Sri N Nageswara Rao, Vijayawada V. The ACIT, Circle-1(1), Vijayawada

ITA 441/VIZ/2010

• Counselvise Citation: 44125314 RSA 2010
• Duration Of Justice: 3 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 01-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D MANOJ KUMAR
• Keywords: Question of law
• Section: 40A(3)

Judgement Text

ITA NO.441/VIZAG/2010 SRI N. NAGESWARA RAO, VIJAYAWADA IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 441 /VIZAG/ 20 1 0 ASSESSMENT YEAR : 2007 - 08 SRI N. NAGESWARA RA O VIJAYAWADA VS. ACIT CIRCLE - 1(1) VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO.ACLPN 2489D APPELLANT BY: SRI G.V.N. HARI, ADVOCATE RESPONDENT BY: SHRI D. MANOJ KUMAR, ADDL. CIT DATE OF HEARING : 05.12.2013 DATE OF PRONOUNCEMENT : 11.12.2013 ORDER PER SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER:- THIS IS AN ASSESSEES APPEAL AGAINST THE ORDER OF THE CIT(A), VIJAYAWADA DATED 30.7.2010. THE ASSESSEE HAS RAISE D THE FOLLOWING EFFECTIVE GROUNDS: 2. THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE AC TION OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT . 3. WITHOUT PREJUDICE TO THE GROUND NO.2, THE ESTIMATE OF PROFIT, MADE BY THE LD. CIT(A) @ 10% OF THE GROSS RECEIPTS IS ON A HIGHER SIDE. 4. THE LD. CIT(A) OUGHT TO HAVE DELETED THE DISALLOWAN CE OF ` .40,37,746/- MADE BY THE ASSESSING OFFICER U/S 40(A )(IA) OF THE INCOME TAX ACT, 1961. 2. IN THE COURSE OF APPELLATE PROCEEDINGS, GROUND N OS.2 & 3 HAVE NOT BEEN PRESSED BY THE LD. COUNSEL AND ACCORDINGLY THE Y ARE DISMISSED AS WITHDRAWN. 3. THE ONLY ISSUE FOR CONSIDERATION IN THIS APPEAL IS WITH REFERENCE TO THE GROUND NO.4 WHERE THE ASSESSING OFFICER MADE THE DI SALLOWANCE OF ` .40,37,746/- U/S 40A(IA) OF THE ACT. THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD NOT PAID THE TDS AND ACCORDINGLY THE A BOVE AMOUNT CLAIMED AS FINANCE CHARGES ARE REQUIRED TO BE DISALLOWED U/S 4 0A(IA) OF THE ACT. THE ITA NO.441/VIZAG/2010 SRI N. NAGESWARA RAO, VIJAYAWADA 2 ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT THE E NTIRE AMOUNT WAS ACTUALLY PAID DURING THE YEAR AND THERE WAS NO OUTS TANDING AMOUNT AT THE END OF THE YEAR, THEREFORE, NO DISALLOWANCE COULD H AVE BEEN MADE. FURTHER, IT WAS CONTENDED THAT ONCE THE NET PROFIT IS ESTIMA TED BY REJECTING THE BOOKS OF ACCOUNT, THE DISALLOWANCES FROM SECTION 30 TO 44 OF THE ACT ARE DEEMED TO HAVE BEEN CONSIDERED. RELIANCE WAS PLACED ON THE D ECISION OF THE CASE JAIPUR VIDYUT VITRAN NIGAM LTD. VS. DCIT 123 TTJ (J P) 888 (2009) AND THE DECISION OF INDWELL CONSTRUCTIONS VS. CIT 232 ITR 7 16 (A.P.). THE LD. CIT(A) DID NOT AGREE WITH THE JURISDICTIONAL DECISION OF T HE HONBLE HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS (SUPRA) ON THE REASON THAT THE JUDGEMENT WAS DELIVERED PRIOR TO INTRODUCTION OF SECTION 40A(IA) OF THE ACT AND THEREFORE THE DECISION CANNOT BE HELD TO HAVE ANY RELEVENCE TO TH E PRESENT FACTS. THE LD. CIT FOLLOWED THE JUDGEMENT OF ITAT HYDERABAD BENCH IN THE CASE OF M/S. PARNIKA CONSTRUCTIONS PVT. LTD. VS. DCIT IN ITA 108 1/HYD/2009 DATED 16.7.2010 AS UPHELD THE DISALLOWANCE WAS MADE UNDER SECTION 40A(IA) OF THE ACT. 4. AT THE OUTSET, THE LD. COUNSEL SUBMITTED THAT TH IS ISSUE IS COVERED BY THE LATER DECISION OF THE HONBLE JURISDICTIONAL HI GH COURT IN THE CASE OF M/S. EDCO INDIA (P) LTD. IN ITTA NO.60 OF 2013 DATED 20. 6.2013, WHEREIN THE HONBLE HIGH COURT HAS FOLLOWED THE DECISION IN THE CASE OF INDWELL CONSTRUCTIONS 232 ITR 776 (AP) AND ACCORDINGLY THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. 5. THE LD. D.R. HOWEVER RELIED ON THE DECISION OF T HE COORDINATE BENCH IN THE CASE OF K. VENKATARAJU VEMAGIRI VS. ADDL. CIT R AJAHMUNDRY IN ITA NO.312/VIZAG/2008 DATED 3.5.2013 WHEREIN THE COORDI NATE BENCH HAS DISTINGUISHED THE JUDGEMENT OF THE JURISDICTIONAL H IGH COURT IN CONFIRMING THE DISALLOWANCE MADE UNDER SECTION 40A(IA) OF THE ACT. 6. WE HAVE CONSIDERED THE ISSUE AND EXAMINED TH E LEGAL POSITION. THE COORDINATE BENCH IN THE CASE OF EDCO INDIA (P) LTD. VS. DCIT IN ITA NO.1058/H/2011 DATED 14.9.2011 CONSIDERED THE JURIS DICTIONAL HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS VS. CIT (SUPRA) T O HOLD THAT NO FURTHER ITA NO.441/VIZAG/2010 SRI N. NAGESWARA RAO, VIJAYAWADA 3 ADDITION/DISALLOWANCE COULD BE MADE ON THE BASIS OF VERY SAME BOOKS OF ACCOUNTS WHICH HAVE BEEN REJECTED BY THE AO. THIS ORDER OF THE ITAT HAS BEEN UPHELD BY THE HONBLE JURISDICTIONAL HIGH COUR T VIDE THE ORDER DATED 20.6.2013 WHERE ON THE FOLLOWING QUESTION IT WAS HE LD AS UNDER: THIS APPEAL IS SOUGHT TO BE ADMITTED ON THE FOLLOW ING SUGGESTED QUESTION OF LAW: WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE APPELLATE TRIBUNAL IS JUSTIFIED IN HOLDING THAT NO FURTHER DISALLOWANCE UNDER SECTION 40A(IA) AND 40A(3) OF TH E INCOME TAX ACT, CAN BE MADE ON THE BASIS OF THE BOO KS OF ACCOUNTS INSPITE OF MANDATORY PROVISION AND NON-OBS TANTE CLAUSE CONTAINED THEREIN, MERELY BECAUSE THE INCOME WAS DETERMINED ON ESTIMATE BASIS, BY REJECTING SUCH BOO KS OF ACCOUNTS? WE HAVE GONE THROUGH THE IMPUGNED ORDER OF THE APP ELLATE TRIBUNAL AND WE DO NOT FIND ANY REASON TO INTERFERE WITH THE SAME AS THE TRIBUNAL HAS DECIDED THE MATTER RELYING ON THE DECISION OF THIS COURT IN THE CASE OF INDWELL CONSTRUCTIONS VS. CIT REPORTED IN (232 ITR 776)-AP. ACCORDINGLY, THE APPEAL IS DISMISSED. NO ORDER AS TO COSTS. AS A SEQUEL, MISCELLANEOUS PETITIONS, IF ANY PENDING, SH ALL STAND DISMISSED. 7. RESPECTFULLY FOLLOWING THE SAME, SINCE THE ISSUE IS CRYSTALLIZED BY THE ABOVE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, WE DELETE THE ADDITION MADE BY THE A.O., AND CONFIRMED BY THE CIT (A). THE COORDINATE BENCH DECISION RELIED ON BY LD. DR STANDS DISAPPRO VED BY THE LATER JUDGEMENT OF HIGH COURT. ACCORDINGLY, THIS GROUND I S ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS CON SIDERED ALLOWED. PRONOUNCED IN THE OPEN COURT ON 11 TH DEC 13 SD/ - SD/ - ( SAKTIJIT DEY ) ( B. RAMAKOTAIAH ) JUDICIAL MEMBER ACCOUNTANT MEMBER VG/SPS VISAKHAPATNAM, DATED 11 TH DECEMBER, 2013 ITA NO.441/VIZAG/2010 SRI N. NAGESWARA RAO, VIJAYAWADA 4 COPY TO 1 SRI N. NAGESWAR RAO, PRO: SOUTH INDIA FREIGHT CARRI E RS, D.NO.9 - 66 - 42, ALLADIVARI STREET, KOTHAPET, VIJAYAWADA 2 ACIT, CIRCLE - 1(1), VIJAYAWADA 3 THE CI T, VIJAYAWADA 4 THE CIT (A) , VJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM