DCIT, Central Circle-2(1), Hyderabad, Hyderabad v. Ragini Constructions, Khammam, Khammam

ITA 175/HYD/2015 | 2011-2012
Pronouncement Date: 10-11-2017 | Result: Dismissed

Appeal Details

RSA Number 17522514 RSA 2015
Assessee PAN AAUFS4784M
Bench Hyderabad
Appeal Number ITA 175/HYD/2015
Duration Of Justice 2 year(s) 8 month(s) 16 day(s)
Appellant DCIT, Central Circle-2(1), Hyderabad, Hyderabad
Respondent Ragini Constructions, Khammam, Khammam
Appeal Type Income Tax Appeal
Pronouncement Date 10-11-2017
Appeal Filed By Department
Tags No record found
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 10-11-2017
Date Of Final Hearing 11-07-2017
Next Hearing Date 11-07-2017
First Hearing Date 11-07-2017
Assessment Year 2011-2012
Appeal Filed On 23-02-2015
Judgment Text
ITA NOS 167 172 175 AND 199 SREE NAGENDRA CONSTRUCT IONS KHAMMAM AND OTHERS. PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH HYDERABAD BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN ACCOUNTANT MEMBER FOR ASSESSEE : SMT. PALLAVI AGARWAL DR FOR REVENUE : SHRI P. MURALI MOHAN RA O O R D E R PER BENCH. ITA NO.202/HYD/2015 IS THE APPEAL FILED BY M/S. SRE E NAGENDRA CONSTRUCTIONS FOR THE A.Y 2011-12 WHILE I TA APPEAL NO ASSESSEE RESPONDENT A.Y 167/HYD/2015 DCIT C.C. 2(1) HYDERABAD SREE NAGENDRA CONSTRUCTIONS KHAMMAM PAN:AAUFS 4784 M 2009-10 202/HYD/2015 SREE NAGENDRA CONSTRUCTIONS KHAMMAM PAN:AAUFS 4784 M DCIT C.C.-3 HYDERABAD 2011-12 172/HYD/2015 DCIT C.C.2(1) HYDERABAD VARALAXMI CONSTRUCTIONS KHAMMAM PAN:AAGFV 0744C 2011-12 199/HYD/2015 VARALAXMI CONSTRUCTIONS KHAMMAM PAN:AAGFV 0744C DCIT C.C.-3 HYDERABAD 2011-12 175/HYD/2015 DCIT C.C.2(1) HYDERABAD RAGINI CONSTRUCTIONS KHAMMAM PAN:AAFFR 7361G 2011-12 205/HYD/2015 RAGINI CONSTRUCTIONS KHAMMAM PAN:AAFFR 7361G DCIT C.C.2(1) HYDERABAD 2011-12 139/HYD/2015 DCIT C.C.2(1) HYDERABAD MAA HIGHWAYS KHAMMAM PAN:AAFM 0756 B 2011-12 196/HYD/2015 MAA HIGHWAYS KHAMMAM PAN:AAFM 0756 B DCIT C.C.2(1) HYDERABAD 2011-12 DATE OF HEARING: 17.10 . 2017 DATE OF PRONOUNCEMENT: 10 . 1 1 .2017 ITA NOS 167 172 175 AND 199 SREE NAGENDRA CONSTRUCT IONS KHAMMAM AND OTHERS. PAGE 2 OF 12 NO.167/HYD/2015 IS THE APPEAL FILED BY THE REVENUE AGAINST THE RELIEF GRANTED TO M/S. SREE NAGENDRA CONSTRUCTIONS FOR THE A.Y 2009-10. ALL THE OTHER APPEALS ARE CROSS APPEALS FI LED BY THE RESPECTIVE ASSESSEES AS WELL AS THE REVENUE FOR THE A.Y 2011-12 AGAINST THE ORDERS OF THE CIT(A) HYDERABAD DATED 28.11.2014 RESPECTIVELY. ITA NO.167/HYD/2015-A.Y 2009-10 2. THIS IS REVENUES APPEAL FOR THE A.Y 2009-10. 3. BRIEF FACTS OF THE CASE ARE THAT THERE WAS SEARC H & SEIZURE OPERATION U/S 132 OF THE I.T. ACT IN THE CA SE OF M/S. MADHUCON PROJECTS LTD AND ITS GROUP ON 4.2.2011. TH E ASSESSEE BEING ONE OF THE SUB-CONTRACTORS OF MADHUCON GROUP WAS ALSO SEARCHED. PURSUANT THERE TO A NOTICE U/S 153A OF T HE ACT WAS ISSUED TO THE ASSESSEE ON 13.01.2012. DURING THE AS SESSMENT PROCEEDINGS U/S 143(3) R.W.S. 153A OF THE ACT THE AO CALLED FOR VARIOUS DETAILS FROM THE ASSESSEE AND THE ASSESSEE FURNISHED THE SAME. AFTER CONSIDERING THE SAID MATERIAL THE AO O BSERVED THAT M/S. MADHUCON PROJECTS LTD HAD DIVERTED THE FUNDS O F THE SUB- CONTRACTORS (THE ASSESSEE BEING ONE OF THEM) AND H AS SIPHONED OFF THE SAME DURING THE FINANCIAL YEAR 2008-09 RELEVANT TO THE A.Y 2009-10. THE AO IN PARA 3.6 OF HIS ORDER HAS TABU LATED THE AMOUNTS GIVEN AND TAKEN FROM THE ASSESSEE. OBSERVIN G THAT THESE AMOUNTS WERE NEVER USED BY THE ASSESSEE FOR ITS BUS INESS ACTIVITIES AND THAT THESE AMOUNTS WERE DISALLOWED I N THE HANDS OF THE PRINCIPAL CONTRACTOR I.E. M/S. MADHUCON PROJECT S LTD HE MADE THE ADDITION PROTECTIVELY IN THE HANDS OF THE ASSESSEE FIRM. THEREAFTER HE ALSO ESTIMATED THE BUSINESS PROFIT O F THE ASSESSEE ITA NOS 167 172 175 AND 199 SREE NAGENDRA CONSTRUCT IONS KHAMMAM AND OTHERS. PAGE 3 OF 12 AT 8% OF THE GROSS RECEIPTS AND BROUGHT IT TO TAX. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WH O GRANTED RELIEF TO THE ASSESSEE BY OBSERVING THAT THE ISSUES INVOLV ED IN THIS CASE ARE IDENTICAL TO THE ISSUES DECIDED IN THE CASE OF M/S. MAA HIGHWAYS FOR THE A.Y 2007-08 TO 2010-11 WHEREIN HE HAD PASSED A DETAILED ORDER IN ITA NO.123/CIT(A)-12/H/2013-14. HE ACCORDINGLY DELETED THE ADDITION OF THE AMOUNTS WI THDRAWN FROM THE BANK A/C OF THE ASSESSEE AND ROUTED TO THE MAIN CONTRACTOR I.E. M/S. MADHUCON PROJECTS LTD. HOWEVER HE CONFIR MED THE ESTIMATION OF BUSINESS INCOME AT 8% OF ITS GROSS RE CEIPTS. AGAINST THE RELIEF GRANTED BY THE CIT (A) THE REVENUE IS I N APPEAL BEFORE US. 4. THE LEARNED DR SUPPORTED THE ORDER OF THE AO AND FURTHER PLACED RELIANCE UPON THE JUDGMENT OF THE HO N'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SURENDRA GULABCHA ND MODI REPORTED IN 140 ITR 517 (GUJ.) TO SUBMIT THAT SINCE THE ISSUE OF SUBSTANTIVE ADDITION IN THE CASE OF M/S. MADHUCON P ROJECTS LTD IS PENDING BEFORE THE CIT (A) THESE APPEALS OF THE AS SESSEE ALSO SHOULD BE REMANDED TO THE FILE OF THE CIT (A) WITH A DIRECTION TO DECIDE BOTH THE APPEALS SIMULTANEOUSLY. 5. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND SUBMITTED THAT SIMILAR ARGUMENTS OF THE LEARN ED DR IN THE CASE OF M/S. MAA HIGHWAYS WERE CONSIDERED BY THE TR IBUNAL AND IT WAS HELD IN FAVOUR OF THE ASSESSEE. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD WE FIND THAT IN THE CASE OF MAA HIGHWAYS IT HAS BEEN ITA NOS 167 172 175 AND 199 SREE NAGENDRA CONSTRUCT IONS KHAMMAM AND OTHERS. PAGE 4 OF 12 OBSERVED THAT THE ASSESSMENTS IN THE SAID CASE HAVE ALSO BEEN DONE U/S 153A OF THE ACT PURSUANT TO THE SEARCH CO NDUCTED IN THE GROUP CASES OF M/S MADHUCON PROJECTS LTD ON THE SAME DATE I.E. 4.2.2011. IN THE SAID CASE ALSO THE REVENUE H AD SOUGHT REMAND OF THE MATTERS TO THE FILE OF THE CIT (A) TO DECIDE ALONG WITH THE CASES OF MADHUCON PROJECTS LTD. AFTER CONS IDERING THE ARGUMENTS OF BOTH THE PARTIES AT LENGTH THIS TRIBU NAL HAS HELD THAT THE ASSESSEE BEING A SUB-CONTRACTOR AND SINCE ITS BOOKS OF ACCOUNT WERE NOT RELIABLE THE INCOME CAN BE ESTIMA TED AT 8% OF THE GROSS RECEIPTS WHERE THE ASSESSEE IS A MAIN CON TRACTOR AND AT 5% IF IT IS A SUB-CONTRACTOR. FURTHER IT HAS ALSO BEEN OBSERVED THAT WHERE THE INCOME HAS BEEN ESTIMATED THEN THER E CANNOT BE ANY DISALLOWANCE OF EXPENDITURE AS HELD BY THE JURI SDICTIONAL HIGH COURT IN THE CASE OF M/S INDWELL CONSTRUCTIONS LTD (232 ITR 776). FOR THE PURPOSE OF READY REFERENCE THE RELEVANT PA RAGRAPHS ARE REPRODUCED HEREUNDER: 2. FACTS OF THE CASE COMMON IN ALL THESE CASES ARE THAT THERE WAS A SEARCH AND SEIZURE OPERATION UNDER S.13 2 OF THE ACT IN THE CASE OF MADHUCON PROJECTS LIMITED AN D GROUP OF CASES ON 4.2.2011. AFTER THE SEARCH IN THE CASE MADHUCON PROJECTS LTD. AND ITS GROUP CONCERNS INCLU DING THE ASSESSEES HEREIN NOTICES UNDER S.153A WERE ISS UED TO THE ASSESSEES. IN RESPONSE THERETO THE ASSESSEES F ILED RETURNS OF INCOME FOR RELEVANT ASSESSMENT YEARS. DU RING THE ASSESSMENT PROCEEDINGS UNDER S.143(3) THE BOO KS OF ACCOUNT MAINTAINED BY THE ASSESSEES WERE REJECTED A ND THE INCOME OF THE ASSESSEES WAS ESTIMATED AT 8% OF THE GROSS RECEIPTS AND THE ASSESSING OFFICER ACCORDING LY MADE ADDITIONS TO THE INCOME RETURNED BY THE ASSESS EES. 3. FURTHER THE ASSESSING OFFICER ALSO OBSERVED THA T THE COMPANY'S ADDRESS GIVEN BY M/S. MADHUCON PROJECTS L TD. WAS ACTUALLY A SMALL ROOM ON THE TERRACE AND NO DOCUMENTS OR PAPERS RELATING TO THE ASSESSEE OR M/S . MADHUCON GROUP WERE AVAILABLE. HE FURTHER OBSERVED THAT DURING THE COURSE OF SEARCH AND IN THE POST SE ARCH ITA NOS 167 172 175 AND 199 SREE NAGENDRA CONSTRUCT IONS KHAMMAM AND OTHERS. PAGE 5 OF 12 PROCEEDINGS THOUGH THE ASSESSEES WERE GIVEN SUFFIC IENT TIME TO PRODUCE THE BOOKS OF ACCOUNT AND OTHER SUPPORTING DOCUMENTS THE ASSESSEES HAVE FAILED TO PRODUCE THE SAME. HE FURTHER OBSERVED THAT THE ASSE SSEES WERE MAINLY STATIONED AT KHAMMAM AND HAVE OPENED BANK ACCOUNTS IN HYDERABAD AND NEW DELHI WHERE THE Y DO NOT HAVE ANY OPERATIONS AND THEREFORE HE CAME TO THE CONCLUSION THAT THESE BANK ACCOUNTS ARE OPENED ONLY TO FACILITATE THE DIVERSION OF FUNDS TO THE PRINCIPAL CONTRACTOR MADHUCON PROJECTS LTD. HE FURTHER OBSER VED THAT THESE ACCOUNTS ARE USED FOR WITHDRAWING FUNDS BY THE EMPLOYEES OF MADHUCON PROJECTS LTD. AS IT WAS UNEARTHED DURING THE COURSE OF SEARCH AND THAT THOU GH THE PAYMENTS ARE REALISED AND CHEQUES WERE ISSUED I N FAVOUR OF THESE SUB-CONTRACTORS THE MONEY WAS EVENTUALLY WITHDRAWN BY THE PROMOTERS OF M/S. MADHUCON PROJECTS LTD. THROUGH THEIR EMPLOYEES BY W AY OF SELF-SIGNED CHEQUES WHICH ARE HANDED OVER BY TH ESE SUB-CONTRACTORS TO THE MANAGERS OF M/S MADHUCON PROJECTS. OBSERVING THAT THESE AMOUNTS WERE WITHDRA WN AND SIPHONED BACK TO THE MANAGEMENT OF M/S. MADHUCO N PROJECTS LTD. DURING THE RELEVANT FINANCIAL YEAR T HE ASSESSING OFFICER CONCLUDED THAT THESE AMOUNTS WERE NEVER USED FOR THE BUSINESS ACTIVITY OF THE ASSESSE ES HEREIN BUT WERE RETURNED BACK TO THE CONTRACTOR. HE THEREF ORE DISALLOWED THE SAME IN THE HANDS OF THE PRINCIPAL CONTRACTOR AND ADDED THE SAME PROTECTIVELY IN THE HANDS OF THE ASSESSEE FIRMS HEREIN. 4. AGAINST THE ASSESSMENTS THUS MADE ASSESSEES PRE FERRED APPEALS BEFORE THE CIT(A) WHO THOUGH CONFIRMED TH E ESTIMATION OF INCOME AT 8% OF THE GROSS RECEIPTS G RANTED RELIEF BY DELETING THE ADDITIONS MADE ON PROTECTIVE BASIS. 5. LEARNED COUNSEL FOR THE ASSESSEES SUBMITTED THAT THE ASSESSEES WERE MAINTAINING REGULAR BOOKS OF ACCOUNT BUT THE ASSESSING OFFICER REJECTED THE SAME AND ESTIMAT ED THE INCOME OF THE ASSESSEES AT 8% OF THE GROSS RECEIPTS . HE SUBMITTED THAT THIS ESTIMATION OF INCOME IN AN ASSE SSMENT COMPLETED UNDER S.143(3) READ WITH S.153A IS NOT SUSTAINABLE. EVEN OTHERWISE HE SUBMITTED THAT THE ISSUE OF ESTIMATION OF INCOME IN THE CASE OF M/S MA HIGHW AYS ONE OF THE ASSESSEES HEREIN HAS COME UP BEFORE THI S TRIBUNAL IN ITA NO.54/HYD.2013 AND THIS TRIBUNAL VI DE ITS ORDER DATED 30.7.2013 HAS DIRECTED ESTIMATION O F INCOME AT 5% OF THE GROSS RECEIPTS IN THE CASE OF S UB- ITA NOS 167 172 175 AND 199 SREE NAGENDRA CONSTRUCT IONS KHAMMAM AND OTHERS. PAGE 6 OF 12 CONTRACTS AND THEREFORE SINCE ALL THE ASSESSEES HE REIN BELONG TO THE SAME GROUP AND FACTUAL BACKGROUND IN THESE CASES ALSO BEING SAME INCOME OF THESE ASSESSEES HE REIN SHOULD ALSO BE ESTIMATED AT 5%. 6. AS REGARDS THE ESTIMATION OF INCOME THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THERE IS NO FIXED PERCENTAGE OF GROSS RECEIPTS WHICH CAN BE AD OPTED TO ESTIMATE THE INCOME OF THE ASSESSEES AND THAT A S THE BOOKS OF ACCOUNT OF THE ASSESSEES ARE NOT RELIABLE THE ASSESSING OFFICER ON A NOTIONAL BASIS CAN ESTIMATE THE INCOME. ACCORDING TO HER THE ESTIMATION OF INCOME AT 8% OF THE GROSS RECEIPTS IS QUITE REASONABLE AND JUSTI FIED. 7. AS REGARDS THE REVENUE'S APPEAL AGAINST THE DELE TION OF ADDITIONS MADE ON PROTECTIVE BASIS THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT SINCE TH E SUBSTANTIVE ADDITIONS MADE IN THE HANDS OF M/S. MADHUCON PROJECTS LTD. ARE PENDING ADJUDICATION BY THE CIT(A) THESE APPEALS MAY BE KEPT PENDING TO WHICH THE LEARNED COUNSEL FOR THE ASSESSEE OBJECTED. THE LEAR NED DEPARTMENTAL REPRESENTATIVE ALSO RELIED UPON THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL I N THE CASE OF PRABHU WINES IN ITA NO.1100/HYD.2013 DATED 23.10.2013 WHEREIN AFTER CONSIDERING THE PRINCIPLE S LAID DOWN IN INDWELL CONSTRUCTIONS (232 ITR 776) IT HAS BEEN HELD THAT THEY ARE APPLICABLE ONLY TO THE EXTENT OF COMPUTATION OF INCOME UNDER THE HEAD 'BUSINESS' AND AS FAR AS ADDITION OF CASH CREDITS UNDER S.68 AND S.69 THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F CITV/S. DEVI PRASAD VISHWANATH PRASAD REPORTED IN 7 2 ITR 194 (SC) WAS FOLLOWED. 8. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEES ALSO RELIED UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS (232 ITR 776) WHEREIN IT WAS HELD THAT WHERE THE INCOME OF AN ASS ESSEE IS ESTIMATED THERE CANNOT BE ANY OTHER ADDITION. THEREFORE ACCORDING TO HIM THE ADDITION OF REROUT ING OF FUNDS IN THE HANDS OF THE ASSESSEES HEREIN ON PROTE CTIVE BASIS IS RIGHTLY DELETED BY THE CIT(A). 9. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD WE FIND THAT ON THE ISSUE OF ES TIMATION OF BUSINESS INCOME THE ISSUE HAS ALREADY BEEN CONS IDERED AND ADJUDICATED BY THE COORDINATE BENCH OF THIS TRI BUNAL ITA NOS 167 172 175 AND 199 SREE NAGENDRA CONSTRUCT IONS KHAMMAM AND OTHERS. PAGE 7 OF 12 IN THE CASE OF ONE OF THE ASSESSEES HEREIN VIZ. M A HIGHWAYS FOR ASSESSMENT YEAR 2007-08 WHEREIN ESTIMATION OF INCOME IN THE HANDS OF SUBCONTRACTS A T 5% OF THE GROSS RECEIPTS WAS HELD TO BE REASONABLE. RESPECTFULLY FOLLOWING THE SAME WE HOLD THAT IN AL L THESE CASES AS WELL THE BUSINESS INCOME OF THE ASSESSEES FOR THE YEARS UNDER APPEAL BE ESTIMATED AT 5% OF THE GROSS RECEIPTS AND ADDITIONS IF ANY MAY BE DETERMINED ACCORDINGLY. ASSESSEES APPEALS ARE ACCORDINGLY TREA TED AS ALLOWED. 10. AS REGARDS THE REVENUE'S APPEALS AGAINST THE DE LETION OF THE ADDITIONS MADE ON PROTECTIVE BASIS IN THE CA SES OF THESE ASSESSEES WE FIND THAT THE ADDITIONS HAVE BE EN MADE CONSEQUENT TO DETECTING THAT THE ASSESSEES REC EIVED FUNDS FROM M/S. MPL LTD. AND REROUTED THE SAME BAC K TO M/S. MPL ITSELF. ASSESSING OFFICER THEREFORE PRESU MED THAT THE ASSESSEES HAVE NOT EXPENDED THE SAID RECEI PTS TOWARDS THEIR BUSINESS ACTIVITY. BUT AS RIGHTLY HEL D BY CIT(A) ALL WITHDRAWALS CANNOT BE PRESUMED TO BE TH E BUSINESS EXPENDITURE OF THE ASSESSEE PARTICULARLY WHEN THE SAME IS NOT DEBITED TO THE PROFIT & LOSS ACCOUN T. THE CIT(A) AFTER EXAMINING THE ISSUE HAS HELD AT PARA 6.5.3 AS UNDER- '6.5.3. KNOWING THAT THE AMOUNT WITHDRAWN FROM BANK ACCOUNT WAS APPROPRIATED BY THE MAIN CONTRACTOR AND THAT IT WAS NOT USED BY THE APPELLANT IS ONE ASPECT. HOWEVER TO SAY THA T THIS ITEM NEEDS TO BE DISALLOWED IN THE HANDS OF THE APPELLAN T WE HAVE TO FIRST ESTABLISH THAT THE SPECIFIC WITHDRAWALS WERE ACCOUNTED IN BOOKS AS EXPENDITURE INCURRED DURING THE YEAR AND F URTHER THE EXPENDITURE WAS NOT ONLY REVENUE IN NATURE BUT WAS ALSO DEBITED TO THE P&L ACCOUNT TO BE DISALLOWED AS EXPENDITURE. IN THE ABSENCE OF BOOKS AND VOUCHERS ONE CANNOT SPECIFICA LLY CONCLUDE THAT THE AMOUNTS WITHDRAWN WERE INDEED DEP LOYED AND WERE INCURRED TOWARDS REVENUE EXPENDITURE AND GOT D EBITED TO P&L ACCT. IT IS ALSO SEEN THAT THE WITHDRAWALS WERE ACTUALLY MORE THAN THE ENTIRE TURNOVER OF THE APPELLANT FIRM IN A Y 2011-12 INDICATING THAT ALL WITHDRAWALS COULD NOT HAVE BEEN DEBITED IN THE APPELLANT'S BOOKS AS EXPENDITURE. SIMILAR FEATU RE WAS FOUND IN THE CASE OF THE OTHER TWO SUBCONTRACTING FIRMS N AMELY M/S. VARALAKSHMI CONSTRUCTIONS THE WITHDRAWLS FROM BANK WERE MORE THAN TURNOVER FOR ASSESSMENT YEAR 2010-11. FOR M/S RAGINI CONSTRUCTIONS THE WITHDRAWALS WERE MORE THAN THE T URNOVER FOR A.Y. 2010-11 AND A.Y. 2011-12.' ITA NOS 167 172 175 AND 199 SREE NAGENDRA CONSTRUCT IONS KHAMMAM AND OTHERS. PAGE 8 OF 12 THE LEARNED DEPARTMENTAL REPRESENTATIVE HAD RELIED UPON THE DECISION IN THE CASE OF MADHU WINES CITED (SUPRA) BUT WE FIND THAT THE DECISIONS RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE ARE NOT APPLICA BLE TO THE FACTS OF THE CASES BEFORE US. IN THE CITED C ASE BESIDES THE ADDITION ON ACCOUNT OF ESTIMATION OF BUSINESS I NCOME FURTHER ADDITIONS UNDER S.68 WERE UPHELD. IN THE CA SES BEFORE US THOUGH THE AUTHORITIES BELOW HAVE NOT MENTIONED THE SECTION UNDER WHICH THE DISALLOWANCE AND THE CONSEQUENTIAL ADDITIONS ARE MADE FROM THE ORDE R OF THE ASSESSING OFFICER IT APPEARS THAT THE RECEIPTS OF THE ASSESSEE WERE DISALLOWED AS THEY ARE NOT USED FOR BUSINESS M/S. MA HIGHWAYS AND THREE OTHERS KHAMMAM ACTIVITY. THUS IT IS DISALLOWANCE OF BUSINESS EXPE NDITURE. THE CIT(A) HAS RIGHTLY POINTED OUT THAT THE AMOUNTS WITHDRAWN CANNOT BE PRESUMED TO HAVE BEEN DEPLOYED AND INCURRED TOWARDS REVENUE EXPENDITURE AND GOT DEBITED TO THE PROFIT & LOSS ACCOUNT. WHERE THERE I S ESTIMATION OF BUSINESS INCOME DISALLOWANCE AND CONSEQUENTIAL ADDITION OF REVENUE EXPENDITURE IS NO T SUSTAINABLE AS HELD BY THE JURISDICTIONAL HIGH COU RT IN THE CASE OF INDWELL CONSTRUCTIONS (SUPRA). IN VIEW OF THE SAME WE AGREE WITH THE VIEW OF THE CIT(A) THAT THI S ISSUE IS ALSO SQUARELY COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS (SUPRA) WHEREIN IT HAS BEEN CATEGORI CALLY HELD THAT WHERE BUSINESS INCOME OF AN ASSESSEE IS ESTIMATED NO OTHER DISALLOWANCE MAY BE MADE. IN TH E CASE OF MA HIGHWAYS CITED SUPRA AS WELL THE TRIB UNAL HAS TAKEN INTO CONSIDERATION THE DECISION OF THE JURISDICTIONAL HIGH COURT AND HELD THAT NO SEPARATE DISALLOWANCE OF EXPENDITURE SHALL BE MADE ONCE INCO ME IS DETERMINED BY RESORTING TO ESTIMATION. RESPECTFULLY FOLLOWING THE SAME WE DO NOT SEE ANY REASON TO INT ERFERE WITH THE ORDERS OF THE CIT(A). 7. THE LEARNED DR HAD PLACED RELIANCE UPON THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. SURENDRA GULABCHAND MODI FOR KEEPING THE MATTER PEN DING TILL THE APPEALS OF THE MADHUCON PROJECTS LTD ARE DISPOS ED OF BY THE CIT (A). WE FIND THAT THE SAID DECISION WAS FOR THE A.YS 1956-57 ITA NOS 167 172 175 AND 199 SREE NAGENDRA CONSTRUCT IONS KHAMMAM AND OTHERS. PAGE 9 OF 12 AND 1957-58 AND IN THE SAID CASES THE ISSUE WAS PE NDING BEFORE THE HON'BLE SUPREME COURT AND NOT BEFORE THE CIT (A ). THE JUDGMENT OF THE HON'BLE SUPREME COURT WILL BE BINDI NG ON ALL THE COURTS IN INDIA INCLUDING THE TRIBUNAL WHEREAS THE ORDER OF THE ITAT WILL BE BINDING ON THE CIT (A). THEREFORE THE SAID DECISION IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. IN THE CASE OF MAA HIGHWAYS (CITED SUPRA) WE HAVE ALREADY HELD TH AT WHERE THE INCOME IS ESTIMATED AFTER REJECTION OF BOOKS OF ACC OUNT NO FURTHER DISALLOWANCE OF BUSINESS EXPENDITURE CAN BE MADE. I N THE CASE BEFORE US ALSO THE AO HAS MADE THE ESTIMATION ON T HE GROUND THAT THE ASSESSEE HAD NOT INCURRED ANY EXPENDITURE AND THE AMOUNTS WERE NEVER USED FOR ITS BUSINESS ACTIVITIES AND WERE RETURNED BACK TO THE MAIN CONTRACTOR. SINCE THE FAC TS AND CIRCUMSTANCES ARE THE SAME BEFORE US AS IN THE CASE OF MAA HIGHWAYS AND SINCE WE HAVE CONFIRMED THE ESTIMATION OF INCOME BY THE AO AT 8% IN THE CASE OF MAIN CONTRACTOR AND 5% IN THE CASE OF A SUB-CONTRACTOR WE SEE NO REASON TO INTER FERE WITH THE ORDER OF THE CIT (A). 8. IN THE RESULT REVENUES APPEAL IS DISMISSED. ITA NO.202/HYD/2015-A.Y 2011-12 9. IN THIS CASE THE ASSESSEE IS CHALLENGING THE OR DER OF THE CIT (A) IN CONFIRMING THE ESTIMATION OF INCOME AT 8% OF ITS GROSS RECEIPTS. ACCORDING TO THE ASSESSEE THE ASSESSEE IS A SUB-CO NTRACTOR AND THEREFORE ITS INCOME SHOULD BE ESTIMATED AT 5% OF T HE GROSS RECEIPT AND NOT AT 8% OF THE TURNOVER AS HELD BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF MAA HIGHWAYS IN ITA NOS. 20 0 & 201/HYD/2015. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSE E BY THE DECISION OF THE ITA NOS 167 172 175 AND 199 SREE NAGENDRA CONSTRUCT IONS KHAMMAM AND OTHERS. PAGE 10 OF 12 TRIBUNAL IN ITA NO.169/HYD/2015 WHEREIN THE REVENUE S APPEAL HAS BEEN DISMISSED BY DIRECTING THE AO TO VERIFY WHETHE R THE ASSESSEE IS A SUB-CONTRACTOR OR MAIN CONTRACTOR AND TO ESTIMATE T HE INCOME @ 8% FOR THE MAIN CONTRACTOR AND AT 5% IN THE CASE OF SUB-CO NTRACTOR. 10. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD WE FIND THAT IN THE ASSESSEES OWN CASE WE HAVE ALREADY HELD THAT THE INCOME SHOULD BE ESTIMATED @8% OF ITS GROS S RECEIPTS IN THE CASE OF MAIN CONTRACTOR AND @5% OF ITS GROSS RECEIP TS IN THE CASE OF SUB-CONTRACTOR IN THE REVENUES APPEAL FOR THE A.Y 2009-10 AND ALSO IN THE REVENUES APPEAL IN THE ASSESSEES OWN CASE FOR THE A.Y 2011-12 IN ITA NO.169/HYD/2015 DATED 31.3.2016. ACCORDINGLY T HE AO IS DIRECTED TO VERIFY THE FACTS AND RE-COMPUTE THE INCOME ACCOR DINGLY SUBJECT TO THE CONDITION THAT THE ASSESSED INCOME SHALL NOT BE LES S THAN THE RETURNED INCOME OF THE ASSESSEE. 11. IN THE RESULT ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.139 & 196/HYD/2015 A.Y 2011-12 (MAA HIGHWAY S) 12. ITA NO.139/HYD/2015 IS REVENUES APPEAL AND ITA NO.196/HYD/2015 IS ASSESSEES APPEAL FOR THE A.Y 20 11-12. THE ISSUES INVOLVED IN THESE APPEALS FOR THE RELEVANT A.Y ARE SIMILAR TO THE ISSUES IN THE CASE OF SREE NAGENDRA CONSTRUCTIONS IN ITA N O.167/HYD/2015- A.Y 2009-10 AND IN ITA NO.202/HYD/2015 FOR A.Y 2011 -12 AS ABOVE AND FOR THE REASONS GIVEN IN THE ABOVE PARAGRAPHS A ND SUBJECT TO THE CONDITION THAT THE ASSESSED INCOME SHALL NOT BE LES S THAN THE RETURNED INCOME OF THE ASSESSEE THE REVENUES APPEAL IS DIS MISSED AND THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATIST ICAL PURPOSES. ITA NOS 167 172 175 AND 199 SREE NAGENDRA CONSTRUCT IONS KHAMMAM AND OTHERS. PAGE 11 OF 12 ITA NOS. 172 &199/HYD/2015 A.Y 2011-12 (VARALAXMI CONSTRUCTIONS) 13. BOTH ARE CROSS APPEALS AND THE ISSUES INVOLVED IN THESE APPEALS FOR THE RELEVANT A.Y ARE SIMILAR TO THE ISS UES IN THE CASE OF SREE NAGENDRA CONSTRUCTIONS IN ITA NO.167/HYD/2015-A.Y 2 009-10 AND ITA NO.202/HYD/2015 FOR A.Y 2011-12 AS ABOVE AND FOR TH E REASONS GIVEN IN THE ABOVE PARAGRAPHS AND SUBJECT TO THE CONDITIO N THAT THE ASSESSED INCOME SHALL NOT BE LESS THAN THE RETURNED INCOME O F THE ASSESSEE THE REVENUES APPEAL IS DISMISSED AND THE ASSESSEES AP PEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.175 & 205/HYD/2015 A.Y 2011-12 (RAGINI CONSTRUCTIONS) 14. BOTH ARE CROSS APPEALS AND THE ISSUES INVOLVED IN THESE APPEALS FOR THE RELEVANT A.Y ARE SIMILAR TO THE ISS UES IN THE CASE OF SREE NAGENDRA CONSTRUCTIONS IN ITA NO.167/HYD/2015-A.Y 2 009-10 AND ITA NO.202/HYD/2015 FOR A.Y 2011-12 AS ABOVE AND FOR TH E REASONS GIVEN IN THE ABOVE PARAGRAPHS AND SUBJECT TO THE CONDITIO N THAT THE ASSESSED INCOME SHALL NOT BE LESS THAN THE RETURNED INCOME O F THE ASSESSEE THE REVENUES APPEAL IS DISMISSED AND THE ASSESSEES AP PEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 15. TO SUM UP THE APPEALS FILED BY THE REVENUE ARE DISMISSED WHILE THE APPEALS OF THE RESPECTIVE ASSE SSEES ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH NOVEMBER 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD DATED 10 TH NOVEMBER 2017. VINODAN/SPS ITA NOS 167 172 175 AND 199 SREE NAGENDRA CONSTRUCT IONS KHAMMAM AND OTHERS. PAGE 12 OF 12 COPY TO: 1 DCIT CENTRAL CIRCLE 2(1) 3 RD FLOOR POSNETT BHAVAN RAMKOTE TILAK ROAD HYDERABAD 2 P. MURALI & CO. CAS 6-3-655/2/3 1 ST FLOOR SOMAJIGUDA HYDERABAD 500082 3 CIT (A) - 12 HYDERABAD 4 CIT CENTRAL HYDERABAD 5 THE DR ITAT HYDERABAD 6 GUARD FILE BY ORDER