DEPUTY COMMISSIONER OF INCOME TAX vs. J M MHATRE INFRA PVT LTD, RAIGAD

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ITA 2794/PUN/2016Status: DisposedITAT Pune06 November 2019AY 2012-135 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found the CIT(A)'s order restricting the net profit rates to be unjustified. It restored the Assessing Officer's estimation of net profit at 9% on self-executed contract receipts and 4.5% on sub-contract receipts.

What were the facts?

The assessee, engaged in government and transport contracts, had its books of accounts rejected by the AO who estimated net profit at 9% and 4.5%. The CIT(A) reduced these rates to 8% and 4%. The Tribunal referred to a previous order for AY 2010-11 where net profit was confirmed at 10% and 5%.

What were the issues?

Whether the CIT(A) was justified in restricting the net profit rates on contract and sub-contract receipts, and whether the AO's estimation should be restored.

Which sections of the Income-tax Act were involved?

Section 145(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE

Before: SHRI R.S. SYALSHRI S.S. VISWANETHRA RAVI, JM

For Appellant: Shri Khushiram Jadhwani
For Respondent: Shri S.P. Walimbe
Hearing: 04.11.2019Pronounced: 06.11.2019

आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM :

The above said two appeals and C.Os filed by the Revenue and assessee respectively against the same common order dated 30.09.2016 passed by the CIT(A)-II, Thane for A.Ys.2011-12 and 2012-13.

2.

Since the issues raised in both the appeals and cross-objections are

based on similar identical facts and therefore, with the consent of both the

parties, we proceed to hear the appeals and cross-objections together and

dispose of the same by this consolidated order for the sake of convenience.

We shall take the issue and facts and circumstances in appeal

No.2793/PUN/2016 as lead case.

3.

The only effective issue emanates amongst three grounds raised to

be decided is whether the CIT(A) is justified in restricting the rate of net

profit at 8% and 4% as against 9% and 4.5% in the facts and

circumstances of the case.

4.

Heard both sides and perused the material available on record. The

assessee is a firm and for the year under consideration derived income

from Government contracts and transport contracts. The assessee filed

its return of income declaring a total income of Rs.11,04,42,416/-. The

AO rejected the books of accounts u/s 145(3) of the Act and completed the

assessment vide its order dated 28.03.2014 by determining the total

income of Rs.12,81,44,555/- by estimating the net profit at 9% against

self-executed contract receipts and 4.5% on sub-contract receipts. The

CIT(A) restricted the same at 8% and 4% respectively. We find the order of

Co-ordinate Bench of the Tribunal of Mumbai in assessee’s own case for

A.Y. 2010-11 at Page No.68 of the Paper Book wherein we find the

Tribunal confirmed the order of CIT(A) in adopting net profit at 10% on

contract receipts and 5% on sub-contract receipts.

5.

Shri Kushiram Jadhwani, Ld.A.R. submitted the assessee preferred

an appeal before the Hon’ble High Court of Bombay against the order

dated 21.12.2017 of Mumbai Tribunal for A.Y. 2010-11 and it is pending

for adjudication. There is no dispute in the facts and circumstances of the

present appeal with that of appeal for A.Y. 2010-11.

6.

We note that the Co-ordinate Bench of the Tribunal, Mumbai in its

order to come to a conclusion in confirming the order of CIT(A) in

estimating the net profit at 10% and 5% by referring to the order of the

Tribunal in assessee’s own case for A.Y. 2008-09 and no order contrary to

the finding of Mumbai Tribunal nor any order suspending the same from

Hon’ble High Court of Mumbai is on record. Therefore, we are of the view

that the impugned order passed by the order of CIT(A) is not justified and

hence, it is set aside. Thus, the order of AO in adopting net profit at 9%

and 4.5% on contract receipts and sub-contract receipts respectively is

restored. Ground No.1 raised by the Revenue is allowed.

7.

Ground Nos.2 and 3 are general in nature requiring no adjudication

from us. Hence, both are dismissed.

8.

In the result, appeal in ITA No.2793/PUN/2016 is partly allowed.

9.

Now we shall take up ITA No.2794/PUN/2016 as discussed above.

10.

We find the only effective ground raised by the Revenue in this

appeal are similar to the ground No.1 in ITA No.2793/PUN/2016.

Therefore, the view expressed by us in ground No.1 in ITA

No.2793/PUN/2016 is equally applicable to ground No.1 in ITA

No.2794/PUN/2016. Thus, the ground No.1 raised by the Revenue is

allowed.

11.

Ground Nos.2 and 3 are general in nature requiring no adjudication

from us. Hence, both are dismissed.

12.

Now, we shall take up C.O.Nos.7 & 8/PUN/2019 filed by the

assessee.

13.

Shri Kushiram Jadhwani, the Ld.A.R. submits that the assessee has

no interest in prosecuting the only ground raised in Cross-Objections and

prayed to dismiss the same as not pressed. Therefore, grounds raised by

the assessee in both the C.Os are dismissed as not pressed.

14.

In the result, the C.Os of assessee are dismissed.

15.

To sum up, appeals of Revenue are partly allowed and the C.Os of

assessee are dismissed.

Order pronounced on 6th day of November, 2018.

Sd/- Sd/- (R.S. SYAL) (S.S. VISWANETHRA RAVI) VICE PRESIDENT JUDICIAL MEMBER

पुणे Pune; �दनांक Dated : 6th November, 2019. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-II, Thane. 4. Pr. CIT-II, Thane. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” / DR, ITAT, “A” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER

// True Copy // // // True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.

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