ACIT, Circle -9(1), Hyderabad V. Sri Nallbolu Dharma Reddy, Hyderabad

ITA 1535/HYD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1444 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 08-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BABU
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1535/HYD/2012 ASSESSMENT YEAR 2009-10 THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-9(1) HYDERABAD VS. SRI NALLBOLU DHARMA REDDY HYDERABAD PAN: ACDPN6364R APPELLANT RESPONDENT APPELLANT BY: SRI K.E. SUNIL BABU RESPONDENT BY: NONE DATE OF HEARING: 15. 0 1.201 3 DATE OF PRONOUNCEMENT: 15. 0 1.201 3 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VI, HYDERABAD DATED 16.7.2012 FOR ASSESSMENT YEAR 2009-10. 2. THE REVENUE RAISED THE FOLLOWING GROUND: 'IN THIS CASE, THE ASSESSMENT WAS COMPLETED AFTER R EJECTING THE BOOKS OF ACCOUNT AS THE SAME WERE NOT MAINTAINED PR OPERLY AND THE PROFIT WAS ESTIMATED @ 5% OF THE TURNOVER FOR T RADING BUSINESS AND 8% OF THE TURNOVER FOR CIVIL CONTRACT BUSINESS. THE LEARNED CIT(A) HAS ACKNOWLEDGED THAT EVEN THOUGH THE ASSESS EE HAS FAILED TO PRODUCE THE BOOKS OF ACCOUNT, THE PROFITS SHOULD BE ESTIMATED @ 5% IN LIGHT OF PREVIOUS JUDICIAL PRONOUNCEMENTS, WH ICH IS NOT ACCEPTABLE.' 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A N INDIVIDUAL DERIVING INCOME FROM TRADING AND EXECUTION OF CIVIL CONTRACT S. DURING THE YEAR, THE TURNOVER OF THE TRADING ACTIVITY WAS RS. 1,75,19,21 4 ON WHICH THE ASSESSEE MADE A PROFIT OF RS. 2,76,317. THE TURNOVER OF THE CONTRACT BUSINESS WAS RS. 5,58,57,767 ON WHICH THE ASSESSEE MADE A PROFIT OF RS. 70,37,903. THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT FOR BOTH THE BUSINESSES. CONSEQUENTLY, THE ASSESSING OFFICER ESTIMATED THE P ROFIT U/S. 145 OF THE INCOME-TAX ACT, 1961. ITA NO. 1535/HYD/2012 SRI NALLBOLU DHARMA REDDY ===================== 2 4. THE CIT(A) CONFIRMED REJECTION OF THE BOOKS OF ACCO UNT BY THE ASSESSING OFFICER. THE CIT(A) DIRECTED THE ASSESSI NG OFFICER TO ACCEPT THE BOOKS OF ACCOUNT WITH REFERENCE TO TRADING BUSINESS . ON ESTIMATION OF INCOME WITH REGARD TO CONTRACT RECEIPTS, HE DIRECTE D THE ASSESSING OFFICER TO ESTIMATE THE INCOME AT 5% OF THE GROSS RECEIPTS. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN OUR OPINION, THE CIT(A) IS NOT JUSTIFIED IN DIRE CTING THE ASSESSING OFFICER TO ACCEPT BOOKS OF ACCOUNT WITH REFERENCE T O THE TRADING BUSINESS. AS THE BOOKS OF ACCOUNT WERE REJECTED, THE INCOME I S TO BE ESTIMATED ON A REASONABLE BASIS TAKING CLUE FROM SECTION 44AD. WE CONFIRM THE ORDER OF THE ASSESSING OFFICER IN ESTIMATION OF INCOME AT 5% ON TRADING ACTIVITY. REGARDING ESTIMATION OF INCOME FROM CONTRACT BUSINE SS, PLACING RELIANCE ON THE ORDER OF THE TRIBUNAL IN THE CASE OF C. ESW ARA REDDY & CO. IN ITA NO. 668/HYD/2009 FOR A.Y. 2003-04 & ORS., DATED 31 ST JANUARY, 2011, WE DIRECT THE ASSESSING OFFICER TO ESTIMATE THE INCOME AT 8% ON MAIN CONTRACT RECEIPTS AND 5% ON SUB-CONTRACT RECEIPTS. 6. IN THE RESULT, REVENUE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY, 2013. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 15 TH JANUARY, 2013 TPRAO COPY FORWARDED TO: 1. THE ASST. COMMISSIONER OF INCOME - TAX, CIRCLE - 9(1), BLOCK NO. 1B, IT TOWERS, AC GUARDS, HYDERABAD-500 004. 2. SRI NALLBOLU DHARMA REDDY, H. NO. 33/A, OLD SANTOSH NAGAR COLONY, HYDERABAD. 3. THE CIT(A) - VI, HYDERABAD. 4. THE CIT - VI, HYDERABAD. 5. THE DR B BENCH ITAT, HYDERABAD.