Sayyapu Raju Engg. Constructions, Visakhapatnam V. THE ACIT, CIRCLE - 4(1), Visakhapatnam

ITA 111/VIZ/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1099 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 10-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAVI
• Keywords: Condonation of delay
• Section: 148

Judgement Text

ITA NO.111/VIZAG/2014 SAYYAPU RAJU ENGINEERING CONSTRUCTIONS, VISAKHAPATN AM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.111/VIZAG/2014 ( / ASSESSMENT YEAR: 2010-11) SAYYAPU RAJU ENGG. CONSTRUCTIONS VISAKHAPATNAM VS. ACIT, CIRCLE - 4(1), VISAKHAPATNAM [PAN: AACCS3995D ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI K. RAVI, DR / DATE OF HEARING : 27.05 .2016 / DATE OF PRONOUNCEMENT : 1 0.06.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A), VISAKHAPATNAM DATED 5.11.2013 AND IT PERTAI NS TO THE ASSESSMENT YEAR 2010-11. ITA NO.111/VIZAG/2014 SAYYAPU RAJU ENGINEERING CONSTRUCTIONS, VISAKHAPATN AM 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PUBLIC LIMITED COMPANY WHICH IS ENGAGED IN THE BUSINESS OF CIVIL E NGINEERING WORKS. THE ASSESSEE WAS AWARDED THE CONTRACT WORK BY DIREC TOR GENERAL OF NAVAL PROJECTS (DGNP) FOR A TOTAL VALUE OF RS.13.06 CRORES IN THE YEAR 1991-92. THERE WAS A DISPUTE CROPPED UP BETWEEN THE ASSESSEE COMPANY AND THE PRINCIPALS I.E. DGNP, HENCE, THE SA ID WORK CONTRACT WAS CANCELLED BY THE DGNP FOR THE REASONS THAT THE WORK EXECUTED BY THE COMPANY IS UNSATISFACTORY. THE MATTER HAS BEEN REFERRED TO ARBITRATION AND THE ARBITRATOR HAS PASSED ARBITRATI ON AWARD ON 31.3.2000 BY AWARDING AN AMOUNT OF RS.7.99 CRORES ALONG WITH AN INTEREST OF RS.9.75 CRORES. AGGRIEVED BY THE ARBITRATION AWARD, THE DGNP CHALLENGED THE ARBITRATION AWARD BEFORE THE COURTS AND THE MATTER WENT UP TO HONBLE SUPREME COURT AND FINALLY SUPREME COU RT HAS REMANDED THE MATTER BACK TO THE A.P. HIGH COURT. MEANWHILE, THE COMPANY HAS FILED EXECUTION PETITION BEFORE THE DISTRICT COURT, VISAKHAPATNAM FOR AN AMOUNT OF RS.14.14 CRORES. THE DGNP CHALLENGED THE EXECUTION PETITION FILED BY THE ASSESSEE BEFORE THE A.P. HIGH COURT. THE A.P. HIGH COURT VIDE ITS INTERIM ORDER DIRECTED THE DGNP TO PAY AN INTERIM AMOUNT OF RS.7,07,77,051/- AND ALLOWED THE ASSESSEE TO WITHDR AW THE MONEY BY FURNISHING EQUAL AMOUNT OF SECURITY IN THE FORM OF TITLE DEEDS OF AN IMMOVABLE PROPERTY. THE ASSESSEE COMPANY, AS PER TH E DIRECTIONS OF ITA NO.111/VIZAG/2014 SAYYAPU RAJU ENGINEERING CONSTRUCTIONS, VISAKHAPATN AM 3 A.P. HIGH COURT HAS WITHDRAWN AN AMOUNT OF RS.3 CRO RES EACH ON 16.11.2004 AND 15.11.2007 AND FURTHER SUM OF RS.2,8 2,47,142/- ON 13.8.2009. FINALLY, THE A.P. HIGH COURT PASSED FINA L ORDER ON 18.6.2014 AND DISMISSED THE REVIEW PETITION FILED BY THE DGNP . 3. THE ASSESSING OFFICER, BASED ON THE INFORMATIO N THAT ASSESSEE COMPANY HAS RECEIVED INTERIM AWARD OF RS.2,82,47,14 2/-, HAD REASONS TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS BE EN ESCAPED ASSESSMENT, AS ASSESSEE DID NOT FILED RETURN FOR TH E ASSESSMENT YEAR 2010-11, OFFERING THE SAID RECEIPT FOR TAXATION. T HEREFORE, ISSUED NOTICE U/S 148 OF THE ACT TO REOPEN THE ASSESSMENT. IN RE SPONSE TO NOTICE U/S 148 OF THE ACT, THE ASSESSEE FILED ITS RETURN OF IN COME ON 31.12.2011 DECLARING TOTAL INCOME OF RS.NIL, BESIDES AGRICULTU RAL INCOME OF RS.6,61,500/-. THEREAFTER, NOTICE U/S 143(2) OF THE ACT WAS ISSUED CALLING FOR THE INFORMATION. IN RESPONSE TO NOTICE, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME T O TIME AND SUBMITTED BOOKS OF ACCOUNTS AND OTHER RELEVANT DOCU MENTS. THE A.O. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE H ELD THAT THE AMOUNT RECEIVED BY THE ASSESSEE FROM THE DGNP PENDING DISP OSAL OF REVIEW PETITION BEFORE THE HONBLE A.P. IS ACCRUED TO THE ASSESSEE, THEREFORE, ITA NO.111/VIZAG/2014 SAYYAPU RAJU ENGINEERING CONSTRUCTIONS, VISAKHAPATN AM 4 THE ASSESSEE NEED TO OFFER THE SAID RECEIPT FOR TAX ATION ON RECEIPT BASIS AND MADE ADDITION OF RS. 2,82,47,142. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. THE CIT(A) AF TER CONSIDERING THE DETAILS SUBMITTED BY THE ASSESSEE HELD THAT SIMILAR ADDITION WAS MADE FOR THE ASSESSMENT YEAR 2005-06 AND 2008-09 WHICH W AS CHALLENGED BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY. THE LD. CIT(A) IN HIS ORDER DATED 28.3.2012 IN ITA NOS.203 & 204 DISMISSE D THE APPEAL FILED BY THE ASSESSEE. SINCE, THE FACTS AND ISSUE INVOLVE D IN THIS APPEAL IS SIMILAR TO THE APPEALS FILED FOR THE ASSESSMENT YEA R 2005-06 & 2008-09, BY FOLLOWING HIS PREDECESSOR CIT(A) ORDER, DISMISSE D THE APPEAL FILED BY THE ASSESSEE. AGGRIEVED BY THE CIT(A) ORDER, THE A SSESSEE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING, THE LD. A.R. FOR THE ASS ESSEE SUBMITTED THAT THERE IS A DELAY OF 74 DAYS IN FILING THIS APP EAL BEFORE THE TRIBUNAL. THE A.R. FURTHER SUBMITTED THAT THE ASSESSEE HAS FI LED A PETITION FOR CONDONATION OF DELAY ALONG WITH AFFIDAVIT AND REQUE STED TO CONDONE THE DELAY IN FILING THE APPEAL. THE ASSESSEE FURTHER SU BMITTED THAT SHRI S.SATYANARAYANA RAJU, MANAGING DIRECTOR OF THE COMP ANY HAD PARALYTIC ITA NO.111/VIZAG/2014 SAYYAPU RAJU ENGINEERING CONSTRUCTIONS, VISAKHAPATN AM 5 STROKE AND HIS LEFT HAND AND LEG LOST MOBILITY. LA TER ON IN THE MONTH OF NOV12 HE HAD UNDERGONE AN OPEN HEART SURGERY IN MU MBAI. HE WAS TAKING THE FOLLOW UP TREATMENT UNDER THE TREATMENT OF CARDIOLOGIST OF QUEENS NRI HOSPITAL, VISAKHAPATNAM. AS THE ASSESSEE DID NOT RECOVERED FULLY FROM THE PARALYTIC STROKE AS WELL AS FROM THE MAJOR HEART SURGERY, HE WAS ADVISED FOR TAKING TO REST AND OTHER PRECAUT IONS FROM TIME TO TIME BY THE CARDIOLOGIST. ON 18.1.2015, THE PETITI ONER FELL SICK AGAIN AND THROUGH CONSULTATION WITH THE CARDIOLOGIST, HE WAS ADVISED TO TAKE COMPLETE BED REST FOR 3 MONTHS. DURING THIS PERIOD I.E. 1.1.2014 TO 23.2.2014 THE ASSESSEE COULD NOT ATTEND ANY OTHER M ATTERS. AS SOON AS HE STARTED RECOVERING FROM ILLNESS, HE IMMEDIATELY TOOK STEPS TO GET THE APPEAL FILED BEFORE THE HONBLE ITAT, VISAKHAPATNAM WITHOUT FURTHER DELAY. THUS, THE APPEAL COULD BE FILED ON 10.4.201 4 RESULTING IN A DELAY OF 74 DAYS IN FILING THE APPEAL. THE ASSESSEE COUL D NOT FILE THE APPEAL IN TIME BECAUSE OF HIS ILLNESS, THEREFORE, THERE IS A VALID AND SUFFICIENT REASONS FOR CONDONING THE DELAY OF 74 DAYS IN FILIN G THE APPEAL, THEREFORE, THE SAME MAY BE CONDONED. ON THE OTHER HAND, THE LD. D.R. DID NOT OBJECT FOR CONDONATION OF DELAY. 6. HAVING HEARD BOTH THE SIDES AND ALSO ON PERUSAL OF THE CONDONATION PETITION FILED BY THE ASSESSEE, WE NOTI CED THAT DURING THE ITA NO.111/VIZAG/2014 SAYYAPU RAJU ENGINEERING CONSTRUCTIONS, VISAKHAPATN AM 6 PERIOD FROM 1.1.2014 TO 20.3.2014 THE ASSESSEE WAS FALLEN SICK. HE WAS UNDER MEDICAL TREATMENT, THEREFORE, COULD NOT FILE THE APPEAL WITHIN THE TIME ALLOWED UNDER THE ACT. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE REASONS GIVEN BY THE ASSESSEE FOR CONDONATION OF DELAY OF 74 DAYS APPEARS TO BE VALID REASONS. HENCE, WE CONDONE THE DELAY IN FILING THE APPEAL AND ADMIT TH E APPEAL FOR HEARING. 7. THE LD. A.R. FOR THE ASSESSEE, AT THE TIME OF HE ARING SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF ITAT, VISAKHAPATNAM IN ASSESSEES OWN CASE FOR T HE ASSESSMENT YEAR 2005-06 AND 2008-09. THE ITAT, UNDER SIMILAR CIRCUM STANCES DELETED THE ADDITIONS MADE BY THE A.O., BY HOLDING THAT THE INTERIM AMOUNT RECEIVED IS NOT TAXABLE ON RECEIPT BASIS, PENDING L ITIGATION, THEREFORE, REQUESTED TO DELETE ADDITION MADE BY THE A.O. ON T HE OTHER HAND, THE LD. D.R. STRONGLY SUPPORTED THE ORDER OF THE CIT(A) . 8. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATE RIALS AVAILABLE ON RECORD. THE LD. A.R. FOR THE ASSESSEE AT THE TIM E OF HEARING SUBMITTED THAT A SIMILAR ISSUE HAS BEEN CONSIDERED BY THE ITAT, IN ASSESSEES CASE FOR THE ASSESSMENT YEAR 2005-06 AND 2008-09. THE ITAT VIDE ORDER DATED 4.12.2015 IN ITA NO.256 & 257 /VIZAG/2012 CONSIDERED THE ISSUE AND HELD IN FAVOUR OF THE ASSE SSEE. WE NOTICED THAT ITA NO.111/VIZAG/2014 SAYYAPU RAJU ENGINEERING CONSTRUCTIONS, VISAKHAPATN AM 7 THE COORDINATE BENCH OF THIS TRIBUNAL, IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2005-06 AND 2008-09, UNDER SIMILAR CIRCUMSTANCES DELETED THE ADDITIONS MADE BY THE A.O. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELOW: 22. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO APPLYING THE RATIOS OF THE JUDGEMENTS CITED ABOVE, WE ARE OF THE OPINION, THAT THE INTERIM AMOUNT RECEIVED TOWARDS ARBITRATIO N AWARD AFTER FURNISHING SECURITY AND ALSO ON PERSONAL GUARANTEE OF THE DIRECTORS OF THE COMPANY, CANNOT BE TREATED AS INCOME OF THE ASSESSE E ON RECEIPT BASIS IN THE YEAR OF RECEIPT. ON GOING THROUGH THE FACTS OF THE PRESENT CASE, WE NOTICED THAT ISSUE IS NOT YET FINAL. THE HONBLE A .P. HIGH COURT, FINALLY DISMISSED THE REVIEW PETITION FILED BY THE DGNP ON 18.6.2014 AND UPHELD THE ARBITRATION AWARD. THEREFORE, IN OUR OPINION, THE ASSESSEE HAS GOT ABSOLUTE RIGHT TO RECEIVE THE AMOUNT, WHEN THE HON BLE A.P. HIGH COURT FINALLY UPHELD THE ARBITRATION AWARD AND NOT IN THE IMPUGNED ASSESSMENT YEARS. UNDER THESE CIRCUMSTANCES, INTERIM AMOUNT R ECEIVED BY THE ASSESSEE CANNOT BE BROUGHT TO TAX AS INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2005-06 & 2008-09. THEREFORE, WE DIRECT THE A.O. TO DELETE THE ADDITIONS OF RS. 3 CRORE EACH MADE FOR T HE A.Y. 2005-06 AND 2008-09. 9. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECISIO N, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 & 2008-09 IN I TA NOS. NO.256 & 257/VIZAG/2012, WE ARE OF THE VIEW THAT THE INTERIM AMOUNT RECEIVED BY THE ASSESSEE TOWARDS ARBITRATION AWARD BY FURNISHIN G EQUAL AMOUNT OF SECURITY AND ALSO ON PERSONAL GUARANTEE OF THE DIRE CTOR CANNOT BE TREATED AS INCOME OF THE ASSESSEE ON RECEIPT BASIS. THE HONBLE A.P. HIGH COURT, FINALLY DISMISSED THE REVIEW PETITION F ILED BY THE DGNP ON 18.6.2014 AND UPHELD THE ARBITRATION AWARD. THEREFO RE, IN OUR OPINION, ITA NO.111/VIZAG/2014 SAYYAPU RAJU ENGINEERING CONSTRUCTIONS, VISAKHAPATN AM 8 THE ASSESSEE HAS GOT ABSOLUTE RIGHT TO RECEIVE THE AMOUNT, WHEN THE HONBLE A.P. HIGH COURT FINALLY UPHELD THE ARBITRAT ION AWARD, I.E. 18-06- 2014, AND ACCORDINGLY, THE AMOUNT IS TAXABLE FOR TH E A.Y. 2015-16. HENCE, WE DIRECT THE A.O. TO DELETE THE ADDITIONS M ADE FOR THE A.Y. 2010-11. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 10 TH JUN16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 10.06.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SAYYAPU RAJU ENGG. CONSTRUCTIONS , 102, D.NO.50-1- 54/15, ASR NAGAR, SEETHAMMADHARA, VISAKHAPATNAM 2. / THE RESPONDENT THE ACIT, CIRCLE-4(1), VISAKHAP ATNAM 3. + / THE CIT-2, VISAKHAPATNAM 4. + ( ) / THE CIT (A), VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM