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M/s. Divyasree Realtors Versus Deputy Commissioner of Income-tax, Central Circle -2 (2) , Bangalore

2016 (2) TMI 124 - ITAT BANGALORE

Applicability of provisions of section 44AD - nature of work - income from business or from other sources - Held that:- Since Shri. P. Shyamaraju was also a partner of the assessee firm, cannot find any fault in him exercising control over the accounts of the assessee as well. Copy of the partnership deed placed also show that Shri. P. Shyama Raju was a partner of the assessee fim. In any case we find that the statement of Shri. V. Samba Moorthy was neither put to the assessee nor assessee was g .....

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ssessee : Shri. V. Narendra Sharma, Advocate For The Revenue : Shri Sunil Kumar Agarwala, JCIT ORDER PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : In this appeal filed by assessee it has taken altogether six grounds which are reproduced hereunder : 1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The order of assessment passed uls.143[3] rws 153C of the Act is bad .....

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ant has reasons to believe that the same has not been recorded and that the mandatory conditions to assume jurisdiction is to record reasons and in the absence of the same, the assessment is bad in law and liable to be cancelled. 4. Without prejudice to the above, the order of assessment passed u/s.153C of the Act is barred by limitation in as much as, the assessment ought to have been completed on or before 31/12/2008 in terms of the provisions of section 153B of the Act and the assessments hav .....

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in law under the facts and circumstances of the appellant's case. 6. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered 02. Grounds 1 and 6 are general in nature and do not need any adjudication. 03. Learned Counsel for the Assessee at the outset submitted that for the impugned assessment year, assessment was done u/s.143(3) of the Incometax Act, 1961 ( the Act in short) and t .....

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2(2), Bangalore, whereas the notification dated.24.06.2008 whereby assessee s case was transferred from ITO, Ward -1(1), Bangalore to ACIT Central Circle -2(2), Bangalore, placed at paper book page 61, clearly mentioned that it was effective from 01.07.2008. As per the Ld. AR, notice issued by ACIT, Central Circle -2(2) prior to the said notification coming into effect was invalid. Ld. AR also referred to the assessment order which according to him, clearly referred to the notice dt.26.06.2008. .....

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was pointed out to the AO that the notice dt.26.06.2008 was invalid for want of jurisdiction. According to the Ld. AR assessee had earlier filed a return of income for the impugned assessment year on 22.02.2008 and along with the above mentioned letter filed a copy of the said return was attached. The proceedings initiated based on an invalid notice u/s.142(1) of the Act, according to him, was invalid. Further according to him, this being a purely legal question, the Tribunal could consider it .....

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ross contract receipts at ₹ 39,80,000/- relying on Section 44AD of the Act. Ld. AR submitted that these receipts were from M/s. Shyamaraju & Co., and TDS were duly deducted by M/s. Shyamaraju & Co. India Ltd. As per the Ld. AR, AO had placed reliance on a statement of Shri. P. Shyamaraju, General Manager (Finance) of M/s. Shyamaraju & Co. India P. Ltd, for coming to a conclusion that the transactions of contract work was only a make-believe one. As per the Ld. AR, assessee had .....

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ssee firm. However according to him, this could not have been cited as a reason for dis-believing the work done by the assessee for M/s. Shyamaraju & Co. India P. Ltd. Without any rhyme and reason, as per the Ld. AR its head of income was shifted. 06. Per contra, Ld. DR strongly assailing the admission of the ground relating to validity of notice u/s.142(1) of the Act, submitted that assessee had cooperated with the AO in the course of assessment proceedings. According to him, it was an admi .....

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the director of M/s. Shyamaraju & Co. India P. Ltd, the transactions between them could not be believed. Assessee could not produce any evidence for having done any work or having incurred any expenditure. Thus it could not be say that its income should be assessed under the head income from business . Further as per the Ld. DR assessee could have file an appeal before the CIT (A) only under the circumstances mentioned u/s.246(1)(a) of the Act. Its appeal was not against an appealable order .....

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. Grounds 2 to 4 have not been pressed by the Ld. AR and therefore are dismissed. 09. Vis-a-vis the additional ground orally taken by the Ld. AR, what I find is that a legal ground can be raised before the Tribunal though it is not appearing in the appeal memo, as held by the Hon ble Karnataka High Court in the case of Sankeshwar Printers P. Ltd (supra). Case of the assessee is that notice u/s.142(1) of the Act, placed by it at paper book page 6 was issued by the ACIT, Central Circle -2(2), Bang .....

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very same officer. Just because assessment order referred to an earlier notice would not in my opinion, be a reason to say that assessment was invalid. Hence, I dismiss this ground taken by the assessee. 10. Coming to the merits of the issue, what I find is that assessee had filed its return u/s.44AD of the Act, which is reproduced hereunder : "44AD Special provision for computing profits and gains of business of civil construction, etc.- (1) Notwithstanding anything to the contrary contai .....

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nd gains of business or profession": Provided that nothing contained in this sub-section shall apply in case the aforesaid gross receipts paid or payable exceed an amount of forty lakh rupees. (2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed : Provided that where the assessee is a firm, the salary and interest pai .....

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shall not apply in so far as they relate to the business referred to in sub-section (1) and in computing the monetary limits under those sections, the gross receipts or, as the case may be, the income from the said business shall be excluded. (5) Nothing contained in the foregoing provisions of this section shall apply, where the assessee claims and produces evidence to prove that the profits and gains from the aforesaid business during the previous year relevant to the assessment year commenci .....

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the profits and gains specified in sub-section (1), if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB. Explanation : For the purposes of this section, the expression "civil construction" includes- (a) the construction or repair of any building, bridge, dam or other structure or of any canal or road; (b) the execution of an .....

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ork and the work tender to the assessee was for earth-work excavation. Assessee also produced a copy of the bill raised by M/s. Shyamaraju & Co. India P. Ltd, which was dt.03.07.2006, giving details of the work done by it at paper book page.51. AO had rejected this evidence for a reason that Shri. V. Shambamoorthy, GM of M/s. Shyamaraju & Co. India P. Ltd,, when examined had stated that the control over old bank accounts of the assessee was also with him. Relevant replies given by Shri. .....

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