SHRI KIRTIMAN SINGH,RANCHI vs. DCIT, RANCHI
Facts
A survey operation was conducted, leading the Assessing Officer to reject the assessee's books of account and estimate income. The assessee, a contractor, disputed the estimation methods and calculations of profit made by the AO and CIT(A). The case involved the consideration of bank accounts of third parties and alleged benami transactions.
Held
The Tribunal noted that the initial estimate of profit by the AO was 10%, reduced to 8% by the CIT(A), and further restricted to 5% by the ITAT for the A.Y. 2009-10. Following the previous decision for A.Y. 2009-10, the Assessing Officer is directed to apply a rate of 5% on the total contract receipts for A.Y. 2010-11. The appeal is partly allowed.
Key Issues
Whether the Assessing Officer and CIT(A) were justified in estimating the profit on contract receipts based on third-party bank deposits and other indirect evidence, and whether the rate of profit estimation was excessive and arbitrary.
Sections Cited
133A, 131, 145(3), 254
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Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI GEORGE MATHAN & SHRI RATNESH NANDAN SAHAYShri Kirtiman Singh,
IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER ITA No. 122/Ran/2016 (Assessment Year-2010-11) (Hybrid Hearing) Shri Kirtiman Singh, D.C.I.T., 357/A, Professor Colony, Karam Toli, Circle-2, Vs. Behind Abhilasha Building, Morabadi, Ranchi. Ranchi-834001. PAN No. AWMPS 5592 F Appellant/ Assessee Respondent/ Revenue
Assessee represented by Shri Devesh Poddar, Adv. Department represented by Shri Khubchand T. Pandya, Sr.DR Date of hearing 20/05/2025 Date of pronouncement 20/05/2025 O R D E R PER: BENCH 1. This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals), Ranchi (in short, the ld. CIT(A)) dated 04/02/2016 for the A.Y. 2010-11. In this appeal, the assessee has raised following grounds of appeal: "1. For that ld. AO made an estimate of profit at 10% which was reduced to 8% by ld. CIT(A). The turnover of Rs.2,00,97,709/- was accepted. The appellant has maintained audited books of accounts which was verifiable in past, the book result disclosed was accepted. Ld. AO was, therefore, not justified in making an estimate of profit without any valid reason and finding. No indiscriminating document was found during survey. |The estimate made, therefore, was unjustified, illegal, highly excessive and without any basis. 2. For that ld. AO was not justified in estimating the contract receipts on the basis of deposits made in Oriental Bank of Commerce in the name of the appellant. The estimate of profit at 10% on the alleged deposit is unjustified and illegal. It was alleged that the appellant had supplied labour and some material on request of the Executive Engineer of NREP. The cost was reimbursed by making payment and depositing the same in the bank account. In any case, the profit estimated at 10% on supply of labour and some material is illegal, incorrect and uncalled for.
ITA 122/Ran/2016 Shri Kirtiman Singh Vs DCIT 3. For that ld. CIT(A) was not justified in considering the bank account maintained by Sri Sukhra Oran as pertaining to the appellant. Here again, the deposits were considered as contract receipt and 10% profit was estimated. 4. For that the ld. CIT(A) was not justified in confirming that bank account in the name of Sri Alok Nath Bhagat pertains to the appellant. The deposits were considered as contract receipt and estimate of 10% profit was made. 5. For that in any view of the case, the bank account of the other persons operated by other persons having no contract with the appellant so far the work is done. Merely because both of them have been working with the appellant in regular course, the presumption that the work was done by the appellant is unjustified, illegal and incorrect. 6. For that the statement of Sri Baidyanath Singh, employee of appellant, statement of Sri Binod Sarkar, Tax Consultant for the appellant and the statement of the appellant taken thereof to involve the appellant to suggest that Sukhra Oran and Sri Alok Nath Bhagat were the Benamidar of the appellant and the supply of labour or any other work was done by the appellant for which payment received by them was deposited in their bank account. There was no evidence to suggest that any work order was allotted to them or to the appellant for doing any work. No TDS was deducted on the deposits made in the bank account. The estimate of profit as belonging to the appellant is, therefore, unjustified, arbitrary and illegal. 7. For that in any view of the case, without prejudice to our contention mentioned above, the estimate of profit at 10% is unjustified, excessive, arbitrary and uncalled for. 8. For that ld. Assessing Officer was not justified in charging interest on assessed income. Following the decision of Hon’ble Jharkhand High Court, interest is to be charged on the returned income only. 9. For that other grounds in detail will be argued at the time of hearing." 2. Facts of the case, in brief, are that the appellant is a contractor. A survey operation under Section 133A of the Income Tax Act, 1961 (in short, the Act) was conducted in the case of appellant on 16/03/2011 and various documents were impounded and the statement of the appellant as well as his staffs were recorded under Section 131 of the Act. After giving due consideration of all the facts and the material available with him, the Assessing Officer rejected the books of account of the assessee under Section 145(3) of the Act and estimated the income at Rs. 20,09,770/- @ 10% of total turnover.
ITA 122/Ran/2016 Shri Kirtiman Singh Vs DCIT 3. Aggrieved by the order of Assessing Officer, the assessee preferred appeal before the ld. CIT(A), who vide the impugned order, restricted the addition to 8% of the total contract receipts. 4. Aggrieved by the order of ld. CIT(A), this appeal has been preferred before the Tribunal and the Hon'ble ITAT vide its order dated 05/04/2019 passed in ITA No. 121/Ran/2016 and 122/Ran/2016 further restricted the addition to 5% of the total contract receipts by following the decision of Hon'ble Jurisdictional High Court of Jharkhand and also allowed depreciation and partners remuneration. However, the Hon'ble ITAT, though, in the body of the order at the beginning, has taken both ITA No. 121/Ran/2016 and ITA No. 122/Ran/2016 for the A.Y. 2009-10 and 2010-11 while passing the final decision, the Hon'ble ITAT only considered the grounds raised for A.Y. 2009-10 in ITA No. 121/Ran/2016 and the grounds raised for A.Y. 2010-11 in ITA No. 122/Ran/2016 remained to be adjudicated. 5. Thus, the appellant filed Misc. Application being MA No. 14/Ran/2019 in ITA No. 122/Ran/2016 for the A.Y. 2010-11 before the Hon'ble Tribunal and pointed out the mistake which was apparent from the record under Section 254 of the Act. Accordingly, the Hon'ble Tribunal recalled the impugned order dated 05/04/2019 for limited purpose to adjudicate the grounds raised in A.Y. 2010- 11 in ITA No. 122/Ran/2016. 6. The present appeal in ITA No. 122/Ran/2016 for A.Y. 2010-11 is being adjudicated to rectify the same. 7. Considering the facts and circumstances of the case and the decision of the Hon'ble ITAT dated 05/04/2019 for A.Y. 2009-10, the ratio of the decision has
ITA 122/Ran/2016 Shri Kirtiman Singh Vs DCIT to be followed in ITA No. 122/Ran/2016 and accordingly, the Assessing Officer is directed to apply a rate of 5% of the total contract receipts in the A.Y. 2010- 11 and allow the same relief as given by this Bench in ITA No. 121/Ran/2016 for the A.Y. 2009-10. In the result, grounds of appeal raised by the assessee are partly allowed. 8. In the result, this appeal of assessee is partly allowed. Order announced in open court on 20th May, 2025. Sd/- Sd/- (GEORGE MATHAN) (RATNESH NANDAN SAHAY) JUDICIAL MEMBER ACCOUNTANT MEMBER Ranchi, Dated: 30/05/2025 *Ranjan Copy to: 1. Assessee 2. Revenue 3. CIT 4. DR By order 5. Guard File Sr. Private Secretary, ITAT, Ranchi
