KRR INFRA PROJECTS PRIVATE LIMITED,HYDERABAD vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE-2(1), HYDERABAD

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ITA 105/HYD/2018Status: DisposedITAT Hyderabad23 August 2021AY 2012-136 pages
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What did the Tribunal hold?

The Tribunal deleted the disallowance under Section 40(a)(ia) as it does not apply to estimated income. However, issues regarding the quantification of contractual and sub-contractual receipts, and income from other sources/Form 26AS differences were restored to the Assessing Officer for fresh verification.

What were the facts?

The assessee appealed against orders that estimated 9% profit on gross receipts, disallowed expenses for non-deduction of TDS, and treated interest income as from other sources. The assessments were made under Section 144 (best judgment assessment) as the assessee failed to provide necessary documentation.

What were the issues?

Whether profit estimation on gross receipts is valid without rejecting books of accounts, and whether Section 40(a)(ia) disallowance applies to estimated income.

Which sections of the Income-tax Act were involved?

Section 144,Section 40(a)(ia)

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Income Tax Appellate Tribunal, HYDERABAD ‘ A ‘ BENCH, HYDERABAD.

Before: SHRI S.S. GODARA & SHRI L. P. SAHU

For Appellant: Shri P. Murali Mohana Rao

M/s. KRR Infra Projects Pvt. Ltd., Hyderabad. PAN AADCK 8254A …..Appellant. Vs. Dy. Commissioner of Income Tax, Circle 2(1), Hyderabad. …..Respondent. Appellant By : Shri P. Murali Mohana Rao. Respondent By : Shri Ashok Kardam. (D.R.) Date of Hearing : 01.06.2021. Date of Pronouncement : 23.08.2021. O R D E R Per Shri S.S. Godara, J.M. : These two assessee’s appeals for Asst. Year 2012-13 & 2013-14 arise of the Commissioner of Income Tax (Appeals)-12, Hyderabad’s separate orders; both dt.08.09.2017, passed in case Nos.0037/2016-17 & 0044/2016-17 in proceedings under Section 144 of Income Tax Act, 1961 (‘the Act’), respectively.

2.

We notice at the outset that the assessee's identical substantive grounds raised in both these appeals challenge correctness of lower authorities’ action inter alia estimating 9% profit element on gross receipts of Rs.571,73,84,001 and Rs.192,42,57,336; section 40(a)(ia) disallowance on account of non-deduction of TDS of Rs.410,84,69,323 and 10,70,60,166 followed by treatment of interest income of Rs.96,98,339 as income from other sources than business income in Assessment Year 2012-13 and difference in Form 26AS of Rs.4,43,17,395 in Assessment Year 2013-14; respectively.

3.

The assessee's first and foremost argument before us is that both the lower authorities' have erred in law and on facts in estimating 9% income element pertaining to its contract receipts without even rejecting the books of accounts. Learned counsel fails to dispute that this instant assessments involve section 144 “best judgment” proceedings wherein the assessee had failed even to

4.

Next issue in both these appeals is that of correctness of income estimation @ 9% profit element on contract works as against 8% claimed at assessee's behest. It fails to dispute the hon’ble jurisdictional high court’s recent decision in & 41/2020 DCIT Vs. Mac Engineering and vice versa dt.24.2.2021 has upheld the tribunal direction(s) to the Assessing Officer for adopting profit estimation @ 9% and 6% qua contract and sub- contract receipts; respectively. We, therefore decline the assessee's instant second argument as well.

5.

Learned counsel’s last contention as per the assessee's detailed paper book running into 126 pages for Assessment Year 2012-13 and 286 pages for Assessment Year 2013-14 is that both these impugned assessment years involves the assessee sub-contractual receipts as well which ought to have been sustained to the corresponding latter estimation

4 & 106/Hyd/2018 @ 6% only. Learned departmental representative fails to dispute that all these requires afresh factual verification as we are dealing with 144 “best judgment” assessment. We therefore restore the instant issue of quantification of contractual as well as sub-contractual receipts in both these assessment years back to the Assessing Officer for necessary factual verification. Learned counsel undertakes to file all the necessary documents to this effect before the Assessing Officer; at assessee's risk and responsibility. The same shall be followed by three effective opportunities of hearings. This former issue of estimation of income element in both these assessment years is partly accepted for statistical purposes in foregoing terms.

6.

Next comes the second issue of 40(a)(ia) disallowance in both these assessment years under consideration. Suffice to say, it has come on record that we are dealing with an instance of estimation of income on gross turnover and therefore, section 40(a)(ia) will not apply as hon’ble jurisdictional high court’s landmark decision in Indwell

7.

Coming to the remaining issue of income from other sources and difference in Form 26AS (supra), learned counsel inter alia argued that the same represents business income in former and that corresponding taxable income already stand assessed; respectively. Be that as it may, both the instant issues require a fresh factual verification. We therefore restore the same back to the Assessing Officer for his necessary exercise to this effect. The assessee is directed to place on record all necessary details.

8.

Both these assessee's appeals are partly allowed for statistical purposes. A copy of this common order be placed in the respective files.

Order pronounced in the open court on 23rd Aug., 2021.

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