GEA BGR India Limited, CHENNAI V. ACIT (OSD), CHENNAI

ITA 1124/CHNY/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8658 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 04-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR CIT
• Assessee Lawyers: SANDHYAARTI T
• Keywords: Set aside
• Section: 201; 63

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI . . , . , BEFORE SHRI DUVVURU R.L. REDDY, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.1124/CHNY/2017 /ASSESSMENT YEAR: 2012-13 M/S.GEA BGR INDIA LTD., NO.443, ANNA SALAI, TEYNAMPET, CHENNAI-18. VS. THE ASST. COMMISSIONER- OF INCOME TAX (OSD), CORPORATE CIRCLE-2, CHENNAI. [PAN: AACCG 8823 E] ( # /APPELLANT) ( $%# /RESPONDENT) # & / APPELLANT BY : MS.SANDHYAARTI.T, FCA $%# & /RESPONDENT BY : MR. R.CLEMENT RAMESH- KUMAR, ADDL.CIT & /DATE OF HEARING : 08.07.2019 & /DT. OF PRONOUNCEMENT : 06.09.2019 / O R D E R PER SHRI DUVVURU R.L. REDDY, JUDICIAL MEMBER : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER O F THE PRINCIPAL COMMISSIONER OF INCOME TAX-2, CHENNAI, PASSED U/S.2 63 OF IT ACT, IN C.NO.1228/PR.CIT-2/263/2016-17 DATED 28.03.2017 FOR THE AY 2012-13. 2. THE ONLY GRIEVANCE IN THE ASSESSEES CASE IS THAT THE PR.CIT ERRED IN PASSING THE ORDER U/S.263 OF THE IT ACT AND MADE AN ADDITION WITH RESPECT TO NET RETENTION MONEY DURING THE AY 2012-13 OF RS. 1,85,48,026/-. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED I TS RETURN OF INCOME FOR ITA NO.1124/CHNY/2017 :- 2 -: THE AY 2012-13 ON 28.09.2012 ADMITTING A TOTAL INCO ME OF RS.12,04,96,429/-. THE ASSESSMENT WAS COMPLETED U/ S.143(3) OF THE ACT ON 16.03.2015 AND ASSESSED THE INCOME OF RS.12,61,3 6,818/-. AS PER THE ORDER OF THE PR.CIT, THE ASSESSEE HAD DEDUCTED A SU M OF RS.3,11,25,156/- AS RETENTION MONEY DURING THE AY 2012-13 AND AT THE SAME TIME ADDED A SUM OF RS.1,25,77,130/- AS RETENTION MONEY PERTAINI NG TO THE EARLIER YEARS REALIZED DURING THE FINANCIAL YEAR RELEVANT T O THE AY 2012-13. THE DIFFERENCE OF RETENTION MONEY REALIZED AND WITHHELD I.E. RS.1,85,48,026/- HAD BEEN EXCLUDED FROM THE PROFIT FOR THE RELEVANT FY. IT WAS FURTHER NOTICED THAT ALTHOUGH THE ASSESSEE COMPANY HAD EXCL UDED THE WITHHELD AMOUNT FROM THE PROFIT AMOUNT OF THE RELEVANT AY 20 12-13 CORRESPONDING EXPENDITURE THEREON HAD NOT BEEN EXCLUDED. IN OTHE R WORDS, THE ENTIRE GROSS RECEIPTS (RETENTION MONEY NOT REALIZED) HAD B EEN EXCLUDED WITHOUT CONSIDERING THE CORRESPONDING EXPENDITURE. HENCE, THE PROFITS OF THE ASSESSEES COMPANY HAD BEEN UNDER STATED TO THAT EX TENT. THE PR.CIT HAS OBSERVED THAT THE NET PROFIT RATIO OF THE COMPANY I S DECLARED AT 15.12%, HENCE THE GROSS EXPENDITURE COMPONENT IS 84.88%. I F THIS RATIO IS APPLIED ON THE WITHHELD AMOUNT OF RETENTION MONEY RS.1,84,4 8,026/- AN AMOUNT OF RS.1,57,43,565/- IS TO BE ADDED BACK TO THE TOTA L INCOME FOR THE AY 2012-13. UNDER THESE CIRCUMSTANCES, THE PR.CIT STAT ED THAT THE ORDER OF THE ASSESSMENT U/S.143(3) OF IT ACT FOR THE AY 201 2-13 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE SH OW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON 03.03.2017 PROPOSING TO R EVISE THE ASSESSMENT ORDER U/S.263 OF THE ACT. IN RESPONSE TO THE NOTIC E, THE ASSESSEE FILED HIS ITA NO.1124/CHNY/2017 :- 3 -: SUBMISSIONS VIDE LETTER DATED 15.03.2017 & 17.03.20 17 AND SUBMITTED THAT THE RETENTION MONEY IS OFFERED TO TAX IN THE Y EAR OF REALIZATION AND NO EXPENDITURE IS RELATING TO THAT PART OF THE INCOME IS CLAIMED AS DEDUCTION. HOWEVER, THE PR.CIT HAS NOT SATISFIED WITH THE EXPL ANATION GIVEN BY THE ASSESSEE AND SET ASIDE THE ASSESSMENT ORDER AND HE HAS GIVEN A DIRECTION TO CONSIDER THE ISSUE DE NOVO IN ACCORDANCE WITH LA W AND PASSED THE ORDER U/S.263 OF THE ACT. 3. ON BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPE AL BEFORE US. NOW, THE POINT FOR CONSIDERATION BEFORE US IS WHETH ER THE ORDER PASSED BY THE PR.CIT U/S.263 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE OR NOT? THE LD.COUNSEL FOR THE ASSESSEE HA S SUBMITTED THAT THE RETENTION MONEY IS OFFERED TO TAX IN THE YEAR OF RE ALIZATION AND NO EXPENDITURE THAT PART OF THE CLAIM AS DEDUCTION. T HEREFORE, THE ORDER PASSED BY THE PR.CIT U/S.263 IS LIABLE TO BE SET AS IDE. ON THE OTHER HAND, LD.DR SUBMITTED THAT THE AO HAD NOT EXAMINED THIS I SSUE AT ALL. HE FURTHER SUBMITTED THAT THE AO NEITHER EXAMINED THE SCOPE AND NATURE OF THE RETENTION MONEY RECEIVED BY THE ASSESSEE NOR TH E METHOD OF ACCOUNTING FOLLOWED BY IT IN RESPECT THEREOF. THER EFORE, THE ASSESSMENT ORDER PASSED U/S.143(3) IS PREJUDICIAL TO THE INTER EST OF THE REVENUE. THEREFORE, THE ORDER PASSED U/S.263 BY THE PR.CIT I S TO BE CONFIRMED. ITA NO.1124/CHNY/2017 :- 4 -: 4. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERI ALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW INCLUDING PAPER BOOK FILED BY THE ASSESSEE. 5. IN THIS CASE, THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE AO HAD NOT EXAMINED THIS ISSUE AT ALL AND ALSO HE HAS NOT EXAMINED THE SCOPE AND RETENTION MONEY RECEIVED BY THE ASSESSEE AND ALSO T HE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. APART FROM TH IS, THE PR.CIT HAS GIVEN A DIRECTION TO THE AO TO EXAMINE THIS ISSUE S INCE THE LD.AO FAILED TO LOOK INTO THIS ISSUE. THEREFORE, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER PASSED BY THE PR.CIT U/S.263 OF THE ACT. THEREFORE , THE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED AND ITS DEVOID OF MERIT S. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S DISMISSED. ORDER PRONOUNCED ON THE 06 TH DAY OF SEPTEMBER, 2019, IN CHENNAI. SD/- SD/- ( . ) (S. JAYARAMAN) /ACCOUNTANT MEMBER ( - . . . / ) (DUVVURU R.L. REDDY) /JUDICIAL MEMBER /CHENNAI, 1 /DATED: 06 TH SEPTEMBER, 2019. TLN & $23 43 /COPY TO: 1. # /APPELLANT 4. 5 /CIT 2. $%# /RESPONDENT 5. 3 $ /DR 3. 5 ( ) /CIT(A) 6. /GF