Reiwance Engineering Private Limited, Hyderabad V. Income Tax Officer, Ward-3(2), Hyderabad

ITA 1880/Hyd/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7830 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-08-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 17-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: P VINOD
• Keywords: Opportunity of being heard; Principle of natural justice; Assessment record
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI I NTURI RAMA RAO , ACCOUNTANT MEMBER ITA NO. 1880/HYD/2017 ASSESSMENT YEAR: 201 2 - 2013 M/S. REIWANCE ENGINEERING PRIVATE LIMITED, PLOT NO.170, PHASE - II, INDUSTRIAL DEVELOPMENT AREA, MALLAPUR, HYDERABAD. PAN: AACCR 4652 G VS. INCOME TAX OFFICER, WARD - 3(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SR I P. VINOD REVENUE BY: SHRI NILANJAN DEY, DR DATE OF HEARING: 0 6 .08.2018 DATE OF PRONOUNCEMENT: 14 TH AUGUST, 2018 ORDER PER I NTURI RAMA RAO , A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF LD. CIT(A) - 3, HYDERABAD DATED 08.08.2017 FOR THE A.Y. 2012 - 13. THE A PPELLANT - COMPANY RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE CIT(A) - 3, HYDERABAD IS PERVERSE, ILLEGAL AND UN SUSTAINABLE IN LAW. 2. THE ORDER OF THE CIT(A) IS PASSED IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE WITHOUT GIVING PROPER OPPORTUNITY TO THE APPELLANT TO PRESENT HIS CASE. THE CIT(A) FAILED TO APPRECIATE THAT THE AUTHORISED REPRESENTATIVE COULD N OT ATTEND THE HEARING ON ACCOUNT OF FINALISATION OF AUDITS AND INCOME TAX DEADLINES FOR FILING RETURNS BY 30.09.2017. 3. WITHOUT PREJUDICE TO ABOVE, THE CIT(A) ERRED IN SUSTAINING THE ESTIMATED DISALLOWANCE OF RS. 47,40,000/ - FROM OUT OF THE EXPENDITURE CL AIMED TOWARDS POWER AND FUEL. THE CIT(A) HAVING CONSIDERED THE APPEAL ON MERITS OUGHT TO HAVE CONSIDERED 2 THE REASONS NARRATED IN STATEMENT OF FACTS FOR THE INCREASED EXPENDITURE CLAIM TOWARDS POWER AND FUEL DURING THE PREVIOUS YEAR RELEVANT TO ASSET. YEAR UNDER CONSIDERATION. 4. THE CIT(A) FAILED TO APPRECIATE THAT THE ESTIMATED DISALLOWANCE BY THE ASSESSING OFFICER HAS NO BASIS AND THE SAME WAS DONE BEHIND THE BACK OF THE APPELLANT AND WITHOUT GOING INTO THE MATERIAL FILED BEFORE HIM SUBSTANTIATING TH E CLAIM OF EXPENDITURE. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY DULY INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT, 1956. IT IS ENGAGED IN THE BUSINESS OF GALVANIZING OF METALS. RETURN OF INCOME FOR THE A.Y. 2012 - 13 WA S FILED ON 30.09.2012 ADMITTING A LOSS OF RS. 50,41,952/ - , AGAINST THE SAID RETURN OF INCOME THE ASSESSMENT WAS COMPLETED BY THE ITO - WARD 3(2), HYDERABAD VIDE THE ORDER DATED 25.03.2015 U/S 143(3) OF THE ACT AT A LOSS OF RS. 50,41,952/ - . WHILE DOING SO, THE ASSESSING OFFICER DISALLOWED A SUM OF RS. 47,70,400/ - OUT OF THE POWER AND FUEL EXPENSES OF RS.1,74,47,682/ - HOLDING IT TO BE AN EXCESSIVE W HEN COMPARED TO THE EARLIER YEARS. 3. BEING AGGRIEVED, ASSESSEE PREFERRED A N APPEAL BEFORE THE CIT (A) CONTENDING THAT THE ADDITION WAS MADE WITHOUT GRANTING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THE INCREASE IN EXPENDITURE IS ONLY ON ACCOUNT OF INCREASE IN THE COST OF FUR NACE OIL AND THEREFORE, NO SUCH ADDITION IS SUSTAINABLE. LD. CIT(A) VIDE THE IMPUGNED ORDER HAD DISMISSED THE APPEAL IN LIMINE FOR NON - APPEARANCE. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE FIND FROM THE RECORD THAT THE LD. CIT(A) HAD DISMISSED THE APPEAL IN LIMINE AS NONE APPEARED BEFORE HIM. LD. CIT(A) WHILE DEALING WITH THE MERITS OF THE ADDITION HAD SIMPLY CONFIRMED THE ADDITION ON THE GROUND THAT NO WRITTEN SUBMISSIONS WERE FILED BEFORE HIM. FROM THE STATEMENT OF FACTS FILED BEFORE HIM, IT IS CLEAR THAT THE 3 APPELLANT SOUGHT RELIEF ON THE GROUND THAT THE ASSESSING OFFICER MADE ADDITION WITHOUT ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND THE APPELLANT ALSO OFFERED EXPLANATION JUSTIFYING THE INCREASE IN EXPENDITURE ON POW ER AND FUEL. HOWEVER, CIT(A) WITHOUT CONSIDERING THE ASSESSEES EXPLANATION AND VERIFYING THE ASSESSMENT RECORD AS TO WHETHER THE ASSESSEE WAS GIVEN AN OPPORTUNITY BEFORE MAKING THE ADDITION , MERELY CONFIRMED THE ADDITION. CIT(A) HAD ALSO NOT GIVEN ANY PROOF OF SERVICE OF NOTICE ON THE APPELLANT. THEREFORE, IN OUR CONSIDERED OPINION, THE MATTER REQUIRES TO BE REMANDED TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW AFTER AFFORDING A REASONABLE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 14 TH AUGUST, 2018 . SD/ - SD/ - (P. MADHAVI DEVI) (I NTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD , DATED : 14 TH AUGUST, 2018 OKK COPY TO: - 1) K. VASANTKUMAR, A.V. RAGHU RAM, P. VINOD & M. NEELIMA DEVI, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD - 1. 2) INCOME TAX OFFICER, WARD 3(2), SIGNATURE TOWERS, OPP. BOTANICAL GARDENS, KONDAPUR, HYDERABAD 500 084. 3) THE CIT(A) - 3 , HYDERABAD 4) THE PR. CIT - 3 , HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE