COMMISSIONER OF INCOME TAX-II CHD vs. GURINDERPAL SINGH,#66 27-A CHD

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ITA/260/2011HC Punjab & HaryanaPHHC01095588201113 September 2011Author: MR. JUSTICE HEMANT GUPTA,MR JUSTICE JASWANT SINGH2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose for consideration. The determination of the appropriate net profit rate was considered a question of fact, dependent on the circumstances of each case. The Court noted that the Assessing Officer had applied a net profit rate of 7%, which was affirmed by the ITAT. The ITAT's finding that the revenue had not produced evidence to prove higher profits than the 7% rate was highlighted. Furthermore, the Court observed that a net profit rate of 7% had been consistently applied in previous years (2001-2002 to 2004-05), making the enhancement to 12% by the Commissioner (Appeals) unjustified. Consequently, the High Court found no illegality or irregularity in the ITAT's order and dismissed the appeals. The operative direction was the dismissal of the appeals.

What were the facts?

The appeals were filed by the Commissioner of Income Tax-II, Chandigarh, against the order of the Income Tax Appellate Tribunal (ITAT), Chandigarh, for assessment years 2005-2006 and 2006-2007. The ITAT had set aside the order of the Commissioner of Income Tax (Appeals) and upheld the Assessing Officer's order which applied a net profit rate of 7%. The assessee, Gurinder Pal Singh, had taken over a road construction business from his deceased father, Rajinder Singh. For earlier assessment years (1996-1997 and 1998-1999), a net profit rate of 8% was applied to the father's business. The Commissioner of Income Tax (Appeals) had enhanced the net profit rate to 12%, which the ITAT found unjustified.

What were the issues?

1. Whether a substantial question of law arises for consideration regarding the net profit rate to be applied to the assessee's road construction business. (Question of fact/mixed law and fact) The assessee contended that the net profit rate of 7% applied by the Assessing Officer was reasonable, especially considering that this rate had been applied in previous years (2001-2002, 2002-03, 2003-04, and 2004-05). The assessee argued that there was no evidence presented by the revenue to justify an enhancement of this rate. The revenue, represented by the Commissioner of Income Tax-II, Chandigarh, argued that the net profit rate should be enhanced. The revenue's specific arguments or reliance on any authorities, circulars, or precedents were not recorded in the judgment.

AI-generated summary — verify with the full judgment below

#1# IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH Commissioner of Income Tax-II, Chandigarh ....Appellant Versus Gurinder Pal Singh ....Respondent AND I.T.Appeal No.261 of 2011 Commissioner of Income Tax-II, Chandigarh ....Appellant Versus Gurinder Pal Singh ....Respondent Date of Order: 13.9.2011 CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MR. JUSTICE JASWANT SINGH Present: Ms. Urvashi Dhugga, Advocate for the appellant(s). HEMANT GUPTA, J (ORAL)

This order shall dispose of two appeals bearing ITA No.260 of 2011 pertaining to assessment year 2005-2006 and ITA No.261 of 2011 pertaining to assessment year 2006-2007 against order dated 18.8.2010 whereby the Income Tax Appellate Tribunal, Chandigarh has set aside the order of the Commissioner of Income Tax (Appeals) and maintained the order of the Assessing Officer levying net profit rate @ 7%.

Earlier, Rajinder Singh-father of the assessee was carrying on the road construction work and after his death, present assessee has taken over the construction business of the Firm. It has been found by the Tribunal that for the earlier years i.e 1996-1997 and 1998-1999, the net profit at the rate of 8% was applied while framing assessment of the father #2# of the assessee. Therefore, the assessment framed by the Assessing Officer at the net profit rate of 7% is reasonable and that order of the Commissioner enhancing the net profit rate to 12% is not justified.

Having heard learned counsel for the appellant at some length, we do not find that any substantial question of law arises for the consideration of this Court. It is question of fact keeping in view circumstances of each case as to whether net profit rate of 7% is to be applied or enhanced to the rate of 12%. The Assessing Officer applied the net profit rate as 7% and the said order has been affirmed by the learned Appellate Tribunal. The learned Tribunal has recorded a finding that there is no evidence produced by the revenue to prove that the assessee has the higher profit than the net profit rate of 7%. A perusal of the order passed by the learned Commissioner shows that for the earlier years such as 2001-2002, 2002-03, 2003-04 and 2004-05, net profit rate of 7% was applied. Since the net profit rate was being applied in the previous years as 7%, there is no valid ground to enhance the net profit rate to 12%.

We do not find any illegality or irregularity in the impugned order warranting any interference by this Court. Accordingly, both the appeals are dismissed. ( HEMANT GUPTA ) JUDGE September 13, 2011 ( JASWANT SINGH ) manoj JUDGE

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