DCIT, Cir-2(3), Hyderabad V. M/s Taurus Earth Movers Private Limited, Hyderabad

ITA 1791/HYD/2012

• Counselvise Citation: 179122514 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 11-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.1791/HYD/2012 ASSESSMENT YEAR 2008-09 DCIT, CIRCLE 2(3) HYDERABAD. VS. M/S. TAURUS EARTH MOVERS P. LTD., HYDERABAD 500 013. PAN AAACT-8335-N (APPELLANT) (RESPONDENT) FOR REVENUE MR. D. SUDHAKAR RAO FOR ASSESSEE -NONE- DATE OF HEARING 10.07.2014 DATE OF PRONOUNCEMENT 18.07.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-III, HYDERABAD DATED 18.10.2012 ON THE ISSUE OF ESTIMATION OF INCOME ON THE ADDITIONAL TUR NOVER OF RS . 142.99 CRORES. REVENUE HAS RAISED GROUND NO.2 ON TH E ISSUE THAT LD. CIT(A) WAS NOT JUSTIFIED IN TREATING 15% OF THE SUPPRESSED TURNOVER TO BE THE INCOME WHEN ASSESSEE DID NOT PRODUCE ANY EVIDENCE OF INCURRING EXPENDITURE AGAIN ST THE SUPPRESSED TURNOVER. 2. BRIEFLY STATED, ASSESSEE COMPANY DERIVED ITS INCOME FROM PURCHASE AND SALE OF MACHINERIES AND SP ARE PARTS MANUFACTURED BY JCB INDIA LTD., IT ADMITTED TOTAL I NCOME OF RS.2,68,73,270/- FOR THE IMPUGNED YEAR. SINCE, ASSE SSEE HAS NOT RESPONDED TO VARIOUS NOTICES ISSUED, A.O. COMPL ETED THE 2 ITA.NO.1791/HYD/2012 M/S. TAURUS EARTH MOVERS P. LTD., HYDERABAD. ASSESSMENT EX-PARTE UNDER SECTION 144 AND MADE CERT AIN ADDITIONS. ONE SUCH ADDITION WAS THE ADDITIONAL TUR NOVER OF RS.142,99,61,063/-. A.O. VIDE PARA-6 NOTED THAT ASS ESSEES TURNOVER OBTAINED FROM SALES TAX DEPARTMENT AND CIB AUTHORITIES WAS AT RS.363,49,06,616/-. ASSESSEE HAS SHOWN THE TURNOVER LESS BY AN AMOUNT OF RS.142,99,61,063/ -. THIS AMOUNT WAS TAKEN AS SUPPRESSED TURNOVER AND ADDED T O THE TOTAL INCOME OF THE ASSESSEE AS SUCH. 2.1. BEFORE THE LD. CIT(A), ASSESSEE CONTENDED THA T A.O. WAS NOT JUSTIFIED IN TREATING THE ENTIRE TURNO VER AS REPRESENTING INCOME OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT EVEN ASSUMING FOR A WHILE THAT SUCH A TURNOVER EXISTED, THE PROFITS ON THE TURNOVER ALONE COULD BE TAXED BU T NOT THE TURNOVER ITSELF, SINCE THERE SHOULD BE DEDUCTION F OR THE COST OF PURCHASE OF GOODS AND THE RELATED EXPENDITURE INCID ENTAL THERETO. CONSIDERING THE ASSESSEES SUBMISSIONS, LD . CIT(A) DETERMINED THE TOTAL INCOME AT 15% OF THE ADDITIONA L TURNOVER THEREBY, CONFIRMING ADDITION OF RS.21,44,94,159/-. THE RELEVANT FINDINGS OF THE LD. CIT(A) IN PARA 6.2 IS AS UNDER : 6.2. I HAVE CONSIDERED CAREFULLY THE FACTS AND EVI DENCE. THE APPELLANT IS NOT A MANUFACTURER BUT PURCHASED A ND SELLS MACHINES AND SPARE PARTS MANUFACTURED BY JCB INDIA LIMITED. THIS IS EVIDENT FROM THE ASSESSMENT ORDER AS WELL. IF THE ENTIRE ADDITION IS MADE THEN THE GROSS PROFIT W ILL BE ALMOST 60%. SUCH HUGE AMOUNT OF GP FOR A COMPANY WH OSE BUSINESS WAS ALMOST COMING TO A STANDSTILL IS UNTEN ABLE ON MARKET REALITIES AND ON HUMAN PROBABILITY. THERE IS MERIT IN THE CONTENTION OF THE APPELLANT THAT IT HAD TO PURC HASE PRODUCTS BEFORE THEY COULD BE SOLD. THE A.O. MUST P ROVIDE ADEQUATE ALLOWANCE FOR PURCHASES AND DIRECT EXPENSE S. THEREFORE, I HOLD THAT ONLY 15% OF THE ADDITIONAL T URNOVER OF RS.142,99,61,063/- I.E., RS.21,44,94,159/- IS TO BE ADDED. THE APPELLANT GETS RELIEF ACCORDINGLY. 3 ITA.NO.1791/HYD/2012 M/S. TAURUS EARTH MOVERS P. LTD., HYDERABAD. 3. WHEN THE CASE WAS TAKEN UP FOR HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE. THERE WAS NO IN FORMATION ON RECORD WHETHER ASSESSEE HAS PREFERRED ANY APPEAL ON THE ORDER OF THE LD. CIT(A) ON THE ADDITIONS SUSTAINED BY THE LD. CIT(A). 4. LD. D.R. COULD NOT INFORM WHETHER ANY CROSS APPEAL EXISTED. IN SPITE OF ISSUING NOTICE AND POST ING THE CASE FROM 04.03.2013 ONWARDS, NONE APPEARED ON BEHALF OF THE ASSESSEE, THEREFORE, THE CASE WAS HEARD EX-PARTE AS SESSEE. 5. AFTER HEARING LEARNED D.R. ARGUMENTS, WE ARE OF THE OPINION THAT THERE IS NO NEED TO DISTURB THE OR DER OF THE LD. CIT(A). A.O. COULD HAVE GIVEN AN OPPORTUNITY TO THE ASSESSEE TO RECONCILE THE TURNOVER OR EXAMINED HOW THE EXCESS T URNOVER COULD BE REPORTED. ATLEAST HE COULD HAVE VERIFIED F ROM THE COMPANY VIZ., JCB INDIA LIMITED ABOUT THE PURCHASES MADE BY THE ASSESSEE AS ASSESSEE BEING A COMPANY, COULD HAV E MAINTAINED BOOKS OF ACCOUNTS UNDER THE COMPANY LAW. HOWEVER, A.O. HAS ADDED SO-CALLED DIFFERENCE OF TUR NOVER AS REPORTED BY THE CIB, EVEN WITHOUT VERIFYING FROM TH E SALES TAX DEPARTMENT AND MADE THE ADDITION OF DIFFERENCE OF T URNOVER AS INCOME. AS SEEN FROM THE SUBMISSIONS BEFORE THE LD. CIT(A), ASSESSEE DID CONTEST THAT THEY HAVE SOLD GOODS AND MACHINES ONLY OF M/S. JCB INDIA LTD., AND ADMITTED TURNOVER WAS AT RS.220.49 CRORES FULLY SUPPORTED BY AUDITED BOOKS O F ACCOUNTS, PURCHASE BILLS/SALES INVOICES. IT WAS ALSO FURTHER SUBMITTED THAT TURNOVER ADMITTED BY THE ASSESSEE COMPANY WAS FULLY SUPPORTED BY VAT RETURNS FILED BEFORE THE SALES TAX AUTHORITIES. IN SPITE OF SUBMISSIONS THEREON, LD. C IT(A), HOWEVER, ACCEPTED THE ALTERNATE CONTENTION OF THE A SSESSEE AND DETERMINED THE PROFIT AT 15% OF THE ADDITIONAL TURN OVER OF THE 4 ITA.NO.1791/HYD/2012 M/S. TAURUS EARTH MOVERS P. LTD., HYDERABAD. AMOUNT ADDED BY THE A.O. CONSIDERING THE FACTS OF T HE CASE, WE ARE OF THE OPINION THAT THERE IS NO NEED TO INTE RFERE WITH THE ORDER OF THE LD. CIT(A) AS THE ENTIRE TURNOVER CAN NOT BE TAKEN AS INCOME OF THE ASSESSEE. JUDICIAL PRINCIPLES ON T HE ISSUE SUPPORT ONLY ESTIMATION OF INCOME ON THE SO-CALLED ADDITIONAL TURNOVER. IN VIEW OF THIS, WE DO NOT FIND ANY MERIT IN THE REVENUE GROUNDS AND ARE ACCORDINGLY REJECTED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.07.2014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 18 TH JULY, 2014 VBP/- COPY TO 1. DCIT, CIRCLE 2(3), 8 TH FLOOR, B BLOCK, I.T. TOWERS, MASAB TANK, HYDERABAD 500 004. 2. M/S. TAURUS EARTH MOVERS P. LTD., NO.10-83/B, GOKHALE NAGAR, RAMANTHAPUR, HYDERABAD 500 013. 3. CIT(A)-III, HYDERABAD 4. CIT-II, HYDERABAD 7. D.R. B BENCH, ITAT, HYDERABAD.