9911796707
TMI Blog2010 (8) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been justified in enhancing the income by applying net profit rate of 12%. 3. That the learned CIT(A), Chandigarh has not been justified in ignoring circular issued by CBDT which is binding on the Income Tax Department. 4. That the learned CIT(A), Chandigarh has not been justified in not allowing deduction on account of depreciation, interest and other expense directly related to Government Department while applying profit rate as there is no element of profit. 3. The assessee in Assessment Year 2006-07 (ITA No.819/Chd/2009) has raised another ground by way of ground No.5 5. That the learned CIT(A), Chandigarh has not been justified in not reducing payment made to subcontractor from gross receipts while applying profit rate. 4. The ground No.1 raised by the assessee being general, is dismissed. 5. The facts in the present appeal are identical, however, for adjudicating the issue a reference is being made to the facts in ITA No.818/Chandi/2009. The brief facts of the case are that the assessee was engaged in the business of road construction i.e. mainly laying and relaying of metal roads. The said business was carried on under the name and style of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate order. The contention of the learned AR for the assessee was that the ratio of the judgment are not applicable to the facts of the case and rate of 7% merits to be applied. The learned AR placed reliance on the past history of the case where all up to date assessments was framed at the rate of 7% and reliance was also placed on the order of the Tribunal in the case of Rajinder Singh in ITA No. 253/Chandi/2008 relating to Assessment Year 1998-99, where the Tribunal had upheld the rate of 8%. The CIT(A) also noted that survey u/s 133A of the Income Tax Act was conducted on the premises of the assessee on 12.3.2009 and it was found during the survey operations that the books of account of any of the years were not available at the business premises. The assessee offered ₹ 1.30 crores for taxation as additional income for Assessment Year 2009-10. The explanation of the assessee was that the said amount was surrendered to buy peace of mind and it included unexplained income pertaining to previous year on account of unexplained advances to the suppliers. The explanation of the assessee was that for the past many years the income had been assessed on the basis of rate on net ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arried on by the father of assessee for the past several years and rate of 8% was applied. Even in the assessment orders passed u/s 143(3) of the Act relating to assessment years 2003-04 2004-05, rate of 7% was applied. It was further pointed out that the Tribunal in assessment years 1996-97 1998 99 had upheld application of rate of 8%. The Ld. AR for the assessee pointed out that as the business conditions were same and the assessee was working for the same Govt. agencies, there was no reason for enhancement. The Ld. DR for the Revenue placed reliance on the order of CIT(A) and the ratio laid down by the Hon'ble Punjab Haryana High Court in the case of Prabhat Kumar (supra). 7. We have heard the rival contentions and perused the records. The assessee is carrying on the business of road contractor. Due to non production of books of account by the assessee, the same were rejected by the Assessing Officer and a net profit rate of 7% was applied to determine the income for the year. The CIT(A) enhanced the said rate to 12% to determine the income in the hands of the assessee. The assessee is in appeal against the rate to be applied for working out the income for the year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the Hon'ble Punjab Haryana High Court in Raja Ram Contractors Vs. CIT in ITA No. 689 of 2009, date of decision 7.4.2010, has upheld application of net profit rate of 10% as Net Profit Rate. It has been further laid down by the Hon'ble Jurisdictional High Court that where the books of account have been rejected, the estimation of income by applying of flat rate inherently involves an element of subjectivity. Similar issue of road contractor arose before the Tribunal in Kumar Builders Vs. ACIT, Ludhiana (ITA No.416/Chd/2010), wherein also the issue raised was the application of net profit rate. The Assessing Officer and CIT(A) had applied net profit rate of 12% to the gross receipts to determine the income for the year following the ratio laid down by the Hon'ble Punjab Haryana High Court in M/s Prabhat Kumar (Supra). The Tribunal in the case of Kumar Builders (ITA No.416/Chd/2010) vide order dated 30.6.2010 had directed the Assessing Officer to recompute the income after applying net profit rate of 10%. 9. The net profit rate to the applied for computing the income of the assessee is thus dependent on the facts of each case. We find that the Tribunal in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-07 and ground No. 4 in Assessment Year 2005-06 and ground Nos. 4 5 in Assessment Year 2006-07 are dismissed. 11. The assessee in ITA No.865/Chd/2009 is a partnership firm in which Shri Gurinder Pal Singh (the assessee in the above appeals), is partner to the extent of 90% share. The facts of the case are identical to the facts in ITA Nos. 818 819/Chd/2009. The Assessing Officer in the present case had applied net profit rate of 8% to the gross receipts, which was enhanced to 12% by the CIT(A) following the identical nature of work being done by the assessee and Shri Gurinder Pal Singh. In line with our reasoning in the paras herein above, we set aside the order of CIT(A) and direct the Assessing Officer to compute the income after applying net profit rate of 8% to the contract receipts less cost of material supplied by the Government and purchases made from Government Agencies. In the facts of the case, no further deduction is allowable on account of depreciation, interest and other expenses, once the income is determined by applying net profit rate to the receipts. The ground No.2 raised by the assessee is thus allowed and ground Nos. 4 5 are dismissed. 12. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
