DCIT., Circle-16(1), Hyderabad, Hyderabad V. M/s NSL Textiles Limited, Hyderabad

ITA 1587/HYD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87318 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-02-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 16-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Opportunity of being heard; Additional evidence; Revised return
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1587/HYD/2014 ASSESSMENT YEAR: 2010-11 DY. COMMISSIONER OF INCOME- TAX, CIRCLE 16(1), HYDERABAD M/S NSL TEXTILES LTD., HYDERABAD PAN AABCJ1299A (APPELLANT) (RESPONDENT) REVENUE BY SHRI D. SUDHAKAR RAO ASSESSEE BY SHRI V. RAGHAVENDRA RAO DATE OF HEARING 25-02-2015 DATE OF PRONOUNCEMENT 04-03-2015 O R D E R PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-V, HYDERABAD DATED 11/08/2014 FOR AY 2010-11 . 2. THE SOLE GRIEVANCE OF THE DEPARTMENT IS AGAINST THE ORDER PASSED BY THE CIT(A) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER BY ADMITTING ADDITIONAL EVIDENCE IN VIOLAT ION OF RULE 46A OF THE IT RULES. 3. BRIEFLY THE FACTS OF THE CASE ARE, ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF GREY FA BRIC AND DYEING, YARN, GINNING AND PRESSING OF COTTON. FOR THE YEAR UNDER CONSIDERATION, ASSESSEE FILED ITS RETURN OF INCOME ON 30/09/2011 ADMITTING TOTAL LOSS OF RS. 102,91,20,171. SUBSEQUE NTLY, ASSESSEE 2 ITA NO. 1587/HYD/2014 NSL TEXTILES LTD. FURNISHED REVISED RETURN OF INCOME ON 25/09/2012 AD MITTING TOTAL LOSS OF RS. 156,52,01,368. THE ASSESSMENT WAS COMPLETED AT RS. 23,05,90,534 U/S 115JB ON THE BOOK PROFITS AS THERE WAS LOSS OF RS. 52,21,82,353 UNDER NORMAL PROVISIONS BY MAKING AN A DDITION OF RS. 104,29,76,420 ON ACCOUNT OF UNACCOUNTED SALES. AGGR IEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A). 4. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE, DELETED THE ADDITION MADE BY AO ON ACCOUNT OF UNACC OUNTED SALES BY OBSERVING AS UNDER: 4.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ASSESSMENT ORDER AND THE CONSEQUENTIAL O RDER OF THE ASST. COMMISSIONER (CT) (LTU), GUNTUR-II, DIVISION. THE ASST. COMMISSIONER (CT), GUNTUR, VIDE HIS ORDER DATED 02/ 05/2012, HAD NOT DELETED THE INTER-DIVISIONAL TRANSACTIONS A MOUNTING TO RS. 260.92 CRORES FROM THE TOTAL TURNOVER AND ARRIV ED AT THE TOTAL TURNOVER OF THE ASSESSEE AT RS. 828.44 CRORES. ON A PPEAL BY THE ASSESSEE, THE APPELLATE DY. COMMISSIONER (CT), GUNTUR, VIDE ORDER DATED 25/11/2013 HAD REMANDED BACK THE M ATTER TO THE ASST. COMMISSIONER (CT) GUNTUR, FOR FRESH CONSI DERATION. THE ASST. COMMISSIONER (CT) GUNTUR, VIDE HIS ORDER DATED 20/05/2014, FOR THE FY 2010-11, HAS DELETED THE TUR NOVER OF RS. 237,71,93,143 COMPRISING OF (A) INTERCOMPANY TRANSA CTIONS (RS.133,42,16,723) AND (B) INTER-DIVISIONAL TRANSAC TIONS (RS.104,29,76,420) FROM THE TOTAL TURNOVER OF RS. 828,44,71,612. THE AO DISALLOWED THE INTER-DIVISION AL TRANSACTIONS OF RS. 104,29,76,420 ON THE VAT ORDER OF THE ASST. COMMISSIONER (CT) GUNTUR DATED 02/05/2012. SINCE TH E APPELLATE DY. COMMISSIONER (CT), GUNTUR, VIDE ORDER DATED 20/05/2014, HAD DELETED, INTER-ALIA, THE TURNOVER O F RS. 104,29,76,420 ON ACCOUNT OF INTER-DIVISIONAL TRANSA CTIONS FROM THE TOTAL TURNOVER OF RS. 828.44 CRORES, THE ADDITI ON MADE BY THE AO BASING ON THE VAT ORDER CANNOT BE SUSTAINED. THEREFORE, THE ADDITION OF RS. 104,29,76,420 ADDED ON ACCOUNT OF UNACCOUNTED SALES IS DELETED. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGL Y OBJECTING TO ADMISSION OF ADDITIONAL EVIDENCE BY THE CIT(A) WHIL E DELETING THE ADDITION SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIE D IN CONSIDERING THE 3 ITA NO. 1587/HYD/2014 NSL TEXTILES LTD. ADDITIONAL EVIDENCE FILED BY THE ASSESSEE FOR THE F IRST TIME BEFORE HIM WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSING OFFI CER TO HAVE HIS SAY ON SUCH ADDITIONAL EVIDENCE. THE ADDITIONAL EVIDENCE IS THAT THE APPELLATE DY. COMMISSIONER (CT), GUNTUR, VIDE ORDER DATED 20/05/2014, HAD DELETED, INTER-ALIA, THE TURNOVER O F RS. 104,29,76,420 ON ACCOUNT OF INTER-DIVISIONAL TRANSA CTIONS FROM THE TOTAL TURNOVER OF RS. 828.44 CRORES, THE ADDITION M ADE BY THE AO BASING ON THE VAT ORDER CANNOT BE SUSTAINED . THE LEARNED DEPARTMENTAL REPRESENTATIVE, THEREFORE, URGED FOR R EMITTING THE MATTER BACK TO THE ASSESSING OFFICER FOR RECONSIDER ING THE ENTIRE ISSUE AFRESH. 6. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO DID N OT DISPUTE THE FACT THAT CERTAIN ADDITIONAL EVIDENCES WERE PRODUCE D FOR THE FIRST TIME BEFORE THE CIT(A) AND CONSIDERING THE SAME, THE CIT (A) DELETED THE ADDITION. 7. WE HAVE HEARD SUBMISSIONS OF THE PARTIES AND PE RUSED THE MATERIALS ON RECORD. IT IS A FACT ON RECORD THAT TH E CIT(A) ON CONSIDERING CERTAIN ADDITIONAL EVIDENCE PRODUCED BE FORE HIM FOR THE FIRST TIME BY THE ASSESSEE HAS DELETED THE ADDITION WHICH IS CLEARLY IN VIOLATION OF THE PROVISIONS CONTAINED IN RULE 46A O F THE IT RULES, 1962. WHEN ADDITIONAL EVIDENCE WAS SUBMITTED FOR TH E FIRST TIME BEFORE THE CIT(A), IN ALL FAIRNESS, HE SHOULD HAVE FORWARDED THE SAME TO THE ASSESSING OFFICER FOR EXAMINING IT AND OFFER HIS COMMENTS ON SUCH EVIDENCE. ONLY AFTER GIVING ASSESSING OFFICER AN OPPORTUNITY TO EXAMINE THE ADDITIONAL EVIDENCE, THE CIT(A) COULD H AVE CONSIDERED THE SAME FOR DECIDING THE ISSUE INVOLVED IN THE APP EAL BEFORE HIM ON THEIR MERITS. THE CIT(A) HAVING NOT DONE SO IN COMP LIANCE WITH THE PROVISION CONTAINED UNDER RULE 46A OF THE IT RULES, 1962 WE ARE INCLINED TO SET ASIDE THE IMPUGNED ORDER OF CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER BY DIRECTING HIM TO REEXAMINE THE ISSUE AFRESH IN ITS ENTIRETY AND IN A CCORDANCE WITH LAW 4 ITA NO. 1587/HYD/2014 NSL TEXTILES LTD. AFTER DULY CONSIDERING ALL THE MATERIALS AVAILABLE ON RECORD AND SUCH OTHER FURTHER EVIDENCE THAT MAY BE PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM. ACCORDINGLY, WE REMIT THE MAT TER BACK TO THE FILE OF THE ASSESSING OFFICER, WHO SHALL COMPLETE THE PR OCEEDING AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO COOPERATE WITH THE ASSE SSING OFFICER FOR FINALISATION OF THE PROCEEDING BY COMPLYING TO THE NOTICES THAT MAY BE ISSUED BY ASSESSING OFFICER AND SHOULD ALSO FURNISH SUCH INFORMATION AS MAY BE CALLED FOR BY THE ASSESSING OFFICER, AS O THERWISE, THE ASSESSING OFFICER WOULD BE AT LIBERTY TO DRAW HIS O WN INFERENCES AND DECIDE THE MATTER IN ACCORDANCE WITH LAW ON THE BAS IS OF MATERIALS ALREADY AVAILABLE ON RECORD. THE GROUNDS RAISED BY THE DEPARTMENT ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH, 2015 SD/- SD/- (P.M. JAGTAP) (ASHA VIJAYARAGH AVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 4 TH MARCH, 2015 KV COPY TO:- . 1. DY. COMMISSIONER OF INCOME-TAX, CIRCLE 16(1), ROOM NO. 612, 6 TH FLOOR, AAYAKAR BHAVAN, L.B. STADIUM ROAD, BASHEERBAGH, HYDERABAD 500 004. M/S NSL TEXTILES LTD., 8-2-684/2/A, 4 TH FLOOR, NSL ICON, ROAD NO. 12, BANJARA HILLS, HYDERABAD 3. CIT(A)-V, HYDERABAD 11. CIT-IV, HYDERABAD 12. THE DR, ITAT, HYDERABAD