United Electric Co., , Chirala V. Asst. Commissioner of Income Tax, Circle-1(1), Guntur

ITA 2139/Hyd/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4465 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 11-03-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 05-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P V SUBBA RAJU
• Assessee Lawyers: A C GANGAIAH
• Keywords: Reassessment proceedings
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ITA NO. 2139/HYD/2018 ASSESSMENT YEAR: 2009-10 M/S UNITED ELECTRIC CO. CHIRALA PAN AABFU2361D VS. ACIT, CIRCLE-1, ONGOLE. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.C. GANGAIAH, AR REVENUE BY : SHRI P.V. SUBBARAJU, DR DATE OF HEARING : 11-03-2019 DATE OF PRONOUNCEMENT : 15-03-2019 ORDER PER D.S. SUNDER SINGH, A.M: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) (1) (CIT(A)- 1), GUNTUR, DATED 28.08.2018. 2. IN THIS CASE THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 22,93,470/- ON 30.06.2011. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON TOTAL INCOME OF RS. 24,03,893/-. IN THE ASSESSMENT PROCEEDINGS THE A.O COMPLETED THE ASSESSMENT ESTIMATING THE INCOME @ 8% ON TURNOVER. SUBSEQUENTLY THE COMMISSIONER OF INCOME TAX (CIT),GUNTUR HAS TAKEN UP THE CASE FOR REVISION U/S 263 OF THE ACT AND OBSERVED THAT THE A.O HAS COMMITTED AN ERROR IN ADOPTING THE TURNOVER FOR 2 ITA NO. 2139/HYD/2018 M/S UNITED ELECTRIC CO., CHIRALA. ESTIMATION OF INCOME. THE CIT VERIFIED THE RECORDS AND FOUND THAT THE TOTAL TURNOVER OF THE ASSESSEE WAS RS. 7,29,84,056/-. AGAINST THE GROSS RECEIPTS OF 7,29,84,056/-, THE A.O HAS TAKEN THE TURNOVER OF RS. 5,87,64,984/-, WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY ISSUED THE NOTICE U/S 263 OF THE ACT CALLING FOR THE OBJECTIONS OF THE ASSESSEE AS TO WHY THE ASSESSMENT ORDER SHOULD NOT BE REVISED U/S 263 OF THE ACT. IN RESPONSE TO THE NOTICE ISSUED U/S 263, THE ASSESSEE SUBMITTED AN EXPLANATION STATING THAT THE ASSESSEE HAD AGREED FOR THE ADDITION OF RS. 1,10,423/- AND THE ASSESSMENT WAS COMPLETED ON AGREED BASIS, HENCE, THE ASSESSMENT SHOULD NOT BE REVISED U/S 263 OF THE ACT. NOT BEING IMPRESSED WITH THE EXPLANATION OF THE ASSESSEE, THE LD. CIT HELD THAT THERE WAS AN ERROR IN THE ASSESSMENT ORDER IN DETERMINING THE TURNOVER AND ESTIMATION OF INCOME. ACCORDING TO THE LD.CIT THE GROSS TURNOVER IS RS. 7,29,84,056/- AND THE A.O HAS TAKEN THE TURNOVER OF RS. 5,87,64,984/- FOR ESTIMATION OF INCOME, THEREFORE, HELD THAT THE ASSESSMENT ORDER PASSED BY THE A.O IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. CIT FURTHER OBSERVED THAT THE A.O SHOULD HAVE BROUGHT THE BROKERAGE RECEIPTS AMOUNTING TO RS. 21,673/- AND HONORARIUM OF RS.1,11,132/- TO TAX SEPARATELY, INSTEAD OF INCLUDING IN TURNOVER WHICH IS ALSO HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY DIRECTED THE A.O TO REFRAME THE ASSESSMENT ORDER AFTER HEARING THE ASSESSEE AND TAKING INTO THE CONSIDERATION OF THE THE IRREGULARITIES AND ERRORS SPECIFIED IN 263 ORDER. THE LD.CIT ALSO GIVEN A DIRECTION THE A.O TO GIVE 3 ITA NO. 2139/HYD/2018 M/S UNITED ELECTRIC CO., CHIRALA. OPPORTUNITY TO THE ASSESSEE BEFORE PASSING THE CONSEQUENTIAL ORDER. 3. THE ASSESSEE WENT ON APPEAL BEFORE THE HONBLE ITAT, AGAINST THE ORDER PASSED U/S 263 AND THE ITAT IN ITS ORDER DATED 02.04.2014 IN ITA NO. 353/VIZAG/2013 UPHELD THE ORDER OF THE CIT AND DISMISSED THE APPEAL. THE A.O PASSED THE CONSEQUENTIAL ORDER GIVING EFFECT TO THE ORDER PASSED U/S 263 OF THE ACT BY AN ORDER DATED 12.12.2013. IN THE CONSEQUENTIAL ORDER, THE LD.A.O ADOPTED THE TURNOVER OF RS. 7,29,84,056/- IN PLACE OF RS.5,87,64,984/- AND ESTIMATED THE INCOME @ 8% OF THE TOTAL TURNOVER. THE A.O ALSO SEPARATELY MADE THE ADDITION OF RS. 21,673 TOWARDS BROKERAGE RECEIPTS AND RS. 1,11,132/- TOWARDS HONORARIUM RECEIPTS TO THE ASSESSEE INCOME. ACCORDINGLY COMPUTED THE TOTAL INCOME AT RS. 59,71,530/-. 4. AGAINST THE ORDER OF THE A.O, DATED 12.12.2013 THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) UPHELD THE ESTIMATION OF INCOME @ 8% ON GROSS TURNOVER AS WELL AS CONFIRMED THE ADDITION TOWARDS BROKERAGE AND HONORARIUM. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASSESSEE FILED APPEAL BEFORE THE ITAT. 5. IN THE APPEAL MEMO THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. A.O HAD NOT CONSIDERED THE DIRECTIONS OF CONSEQUENTIAL ORDERS MODIFYING ASSESSMENT ORDERS PASSED U/S 143(3) R.W.S 263. 4 ITA NO. 2139/HYD/2018 M/S UNITED ELECTRIC CO., CHIRALA. 2. ANY OTHER GROUND MAY BE SOUGH AT THE TIME OF HEARING OF APPEAL. 5.1 VIDE PETITION DATED 03.11.2018 THE ASSESSEE RAISED AN ADDITIONAL GROUND WHICH AS UNDER: WHETHER ASSISTANT COMMISSIONER OF INCOME TAX IS PROPER IN ESTIMATING THE INCOME OF TURNOVER OF RS. 45,17,082/- AND RS. 97,01,990/- AT 8% IGNORING THE PROFITS OF EARLIER YEARS AND TAXING THE COMMISSION AND HONORARIUM CONNECTED TO BUSINESS TOTALLY IGNORING THE SUBMISSIONS OF THE APPELLANT? 6. DURING THE APPEAL HEARING THE LD. AR REQUESTED FOR ADMISSION OF ADDITIONAL GROUNDS AND ARGUED FOR ESTIMATION OF INCOME LESSER THAN 8% AND TO EXCLUDE THE SALES OF RS. 45,17,082/- AND RS. 97,01,980/- AGGREGATING TO RS. 1,42,19,072/-. 7. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH MATERIAL PLACED ON RECORD. THE LIMITED ISSUE INVOLVED IN THIS APPEAL IS WHETHER THE A.O HAS GIVEN EFFECT TO THE ORDER PASSED U/S 263 CORRECTLY OR NOT. THE A.O WHILE ESTIMATING THE INCOME IN ORIGINAL ASSESSMENT MADE U/S 143(3) DATED 29/03/2011 TAKEN THE TURNOVER OF RS. 5,87,64,984/- AGAINST THE ACTUAL TURNOVER OF RS. 7,29,84,056/- AND THE A.O HAS NOT GIVEN ANY REASON FOR OMISSION OF TURNOVER RELATING TO VAT @ 12.50% SALES AND VAT @ 4% SALES. THUS, THOUGH THE TOTAL TURNOVER WAS RS. 7,29,84,056/- THE AO HAS ADOPTED THE SUM OF RS. 5,87,64,984/- WITHOUT GIVING ANY REASON. IN THE ORDER PASSED U/S 263, THE LD.CIT 5 ITA NO. 2139/HYD/2018 M/S UNITED ELECTRIC CO., CHIRALA. DIRECTED THE A.O TO ESTIMATE THE PROFIT @ 8% ON THE TOTAL TURNOVER OF RS. 7,29,84,056/-AND THE ASSESSEE CHALLENGED THE COMPUTATION OF TOTAL TURNOVER AND ESTIMATION OF INCOME @ 8% ON TOTAL TURNOVER. THE ITAT UPHELD THE ORDER OF THE LD.CIT, WITH REGARD TO THE DETERMINATION OF TOTAL TURNOVER AND WITH REGARD TO THE ESTIMATION OF INCOME, THE HONBLE ITAT VIEWED THAT A.O WOULD CONSIDER ALL THE FACTS AND CIRCUMSTANCES FOR ESTIMATION OF INCOME. HENCE, ISSUE OF DETERMINATION OF TOTAL TURNOVER AT RS. 7,29,84,056/- AND THE INCLUSION OF 12.50% VAT SALES AND VAT 4% SALES OF RS.45,17.082/- AND RS.97,01,990/- HAS REACHED FINALITY. 8.1 DURING THE REVISION PROCEEDINGS U/S 263 THE ASSESSEE ARGUED BEFORE THE CIT THAT THE ASSESSMENT WAS COMPLETED ON AGREED BASIS BUT DID NOT CHALLENGE ESTIMATION OF INCOME @ 8%. THE HONBLE ITAT HAS CONFIRMED THE ORDER OF THE LD.CIT AND GIVEN AN OBSERVATION THAT THE A.O SHALL CONSIDER THE ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AND ESTIMATE THE INCOME AS PER THE PROVISIONS OF THE ACT. WE HAVE GONE THROUGH THE ASSESSMENT ORDER GIVING EFFECT TO THE ORDER OF THE LD.CIT DATED 12.12.2013. THE LD.CIT HAS GIVEN A DIRECTION TO THE AO TO ESTIMATE THE INCOME @8% ON TOTAL TURNOVER AND THE AO HAS ESTIMATED THE INCOME ACCORDINGLY. BEFORE COMPLETION OF ASSESSMENT, THE A.O HAD ISSUED THE NOTICE GIVING OPPORTUNITY TO THE ASSESSEE AND THE ASSESSEE DID NOT RESPOND TO THE NOTICE. DUE TO NON- COMPLIANCE AND NON-SUBMISSION OF INFORMATION, THE AO COMPLETED THE ASSESSMENT AS PER THE INFORMATION AVAILABLE ON RECORD AND AS PER THE DIRECTIONS OF THE LD.CIT IN THE 6 ITA NO. 2139/HYD/2018 M/S UNITED ELECTRIC CO., CHIRALA. ORDER U/S 263. ACCORDINGLY THE A.O ESTIMATED THE INCOME @ 8% OF THE TURNOVER. THE ASSESSEE HAS NOT CHALLENGED ESTIMATION OF INCOME @ 8% BEFORE THE CIT(A) AND NO MATERIAL IS PLACED BEFORE US TO ESTABLISH THAT THE INCOME OF THE ASSESSEE IS BELOW 8%. THEREFORE, WE HOLD THAT THE A.O HAS GIVEN TO THE EFFECT TO THE ORDER OF THE LD. CIT CORRECTLY AND ESTIMATED THE INCOME @ 8 & AND THERE IS NO MISTAKE IN THE ORDER OF THE A.O. THEREFORE ,WE UPHOLD THE ORDER OF THE LD. A.O AND DISMISS THE APPEAL OF THE ASSESSEE ON THIS GROUND. 8.2 THE NEXT ISSUE IS TAXING THE BROKERAGE RECEIPTS AND HONORARIUM AS PER THE DIRECTIONS OF THE LD.CIT. THE LD.CIT HAS GIVEN THE DIRECTION TO TAX THE BROKERAGE RECEIPTS AND HONORARIUM SEPARATELY, SINCE THE SAID RECEIPTS ARE NOT INTERLINKED WITH THE TURNOVER. DURING THE REASSESSMENT PROCEEDINGS THE A.O ISSUED THE NOTICE FOR GIVING EFFECT FOR THE ORDER OF THE CIT AND THE ASSESSEE DID NOT RESPOND TO THE NOTICE. DUE TO NON-COMPLIANCE AND NON-SUBMISSION OF INFORMATION, THE AO COMPLETED THE ASSESSMENT TAXING THE RECEIPTS SEPARATELY. THIS ISSUE WAS AGITATED BEFORE THE CIT(A) AND RAISED THROUGH ADDITIONAL GROUND. DURING THE APPEAL HEARING THE LD. A.R. DID NOT EXPLAIN AS TO WHY THE SAID RECEIPTS SHOULD NOT BE ASSESSED SEPARATELY AND NO MATERIAL IS PLACED BEFORE US TO SHOW THAT THE BROKERAGE COMMISSION AND THE HONORARIUM ARE PART OF THE TURNOVER. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. A.O AND THE SAME IS UPHELD AND DISMISS THE APPEAL OF THE ASSESSEE ON THIS GROUND. ACCORDINGLY, ALL 7 ITA NO. 2139/HYD/2018 M/S UNITED ELECTRIC CO., CHIRALA. THE GROUNDS OF APPEAL AND THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH, 2019 SD/- SD/- (V. DURGA RAO) (D.S. SUNDER SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 15 TH MARCH , 2019. KRK 1 UNITED ELECTRIC CO., ANDHRA RATNA ROAD, CHIRALA, PRAKASHAM DIST, PIN 523157. 2 ACIT, CIRCLE 1(1), GUNTUR. 3 THE CIT(A)-1, GUNTUR. 4 THE PR. CIT, GUNTUR. 5 THE DR, ITAT HYDERABAD 6 GUARD FILE