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Income Tax Appellate Tribunal, KOLKATA BENCH “A” KOLKATA
Before: Shri Waseem Ahmed & Shri S.S.Viswanethra Ravi
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:-
This appeal and Cross Objection (CO) by the Revenue and assessee are against the order of Commissioner of Income Tax (Appeals), Asansol dated 18.02.2013. Assessment was framed by ACIT Circle-2, Asansol u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 23.12.2011 for assessment year 2009-10.
CO No.89/Kol/2013 A.Y. 2009-10 ACIT Cir-2, Asl. V. Sh Mritunjoy Mukherjee Page 2 Shri Ravi Tulsiyan, L’d Authorized Representative appeared on behalf of assessee and Shri Rajat Kumar Kureel, L’d Departmental Representative appeared on behalf of Revenue. First we take up Revenue’s appeal in ITA No.1183/Kol/2013.
At the threshold it is noted that there is very smallness delay in filing the appeal by the Revenue. The Revenue has fled condonation petition, stating the reasons that the delay is occurred due to concerned official was on leave. Ld. AR for assessee submitted that considering delay he should not be having any objection to the Bench if the delay of condonation. Thus, in our considered opinion, on the facts and circumstances this delay deserves to be considered and therefore the same is condoned and hearing proceeded with.
3. Sole issue raised by Revenue is that L’d CIT(A) erred in treating the profit @ 10.5% of contract receipts.
4. Facts in brief are that assessee is an individual and engaged in business of civil constructions under the name & style of Proprietary firm M/s Mrityunjoy Mukherjee & Co. During the year under consideration the assessee has claimed various expenses in its profit and loss account. However, the assessee failed to substantiate the various expenses claimed and debited in the profit & loss account during assessment proceedings. Accordingly, the AO disallowed the expenses and added to the total income of the assessee as detailed below : i) On account of bogus expenses Rs.28,24,850 ii) On account of transporting charge Rs. 92,605 iii) On account of labour charges including hire charges Rs.28,66,611 iv) On account of general expenses Rs. 49,972 v) On account of site expenses Rs. 47,774 Rs.58,81,812 CO No.89/Kol/2013 A.Y. 2009-10 ACIT Cir-2, Asl. V. Sh Mritunjoy Mukherjee Page 3 5. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who gave partly relief to assessee by observing as under:- “16. On a careful consideration of facts, I relying on decisions sin paragraph 9 conclude that income has to be determined at a fixed percentage of gross receipts less materials supplied, if any. The percentage cannot lead to figure equaling or be near 33.41% fixed by Assessing Officer since there is no precedent. On the other hand, considering the level of absence of vouchers or its defects (considered high in this case) 8% ins not justified. Accordingly I direct the Assessing Officer to assess the income from contract work at 10.5% of the figure obtained by reducing value of materials supplied from gross contact receipts.”
Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us.
Before us Ld. DR submitted that Ld. CIT(A) has worked out the income on estimate basis @ 10.5% of the gross receipt without rejecting the books of account of assessee and vehemently relied on the order of AO.
On the other hand, Ld. AR submitted that there are various companies in the identical business and their profit from the business do not exceed more than 8% on the gross receipts. The assessee agreed for the addition of income @ 8% of the gross turnover to buy the peace of mind. The ld. AR also submitted that profit assessed under section 143(3) of the Act in the earlier years is 8% approx only.
We have rival parties and perused the materials available on record. From the aforesaid discussion, we find the AO has disallowed the various expenses as these were not verified. But the ld.CIT(A) has treated the income of the assessee @ 10.5% of the gross receipt. So the Revenue is in appeal before us. Now the question before us arises for adjudication is as to whether the action of the ld. CIT(A) is correct for working out the income @ 10.50% of the gross receipt. From the facts of the case, we find that the nature of the work of the assessee has not been doubted and in the similar facts and CO No.89/Kol/2013 A.Y. 2009-10 ACIT Cir-2, Asl. V. Sh Mritunjoy Mukherjee Page 4 circumstances various Hon’ble courts have held that a reasonable percentage of profit can be worked out which are cited below. “1. In the case of M/s Triveni Enterprise, Hyderabad Vs the Income-tax Officer Wd 6(1) & 353.Hyd/2011 it has been held that in the AY 2006-07 and 2008-09, the assessee was engaged in the business of civil construction. Assessee fails to prove the expenses with details AO estimated the income of the assessee at 12% of the gross receipt. On appeal, Learned CIT(A) directed the AO to estimate the income at 8% in the case of main contract receipts and at 6% on the sub contract receipt. Tribunal direct the Assessing Officer to estimate the income of the assessee at 8% on main contract receipts and at 5% of the sub contract receipts as above said.
2. In the case of Shri Om Prakash Tripathi Vs ACIT (Contractor) Circle 2(1), Farrukhabad. ITA No. 330/Agr/2005 it has been held that in the AY 2001-02, the assessee was engaged in the business of civil construction. Net profit rate shown by the assessee 5.32%. the same being accepted by the AO CIT(A), Agra. Rejected the books of account by applying provisions of section 145 and estimated the net profit at 7% of the gross receipts. Tribunal confirmed the order of the CIT(A) on the issue with conclusion that the rate applied has been rightly based on the net profit rate on different years.
In the case of Metropolitan Engg. Co. Opt. Society Ltd. vs. ACIT ITA No.s 2172 & 2172/Kol/2010 it has been held that in the AY 2001-02, the assessee is engaged in civil contract business with others business segments. AO estimated net income from the work contract @ 10% on the gross contract receipts. Assessee failed to furnish necessary evidence for purchase and other expenses. Purchase & expenses not confirmed on an enquiry conducted by the AO u/s. 133(6). Ld. CIT(A) confirmed the order of the Assessing Officer. Tribunal relied on the decision of Hon’ble Orissa High Court decision in the case of CIT Vs Nandaram Hunda Ram (1976) 103 ITR 433, wherein it is held that “if the assessee failed to produce acceptable accounts revenue would be on the decision of Royal medial Hall vs. CIT (1962) 46 ITR 748 (AP) wherein it is held that “estimate of income on the basis of materials available and the past assessment record was held proper” and Tribunal directed the Assessing Officer to recomputed the income by applying 6% of net profit on gross contract receipts.
In the case of Pravin Pandurang Patil, Islampur in ITA No. 850/PN/08 it has been held that in the AY 2005-06, the assessee is engaged in civil contract business with others business segments. AO rejected the books of account invoking the provisions of Section 145(3) and estimated net income from the contract business @ 8%. Assessee failed to produce the labour payment vouchers and purchase bills to verify the expenses purchase and closing stock. Ld. CIT(A) has estimated the income from regular contract business at 8% of the contract receipts and 4% in so far sub-contracting is concerned. Honble lordship of Tribunal, directed to estimate the income @ 6% from the contract business sand so far as profit on sub-contract business and road roller hiring is concerned uphold the estimation as adopted by the Commissioner of Income Tax (Appeals) to meet the end of justice.
CO No.89/Kol/2013 A.Y. 2009-10 ACIT Cir-2, Asl. V. Sh Mritunjoy Mukherjee Page 5
5. In the case of the ACIT Gandhidham Circle vs. M/s Ishwar Construction Co. Gandhidham, it has been held that in the AY 2005- 06, the assessee was engaged in the business of civil construction. Assessee fails to provide proper evidence in the shape of bills, vouchers, unable to verify purchases before the AO and AO made addition for unexplained purchase, sub-contract expenses and under valuation of work-in-progress. The Ld. CIT(A) estimated the total income by applying net profit rate of 4%. Both the assessee and revenue has challenged to the extent of order against them. The Tribunal inclined upon the order of the Ld. CIT(A) and accordingly confirmed.”
Respectfully following the same and considering the profit in its own case for the earlier years @ 8% approx of the gross receipts which was accepted by the Revenue, we find no reason to interfere in the order of Ld. CIT(A) and thus the ground of Revenue’s appeal is dismissed.
In the result, Revenue’s appeal dismissed.
Now coming to assessee’s CO No.89/Kol/2013.
6. In the CO, the assessee has challenged the rate 10.50% at which the Ld. CIT(A) directed the AO to compute the profit. The ld. AR submitted that the assessee should be charged profit @ 8% of the gross receipts. At the outset we find that the ld. CIT(A) in his order has given substantial relief to the assessee and we have already upheld the same. Accordingly we find no substance in the CO filed by the assessee. Hence we dismiss the same.