Moglinedu Venkateswara Rao, Vijayawada V. THE CIT, Vijayawada

ITA 516/VIZ/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89169 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 08-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LUCAS PETER
• Assessee Lawyers: A C GANGAIAH
• Keywords: Opportunity of being heard; Assessment record
• Section: 68; 263

Judgement Text

ITA NO.516 OF 2014 MOGLINEDU VENKATESWARA RAO VIJAY AWADA PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, & SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.516/VIZAG/2014 ASSESSMENT YEAR: 2009-10 SHRI MOGLINEDU VENKATESWARA RAO, F-4 VANDANA APARTMENT, PYDAIAH STREET, LABBIPET VIJAYAWADA 533010 THE COMMISSIONER OF INCOME TAX VIJAYAWADA (APPELLANT) PAN NO: AHGPM 3416 R VS. (RESPONDENT) ASSESSEE BY: SHRI A.C. GANGAIAH, CA DEPARTMENT BY: SHRI LUCAS PETER, CIT DR DATE OF HEARING: 4/3/2015 DATE OF PRONOUNCEMENT: 5/3/2015 ORDER PER SAKTIJIT DEY. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT, VIJAYAWADA DATED 18.03.2014 PASSE D UNDER SECTION 263 OF THE ACT FOR THE ASSESSMENT YEAR 2009-10. 2. THERE IS A DELAY OF 111 DAYS IN FILING OF THE APP EAL. ASSESSEE HAS FILED A DELAY CONDONATION PETITION SUPPO RTED BY AN AFFIDAVIT WHEREIN IT IS STATED THAT ASSESSEE WAS OUTSI DE INDIA FROM 10.1.2014 TO 10.7.2014 DURING WHICH PROCEEDINGS UNDER SECTION 263 OF THE ACT WAS INITIATED AND ALSO COMPLETED . IT WAS ITA NO.516 OF 2014 MOGLINEDU VENKATESWARA RAO VIJAY AWADA PAGE 2 OF 9 SUBMITTED SINCE ASSESSEE WAS OUTSIDE INDIA FOR QUITE SO ME TIME AND AFTER RETURNING BACK HE FELL ILL, AS A RESULT OF W HICH HE COULD NOT FILE THE APPEAL IN TIME. IN SUPPORT OF SUCH CONTENTION THE LEARNED AUTHORISED REPRESENTATIVE ALSO PRODUCED PHOTOCOPY OF PASSPORT OF THE ASSESSEE. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE OPPOSED THE CONDONATION OF DELAY. HAVING CONSIDERED THE SUBMISSIO NS OF THE PARTIES AND REASON FOR DELAY, WE ARE INCLINED TO C ONDONE THE DELAY AS IN OUR VIEW THE ASSESSEE WAS PREVENTED BY S UFFICIENT CAUSE IN FILING THE APPEAL WITHIN THE PRESCRIBED TIME. 4. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. CIT HAD NOT FOUND FAULT THE ESTIMATION OF INCO ME ON THE TURNOVER BY REJECTING BOOKS OF ACCOUNT. THE BOOKS REJECTED; CANNOT BE TAKEN FOR CASH CREDITS AS PER SETTLED LAW FOR TIME BEING IN FORCE. THE ASSESSMENT IS NOT ERRONEOUS. THE INVOKING OF REVISI ON POWERS UNDER SECTION 263 IS BAD AND REVISION I TO B E ANNULLED. 2. CIT HAD CONSIDERED THE INFORMATION AVAILABLE ON THE RECORD WHICH IS DULY CONSIDERED IN REJECTING TH E BOOKS OF ACCOUNT. CIT UPHOLDING ESTIMATION BY REJECTING THE BOOKS; HAD NOT BROUGHT ANY MATERIAL T O SUGGEST ASSESSMENT IS BAD. IT IS THE DUTY OR REVISI ON AUTHORITY TO BRING THE MATERIAL SPECIFYING THE ASSESSMENT IS ERRONEOUS. ASSUMPTIONS AND PRESUMPTIONS TO SPECIFY THAT THE ASSESSMENT IS ERRONEOUS; ARE BAD. THE PROCEDURE SPECIFIED IN SECTION 263 IS NOT FOLLOWED. THE REVISION IS TO BE ANNULLED. ITA NO.516 OF 2014 MOGLINEDU VENKATESWARA RAO VIJAY AWADA PAGE 3 OF 9 5. BRIEFLY THE FACTS ARE, ASSESSEE AN INDIVIDUAL IS ENGAGED IN THE BUSINESS OF EXECUTION OF CIVIL CONTRACT WORK. FOR ASSESSMENT YEAR UNDER CONSIDERATION ASSESSEE FILED HI S RETURN OF INCOME ON 20.07.2009 DECLARING TOTAL INCOME OF RS .4,86,664. DURING ASSESSMENT PROCEEDINGS ASSESSING OFFICER NOTIC ED THAT ON GROSS CONTRACT RECEIPT OF RS.77,41,881 ASSESSEE HAD ADMITTED NET PROFIT OF RS.3,95,311. FURTHER, ON VERIFI CATION OF BOOKS OF ACCOUNT ALONG WITH BILLS AND VOUCHERS IT WAS FOUND THAT MOST OF THE VOUCHERS ARE SELF MADE, HENCE NOT VERIF IABLE. ASSESSING OFFICER THEREFORE, BEING OF THE VIEW THAT BO OK RESULTS ARE NOT RELIABLE, REJECTED THE BOOKS OF ACCOUNT AND ES TIMATED THE PROFIT @ 12.5% OF THE GROSS CONTRACT RECEIPTS AND ULT IMATELY COMPLETED THE ASSESSMENT. 6. THE LEARNED CIT IN EXERCISE OF POWER UNDER SECTIO N 263 OF THE ACT CALLED FOR ASSESSMENT RECORDS OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR AND AFTER EXAMINING THE SAME WAS OF THE VIEW THAT THE ASSESSMENT ORDER PASSED IS ERRONEO US AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE AS THE ASSES SING OFFICER HAS NOT CONDUCTED ANY INQUIRY OR EXAMINED THE FOLLOWING ISSUES: ITA NO.516 OF 2014 MOGLINEDU VENKATESWARA RAO VIJAY AWADA PAGE 4 OF 9 THOUGH ASSESSEE CLAIMED HIMSELF TO BE A LABOUR CONTRACTOR, HOWEVER, HE CLAIMED EXPENDITURE TOWARDS MATERIAL HIRING CHARGES WHICH IS UNRELATED EXPENDITU RE. CERTAIN CREDITS WERE FOUND IN THE ACCOUNTS HELD BY THE ASSESSEE WITH THE STATE BANK OF INDIA AND SYNDICATE BANK, SOURCES OF WHICH WERE NOT EXAMINED BY THE ASSESSING OFFICER TO ENSURE WHETHER PROVISIONS OF SEC TION 68 ARE ATTRACTED. ASSESSEE RECEIVED CERTAIN CONTRACT RECEIPTS FROM VIJAYAWADA MUNICIPAL CORPORATION WHICH IS EVIDENT FRO M TDS CERTIFICATE ISSUED BY THEM. HOWEVER, THEY WERE NOT REFLECTED IN THE BANK STATEMENTS FILED BY THE ASSESSEE. THIS INDICATES THAT THE ASSESSEE IS HAVING ANOTHER BANK ACCOUNT WHEREIN SUCH AMOUNTS ARE CREDITED. ASSESSING OFFICER HAS NOT ENQUIRED INTO THIS ASPECT. THERE IS LOT OF CONTRADICTIONS BETWEEN THE FIGURES IN THE BANK STATEMENT AND CASH BOOK EXTRACTS. HENCE FIGURES BETWEEN CASH BOOK EXTRACT AND THE LEDGER ARE NOT TALLYIN G ON VARIOUS DATES. 7. THOUGH, THE ASSESSEE OBJECTED TO THE INITIATION OF PROCEEDINGS UNDER SECTION 263 BY SUBMITTING A DETAILED REPLY ITA NO.516 OF 2014 MOGLINEDU VENKATESWARA RAO VIJAY AWADA PAGE 5 OF 9 BUT THE CIT REJECTING THE SUBMISSIONS OF THE ASSESSEE SET ASIDE THE ASSESSMENT ORDER BY DIRECTING AS UNDER: 5.3 FOR THE PURPOSE OF INVOKING THE JURISDICTION UNDER SECTION 263, IT IS SETTLED LAW THAT THE REVISIONAL AUTHORITY SHOULD APPLY THE TESTS AS TO WHETHER SUCH AN ORDER CONTAINS SOME APPARENT ERROR OF REASONING OR OF LAW OR OF THE FACT ON THE FACE OF IT AND ALSO WHETH ER IT IS AN ORDER WHEREIN THE ASSESSING OFFICER SIMPLY ACCEPTED WHAT THE ASSESSEE HAS STATED IN ITS RETURN &/OR IN THE OTHER PARTICULARS AND FAILED TO MAKE EXAMINATION/VERIFICATION/ENQUIRIES WHICH ARE CALLED FOR ON THE FACTS AND CIRCUMSTANCES OF THE CASE WHIC H HE AS AN INVESTIGATOR OF THAT CASE WAS DUTY BOUND T O DO. IF WE APPLY ABOVE TESTS TO THE FACTS AND CIRCUMSTANCES OF THIS CASE AS DISCUSSED IN PARAS 2 READ WITH PARAS 5 & 5.1 (SUPRA) IT IS CLEAR THAT TH E ORDER IS ERRONEOUS AND IS PREJUDICIAL TO THE INTERE STS OF REVENUE WITHIN THE SCOPE OF SECTIONS 263 OF THE ACT AND HENCE IT IS SET ASIDE. THE ASSESSING OFFICER IS DIRECTED TO REDO THE ASSESSMENT ON THE LINES INDICA TED ABOVE IN PARA 5.1 IN ACCORDANCE WITH LAW AND ESTABLISHED PROCEDURE ON SUCH ISSUES AND AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. 8. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED BEFOR E US, ASSESSING OFFICER AFTER VERIFYING BOOKS OF ACCO UNT AND OTHER INFORMATION WAS OF THE VIEW THAT THEY ARE NOT RELIABLE. H ENCE AFTER REJECTING BOOKS OF ACCOUNT HE PROCEEDED TO ESTIMA TING PROFIT AT 12.5% OF THE GROSS CONTRACT RECEIPTS. THAT BEING THE CASE, LEARNED CIT WAS NOT JUSTIFIED IN REVISING THE ASSESSMENT ORDER BY OBSERVING THAT ASSESSING OFFICER HAS NOT VE RIFIED THE BOOKS OF ACCOUNT. IT WAS SUBMITTED ONCE THE BOOKS OF ACC OUNT ARE REJECTED AND PROFIT IS ESTIMATED LEARNED CIT CANN OT AGAIN ITA NO.516 OF 2014 MOGLINEDU VENKATESWARA RAO VIJAY AWADA PAGE 6 OF 9 DIRECT THE ASSESSING OFFICER TO EXAMINE THE ISSUES ARIS ING OUT OF THE SAME BOOKS OF ACCOUNT. IT WAS SUBMITTED, ONCE PROFIT IS ESTIMATED BY ASSESSING OFFICER, THE CIT CANNOT SUBSTITU TE HIS VIEW WITH THAT OF THE ASSESSING OFFICER. IN SUPPORT OF SUCH CONTENTION LEARNED AUTHORISED REPRESENTATIVE RELIED UPO N A NUMBER OF DECISIONS AS REFERRED TO IN THE WRITTEN SUB MISSIONS. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTH ER HAND SUBMITTED BEFORE US THAT THOUGH IT MAY BE A FACT, ASSESSING OFFICER HAS ESTIMATED THE PROFIT AFTER REJEC TING THE BOOKS OF ACCOUNT, BUT HE HAS NOT EXAMINED ISSUES LIKE SOURCE OF CREDIT MADE TO THE BANK ACCOUNT AS WELL AS WHETHER R ECEIPTS FROM VIJAYAWADA MUNICIPAL CORPORATION HAS BEEN DISCL OSED BY THE ASSESSEE IN CONTRACT RECEIPTS. THEREFORE, ASSESSING OFFICER HAVING NOT EXAMINED AND WITHOUT CONDUCTING ANY ENQUI RY ON THESE ISSUES, THE ASSESSMENT ORDER IS ERRONEOUS AND PR EJUDICIAL TO THE INTERESTS OF THE REVENUE. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS ON RECORD AS WELL AS ORDERS OF THE REVENUE AUTHORITIES. WE HAVE ALSO EXAMINED THE DECISI ONS RELIED UPON BY THE LEARNED AUTHORISED REPRESENTATIVE. UNDISPUTEDLY, ASSESSMENT IN CASE OF ASSESSEE WAS COMP LETED ITA NO.516 OF 2014 MOGLINEDU VENKATESWARA RAO VIJAY AWADA PAGE 7 OF 9 BY ESTIMATING THE PROFIT FROM CONTRACT BUSINESS AFTER REJ ECTING THE BOOKS OF ACCOUNT. THEREFORE, ONCE THE BOOKS OF ACC OUNT WERE FOUND TO BE UNRELIABLE, IT IS THE DISCRETION OF TH E ASSESSING OFFICER TO REJECT THE BOOKS OF ACCOUNT AND ESTIMATE PROFI T. THE CIT THEREFORE, CANNOT CONSIDER THE ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVE NUE BY ALLEGING THAT THE ASSESSING OFFICER HAS NOT EXAMINED TH E INDIVIDUAL EXPENDITURES CLAIMED BY THE ASSESSEE. ONC E PROFIT IS ESTIMATED AFTER REJECTING BOOKS OF ACCOUNT, IT TAKES CAR E OF ALL DEFICIENCIES AND DISCREPANCIES FOR WHICH THE BOOKS O F ACCOUNT ARE REJECTED. THEREFORE, ASSESSING OFFICER IS NOT S UPPOSED TO LOOK INTO THE AUTHENTICITY OF THE INDIVIDUAL EXPENDITUR E AGAIN. HOWEVER, AS FAR AS THE SOURCE OF CREDIT MADE INTO THE S AVINGS BANK ACCOUNTS IS CONCERNED, ON A PERUSAL OF THE ASSE SSMENT ORDER IT IS TO BE NOTED THAT THERE IS NOTHING MENTIONED TH EREIN WHICH COULD INDICATE THAT THE ASSESSING OFFICER HAS E XAMINED THE SOURCE OF SUCH CREDIT INTO BANK ACCOUNT. ASSESSEE HAS ALSO NOT PLACED ANY MATERIAL BEFORE US TO INDICATE THAT THE SOURCE OF CREDIT INTO BANK ACCOUNTS WAS EXAMINED BY THE ASSESSIN G OFFICER DURING THE ASSESSMENT PROCEEDINGS. MOREOVER, IN OUR VIEW, THE PAYMENTS RECEIVED FROM VIJAYAWADA MUNICIPAL CORPORATION WHETHER FORMS PART OF CONTRACT RECEIPTS OF RS.77,41,881 ALSO REQUIRES VERIFICATION AS NO MATERIA L HAS BEEN ITA NO.516 OF 2014 MOGLINEDU VENKATESWARA RAO VIJAY AWADA PAGE 8 OF 9 PLACED BEFORE US TO INDICATE THAT IT FORMS PART OF THE GRO SS CONTRACT RECEIPTS OF RS.77,41,881. THEREFORE, IN OUR V IEW, AT LEAST FOR NON CONSIDERATIONS OF THE AFORESAID TWO ISSU ES, THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE DECISION RELIED UPON BY LEARNED AUTHORISED REPRESENTATIVE CANNOT BE APPLIED TO THE FACTS OF THE PRES ENT CASE AS RATIO LAID DOWN THEREIN ARE ON THE BASIS OF P ECULIAR FACTS INVOLVED IN THOSE CASES, HENCE CANNOT BE CONSIDE RED DIVORCED FROM THOSE FACTS. IN VIEW OF THE ABOVE SAID , WE DIRECT THE ASSESSING OFFICER TO EXAMINE THE ISSUES RELATING TO CREDITS IN THE ACCOUNTS WITH STATE BANK OF INDIA AND SYNDICATE BANK AND WHETHER RECEIPTS FROM VIJAYAWADA MUNICIPAL CORPOR ATION HAS BEEN SHOWN BY THE ASSESSEE IN HIS RETURN OF INCOM E. ASSESSING OFFICER MUST AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ISSUES. THE ORDER OF LEARNED CIT IS MODIFIED TO THE EXTENT INDICATED ABOVE. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 5 TH MARCH, 2015. SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 5 TH MARCH,2015 PVV/SPS CAMP: VISAKHAPATNAM, ITA NO.516 OF 2014 MOGLINEDU VENKATESWARA RAO VIJAY AWADA PAGE 9 OF 9 COPY TO 1 SHRI MOGLINEDU VENKATESWARA RAO, F-4 VANDANA APARTMENT, PYDAIAH STREET, LABBIPET VIJAYAWADA 533010 2 THE COMMISSIONER OF INCOME TAX VIJAYAWADA 3 DEPARTMENTAL REPRESENTATIVE ITAT VISAKHAPATNAM 4 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM