ACIT 15(3), MUMBAI vs. TIRUPATI CORPORATION, NAVI MUMBAI

These are the appeals filed by the Revenue against the order of CIT(A)—26, Mumbai dated 25/02/2014 for A.Y. 2007-08 in the matter of order passed u/s.143(3) and 271(1)(c) of the IT Act.

The following grounds have been taken by the Revenue in 1. "On the facts and in the circumstances of the case , the Id. CIT(A) has erred in directing the Assessing Officer to determine the profit @8% on W.I. P. excluding the interest to the partners, remuneration to partners and cost of land merely on the basis that such a rate was accepted by the Assessing Officer in an earlier assessment year, without considering that res-judicata does not apply to the income tax 3067/Mum/2014 M/s. Tirupati Corporation proceedings and also that the facts in the impugned assessment year are distinctly different ," 2. " On the facts and in the circumstances of the case , the Id. CIT(A) has erred in directing to the Assessing Officer to blindly follow the rule of consistency without going into the facts of this assessment year which is not the ratio of relevant direction of the Hon'ble Supreme Court of India.”

Rival contentions have been heard and record perused.

Facts in brief are that assessee is a Contractor. During the year under consideration, the AO estimated profit at 10%. After giving detailed finding, the CIT(A) directed for applying profit rate at 8%. CIT(A) has observed that Department itself has accepted profit at 8% work in progress during the immediately preceding A.Y.2006-07. Keeping in view the nature of assessee’s business, we do not find any infirmity in the order of CIT(A) for directing the AO to determine profit at 8% on work in progress. Accordingly, we do not find any reason to interfere in the order of CIT(A). 5. In the result, appeal of the Revenue is dismissed. ITA No.3067/Mum/2014 3067/Mum/2014 M/s. Tirupati Corporation 6. This appeal is filed by the Revenue for deleting the penalty imposed by the AO with respect to the addition made on estimated basis by estimating profit at 10%. As we have already confirmed the order of CIT(A) for deleting the addition, the penalty has no legs to stand.

Moreover, we found that AO has levied penalty on the estimated addition so made which has been deleted by CIT(A) by observing that AO has estimated the income of assessee at 10% of the profit on work in progress and since, there is no change in the facts, applying rule of consistency as propounded by Hon’ble Supreme Court in case of Radhasoami Satsang, he directed the AO to determine profit at 8%, thus, penalty imposed on the basis of addition made by AO on estimated basis was deleted by CIT(A). In view of the following judicial pronouncements, no penalty is leviable on the addition made on estimated basis. a. C.IT.Vs. Sangrur Vanaspati Mill Ltd. 303 ITR 53 (P & H) b. C.IT. Vs. RavaitSingh&Co. 254ITR191(P&H) c. CIT Vs. Krishi Tyre Retreading & Rubber lnd.[2014] 360 ITR 580 (Raj.) d. DCIT Vs. Kalindi Rail Nirman Engg. Ltd. [2012J52 SOT 91 (Delhi) e. Sunil Kumar Singhania Vs. ACIT [2012] 52 SOT 137 (Hyderabad) 8. In view of the above discussion, we do not find any reason to interfere in the order of CIT(A) for deleting the penalty so imposed.