Dy.CIT, Circle-2(3), Hyderabad V. M/s GVS Infra Projects Private Limited, Hyderabad

ITA 634/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69715 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Keywords: Depreciation
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 634/HYD/2013 ASSESSMENT YEAR : 2009-10 DY. COMMISSIONER OF INCOME-TAX, APPELLANT CIRCLE 2(3), HYDERABAD. VS. M/S GVS INFRA PROJECTS PVT. LTD., RES PONDENT (PREVIOUSLY KNOWN AS SSVG ENGG. PROJECTS PVT. LTD.) APPELLANT BY : SHRI D. SUDHAKAR RAO RESPONDENT BY : NONE DATE OF HEARING : 12/08/2013 DATE OF PRONOUNCEMENT : 12/08/2013 ORDER PER CHANDRA POOJARI, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIREC TED AGAINST THE ORDER PASSED BY THE CIT(A)-IV, HYDERABAD ON 25/02/ 2013, FOR ASSESSMENT YEARS 2009-10. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTI ON. IT FILED ITS RETURN OF INCOME ON 15/10/2009, ADMITTING AN INCOME OF RS. 6,76,04,430/-. IN THE COURSE OF THE ASSESSMENT PROC EEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD INCURRED SUB- CONTRACT EXPENDITURE OF RS. 63,20,97,509/- BY CREDITING THE FOLLOWING 4 PARTIES: 2 ITA NO. 634/HYD/13 M/S GVS INFRA PROJECTS PVT. LTD. (I) OUTFIELD INFRASTRUCTURE LTD. (II) SOLVENT REAL ESTATES P LTD. (III) EARTHWORK INFRESTRUCTUREPVT LTD. AND (IV) COSMOS INFRA ENGINEERING INDIA LTD. 3. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HA D NOT FURNISHED THE PROOF OF PAYMENT TO THESE SUB-CONTRAC TORS, THAT ALL THE EXPENSES WERE DEBITED IN JANUARY, FEBRUARY AND MARCH, 2009, THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE EXACT NATURE OF WORK DONE BY THESE PARTIES, THAT THE LETT ERS ADDRESSED TO THESE SUB-CONTRACTORS WERE RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARK 'THAT NO SUCH PA RTY EXISTED AT THOSE ADDRESSES' AND THAT IT WAS HIGHLY IMPROBAB LE THAT THE 4 PARTIES HAD EXECUTED THE WORK WITHOUT RECEIPT OF MONEY FROM THE ASSESSEE. THE ASSESSING OFFICER THEREFORE DIREC TED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT WITH BILLS /VOUCHERS AND TO ARRANGE FOR PHYSICAL INSPECTION OF THE WORK CLAIMED TO HAVE BEEN CARRIED OUT BY THE PARTIES CONCERNED, BUT , THE ASSESSEE FAILED TO PRODUCE THE BOOKS. 4. SUBSEQUENTLY, A SURVEY U/S. 133A WAS CARRIED OU T AT THE BUSINESS PREMISES OF THE ASSESSEE ON 26.12.2011. A STATEMENT WAS RECORDED FROM SRI C. RAVI KUMAR, MANAGER (FINAN CE), WHO STATED THAT THE ASSESSEE WAS NOT MAINTAINING REGULA R BOOKS OF ACCOUNT AND BILLS/VOUCHERS IN SUPPORT OF THE EXPEND ITURE CLAIMED. THE ASSESSING OFFICER GAVE ANOTHER OPPORTU NITY TO THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT AND EVIDEN CE OF PAYMENT TO THE SUB-CONTRACTORS. VIDE ITS LETTER DTD . 28.12.2011, THE ASSESSEE CLAIMED THAT IT HAD FURNIS HED ALL THE INFORMATION CALLED FOR EARLIER. HOWEVER, THE ASSESS ING OFFICER NOTED IN HIS ORDER THAT THIS CLAIM WAS INCORRECT AS THE BOOKS OF ACCOUNT AND BILLS & VOUCHERS HAD NOT BEEN FURNISHED AND THE ASSESSEE HAD ALSO NOT FURNISHED ANY INFORMATION ABOUT THE 3 ITA NO. 634/HYD/13 M/S GVS INFRA PROJECTS PVT. LTD. LOCATION OF THE WORK DONE BY THE SUB-CONTRACTORS. THE ASSESSING OFFICER HAD ALSO ISSUED A COMMISSION U/S, 131(D) TO ITO WARD: 10(2), KOLKATA WHO WAS THE ASSESSING OFFICER OF THE SUB CONTRACTORS OUTFIELD INFRASTRUCTURE PVT LTD., SOLVE NT REAL ESTATES P LTD., EARTHWORK INFRASTRUCTURE P LTD. TO VERIFY A ND OBTAIN THE ACCOUNT COPIES OF SSVG ENGINEERING PROJECTS P LTD. IN THEIR BOOKS AND THEIR BANK ACCOUNT STATEMENTS TO SEE IF THE PAY MENTS TOWARDS SUB-CONTRACT HAD BEEN RECEIVED BY THEM FROM THE ASS ESSEE. THE THREE PARTIES STATED THAT THEY HAD NOT RECEIVED ANY PAYMENTS FROM THE ASSESSEE AND THAT THE ENTIRE AMOUNT WAS RE CEIVABLE. THE BOOKS OF THESE COMPANIES AND THEIR BANK ACCOUNT STA TEMENTS ALSO SHOWED THAT NO MONEY HAD BEEN RECEIVED FROM THE ASS ESSEE. THE ASSESSING OFFICER, THEREFORE, CONCLUDED THAT THE BO OKS OF ACCOUNT OF THE ASSESSEE WERE NOT CORRECT. THE ASSESSING OFF ICER ALSO FOUND DEFICIENCIES IN THE LEDGER ACCOUNTS OF 'MARBLE' EXP ENDITURE OF RS. 3,60,01,303/- AND 'GRANITE' EXPENDITURE OF RS. 4,27 ,19,066/-. 5. IN THE LIGHT OF THESE DISCREPANCIES, THE ASSESS ING OFFICER REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE INC OME AT 12.5% OF THE GROSS RECEIPTS OF RS. 153,30,36,420/- AFTER ALLOWING DEPRECIATION OF RS. 2,98,17,874/-, THE ASSESSING OF FICER ASSESSED THE TOTAL INCOME AT RS. 16,18,11,678/-. 6. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER I N APPEAL BEFORE THE CIT(A) AND SUBMITTED THAT THE ASSESSEE WAS A LI STED COMPANY WHOSE BOOKS OF ACCOUNT HAVE BEEN AUDITED UNDER THE COMPANIES ACT, AS WELL AS THE INCOME TAX ACT. HE FURTHER SUBM ITTED THAT THERE WAS NO DEFICIENCY IN THE BOOKS OF ACCOUNT AND , THEREFORE, THE REJECTION OF BOOKS WAS NOT JUSTIFIED. THE AR RE LIED ON FEW CASE LAWS, WHICH WERE MENTIONED AT PAGE 3 & 4 OF CIT(A) S ORDER. 4 ITA NO. 634/HYD/13 M/S GVS INFRA PROJECTS PVT. LTD. 7. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO ESTIMA TE THE INCOME AT 8% OF THE CONTRACT RECEIPTS PLACING RELIANCE ON THE DECISION OF THE ITAT, AHMEDABAD BENCH IN CASE OF ARIHANT BUILDE RS PVT. LTD. VS. ACIT, 291 ITR (AT) 41 (AHD.SB). 8. AGGRIEVED, THE REVENUE IS IN APPEAL BEFOR E US AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD.CIT(A) ERRED IN LAW IN GRANTING FURTHER R ELIEF ON ESTIMATED PROFITS WITHOUT ANY BASIS. 2. THE CIT(A) ERRED IN LAW AND ON FACTS IN GRANTING RELIEF WITHOUT ANY BASIS AND FOLLOWING DECISION IN OTHER C ASES WHERE AS ESTIMATION CAN VARY FROM CASE TO CASE. 3. THE CIT(A) ERRED IN LAW AND ON FACTS IN NOT TAKI NG COGNIZANCE OF THE FACT THAT THE ASSESSEES CONDUCT OF NON PRODUCTION OF BOOKS IS DELIBERATE SO THAT THE ASSES SING OFFICER IS FORCED TO MAKE ESTIMATE AND THEREAFTER A N ATTEMPT IS MADE BY THE ASSESSEE IN APPEAL TO GET REDUCTION ON THE ESTIMATION. 9. NONE APPEARED ON BEHALF OF THE RESPONDENT- ASSESSEE AT THE TIME OF HEARING. HOWEVER, WE PROCEED TO DECIDE THE APPEAL AFTER HEARING LEARNED DR AND ON MERITS. 10. AFTER CONSIDERING THE SUBMISSIONS OF THE LEARNED DR AND PERUSING THE MATERIAL ON RECORD AS WELL AS THE ORDE RS OF THE AUTHORITIES BELOW, WE ARE OF THE OPINION THAT THE C IT(A) IS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO EST IMATE THE INCOME AT 8% OF CONTRACT RECEIPTS. IN OTHER WORDS, WE MAKE IT CLEAR THAT THE INCOME IS TO BE ESTIMATED AT 8% ON THE TURNOVER OF RS. 153,30,36,420/-, WHICH WAS CONSIDERED BY THE ASSESS ING OFFICER AND THEREAFTER THE ASSESSEE IS NOT ENTITLED FOR ANY OTHER DEDUCTION U/S 29 TO 40 OF THE ACT, AS HELD BY THE H ONBLE 5 ITA NO. 634/HYD/13 M/S GVS INFRA PROJECTS PVT. LTD. JURISDICTIONAL HIGH COURT IN CASE OF M/S INDWELL CO NSTRUCTIONS VS. CIT, 232 ITR 776. 11. IN THE RESULT, APPEAL OF THE REVENUE I S DISPOSED OF AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST, 2013. SD/- SD/- (SAKTIJIT DEY) JUDICIAL MEMBER (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 12 TH AUGUST, 2013 KV COPY TO:- 1) DCIT, CIRCLE 2(3), 8 TH FLOOR, B BLOCK, IT TOWERS, MASAB TANK, HYDERABAD 500 004. 2) M/S GVS INFRA PROJECTS PVT. LTD., 1 ST FLOOR, SRINIVASA GUNDLURI COMPLEX, 12-2-460, AMBA GARDENS, MEHDIPATN AM, HYDERABAD. 3) THE CIT (A)-IV, HYDERABAD 4) THE CIT-III, HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.