Virchow Biotech Private Limited , Hyderabad V. Income Tax Officer, Ward-17(4), Hyderabad

ITA 260/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5952 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2014-2015
• Appeal Filed On: 28-02-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: S RAMA RAO
• Keywords: Valuation report; Set aside
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 260/HYD/2019 ASSESSMENT YEAR: 2014-15 VIRCHOW BIOTECH PRIVATE LIMITED, HYDERABAD [PAN: AABCV2578A] VS INCOME TAX OFFICER, WARD-17(4), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S.RAMA RAO, AR FOR REVENUE : SMT. NIVEDITA BISWAS, DR DATE OF HEARING : 23-02-2021 DATE OF PRONOUNCEMENT : 26-04-2021 O R D E R PER S.S.GODARA, J.M. : THIS ASSESSEES APPEAL FOR AY.2014-15 ARISES FROM TH E PR.CIT-5, HYDERABADS ORDER DATED 28-01-2019, U/S.26 3 OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. WE STRAIGHT AWAY ADVERT TO THE RELEVANT BASIC FACTS CULMINATING IN THE LEARNED PR.CITS REVISION JURISDI CTION EXERCISE U/S.263 OF THE ACT. THE ASSESSING OFFICER H AD ADMITTEDLY FRAMED HIS SECTION 143(3) REGULAR ASSESSME NT ON 16-12-2016 DISALLOWING THE ASSESSEES SECTION 35(2AB) CLAIM OF RS.5,19,59,503/-. THE CIT THEREAFTER SOUGHT TO EXER CISE HIS SECTION 263 REVISION JURISDICTION TERMING THE SAME AS AN ITA NO. 260/HYD/2019 :- 2 -: ERRONEOUS ONE SO FAR AS IT CAUSED PREJUDICE TO INTERE ST OF THE REVENUE FOR THE REASON THAT THERE WAS NO VALUATION CERTIF ICATE QUA THE ASSESSEES SHARES SOLD HAVING FACE VALUE OF RS. 10/- WITH PREMIUM OF RS.16.40. THE ASSESSEE STRONGLY SUPP ORTED THE IMPUGNED ASSESSMENT ON THE GROUND THAT THE ASSESSI NG OFFICER HAD FINALISED THE SAME AFTER MAKING ALL DUE E NQUIRIES. IT ALSO BUTTRESSED THE FOREGOING VALUATION AS PER REPOR T DT.26-03-2014 UNDER RULE 11UA OF THE INCOME TAX RULES , 1962. 3. WE NOTICE IN THIS FACTUAL BACKDROP THAT THE PR.CIT HAS QUOTED RULE 11UA OF THE INCOME TAX RULES STIPULATING TH AT THE ACCOUNTANT; AS DEFINED THEREIN, MEANS A FELLOW OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA, WHEREIN THE MEANING OF THE CHARTERED ACCOUNTANTS ACT 1949 (38 OF 1949), WHO IS NO T APPOINTED BY THE COMPANY AS AN AUDITOR U/S.44AB OF THE ACT OR U/S.224 OF THE COMPANIES ACT, 1956. LEARNED PR.CI T THEREAFTER CONCLUDES THAT THE ASSESSEES ACCOUNTANT SIGNIN G THE IMPUGNED VALUATION IS NONE OTHER THAN ITS AUDITOR ON LY. MEANING THEREBY THAT IT IS A CASE OF CLEAR-CUT VIOLATION OF FOREGOING RULE 11UA OF THE INCOME TAX RULES WHICH VE RY MUCH RENDERS THE REGULAR ASSESSMENT HEREIN ABOVE AS AN ERR ONEOUS ONE CAUSING PREJUDICE TO THE INTEREST OF THE REVENUE IN VITING EXIGIBILITY OF SECTION 263 JURISDICTION. HE HAS THUS SET ASIDE THE SAME FOLLOWED BY DIRECTIONS TO THE ASSESSING OFFICER TO FRAME A FRESH ONE. 4. LEARNED AUTHORISED REPRESENTATIVE VEHEMENTLY CONTEND ED DURING THE COURSE OF HEARING THAT THE ASSESSEE HAD RIGH TLY GONE BY A DULY OBTAINED VALUATION REPORT UNDER RULE 11UA O F THE ITA NO. 260/HYD/2019 :- 3 -: INCOME TAX RULES AND THEREFORE, THE IMPUGNED REVISION ACTION IS NOT SUSTAINABLE. HE FAILS TO DISPUTE THE PR.CITS CL INCHING FINDING THAT THE ACCOUNTANT ISSUING THE ASSESSEES FOREG OING VALUATION REPORT IS ALSO AN AUDITOR OF THE COMPANY ITS ELF U/S.44AB OF THE ACT. THIS CLINCHING ASPECT HAS GONE UN - REBUTTED FROM THE ASSESSEES SIDE THEREFORE. WE THUS QUOTE HON'BLE APEX COURTS LANDMARK DECISION IN MALABAR IN DUSTRIAL CO. VS. CIT (2000) [243 ITR 83] (SC) THAT AN ASSESSME NT WHICH DOES NOT CONFIRM TO FOUR CORNERS OF THE PROVISIONS OF THE ACT LACKING ALL DUE ENQUIRIES IS ITSELF AN ERRONEOUS ON E CAUSING PREJUDICE TO THE INTEREST OF REVENUE AND THEREFORE, REVI SABLE U/S.263 OF THE ACT. WE ACCORDINGLY UPHOLD THE PR.CITS REVISION DIRECTION ON THE FOREGOING ISSUE. NO OTHER ARGUMENT HAS BEEN RAISED BEFORE US. 5. THIS ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH APRIL, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.GO DARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 26-04-2021 TNMM ITA NO. 260/HYD/2019 :- 4 -: COPY TO : 1.VIRCHOW BIOTECH PRIVATE LIMITED, PLOT NO.4, SV CO -OP. INDUSTRIAL ESTATE IDA, JEEDIMETLA, HYDERABAD. 2.THE INCOME TAX OFFICER, WARD-17(4), HYDERABAD. 3.PR.CIT-5, HYDERABAD. 4.D.R. ITAT, HYDERABAD. 5.GUARD FILE.