Versant Home Appliances Private Limited , Hyderabad V. Income Tax Officer, Ward-17(3) , Hyderabad

ITA 1896/Hyd/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8599 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2013-2014
• Appeal Filed On: 26-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARUCHURI DINESH
• Keywords: Depreciation
• Section: 28; 144; 143(2); 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A”: HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SH RI SAT B EER S INGH GO DA RA , JU DIC IAL MEMBER AND SHR I L AXMI PR AS A D SAHU , A C COUNTA NT MEMBER ITA No. 1896/H/2019 Assessment Year: 2013-14 Versant Home Appliances Pvt. Ltd., Hyderabad. PAN – AADCV 7578C Vs. Income-tax Officer, Ward – 17(3), Hyderabad (Appellant) (Respondent) Assessee by: Shri P. Murali Mohan Rao Revenue by: Shri Paruchuri Dinesh Date of hearing: 21/10/2021 Date of pronouncement: 15/11/2021 O R D E R PER L.P. SAHU, A.M.: This appeal filed by the assessee is directed against CIT(A)- 1, Hyderabad’s order dated 10/10/2019 for AY 2013-14 involving proceedings u/s 144(3) of the Income Tax Act, 1961; in short “the Act. 2. In this appeal, the assessee has raised 11 grounds of appeal, the sum and substance of which are that the ld. CIT(A) erred in upholding the estimation of net profit at 5% on the total turnover 2 ITA No. 1896/Hyd/2019 Versant Home Appliances Pvt. Ltd., Hyd. 2 made by the AO on adhoc basis instead at 0.05% without taking into account the facts and circumstances of the case and without taking into consideration any comparable cases in the similar line of business activity. 3. Briefly, the facts of the case are that the assessee company in the business of Trading in Home Appliances, filed its Return of Income for the A Y 2013-14 on 25.10.2013 declaring a total income of Rs.4,56,200/-. Subsequently, the case was selected for scrutiny through CASS and a notice u/ s 143(2) of the Income Tax Act, 1961 was issued to the assessee on 03.09.2014. Since the assessee failed to comply the notices and failed to appear before the AO, the Assessing Officer had passed an order u/s 144 dated 15.03.2015, determining the total income at Rs4,28,66,445/-. While completing the assessment u/s 144 of the Income Tax Act, 1961, the AO estimated the Profit of the assessee at Rs.4,28,06,445/- which is 5% of the turnover of Rs.85,73,28,9P6/-. The Assessing Officer has deducted the profit declared by the assessee of Rs.4,56,200/- from the estimation of 5% of the turnover and made a net disallowance of Rs.4,24,10,245/-for the A Y 2013-14. 4. When the assessee preferred an appeal before the CIT(A), the CIT(A) confirmed the order of AO. 5. Aggrieved by the order of the CIT(A), the assessee is in appeal before the ITAT. 3 ITA No. 1896/Hyd/2019 Versant Home Appliances Pvt. Ltd., Hyd. 3 6. Before us, the ld. AR submitted that the Assessing Officer had made the estimation of Rs.4,24,10,245/ - @ 5% of the Turnover of Rs.85,73,28,906/- observing that the assessee has not submitted the relevant documents/supporting for the expenditure claimed in the Profit and Loss A/C. In this regard, he submitted that the assessee could not produce the details during assessment proceedings due to the reason that the assessee has closed down its business. He contended that the AO has not given further opportunity to the assessee to submit the information required. Further, he submitted that the assessee is into the line of trading home appliances and the margin arrived by the company is less than 5 % of the sales and charging 5% on the business income is higher for these type of business entrepreneurs. The assessee has got its Books of Account audited u/s 44AB of the Act and there are no discrepancies found by the Auditor from the Books of Accounts. He contended that Without considering all these facts the Assessing Officer has estimated the business income of the assessee at 5% of the sales clear of depreciation and other disallowances from sec 28 to sec 44 of the IT Act, which is not correct. The AO ought to have accepted the book profits as declared by the assessee and even though if the business income is to be estimated, it can be estimated at 0.1 % of sales and not at 5%, which is higher. He, therefore, requested the Bench to remit the matter back to the file of the AO to represent assessee’s case on merits by producing the documentary evidence to substantiate assessee’s case. He undertook before us to appear before the AO 4 ITA No. 1896/Hyd/2019 Versant Home Appliances Pvt. Ltd., Hyd. 4 without fail and without seeking adjournments with all the relevant documents to substantiate assessee’s case. 7. The ld. DR, on the other hand, has not objected to remit the matter back to the file of the AO. 8. We have considered the facts of the case and the request made by the learned AR. We are of the view that interest of justice will be served if the matter is restored to the file of AO to decide the matter on merits. Accordingly, the AO is directed to afford reasonable opportunity of being heard to the assessee and thereafter decide the issue on merits. We direct the assessee to appear before the AO with all the relevant evidences; at its own risk and responsibility to be followed by three effective opportunities of hearing. 9. In the result, appeal of the assessee is treated as allowed for statistical purposes in above terms. Pronounced in the open court on 15 th November, 2021. Sd/- Sd/- (S.S. GODARA) (L. P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 15 th November, 2021. kv 5 ITA No. 1896/Hyd/2019 Versant Home Appliances Pvt. Ltd., Hyd. 5 Copy to : 1 Versant Home Appliances Pvt. Ltd., C/o P. Murali & Co., CAs, 6-3-655/2/3, 1 st Floor, Somajiguda, Hyderabad – 82 2 ITO, Ward – 17(3), Hyderabad 3 CIT(A) - 1, Hyderabad 4 Pr. CIT - 5, Hyderabad 5 ITAT, DR, Hyderabad. 6 Guard File.