ACIT, Circle-8(1), Hyderabad V. M/s. Sigma Constructions, Hyderabad

ITA 752/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66308 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 16-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Keywords: Unexplained investment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 752/HYD/2012 ASSESSMENT YEAR: 2006-07 ASST. COMMISSIONER OF INCOME TAX, ... APPELLANT CIRCLE 8(1), HYDERABAD VS. M/S SIGMA CONSTRUCTIONS , RESPONDENT HYDERABAD (PAN/GIR NO. AAPFS4577F/S-597) APPELLANT BY : SMT. NIVEDITA BISWAS RESPONDENT BY : NONE DATE OF HEARING : 04/09/2012 DATE OF PRONOUNCEMENT : 05/10/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDERS OF CIT(A), GUNTUR, DATED 18/11/2011 FOR THE ASSESSMENT YEAR 2006-07 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE FIRM CARRYING CIVIL CONTRACT WORKS, FILED ITS RETURN OF INCOME FOR THE AY 2006-07 ON 31/10/2006, ADMITTING TOTAL INCOME AT RS . 23,77,737/-. WHILE COMPLETING THE ASSESSMENT U/S 14 3(3), THE ASSESSING OFFICER HAD ADDED RS. 5 LAKHS INTRODUCED BY THE FIRM AS ITS CAPITAL AS UNEXPLAINED INVESTMENT. THE ASSESSIN G OFFICER HAD ALSO REJECTED THE BOOK RESULTS OF THE ASSESSEE AND ESTIMATED THE INCOME @ 12.5% ON GROSS RECEIPTS OF RS. 5,15,70,033 /-, WHICH WORKED OUT TO RS. 64,46,254/-. 2 752/HYD/2012 M/S SIGMA CONSTRUCTIONS P. LTD. 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A), IT WAS SUBMITTED THAT THE ASS ESSING AUTHORITY OUGHT TO HAVE GRANTED SUFFICIENT OPPORTUN ITY SO AS TO ENABLE THE ASSESSEE TO PRODUCE PROOF IN SUPPORT OF THE ADDITION OF CAPITAL AMOUNT OF RS. 5.00 LAKH TREATED AS UNEXPLAI NED INVESTMENT. IT WAS POINTED OUT THAT THE ALLEGATION OF THE ASSESSING OFFICER THAT THE ASSESSEE DID NOT RESPOND TO THE NOTICES IS NOT CORRECT. THE AR OF THE ASSESSEE SUBMITTED TH AT THE AMOUNT INTRODUCED IS FROM THE SOURCE OF AGRICULTURAL INCOM E OF THE PARTNERS AND THE DETAILS WITH RESPECT TO THE LANDS OF THE PARTNERS ARE AVAILABLE AND CAN BE PRODUCED. IT WAS ALSO SUBM ITTED BY THE LEARNED AR THAT THE ASSESSING OFFICER WAS NOT JUSTI FIED IN REJECTING THE BOOKS OF ACCOUNT AND VOUCHERS. IT WAS FURTHER SUBMITTED TO THE CLARIFICATION SOUGHT BY THE ASSESS ING AUTHORITY VIDE LETTER DATED 03/12/2008 THE ASSESSEE HAD EXPL AINED AS TO HOW SEVERE LOSS DUE TO TERMINATION OF WORK BY THE C ONTRACTEES IN THE STATE OF MADHYA PRADESH ON ACCOUNT OF NAXAL PRO BLEMS AND ALSO DUE TO HEAVY INCREASE IN PRICES OF MATERIALS T HE ASSESSEE WAS NOT ABLE TO COMPLETE THE WORK UNDERTAKEN BY THE ASS SESSEE. FURTHER THE SECURITY DEPOSITS HAD BEEN FORFEITED BY THE ASSESSEE. THE AR FURTHER STATED THAT THE EXPENDITURE WAS INCU RRED FOR LABOUR AND SERVICES RENDERED FOR EXECUTION OF WORKS . THE AR ALSO ENCLOSED A LETTER OF THE TERMINATION OF THE GENERAL MANAGER, M.P., RURAL ROAD DEVELOPMENT AUTHORITY AND ALSO TDS CERTI FICATES. IT WAS CONCLUDED BEFORE THE CIT(A) THAT THE ASSESSEE W AS READY WITH BOOKS OF ACCOUNT AND BANK STATEMENT, ETC. AND THE SAME MAY BE CONSIDERED BY THE CIT(A) UNDER RULE 46(A)(D) OF THE INCOME TAX RULES. 3 752/HYD/2012 M/S SIGMA CONSTRUCTIONS P. LTD. 5. THE CIT(A) CALLED FOR REMAND REPORT DATED 11/02/ 2010 OBTAINED FROM THE ASSESSING OFFICER ON THE SUBMISSI ONS MADE BY THE LEARNED AR OF THE ASSESSEE. THE ASSESSING OFFIC ER SUBMITTED HIS REPORT VIDE LETTER DATED 01/03/2011 AND THE ASS ESSEE SUBMITTED ITS REPLY VIDE LETTER DATED 01/11/2011 FO R THE REMAND REPORT. THE ASSESSEE IN ITS REPLY STATED THAT THE E NTIRE BILLS/BILLS/INVOICES/VOUCHERS WERE LEFT AT THE SITE ITSELF DUE TO LIFE THREAT FROM THE NAXALITES AND THE ASSESSEES CONSTR UCTION EQUIPMENT , NAMELY, EXCAVATOR (ROAD MACHINE) WAS GU TTED IN THE FIRE BY THE NAXALITES AD THE SAME WAS PUBLISHED IN THE DAILY LOCAL NEWS PAPER, AS UNDER: THE NAXALITES/MAOISTS DESTRUCTED THE CONSTRUCTION L ABOUR AND ALSO THREATENED WITH DIRE CONSEQUENCES NOT TO D O THE ROAD CONSTRUCTION WORK AND ACCORDINGLY BY POURING D IESEL ON THE CONSTRUCTION MATERIAL AND CONSTRUCTION ROAD MAC HINE GENERATOR, MIXER MACHINE WAS GOT BURNT BY THEM. 6. IT WAS ALSO STATED BY THE ASSESSEE THAT THE INSU RANCE AMOUNT RECOVERED WAS ADJUSTED BY THE FINANCE COMPAN Y AND PERFORMANCE BANK GUARANTEE TO THE TUNE OF RS. 40,00 ,000/- WERE ENCASHED BY THE MADHYA PRADESH GOVERNMENT, WHICH RE SULTED AS NPA IN THE BANK ACCOUNT. THEREFORE, IT WAS SUBMITTE D THAT THE ASSESSEE HAD SUFFERED HUGE LOSS AND MENTAL AGONY AN D HAD TO STOP HIS BUSINESS OF CONSTRUCTION. 7. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BEING CONVINCED WITH THE EVIDENCES PRO DUCED BY THE ASSESSEE WITH RESPECT TO THE NAXALITE MOVEMENT AT M ADHYA PRADESH, WHICH HAD BROUGHT THE ASSESSEES BUSINESS TO A STAND STILL, HELD THAT THE ASSESSEES GRIEVANCES HAS TO B E CONSIDERED FAVOURABLY. THE CIT(A) OBSERVED THAT SINCE THE ASSE SSEE IS READY WITH COMPUTERIZED BOOKS AND HAD PRODUCED THE SAME D URING THE 4 752/HYD/2012 M/S SIGMA CONSTRUCTIONS P. LTD. ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER SHOUL D NOT HAVE INSISTED ON THE PRODUCTION OF VOUCHERS, BILLS, RECE IPTS, ETC. FOR VARIOUS CLAIMS MADE CONSIDERING THE CIRCUMSTANCES OF THE ASSESSEE. THE CIT(A) FURTHER OBSERVED THAT SINCE TH E BOOKS OF ACCOUNT OF THE ASSESSEE WERE AUDITED U/S 44AB, THE AUTHENTICITY OF THE BOOKS RESULTS CANNOT BE SUSPECTED. THE CIT(A ) HELD THAT FOR REFERRING TO ESTIMATION, THE ASSESSING OFFICER HAS TO REJECT THE BOOKS BY SHOWING DEFECTS, WHICH IS NOT THE CASE HER E AND, THEREFORE, THE ASSESSING OFFICER IS BOUND TO ACCEPT THE BOOKS RESULTS AND HENCE THE ESTIMATION RESORTED TO BY THE ASSESSING OFFICER IS UNJUSTIFIED. 8. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US, R AISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE CIT(A)S DECISION IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE CIT(A) OUGHT NOT TO HAVE DELETED THE ESTIMAT ED INCOME @ 12.5% OF THE GROSS PROFIT IN ABSENCE OF RE LEVANT BILLS, VOUCHERS AND RECEIPTS. 9. NONE APPEARED ON BEHALF OF THE RESPONDENT-ASSESS EE AT THE TIME OF HEARING BEFORE US. HOWEVER, WE PROCEED TO D ECIDE THE APPEAL AFTER HEARING THE LEARNED DR AND ON MERITS. 10. WE HAVE HEARD THE LEARNED DR AND PERUSED THE RE CORD AS WELL AS GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSEE HAS FURNISHED BOOKS OF ACCOUNT WH EN THE CIT(A) CALLED FOR REMAND REPORT AND THE SAME WAS PERUSED B Y THE AO. HOWEVER, THE ASSESSEE COULD NOT FURNISH BILLS/VOUCH ERS/INVOICES SINCE THE MANAGING PARTNER OF THE ASSESSEE HAD LEFT THE SITE IN A HURRY TO SAVE HIS LIFE FROM THE NAXALITES, AND THE SAME IS EVIDENCED FROM THE LOCAL PAPER NAYEE DUNIYA, BALAGH AT. THE WORK OF THE ASSESSEE WAS EFFECTED AND THE CONSTRUCTIONAL MATERIAL AND 5 752/HYD/2012 M/S SIGMA CONSTRUCTIONS P. LTD. CONSTRUCTION ROAD MACHINE GENERATOR, MIXER MACHINE GOT BURNT BY THE NAXALITES. THE ASSESSEE HAS NOT PRODUCED BILLS/VOUCHERS/INVOICES BEFORE THE CIT(A) NOR BEFOR E THE ASSESSING OFFICER AND ALSO THE SAME WERE NOT PRODUCED BEFORE US. THEREFORE, IT IS APPROPRIATE TO REMIT THE ISSUE BAC K TO THE FILE OF THE ASSESSING OFFICER TO RE-DECIDE THE ISSUE IN ACC ORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARI NG TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO PRODUCE THE B OOKS OF ACCOUNT AS WELL AS OTHER EVIDENCES BEFORE THE ASSES SING OFFICER FOR EXAMINATION AND TO ADJUDICATE THE ISSUE IN DISP UTE. 11. IN THE RESULT, APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 05/10/2012. SD/- SD/- ( CHANDRA POOJARI) (ASHAVIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 5 TH OCTOBER, 2012. KV COPY TO:- 1) ACIT, CIRCLE 8(1), 8 TH FLOOR, C-BLOCK, IT TOWERS, AC GUARDS, HYDERABAD. 2) M/S SIGMA CONSTRUCTIONS, 8-3-945, FLAT NO. 201, PLO T NO. 7, VISWANATH APARTMENTS, SRINIVASANAGAR, WEST, HYDERABAD. 3) THE CIT (A), GUNTUR 4) CIT-III, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABA D. 6 752/HYD/2012 M/S SIGMA CONSTRUCTIONS P. LTD.