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TMI Blog2017 (11) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/Hyd/2015, 199/Hyd/2015, 175/Hyd/2015, 205/Hyd/2015, 139/Hyd/2015 And 196/Hyd/2015 - - - Dated:- 10-11-2017 - Smt. P. Madhavi Devi, Judicial Member And Shri S.Rifaur Rahman, Accountant Member For The Assessee : Smt. Pallavi Agarwal, DR For The Revenue : Shri P. Murali Mohan Rao ORDER Per Bench. ITA No.202/Hyd/2015 is the appeal filed by M/s. Sree Nagendra Constructions for the A.Y 2011-12, while ITA No.167/Hyd/2015 is the appeal filed by the Revenue against the relief granted to M/s. Sree Nagendra Constructions for the A.Y 2009-10. All the other appeals are cross appeals filed by the respective assessees as well as the Revenue for the A.Y 2011-12, against the orders of the CIT(A), Hyderabad, dated 28.11.2014 respectively. ITA No.167/Hyd/2015-A.Y 2009-10 2. This is Revenue s appeal for the A.Y 2009-10. 3. Brief facts of the case are that there was search seizure operation u/s 132 of the I.T. Act in the case of M/s. Madhucon Projects Ltd and its group on 4.2.2011. The assessee, being one of the sub-contractors of Madhucon Group, was also searched. Pursuant there to, a notice u/s 153A of the Act was issued to the assessee on 13.01.2012. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessments in the said case have also been done u/s 153A of the Act, pursuant to the search conducted in the group cases of M/s Madhucon Projects Ltd on the same date i.e. 4.2.2011. In the said case also, the Revenue had sought remand of the matters to the file of the CIT (A) to decide along with the cases of Madhucon Projects Ltd. After considering the arguments of both the parties at length, this Tribunal has held that the assessee being a sub-contractor and since its books of account were not reliable, the income can be estimated at 8% of the gross receipts where the assessee is a main contractor and at 5% if it is a sub-contractor. Further, it has also been observed that where the income has been estimated, then there cannot be any disallowance of expenditure as held by the jurisdictional High Court in the case of M/s Indwell Constructions Ltd (232 ITR 776). For the purpose of ready reference, the relevant paragraphs are reproduced hereunder: 2. Facts of the case common in all these cases are that there was a search and seizure operation under S.132 of the Act in the case of Madhucon Projects Limited and group of cases on 4.2.2011. After the search in the case Madhucon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimation of income at 8% of the gross receipts, granted relief by deleting the additions made on protective basis. 5. Learned counsel for the assessees submitted that the assessees were maintaining regular books of account, but the Assessing Officer rejected the same and estimated the income of the assessees at 8% of the gross receipts. He submitted that this estimation of income in an assessment completed under S.143(3) read with S.153A is not sustainable. Even otherwise, he submitted that the issue of estimation of income in the case of M/s MA Highways, one of the assessees herein, has come up before this Tribunal in ITA No.54/Hyd.2013 and this Tribunal vide its order dated 30.7.2013 has directed estimation of income at 5% of the gross receipts in the case of sub 6 12 contracts and therefore, since all the assessees herein belong to the same group and factual background in these cases also being same, income of these assessees herein should also be estimated at 5%. 6. As regards the estimation of income, the Learned Departmental Representative submitted that there is no fixed percentage of gross receipts, which can be adopted to estimate the income of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue's appeals against the deletion of the additions made on protective basis in the cases of these assessees, we find that the additions have been made consequent to detecting that the assessees received funds from M/s. MPL Ltd. and rerouted the same back to M/s. MPL itself. Assessing Officer therefore, presumed that the assessees have not expended the said receipts towards their business activity. But as rightly held by CIT(A), all withdrawals cannot be presumed to be the business expenditure of the assessee, particularly, when, the same is not debited to the Profit Loss Account. The CIT(A), after examining the issue has held at para 6.5.3 as under- 6.5.3. Knowing that the amount withdrawn from bank account was appropriated by the main contractor and that it was not used by the appellant is one aspect. However, to say that this item needs to be disallowed in the hands of the appellant, we have to first establish that the specific withdrawals were accounted in books as expenditure incurred during the year and further, the expenditure was not only revenue in nature but was also debited to the P L account to be disallowed as expenditure. In the absence of books and voucher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce income is determined by resorting to estimation. Respectfully following the same, we do not see any reason to interfere with the orders of the CIT(A). 7. The learned DR had placed reliance upon the judgment of the Hon'ble Gujarat High Court in the case of CIT vs. Surendra Gulabchand Modi for keeping the matter pending till the appeals of the Madhucon Projects Ltd are disposed of by the CIT (A). We find that the said decision was for the A.Ys 1956-57 and 1957-58 and in the said cases, the issue was pending before the Hon'ble Supreme Court and not before the CIT (A). The judgment of the Hon'ble Supreme Court will be binding on all the Courts in India including the Tribunal whereas the order of the ITAT will be binding on the CIT (A). Therefore, the said decision is not applicable to the facts of the case before us. In the case of MAA Highways (cited Supra), we have already held that where the income is estimated after rejection of books of account, no further disallowance of business expenditure can be made. In the case before us also, the AO has made the estimation on the ground that the assessee had not incurred any expenditure and the amounts were never used f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the reasons given in the above paragraphs and subject to the condition that the assessed income shall not be less than the returned income of the assessee, the Revenue s appeal is dismissed and the assessee s appeal is treated as allowed for statistical purposes. ITA Nos. 172 199/Hyd/2015 A.Y 2011-12 (Varalaxmi Constructions) 13. Both are cross appeals and the issues involved in these appeals for the relevant A.Y are similar to the issues in the case of Sree Nagendra Constructions in ITA No.167/Hyd/2015-A.Y 2009-10 and ITA No.202/Hyd/2015 for A.Y 2011-12 as above and for the reasons given in the above paragraphs and subject to the condition that the assessed income shall not be less than the returned income of the assessee, the Revenue s appeal is dismissed and the assessee s appeal is treated as allowed for statistical purposes. ITA Nos.175 205/Hyd/2015 A.Y 2011-12 (Ragini Constructions) 14. Both are cross appeals and the issues involved in these appeals for the relevant A.Y are similar to the issues in the case of Sree Nagendra Constructions in ITA No.167/Hyd/2015-A.Y 2009-10 and ITA No.202/Hyd/2015 for A.Y 2011-12 as above and for the reasons given in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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