COMMISSIONER OF INCOME TAX II AMRITSAR vs. VIDYA SAGAR SAINI

ITA No.163 of 2014 (O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT

CHANDIGARH ITA No.163 of 2014 (O&M) Date of decision: 15.9.2014 The Commissioner of Income Tax II, Amritsar ……Appellant Vs. Shri Vidya Sagar Saini, Government Contractor, Saingarh Pathankot …..Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON’BLE MR. JUSTICE FATEH DEEP SINGH Present: Mr. Denesh Goyal, Advocate for the appellant.

Ajay Kumar Mittal,J. 1. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 31.10.2013, Annexure A.3 passed by the Income Tax Appellate Tribunal Amritsar Bench, Amritsar (in short, “the Tribunal”) in ITA No.335 (ASR)/2012 for the assessment year 2009-10, claiming following substantial questions of law:- i) On the facts and the circumstances of the case, whether the Hon'ble Tribunal has erred in applying rate of 8% of net profit against 12% applied by the AO without appreciating that the AO had done so after rejecting the books of account under section 145(3) after pin pointing specific defects? ii)On the facts and circumstances of the case, whether the Hon'ble Tribunal has erred in allowing depreciation in addition to restricting the net profit rate at 8% without appreciating the fact that once books of account are rejected GURBAX SINGH 2014.10.07 12:21 I attest to the accuracy and integrity of this document High Court Chandigarh

ITA No.163 of 2014 (O&M) 2 and net profit is applied on rate basis, depreciation is deemed to have been allowed in the net profit so computed? iii)Whether on the facts and circumstances of the case, the learned ITAT was right in dismissing the appeal of the department by respectfully following their own order passed in the case of the assessee for the assessment year 2006-07 whereas the said order of the Tribunal was not accepted by the department and appeal was filed by the department under section 260A which was later dismissed by this Hon'ble High Court. Since tax effect in this case was below the prescribed monetary limits, so no SLP has been filed? iv)The Hon'ble ITAT failed to appreciate that every assessment year is separate one and AO had applied net profit rate of 12% due to peculiar facts and circumstances in this assessment year. Therefore, the judgment passed by the ITAT is wrong and perverse? 2. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The assessee is a government contractor and has been undertaking work of construction of roads in the border districts of Punjab and Himachal Pradesh for the last many years. Return of income was filed on 19.01.2010 in the status of individual showing income of ` 38,70,532/- which was processed under section 143(1) of the Act on 31.3.2011. The case was selected for scrutiny. Assessment under section 143(3) of the Act was made vide order dated 21.12.2011, Annexure A.1 at an income of `1,17,27,839/- by applying 12% rate on gross receipt after excluding cost of material supplied by the department. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 12.6.2012, Annexure A.2, the CIT(A) partly allowed the appeal and directed the Assessing officer to apply net profit rate of 8% as against 12% applied GURBAX SINGH 2014.10.07 12:21 I attest to the accuracy and integrity of this document High Court Chandigarh

ITA No.163 of 2014 (O&M) 3 at the time of assessment on the contract receipt and to allow the depreciation. The relief allowed by the CIT(A) was at `66,11,532/-. Aggrieved by the order, the department filed appeal before the Tribunal. Vide order dated 31.10.2013, Annexure A.3, the Tribunal dismissed the appeal. Hence the instant appeal by the revenue. 3. We have heard learned counsel for the appellant-revenue and perused the record. 4. Learned counsel for the appellant-revenue submitted that the case of the assessee for the current assessment year 2009-10 was different from the assessment year 2006-07 and therefore, the gross profit rate of 8% applied for the assessment year 2006-07 ought not to have been applied for the assessment year 2009-10 as well. 5. We are unable to accept the contention of learned counsel for the appellant-revenue. The Tribunal while rejecting the contention of the revenue recorded as under:- “6.1 As regards the estimation of income, the AO applied a net profit rate of 12% relying upon the decisions of ITAT and Hon'ble Punjab and Haryana High Court in certain cases. But it has not been brought on record, whether the facts in those cases are identical or similar to the facts in the present case. In such circumstances, the facts in assessee's own case have to be perused. Infact, for making an estimation, the circumstances and facts in assessee's own case during the impugned year and in past years are the best guide, as also argued by learned counsel for the assessee, Mr. Salil Kapoor, Advocate. In past the history of the assessee has been accepted, as net profit rate of 8% on gross turnover. For the assessment year 2006-07, in assessee's own case, the ITAT Amritsar Bench has upheld net profit rate of 8% which decision has been confirmed by the Hon'be Jurisdictional High Court, as mentioned hereinabove. GURBAX SINGH 2014.10.07 12:21 I attest to the accuracy and integrity of this document High Court Chandigarh

ITA No.163 of 2014 (O&M) 4 We are aware that each year is an independent year in Income tax proceedings but when there is no deviation of facts brought on record by the revenue with reference to preceding years, we have no alternative but to accept the past history of net profit rate of 8% and also with a view of circumstances and facts of impugned year. Accordingly, we find no infirmity in the order of the learned CIT(A). Thus, all the grounds of revenue are dismissed.” 6. The Tribunal had categorically recorded that there was no deviation of facts brought on record by the revenue with reference to the current assessment year and in such a situation, on the basis of the past history, net profit rate of 8% was applied. Further, this Court while dealing with similar issue in ITA No.80 of 2012, The Commissioner of Income Tax II, Amritsar vs. Vidya Sagar Saini, in the case of the assessee itself, decided on 13.2.2013, upheld net profit rate of 8%. Learned counsel for the appellant has not been able to demonstrate that there was any change in circumstances. 7. Accordingly, no substantial question of law arises. The appeal being devoid of any merit stands dismissed. (Ajay Kumar Mittal) Judge September 15, 2014 (Fateh Deep Singh) 'gs' Judge GURBAX SINGH 2014.10.07 12:21 I attest to the accuracy and integrity of this document High Court Chandigarh