Income Tax Appellate Tribunal - Hyderabad
Sri Katta Naraiah,, Hyderabad vs Assessee on 16 January, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "A", HYDERABAD
BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND
SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA No. 917/Hyd/2014
Assessment Year: 2010-11
The Income Tax Officer, Sri Katta Naraiah,
Ward-1, Vs Vontimitta,
KADAPA KADAPA
[PAN: AMHPK 7862 M]
ITA No. 563/Hyd/2014
Assessment Year: 2010-11
Sri Katta Naraiah, The Income Tax Officer,
Vontimitta, Vs Ward-1,
KADAPA KADAPA
[PAN: AMHPK 7862 M]
(Appellant) (Respondent)
For Revenue : Shri Ramakrishna Bandi, DR
For Assessee : Shri A.V.Raghu Ram, AR
Date of Hearing : 06-01-2015
Date of Pronouncement : 16-01-2015
ORDER
PER B. RAMAKOTAIAH, A.M. :
These are cross appeals by assessee and Revenue against the order of the Commissioner of Income Tax(Appeals), Guntur dated 24-01-2014.
I.T.A. Nos. 917 /Hyd/14 &
:- 2 -: 563/Hyd/14
Sri Katta Naraiah
2. Briefly stated, assessee is an individual engaged in sub- contract works with KNR Constructions Ltd., Hyderabad and in the assessment made u/s.143(3) of the Income Tax Act (Act), Assessing Officer made the following additions/disallowances:
i. Difference in gross contract receipts : Rs.9,82,250 ii. Closing Balance : Rs.65,36,100 iii. Retention money : Rs.11,38,894 iv. Debit Notes : Rs.9,99,788 v. Difference in Bank Account : Rs.2,59,076 After considering the assessee's submissions, the ld.CIT(A) deleted the addition of closing balance, retention money, debit notes and difference in bank account while confirming the difference in gross receipts. Revenue is aggrieved on the deletion of closing balance of Rs.65,36,100/- and difference in bank account of Rs.2,59,076/-. Assessee is aggrieved on the confirmation of difference in gross receipts of Rs.9,82,250/-. These are considered after hearing the ld.DR and ld.AR and perusing the Paper Book placed on record.ITA No.917/Hyd/2014 (Revenue's Appeal):
3. As briefly stated, Revenue has raised two grounds on two issues.
3.1 The issue of deletion of addition of Rs.65,36,100/-: In the course of assessment, AO obtained account copy from M/s KNR Constructions Ltd., Hyderabad and noticed that the outstanding credit balance as on 31-03-2010 in respect of the assessee was Rs.65,36,100/-. On comparing the Balance Sheet of assessee, Assessing Officer was of the opinion that this amount was not shown by assessee as outstanding, therefore, suppression of that amount.
I.T.A. Nos. 917 /Hyd/14 &
:- 3 -: 563/Hyd/14
Sri Katta Naraiah
Assessee submitted that it has credit balances in respect of amounts receivable from KNR Constructions Ltd., Hyderabad of different works of a grand total of Rs.78,80,176/- which was shown as outstanding amounts in the ledger accounts. As against that, assessee has payable amounts of Rs.72,01,276/- towards boulder expenses payable, labour expenses payable and Mess charges payable and since these credits are available in Sundry Debtors account, only the net balance of Rs.6,78,900/- was shown in the Balance Sheet. Assessing Officer did not accept the submission of assessee and made the addition of Rs.65,36,100/-. During the appellate proceedings before the ld.CIT(A), assessee made the same submissions, furnished the copies of the Balance Sheet and other final accounts in support of the contentions. Ld.CIT(A) after perusing the submissions as well as the accounts gave a finding that amount receivable from KNR Constructions Ltd., Hyderabad at Rs.65,36,100/- is as per the assessee's Balance Sheet and there appears to be no omission or error. In view of this, the addition made was deleted.
4. Ld.DR vehemently argued that this was an after thought to explain the discrepancy and the addition made by Assessing Officer is perfectly valid. He also submitted that there is no net amount payable to KNR Constructions Ltd., Hyderabad towards boulder expenses or labour expenses, therefore, assessee's explanation that only net amount was taken to Balance Sheet cannot be accepted.
5. We are not convinced with the arguments of the ld.DR. As seen from the ledger account filed on record in the Paper Book, particularly with reference to the appeal of assessee, the outstanding amount at the end of 31-03-2010 in the ledger account pertaining to KNR Constructions Ltd., Hyderabad, is showing closing balance of I.T.A. Nos. 917 /Hyd/14 & :- 4 -: 563/Hyd/14 Sri Katta Naraiah Rs.65,36,100/-. There is no dispute with reference to the amounts payable of boulder expenses and labour expenses arising from P&L A/c. Assessing Officer has not disallowed any amount towards these expenses claimed in the P&L A/c. In the method of accounting being followed by assessee only net amount was shown in the Balance Sheet. Since the detailed accounts indicate that there is no omission or error in the receivables, we uphold the order of the ld.CIT(A). Revenue's ground is dismissed.
6. The next ground raised by Revenue is with reference to the deletion of addition of Rs.2,59,076/-. Assessing Officer noted that assessee in the return of income has not shown any bank balance whereas the ING Vysya Bank Ltd., account indicated an amount of Rs.2,59,076/-. As balance in this account was not reflected, Assessing Officer made addition of the said amount. It was the explantion of assessee that while uploading the details of Balance Sheet, it was wrongly shown as cash balance, whereas the actual cash balance was Rs.14,346.84 and bank balance was 2,19,076.82 both totaling to Rs.2,33,423.66. It was further explained that even though the bank balance shown at Rs.2,59,076 there was a payment of Rs.10,000/- make to pitching/revetment labour, Shri Ashok Kumar, which was shown wrongly as Rs.50,000/- in the Books of Accounts. This being bank reconciliation entry, there is no difference in the balance shown in the books. Ld.CIT(A) in his one line order noted that "I have perused the submission made and find them to be in order. The addition of Rs.2,59,076 is deleted". Revenue is aggrieved.
7. After considering the ld.DR's arguments and ld.AR's explanation on the account, we are of the opinion that this issue requires re-examination by the Assessing Officer. We make it clear I.T.A. Nos. 917 /Hyd/14 & :- 5 -: 563/Hyd/14 Sri Katta Naraiah that just because assessee has entered wrongly in the return while uploading, that cannot be taken as a Gospel Truth. Assessing Officer is directed to enquire and examine the Cash Book and bank statement in determining the actual balances. Moreover, assessee admits that there is a mistake in bank payment of Rs.10,000/- but recorded as Rs.50,000/- in the Books of Accounts. Whether it is a mistake in payment made or mistake in claiming labour expenses requires examination. In case this mistake in payment of outstanding payments, then, it may not have any bearing on P&L A/c and that amount can be taken in reconciliation of the balance as available in the books. With these observations and directions, the issue is restored to the file of Assessing Officer. Needless to say that assessee should be given adequate opportunity to explain. Revenue's ground to that extent is allowed for statistical purposes.
ITA No.563/Hyd/2014 (Assessee's Appeal):8. In this, assessee is aggrieved on sustaining the addition of Rs.9,82,250/-. The facts leading to the addition are that the Assessing Officer noticed that the gross contract receipts shown by assessee in the P&L A/c are Rs.2,08,58,273/- whereas Form 26AS indicates the receipt of Rs.2,18,40,523/-. As assessee could not reconcile the amount at the time of assessment, Assessing Officer made the addition as suppression of contract receipts. 8.1 During the appellate proceedings before the CIT(A), assessee submitted that assessee has received TDS certificates from KNR Constructions Ltd., Hyderabad, for an amount of Rs.2,08,58,273/- only. Further stated that it has maintained different accounts and in all the accounts, the total credit from the contractee was Rs.2,11,13,799/-, the details of which were submitted. Since amount of only Rs.2,08,58,273/- was shown in the P&L A/c, I.T.A. Nos. 917 /Hyd/14 & :- 6 -: 563/Hyd/14 Sri Katta Naraiah assessee admitted before Ld CIT(A) the difference of 2,55,526/- and not Rs.9,82,250/-. It was further submitted that assessee has paid an amount of Rs.6 Lakhs to KNR Constructions Ltd., Hyderabad, on 07-11-2009 and this transaction could have been shown wrongly in gross contract receipts.
9. The ld.CIT(A) however, has not agreed and confirmed the addition stating as under:
6.3 I have perused the submissions made. At the outset, the appellant himself has admitted that the contract receipts have been under reported by him to the extent of Rs.2,55,526/-. Secondly, his claim that Rs.6 lakhs was paid to M/s.KNR Constructions Ltd., as a financial transaction does not appear relevant to the issue at hand. If the amount was paid by the appellant, it could not erroneously be included as an amount received by the appellant and hence this contention does not appear to have any basis.
Moreover, the contractee, namely M/s.KNR Constructions LTd., Hyderabad, have in their letter dated 24-11-2012 addressed to the Assessing Officer stated that they had issued two TDS Certificates to the appellant, the details of which are as under:
TDS Certificate of KNT-01 Rs.2,08,58,273/-
TDS Certificate of AP-07 Rs.9,71,962/-
6.4 Thus, it is apparent that the appellant has merely taken into account one TDS Certificate ignoring the second certificate issued by the contractee. The appellant has furnished no explanation as to why the second TDS Certificate was not accounted for nor any reconciliation statement to explain the difference. In view of the same, the addition of Rs.9,82,250/- on account of under reporting of contract receipts is sustained and appellant's appeal in respect of this addition is dismissed.
I.T.A. Nos. 917 /Hyd/14 & :- 7 -: 563/Hyd/14 Sri Katta Naraiah
10. After considering rival contentions and examining the ledger accounts placed on record, we are of the opinion that this issue also require re-examination by the Assessing Officer. As far as TDS certificates are concerned, assessee did claim tax credits, so Ld. CIT(A) observation that all TDS certificates were not claimed is not correct. The contention that Rs.6 Lakhs is a financial transaction and admission of Rs.2,55,526/- as turnover have not been adjudicated. The order of CIT(A) did not deal with either of the issues. Therefore, in the interest of justice, we remit the issue to the file of Assessing Officer to examine the ledger copies of both assessee as well as KNR Constructions Ltd., Hyderabad and reconcile the turnovers and other transactions vis-a vis the TDS certificates and make the addition accordingly. Assessing Officer attention is drawn to the fact that assessee admits an amount of Rs.2,55,526/- as a turnover. Since TDS certificates and ledger accounts of parties require detailed reconciliation, Assessing Officer is free to examine and decide the issue after giving opportunity to assessee. The grounds of the assessee are allowed for statistical purposes.
11. In the result, Revenue's appeal is 'partly allowed' and assessee's appeal is 'allowed' for statistical purposes.
Order pronounced in open Court on 16th January, 2015.
Sd/- Sd/-
(SAKTIJIT DEY) (B. RAMAKOTAIAH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated 16th January, 2015.
TNMM
I.T.A. Nos. 917 /Hyd/14 &
:- 8 -: 563/Hyd/14
Sri Katta Naraiah
Copy to :
1. Income Tax Officer, Ward-1, Simhapuri Colony, Kadapa- 516 001.
2. Sri Katta Naraiah, # 6-17-1, Near Madhavaram, Vontimitta, KADAPA, C/o. Shri K.Vasantkumar & A.V.Raghu Ram, Advocates, 610, Babukhan Estate, Basheeerbagh, Hyderabad
3. CIT(A)-Guntur
4. CIT, Tirupati
5. D.R. ITAT, Hyderabad.