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ITA 679/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2549 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 11-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAN REDDY
• Assessee Lawyers: P MURALI MOHAN RAO
• Section: 143(3); 144

Judgement Text

ITA NO 679 OF 2 016 EDCO INDIA P LTD HYDERABAD. PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.679/HYD/2016 (ASSESSMENT YEAR: 2011-12) M/S. EDCO INDIA P LTD HYDERABAD PAN: AAACE 4487 E VS DY. COMMISSIONER OF INCOME TAX, CIRCLE 2(2) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P. MURALI MOHAN RAO FOR REVENUE : SHRI MOHAN REDDY, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2011-12. THIS APPEAL IS AGAINST THE ORDER OF THE CIT (A)-5, HYDER ABAD, DATED 28.01.2016. THE ASSESSEE HAS RAISED THE FOLLOWING G ROUNDS OF APPEAL: 1. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN DISMISSING THE APPEAL. 2. THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE AO IS JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 144 AND COMPLETING THE ASSESSMENT. 3. THE LD.CIT(A) OUGHT TO HAVE ACCEPTED THE TOTAL INCOME OF RS.4,30,51,740 DECLARED IN THE RETURN OF INCOME BY THE APPELLANT. 4. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE REJECTION OF BOOKS OF ACCOUNT BY THE DATE OF HEARING : 27.09.2017 DATE OF PRONOUNCEMENT : 29.09.2017 ITA NO 679 OF 2 016 EDCO INDIA P LTD HYDERABAD. PAGE 2 OF 5 ASSESSING OFFICER IS MERELY ON THE BASIS OF SUSPICION, PRESUMPTIONS AND CONJECTURES. 5. THE LD.CIT(A) ERRED IN UPHOLDING THE ESTIMATION OF PROFIT AT 12.5% OF THE CONTRACT RECEIPTS OF RS. 71,98,68,979/-. 6. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF AO IN REJECTING THE BOOK RESULTS. 7. WITHOUT PREJUDICE TO THE ABOVE, THE LD.CIT(A) OUGHT TO HAVE DIRECTED THE AO TO ESTIMATE THE PROFIT AT 8% ON MAIN CONTRACT RECEIPTS AND 5% ON SUB- CONTRACT RECEIPTS. ' 8. WITHOUT PREJUDICE TO ABOVE GROUNDS, THE LD. CIT(A) OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE PROFIT ON THE BASIS OF AVERAGE OF PROFIT ADMITTED IN LAST THREE TO FOUR ASSESSMENT YEARS. 9. THE ASSESSEE MAY ADD, ALTER OR MODIFY OR SUBSTITUTE ANY OTHER POINT TO THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTS. IT HAS FILED ITS RETURN OF INCOME FOR THE RELEVANT A.Y ON 30.09.2011 ADMITTING A TOTAL INCOME OF RS.4,30,51,740. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE ASSESSEE WAS DIRECTED TO FURNISH CERTAIN DETAILS. THE ASSESSEE DID NOT PRODU CE ANY DETAILS NOR DID IT APPEAR BEFORE THE AO. THEREFORE, THE AO REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE AND ESTIMATED THE INCOME OF THE ASSESSEE AT 12.5% OF THE GROSS CONTRACT RECEIPTS. A GGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) STA TING THAT THE AO OUGHT TO HAVE ESTIMATED THE PROFIT AT 8% OF THE M AIN CONTRACT RECEIPT AND 5% OF THE SUB CONTRACT RECEIPTS. HE PLAC ED RELIANCE ITA NO 679 OF 2 016 EDCO INDIA P LTD HYDERABAD. PAGE 3 OF 5 UPON THE DECISION OF THE ITAT IN THE CASE OF M/S. V ARALAXMI GRANITES (P) LTD IN ITA NOS. 1435 TO 1438/HYD/2010 FOR SUCH ESTIMATION OF INCOME. THE CIT (A) HOWEVER, CONFIRME D THE ORDER OF THE AO AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE IS THE MAIN CONTRACTOR IN THE CASE OF AMR POWER (P) LTD AND IS A SUB CONTRACTOR WITH OTHER CONTRACTORS SUCH AS VINIRMA PROJECTS (P) LTD, MAYTTAS-NCC JV, RITHVWIK PROJECTS (P) LTD, RITHWIK ENERGY GENERATION P LTD, SIDDHARTHA IN FRA PROJECTS, ZVS RAMKEY JV ETC., HE ALSO FILED A COPY OF FORM NO. 26AS I.E. TDS CERTIFICATE, WHEREIN THE TDS HAS BEEN MADE BY ALL T HE PARTIES. HE SUBMITTED THAT AS PER VARIOUS DECISIONS OF THIS TRI BUNAL IN A NUMBER OF CASES, IN THE CASES OF CIVIL CONTRACTORS, THE INCOME FROM MAIN CONTRACT IS ESTIMATED AT 8% AND IN THE CASE OF SUB CONTRACT, IT IS TO BE ESTIMATED AT 5% OF THE GROSS CONTRACT R ECEIPTS. HE HAS FILED COPIES OF SUCH DECISIONS IN THE FORM OF A PAP ER BOOK BEFORE US. 4. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS N OT COOPERATED BY FILING THE RELEVANT DETAILS BEFORE TH E AO OR THE CIT (A) AND SUBMITTED THAT THE ASSESSEE SHOULD BE DIREC TED TO PRODUCE ITS BOOKS OF ACCOUNT INSTEAD OF ESTIMATING ITS INCO ME. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAD APPEARED BEFORE THE CIT (A) ON A N UMBER OF OCCASIONS AND SOUGHT ADJOURNMENTS AND ALSO FILED WR ITTEN SUBMISSION BEFORE THE CIT (A). HE SUBMITTED THAT TH E ASSESSEE HAS RETURNED AN INCOME OF 5.1% OF ITS CONTRACT RECEIPTS WHICH IS MUCH ITA NO 679 OF 2 016 EDCO INDIA P LTD HYDERABAD. PAGE 4 OF 5 BELOW 8% IN THE CASE OF MAIN CONTRACTS AND IS SAME A S 5% IN THE CASE OF SUB-CONTRACT. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THERE IS NO FINDING EITHER BY THE AO OR BY THE CIT (A) AS TO THE NATURE OF THE ACTIVITIES CARR IED OUT BY THE ASSESSEE I.E. WHETHER IT IS A MAIN CONTRACTOR OR SU B-CONTRACTOR. THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNT BEFORE ANY OF THE AUTHORITIES BUT ADMITTEDLY THE INCOME RETURNED BY THE ASSESSEE IS AT 5.1% OF ITS GROSS CONTRACT RECEIPTS W ITHOUT ANY DIFFERENTIATION BETWEEN MAIN CONTRACT AND SUB CONTR ACTS. THE ASSESSEE HAS FILED TDS CERTIFICATES AND THE GROSS C ONTRACT RECEIPTS ARE EVIDENT THEREFROM. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE FILE OF THE AO TO VERIFY THE ASSESSEES BOOKS OF ACCOUNT AND IF IT IS FOUND THAT THE INCOME RETURNED BY THE ASSESSEE IS LESS THAN WHAT IS DIREC TED TO BE ESTIMATED BY THE TRIBUNAL IN THE CASES OF MADHUCON PROJECTS LTD, MAA HIGHWAYS, DNR CONSTRUCTIONS I.E. @ 8% OF GROSS C ONTRACT RECEIPTS IN MAIN CONTRACTS AND 5% OF THE GROSS CONT RACT RECEIPTS IN SUB-CONTRACTS, THEN THE HIGHER OF THE RETURNED O R ESTIMATED INCOME SHALL BE APPLIED TO THE ASSESSEES CASE. 7. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH SEPTEMBER, 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 29 TH SEPTEMBER, 2017. VINODAN/SPS ITA NO 679 OF 2 016 EDCO INDIA P LTD HYDERABAD. PAGE 5 OF 5 COPY TO: 1 P.MURALI & CO. CAS, 6-3-655/2/3 1 ST FLOOR SOMAJIGUDA, HYDERABAD 500082 2 DCIT, CIRCLE 2(2) HYDERABAD 3 CIT (A)-5 HYDERABAD 4 PR. CIT 5 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER