Sri Surya Constructions, Suryapet, Hyderabad V. ITO, Suryapet, Suryapet

ITA 502/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6276 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 11-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BABU
• Assessee Lawyers: S RAMA RAO
• Section: 143(3); 133A

Judgement Text

ITA 502 OF 2016 SRI SURYA CONSTRUCTIONS HYDERABAD PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P.MADHAVI DEVI, JUDICIAL MEMBER & SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.502/HYD/2016 (ASSESSMENT YEAR: 2010-11) SRI SURYA CONSTRUCTIONS SURYAPET PAN: ABKFS 1420 P VS. INCOME TAX OFFICER SURYAPET (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO FOR REVENUE : SHRI K.E. SUNIL BABU, DR DATE OF HEA R ING : 2 7 .07.2016 DATE OF PRONOUNCEMENT : 24 .08.2016 O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2010-11. IN T HIS APPEAL, THE ASSESSEE IS AGGRIVED BY THE ORDER OF TH E CIT (A) IN ESTIMATING THE PROFIT OF THE ASSESSEE AT 12.5% OF S ALES. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED ITS RETURN OF INCOME FOR THE RELEVANT A.Y ON 14.05.2010 DECLAR ING A LOSS OF RS.5,51,382. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE AO ASKED THE ASSESSEE TO FURNISH VARIO US DETAILS OF THE ASSESSEES BUSINESS ACTIVITIES. VIDE LETTER DAT ED 7.7.2012, THE ASSESSEE SUBMITTED A NOTE ON ITS BUSINESS ACTIVITIE S, COPY OF THE REGISTERED PARTNERSHIP DEED, NAMES AND ADDRESS OF T HE PARTNERS, COPIES OF THE I.T. RETURNS OF SOME OF THE PARTNERS AND COPY OF THE APPROVED PLAN. AFTER EXAMINING THE DETAILS FILED BY THE ASSESSEE, AO NOTICED THAT THE ASSESSEES FIRM HAS NOT MAINTAI NED BOOKS OF ACCOUNT, THOUGH THERE WAS SALE OF FLATS TO THE EXTE NT OF RS.13.00 ITA 502 OF 2016 SRI SURYA CONSTRUCTIONS HYDERABAD PAGE 2 OF 3 LAKHS. AO DID NOT AGREE WITH THE ASSESSEES CONTENT ION THAT THE GROSS RECEIPTS RECEIVED BY THE ASSESSEE IS ONLY RS. 13.00 LAKHS. HE OBSERVED THAT THE SALE CONSIDERATION SHOWN IN THE S ALE DEED IS VERY LESS THAN THE DOCUMENT VALUED. THEREFORE, FURT HER DETAILS WERE CALLED FOR FROM THE ASSESSEE. ASSESSEE WAS ALS O CONFRONTED WITH THE MATERIAL FOUND AND SEIZED DURING THE COURS E OF SURVEY U/S 133A OF THE ACT. ASSESSEE FURNISHED ITS EXPLANA TION. HOWEVER, THE AO WAS NOT CONVINCED WITH THE ASSESSEE S CONTENTIONS. HE OBSERVED THAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT AND HAS ALSO NOT MAINTAINED AN Y BILLS AND VOUCHERS AND HAS NOT FURNISHED THE MODE OF PAYMENT TOWARDS CONSTRUCTION MATERIAL ETC. HE ALSO OBSERVED THAT MO ST OF THE PORTIONS SOLD DURING THE YEAR, WERE SHOPS AND MALLS WHERE THE PROFIT RATE IS MORE. HE, THEREFORE, DISALLOWED THE CLAIM OF LOSS BY THE ASSESSEE FIRM. THEREAFTER, HE PROCEEDED TO ESTI MATE THE PROFIT RATE IN THE ASSESSEES CASE AT 15% OF THE TOTAL SAL E VALUE OF THE BUILT UP AREA. AGGRIEVED, THE ASSESSEE PREFERRED A N APPEAL BEFORE THE CIT (A) WHO RESTRICTED THE ESTIMATION OF PROFIT TO 12.5% OF THE SALES BY FOLLOWING THE DECISION OF THE ITAT IN VARI OUS CASES WHICH ARE REPRODUCED BY HIM AT PARA 5 OF HIS ORDER. AGAIN ST THIS ORDER OF THE CIT (A), THE ASSESSEE IS IN FURTHER APPEAL B EFORE US. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAD OFFERED INCOME AT 8% OF THE SALES, WHI CH IS A REASONABLE ESTIMATE. HE SUBMITTED THAT THE ITAT IN MANY CASES HAS ESTIMATED THE INCOME AT 8% OF THE RECEIPTS AND IN THE CASE OF THE ASSESSEE ALSO, IT SHOULD BE RESTRICTED TO 8% OF THE RECEIPTS. THE LEARNED DR, HOWEVER, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. ITA 502 OF 2016 SRI SURYA CONSTRUCTIONS HYDERABAD PAGE 3 OF 3 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAD ADMITTEDLY NO T MAINTAINED ANY BOOKS OF ACCOUNT AND HAS OFFERED THE INCOME U/S 44AB OF THE ACT BY ESTIMATING THE PROFIT AT 8% OF THE SALES . THE AO AND THE CIT (A) HAVE ESTIMATED THE PROFIT AT 15% AND 12 .5% RESPECTIVELY. THE LEARNED COUNSEL FOR THE ASSESSEE HAD SUBMITTED THAT THE ASSESSEE WAS INTO CIVIL CONSTRUCTION AND P ARTICULARLY CONSTRUCTION OF RESIDENTIAL FLATS AND HENCE THE PRO FIT SHOULD BE TAKEN AT 8% OF THE RECEIPTS ONLY. WE ALSO FIND FROM THE ORDERS OF THE AUTHORITIES BELOW, THAT THE ASSESSEE HAS NOT ON LY CONSTRUCTED RESIDENTIAL FLATS, BUT HAS ALSO CONSTRUCTED SHOPS A ND MALLS, WHERE THE COST OF CONSTRUCTION WOULD BE LOW, BUT TH E RECEIPTS WOULD BE HIGH. IN SUCH CIRCUMSTANCES, WE ARE INCL INED TO RESTRICT THE PROFIT TO 10% OF THE SALES. THE ASSESS EE ACCORDINGLY GETS PARTIAL RELIEF. 5. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH AUGUST, 2016. S D/ - S D/ - (S.RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 24 TH AUGUST, 2016. VNODAN/SPS COPY TO: 1. SHRI S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS E LEGANCE, 3-6-643 STREET NO.9 HIMAYATNAGAR, HYDERABAD 500029 2. INCOME TAX OFFICER SURYAPET, NALGONDA DISTT. TELANG ANA 3. CIT(A) -3 HYDERABAD 4. PR. CIT 3 HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER