THE Dy. CIT, CIRCLE - 2(1), Vijayawada V. Sri Chidupothu Krishna Murthy, Vijayawada

ITA 48/VIZ/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1982 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K SETHI
• Keywords: Rejection of books of accounts
• Section: 143(3)

Judgement Text

ITA NO.48/VIZAG/2013 CH. KRISHNA MURTHY, VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.48/VIZAG/2013 ( / ASSESSMENT YEAR: 2009-10) DCIT , CIRCLE - 2(1) VIJAYAWADA VS. CH. KRISHNA MURTHY, VIJAYAWADA [PAN: AAZPC0 810D ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI M.K. SETHI, DR / RESPONDENT BY : SHRI C. SUBRAHMANYAM, AR / DATE OF HEARING : 28.03.2016 / DATE OF PRONOUNCEMENT : 31.03.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), VIJAYAWADA DATED 30.11.2012 FOR THE ASSESSM ENT YEAR 2009-10. 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS A CIVIL CONTRACTOR DOING CIVIL CONTRACT WORKS. THE ASSESSEE FILED A RETURN OF INC OME BY DECLARING TOTAL ITA NO.48/VIZAG/2013 CH. KRISHNA MURTHY, VIJAYAWADA 2 INCOME OF RS.2,28,87,687/-. THE RETURN FILED BY TH E ASSESSEE WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (H EREINAFTER CALLED AS THE ACT). THEREAFTER, AFTER DUE PROCESS, ASSESSM ENT WAS COMPLETED U/S 143(3) OF THE ACT AND INCOME ASSESSED AT RS.3,46,74 ,553/-. 3. IN THE ASSESSMENT ORDER, THE A.O. HAS NOTICED TH AT THE ASSESSEE HAS PRODUCED BILLS & VOUCHERS FOR ALL THE EXPENSES DEBITED TO PROFIT & LOSS ACCOUNT. ON VERIFICATION OF THE SAME, IT WAS FOUND THAT MOST OF THE BILLS & VOUCHERS UNDER THE HEAD MATERIAL PURCHASES LIKE DUST, METAL, GRAVEL, ETC. LABOUR CHARGES AND WATER EXPENSES ARE SELF MADE ONES. THE A.O. FURTHER OBSERVED THAT THE VOUCHERS DID NOT CON TAIN THE ESSENTIAL DETAILS REGARDING THE ADDRESS OF THE PAYEE, QUANTUM OF THE WORK DONE OR SERVICES RENDERED, THE RATE PER UNIT OF TIME/WOR K ETC. IN VIEW OF THE ABOVE DISCREPANCIES, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED THE INCOME OF THE ASSESSEE A T 12.5% ON MAIN CONTRACT RECEIPTS. SO FAR AS SUB CONTRACT IS CONCE RNED, A.O. HAS ESTIMATED AT 3%. ON APPEAL, THE LD. CIT(A) HAS ADO PTED 9% IN PLACE OF 12.5% ON MAIN CONTRACTS BY OBSERVING THAT SOME OF T HE CONTRACTS WERE UNDERTAKEN BY THE ASSESSEE INDEPENDENTLY AND SOME W ERE GIVEN TO OTHERS ON SUB CONTRACT BASIS. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: ITA NO.48/VIZAG/2013 CH. KRISHNA MURTHY, VIJAYAWADA 3 NEXT ISSUE IS CONTRACT WORKS AND SUB CONTRACT WORK S AND THE RATE OF ESTIMATION ON SUCH WORKS. IT TRANSPIRES FROM RE CORDS THAT THE APPELLANT RECEIVED CONTRACT WORKS TO THE EXTENT OF RS.33,36,0 1,952/- AND OUT OF SUCH WORKS, THE APPELLANT HAS GIVEN WORKS OF RS.2,1 1,96,328/- ON SUBCONTRACT BASIS TO ANOTHER PARTY. IT IS COMMON KNO WLEDGE THAT PROFITS IN MAIN CONTRACTS IS MORE THAN FROM THE CONTRACT WORKS GIVEN TO OTHERS ON SUBCONTRACT BASIS, AS THE APPELLANT HAS TO FOREGO C ERTAIN AMOUNT OF PROFITS. THE AO RELIED ON THE CASE OF M/S. KNR CONS TRUCTIONS, WHERE ADOPTING 12.5% IS APPROVED ON CONTRACT WORKS, WHERE AS THE APPELLANT HAS POINTED OUT TO THE AO THAT THERE ARE CASES LIKE DCIT VS. M/S. SRINIVASA LAKSHMI CONSTRUCTIONS, ADILABAD, WHEREIN UNDER SIMI LAR CIRCUMSTANCES ADOPTING 8% WAS CONSIDERED SATISFACTORY. THUS, THE POINT TO BE NOTED HERE IS THAT AS TO WHAT IS THE APPROPRIATE YIELD DE PENDS ON FACTS AND CIRCUMSTANCES OF EACH CASE AND THERE ARE NO HARD AN D FAST RULES TO BE APPLIED ON UNIVERSAL BASIS. BUT, IN ANY CASE VARIOU S APPELLATE BODIES HAVE HELD THE ESTIMATION OF INCOME TO BE BETWEEN 8 TO 12 .5 PERCENT ON CONTRACT WORKS. THE APPELLANT HAS STATED THAT OUT O F THE TOTAL CONTRACT WORKS RECEIVED (RS.33,36,01,952/-), THE APPELLANT H AS GIVEN WORKS AMOUNTING TO RS. 2,11,96,328/- TO OTHERS ON BACK TO BACK BASIS ON WHICH NO INCOME WAS ADMITTED, WHERE AS THE AO ESTIMATED I NCOME FROM SUCH WORKS TO BE AT 3%. BUT, HOWEVER HAVING REGARD TO FA CTS, CIRCUMSTANCES AND THE JUDICIAL OPINION PREVALENT, I AM OF THE CON SIDERED OPINION THAT ENDS OF JUSTICE ARE MET FOR MAIN CONTRACTS A PERCEN TAGE OF 9 IS ADOPTED IN THE PLACE OF 12.5 ADOPTED BY THE AO IN THE IMPUGNED ASSESSMENT ORDER AND HE IS DIRECTED ACCORDINGLY. 4. WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE L D. CIT(A). 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 31 ST MAR16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER # /VISAKHAPATNAM: ' /DATED : 31.03.2016 VG/SPS ITA NO.48/VIZAG/2013 CH. KRISHNA MURTHY, VIJAYAWADA 4 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE DCIT, CIRCLE-2(1), VIJAYAWAD A 2. / THE RESPONDENT SRI CHIDUPOTHU KRISHNA MURTHY, FLAT NO.42, MOULI TOWERS, CHANDRAMOULIPURAM, VIJAYAWADA 3. + / THE CIT, VIJAYAWADA 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM