GVPR Engineers Limited V. Assistant Commissioner of Income Tax Central Circle \\u2013 5, Hyderabad

ITTA/78/2014

AI Insights

The case involves multiple appeals by M/s. GVPR Engineers Limited against the orders of the Assistant Commissioner of Income Tax, Central Circle \\u2013 5, Hyderabad, concerning the assessment years 2003-04. The primary legal issue was whether the Tribunal was correct in sustaining part of the ad hoc addition without issuing a show cause notice, which is mandated under Section 145(3) read with Section 143(2) of the Income Tax Act. The Tribunal had previously reduced the disallowance percentages on labor and site expenses after reviewing the evidence. The High Court dismissed the appeals, agreeing with the Tribunal's decision and finding that the assessee had been sufficiently notified through the appellate process.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 808040 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 25-03-2014
• Assessment Year: misc
• Laws Referred To: Section 145(3), Section 143(2), Section 153A
• Result in Favour of: Revenue
• Court: HIGH COURT
• Keywords: Ad-hoc addition; Appeal; Assessment; Disallowance; Income Tax; Show cause notice; Tribunal
• Section: 143(2); 153A; 145(3)

Judgement Text

"IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. Nos. 78, 79, 81, 82, 83, 99, 100, 101 and 102 of 2014 Date: 25.03.2014 I.T.T.A. No.78 of 2014 Between: M/s. GVPR Engineers Limited, Hyderabad, rep., by G. Veera Sekhar Reddy, Director. … Appellant And Assistant Commissioner of Income Tax Central Circle – 5, Hyderabad. … Respondent This Court made the following: THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. Nos. 78, 79, 81, 82, 83, 99, 100, 101 and 102 of 2014 COMMON ORDER: (Per the Hon’ble The Chief Justice Sri Kalyan Jyoti Sengupta) I.T.T.A.No.101 of 2014 This appeal is preferred against the judgment and order of the learned Tribunal dated 27.12.2011 in relation to assessment year 2003- 04 and sought to be admitted on the following suggested question of law: Whether on the facts and circumstances of the case, sustaining part of the ad hoc addition by the Tribunal is legally valid without issuing show cause notice by the adjudicating authority proposing such ad hoc addition, which is mandatory u/s. 145(3) read with Section 143(2). The facts of the case are as under: The assessee is in the business as a sub-contractor in the line of civil works, canal excavation and mine and iron ore activities. There has been search and seizure in the case of Sri Venkata Kutumba Rao and others on 28.07.2008. Search operations were conducted at the business premises of the assessee. Notice under Section 53A was issued and pursuant thereto assessee filed returns for the years under appeal. On filing of the returns final assessment was made. While doing so, the additions/disallowances made by the assessing officer were confirmed by the CIT(A) with little modification. Now it appears from the fact that the CIT(A) while confirming the assessment made under Section 153A of the Act disallowed all labour and site expenses to the extent of 7% while the Assessing Officer disallowed to the extent of 10%. Therefore, part relief was granted. Similarly, for other assessment years, the CIT(A) also reduced the percentage of disallowance. The Tribunal, after considering the evidence and appreciating the fact, granted part disallowance to the extent of 5%. In this case, the learned counsel for the appellant argues that while upholding the part disallowance the learned Tribunal should have issued notice as required under Section 145(3) read with Section 143(2). According to us, service of notice is required at the first instance when the Assessing Officer taken up assessment of income to make the assessee aware of intention of the Assessing Officer. In this case assessee is given notice automatically since the original assessment order was challenged by preferring an appeal and the first appellate authority has granted part relief. Thereafter, the learned Tribunal granted further relief. The object of service of notice under the aforesaid Section is to make the assessee aware of the action that is proposed to be taken and this complaint and grievance must have been taken care of by the CIT(A) and further notice is not required to be served. Moreover, when we notice that on appreciation of evidence and fact the learned Tribunal has exercised discretion while reducing the percentage of disallowances, we do not think that we need to decide anything else. Accordingly, the appeal is dismissed. Now, coming to other appeals being ITTA.Nos.78, 79, 81, 82, 83, 99, 100 and 102 of 2014 are concerned, in view of the order passed by us today in ITTA.No.101 of 2014, we do not want to pass separate order in these appeals and we follow the same order, as the issues on fact and law are identical. The appeals are accordingly dismissed in terms of the order passed in ITTA.No.101 of 2014. No order as to costs. ___________________ K.J. SENGUPTA, CJ ___________________ SANJAY KUMAR, J Date: 25.03.2014 ES "