ACIT, Circle-5(1), Visakhapatnam V. Gottipati Sudhakar, Visakhapatnam

ITA 514/VIZ/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6501 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 25-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C S NAIK
• Keywords: Business income; Depreciation; Audit objection; Tax effect

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI D MANMOHAN , VICE PRESIDENT & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 5 1 4 /VIZ/ 201 7 ( / ASSESSMENT YEAR: 200 7 - 0 8 ) ASST.COMMISSIONER OF INCOME TAX, CIRCLE - 5(1) VISAKHAPATNAM VS. SHRI GOTTIPATI SUDHAKAR 14 - 8 - 42, MAIN ROAD ANAKAPALLE VISAKHAPATNAM [PAN : AFDPG2191L] ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI B.C.S.NAIK , D R / RESPONDENT BY : NONE / DATE OF HEARING : 04 . 1 2 .2017 / DATE OF PRONOUNCEMENT : 06 . 1 2 .2017 / O R D E R PER D. MANMOHAN , VICE PRESIDENT : THIS APPEAL IS FILED AT THE INSTANCE OF THE REVENUE AND IT IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME - TAX (APPEALS) [CIT(A)] - 2, VISAKHAPATNAM. 2 ITA NO.51 4/VIZ/2017 SHRI GOTTIPATI SUDHAKAR , VISAKHAPATNAM 2. FOLLOWING GROUNDS WERE RAISED BEFORE US: (I) THE ORDER OF THE LD.CIT(A) - 1, VISAKHAPATNAM IS ERRONEOUS IN LAW. (II) THE LD.CIT(A) ERRED IN DIRECTING THE AO TO ALLOW THE DEPRECIATION FROM THE INCOME ESTIMATED, WITHOUT CONSIDERING THE ASSESSMENT ORDER OF THE AO WHICH WAS MADE AS PER THE JUDGMENT PRONOUNCED BY THE HONBLE HIGH COURT OF AP IN THE CASE INDWELL CONSTRUCTION VS. CIT (232 ITR 776). (III) THOUGH THE TAX EFFECT IS BELOW THE MONETARY LIMIT PRE SCRIBED BY THE CBDT FOR FILING REVENUE APPEAL TO THE ITAT, THE CASE IS COVERED BY THE EXCEPTION PROVIDED AT PARA 8(C) OF THE CBDTS CIRCULAR NO.21/2015 DATED 10.12.2015 (IV) ANY OTHER GROUND THAT MAY BE RAISED AT THE TIME OF HEARING. 3 . IN THIS CASE, THE TAX EFFECT IN DISPUTE IS LESS THAN THE SPECIFIED LIMIT, BUT THE ASSESSING OFFICER(AO) HAS TAKEN AID OF PARA 8(C) OF THE CBDT CIRCULAR NO.21/2015 DATED 10.12.2015 WITHOUT SPECIFYING AS TO WHETHER SUCH A GROUND IS AUTHORI S ED BY THE COMMISSIONER WHILE GIV ING A DIRECTION U/S 253 OF THE ACT. THE CBDT HAS ISSUED CERTAIN INSTRUCTIONS TO THE CONCERNED COMMISSIONERS IN THE PROCESS OF MONITORING OF FILING OF APPEALS - VIDE SECTION 3 OF TAXMAN N S INCOME TAX RULES, 2016 - WHICH REQUIRES THE CIT TO SPECIFY THE GROU NDS WHICH ARE TO BE RAIS ED BEFORE THE TRIBUNAL , WHILE PREFERRING THE APPEAL. IN THE INSTANT CASE, THE LD.COMMISSIONER HAS FORWARDED THE AUTHORI S ATION IN A ROUTINE MANNER WITHOUT SPECIFYING AS TO WHAT ARE THE GROUNDS THAT A RE REQUIRED TO BE TAKEN INTO CONS IDERATION AND WHETHER IT IS A FIT CASE FOR FILING AN APPEAL DESPITE THE LOW TAX EFFECT. THE 3 ITA NO.51 4/VIZ/2017 SHRI GOTTIPATI SUDHAKAR , VISAKHAPATNAM CIRCULAR ISSUED BY THE CBDT WAS LATER ON EXPLAINED IN INSTRUCTION 5/2 017 , W HEREIN IT WAS STATED THAT THE APPEAL SHOULD NOT BE FILED IN A R OUTINE MANNER MERELY BECAUSE THERE IS REVENUE AUDIT OBJECTION, UNLESS IT IS A FIT CASE FOR FILING AN APPEAL. IN OTHER WORDS, THE FINDINGS OF THE CIT(A) SHOULD BE FOUND TO BE PERVERSE AND IN SUCH CASES, IT HAS TO BE SPECIFIED IN THE AUTHORIZATION BY THE CO MMISSIONER THAT THE APPEAL IS PERMITTED TO BE FILED DESPITE LOW MONETARY EFFECT . N O SUCH MENTION WAS MADE IN THE AUTHORIZATION MEMO. 3.1. EVEN ON MERITS, THE CASE OF THE ASSESSEE WAS ESTIMATING THE BUSINESS INCOME @ 10.5% OF THE GROSS RECEIPTS CLEAR OF DEPRECIATION IS ON HIGHER SIDE ; BY PLACING RELIANCE UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT, IT WAS CONTENDED THAT DEPRECIATION IS A SEPARATE CHARGE TO THE PROFIT EARNED BY THE ASSESSEE AND IT HAS TO BE INDEPENDENTLY CONSIDERED EVEN IN THE CAS E OF ESTIMATION OF INCOME. IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 - 09 AND 2009 - 10, THE ITAT CONSIDERED THE SAME ISSUE AND CONCLUDED THAT ESTIMATING THE INCOME @ 8% ON STONE CRUSHING AND 4% ON TRANSPORT CONTRACT WILL MEET THE EN DS OF JUSTIC E . IT ALSO HELD THAT UPON ESTIMATING PROFIT , ASSESSEE WOULD BE ENTITLED TO CLAIM DEPRECIATION. 4 ITA NO.51 4/VIZ/2017 SHRI GOTTIPATI SUDHAKAR , VISAKHAPATNAM 3. 2 . NO MATERIAL WHATSOEVER WAS PLACED BY THE LD.DR TO SHOW THAT THE ESTIMATE OF PROFIT BY THE CIT (A) IS PERVERSE OR UNREASONABLE; IN FACT, THE ESTIMATION OF PR OFIT IS BASED UPON THE FINDINGS GIVEN BY THE ITAT IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 - 09 AND 2009 - 10 AND CLAIM OF DEPRECIATION WAS BASED UPON THE DECISION OF THE HONBLE AP HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS VS. CIT [232 IT R 776]. ON THE TOP OF IT, THE CBDT CLARIFIED VIDE INSTRUCTION 5/2017 THAT APPEAL SHOULD NOT BE FILED IN A ROUTINE MANNER. IN OTHER WORDS, THE REASONS FOR PREFERRING AN APPEAL NEED TO BE SPECIFIED. IN THE INSTANT CASE, NO SUCH REASONS WERE MENTIONED. TH US, THE APPEAL DESERVES TO BE DISMISSED AS UNADMITTED. E VEN ON MERITS, THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL (SUPRA). 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. P RONOUNCED IN THE OPEN COURT ON 6 TH DEC 20 17 . SD/ - SD/ - ( . . ) ( . ) ( D.S. SUNDER SINGH ) ( D. MANMOHAN ) / ACCOUNTANT MEMBER / VICE PRESIDENT /VISAKHAPATNAM /DATED : 06 . 1 2 .2017 L. RAMA, SPS 5 ITA NO.51 4/VIZ/2017 SHRI GOTTIPATI SUDHAKAR , VISAKHAPATNAM / COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT - ASST.COMMISSIONER OF INCOME TAX, CIRCLE - 5(1) VISAKHAPATNAM 2. / THE RESPONDENT SHRI GOTTIPATI SUDHAKAR, 14 - 8 - 42, MAIN ROAD , ANAKAPALLE, VISAKHAPATNAM 3 . THE PR.COMMISSIONER OF INCOME TAX - 2, VISAKHAPATNAM 4 . , , / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM