Dt. Commissioner of Income Tax, Circle-1(1)., Hyderabad V. American Infoserv Private Limited, Hyderabad

ITA 1171/Hyd/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0052 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 15-07-2021
• Assessment Year: 2009-2010
• Appeal Filed On: 07-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROHIT MUJUMDAR D
• Assessee Lawyers: P MURALI MOHANA RAO
• Section: 40A(3); 142(2A); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 362/HYD/18 2009-10 AMERICAN INFOSERV PRIVATE LIMITED, HYDERABAD [PAN: AAFCA3535L] DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1), HYDERABAD 858/HYD/17 2010-11 1171/HYD/17 2009-10 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1), HYDERABAD AMERICAN INFOSERV PRIVATE LIMITED, HYDERABAD [PAN: AAFCA3535L] 1172/HYD/17 2010-11 FOR ASSESSEE : SHRI P.MURALI MOHANA RAO , AR FOR REVENUE : SHRI R AJ ENDRA KUMAR & SHRI ROHIT MUJUMDAR, DRS DATE OF HEARING : 1 5 - 0 7 - 20 2 1 DATE OF PRONOUNCEMENT : 20 - 0 7 - 2021 O R D E R PER S.S.GODARA, J.M. : THESE TWO REVENUES AND ASSESSEES CROSS-APPEALS IT A NO.1171/HYD/2017 WITH ITA NO.362/HYD/2018 FOR AY.20 09- 10 & ITA NO.1172/HYD/2017 WITH ITA NO.858/HYD/2017 F OR AY.2010-11 ARISE AGAINST THE CIT(A)-1, HYDERABADS SE PARATE ORDERS; BOTH DATED 21-02-2017 PASSED IN CASE NOS.0304 & 0305/CIT(A)-1/HYD/2013-14/2016-17, INVOLVING PROCEE DINGS U/S.143(3) R.W.S.147 AND U/S.143(3) OF THE INCOME TA X ACT, 1961 [IN SHORT, THE ACT]; RESPECTIVELY. HEARD BOTH THE PARTIES. CASE FILES PERUSED. ITA NOS. 1171, 1172/HYD/2017 858/HYD/17 & 362/HYD/2018 :- 2 -: 2. IT TRANSPIRES AT THE OUTSET THAT THESE INSTANT REVENUES APPEALS ITA NOS.1171 & 1172/HYD/2017 AND ASSESSEES CASE ITA NO.362/HYD/2018 SUFFER DELAY FROM 31 DAYS EACH AND 248 DAYS; RESPECTIVELY STATED TO BE ATTRIBUTABLE TO THE REASON( S) BEYOND ITS CONTROL AS PER CONDONATION PETITION(S)/AFFID AVIT(S). NO REBUTTAL HAS COME FROM EITHER SIDE TO THIS EFFECT. THE IMPUGNED DELAYS IN ALL THE ABOVE APPEALS ARE CONDONED THEREFORE. 3. WE NEXT FIND BOTH THE ASSESSEES APPEALS ITA NOS.858/HYD/2017 AND 362/HYD/2018 RAISE A PURELY LE GAL QUESTION OF VALIDITY OF THE IMPUGNED ASSESSMENT MAKIN G VARIOUS DISALLOWANCES/ADDITIONS BASED ON THE SPECIAL AUDITORS REPORT SUBMITTED U/S.142(2A) OF THE ACT. THE ASSESSEE HA S RAISED ITS FIRST, FOURTH TO SIXTH SUBSTANTIVE GROUNDS IN AY.2009- 10 AND 11 TH SUBSTANTIVE GROUND IN AY.2010-11 THAT THIS ENTIRE PROCEDURE ADOPTED SECTION 142(2A) OF THE ACT IS NOT SUSTAINABLE IN LAW SINCE THE CORRESPONDING SPECIAL AU DITORS REPORTS HAVE BEEN SUBMITTED BEYOND THE PRESCRIBED TIME PERIOD. THE REVENUES VEHEMENT CONTENTION ON THE OTHER HAND IS THAT THE FOREGOING STATUTORY PROVISION STIPULATES ONUS O N THE ASSESSEE THAN ON THE DEPARTMENT TO FURNISH THE CORRESPON DING SPECIAL AUDIT REPORT U/S.142(2C) OF THE ACT. IT ALSO SOUGHT TO HIGHLIGHT THE FACT THAT THIS ASSESSEE HAD NOT AT ALL CO-O PERATED WITH THE SPECIAL AUDITOR IN AY.2009-10. 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE FOREGOING RIVAL SUBMISSIONS AGAINST AND IN SUPPORT O F THE VALIDITY OF THE SPECIAL AUDITORS REPORTS IN BOTH THES E ASSESSMENT YEARS. THERE IS NO DISPUTE BETWEEN THE P ARTIES ITA NOS. 1171, 1172/HYD/2017 858/HYD/17 & 362/HYD/2018 :- 3 -: THAT THE ASSESSING OFFICER(S) HAD DIRECTED SPECIAL AUDI T(S) IN BOTH THESE ASSESSMENT YEARS AS PER HIS ORDER(S) TO THIS EFFECT DT.26-12-2012. WE FURTHER NOTE THAT THE SPECIAL AUDITOR HAD FILED HIS BOTH OF HIS REPORTS ON 29-06-2013. 5. WE FIND NO SUBSTANCE IN REVENUES FOREGOING ARGUM ENTS SUPPORTING THE SPECIAL AUDITORS TWIN REPORTS. THIS IS FOR THE REASON THAT THE IMPUGNED SPECIAL AUDIT REPORTS FORMING THE BASIS OF THE VARIOUS IMPUGNED DISALLOWANCES/ADDITION S I.E. SECTION 10A, FOREIGN BRANCH EXPENSES, SECTIONS 40(A )(IA) AND 40A(3) DISALLOWANCES AND UN-RELATED BUSINESS EXPENSE S ETC; HAVE EVER BEEN PREPARED BEYOND THE STIPULATED TIME PERI OD OF 180 DAYS FROM THE ASSESSING OFFICERS DIRECTIONS TO THI S EFFECT ISSUED TO THE ASSESSEE. WE FURTHER WISH TO MAKE IT CLEA R THAT THIS IS NOT THE REVENUES CASE BEFORE AS THAT THE ASSE SSEE HAD IN FACT RECEIVED THE ASSESSING OFFICERS SECTION 142( 2A) R.W.S.(2C) DIRECTION ON ANY OTHER DAY AND DATE; AS THE CASE MAY BE WITHIN 180 DAYS COUNTED BACKWARDS FROM 29-06-2013 (SUPRA). WE THUS ADOPT STRICT INTERPRETATION AS PER THE HO N'BLE APEX COURTS RECENT LANDMARK DECISION IN COMMISSIONER OF CUSTOMS VS. DILIP KUMAR (2018) 9 SCC 1 (FB)(SC) AND HOLD THAT THE IMPUGNED SPECIAL AUDITORS REPORT FORMING THE BA SIS OF VARIOUS DISALLOWANCES/ADDITIONS DESERVES TO BE QUASH ED AS NON EST. ORDERED ACCORDINGLY. ALL THE FOREGOING DISALLOWANCES/ADDITIONS BASED ON THE SAID TWIN SPECIA L AUDIT REPORTS ALSO DESERVE TO BE DELETED SINCE HAVING NO LE GS TO STAND. 6. MR.MUJUMDAR LASTLY SOUGHT TO BUTTRESS THE POINT THAT THE ASSESSEE HAS NOT CO-OPERATED BEFORE THE SPECIAL AUDITOR OR ITA NOS. 1171, 1172/HYD/2017 858/HYD/17 & 362/HYD/2018 :- 4 -: ASSESSING OFFICER THROUGHOUT. WE FIND NO REASON TO A CCEPT THIS LAST ARGUMENT AS WELL SINCE THE SPECIAL AUDITORS REPOR T IN PGS.11 TO 40 OF THE PAPER BOOK (AY.2010-11) MAKES IT C LEAR THAT HE HAD VERY MUCH VISITED THE ASSESSEES HEAD OFFIC E AS WELL AS THE BRANCHES AND GOT ALL THE NECESSARY MATERI AL. 7. THE ASSESSEES 1 ST AND 4 TH TO 6 TH SUBSTANTIVE GROUNDS IN AY.2009-10 AND 11 TH SUBSTANTIVE GROUNDS IN AY.2010-11 STAND ACCEPTED. ALL OTHER ISSUES ON MERITS IN ALL THESE FOUR CROSS APP EALS ARE RENDERED ACADEMIC. 8. TO SUM-UP, REVENUES APPEALS ITA NOS.1171 & 1172/HYD/2017 ARE DISMISSED AND ASSESSEES CROSS AP PEALS ITA NOS.858/HYD/2017 AND 362/HYD/2018 ARE ALLOWED. A COPY OF THIS COMMON ORDER BE PLACED IN THE RESPECTIVE CASE FILES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 20-07-2021 TNMM ITA NOS. 1171, 1172/HYD/2017 858/HYD/17 & 362/HYD/2018 :- 5 -: COPY TO : 1.AMERICAN INFOSERV PRIVATE LIMITED, C/O. P.MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 S FLOOR, SOMAJIGUDA, HYDERABAD. 2.THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1 ), HYDERABAD. 3.CIT(APPEALS)-1, HYDERABAD. 4.THE PR.CIT-1, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.