SHYAM SUNDER RAVINUTHALA,HYDERABAD vs. ITO., WARD-10(1), HYDERABAD

Aggrieved by the Ld.CIT(A) order, the assessee is now in appeal before the Tribunal.

The learned counsel for the assessee submitted that the assessee is not disputing total contract receipts as per From 26AS at Rs.1,46,13,636/-. However, the Assessing Officer added advances shown by the assessee at Rs.98,42,433/- and offered to tax in the subsequent assessment year, which amounts to double addition. Further, when the Assessing Officer has estimated 8% net profit on total turnover, he cannot make adhoc disallowance of expenditure @30%, on the ground that no bills and vouchers have been furnished. Therefore, he submitted that the additions made by the Assessing Officer should be deleted. The learned counsel for the assessee further submitted that the assessee has claimed deduction under Chapter VIA towards various investments, but the Assessing Officer disallowed the claim without any basis. Therefore, he submitted that the additions made by the Assessing Officer should be deleted.

We have heard both the parties, perused the material on record and gone through the orders of the authorities below. The assessee has admitted gross contract receipts of Rs.92,87,502/- and after expenses, declared net profit of Rs.7,43,000/-. The Assessing Officer estimated net profit of 8% on total contract receipts of Rs.2,44,56,069/-, which includes contract receipts of Rs.1,46,13,636/- as per Form 26AS and advances shown by the assessee at Rs.98,42,433/-. According to the Assessing Officer, the assessee has not considered the total contract receipts as per Form 26AS and also not proved advances shown at Rs.98,42,433/-. The assessee has furnished copy of ITR filed for the year under consideration along with Form 26AS and ledger account copies of the assessee in the books of accounts of NEC-KPCL for the financial year 2015-16. The assessee has admitted gross receipts of Rs.92,87,502/- and Shyam Sunder Ravinuthala the balance amount of advances received from NEC-KPCL has been accounted in the subsequent year as contract receipts and offered to tax for the assessment year 2017-18. The Assessing Officer, without considering the books of accounts and explanation offered by the assessee, aggregated total contract receipts as per Form 26AS and added advances shown by the assessee to arrive at gross contracts of Rs.2,44,56,069/, even though as per Form 26AS, the assessee has received only Rs.1,46,06,600/- for the financial year 2015-16. From the workings of the Assessing Officer, we find that the Assessing Officer has considered the advances as per Form 26AS and also as per books of accounts of the assessee, which amounts to considering one amount, three times. That is one as per Form 26AS, ignoring the advances claimed by the assessee as per ledger account of the payer itself, one as per advances shown by the assessee. In other words, when the assessee has received total contract receipts of Rs.1,46,06,600/-, the Assessing Officer has arrived at Rs.2,44,56,069/- without any basis. Therefore, we are of the considered view that the Assessing Officer has erred in aggregating contract receipts as per Form 26AS plus advances shown by the assessee, even though the books of accounts maintained by the assessee clearly shows that for the year under consideration, his contract receipts were only at Rs.92,87,502/-. Thus, we direct the Assessing Officer to consider the contract receipts at Rs.92,87,502/- as per books of accounts of the assessee, because, the balance amount contract receipts as per From 26AS amounting to Rs.98,42,433/- has Shyam Sunder Ravinuthala been shown as advances and offered to tax in the subsequent assessment year, which is evident from ITR filed for the A.Y.2017-18 and Form 26AS for the F.Y.2016-17, where, the gross contract receipts of the assessee was only at Rs.1,03,535/- and if we add advances of F.Y.2015-16, relevant to A.Y.2016-17 plus contract receipts of F.Y.2016-17, total contract receipts admitted for the A.Y.2017-18 is matching with the contract receipts declared by the assessee in the ITR filed for the A.Y.2017-18.

Coming back to estimation of profit and disallowance of 30% of expenditure. Admittedly, the Assessing Officer estimated 8% profit on contract receipts, on the ground that the assessee could not produce relevant books of accounts and bills and vouchers in support of various expenses. In other words, the Assessing Officer ignored the books of accounts and financial results declared by the assessee and estimated 8% net profit. In addition to estimation of profit, the Assessing Officer made 30% adhoc disallowance of expenses for want of bills and vouchers. Once, profit is estimated on gross contract receipts, then it is presumed that the said profit is after all expenditure incurred, wholly and exclusively for the purpose of business. Therefore, in general sense, no further disallowance can be made towards expenditure. Therefore, we are of the considered view that, to this extent, the Assessing Officer has blown hot and cold, which is evident from estimation of profit on gross receipts and disallowance of expenditure, which is not permissible.

In so far as addition of Rs.1,50,000/- towards Chapter VIA deduction, the assessee could not file any evidences, therefore, in the absence of any evidences, additions made by the Assessing Officer is confirmed.