Sujana Towers Limited (Presently known as Neueon Towers limited), Hyderabad, Hyderabad V. DCIT, Circle-3(2), Hyderabad, Hyderabad

ITA 335/HYD/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2654 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 24-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H VIJAYALAKSHMI
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence
• Section: 142(1); 115JB; 145; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 335/HYD/2017 ASSESSMENT YEAR: 2011-12 M/S NEUEON TOWERS LTD., (FORMERLY KNOWN AS M/S SUJANA TOWERS LTD.), HYDERABAD PAN AAKCS7820F VS. DY. COMMISSIONER OF INCOME- TAX, CIRCLE 3(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. MURALI MOHAN RAO REVENUE BY : SMT. H. VIJAYALAKSHMI DATE OF HEARING 19-12-2017 DATE OF PRONOUNCEMENT 24-01-2018 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(A) 3, HYDERABAD, DATED 13/12/2016 FOR THE AY 2011-12. 2. BRIEFLY THE FACTS OF THE CASE ARE, ASSESSEE COMP ANY IS IN THE BUSINESS OF MANUFACTURING OF RE-ROLLED STEEL PRODUC TS, TRADING IN STEEL COMPONENTS AND CONSTRUCTION OF TELECOM TOWERS. THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE AY 2011- 12 BELATEDLY ON 30/03/2013 DECLARING AN INCOME OF RS. 43,54,460/- U NDER NORMAL PROVISIONS AND RS. 3,75,07,584/- U/S 115JB OF THE I NCOME-TAX ACT, 1961 (IN SHORT THE ACT). THE CASE WAS SELECTED FO R SCRUTINY UNDER CASS AND NOTICE U/S 143(2) WAS ISSUED TO THE ASSESS EE ON 2 ITA NO. 335 /HYD/2017 NEUEON TOWER LTD. 10/08/2013. IN RESPONSE TO THE SAID NOTICE, ASSESSE E FILED A LETTER DATED 03/09/2013 ENCLOSING A COPY OF COMPUTATION AN D P&L ACCOUNT AND BALANCE SHEET. ANOTHER NOTICE U/S 142(1) DATED 04/10/2013 WAS ISSUED CALLING FOR VARIOUS DETAILS, AGAINST WHICH T HE ASSESSEE FILED A LETTER DATED 11/11/2013 FURNISHING PART OF INFORMAT ION. ACCORDING TO THE AO, SINCE THE ASSESSEE CLAIMED THAT IT IS IN TH E BUSINESS OF MANUFACTURING RE-ROLLED STEEL PRODUCTS, TRADING IN STEEL COMPONENTS AND CONSTRUCTION OF TELECOM TOWERS, IT IS NECESSARY TO HAVE THE FOLLOWING INFORMATION TO VERIFY THE EXPENDITURE CLA IMED BY THE ASSESSEE: (A) BOOKS OF ACCOUNT (B) DETAILS ON NATURE OF BUSINESS (C) PRODUCTS PRODUCED OR TRADED, ITS QUANTITATIVE D ETAILS. (D) DETAILS OF MAIN RAW MATERIAL USED, ITS QUANTITA TIVE DETAILS. (E) PLACE OF PURCHASE OF RAW MATERIAL AND ITS MODE OF TRANSPORT TO THE FACTORIES (F) DETAILS OF OPENING STOCK, PURCHASES, SALES AND CLOSING STOCK OF MANUFACTURED GOODS AND TRADED GOODS SEPARATELY I N TERMS OF QUANTITY AND COST. (G) STOCK REGISTERS FOR MOVEMENT OF RAW MATERIAL AN D FINISHED PRODUCTS. (H) LOCATION OF FACTORIES AND NATURE OF GOODS PRODU CED AT EACH FACTORY. (I) LOCATION OF STOCK YARDS AND NATURE OF GOODS STO RED THERE IN. 2.1 SINCE THE ASSESSEE DID NOT FILE ANY INFORMATION , THE AO REJECTED THE BOOK RESULTS U/S 145(1) AND PROCEEDED TO ESTIMA TE THE INCOME OF THE ASSESSEE FOR THE FOLLOWING REASONS: 1. THE ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNT. 2. THE ASSESSEE HAS NOT PRODUCED EVIDENCE FOR ALL T HE ADDITIONS CLAIMED TO HAVE MADE DURING THE YEAR. 3. THE ASSESSEE HAS NOT PRODUCED DETAILS OF RAW MAT ERIAL USED, ITS QUANTITATIVE DETAILS. 4. THE ASSESSEE HAS NOT PRODUCED DETAILS OF PLACE O F PURCHASE OF RAW MATERIAL AND ITS MODE OF TRANSPORT TO THE FA CTORIES. 5. THE ASSESSEE HAS NOT PRODUCED DETAILS OF OPENING STOCK, PURCHASES, SALES AND CLOSING STOCK OF MANUFACTURED GOODS AND TRADED GOODS SEPARATELY IN TERMS OF QUANTITY AND CO ST. 6. THE ASSESSEE HAS NOT PRODUCED STOCK REGISTERS FO R MOVEMENT OF RAW MATERIAL AND FINISHED PRODUCTS. 3 ITA NO. 335 /HYD/2017 NEUEON TOWER LTD. 7. THE ASSESSEE HAS NOT PRODUCED LOCATION OF FACTOR IES AND NATURE OF GOODS PRODUCED AT EACH FACTORY. 8. THE ASSESSEE HAS NOT PRODUCED LOCATION OF STOCK YARDS AND NATURE OF GOODS STORED THERE IN. 2.2 AO OBSERVED THAT SINCE THE ASSESSEES TURNOVER CONSISTS OF MANUFACTURING, TRADING AND CONSTRUCTION OF TELECOM TOWERS, THE ASSESSEE WAS ASKED TO PRODUCE QUANTITATIVE AND QUAL ITATIVE DETAILS OF TURNOVER, BUT, THE ASSESSEE COULD NOT PRODUCE EVEN THESE DETAILS, WHICH PROVE THAT THE COMPANY HAS NOT MAINTAINED SEG MENT WISE QUANTITATIVE DETAILS. THEREFORE, THE AO OBSERVED TH AT THE NET PROFIT APPLICABLE TO ANY PARTICULAR TRADE CANNOT BE APPLIE D TO THIS CASE. THE ASSESSEE ADMITTED A NET INCOME OF RS. 43,54,460/- O N A TOTAL TURNOVER OF RS. 1298,53,08,825/-. IN PERCENTAGE WISE THE PRO FIT WORKS OUT TO 0.03%. IN ADDITION TO THE TURNOVER OF RS. 1298,50,0 8,825/-, THE ASSESSEE HAS AN OTHER INCOME OF RS. 2,97,90,799, IT MEANS THE NET PROFIT ADMITTED IS LESS THAN THE OTHER INCOME. 2.3 IN VIEW OF THE ABOVE OBSERVATIONS, THE AO ESTIM ATED THE INCOME OF THE ASSESSEE AT 1% AND DETERMINED THE INCOME AT RS. 13,01,50,900/-. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THE FO LLOWING ADDITIONAL EVIDENCE: A) ABSTRACT OF SALES REGISTER. B) ABSTRACT OF PURCHASE REGISTER C) CONFIRMATION FROM THE PARTIES TO WHOM SALES WERE MADE AND ALSO THE PARTIES FROM WHOM PURCHASES WERE MADE ALON G WITH THEIR INCOME-TAX RETURNS, AUDIT REPORT AND FINANCIA L STATEMENTS. 4.1 AS THE ABOVE INFORMATION WAS NOT SUBMITTED DURI NG THE ASSESSMENT PROCEEDINGS, THE SAME WAS SENT TO THE AO . THE AO IN HIS REMAND REPORT DATED 28/07/2016 REPORTED AS UNDER: 4 ITA NO. 335 /HYD/2017 NEUEON TOWER LTD. A) THE LETTERS 1-10-2015 & 13-6-2016 WERE ISSUED T O THE ASSESSEE, CALLING FOR INFORMATION TO SUBSTANTIATE T HE ADDITIONAL EVIDENCE FILED BY THE APPELLANT BEFORE THE CIT(APPE AL). DESPITE THE REPEATED PHONE CALLS THERE WAS NO RESPONSE FROM THE APPELLANT AND THE APPELLANT DID NOT SUBMIT ANY OF T HE INFORMATION CALLED FOR. B) THE INFORMATION CALLED FOR BY ASSESSING OFFICER VIDE PARA 3 IS VERY MUCH ESSENTIAL FOR ARRIVING AT THE CORRECT INC OME OF THE ASSESSEE. C) DESPITE REPEATED NOTICES EITHER DURING THE ASSES SMENT PROCEEDINGS OR DURING THE REMAND PROCEEDINGS THE IN FORMATION CALLED FOR WAS NOT PRODUCED, THEREFORE THE ASSESSEE DID NOT SATISFY THE CONDITIONS LAID DOWN IN RULE 46A OF I.T RULES 1962. THEREFORE THE ASSESSING OFFICER RECOMMENDED THAT AD DITIONAL EVIDENCE SHOULD NOT BE ADMITTED. 4.2 WHEN THE COPY OF THE REMAND REPORT WAS SENT TO THE ASSESSEE, THE ASSESSEE SUBMITTED AS UNDER: A) THAT THE ASSESSING OFFICER HAS NOT GIVEN REASONA BLE OPPORTUNITY TO SUBMIT THE INFORMATION. THEREFORE TH E ADDITIONAL EVIDENCE WAS FILED UNDER RULE-46A(I)(C). B) THE INFORMATION COULD NOT BE SUBMITTED BECAUSE O F THE REASONS BEYOND THE CONTROL OF THE ASSESSEE AND BECA USE OF INSUFFICIENT OPPORTUNITY GRANTED BY ASSESSING OFFIC ER FOR PRODUCTION OF VOLUMINOUS INFORMATION. C) SIMILAR ISSUE WAS INVOLVED IN AY 09-10 WHEREIN T HE HON'BLE ITAT, HYDERABAD IN ITA NO. 1360/H/2013 HAS HELD THA T: CONSIDERING TOTALITY OF FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE SPECIFIC PLEA OF THE ASSESSEE, IN THE INTERESTS OF JUSTICE IN THIS CASE ALSO, WE ARE INCLINED TO SET A SIDE THE IMPUGNED ORDER OF THE CLT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH SIMILAR DIRECTIONS. W E DO SO AND DIRECT THE ASSESSING OFFICER TO RE-EXAMINE THE MATT ER, AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE TO PR ODUCE THE BOOKS OF ACCOUNT AND OTHER INFORMATION, AND RE-DETE RMINE THE INCOME ACCORDINGLY. THE DIRECTIONS GIVEN IN THE ORD ER OF THIS TRIBUNEL DATED 13.8.2013, EXTRACTED ABOVE, APPLY MU TATIS MUTANDIS TO THIS CASE AS WELL. ASSESSEE IS DIRECTED TO COOPERATE WITH THE ASSESSING OFFICER AND COMPLY WITH THE NOTI CES, AND THE ASSESSING OFFICER IS DIRECTED TO COMPLETE THE ASSES SMENT AFRESH 5 ITA NO. 335 /HYD/2017 NEUEON TOWER LTD. IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPO RTUNITY OF HEARING TO THE ASSESSEE. ' 4.3 WHEN THE CIT(A) VIDE LETTER DATED 16/09/2016 AS KED THE ASSESSEE TO GIVE REASONS WHICH PREVENTED IT FROM SU BMITTING THE INFORMATION DURING THE ENTIRE ASSESSMENT AND REMAND PROCEEDINGS, THERE WAS NO RESPONSE FROM THE ASSESSEE. THE CIT(A ), THEREFORE, CONFIRMED THE ACTION OF THE AO BY OBSERVING AS UNDE R: 10. IN VIEW OF THE ABOVE DISCUSSION IT IS QUITE EVI DENT THAT THE ASSESSING OFFICER CALLED FOR THE REQUIRED INFORMATI ON AS MENTIONED AT PARA 3 DURING THE ORIGINAL SCRUTINY PR OCEEDINGS AND ALSO DURING THE REMAND PROCEEDINGS. THE SAME WA S CALLED FOR BY THE UNDERSIGNED EVEN DURING APPEAL PROCEEDIN GS. HOWEVER, THERE IS ABSOLUTELY NO RESPONSE DESPITE RE PEATED OPPORTUNITIES GIVEN RIGHT FROM THE SCRUTINY PROCEED INGS TILL THE DATE OF PASSING OF THIS ORDER. EVEN THE ADDITIONAL EVIDENCE PRODUCED IS NOT THE INFORMATION WHICH WAS REQUIRED BY THE ASSESSING OFFICER. THE ADDITIONAL EVIDENCE SUBMITTE D DOES NOT RELATE TO THE INFORMATION CALLED FOR BY THE ASSESSI NG OFFICER WHICH IS VITAL TO THE ASSESSMENT. THE APPELLANT DID NOT PRODUCE THE VITAL/FUNDAMENTAL INFORMATION LIKE BOOKS OF ACC OUNTS, PURCHASE REGISTER, SALES REGISTER, EVIDENCE TO THE TRANSPORTATION OF GOODS WHICH ARE VITAL FOR COMPLETING THE ASSESSM ENT. THIS WILL ONLY LEAD TO OBVIOUS CONCLUSION THAT WHETHER T HE APPELLANT DO NOT POSSESS THIS INFORMATION OR IS NOT SUBMITTIN G THE INFORMATION AS THE SAME IS IN FAVOUR OF THE DEPARTM ENT. IN THESE CIRCUMSTANCES THE ASSESSING OFFICER WAS FAIR ENOUGH TO ESTIMATE THE INCOME @ 1% ON THE TURNOVER AGAINST TH E INCOME OFFERED BY THE APPELLANT IN THE IMMEDIATE PRECEDING YEAR AT 1.74% AND FOR THE REASONS IN THE PRECEDING PARAS TH E INCOME ASSESSED BY THE ASSESSING OFFICER AT RS. 13,01,50,9 90/- IS CONFIRMED AND ALL THE GROUNDS ARE DISMISSED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE I S IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. CIT (A) IS BAD BOTH IN LAW AND ON FACTS TO THE EXTENT IT IS PREJUDICIAL TO THE INTEREST OF THE ASSESSEE. 2. THE LD. CIT (A) ERRED IN UPHOLDING THE ADDITION OF RS. 13,01,50,900/- BY ESTIMATING THE INCOME @ 1 % ON TU RNOVER, BY THE AO IN REJECTING THE AUDITED BOOKS OF ACCOUNT, U NDER THE COMPANIES ACT AS WELL AS UNDER THE PROVISIONS OF SE CTION 44AB. 6 ITA NO. 335 /HYD/2017 NEUEON TOWER LTD. 3. THE LD. CIT (A) ERRED IN NOT ACCEPTING THE OBJECTIONS/SUBMISSIONS MADE BY THE APPELLANT IN RES PECT OF THE REMAND REPORT SUBMITTED BY THE AO. 4. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE FA CT THAT THE PROFIT THAT HAS BEEN ADMITTED BY THE APPELLANT IS A S PER THE AUDITED BOOKS OF ACCOUNTS AND WHERE NO DEFICIENCIES DISCREPANCIES WERE NOTICES. 5. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE FA CT THAT THE BOOKS OF ACCOUNTS SUBMITTED BEFORE THE AO BY THE AS SESSEE ARE NOT INCORRECT NOR INCOMPLETE AND THEREBY THE INVOKI NG OF PROVISIONS U/ S 145 ARE AGAINST TO THE PRINCIPLES O F NATURAL JUSTICE AND IS BAD IN LAW. 6. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE FA CT THAT THE BOOKS OF ACCOUNTS THAT HAVE BEEN SUBMITTED BY THE A SSESSEE FOR THE AY 2009-10 WERE ACCEPTED BY HON'BLE ITAT, H YDERABAD VIDE ITS ORDER IN ITA NO. 1360/HYD/2013. 6. LD. AR SUBMITTED THAT SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE COORDINATE BENCH OF THIS TRIBUNAL IN ASS ESSEES OWN CASE FOR AYS 2009-10 AND 2010-11 WHEREIN THE COORDINATE BENCH REMITTED THE MATTER BACK TO THE FILE OF THE AO TO DECIDE THE APPEAL ON PRODUCTION OF THE REQUIRED INFORMATION BY ALLOWING ONE MORE OPPORTUNITY TO THE ASSESSEE TO FURNISH THE SAME BEF ORE AO. 7. LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSSESEES OWN CASE FOR AY 2009-10 WHEREIN THE COORDINATE BENCH HAS HELD AS UN DER: 10. CONSIDERING THE SUBMISSIONS OF THE PARTIES AND KEEPING IN VIEW THE INTEREST OF JUSTICE, WE ALLOW ONE MORE OP PORTUNITY TO THE ASSESSEE FOR PRODUCTION OF ITS BOOKS OF ACCOUNT S AND OTHER DOCUMENTS BEFORE THE ASSESSING OFFICER TO SUBSTANTI ATE ITS CLAIM AND ACCORDINGLY, SET ASIDE THE ORDER OF THE C IT(A) AND 7 ITA NO. 335 /HYD/2017 NEUEON TOWER LTD. REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFIC ER FOR DE NOVO ASSESSMENT AFTER EXAMINING THE BOOKS OF ACCOUNTS AN D OTHER DOCUMENTS. WE ALSO DIRECT THE ASSESSEE TO PRODUCE A LL ITS BOOKS OF ACCOUNTS, DOCUMENTS, BILLS, INVOICES AND A NY OTHER INFORMATION CALLED FOR BY THE ASSESSING OFFICER AND COOPERATE IN FINALISATION OF THE PROCEEDING. IN THE EVENT, THE ASSESSEE DOES NOT COOPERATE BY PRODUCING THE BOOKS OF ACCOUNTS AND OTHER INFORMATION CALLED FOR BY THE ASSESSING OFFICER OR IF THE ASSESSING OFFICER ON EXAMINATION OF THE BOOKS OF AC COUNTS AND OTHER DOCUMENTS FINDS THAT THERE ARE DISCREPANCIES WHICH THE ASSESSEE IS NOT, ABLE TO EXPLAIN, THE ASSESSING OFF ICER WOULD BE AT LIBERTY TO TAKE AN INDEPENDENT DECISION IN THE M ATTER IN ACCORDANCE WITH LAW. THE ASSESSING OFFICER SHALL AF FORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. EVEN IN AY 2010-11, FOLLOWING THE DECISION IN AY 20 09-10, THE COORDINATE BENCH REMITTED THE ISSUE TO THE FILE OF THE AO. AS THE ISSUE UNDER CONSIDERATION IS MATERIALLY IDENTICAL TO THAT OF AY 2009-10 & 2010-11, FOLLOWING THE DECISION IN AY 2009-10, WE R EMIT THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE I SSUE AS PER THE DIRECTIONS GIVEN BY THE COORDINATE BENCH IN AY 2009 -10. WE NOTICED THAT ASSESSEE HAS NOT SUBMITTED ANY INFORMATION BEF ORE LOWER AUTHORITIES. EVEN THOUGH IT MIGHT HAVE DIFFICULTIES IN SUBMITTING VARIOUS DETAILS, IT IS THE DUTY OF THE ASSESSEE TO TAKE THE AUTHORITIES INTO CONFIDENCE AND IT CANNOT REMAIN SILENT BY WAST ING JUDICIAL TIME OF THE AUTHORITIES. WE DIRECT THE ASSESSEE TO COOPERAT E WITH THE AUTHORITIES BY SUBMITTING REQUIRED INFORMATION BEFO RE THE AO TO COMPLETE THE ASSESSMENT WITHOUT FURTHER DELAY. AT T HE SAME TIME, WE DIRECT THE AO TO CONSIDER THE SUBMISSIONS OF THE AS SESSEE JUDICIOUSLY AND IN CASE IT IS FOUND THAT ASSESSEE IS UNABLE TO FURNISH THE REQUIRED INFORMATION WITHIN TIME, AO CAN SUSTAIN THE ADDITIO N. 8 ITA NO. 335 /HYD/2017 NEUEON TOWER LTD. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2018. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 24 TH JANUARY, 2018 KV COPY TO:- 1) M/S NEUEON TOWERS LTD, C/O P. MURALI & CO., CAS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82 2) DCIT, CIRCLE 3(2), HYD. 3) CIT(A) 3, HYDERABAD. 4) PR. CIT 3 , HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE