Dy. Commissioner Of Income Tax, Hyderabad V. M/s. Sujana Towers Ltd., Hyderabad

ITA 1409/HYD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6449 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 28-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKARA RAO
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Depreciation; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1360/HYD/13 : ASSESSMENT YEAR 2009 - 10 M/S. SUJANA TOWERS LTD., HYDERABAD ( PAN - AAKCS 7820 F) V/S. ASST. COMMISSIONER OF INCOME - TAX CIRCLE 3(2), , HYDERABAD (APPELLANT) (RESPONDENT) ITA NO.140 9 /HYD/13 : ASSESSMENT YEAR 2009 - 10 DY. COMMISSIONER OF INCOME - TAX CIRCLE 3(2), , HYDERABAD V/S. M/S. SUJANA TOWERS LTD., HYDERABAD ( PAN - AAKCS 7820 F) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P,MURALI MOHAN RAO REVENUE BY : SHRI D.SUDHAKARA RAO DR DATE OF HEARING 09 .0 7 .2014 DATE OF PRONOUNCEMENT 16.07.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THESE ARE CROSS APPEALS FOR THE ASSESSMENT YEAR 2009 - 10 AND THEY ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) IV HYDERABAD DATED 30.8.2013. SINCE COMMON ISSUES ARE INVOLVED, THESE APPEALS ARE BEING DISPOSED OF WITH THIS COMMON ORDE R FOR THE SAKE OF CONVENIENCE. 2. THE MAIN ISSUE INVOLVED IN THESE APPEALS RELATES TO ESTIMATION OF THE INCOME OF THE ASSESSEE FROM BUSINESS. ITA NO.1360 & 1 409 /HYD/201 3 M/S. SUJANA TOWERS LTD., HYDERABAD 2 3 . FACTS OF TH E CASE IN BRIEF ARE THAT THE ASSESSEE COMPANY, ENGAGED IN THE BUSIN ES S OF MANUFACTURING O F REROLLED STEEL PRO D U C TS AND MANUFACTURING AND ERECTION OF TELECOM AND TRANSMISSION TOWERS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10, DECL A RING A L O S S OF RS .8,08,13,432 UN D ER NORMAL PROVISIONS, AND BOOK PROFIT OF RS .8,00,62,073 UN D ER S.11 5JB OF THE ACT. IN THE COU R SE OF ASSESSMENT PROCEEDIN G S, THE ASSESSING OFFICER OBSERVING THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE OF RS.479,19,18,645, FOR AN AGGREGATE MANUFACTURING AND TRADING TURNOVER DURING THE Y E AR OF R S .576,17,18,891, WAS VERY H IGH. HE ACCORDINGLY CALLED FOR DETAILED INFORMATION FROM THE ASSESSEE , INCLUDING DOCUMENTS IN SUPPORT OF THE CLAIM O F OPENING STOCK, SALES, PU R CH AS ES AND CLO S IN G STOCK OF MANUFA C TURED GOODS AND TRADED GOODS SEPARATELY IN TERMS OF QUANTITY AND COST. ASSESSEE COULD PRODUCE ONLY A PA R T OF THIS IN F ORM A TION, I.E. ABSTRACT O F THE PU R CH A SE REGI S TER AND SALE REGISTER AND SOME SAMPLE PU R CH AS E BILLS, ETC. F OR VERIFI C ATION. ESSENTIAL DATA LIKE DELIVERY CH A LLANS AND C ORRECT PLACES O F DELIVERY OF MACHINERY AND S EGMENTAL DETAILS FOR MANUFACTURING AND TRADING ACTIVITIES WERE NO T FURNISHED. ASSESSEE, BEING A MANUFACTURING UNIT, ACCOR D ING TO THE ASSESSING OFFICER, IT SHOULD HA V E MAINTAINED AT LEAST ALL THE ABOVE DETAILS AND FURNISHED THE SAME ON BEING ASKED FOR. FURTH E R, DETAILED ANALYSIS BY THE ASSESSING OFFICER OF THE SAM P LE PURCHASE BILLS, SHOWED THAT HUGE QUANTITIES OF STEEL HAD APPARENTLY BEEN TRANSPO R TED ON AUTO RICKSHAWS AND OTHER LIGHT MOTOR VEHICLES. IN THE CIRCUM S T A NCES, THE ASSESSING OFFICER REJECTE D THE BOOKS OF ACCOUNT WITH THE FOLLO W IN G SPECIFIC OBSERVATIONS - A ) ASSESSEE FAILED TO P R O D U C E THE D ETAILS O F THE PU R CH AS ES AS CALLED FOR IN THE QUESTIONNAIRE ; B ) THE ASSESSEE FAIL E D TO P R O D U C E THE DE T AILS O F TH E SALES AS CALLED FOR ; C ) THE ASSESSEE FAIL E D TO PRODUCE THE DETAILS OF THE PLACES OF PU R CH AS E AND MODE OF TRANSPORTATION OF THE GOODS PU R CH AS ED ; ITA NO.1360 & 1 409 /HYD/201 3 M/S. SUJANA TOWERS LTD., HYDERABAD 3 D ) ASSESSEE FAILED TO P R O D U C E THE D ETAILS OF THE PL A CES OF SALE AND MODE OF TRANSPORTATION OF THE GOODS SOLD ; E ) ASSESSEE FAILED TO P R O D U C E DETAILS O F OPENING STOCK , PU R CHA S ES, SALES AND CLO S IN G STOCK OF MANUFACTURED GOODS AND TRADED GOODS SEPARATELY IN TERMS OF QUANTITY AND COST ; F ) ASSESSEE FAIL E D TO P R O D UCE DETAILS O F WHERE AND HO W THE ADDITIONAL MACHINERY WAS PUT TO USE AND THE INCREASE IN PRODUCTION AND ELECTRICITY CONSUMPTION AFTER THE INSTALLATION OF THE MACHIN E RY CL A IM E D TO H A VE BE E N PUT TO USE DURING THE Y E AR. THE ASSESSEE THUS COULD NO T JUSTIFY THE CLAIM FOR DEPRE C IAT I ON ; G ) ASSESSEE FAI L ED TO PRO D U C E THE DAY TO DAY CONSUMPTION OF RAW MATERIAL DETAIL S AND THE COR RESPONDING PRODUCTION DETAILS REL A TING TO MANUFACTURED GOODS, AND THUS, THE ACTUAL P R ODU C TION AND CORRESPONDING R A W MATERIAL CONSUMPTION DETAILS COULD NO T BE VERIFIED ; H ) THE NET PROFIT ( PBT/NET SALES ) DECL A RED BY THE ASSESSEE AT 1.48% FOR THE F IN ANCIAL YEAR UNDER CON S I D ERATION IS NO T EVEN HALF OF THE RESULT DECL A RED BY THE ASSESSEE IN THE IMM E DI A TELY PRECEDING YEAR AT 3.25%. 4. FOR THE ABOVE REASONS, AND RELYING ON A NUMBER OF JUDICIAL PRONOUNCEMENTS THE ASSESSING OFFICER REJECTED THE BOOK RESULTS, AND ES TIMATED THE NET INCOME OF THE ASSESSEE AT 1.5% OF THE TOTAL TURNOVER, IN WHICH HE INCLUDED OTHER INCOME DECLARED BY THE ASSESSEE OF RS.6,87,29,599 AS WELL, ON THE GROUND THAT SUCH INCOME WAS ALSO DERIVED FROM THE BUSINESS OF THE ASSESSEE. 5. ON APPEA L, THE CIT(A), NOTWITHSTANDING THE FACT THAT THE ASSESSEE ITSELF DECLARED HIGHER PROFIT WORKING OUT TO 3.25% IN THE IMMEDIATELY PRECEDING YEAR, OBSERVING THAT THE RATE ADOPTED BY THE ASSESSING OFFICER FOR ESTIMATING THE NET INCOME OF THE ASSESSEE OF 1.5% OF THE TURNOVER TO BE ON HIGHER SIDE, ITA NO.1360 & 1 409 /HYD/201 3 M/S. SUJANA TOWERS LTD., HYDERABAD 4 AND ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE SAME BY APPLYING A RATE OF 1%, NET OF ALL DEDUCTIONS/ALLOWANCES, INCLUDING DEPRECIATION, WHICH ACCORDING TO HIM NEED NOT BE SEPARATELY ALLOWED, CONSIDERING THE LOWER RATE ADOPTED. 6. STILL AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEFORE US , VIDE I TA NO. 1360/HYD/2013 , WHEREAS AGGRIEVED BY THE RELIEF GRANTED BY THE CIT(A), REVENUE PREFERRED ITS APPEAL ITA NO.1409/HYD/2013. 7. E LABORATE GROUNDS HAVE BEEN RAISED BY THE ASSESSEE, CONTENDING THAT THE RATE OF 1% ADOPTED BY THE CIT(A) FOR ESTIMATION OF INCOME O F THE ASSESSEE IS ON THE HIGHER SIDE , SINCE ADOPTION OF A RATE OF 0.5% WOULD BE REASONABLE ; AND NON - ALLOWANCE OF DEPRECIATION FROM SUCH ESTIM A TED INCOME IS AGAINST THE INSTRUCTIONS OF THE CBDT AND THE DECISION S OF THE T RIBUNAL IN SIMILAR MATTERS. HOWEVER, AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE PLEADED FOR ONE MORE OPPORTUNITY TO THE ASSESSEE, TO FURNISH BOOKS OF ACCOUNT AND OTHER DETAIL S BEFORE THE ASSESSING OFFICER, AND FOR THE RE - EXAMINATION OF THE MATTER AT THE LEVEL OF ASSESSING OFFICER . HE ALSO FURNISHED BEFORE US A COPY OF THE ORDER OF THE TRIBUNAL DATED 13.8.2013, IN CROSS APPEALS IN THE CASES OF M/S. SUJANA UNIVERSAL INDUSTRIES LTD., HYDERABAD (ITA NO.304 & 475/HYD/2013); AND M/.S SUJANA METAL PRODUCTS LTD. (ITA NO.305 AND 474/HYD/2013), WHERE CONSIDERING SIMILAR ADDITIONS, AND SIMILAR PLEA OF THE ASSESSEE, MATTER WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH EXAMIN ATION, SETTING ASIDE THE ORDERS OF THE CIT(A) IMPUGNED THEREIN. 8. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE CONTRARY, OPPOSING THE RELIEF GRANTED BY THE CIT(A) ON THE GROUND THAT THE RATE OF 1.5% ADOPTED BY THE ASSESSING OFFICER WAS IN LINE WITH THE T REND IN THE MARKET IN ASSESSEES LINE OF BUSINESS, SUBMITTED THAT THE ORDER OF THE ASSESSING OFFICER BE RESTORED. ITA NO.1360 & 1 409 /HYD/201 3 M/S. SUJANA TOWERS LTD., HYDERABAD 5 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CONSIDERED THE SPECIFIC PLEA OF THE ASSESSEE FOR ONE MORE OPPORTUNITY FOR FURNISHING THE RELEVANT BOOKS OF ACC OUNT AND OTHER DETAILS, IF THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. WE FIND THAT THIS TRIBUNAL, IN THE CONTEXT OF ADDITIONS MADE SIMILAR CIRCUMSTANCES AND CONSIDERING SIMILAR PLEAS OF THE ASSESSEE, IN THE CASES O F ASSESSEES OWN GROUP, VIDE ITS ORDER DATED 13.8.2013, RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER, IN THE FOLLOWING MANNER - 10. CONSIDERING THE SUBMISSIONS OF THE PARTIES AND KEEPING IN VIEW THE INTEREST OF JUSTICE, WE ALLOW ONE MORE OPPORTUNITY TO THE ASSESSEE FOR PRODUCTION OF ITS BOOKS OF ACCOUNTS AND OTHER DOCUMENTS BEFORE THE ASSESSING OFFICER TO SUBSTANTIATE ITS CLAIM AND ACCORDINGLY, SET ASIDE THE ORDER OF THE CIT(A) AND REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR DENOVO ASSESSMENT AFTER EXAMINING THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS. WE ALSO DIRECT THE ASSESSEE TO PRODUCE ALL ITS BOOKS OF ACCOUNTS, DOC UMENTS, BILLS, INVOICES AND ANY OTHER INFORMATION CALLED FOR BY THE ASSESSING OFFICER AND COOPERATE IN FINALISATION OF THE PROCEEDING. IN THE EVENT, THE ASSESSEE DOES NOT CO - OPERATE BY PRODUCING THE BOOKS OF ACCOUNTS AND OTHER INFORMATION CALLED FOR BY THE ASSESSING OFFICER OR IF THE ASSESSING OFFICER ON EXAMINATION OF THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS FINDS THAT THERE ARE DISCREPANCIES WHICH THE ASSESSEE IS NOT ABLE TO EXPLAIN, THE ASSESSING OFFICER WOULD BE AT LIBERTY TO TAKE AN INDEPENDENT DECISI ON IN THE MATTER IN ACCORDANCE WITH LAW. THE ASSESSING OFFICER SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 10. CONSIDERING TOTALITY OF FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE SPECIFIC PLEA OF THE ASSESSEE, IN THE IN TERESTS OF JUSTICE IN THIS CASE ALSO, WE ARE INCLINED TO SET ASIDE THE IMPUGNED ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH SIMILAR DIRECTIONS. WE DO SO AND DIRECT THE ASSESSING OFFICER TO RE - EXAMINE THE MATTER, AF TER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT AND OTHER INFORMATION, AND RE - DETERMINE THE INCOME ACCORDINGLY. THE DIRECTIONS GIVEN IN THE ORDER OF THIS TRIBUNAL DATED 13.8.2013, EXTRACTED ABOVE, APPLY MUTATIS MUTANDIS T O THIS CASE AS WELL. ASSESSEE IS DIRECTED TO COOPERATE WITH THE ASSESSING OFFICER AND COMPLY WITH THE NOTICES, AND THE ASSESSING OFFICER IS ITA NO.1360 & 1 409 /HYD/201 3 M/S. SUJANA TOWERS LTD., HYDERABAD 6 DIRECTED TO COMPLETE THE ASSESSMENT AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 11. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE COURT ON 16 TH JULY, 2014 SD/ - SD/ - ( B.RAMAKOTAIAH ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 16 TH JULY, 2014 COPY FORWARDED TO: 1. M/S. SUJANA TOWERS LTD., C/O. M/S. P.MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500 082 2 . DY./ ASST. COMMISSIONER OF INCOME - TAX CIRCLE 3 (2) , HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) IV HYDERABAD 4. COMMISSIONER OF INCOME - TAX III , HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S