M/s Metrik Infraprojects Private Limited , Bangalore V. Assistant Commissioner of Income Tax Circle-4(1)(2), Bangalore

ITA 52/BANG/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5568 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 06-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRA
• Keywords: Opportunity of being heard; Principle of natural justice; Set aside
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA No. 52/Bang/2019 Assessment Year : 2012-13 M/s. Metrik Infraprojects Pvt. Ltd., Solus, Floor – 11, No. 2, 1 st Cross, J C Road, Bangalore – 560 027. PAN: AAGCM8605C Vs. The Assistant Commissioner of Income Tax, Circle – 4 (1)(2), Bangalore. APPELLANT RESPONDENT Assessee by : Shri S.V. Ravishankar, Advocate Revenue by : Shri Priyadarshi Mishra, Addl. CIT (DR) Date of Hearing : 24-03-2022 Date of Pronouncement : 31-03-2022 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal has been filed by assessee against the order dated 24.08.2018 passed by the Ld.CIT(A)-4, Bangalore for Assessment Year 2012-13 on following grounds of appeal. “1. The order of the learned CIT(A) confirming the disallowance of loss of Rs. 1,65,61,719/- in so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the case. 2. The appellant denies itself liable to an income of Rs. 22,46,399/- against the declared loss of Rs. 1,43,15, 320/-, on the facts and circumstances of the case. 3. The learned CIT(A) was not justified in law and on facts, in appreciating that the appellant has complied with the Page 2 of 7 ITA No. 52/Bang/2019 provisions of AS 7 as prescribed and that the expenses recognised was in conformity of the accounting standards prescribed, on the facts and circumstances of the case. 4. The authorities below were not justified in appreciating that the appellant has followed the accrual basis of accounting in the computation of business income, on the facts and circumstances of the case. 5. The learned CIT(A) was not justified in law and on facts in appreciating that the appellant has recognised the revenue in the following years upon receipt and that the same were revenue neutral, on the facts and circumstances of the case. 6. The learned CIT(A) was not justified in law and on facts in appreciating that the AO has made a disallowance on a wrong appreciation of the accounting standards and the assessment order ought to have been set aside as bad in law, on the facts and circumstances of the case. 7. The Learned CIT(A) was not justified in appreciating that the order of assessment has been passed in violation of the principles of natural justice, i.e. without considering the submissions of the appellant and in undue haste and hence the whole process has been vitiated and for these reasons the order passed ought to have been set aside, on the facts and circumstances of the case. 8. The appellant denies the liability to pay interest under section 234B and section 234D of the Act in view of the fact that there is no liability to additional tax as determined by the learned assessing officer. Without prejudice the rate, period and on what quantum the interest has been levied are not discernable from the order and hence deserves to be cancelled on the facts and circumstances of the case. 9. The Appellant craves leave to add, alter, substitute and delete any or all of the grounds of appeal urged above. 10. For the above and other grounds to be urged during the hearing of the appeal the Appellant prays that the appeal be allowed in the interest of equity and justice.” 2. Brief facts of the case are as under: The assessee is a company engaged in construction business, development, sales, management and operation of housing Page 3 of 7 ITA No. 52/Bang/2019 projects and other related activities. For your under consideration assessee filed return of income declaring a loss of ₹1,43,15,320/-. The case was selected for scrutiny and statutory notices were issued to assessee in response to which representative of assessee appeared before the Ld.AO and file requisite details is called for. The Ld.AO recomputed the income in the hands of assessee as under: 3. The Ld.AO was of the opinion that assessee followed percentage completion method for construction contracts and that revenue was to be recognised upon the project reaching the threshold limit which in the present case was not achieved on the date of the balance sheet. The Ld.AO disallowed the business loss claimed by the assessee. The expenses claimed were set off in proportion of the completion that was recognised in the subsequent years by the Ld.AO. Aggrieved by the order of Ld.AO, the assessee preferred appeal before the Ld.CIT(A). Page 4 of 7 ITA No. 52/Bang/2019 4. The Ld. CIT(A) after considering the submissions filed by assessee observed and held as under: reproduce para 7 at page 6-8 of the CIT(A) order Page 5 of 7 ITA No. 52/Bang/2019 Page 6 of 7 ITA No. 52/Bang/2019 Aggrieved by the order of the Ld. CIT(A), assessee filed appeal before the Tribunal. At the outset Ld.AR submitted that against assessee corporate insolvency resolution process has been passed and a moratorium have been drawn. The Ld.DR submitted that the issue may be remanded to the Ld.AO under such circumstances. We have perused submissions advanced by both sides based on the records placed before us. 5. The assessee submitted before the authorities below that, during the year under consideration the project has not reached the threshold limit wherein, income could have been offered. It is submitted that it is from assessment year 2013-14, that revenue has been recognized, as minimum threshold was achieved. We note that the Ld.AO proceeded on the premise that assessee claimed the expenses without offering corresponding revenue to tax. The Ld.AO applied accounting standard 7, whereas assessee followed accounting standard 9. 6. In our view the Ld.AO needs to verify the submissions of assessee in accordance with law and to consider the claim for year under consideration in the light of evidences / documents filed by assessee. Page 7 of 7 ITA No. 52/Bang/2019 Accordingly we remand this issue back to the Ld.AO to re- adjudicate the issue in accordance with law by granting proper opportunity of being heard to assessee. Accordingly grounds raised by assessee stands allowed for statistical purposes. In the result appeal filed by assessee stands allowed for statistical purposes. Order pronounced in the open court on 31 st March, 2022. Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 31 st March, 2022. /MS / Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, ITAT, Bangalore