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Income Tax Appellate Tribunal, Hyderabad SMC Bench, Hyderabad
Before: Smt. P. Madhavi Devi
This is assessee’s appeal for the A.Y 2010-11 against the order of the CIT (A)-6, Hyderabad, dated 25/10/2019.
Brief facts of the case are that the assessee individual, carrying on contract business, filed his return of income for the A.Y 2010-11 on 15.10.2010 admitting a total income of Rs.12.00 lakhs. Pursuant to the selection of return of income of the assessee for scrutiny through CASS to examine various receipts of “contractors business” , assessment u/s 143(3) was taken up.
3. During the assessment proceedings, the Assessing Officer asked the assessee to produce the bills/vouchers for the expenses debited to the P&L A/c, a copy of the agreement entered into with the Principal Contractor and the TDS certificates pertaining to the gross receipts admitted. However, the assessee failed to produce the relevant documents and therefore, the Assessing Officer rejected the books of account of the assessee and estimated the profit percentage at 8% of gross receipts on the main contracts and 6% on sub-contracts. Aggrieved, the assessee preferred an appeal before the CIT (A) who confirmed the assessment of profit on main contract at 8% and income from sub-contracts at 5%. Against this order of the CIT (A), the assessee is in appeal before the Tribunal by raising the following grounds of appeal: “I. Estimated Net Income at 8% on the Gross Contract Bills Rs.51,66,770/- which works out to Rs.4,13,337/-as against admitted Income of Rs.73,312/- Consequential addition of Income Rs.3,40,025/- Disputed Tax Rs.l,02,039/- Same uphold by the C I T Appeals
(i) The learned Commissioner of Income tax Appeals totally misconstrued the facts of the entire case while upholding the contention of the Assessing Officer.
(ii) The Hon'ble CIT Appeals has overlooked the detailed submissions made in the course of scrutiny to The Assistant Commissioner on 13-8-2012 (ii) later on change of jurisdiction to the Income Tax Officer Ward-1 Nellore on 18-12-2012 (iii) After preferring Appeal in the course of hearing of the Appeal submissions made before the Cl T Appeals also not looked in to. By misconstruing the entire facts of the case the addition was upheld. The Addition may be deleted.
II. AO Estimated G.P at 6% ON THE SUB CONTRACT BILLS- Rs2.94.80.674/-.as against admitted Gross Profit of 4.52% Consequential Addition of Income Rs.5.59.891/- Cl T CA) reduced the GP Addition from 6% to 5% Addition sustained Rs.1.82.250/- Disputed Tax Rs. 54. 675/- (i) The learned Cl T Appeals who appreciated the reasons for admitting Low Gross Profit of 4.52% Viz., Already tendered work allotted to the Appellant -All of a sudden the work to be executed at two different places was reduced the Tender Rate by the contractee suo motu. (ii) (ii) to add to this Cement Steel, Metal, Sand and Petrol Diesel Rates, Labour charges have gone up.
(iii) The Appellant further submits that the Entire expenditure is verifiable duly supported by Bills and vouchers. Without appreciation of the Books of accounts and by overlooking the statements filed the CIT Appeals has alleged that the expenditure is not supported by Bills. Neither the A 0 nor the CIT pointed out which expenditure is not supported by Bills In fact the entire expenditure is supported by Bills. No defects pointed out. The Addition may be deleted. III ENHANCEMENT OF INCOME BY C I T APPEALS Rs.1,80,311/- Disputed tax Rs.54,093/- :- The Commissioner of Income tax Appeals is not justified in enhancing the Income suo motu being the difference between the Contract amount and the contract receipts. (8,19,022/- minus Rs.6,38,691/pertaining to the Assessmentyear2011-12. The Cl T Appeals has no statutory power to conduct any enquiry relevant to the Assessment year 2011-12 which is not in dispute before the Cl T Appeals. Without establishing guilt and without making enquiries and without issuing show-cause notice. addition made is unauthorized addition may be set aside. For these and other reasons as may be urged at the time of hearing of the Appeal the Addition made under different heads may be deleted”.
As regards Grounds 1 & 2 against the estimation of income at 8% on main contracts and 5% on sub-contracts, I do not find any reason to interfere with the orders of the CIT (A) as the CIT(A) has followed the precedents on the issue i.e. the decisions of the Tribunal which he has quoted in his order. Therefore, Grounds 1 and 2 are rejected.
As regards enhancement of the income by the CIT (A) to the extent of 6,38,691/- is concerned also, I find that the CIT (A) has directed the Assessing Officer to verify whether the said amount disclosed by the assessee in the subsequent A.Y 2011-12 relate to the contract amount received in the A.Y 2010-11 and thereafter, in the event of assessee’s failure to establish a direct nexus only, to enhance the amount to the extent of Rs.6,38,691/. Therefore, I do not see any reason to interfere with this direction of the CIT (A).
In the result, assessee’s appeal is dismissed.
Order pronounced in the Open Court on 22nd April, 2021.