SVB Constructions, Anantapur, Hyderabad V. ACIT, Circle-1, Anantapur, Anantapur

ITA 1011/HYD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2683 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-01-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 13-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: K A SAI PRASAD
• Section: 143(3)

Judgement Text

ITA NO 10 11 OF 2016 SVB CONSTRUCTIONS ANANTAPUR. PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.1011/HYD/2016 (ASSESSMENT YEAR:2011-12) M/S. SVB CONSTRUCTIONS ANANTAPUR PAN: ABN FS 4084Q VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1 ANANTAPUR (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.A. SAI PRASAD FOR REVENUE : SMT. SUMAN MALIK, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2011-12. IN T HIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF T HE LEARNED CIT (A)- KURNOOL, DATED 29.04.2016. THE ASSESSEE HAS RA ISED THE FOLLOWING GROUNDS OF APPEAL: 1.THE LEARNED CIT(A) IS NOT JUSTIFIED IN CONFIRMI NG THE ADDITION OF RS.88,69,745. 2. THE LEARNED CIT (A) IS NOT JUSTIFIED IN NOT PROP ERLY APPRECIATING THE DETAILED BILLS FOR THE WORK DONE B Y THE APPELLANT ITSELF AND THE WORK DONE BY SUB- CONTRACTORS. 3. THE LEARNED CIT (A) IS NOT JUSTIFIED IN REJECTIN G THE APPELLANTS CLAIM THAT PART OF THE WORK (RS.1,06,15,712/- OUT OF RS.10,20,17,897) WAS EXECUTED BY THE APPELLANT ITSELF ON THE MERE GROUND DATE OF HEARING: 23.01.2018 DATE OF PRONOUNCEMENT: 2 5 . 0 1 .2018 ITA NO 10 11 OF 2016 SVB CONSTRUCTIONS ANANTAPUR. PAGE 2 OF 5 THAT THE APPELLANT DID NOT PRODUCE CONFIRMATORY PROOF FROM THE CONTRACTEE ENERCON (INDIA) LTD . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM CARRYING ON CIVIL CONTRACT WORK. IT FILED ITS E-RET URN FOR THE A.Y 2011-12 ON 30.09.2011 ADMITTING TOTAL INCOME OF RS. 22,33,230. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE ASSESSEE WAS REQUIRED TO FILE CERTAIN INFORMATION. THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED THE DETAIL S CALLED FOR. 3. THE AO OBSERVED THAT THE ASSESSEE HAS TAKEN CIVI L CONTRACT WORK FROM M/S. ENERCON (INDIA) LTD, DAMAN AND RECEIVED GROSS BILLS OF RS.10,20,17,897 DURING THE YEAR UNDE R CONSIDERATION AND THAT THE ASSESSEE HAS GIVEN THE W ORK TO SUB- CONTRACT AND PAID AN AMOUNT OF RS.8,90,10,914 TO TH EM DURING THE YEAR. SINCE VERY FEW DETAILS OF THE WORK CARRIE D OUT BY THE ASSESSEE HAVE BEEN GIVEN BY THE ASSESSEE, THE AO IS SUED A SHOW- CAUSE NOTICE TO THE ASSESSEE ON 10.03.2014 REQUIRIN G HIM TO FURNISH ALL THE DETAILS IMMEDIATELY. THE ASSESSEE F URNISHED PART OF THE DETAILS AND ON PERUSAL OF THE SAID DETAILS, THE AO OBSERVED THAT AS FAR AS THE ASSESSEE IS CONCERNED, THERE NEE D NOT BE MUCH EXPENDITURE EXCEPT ADMINISTRATIVE EXPENDITURE, AS T HE ASSESSEE FIRM HAS GIVEN SUB-CONTRACTS TO MANY PERSONS. SINCE THE ASSESSEE ALSO DID NOT PRODUCE VOUCHERS FOR THE ENTIRE EXPENS ES, THE AO HELD THAT THE GROSS PROFIT AVAILABLE WITH THE ASSES SEE IS AT RS.1,30,06,983 AND AFTER ALLOWING THE ADMINISTRATIV E EXPENSES OF RS.13,62,363, INTEREST TO PARTNERS OF RS.61,645 AND REMUNERATION TO PARTNERS OF RS.4,80,000, THE AO TREATED THE BALA NCE OF RS.1,11,02,975 AS INCOME OF THE ASSESSEE. SINCE THE ASSESSEE HAD ITA NO 10 11 OF 2016 SVB CONSTRUCTIONS ANANTAPUR. PAGE 3 OF 5 ALREADY ADMITTED NET PROFIT OF RS.22,33,230, THE RE MAINING AMOUNT OF RS.88,69,745 WAS BROUGHT TO TAX. AGGRIEVE D, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) STA TING THAT THE ASSESSEE ALSO HAS CARRIED ON PART OF THE WORK AND T HEREFORE, THE ENTIRE RECEIPT AFTER REDUCING THE SUB-CONTRACT PAYM ENT CANNOT BE TREATED AS THE ASSESSEES INCOME FOR THE RELEVANT A .Y. THE CIT (A) HOWEVER, CONFIRMED THE ORDER OF THE AO AND THE ASSE SSEE IS IN SECOND APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE AO AND THE CIT (A) HAVE ACCEPTED THE PAYMENTS M ADE BY THE ASSESSEE TO THE SUB-CONTRACT WORK. HE SUBMITTED THA T THE BALANCE OF RS.1,30,06,983 HAS BEEN TREATED AS THE GROSS PRO FIT OF THE ASSESSEE WHICH IS NOT SUSTAINABLE. HE SUBMITTED THA T THE ASSESSEE HAS CARRIED ON CERTAIN WORK BY ITSELF AND AFTER RED UCING THE EXPENSES INCURRED BY IT FOR CARRYING ON SUCH WORK, THE ASSESSEE HAS OFFERED THE NET PROFIT TO TAX. HE HAS DRAWN OUR ATTENTION TO THE P&L A/C OF THE ASSESSEE TO DEMONSTRATE THAT THE ASS ESSEE HAS ALSO INCURRED CERTAIN EXPENSES TO THE TUNE OF RS.9, 80,45,894. HE HAS ALSO DRAWN OUR ATTENTION TO THE BILLS & VOUCHER S AT PAGES 7 TO 35 OF THE PAPER BOOK FILED BY HIM. HE SUBMITTED THA T THESE PAPERS WERE SUBMITTED BEFORE THE AO AND THE CIT (A), BUT T HEY HAVE FAILED TO CONSIDER THE SAID DETAILS. HE HAS DRAWN OUR ATTE NTION TO THE SUBMISSIONS OF THE ASSESSEE DATED 30.01.2014 WHEREI N THE ASSESSEE HAD STATED THAT THE FIRM HAD EXECUTED THE WORK ON ITS OWN OF RS.1,31,56,983 AND RELATED EXPENDITURE WAS C LAIMED IN P&L A/C. HE EXPLAINED THE WORK CARRIED OUT BY THE A SSESSEE AS CLEANING AND FORMATION OF ROADS ON HILLS AND FOR TH IS PURPOSE IT HAD TO REMOVE BOULDERS AND CARRY OUT WORK OF BLASTI NG, LEVELLING ITA NO 10 11 OF 2016 SVB CONSTRUCTIONS ANANTAPUR. PAGE 4 OF 5 ETC., WHICH ARE LABOUR ORIENTED AND THEREFORE, THE MARGIN OF INCOMES IS VERY LOW. THEREFORE, ACCORDING TO THE LE ARNED COUNSEL FOR THE ASSESSEE, THE ASSESSEE HAS ESTABLISHED THAT IT HAS CARRIED ON THE WORK BY ITSELF AND THE NET PROFIT OFFERED BY IT @ 20% IS MORE THAN REASONABLE. 5. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED ANY MATERIAL TO SATISFY THE AUTHO RITIES BELOW THAT THE ASSESSEE HAS ALSO CARRIED OUT ANY OF THE C ONTRACT WORK. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE AO AND THE CIT (A) HAVE NOT DOUBTED THE SUB-CONTRACTS GIVEN BY THE ASSESSEE. WE FIND TH AT THE ASSESSEE HAS FILED A STATEMENT OF THE TOTAL WORK EXECUTED BY THE SUB- CONTRACTORS AS WELL AS BY ITSELF AT PAGES 56 TO 61 OF THE PAPER BOOK. IN SUPPORT THEREOF, THE ASSESSEE HAS ALSO FIL ED THE RELEVANT BILLS AND INVOICES. AS SEEN FROM THESE DOCUMENTS, T HE ASSESSEES PAYMENTS ARE MOSTLY TOWARDS HIRING OF THE JCBS AND CIVIL CONSTRUCTION WORK. THEREFORE, THE FINDINGS OF THE A O AND THE CIT (A) THAT THE ASSESSEE HAS NOT FILED ANY DETAILS ABO UT THE WORK CARRIED ON BY IT IS NOT CORRECT. FURTHER, THE ENTIR E RECEIPT, EXCEPT FOR THE SUB CONTRACT PAYMENTS AND THE ADMINISTRATIV E EXPENSES, HAS BEEN TREATED AS ASSESSEES INCOME. WE ALSO FIND THAT THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNT. IN THESE CIR CUMSTANCES, WE PREFER TO ESTIMATE THE PROFIT RATHER THAN REMAND TH E ISSUE TO THE FILE OF THE AO FOR VERIFICATION OF THE ABOVE DOCUME NTS. WE FIND THAT IN THE CASES OF CIVIL CONTRACTORS, THE MAXIMUM RATE OF NET PROFIT ITA NO 10 11 OF 2016 SVB CONSTRUCTIONS ANANTAPUR. PAGE 5 OF 5 ESTIMATED BY THIS TRIBUNAL IS 12.5% WHEREAS THE NET PROFIT OFFERED BY THE ASSESSEE IS MORE THAN SUCH RATE. THEREFORE, WE DIRECT THE AO TO ACCEPT THE NET PROFIT OFFERED BY THE ASSESSEE . 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JANUARY, 2018. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 25 TH JANUARY 2018. VINODAN/SPS COPY TO: 1 C/O CH. PARTHASARATHY & CO. 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO.1, ASHOKNAGAR, HYDERABAD 5 00020 2 ACIT, CIRCLE-1, AAYAKAR BHAVAN, 3 RD ROAD, NEW TOWN, ANANTAPUR 515001 3 CIT (A)-KURNOOL 4 PR. CIT - KURNOOL 5 THE DR, ITAT HYDERA BAD 6 GUARD FILE BY ORDER