THE PRINCIPAL COMMISSIONER OF INCOME TAX KOCHI Vs. M/S. SILPA PROJECT & INFRASTRUCTURES (INDIA) PVT LTD 3RD FLOOR, NORTH AVENUE, PARAMARA ROAD, KOCHI 682 018

JUDGEMENT

(1.) Aggrieved by the order passed by the Income Tax Appellate Tribunal, Cochin Bench in I.T.A. No.224/2015 concerning the Assessment Year 2010-11, the Revenue has filed this appeal.

(2.) The assessee is a contractor undertaking construction works. Assessee filed its return for the assessment year 2010-11 returning an income of Rs 4,06,96,700/- and claimed refund of Rs. 32,92,907/- on account of excess tax paid through TDS. The return was selected for scrutiny under Section 143(3) and notice under Section 143(2) was issued to the assessee. After completing the procedural formalities, the Assessing Officer passed Annexure-A order whereby Rs. 1,75,00,000/- was added to the total income returned and the assessment was completed. The assessee filed appeal before the Commissioner of Income Tax (Appeals) who by Annexure-B order found it appropriate to consider gross profit, instead of net profit, as the basis for levy of tax. Thereafter, the first appellate authority made reference to the gross turnover, gross profit and percentage of gross profit returned by the assessee for the Assessment Years 2009-10, 2010-11 and 2011-12 and found that average gross profit returned was 16.94%. Then, he took note of the fact that for the assessment year in question, the assessee had returned gross profit at 16.5% only. On that basis, it was ordered that 0.44%, being the difference in the average gross profit and the returned gross profit, should be applied and ordered that the addition to total income be restricted to Rs. 39,83,347/-.

(3.) The assessee carried the matter in appeal to the Tribunal. The Tribunal made extensive reference to the orders of the statutory authorities and thereafter, directed that Rs. 31,07,29,889/- be excluded from the total turnover and that the additional 0.44% be levied on Rs. 59,45,76,475/-. The reasoning of the Tribunal is contained in paragraph 10 of its order which reads as under: