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Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Before: DR. MANISH BORAD, HON’BLE & SHRI SONJOY SARMA, HON’BLE
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
I.T.A. No. 2514/Kol/2019 and I.T.A. No. 1605/Kol/2019 are cross-appeals directed against the order of the Learned Commissioner
2 Assessment Year: 2013-14 Assessment Year: 2013-14 Assessment Year: 2015-16 M/s. Dilip Kumar Das & Sons
of Income Tax (Appeals), Jalpaiguri (hereinafter the “ld. CIT(A)”) dt. 27/01/2017, passed u/s 250 of the Income Tax Act, 1961 (“the Act”) for the Assessment Year 2013-14. I.T.A. No. 2515/Kol/2019 is an appeal filed by the assessee directed against the order of the Learned Commissioner of Income Tax (Appeals), Jalpaiguri (hereinafter the “ld. CIT(A)”) dt. 30/01/2018, passed u/s 250 of the Income Tax Act, 1961 (“the Act”) for the Assessment Year 2015-16. 2. The Registry has pointed out that there is a delay of 145 days in filing of I.T.A. No. 2514/Kol/2019 and I.T.A. No. 2515/Kol/2019 by the assessee. Petition for condonation of delay is placed on record by the assessee explaining the reasons for late filing of appeal. On perusing the same, we are convinced that the assessee was prevented by sufficient cause from filing these appeals in time. Accordingly, we condone the delay and proceed to admit the appeals for hearing.
We first take up the cross-appeals for Assessment Year 2013-14. Facts in brief are that the assessee is a partnership firm engaged in the business of Civil contracts. Income of Rs.1,98,85,090/- declared in the return of income filed for Assessment Year 2013-14 on 28/09/2013. Subsequent to survey conducted u/s 133A of the Act at the business premises of the assessee on 31/07/2015, notice u/s 148 of the Act was issued and duly served followed by validly serving notice u/s 143(2)
3 Assessment Year: 2013-14 Assessment Year: 2013-14 Assessment Year: 2015-16 M/s. Dilip Kumar Das & Sons
and 142(1) of the Act. Assessment proceedings were carried out and various details as called for by the ld. Assessing Officer were submitted. During the year turnover of the assessee was Rs.29,03,76,782/- on which net profit declared @5.78%. The ld. Assessing Officer after going through the records observed certain discrepancies and made additions under various heads totaling to Rs.7,34,12,430/- assessing total income at Rs.9,32,97,520/- in the following manner:-
The assessee challenged the additions made by the ld. Assessing Officer before the ld. CIT(A) and made detailed submissions. After considering the same and also considering the order of his predecessor for the preceding years, estimated the net profit @8% instead of 5.79% show by the assessee and partly allowed the assessee’s appeal.
4 Assessment Year: 2013-14 Assessment Year: 2013-14 Assessment Year: 2015-16 M/s. Dilip Kumar Das & Sons
Aggrieved, both the assessee and the revenue are in appeal before this Tribunal.
At the outset, the ld. Counsel for the assessee submitted that similar issue came up for adjudication before this Tribunal in assessee’s own case for Assessment Year 2011-12 and 2014-15 wherein also books of accounts of the assessee were rejected and profits were estimated by the ld. CIT(A) @8%, however, Hon’ble Tribunal partly allowed the assessee’s appeal by estimating the net profit @6.75% on the contractual turnover. The ld. Counsel for the assessee prayed that for the year under appeal also, as against all the additions made by the Assessing Officer and partly allowed by the ld. CIT(A), the net profit may be estimated @6.75%.
On the other hand, the ld. D/R vehemently argued supporting the order of the ld. Assessing Officer.
We have heard rival contentions and perused the record placed before us. We notice that the assessee is a civil contractor has declared the net profit @5.79%. The ld. Assessing Officer had made additions under various heads but the ld. CIT(A) has observed that the books of accounts of the assessee deserves to be rejected and profits to be estimated @8%. We also notice that this Tribunal in the assessee’s own case for Assessment Year 2011-12 & 2014-15 has decided the similar issue and sustained the addition @6.75% by observing as follows:-
5 Assessment Year: 2013-14 Assessment Year: 2013-14 Assessment Year: 2015-16 M/s. Dilip Kumar Das & Sons
“3. Brief facts of the case is that the assessee is a Government Contractor performing civil jobs viz. construction of roads, culverts etc. in the remote areas of North Bengal including national and international border areas. The AO noted that for the Assessment Year 2011-12, the assessee firm has shown net profit of 5.48% from its contractual business. The AO noted that there was a survey on 31.07.2015 (i.e. AY 2016-17) conducted in the assessees premises and after issuing statutory notices, the assessment was carried out against the assessee. The AO noted that there was unexplained expenditure so, he made addition u/s 69C & on the basis of violation of section 40(a)(ia) and section 40A(3) for AY 2014-15 an amount of Rs. 54,57,223/- & Rs. 1,10,97,600/- was disallowed. Similarly for AY 2011-12 disallowance u/s 40A(3) Rs. 52,62,039/- was made. On appeal, the Ld. CIT(A) deleted the additions made u/s 69C, 40(a)(ia) & 40A(3) of the Act and thereafter rejected the books of accounts of the assessee and estimated income[NP] at 8% of the turnover. Aggrieved the assessee is before us.
We have heard both the parties and perused the records. We note that assessee is a civil contractor of the Government and is engaged in the construction of roads and other civil works in the border areas of the State/National & International borders. In the assessment year 2011-12 & 2014-15, the assessee had timely filed return of income disclosing an income of Rs. 1,57,40,468/- & Rs. 1,77,85,850/- respectively from contractual business of net profit of 5.48% and 4.55% respectively. The AO after survey was conducted on 31.07.2015 after issuing 148 notice has framed, the reassessment making disallowance as noted above u/s 40(a)(ia) and section 40A(3) of the Act as well as addition u/s 69C of the Act. On appeal, the Ld. CIT(A) has deleted the additions made u/s 40(a)(ia), sec. 40A(3) & sec. 69C of the Act and thereafter has rejected the books of accounts of the assessee and estimated the net profit at 8%. The main plea of the assessee is that the net profit of 8% is very high and relied on certain decisions of the Tribunal wherein lesser net profit has been accepted by the Tribunal in the cases of Contractors. We note that the Revenue has not challenged the decision of the Ld. CIT(A) and only the assessee is in appeal before us against the action of the Ld. CIT(A). We note that the assessee has not challenged action of the AO in rejecting the books of accounts. Therefore, the only issue is whether the estimation of net profit by the Ld. CIT(A) is reasonable or not. We note that in order to arrive at net profit of 8% to Ld. CIT(A) has taken into account, the 6 Assessment Year: 2013-14 Assessment Year: 2013-14 Assessment Year: 2015-16 M/s. Dilip Kumar Das & Sons
net profit percentage of assessee from A.Y. 2011-12 to 2014-15. We note that for easy understanding, we reproduce the chart of net profit percentage of the assessee from A.Y. 2011-12 to 2014-15 which is as under: ****************** ******************
We note that the Ld. CIT(A) has given notice to the assessee vide order sheet dated 15.05.2017 wherein he conveyed his desire to reject the books of accounts based on the discrepancies noted therein and his intention to estimate net profit at 8%. Pursuant to which, the assessee pleaded that the estimate of net profit should be determined at 5%. We note that the Ld. CIT(A) has estimated the income at 8% instead of 5.79% declared by the assessee (excluding material supplied by the Government) and also it was made clear by the Ld. CIT(A) that assessee will get deduction at Rs. 7,23,906/- and Rs. 53,543/- which were added by the AO though not contested by the assessee. We note that the Ld. CIT(A) has not taken into consideration any comparable cases similar to that of assessee to determine net profit at 8%. We note that from the assessees own performance and net profit declared from A.Y. 2011-12 to 2014-15, an estimate of 6.75% on the contractual turnover of the assessee could be just, fair and reasonable and we order accordingly. Likewise for A.Y. 2014-15, we direct the estimation of the net profit at 6.75% on the contractual turnover of the assessee.”
Since the net profit @6.75% has been estimated by the Tribunal in the assessee’s own case, we, therefore, respectfully following the same, uphold the finding of the ld. CIT(A) of rejecting the books results and estimate the net profit rate @ 6.75% for the year under appeal on the gross turnover and the addition is sustained only to the extent of the difference between the net profit rate of 6.75% estimated by us as against the net profit declared by the assessee in its income tax return.
7 Assessment Year: 2013-14 Assessment Year: 2013-14 Assessment Year: 2015-16 M/s. Dilip Kumar Das & Sons
Accordingly, the assessee’s appeal is partly allowed and the that of the revenue is dismissed for Assessment Year 2013-14. 9. As far as Assessment Year 2015-16 is concerned, only the assessee is in appeal and the issue remains the same regarding the estimation of net profit where the assessee has challenged that the ld. CIT(A) has erred in estimating the net profit @8%. We considering our decision for Assessment Year 2013-14 as well as the decision of this Tribunal in the assessee’s own case for Assessment Year 2011-12 and 2014-15, estimate the net profit for Assessment Year 2015-16 @6.75% and partly allow the appeal of the assessee.
In the result, appeal of the assessee for Assessment Year 2013-14 & 2015-16 are partly allowed and the cross-appeal filed by the revenue is dismissed. Order pronounced in the Court on 14th December, 2023 at Kolkata. (SONJOY SARMA) ACCOUNTANT MEMBER Kolkata, Dated 14/12/2023 *SC SrPs
8 Assessment Year: 2013-14 Assessment Year: 2013-14 Assessment Year: 2015-16 M/s. Dilip Kumar Das & Sons
आदेश क" "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Assessee
""यथ" / The Respondent 3. संबंिधत आयकर आयु" / Concerned Pr. CIT 4. आयकर आयु" अपील / The CIT(A)- ( ) 5. िवभागीय "ितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाड" फाई/ Guard file.
आदेशानुसार/ BY ORDER