M/s. KCVR Construction, Hyderabad V. CIT - Tirupathi, Tirupathi

ITA 23/HYD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3105 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-06-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 08-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SENTHIL KUMAR
• Assessee Lawyers: SHRIK A SAI PRASAD
• Keywords: Rejection of books of accounts
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMEBR ITA NO.23/HYD/2010 ASSTT. YEAR 2003-04 M/S KCVR CONSTRUCTIONS, ANANTHAPUR (PAN NO. AAFFK 3013 O) V/S. DY. COMMISSIONER OF INCOME TAX, TIRUPATHI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRIK.A. SAI PRASAD RESPONDENT BY : SHRI B. SENTHIL KUMAR, DR O R D E R PER SHRI G.C. GUPTA, VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-0 4 IS DIRECTED AGAINST THE ORDER OF THE CIT. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS REGARDING THE VALIDITY OF ORDER PASSED BY THE CIT U/S 263 OF THE INCOME-TAX ACT, 1961. 2. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ORIGINAL ASSESSMENT IN THIS CASE WAS FRAMED IN SCRUTINY ASSESSMENT U/S 143 (3) OF THE ACT. HE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN EXECUTION OF CIVIL CONTRACT WORKS AND THE ASSESSING OFFICER HAS CONSIDER ED THAT FULL VOUCHERS IN SUPPORT OF THE CLAIM OF EXPENDITURE CO ULD NOT BE PRODUCED BY THE ASSESSEE. THE ASSESSING OFFICER AFTER CONSIDER ING THAT THE FULL VOUCHERS IN SUPPORT OF THE CLAIM OF EXPENSES, CO ULD NOT BE PRODUCED BY THE ASSESSEE AND THAT ONLY SELF MADE VOUCHERS W ERE PRODUCED IN CONNECTION WITH THE PURCHASE OF MATERIAL, M ADE CERTAIN ITA NO.23/HYD/10 KCVR CONSTRUCTIONS, ANANTHAPUR. 2 DISALLOWANCE AND COMPLETED THE ASSESSMENT. HE SUBMITTED THA T THE ONLY REASON FOR PASSING THE ORDER U/S 263 BY THE CIT SE TTING ASIDE THE ASSESSMENT TO THE ASSESSING OFFICER WAS THAT THE ASSESSING OFFICER COULD HAVE REJECTED THE BOOKS OF ACCOUNTS AND INVOKED THE PROVISIONS OF SEC.145 (3) OF THE ACT FOR ESTIMATION OF INCOME. HE R ELIED ON THE DECISION IN THE CASE OF SURINDER PAL SINGH & CO. VS. ITO WARD 3(4) IN 35 SOT 296 (AMRITSAR), IN SUPPORT OF HIS CONTENTION. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS RELIED ON THE ORDER OF THE CIT. HE SUBMITTED THAT IT IS A CASE OF NON APPL ICATION OF MIND BY THE ASSESSING OFFICER AND ACCORDINGLY THE CIT WAS JUSTIFIED IN INVOKING THE PROVISION OF SEC.263 OF THE ACT AND SETTING ASIDE TH E ASSESSMENT TO THE FILE OF THE ASSESSING OFFICER. HE RELIED ON THE D ECISION OF THE HON'BLE KERALA HIGH COURT IN THE CASE OF PANCHMAN TRADER S VS. CIT & ANOTHER, 283 ITR 50. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND HAVE PERU SED THE ORDER OF THE CIT PASSED U/S 263 OF THE ACT. WE FIND TH AT THE ORIGINAL ASSESSMENT IN THIS CASE WAS FRAMED IN SCRUTINY ASSESSMENT U/S 143 (3) R.W.S.147 OF THE ACT. THE ASSESSING OFFICER HAS RECORDE D THAT CERTAIN EXPENSES CLAIMED BY THE ASSESSEE WERE UNVERIFIABL E. THE ASSESSING OFFICER HAS FURTHER RECORDED THAT MOST OF THE VO UCHERS ARE SELF MADE AND THE AMOUNTS WERE PAID TO LOCAL MECHANICS I N CASH AND CONSIDERING THE UNVERIFIABLE NATURE OF THE CLAIM, HE D ISALLOWED 20% OF THE EXPENDITURE CLAIM UNDER THE TWO RELEVANT HEADS AN D REDUCED THE AMOUNT OF LOSS CLAIMED BY THE ASSESSEE. IN THESE FACTS OF TH E CASE, IT COULD NOT BE SAID THAT IT IS A CASE OF NON APPLICATION OF MIND BY THE ASSESSING OFFICER. WE FIND THAT MERELY BECAUSE THE CIT WAS OF THE VIEW THAT ON ACCOUNT OF DEFECTS IN THE ACCOUNTS OF THE ASSESSEE OR FOR ITS ITA NO.23/HYD/10 KCVR CONSTRUCTIONS, ANANTHAPUR. 3 FAILURE TO PRODUCE FULL VOUCHERS IN SUPPORT OF HIS CLAIM OF EXPENSES, THE ASSESSING OFFICER COULD HAVE REJECTED THE BOOKS OF ACCOUNTS AN D ESTIMATED THE PROFITS, IT COULD NOT BE SAID THAT THE OR DER OF THE ASSESSING OFFICER IS ERRONEOUS AND PRE-JUDICIAL TO THE INT EREST OF THE REVENUE. THE CIT COULD NOT SIT OVER THE JUDGMENT OF THE ASSESSING OFFICER AND SINCE THE ASSESSING OFFICER HAS TAKEN A ONE POSSIB LE VIEW WHICH COULD NOT BE SAID TO BE ARBITRARY OR PATENTLY WR ONG, WE HOLD THAT THE ACTION OF THE CIT IN INVOKING THE SECTION 263 OF THE ACT WAS NOT IN ACCORDANCE WITH THE LAW. ACCORDINGLY THE ORDER OF THE CI T PASSED U/S 263 IS CANCELLED AND THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 09-07-20120. SD/- SD/- (CHANDRA POOJARI) (G.C. GUPTA) ACCOUNTANT MEMBER VICE-PRESIDENT PVV/SPS DATE: 9TH JULY, 2010 COPY FORWARDED TO: 1. M/S.KCVR CONSTRUCTIONS C/O CH. PARTHASARATHY & CO.,1- 1-298/B/3, 1ST FLOOR, SOWBHAGYA AVENUE, ST. NO.1, ASHOKNAGAR, HYD ERABAD 500020 2. THE COMMISSIONER OF INCOME-TAX TIRUPATHI 3 THE DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD.