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1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU
ON THE 20TH DAY OF NOVEMBER, 2018
BEFORE
THE HON'BLE MR. JUSTICE RAVI MALIMATH
AND
THE HON’BLE MR.JUSTICE K.NATARAJAN
INCOME TAX APPEAL NO.30 OF 2010
BETWEEN:
THE COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE, C.R.BUILDING, ATTAVARA, BENGALURU
THE DEPUTY COMMISSIONER OF INCOME-TAX, C.R.BUIDLING, ATTAVARA, BENGALURU
... APPELLANTS
(BY SRI K.V.ARAVIND, ADVOCATE)
AND:
SHRI.K.RADHA KRISHNA NAIK, PUBLIC WORKS DEPARTMENT, CONTRACTOR, UPPINNANGADY, PUTTUR TALUK, DAKSHINA KANNADA
... RESPONDENT
(BY SRI A.SHANKAR, SENIOR ADVOCATE ALONGWITH SRI.M.LAVA, ADVOCATE)
2 THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260A OF THE INCOME TAX ACT, 1961 ARISING OUT OF ORDER DATED 21.08.2009 PASSED IN ITA NO.403/BANG/2009, FOR THE ASSESSMENT YEAR 2001- 2002, PRAYING THAT THIS HON’BLE COURT MAY BE PLEASED TO; (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF THE LAW STATED THEREIN;(ii) ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT, BENGALURU IN ITA NO.403/BANG/2009 DATED 21.08.2009 AND CONFIRM THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (CENTRAL), BENGALURU, IN THE INTEREST OF JUSTICE AND EQUITY.
*****
THIS INCOME TAX APPEAL COMING ON FOR HEARING THIS DAY, RAVI MALIMATH J., DELIVERED THE FOLLOWING:
JUDGMENT
The assessee is in the business of civil contract. A search was conducted on 16.02.2005. The assessment under Section-143(3), read with Section-153A of the Income tax Act, was completed for the asst. year 2001-02 on 27.12.2006, assessing the income at Rs.35,43,430/-, apart from the agricultural income of Rs.1,50,000/-.
On perusal of the assessment records, it was noticed that the assessment for the asst. year 1999-2000 to 2000-01 was completed on the same day, along with
3 the assessment for the asst. year 2001-2002. The Assessing Officer has restricted the direct cost to 77% of the contract receipts for the asst. year 1999-00 and 2000- 01 in the relevant years, since the assessee was indulging in inflation of expenses and was not maintaining relevant assessment records. However, for the asst. year 2001-02, he had allowed direct cost at 87% of the contract receipts, though there was no variation in the facts as compared to those three assessment years. Thereafter, the Assessing Officer accepted the claim of the assessee and made certain other additions.
Aggrieved by the same an appeal was filed. The Appellate Authority set-aside the impugned order and directed the Assessing Officer to adopt direct cost of 77% of the contract receipts, instead of 2,23,18,242/- as claimed by the assessee. Aggrieved by the same, the assessee approached the Tribunal. By the impugned order, the appeal was allowed. Questioning the same, the present appeal is filed by the Revenue.
The appeal was admitted on 25.11.2010, to consider the following substantial question of law : “Whether the Tribunal was correct in holding that the direct cost attributable to the asst. year 2001-02 to 2005-06 being 87.37% should have been adopted and there was no error in the order of assessment for the Commissioner to interfere when admittedly the direct cost percentage for the asst. year 1999-2000 to 2005-2006 was 77.00%, 77.00%, 87.37%, 71.23%, 70.58%, 68.92% and 58.84%, which was not adopted and consequently, recorded a perverse finding?
We have heard the learned counsel on the substantial question of law. The Tribunal while considering the case of the assessee was of the view that the Assessing Officer has accepted a recognized method of treating the expenses in the absence of any clinching evidence to the same. Therefore, it reversed the order passed by the Commissioner of Income Tax (Appeals), and upheld the order of the Assessing Officer.
5 6. On hearing learned counsels, we are of the considered view that the findings recorded by the Tribunal are just and proper. The Tribunal was justified in holding that an accepted recognized method of treating expenses has been adopted by the Assessing Officer, since the average of the previous two years has been taken. The same cannot be found fault with. We find no valid reason to differ. Under these circumstances, the substantial question of law is answered in favour of the assessee and against the Revenue. The appeal is accordingly disposed off.
SD/- SD/- JUDGE
JUDGE