KCVR INFRA PROJECTS PRIVATE LIMITED,HYDERABAD V. ACIT., CENTRAL CIRCLE-2(2), HYDERABAD

ITA 986/HYD/2025

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KCVR Infra Projects Private Limited appealed against the order of the Commissioner of Income Tax (Appeals)-12, Hyderabad, which upheld the disallowance of a subcontract payment of Rs.19,87,932 by the Assessing Officer. The payment was made to a subcontractor, Mr. P. Anjani Kumar, for civil works. The Assessing Officer disallowed the payment due to the absence of the subcontractor's bank statement and RA bills evidencing the execution of work. The Tribunal, after considering the submissions and evidence, including the payment through banking channels, deduction of TDS, and the subcontractor's response to the notice under section 133(6) of the Act, found the expenditure to be genuine and allowable.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 789647 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: misc
• Appeal Filed On: 03-06-2025
• Other Referred Cases: Ajaipal Mangal & Co. vs ACIT, ASR Engg. & Projects Ltd vs DCIT, CIT vs SVE Engineers Pvt Ltd
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M.V. PRASAD
• Keywords: Business expenditure; Corroborative evidences; TDS; Bogus
• Section: 143(3); 133(6); 69C; 37(1)

Judgement Text

" ITA No 986 of 2025 KCVR Infra Projects P Ltd Page 1 of 8 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A ‘Bench, Hyderabad Įी ͪवजय पाल राव, उपाÚ य¢ एवं Įी मधुसूदन सावͫडया, लेखा सदè य क े सम¢ । Before Shri Vijay Pal Rao, Vice-President A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.986/Hyd/2025 (िनधाŊरण वषŊ/Assessment Year: 2021-22) KCVR Infra Projects Private Limited Hyderabad PAN: AAECK2457N Vs. Asstt. CIT Circle 2(2) Hyderabad (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: C A M.V. Prasad राज̾ व Ȫारा/Revenue by:: Shri Ranjan Agrawala, Sr. DR सुनवाई की तारीख/Date of hearing: 19/11/2025 घोषणा की तारीख/Pronouncement: 26/11/2025 आदेश/ORDER Per Madhusudan Sawdia, A.M.: This appeal is filed by KCVR Infra Projects Private Limited (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals)-12, Hyderabad (“Ld. CIT(A)”) dated 29.03.2025 for the A.Y 2021-22. 2. At the outset, it is observed that the appeal has been filed before us with a delay of three days. The assessee has filed a condonation petition along with a copy of affidavit explaining the cause of delay. The Learned Authorized Representative (“Ld. AR”) Printed from counselvise.com ITA No 986 of 2025 KCVR Infra Projects P Ltd Page 2 of 8 submitted that the assessee was in a dilemma as to whether the appeal should be filed before the Tribunal or not. The Ld. AR stated that the assessee was uncertain about the necessity of pursuing further appellate remedy and required some time to take an informed decision. The decision to file the appeal was ultimately taken, but due to this process of contemplation and seeking advice, the appeal could be filed only after a delay of three days. It has been affirmed that the delay was neither deliberate nor intentional but occurred due to bona fide reasons beyond the control of the assessee. The Ld. AR further submitted that the delay is minor, not deliberate, and there is no mala fide intention on the part of the assessee. He prayed that the delay be condoned by adopting a liberal and justice-oriented approach. 3. Per contra, the Learned Departmental Representative (“Ld. DR”) objected to the condonation of delay, contending that the reason given by the assessee for not filing the appeal in time is not reasonable and therefore the delay should not be condoned. 4. We have considered the rival submissions and perused the material available on record. The delay involved is only three days, which, in our considered view, is minor and marginal. Courts have consistently held that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice must prevail. In the present case, the explanation offered by the assessee that he was in a dilemma about filing the appeal and required time to arrive at a decision is plausible and bona fide. There is nothing on record to show that the delay was intentional or caused due to negligence. Rejecting the appeal at the threshold would defeat the cause of justice. Printed from counselvise.com ITA No 986 of 2025 KCVR Infra Projects P Ltd Page 3 of 8 Therefore, we are satisfied that the assessee has shown sufficient cause for the delay in filing the appeal. Accordingly, the delay of three days in filing the appeal is hereby condoned and the appeal is admitted for adjudication on merits. 5. The assessee has raised the following grounds of appeal: “1. The learned CIT (Appeals) is erred in facts and law while passing the order. 2. The learned CIT (Appeals) is not justified in upholding the decision of the Assessing Officer that the sub-contract payment of Rs.19,87,932/ - made to Shri P. Anjani Kumar on a mere pretext that the sub- contractor failed to provide the bank account statement and RA bills is unreasonable. 3. The learned CIT (Appeals) would have appreciated that the appellant has proved the payment by producing the bank statement where the payment made to sub-contractor is proved and also the return filed has proved payment of tax on such receipt in the hands of the sub-contractor and would have allowed the payment claimed as genuine. 4. The Learned CIT (Appeals) would not have considered the claim as non-genuine merely depending upon non- submission of part of information by the sub-contractor. He would have appreciated that the AO was not justified in disallowing such payment without proving corroboratively that such subcontract work has not been executed at all. 5. The learned CIT (Appeals) has erred in not appreciating the fact that P. Anjani Kumar, sub-contractor, also filed his return of income and admitted the sub contract receipts and disclosed profit on such works carried on and therefore, would have allowed the contention of the appellant. 6. Any other ground/grounds that may be urged at the time of hearing”. 6. The brief facts of the case are that the assessee is a company engaged in the business of execution of civil works contracts such as laying of BT roads and CC roads etc. The assessee filed its return of income for Assessment Year 2021–22 Printed from counselvise.com ITA No 986 of 2025 KCVR Infra Projects P Ltd Page 4 of 8 on 12.01.2022, admitting total income of Rs.9,92,50,270/-. During the assessment proceedings, the Learned Assessing Officer (“Ld. AO”) observed that the assessee had made subcontract payments of Rs.19,87,932/- to Mr. P. Anjani Kumar (“the subcontractor”). To verify the payment made to sub-contractor, Ld. AO issued notice under section 133(6) of the Income Tax Act, 1961 (“the Act”). In response to the notice, the subcontractor filed before the Ld. AO the copy of Income Tax Return, Non-GST bill and the copy of subcontract agreement with the assessee. However, in the absence of (i) bank account copy of the subcontractor and (ii) RA bills evidencing execution of work, the Ld. AO held that the genuineness of the subcontract expenses was not established. Accordingly, the Ld. AO disallowed Rs.19,87,932/- under section 37(1) of the Act. Further, the Ld. AO made other addition of Rs.7,54,584/- under section 69C of the Act. Accordingly, the assessment was completed by the Ld. AO under section 143(3) of the Act on 28.12.2022, determining the total income of the assessee at Rs.10,19,92,786/-. 7. Aggrieved with the order of the Ld. AO, the assessee preferred appeal before the Ld. CIT(A). The Ld. CIT(A), agreeing with the findings of the Ld. AO, dismissed the appeal of the assessee. 8. Aggrieved with the order of the Ld. AO, the assessee is now in appeal before this Tribunal. At the outset, the Learned Authorized Representative (“Ld. AR”) submitted that the solitary issue involved out of the grounds of appeal of the assessee is towards the addition of Rs.19,87,932/- made by the Ld. AO on account of payment made by the assessee to the subcontractor. In Printed from counselvise.com ITA No 986 of 2025 KCVR Infra Projects P Ltd Page 5 of 8 this regard, the Ld. AR submitted that the assessee made the subcontract payments through proper banking channels, which is evident from the bank statements of the assessee. He further submitted that the TDS was duly deducted by the assessee on these payments in accordance with the provisions of the Act. Further, in response to notice under section 133(6) of the Act, the subcontractor filed copy of his ITR, bills, and subcontract agreement before the Ld. AO. The subcontractor has also offered the subcontract receipts as income in his return of income. The Ld. AR also submitted that the assessee had filed before the Ld. CIT(A) the copies of RA Bills placed at page nos. 26 to 28 of the paper book. It was argued that despite all supporting evidence, both lower authorities disallowed the expenditure merely on suspicion and on the ground that RA bills were not produced. The Ld. AR argued that once the payments were made through banking channels, TDS was deducted, subcontractor responded to notice u/s 133(6) of the Act, and the income was offered to tax by the subcontractor, the expenditure becomes allowable under section 37(1) of the Act. In support of his contention, the Ld. AR relied on the decision of the Coordinate Bench of the Tribunal in the case of Ajaipal Mangal & Co. vs ACIT, ITAT Mumbai, ITA No.1973/Mum/2022 (AY 2017–18) dated 12.10.2022, ASR Engg. & Projects Ltd vs DCIT, ITAT Hyderabad, 111 taxmann.com 49 and the decision of the Hon’ble Madras High Court in the case of CIT vs SVE Engineers Pvt Ltd, 75 Taxmann.com 109. 9. Per contra, the Ld. DR submitted that the subcontract agreement and RA bills furnished contain only the scope of work undertaken by the assessee. These documents do not specifically describe the nature of work actually executed by the Printed from counselvise.com ITA No 986 of 2025 KCVR Infra Projects P Ltd Page 6 of 8 subcontractor. It was further argued that the subcontractor worked only for the assessee during the year and had no independent contracts, creating doubt on whether any actual subcontracting work was done. Therefore, according to the Ld. DR, both lower authorities were right in disallowing the expenditure. 10. We have heard the rival submissions and perused the material available on record. We observe that there is no dispute as far as the following facts are concerned: (a) Payments to the subcontractor were made through cheque/banking channels. (b) The assessee deducted TDS on the subcontract payments. (c) The subcontractor responded to the notice u/s 133(6) of the Act and submitted copy of his Income Tax Return, copy of subcontract agreement and copy of bills issued to the assessee. (d) The subcontractor has offered the receipts as income in his ITR. (e) Copies of bills and subcontract agreement are placed in the paper book. (f) The Ld. AO has not brought any contrary evidence to show that the payment was bogus or that the work was not executed. 11. The only reason for disallowance by the Ld. AO was absence of the subcontractor’s bank statement and RA bills. Printed from counselvise.com ITA No 986 of 2025 KCVR Infra Projects P Ltd Page 7 of 8 However, the assessee has submitted the RA bills, before Ld. CIT (A). On the basis of the present facts and circumstances of the case, in our considered view once the subcontractor has confirmed the work, furnished ITR, and offered the income, once the assessee has made payment through banking channels and deducted TDS, once the contractual relationship is evidenced by a written subcontract agreement, then the expenditure cannot be disallowed merely on suspicion or on the ground that RA bills were not produced. The law is well-settled that disallowance cannot be made when the identity of the payee, genuineness of the payment, and business purpose stand established. Further, the Revenue has not rebutted the evidence filed by the assessee. In these circumstances, we hold that the subcontract payment is a genuine business expenditure allowable under section 37(1) of the Act. Accordingly, we direct the Ld. AO to delete the addition pf Rs.19,87,932/- made on account of payment to sub-contractor. 12. In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 26th November 2025. Sd/- Sd/- (VIJAY PAL RAO) VICE PRESIDENT (MADHUSUDAN SAWDIA) ACCOUNTANT MEMBER Hyderabad, dated 26th November, 2025 Vinodan/sps Printed from counselvise.com ITA No 986 of 2025 KCVR Infra Projects P Ltd Page 8 of 8 Copy to: S.No Addresses 1 KCVR Infra Projects (P) Ltd, Flat No.401, Siri Sampada Arcade-1 Khajaguda, Gachbowli KV Ranga Reddy Telangana 500032 HYD 2 Astt. CIT, Circle 2(2), Aayakar Bhavan, Shakker Bhavan, Basheerbagh, Hyderabad 500004 3 Pr. CIT - Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order Printed from counselvise.com "