Edco (India) P Ltd.,, Hyderabad vs Assessee

EDCO (India) P. Ltd., vs. Dy. Commissioner of Income- Hyderabad. tax, Circle - 2(2), Hyderabad.

PAN - AAACE 4487 E (Appellant) (Respondent)

Assessee by : Shri P. Murali Mohan Rao Revenue by : Shri Rajat Mitra

Date of hearing 26-03-2015 Date of pronouncement 01-04-2015

O RDE R

PER SAKTIJIT DEY, J.M.:

This appeal by the assessee is directed against order dated 04/09/2014 passed by ld. CIT(A)-III, Hyderabad for A.Y. 2009-10.

2. Briefly stated, assessee a company is engaged in the business of executing civil contract works. For the AY under consideration, assessee filed its return of income on 30/09/2009 declaring income of Rs. 3,72,23,710. During the scrutiny assessment proceeding, AO called for books of account and other related documents like bills, vouchers, etc. for verification. He also called upon assessee to produce details of working of closing work-in-progress, sundry creditors and the method of valuation of work completed for which bills are submitted. After verifying the books of account and the informations submitted by assessee, AO was of the view that there are discrepancies in the books of account and the expenditures 2 ITA No. 1800/Hyd/2014 EDC O (India) P. Ltd.

claimed are not supported by authentic bills/vouchers. He, therefore, proposed to reject the books of account and estimate the profit at 8% on gross bills. Further, AO noted that in case of assessee for AY 2008-09, ITAT in its order in ITA No. `058/Hyd/2011 dt. 14/10/2011 has directed for estimating the profit @ 8%. Accordingly, AO completed the assessment by estimating the profit at 8% on the gross bills, which resulted in determination of total income at Rs. 5,57,78,240. Being aggrieved of the assessment order, so passed, assessee preferred appeal before ld. CIT(A).

3. As can be seen from the order of ld. CIT(A), though, a number of opportunities were given to assessee to represent its case, but, neither assessee appeared nor any one on behalf of it appeared to represent the case. Further, ld. CIT(A) found that as per the Memorandum of Appeal there is a delay of 659 days in filing the appeal. He observed that though assessee had filed a petition requesting to condone the delay, but, he was not satisfied with the reason shown by assessee for such delay. Accordingly, he held that as assessee has failed to show sufficient cause for the delay of 659 days, assessee's request for condoning the delay cannot be acceded to. Further, ld. CIT(A) held that assessee also failed to appear before him in spite of a number of opportunities being given. Accordingly, ld. CIT(A) dismissed the appeal of assessee without going into the merits of the issues.

4. Ld. AR submitted before us, before ld. CIT(A) assessee could not be represented as assessee never received notices. He further submitted, the delay in filing of appeal before ld. CIT(A) was due to reasonable cause, hence, ld. CIT(A) should not have dismissed appeal of assessee ex-parte without affording a reasonable opportunity of being heard. Ld. AR submitted, had assessee been given opportunity, it would have been able to convince ld. CIT(A) that 3 ITA No. 1800/Hyd/2014 EDC O (India) P. Ltd.

estimation of profit is on the higher side as during the year under consideration, assessee has executed work only on sub-contract basis and rate of profit on which, as per the decisions of ITAT, is 5%. Thus, ld. AR submitted, fair opportunity may be given to assessee to represent/explain its case before the departmental authorities.

5. Ld. DR, on the other hand, submitted before us, assessee has been very casual in its approach, hence, ld. CIT(A) was justified in dismissing appeal without condoning delay.

6. We have considered the submissions of the parties and perused the materials on record as well as the orders of revenue authorities. Undisputedly, assessee's appeal before ld. CIT(A) was delayed by 659 days. Though, assessee had filed a petition seeking condonation of delay, but, ld. CIT(A) was not satisfied with the reason shown. Accordingly, he refused to condone the delay and dismissed the appeal ex-parte as assessee did not appear before him. The limited prayer of assessee before us, is for granting one more opportunity to represent its case before departmental authorities. Therefore, without entering into the dispute, whether hearing notices issued by ld. CIT(A) was at all served on assessee and whether reasons shown for condoning the delay are sufficient or not, we are of the view that in the interest of justice one more opportunity is required to be given to assessee for explaining its case. Further, considering assessee's claim that during the year assessee has only executed sub-contract work, rate of profit on which cannot be adopted at 8% in view of certain decisions of ITAT, we are inclined to remit the matter back to the file of AO, as assessee is required to establish on record by furnishing adequate evidence that during the year it has executed the works by on sub-contract basis. We, accordingly, set aside the order of ld. CIT(A) and remit the matter back to the file of AO for deciding afresh after affording reasonable opportunity of being heard to 4 ITA No. 1800/Hyd/2014 EDC O (India) P. Ltd.

assessee. We also direct assessee to cooperate with AO in finalizing the proceeding by complying to the notices to be issued by AO.

7. In the result, appeal of assessee is treated as allowed for statistical purposes.

Pronounced in the open court on 1 st April, 2015.

Sd/- Sd/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER

Hyderabad, Dated: 1 st April, 2015 kv Copy to:-

1) EDCO (India) Pvt. Ltd. C/o P. Murali & Co., CAs., 6-3-655/2/3, 1 st Floor, Somajiguda, Hyderabad - 500 082

2)DCIT, Circle - 2(2), Hyderabad

3) CIT(A)-III, Hyderabad

4) CIT-II, Hyderabad

5) The Departmental Representative, I.T.A.T., Hyderabad.