Income tax Officer, Ward-1, Kadapa V. Sri Tappeta Ramakrishna Reddy, Proddatur

ITA 1398/HYD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1409 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 10-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MAYA MAHESWARI
• Assessee Lawyers: A V RAGHURAM
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, J.M. AND SHRI B.R.BASKARAN, A.M. ITA NO.1398/HYD/2012 (ASSESSMENT YEAR 20 09-10) INCOME TAX OFFICER, WARD - I, KADAPA. V/S. SHRI TAPPETA RAMAKRISHNA REDDY, PRODDATUR. ( PAN - ACHPT 7435 R ) (APPELLANT) (RESPONDENT) APPELLANT BY : S MT. MAYA MAHESWARI RESPONDENT BY : S HRI A.V.RAGHURAM DATE OF HEARING 2.1.2013 DATE OF PRONOUNCEMENT 04.01.2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 29.6.2012 PASSED BY LEARNED CIT(APPEALS) GUNTUR AND IT RELATES TO ASSESSMENT YEAR 2009-10. 2. THE SOLITARY ISSUE URGED BY THE REVENUE IN THIS APPEAL IS WHETHER LEARNED CIT(APPEALS) IS JUSTIFIED IN REDUCING THE ESTIMATE FROM 8% TO 6% AND FURTHER DIRECTING THE ASSESSING OFFICER TO REDUCE T HE RECOVERIES FROM THE GROSS CONTRACT RECEIPTS. ITA NO.1398/HYD/2012 SHRI TAPPETA RAMAKRISHNA REDDY, PRODDATUR. 2 3. THE FACTS RELATING TO THE CASE ARE STATED IN BR IEF. THE ASSESSEE IS A SUB-CONTRACTOR AND HE HAS UNDERTAKEN WORK FROM ANOT HER TWO SUB-CONTRACTORS HE FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSI DERATION DECLARING A TOTAL INCOME OF RS.4,98,470. SINCE THE ASSESSEE DID NOT RESPOND TO THE NOTICES ISSUED BY THE ASSESSING OFFICER, THE ASSESSMENT WAS COMPLETED EX-PARTE UNDER S.144 OF THE ACT. THE ASSESSING OFFICER REJECTED THE BOOK R ESULTS AND ESTIMATED THE INCOME AT 8% OF THE GROSS CONTRACT RECEIPTS. THE ASSESSEE CARRIED THE MATER IN APPEAL BEFORE THE LEARNED CIT(APPEALS). THE FIRST APPELLA TE AUTHORITY, ON BEING CONVINCED THAT THE PROFIT OF A SUB-CONTRACTOR WOULD BE LESS, DETERMINED THE INCOME AT 6% OF THE CONTRACT RECEIPTS. HOWEVER, HE DIRECTED THE ASSESSING OFFICER TO REDUCE THE RECOVERIES MADE BY THE PRINCIPAL WHIL E DETERMINING THE QUANTUM OF GROSS CONTRACT RECEIPTS. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(APPEALS), REVENUE IS IN APPEAL BEFORE US. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT THE RATE OF 8% ADOPTED BY THE ASSESSING OFFICER IS REASONABLE ON E. SHE FURTHER SUBMITTED THAT THE ASSESSING OFFICER DID NOT HAD THE OPPORTUN ITY TO EXAMINE THE NATURE OF RECOVERIES MADE FROM THE CONTRACT RECEIPTS AND HENC E, THE LEARNED CIT(APPEALS) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO RED UCE THE RECOVERIES WITHOUT CARRYING OUT ANY EXAMINATION. 5. ON THE OTHER HAND, THE LEARNED AUTHORISED REPRE SENTATIVE, BY PLACING RELIANCE ON THE DECISION OF THE COORDINATE BENCH DATED 31.1.2011 IN THE CASE OF M/S.C.ESWAR REDDY AND CO., IN ITA NO.668/HY D/2009 AND OTHERS, SUBMITTED THAT THE TRIBUNAL HAS HELD THE ESTIMATE O F INCOME AT THE RATE OF 5%ON SUB-CONTRACT RECEIPTS IS JUSTIFIED. HE SUBMITTED T HAT THE ASSESSEE HEREIN IS A SUB- CONTRACTOR TO A SUB-CONTRACTOR AND HENCE, THE INCOM E ESTIMATED AT THE RATE OF 6% IS QUITE REASONABLE. HE FURTHER SUBMITTED THAT THE RECOVERIES HAVE BEEN MADE ITA NO.1398/HYD/2012 SHRI TAPPETA RAMAKRISHNA REDDY, PRODDATUR. 3 TOWARDS DIESEL, BLASTING MATERIAL AND MESS CHARGES AND THESE DETAILS WERE FURNISHED TO THE ASSESSING OFFICER ALONGWITH THE RE TURN OF INCOME. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREF ULLY PERUSED THE RECORD. THE FIRST ISSUE IS ABOUT THE REASONABLEN ESS OF ESTIMATE OF INCOME. THE ASSESSING OFFICER ESTIMATED THE INCOME AT 8% OF THE GROSS CONTRACT RECEIPTS, WHICH WAS REDUCED TO 6% BY THE LEARNED CIT(APPEALS ). THE UNDISPUTED FACT REMAINS THAT THE ASSESSEE IS NOT A MAIN CONTRACTOR AND HE HAS UNDERTAKEN CONTRACTS FROM OTHER SUB-CONTRACTORS. IN THAT SITUA TION, THERE SHOULD NOT BE ANY DISPUTE THAT THE PROFIT MARGIN AT THE LEVEL OF SECO ND SUB-CONTRACT WOULD BE LESS. ACCORDINGLY, IN OUR VIEW, THE ESTIMATION OF INCOME MADE BY THE LEARNED CIT(APPEALS) AT 6% APPEARS TO BE REASONABLE. 7. THE NEXT ISSUE IS ABOUT THE DIRECTION GIVEN BY THE LEARNED CIT(APPEALS) TO THE ASSESSING OFFICER TO DEDUCT THE RECOVERIES FROM THE GROSS CONTRACT RECEIPTS. THOUGH THE LEARNED AUTHORISED R EPRESENTATIVE SUBMITTED THAT THE DETAILS OF RECOVERIES WERE SUBMITTED TO THE ASS ESSING OFFICER, YET THE FACT REMAINS THAT THE ASSESSING OFFICER DID NOT HAVE OCC ASION TO EXAMINE THE NATURE OF THOSE RECOVERIES, AS HE HAD REJECTED THE BOOKS OF A CCOUNT. FROM THE ORDER OF THE LEARNED CIT(APPEALS), WE NOTICE THAT THE FIRST APPE LLATE AUTHORITY ALSO DID NOT EXAMINE THE NATURE OF RECOVERIES. ACCORDINGLY, IN O UR VIEW, THE CLAIM OF THE ASSESSEE ON THIS COUNT REQUIRES EXAMINATION AT THE END OF THE ASSESSING OFFICER. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LEARNED C IT(APPEALS) ON THIS ISSUE, AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFIC ER WITH A DIRECTION TO EXAMINE THE NATURE OF RECOVERIES AND TO DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. 8. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ITA NO.1398/HYD/2012 SHRI TAPPETA RAMAKRISHNA REDDY, PRODDATUR. 4 ORDER PRONOUNCED IN THE COURT ON 04.01.2013 SD/- SD/- ( ASHA VIJAYARAGHAVAN ) ( B.R.BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED/- 04 TH JANUARY, 2013 COPY FORWARDED TO: 1. SHRI TAPPETA RAMAKRISHNA REDDY, FLAT NO.501, SRI SAI KRISHNA RESIDENCY, YMR COLONY, PRODDATUR. 2. 3. 4. 5. INCOME - TAX OFFICER , WARD - I, KADAPA, COMMISSIONER OF INCOME-TAX(APPEALS), GUNTUR COMMISSIONER OF INCOME-TAX, TIRUPATI DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.