ACIT, Circle-1, Anantapur, Anantapur V. Gerdau Steels India Ltd., Tadipatri, Tadipatri

ITA 1059/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2599 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 28-07-2016
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Section: 143(3); 144

Judgement Text

ITA NO 1059 OF 2016 GERDAU STEELS INDIA LTD TADIPA TRI PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.1059/HYD/2016 (ASSESSMENT YEAR: 2012-13) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1 ANANTAPUR VS M/S. GERDAU STEELS INDIA LTD JAMBULAPADU(V) TADIPATRI PAN: AACCS 8629 N FOR REVENUE : SMT. U. MINI CHANDRAN, DR FOR ASSESSEE : SHRI SUMEET KHURANA O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y 2012-13. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) ERRED IN DELETING THE ADDITION OF RS.13,50,08,000 MADE TOWARDS DISALLOWANCE OF EXPENDITURE ON RAW MATERIAL CONSUMED PERTAINING TO FINANCIAL YEAR 2010-11 AND EARLIER YEARS. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED CIT (A) ERRED IN DELETING THE ADDITION OF RS.5,42,24,000 MADE TOWARDS DISALLOWANCE OF PRIOR PERIOD INTEREST PAYMENT 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY WHICH IS IN THE BUSINESS OF MANUFACTURE AND SALE OF PIG IRON AND DATE OF HEARING : 14.02.2017 DATE OF PRONOUNCEMENT : 21.04.2017 ITA NO 1059 OF 2016 GERDAU STEELS INDIA LTD TADIPA TRI PAGE 2 OF 5 STEEL BILLETS, FILED ITS RETURN OF INCOME FOR THE A .Y 2012-13 ON 29.9.2013 ADMITTING A TOTAL LOSS OF RS.187,96,65,60 9. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, VARIO US DETAILS WERE CALLED FOR. AS THERE WAS NO RESPONSE FROM THE ASSESSEE TILL THE LAST DATE OF LIMITATION I.E. 31.3.2015, THE AO PROCEEDED TO COMPLETE THE ASSESSMENT EX-PARTE U/S 144 OF THE ACT . THE AO OBSERVED THAT THE ASSESSEE COMPANY WAS FOLLOWING TH E MERCANTILE SYSTEM OF ACCOUNTING BUT HAS DEBITED EXPENDITURE OF EARLIER YEARS TO THE P&L A/C OF THE YEAR UNDER CONSIDERATION. HE OBSERVED THAT THE COMPANYS AUDITORS THEMSELVES IN THEIR REPORT T O THE MEMBERS OF THE COMPANY HAVE MADE MANY ADVERSE COMME NTS ON THE ACCOUNTING SYSTEM AND THE STANDARD OF THE COMPA NY. HE OBSERVED THAT THE ASSESSEE HAS DEBITED TO THE P&L A /C OF THE YEAR UNDER CONSIDERATION, A SUM OF RS.6,66,54,000 FOR TH E RAW MATERIAL CONSUMED DURING THE FINANCIAL YEAR 2010-11 AND RS.6,83,54,000 OF THE YEARS EARLIER TO THE FINANCIA L YEAR 2010-11. HE THEREFORE, OBSERVED THAT THE EXPENDITURE OF RS.1 3,50,08,000 PERTAINS TO THE EARLIER YEARS AND WAS DEBITED TO TH E P&L A/C OF THE CURRENT YEAR. HE ACCORDINGLY DISALLOWED RS.13,50,08 ,000. 3. HE ALSO OBSERVED THAT THE INTEREST EXPENDITURE D EBITED TO THE P&L A/C OF THE YEAR UNDER CONSIDERATION INCL UDES RS.5,42,27,000 OF THE EARLIER YEARS. SINCE IT PERTA INS TO THE EARLIER YEARS BUT IS DEBITED TO THE P&L A/C OF THE CURRENT YEAR, THE AO DISALLOWED THE SAME. AGGRIEVED, THE ASSESSEE PREFER RED AN APPEAL BEFORE THE CIT (A) STATING THAT THE ASSESSEE HAD MA DE CERTAIN PURCHASES IN THE PAST YEARS BUT THE PAYMENT OF THE SAME BECAME SUBJECT TO PRICE RELATED DISPUTE WHEREBY THE BUYER DEMANDED RS.6,83,54,000 FOR THE PRICE DIFFERENCE, BUT ULTIMA TELY THE AMOUNT ITA NO 1059 OF 2016 GERDAU STEELS INDIA LTD TADIPA TRI PAGE 3 OF 5 WAS SETTLED AT RS.6,66,54,000 DURING THE FINANCIAL YEAR 2011-12. IT IS SUBMITTED THAT THE LIABILITY CRYSTALLIZED DUR ING THE YEAR IN QUESTION AND BECAME AN EXPENDITURE OF THE ASSESSEE FOR THE CURRENT YEAR AND WAS ACCORDINGLY ADDED TO THE COST OF THE MATERIAL CONSUMED. HE SUBMITTED THAT THE AO HAS ERRONEOUSLY ADDED BOTH THE DISPUTED AMOUNT AS WELL AS THE FINALLY SETTLED AMOUNT RESULTING IN THE ADDITION OF RS.13,50,08,000 WHICH AMOUNTS TO DOUBLE ADDITION. FURTHER, AS REGARDS THE INTEREST E XPENDITURE OF RS.5,42,27,000 PERTAINING TO THE EARLIER YEARS IS C ONCERNED, IT WAS SUBMITTED THAT THE SAME AMOUNT WAS ADDED IN ASSESSM ENT FOR THE A.Y 2011-12 ALSO. THE CIT (A) CONSIDERED THE ASSESSE ES CONTENTIONS AND ALLOWED THE ASSESSEES APPEAL AGAIN ST WHICH THE REVENUE IS IN APPEAL BEFORE US. 4. THE LEARNED DR SUBMITTED THAT THE ASSESSEE FAILE D TO APPEAR AND SUBMIT THE DETAILS BEFORE THE AO, INSPIT E OF SHOW CAUSE NOTICE ISSUED TO IT, BUT BEFORE THE CIT (A), IT MADE SOME SUBMISSIONS WITHOUT ANY RELEVANT EVIDENCE. SHE SUBM ITTED THAT THE CIT (A) HAS ALSO ACCEPTED THE ASSESSEES CONTEN TION WITHOUT ANY VERIFICATION OF FACTS AND WITHOUT EVEN CALLING FOR A REMAND REPORT FROM THE AO. THEREFORE, HE PRAYED THAT THE O RDER OF THE CIT (A) IS TO BE SET ASIDE AND A DIRECTION MAY BE GIVEN TO THE AO FOR RE- EXAMINATION OF THE ISSUE IN THE LIGHT OF THE EVIDEN CE PRODUCED BY THE ASSESSEE. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, SUBMITTED THAT ALL THE RELEVANT MATERIAL HAS BEEN FILED BEFORE THE CIT (A) AND THE CIT (A) HAS ALLOWED THE APPEAL AFTER ITA NO 1059 OF 2016 GERDAU STEELS INDIA LTD TADIPA TRI PAGE 4 OF 5 APPRECIATING THE EVIDENCE FILED BY IT. THEREFORE, A CCORDING TO HIM, THERE IS NO NEED FOR ANY REMAND TO THE AO. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE REMAINED EX-PARTE BEFORE THE AO AND THEREFORE, THE AO COMPLETED THE ASSESSMENT U /S 144 OF THE I.T. ACT WITHOUT HEARING THE ASSESSEE. IT WAS O NLY BEFORE THE CIT (A) THAT THE ASSESSEE HAS SUBMITTED THE DETAILS OF THE DISPUTE ON THE PRICE OF THE NEW MATERIAL CONSUMED IN THE EA RLIER YEARS TO BE PAID IN THE CURRENT FINANCIAL YEAR AND ALSO ON T HE INTEREST INCOME ALREADY ASSESSED TO TAX IN EARLIER YEARS. ON GOING THROUGH THE ORDER OF THE CIT (A), WE FIND THAT THE CIT (A) HAS ACCEPTED THE ASSESSEES CONTENTIONS WITHOUT ANY VERIFICATION. TH ERE IS NO REMAND REPORT CALLED FOR FROM THE AO, NOR HAS HE VE RIFIED THE DETAILS BY HIMSELF. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO SET ASIDE THE ORDER OF THE CIT (A) AND REMAND TH E ISSUE TO THE FILE OF THE AO FOR DE NOVO CONSIDERATION IN ACCORDA NCE WITH THE LAW AFTER GIVING THE ASSESSEE A FAIR OPPORTUNITY OF HEA RING. 7. IN THE RESULT, REVENUES APPEAL IS TREATED AS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST APRIL, 2017. SD/- SD/- (INTURI RAMA RAO) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 21 ST APRIL, 2017. VINODAN/SPS ITA NO 1059 OF 2016 GERDAU STEELS INDIA LTD TADIPA TRI PAGE 5 OF 5 COPY TO: 1 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE -1 AA YAKAR BHAVAN 3 RD ROAD, ANANTAPUR 2 M/S. GERDAU STEELS INDIA LTD, JAMBULADINNE(V) TAD IPATRI 515411 3 CIT (A)-KURNOOL 4 PR. CIT - KURNOOL 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER