ABHI BUILDERS,GHAZIABAD vs. ACIT, NEW DELHI
Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: Sh. Satbeer Singh Godara & Sh. S. Rifaur Rahman
Per Satbeer Singh Godara, Judicial Member:
This assessee’s appeal for Assessment Year 2010-11, arises against the CIT(A)-XX, New Delhi’s case No. 130/2013-14
dated 24.12.2014, in proceedings u/s 144 of the Income Tax
Act, 1961 (in short “the Act”).
Case called twice. None appears at the assessee’s behest. It is accordingly proceeded ex-parte.
Delay 172 days in filing of the instant appeal is condoned in light of the assessee’s contention petition explaining the Abhi Builders
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same to be attributed to various circumstances beyond it’s control.
4. The assessee pleads the following substantive grounds in the instant appeal:
“1. Because the Ld. C.I.T. Appeal, New Delhi has not considered the facts and circumstances of the case and confirm the addition of Income of Rs. 3,379,074 U/s 68 of the Income tax Act, is illegal and bad in law.
Assessee has maintained books of account in the ordinary and normal course of business, audited U/s 44 AB of the Income Tax Act 1961 whether in facts the assessment proceeding has been completed ex-parte U/s 144 of the Act. Appellant couldn't attend the A.O. because he is suffering from Chronic disease.
Law & Facts both are different things. Assessee has maintained books of accounts but couldn't produce at the time of hearing because of unavoidable circumstances, it doesn't support to made the addition and presumed the excessive profit i.e. 8% of the total receipts. Assessee has regularly assessed as partnership firm in earlier years.
Assessee is a civil contractor. It is essential to provide wages and consumed the materials in executing of the works contract, therefore the expenditure debited in profit and loss account is true and genuine and could not denied and should not be disallowed.
Because Ld. AO has added Income of Rs. 2,218,017 on account of net profit 8% computed of the total receipt whether books has been maintained properly and fully vouched inadvertently made addition in profit is bad in law. Then only books couldn't produced before AO due to Assessee is suffering from chronic disease those days and till date, under these unavoidable circumstances any estimation of excessive profit is against the principle of nature justice.
Because the Ld AO has added 1,161,052 (interest & remuneration of the partners) without considering the facts and circumstances, Assessee firm is partnership firm that constituted by two partners named as Shri P.S Chauhan and Shri O.S Rana ,till day with no change in constitution of the firm and continuously asses Status of partnership firm Pan bearing no AAGFA5916R and if Ld AO computed the net profit of 8% then the also remuneration to partner and interest Abhi Builders
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paid on capital treat as business expenditure becomes liable to allow deduction and the provision of Income tax act and such firm not liable to assessed as AOP .Judges shall not withdrawal from judging.
Because of the Earlier Assessee regularly assessed with the department. During each and every year, assessment proceeding has been completing under 142(3) of the Act and the net profit is always 52.50% to 6.21% till now. Therefore, how the excessive profit could be computed when this is the same firm with same promoters & same work.
Because of the Assessee firm is partnership firm, partnership deed was executed on the date 1-04-2000 constituted by two partners; P.S Chauhan and O.S Rana, sharing of profit and loss by 50% each in constitution of date para no.4 has discussed that the partners have agreed that the capital of the firm shall be such sum as may appear in the respective capital accounts of partners from time to time. They have also agreed that interest of 18% p.a. will be paid in respect of their capital investment & loans made for carrying on the business of the firm. Such interest shall be calculated and credited to the account of concerned partner during the closing of the accounting year, in case of lesser lower than 18% p.a. as may be agreed by and between the partners. They further agreed that the However interest @ 18% p.a. will be charged by the firm in the event of a debit balance in the account of any of the partners. Such interest payable to the partners shall be charged to the profit & loss a/c of the firm and treated as an expenditure of the partnership firm.
Because Asssessee has maintained books of account in normal course of business and filed the return U/s 139 of Income Tax act 1961, only non-appearance of the Ld. AO ex- parte proceeding has been completed at the end of Ld A.O ,it doesn't prove that all the expenditure which has been debited in profit and loss a/c is incorrect and assessment proceeding has been completed U/s 144 OF INCOME TAX ACT to support the disallowance of remuneration of the partners and interest of the capital which is against the principle of natural justice. 10. Because charging the Interest U/s 234A, 234B and 234C is illegal and bad in law.
The Addition is bad in law and harsh.
The Addition is not proper and unjust and thus not supported by law.” Abhi Builders
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4. It next emerges with the able assistance coming from the Revenue side that the learned Assessing Officer had framed his section 144 assessment on 28.03.2013 inter alia making twin additions of GP estimation
@
8%
on gross receipts of Rs.5,91,96,282; resulting in addition of Rs.22,18,017/- after rejecting books of account followed by disallowance of partners remuneration amounting to Rs.11,61,052/-; respectively. So far as the assessee’s first and foremost substantive ground that challenging section 68 addition of Rs.33,79,074/- is concerned, we conclude that there is no such discussion treating the sum total of the twin addition as unexplained cash credit. We accordingly see no reason to accept the same which is hereby rejected.
Next comes the assessee’s endeavour to reverse both the learned lower authorities estimating 8% gross profit in civil contractor business after rejecting it’s books. We note that the assessee has not been able to explain it’s alleged audited book result all along either in the course of assessment or in the lower appellate proceedings. We thus see no reason to disturb the learned lower authorities findings estimating the impugned GP in assessee’s case @8% after rejecting it’s books. Rejected accordingly. Abhi Builders
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6. Lastly comes the third issue of partners remuneration amounting to Rs.11,61,052/- adopted in the P&L account. All what the Revenue has argued in light of the assessment discussion at page 3 is that the assessee has been treated as an AOP. We are of the considered view that given the fact that the assessee all along is getting assessed as a partnership firm even in the assessment order, there is no basis for the learned revenue authorities to deny the statutory benefits of partners interest remuneration u/s 40(b) of the Act. We thus find merit in the assessee’s instant last substantive ground which is hereby allowed. Necessary computation shall follow as per law.
This assessee’s appeal is partly allowed. Order Pronounced in the Open Court on 22/01/2025. (S. Rifaur Rahman) (Satbeer Singh Godara) Accountant Member Judicial Member
Dated: 22/01/2025
*Subodh Kumar, Sr. PS*