Bollareddy Satyanarayana Reddy, Vijayawada V. THE ACIT, CIRCLE-1(1), Vijayawada

ITA 354/VIZ/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6720 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-04-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 20-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI SHANKAR NARAYANAN
• Keywords: Business income; Depreciation; Principle of natural justice; Additional evidence
• Section: 143(3); 6

Judgement Text

, , 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.354/VIZ/2013 ( / ASSESSMENT YEAR: 2008 - 09) BOLLAREDDY SATYANARAYANA REDDY D.NO.2 - 135 PUTRELA(V), VISSANNAPET(M) KRISHNA DT. ACIT - 1(1), VIJAYAWADA ( / APPELLANT) / RESPONDENT) ./ I.T.A.NO.3 87 /VIZ/2013 ( / ASSESSMENT YEAR: 2008 - 09) ACIT - 1(1), VIJAYAWADA BOLLAREDDY SATYANARAYANA REDDY D.NO.2 - 135 PUTRELA(V), VISSANNAPET(M) KRISHNA DT. ( / APPELLANT) / RESPONDENT) / ASSESSEE BY : NONE / REVENUE BY : SHRI RAVI SHANKAR NARAYANAN / DATE OF HEARING : 2 8 .0 8 .2017 / DATE OF PRONOUNCEMENT : 30 .08.2017 2 ITA NO S . 354 /VIZ/201 3 AND 387/VIZ/2013 SRI B.SATYANARAYA REDDY, VIJAYAWADA / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), [CIT(A)], VIJAYAWADA VIDE ITA NO.267/CIT(A)/VJA/2011 - 12 DATED 06.03.2013. 2. THE ASSESSEE FILED RETURN OF INCOME DECLAR ING TOTAL INCOME OF RS.21,08,990/ - AND AGRICULTURAL INCOME OF RS.2,25,300/ - ON 29.09.2008. THE ASSESSMENT WAS COMPLETED U/S 143(3) BY AN ORDER DATED 28.10.2011 ON TOTAL INCOME OF RS.84,28,905/ - . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE DID NOT PROD UCE THE BOOKS OF ACCOUNTS AND BILLS IN SUPPORT OF THE INCOME AND EXPENDITURE AND DID NOT EXPLAIN THE SOURCE FOR ACQUIRING THE ASSETS. THEREFORE, THE ASSESSING OFFICER MADE THE FOLLOWING ADDITIONS TO RETURN OF INCOME : (I) PURCHASE OF AGRICULTURAL LAND U NEXPLAINED INVESTMENT FOR NOT EXPLAINING THE SOURCES. RS.37,35,645/ - (II) SUPPRESSION OF WORK IN PROGRESS RS. 8,00,000/ - 3 ITA NO S . 354 /VIZ/201 3 AND 387/VIZ/2013 SRI B.SATYANARAYA REDDY, VIJAYAWADA (III) ESTIMATION OF INCOME @12.5% ON TOTAL TURNOVER FOR NON PRODUCTION OF BOOKS OF ACCOUNTS AND VOUCHERS RS.47,20,818/ - 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND PRODUCED THE BOOKS OF ACCOUNTS BEFORE THE LD.CIT(A). LD. CIT(A) AFTER VERIFICATION OF THE BOOKS OF ACCOUNTS DELETED THE ADDITION OF RS.37, 35,645/ - RELATING TO ACQUISITION OF THE AGRICULTURAL LANDS AND THE ADDITION OF RS.8,00,000/ - RELATING TO THE WORK IN PROGRESS. THE LD.CIT(A) CONFIRMED THE ADDITION OF RS.47,20,818/ - , THE ADDITION MADE ON ESTIMATION BASIS. AGGRIEVED BY THE ORDER OF THE LD .CIT(A) BOTH THE DEPARTMENT AND THE ASSESSEE FILED APPEALS BEFORE US. 4. THE ASSESSEE HAS AGITATED FOR NOT ALLOWING THE DEPRECIATION FROM THE ESTIMATED INCOME, WHEREAS THE REVENUE HAS AGITATED FOR DELETING THE ADDITION OF RS.37,35,645/ - AND WORK IN PROGR ESS OF RS.8,00,000/ - . THE REVENUE IN ITS GROUNDS OF APPEAL RAISED THE ISSUE FOR NOT GIVING AN OPPORTUNITY UNDER RULE 46A OF I.T. RULES IN RESPECT OF PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE CIT(A). THE ASSESSEE DID NOT PRODUCE THE 4 ITA NO S . 354 /VIZ/201 3 AND 387/VIZ/2013 SRI B.SATYANARAYA REDDY, VIJAYAWADA BOOKS OF ACCOUNTS BEFORE THE AO AND PRODUCED THE SAME BEFORE THE CIT(A). THE LD.CIT(A) NEITHER CALLED FOR THE OBJECTIONS OF THE AO NOR CALLED FOR THE REMAND REPORT AND ALLOWED THE APPEAL OF THE ASSESSEE. 5. APPEARING FOR THE REVENUE, THE LD.DR ARGUED THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNTS AND VOUCHERS AND COULD NOT EXPLAIN THE SOURCES FOR ACQUISITION OF AGRICULTURAL LAND AND DISCREPANCY IN WORK IN PROGRESS. LD. AR FURTHER ARGUED THAT SINCE THE ASSESSEE DID NOT PROD UCE THE BOOKS OF ACCOUNTS, THE ASSESSING OFFICER RESORTED FOR ESTIMATION OF INCOME @ 12.5% ON TOTAL SALES AND MADE THE OTHER ADDITIONS WHICH IS EVIDENT FROM THE PARA NO.5 OF THE ASSESSMENT ORDER. BEFORE THE LD.CIT(A), THE ASSESSEE PRODUCED BOOKS OF ACCOUNT S, BUT THE LD.CIT(A) WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AGAINST RULE 46A. THEREFORE, ACCORDING TO THE LD.DR, IT IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND RULE 46A OF I.T. RULES, HENCE, THE CASE SHOULD BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF BOOKS OF ACCOUNTS AND TO EXAMINE THE SOURCES FOR ACQUISITION OF ASSETS AND CORRECTNESS OF THE INCOME. NONE APPEARED ON BEHALF OF THE ASSESSEE. 5 ITA NO S . 354 /VIZ/201 3 AND 387/VIZ/2013 SRI B.SATYANARAYA REDDY, VIJAYAWADA 6. WE HAVE HEARD THE DEP ARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL PLACED ON RECORD. AS PER THE ASSESSMENT ORDER, THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNTS AND DID NOT EXPLAIN THE SOURCES FOR ACQUIRING THE AGRICULTURAL LANDS. WHEREAS, BEFORE THE LD.CIT(A), THE ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUNTS, BUT THE LD.CIT(A) HAS NEITHER CALLED FOR THE REMAND REPORT NOR GIVEN AN OPPORTUNITY TO THE AO AS PER RULE 46A OF I.T. RULES. LD.CIT(A) STATED IN THE ORDER THAT HE HAS SEEN CASH BOOK, BANK ACCOUNT COPIES BUT NO T REFERRED TO THE AO. THUS, THE PROVISIONS OF RULE 46A IS VIOLATED IN THIS CASE. HAVING ACCEPTED THE ADDITIONAL EVIDENCE, THE LD.CIT(A) SHOULD HAVE CALLED FOR THE REMAND REPORT. IN THE INSTANT CASE THE LD.CIT(A) HAS NOT GIVEN ANY OPPORTUNITY TO THE AO AND IT IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND AGAINST RULE 46A OF I.T.RULES. HENCE WE ARE OF THE CONSIDERED OPINION THAT THE ENTIRE ASSESSMENT SHOULD BE REMITTED BACK TO THE FILE OF THE AO FOR DENOVO CONSIDERATION. ACCORDINGLY, WE SET ASIDE THE ORDE R OF THE LD.CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE AO FOR DENOVO CONSIDERATION. 6 ITA NO S . 354 /VIZ/201 3 AND 387/VIZ/2013 SRI B.SATYANARAYA REDDY, VIJAYAWADA 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE AS WELL AS THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSE. T HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30 TH AUG 2017 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 30.08.2017 L. RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE A SSESSEE BOLLAREDDY SATYANARAYANA REDDY, D.NO.2 - 135 , PUTRELA(V), VISSANNAPET(M), KRISHNA DT. 2 . / THE RE VENUE ACIT, CIRCLE - 1(1), VIJAYAWADA 3 . / THE COMMISSIONER OF INCOME TAX, VIJAYAWADA 4 . ( ) / THE CIT (APPEALS), VIJAYAWADA 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM