ITO, Ward-2, Anantapur V. Goutham Constructions, Anantapur

ITA 557/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69931 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 19-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.557/HYD/2013 ASSESSMENT YEARS 2009-2010 ITO, WARD 2 ANANTAPUR. VS. GOUTHAM CONSTRUCTIONS ANANTAPUR. PAN AAHFG6577B (APPELLANT) (RESPONDENT) FOR APPELLANT : SMT. K. HARITHA FOR RESPONDENT : -NONE- DATE OF HEARING : 05.11.2013 DATE OF PRONOUNCEMENT : 13.11.2013 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE O RDER OF THE CIT(A), GUNTUR DATED 30.11.2012 FOR THE ASSE SSMENT YEAR 2009-2010. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A SUB- CONTRACTOR ENGAGED FOR STRENGTHENING RESERVOIR OF T ANKS AND CEMENT LINING OF CANALS RELATING TO PENNA DELTA MO DERINIZATION PROJECT. THE ASSESSEE HAS TAKEN SUB-CONTRACT FROM THE MAIN CONTRACTOR M/S. ENGINEERING PROJECTS (INDIA) LIMITE D, HYDERABAD. THE ASSESSEE BROUGHT OUT DETAILED SUBMISSIONS BEFOR E THE LOWER AUTHORITIES WHEREIN SEVERAL EXCEPTIONAL CIRCUMSTANC ES HAVE BEEN STATED WHICH HAS AFFECTED ITS BUSINESS DURING THE Y EAR. 3. THE CASE WAS SELECTED FOR SCRUTINY BY THE INCOM E TAX OFFICER, WARD 2, ANANTAPUR FOR THE ASSESSMENT YEAR 2009-2010. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, MANY D ETAILS SUCH 2 AS THE BILL/VOUCHERS FOR VARIOUS EXPENSES CALLED FO R WHICH ARE ALSO DULY SUBMITTED BY THE ASSESSEE. IN VIEW OF THE LARGE VOLUME OF VOUCHER/BILLS, THE ASSESSEE HAS PRODUCED ONE MON TH VOUCHERS FOR APRIL, 2008 AND SUBMITTED THAT THE REMAINING MO NTHS VOUCHERS SHALL BE PRODUCED AS PER THE DIRECTIONS OF THE ASSESSING OFFICER. 4. THE ASSESSING OFFICER ASSESSED THE INCOME REJEC TING THE BOOKS OF ACCOUNTS MAINTAINED AND ESTIMATED THE INCOME AT 8% OF THE GROSS RECEIPTS RECEIVED. 5. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE SUBMI TTED THAT IT HAS NOT RECEIVED PAYMENTS FROM MAIN CONTRAC TOR IN TIME, WHICH RESULTED IN SEVERE FINANCIAL STRAIN. IT HAS A LSO STATED THAT THE WORK SITE WAS NOT HANDED OVER IN TIME AND IT HA D TO FACE THE WRATH OF LOCAL FARMERS, WHOSE LANDS WERE PROPOSED T O BE ACQUIRED FOR IMPLEMENTATION OF THE FARMERS. IT HAD FURTHER S TATED THAT IT HAS PURCHASED TWO HEAVY DUTY EARTH MOVING EQUIPMENT S, THE PAYMENT OF WHICH COULD NOT BE MADE TO DUE TO FINANC IAL STRAINS, RESULTING IN ISSUANCE OF ARREST WARRANTS AGAINST IT . IN ADDITION, IT HAS STATED THAT ONLY 9% OF THE WORK ALLOTTED WAS EX ECUTED AND REMAINING 91% COULD NOT BE EXECUTED DUE TO VARIOUS PROBLEMS AND THE WORK WAS FINALLY ABANDONED RESULTING IN FUR THER FINANCIAL STRAIN. FURTHER, BEFORE THE LEARNED CIT(A) IT WAS S UBMITTED BY THE ASSESSEE THAT THE ASSESSING OFFICERS ESTIMATE OF 8 % OF THE GROSS RECEIPTS IS ALSO ON A HIGHER SIDE CONSIDERING THE I NEXPERIENCE OF THE CONTRACTOR, NEW TO THIS LINE OF ACTIVITY AND WO RKS BEING EXECUTED FROM VERY REMOTE VILLAGES OF NELLORE AND W ORK SITES BEING VERY FAR FROM ANY HABITATION. IT WAS FURTHER SUBMITTED THAT THE SITES WHERE THE PENNA DELTA MODERNISATION WORKS ARE TO BE EXECUTED ARE ALSO NOT HANDEDOVER TO THE ASSESSEE IN TIME, THERE BEING DELAYS IN ACQUISITION OF SITES FROM THE LAND LORDS. THERE WAS ALSO HUGE DELAY IN PAYMENT OF BILLS DUE TO PAUCITY OF FUNDS AT THE GOVERNMENT LEVEL. IT WAS SUBMITTED THAT BEING A SUB -CONTRACTOR, 3 AND FOR THE VARIOUS REASONS MENTIONED BEFORE THE AS SESSING OFFICER, THE ESTIMATION OF INCOME AT 8% OF THE GROS S RECEIPTS IS ON A VERY HIGH SIDE. 6. THE LEARNED CIT(A) HELD THAT EXCEPTIONAL CIRCUMSTANCES HAVE BEEN FACED BY THE ASSESSEE WHICH HAS RESULTED IN FINANCIAL CRISIS AND FOLLOWED THE DECIS ION OF THE ITAT, HYDERABAD DATED 31.1.201 IN THE CASE OF E. EASWAR R EDDY & CO. VS. ACIT-6(1) FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 (ITA. NO. 668/HYD/2009 AND 685/HYD/2009) AND DIRECT ED THE ASSESSING OFFICER TO RECOMPUTE THE INCOME OF THE AS SESSEE ADOPTING RATE OF 5% OF GROSS CONTRACT RECEIPTS AND FURTHER TO ALLOW THERE FROM, THE SALARY AND INTEREST PAID TO P ARTNERS. 7. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US AND H AS RAISED THE FOLLOWING GROUNDS : 1. THE ORDER OF THE HONBLE CIT(A) IS ERRONEOUS BO TH ON FACTS AND IN LAW. 2. THE HONBLE CIT(A) IS NOT JUSTIFIED IN TAKING IN TO ACCOUNT ADDITIONAL EVIDENCE PRODUCED, WITHOUT GIVIN G A REASONABLE OPPORTUNITY TO THE A.O. TO EXAMINE THE SAID EVIDENCE THEREBY VIOLATING THE PROVISIONS OF RULE46A(3) OF THE INCOME TAX RULES, 1962. 3. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F APPEAL PROCEEDINGS. 8. BEFORE THE TRIBUNAL, THE LEARNED D.R. SMT. K. HA RITHA STATED THAT THE ASSESSEE HAD PRODUCED ADDITIONAL IN FORMATION BEING COPY OF THE LETTER ADDRESSED BY THE MAIN CONT RACTOR VIZ., M/S. ENGINEERING PROJECTS (INDIA) LTD. TO THE EXECU TIVE ENGINEER, DRAINAGE DIVISION, NELLORE FROM WHICH IT WAS OBVIOU S THAT WORK COULD NOT BE CONTINUED FOR VARIOUS REASONS. THIS LE TTER WAS NOT PRODUCED FOR EXAMINATION BEFORE THE ASSESSING OFFIC ER AND THEREBY, THE PROVISIONS OF RULE 46A(3) OF THE I.T. RULES, 1962 HAVE BEEN VIOLATED. 4 9. FOR THIS OBJECTION OF THE REVENUE, WE ARE OF TH E OPINION THAT THE CIT(A) MERELY OBSERVED THAT THE AS SESSEE HAD MERELY NARRATED THE CIRCUMSTANCES WHEREIN JALA YAG NAM PROJECT UNDERTAKEN BY THE ASSESSEE AS A SUB-CONTRACTOR WAS A FAILURE AND NO ADDITIONAL EVIDENCE AS SUCH HAS BEEN PRODUCE D BY THE ASSESSEE BEFORE THE CIT(A). HENCE, THIS OBJECTION O F THE DEPARTMENT IS TO BE OVERRULED. 10. WE HAVE HEARD THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE REVE NUE HAS NOT RAISED ANY GROUNDS ON MERITS OF ESTIMATION AT 5% MA DE BY LEARNED CIT(A). THE ONLY OBJECTION IS ON ADMISSION OF ADDITIONAL EVIDENCE. AS SEEN FROM THE ORDER OF LEARNED CIT(A) HE HAS NOT RELIED ON THAT LETTER AT ALL. HE HAS CONSIDERED OTH ER FACT THAT THERE IS FAILURE TO COMPLETE PROJECT, ONLY 9% OF THE WORK WAS EXECUTED, FINANCIAL PROBLEMS ETC., IN RESTRICTING THE ESTIMAT ION TO 5%, ASSESSEE BEING SUB CONTRACTOR. SINCE, WE ARE NOT IN FORMED ABOUT ANY CROSS APPEAL BY ASSESSEE, WE REFRAIN IN MAKING ANY COMMENT ON THE ADDITION SUSTAINED. REVENUE GROUND BEING ONL Y ON ADMISSION OF ADDITIONAL EVIDENCE WHICH HAS NOT MATE RIALLY EFFECTED THE ORDER OF CIT(A), WE REJECT THE GROUNDS . 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.11.2013. SD/- SD/- (B. RAMAKOTAIAH) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD DATE 13 TH NOVEMBER, 2013. VBP/- 5 COPY TO 1. I.T.O, WARD 2, AAYAKAR BHAVAN, 3 RD ROAD, NEW TOWN, ANANTAPUR 2. GOUTHAM CONSTRUCTIONS, D.NO.15-685, KALPANA COMP LEX, R.F.ROAD, ANANTAPUR. 3. CIT(A), GUNTUR 4. CIT, TIRUPATI 5. D.R. A BENCH, ITAT HYDERABAD