THE ACIT, Visakhapatnam V. V.Chinna Hazarathaiah, Visakhapatnam

ITA 112/VIZ/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6550 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 10-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M N M NAIK
• Assessee Lawyers: C KAMESWARA RAO
• Keywords: Depreciation; Assessment record
• Section: 143(3); 147; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI G. MANJUNATHA, HONBLE ACCOUNTANT MEMBER ITA NO. 297 / VIZ /201 5 (ASST. YEAR : 20 07 - 08 ) AND ITA NO. 112 / VIZ /201 6 (ASST. YEAR : 20 0 8 - 0 9 ) ACIT, CIRCLE - 5(1), VISAKHAPATNAM. V . SRI VADLAMUDI CHINA HAZARATAIAH, PROP. : M/S. SIMHAPUR TRANSPORT, D.NO. 1 - 1 - 3/1 , NEAR PUMP HOUSE, NH - 5 , BHPV POST,VISAKHAPATNAM - 12 PAN NO. ABIPV 7284 L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C. KAMESWARA RAO FCA DEPARTMENT BY : SHRI M.N.M. NAIK SR. DR DATE OF HEARING : 06 / 02 /201 7 . DATE OF PRONOUNCEMENT : 14 / 02 /201 7 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THESE ARE THE APPEAL S FILED BY THE REVENUE AGAINST THE SEPARATE ORDER S OF THE COMM ISSIONER OF INCOME TAX (APPEALS) - 2, VISAKHAPATNAM , DATED 0 4 /0 5 /201 5 & 22/12/2015 FOR THE ASSESSMENT YEAR S 2007 - 08 & 2008 - 09 . ITA NO. 297/VIZ/2015 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A TRANSPORT CONTRACTOR , FILED RETURN OF INCOME DECLARING TOTAL INCOME OF 9,01,690/ - 2 ITA NO. 297/VIZ/2015 & ITA NO.112/VIZ/2016 THE ASSESSING OFFICER AFTER FOLLOWING DUE PROCEDURE , ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) BY REJECTING THE BOOKS OF ACCOUNT AND ESTIMATED GROSS RECEIPTS OF 15,17,04,380/ - AND DETERMINED TOTAL INCOME AT 19,05,128/ - . SUBSEQUENTLY, THE ASSESSING OFFICER BY ISSUING NOTICE UNDER SECTION 1 48 OF THE ACT HA D REOPENED THE ASSESSMENT AND DENIED THE CLAIM OF DEPRECIATION. 3 . THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND SUBMITTED THAT THE ASSESSING OFFICER DENIED THE DEPRECIATION WITHOUT GIVING ANY REASONS, THEREFORE, IT IS BAD IN LAW. HE PRAYED THAT DEPRECIATION MAY BE ALLOWED TO THE ASSESSEE. THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER CONSIDERING THE EXPLANATION/SUBMISSIONS OF THE ASSESSEE, HE DIRECTED THE ASSESSING OFFICER TO ESTIMATE INCOME OF THE ASSESSEE AT 1.05% ON GROSS CONTRACT RECEIPTS OF 15,17,04,380/ - NETTING O FF ALL EXPENSES INCLUDING DEPRECIATION. 4 . ON BEING AGGRIEVED , THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL . 5. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER . 6. ON THE OTHER HAND, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND ALSO POINTED OUT FROM THE PAPER BOOK AT PAGE NO.1 THAT ASSESSMENT YEAR 2005 - 06 , THE INCOME ESTIMATED BY THE ASSESSING OFFICER UNDER SECTION 143(3) WAS OF 0.58% NET OFF ALL EXPENSES; FOR 2006 - 07 AT 1.12% AND 2007 - 08 AT 1 . 09% . THE COMMISSIONER OF 3 ITA NO. 297/VIZ/2015 & ITA NO.112/VIZ/2016 INCOME TAX (APPEALS) DIRECTED THE ASSESSING OFFICER TO ESTIMATE INCOME OF THE ASSESSEE AT 1.5% ON GROSS TOTAL RECEIPTS . THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER SUBMITTED THAT THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) MAY BE UPHELD. 7 . WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW . THE ASSESSEE IS IN THE BUSINESS O F TRANSPORT CONTRACT , FILED RETURN OF INCOME DECLARING TOTAL INCOME OF 9,01,690/ - AND ALSO CLAIMED DEPRECIATION . THE ASSESSING OFFICER HAS ESTIMATED THE INCOME AT 5% OF THE GROSS REC EIPTS AND ALSO ALLOWED DEPRECIATION. SUBSEQUENTLY, KEEPING IN VIEW OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS V S. CIT (232 ITR 776) , DENIED THE CLAIM OF DEPRECIATION. ON APPEAL, COMMISSIONER OF INCOME TA X (APPEALS) BY CONSIDER I NG THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO THE DECISION OF THE ITAT , BENCH AT VIZAG IN THE CASE OF ACIT V S. INFRA CONSTRUCTIONS IN ITA NO. 488/VIZ/2004 , BY ORDER DATED 04/06/2009, WHEREIN THE ITAT HAS CONSIDERED THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS (SUPRA) AND ALLOWED DEPRECIATION. THE COMMISSIONER OF INCOME TAX (APPEALS) KEEPING IN VIEW OF THE ABOVE, DIRECTED THE AS SESSING OFFICER TO ESTIMATE THE INCOME OF LORRY TRANSPORT BUSINESS AT 1.5% OF THE GROSS CONTRACT RECEIPTS NET OFF ALL EXPENSES INCLUDING DEPRECIATION. WE HAVE ALSO CONSIDERED THE COMPARATIVE CHART FILED FOR THE ASSESSMENT YEAR S 2005 - 06 TO 2007 - 08 . WE FIND THAT NET PROFIT EARNED BY THE ASSESSEE 4 ITA NO. 297/VIZ/2015 & ITA NO.112/VIZ/2016 WAS OF ALMOST SIMILAR TO THE NET PROFIT ADOPTED BY THE COMMISSIONER OF INCOME TAX (APPEALS). FOR THE SAKE OF CONVENIENCE , THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS EXTRACTED HEREUNDER: - 3. I HAVE CONSIDERED THE SUBMISSIONS MADE. I HAVE ALSO PERUSED ASSESSMENT RECORDS AND CONSIDERED THE DETAILS AVAILABLE ON RECORD. 3.1. AT THE OUTSET IT IS RELEVANT TO NOTE THAT THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER MENTIONE D THAT THE ASSESSMENT WAS REOPENED AFTER TAKING THE APPROVAL OF THE CIT. HOWEVER, THE PERUSAL OF THE ASSESSMENT RECORDS CLEARLY SHOW THAT NO SUCH APPROVAL WAS SOUGHT FROM THE CIT OR JCIT AND NO SUCH APPROVAL WAS GIVEN BY THE HIGHER AUTHORITIES. THUS THE RE FERENCE MADE BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER OF HAVING TAKEN APPROVAL FROM CIT IS FACTUALLY WRONG. IT IS ALSO SEEN THAT CIT(A) IN HIS APPELLATE ORDER DTD.14.02.2014, TAKING COGNIZANCE OF S U CH APPROVAL HELD THE REOPENING TO BE BAD IN LAW AND DID NOT ADJUDICATE THE OTHER GROUNDS. AS IT IS NOTED FROM THE RECORDS, THAT TH E DECISION OF THE CIT(A) WAS BA SED ON INCORRECT MATERIAL FACTS APPARENT FROM THE RECORD, I CONSIDER IT APPROPRIATE TO INVOKE THE PROVISIONS OF SECTION 154 TO RECTIFY T HE APPELLATE ORDER DTD.14.02.2014. AS THE ASSESSING OFFICER HAD NOT TAKEN ANY APPROVAL FOR REOPENING OF THE ASSESSMENT, THE DECISION GIVEN IN THE APPELLATE ORDER DTD.14.02.2014 SUFFERS FROM MISTAKE APPARENT FROM RECORD AND THE SAME IS RECTIFIED IN THIS ORD ER. AS A RESULT, THE VARIOUS OTHER ISSUES RAISED BY ASSESSEE ARE ALSO ADJUDICATED IN THIS ORDER. 3 .2 IT IS RELEVANT TO NOTE THAT THE HONOURABLE JURISDICTIONAL HIGH COURT OF ANDHRA PRADESH IN THE CASE OF INDWELL CONSTRUCTION VS. CIT HAS HELD THAT WHEN AN ESTIMATION OF INCOME IS MADE THEN IT WOULD MEAN THAT ALL EXPENSES CONTAINED IN SECTION 30 TO 43D OF THE INCOME - TAX ACT HAS BEEN CONSIDERED TO BE ALLOWED. THEREFORE NO SEPARATE ALLOWANCE NEED S T O BE MADE WITH REGARD TO DEPRECIATION OR ANY OTHER EXPENDITURE. I FIND THAT HE ASSESSING OFFICER HAD REOPENED THE ASSESSMENT TO CONSIDER THE INCOME THAT HAS ESCAPE D IN ALLOWING DEPRECIATION AFTER ESTIMATION OF INCOME BASED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT OF ANDHRA PRADESH IN THE CASE OF INDWELL CONSTRUCTION. THEREFORE, I DO NOT FIND ANY DEFICIENCY IN THE ASSESSING OFFICERS ACTION IN THE REOPENING OF THE ASSESSMENT U/S 147 AND THE ASSESSING OFFICERS ACTION IS UPHELD. IN VIE W OF THE ABOVE, WE FIND NO INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), THUS, THE APPE AL FILED BY THE REVENUE IS DISMISSED. 5 ITA NO. 297/VIZ/2015 & ITA NO.112/VIZ/2016 ITA NO. 112/VIZ/2016 8 . INSOFAR AS ASSESSMENT YEAR 2008 - 09 IS CONCERNED, THE FACTS AND CIRCUMSTANCES A R E SIMILAR TO THE FACTS INVOLVED IN ASSESSMENT YEAR 2007 - 08. THEREFORE, IN VIEW OF OUR DECISI ON IN PRECEDING PARAGRAPH SHALL APPLY MUTATIS MUTANDIS TO THE ASSESSMENT YEAR 2008 - 09 ALSO. THUS, THE GROUND OF APPEAL RAISED BY THE REVE N UE IS DISMISSED. 9 . IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON TH IS 1 4 T H DAY OF FEBRUARY , 201 7 . S D / - S D / - ( G. MANJUNATHA ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 4 T H FEBRUARY , 201 7 . VR/ - COPY TO: 1 . THE ASSESSEE - SRI VADLAMUDI CHINA HAZARATAIAH, PROP. : M/S. SIMHAPUR TRANSPORT, D.NO. 1 - 1 - 3/1, NEAR PUMP HOUSE, NH - 5, BHPV POST,VISAKHAPATNAM - 12 . 2 . THE REVENUE - ACIT, CIRCLE - 5(1), VISAKHAPATNAM. 3 . THE CIT - 2, VISAKHAPATNAM. 4 . THE CIT(A) - 2, VISAKHAPATNAM. 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., VISAKHAPATNAM