Assistant Commissioner of Income Tax, Central Circle-1(1), Rajahmundry V. Swapna Infracon Private Limited, Hyderabad

ITA 414/VIZ/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1970 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 06-08-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K SONAWAL
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 4 1 4 / VIZ /201 8 (ASST. YEAR : 20 13 - 14 ) ACIT, CENTRAL CIRCLE - 1(1), RAJAMAHENDRAVARAM. V S . M/S. SWAPNA INFRACON (P) LTD., D.NO. 8 - 2 - 674/2/B/8, SAI NAGAR HOUSING SOCIETY, ROAD NO.13, BANJARA HILLS, HYDERABAD . PAN NO. AAPCS 6554 D (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE . DEPARTMENT BY : SHRI D.K. SONAWAL CIT DR DATE OF HEARING : 20 / 0 6 /201 9 . DATE OF PRONOUNCEMENT : 28 / 0 6 /201 9 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) , RAJAMAHENDRAVARAM , DATED 16 /0 5 /201 8 FOR THE ASSESSMENT YEAR 20 13 - 14 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF EXECUTION OF CIVIL CONTRACT WORKS , FILED ITS RETURN OF INCOME BY DECLARING TOTAL INCOME OF RS. 12,38,280/ - . THE RETURN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS AND 2 ITA NO. 4 1 4 /VIZ/2018 ( M/S. SWAPNA INFRACON (P) LTD. ) AFTER FOLLOWING DUE PROCEDURE, AS SESSMENT WAS COMPLETED U / S EC. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT'). DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS GROSS RECEIPTS FROM SUB - CONTRACT WORKS AT RS. 11,22,74,813/ - AND SUB - CONTRACTS GIVEN TO THIRD PARTIES AT RS. 3,88,80,309/ - . ON VERIFICATION OF THE BILLS/VOUCHERS , IT WAS OBSERVED THAT MOST OF THE VOUCHERS ARE SELF - MADE OR INCOMPLETE. THE AR SUBMITTED THAT IN VIEW OF THE NATURE OF WORKS INVOLVED LIKE EARTH WORK AND THE PEOPLE FROM UNORGANIZED SECTOR , THE PAYMENTS WERE REQUIRED TO BE MADE IN CASH BY OBTAI N ING SELF MADE VOUCHERS. IN ABSENCE OF SATISFACTORY EVIDENCE , THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED AT 6% ON SUB - CONTRACT REC E IPTS OF RS. 11,22,74,813/ - AND 4% ON SUB - CONTRACTS GIVEN TO THIRD PARTIES OF RS. 3,88,80,309/ - AND ACCORDINGLY ASSESSMENT WAS COMPLETED. 3 . ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE HAS CLAIMED STATUTORY DEPRECIATION OF RS. 79,09,876/ - . HE RELIED ON THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF Y.RAMACHANDRA R E DDY AND ALSO THE DECISION OF THE ITAT, VISAKHAPATNAM IN THE CASE OF ACIT VS. M/S. RAGHAVENDRA CONSTRUCTIONS IN ITA NO. 309/VIZ/2019 , DATED 20/12/2017 . THE LD. CIT(A) BY CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE , 3 ITA NO. 4 1 4 /VIZ/2018 ( M/S. SWAPNA INFRACON (P) LTD. ) DIRECTED THE ASSESSING OFFICER TO ALLOW DEPRECIATION OF RS.79,09,876/ - . 4 . ON BEING AGGRIEVED, REVENUE CARRIED THE MATTER IN APPEAL BEFORE THIS TRIBUNAL. 5. LD. DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE ESTIMATION MADE BY THE ASSESSING OFFICER ON SUB - CONTRACT WORKS AT 6% AND ON SUB - CONTRACTS GIVEN TO THIRD PARTIES AT 4% IS VERY LOWER SIDE AND THE RE FORE NO SEPARATE CLAIM IS TO BE ALLOWED IN THIS CASE. NONE APPEARED ON BEHALF OF THE ASSESSEE. 6 . WE HAVE HEARD LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 7 . IN THIS CASE, THE ASSESSEE IS CARRYING ON BUSINESS OF EXECUTION OF CIVIL CONTRACT WORKS . THE ASSESSEE RECEIVED GROSS INCOME FROM SUB - CONTRACT S OF RS. 11,22,74,813/ - AND SUB - CONTRACTS GIVEN TO THIRD PARTIES OF RS. 3,88,80,309/ - . THE ASSESSEE HAS FILED SELF MADE VOUCHERS BEFORE THE ASSESSING OFFICER AND THE BOOKS OF ACCOUNT ARE ALSO NOT MAINTAINED PROPERLY , THEREFORE, THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE INCOME OF THE ASSESSEE FROM SUB - CONTRACT WORKS AT RS. 67,36,489/ - AND SUB - CONTRACT WORKS GIVEN TO THIRD PARTIES AT RS. 15,55,212 / - . ACCORDINGLY, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT BY ESTIMATING THE TOTAL INCOME OF THE 4 ITA NO. 4 1 4 /VIZ/2018 ( M/S. SWAPNA INFRACON (P) LTD. ) ASSESSEE AT RS. 82,91,701/ - . ON APPEAL , DEPRECIATION AS CLAIMED BY THE ASSESSEE OF RS. 79,09,876/ - , HAS BEEN ALLOWED BY THE LD.CIT(A). WE FIND THAT THE TOTAL INCOME ESTIMATED BY THE ASSESSING OFFICER AT RS. 82,91,701/ - AND IF DEPRECIATION OF RS.79,09,876/ - IS ALLOWED , THE ONLY INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION COMES RS. RS. 3,81,825/ - , IN OUR OPINION, WHEN THE ASSESSING OFFICER HAS E S TIM A TED THE INCOME OF THE ASSESSEE AT A LOWER LEVEL BY NOT ALLOWING DEPRECIATION BY CONSIDERING THE FACT ASSESSEE NOT MAINTAINING THE BOOKS OF ACCOUNT PROPERLY AND NOT MAINTAINING REGULAR BILLS/VOUCHERS , CLAIMING DEPRECIATION ON EST IMATED INCOME IS NOT JUSTIFIED. WE THEREFORE, REVERSE THE ORDER PASSED BY THE LD. CIT(A) AND UP HOLD THE ESTIMATION MADE BY THE ASSESSING OFFICER. THUS, THIS APPEAL FILED BY THE REVENUE IS ALLOWED. 8 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 8 T H DAY OF JUNE , 201 9 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 8 T H JUNE , 201 9 . VR/ - 5 ITA NO. 4 1 4 /VIZ/2018 ( M/S. SWAPNA INFRACON (P) LTD. ) COPY TO: 1. THE ASSESSEE M/S. SWAPNA INFRACON (P) LTD., D.NO. 8 - 2 - 674/2/B/8, SAI NAGAR HOUSING SOCIETY, ROAD NO.13, BANJARA HILLS, HYDERABAD. 2. THE REVENUE ACIT, CENTRAL CIRCLE - 1(1), RAJAMAHENDRAVARAM. 3. THE PR. CIT , RAJAMAHENDRAVARAM. 4. THE CIT(A) , RAJAMAHENDRAVARAM. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.