LPL Infrasructures Ltd, Secunderabad V. THE JCIT, Hyderabad

ITA 307/HYD/2003

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66124 (ITAT-HYDERABAD)
• Duration Of Justice: 9 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-04-2011
• Assessment Year: 1997-1998
• Appeal Filed On: 19-02-2003
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PHANI RAJU
• Assessee Lawyers: P N MOORTHY
• Keywords: Depreciation; Opportunity of being heard
• Section: 234B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.307/HYD/2003 ASSESSMENT YEAR : 1997-98 M/S.LPL INFRASTRUCTURES LTD., HYDERABAD. .... APPELLANT GIR- L-19/SR.3 VS. JCIT, SPL. RANGE-3, HYDERABAD. RESPONDENT APPELLANT BY : SHRI P.N. MOORTHY RESPONDENT BY : SHRI PHANI RAJU DATE OF HEARING : 06-06-2012 DATE OF PRONOUNCEMENT : 03-08-2012 ORDER PER SAKTIJIT DEY, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 30-12-2002 OF CIT (A)-III, HYDERABAD PA SSED IN ITA NO.387/TR/SR-3/CIT(A)-III/02-03 AND IT PERTAINS TO THE ASSESSMENT YEAR 1997-98. 2. BRIEFLY THE FACTS ARE THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF EXECUTING CONTRACT WORK. FOR THE A SSESSMENT YEAR UNDER DISPUTE THE ASSESSEE FILED ITS RETURN OF INCO ME DECLARING AN INCOME OF RS.14,51,000. THE AO ISSUED NOTICE U/S 143(2) ASKING 2 ITA NO. 307 OF 2003 LPLINFRASTRUCTURES LTD. SECBAD.. THE ASSESSEE TO PRODUCE BOOKS OF ACCOUNT AND PASS B OOKS BUT THERE WAS NO COMPLIANCE BY THE ASSESSEE. AS APPEAR S FROM THE ASSESSMENT ORDER IN SPITE OF AVAILING SEVERAL OPPOR TUNITIES, THE ASSESSEE NEITHER APPEARED NOR PRODUCED THE BOOKS OF ACCOUNTS. THE AO THEREFORE PROCEEDED TO COMPLETE THE ASSESSME NT EX PARTE. FROM THE P & L A/C, FILED WITH THE RETURN THE AO FO UND THAT ON A GROSS CONTRACT RECEIPT OF RS.7,65,67,995.00 HE ASSE SSEE HAS DECLARED INCOME OF RS.14,51,090.00 WHICH WORKS OUT TO ONLY 1.9%. THE AO CONSIDERING THE FACT THAT ASSESSES IN SIMILAR LINE OF BUSINESS ARE SHOWING PROFIT AT 8% ESTIMATED THE PRO FIT AT 8% NET OF ALL EXPENSES INCLUDING DEPRECIATION. 3. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BY FILING AN APPEAL BEFORE THE CIT (A). BEFORE THE CIT (A), THE ASSESSEE TOOK A PLEA THAT THE AO HAD COMPLETED THE ASSESSMENT EX PARTE WITHOUT ALLOWING THE ASSESSEE TO PRODUCE ITS BOOKS OF ACCOUNTS AND AN OPPORTUNITY OF BEING HEARD. CONSIDERING THE PLEA OF THE ASSESSEE THE CIT (A) ALLOWED OPPORTUNITY TO THE ASS ESSEE TO PRODUCE BOOKS OF ACCOUNTS AND OTHER EVIDENCES BEFOR E THE AO AND DIRECTED THE AO TO SUBMIT A REPORT AFTER EXAMINING THE BOOKS OF ACCOUNTS AND EVIDENCES. IN THE REMAND PROCEEDINGS ALSO THE ASSESSEE DID NOT PRODUCE ANY BOOKS OF ACCOUNTS NOR PRODUCED ANY EVIDENCE WITH REGARD TO SUB CONTRACT WORKS AND PAYM ENT MADE TO SUB-CONTRACTORS. NONE OF THE SUB CONTRACTORS APPEAR ED BEFORE THE AO IN PURSUANCE TO SUMMONS. THE ASSESSEE ALSO DID NOT PRODUCE ANY SUB CONTRACTOR BEFORE THE AO. THE AO THEREFORE SUGGESTED ESTIMATION OF PROFIT AT 8% TO BE REASONABLE. THE C IT (A) FOUND THE SUBMISSIONS OF THE ASSESSEE IN NOT SUBMITTING T HE BOOKS OF ACCOUNTS AND EVIDENCE NOT ACCEPTABLE. THE CIT (A) T HEREFORE UPHELD THE ESTIMATION OF PROFIT AT 8% CLEAR OF DEPR ECIATION. 3 ITA NO. 307 OF 2003 LPLINFRASTRUCTURES LTD. SECBAD.. 4. WE HAVE HEARD SUBMISSIONS OF THE PARTIES AND PER USED MATERIALS ON RECORD. UNDISPUTEDLY THE ASSESSEE IN SPITE OF AVAILING SEVERAL OPPORTUNITIES DID NOT PRODUCE ITS BOOKS OF ACCOUNTS OR OTHER DOCUMENTS BEFORE THE AO. THE ASSE SSEE EVEN DID NOT PRODUCE THE BOOKS OF ACCOUNTS AND EVIDENCES WITH REGARD TO SUB CONTRACT WORK, MATERIAL DEDUCTION EITHER BEF ORE THE CIT (A) OR BEFORE THE AO IN COURSE OF REMAND PROCEEDING. T HERE WAS COMPLETE NON CO-OPERATION FROM THE ASSESSEE. IN TH IS SITUATION, THERE WAS NO OTHER WAY BUT TO ESTIMATE THE PROFIT C ONSIDERING THE FACT THAT THE PROFIT SHOWN BY THE ASSESSEE AT 1.9% WAS ABNORMALLY LOW. THE AO HAS APPLIED THE RATE OF 8% WHICH RATE WAS ALSO APPLIED FOR THE ASST. YEAR 1993-94 AND THE ESTIMATION WAS UPHELD IN APPEAL. IN CASES OF SIMILAR NATURE TH E ITAT, HYDERABAD BENCH FOLLOWING THE THIRD MEMBER DECISION IN CASE OF K. KRISHNA MOHAN CONSTRUCTIONS ITA NOS. 380 AND 381 /HYD/94 HAS CONSISTENTLY HELD ESTIMATION OF PROFIT AT 12.5% TO BE REASONABLE AND THEREAFTER ALLOWED DEPRECIATION. CONSIDERING THE AFORESAID VIEW OF THE ITAT THE ESTIMATION OF PROFIT AT 8% ON GROSS CONTRACT RECEIPTS CLEAR OF ALL DEDUCTIONS INCLUDING DEPRECIA TION APPEARS TO BE REASONABLE AND DESERVES NO INTERFERENCE. FOR THE AFORESTATED REASONS GROUND NOS. 1 AND 2 ARE REJECTED. 5. GROUND NO.3 RELATES TO ADDITION OF RS.1,10,000 U /S 68 OF THE ACT ON ACCOUNT OF UNSECURED LOAN. 6. THE AO ON EXAMINING THE AUDITED STATEMENT OF ACC OUNTS FOUND INCREASE IN THE UNSECURED LOANS TO THE TUNE O F RS.1,10,000/-. SINCE THE ASSESSEE FAILED TO EXPLAIN ABOUT THE LOAN THE AO ADDED IT TO THE TOTAL INCOME U/S 68 OF THE A CT. THE CIT (A) ALSO CONFIRMED THE ADDITION SINCE THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE TO ESTABLISH THE IDENTITY, CRE DITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. 4 ITA NO. 307 OF 2003 LPLINFRASTRUCTURES LTD. SECBAD.. 7. AFTER GOING THROUGH THE 1ST APPEAL ORDER AND ASS ESSMENT ORDER, WE FIND THAT THE ASSESSEE HAD NEVER PRODUCED ITS BOOKS OF ACCOUNTS, HENCE BOOKS RESULTS WERE NOT RELIED UPON AND INCOME WAS ESTIMATED. ADDITION U/S 68 COULD BE MADE WHEN ANY SUM IS FOUND TO BE CREDITED IN THE BOOKS AND THE ASSESSEE OFFERS NO EXPLANATION WHEN THE AO HAS NOT EXAMINED THE BOOKS AT ALL AND HAS RESORTED TO ESTIMATION OF PROFIT, HE COULD NOT HAVE MADE ADDITION U/S 68 OF THE ACT. WE THEREFORE DIRECT TH E AO TO DELETE THE ADDITION. THIS GROUND IS ALLOWED. 8. SO FAR AS GROUND NO.6 IS CONCERNED, IT IS SEEN T HAT THE ASSESSEE HAS CLAIMED TDS OF A HIGHER AMOUNT THEN WH AT IS REFLECTED IN THE TDS CERTIFICATES SUBMITTED ALONG W ITH THE RETURN OF INCOME. THE AO THEREFORE DID NOT GIVE FULL CRED IT TO THE TDS CLAIMED BY THE ASSESSEE WHICH RESULTED IN LEVY OF I NTEREST U/S 234B AND 234C OF THE ACT. THE CIT (A) ALSO UPHELD THE LEVY OF INTEREST. THE CLAIM OF TDS BY THE ASSESSEE COULD N OT HAVE BEEN ALLOWED IN ABSENCE OF TDS CERTIFICATES. THE AO WAS THEREFORE JUSTIFIED IN CHARGING INTEREST U/S 234B AND 234C OF THE ACT. THE GROUND RAISED IS DISMISSED. 9. IN VIEW OF OUR OBSERVATION AND FINDING WHILE DEA LING WITH GROUND NOS. 1 AND 2, GROUND NOS. 4, 5 AND 7 ARE REJ ECTED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 3 - 8-2012. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 3 RD AUGUST, 2012. 5 ITA NO. 307 OF 2003 LPLINFRASTRUCTURES LTD. SECBAD.. COPY TO:- 1) C/O SHRI P.N. MOORTHY, TAX CONSULTANT,1-8-499/14 /1, CHIKKADAPALLY, HYDERABAD. 2) ACIT, CIR-2(1), HYDERABAD. 3) THE CIT (A)-III, HYDERABAD 4) THE CIT CONCERNED, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABA D. JMR* 6 ITA NO. 307 OF 2003 LPLINFRASTRUCTURES LTD. SECBAD..