ACIT, Circle-9(1), Hyderabad V. M/s S.K.R.Constractions, Nalgonda District

ITA 958/HYD/2013

• Counselvise Citation: 95822514 RSA 2013
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 07-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Assessee Lawyers: S RAMA RAO
• Keywords: Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.958/HYD/2013 ASSESSMENT YEARS 2009-10 ACIT - 9(1) HYDERABAD VS. M/S. SKR CONSTRUCTIONS SURYAPET, NALGONDA DIST. PANAAZFS8077Q (APPELLANT) (RESPONDENT) FOR REVENUE : MR. B. YADAGIRI FOR ASSESSEE : MR. S. RAMA RAO DATE OF HEARING : 02.01.2014 DATE OF PRONOUNCEMENT : 08.01.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY REVENUE IS AGAINST THE ORDER OF T HE CIT(A)-V, HYDERABAD DATED 21.02.2013 FOR THE ASSESS MENT YEAR 2009-2010. THE REVENUE HAS RAISED THE FOLLOWING MAT ERIAL GROUND IN ITS APPEAL : 2. THE LEARNED CIT(A) ERRED IN DIRECTING THE A.O. TO ESTIMATE THE INCOME @ 8% OF THE GROSS RECEIPTS (EXCEPT THE SUB-CONTRACT RECEIPTS) AS REDUCED BY THE DEPARTMENTAL RECOVERIES. 2. AT THE OUTSET, THE REVENUE HAS FILED A PETITION FOR CONDONATION OF DELAY OF 06 DAYS IN FILING THE APPEA L. AFTER CONSIDERING THE AFFIDAVIT ON RECORD, THE DELAY IS C ONDONED. 3. BRIEFLY STATED, THE ASSESSEE-FIRM IS IN CIVIL C ONTRACT WORKS AND DECLARED TOTAL INCOME OF RS.1,92,90,510/- . EVEN 2 ITA.NO.958/HYD/2013 M/S. SKR CONSTRUCTIONS, SURYAPET THOUGH THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNT S AND FILED NECESSARY DETAILS INCLUDING THE AUDITED REPORTS ON THE REASON THAT PROPER BILLS AND VOUCHERS FOR SEVERAL PURCHASE S HAVING BEEN PRODUCED AND NO QUANTITATIVE DETAILS FOR MATER IAL PURCHASES WERE FURNISHED, THE BOOKS OF ACCOUNTS WER E REJECTED BY THE ASSESSING OFFICER AND INCOMES WERE ESTIMATED AT 9% OF THE CONTRACT RECEIPTS AND 2% ON SUB-CONTRACT WORKS. ACCORDINGLY, THE TOTAL INCOME WAS DETERMINED AT RS.2,27,09,947/- BY THE ASSESSING OFFICER. 4. THE ASSESSEE CONTENDED BEFORE THE CIT(A) THAT T HERE WAS NO REASON TO REJECT THE BOOKS OF ACCOUNTS AND F URTHER ESTIMATION OF INCOME AS DONE BY AO. THE LEARNED CIT (A) IN HIS BRIEF ORDER HAS DETERMINED THE APPEAL AS UNDER : 7. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND GONE THROUGH THE ASSESSMENT ORDER. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE ITAT, HYDERABAD IN THE CASE OF C. EASWAR REDDY & CO., HYDERABAD VIDE ORDER IN ITA.NO.668/HYD/2009 DATED 31.01.2011, THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE THE INCOME FOR THE YEAR UNDER CONSIDERATION AT 8% OF THE GROSS CONTRACT RECEIPTS (EXCEPT THE SUB-CONTRACT RECEIPTS) AS REDUCED BY THE DEPARTMENTAL RECOVERIES OF RS.2,16,06,527/- . 8. WITH REGARD TO THE ESTIMATION OF INCOME FROM THE SUB-CONTRACTS AT 2% BY THE ASSESSING OFFICER, I CONFIRM THE ESTIMATION OF INCOME AT 2%. IN COMING TO THE CONCLUSION, I PLACE 3 ITA.NO.958/HYD/2013 M/S. SKR CONSTRUCTIONS, SURYAPET RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF BRIJ BHUSHAN LAL PARDUMAN KUMAR ETC. VS. CIT REPORTED IN 115 ITR 524. HOWEVER, I SPECIFICALLY MENTION THAT THE INCOME SO ARRIVED ADOPTING THE ABOVE RATES SHALL NOT BE LESS THAN THE INCOME RETURNED BY THE APPELLANT. 5. THE REVENUE CONTENDED BEFORE THE TRIBUNAL THAT DETERMINATION OF INCOME BY THE CIT(A) AT 8% OF THE GROSS RECEIPTS BY REDUCING THE DEPARTMENTAL RECOVERIES I S NOT CORRECT. THE LEARNED D.R. SUBMITTED THAT THE ORDER OF THE CI T(A) RESULTED IN DETERMINING THE INCOME LESS THAN THE TOTAL INCOM E RETURNED AND FURTHER, THE A.O. WAS REASONABLE IN ESTIMATING INCOME AT 9% OF THE GROSS RECEIPTS, THE LEARNED CIT(A) HAS NO REASON TO REDUCE TO 8%, THAT TOO EXCLUDING THE DEPARTMENTAL RE COVERIES. 6. THE LEARNED A.R. SUBMITTED THAT THE ORDER OF TH E CIT(A) IS CONSISTENT WITH THE ORDERS ON THE ISSUE A ND FURTHER SUPPORTED BY THE DECISION OF THE HONBLE SUPREME C OURT IN THE CASE OF BRIJ BHUSHAN LAL PARDUMAN KUMAR ETC. VS. CI T 115 ITR 524 (SC) TO EXCLUDE RECOVERIES. IT WAS FURTHER SUBM ITTED THAT THE CONSEQUENTIAL ORDER AFTER THE ORDER OF THE LEARNED CIT(A) HAS NOT BEEN ISSUED BY THE A.O. 7. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE RECORD. WE DO NOT FIND ANY REASON TO DISTURB THE F INDING OF THE CIT(A) TO THE EXTENT ESTIMATE OF INCOME AT 8% WHIC H IS IN TUNE WITH MANY ORDERS OF ITAT ON SIMILAR FACTS IN OTHER CASES. HIS DIRECTION TO EXCLUDE THE DEPARTMENTAL RECOVERIES IS ALSO CONSISTENT WITH THE JUDGMENT OF THE HONBLE SUPREME COURT (SUPRA) ON THE ISSUE. IT IS, FOR THE ASSESSING OFFI CER TO EXAMINE WHETHER TO PROCEED WITH ESTIMATION OF INCOME BY REJ ECTING BOOKS 4 ITA.NO.958/HYD/2013 M/S. SKR CONSTRUCTIONS, SURYAPET OF ACCOUNTS AND THE CONSEQUENCES THERE OF. EVEN T HOUGH THE LEARNED D.R. SUBMITTED THAT THE ASSESSING OFFICER I S REASONABLE ENOUGH TO ESTIMATE THE INCOME AT 9% ON CONTRACTS AN D 2% ON SUB-CONTRACTS, WE ARE UNABLE TO UPHOLD THE ORDER OF THE ASSESSING OFFICER ON THE REASON THAT LEARNED CIT(A) RESTRICTED THE SUB-CONTRACT PAYMENTS TO 8%, WHICH IS ALSO IN TU NE WITH VARIOUS DECISIONS OF THE ITAT. LEARNED CIT(A) HAS FOLLOWED IN THE CASE OF C. ESWAR REDDY & CO. HYDERABAD VIDE ITA.NO.668/HYD/2009 DATED 31.01.2011. THEREFORE, WH ILE UPHOLDING THE ORDER OF THE CIT(A), WE MODIFY THE OR DER TO THE EXTENT THAT INCOME SO ARRIVED AT AS PER THE DIRECTI ON OF CIT(A) SHOULD NOT BE LESS THAN THE INCOME RETURNED BY ASSE SSEE. IN THAT EVENT, TOTAL INCOME RETURNED BY THE ASSESSEE S HOULD BE ACCEPTED BY AO. WITH THIS MODIFICATION, GROUNDS OF THE REVENUE ARE DISMISSED AND THE APPEAL OF THE REVENUE IS CONS IDERED AS PARTLY ALLOWED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.01. 2014. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT ME MBER HYDERABAD, DATE 08 TH JANUARY, 2014 VBP/- COPY TO 1. ACIT, CIRCLE 9(1), ROOM NO.127, 1B, FIRST FLOOR, I.T. TOWERS, A.C. GUARDS, MASAB TANK, HYDERABAD . 2. M/S. SKR CONSTRUCTIONS, 1-2-270/130/A/2, KUDA KUD A ROAD, SURYAPET, NALGONDA DIST. 3. CIT(A)-V, HYDERABAD. 4. CIT-VI, HYDERABAD 5. D.R. A BENCH, ITAT, HYDERABAD.