M/s Sree Lalitha Constructions, Visakhapatnam v. The CIT-1, Visakhapatnam

ITA 42/VIZ/2010 | 2005-2006
Pronouncement Date: 04-08-2010 | Result: Allowed

Appeal Details

RSA Number 4225314 RSA 2010
Assessee PAN AATFS5754L
Bench Visakhapatnam
Appeal Number ITA 42/VIZ/2010
Duration Of Justice 6 month(s) 9 day(s)
Appellant M/s Sree Lalitha Constructions, Visakhapatnam
Respondent The CIT-1, Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 04-08-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 04-08-2010
Assessment Year 2005-2006
Appeal Filed On 25-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.42/VIZAG/2010 ASSESSMENT YEAR : 2005-06 M/S. SREE LALITHA CONSTRUCTIONS VISAKHAPATNAM CIT-1 VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) PAN NO.AATFS 5754L APPELLANT BY: SHRI SUBRATA SARKAR DR RESPONDENT BY: SHRI G.V.N. HARI CA ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT PASSED U/S 263 OF THE I.T. ACT ON THE GROUND THAT CI T HAS ERRED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE I.T. ACT IGNORI NG THE FACTS AND CIRCUMSTANCES UNDER WHICH THE ASSESSING OFFICER HAS PASSED THE ORDER BY DETERMINING THE INCOME AT 6% OF THE GROSS RECEIPTS AFTER REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEES. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE ORDER OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. ON PERUSAL IT IS NOTICED THAT ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF EXECUTION OF CIVIL CONTRACT WORKS. FOR THE IMPUGNE D ASSESSMENT YEAR I.E. A.Y. 2005-06 THE ASSESSEE FILED ITS RETURN OF INCOME DE CLARING TOTAL INCOME OF RS.19 06 420/-. INITIALLY RETURN WAS PROCESSED U/S 143(1) RESULTING IN A REFUND OF RS.9 97 275/- WHICH WAS ISSUED TO THE ASS ESSEE VIDE INTIMATION DATED 22.3.2006. SUBSEQUENTLY THE CASE WAS SELECT ED FOR SCRUTINY. THE NOTICES U/S 143(2) AND 142(1) WERE ISSUED FROM TIME TO TIME. IN RESPONSE THERETO THE AUTHORIZED REPRESENTATIVE OF THE ASSESS EE APPEARED AND FILED THE DETAILS AND PRODUCED THE BOOKS OF ACCOUNTS. ON EXA MINATION OF THE BOOKS OF ACCOUNTS THE OFFICER HAS NOTED THAT VARIOUS EXPENS ES WERE NOT SUPPORTED BY VOUCHERS AND WERE NOT AMENABLE FOR VERIFICATION. IN VIEW OF THE UNVERIFIABLE 2 EXPENSES THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND HAS ESTIMATED THE INCOME AT A RATE OF 6% ON GROSS CONTRACT RECEIPTS AND 10% ON VEHICLE HIRE CHARGES AND ACCORD INGLY THE TOTAL INCOME WAS ASSESSED AT RS.72 69 331/-. 3. THE CIT ON VERIFICATION OF THE RECORDS HAS NOTED THAT PURCHASES WERE SHOWN AT RS.4 46 89 742/- AS PER SALES TAX ORDERS WHEREAS AS PER THE RETURN OF INCOME FILED THE PURCHASES WERE SHOWN AT RS.6 0 0 30 055/-. THE CIT HAS ALSO NOTED SOME MORE DISCREPANCIES IN THE ACCOUNTS AND HAS OBSERVED THAT THE ESTIMATION AT 6% ON TURNOVER AS NET PROFIT IS N OT PROPER. THUS THE ORDER OF THE A.O. IS ERRONEOUS AND PREJUDICIAL TO THE INT EREST OF THE REVENUE. THE CIT ACCORDINGLY SET ASIDE THE ORDER OF THE A.O. AND DIRECT THE A.O. TO RE-DO THE ASSESSMENT DE-NOVO. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT ASSESSING OFFICER HAS ALSO REJECTED THE BOOKS OF ACCOUNTS AND HAS EST IMATED THE INCOME OF THE ASSESSEES AT 6% OF THE TOTAL TURNOVER WITHOUT ALLOW ING DEPRECIATION AND INTEREST AND NOW THE CIT WANTS TO THRUST UPON HIS W ISDOM UPON THE ASSESSING OFFICER. IT IS A QUESTION OF ESTIMATE AN D CIT CANNOT FORCE THE ASSESSING OFFICER TO ESTIMATE AN INCOME AT A PARTIC ULAR FIGURE. HE HAS ALSO INVITED OUR ATTENTION TO THE NOTICE ISSUED BY THE A .O. THROUGH WHICH THE COMPLETE DETAILS WERE SOUGHT. THE A.O. HAS EXAMINE D THE INFORMATIONS FILED BEFORE IT AND BEING NOT CONVINCED WITH IT HE REJEC TED THE BOOKS OF ACCOUNTS AND ESTIMATED THE INCOME. FOR INVOKING THE JURISDI CTION U/S 263 OF THE I.T. ACT THE CIT IS REQUIRED TO MAKE OUT A CASE THAT TH E ASSESSMENT ORDER IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE INSTANT CASE THE ASSESSMENT ORDER MAY BE PREJUDICI AL TO THE INTEREST OF THE REVENUE BUT IT CANNOT BE ERRONEOUS AS THE ASSESSING OFFICER HAS ESTIMATED THE INCOME AFTER REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEES. 5. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CA REFUL PERUSAL OF THE RECORD WE FIND THAT INITIALLY THE ASSESSMENT WAS P ROCESSED U/S 143(1) RESULTING INTO A REFUND. SUBSEQUENTLY IT WAS TAKE N UP IN A SCRUTINY AND PROPER ASSESSMENT WAS MADE. ON EXAMINATION WHEN T HE ASSESSING OFFICER 3 HAS NOTED THAT THE BOOKS OF ACCOUNTS ARE NOT PROPER LY MAINTAINED HE REJECTED THE BOOKS OF ACCOUNTS AND HAS ESTIMATED TH E NET PROFIT AT 6% OF THE TOTAL RECEIPTS. THE ESTIMATION OF THE ASSESSING OF FICER MAY BE AT LOWER SIDE BUT IT CANNOT BE REVISED BY THE CIT SIMPLY BY HOLDI NG THAT THE ORDER OF THE A.O. IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST O F THE REVENUE. WHATEVER INCOME WAS ESTIMATED BY THE A.O. IT WAS DONE AFTER DUE APPLICATION OF MIND. IT CANNOT BE REVISED ONLY FOR THE SIMPLE REASON THAT A.O. HAS ESTIMATED AT LOWER SIDE. WE THEREFORE OF THE VIEW THAT THE ASSE SSMENT ORDER CANNOT BE HELD TO BE ERRONEOUS. THEREFORE THE CIT IS NOT RI GHT IN EXERCISING THE JURISDICTION U/S 263 OF THE ACT THEREFORE WE SET ASIDE THE ORDER OF CIT. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. PRONOUNCED IN THE OPEN COURT ON 4.8.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 4 TH AUGUST 2010 COPY TO 1 SLC PROJECTS PVT. LTD. ERSTWHILE SREE LALITHA CO NSTRUCTIONS D.NO.50-104- 2 SEETHAMMADHARA VISAKHAPATNAM-530 013. 2 THE CIT-1 VISAKHAPATNAM 3 THE CIT(A) VISAKHAPATNAM 4 THE DR ITAT VISAKHAPATNAM. 5 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM