Appeal details
Counselvise Citation
[2016] 131 COUNSELVISE.COM (IT) 6145 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 month(s) 20 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
21-10-2016
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
B
Next Hearing Date
04-10-2016
Assessment Year
2013-2014
Appeal Filed On
01-04-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 457/HYD/2016 ASSESSMENT YEAR: 2013-14 SRI VENKATESWARA LORRY TRANSPORT, BELLAMPALLI, ADILABAD DISTRICT [PAN: ABOFS7660K] VS INCOME TAX OFFICER, WARD-1, MANCHERIAL (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI V. SIVA KUMAR, AR FOR REVENUE : SMT. G. APARNA RAO, CIT-DR DATE OF HEARING : 04-10-2016 DATE OF PRONOUNCEMENT : 21-10-2016 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E PR. COMMISSIONER OF INCOME TAX-2, HYDERABAD DATED 18-02 -2016, U/S. 263 OF THE INCOME TAX ACT [ACT]. 2. BRIEFLY STATED, ASSESSEE-FIRM IS ENGAGED IN TRANSPO RTATION OF COAL FOR M/S. SINGARENI COLLIERIES LIMITED. SURVEY OPERATIONS U/S. 133A OF THE ACT WAS CONDUCTED IN THIS CASE ON 07-11-201 2. DURING THE COURSE OF SURVEY, IT WAS FOUND THAT ASSESSEE IS NOT MAINTAINING REGULAR BOOKS OF ACCOUNT AND VERIFIABLE EVIDENCE FOR EXPENSES. IN THE COURSE OF SURVEY, THE MANAGING PARTNER ADMITTED NET P ROFIT OF I.T.A. NO. 457/HYD/2016 SRI VENKATESWARA LORRY TRANSPORT :- 2 -: 5% ON THE GROSS TRANSPORT CONTRACT RECEIPTS FOR AYS. 201 1-12, 2012-13 & 2013-14. ASSESSEE HAS DULY ACTED UPON THE STATEMENTS AND FILED RETURNS ACCORDINGLY ADMITTING INCOMES DISCLO SING NET PROFIT AT 5% FOR AY. 2011-12 & 2012-13. HOWEVER, FOR AY. 2013- 14, DURING WHICH YEAR THE SURVEY OPERATIONS WERE COND UCTED, ASSESSEE SEEMS TO HAVE MAINTAINED BOOKS OF ACCOUNT AFT ER THE SURVEY AND FILED RETURN DECLARING INCOME AT RS. 29,16 ,856/- ON GROSS RECEIPTS OF RS. 14,75,28,963/-. THE AO I.E., ITO, WARD-I, MANCHERIYAL, COMPLETED THE ASSESSMENT IN THE CASE OF A SSESSEE ON 10-12-2013 BY ACCEPTING THE INCOME RETURNED. HOWEVER, IN THE IMPUGNED ASSESSMENT ORDER, AO MENTIONED THAT THE PARTNER AND THE AR HAD EXPLAINED THE TRANSACTIONS FOUND IN THE MATE RIAL IMPOUNDED DURING THE SURVEY AND ON ACCOUNT OF DEFICIE NCIES NOTICED, REQUESTED TO COMPLETE THE ASSESSMENT BASED ON THE ADMISSION MADE DURING THE COURSE OF SURVEY. IT WAS RECORDED THAT AR REQUESTED TO COMPLETE THE ASSESSMENT AS THE ADMI TTED INCOME DURING THE COURSE OF SURVEY WAS OFFERED. HOWEVER, WHILE PASSING THE ORDER, THE AO ACCEPTED THE INCOME RETURNED. 2.1. ON EXAMINATION OF THE ASSESSMENT RECORD, THE LD. P R.CIT WAS OF THE OPINION THAT AOS ORDER WAS ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF REVENUE. THERE IS A MENTION THAT INCOME RE TURNED WAS ACCEPTED WHEN ON THE FACE OF THE ORDER, AR AGREED FOR ESTIMATING THE INCOME AS ADMITTED DURING THE SURVEY. ACCORDINGLY, LD. PR.CIT ISSUED A NOTICE U/S. 263 AND ASKED ASSESSEE TO EXPLAI N WHY THE ORDER CANNOT BE MODIFIED BY DETERMINING THE INCOME A T 5% OF THE GROSS RECEIPTS AS ESTIMATED DURING THE SURVEY. ASSESS EE, HOWEVER, SUBMITTED THAT AO HAS NOT FOUND ANY DISCREPANCIES IN THE BOOKS OF ACCOUNT OR COMMENTED ON THE LOW PERCENTAGE OF THE PROFI TS SHOWN. I.T.A. NO. 457/HYD/2016 SRI VENKATESWARA LORRY TRANSPORT :- 3 -: IT WAS FURTHER CONTENDED BEFORE THE LD. PR.CIT THAT THE STATEMENT RECORDED DURING THE COURSE OF SURVEY U/S. 133A HAS NO EVIDENTIARY VALUE AND ANY ADMISSION MADE DURING SUCH STATEMENT CA NNOT BE MADE A BASIS FOR ADDITION. THE CONTENTIONS RAISED BY ASSESSEE WERE CONSIDERED BY THE LD.CIT AND AFTER EXTRACTING TH E STATEMENT GIVEN BY THE PARTNER IN THE COURSE OF SURVEY, LD. PR.C IT SET ASIDE THE ASSESSMENT WITH A DIRECTION TO REVISE THE TOTAL INCOME BY ADOPTING 5% OF THE GROSS CONTRACT RECEIPTS. HE ALSO D IRECTED THE AO TO INITIATE THE PENALTY PROCEEDINGS U/S. 271(1)(C). H IS ORDERS IN PARA 6, 7 & 8 ARE AS UNDER: 06. A PERUSAL OF THE WRITTEN STATEMENTS FILED BY T HE ASSESSEE FIRM FOR THE A.YS 2011-12 AND 2012-13 REVEALS THAT THE A SSESSEE HAS DISCLOSED NET TOTAL INCOMES OF RS.73,44,370/- ON GROSS RECEIP TS OF RS.14,68,87,443/- FOR AY 2011-12 AND RS. 83,39,680/- ON-TOTAL GROSS R ECEIPTS OF RS.16,67,93,605/- FOR AY 2012-13 WHICH ARE AT 5% OF THE GROSS BILLS. THUS IT IS EVIDENT FROM RECORD THAT THE ASSESSE HAS ACTE D ON THE ADMISSION MADE BY IT DURING THE COURSE OF SURVEY U/S 133A AND IN THE SWORN STATEMENT RECORDED U/S 131 OF THE ACT IMMEDIATELY T HEREAFTER, BY FILING ITS RETURNS FOR AY 2011-12 AND 2012-13 DISCLOSING ITS N ET INCOME AT 5% OF THE GROSS TRANSPORT RECEIPTS. ONLY WHEN IT CAME TO AY 2 013-14, THE ASSESSEE HAS FAILED TO HONOUR ITS ADMISSION SO MADE BY DISCL OSING NET INCOME OF ONLY 1.97% OF THE GROSS TRANSPORT RECEIPTS. THE ASS ESSING OFFICER, DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, HAS NEITHER CONFRONTED THE ASSESSEE ABOUT THIS GROSS UNDER-STATEMENT OF THE RE TURNED INCOME NOR THE ASSESSE HAS DISCLOSED THE FACT AND EXPLAINED THE RE ASONS. ON THE CONTRARY, THE AR IN THE COURSE OF HEARING OF THE SC RUTINY ASSESSMENT, EXHORTED THE AO TO ACCEPT THE RETURNED INCOME AS TH EY HAVE DISCLOSED THE INCOME AS PER ADMISSION MADE DURING THE COURSE OF S URVEY AND THE ASSESSING OFFICER WITHOUT ANY EXAMINATION HAS SIMPL Y ACCEPTED THE RETURNED INCOME BY RECORDING THE SAME MISTAKEN FACT THAT THE INCOME RETURNED WAS AS PER THE ADMISSION MADE AND PASSED T HE IMPUGNED ORDER. THEREFORE, THE IMPUGNED ASSESSMENT ORDER PAS SED BY THE AO IS PERVERSE IN VIEW OF THE APPARENT CONTRADICTION IN T HE STATEMENTS MADE AND THE ACTUAL INCOME RETURNED THEREBY RENDERING THE IM PUGNED ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. DURING THE COURSE OF PROCEEDINGS U/S 263 ALSO, THE ARS, ON SPE CIFICALLY ASKING, HAVE ADMITTED THAT NO REGULAR BOOKS OF ACCOUNTS WERE MAI NTAINED EVEN AFTER THE DATE OF SURVEY AND THAT WHATEVER BOOKS WERE PRODUCE D WERE PREPARED SUBSEQUENTLY FROM THE ROUGH NOTE BOOKS AND ALSO ADM ITTED THAT THERE WERE NO AGREEMENTS WITH THE LORRY OWNERS AND THERE WAS N O BASIS FOR THE I.T.A. NO. 457/HYD/2016 SRI VENKATESWARA LORRY TRANSPORT :- 4 -: PAYMENTS ALLEGEDLY MADE TO THEM. THUS THE SITUATION EXISTING PRIOR TO THE DATE OF SURVEY WAS EQUALLY PERSISTING SUBSEQUENT TO THE DATE OF SURVEY ALSO AND THERE WAS NO CHANGE AT ALL AND WHATEVER RO UGH NOTE BOOKS AND CASH VOUCHERS MAINTAINED BY THE ASSESSEE ARE NOT AM ENABLE FOR ANY REASONABLE AND INDEPENDENT VERIFICATION. 07. IN THE CITED CASE OF M/S S KHADER KHAN AND SON, THE HON'BLE MADRAS HIGH COURT HAS CLEARLY BROUGHT OUT THE' CRUC IAL FACTS THAT WITHIN A WEEK OF THE SURVEY CONDUCTED IN THAT CASE, THAT ASS ESSEE HAS RETRACTED FROM THE STATEMENT GIVEN BY ONE OF ITS PARTNERS AND A CLEAR BASIS FOR SUCH RETRACTION WAS ALSO BROUGHT OUT THAT THE ADMITTED A DDITIONAL INCOME COULD NEVER BE ACHIEVED IN THE NATURE OF THE BUSINESS. HO WEVER, THE FACTS IN THE PRESENT CASE ARE CLEARLY DIFFERENT AND AS SUCH THE RATE IN THE CITED DECISION DOES NOT APPEAR IN THE FACTS OF THE PRESENT CASE. A T THE OUTSET, THE ASSESSEE HAS NOT ONLY ADMITTED ITS NET INCOME AT 5% OF THE GROSS TRANSPORT RECEIPTS IN THE STATEMENT RECORDED DURING THE COURS E OF SURVEY, BUT ALSO CONFIRMED THE ADMISSION IN THE SWORN STATEMENT RECO RDED FROM THE SAME PARTNER U/S 131 IMMEDIATELY THEREAFTER IN WHICH THE DEPONENT HAS CLEARLY RECORDED HIS ASSERTION THAT THE SWORN STATEMENT WAS RECORDED AS PER HIS VERSION AND WITHOUT ANY COERCION OR PRESSURE. THE A SSESSEE AT NO STAGE OF ASSESSMENT PROCEEDINGS HAS EVER RETRACTED FROM HIS ADMISSION STATEMENT. IN FACT THE ASSESSEE HAS FURTHER ACTED IN ACCORDANC E WITH ITS ADMISSION BY FILING THE RETURNS OF INCOME FOR AYS 2011-12 AND 20 12-13 BY DISCLOSING ADDITIONAL INCOME SO THAT THE NET INCOME OFFERED WA S 5% OF THE RESPECTIVE GROSS TRANSPORT RECEIPTS. EVEN IN THE COURSE OF AS SESSMENT FOR THE AY 2013-14, THE ASSESSEE TRIED TO MISLEAD THE ASSESSIN G OFFICER BY STATING THAT THEY HAVE RETURNED THE INCOME AS PER THEIR ADM ISSION MADE DURING THE COURSE OF SURVEY AND EXHORTED HIM TO ACCEPT THE RETURNED INCOME. THE ASSESSING OFFICER HAS SIMPLY ACCEDED TO ITS REQUEST WITHOUT ANY VERIFICATION AND PASSED THE IMPUGNED ASSESSMENT ORD ER BY RECORDING THE WRONG FACT OF RETURNED INCOME BEING AT THE RATE AT WHICH ADMISSION WAS MADE. THE ASSESSEE ALSO CANNOT ACCEPT A PART OF TH E SWORN STATEMENT BY HONOURING IT WHILE FILING ITS RETURNS OF INCOME FOR AY. 2011-12 AND 2012-13 AND DISCARD ITS OWN ADMISSION IN THE SWORN STATEMEN T WHILE FILING ITS RETURN OF INCOME FOR AY. 2013-14 THAT TO WITHOUT AN Y BASIS OR CHANGE IN CIRCUMSTANCES. IT IS ALSO NOT THE CASE OF THE ASSE SSEE THAT IMMEDIATELY AFTER THE DATE OF SURVEY, ITS PROFITABILITY HAS TAK EN A BEATING. 08. FOR THE REASONS STATED ABOVE, I HOLD THAT THE I MPUGNED ASSESSMENT ORDER DATED 10.12.2013 IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE AND DIRECT THE ASSESSING OFFIC ER TO REVISE IT BY ADOPTING THE TOTAL INCOME AT 5% OF THE GROSS CONTRA CT RECEIPTS AND ISSUE THE REVISED DEMAND NOTICE TO THE ASSESSEE. PENALTY NOTICE U/S 271(1)(C) ALSO MAY BE ISSUED IN VIEW OF THE CONCEALMENT OF TR UE PARTICULARS OF THE ASSESSEE'S INCOME BY NOT DISCLOSING THE CORRECT AMO UNT OF PROFITS IN THE RETURN FILED FOR AY 2013-14. I.T.A. NO. 457/HYD/2016 SRI VENKATESWARA LORRY TRANSPORT :- 5 -: 2.2. CONTESTING THE ABOVE, ASSESSEE RAISED THE GROUNDS AS UNDER: 2. THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TA X WAS NOT JUSTIFIED IN HOLDING THAT THE ORDER PASSED BY T HE INCOME TAX OFFICER, WARD-1, MANCHERIAL ON 10-12-2013 FOR T HE ASST. YEAR 2013-14 IS ERRONEOUS AND PREJUDICIAL TO THE IN TEREST OF REVENUE. 3. THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX WAS NOT CORRECT IN DIRECTING THE ASSESSING OFFICER TO ADOPT TOTAL INCOME AT 5% OF THE GROSS CONTRACT RECEIPTS, AS MENTIONED BY THE APPELLANT IN THE SWORN STATEMENT U/S. 133A OF THE I .T ACT DURING THE COURSE OF SURVEY WITHOUT CONSIDERING THE FACTS OF THE CASE. GROUNDS NOS. 1 & 4 ARE GENERAL IN NATURE. 3. LD. COUNSEL SUBMITTED THAT ASSESSEE HAS MAINTAINED BO OKS OF ACCOUNT POST SURVEY AND HAS GOT THEM AUDITED AND A O HAS NOT FOUND ANY DISCREPANCIES, THEREFORE, THE INCOME RETUR NED WAS ACCEPTED. HE REFERRED TO THE SUBMISSIONS MADE BEFORE THE CIT ABOUT THE ACCEPTANCE OF THE RETURNED INCOME AND WHY GROS S PROFIT SHOULD NOT BE ESTIMATED. ON A QUERY BY THE BENCH, IT WAS FAIRLY SUBMITTED THAT NO INFORMATION WAS FURNISHED BEFORE THE AO EXCEPT PRODUCING THE BOOKS OF ACCOUNT. 4. LD. DR HOWEVER, REITERATED THE CONTENTIONS TAKEN UP BY THE PR.CIT THAT ORDER OF THE AO IS ERRONEOUS IN THE SENSE WHILE IT WAS STATED THAT AR ADMITTED FOR ESTIMATION OF INCOME AS ADMITTED DURING THE COURSE OF SURVEY, BUT IN PAGE 2 OF THE OR DER, INCOME RETURNED WAS ACCEPTED WITHOUT ANY REASON. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE DOCUMENTS PLACED ON RECORD. ADMITTEDLY, DURING THE COU RSE OF SURVEY OPERATIONS, ASSESSEE IN FACT OFFERED INCOME AT 5% OF THE I.T.A. NO. 457/HYD/2016 SRI VENKATESWARA LORRY TRANSPORT :- 6 -: GROSS RECEIPTS AS IT HAS NOT MAINTAINED PROPER BOOKS O F ACCOUNT. NOT ONLY THAT, ASSESSEE ALSO FOLLOWED IT UP BY FILING THE RETURNS FOR AY. 2011-12 AND 2012-13 OFFERING INCOMES AT 5% OF TH E GROSS RECEIPTS WHICH WERE ACCEPTED BY THE DEPARTMENT. THERE FORE, ASSESSEES CONTENTION THAT STATEMENT GIVEN DURING THE SUR VEY DOES NOT HAVE ANY EVIDENTIARY VALUE HAS NO BASIS. FOR THE R EASONS BEST KNOWN TO THE MANAGING PARTNER, ASSESSEE NOT ONLY AGRE ED FOR ESTIMATION OF INCOME DURING THE COURSE OF SURVEY U/S 133A BUT ALSO FILED RETURNS ACCORDINGLY. HOWEVER, FOR AY. 20 13-14, AS SEEN FROM THE STATEMENT OF SURVEY ONLY A TURNOVER OF RS. 5.2 5 CRORES WAS MADE AS ON THE DATE OF SURVEY I.E., 07-11-2012 A ND SUBSEQUENTLY, THERE WAS MORE THAN RS. 8 CRORES OF TURNO VER TO MAKE IT TO RS. 14.75 CRORES FOR THE WHOLE YEAR. ASSES SEE MAY HAVE MAINTAINED BOOKS OF ACCOUNT FOR THE WHOLE PERIOD AND A LSO FILED AUDITED STATEMENTS ALONG WITH THE RETURN OF INCOME. H OWEVER, AOS ORDER INDICATES THAT THERE ARE CERTAIN DEFICIENCIE S NOTICED. THIS IS WHAT THE AO HAS RECORDED IN THE ASSESSMENT ORDE R. THE ASSESSEE-FIRMS ONE OF THE PARTNER AND THE A.R ., HAD EXPLAINED THE TRANSACTIONS FOUND IN THE MATERIAL IM POUNDED DURING THE COURSE OF SURVEY AND ON ACCOUNT OF DEFIC IENCIES NOTICED, REQUESTED TO COMPLETE THE ASSESSMENT BASED ON THE ADMISSION MADE DURING THE COURSE OF SURVEY AND ALSO IN VIEW OF THE RESULTANT TAXES MAY BE ADJUSTED FROM THE REF UNDS DUE. IN VIEW OF THE ABOVE, THE ASSESSMENT IS COMPLETED B Y ACCEPTING THE RETURNED INCOME AS ADMITTED DURING THE COURSE O F SURVEY. 5.1. AS CAN BE SEEN FROM THE ABOVE, WHILE GIVING A F INDING THAT INCOME IS TO BE ESTIMATED ON THE BASIS OF THE SURVEY, TH E AO HAS ACCEPTED THE INCOME RETURNED WHICH IS AT 1.97% OF THE G ROSS I.T.A. NO. 457/HYD/2016 SRI VENKATESWARA LORRY TRANSPORT :- 7 -: RECEIPTS. THE REASONS FOR ACCEPTING THE INCOME RETURNE D ON THE BASIS OF THE BOOKS OF ACCOUNT ARE NOT FORTHCOMING FROM THE ORDER. THEREFORE, WE ARE OF THE OPINION THAT LD. PR.CIT EXE RCISED HIS JURISDICTION U/S. 263 VALIDLY AS THERE IS AN ERROR IN THE ORDER ITSELF AS CAN BE SEEN ON THE FACE OF IT. THIS IS CERTAINLY A N ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 5.2. HOWEVER, WE ARE NOT CONVINCED WITH THE DIRECTION O F THE CIT TO ADOPT 5% OF THE GROSS RECEIPTS, WITHOUT GIVING AN OPP ORTUNITY TO ASSESSEE. IN FACT, ASSESSEES SUBMISSION IS THAT IT HAD MAINTAINED BOOKS OF ACCOUNT. THEREFORE, IN OUR OPINION, THE VER ACITY AND CORRECTNESS OF THE BOOKS SO MAINTAINED SHOULD HAVE BEE N EXAMINED BY THE AO AFRESH. IN VIEW OF THAT, WE MODIFY THE ORDER OF CIT DIRECTING THE AO TO ENHANCE THE INCOME, TO SET ASIDE THE IMPUGNED ORDER OF THE AO AND RESTORE THE ENTIRE ASSESSMENT PROCEE DINGS TO THE FILE OF AO TO EXAMINE ASSESSEES CONTENTIONS IN DETA IL AND IF THE BOOKS OF ACCOUNT ARE CORRECT AND REFLECTS TRUE AND FAIR AFFAIRS OF ASSESSEES BUSINESS, THEN, AO IS FREE TO ACCEPT THE INC OME RETURNED. IN CASE OF REJECTION OF BOOKS OF ACCOUNT, H OWEVER, WE MAKE IT CLEAR THAT ANY ESTIMATION OF INCOME SHOULD NOT E XCEED 5% AS DETERMINED BY THE PR.CIT/OR ADMITTED BY ASSESSEE IN THE COURSE OF SURVEY. CONSEQUENTLY, THE DIRECTION TO INITIATE PEN ALTY PROCEEDINGS ALSO STANDS MODIFIED. AO IS FREE TO CONS IDER WHETHER TO INITIATE PENALTY PROCEEDINGS OR NOT ON THE BASIS OF EXAMINATION OF ASSESSEES BUSINESS AFFAIRS. HE IS DIRECTED TO PASS A DETAILED ORDER SO THAT THERE WILL BE NO CONFUSION, AS ARISING IN THI S CASE ON THE IMPUGNED ASSESSMENT ORDER. ASSESSE SHOULD BE GIVEN DUE OPPORTUNITY IN THE CONSEQUENTIAL ASSESSMENT PROCEEDING S. WITH I.T.A. NO. 457/HYD/2016 SRI VENKATESWARA LORRY TRANSPORT :- 8 -: THESE DIRECTIONS, WHILE UPHOLDING INITIATION OF PROCEE DINGS ON 263, THE GROUNDS OF ASSESSEE ARE PARTLY ALLOWED. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER, 2016 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 21 ST OCTOBER, 2016 TNMM COPY TO : 1. SRI VENKATESWARA LORRY TRANSPORT, H.NO. 28-3-224 , CALTEX AREA, BELLAMPALLI, ADILABAD DIST. 2. THE INCOME TAX OFFICER, WARD-I, BELLAMPALLI MAIN ROAD, MANCHERIAL. 3. PR.CIT-2, HYDERABAD. 4. D.R. ITAT, HYDERABAD. 5. GUARD FILE.
