GSP Infratech Development Private Limited , Hyderabad V. Income Tax Officer, Ward-2(2), Hyderabad

ITA 2172/Hyd/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9454 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2014-2015
• Appeal Filed On: 13-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEEJU GUPTA
• Assessee Lawyers: D V ANJANEYULU
• Keywords: Principle of natural justice; Set aside
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A ', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN , ACCOUNTANT MEMBER ITA NO. 2172 / HYD/201 8 ASSESSMENT YEAR: 20 1 4 - 1 5 GSP INFRATECH DEVELOPMENT PVT LTD. , HYDERABAD. PAN A ABCG 5845P VS. INCOME - TAX OFFICER, WARD 2 (2), HYDERABAD. APPELLANT RESPONDENT ASSESSEE BY: S HRI D.V. ANJANEYULU REVENUE BY: S MT. NEEJU GUPTA DATE OF HEARING: 28 / 0 3 / 201 9 DATE OF PRONOUNCEMENT: 05 / 0 4 /201 9 O R D E R PER S. RIFAUR RAHMAN , AM: T H IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) 2 , HYDERABAD, DATED, 31 /0 8 /201 8 FOR AY 20 1 4 - 15 . 2. BRIEF FACTS OF THE CASE ARE, T HE A SSESSEE COMPANY, ENGAGED IN THE BUSINESS OF INFRATECH DEVELOPMENT, FILED ITS RETURN OF INCOME FOR THE AY 2014 - 15 ON 11/12/2014 ADMITTING INCOME OF RS. 3,77,54,570/ - AFTER CHAPTER VIA DEDUCTIONS OF RS. 79,159/ - . SUBSEQUENTL Y, THE CASE WAS SELECTED FOR SCRUTINY , AN STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE. IN RESPONSE, THE ASSESSEE FILED THE REQUIRED INFORMATION. 2.1 THE AO OBSERVED THAT D URI NG THE YEAR THE ASSESSEE COMPANY HAD INCURRED VARIOUS EXPENSES AND I T WA S FOUND THAT UNDER THE HEAD EARTH WORK CANAL AND LIFT IRRIGATION WORK I.T.A. NO. 2172 /HYD/1 8 GSP INFRATECH DEVELOPMENT PVT. LTD., HYD. 2 EXPENSES THE INCURRED AN AMO U NT OF RS. 18 , 11 , 14 , 976/ - . ON VERIFICATION OF THE VOUCHERS AND BILLS , THE AO NOTICED T HAT SOME OF THE VOUCHERS PERTAINING TO LABOUR CHARGES WE RE SELF - MADE AND NOT PROPERLY MAINTAINED. WHEN THE AR WAS ASKED TO ESTABLISH THE GENUIN ENESS OF THESE EXPENSES, SHE STATED THAT THE WORK SITES WE RE LOCATED AT REMOTE PLACES AND MOST OF THE LABOURERS WERE ILLITERATE. HENCE THE DAILY WAGES NEED TO BE PAID IN CASH AND SELF - CONTAINED VOUCHERS WE RE OBTAINED AND MAINTAINED. AFTER CONSIDERING THE SUBMISSIONS OF THE AR , THE AO PROCEEDED TO DISALLOW 5% OF THE LABOUR CHARGES OF RS . 8 , 55 , 15 , 856/ - WHICH WORKS OUT TO RS. 4 2, 77,282/ - . , FOR WHICH T HE AR HAS AGREED HENCE , THE AO ADDED AN AMOUNT OF RS. 42,77,292/ - TO THE RETURNED INCOME OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHO DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND OF NON - COMPLIANCE AS WELL AS ON MERITS ALSO, UPHELD THE ACTION OF AO. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF LD. CIT(A) IS ERRONEOUS IN LAW, CONTRARY TO FACTS, PROBABILITIES OF THE CASE AND AGAINST THE PRINCIPLES OF EQUITY AND NATURAL JUSTICE. 2. LD. CIT(A) ERRED IN LAW AND FACTS IN DISMISSING THE APPEAL EX - PART Y BY STATING THAT THERE WAS NO RESPONSE TO THE HEARING NOTICES FROM THE APPELLANT OR BY THE AR WHERE IN FACT NO SUCH NOTICE WAS EVER RECEIVED BY APPELLANT OR ITS AR. FURTHER, FOR THE SAME APPELLANT FOR THE A Y 2013 - 14 AN APPEAL IS PENDING BEFORE THE SAME INCUMB ENT WHEREIN IT WAS REPEATEDLY MENTIONED IN WRITING THAT APPEAL FOR A Y 2014 - 15 IS ALSO PENDING AND CLEARLY MENTIONING THE REASON AR IS UNABLE TO ATTEND IS SOLELY BECAUSE THE BOOKS OF ACCOUNTS AND APPEAL PAPERS WERE IMPOUNDED BY DEPARTMENT ON 22.02.2017 AND STILL BEING HELD IN THEIR CUSTODY. I.T.A. NO. 2172 /HYD/1 8 GSP INFRATECH DEVELOPMENT PVT. LTD., HYD. 3 3. SUBJECT TO ABOVE EVEN ON MERITS, THE AD HOC DISALLOWANCE MADE BY AO AND UPHELD BY CIT(A) BEING 5% OF THE LABOUR CHARGES INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS, WITHOUT DOUBTING GENUIN ENESS OF T HE EXPENDITURE, BEING PAYMENTS MADE IN REMOTE AREAS WHERE WORKS ARE EXECUTED AND WHERE NO BANKING FACILITIES ARE AVAILABLE IS BAD IN LAW. 4. FURTHER, THE CONTENTION OF AO THAT AR HAS AGREED FOR DISALLOWANCE AND RELYING ON SUCH SOLE ADMISSION MAKING ADHOC DISALLOWANCE IS UNWARRANTED BOTH IN LAW AND FACTS AS HELD IN THE CASES OF [1967] 63 ITR 738 (AP) ABDUL HAMEED KHAN V CIT AND [2006] 8 SOT 147 (COCHIN) VAMADEVEN BHANU V DY. CIT 5. FOR THESE AND OTHER REASONS THAT MAY BE URGED AT THE TIME OF HEARING APPE LLANT PRAYS THE HONORABLE TRIBUNAL TO KINDLY SET ASIDE THE ORDER OF CIT(A). 5. BEFORE US, LD. AR OF THE ASSESSEE SUBMITTED THAT THE AO FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE IS A PRIVATE COMPANY DULY AUDITED UNDER COMPANIES ACT AND TAX AUDIT U /S 44AB AND THE PAYMENTS ARE SUPPORTED BY SELF CONTAINED VOUCHERS AND ALL THE PAYMENTS ARE MADE IN REMOTE AREAS WHERE BANKING FACILITIES ARE NOT THERE AS CONTAINED UNDER THE PROVISIONS U/S 40A(3) READ WITH RULE 6DD AND ALSO LABOU RERS ARE ILLITERATES. 5.1 HE FURTHER SUBMITTED THAT THE AO ERRED IN LAW BY MAKING DISALLOWANCE WITHOUT DOUBTING THE GENUINENESS OF THE EXPENDITURE WHICH WAS EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND ALSO SIMPLY FOLLOWED THE PREVIOUS ASSESSMENT ORDER WHERE RES - JUDICATA IS NOT APPLICABLE AS EVERY ASSESSMENT IS INDEPENDENT. FINALLY, HE SUBMITTED THAT THE MAKING DISALLOWANCE WITHOUT DOUBTING THE GENUINENESS OF THE EXPENDITURE, WITHOUT REJECTING THE BOOK RESULTS. I.T.A. NO. 2172 /HYD/1 8 GSP INFRATECH DEVELOPMENT PVT. LTD., HYD. 4 6. LD. DR, ON THE OTHER HAND, RELIED ON THE ORDER S OF REVENUE AUTHORITIES. 7. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE BOOKS OF ACCOUNT AND APPEAL PAPERS WERE IMPOUNDED BY THE DEPARTMENT AND THE SAME ARE STILL IN THEIR CUSTODY, DUE TO WHICH, THE ASSESSEE WAS UNABLE TO APPEAR BEFORE THE CIT(A) AND ARGUE ITS CASE. THOUGH THE AR AGREED FOR THE ADDITION MADE BY THE AO BEFORE HIM, THE SAME CAN BE WITHDRAWN AS HELD BY THE HONBLE AP HIGH COURT IN THE CASE OF 63 ITR 738 (AP), WHEREIN THE HONBLE COURT HAS HELD AS UN DER: ADMISSION MADE BY A COUNSEL IN THE COURSE OF A PROCEEDING CAN BE WITHDRAWN UNLESS CIRCUMSTANCES ARE SUCH AS TO GIVE RISE TO AN ESTOPPEL COUNSEL HAD NOT MADE THE ADMISSION ATTRIBUTED IN HIM EVEN ASSUMING THAT SUCH AN ADMISSION WAS MADE, IT COULD BE WITHDRAW N AS IT WAS AN ADMISSION MADE IN THE COURSE OF ARGUMENT AND DEPARTMENT HAD NOT ACTED TO ITS PREJUDICE ON THE STRENGTH OF SUCH ADMISSION . 7.1 IN VIEW OF THE ABOVE OBSERVATIONS, WE REMIT THE ISSUE BACK TO THE FILE OF AO TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO REPRESENT ITS CASE AND ACCORDINGLY DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 5 TH APRIL , 201 9. SD/ - ( P. MADHAVI DEVI ) JUDICIAL MEMBER SD/ - ( S. RIFAUR RAHMAN ) ACCOUNTANT MEMBER HYDERABAD, DATED 5 T H APRIL , 201 9. KV I.T.A. NO. 2172 /HYD/1 8 GSP INFRATECH DEVELOPMENT PVT. LTD., HYD. 5 COPY FORWARDED TO: 1. M/S GSP INFRATECH DEVELOPMENT PVT. LTD., M/S ANJANEYULU & CO., CAS, 30, BHAGYALAKSHMI NAGAR, GANDHI NAGAR, HYD 500 080 2 . IT O , WARD 2 (2), HYDERABAD. 3 . CIT (A) - 2 , HYDERABAD 4. PR. CIT 2 , HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE