TMI Blog2022 (9) TMI 1318X X X X Extracts X X X X X X X X Extracts X X X X ..... partly allowed. Disallowance being 30% of the expenditure (professional services + Contract charges) - As the assessee in its computation of income has suo moto disallowed an amount which includes the amount disallowed by the Assessing Officer. We, therefore, deem it proper to restore the issue to the file of the Assessing Officer with a direction to verify the computation statement and after being satisfied, delete the addition. The 2nd issue raised by the assessee in the grounds of appeal is accordingly allowed for statistical purposes. - ITA No. 270/Hyd/2022 - - - Dated:- 26-9-2022 - Shri R.K. Panda, Accountant Member And Shri Laliet Kumar, Judicial Member For the Assessee : Shri P. Murali Mohan Rao,CA For the Revenue : Shri Kumar Aditya, DR ORDER PER R.K. PANDA, A.M This appeal filed by the assessee is directed against the order dated 17.6.2022 of the learned CIT (A)-NFAC, relating to A.Y.2017-18. 2. Facts of the case, in brief, are that the assessee is engaged in the business of construction under the name and style of AZ Developer. It has undertaken two contract works, one at Moinabad and the second one at Kompally and also maintaining th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Tribunal by raising the following grounds of appeal: 1. The learned CIT (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 reasonable and therefore, ought to have deleted the addition made of Rs.85,56,088/- . d) The Ld. CIT(A) ought to have appreciated that if the amount of| Rs.85,56,088/- is added to the net profit admitted it results in a net profit A: rate of 37.78% which is abnormal and which is not possible to be achieved in the line of trade of the appellant. 4. a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee strongly challenged the order of the learned CIT (A) in confirming the various additions made by the Assessing Officer. So far as the disallowance of Rs.1,00,764/- u/s 40(a)(ia) of the Act is concerned, the learned Counsel for the assessee submitted that the assessee has already disallowed the expenditure on account of non-deduction of TDS in the computation of income, therefore, the learned CIT (A) not justified in confirming the disallowance made by the Assessing Officer which amounts to double disallowance. 7.1 So far as the order of the learned CIT (A) in sustaining the addition of Rs.85,56,088/- by the Assessing Officer is concerned, he submitted that the assessee has already declared the net profit of 9.2% and disallowance of Rs.85,56,088/- will result to a net profit rate of 37.8% which is abnormal and is not possible in this line of business undertaken by the assessee. He submitted that the disallowance made by the Assessing Officer and sustained by the learned CIT (A) is very much on the higher side and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional 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 business. It is his submission that the assessee has already declared 9.2% profit on the total sales and therefore, the addition of Rs.85,56,088/- is on the higher side. Similarly, the disallowance of Rs.1,00,764/- amounts to double addition since the assessee has already made suo moto disallowance in the computation of total income. 10.1 We find some force in the above arguments of the learned Counsel for the assessee. Admittedly, the assessee has declared 9.29% profit on the total sales and addition of Rs.85,56,088/- gives the profit rate of 37.8% which is not possible in this line of business. At the same time, by not providing the bills and vouchers before the Assessing Officer, the assessee has failed to prove the genuineness of the expenses de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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