DCIT., Circle-2(1), Hyderabad V. M/s K.R.R.Infrastructures, Hyderabad

ITA 1685/HYD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98522 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 03-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BABU
• Assessee Lawyers: P MURALI MOHAN RAO
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NO.1685/HYD/2014 ASSESSMENT YEAR 2010-2011 THE DCIT, CENTRAL CIRCLE-6(1), HYDERABAD. VS. M/S. K.R.R. INFRASTRUCTURES HYDERABAD 500 016. PAN AAJFK1086D (APPELLANT) (RESPONDENT) ITA.NO.1178/HYD/2015 ASSESSMENT YEAR 2010-2011 M/S. K.R.R. INFRASTRUCTURES HYDERABAD 500 016. PAN AAJFK1086D VS. THE DCIT, CENTRAL CIRCLE-6(1), HYDERABAD. (APPELLANT) (RESPONDENT) FOR REVENUE : MR. K.E. SUNIL BABU FOR ASSESSEE : MR. P. MURALIMOHAN RAO DATE OF HEARING : 31.08.2016 DATE OF PRONOUNCEMENT : 14.09.2016 ORDER PER SMT. P. MADHAVI DEVI, J.M. BOTH ARE CROSS-APPEALS FOR THE A.Y. 2010-2011. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPAN Y WHICH IS ENGAGED IN THE BUSINESS OF EXECUTION OF CIVI L CONTRACTS, HAS FILED ITS RETURN OF INCOME FOR THE A.Y. 2010-2011 ON 25.10.2010 ADMITTING TOTAL INCOME OF RS.93,76,039. TH E RETURN OF INCOME WAS TAKEN-UP FOR SCRUTINY AND NOTICES UNDER S ECTION 143(2) AND 142(1) OF THE ACT WERE ISSUED AND SERVED O N THE 2 ITA.NOS.1685/H/2014 & 1178/H/2015 M/S. K.R.R. INFRASTRUCTURES, HYDERABAD. ASSESSEE. IN RESPONSE TO THE SAID NOTICE, THE REPRESEN TATIVE OF THE ASSESSEE APPEARED AND FURNISHED COPY OF THE RETURN FILED. HOWEVER, THE ASSESSING OFFICER REQUIRED FURNISHING O F BALANCE INFORMATION AND POSTED THE CASE FOR FURTHER HEARING. HO WEVER, NONE APPEARED FOR THE ASSESSEE BEFORE THE ASSESSING O FFICER NOR DID IT FILE ANY INFORMATION AS CALLED FOR. IN VIEW OF THE SAME, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTI ON 144 OF THE I.T. ACT BY ADOPTING THE PROFIT RATE AT 12.5% ON THE GROSS RECEIPTS AS PER THE RETURN OF INCOME AND BROUGHT IT TO TA X. 2.1. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFOR E THE CIT(A) CONTENDING INTER ALIA THAT THE ASSESSEE WAS A SUB- CONTRACTOR AND NOT A PRINCIPAL CONTRACTOR AND THEREFORE, THE INCOME SHOULD BE ESTIMATED AS PER THE BOOKS OF ACCOUN T OF THE ASSESSEE OR AT 5% OF THE GROSS RECEIPTS. HE PLACED REL IANCE UPON VARIOUS DECISIONS OF THE TRIBUNAL. THE CIT(A) AFTER CONSIDERING THE ASSESSEES CONTENTIONS UPHELD THE REJECTION OF THE BOOK S OF ACCOUNT BY THE ASSESSING OFFICER BUT ESTIMATED THE PROFI T AT 8% OF THE TURNOVER. SHE ACCORDINGLY, PARTLY ALLOWED THE ASSES SEES APPEAL, AGAINST WHICH, BOTH THE REVENUE AND THE ASSESS EE ARE IN APPEAL BEFORE US. 3. IT IS THE CONTENTION OF THE REVENUE THAT THE PROFIT SHOULD BE ESTIMATED AT 12.5% OF THE TURNOVER; WHILE IT IS THE CASE OF THE ASSESSEE, THAT IT SHOULD BE ESTIMATED AT 5% OF TH E TURNOVER. THE RESPECTIVE PARTIES ADVANCED THEIR ARGUMENTS IN SUPP ORT OF THEIR GROUNDS OF APPEAL. 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS CLAI MED TO BE A SUB-CONTRACTOR AND THE CIT(A) HAS ACCEPTED THE SAID CO NTENTION 3 ITA.NOS.1685/H/2014 & 1178/H/2015 M/S. K.R.R. INFRASTRUCTURES, HYDERABAD. WITHOUT ANY VERIFICATION OF FACTS. THE ASSESSEE THOUGH APPEARED BEFORE THE ASSESSING OFFICER BUT FAILED TO FURNISH ANY INFORMATION AS CALLED FOR BY THE ASSESSING OFFICER. THE VERACITY OF THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE HAS ALSO NOT BEEN CO NSIDERED BY ANY OF THE AUTHORITIES BELOW. IN VIEW OF THE SAME, W E ARE OF THE OPINION THAT THE ESTIMATION OF INCOME BY THE ASSESSING OFFICER AS WELL AS THE CIT(A) ARE WITHOUT ANY VERIFICATION OF THE BOOKS OF ACCOUNT AND WITHOUT POINTING OUT THE DEFECTS FOR REJECTI ON OF THE BOOKS OF ACCOUNT, ESTIMATION OF INCOME IS NOT SUSTAINABL E. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO SET ASIDE THE O RDERS OF THE AUTHORITIES BELOW AND REMAND THE ISSUE TO THE FILE O F THE ASSESSING OFFICER FOR DE NOVO CONSIDERATION IN ACCORDANCE WITH LAW. THE ASSESSEE SHALL FURNISH ALL THE RELEVANT MATE RIAL BEFORE THE ASSESSING OFFICER AND COOPERATE FOR EARLY COMPLE TION OF THE ASSESSMENT PROCEEDINGS. THE ASSESSEE SHALL ALSO BE A T LIBERTY TO FURNISH ANY INFORMATION IN SUPPORT OF ITS CONTENTION. 5. IN THE RESULT, BOTH THE ASSESSEES AS WELL AS REVEN UES APPEALS ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 14.09.2015. SD/- SD/- (B. RAMAKOTAIAH) (SMT. P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 14 TH SEPTEMBER, 2016 VBP/- COPY TO 1. THE DCIT, CIRCLE-6(1), HYDERABAD. 2. M/S. K.R.R. INFRASTRUCTURES, HYDERABAD. C/O. MR. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82. 3. CIT(A)-IV, HYDERABAD. 4. CIT-III, HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD 6. GUARD FILE