Ita/163/2014 Of Commissioner Of Income Tax Ii Amritsar v. Vidya Sagar Saini

ITA No.163 of 2014 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No.163 of 2014 (O&M)Date of decision: 15.9.2014 The Commissioner of Income Tax II, Amritsar Vs, ..-.-- Appe Shri Vidya Sagar Saini, Government Contractor, Saingarh Pathankot ..-.-Responde CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTALHON’BLE MR. JUSTICE FATEH DEEP SINGH Present: Mr. Denesh Goyal, Advocate tor the appellant. Ajay Kumar Mittal,J. 1,This appeal has been preferred by the revenue under Section260A of the Income Tax Act, 1961 (in short, “the Act’) against the orderdated 31.10.2013, Annexure A.3 passed by the Income Tax AppellateTribunal Amritsar Bench, Amritsar (in short, “the Tribunal’) in ITA No.335(ASR)/2012 for the assessment year 2009-10, claiming followingsubstantial questions of law:- 1) On the facts and the circumstances of the case, whether thHon'ble Tribunal has erred in applying rate of 8% of netprofit against 12% applied by the AO without appreciatingthat the AO had done so after rejecting the books of accountunder section 145(3) after pin pointing specific defects?Hon'ble Tribunal has erred in applying rate of 8% of netprofit against 12% applied by the AO without appreciatingthat the AO had done so after rejecting the books of accountunder section 145(3) after pin pointing specific defects? i11)On the facts and circumstances of the case, whether thHon'ble Tribunal has erred in allowing depreciation inaddition to restricting the net profit rate at 8% withoutappreciating the fact that once books of account are rejectedHon'ble Tribunal has erred in allowing depreciation inaddition to restricting the net profit rate at 8% withoutappreciating the fact that once books of account are rejected and net profit is applied on rate basis, depreciation is deemedto have been allowed in the net profit so computed?to have been allowed in the net profit so computed? i11)Whether on the facts and circumstances of the case, thelearned ITAT was right in dismissing the appeal of thedepartment by respectfully following their own order passedin the case of the assessee for the assessment year 2006-07whereas the said order of the Tribunal was not accepted bythe department and appeal was filed by the department undersection 260A which was later dismissed by this Hon'ble HighCourt. Since tax effect in this case was below the prescribedmonetary limits, so no SLP has been filed?learned ITAT was right in dismissing the appeal of thedepartment by respectfully following their own order passedin the case of the assessee for the assessment year 2006-07whereas the said order of the Tribunal was not accepted bythe department and appeal was filed by the department undersection 260A which was later dismissed by this Hon'ble HighCourt. Since tax effect in this case was below the prescribedmonetary limits, so no SLP has been filed? iv) The Hon'ble ITAT failed to appreciate that every assessmenyear 1S Separate one and AO had applied net profit rate of12% due to peculiar facts and circumstances in thisassessment year. Therefore, the judgment passed by theITAT is wrong and perverse?year 1S Separate one and AO had applied net profit rate of12% due to peculiar facts and circumstances in thisassessment year. Therefore, the judgment passed by theITAT is wrong and perverse? iv) The Hon'ble ITAT failed to appreciate that every assessmenyear 1S Separate one and AO had applied net profit rate of12% due to peculiar facts and circumstances in thisassessment year. Therefore, the judgment passed by theITAT is wrong and perverse?year 1S Separate one and AO had applied net profit rate of12% due to peculiar facts and circumstances in thisassessment year. Therefore, the judgment passed by theITAT is wrong and perverse? 2A few facts relevant for the decision of the controversyinvolved as narrated in the appeal may be noticed. The assessee is agovernment contractor and has been undertaking work of construction ofroads in the border districts of Punjab and Himachal Pradesh for the lastmany years. Return of income was filed on 19.01.2010 in the status ofindividual showing income of|=a38,70,532/- which was processed undersection 143(1) of the Act on 31.3.2011. The case was selected for scrutiny,Assessment under section 143(3) of the Act was made vide order dated21.12.2011, Annexure A.1 at an income of|41,17,27,839/- by applying 12%rate on gross receipt after excluding cost of material supplied by thedepartment. Aggrieved by the order, the assessee filed appeal before theCommissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated12.6.2012, Annexure A.2, the CIT(A) partly allowed the appeal and directedthe Assessing officer to apply net profit rate of 8% as against 12% applied ITA No.163 of 2014 (O&M) at the time of assessment on the contract receipt and to allow thedepreciation. The relief allowed by the CIT(A) was at |=66,11,532/-.Aggrieved by the order, the department filed appeal before the Tribunal.Vide order dated 31.10.2013, Annexure A.3, the Tribunal dismissed theappeal. Hence the instant appeal by the revenue,3,We have heard learned counsel for the appellant-revenue andperused the record. 4Learned counsel for the appellant-revenue submitted that thecase of the assessee for the current assessment year 2009-10 was differentfrom the assessment year 2006-07 and therefore, the gross profit rate of 8%applied for the assessment year 2006-07 ought not to have been applied forthe assessment year 2009-10 as well. 5 We are unable to accept the contention of learned counsel forthe appellant-revenue. The Tribunal while rejecting the contention of therevenue recorded as under:- “6.1 As regards the estimation of income, the AO applied a netprofit rate of 12% relying upon the decisions of ITAT andHon'ble Punjab and Haryana High Court in certain cases. But ithas not been brought on record, whether the facts in those casesare identical or similar to the facts in the present case. In suchcircumstances, the facts in assessee's own case have to beperused. Infact, for making an estimation, the circumstancesand facts in assessee's own case during the impugned year andin past years are the best guide, as also argued by learnedcounsel for the assessee, Mr. Salil Kapoor, Advocate. In pastthe history of the assessee has been accepted, as net profit rateof 8% on gross turnover. For the assessment year 2006-07, inassessee'S own case, the ITAT Amritsar Bench has upheld netprofit rate of 8% which decision has been confirmed by theHon'be Jurisdictional High Court, as mentioned hereinabove. We are aware that each year is an independent year in Incometax proceedings but when there is no deviation of facts broughton record by the revenue with reference to preceding years, wehave no alternative but to accept the past history of net profitrate of 8% and also with a view of circumstances and facts ofimpugned year. Accordingly, we find no infirmity in the orderof the learned CIT(A). Thus, all the grounds of revenue aredismissed.” 6. 6.The Tribunal had categorically recorded that there was nodeviation of facts brought on record by the revenue with reference to thecurrent assessment year and in such a situation, on the basis of the pasthistory, net profit rate of 8% was applied. Further, this Court while dealingwith similar issue in ITA No.80 of 2012, |The Commissioner of Income We are aware that each year is an independent year in Incometax proceedings but when there is no deviation of facts broughton record by the revenue with reference to preceding years, wehave no alternative but to accept the past history of net profitrate of 8% and also with a view of circumstances and facts ofimpugned year. Accordingly, we find no infirmity in the orderof the learned CIT(A). Thus, all the grounds of revenue aredismissed.” 6. 6.The Tribunal had categorically recorded that there was nodeviation of facts brought on record by the revenue with reference to thecurrent assessment year and in such a situation, on the basis of the pasthistory, net profit rate of 8% was applied. Further, this Court while dealingwith similar issue in ITA No.80 of 2012, |The Commissioner of Income Tax IT, Amritsar vs. Vidya Sagar Saini,in the case of the assessee itself,decided on 13.2.2013, upheld net profit rate of 8%. Learned counsel for theappellant has not been able to demonstrate that there was any change incircumstances. TiAccordingly, no substantial question of law arises. The appealbeing devoid of any merit stands dismissed. September 15, 2014?6&? (Ajay Kumar Mittal)Judge(Fateh Deep Singh)Judge