M/S. Sai Krishna Construction,, ... vs Department Of Income Tax
- CitationI.T.A. No. 1257/HYD/2014
Ratio decidendi
The rule this decision rests on
The Assessing Officer, having accepted the books of account as a whole, cannot add to the assessee's income the amount of a sale receipt that is recorded in those books and that the assessee shows was already included in the gross receipts, where the assessee has reconciled the difference with sale deeds, receipt details and advances as per the balance sheet; the unreconciled residual may be taxed only to the extent of the variation the reconciliation leaves. Where a revenue authority rejects an explanation put forward by the assessee without bringing on record any evidence to contradict it, that rejection does not displace the assessee's reconciled explanation, and the appellate authority is entitled to uphold the explanation in the absence of counter-evidence from the Revenue.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
The Asst. Commissioner M/s. Sai Krishna Construction, of Income Tax, Vs SBH Colony, Srinagar Colony, Circle-8(1), HYDERABAD HYDERABAD [PAN: AAOFS0684A]
(Appellant) (Respondent)
For Revenue : Shri Rajat Mitra, DR For Assessee : Shri V. Raghavendra Rao, AR
Date of Hearing : 26-03-2015 Date of Pronouncement : 31-03-2015
ORDER
PER B. RAMAKOTAIAH, A.M. :
This is Revenue's appeal filed against the order of the Commissioner of Income Tax(Appeals)-Vijayawada, dated 20-03-2014.
2. Briefly stated, assessee-firm is engaged in the business of construction and sale of flats. Survey operations u/s.133A of the Income Tax Act (Act) were conducted on 11-08-2009. Assessee filed return of income on 25-09-2009 declaring income of Rs.81,49,392/-, admitting 10% income, as disclosed during the course of survey, on I.T.A. No. 1257/Hyd/14 :- 2 -: M/s. Sai Krishna Construction
gross receipts of Rs.8,14,93,918/-. In the course of assessment proceedings, Assessing Officer (AO) noticed that sale proceeds in respect of sale of one flat amounting to Rs.44,20,000/- in the name of Smt.Renu Shorey which was appearing in the Books of Accounts was not taken into account in the gross-receipts worked out during the survey. When this was pointed out, Assessee has stated that this amount was included in the receipts shown at Rs.8,14,93,918/-, but AO did not accept assessee's explanation. Instead of assessing the profit at 10% on the said amount, AO added the entire amount of sale consideration of Rs.44,20,000/- as income. AO also made addition of Rs.3,41,120/- as miscellaneous receipts not disclosed, on which even though assessee preferred an appeal before ld.CIT(A), did not press the issue.
3. Ld.CIT(A) considering assessee's explanation accepted that these amounts were in fact part of the two advances of Rs.43,50,000/- shown in the Books of Accounts under the head 'Advances received from Customers' which were included in the sale, therefore, there is no suppression of turnover. Ld.CIT(A) on examination of the facts, confirmed an addition of Rs.70,000/- and deleted the amount of Rs.43,50,000/- with the following order:
"During the course of appeal proceedings, the appellant's A.R has submitted that the sale proceeds of Rs.44,22,000/- were not taken into account while working out the gross receipt during the course of survey, however, there is only minor variation of Rs.70,000/- in the income admitted due to the fact that two advances of Rs.19,50,000/- and Rs.24,00,000/-, totaling in all to Rs.43,50,000/-,shown in the books of account under the head "advances received from the customers' were included as sales in the gross receipts worked out at the time of survey. He filed a reconciliation statement to this effect along with copies of sale deeds, details of sales receipts, Advances as per Balance sheet etc. On a perusal of the assessment order, it is noticed that the appellant had made the same submissions before the AO, however, the AO did not discuss anything about the advances shown as sale I.T.A. No. 1257/Hyd/14 :- 3 -: M/s. Sai Krishna Construction
proceeds, but only added the sale proceeds of Rs.44,20,000/- as suppressed sales, which is not in order. When the suppressed sales were considered as income, the AO ought to have considered the advances shown as gross receipts and reduce the same from gross receipts and made addition to the extent of any variation. If he opposes the appellant's explanation on advances, he should have brought on record some evidence to this effect. Moreover, the AO did not find any fault with the books of account which includes P&L Account, Balance Sheet etc., produced by the appellant and accepted the same. The appellant has reconciled the difference and submitted necessary evidence in the form of sale deeds, details of gross receipts, advances etc., in support of his claim. In the circumstances, the AO is directed to consider the advances shown as gross receipts and restrict the addition to Rs.70,000/- i.e, to the extent of variation between the suppressed sale value and the amount of advances shown as receipts (Rs.44,20,000 - Rs.43,50,000)".
4. On considering the rival contentions and perusing the reconciliation placed on record, we are of the opinion that there is no need to disturb the order of CIT(A). In fact, even though assessee has given same explanation in the course of assessment proceedings, AO did not accept the same and brought the entire amount to tax. Ld. CIT(A) order is correct on the facts of the case and Revenue has not brought anything on record to counter such finding.
5. In view of this, we uphold the order of CIT(A) and dismiss the Revenue's appeal.
Order pronounced in open Court on 31st March, 2015.
Sd/- Sd/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated 31st March, 2015
TNMM I.T.A. No. 1257/Hyd/14 :- 4 -: M/s. Sai Krishna Construction
Copy to :
1. The Asst. Commissioner of Income Tax, Circle-8(1), 8th Floor, C-Block, I.T.Towers, Hyderabad.
2. M/s. Sai Krishna Construction, 8-3-961/A, Beside SBI, Sripada Towers, SBH Colony, Srinagar Colony, Hyderabad.
3. CIT(Appeals)-Vijayawada
4. CIT-II, Hyderabad
5. D.R. ITAT, Hyderabad
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