Vijaya Bhavani Constructions Pvt.Ltd., Hyd, Hyderabad V. DCIT, Circle-3(3), Hyd, Hyderabad

ITA 666/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5882 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-12-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 09-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Assessee Lawyers: P MURALI MOHANA RAO
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 666/HYD/2016 ASSESSMENT YEAR: 2008-09 VIJAYA BHAVANI CONSTRUCTIONS P. LTD., HYDERABAD. PAN AABCV 6770A VS. DY. COMMISSIONER OF INCOME- TAX, CIRCLE 2(3), HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. MURALI MOHANA RAO REVENUE BY : SMT. U. MINI CHANDRAN DATE OF HEARING : 27-12-2016 DATE OF PRONOUNCEMENT : 30-12-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS IS AN APPEAL OF THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (A) 5 , HY DERABAD, DATED 31/12/2015, FOR AY 2008-09. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS A PRIVATE LTD. COMPANY ENGAGED IN THE BUSINESS OF SUB-CONTRAC TS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAD UNDERTAKEN WORK CONTRACTS FOR ROADS, BRIDGES AND CANAL WORKS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED B OOKS, BILLS AND VOUCHERS WHICH HAVE BEEN SUBJECTED TO AUDIT UNDER T HE COMPANIES ACT, 1956 AND SECTION 44AB OF THE IT ACT. THE AO NO TICED THAT SOME OF THE BILLS/VOUCHERS SO PRODUCED WERE SELF-MADE. A CCORDING TO THE ASSESSEE, SINCE THE WORK HAD BEEN UNDERTAKEN IN REM OTE AREAS AND MOST OF THE LABOUR WAS ILLITERATE, HENCE, BILLS/VOU CHERS WERE SELF MADE. THE AO REJECTED THE BOOKS OF ACCOUNT U/S 145( 3) AND 2 ITA NO. 666/H/16 VIJAYA BHAVANI CONSTRUCTIONS P. LTD. ESTIMATED THE INCOME AT 9% OF GROSS CONTRACT RECEIP TS BEFORE ALLOWING DEPRECIATION. FURTHER, THE AO NOTICED THAT THE ASSE SSEE HAD ALSO NOT OFFERED TO TAX INTEREST INCOME ON DEPOSITS HELD WIT H SBI AND PNB AND THE SAME HAD BEEN BROUGHT TO TAX BY HIM REDUCING TH E LOSS ADMITTED BY THE ASSESSEE TO RS. 10,51,909/-. 3. AS THE ASSESSEE DID NOT OFFER TO TAX INTEREST IN COME ON DEPOSITS HELD WITH SBI AND PNB, THE AO INITIATED PENALTY PRO CEEDINGS U/S 271(1)(C) ON THE GROUND THAT THE ASSESSEE HAS CONCE ALED ITS INCOME. ACCORDINGLY, THE AO LEVIED MINIMUM PENALTY OF RS. 5 ,07,412/- ON THE AMOUNT OF TAX SOUGHT TO BE EVADED. 4. WHEN THE ASSESSEE CARRIED THE MATTER IN APPEAL B EFORE THE CIT(A), THE CIT(A) CONFIRMED THE PENALTY LEVIED BY THE AO. 5. AGGRIEVED BY THE ACTION OF THE CIT(A) IN CONFIRM ING THE PENALTY LEVIED BY THE AO, THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. CIT (A)-S, HYDERABAD IS ER RONEOUS BOTH ON FACTS AND IN LAW AND IN UPHOLDING THE PENALTY LE VIED OF RS. 5,07,4121 U/S 271(1)(C) OF THE LT. ACT, 1961. 2. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THAT P ENALTY U/S 271(1)(C) OF THE ACT CANNOT BE LEVIED IN RESPECT OF DIFFERENTIAL INCOME THAT ARISES ON ESTIMATION OF PROFIT AT A HIG HER RATE. 3. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT ME RE ACCEPTANCE OF THE APPELLANT IN THE ASSESSMENT FOR E STIMATION OF PROFIT AT A HIGHER RATE DOES NOT ENTAIL THE APPELLA NT FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 4. THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT TH E APPELLANT HAS NEITHER CONCEALED ANY INCOME NOR FURNISHED ANY INAC CURATE PARTICULARS OF INCOME. 5. THE LD. CIT(A) WHILE CONFIRMING THE PENALTY, ERR ED ON HOLDING THAT EXPLANATION -1 TO SECTION 271(1)(C) OF THE ACT IS RELEVANT FOR THE PURPOSE OF THE APPELLANT'S CASE. 3 ITA NO. 666/H/16 VIJAYA BHAVANI CONSTRUCTIONS P. LTD. 6. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT EX PLANATION -1 TO SEC.271(1)(C) OF THE ACT IS NOT APPLICABLE TO TH E APPELLANT'S CASE ON FACTS. 7. THE LD. CIT (A) ERRED IN NOT DISTINGUISHING THE CASE LAWS RELIED UPON BY THE APPELLANT. 8. THE LD. CIT (A) WHILE CONFIRMING THE PENALTY U/S 271(1)(C) OF THE ACT ERRED IN RELYING ON THE CASE LAWS WHICH ARE DISTINGUISHABLE ON FACTS. 9. THE APPELLANT MAY ADD, ALTER OR MODIFY OR SUBSTI TUTE ANY OTHER POINT TO THE GROUNDS OF APPEAL AT ANY TIME BEFORE O R AT THE TIME OF HEARING OF THE APPEAL. 5.1 THE ASSESSEE FILED A PETITION REQUESTING FOR A DMISSION OF THE ADDITIONAL GROUNDS, RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD . VS. CIT, [1998] 229 ITR 383 (SC), WHICH ARE AS UNDER: 11. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE AO ERRED IN NOT MENTIONING EXPLICITLY WHETHER PENAL TY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF I NACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME. 12. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT T HAT OMISSION OF ASSESSING OFFICER TO EXPLICITLY MENTION THAT PEN ALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF INACCURATE PA RTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER L IABLE FOR CANCELLATION. 6. AS THE SAID ADDITIONAL GROUNDS ARE LEGAL GROUND S, WHEREIN, THE FACTS ARE ON RECORD AND FACTS DO NOT REQUIRE FRESH INVESTIGATION, FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO., LIMITED VS. CIT 229 ITR 383 (SC), WE ADMIT THE SAID ADDITIONAL GROUNDS OF ASSESSEE. 7. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS BY ISSUE OF A NOTICE U/S 274 R.W.S. 271(1)(C) ON 20.12.2010. HE SUBMITTED THAT W HILE ISSUING THE SAID NOTICE, THE ASSESSING OFFICER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CONCEALMENT OF INCOME OR FOR FURNISHI NG OF INACCURATE 4 ITA NO. 666/H/16 VIJAYA BHAVANI CONSTRUCTIONS P. LTD. PARTICULARS OF INCOME. THEREFORE, THE NOTICE IS NOT VALIDLY ISSUED. CONSEQUENTLY, THE ORDER PASSED U/S 271(1)(C) ALSO I S NOT VALID. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC). 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 9. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SS AS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC) WHEREIN THE APEX COURT UPHELD THE DECISION OF THE HONBLE HIGH COURT, IN W HICH, THE HONBLE HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL AND DISMISSED THE APPEAL OF THE REVENUE, WHO CAME IN APPEAL AGAINST T HE ORDER OF THE TRIBUNAL. THE TRIBUNAL RELYING ON A DECISION OF KA RNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACT ORY, [2013] 359 ITR 565/210 ALLOWED THE APPEAL OF THE ASSESSEE HOLD ING THAT NOTICE ISSUED BY ASSESSING OFFICER U/S 274 READ WITH SECTI ON 271(1)(C) WAS BAD IN LAW, AS IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) PENALTY PROCEEDINGS HAD BEEN INITIATED, I.E. WHETHE R FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME. 9.1 IN THE CASE UNDER CONSIDERATION, ON PERUSAL OF THE SHOW CAUSE NOTICES ISSUED BY THE ASSESSING OFFICER U/S 274 R.W .S. 271(1)(C) OF THE IT ACT, 1961, DATED 20/12/2010, IT IS SEEN THAT TH E ASSESSING OFFICER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CO NCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, AS PER THE RATIO LAID DOWN BY THE HONBL E SUPREME COURT IN THE CASE OF SSAS EMERALD MEADOWS, THE NOTICE ISSU ED BY THE ASSESSING OFFICER IS NOT VALID AND CONSEQUENTLY, TH E ORDER PASSED U/S 5 ITA NO. 666/H/16 VIJAYA BHAVANI CONSTRUCTIONS P. LTD. 271(1)(C) IS ALSO NOT VALID. HENCE, WE SET ASIDE TH E ORDER OF THE CIT(A) AND QUASH THE ORDER PASSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. ACCORDINGLY, THE APPEAL OF TH E ASSESSEE IS ALLOWED. 10. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER AC COUNTANT MEMBER HYDERABAD, DATED: 30 TH DECEMBER, 2016 KV COPY TO:- 1) M/S VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., C/O SHRI P. MURALI & CO.,CAS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500 082 2) DCIT, CIRCLE 3(3), HYD. 3) CIT(A) - 5, HYDERABAD 4 PR. CIT - 5, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE