YENUGANTI SRINIVASAN,CHENNAI vs. ITO NON CORPORATE WARD 8(1), CHENNAI

आदेश / O R D E R

PER INTURI RAMA RAO, ACCOUNTANT MEMBER:

ITA No.3120/2018 :- 2 -:

The Assessee raised the following grounds of appeal: 2.

‘’1. The order of the learned Commissioner of Income (Appeals)-9, is wrong, illegal and opposed to facts of the instant case.

4. The learned CIT(A)-7 ought to have seen that the appellant is engaged only in the business of construction and does not have any alternate source of income. The learned CIT(A)-9 ought to have confined his addition to the gross profit and erred in treating the entire additional turnover offered by the appellant as the income of the appellant.

For these and other grounds that may be rendered at the time of hearing it is most humbly prayed that the Hon’ble Tribunal may be pleased to allow the appellants appeal and thus render justice’’.

The brief facts of the case are as under: 3.

The appellant is an individual engaged in the business of civil construction. The return of income for the AY 2015-2016 was filed on 23.08.2015 disclosing total income of �14,20,820/-.

Against the said return of income, the assessment was completed by the Income Tax Officer, Non Corporate Ward 8(1), Chennai vide order dated 27.12.2017 passed u/s. 143(3) of the ITA No.3120/2018 :- 3 -:

Income Tax Act, 1961 (for short ‘the Act’) at total income of � 1,12,28,820/-. While doing so, the AO made an addition of �1,09,29,990/- being alleged difference on turnover between return of income, sales tax and service tax.

Assessee alongwith two others co-owned a property being plot no.166, Kishnamachari Nagar, Maduravoyal Madura Alapakkam Village, admeasuring 3060 sq.ft of land. The interest of the appellant in the said property is about 1/3rd. During the Asst. Year. 2014-15, the appellant ventured to develop the said property through his proprietary concern ‘’Sripathy Builders’’ and obtained permission to build six flats.

During the course of assessment proceedings, the Assessing Officer found that turnover of �1,69,55,000/- was disclosed to Service Tax Department, turnover of �1,77,60,000/- was disclosed to Sales Tax Department and �1,00,00,000/- was disclosed in the return of income.

When assessee was asked to explain the discrepancies, assessee had stated that the turnover disclosed to the Sales tax Department is correct. However, in respect of Service Tax, turnover is lower on account of some difference in calculation and with regards to the turnover disclosed in the return of income, it was stated that receipt of �59,85,000/- was to be considered in the next year as the possession

ITA No.3120/2018 :- 4 -: of the flat was handed over only in the subsequent year. Accordingly, corresponding receipts and expenses were excluded, thereby resulting in the turnover of �1,00,00,000/-. It was further submitted that the books of accounts were lost in the floods and therefore on the turnover of �1,00,00,000/- presumptive rate of 8% was applied. The Assessing Officer rejected the contention of the assessee and completed the assessment by making addition on account of difference on account of the turnover of �77,60,000/- and �17,45,000/- being amount received on sale made in the earlier years but corresponding expenses was claimed in this year.

Being aggrieved by the above additions, an appeal was 5. preferred before ld. CIT(A), who vide impugned order confirmed the additions.

Being aggrieved by the order of the ld. CIT(A), the appellant 6. is in appeal before us in the present appeal. The ld. Authorised Representative submitted that during the assessment year 2014-15, assessee had completed the sale of two flats belonging to Ms. Manju G Kurup and Ms. Logeswari and the corresponding turnover was booked in the immediate preceding year and the income was offered to tax under presumptive rate of tax. It is further stated that this amount was received in the subsequent assessment year i.e the year

ITA No.3120/2018 :- 5 -: under consideration and the same was again offered to tax though it was suffered tax in the earlier assessment year and therefore pleaded that same needs to be deleted from the taxable income for the year under consideration. It was further submitted that during the year under consideration, the possession of the flats except one flat purchased by one Shri. Anandakumar was handed over to the buyer and the sale consideration of the said flat was offered to tax for the year under consideration and the assessee had also filed revised return disclosing additional income of �2,98,810/-, thereby enhancing the returned income to �14,20,800/-, which constitute 8% of the total gross receipt of �1,77,60,000/-. It is further submitted that when the income is offered to tax under presumptive rate of 8%, there is no warrant to make any further additions.

On the other hand, the ld. Sr. Departmental Representative 7. placed reliance on the orders of lower authorities.

We heard the rival submissions and perused the material on 8. record. Admittedly, assessee before us is in the business of civil construction and no books of accounts were produced before the Assessing Officer for whatsoever reasons and the discrepancies between turnover reported in the Income tax return, sales tax and service tax stands explained before Assessing Officer. The income

ITA No.3120/2018 :- 6 -: which was offered to tax in earlier years cannot be again taxed in the subsequent years. Similarly, income which was offered to tax in the subsequent year cannot be taxed in the present year. In the circumstances, statute specifies presumptive rate of 8%, on the gross receipts. This can be taken as guiding factor and the income offered by the assessee at �14,20,800/- can be accepted as reasonable profit and there is no scope of any further additions.

In the result, the appeal filed by the assessee is allowed. 9.

Order pronounced on 17th day of September, 2019, at Chennai.