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Income Tax Appellate Tribunal, PATNA BENCH, PATNA (VIRTUAL HEARING AT KOLKATA
Before: SHRI DR. MANISH BORAD, HON’BLE & SHRI SONJOY SARMA, HON’BLE
IN THE INCOME TAX APPELLATE TRIBUNAL, PATNA BENCH, PATNA (VIRTUAL HEARING AT KOLKATA) BEFORE SHRI DR. MANISH BORAD, HON’BLE ACCOUNTANT MEMBER AND SHRI SONJOY SARMA, HON’BLE JUDICIAL MEMBER ITA No.201/PAT/2014 Assessment Year: 2008-09 M/s. Kumar Construction ITO, Ward-Chapra P.O. Dumri Adda, P.S. Vs. Doriganj, Dist. Chapra. PAN: AAJFM 7295 G (Appellant) (Respondent) Present for: Appellant by : Smt. Archana Sharma, CA Respondent by : Shri Rupesh Agrawal, Sr. DR Date of Hearing : 28.06.2022 Date of Pronouncement : 23.09.2022 O R D E R PER SONJOY SARMA, JM: The captioned appeals preferred by the assessee for the A.Y. 2008-09 is directed against the order passed u/s 143(3) of the Income-tax Act, 1961 passed by OSD, CIT(A) dated 27.06.2014. The assessee has taken the following revised ground of appeal for A.Y. 2008-09 as under: “i. An expenses of 10% including the expenses on purchase of material amounting to Rs. 14,21,032/- has been disallowed and the same has been added to assessees total income while computation of tax. ii. Sundry creditors amounting to Rs. 69,73,159/- including outstanding labour charges/payment and others have been disallowed and the same has been added to assessees total income while computation of tax. iii. Tax imposed upon the assessee is very harsh and unjustifiable as it makes the net profit of the assessee approximately 31% of the revenue received during the year and as such impugned order required to be set aside. So, we pray for consider the revised grounds stated above and grant relief for assessee’s income @ 6% of the total receipts of Rs. 2,84,29,497/-.”
2 ITA No.201/PAT/2014 M/s. Kumar Construction A.Y. 2008-09 2. Brief facts of the case are that the assessee had filed its return of income for the assessment year 2008-09 on 11.01.2009 at an income of Rs. 2,52,156/-. The case of the assessee was selected for scrutiny. The AO during the course of hearing found that no bills and vouchers were produced by the assessee except the copies of bills of bitumen and metal chips and the AO in absence of such bills and vouchers of material purchased and he added 10% of expenses at Rs. 14,21,032/- to the total income of the assessee. Further, he found that sundry creditors amounting to Rs. 74,87,159/- as non-genuine and made addition of Rs. 74,87,159/- for AY 2008-09. Aggrieved by the order of the Assessing Officer, assessee preferred an appeal before the First Appellate Authority and the appeal of the assessee was partly allowed by the ODS vide order dated 27.06.2014.
Dissatisfied with the above order, the assessee preferred an appeal before the Tribunal. At the time of hearing, the ld. AR of the assessee submitted that while framing the assessment by the AO, expenses of 10% on purchase of material amounting to Rs. 14,21,032/-has been disallowed and the same has been added to the total income of the assessee and sundry creditors amounting to Rs. 69,73,159/- in respect of outstanding labour charges/payment and others have been disallowed and the same has been also added to total income of the assessee. Moreover, the ld. CIT(A) also did not give any relief to the assessee, while deciding the impugned order, the AR of the assessee further submitted that construction of road majorly requires materials have bitumen, stone chips, sand, mitti, morum, metal, bricks, cement, stone dust out of which bitumen and metal chips have already been provided and rest of the materials purchases were made locally where only small traders available who are not as much financially literate therefore bills cannot be furnished moreover it is not a legal binding to take ID-proof of traders at the time of purchase, therefore, the addition should be deleted. Besides the another issue in respect of sundry creditors amounting to Rs. 69,73,159/- outstanding labour charges/payment since all the creditors have confirmed their outstanding balances against the appellant as on 31.03.2008 which tallied with the credit balances shown by the appellant in its books of accounts against their names although the claim of the assessee has been out-rightly rejected on the technical ground that id-proof of the creditors has not been submitted. Moreover, same has not been mentioned under any
3 ITA No.201/PAT/2014 M/s. Kumar Construction A.Y. 2008-09 section of the I.T. Act, 1961. Therefore, addition made by the authorities below required to be deleted. The ld. AR substantiate her argument, she relied on various decisions rendered by co-ordinate bench where the Tribunal directed the Assessing Officer to recomputed the income by applying net profit on gross contract receipts and pray before us. Similar direction may be given to the AO to recompute the income by applying of net profit on gross contract receipts.
We after hearing the rival submission of the parties and examining the impugned order as well as material available on record. We notice that assessee could not be able to provide purchase of construction material before the AO to substantiate its claim and sundry creditors amounting to Rs. 69,73,159/- before the authorities below however claim of the assessee was disallowed by ld. CIT(A) passed the impugned order. It is an admitted fact that the assessee did not provide necessary documents before the authorities below to substantiate its claim and the AO disallowed 10% of such expenses amounting to Rs. 14,21,032/- and sundry creditors of Rs. 69,73,159/- respectively. We consider the facts of the case found that although assessee has failed to produce proper accounts before the authorities below and addition was made for which the net profit of the assessee becomes approximately high and unjustified therefore, we direct the Assessing Officer to delete the above additions and recompute the income of assessee by applying 8% of the gross contract receipts and then reduce the income already offered in the return of income and tax the remaining amount. Accordingly, the appeal of the assessee is partly allowed.
In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 23.09.2022.
Sd/- Sd/- (MANISH BORAD) (SONJOY SARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Kolkata, Dated: 23.09.2022. Biswajit, Sr. P.S.
4 ITA No.201/PAT/2014 M/s. Kumar Construction A.Y. 2008-09
Copy to: 1. The Appellant: M/s. Kumar Construction. 2. The Respondent: ITO, Ward-Chapra. 3. The CIT, 4. The CIT (A) 5. The DR Concerned Bench
//True Copy// [ By Order
Assistant Registrar ITAT, Kolkata Benches, Kolkata