THE ITO, WARD - 1(3), Vijayawada V. Dontala Purnachandra Rao,

ITA 105/VIZ/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0203 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 22-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: A C GANGAIAH; M K SETHI
• Section: 143(3); 145

Judgement Text

ITA NO.105/VIZAG/2013 & CO 63/VIZAG/2013 DONTALA PURNACHANDRA RAO, KRISHNA DIST. 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . . . . , ,, , . . . . , , , , % % % % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER . .. ./ // / I.T.A.NO.105/VIZAG/2013 ( / ASSESSMENT YEAR : 2009-10) ITO WARD-1(3) VIJAYAWADA VS. DONTALA PURNACHANDRA RAO KRISHNA DIST. [ PAN: AFFPD8153H ] (+ + + + / APPELLANT) (,-+ ,-+ ,-+ ,-+ / RESPONDENT ) C.O. NO.63/VIZAG/2013 (ARISING OUT OF I.T.A.NO.105/VIZAG/2013) ( / ASSESSMENT YEAR : 2009-10) DONTALA PURNACHANDRA RAO KRISHNA DIST. VS. ITO WARD - 1(3) VIJAYAWADA ( + + + + / APPELLANT) ( ,-+ ,-+ ,-+ ,-+ / RESPONDENT ) + / / APPELLANT BY : SHRI A.C. GANGAIAH, AR ,-+ / / RESPONDENT BY : SHRI M.K. SETHI, DR / 3 / DATE OF HEARING : 29.10.2015 / 3 / DATE OF PRONOUNCEMENT : 27.11.2015 ITA NO.105/VIZAG/2013 & CO 63/VIZAG/2013 DONTALA PURNACHANDRA RAO, KRISHNA DIST. 2 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE AND THE CROSS APPE AL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), VIJAYAWAD A FOR THE ASSESSMENT YEAR 2009-10. 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS A CIVIL CONTRACTOR AND ON A TOTAL RECEIPT OF RS.1,73,09,239/- AN AMOUNT OF RS.8 ,72,805/- WAS ADMITTED AS AN INCOME. THE RETURN FILED BY THE ASSE SSEE WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT). THEREAFTER FOLLOWING THE DUE PROCESS, ASSESSMENT WA S COMPLETED U/S 143(3) OF THE ACT BY REJECTING THE BOOKS OF ACCOUNT S FILED BY THE ASSESSEE AND ESTIMATED THE PROFIT ON GROSS TURNOVER OF CONTRACT RECEIPTS @ 12.5%. IN THE ASSESSMENT ORDER, THE AO HAS OBSER VED THAT DURING THE ASSESSMENT PROCEEDINGS, THE AR OF THE ASSESSEE WAS ASKED TO PRODUCE BILLS/VOUCHERS IN RESPECT OF EXPENDITURE DE BITED TO THE PROFIT & LOSS ACCOUNT. IN RESPONSE TO THIS, THE AR OF THE A SSESSEE HAS PRODUCED BILLS & VOUCHERS AND ON VERIFICATION OF THE SAME, I T IS NOTICED THAT MOST OF THE EXPENDITURE IS INCURRED THROUGH SELF MADE VO UCHERS. THE ASSESSEES PROFIT COULD NOT BE DEDUCED FROM THE BOO KS OF ACCOUNTS PRODUCED BY THE ASSESSEE DUE TO PREPONDERANCE OF SE LF MADE VOUCHERS ITA NO.105/VIZAG/2013 & CO 63/VIZAG/2013 DONTALA PURNACHANDRA RAO, KRISHNA DIST. 3 AND THE SELF MADE VOUCHERS CANNOT BE RELIED AND BOO K RESULTS OF ASSESSEE ARE REJECTED U/S 145 (3) OF THE ACT. SINC E THE BOOK RESULTS OF THE ASSESSEE ARE REJECTED, THE INCOME OF THE ASSESS EE WAS ESTIMATED @ 12.5% ON THE GROSS RECEIPTS OF RS.1,73,09,239/- WHI CH WORKS OUT TO RS.21,63,655/-. SINCE ASSESSEE HAS ALREADY DECLARE D PROFIT OF RS.8,12,805/-, THE SAME IS REDUCED FROM RS.21,63,65 5/-, HENCE AN AMOUNT OF RS.12,90,850/- IS ADDED TO THE TOTAL INCO ME OF THE ASSESSEE. 3. ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). HE SUBMITTED BEFORE THE LD. CIT(A) THAT TH E ASSESSING OFFICER, WITHOUT THERE BEING ANY REASON, BOOKS OF ACCOUNTS WERE REJECTED AND ESTIMATION WAS MADE AT HIGHER SIDE AND PRAYED FOR D ELETION OF THE ADDITION MADE BY THE AO. 4. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, HE HAS DIRECTED THE AO TO RESTRICT THE DISALLOWANCE TO 2.5% OF SUCH EXPENDITURE AMOUNTING TO RS.1,88,035/-. 5. ON BEING AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. D.R. SUBMITTED THAT THE ASSESSEE IS A CIVIL CON TRACTOR AND IN THE LINE OF ASSESSEES BUSINESS, MINIMUM PROFIT MARGIN WOULD BE @ 8 TO 10% AND SUBMITTED THAT ATLEAST THE DISALLOWANCE OF EXPE NDITURE UPTO 10% MAY BE CONFIRMED. ITA NO.105/VIZAG/2013 & CO 63/VIZAG/2013 DONTALA PURNACHANDRA RAO, KRISHNA DIST. 4 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS SUBMITTED THAT THE LD. CIT(A) RESTRICTED DISALLOWANCE TO 2.5% , WHICH IS CORRECT AND THEREFORE PRAYED FOR NO FURTHER DISALLOWANCE AND RE QUESTED TO CONFIRM THE ORDER OF LD. CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECOR DS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE A SSESSEE IS CARRYING ON THE BUSINESS OF CIVIL CONTRACT WORKS FILED A RETURN OF INCOME DECLARING TOTAL INCOME OF RS.8,72,805/-. THE ASSESSING OFFIC ER AFTER FOLLOWING THE DUE PROCESS HAVING NOT SATISFIED WITH THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE, HE HAS ESTIMATED THE PROFIT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION @ 12.5% OF THE GROSS TURNOVER O N THE CONTRACT RECEIPTS. ON APPEAL, THE LD. CIT(A) WITHOUT GIVING PROPER JUSTIFICATION, SIMPLY REDUCED DISALLOWANCE FROM 12.5% TO 2.5%. WE FIND THAT THE ASSESSING OFFICER HAS ESTIMATED PROFIT AT 12.5% ON THE GROSS RECEIPTS. THE LD. CIT(A) WITHOUT CONSIDERING THAT, HE HAS RES TRICTED THE DISALLOWANCE TO 2.5% OF EXPENDITURE. WE FIND THAT T HE ORDER PASSED BY THE LD. COMMISSIONER IS NOT PROPER AND HE HAS NOT C ONSIDERED THE ISSUE ALSO PROPERLY. HOWEVER, WE ALSO FIND THAT THE ESTI MATION OF THE PROFITS BY THE AO WAS ALSO ON HIGHER SIDE AND KEEPING IN VI EW OF THE FACTS AND CIRCUMSTANCES, THE INCOME OF THE ASSESSEE IS ESTIMA TED AT 8% AND ACCORDINGLY DIRECT THE AO TO CALCULATE THE INCOME O F THE ASSESSEE. ITA NO.105/VIZAG/2013 & CO 63/VIZAG/2013 DONTALA PURNACHANDRA RAO, KRISHNA DIST. 5 8. SO FAR AS CROSS APPEAL FILED BY THE ASSESSEE IS CONCERNED, IT IS ONLY SUPPORTIVE. IN VIEW OF OUR ABOVE ORDER, THE CROSS APPEAL FILED BY THE ASSESSEE CANNOT SURVIVE. THEREFORE, THE SAME IS DI SMISSED. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS PA RTLY ALLOWED AND CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27 TH NOV15. SD/- SD/- ( (( ( . . . . ) ( ) ( ) ( ) ( . .. . ) )) ) ( (( ( G. MANJUNATHA) ( (( ( V. DURGA RAO ) )) ) / // / ACCOUNTANT MEMBER / // / JUDICIAL MEMBER /VISAKHAPATNAM: 6 / DATED : 27.11.2015 VG/SPS / , 7 / COPY OF THE ORDER FORWARDED TO :8 1. + / THE APPELLANT ITO WARD-1(3), VIJAYAWADA 2. ,-+ / THE RESPONDENT DONTALA PURNACHANDRA RAO, D.NO.1-84, KATTUBADIPALEM, G. KONDURU MANDAL, KRISHNA DIST. 3. : / THE CIT, VIJAYAWADA 4. : () / THE CIT(A), VIJAYAWADA 5. ,, , / // / DR, ITAT, VISAKHAPATNAM 6 . . . . / GUARD FILE / BY ORDER // TRUE COPY // @A ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM