ACIT, Hyderabad V. M/s Shantha SriramHousing Pvt.Ltd., Hyderabad

ITA 952/HYD/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53704 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 22-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD
• Assessee Lawyers: S RAMA RAO
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.885/HYD/2008 ASSESSMENT YEAR 2004-05 M/S SHANTA SRIRAM CONSTRUCTIONS (P) LTD., HYDERABAD (PAN: AADCS4180M) VS THE DCIT, CIRCLE 3(1), HYDERABAD APPELLANT RESPONDENT ITA NO.951/HYD/2008 ASSESSMENT YEAR 2004-05 THE ACIT, CIRCLE 3(1), HYDERABAD VS M/S SHANTA SRIRAM CONSTRUCTIONS (P) LTD., HYDERABAD (PAN: AADCS4180M) APPELLANT RESPONDENT ITA NO.952/HYD/2008 ASSESSMENT YEAR 2004-05 THE ACIT, CIRCLE 3(1), HYDERABAD VS M/S SHANTA SRIRAM HOUSING (P) LTD., HYDERABAD (PAN AAECS 8036M) APPELLANT RESPONDENT ASSESSEE BY: SHRI S. RAMA RAO REVENUE BY: SHRI T. DIWAKAR PRASAD DATE OF HEARING; 03.08.2011 DATE OF PRONOUNCEMENT: 12.10.2011 ORDER PER CHANDRA POOJARI, A.M. THE ITA NO.885/H/2008 & 951/H/2008 ARE CROSS APPEALS DIRECTED AGAINST THE ORDER PASSED BY THE CI T(A) IV, HYDERABAD DATED 14.3.2008 AND PERTAINS TO THE ASSES SMENT ITA NOS. 885, 951 & 952/H/2008 M/S. SHANTA SRIRAM CONSTRUCTIONS (P) LTD. ============================== 2 YEAR 2004-05. THE ITA NO.952/H/2008 IS BY THE REVE NUE IS DIRECTED AGAINST THE ORDER OF CIT(A) IV HYDERABAD DATED 14.3.2010 FOR ASSESSMENT YEAR 2004-05 IN RESPECT OF ANOTHER ASSESSEE. SINCE ISSUES INVOLVED IN THESE APPEALS A RE COMMON IN NATURE, THEY ARE CLUBBED, HEARD AND DISPOSED OFF VI DE THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE FACTS IN BOTH ASSESSEES CASES ARE SIMILAR IN NATURE AND FOR CONVENIENCE PURPOSE WE ARE CONSIDERING ONE OF THE ASSESSEE CASES IN ITA NO.885/H/2008 & ITA NO.951/H/ 2008 WHICH IS AS FOLLOWS: 2.1. A SURVEY U/S 133A HAD BEEN CONDUCTED AT THE B USINESS PREMISES OF THE ASSESSEE COMPANY ON 11.10.2004. CO NSEQUENT TO THE SURVEY, THE ASSESSEE ADMITTED RS.50,00,000/- AS ADDITIONAL INCOME FOR THE ASSESSMENT YEAR 2004-05 B Y FILING A LETTER DATED NIL UNDER THE SIGNATURE OF SHRI M. NAR ASAIAH, MANAGING DIRECTOR. THE LETTER HAS BEEN REPRODUCED BY THE ASSESSING OFFICER IN HIS ORDER AS UNDER: IN THE COURSE OF SURVEY PROCEEDINGS, BOOKS AND RECORDS IMPOUNDED BY YOUR OFFICE REFLECTED A PROFIT AROUND RS.15 LAKHS ON A TURNOVER OF RS.710 LAKHS PROVISIONAL. THE ASSESSEE COMPANY WAS ASKED TO EXPLAIN THE REASONS FOR LOW PROFITABILITY AND ALSO BASIS FOR INCOME RECOGNITION. I, MD OF SHANTA SRIR AM CONSTRUCTIONS (P) LTD., AND SHANTA SRIRAM HOUSING (P) LTD. ADMIT THAT BOOKS OF ACCOUNTS BOTH THE COMPANIES REFLECT A TRUE STATEMENT OF AFFAIRS. 2.2. SHANTA SRIRAM CONSTRUCTIONS P LTD. WITH REGARD TO INCOME RECOGNITION ON WORK IN PROGRESS THE ASSESSEE COMPANY HAS NOT ADOPTED ACCOUNTING STANDARD 7 (ACCOUNTING FOR CONSTRUCTION CONTRACTS) WHICH IS MANDATORY FOR WORKS CONTRACT AND NOT FOR BUILDERS. TO BUY PEACE WITH THE DEPARTMENT I AM AGREEABLE TO ADMIT A NOTIONAL INCOME ON WORKS IN PROGRESS, WHICH WORKS OUT TO ITA NOS. 885, 951 & 952/H/2008 M/S. SHANTA SRIRAM CONSTRUCTIONS (P) LTD. ============================== 3 RS.32 LAKHS. SIMILARLY, SOME EXTRA WORKS (WORKS OVER AND ABOVE THE STANDARD SPECIFICATION) EXECUTED BY THE COMPANY CONTRACTORS WERE NOT ROUTED THROUGH THE BOOKS OF ACCOUNTS AS CUSTOMER WOULD AFFECT THE DIRECT PAYMENT TO THOSE CONTRACTORS. I WOULD ALSO ADMIT AN ADDITIONAL INCOME OF RS.18 LAKHS FROM THESE WORKS. WITH THE ABOVE ADMISSIONS THE INCOME OF M/S SHANTA SRIRAM CONSTRUCTIONS P LTD., WOULD BE ENHANCED BY RS.50 LAKHS AND THE SAME IS BEING ADMITTED AS ADDITIONAL INCOME FOR THE ASSESSMENT YEAR 2004-05. THE SELF ASSESSMENT TAX FOR THE ABOV E ADDITIONAL INCOME SHALL BE PAID ON OR BEFORE 31.12.2004 AND FILE THE RETURN ON OR BEFORE 31.11.2004. DURING THE ASSESSMENT PROCEEDINGS HOWEVER, THE ASSESSING OFFICER FOUND THAT THOUGH THE ASSESSEE HAD ADMITTED RS.50 LAKHS AS ADDITIONAL INCOME FOR THE ASSESSMENT YEAR 2004-05, RS.32 LAKHS AS NOTIONAL INCOME AS WORK IN PROGRESS AND RS.18 LAKHS ON EXTRA WORKS EXECUTED BY COMPANY CONTRACTS NOT ROUTED THROUGH BOOKS, NO SUCH ADDITIONAL INCOME OVER AND ABOVE THE REGULAR PROFITS OF THE COMPANY F OR THE YEAR WAS SHOWN IN THE RETURN. THE ASSESSING OFFICER NOTED THAT AS MENTIONED IN THE LETTER ABOVE , THERE WAS A PROFIT OF RS.15 LAKHS AS PER THE PROVISIONAL ACCOUNT ON THE DATE OF SURVEY. NO COPY OF SUCH PROVISIONAL ACCOUNT PURPORTEDLY TAKEN ON THE DATE OF SURVEY WAS EITHER AVAILABLE ON RECORD OR COULD BE PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEES CONTENTION THAT THERE WAS A PROFIT OF RS.15 LAKHS ONLY ON THE DATE OF SURVEY WAS NOT CORRECT BECAUSE THE ASSESSEE ITSELF HAD LATER FILED ITS RETURN OF INCOME ADMITTING A PR OFIT OF RS.68,97,984/-, ON THE BASIS OF PROFIT AND LOSS ACCOUNT SIGNED BY THE MD AS ALSO THE STATUTORY AUDITORS ON 31.8.2004 ITSELF, WHILE THE SURVEY HAD BEEN CONDUCTED SUBSEQUENTLY ONLY ON 11.10.2004. HE, THEREFORE, CONCLUDED THAT THE ASSESSEE COMPANY HAD A PROFIT OF RS.68,97,984/- EVEN BEFORE THE SURVEY ACTION AND, THEREFORE, THE ADDITIONAL INCOME OF RS.50 LAKHS ADMITTED CONSEQUENT TO THE SURVEY WAS OVER AND ABOVE THE REGULAR PROFITS FOR THE YEAR. S UCH ADDITIONAL INCOME WAS NOT SHOWN IN THE RETURN, AD ADDITION OF THIS AMOUNT WAS MADE. ITA NOS. 885, 951 & 952/H/2008 M/S. SHANTA SRIRAM CONSTRUCTIONS (P) LTD. ============================== 4 3. IT WAS SUBMITTED BEFORE THE CIT(A) THAT THE ASS ESSEE ON THE DATE OF SURVEY HAD AGREED TO OFFER THE ADDITION AL INCOME OF RS.50 LAKHS ON THE PRESUMPTION THAT ITS ESTIMATED PROFITS AS PER THE BOOKS AND RECORDS ON THE DATE OF SURVEY WAS ONLY RS.15 LAKHS. THE MANAGING DIRECTOR OF THE COMPANY OFFERE D THE SAID ADDITIONAL INCOME CONSIDERING THAT A PROFIT OF RS.1 5 LAKHS ON A TURN OVER OF RS.710 LAKHS WAS TOO LOW, ALTHOUGH HE WAS NOT AWARE OF THE TECHNICALITIES IN THE PREPARATION OF A CCOUNTS OF CONSTRUCTION BUSINESS. HOWEVER, HE SUBSEQUENTLY RE ALISED THAT THE AUDITED BOOKS OF ACCOUNTS FOR THE YEAR REFLECTE D A PROFIT OF RS.67.99 LAKHS, WHICH IS MUCH MORE THAN THE FIGURE ESTIMATED IN THE COURSE OF SURVEY. ACCORDINGLY, THE RETURN O F INCOME WAS FILED DISCLOSING THE SAME PROFIT AS IT HAD ALREADY TAKEN CARE OF THE ADDITIONAL INCOME OF RS.50 LAKHS DECLARING DURI NG THE COURSE OF SURVEY. IT WAS FURTHER SUBMITTED THAT TH E ADDITIONAL INCOME HAD BEEN OFFERED DURING THE SURVEY ONLY ON A CCOUNT OF THE FACT THAT THE MANAGING DIRECTOR WAS INSISTED UP ON TO EXPLAIN THE REASONS FOR LOW PROFITABILITY AND TO OFFER A HI GHER INCOME ON A TURN OVER OF RS.710 LAKHS. IT WAS CONTENDED THAT THE ASSESSING OFFICER HAS ALSO REFERRED TO THE PROVISIO NAL ACCOUNT REFLECTING A PROFIT OF RS.15 LAKHS IN HIS ORDER AND IT WAS ON THE BASIS OF THIS RECORD THAT ADDITIONAL INCOME WAS DEC LARED. THE ASSESSEE COULD NOT BE PUNISHED FOR NOT PLACING ON R ECORD THE PROVISIONAL P&L ACCOUNT FOUND AND IMPOUNDED ON THE DATE OF SURVEY. IT WAS CLAIMED THAT THE MANAGING DIRECTOR WAS IGNORANT OF THE FACT THAT THE AUDITED BALANCE SHEET WAS ALRE ADY AVAILABLE WITH THE AUDITOR ON THE DATE OF SURVEY. WHEN HE LA TER FOUND THAT THE PROFIT SHOWN IN SUCH AUDITED ACCOUNTS WAS RS.53 LAKHS MORE THAN THE ASSUMED PROFITS OF RS.15 LAKHS HE REQ UESTED THE ASSESSING OFFICER TO TREAT THE ADDITIONAL INCOME OF RS.50 LAKHS DECLARED DURING SURVEY AS PART OF RS.68.97 LAKHS SH OWN IN THE RETURN. ITA NOS. 885, 951 & 952/H/2008 M/S. SHANTA SRIRAM CONSTRUCTIONS (P) LTD. ============================== 5 4. IT WAS CLAIMED THAT THE ASSESSING OFFICER HAD R EJECTED THE CONTENTION OF THE ASSESSEE SIMPLY ON THE GROUND THA T THERE WAS A DECLARATION REGARDING ADDITIONAL INCOME. HE HOWE VER HAD IGNORED THE PROVISIONAL ACCOUNT SHOWING PROFIT OF R S.15 LAKHS WHICH FORMED THE BASIS FOR SUCH DISCLOSURE. THE AS SESSEE AVERRED THAT THE ASSESSING OFFICER HAD NOT SUPPORTE D HIS THEORY BY PLACING ON RECORD ANY INCRIMINATING MATERIAL AND SUPPORT FOR THE ADDITION OF RS.50 LAKHS NOR HAD HE RECORDED ANY REASONS FOR IGNORING AUDITED BOOKS OF ACCOUNTS WHILE MAKING SUC H AD HOC ADDITION ON THE BASIS OF ESTIMATION. IT WAS AVERRE D THAT THE ASSESSING OFFICER HAD NOT CONSIDERED THAT ALL FACTS ATTRIBUTABLE FOR LOW PROFITABILITY AS REFLECTED BY THE PROVISION AL ACCOUNT HAD ALREADY BEEN TAKEN CARE OF IN THE AUDITED BALANCE S HEET AND THAT THE ASSESSEE WAS IGNORANT ABOUT SUCH AUDITED BALANC E SHEET AT THE TIME OF SURVEY. THEREFORE, CLAIMED THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, DOCUMENTS OR OTHER EVID ENCES, IT WAS NOT CORRECT TO REJECT THE INCOME DECLARED BY TH E ASSESSEE AND TO MAKE FURTHER ADDITION WITHOUT ANY BASIS. 5. THE REPRESENTATIVE OF THE ASSESSEE FILED A COPY OF THE PROVISIONAL P&L ACCOUNT FOR THE YEAR ENDED 31.3.200 4 REFLECTING A PROFIT OF RS.12,07,019/- BEFORE THE LOWER AUTHORI TIES. IT WAS SUBMITTED THAT THE WORKING IN PROGRESS AS PER THE S AID PROVISIONAL ACCOUNT ON THE DATE OF SURVEY REFLECTED AN AMOUNT OF RS.4,18,56,256/- WHEREAS THE WORK IN PROGRESS AS PE R THE AUDITED BALANCE SHEET SHOWS AN AMOUNT OF RS.4,92,82 ,300/- SHOWING AN INCREASE OF RS.74,26,044/- IN THE ACTUAL WORK IN PROGRESS. THE AR EXPLAINED THAT THE SAID INCREASE WAS ON ACCOUNT OF SALES RETURN OF RS.18,32,000 AND INCREAS E IN OTHER DIRECT AND INDIRECT EXPENDITURE, INCLUDING THE PROF IT MARGIN ON WORK IN PROGRESS WHICH IS RS.55,94,044/-. HE CONTE NDED THAT THE MANAGING DIRECTOR AND THE ACCOUNTS STAFF OF THE COMPANY ITA NOS. 885, 951 & 952/H/2008 M/S. SHANTA SRIRAM CONSTRUCTIONS (P) LTD. ============================== 6 WERE NOT FULLY CONVERSANT WITH THE TECHNICALITIES O F PREPARATION OF BALANCE SHEET AND CONSEQUENTLY HE WAS NOT AWARE OF THE FACT THAT THE CLOSING WORK IN PROGRESS HAD ALREADY TAKEN CARE OF THE PROFIT ELEMENT OF MORE THAN RS.32 LAKHS DISCLOSED I N THE STATEMENT. 6. WITH REGARD TO INCOME ON EXTRA WORKS ADMITTED A T RS.18 LAKHS IT WAS SUBMITTED THAT THE EXTRA WORKS DONE BY THE COMPANY AMOUNT TO RS.18,88,000/- AND THAT THE INCOM E ON SUCH WORK HAD ALSO BEEN INCLUDED IN THE REVENUE UND ER SALES. HE SUBMITTED THAT THE MANAGING DIRECTOR WAS NOT AWA RE OF THE FACT THAT SUCH INCOME HAD ALSO BEEN RECOGNISED IN T HE AUDITED FINANCIAL STATEMENTS AND HENCE HE OFFERED AN ADDITI ON OF RS.18 LAKHS TOWARDS THE SAME. HE, THEREFORE, SUBMITTED T HAT THE ENTIRE ADDITION OF RS.50 LAKHS BE DELETED AS THE AD DITIONAL INCOME OFFERED BY THE MANAGING DIRECTOR IN HIS STAT EMENT HAS ALREADY BEEN CONSIDERED IN THE REGULAR PROFITS SHOW N IN THE RETURN AND THE ASSESSING OFFICER HAD NOT PLACED ON RECORD ANY FURTHER INCRIMINATING MATERIAL TO SUPPORT THE ADDIT ION. 7. ON CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCE S OF THE CASE THE CIT(A) HAS SUSTAINED ADDITION OF RS.18 LAK HS AND DELETED RS.32 LAKHS ON THE REASON THAT THE ADDITION AL INCOME OF RS. 32 LAKHS IN RESPECT OF WORK-IN-PROGRESS WAS NOT INCLUDED IN THE REGULAR BOOKS OF ACCOUNT WAS TO BE PROVED BY TH E ASSESSING OFFICER AND THE BURDEN IS ON THE ASSESSEE TO PROVE THAT THE ADDITIONAL INCOME OF RS. 18 LAKHS IN RESPECT OF UNR ECORDED EXTRA-WORK. AGAINST THIS BOTH ARE IN APPEAL BEFOR E US. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD . THE DR RELIED ON THE FOLLOWING JUDGEMENTS: 1. PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA & OTHERS (91 ITR 18) (SC) WHEREIN HELD ITA NOS. 885, 951 & 952/H/2008 M/S. SHANTA SRIRAM CONSTRUCTIONS (P) LTD. ============================== 7 THAT: ENTRIES MADE BY THE ASSESSEE IN THE ACCOUNT BOOKS TREATING A PORTION OF THE GENERAL EXPENDITURE AS EX PENSES TOWARDS IMMATURE PLANTS AND CAPITALISING SUCH PORTI ON AMOUNT TO AN ADMISSION THAT THE AMOUNT IN QUESTION WAS LAID OUT OR EXPENDED FOR THE CULTIVATION, UPKEEP OR MAINTENANCE OF IMMATURE PLANTS FROM WHICH NO AGRICU LTURAL INCOME WAS DERIVED DURING THE PREVIOUS YEAR FOR THE PURPOSE OF EXPLANATION (2) TO SECTION 5 OF THE KERA LA AGRICULTURAL INCOME TAX ACT, 1950. SUCH ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE. IT IS OPEN TO THE ASSESSEE WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT AND THE ASSESSEE SHOULD BE GIVEN A PROPER OPPORTUNITY TO SHOW THAT T HE BOOKS OF ACCOUNTS DO NOT DISCLOSE THE CORRECT STATE OF FACTS. 2. DR. S.C.GUPTA VS. CIT (248 ITR 782) (ALL.) WHEREIN IT WAS HELD THAT: A STATEMENT MADE VOLUNTARILY BY THE ASSESSEE COULD FORM THE BASIS OF ASSESSMENT. THE MERE FACT THAT THE AS SESSEE RETRACTED THE STATEMENT COULD NOT MAKE THE STATEMEN T UNACCEPTABLE. THE BURDEN LAY ON THE ASSESSEE TO ES TABLISH THE ADMISSION MADE IN THE STATEMENT AT THE TIME OF SURVEY WAS WRONG AND THE FACT THERE WAS NO ADDITIONAL INCO ME. THE BURDEN WAS NOT EVEN ATTEMPTED TO THE DISCHARGED . THE ORDER OF THE TRIBUNAL WAS BASED ON FACTS AND NO QUE STION OF LAW AROSE FROM IT. 9. ON THE OTHER HAND THE AR RELIED ON THE FOLLOWIN G JUDGEMENTS: 1. INCOME TAX OFFICER VS. VIJAYAKUMAR 327 ITR 497 WHEREIN IT WAS HELD THAT THE CONFESSION MADE BY THE ASSESSEE DURING THE SURVEY PROCEEDINGS IS NOT CONCLUSIVE AND IT IS OPEN TO THE ASSESSEE TO ESTABL ISH BY FILING COGENT EVIDENCE THAT THE SAME WAS NOT TRU E AND CORRECT. 2. SATISH BUILDERS VS. ACIT (23 DTR 170 (DEL.) WHEREIN IT WAS HELD THAT ADDITION ON THE BASIS OF ADMISSION SIMPLICITOR MADE DURING THE SURVEY WITHOUT ANY SUPPORTING MATERIAL, WHICH SURRENDER WAS SUCCESSFUL LY RETRACTED BY THE ASSESSEE BY ANNEXING FOOT NOTES TO THE RETURN IS NOT SUSTAINABLE. ITA NOS. 885, 951 & 952/H/2008 M/S. SHANTA SRIRAM CONSTRUCTIONS (P) LTD. ============================== 8 3. M. MAHENDRA VS. ACIT (133 TTJ 98) WHEREIN IT WAS HELD THAT ADDITION MADE BY THE ASSESSING OFFICER TOWARD UNACCOUNTED TRANSACTIONS SIMPLY ON THE BASIS OF STATEMENT MADE BY THE ASSESSEE DURING THE SURVEY CANNOT BE SUSTAINED. 10. ADMITTEDLY, IN THESE CASES, A SURVEY TOOK PLAC E ON 11.10.2004. AT THE TIME OF SURVEY THE MANAGING DIR ECTOR OF THE COMPANY WAS OF THE OPINION THAT ESTIMATED THE PROFI T OF THE COMPANY FOR THE ASSESSMENT YEAR WAS AT RS.15 LAKHS. ACTUALLY THE PROVISIONAL BALANCE SHEET FILED BEFORE THE CIT (A) REFLECTS THE PROFIT OF RS.12,07,019/-. THE AUDITED BALANCE SHEE T DATED 31.8.2004 WHICH WAS AVAILABLE AT THE TIME OF SURVEY ON 11.10.2004 REFLECTED THE PROFIT OF RS.68,97,984/-. THE RETURN OF INCOME WAS FILED ADMITTING A PROFIT OF RS.68,97, 984/- ON 30.11.2004 WHICH IS ON THE BASIS OF AUDITED BALANCE SHEET. AT THE TIME OF SURVEY, THE MANAGING DIRECTOR IS NOT AW ARE OF THE TRUE PROFIT DECLARED BY THE ASSESSEE IN THE AUDITED BALANCE SHEET. HE HAS NOT GONE THROUGH THE AUDITED BALANCE SHEET INSTEAD OF THIS HE HAS BASED HIS OPINION ON THE BAS IS OF PROVISIONAL BALANCE SHEET. THE DEPARTMENT ALSO NOT GONE THROUGH THE AUDITED BALANCE SHEET AT THE TIME OF SU RVEY THOUGH IT WAS AVAILABLE AT THE TIME OF SURVEY. THE MANAGI NG DIRECTOR OF THE COMPANY OFFERED AN ADDITIONAL INCOME AT RS. 50 LAKHS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON THE PRET EXT THAT THE INCOME FOR THE ASSESSMENT YEAR IS AT RS. 15 LAKHS O N TURNOVER OF RS. 710 LAKHS. HOWEVER, THE INCOME OF THE ASSESSEE AS PER AUDITED BALANCE SHEET IS AT RS. 68,97,984 AND THIS FACT WAS NOT RECOLLECTED BY THE MANAGING DIRECTOR AT THE TIME OF SURVEY. THE ASSESSEE HAS EXPLAINED THE REASONS FOR DISCREPANCIE S AND RECONCILED THE SAME AS THERE WAS SUBSTANTIAL DIFFER ENCE IN THE WORK-IN-PROGRESS REFLECTED IN THE PROVISIONAL BALAN CE SHEET AND AUDITED BALANCE SHEET. AS PER THE PROVISIONAL BAL ANCE SHEET THIS FIGURE WAS RS. 4,18,56,256 AS AGAINST THE CORR ECT FIGURE IN ITA NOS. 885, 951 & 952/H/2008 M/S. SHANTA SRIRAM CONSTRUCTIONS (P) LTD. ============================== 9 AUDITED BALANCE SHEET IS AT RS. 4,92,82,300 WHICH S HOWS AN INCREASE OF RS. 74,26,044. THIS WAS DUE TO INCREAS E ON ACCOUNT OF SALES RETURN OF RS. 18,32,000 AND INCREASE IN OT HER EXPENDITURE AT RS. 55,94,044. THERE WAS ADMISSION OF EXTRA WORK AT RS. 18 LAKHS BY THE MANAGING DIRECTOR AT TH E TIME OF SURVEY. HOWEVER, THE AUDITED BALANCE SHEET SHOWS A N ADDITIONAL WORK OF RS. 18.88 LAKHS. SINCE THE MANA GING DIRECTOR OF THE COMPANY AND THE STAFF WHO WERE AT T HE TIME OF SURVEY WERE NOT CONVERSANT OF THE CORRECT POSITION OF THE ASSESSEE ON THE DATE OF SURVEY RELATING TO THE ASSE SSMENT YEAR UNDER CONSIDERATION WHO RELIED ON THE PROVISIONAL B ALANCE SHEET. HAD THEY HAVE FULL KNOWLEDGE ABOUT THE AUDI TED ACCOUNTS, THEY WOULD NOT HAVE GIVEN INCORRECT FIGUR E. THOUGH THE LOWER AUTHORITIES AGREED WITH THE EXPLANATION G IVEN BY THE ASSESSEE REGARDING DISCREPANCIES BETWEEN THE STATEM ENT GIVEN AT THE TIMER OF SURVEY AND AUDITED BALANCE SHEET WH ICH WAS REJECTED BY THEM ON THE REASON THAT NO DETAILS REGA RDING SUCH DISCREPANCIES FILED BY THE ASSESSEE EITHER BEFORE T HE ASSESSING OFFICER OR BEFORE THE FIRST APPELLATE AUTHORITY. BUT IN OUR OPINION, THE DISCREPANCIES EXPLAINED BY THE ASSESSE E IS BONA- FIDE MORE SO, WHEN THE AUDITED BALANCE SHEET SHOWS INCOME AT RS. 68,97,984 AS AGAINST RS. 15 LAKHS REFLECTED IN THE BOOKS OF ACCOUNT IMPOUNDED BY SURVEY TEAM ON 11.10.2004, IT IS NATURAL TO ACCEPT THE AUDITED BALANCE SHEET. AFTER CONSIDE RING THE INCOME REFLECTED IN THE AUDITED BALANCE SHEET, MAKI NG ONCE AGAIN ADDITION AS STATED BY THE MANAGING DIRECTOR A T THE TIME OF SURVEY WOULD AMOUNT TO DOUBLE ADDITION. IF THE ASS ESSING AUTHORITY WANTS TO MAKE ADDITION, HE SHOULD CONSIDE R ONLY PROFIT DECLARED IN THE IMPOUNDED BOOK OF ACCOUNT AT THE TI ME OF SURVEY. THE ASSESSING OFFICER CANNOT BLOW HOT AND COLD AT A TIME. HENCE IN OUR OPINION, THE ASSESSEE FILED THE RETURN OF INCOME AS PER AUDITED BALANCE SHEET AND IT IS NOT R EJECTED BY THE ITA NOS. 885, 951 & 952/H/2008 M/S. SHANTA SRIRAM CONSTRUCTIONS (P) LTD. ============================== 10 ASSESSING AUTHORITY, THEREAFTER IT IS NOT POSSIBLE TO MAKE ANY AD- HOC ADDITION ON THE BASIS OF STATEMENT MADE DURING THE COURSE OF SURVEY WITHOUT ANY CORROBORATIVE MATERIAL. IN V IEW OF THIS, WE INCLINED TO ALLOW THE APPEAL OF THE ASSESSEE AND AS SUCH THE REVENUE APPEAL WILL BECOME INFRUCTUOUS. 11. REGARDING ITA NO.952/H/2008, THE ISSUES HEREIN ARE SIMILAR TO THE ISSUES IN ITA NO. 885/HYD/08 AND 951 /HYD/08. ONLY THE CHANGES ARE IN THE AMOUNT. IN VIEW OF THE DISCUSSION IN EARLIER APPEALS IN ITA NO.885 & 951/H/2008, APPL YING THE SAME RATIO, WE DISMISS THE REVENUE APPEAL ON THIS I SSUE. 12. IN THE RESULT, THE ASSESSEES APPEAL IN ITA NO .885/H/2008 IS ALLOWED AND THAT OF THE REVENUE APPEALS IN ITA N OS.951 & 952/H/2008 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH OCTOBER, 2011. SD/- (G.C. GUPTA) SD/- (CHANDRA POOJARI) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD, DATED THE 12 TH OCTOBER, 2011 COPY FORWARDED TO: 1. M/S SHANTA SRIRAM CONSTRUCTIONS (P) LTD., # 501, AMOGHPLAZA, BESIDES GRAND KAKATIYA, BEGUMPET, HYDERABAD-16. 2. M/S SHANTA SRIRAM HOUSING (P) LTD., 8-2-503, BESIDE S IRANIAN CONSULATE, ROAD NO.7, BANJARA HILLS, HYDERA BAD. 3. THE DCIT, CIRCLE 3(1), HYDERABAD 4. THE ACIT, CIRCLE 3(1), 7 TH FLOOR, B-BLOCK, I.T. TOWERS, HYDERABAD. 5. THE CIT(A)-IV, HYDERABAD. 6. THE CIT-III, HYDERABAD 7. THE DR, ITAT, HYDERABAD TPRAO