Sri Katta Naraiah, Hyderabad V. ITO,Ward -1, Kadapa

ITA 563/HYD/2014

• Counselvise Citation: 56322514 RSA 2014
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-01-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 27-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: A V RAGHURAM

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 917/HYD/2014 ASSESSMENT YEAR: 2010-11 THE INCOME TAX OFFICER , WARD-1, KADAPA VS SRI KATT A NARAIAH, VONTIMITTA, KADAPA [PAN: AMHPK 7862 M] ITA NO. 563/HYD/2014 ASSESSMENT YEAR: 2010-11 SRI KATTA NARAIAH, VONTIMITTA, KADAPA [PAN: AMHPK 7862 M] VS THE INCOME TAX OFFICER , WARD-1, KADAPA (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI RAMAKRISHNA BANDI, DR FOR ASSESSEE : SHRI A.V.RAGHU RAM , AR DATE OF HEARING : 0 6 - 0 1 - 201 5 DATE OF PRONOUNCEMENT : 16 - 01 - 2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THESE ARE CROSS APPEALS BY ASSESSEE AND REVENUE AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS), G UNTUR DATED 24-01-2014. I.T.A. NOS. 917 /HYD/14 & 563/HYD/14 SRI KATTA NARAIAH :- 2 -: 2. BRIEFLY STATED, ASSESSEE IS AN INDIVIDUAL ENGAGE D IN SUB- CONTRACT WORKS WITH KNR CONSTRUCTIONS LTD., HYDERAB AD AND IN THE ASSESSMENT MADE U/S.143(3) OF THE INCOME TAX ACT (A CT), ASSESSING OFFICER MADE THE FOLLOWING ADDITIONS/DISALLOWANCES: I. DIFFERENCE IN GROSS CONTRACT RECEIPTS : RS.9,82,25 0 II. CLOSING BALANCE : RS.65,36,100 III. RETENTION MONEY : RS.11,38,894 IV. DEBIT NOTES : RS.9,99,788 V. DIFFERENCE IN BANK ACCOUNT : RS.2,59,076 AFTER CONSIDERING THE ASSESSEE'S SUBMISSIONS, THE L D.CIT(A) DELETED THE ADDITION OF CLOSING BALANCE, RETENTION MONEY, D EBIT NOTES AND DIFFERENCE IN BANK ACCOUNT WHILE CONFIRMING THE DIF FERENCE IN GROSS RECEIPTS. REVENUE IS AGGRIEVED ON THE DELETION OF CLOSING BALANCE OF RS.65,36,100/- AND DIFFERENCE IN BANK ACCOUNT OF RS .2,59,076/-. ASSESSEE IS AGGRIEVED ON THE CONFIRMATION OF DIFFER ENCE IN GROSS RECEIPTS OF RS.9,82,250/-. THESE ARE CONSIDERED AF TER HEARING THE LD.DR AND LD.AR AND PERUSING THE PAPER BOOK PLACED ON RECORD. ITA NO.917/HYD/2014 (REVENUE'S APPEAL) : 3. AS BRIEFLY STATED, REVENUE HAS RAISED TWO GROUND S ON TWO ISSUES. 3.1 THE ISSUE OF DELETION OF ADDITION OF RS.65,36 ,100/-: IN THE COURSE OF ASSESSMENT, AO OBTAINED ACCOUNT COPY FRO M M/S KNR CONSTRUCTIONS LTD., HYDERABAD AND NOTICED THAT THE OUTSTANDING CREDIT BALANCE AS ON 31-03-2010 IN RESPECT OF THE A SSESSEE WAS RS.65,36,100/-. ON COMPARING THE BALANCE SHEET OF ASSESSEE, ASSESSING OFFICER WAS OF THE OPINION THAT THIS AMOU NT WAS NOT SHOWN BY ASSESSEE AS OUTSTANDING, THEREFORE, SUPPRESSION OF THAT AMOUNT. I.T.A. NOS. 917 /HYD/14 & 563/HYD/14 SRI KATTA NARAIAH :- 3 -: ASSESSEE SUBMITTED THAT IT HAS CREDIT BALANCES IN R ESPECT OF AMOUNTS RECEIVABLE FROM KNR CONSTRUCTIONS LTD., HYDERABAD O F DIFFERENT WORKS OF A GRAND TOTAL OF RS.78,80,176/- WHICH WAS SHOWN AS OUTSTANDING AMOUNTS IN THE LEDGER ACCOUNTS. AS AGA INST THAT, ASSESSEE HAS PAYABLE AMOUNTS OF RS.72,01,276/- TOWA RDS BOULDER EXPENSES PAYABLE, LABOUR EXPENSES PAYABLE AND MESS CHARGES PAYABLE AND SINCE THESE CREDITS ARE AVAILABLE IN SU NDRY DEBTORS ACCOUNT, ONLY THE NET BALANCE OF RS.6,78,900/- WAS SHOWN IN THE BALANCE SHEET. ASSESSING OFFICER DID NOT ACCEPT TH E SUBMISSION OF ASSESSEE AND MADE THE ADDITION OF RS.65,36,100/-. DURING THE APPELLATE PROCEEDINGS BEFORE THE LD.CIT(A), ASSESSE E MADE THE SAME SUBMISSIONS, FURNISHED THE COPIES OF THE BALANCE SH EET AND OTHER FINAL ACCOUNTS IN SUPPORT OF THE CONTENTIONS. LD.C IT(A) AFTER PERUSING THE SUBMISSIONS AS WELL AS THE ACCOUNTS GAVE A FIND ING THAT AMOUNT RECEIVABLE FROM KNR CONSTRUCTIONS LTD., HYDERABAD A T RS.65,36,100/- IS AS PER THE ASSESSEE'S BALANCE SHE ET AND THERE APPEARS TO BE NO OMISSION OR ERROR. IN VIEW OF THI S, THE ADDITION MADE WAS DELETED. 4. LD.DR VEHEMENTLY ARGUED THAT THIS WAS AN AFTER T HOUGHT TO EXPLAIN THE DISCREPANCY AND THE ADDITION MADE BY AS SESSING OFFICER IS PERFECTLY VALID. HE ALSO SUBMITTED THAT THERE I S NO NET AMOUNT PAYABLE TO KNR CONSTRUCTIONS LTD., HYDERABAD TOWARD S BOULDER EXPENSES OR LABOUR EXPENSES, THEREFORE, ASSESSEE'S EXPLANATION THAT ONLY NET AMOUNT WAS TAKEN TO BALANCE SHEET CANNOT B E ACCEPTED. 5. WE ARE NOT CONVINCED WITH THE ARGUMENTS OF THE L D.DR. AS SEEN FROM THE LEDGER ACCOUNT FILED ON RECORD IN THE PAPER BOOK, PARTICULARLY WITH REFERENCE TO THE APPEAL OF ASSESS EE, THE OUTSTANDING AMOUNT AT THE END OF 31-03-2010 IN THE LEDGER ACCOU NT PERTAINING TO KNR CONSTRUCTIONS LTD., HYDERABAD, IS SHOWING CLOS ING BALANCE OF I.T.A. NOS. 917 /HYD/14 & 563/HYD/14 SRI KATTA NARAIAH :- 4 -: RS.65,36,100/-. THERE IS NO DISPUTE WITH REFERENCE TO THE AMOUNTS PAYABLE OF BOULDER EXPENSES AND LABOUR EXPENSES ARI SING FROM P&L A/C. ASSESSING OFFICER HAS NOT DISALLOWED ANY AMOU NT TOWARDS THESE EXPENSES CLAIMED IN THE P&L A/C. IN THE METHOD OF ACCOUNTING BEING FOLLOWED BY ASSESSEE ONLY NET AMOUNT WAS SHOWN IN T HE BALANCE SHEET. SINCE THE DETAILED ACCOUNTS INDICATE THAT TH ERE IS NO OMISSION OR ERROR IN THE RECEIVABLES, WE UPHOLD THE ORDER OF THE LD.CIT(A). REVENUE'S GROUND IS DISMISSED. 6. THE NEXT GROUND RAISED BY REVENUE IS WITH REFERE NCE TO THE DELETION OF ADDITION OF RS.2,59,076/-. ASSESSING OF FICER NOTED THAT ASSESSEE IN THE RETURN OF INCOME HAS NOT SHOWN ANY BANK BALANCE WHEREAS THE ING VYSYA BANK LTD., ACCOUNT INDICATED AN AMOUNT OF RS.2,59,076/-. AS BALANCE IN THIS ACCOUNT WAS NOT R EFLECTED, ASSESSING OFFICER MADE ADDITION OF THE SAID AMOUNT. IT WAS THE EXPLANTION OF ASSESSEE THAT WHILE UPLOADING THE DET AILS OF BALANCE SHEET, IT WAS WRONGLY SHOWN AS CASH BALANCE, WHEREA S THE ACTUAL CASH BALANCE WAS RS.14,346.84 AND BANK BALANCE WAS 2,19,076.82 BOTH TOTALING TO RS.2,33,423.66. IT WAS FURTHER EX PLAINED THAT EVEN THOUGH THE BANK BALANCE SHOWN AT RS.2,59,076 THERE WAS A PAYMENT OF RS.10,000/- MAKE TO PITCHING/REVETMENT LABOUR, S HRI ASHOK KUMAR, WHICH WAS SHOWN WRONGLY AS RS.50,000/- IN TH E BOOKS OF ACCOUNTS. THIS BEING BANK RECONCILIATION ENTRY, TH ERE IS NO DIFFERENCE IN THE BALANCE SHOWN IN THE BOOKS. LD.CIT(A) IN HI S ONE LINE ORDER NOTED THAT 'I HAVE PERUSED THE SUBMISSION MADE AND FIND THEM T O BE IN ORDER. THE ADDITION OF RS.2,59,076 IS DELETED'. REVENUE IS AGGRIEVED. 7. AFTER CONSIDERING THE LD.DR'S ARGUMENTS AND LD.A R'S EXPLANATION ON THE ACCOUNT, WE ARE OF THE OPINION T HAT THIS ISSUE REQUIRES RE-EXAMINATION BY THE ASSESSING OFFICER. WE MAKE IT CLEAR I.T.A. NOS. 917 /HYD/14 & 563/HYD/14 SRI KATTA NARAIAH :- 5 -: THAT JUST BECAUSE ASSESSEE HAS ENTERED WRONGLY IN T HE RETURN WHILE UPLOADING, THAT CANNOT BE TAKEN AS A GOSPEL TRUTH. ASSESSING OFFICER IS DIRECTED TO ENQUIRE AND EXAMINE THE CASH BOOK AN D BANK STATEMENT IN DETERMINING THE ACTUAL BALANCES. MORE OVER, ASSESSEE ADMITS THAT THERE IS A MISTAKE IN BANK PAYMENT OF R S.10,000/- BUT RECORDED AS RS.50,000/- IN THE BOOKS OF ACCOUNTS. W HETHER IT IS A MISTAKE IN PAYMENT MADE OR MISTAKE IN CLAIMING LABO UR EXPENSES REQUIRES EXAMINATION. IN CASE THIS MISTAKE IN PAYM ENT OF OUTSTANDING PAYMENTS, THEN, IT MAY NOT HAVE ANY BEA RING ON P&L A/C AND THAT AMOUNT CAN BE TAKEN IN RECONCILIATION OF T HE BALANCE AS AVAILABLE IN THE BOOKS. WITH THESE OBSERVATIONS AN D DIRECTIONS, THE ISSUE IS RESTORED TO THE FILE OF ASSESSING OFFICER. NEEDLESS TO SAY THAT ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY TO EX PLAIN. REVENUE'S GROUND TO THAT EXTENT IS ALLOWED FOR STATISTICAL PU RPOSES. ITA NO.563/HYD/2014 (ASSESSEE'S APPEAL) : 8. IN THIS, ASSESSEE IS AGGRIEVED ON SUSTAINING THE ADDITION OF RS.9,82,250/-. THE FACTS LEADING TO THE ADDITION A RE THAT THE ASSESSING OFFICER NOTICED THAT THE GROSS CONTRACT R ECEIPTS SHOWN BY ASSESSEE IN THE P&L A/C ARE RS.2,08,58,273/- WHEREA S FORM 26AS INDICATES THE RECEIPT OF RS.2,18,40,523/-. AS ASSE SSEE COULD NOT RECONCILE THE AMOUNT AT THE TIME OF ASSESSMENT, ASS ESSING OFFICER MADE THE ADDITION AS SUPPRESSION OF CONTRACT RECEI PTS. 8.1 DURING THE APPELLATE PROCEEDINGS BEFORE THE CIT (A), ASSESSEE SUBMITTED THAT ASSESSEE HAS RECEIVED TDS CERTIFICAT ES FROM KNR CONSTRUCTIONS LTD., HYDERABAD, FOR AN AMOUNT OF RS. 2,08,58,273/- ONLY. FURTHER STATED THAT IT HAS MAINTAINED DIFFER ENT ACCOUNTS AND IN ALL THE ACCOUNTS, THE TOTAL CREDIT FROM THE CONTRAC TEE WAS RS.2,11,13,799/-, THE DETAILS OF WHICH WERE SUBMITT ED. SINCE AMOUNT OF ONLY RS.2,08,58,273/- WAS SHOWN IN THE P& L A/C, I.T.A. NOS. 917 /HYD/14 & 563/HYD/14 SRI KATTA NARAIAH :- 6 -: ASSESSEE ADMITTED BEFORE LD CIT(A) THE DIFFERENCE O F 2,55,526/- AND NOT RS.9,82,250/-. IT WAS FURTHER SUBMITTED THAT A SSESSEE HAS PAID AN AMOUNT OF RS.6 LAKHS TO KNR CONSTRUCTIONS LTD., HYDERABAD, ON 07-11-2009 AND THIS TRANSACTION COULD HAVE BEEN SHO WN WRONGLY IN GROSS CONTRACT RECEIPTS. 9. THE LD.CIT(A) HOWEVER, HAS NOT AGREED AND CONFIR MED THE ADDITION STATING AS UNDER: 6.3 I HAVE PERUSED THE SUBMISSIONS MADE. AT THE O UTSET, THE APPELLANT HIMSELF HAS ADMITTED THAT THE CONTRACT RE CEIPTS HAVE BEEN UNDER REPORTED BY HIM TO THE EXTENT OF RS.2,55,526/-. SE CONDLY, HIS CLAIM THAT RS.6 LAKHS WAS PAID TO M/S.KNR CONSTRUCTIONS LTD., AS A FINANCIAL TRANSACTION DOES NOT APPEAR RELEVANT TO THE ISSUE AT HAND. IF THE AMOUNT WAS PAID BY THE APPELLANT, IT COULD NOT ERRONEOUSLY BE INCLUDED AS AN AMOUNT RECEIVED BY THE APPELLANT AND HENCE THIS CONTENTION DOES NOT APPEAR TO HAVE ANY BASIS. MOREOVER, THE CONTRACTEE, NAMELY M/S.KNR CONSTRUCTI ONS LTD., HYDERABAD, HAVE IN THEIR LETTER DATED 24-11-2012 ADDRESSED TO THE ASSESSING OFFICER STATED THAT THEY HAD ISSUED TWO TDS CERTIFICATES TO THE APPELLANT, THE DETAILS OF WHICH ARE AS UNDER: TDS CERTIFICATE OF KNT-01 RS.2,08,58,273/- TDS CERTIFICATE OF AP-07 RS.9,71,962/- 6.4 THUS, IT IS APPARENT THAT THE APPELLANT HAS ME RELY TAKEN INTO ACCOUNT ONE TDS CERTIFICATE IGNORING THE SECOND CER TIFICATE ISSUED BY THE CONTRACTEE. THE APPELLANT HAS FURNISHED NO EXPLANA TION AS TO WHY THE SECOND TDS CERTIFICATE WAS NOT ACCOUNTED FOR NOR ANY RECON CILIATION STATEMENT TO EXPLAIN THE DIFFERENCE. IN VIEW OF THE SAME, THE A DDITION OF RS.9,82,250/- ON ACCOUNT OF UNDER REPORTING OF CONTRACT RECEIPTS IS SUSTAINED AND APPELLANT'S APPEAL IN RESPECT OF THIS ADDITION IS DISMISSED. I.T.A. NOS. 917 /HYD/14 & 563/HYD/14 SRI KATTA NARAIAH :- 7 -: 10. AFTER CONSIDERING RIVAL CONTENTIONS AND EXAMINING THE LEDGER ACCOUNTS PLACED ON RECORD, WE ARE OF THE OPINION TH AT THIS ISSUE ALSO REQUIRE RE-EXAMINATION BY THE ASSESSING OFFICER. A S FAR AS TDS CERTIFICATES ARE CONCERNED, ASSESSEE DID CLAIM TAX CREDITS, SO LD. CIT(A) OBSERVATION THAT ALL TDS CERTIFICATES WERE N OT CLAIMED IS NOT CORRECT. THE CONTENTION THAT RS.6 LAKHS IS A FINANC IAL TRANSACTION AND ADMISSION OF RS.2,55,526/- AS TURNOVER HAVE NOT BEE N ADJUDICATED. THE ORDER OF CIT(A) DID NOT DEAL WITH EITHER OF THE ISSUES. THEREFORE, IN THE INTEREST OF JUSTICE, WE REMIT THE ISSUE TO T HE FILE OF ASSESSING OFFICER TO EXAMINE THE LEDGER COPIES OF BOTH ASSESS EE AS WELL AS KNR CONSTRUCTIONS LTD., HYDERABAD AND RECONCILE THE TUR NOVERS AND OTHER TRANSACTIONS VIS-A VIS THE TDS CERTIFICATES AND MA KE THE ADDITION ACCORDINGLY. ASSESSING OFFICER ATTENTION IS DRAWN TO THE FACT THAT ASSESSEE ADMITS AN AMOUNT OF RS.2,55,526/- AS A TUR NOVER. SINCE TDS CERTIFICATES AND LEDGER ACCOUNTS OF PARTIES REQ UIRE DETAILED RECONCILIATION, ASSESSING OFFICER IS FREE TO EXAMIN E AND DECIDE THE ISSUE AFTER GIVING OPPORTUNITY TO ASSESSEE. THE GR OUNDS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, REVENUE'S APPEAL IS PARTLY ALLO WED AND ASSESSEE'S APPEAL IS ALLOWED FOR STATISTICAL PURP OSES. ORDER PRONOUNCED IN OPEN COURT ON 16 TH JANUARY, 2015. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 16 TH JANUARY, 2015. TNMM I.T.A. NOS. 917 /HYD/14 & 563/HYD/14 SRI KATTA NARAIAH :- 8 -: COPY TO : 1. INCOME TAX OFFICER, WARD - 1, SIMHAPURI COLONY, KADAPA - 516 001. 2. SRI KATTA NARAIAH, # 6-17-1, NEAR MADHAVARAM, VO NTIMITTA, KADAPA, C/O. SHRI K.VASANTKUMAR & A.V.RAGHU RAM, ADVOCATES, 610, BABUKHAN ESTATE, BASHEEERBAGH, HYDE RABAD 3. CIT(A)-GUNTUR 4. CIT, TIRUPATI 5. D.R. ITAT, HYDERABAD.