M/S PADAM CONSTRUCTION CO. vs. THE ASSTT. COMMISSIONER

1 - IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ----- - : 20.7.2010 Date of decision /

M s Padam Construction Company Bhatinda --- Appellant Versus

The Assistant Commissioner of - ,

Income tax Bhatinda and another --- Respondents --- :

CORAM HON’BLE MR JUSTICE ADARSH KUMAR GOEL

HON’BLE MR JUSTICE AJAY KUMAR MITTAL --- : PRESENT .

, Mr Akshay Bhan Advocate

. for the appellant .

, Ms Savita Saxena Advocate

. for the respondent ---

, . AJAY KUMAR MITTAL J

The assessee has approached this Court under 260-

, 1961 ( “ Section A of the Income tax Act in short the

2 -

)

Act’ and prayed that the following substantial questions of

, law arise in this appeal for the consideration of this Court

, from the order of the Income tax Appellate Tribunal Amritsar , ,

14.9.1999,

Bench Amritsar passed on in Income tax Appeal . 1245( )-1991

1989-90: No ASR for the assessment year 1-

Whether in the facts and circumstances of the ,

, case the Income Tax Appellate Tribunal Amritsar ,

. . Bench Amritsar was justified in applying a net G P

9.25%? rate of 2-

Whether the lower authorities were justified in

145(1)

applying proviso to Section of the Income

? Tax Act in the case of the assessee 3-

-1 -3 Whether the impugned annexure A to A can

? be sustained in the eyes of law

The assessee appellant furnished its return

. 6,00,540/-

- declaring income of Rs by applying gross profit

8%.

143(1) rate of The return was processed under Section

. of the Act and was subsequently selected for scrutiny The

143(3)

, assessment was completed under Section of the Act

3 - 25.1.1991

. 8,52,052/- vide order dated at an income of Rs

. whereby the assessing officer made an addition of Rs 2,47,127/-

9.25%. by applying net profit rate at The

- ( ) [(

“ ( )] Commissioner of Income tax Appeal for short CIT A ”

concurred with the view of the assessing officer in the matter

9.25%,

of application of gross profit rate of though it gave a

. 20,596/- relief to the assessee in the sum of Rs observing

that since sales tax formed part of trading receipt and as

such the sales tax paid by the assessee was required to be

reduced from the gross receipts It was found that the gross

. 2,22,666/-,

receipts would go down by Rs and the profit

9.25% worked on that amount at gross profit rate of would

. 20,596/-. come to Rs

, The Income tax AppellateTribunal Amritsar , (

Bench Amritsar for short the Tribunal” affirmed the findings

14.9.1999. of the authorities below vide order dated

We have heard learned counsel for the parties and

. have perused the record

4 - Learned counsel for the assessee submitted that

learned Tribunal had erred in upholding the gross profit rate 9.25%

of applied by the authorities below The counsel

( )

submitted that the CIT A while recording its concurrence to

the view of the assessing officer had relied upon its decision

relating to the previous years and the Tribunal has ignored

23.11.1995

its own decision dated in the case of the present

, assessee relating to previous three assessment years

whereby the gross profit rate of had been held to be fair

. and reasonable

The Tribunal while adjudicating the controversy

raised by the assessee in the appeal and rejecting the

, contention of the learned counsel for the assessee recorded

: as under “9.

On going through the orders of the lower ,

authorities the observation of which also could not

, be challenged by the counsel of the assessee

during the course of arguments we find that in

5 - this case the assessee is not maintaining stock

register of materials and no day to day record of - -

. work in progress was kept by the assessee It

( )

has also been observed by the CIT A that the

vouchers were self prepared in respect of labour

expenses and the same was not subject to any . ,

verification Hence we are of the opinion that in

- - the absence of record of day to day work in

, progress and stock registers of materials the

expenses incurred by the assessee could not be -

co related to the work done and hence the lower

authorities were fully justified in applying the

145(1)

, proviso to Section of the Income Tax Act 1961

. , in the case of the assessee Accordingly

. the first point is decided in favour of the Revenue 10.

In the year under consideration the assessee

. .

8% firm has disclosed G P rate of about whereas

. .

on the other hand the learned A O after taking

, into consideration the magnitude of the work

6 - scattered work of the assessee and also

considering the plea of the assessee that due to

disturbed conditions in Punjab he has to suspend

his work off and also after giving consideration to

, . . the nature of business of the assessee the A O

. .

9.25%

applied the G P rate of and worked out the

. income of the assessee 12.

( )

In appeal the learned CIT A has upheld

. .

9.25%

- the G P rate of but reduced the gross

. receipts on account of sales tax to the tune of Rs 2,22,666/-

by treating as a trading receipt and in

. 20,596/- this manner granted a relief of Rs to

. the assessee 13.

During the course of arguments this Bench

has asked the assessee to work out the net profit

9.25% . .

rate considering G P rate applied by the

lower authorities To this the learned counsel for

, the assessee after working out the net profit rate

replied that net profit in the case of the assessee

7 - for the year under consideration would work out to 4.2%

. .

if we take into consideration the G P rate of 9.25%

as applied by the lower authorities in our

. . 9.25%

opinion the application of G P of by the

lower authorities is already on a very low side and ,

so we are of the opinion that this application of

4.2%

. . net profit rate of or application of G P rate 9.25%

by the lower authorities in working out the

net income of the assessee is most reasonable

. and fair and does not call for any interference ,

Hence we are of the opinion that in these facts

and the circumstances the lower authorities have

already given sufficient relief to the assessee by

. .

9.25%

applying the G P rate of and hence no

. , interference is called for from our side Accordingly

this issue is disposed of by holding that the CIT ( )

. .

A was justified in applying the G P rate of 9.25%

. in the case of the assessee ”

8 - Learned counsel for the appellant made

strenuous effort to persuade this Court to take a view

different than the one taken by the Tribunal by urging that

rejection of the books of accounts of the assessee and

9.25%,

application of gross profit rate of was arbitrary and

without any basis Learned counsel sought to urge that this

Court on re appreciation of evidence may record a finding in

. , ,

favour of the assessee He however could not point out any

error of law or perversity in the findings recorded by the

. authorities below

In view of the above we are of the opinion that

no substantial question of law arises in this appeal for

adjudication by this Court The appeal is consequently . dismissed (

AJAY KUMAR ) MITTAL JUDGE (

ADARSH KUMAR ) GOEL

9 -

20, 2010 July JUDGE * * rkmalik