ACIT, Circle-2(2), Hyderabad, Hyderabad V. Time Projects Pvt.Ltd., Hyd, Hyderabad

ITA 186/HYD/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6112 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 27-02-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Assessee Lawyers: A V RAGHURAM
• Keywords: Audit objection; Tangible material; Difference of opinion; Assessment record; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

ITA NO 186 OF 2015 TIME P ROJECTS P LTD HYDERABAD PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.186/HYD/2015 (ASSESSMENT YEAR: 2007-08) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 2(2) HYDERABAD VS M/S. TIME PROJECTS PRIVATE LIMITED HYDERABAD PAN: AACCT 1128 K FOR REVENUE: SMT. U. MINICHANDRAN, DR FOR ASSESSEE: SHRI A.V. RAGHURAM O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y 2007-08. IN THI S APPEAL, THE REVENUE IS AGGRIEVED BY THE ORDER OF TH E CIT (A) IN HOLDING THE REOPENING OF THE ASSESSMENT U/S 147 OF THE ACT AS NULL AND VOID AND NOT DECIDING THE CASE ON MERITS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE. IT FILED ITS RETURN OF INCOME FOR THE RELEVANT A.Y ON 28.10.2007 ADMITT ING AN INCOME OF RS.95,48,352. INITIALLY, THE ASSESSMENT WAS COMP LETED U/S 143(3) OF THE ACT ON 30.10.2009 ASSESSING THE INCOM E AT RS.95,65,680. THEREAFTER THE ASSESSMENT WAS REOPENE D U/S 147 OF THE ACT BY ISSUANCE OF A NOTICE U/S 148 OF THE A CT DATED 28.03.2012. THE ASSESSEE FILED A LETTER DATED 7.12. 2012 SEEKING DATE OF HEARING : 05.10.2016 DATE OF PRONOUNCEMENT : 26.10.2016 ITA NO 186 OF 2015 TIME P ROJECTS P LTD HYDERABAD PAGE 2 OF 4 REASONS FOR THE REOPENING OF THE ASSESSMENT. THE REASONS FOR THE REOPENING WERE FURNISHED TO THE ASSESSEE VIDE LETT ER DATED 08.10.2013 ACCORDING TO WHICH THE ASSESSEE HAS CLAI MED PROVISIONAL EXPENSES WHICH ARE NOT ALLOWABLE. IN RE SPONSE THERETO, THE ASSESSEE, VIDE LETTER DATED 05.03.2013, SUBMITT ED THAT THE ASSESSEE HAS STARTED TWO PROJECTS (I) GOLDEN RIDGE PHASE-I & II AT PENDYAL VILLAGE, MAHESWARAM MANDAL, RANGA REDDY DIS TT. AND (II) TIME CITY SITUATED AT MEERKHANPET VILLAGE, KANDUKUR MANDAL, RANGA REDDY DISTT AND THAT THE FIRST PROJECT WAS ST ARTED DURING FINANCIAL YEAR 2004-05 AND 2 ND PROJECT IN FINANCIAL YEAR 2006-07. IT WAS ALSO SUBMITTED THAT THE DEVELOPMENT OF THE P ROJECT HAD STARTED AND THE PLOTS WERE ALSO SOLD AND IN THE PRO CESS, THE ASSESSEE HAS INCURRED EXPENDITURE OF ABOUT RS.3.00 CRORES AND SINCE THE ASSESSEE HAD DECLARED PROFITS ON A PROVIS IONAL BASIS FOR THE A.Y 2006-07, THE ASSESSEE FOR THE A.Y 2007-08 ALS O ESTIMATED THE INCOME AT 14.5% AS NET PROFIT AND PAID REQUIRED TAXES. IT WAS FURTHER SUBMITTED THAT IN ADDITION TO THE ABOVE, SO ME PARTIES WANTED TO REGISTER SOME PLOTS BY PAYING THE FULL AM OUNT AND AS ONLY A PORTION OF WORK WAS DONE IN THE PROJECT, THE ASSESSEE HAD ESTIMATED 14.5% OF SALES AS PROFIT AND DECLARED AND PAID TAXES ON THE SAME AND THE BALANCE AMOUNT HAS BEEN SHOWN AS P ROVISIONAL EXPENDITURE AS THE ASSESSEE HAD THE RESPONSIBILITY OF MAKING THE WHOLE LAYOUT IN COMPLETE AND LIVABLE CONDITION. TH E AO HOWEVER, WAS NOT CONVINCED WITH THE ASSESSEES CONTENTION AN D OBSERVED THAT THE PROVISIONAL EXPENSES ARE NOT ALLOWABLE. TH US, HE DISALLOWED THE SAME AND BROUGHT IT TO TAX. HE ACCOR DINGLY MADE AN ADDITION OF RS.2,24,21,116. AGAINST THE SAME, TH E ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) CHALLENGING THE PROCEEDINGS U/S 147 OF THE ACT ON THE GROUND THAT THE REOPENING IS ON MERE ITA NO 186 OF 2015 TIME P ROJECTS P LTD HYDERABAD PAGE 3 OF 4 CHANGE OF OPINION. THE CIT (A) ALLOWED THE ASSESSE ES GROUND OF APPEAL ON THE JURISDICTION ISSUE AND DID NOT DECIDE THE OTHER ISSUES ON MERITS. AGAINST THIS ORDER OF THE CIT (A) , THE REVENUE IS IN APPEAL BEFORE US. 3. THE LEARNED DR SUPPORTED THE ORDER OF THE AO, WH ILE THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT (A). 4. ON GOING THROUGH THE ORDER OF THE CIT (A), WE FI ND THAT HE HAS OBSERVED THAT THE AO HAS INITIATED THE REOPE NING ON THE BASIS OF AN AUDIT OBJECTION AND THEREAFTER, AFTER R EFERRING TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT VS. KELVINATOR OF INDIA LTD REPORTED IN (2010) 320 ITR 561 (S.C) AND ALSO ITAT DECISION IN THE CASE OF M/S. ESS ESS CONS TRUCTIONS IN ITA NO.632/HYD/2012 FOR THE A.Y 2004-05 HOLDING THA T THE REOPENING OF THE ASSESSMENT WHEN NO FRESH/TANGIBLE MATERIAL FORMED THE BASIS IS BAD IN LAW, HE HELD THE ASSESSM ENT ORDER TO BE VOID ABINITIO. EXCEPT FOR THE RELYING UPON THE DECISIONS OF THE HON'BLE SUPREME COURT AND THE COORDINATE BENCH OF T HIS TRIBUNAL AS ABOVE, THE CIT (A) HAS NOT GIVEN ANY RE ASON AS TO WHY HE BELIEVES THAT THE REOPENING IS ON MERE CHANGE OF OPINION. THE LEARNED DR HAD SUBMITTED THAT THERE IS NO MATERIAL IN THE ASSESSMENT RECORD TO SUBSTANTIATE THE FINDING OF TH E CIT (A) THAT THE REOPENING IS ON THE BASIS OF AN AUDIT OBJECTION . SHE SUBMITTED THAT IT IS NOT KNOWN AS TO HOW THE CIT (A) HAS FORM ED AN OPINION THAT THE REOPENING IS ON AUDIT OBJECTION. FURTHER, W E ALSO FIND THAT THERE IS NO MATERIAL PLACED EVEN BEFORE US BY THE A SSESSEE IN SUPPORT OF THE FINDINGS OF THE CIT (A) THAT THE REO PENING IS ON THE ITA NO 186 OF 2015 TIME P ROJECTS P LTD HYDERABAD PAGE 4 OF 4 BASIS OF AN AUDIT OBJECTION. HOWEVER, IT IS THE CA SE OF THE ASSESSEE THAT THE ASSESSEE HAS FURNISHED ALL THE RELEVANT MA TERIAL BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT AND IT IS THE VERY SAME MATERIAL WHICH HAS BEEN TAK EN INTO CONSIDERATION BY THE AO FOR REOPENING OF THE ASSESS MENT U/S 147 OF THE ACT. SINCE THE CIT (A) HAS NOT GIVEN ANY FIN DING ON THE FACTS TO COME TO THE CONCLUSION THAT THE REASSESSMENT IS BAD IN LAW, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE F ILE OF THE CIT (A) FOR RE-CONSIDERATION IN ACCORDANCE WITH LAW AND PAS SING A SPEAKING ORDER. IF IT IS FOUND THAT THE REOPENING O F THE ASSESSMENT IS NOT ON THE BASIS OF AN AUDIT OBJECTION, BUT IS O N VALID GROUND, THAN THE CIT (A) SHALL DECIDE THE APPEAL ON MERITS. 5. IN THE RESULT, REVENUES APPEAL IS TREATED AS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER, 2016. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 26 TH OCTOBER, 2016. VINODAN/SPS COPY TO: 1 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 2(2) HY DERABAD 2 M/S. TIME PROJECTS PVT. LTD 6-3-883 F1, SOMAJIGUDA CIRCLE, BEGUMPET ROAD, HYDERABAD 3 CIT (A)-2 HYDERABAD 4 CIT 2 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER