Swan Turbine Services Private Limited, Hyderabad V. Deputy Commissioner Of Income Tax, Circle 3(1), Hyderabad

ITA 5/Hyd/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3855 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Assessment Year: 2019-2020
• Appeal Filed On: 11-01-2021
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VENUDHAR GODESI
• Assessee Lawyers: M V ANIL KUMAR
• Keywords: Opportunity of being heard
• Section: 43B; 37(1); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD (THROUGH VIRTUAL HEARING) BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SRI S.S. GODARA, JUDICIAL MEMBER ITA NOS.4 & 5/HYD/2021 A.YS. 2018 - 19 & 2019 - 20 SWAN TURBINE SERVICES PRIVATE LIMITED, HYDERABAD. PAN: AAFCS 2739 A VS. DCIT, CIRCLE - 3(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI M.V. ANIL KUMAR REVENUE BY SRI VENUDHAR GODESI, DR DATE OF HEARING: 22/09/2021 DATE OF PRONOUNCEMENT: 05 /10/2021 ORDER PER A. MOHAN ALANKAMONY , A.M: TH ESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE LD. CIT(A) - 3, HYDERABAD IN APPEAL NO.10158/2019 - 20/B1/CIT(A) - 3, DATED 31/07/2020 AND NO. 10043/2020 - 21/C/CIT(A) - 3, DATED 22/09/2020 PASSED U/S. 143(1) R.W.S 250(6) OF THE ACT FOR THE A.Y. 2018 - 19 AND 2019 - 20 RESPECTIVELY. 2. THERE IS A DELAY OF 99 DAYS AND 51 DAYS IN FILING THE APPEALS BEFORE THE TRIBUNAL FOR THE A.Y. 2018 - 19 AND 2019 - 20 RESPECTIVE LY . 2 CONSIDERING THE FACT THAT THESE TWO APPEALS OF THE ASSESSEE ARE FILED DURING THE PANDEMIC SITUATION, TAKING A LENIENT VIEW, WE HEREBY CONDONE THE DELAY OF 99 DAYS IN FILING THE APPEAL IN ITA NO. 4/HYD/2021 AND 51 DAYS IN ITA NO. 5/HYD/2021 AND PROCEED TO ADJUDICATE THE APPEALS ON MERITS. 3. THE ASSESSEE HAS RAISE D SEVEN GROUNDS IN ITS APPEAL FOR THE A.Y. 2018 - 19 AND THEY ARE EXTRACTED HEREIN BELOW FOR REFERENCE: 1. YOUR APPELLANT SUBMITS THAT THE CIT(A) ERRED IN LAW IN CONFIRMING THE ADDITION MADE UNDER SECTION 36(1)(VA) OF THE ACT IGNORING THE SUBMISSIONS MADE B Y YOUR APPELLANT IN RESPONSE TO THE PROPOSED ADJUSTMENT NOTICE. 2. YOUR APPELLANT SUBMITS THAT THE CIT(A) AS WELL AS THE CPC OUGHT TO HAVE CONSIDERED THE REPLY BY YOUR APPELLANT AND OUGHT NOT TO HAVE MADE THE ADDITION OF RS. 11,55,523/ - BEING EMPLOYEES CON TRIBUTION TO PROVIDENT FUND AND ESI UNDER SECTION 36(1)(VA) OF THE ACT IGNORING THE FACT THAT IS OTHERWISE ALLOWABLE U/S. 43B OF THE ACT. 3. YOUR APPELLANT SUBMITS THAT CIT(A) HAS PROVIDED ONLY ONE OPPORTUNITY OF HEARING AND OUGHT TO HAVE PROVIDED ANOTHER OPPORTUNITY OF HEARING TO THE APPELLANT. 4. YOUR APPELLANT SUBMITS THAT CIT(A) AS WELL AS THE CPC OUGHT TO HAVE APPRECIATED THE FACT THAT THE ENTIRE AMOUNT OF RS. 11,55,523 WAS PAID WITHIN THE FINANCIAL YEAR OR BEFORE THE DUE DATE OF FILING THE RETURN OF I NCOME. HENCE, THE SAME SHOULD BE ALLOWED AS DEDUCTION. 5. YOUR APPELLANT SUBMITS THAT CIT(A) AS WELL AS THE CPC ERRED IN NOT TREATING THE EXPENDITURE AS ALLOWABLE U/S. 37(1) OF THE ACT AS THE PAYMENT OF EMPLOYEES AND EMPLOYERS CONTRIBUTION TO PF AND ESI W AS INCURRED IN THE COURSE OF BUSINESS AND FOR THE PURPOSE OF BUSINESS. 6. THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT IN CASE OF CONFLICTING JUDGMENTS BY THE HIGH COURTS, THE VIEW FAVOURABLE TO THE APPELLANT HAS TO BE CONSIDERED. 7. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING YOUR APPELLANT PRAYS THAT THE HONBLE MEMBERS MAY DELETE THE ADDITION OF RS. 11,55,523/ - . 3 4. THE ASSESSEE HAS RAISED SEVEN GROUNDS IN ITS APPEAL FOR THE A.Y. 2019 - 20 AND THEY ARE EXTRACTED HEREIN BELOW FOR REFERENCE: 1. YOUR APPELLANT SUBMITS THAT THE CIT(A) ERRED IN LAW IN CONFIRMING THE ADDITION MADE UNDER SECTION 36(1)(VA) OF THE ACT IGNORING THE SUBMISSIONS MADE BY YOUR APPELLANT IN RESPONSE TO THE PROPOSED ADJUSTMENT NOTICE. 2. YOUR APPELLANT SUBMITS THAT THE CIT(A) AS WELL AS THE CPC OUGHT TO HAVE CONSIDERED THE REPLY BY YOUR APPELLANT AND OUGHT NOT TO HAVE MADE THE ADDITION OF RS. 5,97,209 / - BEING EMPLOYEES CONTRIBUTION TO PROVIDENT FUND AND ESI UNDER SECT ION 36(1)(VA) OF THE ACT IGNORING THE FACT THAT IS OTHERWISE ALLOWABLE U/S. 43B OF THE ACT. 3. YOUR APPELLANT SUBMITS THAT CIT(A) HAS PROVIDED ONLY ONE OPPORTUNITY OF HEARING AND OUGHT TO HAVE PROVIDED ANOTHER OPPORTUNITY OF HEARING TO THE APPELLANT. 4. YO UR APPELLANT SUBMITS THAT CIT(A) AS WELL AS THE CPC OUGHT TO HAVE APPRECIATED THE FACT THAT THE ENTIRE AMOUNT OF RS. 5,97,209/ - WAS PAID WITHIN THE FINANCIAL YEAR OR BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME. HENCE, THE SAME SHOULD BE ALLOWED AS DEDUCTION. 5. YOUR APPELLANT SUBMITS THAT CIT(A) AS WELL AS THE CPC ERRED IN NOT TREATING THE EXPENDITURE AS ALLOWABLE U/S. 37(1) OF THE ACT AS THE PAYMENT OF EMPLOYEES AND EMPLOYERS CONTRIBUTION TO PF AND ESI WAS INCURRED IN THE COURSE OF BUSINESS AND FOR THE PURPOSE OF BUSINESS. 6. THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT IN CASE OF CONFLICTING JUDGMENTS BY THE HIGH COURTS, THE VIEW FAVOURABLE TO THE APPELLANT HAS TO BE CONSIDERED. 7. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING YOUR APPELLANT PRAYS THAT THE HONBLE MEMBERS MAY DELETE THE ADDITION OF RS. RS. 5,97,209/ - . 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF PROVIDING REPAI R AND MAINTENANCE SERV ICES FOR TURBINES, MANUFACTURING AND TRADING IN TURBINE PARTS ETC., FILED ITS RETURN OF INCOME FOR THE A.Y. 2018 - 19 ON 4/10/2018 AND FOR THE A.Y. 2019 - 20 ON 01/20/2019 ADMITTING TOTAL INCOME OF RS. 1,94,19,565/ - AND RS. 3,46,80,257/ - FOR THE A.Y. 2018 - 19 A ND 2019 - 20 4 RESPECTIVELY. THE RETURNS OF INCOME FILED BY THE ASSESSEE FOR THE A.Y. 2018 - 19 AND 2019 - 20 WERE PROCESSED U/S. 143(1) OF THE ACT BY THE LD. A.O. AT CPC, BANGALURU AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 2,05,75,090/ - AND RS. 3,5 2,77,466/ - FOR THE AYS 2018 - 19 AND 2019 - 20 RESPECTIVELY AND MADE CERTAIN ADDITIONS TOWARDS BELATED PAYMENT OF EMPLOYEES CONTRIBUTION TO PF AND ESI BY INVOK ING THE PROVISIONS OF SECTION 143(1)(A)(IV) R.W.S 36(1)(VA) OF THE ACT IN BOTH THE ASSESSMENT YEARS . IN THE A.Y. 2018 - 19 THE LD. A.O. ALSO MADE ADDITION OF RS.2,64,893/ - TOWARDS PROFIT ON SALE OF ASSETS. AGGRIEVED, THE ASSESSEE FILED APPEALS BEFORE THE LD. CIT(A) FOR THE BOTH THE ASSESSMENT YEARS. ON APPEAL, THE LD. CIT(A) PARTLY ALLOWED THE ASSE SSEES APPEAL FOR THE A.Y. 2018 - 19 AND GRANTED RELIEF IN RESPECT OF ADDITION OF RS.2,64,893/ - MADE BY THE LD. A.O. TOWARDS PROFIT ON SALE OF ASSETS AND SUSTAINED THE ADDITION MADE BY THE LD. A.O. TOWARDS BELATED PAYMENTS OF EMPLOYEES CONTRIBUTION TO PF AN D ESI FOR BOTH THE ASSESSMENT YEARS. AGGRIEVED BY THE ORDERS OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL FOR THE A.Y.S 2018 - 19 AND 2019 - 20. 6 . AT THE OUTSET, THE LD. AR SUBMITTED BEFORE US THAT THE LD. CIT(A) HAD PASSED EX - PARTE ORDER S FOR THE AYS 2018 - 19 AND 2019 - 20 AND THE ASSESSEE WAS NOT AFFORDED PROPER OPPORTUNITY OF BEING HEARD. LD.AR FURTHER SUBMITTED THAT LD. CIT(A) DID NOT CONSIDER THE SUBMISSIONS OF THE ASSESSEE FOR BOTH THE AYS UNDER CONSIDERATION . IT WAS THEREFORE PLEADED T HAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE LD. CIT(A) 5 IN ORDER TO PROVIDE ONE MORE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD . LD. DR, ON THE OTHER HAND, VEHEMENTLY OPPOSED TO THE SUBMISSIONS OF THE LD. AR AND ARGUED THAT THOUGH PROPER OPPORTU NITIES HAD BEEN PROVIDED TO THE ASSESSEE, ON THE GIVEN DATES OF HEARING, NEITHER THE ASSESSEE NOR ITS REPRESENTATIVE APPEARED BEFORE THE LD. CIT(A) EXCEPT FILING WRITTEN SUBMISSIONS. THEREFORE THE LD. CIT(A) HAD NO OTHER OPTION BUT TO PASS ORDERS BASED ON THE MATERIALS AVAILABLE ON RECORD. HENCE, IT WAS PLEADED THAT THE ORDERS PASSED BY THE LD. CIT(A) FOR THE A.Y. 2018 - 19 AND 2019 - 20 DO NOT CALL FOR ANY INTERFERENCE. 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS A ND CAREFULLY PERUSED THE MATERIALS ON RECORD. ON EXAMINING THE FACTS OF THE CAS E , WE FIND THAT THE CIT(A) HAD GIVEN ONLY ONE OPPORTUNITY TO THE ASSESSEE IN BOTH THE AYS 2018 - 19 AND 2019 - 20. ON THE GIVEN DATE OF HEARING NONE APPEARED ON BEHALF OF THE ASSES SEE BEFORE THE LD. CIT(A) BUT, FILED WRITTEN SUBMISSIONS THROUGH E - MAIL/ITBA MODULE AND REQUESTED THE LD. REVENUE AUTHORITIES TO DISPOSE OFF THE APPEALS ON THE BASIS OF THE ASSESSEES WRITTEN SUBMISSIONS. THEREFORE, THE LD. CIT(A) ADJUDICATE D THE APPEAL S BASED ON THE MATERIAL AVAILABLE ON RECORD. IN THIS SITUATION, CONSIDERING THE ISSUES INVOLVED IN THE APPEAL AS WELL AS THE PRAYER OF THE LD. AR, IN THE INTEREST OF JUSTICE, WE HEREBY REMIT THE MATTER BACK TO THE FILE OF LD. CIT(A) IN ORDER TO CONSIDER THE ISSUES INVOLVED IN THE APPEAL S FOR THE A.Y. 2018 - 19 AND A.Y. 2019 - 20 AFRESH AND DECIDE THE 6 MATTER ON MERITS BY PROVIDING ONE MORE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. AT THE SAME BREATH, WE ALSO HEREBY CAUTION THE ASSESSEE TO PROMPTLY CO - OPERATE BE FORE THE LD. CIT(A) IN THE PROCEEDINGS FAILING WHICH THE LD. CIT(A) SHALL BE AT LIBERTY TO PASS APPROPRIATE ORDER S IN ACCORDANCE WITH LAW AND MERITS BASED ON THE MATERIALS ON THE RECORD. IT IS ORDERED ACCORDINGLY. 8 . IN THE RESULT, TWO APPEAL S FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREINABOVE. PRONOUNCED IN THE OPEN COURT ON 05 TH O CTOBER, 2021. S D/ - SD/ - (S.S. GODARA) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 05 TH OCTOBER , 2021. OKK COPY TO: - 1) SWAN TURBINE SERVICES PRIVATE LIMITED, C/O. M. ANANDAM & CO., CHARTERED ACCOUNTANTS, FLAT NO. 7A, SURYA TOWERS, S.P. ROAD, SECUNDERABAD, TELANGANA. 500 003. 2) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 3(1), HYDERABAD. 3) THE COMMISSIONER OF INCOME TAX (APPEALS) - 3, HYDERABAD. 4) THE PRINCIPAL COMMISSIONER OF INCOME TAX - 3, H YDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE