Ita/30/2010 Of The Commissioner Of Income Tax v. Shri. K.radha Krishna Naik

IN THE HIGH COURT OF KARNATAKA AT BENGALURU ON THE 20 DAY OF NOVEMBER, 201383 BEFORE THE HON BLE MR. JUSTICE RAVI MALIMATH AND THE HON'BLE MR.JUSTICE K.NATARAJAN INCOME TAX APPEAL NO.30 OF 2010 BETWEEN: 1.THE COMMISSIONER OF INCOME-TAXCENTRAL CIRCLE,C.R.BUILDING,ATTAVARA, |BENGALURU 2.THE DEPUTY COMMISSIONER OF|INCOME-TAX, C.R.BUIDLING,AITAVARA, |BENGALURUAPPELLANTS(BY SRI K.V.ARAVIND, ADVOCATE) (BY SRI K.V.ARAVIND, ADVOCATE) AND" SHRI.K.RADHA KRISHNA NAIK,|PUBLIC WORKS DEPARTMENT, CONTRACTOR,UPPINNANGADY,PUTTUR TALUK,DAKSHINA KANNADA RESPONDENT (BY SRI A.SHANKAR, SENIOR ADVOCATE |ALONGWITH SRI.M.LAVA, ADVOCATE) | THIS|INCOMETAXAPPEAL|ISFILEDUNDER|SECTION 260A OF THE INCOME TAX ACT, 1961 ARISING|OUT OF ORDER DATED 21.08.2009 PASSED IN ITA.NO.403/BANG/2009, FOR THE ASSESSMENT YEAR 2001-2002, PRAYING THAT THIS HON'BLE COURT MAY BE|PLEASEDTO;(i).FORMULATETHE|SUBSTANTIAL|QUESTIONS OF THE LAW STATED THEREIN;(ii) ALLOW|THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE.ITAT, BENGALURU IN ITA NO.403/BANG/2009 DATED|21.08.7009 AND CONFIRM THE ORDER PASSED BY THE.COMMISSIONER OF INCOME TAX (CENTRAL), BENGALURU,|IN THE INTEREST OF JUSTICE AND EQUITY. AK AK THIS INCOME TAX APPEAL COMING ON FOR)HEARING THIS DAY, RAVI MALIMATH J., DELIVERED THEFOLLOWING: JUDGMENT The assessee is in the business of civil contract. Asearcn was conducted on 16.02.7005. Tne assessment.under Section-143(3), read with Section-153A of the)Income tax Act, was completed for the asst. year 2001-02on 27.12.2006, assessing the income at Rs.35,43,430/-,.apart from the agricultural income of Rs.1,50,000/-. | 2).On perusal of the assessment records, it wasnoticed that the assessment for the asst. year 1999-2000.to 2000-01 was completed on the same day, along witn) the assessment for the asst. year 2001-2002. TheAssessing Officer nas restricted the direct cost to 7/% ofthe contract receipts for the asst. year 1999-00 and 2000-O1 in the relevant years, since the assessee was indulging|in inflation of expenses and was not maintaining relevantassessment records. However, for the asst. year 2001-02,he had allowed direct cost at 8/% of the contract receipts,though there was no variation in the facts as compared to.those three assessment years. Thereafter, the Assessing.Officer accepted the claim of the assessee and madecertain otner additions. 3.Aggrieved by the same an appeal was filed.Tne Appellate Autnority set-aside the impugned order and)directed the Assessing Officer to adopt direct cost of 7/%|of the contract receipts, instead of 2,23,18,242/- asclaimed by the assessee. Aggrieved by the same, the.assessee approached the Tribunal. By the impugned order, the appeal was allowed. Questioning the same, the present|appeal is filed by the Revenue. 4Tne appeal was admitted on 25.11.2010, toconsider the following substantial question of law :. “Whether the Tribunal was correct in nolding—that the agirect cost attributable to the asst.year 2001-02 to 2005-06 being 87.37% snoulahave been adopted and there was no error inthe order of assessment for the Commissioner|to interfere when admittedly the direct costpercentage for the asst. year 1999-2000 to2005-2006 was 77.00%, 77.00%, 87.37%,|71.23%, 70.58%, 68.92% and 58.84%, wnhicnwas not adopted and consequently, recorded aperverse finding? 5.We nave neard tne learned counsel on tne.substantial question of law. The Tribunal while consideringtne case of tne assessee was of the view tnat tne!Assessing Officer has accepted a recognized method oftreating the expenses in the absence of any clinching.evidence to the same. Therefore, it reversed the order)passed by the Commissioner of Income Tax (Appeals), and|upheld the order of the Assessing Officer. 5.We nave neard tne learned counsel on tne.substantial question of law. The Tribunal while consideringtne case of tne assessee was of the view tnat tne!Assessing Officer has accepted a recognized method oftreating the expenses in the absence of any clinching.evidence to the same. Therefore, it reversed the order)passed by the Commissioner of Income Tax (Appeals), and|upheld the order of the Assessing Officer. 6.On hearing learned counsels, we are of theconsidered view that the findings recorded by the Tribunal are just and proper. The Tribunal was justified in holdingthat an accepted recognized method of treating expenses|has been adopted by the Assessing Officer, since theaverage of the previous two years has been taken. The.Same cannot be found fault with. We find no valid reason|to differ. Under these circumstances, the substantial|question of law is answered in favour of the assessee andagainst the Revenue. Tne appeal is accordingly disposed|off. SD/- SD/- JUDGE | JUDGE JJ.