DONTHALA PURNACHANDRA RAO,G KONDURU vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(1), , VIJAWADA
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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
PER S. BALAKRISHNAN, Accountant Member :
This appeal filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals), Vijayawada [Ld. CIT(A)] in ITA No. 10099/CIT(A)/VJA/2016-17, dated 17/3/2018 arising
2 out of the order passed U/s. 143(3) of the Income Tax Act, 1961
[the Act] dated 12/12/2017 for the AY 2015-16.
The assessee is an individual and proprietor of M/s. Sravani
Constructions and engaged in the business of Civil contracts,
filed his return of income admitting a total income of Rs.
43,34,610/- for the AY 2015-16. Subsequently, the case was
selected for limited scrutiny under CASS for the reason to
examine “large other expenses claimed in the P & L Account”.
Accordingly, notice U/s. 143(2) of the Act was served on
2/8/2016. In response to the notice, the assessee’s Authorized
Representative (AR) appeared and filed the required details.
Based on the discussions with the AR and the submissions made
by the assessee, the Ld. AO directed the Income Tax Inspectors
[ITIs] to examine the genuinity of the expenses and submit a
report. The Inspectors submitted a report wherein it was
submitted that the assessee has not produced vouchers or
verifiable details for the following major expenses:
i. Aggregate purchases Rs. 55,22,790
ii. Bitumen Transport Expenses Rs. 4,25,330
iii. Brick Purchases Rs. 9,60,200
iv. Concrete Charges Rs. 1,37,194
3 v. Earth Work Charges Rs. 6,73,223
The Ld. AO considered the report of the Inspectors and
provided another opportunity to the assessee to produce complete
details for all the expenses on 15/11/2017. The Ld. AO observed
that the assessee could not produce the bills, vouchers or any
other details with regard to the above expenses. Therefore, the
Ld. AO proposed to reject the books of account and estimated the
income @ 12.5% of the gross receipts and called for the
objections from the assessee on or before 30/11/2017. Since the
assessee has not filed any objections, the Ld. AO rejected the
books of accounts U/s. 145(3) of the Act and estimated the
income @ 12.5% of gross receipts at Rs. 88,18,049/-. Aggrieved
by the order of the Ld. AO, the assessee filed an appeal before the
Ld. CIT(A). Before the Ld.CIT(A) the only contention of the
assessee is with respect to the estimation of income @ 12.5% . To
support his ground before Ld.CIT(A), the assessee produced a
copy of the Hon’ble ITAT, Visakhapatnam decision in the
assessee’s own case for the AY 2009-10. The assessee has not
contested before the Ld. CIT(A) regarding the non-verification of
the books of accounts of the assessee by the Ld. AO. The
assessee has merely pleaded before the Ld. CIT(A) to estimate the
income @ 8% instead of 12.5% estimated by the Ld. AO on gross
receipts based on the ITAT decision in assessee’s own case for
earlier AY. Accordingly, the Ld. CIT(A) considered the
submissions of the assessee and partly allowed the appeal and
directed the Ld. AO to calculate the income @ 8% on gross
receipts. Aggrieved by the order of the Ld. CIT(A), the assessee is
in appeal before us.
The assessee has raised the following grounds of appeal:
“1. The order made by the Ld. CIT(A), Vijayawada is bad in law, arbitrary, contrary to the provisions of law and against the principles of natural justice.
On the facts and circumstances of the case and in law, the Ld. CIT(A), Vijayawada erred in directing the Assessing Officer to calculate the income at 8% on the Gross Receipts since the appellant maintained the books of accounts regularly.
The appellant submits that it was mentioned in the order of the Ld.AO and verification report of the inspectors that verifiable details were not produced for certain expenses but at no point of time the genuineness of the expenditure is neither commented nor found anything on record about the incorrectness of the expenditure. Rejection of books of accounts and resorting to estimation of income is not correct since the appellant maintained books of accounts, got them audited and produced the same for verification during the proceedings.
The appellant submits that there is no clarity in the Assessment Order with regard to the section under which the assessment is completed since it was mentioned on the 1st page (item No.13) of the Assessment Order that the assessment is made U/s. 143(3) of Income Tax Act, 1961 whereas paragraphs
5 4.2, 4.3 & 4.4 of the assessment order state that the assessment is completed U/s. 144 of the IT Act, 1961. This is to further submit that depreciation ought to have been allowed from the income assessed. 5. For these reasons and those which may be urged at the time of hearing of appeal and on the facts and circumstances of the case, the order passed by the CIT(A) to estimate income at 8% on gross receipts may be modified by accepting the income returned.
The appellant craves leave to add, alter, amend, modify, substitute, delete and / or rescind all or any of the grounds of appeal on or before the final hearing, if the necessity so arises.”
At the outset, the Ld. AR argued that the assessee is
regularly maintaining the books of accounts and was subjected to
audit U/s. 44AB of the Act and hence rejection of books of
accounts by the Ld. AO is not valid in law. The Ld. AR further
argued that the Ld. AO has passed the assessment order U/s.
143(3) of the Act whereas the assessment is completed U/s. 144
of the Act. The Ld. AR also submitted that the Ld. CIT(A) has
erred in calculating the income @ 8% on the gross receipts.
Per contra, the Ld. DR referred to para 4.2 of the order of
the Ld. AO wherein the Ld. AO has clearly mentioned about the
proposal to reject the books of accounts and to estimate the
income @ 12.5% on the gross receipts. The Ld. DR further
submitted that the Ld. AO has observed that the assessee has not
6 raised any objections to the above proposal of the Ld. AO. The
Ld. DR further submitted that the assessee has not produced
bills / confirmations before the Ld. AO and has produced only in
the month of November, 2022. He therefore pleaded that the
orders of the Ld. Revenue Authorities be upheld.
We have heard both the sides and perused the material
available on record and the orders of the Ld. Revenue
Authorities. It is seen from the records, that the Ld. AR has not
raised the issue of rejection of books of accounts before the Ld.
CIT(A). The Ld. AR has only pleaded before the Ld. CIT(A) to
estimate the income @ 8% on the gross receipts as held by the
Hon’ble ITAT, Visakhapatnam in ITA No. 105/Viz/2013, dated
27/11/2015 in the assessee’s own case for the AY 2009-10.
None of the above grounds raised before us was contested before
the Ld. CIT(A). It is also noted that after pleading for estimation
of 8% on the gross receipts as income against 12.5% estimated by
the Ld. AO, the assessee contested before us that the Ld. CIT(A)
has erred in directing the Ld. AO to calculate the income @ 8% on
the gross receipts. Further, as submitted by the Ld. DR, we
observe that the confirmation of the accounts were obtained on
26/11/2022 only from Sri Maheswari Stone Crusher. In view of
7 the afterthought of the assessee to contest the rejection of books
of accounts before us inspite of accepting the 8% on gross
receipts allowed by the Ld. CIT(A), following the ITAT,
Visakhapatnam order in the assessee’s own case. We are also of
the considered view that merely not mentioning section 144 by
the Ld.AO cannot invalidate findings nor render the assessment void ab initio. We also are of the opinion that since the assessee
has not produced any details / confirmations before the Ld.
Revenue Authorities before the completion of proceedings, and
also not contested any of the above grounds before the Ld. CIT(A).
Even before us, the assessee has not placed any satisfactory
evidence to establish his case except filing of one confirmation
letter dated 26/11/2022, which is an afterthought. We are
therefore inclined to uphold the order of the Ld. CIT(A) and hence
no interference is required in the order of the Ld. CIT(A).
In the result, appeal of the assessee is dismissed.
Pronounced in the open Court on the 16th February, 2023. Sd/- Sd/- (दु�वू�आर.एलरे�डी) (एसबालाकृ�णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) �या�यकसद�य/JUDICIAL MEMBER लेखासद�य/ACCOUNTANT MEMBER
Dated : 16.02.2023
OKK - SPS
आदेशक���त�ल�पअ�े�षत/Copy of the order forwarded to:- �नधा�रती/ The Assessee–Donthala Purnachandra Rao, D.No.1-84, 1. Katuubadipalem, G. Konduru-521228, Krishna District. राज�व/The Revenue –Assistant Commissioner of Income Tax, Circle- 2. 1(1), Vijayawada. 3. The Principal Commissioner of Income Tax, Vijayawada. आयकरआयु�त (अपील)/ The Commissioner of Income Tax (Appeals), 4. Vijayawada. �वभागीय��त�न�ध, आयकरअपील�यअ�धकरण, �वशाखापटणम/ 5. DR,ITAT, Visakhapatnam गाड�फ़ाईल / Guard file 6. आदेशानुसार / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam
