2012-VIL-952-ITAT-

Income Tax Appellate Tribunal AMRITSAR.

I.T.A. No.59(ASr)/2012

Date: 05.06.2012

SHRI MOHAN SINGH CONTRACTOR

Vs

THE INCOME TAX OFFICER,

Appellant By:Sh. P.N. Arora, Advocate
Respondent By:Sh. Amrik Chand, DR

BENCH

Sh. H.S. Sidhu, Judicial Member And Sh. B.P.Jain, Accountant Member

JUDGMENT

PER BENCH:

This appeal of the assessee arises from the order of the CIT(A), Amritsar, dated 06.01.2012 for the assessment year 2008-09.

2. The assessee has raised following grounds of appeal:

“1. That the assessment order as well as the order of the Ld. CIT(A), Amritsar are both against the facts of the case & untenable in law.

2. That the A.O. has grossly erred in making an addition of Rs. 5,12,239/- by taking estimated profit @ 8% on gross receipts and the Ld. CIT(A) has grossly erred in confirming the same.

The addition confirmed by the Ld. CIT(A), is not called for and the addition made may be deleted.

3. That the authorities below did not appreciate that the books of accounts were duly maintained in the course of business and the same were duly audited by the Chartered Accountant and all the expenses were fully vouched and there was no reason for rejecting the books of accounts without pin pointing out any defect in the account books maintained by the assessee. As such, the Ld. CIT(A) was not justified in confirming the order of the AO and as such the addition confirmed by the ld. CIT(A) deserves to be deleted.

4. That the Ld. CIT(A), did not appreciate that the books of accounts were duly maintained and they were fully supported by vouchers maintained by the assessee. The authorities below have not pointed out any omission or commission and no defects whatsoever either in the purchases or sales have been pointed out by them and the books of accounts are duly maintained and no defect whatsoever was ever pointed out by the AO except general rejection. Thus, the books of accounts cannot be rejected and the addition confirmed by the ld. CIT(A), may be deleted. Alternatively, the addition is very high & excessive.

5. Any other ground of appeal which may be urged at the time of hearing of the appeal.”

3. The brief facts of the case are that the assessee is engaged in the business of civil construction such as sewerage, water supply system etc. The assessee had declared a Net Profit rate of 3.60% as compared to 3.87% in the immediately preceding year. The contract receipts declared during the year were Rs. 1,01,22,137/- as compared to Rs. 1,32,26,714/- in the immediate preceding year. With regard to fall in the Net profit rate, it was explained that the decrease is due to old age of the assessee. The assessee produced the vouchers but there was hardly any receipt which was self made. No wages register/muster roll were produced by the assessee. The assessee was not maintaining stock register. The AO rejected the books of account and applied Net Profit rate of 8% following the decision of the Hon’ble Punjab & Haryana High Court, in the case of CIT, Hissar vs. Prabhat Kumar Contractor, Sirsa, in ITA No.293 of 2008 dated 14.11.2008 and made the addition of Rs. 5,12,239/-.

4. On appeal, the Ld. CIT(A), confirmed the action of the Assessing Officer.

5. We have heard the rival contentions and perused the facts of the case. There is no dispute to the fact that the assessee was not maintaining stock register. The vouchers, most of them which are self made. Wages registers were not produced. Therefore, submissions of the ld. counsel for the assessee, Mr. P.N. Arora are that whatever details required by the AO have been produced before the AO and no defect in the same has been pointed out, can not help the assessee., since the facts remained that the assessee has not maintained stock register. The assessee has not produced wages register and have maintained the payment vouchers which are without any receipts and are self made vouchers. In such facts and circumstances of the case, the results declared by the assessee are not reliable and the books of account cannot be said to be complete and correct and correct income cannot be deduced from such books of account. Therefore, we find no infirmity in the order of the ld. CIT(A), who has rightly invoked the provisions of section 145(3) of the Act.

5.1. As regards the estimation of income, the AO has applied Net Profit rate of 8% and has relied upon the decision of the Hon’ble Punjab & Haryana High Court, in the case of CIT, Hissar vs. Prabhat Kumar Contractor, Sirsa, in ITA No.293 of 2008 dated 14.11.2008. The AO has not brought out the facts on record of the case of CIT, Hissar vs. Prabhat Kumar Contractor, Sirsa (supra), as to how the facts in that case are identical to the facts of the present case. The assessee has been declaring Net Profit rate of 3.87% in the preceding year at a turnover of Rs. 1,32,26,714/-, which has been accepted by the department There is no dispute to this fact. Keeping in view the past history of the present case of the assessee and facts and circumstances of the present case a Net Profit rate of 5% if applied to the contract receipts declared by the assessee will meet both ends of justice. The AO is directed to act accordingly. The orders of both the authorities below are modified accordingly. Thus, the grounds of the assessee are partly allowed.

6. In the result, the appeal of the assessee in ITA No.59(Asr)/2012 is partly allowed.

Order pronounced in the open court on 5th June, 2012.

 

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