VJIL Consulting Limited, Hyderabad V. ITO, Ward 15(3), Hyderabad

ITA 1748/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74533 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K HARITA
• Assessee Lawyers: S RAVI SR
• Keywords: Corroborative evidences
• Section: 133A; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NO.1748 & 1749/HYD/2013 ASSESSMENT YEARS 2008-2009 & 2009-2010 VJIL CONSULTING LIMITED HYDERABAD-500 081. VS. ITO WARD 15(3) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. S. RAVI, SR.COUNSEL FOR REVENUE : MS. K. HARITA DATE OF HEARING : 04.02.2014 DATE OF PRONOUNCEMENT : 04.02.2014 ORDER PER B. RAMAKOTAIAH, A.M. THESE TWO APPEALS ARE AGAINST THE ORDERS OF THE CIT(A)-II, HYDERABAD DATED 25.11.2013 FOR ASSESSMENT YEARS 2008-2009 AND 2009-2010 ARISING OUT OF ORDERS PASSED UN DER SECTION 201(1) AND 201(1A) DATED 31.03.2011 BY INCO ME TAX OFFICER, WARD 15(3), HYDERABAD. 2. BRIEFLY STATED, THE ASSESSEE COMPANY IS IN THE BUSINESS OF PROVIDING SOFTWARE SERVICES AND HAS ITS HEAD OFFICE AT HYDERABAD AND BRANCHES AT USA AND UK. CONSEQUENT TO T HE SURVEY OPERATIONS UNDER SECTION 133A ON 12.03.2010, THE ASSESSEE WAS ASKED TO PRODUCE ITS BOOKS OF ACCOUNTS, DE TAILS OF TDS RETURNS FILED, TDS MADE AND TO GIVE PARTICULARS VI DE LETTER DATED 12.03.2010 AND LATER. A.O. HAD COMPLETED THE ORD ERS ON 31.03.2011 STATING THAT ASSESSEE DID NOT PRODUCE BOO KS OF ACCOUNTS FOR THE ABOVE FINANCIAL YEARS AND LEDGER STA TEMENT FILED (IN RESPONSE TO SHOW CAUSE NOTICES) WAS ONLY ONE SHE ET ITA.NO.1748 & 1749/HYD/2013 VJIL CONSULTING LTD. HYDERABAD LEDGER COPIES OF TDS PAYABLE AND NOT THAT OF EXPENDITURE LEDGER STATEMENTS. SINCE ASSESSEE WAS NOT FORTHCOMING IN FURNI SHING DETAILS, THE A.O. CONSIDERED VARIOUS EXPENDITURE CLAIM ED BY THE ASSESSEE AND RAISED DEMANDS UNDER SECTION 201(1) AN D ALSO INTEREST UNDER SECTION 201(1A) IN THE IMPUGNED ASSESS MENT YEARS. 3. AGGRIEVED, ASSESSEE PREFERRED APPEALS BEFORE THE CIT(A) AND STATED THAT ASSESSEE HAS SUBMITTED THE D ETAILS NOT ONLY IN THE FORM OF LEDGER COPIES BUT ALSO IN THE FORM OF C D CONTAINING INFORMATION BUT A.O. DID NOT VERIFY. IT WAS F URTHER CONTENDED THAT PAYMENTS MADE BY USA AND UK OFFICES ARE NOT SUBJECTED TO PROVISIONS OF TDS AS THE RECIPIENTS ARE NOT ASSESSABLE IN INDIA. IT WAS CONTENDED THAT A.O. COMP UTED THE TDS LIABILITY EVEN ON PAYMENTS MADE ABROAD RESULTING IN A HUGE DEMAND. ON THE REQUEST OF THE ASSESSEE, THE MAT TER WAS REMANDED TO THE A.O. AS ORDERS WERE COMPLETED IN HASTE. A.O. VIDE HIS FIRST REMAND REPORT DATED 12.08.2013 SUBMITTE D THE LEARNED CIT(A) AS UNDER : (A) IN ORDER TO VERIFY THE TDS LIABILITY IN RESPECT O F EXPENDITURE INCURRED BY THE BRANCH OFFICES IN UK AND USA, THE ASSESSEE WAS REQUESTED TO FURNISH THE SUPPORTING EVIDENCES TO SUBSTANTIATE ITS CLAIM THAT THE EXPENSES WERE INCURRED ABROAD BUT THE ASSESSEE FAILED TO FURNISH ANY INFORMATION. (B) FINAL OPPORTUNITY WAS GIVEN BY THE A.O. VIDE LETT ER DATED 10.06.2013 AND THERE IS NO RESPONSE FROM THE ASSESSEE. (C) SEVERAL TELEPHONIC REMINDERS WERE GIVEN, BUT THERE IS NO RESPONSE. (D) IN THE ABOVE BACKGROUND, IT IS EXTREMELY DIFFICULT TO COME TO ANY CONCLUSION IN RESPECT OF TDS DEFAULTS, THEREFORE, THE ASSESSEE SHOULD BE TREATED AS AN ASSESSEE IN DEFAULT. ITA.NO.1748 & 1749/HYD/2013 VJIL CONSULTING LTD. HYDERABAD 4. THE REMAND REPORT OF THE A.O. DATED 12.08.2013 WAS SENT TO THE ASSESSEE FOR COMMENTS AND WAS ASKED TO SUBMIT REPLY BY 04.09.2013. VIDE LETTER DATED 25.09. 2013 ASSESSEE SUBMITTED DETAILS, AS LISTED BY CIT(A) IN P ARA 5.1 OF HIS ORDER, WHICH IS AS FOLLOWS : 1. ANNUAL REPORT OF THE COMPANY. 2. NOTE ON ACCOUNTING PROCESS AT VJIL CONSULTING LTD . 3. DETAILED STATEMENT OF EXPENSES AND TDS 4. GENERAL LEDGER OF EXPENSES FOR HEAD OFFICE AND FOREIGN BRANCHES. 5. COPIES OF TDS CHALLANS. 5. ON 25.09.2003 THE ASSESSEE SUBMITTED DETAILED INFORMATION AND THE MATTER WAS AGAIN REMANDED TO A.O. ON 25.09.2013. THE A.O. SUBMITTED SECOND REMAND REPORT DAT ED 25.10.2013 AND THE IMPORTANT POINTS MENTIONED IN TH IS REPORT, AS EXTRACTED BY LEARNED CIT(A), ARE AS UNDER : (A) THAT THE INFORMATION SUBMITTED BEFORE THE CIT ON 25.09.2013 WAS ALREADY CONSIDERED AND FIRST REMAND REPORT WAS SENT ON 12.08.2013. (B) THE ASSESSEE NEITHER APPEARED NOR FURNISHED ANY EVIDENCE IN SUPPORT OF ITS CLAIM THAT THE EXPENSES WERE INCURRED ABROAD. FURTHER, EVEN ON THE EXPENSES INCURRED IN INDIA, TDS WAS MADE ON SOME PAYMENTS ONLY AND THE REASONS FOR NON-DEDUCTION OF TDS ON BALANCE AMOUNT ARE NOT AVAILABLE ON RECORD. (C) EVEN THOUGH THE ASSESSEE FILED DETAILS OF EXPENSES INCURRED IN INDIA, USA & UK, THERE IS NO SUPPORTING EVIDENCE OF SUCH CLAIM. (D) IN VIEW OF THE ABOVE FACTS, IT IS EXTREMELY DIFFI CULT TO COME TO ANY CONCLUSION IN RESPECT OF TDS DEFAULTS. HENCE, THE ASSESSEE MAY BE TREATED AS ASSESSEE IN DEFAULT. ITA.NO.1748 & 1749/HYD/2013 VJIL CONSULTING LTD. HYDERABAD 6. THIS SECOND REMAND REPORT WAS AGAIN SENT TO ASSESSEE VIDE CIT(A) OFFICE LETTER DATED 11.11.2013 A SKING THE ASSESSEE TO FURNISH COMMENTS BY 25.11.2013. CIT(A) REC ORDS THAT NONE APPEARED ON THAT DATE NOR ANY COMMENTS/OBJECTI ONS WERE FILED. LEARNED CIT(A) DECIDED THE APPEALS BY STA TING AS UNDER AND DISMISSED THE APPEALS. 7. HAVING CONSIDERED INFORMATION ON RECORD, THE CRUX OF THE ISSUE IS THE APPELLANTS CLAIM THAT THERE IS N O TDS LIABILITY ON THE EXPENSES INCURRED BY ITS BRANCH OFFICES IN USA AND UK. WHEREAS, THE A.O. COMPUTED TDS LIABILITY ON EXPENSES INCURRED BY ITS FOREIGN BRANCHES ALSO AS THE ASSESSEE DID NOT PRODUCE ANY EVIDENCES IN SUPPORT OF ITS CLAIM THAT SUCH EXPENSE S WERE REALLY INCURRED OUTSIDE INDIA. HE FAILED TO PRODUCE THE BOOKS OF ACCOUNTS OR ANY BANK STATEMENT IN SUPPORT OF ITS CLAIM THAT THE EXPENSES WERE INCURRED ABROAD. REPEATED OPPORTUNITIES WERE GIVEN DURING ORIGINAL TDS ASSESSMENT PROCEEDINGS, REMAND PROCEEDINGS. EVEN THEN THE APPELLANT FAILED TO PRODUCE THE BOOKS OF ACCOUNTS, HAD FAILED TO SUBMIT ANY EVIDENCES IN SUPPORT OF HIS CLAIM THAT EXPENSES WERE INCURRED ABROAD. THEREFORE, THE APPEAL IS DISMISSED. 7. CONTESTING THE ABOVE ORDER OF THE LEARNED CIT(A) IN BOTH THE IMPUGNED ASSESSMENT YEARS, IT WAS THE CONTENT ION OF THE LEARNED COUNSEL THAT VOLUMINOUS DETAILS WERE SUBMITT ED BY ASSESSEE AND REFERRED TO THE FIRST REMAND REPORT AND SECOND REMAND REPORT TO SUBMIT THAT A.O. STATES THAT ENTIRE INFORMATION HAS BEEN FURNISHED IN THE ASSESSMENT PROCEE DINGS ITSELF, AS CAN BE SEEN FROM THE OBSERVATIONS IN THE REMA ND REPORT. IN THAT CASE, WHY THE A.O. RAISED THE DEMANDS I S NOT UNDERSTANDABLE. HOWEVER, REFERRING TO THE OBJECTIONS TO TH E SECOND REMAND REPORT DATED 25.10.2013 FILED BY THE ASSE SSEE IN THE OFFICE OF LD CIT(A), DULY ACKNOWLEDGED DATED 2 5.11.2013, IT WAS THE SUBMISSION OF THE LEARNED COUNSEL, THAT DETAI LED OBJECTIONS WERE FILED ON 25.11.2013 AS DIRECTED BY THE L EARNED ITA.NO.1748 & 1749/HYD/2013 VJIL CONSULTING LTD. HYDERABAD CIT(A) BUT, SURPRISINGLY, THIS WAS NOT CONSIDERED AND TH E ORDER WAS PASSED ON THAT DATE ITSELF, AS IF, ASSESSEE HAS NOT COMPLIED WITH THE DIRECTIONS. LEARNED COUNSEL REFERRED TO THE DETAILED OBJECTIONS MADE ON VARIOUS ISSUES AND ALSO REFERRED TO THE SECOND REMAND REPORT DATED 25.10.2013 WHEREIN THE A.O. CONCLUDES THAT IT IS EXTREMELY DIFFICULT TO COME TO ANY CONCLUSION IN RESPECT OF TDS DEFAULTS. IT WAS SUBMITTED THAT IT IS THE DUTY OF THE A.O. TO EXAMINE THE DETAILS FURNIS HED BUT WITHOUT EXAMINING, BURDEN CANNOT BE PUT ON THE ASSESSE E BY TREATING IT AS ASSESSEE HAS DEFAULT AND RAISING VARI OUS DEMANDS. IT WAS THE SUBMISSION OF THE LEARNED COUNSEL THAT MATTERS BE RESTORED TO THE FILE OF THE A.O. FOR FRESH EXA MINATION FOR WHICH ASSESSEE HAS NO OBJECTION IN FURNISHING NECE SSARY DETAILS TO THE A.O IF REQUIRED. 8. LEARNED D.R. HOWEVER, HAS NO OBJECTION FOR THE ABOVE PROPOSAL. 9. CONSIDERING THE SEQUENCE OF EVENTS, ORDERS OF AO, REMAND REPORTS AND THE ORDERS OF THE CIT(A), WE ARE OF THE OPINION THAT MATTERS HAVE NOT BEEN EXAMINED BY THE A.O. IN ITS CORRECT PERSPECTIVE. SINCE THE A.O. DID NOT CONDUCT A DETAILED EXAMINATION, WE ARE OF THE OPINION THAT ANOTHER OPPORTU NITY SHOULD BE GIVEN TO THE A.O. TO EXAMINE IN DETAIL, EAC H OF THE INFORMATION FURNISHED BY THE ASSESSEE. AO SHOULD EXAMI NE NECESSARY ACCOUNTS FURNISHED BY THE ASSESSEE ALONG WI TH NATURE OF PAYMENT. HE HAS TO GIVE A FINDING WHETHER ANY PAYMENT IS REQUIRED TO BE SUBJECTED TO TAX AS PER THE PROVISIONS OF I.T. ACT AND IF THERE IS ANY DEFAULT TO QUA NTIFY AFTER DUE EXAMINATION. A.O. CANNOT COMMENT THAT IT IS V ERY DIFFICULT TO COME TO ANY CONCLUSION IN RESPECT OF TDS DEFAULTS. THIS SHOWS THAT OFFICER IS NOT INTERESTED IN EXAMINING THE ITA.NO.1748 & 1749/HYD/2013 VJIL CONSULTING LTD. HYDERABAD DETAILS FURNISHED. WITH THESE OBSERVATIONS, THE ORDERS OF THE A.O. AND CIT(A) ON THIS ISSUE IN THE IMPUGNED ASSES SMENT YEARS ARE SET ASIDE AND THE MATTER IS RESTORED TO THE F ILE OF THE A.O. FOR FRESH EXAMINATION. NEEDLESS TO SAY THAT ASS ESSEE SHOULD BE GIVEN DUE OPPORTUNITY AND ITS SUBMISSIONS SH OULD BE CONSIDERED IN DETAIL. 10. IN THE RESULT, ITA.NO.1748 AND 1749/HYD/2013 OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 04.02.2014. SD/- SD/- (D.MANMOHAN) (B.RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD DATE 4 TH FEBRUARY, 2014 VBP/- COPY TO 1. VJIL CONSULTING LIMITED, HAVING ITS REGISTERED OFF ICE AT NCC HOUSE, 3 RD FLOOR, WESTERN WING, MADHAPUR, HYDERABAD -81. C/O. CH. PUSHYAMKIRAN, DIVYA DATLA, K. PRABHAVATHI, SAMEERA CHAMA, NEHA AKKINENI, S. RAM CHARAN, ADVOCATES, FLAT NO.D, 1 ST FLOOR, UMA ENCLAVE, ROAD NO.9, BANJARA HILLS, HYDERABAD. 2. ITO, WARD 15(3), TDS, 4 TH FLOOR, D BLOCK, I.T. TOWERS, A.C. GUARDS, MASAB TANK, HYDERABAD. 3. CIT(A)-VI, HYDERABAD 4. CIT-V, HYDERABAD 5. D.R. A BENCH, ITAT, HYDERABAD.