DEPUTY COMMISSIONER OF INCOME TAX, SRINAGAR vs. M/S. CONSTRUCTION ENGINEERS, SRINAGAR

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER ANDSH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A.No. 382/Asr/2010 Assessment Year: 2007-08 M/s Construction Engineers, 54, Vs. DCIT-Central Circle, Industrial Estate, Barzulla Jammu. Srinagar. [PAN: AABFC7715P] (Appellant) (Respendent)

I.T.A.No. 495/Asr/2010 Assessment Year: 2007-08 DCIT-Central Circle, Vs. M/s Construction Jammu. Engineers, 54, Industrial Estate, Barzulla Srinagar. [PAN: AABFC7715P] (Appellant) (Respendent)

Appellant by Sh. M.A. Mir, AR Respondent by Ms. Priyanka Singla, Sr. DR.

Date of Hearing 26.12.2022 Date of Pronouncement 31.01.2023 ORDER Per Anikesh Banerjee, JM: The cross appeal of the assessee and revenue are challenged against the order of the ld. Commissioner of Income Tax (Appeals), Bathinda, [in brevity the

I.T.A.Nos. 495 & 382/Asr/2010 2 Assessment Year: 2007-08

CIT(A)], bearing Appeal No. 163/09-10 date of order 28.06.2010 order passed u/s

250(6) of the Income Tax Act 1961, (in brevity the Act) for A.Y. 2007-08. The

impugned order was originated from the order of the ld. Addl. Commissioner of

Income Tax, Range-3, Sringar, Jammu.

by the ITAT, Amritsar Bench. In the factual matrix of the cases is that the

assessee& revenue for A.Y. 2007-08 had challenged the order of the ld. CIT(A)

before the ITAT, Amritsar Bench. The relevant paragraph of the order of the

Bench dated 30/12/2019 is extracted as follows:- “2. The factual matrix of the case in hand is that the assessee for Asst. Year:2007-08 had declared an income of Rs.2,30,64,265/- by filing the return of income on dated 29/03/2008. Thereafter, the return was revised on dated 31/03/2008 by declaring the income of Rs.2,52,17,900/-. During the year under consideration, the assessee had shown gross contract receipts of Rs.45,32,03,843/- in the original return and Rs.46,23,06,595/- in the revised return of income and total net profit of Rs.2,52,17,900/- on the basis of net profit rate @ 5.08%

I.T.A.Nos. 495 & 382/Asr/2010 3 Assessment Year: 2007-08

as declared by the assessee. The Assessing Officer did not agree with the net profit rate applied by the assessee and ultimately estimated the net profit rate @ 10.5% which was challenged before the Ld. CIT(A) by the assessee. The Assessing Officer reduced the net profit rate from 10.5% to 10%, against which, the Assessee as well as the Revenue Department preferred separate appeals under consideration. The Co- ordinate Bench vide its order dated 11.05.2012 decided both the appeals and applied net profit rate @ 7% on the gross contract receipts declared by the assessee minus interest on fixed deposits and other receipts. The Hon'ble Co-ordinate Bench also affirmed the view of the Ld. CIT(A) to the effect that the Ld. CIT(A) has rightly treated the firm as a AOP and has disallowed the interest and salary to partners and the interest income has rightly been treated as income from other sources. The Hon’ble Co-ordinate Bench also held that amount of Rs.6,69,340/- has been duly reflected in the books of account. Once having applied the net profit rate, no addition can be made on account of creditors declared by the assessee. Consequently, the Hon’ble Co-ordinate Bench deleted the addition of Rs.6,69,340/-.” The grievance of the revenue is that the said order dated 30/12/2019 of ITAT was

not considered the direction of the Hon’able Jurisdictional High Court and the

revenue had filed miscellaneous application before the bench against the said order

I.T.A.Nos. 495 & 382/Asr/2010 4 Assessment Year: 2007-08

of ITAT. The Bench has passed a speaking order in relation to dispose ofthe

application of revenue. The relevant paragraphs of the order of bench dated

20/12/2022 is extracted as below:-

“2. Tersely, we advert the fact of the case is that the ITAT, Amritsar Bench has passed the

order on 30/12/2019 by adjudicating the net profit @ 7% on gross contract receipts declared by the assessee. The revenue had filed an appeal before the Hon’ble Jammu & Kashmir High Court at Srinagar bearing ITA No. 04/2012 date of order 05.06.2017. The Hon’ble High Court had passed the order with direction to remand back the orders of ITAT, Amritsar Bench bearing ITA No. 495/Asr/2010 & 382/Asr/2010, bothfor A.Y. 2007-08 and date of order 02.07.2013. The revenue has agitated the issue before the ITAT, Amritsar Bench through miscellaneous application that the bench had passed the order without considering the net profit rate not less than 9% as directed by the Hon’ble Jurisdictional High Court. The application is filed before the Bench for further adjudication. The assessee was called for hearing,but none was present on behalf of the assessee. An adjournment application was filed by the counsel of the assessee. Considering the nature of dispute and the fact of the case, we proceed to dispose the application of the revenue after hearing the learned Sr. DR on the basis of material available on the record. The adjournment application is rejected & the matter is taken for hearing.

I.T.A.Nos. 495 & 382/Asr/2010 5 Assessment Year: 2007-08

3.1 The ld. Sr. DR further argued and pointed out the para no. 8 of order of Hon’ble Apex Court which is extracted as below: “8. Consequently, we set-aside the finding of the Tribunal to the effect that the net profit rate should be 7%. The matter is remitted to the Tribunal to ascertain the appropriate net profit rate which must not be less than 9% which was admitted by the assessee itself.”

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record. The bench is only adjudicating the specific point related ratio of net profit.

The ld. counsel for the assessee has vehemently argued and tried to place that the

AO had taken a different view with ld. CIT(A) after considering the order of the

ITAT. The ITAT has passed the reasonable order to maintain the net profit ratio @

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7%. The ld. Sr. DR had only relied on the order of the Hon’able Jurisdictional

High Court& argued that the Hon’able Jurisdictional High Court is binding on the

ITAT.

We respectfully consider the order of the Hon’able Jurisdictional High Court.

The relevant paragraph of the order of Hon’ableJammu & Kashmir High Court

at Srinagar, bearing ITA No. 04/2012 date of order 05.06.2017 is extracted as

follows: -

“8. Consequently, we set-aside the finding of the Tribunal to the effect that the net profit rate should be 7%. The matter is remitted to the Tribunal to ascertain the appropriate net profit rate which must not be less than 9% which was admitted by the assessee itself.”

The assessee is eligible for net profit @ 9% with interest and salary to partners and

depreciation to be allowed be considered. Here, we are not taking any other views

but only to respectfully follow the order of the Jurisdictional High Court which is

binding on us. The matter is set aside to the ld. CIT(A) for re-compute the income

of the assessee as per direction of the ITAT. Needless to say, the assessee should

I.T.A.Nos. 495 & 382/Asr/2010 8 Assessment Year: 2007-08

get reasonable opportunity of hearing for substantiate its claim.We order

accordingly.

495/Asr/2010 are allowed for statistical purposes.

Order pronounced in the open court on 31.01.2023 Sd/- Sd/- (Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member

Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T.