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TMI Blog2022 (9) TMI 1318X X X X Extracts X X X X X X X X Extracts X X X X ..... one at Kompally and also maintaining the building "Alcazar Plaza and Towers". He filed his return of income on 31.10.2017 declaring total income of Rs.33,76,600/-. The case was selected for scrutiny and statutory notices u/s 143(2)/142(1) were served on the assessee in response to which, the AR of the assessee appeared from time to time and filed the requisite details. 2.1 During the course of assessment proceedings, the Assessing Officer noted that the assessee has declared a net profit of Rs.27,88,095/- which is 9.29% of the total sales of Rs.3,00,24,574/-. The total expenditure debited to the P&L A/c is Rs.41,56,54,455/-. The Assessing Officer asked the assessee to substantiate the claim of expenditure with documentary evidence such as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) erred in dismissing the appeal instead of allowing the appeal. 2. As per the ratio laid down by the Honourable Supreme Court of India in the case of National Thermal Power Co. Ltd v. CIT (1998) 229 ITR 383 (SC), the Hon'ble ITAT has jurisdiction to examine the question of law which has been taken before the ITAT for the first time though not taken before the first appellate authority. 3. a) The Ld. CIT(A) erred in confirming the disallowance of expenditure of 3. Rs.85,56,088/- being 10% total expenditure of Rs.8,55,60,883/- b) The Ld. CIT(A) ought to have accepted the net profit admitted at 9.29% of the total sales. c)The Ld. CIT(A) ought to have appreciated that the net profit rate admitted in the return of income is reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and which is distinguishable on facts of the appellant's case. 5. The Ld. CIT(A) ought to have appreciated the that the Assessing Officer erred in considering the total revenue of Rs.3,00,24,574/- which includes maintenance, rental and other income as total sales instead of actual sales of Rs.1,95,00,000/- 6. The Ld. CIT(A) ought to have appreciated that the Assessing Officer erred in making the addition of Rs.1,00,764/- under section 40(a)(ia) on account of non-deduction of TDS on some payments without appreciating the facts of the case. 7. The Ld. CIT(A) ought to have appreciated the fact that the assessee has already disallowed the expenditure on account of non-deduction of TDS in the computation of income. 8. Without prejudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therefore, the same should be deleted. 8. The learned DR, on the other hand, strongly relied on the order of the learned CIT (A). Referring to the assessment order, he submitted that the assessee in the instant case failed to produce the bills and vouchers before the Assessing Officer for which the Assessing Officer disallowed 10% of the expenditure for which he has asked for the bills and vouchers. He submitted that the Assessing Officer is very reasonable in asking the bills and vouchers in respect of only three heads namely construction cost, maintenance expenditure and administrative overheads and has not asked for bills and vouchers in respect of other items. He submitted that since the order of the learned CIT (A) sustaining the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 10% of expenditure of Rs.8,55,60,883/- on the ground that the assessee failed to discharge the onus cast on him by proving the genuineness of the expenditure debited. The Assessing Officer similarly made disallowance of Rs.1,00,764/- on the ground that the assessee failed to deduct TDS in respect of professional services and contractual charges totaling to Rs.3,35,880/- and therefore, as per the provisions of section 40(a)(ia) of the Act, 30% of the expenditure has to be disallowed. We find the learned CIT (A) sustained both the addition made by the Assessing Officer. It is the submission of the learned Counsel for the assessee that the disallowance of Rs.85,56,088/- amounts to profit rate of 37.8% which is not possible in this line of bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared profit rate of 9.29%, the disallowance of Rs.10,00,000/- on lumpsum basis in the instant case, in our opinion, meet the ends of justice. We hold and direct accordingly. The grounds raised by the assessee on the first issue of disallowance of Rs.85,56,088/- is partly allowed. 11. So far as the 2nd issue raised by the assessee is concerned, i.e, disallowance of Rs.1,00,764/- being 30% of the expenditure of Rs.3,34,880/- (professional services Rs.2,50,000 + Contract charges of Rs.85,088/-), we find from perusal of the page No.46 of the Paper Book that the assessee in its computation of income has suo moto disallowed an amount of Rs.1,32,828/- which includes the amount of Rs.1,00,764/- disallowed by the Assessing Officer. We, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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