C I T vs. M/S SHIVAM CONSTRUCTION CO.

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ITA/183/2007HC Punjab & HaryanaPHHC01072861200714 May 2007Author: MR. JUSTICE M.M. KUMAR,MR. JUSTICE RAJESH BINDAL3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeals filed by the Revenue. The Court adopted the reasoning from its previous order dated 7.5.2007, in ITA No. 167 of 2007 (The Commissioner of Income Tax III, Ludhiana v. M/s Shivam Construction Co.), which dealt with the same assessee and identical questions of fact and law for assessment year 2001-2002. The judgment does not elaborate on the specific reasoning of the ITAT or the High Court's rationale for dismissing the appeals, other than referencing the prior decision. Therefore, the specific findings on each issue and the ratio decidendi are not detailed within this judgment. The operative direction was to dismiss the appeals.

What were the facts?

The Revenue, Commissioner of Income Tax-III, Ludhiana, has filed appeals under Section 260A of the Income Tax Act, 1961, against a common order dated 30.8.2006, passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench ‘A’. The ITAT's order dealt with appeals concerning assessment year 2000-2001 and assessment year 1999-2000. The appeals challenge the ITAT's decision regarding the estimation of profit for contractors. The High Court notes that a similar appeal concerning assessment year 2001-2002, in the case of the same assessee, was dismissed on 7.5.2007, on identical questions of fact and law.

What were the issues?

The High Court was asked to decide the following questions of law: 1. Is the ITAT legally justified in holding that in the case of contractors, profit can be worked on an estimate basis at 10% of the gross receipts, when the assessee claims to be maintaining proper books of account which have been duly audited by a CA, but does not produce complete books for verification before the AO? 2. Can the ITAT travel beyond the provisions of the Income Tax Act and make the deeming provisions of Section 44AD applicable to cases not covered within the statutory limit of Rs. 40 Lakhs turnover, as specifically provided in the Act? Contentions of the Revenue: 1. The ITAT's decision to estimate profit at 10% for contractors, despite the assessee claiming audited books of account, is legally unjustified, especially when complete books were not produced before the Assessing Officer (AO). 2. The ITAT erred in applying Section 44AD to cases exceeding the turnover limit of Rs. 40 Lakhs, thereby going beyond the statutory provisions of the Income Tax Act. Contentions of the Assessee: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 260A,Section 44AD

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A. No. 183 of 2007 Date of Decision: May 14, 2007 The Commissioner of Income Tax-III, Ludhiana …Appellant Versus M/s Shivam Construction Co., Ludhiana …Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE RAJESH BINDAL Present: Mr. S.K. Garg Narwana, Advocate, for the appellant-revenue.

JUDGMENT M. M. KUMAR, J

. This order shall dispose of I.T.A. Nos. 183 and 184 of 2007, as two different assessment orders in respect of the same assessee are the subject matter of challenge. The revenue has filed the appeals under Section 260A of the Income Tax Act, 1961, against the common order dated 30.8.2006, passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘A’, Chandigarh, in I.T.A. Nos. 384/Chandi/2004 and 386/Chandi/2004, in respect of assessment year 2000-2001 and I.T.A. Nos. 383/Chandi/2004 and 385/Chandi/2004, in respect of assessment year 1999-2000. The revenue has claimed the following questions of law:- i) Is the ITAT legally justified in holding that in the case of contractors, profit can be worked on estimate basis at 10% of the gross receipts, when the assessee claims to be maintaining proper books of account which have been duly audited by a CA, but does not produce complete books for verification before the AO? ii) The Income Tax Act clearly provides for applicability of deeming provisions of section 44AD in case of contractor with a total turnover not exceeding Rs. 40 Lakhs can the ITAT travel beyond the provisions of I.T. Act and make the provisions applicable even to those cases which are not covered in the statutory limit of Rs. 40 Lakh, as specifically provided for in the Act? It remains undisputed that I.T.R. No. 167 of 2007, in respect of assessment year 2001-2002, in the case of the same assessee, came up for consideration on 7.5.2007, on the same questions of fact and law. The appeal was dismissed. We adopt the same reasoning to dismiss these appeals as has been adopted in the order dated 7.5.2007, rendered in I.T.A. No. 167 of 2007 (The Commissioner of Income Tax III, Ludhiana v. M/s Shivam Construction Co.). A photocopy of this order be placed in the file of the connected case. (M.M. KUMAR) JUDGE (RAJESH BINDAL) May 14, 2007 JUDGE Pkapoor 3

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