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The ACIT -25(3) C-11, R.No.308 Bandra Kurla Complex, Bandra (E) Mumbai. Vs. M/s. Umiya Construction 2B, Gopal Kunj S.N. Road, Kandivali(W) Mumbai-400 067.
November, 27th 2014
            ,  Û ,  

                MUMBAI BENCHES "F", MUMBAI

       ,     ,  ,  ¢ 

           Before Shri Joginder Singh, Judicial Member
           And Shri Sanjay Arora, Accountant Member

           ITA NO.6415//MUM/2010 (AY: 2007-08)

The ACIT -25(3)               M/s. Umiya Construction
C-11, R.No.308             2B, Gopal Kunj
Bandra Kurla Complex,         S.N. Road, Kandivali(W)
Bandra (E)                    Mumbai-400 067.

    ( /Appellant)                   (×/Respondent)
P.A. No.AAAFU 1010 A

                        C.O. No.93/Mum/2013
     Arising out of ITA NO.6415//MUM/2010 (AY: 2007-08)

M/s. Umiya Construction       The ACIT -25(3)
2B, Gopal Kunj             C-11, R.No.308
S.N. Road, Kandivali(W)       Bandra Kurla Complex,
Mumbai-400 067.               Bandra (E)

     (Cross Objector)               (×/Respondent)
P.A. No.AAAFU 1010 A

    /Department by               Shri Pawan Kumar Beerla
×    /Assessee by :               None

   /                              /
Date of Hearing : 24.11.2014   Date of Pronouncement :
                                    2       ITA NO.6415 & CO 93/MUM/2010 & 13
                                                             Umiya Constructi on

                             / O R D E R

          This appeal by the Revenue is against the order dated

30/06/2010 passed by the ld. CIT(A) for the AY 2007-08. The assessee

has also raised cross objection against the order of the ld. First

Appellate Authority.

2.        During hearing nobody represented the assessee inspite of

the fact that on earlier occasion the assessee sought adjournment.

Therefore we have no option but to proceed ex-parte qua the assessee

and tend to dispose of this appeal on the basis of material available on

record. The ld. DR, Shri Pawan Kumar Beerla, strongly defended the

assessment order and advanced his arguments which is identical to the

ground raised.

2.1       We have considered the submissions put forth by the ld. DR

and perused the material available on record. The facts in brief are that

the assessee is a partnership firm engaged in the         business of civil

construction declared income of Rs.11,83,740/- in its return filed on

29/10/2007, accompanied by P&L Account, audited statement of

accounts and tax audit report u/s. 44AB of the Act. The assessment was

completed u/s. 143(3) of the Act determining the total income at

Rs.66,07,805/-. During assessment proceedings it was noted by the
                                     3         ITA NO.6415 & CO 93/MUM/2010 & 13
                                                                Umiya Constructi on

Assessing Officer that the assessee purchased construction material

from M/s. Vishal Traders and M/s.Piyush Sand Agency. The Assessing

Officer recorded the statement of one Vishal Bipin Chandra Saha,

proprietor of M/s. Vishal Traders on 4/9/2009 and further found that

his father was proprietor of M/s. Piyush Sand Agency. He further noted

that the bills raised by both the parties were written by one persona and

having over- writing adding Umiya Construction. The assessee explained

that the purchases from M/s. Vishal Traders at Rs.2,18,234/- was

already confirmed by the proprietor and there was no reason to disallow

the purchases. Finally, based on the statement, the net profit was

worked out to Rs. 30% determining the income at Rs.66,07,810/- on the

contract receipt of Rs.1,93,14,480/-. On appeal, the ld. Commissioner of

Income tax (Appeals) considered the totality of facts and held that the

profit in any case cannot be more than 19%. The relevant portion from

the impugned order is reproduced hereunder :-

          "4.4 I have considered the submissions of the
          representative and the stand taken by the A.O. It is
          seen from the assessment order that the AO h as
          no t g iven jus tif ic ati on f or addi tio n of
          Rs .2, 18,234/- r epres en ting purchases from
          M/s. Vishal Traders when Mr.Vishal B Shah
          appeared before the AO, and confirmed the
          supply of material to the appellant in
          r e s p ons e to th e s ho wc aus e no ti c e . T he A O
          h as no t de al t wi th th i s objection in the
          assessment order. He has only dealt with the
          objection      of    the   appellant     relating     to
          disallowance of purchases from M/s,Piyush
                          4        ITA NO.6415 & CO 93/MUM/2010 & 13
                                                    Umiya Constructi on

Sand Agency and finally added purchases from
M/s.Padmavati Transport also at the end of the
discussion. As rightly contended by the
representative, statement recorded from son
would not empower the AO to make addition in
respect of purchases from father. The father
was not summoned for examination. Further
as contended by the representative the
appellant filed confirmation of account from
Shri Bipin Popatlal Shah which is not
disputed by the AO. Further it is seen that all
the payments were made by account payee
cheques which were cleared through bank
account Even otherwise with the agreed
addition of Rs.18,56,987/- towards purchase
of steel from M/s.Manju Enterprises, the net
profit of the appellant works       out to 19.21%
and even assuming that the books of account
were incorrect or incomplete, the AO could have
only applied section 145 and determined the net
profit at an appropriate rate and when the profit is
already more than 19%, there is no reason for
making further addition. In the circumstances, the
addition in respect of purchases from M/s.Vishal
Traders (Rs.2,18,234), M/s.Piyush Sand Agency
(Rs.11,26,045) and M/s.Padmavati Transport
(Rs.2,78,590) are deleted.

4.4.1 In respect of purchases from M/s.
Annapurna Construction, it is seen from the
reply of the appellant to the showcase notice
issued by the AO that M/s. Annapurna
Construction filed his reply on 25.08.2009 duly
signed by the proprietor which is not disputed by the
AO. The claim of the appellant that Shri Suresh S.
Patel attended personally with the accountant but
the AO did not record his statement is also not
disputed except stating that the appellant did not
produce the proprietor. It is also not in dispute
that a copy of Income-tax return and bank
statement of M/s. Annapurna Construction
was also filed before the A.O. With the above
evidences already filed before the AO, there is no
                                    5        ITA NO.6415 & CO 93/MUM/2010 & 13
                                                              Umiya Constructi on

          case for addition merely because the appellant did
          not produce Mr. Suresh S. Patel but he appeared
          on his own alongwth his accountant and there
          was change of address. In fact, a copy of bank
          statement of M/s. Annapurna Construction was
          filed before the A.O. by letter dated 24.08.2009
          and it is noticed that the account payee cheques
          issued by the appellant were cleared in the
          above bank account. In the circumstances,
          there is no reason to doubt the purchases from
          the above parties. Even otherwise. as already
          discussed,    with    the   agreed    addition   of
          Rs.18,56,987/-, the net profit of the appellant
          works to more than 19% and there is no
          justification    for   further    addition.   Even
          assuming that the books of account of the
          appellant are incomplete or incorrect, the A.O,
          could have rejected the books of account and
          only es timated the income of the appellant
          which could not be in any case more than 19%.In
          th e circumstances, the addition of Rs.19,44,212/-
          in respect of M/s. Annapurna Construction is
          unjustified and the same is deleted."

2.2. If the observation made in the assessment order, conclusion drawn

in the impugned order, material available on record and the assertions

made by the ld. DR, if, kept in juxtaposition and analyzed, we find that

no justification has been mentioned in the assessment order by the

Assessing Officer for making the addition of Rs.2,18,234/-, when Mr.

Vishal B. Shah, in response to showcause notice, confirmed the supply

of material to the assessee. The addition is merely based upon the

statement of the son without examining the father and more specifically

when all the payments were made by account payee cheques. Even
                                        6          ITA NO.6415 & CO 93/MUM/2010 & 13
                                                                    Umiya Constructi on

otherwise    if   it   is   assumed   that   the   books     of   accounts       were

incorrect/incomplete the Assessing Officer was expected to apply section

145 of the Act and determine the net profit at an appropriate rate, thus,

there was no reason for making the further addition. So far as, the

purchases from M/s. Annapurna Construction are concerned, reply

dated 25/8/2009 was filed, duly signed by the proprietor, which is not

controverted by the Revenue . It is also noted that Shri Suresh S. Patel

personally attended the proceedings along with the attendant, but, their

statement was not recorded, wherein, the copy of statement of M/s.

Annapurna Construction and Income tax Return were filed before the

Assessing Officer . In view of this fact, we find no infirmity in the order

of the ld. Commissioner of Income tax (Appeals) and more specifically

when even in the agreed addition of Rs.18,56,987/-, the net profit of the

assessee work out approximately to 19% . We affirm the stand of the ld.

Commissioner of Income tax (Appeals).

             The appeal of the Revenue is having no merit, consequently,


3.           In the cross objection by the assessee, it has been contended

that the ld. Commissioner of Income tax (Appeals) erred in confirming

the disallowance of purchases of Rs.18,56,987/-. After hearing the

submissions of the ld. DR, and on perusal of record, we note that there

is an agreed addition of Rs.18,56,987/-, vide letter dt. 21/12/2009
                                     7        ITA NO.6415 & CO 93/MUM/2010 & 13
                                                               Umiya Constructi on

addressed to the Assessing Officer wherein through para-6 "in the above

circumstances we would like to admit the addition of Rs.18,56,987/- in order

to avoid further litigation and dispute and buy peace. We agree to pay

income tax on the same." The assessee itself mentioned therefore, in the

absence of any contrary material we find no infirmity in the conclusion

of the ld. Commissioner of Income tax (Appeals). In view of the agreed

addition, there is no merit in the cross objection of the assessee .

           Finally the appeal of the Revenue and the cross objection of

the assessee are dismissed.

   Order pronounced in the open court in the presence of ld. DR at
the conclusion of the hearing on 24/11/2014 .


                  Sd/-                             Sd/-
             (Sanjay Arora)                    (Joginder Singh)
 Mumbai;  Dated : 26th November, 2014.
    \/      Copy of the Order forwarded to :
1.  / The Appellant
2.   × / The Respondent.
3.    () / The CIT, Mumbai.
4.     / CIT(A)-13, Mumbai
5.    ,   ,  / DR,
     ITAT, Mumbai
6.   [  / Guard file.
                                                           / BY ORDER,
           ×  //True Copy//

                                      /  (Dy./Asstt. Registrar)
                                       ,   / ITAT, Mumbai.
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