Jagadish Yadav, Bangalore V. ITO, Bangalore

ITA 1397/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0336 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 20-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H GURUSWAMY ITP

Judgement Text

ITA.1397/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'C', BANGALORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO.1397/BANG/2015 (ASSESSMENT YEAR : 2006-07) SHRI. JAGADISH YADAV, NO.24, K. V. LANE, AKKIPET, BENGALURU 560 053 .. APPELLANT PAN : AAXPY8082B V. INCOME-TAX OFFICER, WARD -1(3), BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. H. GURUSWAMY, ITP REVENUE BY : SHRI. A. V. SREENIVASAN, JCIT HEARD ON : 02.06.2016 PRONOUNCED ON : 17.06.2016 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY ASSESSEE ITS GRIEVANCE IS THAT ADDITION OF RS.5,25,026/- WAS MADE TO ITS INCOME FROM CONTRACTS BY THE AO AND THIS WAS CONFIRMED BY THE CIT (A), DISREGARDING THE NATU RE OF ITS BUSINESS. 02. FACTS APROPOS ARE THAT ASSESSEE, AN INTERIOR DE CORATOR AND DESIGNER HAD FILED ITS RETURN DECLARING INCOME OF RS.3,23,83 0/-. DURING THE COURSE OF ITA.1397/BANG/2015 PAGE - 2 ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE AO TH AT THE ASSESSEE HAD NOT INCLUDED A SUM OF RS.5,25,026/- RECEIVED FROM VARIO US PARTIES IN THE CONTRACT RECEIPTS OF RS.21,87,579/-. WHEN THE ASSE SSEE WAS PUT ON NOTICE, ITS REPLY WAS THAT HE HAD DONE THE WORK, BUT THE CO NCERNED PARTIES HAD NOT ISSUED TDS CERTIFICATES. AO CONSIDERED THE ENTIRE AMOUNT OF RS.5,25,026/-, AS UNDISCLOSED INCOME OF THE ASSESSEE AND MADE AN A DDITION TO THAT AMOUNT. 03. ASSESSEES APPEAL BEFORE THE CIT (A) WAS NOT SU CCESSFUL. 04. NOW BEFORE THIS TRIBUNAL, LD. AR STRONGLY ASSAI LING THE ORDERS OF LOWER AUTHORITIES, SUBMITTED THAT INCOME RETURNED BY THE ASSESSEE WAS MUCH MORE THAN 8% OF ITS CONTRACT RECEIPTS. THIS, AS PER THE LD. AR, WAS MORE THAN THE RATE STIPULATED IN SECTION 44 A D OF THE INCOME-TAX ACT, 1961 (THE ACT IN SHORT). AS PER THE LD. AR, CONTRACT RECEIPTS RETURNED WAS RS.21,87,579/- AND THE NET INCOME, SHOWN BY THE ASS ESSEE CAME TO ABOUT 12% OF SUCH RECEIPTS. FURTHER AS PER THE LD. AR, E VEN IF ADDITIONAL CONTRACT RECEIPTS OF RS.5,25,026/- WAS CONSIDERED THE NET IN COME BY APPLYING THE 8% RATE PRESCRIBED U/S.44AD, WOULD ONLY BE RS.2,17, 008/- AND THIS WAS LOWER THAN THE SUM OF RS.3,23,830/-, ESTIMATED BY T HE ASSESSEE. THUS ACCORDING TO HIM, THE ADDITION WAS UNWARRANTED. ITA.1397/BANG/2015 PAGE - 3 05. PER CONTRA, LD. DR SUPPORTED THE ORDERS OF LOWE R AUTHORITIES. HE SUBMITTED THAT ALL EXPENDITURE OF THE ASSESSEE WOUL D HAVE BEEN BOOKED AGAINST THE CONTRACT RECEIPT OF RS.21,87,579/- SHOW N BY HIM AND THEREFORE THE UNDISCLOSED RECEIPTS OF CONTRACTS WERE IN THE N ATURE OF PURE INCOME. 06. WE HAVE PERUSED THE MATERIALS AND HEARD THE RIV AL CONTENTIONS. ASSESSEE A SMALL TIME CONTRACTOR WHOHAD SHOWN CONTR ACT RECEIPTS OF RS.21,57,579 IN ITS RETURN. IT HAD RETURNED AN INC OME OF RS.3,23,830/-. THE RATE OF PROFIT RETURNED WAS MORE THAN 15%. IF WE A DD THE ADDITIONAL CONTRACT RECEIPT OF RS.5,25,026/-, NOT SHOWN BY THE ASSESSEE, THE TOTAL CONTRACT RECEIPTS WOULD GO UP TO RS.27,12,605/-. R ETURNED INCOME OF RS.3,23,830/- IS STILL MORE THAN 11.5% OF THE GROSS RECEIPTS. ASSESSEE HAD ESTIMATED HIS INCOME. WHEN ESTIMATION IS MADE BY A CONTRACTOR, WHO IS NOT MAINTAINING BOOKS OF ACCOUNTS, RATE OF PROFIT PRESC RIBED U/S.44AD OF THE ACT IS 8% OF THE CONTRACT RECEIPTS THUS WHAT THE A SSESSEE HAD RETURNED, EVEN IF WE RECASTED THE CONTRACT INCOME, WAS MORE T HAN THE RATE OF PROFIT PRESCRIBED U/S.44AD OF THE ACT. IN SUCH CIRCUMSTAN CES, I AM OF THE OPINION THAT THE ADDITION MADE BY THE AO WAS NOT WARRANTED. SUCH ADDITION STANDS DELETED. ITA.1397/BANG/2015 PAGE - 4 07. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH DAY OF JUNE, 2016. SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER