Commissioner Of Income-Tax, Hisar v. M/S Parbhat Kumar Contractor, Sirsa

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Case No. : I. T. A. No. 293 of 2008Date of Decision : November 14, 2008. Commissioner of Income-tax, Hisar....AppellantVs.M/s Parbhat Kumar Contractor, Sirsa....Respondent CORAM : HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE L. N. MITTAL * * * Present :Mr. Sanjeev Kaushik, Standing Counsel for C. I. T. - appellant. * * * ADARSH KUMAR GOEL, J. (Oral) : Revenue has preferred this appeal under Section 260-A ofIncome Tax Act, 1961 against the order of the Ld. Income Tax AppellateTribunal, Chandigarh Bench “A” Chandigarh passed in ITANo.323/Chandi/2005 dated 25.05.2007 for the Assessment Year 2001-02,proposing to raise following substantial question of law :- “i)Whether on the facts and in thecircumstances of the case, the Ld. Tribunal wasright in law in directing to determine the net profitby applying a net profit rate of 12% on contractreceipts of Rs.91,65,025/-, excluding the cost ofmaterial supplied by the department subject toallowability of salary and interest paid to the I. T. A. No. 293 of 2008 partners, without appreciating that the assessee ismaintaining account books and the AssessingOfficer/CIT(A) have made separate addition ofRs.16,48,675/- by proving that the claim of labourpayable was not genuine and further that there wasclear admission on behalf of the assessee duringappellate proceedings before Ld. I.T.A.T. that theaccount of wages is unverifiable ?” The assessee is a contractor engaged in the work of civilconstruction and filed its return for the assessment year in question. TheAssessing Officer made addition to the returned income mainly on accountof claim for wages being found to be not verifiable. On appeal of theassessee, CIT (A) made further additions. Finally, the issue wasconsidered by the Tribunal. While considering the issue of addition onaccount of unverifiable wages, the Tribunal considered it appropriate toapply reasonable rate of profit, which was assessed at the rate of 12% oncontract receipts, excluding the material supplied by the department. TheTribunal also relied upon its judgment in the case of M/s Ess Ess Builders(P) Ltd.(in I.T.A. No.707/Chandi/1997 for the assessment year 93-94,order dated 16.09.2003). We have heard learned counsel for the parties and perused therecord. The Tribunal has proceeded on the basis that there may beunverifiable wages which may call for addition to income, but not to theextent assessed by CIT (A). Applying net profit rate on the basis of bestjudgment, assessment in a given situation will be a question of fact unless,such an assessment is shown to be arbitrary or perverse. In the present case,it cannot be held that any substantial question of law arises. Assessment of12% of net profit rate of contract receipt is not shown to be arbitrary orperverse. I. T. A. No. 293 of 2008 No substantial question of law arises for consideration.The appeal is dismissed. (ADARSH KUMAR GOEL)JUDGE November 14, 2008monika ( L. N. MITTAL )JUDGE