COMMISSIONER OF INCOME TAX JALANDHAR-II JALANDHAR vs. RAKESH KUMAR AGGARWAL PROP. RAKESH KUMAR, CONTRACTOR

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ITA/278/2013HC Punjab & HaryanaPHHC01105139201329 April 2014Author: MR. JUSTICE SURINDER GUPTA,MR. JUSTICE RAJAN GUPTA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court, after hearing the parties and perusing the record, noted that the ITAT's order was not a speaking and reasoned one. The Court referred to its own order of even date in ITA Nos. 100 and 101 of 2013, where a similar impugned order was set aside and the matter was remanded to the Tribunal for fresh adjudication. Consequently, the High Court set aside the impugned order of the ITAT dated 12.06.2013 and remitted the matter back to the Tribunal. The Tribunal is directed to adjudicate the issue afresh after affording an opportunity of hearing to the parties and passing a speaking, well-reasoned order. The issue of whether the ITAT was justified in dismissing the revenue's appeal without considering the High Court's precedent in M/s Prabhat Kumar Contractor was not decided on merits.

What were the facts?

The assessee, Shri Rakesh Kumar Aggarwal, a government contractor, filed his return for assessment year 2009-10 declaring an income of ₹96,71,108. The Assessing Officer (AO), rejecting the assessee's books under Section 145(3), assessed total income at ₹1,49,24,455 by applying a net profit rate of 12% on net receipts of ₹12,43,70,464, resulting in an addition of ₹52,53,348. The CIT(A) partly allowed the appeal, restricting the net profit rate to 10%. Both the assessee and the revenue appealed to the Income Tax Appellate Tribunal (ITAT). The ITAT partly allowed the assessee's appeal and dismissed the revenue's appeal, sustaining an addition of only ₹6 lacs. The revenue has filed the present appeal against the ITAT's order.

What were the issues?

1. Whether on the facts and circumstances of the case and in law, the Income Tax Appellate Tribunal was justified in dismissing the appeal of the revenue without considering that the jurisdictional High Court in the case of M/s Prabhat Kumar Contractor, Sirsa (ITA No.293 of 2008 dated 14.11.2008) on identical facts and in a similar line of business had upheld the net profit rate of 12%? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The ITAT was not justified in dismissing its appeal as it failed to consider the jurisdictional High Court's decision in M/s Prabhat Kumar Contractor, Sirsa, which upheld a net profit rate of 12% on identical facts and similar business. The revenue relied on this precedent.

Which sections of the Income-tax Act were involved?

Section 260A,Section 143(1),Section 143(3),Section 145(3)

AI-generated summary — verify with the full judgment below

ITA No.278 of 2013 (O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.278 of 2013 (O&M) Date of decision: April 29, 2014 The Commissioner of Income Tax, Jalandhar II, Jalandhar ……Appellant Vs. Shri Rakesh Kumar Aggarwal, Prop: Rakesh Kumar Contractor, SCO 17-C, Ladowali Road, District Jalandhar, State Punjab. …..Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON’BLE MR. JUSTICE JASPAL SINGH Present: Mr. Vivek Sethi, Advocate for the appellant. Mr. Pankaj Jain, Sr. Advocate with Mr. Divya Suri, Advocate and Mr. Sachin Bhardwaj, Advocate for the respondent. Ajay Kumar Mittal,J.

1.

This order shall dispose of ITA Nos.278 and 279 of 2013 as the learned counsel for the parties are agreed that the issue involved in both the appeals is identical. However, the facts are being extracted from ITA No.278 of 2013. 2. ITA No.278 of 2013 has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 12.06.2013, Annexure A.3 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar in ITA No.222 (ASR)/2013 for the assessment year 2009-10 proposing to raise the following substantial question of law:- “Whether on the facts and circumstances of the case and in the eyes Singh Gurbax 2014.05.27 11:48 I attest to the accuracy and integrity of this document High Court Chandigarh

ITA No.278 of 2013 (O&M) 2 of law Income Tax Appellate Tribunal was justified in dismissing

the appeal of the revenue without considering the fact that Hon'ble Juri ictional High Court in the case of M/s Prabhat Kumar Contractor, Sirsa (ITA No.293 of 2008 dated 14.11.2008) on identical facts and in similar line of business has upheld the NP rate of 12%?

3.

Briefly, the facts necessary for adjudication of the controversy involved, as narrated in ITA No.278 of 2013 may be noticed. The assessee is a government contractor. He filed his return of income on 28.9.2009 declaring total income of ` 96,71,108/-, which was processed under Section 143(1) of the Act. The Assessing Officer assessed the income of the assessee under Section 143(3) of the Act after rejecting the account books of the assessee under Section 145(3) of the Act working out net profit at the rate of 12% of the net receipts of ` 12,43,70,464/-. Thus, the Assessing Officer assessed total income at ` 1,49,24,455/- as against the net total income of ` 96,71,107/- returned by the assessee thereby making an addition of ` 52,53,348/-. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 11.2.2013, Annexure A.2, the CIT(A) partly allowed the appeal by restricting the net profit rate to 10% as against 12% applied by the Assessing Officer. Feeling aggrieved, both the revenue and the assessee filed appeals before the Tribunal. The Tribunal vide order dated 12.6.2013, Annexure A.3 partly allowed the appeal of the assessee and dismissed the appeal of the revenue. The Tribunal sustained the addition of ` 6 lacs only as against total addition made by the Assessing Officer at ` 52,53,348/- and upheld by the CIT(A) at ` 27,65,939/-.

Hence the present appeals by the revenue.

4.

We have heard learned counsel for the parties and perused the record.

5.

The Tribunal while adjudicating the issue had relied upon the order passed in the case of the assessee for the assessment year 2007-08 as has been Singh Gurbax 2014.05.27 11:48 I attest to the accuracy and integrity of this document High Court Chandigarh

ITA No.278 of 2013 (O&M) 3 noticed in para 17.5 of its order. In view of our order of even date passed in ITA Nos.100 and 101 of 2013 wherein after setting aside the impugned order being not a speaking and reasoned one, the matter has been remanded to the Tribunal to decide the issue afresh, we set aside the impugned order dated 12.6.2013, Annexure A.3 in the present appeals and remit the matter to the Tribunal to adjudicate the issue afresh after affording an opportunity of hearing to the parties in accordance with law by passing a speaking well reasoned order. As a result, both the appeals stand allowed. (Ajay Kumar Mittal) Judge April 29, 2014

(Jaspal Singh) 'gs' Judge Singh Gurbax 2014.05.27 11:48 I attest to the accuracy and integrity of this document High Court Chandigarh

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