Thota Venkata Ram Kumar, Bhimavaram V. THE ITO, Bhimavaram

CO 38/VIZ/2014

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2411 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 22-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C V S MURTHY
• Assessee Lawyers: T SATYANADHAM
• Section: 143(3)

Judgement Text

ITA NO.63/VIZAG/2014 & CO 38/VIZAG/2014 THOTA VENKATA RAM KUMAR, BHIMAVARAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER ./I.T.A.NO.63/VIZAG/2014 ( / ASSESSMENT YEAR: 2009-10) ITO, WARD - 2 , BHIMAVARAM VS. SRI THOTA VENKATA RAM KUMAR, BHIMAVARAM [PAN: AECFT1488F ] ( / APPELLANT) ( ! / RESPONDENT) C.O.38/VIZAG/2014 (ARISING OUT OF I.T.A.NO.63/VIZAG/2014) ( / ASSESSMENT YEAR: 2009-10) SRI THOTA VENKATA RAM KUMAR, BHIMAVARAM VS. ITO, WARD - 2, BHIMAVARAM ( / APPELLANT) ( ! / RESPONDENT) / APPELLANT BY : SHRI T. SATYANADHAM , DR / RESPONDENT BY : SHRI C.V.S. MURTHY, AR / DATE OF HEARING : 11 .08.2016 / DATE OF PRONOUNCEMENT : 09.09.2016 ITA NO.63/VIZAG/2014 & CO 38/VIZAG/2014 THOTA VENKATA RAM KUMAR, BHIMAVARAM 2 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), VISAKHAPATNAM DATED 24.12.2013 FOR THE ASSE SSMENT YEAR 2009-10. THE C.O. FILED BY THE ASSESSEE IS IN SUPPO RT OF THE ORDER PASSED BY LD. CIT(A). 2. FACTS ARE IN BRIEF THAT THE ASSESSEE, IS AN INDI VIDUAL, ENGAGED IN THE BUSINESS OF CIVIL CONTRACTS AND FILED A RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION BY DECLARING TO TAL INCOME OF ` 4,50,060/-. THE RETURN FILED BY THE ASSESSEE WAS I NITIALLY PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CAL LED AS 'THE ACT'), THEREAFTER AFTER DUE PROCESS ASSESSMENT WAS COMPLET ED U/S 143(3) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD DONE CONTRACT W ORKS FROM M/S. NAGARJUNA CONSTRUCTION COMPANY (NCC) LTD., HYDERABA D IN THE NAME OF YAMINISRI CONSTRUCTIONS. THE ASSESSEE HAS DECLARED GROSS RECEIPTS OF ` 82,69,332/- AND DECLARED AN INCOME OF ` 4,50,059/-. THE A.O. HAS ALSO OBSERVED THAT FROM THE RECORDS PROVIDED BY THE NCC LTD., THE ASSESSEE HAS DONE WORK TO THE TUNE OF ` 1,11,84,766/- AND MATERIAL SUPPLIED FOR ` 33,19,868/-, THE TOTAL AMOUNT OF ` 1,45,04,634/-. THE A.O. HAS ITA NO.63/VIZAG/2014 & CO 38/VIZAG/2014 THOTA VENKATA RAM KUMAR, BHIMAVARAM 3 OBSERVED THAT THE ASSESSEE HAS DONE THE WORK FOR ` 1,45,04,634/-. ON THE OTHER HAND, THE ASSESSEE HAS ADMITTED ONLY GROS S RECEIPTS OF ` 82,69,732/- IN THE RETURN OF INCOME. THE A.O. HAS CALLED THE EXPLANATION OF THE ASSESSEE THAT WHY THE DIFFERENCE AMOUNT OF ` 29,15,434/- BE NOT CONSIDERED AS INCOME OF THE ASSE SSEE. THE ASSESSEE HAD ADMITTED BEFORE THE A.O. THAT THE BOOKS ARE NOT PROPERLY MAINTAINED, HOWEVER, CLAIMED THAT THE THERE WAS THE CORRESPONDING EXPENDITURE FOR THIS DIFFERENCE RECEIPTS AMOUNTING ` 29,15,434/-, WHICH MAY BE ALLOWED. HOWEVER, THE A.O. HAS NOT ALLOWED ANY EXPENDITURE CORRESPONDING TO THE DIFFERENCE AMOUNT OF ` 29,15,434/- ON THE GROUND THAT ASSESSEE FAILED TO PRODUCE BILLS/VOUCHERS IN S UPPORT OF THE CLAIM. ACCORDINGLY, A.O. HAS TREATED ` 29,15,434/- AS AN INCOME OF THE ASSESSEE AND ADDED TO THE TOTAL INCOME OF THE ASSES SEE. IN RESPECT OF SUPPLY OF MATERIAL WORTH ` 33,19,868/-, A.O. HAS NOTED THAT THE NCC LTD HAS CERTIFIED THAT THE ASSESSEE HAS SUPPLIED THE SA ME, WHICH AMOUNTS TO TRADING ACTIVITY. AS THE ASSESSEE FAILED TO FURNIS H ANY BILLS/VOUCHERS FOR THE SAID MATERIAL PURCHASE, THE PROFIT WAS ESTIMATE D AT 8% ON THE TOTAL TURNOVER. THUS, THE PROFIT WAS ARRIVED AT ` 2,65,859/- AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN THIS MANNER THE TOTAL INCOME WAS DETERMINED AT ` 36,31,083/-. ITA NO.63/VIZAG/2014 & CO 38/VIZAG/2014 THOTA VENKATA RAM KUMAR, BHIMAVARAM 4 3. ON BEING AGGRIEVED, ASSESSEE CARRIED MATTER IN A PPEAL BEFORE THE LD. CIT(A). THE ASSESSEE HAS SUBMITTED A DETAILED REPRESENTATION BEFORE THE LD. CIT(A). LD. CIT(A) AFTER CONSIDERIN G THE DETAILED EXPLANATION FILED BY THE ASSESSEE, HE HAS CONSIDERE D THE RELEVANT MATERIAL IN RESPECT OF SUPPLY OF MATERIAL TO THE NC C LTD. IT IS ONLY A LABOUR RATE OF CONTRACT BUT NOT SUPPLY OF MATERIAL AND ACCORDINGLY DELETED THE ADDITION MADE BY THE A.O. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: 5.2 I HAVE CONSIDERED THE SUBMISSIONS MADE. AS REGA RDS THE IMPUGNED ADDITION OF RS.2,65,589/-, I FIND MERIT IN THE AR'S CONTENTION THAT THE MATERIALS WERE SUPPLIED BY NCC LTD AND NOT BY THE A SSESSEE. THIS IS EVIDENT FROM THE SCOPE OF WORK ORDER DTD,11.07.2007 AND 01.06.2007 (FILED AS PART OF PAPER-BOOK) IN WHICH IT IS CLEARL Y MENTIONED THAT THIS IS ONLY A LABOUR RATE CONTRACT. EVEN THE INFORMATION F URNISHED BY NCC LTD REFER TO THE MATERIAL SUPPLIED BY IT. THEREFORE, I A M OF THE VIEW THAT THERE IS NO JUSTIFICATION FOR THE IMPUGNED ADDITION OF RS .2,65,589/-. ACCORDINGLY THE AO IS DIRECTED TO DELETE THE SAME. 5.3 DURING THE APPELLATE PROCEEDINGS THE ASSESSEE W AS ASKED TO CLARIFY WHAT WAS THE SOURCE FOR THE CASH DEPOSITED NOTICED IN THE SBI ACCOUNT MAINTAINED BY THE ASSESSEE WITH AXIS BANK, GOKAK BR ANCH. IN THIS REGARD, THE ASSESSEE FLIED LETTER DTD.20.12.2013 AND REPRES ENTED THAT THE CASH WITHDRAWALS FROM CORPORATION BANK BHEEMAVARAM IS TH E SOURCE FOR THE CASH DEPOSITS IN THE SB ACCOUNT MAINTAINED WITH AXI S BANK GOKAK. IT WAS FURTHER REPRESENTED THAT THE WITHDRAWALS FROM THE S BI AXIS BANK ACCOUNT WAS UTILIZED TO MAKE PAYMENTS TO LABOURERS. THE AR FURTHER REPRESENTED THAT THE SAME WAS EXPLAINED TO THE AO, WHO AFTER EX AMINING THE DETAILS FLIED WAS SATISFIED WITH THE ABOVE EXPLANATION. WIT H REGARD TO THE DIFFERENCE IN THE CONTRACT TURNOVER OF RS.29,15,434 /(RS.1,11,84,766/- - RS.82,69,332/-), THE AR REPRESENTED THAT THERE WAS NO UNDERSTATEMENT OF TURNOVER AND THAT THE DISCREPANCY AROSE BECAUSE OF THE DIFFERENCE IN THE RAISING OF BILLS, RELEASING OF PAYMENT AND DEDUCTIO N OF TDS. I HAVE CONSIDERED THE SUBMISSIONS. IT IS SEEN THAT NCC LTD HAS IN ITS LETTER TO THE AO HAS STATED THAT THE CONTRACT WORK DURING THE YEA R WAS RS.1,11,84,766/-. HOWEVER THE ASSESSEE HAD ADMITTED ONLY RS.82,69,332/- . THE ASSESSEE POINTED OUT THE OVERALL TURNOVER AS PER THE 26A FORM FILED ITA NO.63/VIZAG/2014 & CO 38/VIZAG/2014 THOTA VENKATA RAM KUMAR, BHIMAVARAM 5 BY NCC LTD AND THE ASSESSEE FOR THE FOUR YEARS MATC HES, AND THAT THERE WAS NO SUPPRESSION OF RECEIPTS. BUT THE ASSESSEE HA D NOT SATISFACTORILY EXPLAINED THE REASONS FOR THE DISCREPANCY IN THE SU BJECT YEAR POINTED OUT IN THE IMPUGNED ASSESSMENT ORDER AND HAS NOT RECONC ILED THE SAME. TAKING INTO ACCOUNT THE OVERALL FACTS AND CIRCUMSTA NCES, AND OF THE FACT THAT THE OVERALL TURNOVER MATCHES AS PER TDS FORMS FILED BY DEDUCTOR, I CONSIDER IT APPROPRIATE TO ESTIMATE INCOME AT 8% ON THE DIFFERENT CONTRACT RECEIPTS AMOUNTING TO RS.2,33,235/- AS INCOME OF TH E ASSESSEE TO BE CONSIDERED FOR ADDITION INSTEAD OF THE IMPUGNED ADD ITION OF P.S.29,15,434/-. ACCORDINGLY, THE AG IS DIRECTED TO RESTRICT THE ADDITION TO RS.2,33,235/-. 4. I HAVE HEARD BOTH THE SIDES, GONE THROUGH THE OR DERS OF THE AUTHORITIES BELOW AND I FIND THAT THE LD. CIT(A) AF TER CONSIDERING THE RELEVANT MATERIAL CAME TO A CONCLUSION THAT ASSESSE E HAS NOT SUPPLIED ANY MATERIAL TO THE NCC LTD. IT IS ONLY A LABOUR R ATE OF CONTRACT. THE DEPARTMENT HAS NOT BROUGHT ANY MATERIAL TO CONTRADI CT THE FINDING GIVEN BY THE LD. CIT(A). I FIND THAT THE LD. CIT(A) AFTE R CONSIDERING ALL THE DETAILS DELETED THE ADDITION MADE BY THE A.O. IN V IEW OF THE ABOVE, I FIND NO REASON TO INTERFERE WITH THE ORDER PASSED B Y THE LD. CIT(A). THIS GROUND OF APPEAL RAISED BY THE REVENUE IS DISM ISSED. 5. IN SO FAR AS THE DIFFERENCE IN CONTRACT TURNOVER OF ` 29,15,434/- IS CONCERNED ( ` 1,11,84,766/- - ` 82,69,332/-), IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THERE IS NO UNDERSTATEMENT OF T URNOVER AND THAT THE DISCREPANCY AROUSED BECAUSE OF THE DIFFERENCE IN TH E RAISING OF BILLS, RELEASING OF PAYMENT AND DEDUCTION OF TDS. THE LD. CIT(A) AFTER ITA NO.63/VIZAG/2014 & CO 38/VIZAG/2014 THOTA VENKATA RAM KUMAR, BHIMAVARAM 6 CONSIDERING THE EXPLANATION AND ALSO OTHER DETAILS HE HAS ESTIMATED PROFIT AT 8% ON THE DIFFERENCE OF CONTRACT RECEIPTS AMOUNTING TO ` 2,33,235/- AND DIRECTED THE A.O. TO RESTRICT THE AD DITION TO THAT EXTENT OF ` 2,33,235/-. 6. I HAVE CAREFULLY CONSIDERED THE ORDER OF THE LD. CIT(A) AND I FIND THAT THERE IS A DIFFERENCE IN CONTRACT TURNOVER DEC LARED BY THE ASSESSEE AND AS PER THE NCC LTD. OF ` 29,15,434/-. THE ASSESSEE HAS ASKED THE A.O. TO ALLOW THE EXPENDITURE IN RESPECT OF THE DIF FERENCE. HOWEVER, THE A.O. HAS REJECTED THE REQUEST OF THE ASSESSEE AND T OTAL DIFFERENCE IS ADDED AS AN INCOME OF THE ASSESSEE. I FIND THAT TH E A.O. IS NOT CORRECT IN ADDING ENTIRE DIFFERENCE OF TURNOVER AS AN INCOM E. THE LD. CIT(A) HAS ESTIMATED ON A DIFFERENCE TURNOVER AT 8% AND DE LETED THE ADDITION MADE BY THE A.O. TO THAT EXTENT. I FIND NO INFIRMI TY IN THE ORDER PASSED BY THE LD. CT(A). 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ITA NO.63/VIZAG/2014 & CO 38/VIZAG/2014 THOTA VENKATA RAM KUMAR, BHIMAVARAM 7 8. SO FAR AS C.O. FILED BY THE ASSESSEE IS CONCERNE D, IT IS ONLY SUPPORTING THE ORDER PASSED BY THE LD. CIT(A). IN VIEW OF MY ABOVE ORDER, IT BECOMES INFRUCTUOUS AND ACCORDINGLY DISMI SSED. HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 9 TH SEPT16. SD/- ( . ) (V. DURGA RAO) /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 09.09.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO, WARD-2, BHIMAVARAM 2. / THE RESPONDENT SRI THOTA VENKATA RAM KUMAR, TH ATAVARTHI COMPLEX, UNDI ROAD, BHIMAVARAM-534 202. 3. ) / THE CIT, RAJAHMUNDRY 4. ) ( ) / THE CIT(A), VISAKHAPATNAM 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM