A.Periasamy Nadar, Tirunelveli V. ITO, Tirunelveli

CO 8/CHNY/2017

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2908 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 27-04-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 23-01-2017
• Court: TRIBUNAL
• Keywords: Business income; Revision of order; Opportunity of being heard
• Section: 44AD; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . ' # , $ #% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER . / ITA NOS. 3295 & 3296/MDS/2016 / ASSESSMENT YEARS : 2010-11 & 2011-12 AND C.O. NOS. 6 & 8/MDS/2017 THE INCOME-TAX OFFICER, WARD-3, TIRUNELVELI. ( /APPELLANT) V. A. PERIASAMY NADAR , NO.9/101, RAJA VEETHI, KOODANKULAM, TIRUNELVELI 627657. PAN BEOPP1175A ( RESPONDENT/CROSS OBJECTOR) APPELLANT BY : SHRI GURUBASHYAM, JCIT CROSS OBJECTOR BY : NONE ! ' #$% / DATE OF HEARING : 27.04.2017 &' ' #$% / DATE OF PRONOUNCEMENT : 11.05.2017 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS BY THE REVENUE AND THE CROSS OBJECTIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ITA 3295 & 3296/15 & CO 6 & 8/17 2 ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DA TED 15.09.2016. 2. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE AND THEREFORE, WE PROCEED TO DECIDE TH E CASE ON MERITS AFTER HEARING THE LD. DEPARTMENTAL REPRES ENTATIVE. 3. THE COMMON GROUND RAISED BY THE REVENUE IN ALL THESE APPEALS IS WITH REGARD TO THE DIRECTION OF TH E CIT(APPEALS) TO REDUCE THE INCOME AT 5% AS AGAINST 8% OF THE GROSS CONTRACT RECEIPTS, AS DIRECTED BY THE CIT U/S.263 OF THE ACT. THE CROSS OBJECTIONS FILED BY THE ASSESSE E ARE IN SUPPORT OF THE ORDER OF THE CIT(APPEALS). 3. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIA L ON RECORD. ADMITTEDLY, THIS ISSUE WAS CONSIDERED B Y THE CIT U/S.263 OF THE ACT FOR THESE TWO ASSESSMENT YEARS A ND VIDE ORDER DATED 31.3.2015, IT WAS OBSERVED AS UNDER : 3. IN SPITE OF REASONABLE OPPORTUNITIES GIVEN TO THE ASSESSEE ON 4.3.2015, 17.3.2015 AND 25.3.2015 TO EXPLAIN HIS CASE WITH REGARD TO THE SHOW CAUSE NOTICE ISSUED TO HIM U/S.263, THE ASSESSEE HAS FAIL ED TO EXPLAIN AS TO WHY HIS INCOME SHOULD NOT BE ASSESSED AT 8% AND NOT 5% OF THE GROSS RECEIPTS EARNED BY HIM FOR THE RELEVANT PERIOD AS MENTIONED IN THE CAUSE NOTICE ISSUED TO HIM. ITA 3295 & 3296/15 & CO 6 & 8/17 3 4. I AM THEREFORE OF THE CONSIDERED VIEW THAT THE ASSESSMENT MADE WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREFORE THE ASSESSMEN T IN THIS CASE IS SET ASIDE AND ITS REQUIRED TO BE DO NE AFRESH BY THE ASSESSING OFFICE. 5. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER IS DIRECTED TO ASSESS THE INCOME OF THE ASSESSEE AT 8% AND NOT 5% OF THE GROSS RECEIPTS EARNED BY HIM KEEPING IN VIEW OF THE PROVISIONS OF SEC.44AD OF THE IT ACT MORE SO SINCE THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT AND WITH REGARDS TO THE GROSS RECEIPTS EARNED BY HIM DURING THE RELEVANT PERIOD. 6. THE ASSESSING OFFICER IS ALSO DIRECTED TO VERIF Y ANY OTHER ASPECT REGARDING THIS ISSUE WHICH WOULD OTHERWISE BE REQUIRED TO BE INVESTIGATED AND ENQUIRED INTO WHILE COMPLETING THE ASSESSMENT IN THIS ASSESSMENT YEAR. 7. IN THE RESULT, THE ASSESSMENT ORDER PASSED U/S.143(3) OF THE INCOME TAX ACT DATED 11.4.2013 IS CANCELLED AND THE AO IS DIRECTED TO REDO THE ASSESSMENT AFRESH AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY TO BE HEARD AND AS PER THE DIRECTIONS GIVEN ABOVE. 4. THE AO HAS PASSED THE ORDER IN CONSEQUENT UPON THE ORDER PASSED BY THE CIT U/S.263 OF THE ACT FOR THESE TWO ASSESSMENT YEARS, ASSESSED THE INCOME AT 8% OF GROS S RECEIPTS, AGAINST WHICH THE ASSESSEE HAS NOT FILED ANY APPEAL BEFORE THE HIGHER FORUM AND, THEREFORE, THOS E ORDERS ITA 3295 & 3296/15 & CO 6 & 8/17 4 REACHED FINALITY. THE AO PASSED THE CONSEQUENTIAL O RDER IN THESE TWO ASST. YEARS ESTIMATING THE INCOME IN CON FORMITY WITH THE ORDER PASSED CIT U/S 263 OF THE ACT. THE ASSESSEE CARRIED THE APPEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS) HAS GIVEN A FINDING IN PARA 3.2, WHICH READS AS UNDER: 3.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE REPR ESENTATIVE. ADMITTEDLY, THE ORIGINAL ASSESSMENTS IN THIS CASE W ERE COMPLETED BY ESTIMATING 5% OF THE CONTRACT RECEIPTS AS PROFIT S FROM THE BUSINESS ON THE GROUND THAT THE APPELLANT HAD NOT M AINTAINED REGULAR BOOKS OF ACCOUNTS AND PENALTY U/S 271A HAS ALSO BEEN LEVIED FOR BOTH YEARS. THIS MEANS THAT THE APPELLA NT DID NOT MAINTAIN THE REGULAR BOOKS OF ACCOUNTS AND, THEREFO RE, THE INCOME IS TO BE ESTIMATED. WHEN THE ASSESSING OFFICER COM PLETED THE SCRUTINY ASSESSMENTS BY ESTIMATING 5% OF THE GROSS RECEIPTS AS BUSINESS INCOME, THE CIT SET ASIDE THE ASSESSMENTS ON THE GROUND THAT THE INCOME WAS TO BE ESTIMATED AT 8% OF THE CONTRACT RECEIPTS BY RELYING ON SECTION 44AD. THE CIT-2, MA DURAI DID NOT ENHANCE THE ASSESSMENTS BUT ONLY SET ASIDE THE ASSE SSMENTS TO THE ASSESSING OFFICER AS PER PARA 7 OF HIS ORDERS. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED NOTICES TO THE APPELLA NT AND COMPLETED THE ASSESSMENTS BY ESTIMATING THE INCOME AT 8% OF THE CONTRACT RECEIPTS ON THE GROUND THAT SECTION 44 AD IS APPLICABLE TO THE APPELLANT. BUT AS PER THE EXPLAN ATION BELOW SECTION 44AD ONLY WHEN THE TURNOVER IS LESS THAN 40 LAKHS FOR ASSESSMENT YEARS 2010-11 AND LESS THAN 60 LAKHS FOR ASSESSMENT YEAR 2011-12, THE PROVISIONS OF SECTION 44AD WILL BE APPLICABLE IN CASES WHERE BOOKS OF ACCOUNTS WERE NO T ITA 3295 & 3296/15 & CO 6 & 8/17 5 MAINTAINED. ADMITTEDLY, THE TURN OVER OF THE APPEL LANT IS FAR IN EXCESS OF THE ABOVE LIMITS PRESCRIBED IN THE EXPLAN ATION BELOW SECTION 44AD. ACCORDINGLY, IT CANNOT BE SAID THAT THE PROVISIONS OF SECTION 44AD ARE APPLICABLE TO THE CASE OF THE A PPELLANT. FURTHER, AS CONTENDED BY THE REPRESENTATIVE IN THE CASE OF ANOTHER ASSESSEE BY NAME SHRI T. DURAIRAJA (PAN: APRPD9205J) ASSESSED BY INCOME TAX OFFICER, WARD 1( 1), TIRUNELVELI, THE INCOME WAS ESTIMATED AT 5% OF THE GROSS RECEIPTS WHILE PASSING THE SCRUTINY ASSESSMENT ORDER U/S 143 (3) ON 12.04.2013 FOR ASSESSMENT YEAR 2011-12. THE ABOVE ASSESSMENT ORDER HAS BECOME FINAL AS THE SAME WAS N OT SET ASIDE U/S 263 BY CIT OR THE ASSESSMENT WAS REOPENED BY THE ASSESSING OFFICER WITHIN THE PERIOD OF FOUR YEARS E NDING ON 31.03.2016. THE ASSESSING OFFICER CANNOT REOPEN TH E ASSESSMENT AFTER 31.03.2016, AS THERE WAS NO FAILUR E ON THE PART OF THE ASSESSEE TO DISCLOSE THE MATERIAL FACTS. AS CONTENDED BY THE REPRESENTATIVE THE DEPARTMENT CANNOT GIVE DIFFE RENT TREATMENTS TO TWO SIMILARLY PLACED ASSESSEES. BY T HIS REASONING ALSO THE ASSESSING OFFICER WOULD NOT BE JUSTIFIED I N ESTIMATING 8% OF THE GROSS CONTRACT RECEIPTS AS INCOME OF THE APP ELLANT. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER IS DIRECTED TO ADOPT THE TOTAL INCOME AS DETERMINED IN THE ORIGINAL ASSESSMENT ORD ER. BEING SO, THE CIT(APPEALS) CANNOT SIT OVER ON THE O RDER OF THE CIT PASSED U/S.263 OF THE ACT, SO AS TO GIVE RE LIEF TO THE ASSESSEE, AS THE REVISION ORDER OF THE CIT REACHED FINALITY. THE CIT(APPEALS) HAS EXERCISED THE POWER, WHICH IS NOT AT ITA 3295 & 3296/15 & CO 6 & 8/17 6 ALL WITH HIM. ACCORDINGLY, WE CONFIRM THE ORDER OF THE AO AND REVERSE THE ORDER OF THE CIT(APPEALS). 5. IN THE RESULT, THE APPEALS OF THE REVENUE ARE ALLOWED AND CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON 11 TH MAY, 2017 AT CHENNAI. SD/- SD/- ( (. * ) ( + , - ($ ) (G. PAVAN KUMAR) (CHANDRA POOJARI) : ;< /JUDICIAL MEMBER =% ;