Dy.CIT, Circle-3(2), Hyderabad V. M/s Sujana Metal Products Ltd., Hyderabad

ITA 1193/HYD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87417 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-03-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 17-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Rejection of books of accounts
• Section: 115JB

Judgement Text

ITA NOS.1193 AND 1622 OF 2014 SUJANA METAL PRODUCTS LTD HYDERABAD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER & SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1622/HYD/2014 (ASSESSMENT YEAR: 2010-11 ) M/S. SUJANA METAL PRODUCTS LTD HYDERABAD PAN: AACCS 8614 H VS. DY . COMMISSIONER OF INCOME TAX, CIRCLE 3(2) HYDERABAD (APPELLANT) (RESPONDENT) ITA NO.1193/HYD/2014 (ASSESSMENT YEAR: 2010-11 ) DY . COMMISSIONER OF INCOME TAX, CIRCLE 3(2) HYDERABAD VS. M/S. SUJANA METAL PRODUCTS LTD HYDERABAD PAN: AACCS 8614 H (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P. MURALI MOHAN RAO, CA FOR REVENUE : SHRI D. SUDHAKAR RAO, CIT(DR) DATE OF HEARING : 05/03/2015 DATE OF PRONOUNCEMENT : 18 /03/2015 O R D E R PER BENCH: THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND T HE REVENUE AGAINST THE ORDER OF THE LD CIT (A)-IV HYDE RABAD, DATED 10.04.2014 FOR A.Y 2010-11. ITA NOS.1193 AND 1622 OF 2014 SUJANA METAL PRODUCTS LTD HYDERABAD PAGE 2 OF 5 2. BRIEFLY STATED, ASSESSEE IS A COMPANY, ENGAGED I N THE BUSINESS OF MANUFACTURING OF THERMO MECHANICALLY TR EATED (TMT) STEEL PRODUCTS. ASSESSEE FILED ITS RETURN OF INCOME ON 15.10.2010 DELARING A TOTAL INCOME OF RS.4,81,12,32 3 UNDER NORMAL PROVISIONS AND A BOOK PROFIT OF RS.20,11,32, 635 U/S 115JB OF THE I.T. ACT, 1961. 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS, AO DIRE CTED THE ASSESSEE TO FURNISH INFORMATION AND DOCUMENTS IN SU PPORT OF THE ENTRIES IN ITS AUDITED RESULTS AND THE RETURN OF IN COME. AO ALSO REFERRED TO CERTAIN DISCREPANCIES, LISTED VIDE HIS LETTER DATED 1.2.2013 ISSUED TO THE ASSESSEE. HOWEVER, ASSESSEE FAILED TO PRODUCE ANY OF THESE DETAILS. UNDER THE CIRCUMSTNAC ES, AO REJECTED THE BOOKS OF ACCOUNTS SINCE IT WAS NOT POS SIBLE FOR HIM TO ARRIVE AT THE CORRECT INCOME OF THE ASSESSEE FRO M THE BOOKS OF ACCOUNTS STATED TO HAVE BEEN MAINTAINED BY THE ASSE SSEE. AO ESTIMATED THE NET INCOME AT 1.5% OF THE TOTAL TURNO VER. 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE LD CIT (A) UPHELD THE DECI SION OF THE AO IN REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. ITA NOS.1193 AND 1622 OF 2014 SUJANA METAL PRODUCTS LTD HYDERABAD PAGE 3 OF 5 5. THE LD CIT (A) HELD AS FOLLOWS: 9.THE AO ESTIMATED THE INCOME AT 1.5% OF THE TOTAL TURNOVER OF THE APPELLANT. FOR THE PRECED ING A.Y 2009-10 IN THE APPELLANTS OWN CASE, I HAD IN M Y ORDER IN ITA NO.464/AC 3(2)/CIT (A)-IV/2011-12 DATED 22.1.2013, UNDER SIMILAR CIRCUMSTANCES, HAD DIRECTED THE AO TO ESTIMATE THE INCOME OF THE APPELLANT AT 1% OF THE TURNOVER. 6. AGGRIVED BOTH THE ASSESSEE AND THE REVENUE HAVE FILED APPEAL BEFORE THE ITAT RAISING THEIR RESPECTIVE GRO UNDS: ITA NO.1622/HYD/2014-ASSESSEE APPEAL 1. THE LD CIT (A) ERRED BOTH IN LAW AND ON FACTS I N PARTLY ALLOWING THE APPEAL. 2. THE LD CIT (A) ERRED IN UPHOLDING THE REJECTION OF BOOKS BY THE AO. 3. THE LD CIT (A) OUGHT TO HAVE APPRECIATED THE FAC T THAT BOOKS CANNOT BE REJECTED MERELY ON THE GROUND THAT PERCENTAGE OF PROFIT DECLARED IS AT LOWER SIDE. 4. THE LD CIT (A) OUGHT TO HAVE APPRECIATED THE FAC T THAT THE AO CANNOT CHANGE THE METHOD OF ACCOUNTING WHICH IS BEING CONTINUOUSLY FOLLOWED BY THE APPELLANT WIT HOUT ASSIGNING ANY REASON. 5. THE LD CIT (A) OUGHT TO HAVE CONSIDERED THE RETU RNED INCOME FILED BY THE APPELLANT. 6. THE RELIANCE HAS BEEN PLACED ON THE FOLLOWING DECISION OF THE JURISDICTIONAL BENCH OF ITAT IN THE CASE OF VISHAL INFRASTRUCTURE LTD VS. ACIT (104 ITD 537 (HY D.). 7. THE LD CIT (A) ERRED IN ESTIMATING THE INCOME AT 1% OF THE TURNOVER WHICH IS A VERY HIGH PERCENTAGE IN THE LINE OF TRADE OF THE APPELLANT . ITA NOS.1193 AND 1622 OF 2014 SUJANA METAL PRODUCTS LTD HYDERABAD PAGE 4 OF 5 ITA NO.1193/HYD/2014-REVENUES APPEAL : 1. THE LD CIT (A) ERRED IN LAW ALLOWING THE ASSESS EES APPEAL. 2. THE LD CIT (A) OUGHT TO HAVE UPHELD THE ESTIMATI ON OF PROFIT MADE BY THE AO @ 1.5% AS THE ESTIMATION WAS BASED ON THE GENERAL TRENDS IN THE LINE OF THE BUSINESS . 7. WE FIND THAT THE ISSUE IS COVERED BY THE DECISIO N OF THE ITAT COORDINATE BENCH, IN ASSESSEES OWN CASE IN ITA NOS . 304 & 305/HYD/2013 FOR THE A.Y 2009-10. THE RELEVANT PORT ION OF THE DECISION AT PARA 10 OF THE ORDER IS EXTRACTED BELOW : 10. CONSIDERING THE SUBMISSIONS OF THE PARTIES AND KEEPING IN VIEW THE INTEREST OF JUSTICE, WE ALLOW O NE MORE OPPORTUNITY TO THE ASSESSEE FOR PRODUCTION OF ITS B OOKS OF ACCOUNTS AND OTHER DOCUMENTS BEFORE THE ASSESSING O FFICER TO SUBSTANTIATE ITS CLAIM AND ACCORDINGLY, SET ASID E THE ORDER OF THE CIT(A) AND REMIT THE MATTER TO THE FIL E OF THE ASSESSING OFFICER FOR DENOVO ASSESSMENT AFTER EXAMI NING THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS. WE ALSO DIRECT THE ASSESSEE TO PRODUCE ALL ITS BOOKS OF ACCOUNTS, DOCUMENTS, BILLS, INVOICES AND ANY OTHER INFORMATIO N CALLED FOR BY THE ASSESSING OFFICER AND COOPERATE IN FINAL ISATION OF THE PROCEEDING. IN THE EVENT, THE ASSESSEE DOES NOT CO- OPERATE BY PRODUCING THE BOOKS OF ACCOUNTS AND OTHE R INFORMATION CALLED FOR BY THE ASSESSING OFFICER OR IF THE ASSESSING OFFICER ON EXAMINATION OF THE BOOKS OF AC COUNTS AND OTHER DOCUMENTS FINDS THAT THERE ARE DISCREPANC IES WHICH THE ASSESSEE IS NOT ABLE TO EXPLAIN, THE ASSE SSING OFFICER WOULD BE AT LIBERTY TO TAKE AN INDEPENDENT DECISION IN THE MATTER IN ACCORDANCE WITH LAW. THE ASSESSING OFFICER SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE. ITA NOS.1193 AND 1622 OF 2014 SUJANA METAL PRODUCTS LTD HYDERABAD PAGE 5 OF 5 8. RESPECTFULLY FOLLOWING THE DECISION OF THE COORD INATE BENCH, IN ASSESSEES OWN CASE FOR A.Y 2009-10, WE SET ASID E BOTH THE APPEAL TO THE AO TO DECIDE THE MATTER AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. HENCE, BOTH THE APPEAL S ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2015. S D/ - S D/ (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 18 TH MARCH, 2015. VNODAN/SPS COPY TO: 1. M/S. SUJANA METAL PRODUCTS LTD, C/O P. MURALI & CO. CA, 6- 3-655/2/3 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500082 2. THE DY.CIT CIRCLE 3(2) HYDERABAD 3. THE CIT(A)-IV HYDERABAD 4. THE CIT III HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER