Ocean Sparkle Limited, Hyderabad, Hyderabad V. ACIT, Circle-16(2), Hyderabad, Hyderabad

ITA 4/HYD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1253 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 12-03-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 02-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P V SUBBA RAJU
• Assessee Lawyers: T S AJAI
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 143(3); 115JB; 80IA; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE V. DURGA RAO , JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER ITA NO. 4/HYD/2017 ASSESSMENT YEAR: 2010 - 11 OCEAN SPARKLE LIMITED, HYDERABAD. PAN: AAACO 2519 H VS. ACIT, CIRCLE - 16(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI T.S. AJAI REVENUE BY: SRI P.V. SUBBARAJU, DR DATE OF HEARING: 12/03/2019 DATE OF PRONOUNCEMENT: 15 /03/2019 ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 4, HYDERABAD DATED 06/10/2016 FOR THE ASSESSMENT YEAR 2010 - 11. IN THIS APPEAL, ASSESSSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LD CIT(A) HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER WITHOUT DISPOSING OFF ON MERITS THE GROUNDS OF APPEAL RAISED BY THE APPELLANT BEFORE THE CIT(A). 2. THE LD CIT (A) HAS FAILED TO NOTE THAT IN THE PRESENT CASE THE ORDER OF THE COMMISSIONER OF INCOME TAX U/S 263 WAS TO PASS FRESH ORDER IN RESPECT OF (I) EXPENSES RELATING 2 TO EXEMPT INCOME AND (II) FOREIGN EXCHANGE FLUCTUATIONS GAIN AND ITS REDUCTION FROM TAXABLE INCOME AFTER PROVIDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE COMPANY AND THEREFORE, THE DECISION OF THE ITAT IN THE CASE OF MAHESWARI MEGA VENTURES LTD IN ITA NO.1602/HYD/2014 FOR THE AY 2008 - 2009, WHICH IS ON A DIFFERENT SET OF FACTS IS NOT APPLICABLE. 3. THE LD CIT(A) OUGHT TO HAVE DISPOSE OF THE APP EAL ON MERITS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF O & M OF PORTS AND MARINE SERVICES, FILED ITS RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.10,16,37,986/ - UNDER NORMAL PROVISIONS AFTER CLAIMING DEDUCTION U/S 80IA AMOUNTING TO RS. 2,12,27,868/ - AND BOOK PROFIT U/S 115JB AT RS. 21,01,79,679/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT BY DETERMINING TOTAL TAXABLE INCOME AT RS. 12,29,39,428/ - . SUBSEQUENTLY, THE COMMISSIONER, BY EXERCISING THE POWER U/S 26 3 OF THE ACT, ISSUED A SHOW CAUSE NOTICE AND AFTER RECEIVING REPLY FROM THE ASSESSEE, THE COMMISSIONER CAME TO A CONCLUSION THAT THE ASSESSMENT ORDER PASSED BY THE AO DATED 26/12/2012 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND DIRECTED THE AO TO RE - DO THE ASSESSMENT AFRESH DE NOVO IN ACCORDANCE WITH LAW. SUBSEQUENTLY, THE AO PASSED ASSESSMENT ORDER U/S 143(3) R.W.S 263 OF THE IT ACT, 1961 DATED 30/06/2015 BY MAKING VARIOUS ADDITIONS. 3 3. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BE FORE THE CIT (A), WHO DISMISSED THE APPEAL AND OBSERVED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) AND COMMISSIONER OF INCOME TAX ARE THE EQUAL AUTHORITIES, AN D THE AO HAS PASSED THE ASSESSMENT ORDER CONSEQUENT TO THE ORDER PASSED BY THE COMMISSIONER U/ S 263 OF THE ACT AND THEREFORE, THE APPEAL FILED BY THE ASSESSEE IS NOT MAINTAINABLE. AGGRIEVED, ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS OF APPEAL. 4. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE COMMISSIONER PASSED ORDER U/S 263 OF THE ACT AND DIRECTED THE AO TO PASS ASSESSMENT ORDER DE NOVO IN ACCORDANCE WITH LAW AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THE AO PASSED THE ASSESSMENT ORDER U/S 143(3) R.W.S 2 63 BY MAKING VARIOUS ADDITIONS AND THEREFORE, THE APPEAL IS MAINTAINABLE AND THE CIT (A) OUGHT TO HAVE ADJUDICATED THE APPEAL ON MERITS. HE PRAYED THAT THE ORDER PASSED BY THE CIT (A) MAY BE SET - ASIDE AND HE MAY BE DIRECTED TO ADJUDICATE THE APPEAL ON MER ITS. 5. ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT RAISED ANY OBJECTION TO THE LD ARS SUBMISSIONS. 4 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE COMMISSIONER WHILE PASSING THE ORDER U /S 263 OF THE ACT, DIRECTED THE AO TO RE - DO THE ASSESSMENT DE NOVO AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE. SUBSEQUENTLY, THE ASSESSING OFFICER PASSED THE ORDER U/S 143(3) R.W.S 263 OF THE ACT DATED 30/06/2015 BY MAKING CERTAIN ADDITIONS. ASSESSEE CA RRIED THE MATTER IN APPEAL BEFORE THE CIT (A), WHO DISMISSED THE APPEAL BY OBSERVING THAT THE COMMISSIONER OF INCOME TAX AND THE COMMISSIONER OF INCOME TAX (APPEALS) ARE THE EQUAL AUTHORITIES AND THEREFORE, AN APPEAL AGAINST THE ASSESSMENT COMPLETED AS PER THE DIRECTIONS OF THE COMMISSIONER OF INCOME TAX U/S 263 OF THE ACT COULD NOT BE DECIDED BY THE COMMISSIONER OF INCOME TAX (APPEALS). WE FIND THAT WHEN THE AO HAS PASSED THE ASSESSMENT ORDER U/S 143(3) R.W.S 263 ON MERITS OF THE CASE, IT IS THE DUTY OF T HE CIT (A) TO ADJUDICATE THE APPEAL ON MERITS AND IN ACCORDANCE WITH LAW. THEREFORE, IN OUR OPINION, THE CIT (A) IS NOT CORRECT IN DISMISSING THE APPEAL OF THE ASSESSEE. THUS, WE SET - ASIDE THE ORDER OF THE CIT (A) AND DIRECT THE CIT (A) TO ADJUDICATE THE APPEAL ON MERITS, IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSSESSEE IN ACCORDANCE WITH LAW. THUS, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 5 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH, 2019. SD/ - SD/ - (D.S. SUNDER SINGH) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 15 TH MARCH , 2019 OKK COPY TO: - 1) OCEAN SPARKLE LIMITED, NO.128, SRINAGAR COLONY, HYDERABAD. 2) ACIT, CIRCLE - 16(2), HYDERABAD. 3) THE CIT(A) - 4, HYDERABAD 4) THE PR. CIT - 4, HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE