ACIT, CHENNAI V. M/s. V.Subramanian & Co., CHENNAI

ITA 1034/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5310 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 22-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Keywords: Opportunity of being heard; TDS; Set aside

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI D BENCH, CHENNAI. BEFORE SHRI.U.B.S. BEDI J.M. & SHRI. ABRAHAM P. GEORGE A.M. I.T.A. NO. 1034/MDS/2010 ASSESSMENT YEARS: 2007-08 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE V, ANNEXE BUILDING, 6 TH FLOOR, 121, NUNGAMBAKKAM HIGH ROAD, CHENNAI 600 034. VS. M/S. V. SUBRAMANIAN & CO., NO. 4/1, KARUNANIDHI STREET, METTUPALAYAM, CHENNAI 600033. [PAN:AAEFV6104C] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI ANIRUDH RAI ASSESSEE BY : NONE ORDER PER U.B.S. BEDI, J.M . THIS APPEAL OF THE DEPARTMENT IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) VIII, CHENNAI DATED 12.04. 2010 RELEVANT TO THE ASSESSMENT YEAR 2007-08 IN WHICH, THE DEPARTMENT HAS RAIS ED FOLLOWING EFFECTIVE GROUNDS NO. 2 TO 6.1, WHICH ARE REPRODUCED AS UNDER: 2. THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFER ENCE IN CONTRACT RECEIPTS ADMITTED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT AND THAT APPEARING IN THE TDS CERTIFICATE FURNISHED BY THE ASSESSEE. 2.1 THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT THE RIGHT TO INCOME HAD ALREADY VESTED WITH THE ASSESSEE DUR ING THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08 AND ACCORD INGLY THE INCOME IS LIABLE FOR TAXATION IN THAT ASSESSMENT YEAR. 2.2 THE LD. CIT(A) OUGHT TO HAV E APPRECIATED THAT THE ACCOUNTING STANDARD AS 7 RELIED UPON BY THE ASSESSEE IS NOT AT ALL APPLICABLE TO THE ASSESSEES CASE SINCE THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TECHNICAL LIASONING WORK AND AS7 INSTRUCTIONS ARE APPLICABLE TO BUILDERS AND CIVIL CONTRACTORS. 2.3 THE LD. CIT(A) OUGHT TO HAVE SEEN THAT THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF M/S IGNIFLUID BOILERS LIMITED I.T.A. NO.1034/MDS/10 2 (283 ITR 295)AND M/S EAST COAST CONS TRUCTION COMPANY LIMITED (283 ITR 297) ARE DISTINGUISHABLE ON THE FACTS OF THIS CASE IN AS MUCH AS THE RETENTION MONEY WAS THE ISSUE IN DIS PUTE IN THOSE CASES WHEREAS HERE IT IS NOT SO. 2.4 HAVING REGARD TO THE OBSERVA TIONS OF THE HON BLE SUPREME COURT IN THE CASE OF SHOORJI VALLABHDAS & CO., (46 ITR 144) RELIED UPON BY THE CIT(A) HIMSELF, WITH REGARD TO THE CONC EPT OF TAXATION OF REAL INCOME, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ACTI ON OF THE ASSESSING OFFICER AS THE INCOME HAS INFACT ACCRUED TO THE ASSESSEE AND HE HAS ONLY TRIED TO POSTPONE THE TAXATION OF THE SAME WHICH IS NOT PERMITTED IN LAW. 3. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, IT IS SUBMITTED THAT WHILE GIVING RELIEF TO THE ASSESSEE AND DIRE CTING THE ASSESSING OFFICER TO ASSESS ONLY THE LESSER CONTRACT RECEIPT ADMITT ED BY THE ASSESSEE, THE LD. CIT(A) FAILED TO GIVE DIRECTIONS TO RESTRI CT THE TDS CLAIM PROPORTIONATELY. 3.1 THE LD. CIT(A) OUGHT TO HAV E APPRECIATED THAT AS PER THE PROVISIONS OF SECTION 199, THE ASSESSEE IS ELIGIBLE TO CLAIM CREDIT FOR TDS ONLY DURING THE YEAR IN WHICH THE CO RRESPONDING INCOME IS ADMITTED. 4. WHILE GIVING RELIEF TO THE ASSESSEE THE CIT(A) FAILED TO APPRECIATE THAT THE ACTUAL RECEIPT DURING THE Y EAR RELEVANT TO THE ASSESSMENT YEAR WAS ` .3,21,44,473/- AND THE ASSESSEE DID NOT OFFER EVEN THIS AMOUNT AS CONTRACT RECEIPT. 4.1 THE LD. CIT(A) FAILED TO APPR ECIATE THAT THE ASSESSEE ADMITTED ONLY ` .3,13,89,773/- AND THE ASSESSING OFFI CER IN THE ASSESSMENT ORDER DISCUSSED ABOUT THIS DISCREPANCY IN T HE TOTAL RECEIPTS AMOUNTING TO ` .7,40,500/-. 5. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF ` . 14,50,000/- MADE BY THE ASSESSING OFFICER TOWARD S AMOUNT RECEIVED BY THE ASSESSEE FROM M/S CARPI TECH AND CLAIMED BY THE ASSESSEE AS ADVANCE. 5.1 THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE COULD NOT FURNISH ANY DOCUMENT IN WRITING OR ANY WRITTEN CONTRACT IN SUPPORT OF HIS CLAIM THAT THE AMOUNT ACT UALLY REPRESENTED AN ADVANCE 5.2 THE LD. CIT(A) FAILED TO APPREC IATE THAT THE ASSESSEE COULD NOT GIVE ANY SATISFACTORY EXPLANATION T HAT THE SAID ADVANCE WAS OFFERED AS INCOME IN SUBSEQUENT YEARS OR IT WA S RETURNED BACK TO M/S CARPITECH. 6. THE LD. CIT(A) ERRED IN ADMITTI NG THE FRESH EVIDENCE IN THE FORM OF LETTER FROM M/S CARPITECH WHICH EVIDENCE WAS NOT FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. 6.1 THE LD. CIT(A) OUGHT TO HA VE GIVEN AN OPPORTUNITY TO THE ASSESSING OFFICER FOR EXAMINATION OF THIS FRESH EVIDENCE AND THE ACTION OF I.T.A. NO.1034/MDS/10 3 THE CIT(A) IN RELYING UPON THIS EVIDENC E TO GIVE RELIEF TO THE ASSESSEE IS IN VIOLATION OF RULE 46A. 2. THE ASSESSEE DID NOT APPEAR WHEN THE CASE WAS CALLED UP FOR HEARING AND THERE WAS ONE WRI TTEN COMMUNICATION DATED 25.03.2011, BY VIRTUE OF WHICH, THE ASSESSEES CA FIRM HAS TAKEN A PLEA THAT THEIR PARTNER, WHO HAS TO ATTEND THE HEARING ON 11.04.2011 IS NOT IN STAT ION AND REQUESTED FOR ADJOURNMENT. THE REQUEST ON BEHALF OF THE ASSESSEE MADE FOR ADJOURNMENT HAS BEEN CONSIDERED AND FOUND TO BE INADEQUATE TO GRANT ADJOURNMENT. AS SUCH, THE SAME CAME TO BE REJECTED AND WE PROCEED TO DECIDE T HE APPEAL AFTER HEARING OF LD. DR AND CONSIDERING THE MATERIAL ON RECORD, WHIC H INCLUDES WRITTEN S UBMISSION RUNNING INTO 18 PAGES OF THE ASSESSEE DATED 22.11.2010, BY VIRTUE OF WHICH THE ASSESSEES REPRESENTATIVE HAS PLEADED TH AT BASED ON THESE SUBMISSIONS, THE DEPARTMENTS APPEAL SHOULD BE DISMISSED. 3. THE LD. DR STRONGLY RELIED UPON THE GROUND AS RA ISED IN THE MEMORANDUM OF APPEAL AND MADE A S PECIFIC REFERENCE TO LETTER DATED 25.03.2010 FROM M/S. ANDRITX HYDRO INDIA P. LTD. (FORMERLY KNOWN AS VA TECH) AND LETTER DATED 10.03.2010 WRITTEN BY CARPITECH , WHIC H HAVE NOT ONLY BEEN CONSIDERED BY THE LD. CIT(A) BUT RELIEF HAS BEEN GRANTED BASED ON ASSERTION MADE IN SUCH LETTERS WITHOUT AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSE SSING OFFICER OR SEEKING REMAND REPORT FROM HIM WHEN THESE DOCUM ENTS ARE FRESH EVIDENCE, WHICH COULD NOT BE ENTERTAINED OR RELIED UPON BY THE LD. CIT(A) WITHOUT FO LLOWING PROVISIONS OF RULE 46A OF IT RULES. THEREFORE, ON THIS GROUND AL ONE THE ORDER OF THE LD. CIT(A) IS NOT SUSTAINABLE, OTHERWIS E ALSO, RELIEF HAS BEEN GRANTED WITHOUT APPROPRIATELY CONSIDERING OR DISCUSSING THE ISSUES INVOLVED IN THE APPEAL. THEREFORE, IT WAS PLEADED T HAT IN ALL FAIRNESS, THE OR DERS OF AUTHORITIES BELOW I.T.A. NO.1034/MDS/10 4 SHOULD BE SET ASIDE AND MATTER BE RESTOR ED BACK ON THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION OF THE ISSUE AFRESH. 4. WE HAVE HEARD THE LD . DR AND CONSIDERED THE MATERI AL ON RECORD AS WELL AS WRITTEN SUBMISSIONS OF THE A SSESSEE DATED 22.11.2010 RUNNING INTO 18 PAGES. IT IS FOUND TO BE A MATTER OF FACT THAT THE LD. CIT(A) HAS ENTERTAINED AND CONSIDERED TWO LETTERS, WHICH ARE ISS UED AFTER PASSING OF THE ASSESSMENT ORDER DATED 30.12.2009 AND TO GRANT THE RELIEF NEI THER THE ASSESSING OFFICER HAS BEEN ASSOCIATED WITH THE APPEA L PROCEEDINGS NOR ANY REMAND REPORT HAS BEEN OBTAINED BY HIM BEFORE PASSI NG THE APPEAL ORDER. THEREF ORE, IN OUR VIEW, THE PROVISIONS OF RULE 46A OF IT RULES HAV E BEEN VIOLATED IN THIS CASE. KEEPING IN VIEW OF THE ENTIRETY OF FACTS, CIRCUMST ANCES AND MATERIAL ON RECORD AND IN THE INTEREST OF JUSTICE, WE FIND IT JUST AND APPROPRIATE TO SET ASIDE THE ORDERS OF BOTH THE AUTHORITIES AND RESTORE THE MATTER BA CK ON THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO DECIDE THE ISSUE IN VOLVED IN THE APPEAL AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. 5. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED SOON AFTER THE C ONCLUSION OF HEARING ON 11.04.2011. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI, DATED, THE. 11.04.2011 VM/- TO:THE ASSESSEE//A.O./CIT(A)/CIT/D.R.