. It is not a power that can be exercised under the sweet will and pleasure of the concerned I.T.A No. 160/Agra/2015 3 I.T.A No. 120/Agra/2016 authorities. In the present case fixing N.P @ 3% has no basis.
7. Because the act of increasing N.P rate by learned C.I.T is ad-hoc, and there is no relevant material to corroborate such increase in N.P rate."
2. The AO, after rejecting the assessee's books of account, applied a net profit rate of 3.5% on the gross receipts of Rs.11,27,43,678/-, computing the net profit earned by the assessee at Rs.38,46,029/- as against the net profit declared at Rs.30,37,080/-, at the rate of 2.87%. Addition of Rs.9,08,949/- was thus made. The ld. CIT(A) decreased the net profit to 3%, reducing the addition to Rs.3,45,230/-. The assessee is in appeal.
3. Heard. The net profit rate of the earlier the present and subsequent years, as given at page 4 of the impugned order, is as under:
A.Y. Turnover NP Rate
2009-10 96676910/- 1.98% u/s 143(1)
2010-11 12743678/- 2.86%
2011-12 27201 35807- 3. 12% u/s 143(1) 2012-13 5336768667- 2.62% u/s 143(3) 2013-14 2646963407- 2.68% u/s 143(1) I.T.A No. 160/Agra/2015 4 I.T.A No. 120/Agra/2016
4. The average net profit rate comes to 2.65%. The assessee is a private limited company and so, the provisions of section 44AD of the IT Act are not applicable.
5. In accordance with, amongst others, 'CIT and others vs. M/s PNC Construction Company Ltd.', (ITA No.118 of 2010) (All), i.e., the Jurisdictional High Court, the past history needs to be followed in such cases.
6. As such, the net profit rate of 2.65% is directed to be applied and the addition is directed to be reduced accordingly. I.T.A No. 120/Agra/2016
7. This is assessee's appeal for assessment year 2012-13, taking the following grounds:
"1. Because the order appealed against is bad in fact and in law.
2. Because the learned C.I.T. (Appeal) has fixed the N.P (Net Profit) rate at 3% instead of 2.86% as shown by the appellant.
3. Because the learned C.I.T. (Appeal) has not considered the written submissions made before him in correct perspective.
4. Because the increase in Net Profit rate from 2.86% to 3% is erroneous, arbitrary, and unlawful, and instead on I.T.A No. 160/Agra/2015 5 I.T.A No. 120/Agra/2016 based on some relevant materials it is based on whims and fancies of the authority.
5. Because the precedent set by Jurisdictional Allahabad High Court in the case of 'Commissioner of Income Tax & Others Vs PNC Construction Company Limited' has been completely ignored by the learned C.I.T. (Appeal) while fixing N.P rate at 3% instead of 2.86 % and also ignored the I.T.A.T Bench-E, New Delhi decision in the case of Mehta Construction Company Vs ITO.
6. Because the Supreme Court in the case of State of Orissa Vs Maharaja Sri B.P, Deo reported in AIR 1970 (S.C.) 670 has held that the assessment must be based on some relevant material. It is not a power that can be exercised under the sweet will and pleasure of the concerned authorities. In the present case fixing N.P @ 3% has no basis.
7. Because the act of increasing N.P rate by learned C.I.T is ad-hoc, and there is no relevant material to corroborate such increase in N.P rate."
8. In this year, the AO applied net profit rate of 3%, whereas the assessee had shown it at 2.64%. The ld. CIT(A) confirmed the assessment order. I.T.A No. 160/Agra/2015 6 I.T.A No. 120/Agra/2016
9. Facts being the same, considering the assessee's past history, as for A.Y. 2010-11, the AO is directed to apply a net profit rate of 2.65% and the addition is directed to be reduced suitably.
10. In the result, both the appeals are allowed. Order pronounced in the open court on13/03/2018.
Sd/-
(A.D. JAIN) JUDICIAL MEMBER Dated 13/03/2018 *AKV* Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT ASSISTANT REGISTRAR