R.V.Rayanam, Kakinada V. THE DCIT, CIRCLE - 1, Kakinada

ITA 285/VIZ/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6811 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T S N MURTHY
• Keywords: Depreciation
• Section: 40A(3); 143(3); 142(1); 14A; 263

Judgement Text

ITA NO.285/VIZAG/2014 R.V. RAYANAM, KAKINADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.285/VIZAG/2014 ( / ASSESSMENT YEAR: 2009-10) R.V. RAYANAM KAKINADA DCIT, CIRCLE - 1, KAKINADA [PAN NO. AAIFR4192C ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI T.S.N. MURTHY, DR / DATE OF HEARING : 31.07.2017 / DATE OF PRONOUNCEMENT : 09.08.2017 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER U/S 263 OF I.T.ACT OF THE COMMISSIONER OF INCOME TAX (CIT), RAJAHMUNDRY VIDE F.NO.39/263/CIT/RJY/2013-14 DATED 28.3.2014 FOR THE A.Y. 2009-10. 2. ALL THE GROUNDS OF APPEAL ARE AGAINST THE ORDER PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'TH E ACT'). IN THIS CASE, ITA NO.285/VIZAG/2014 R.V. RAYANAM, KAKINADA 2 THE ASSESSEE FILED THE RETURN OF INCOME ADMITTING T OTAL INCOME OF ` 1,87,42,420/- ON 29.9.2009. THE ASSESSMENT WAS COM PLETED U/S 143(3) OF THE ACT ON TOTAL INCOME OF ` 2,00,89,820/-. SUBSEQUENTLY, THE LD.CIT HAS TAKEN UP THE CASE FOR REVISION U/S 263 AND FOUN D THAT THE ASSESSMENT PASSED U/S 143(3) OF THE ACT DATED 12.8. 2011 WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE AND ACCORDINGLY, ISSUED NOTICE U/S 263 OF THE ACT VIDE SHOW CAUSE LE TTER DATED 3.12.2013 FOR THE VARIOUS ISSUES MENTIONED IN THE SAID NOTICE . ON RECEIPT OF EXPLANATION FROM THE ASSESSEE, THE LD. CIT(A) PASSE D THE ORDER U/S 263 OF THE ACT DIRECTING THE A.O. TO EXAMINE THE FOLLOW ING ISSUES AND RE-DO THE ASSESSMENT AFRESH AFTER BEING GIVEN AN OPPORTUN ITY TO THE ASSESSEE. 1) INTEREST PAID TO BANKS ` 97,50,744/- 2) INTEREST ON BANK GUARANTEE DEPOSITS. 3) INTEREST PAID AND RECEIVED OF ` 5,29,608/- 4) BANK CHARGES ` 41,52,878/- 5) WORK IN PROGRESS ` 4,58,06,000/- 6) INTEREST ON SUNDRY DEBTORS RELATING TO THE PARTNERS MR. ALLURI SUBBA RAJU FOR AN AMOUNT OF ` 42,04,726/-. 7) DISALLOWANCE U/S 14A R.W.S. 36(1)(III) OF THE ACT. 8) CIT(A), RAJAHMUNDRY HIRE CHARGES ` 2,79,000/- AND THE TDS THEREON. 9) DISCREPANCIES IN THE BALANCE OF SUNDRY CREDITORS. 10) GENUINENESS OF EXPENDITURE RELATING TO CONTRACT MAT ERIAL A SUM OF ` 18,44,02,051/- AND CONTRACT EXPENSES ` 3,11,55,738/- ITA NO.285/VIZAG/2014 R.V. RAYANAM, KAKINADA 3 11) PAYMENT OF ` 7,72,112/- TOWARDS TRANSPORT CHARGES WITHOUT DEDUCTION OF TDS AND DISALLOWANCE U/S 40A(3) OF THE ACT. 3. AGGRIEVED BY THE ORDER OF THE LD. CIT THE ASSESS EE FILED APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, TH E LD. A.R. ARGUED THAT THE LD. CIT HAS NEITHER MADE OUT A CASE FOR UNDERST ATEMENT OF INCOME NOR A CASE OF ERRONEOUS ORDER. THE LD. CIT HAS NOT MADE ANY OBSERVATION FOR OVERSTATEMENT OF EXPENDITURE OR THE UNDERSTATEMENT OF INCOME OR SUPPRESSION OF ANY ASSET OR OVERSTATEMENT OF THE LIABILITY LEADING TO UNDER ASSESSMENT. THE LD. A.R. FURTHER ARGUED THAT THE A.O. WHILE COMPLETING THE ORIGINAL ASSESSMENT EXAMINED A LL THE DETAILS OF THE ISSUES RAISED BY THE CIT AND MADE THE ESTIMATED DIS ALLOWANCE UNDER VARIOUS HEADS. THE ASSESSING OFFICER HAS ISSUED TH E NOTICE U/S 142(1) OF THE ACT DATED 27.1.2011 COVERING ALL THE ISSUES RAI SED BY THE CIT FOR WHICH, THE ASSESSEE FILED THE REPLY AS PER THE DETA ILS IN PAGE NOS.30 & 31 OF THE PAPER BOOK. IN A NUTSHELL, THE LD. A.R. CONTENDED THAT THE DETAILS CALLED FOR BY THE LD. CIT HAVE ALREADY BEEN EXAMINED BY THE A.O. AND FORMED AN OPINION BEFORE COMPLETING THE ASSESSM ENT. REFERRING TO PAGE 45 OF THE PAPER BOOK, THE LD. A.R. SUBMITTED T HAT THE A.O. AFTER EXAMINATION OF THE BOOKS OF ACCOUNTS AND THE DETAIL S DISALLOWED 5% OF THE LABOUR EXPENSES AND FURTHER DISALLOWANCE OF DEP RECIATION OF 15%. ONCE THE DISALLOWANCE IS MADE ON ESTIMATION BASIS, NO FURTHER ADDITION REQUIRED TO BE MADE. SINCE THE A.O. HAS EXAMINED A LL THE DETAILS ITA NO.285/VIZAG/2014 R.V. RAYANAM, KAKINADA 4 FURNISHED BY THE ASSESSEE AND COMPLETED THE ASSESSM ENT, THERE IS NO CASE FOR MAKING REVISION U/S 263 OF THE ACT ON THE SAME ISSUES. THEREFORE, THE LD. A.R. ARGUED THAT THE ORDER PASSE D U/S 263 OF THE ACT REQUIRED TO SET ASIDE. 4. ON THE OTHER HAND, THE LD. D.R. ARGUED THAT THE A.O. HAS NOT AT ALL EXAMINED THE DETAILS AS STATED BY THE LD. A.R. TH A.O. HAS COMPLETED THE ASSESSMENT IN A SUMMARY MANNER WITHOU T VERIFYING THE DETAILS. THE QUESTION OF FORMING AN OPINION WOULD ARISE ONLY WHEN THE A.O. HAS EXAMINED THE DETAILS AND FORMED AN OPINION . IN THE ASSESSEES CASE, THE ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUN TS AND SUBMITTED THE INFORMATION IN THE ORIGINAL ASSESSMENT. THERE IS NO FINDING IN THE ASSESSMENT ORDER WITH REGARD TO VERIFICATION OF THE INFORMATION. MERE PRODUCTION OF BOOKS OF ACCOUNTS AND THE SUBMISSION OF SOME DETAILS DOES NOT AUTOMATICALLY LEAD TO VERIFICATION OF THE ENTIRE INFORMATION AND FORMING AN OPINION. THERE IS NO INDICATION IN THE ASSESSMENT ORDER LEADING TO EXAMINATION OF THE DETAILS AND FORMING A N OPINION. THE LD. D.R. FURTHER SUBMITTED TO US THAT AS PER THE DETAIL S OF SUNDRY CREDITORS, THERE WAS A DIFFERENCE OF ` 31,199/- IN THE CASE OF PARAMESWARI STEEL PROFILE AND ` 1,02,730/- IN THE CASE OF JAIN IRRIGATION SYSTEMS LIMITED, WHICH WAS PINPOINTED BY THE LD. CIT. FURTHER, IN R ESPECT OF THE DISALLOWANCE U/S 40A(3) OF THE ACT, THE LD. CIT HAS GIVEN CLEAR FINDING ITA NO.285/VIZAG/2014 R.V. RAYANAM, KAKINADA 5 THAT THE PAYMENT WAS MADE IN EXCESS OF ` 20,000/-, WHICH REQUIRE TO BE DISALLOWED U/S 40A(3) OF THE ACT. SINCE THE DIFFER ENCES IN THE SUNDRY CREDITORS LEADS TO UNACCOUNTED PURCHASES AND UNACCO UNTED PAYMENT AND NOT MAKING THE DISALLOWANCE U/S 40A(3) OF THE A CT, IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREF ORE, THE LD. D.R. ARGUED THAT THE LD. CIT HAS RIGHTLY MADE THE REVISI ON U/S 263 OF THE ACT AND NO INTERFERENCE IS CALLED FOR. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. IN THIS CASE, THE ASSESSMENT WAS COMPLETED U/S 143(3) OF TH E ACT ON A TOTAL INCOME OF ` 2,00,89,820/-. THE A.O. HAS COMPLETED THE ASSESSM ENT ESTIMATING THE DISALLOWANCE OF 0.5% OF LABOUR CHARG ES AMOUNTING TO ` 3,33,947/- AND THE DISALLOWANCE OF DEPRECIATION OF ` 13,457/- ON BENZ CIT(A), RAJAHMUNDRY AND NO OTHER DISALLOWANCE WAS M ADE BY THE A.O. THERE WAS NO INDICATION IN THE ASSESSMENT ORDER THA T ANY DETAILS WERE CALLED FOR AND EXAMINED BY THE A.O. NO DOUBT THAT THE ASSESSEE HAS FURNISHED THE DETAILS AS PER LETTER IN PAGE NOS.30 & 31 OF PAPER BOOK AND PRODUCED THE BOOKS OF ACCOUNTS, MERE PRODUCTION OF THE BOOKS OF ACCOUNTS DOES NOT AUTOMATICALLY LEAD TO VERIFICATIO N OF THE COMPLETE INFORMATION AND FORMING AN OPINION. IT IS SEEN FRO M THE INFORMATION SUBMITTED BY THE ASSESSEE FROM PAGE NOS.30 & 31 OF THE PAPER BOOK ITA NO.285/VIZAG/2014 R.V. RAYANAM, KAKINADA 6 THAT THE A.O. DID NOT CALL FOR MOST OF THE INFORMAT ION FOR WHICH THE CIT HAS TAKEN UP FOR REVISION. IN THIS CASE, THERE WAS A DIFFERENCE OF ` 31,199/- IN RESPECT OF PARAMESWARI STEEL PROFILE AN D ` 1,02,730/- IN THE CASE OF JAIN IRRIGATION SYSTEMS LIMITED IN RESPECT OF SUNDRY CREDITORS. IN RESPECT OF SECTION 40A(3) OF THE ACT, THE LD. CIT H AS GIVEN CLEAR FINDING THAT THE PAYMENTS WERE MADE IN EXCESS OF ` 20,000/- ON A SINGLE DAY BUT THE A.O. HAS NOT MADE THE DISALLOWANCE U/S 40A( 3) OF THE ACT. THEREFORE, BOTH THE ABOVE ISSUES RESULTS IN UNDER A SSESSMENT OF THE INCOME, WHICH IS ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF THE REVENUE, HENCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT AND THE ORDER PASSED U/S 263 OF THE ACT IS UPHELD. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 09 TH AUG17. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 09.08.2017 VG/SPS ITA NO.285/VIZAG/2014 R.V. RAYANAM, KAKINADA 7 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SHRI R.V. RAYANAM, D.NO.8-10-22, GANDHI NAGAR, KAKINADA (E.G. DIST.) 2. / THE RESPONDENT THE DCIT, CIRCLE-1, KAKINADA. 3. + / THE CIT, RAJAHMUNDRY 4. + ( ) / THE CIT (A), RAJAHMUNDRY 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM