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TMI Blog2015 (1) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... f actual amount received by assessee towards sub-contract work entrusted by M/s Vishwa Infrastructures and Services Pvt. Ltd. – Decided in favour of assessee. Estimation of profits @ 8.5 % - Held that:- Assessee though in the ground has mentioned that net profit rate of 8.5% has been estimated, however, on perusal of the order of first appellate authority, it is quite evident that he has directed to estimate the profit at 8% - not only during the survey operation but also during the assessment proceeding, assessee itself made a request to estimate the profit at 8.5% on the gross contract receipts - AO while completing the assessment has estimated profit at 8.5% by accepting assessee's request but the CIT(A) has reduced it to 8% - the order of the CIT(A) is upheld – Decided against assessee. - ITA No. 1458/Hyd/2013 - - - Dated:- 15-10-2014 - Shri P. M. Jagtap And Shri Saktijit Dey,JJ. For the Petitioner : Shri P. Raviseshagiri Rao For the Respondent : Shri B. Ramakrishna ORDER Per Saktijit Dey, J. M. This appeal of the assessee is directed against the order dated 10/07/2013 of CIT(A)-VI, Hyderabad relating to AY 2010-11. 2. Assessee has raised four gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ledger account in the books of M/s. Vishwa Infrastructures and Services Pvt. Ltd., which cannot be accepted at the face value. (ii) Secondly, it is not known as to why M/s. Vishwa Infrastructures and Services Pvt. Ltd. will create a provision entry of ₹ 3,27,26,881/ - ₹ 3,38,52,748/- in its books of account and at the same time also deducted TDS @ 2% on the said entries. The reason for making this provision entry and later reversing it in its books of account has not been substantiated. (iii)The assessee has not produced its books of account, so that the claim made by the assessee can be verified. (iv) Further, a search operation u] s 132 of the LT.Act has already been conducted in M/s. Vishwa group of companies and its related persons on 07.08.2012 by the Investigation Wing, Hyderabad. The authenticity of the entries made by M/ s. Vishwa Infrastructures and Services Pvt. Ltd. in its books of account regarding reversal of the said provision is also not free from doubt. (v) The assessee has shown closing Work-in-Progress of Rs. l ,25,00,000/- in the Profit Loss A/c. It was claimed that the value is worked out on the basis of attributable portion of expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subsequent year, the same may be dealt accordingly. Further, the appellant is eligible to be given credit for the TDS made on the said contract receipts of ₹ 8,16,92,576/-, having considered the said receipts for tax purpose, for the year under reference. The ground of appeal is treated as dismissed. 5. The learned AR reiterating its stand taken before the departmental authorities submitted that assessee is executing the work as sub-contractor of M/s Vishwa Infrastructures and Services Pvt. Ltd. It was submitted that during the relevant FY, assessee has actually received an amount of ₹ 12,19,81,102 towards contract receipts from M/s Vishwa Infrastructures and Services Pvt. Ltd. It was submitted that differential amount of ₹ 8,16,92,576 arising out of the amount shown in 26AS statement is due to the fact that the main contractor M/s Vishwa Infrastructures and Services Pvt. Ltd. has made entries in respect of provision made on 31/03/10 amounting to ₹ 3,27,26,881 and ₹ 3,38,52,748 relating to the work of old city sewerage Zone No.2 and provision for an amount of ₹ 1,51,12,951 in respect of work relating to old city sewerage Zone No. 1. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is total lack of information either by assessee or by M/s Vishwa Infrastructures and Services Pvt. Ltd. with regard to actual contract receipts, AO has rightly adopted the figure as mentioned in Form 26AS statement. 7. We have considered the submissions of the parties and perused the orders of the revenue authorities as well as other materials on record. There cannot be dispute with the fact that the assessee has not produced its books of account, bills vouchers, etc. either before AO or before CIT(A). It is also a fact on record that there is a difference of ₹ 8,16,92,576 between the contract receipts shown by assessee in the P L A/c and as mentioned in 26AS statement. Assessee has tried to reconcile the difference by explaining that the amount of ₹ 8,16,92,576 represents the provision entry made by the main contractor M/s Vishwa Infrastructures and Services Pvt. Ltd.. A reference to the assessee's ledger account claimed to be in the books of M/s Vishwa Infrastructures and Services Pvt. Ltd., copies of which are placed at pages 44 45 of the assessee's paper book shows that the differencial amount of ₹ 8,16,92,576 is comprised of the following i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at assessee though in the ground has mentioned that net profit rate of 8.5% has been estimated, however, on perusal of the order of first appellate authority, it is quite evident that he has directed to estimate the profit at 8%. Be that as it may, learned AR contended that application of 8% net profit rate on sub- contract work is excessive. Furhter, relying on the decision of ITAT in case of C. Easwar Reddy he contended that net profit rate of 5% should be adopted. However, we are not inclined to accept such contention of assessee. As can be seen, not only during the survey operation but also during the assessment proceeding, assessee itself made a request to estimate the profit at 8.5% on the gross contract receipts. Though, AO while completing the assessment has estimated profit at 8.5% by accepting assessee's request but the CIT(A) has reduced the same to 8%. In these circumstances, assessee's claim that profit should be estimated at 5% cannot be accepted. Accordingly, we uphold the estimation of net profit at 8% as directed by learned CIT(A). 9. In the result, assessee's appeal is partly allowed for statistical purposes. Pronounced in the open court on 15 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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