DCIT, Circle-2(1), Hyd, Hyderabad V. Raghava Reddy Kunnam, Hyd, Hyderabad

ITA 860/HYD/2016

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8176 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 15-02-2021
• Assessment Year: 2010-2011
• Appeal Filed On: 06-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROHIT MUZUMDAR
• Assessee Lawyers: P MURALI MOHANA RAO
• Keywords: Unexplained cash credit; Business income
• Section: 144

Judgement Text

I N THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 755 /HYD./201 6 ASSESSMENT YEAR: 20 10 - 11 SHRI RAGHAVA REDDY KUNAM VS. ITO, WARD 6(4) HYDERABAD . HYDERABAD [PAN: AKLPK3884F ] & ITA NO. 860 /HYD./2016 ASSESSMENT YEAR: 2010 - 11 DY.CIT, CIRCLE 2(1) VS SHRI RAGHAVA REDDY KUNAM HYDERABAD HYDERABAD (APPELLANT) ( RESPONDENT) FOR ASSESSEE : SHRI P . MURALI MOHANA RAO, A.R. FOR REVENUE : SH. ROHIT MUZUMDAR , CIT, D.R. DATE OF HEARING : 1 5 /02/2021 DATE OF PRONOUNCEMENT : 25 /03/2021 O R D E R PER S.S. GODARA, J.M. THESE A SSESSEES AND R EVENUES CROSS APPEALS FOR AY 2010 - 11 ARISES AGAINST THE CIT(A) - 4, HYDERABADS ORDER DATED 29.02.2016 IN CASE N O. 0441/14 - 15/ITO, WD 6(4)/CIT(A) - 4/HYD/15 - 16 INVOLVING PROCEEDINGS U/S 144 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . ITA NO. 755/H/16 AND 860/H/16 AY: 2010 - 11 SRI RAGHAVA REDDY KUNAM, HYD. 2 H E ARD BOTH THE PARTIES. CASE FILE PERUSED. 2. IT TRANSPIRES DURING THE COURSE OF HEARING THAT THE ASSESSEES APPEAL ITA 755/H/2016 HAS RAISED A SINGLE SUBSTANTIVE GRIEVANCE THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN NOT ACCEPTING IT'S NET PROFITS DECLARED AT THE RATE OF 5.5% THEREBY ENHANCING THE SAME TO 8% QUA BOTH CONTRACTUAL AS WELL AS SUB - CONTRACTUAL RECEIPTS AS PER CIT(A)S ORDER. 3. THE REVENUES TWIN SUBSTANTIVE GROUNDS IN CROSS APPEAL ITA 860/H/16 ON THE OTHER HAND PLEAD THAT CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING UNEXPLAINED CASH CREDITS ADDITION OF RS.1,22,28,754 / - AS WELL AS ACCEPTING ITS AGRICULTURAL INCOME CLAIM OF RS . 80,00,000/ - ; RESPECTIVELY. 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE FOREGOING RIVAL PLEADINGS. BOTH THE LEARNED REPRESENTATIVES REITERATED THEIR RESPECTIVE STANDS QUA CORRECTNESS OF CIT(A)S LOWER APPELLATE FINDINGS ASSESSING ASSESSEES CONTRACTUAL RECEIPTS @ 8% QUA THE ASSESSEES BUSINESS INCOME OF RS.72,09,746/ - . MR. MURALI M OHAN A RAO VEHEMENTLY CONTENDED DURING THE COURSE OF HEARING THAT THE SAME OUGHT TO HAVE BEEN ASSESSED GO ING BY DECLARED PROFIT RATE OF 5.56% ONLY. 4.1. THE REVENUE ON THE OTHER HAND HAS FILED A CAT ENA OF DECISIONS THAT SUCH A PROFIT RATE @ 8% IS JUST AND PROPER. WE FIND SUBSTANCE IN R EVENUES STAND IN PRINCIPLE. MORE PARTICULARLY IN VIEW OF THE FACT T HAT SEC.44 AD OF THE ACT SUFFICIENTLY GUIDES SUCH ITA NO. 755/H/16 AND 860/H/16 AY: 2010 - 11 SRI RAGHAVA REDDY KUNAM, HYD. 3 COURSE OF ACTION THAT 8% PROFIT RATE ON TURNOVER BASIS CAN BE DULY ADOPTED. 4.2. MR. MURALI MOHANA RAO ON THE OTHER HAND PLACED RELIANCE ON THIS TRIBUNALS ORDER IN ITA 264/H/09 DATED 09.01.2013 SHRI P.NAIDU VS ACIT IN FAVOUR OF THE CIT(A)S 8% PROFIT RATE. THE ASSESSEE FAILS TO DISPUTE THAT SUCH ESTIMATION BASED ON THE RELEVANT FACTS IN EACH AND EVERY BUSINESS AND ASSESSMENT YEAR COULD VERY WELL FORM A BROADER GUIDING FACTOR. WE THUS AFFIRM THE CIT(A)S ACTION ADOPTING 8% PROFIT RATE ON ASSESSEES BUSINESS TURNOVER ON CONTRACTUAL RECEIPTS. 4.3. ASSESSEES GRIEVANCE HOWEVER DOES NOT STOP AT THIS STAG E. LD.COUNSEL INFORMED US THAT THE ASSESSEES BUSINESS RECEIPTS FROM SUB - CONTRACT ACTIVITY ARE ALSO THERE IN THE IMPUGNED ASSESSMENT YEAR . WE FIND THAT THIS TRIBUNALS EARLIER ORDER IN ITA 668 TO 669, 676, 677, 682, 683 AND 702/H/2010 MADHUCON PROJECT S LTD. VS ACIT AND ITA 747/H/9 ADOPT 5% PROFIT RATE OF SUB - CONTRACT RECEIPTS. WE THUS RESPECTFULLY FOLLOW THE SAME AND DIRECT THE ASSESSING OFFICER TO FINALISE NECESSARY COMPUTATION QUA ASSESSEES SUB CONTRACT RECEIPTS @ 5% INCOME ELEMENT ONLY. ASSESSE ES APPEAL 755/H/16 IS PARTLY ALLOWED IN ABOVE TERMS. 5. COMING TO R EVENUES CROSS APPEAL ITA 860/H/16 INVOLVING 25 DAYS DELAY, THE ASSESSEE OFFERED NO OBJECTION. THE SAME IS CONDONED. 5.1. WE ADVERT TO THE R EVENUES TWIN SUBSTANTIVE GROUNDS AND N OTICE THAT THE CIT(A)S DETAILED DISCUSSION IN PARA 4.4 QUA THE IMPUGNED UNEXPLAINED CASH CREDIT ADDITION OF RS.1,28,28,754/ - ITA NO. 755/H/16 AND 860/H/16 AY: 2010 - 11 SRI RAGHAVA REDDY KUNAM, HYD. 4 HAS TREATED THE SAME AS PART OF ASSESSEES TURNOVER ONLY ELIGIBLE FOR 8% PROFIT ESTIMATION THAN DELETING IT IN ENTIRETY. WE THUS FIND NO FORCE IN R EVENUES PLEADINGS TO THIS EFFECT . 5. 2 . LAST LY COMES THE R EVENUES LATTER SUBSTANTIVE GROUND SEEKING TO REVIVE AGRICULTURAL INCOME ADDITION OF RS.80 LAKHS (SUPRA). THE ASSESSEE HAS PLACED ITS DETAILED PAPER BOOK/EVIDENCE SUFFICIENTLY I NDICATING THAT THE DEPARTMENT HAS ITSELF ACCEPTED AGRICULTURAL INCOME OF RS.92 LAKHS IN A.Y 2010 - 11 THEREBY NOT MAKING ANY SUCH DISALLOWANCE. THERE IS ALSO NO INDICATION IN THE ASSESSMENT ORDER THAT ASSESSEE HAS NOT OWNED ANY AGRICULTURAL LAND IN THE IMPU GNED ASSESSMENT YEAR . THE VERY FACTUAL POSITION HAS BEEN STATED TO BE THERE IN THE EARLIER ASSESSMENT YEAR AS WELL. WE THUS AFFIRM CIT(A)S FINDINGS UNDER CHALLENGE IN THESE FACTS AND CIRCUMSTANCES. THE REVENUES APPEAL 860/H/16 FAILS THEREFORE. THIS ASSESSEES APPEAL 755/H/16 IS PARTLY ALLOWED AND R EVENUES CROSS APPEAL ITA 860/H/16 IS DISMISSED. ORDERED ACCORDINGLY. A COPY OF THIS COMMON ORDER BE PLACED IN THEIR RESPECTIVE CASE FILES. ORDER PRONOUNCE D IN OPEN COURT ON 25 /03/2021. SD - SD/ - (L.P. SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25 TH MARCH, 2021 *GMV ITA NO. 755/H/16 AND 860/H/16 AY: 2010 - 11 SRI RAGHAVA REDDY KUNAM, HYD. 5 COPY OF ORDER FORWARDED TO: 1. SRI RAGHAVA REDDY KUNAM, C/O P. MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500 082. 2. (I) ITO, WARD 6(4) , HYD. (II) ACIT, RANGE 6 , HYDERABAD 3 . PR.CIT - 6 , HYDERABAD 4. CIT(A) - 4, HYDERABAD. 5. D.R. ITAT HYDERABAD 6. GUARD FILE