DCIT 7(3) vs. VASTU KIRTI ENTERPRISES P.LTD, MUMBAI

The aforesaid appeal has been filed by the revenue against impugned order dated 26.06.2014, passed by Ld. CIT(Appeals)-13, Mumbai for the quantum of assessment passed under section 143(3) for the assessment year 2010- 11, on the following grounds:- “(i) The Ld. CIT(A) has erred in law and on facts in giving relief to the assessee without properly appreciating the factual and legal matrix as clearly brought out by the Assessing Officer. (ii) The Ld. CIT(A) has failed to appreciate that because of non production of various documents, this was a fit

After hearing both the parties, it is noticed that, the tax effect on the disputed issue is less than Rs.10 lakhs, which is apparent from the facts discussed herein after. From the perusal of the impugned order, it is seen that, assessee is engaged in the business of Civil Engineering and contract work. From such activities it had shown total turnover of Rs.14,26,96,823/-. The taxable income from such activities was shown at Rs.69,86,417/-, which in terms of the net profit rate comes to approximately 5%. The AO after detailed discussion in the impugned order had rejected the books of account under section 145(3) and proceeded to make best judgment assessment to determine the income of the assessee. Taking cue from section 44AD, AO adopted the net profit rate of 8% and accordingly, he estimated the addition of Rs.1,14,15,745/-, as against the income of Rs. 69,86,417/-.

In the first appeal, the Ld. CIT(A) confirmed the rejection of books of account by the AO, however proceeded to estimate the profit as per his observation and finding and thereby sustained the addition of Rs.32,88,740/-. Thus, if the same is added to the net profit shown by the assessee, that is, Rs. 69,86,417/-, then the aggregate amount of income from contract work exceeds Rs.1 crore, which has led to net profit rate of approx @ 7.2%, as against the income estimate by the AO at Rs.1.14 crores by adopting @ 8%. Against the said addition as confirmed by the CIT(A), assessee is not appeal as admitted by the Ld. Counsel for the assessee. Thus, the order of CIT(A) has been accepted by the assessee. Now, the disputed addition on which the revenue has filed an appeal is much less than Rs.14 lakhs and the tax effect on such disputed addition would admittedly be much less than Rs.10 lakhs.

Ld. DR also admitted that the tax effect on the disputed addition in the impugned appeal would be less than Rs.10 lakhs.

In view of the aforesaid fact that the tax effect in the impugned appeal is less than Rs.10 lakhs and in the wake of CBDT’s Circular No. 21 of 2015 dated 10.12.2015, we accordingly hold that the appeal filed by the revenue is not maintainable. Further it has also been clarified by the same circular that this monetary limit will apply on pending appeals also which is evident from para 10 of the impugned Circular, which reads as under:- “10. This instruction will apply retrospectively to pending appeals to be filed henceforth in High Courts/Tribunals. Pending appeals below the specified tax limits in para 3 above may be withdrawn/not pressed. Appeals before the Supreme Court will be 4 वा�तु �क�त� एंटर�ासेस �ाइवेट �ल�मटेड Vastu Kirti Enterprises P Ltd ITA 5533/Mum/2014 governed by the instructions on this subject, operative at the time when such appeal was filed”.

In the result, appeal of the revenue stands dismissed.