Income Tax Appellate Tribunal - Hyderabad
Goutham Constructions, Anantapur vs Department Of Income Tax on 5 November, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "A" : HYDERABAD
BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
AND
SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER
ITA.No.557/Hyd/2013
Assessment Years 2009-2010
ITO, Ward 2 vs. Goutham Constructions
Anantapur. Anantapur.
PAN AAHFG6577B
(Appellant) (Respondent)
For appellant : Smt. K. Haritha
For respondent : -None-
Date of Hearing : 05.11.2013
Date of pronouncement : 13.11.2013
ORDER
PER SMT. ASHA VIJAYARAGHAVAN, J.M.
This appeal is filed by the Revenue against the Order of the CIT(A), Guntur dated 30.11.2012 for the assessment year 2009-2010.
2. Brief facts of the case are that the assessee is a sub- contractor engaged for strengthening reservoir of tanks and cement lining of canals relating to "Penna Delta Moderinization Project". The assessee has taken sub-contract from the main contractor M/s. Engineering Projects (India) Limited, Hyderabad. The assessee brought out detailed submissions before the lower authorities wherein several exceptional circumstances have been stated which has affected its business during the year.
3. The case was selected for scrutiny by the Income Tax Officer, Ward 2, Anantapur for the assessment year 2009-2010. During the course of assessment proceedings, many details such 2 as the bill/vouchers for various expenses called for which are also duly submitted by the assessee. In view of the large volume of voucher/bills, the assessee has produced one month vouchers for April, 2008 and submitted that the remaining months vouchers shall be produced as per the directions of the Assessing Officer.
4. The Assessing Officer assessed the income rejecting the books of accounts maintained and estimated the income at 8% of the gross receipts received.
5. On appeal before the CIT(A), the assessee submitted that it has not received payments from main contractor in time, which resulted in severe financial strain. It has also stated that the work site was not handed over in time and it had to face the wrath of local farmers, whose lands were proposed to be acquired for implementation of the farmers. It had further stated that it has purchased two heavy duty earth moving equipments, the payment of which could not be made to due to financial strains, resulting in issuance of arrest warrants against it. In addition, it has stated that only 9% of the work allotted was executed and remaining 91% could not be executed due to various problems and the work was finally abandoned resulting in further financial strain. Further, before the learned CIT(A) it was submitted by the assessee that the Assessing Officer's estimate of 8% of the gross receipts is also on a higher side considering the inexperience of the contractor, new to this line of activity and works being executed from very remote villages of Nellore and work sites being very far from any habitation. It was further submitted that the sites where the Penna Delta Modernisation works are to be executed are also not handedover to the assessee in time, there being delays in acquisition of sites from the land lords. There was also huge delay in payment of bills due to paucity of funds at the Government level. It was submitted that being a sub-contractor, 3 and for the various reasons mentioned before the Assessing Officer, the estimation of income at 8% of the gross receipts is on a very high side.
6. The learned CIT(A) held that exceptional circumstances have been faced by the assessee which has resulted in financial crisis and followed the decision of the ITAT, Hyderabad dated 31.1.201 in the case of E. Easwar Reddy & Co. Vs. ACIT-6(1) for the assessment years 2003-04 and 2004-05 (ITA. No. 668/Hyd/2009 and 685/Hyd/2009) and directed the Assessing Officer to recompute the income of the assessee adopting rate of 5% of gross contract receipts and further to allow there from, the salary and interest paid to partners.
7. Aggrieved, Revenue is in appeal before us and has raised the following grounds :
"1. The Order of the Hon'ble CIT(A) is erroneous both on facts and in law.
2. The Hon'ble CIT(A) is not justified in taking into account additional evidence produced, without giving a reasonable opportunity to the A.O. to examine the said evidence thereby violating the provisions of Rule46A(3) of the Income Tax Rules, 1962.
3. Any other ground that may be urged at the time of appeal proceedings."
8. Before the Tribunal, the learned D.R. Smt. K. Haritha stated that the assessee had produced additional information being copy of the letter addressed by the main contractor viz., M/s. Engineering Projects (India) Ltd. to the Executive Engineer, Drainage Division, Nellore from which it was obvious that work could not be continued for various reasons. This letter was not produced for examination before the Assessing Officer and thereby, the provisions of Rule 46A(3) of the I.T. Rules, 1962 have been violated.
49. For this objection of the Revenue, we are of the opinion that the CIT(A) merely observed that the assessee had merely narrated the circumstances wherein 'Jala Yagnam' project undertaken by the assessee as a sub-contractor was a failure and no additional evidence as such has been produced by the assessee before the CIT(A). Hence, this objection of the department is to be overruled.
10. We have heard the Revenue and perused the material available on record. We find that the revenue has not raised any grounds on merits of estimation at 5% made by learned CIT(A). The only objection is on admission of additional evidence. As seen from the Order of learned CIT(A) he has not relied on that letter at all. He has considered other fact that there is failure to complete project, only 9% of the work was executed, financial problems etc., in restricting the estimation to 5%, assessee being sub contractor. Since, we are not informed about any cross appeal by assessee, we refrain in making any comment on the addition sustained. Revenue ground being only on admission of additional evidence which has not materially effected the order of CIT(A), we reject the grounds.
10. In the result, appeal of the Revenue is dismissed.
Order pronounced in the open Court on 13.11.2013.
Sd/- Sd/-
(B. RAMAKOTAIAH) (ASHA VIJAYARAGHAVAN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad Date 13th November, 2013.
VBP/-
5
Copy to
1. I.T.O, Ward 2, Aayakar Bhavan, 3rd Road, New Town, Anantapur
2. Goutham Constructions, D.No.15-685, Kalpana Complex, R.F.Road, Anantapur.
3. CIT(A), Guntur
4. CIT, Tirupati
5. D.R. 'A' Bench, ITAT Hyderabad