Srinivasa Rao Kalagara, Nizamabad, Hyderabad V. DCIT, Circle-1, Nizamabad, Nizamabad

ITA 726/HYD/2015

• Counselvise Citation: 72622514 RSA 2015
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 28-05-2015
• Court: TRIBUNAL
• Department Lawyers: S MO HARANA
• Assessee Lawyers: K A SAI PRASAD
• Section: 143(3); 142(1); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 726/HYD/2015 ASSESSMENT YEAR: 2010-11 SRI SRINIVASA RAO KALAGARA, NIZAMABAD [PAN: AJAPK4065A] VS THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, NIZAMABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.A. SAI PRASAD, AR FOR REVENUE : SHRI S. MOHARANA, DR DATE OF HEARING : 27-08-2015 DATE OF PRONOUNCEMENT : 18-09-2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF PRINCIPAL COMMISSIONER OF INCOME TAX-5, HYDERABAD DATED 23-03 -2015. ASSESSEE IS QUESTIONING ASSUMING OF JURISDICTION U/S. 263 OF THE INCOME TAX ACT [ACT] BY THE PR.CIT ON THE ISSUES WHICH WERE EXAMIN ED BY THE ASSESSING OFFICER (AO) IN THE COURSE OF ASSESSMENT PROCEEDING S. 2. ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINES S OF CIVIL CONTRACTS FILED RETURN OF INCOME ADMITTING AN INCOME OF RS. 5 2,98,910/- DURING THE YEAR. IN THE ASSESSMENT PROCEEDINGS U/S. 143(3), A O EXAMINED THE CASH DEPOSITS IN THE BANK ACCOUNT AND ALSO TURNOVERS AS SHOWN BY ASSESSEE ON THE BASIS OF THE TDS CERTIFICATES IN THE BOOKS O F ACCOUNTS AND ARRIVED I.T.A. NO. 726/HYD/2015 SRI SRINIVASA RAO KALAGARA :- 2 -: AT THE GROSS CONTRACT RECEIPTS AT RS. 13.22 CRORES. REJECTING THE BOOKS OF ACCOUNTS, AO ESTIMATED INCOME AT 5%, AS THESE CO NTRACT RECEIPTS ARE SUB-CONTRACT BASIS. ACCORDINGLY, THE BUSINESS INCOM E WAS DETERMINED AT RS. 66,11,712/- AND AFTER CONSIDERING OTHER INCOMES AND DEDUCTIONS, TOTAL INCOME WAS ASSESSED AT RS. 69,16,742/- VIDE O RDER DT. 13-03-2013. LD. PR.CIT NOTICED THAT AS PER THE AIR TRANSACTIONS DETAILS PLACED ON RECORD, THERE APPEARS TO BE TWO SB A/CS, ONE JOINTL Y HELD BY ASSESSEE ALONG WITH SMT. K. RAJYALAXMI AND SECOND ONE IN THE NAME OF ASSESSEE HIMSELF. HE NOTICED THAT THERE ARE DEPOSITS OF SIM ILAR AMOUNT OF RS. 51.36 LAKHS AND AO HAS EXAMINED ONLY ONE ACCOUNT AN D HAS NOT EXAMINED THE SECOND ACCOUNT. THEREFORE, THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE OTHER ISSUE TAKEN UP BY THE PR.CIT WAS THAT ASSESSEE RECEIVED TOTAL CONTRACT RE CEIPTS TO THE TUNE OF RS. 15.52 CRORES, WHEREAS, THE EXTRA GROSS RECEIPTS CREDIT FROM L&T AND MEGHA ENGINEERING & INFRA WERE EXCLUDED. AO HAS GI VEN CREDIT FOR THE ENTIRE TDS AMOUNT OF RS. 16,40,698/- INSTEAD OF PRO PORTIONATE CREDIT. THERE SEEMS TO BE EXCESS CREDIT OF TDS WHICH WAS NO T ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. T HIRD ISSUE OF DISALLOWANCE U/S. 40(A)(IA) WERE HOWEVER, DROPPED B Y THE LD. PR.CIT. 3. ON THE ABOVE TWO ISSUES, IT WAS CONTENDED BY ASS ESSEE THAT THERE WAS ONLY ONE SB A/C WITH AXIS BANK AND A CERTIFICAT E FROM BANK CONFIRMING THAT THERE WAS ONLY ONE ACCOUNT IN THE J OINT NAME WITH ASSESSEES WIFE WAS FILED. THE DEPOSIT OF RS. 51.3 6 LAKHS IN THE SB A/C WAS PROPERLY EXPLAINED DURING THE PROCEEDINGS AND T HEREFORE, THERE WAS NO ERROR IN THE ORDER OF AO. LD. PR.CIT HOWEVER, D ID NOT AGREE THAT AO CALLED FOR INFORMATION VIDE NOTICE U/S. 142 DT. 03- 07-2012 ON OTHER ISSUES AND HAS NOT CALLED FOR CLARIFICATION ON THE SAVINGS BANK A/C. HE ALSO DID NOT AGREE STATING THAT THERE WAS NO CERTIF ICATE OF THE BANK AS CONTESTED BY THE AR ON THE RECORD. THEREFORE, HE W AS OF THE OPINION THAT ASSESSMENT ORDER WAS FINALIZED WITHOUT PROPER EXAMI NATION. ON THE ISSUE OF EXCESS CREDIT OF TDS, LD. PR.CIT WAS OF TH E OPINION THAT AO HAS I.T.A. NO. 726/HYD/2015 SRI SRINIVASA RAO KALAGARA :- 3 -: ERRONEOUSLY GIVEN CREDIT AND AS ASSESSEE CONCEDED T HE DIFFERENCE OF RS. 11,535/-. AO OVERLOOKED THIS AMOUNT, EVEN THOUGH I T IS NEGLIGIBLE AMOUNT. ACCORDINGLY, HE DIRECTED THE AO TO DO THE ASSESSMENT AFRESH AFTER SETTING ASIDE THE ORDER U/S. 263. 4. ASSESSEE IS AGGRIEVED AND RAISED THE FOLLOW ING GROUNDS: 2. THE LEARNED COMMISSIONER OF INCOME TAX FAILED TO APPROPRIATE THE FACT THAT THE ASSESSING OFFICER HAS ALREADY EXAMINED ALL THE ISSUES RAISED IN THE PROCEEDINGS U /S. 263 AND HENCE EXEMPTION OF JURISDICTION U/S. 263 IS NOT JUS TIFIED. 3. THE LEARNED COMMISSIONER OF INCOME TAX FAILED TO APPRECIATE THE FACT THE APPELLANT IS HAVING ONLY ON E BANK A/C AND ASSUMPTION OF JURISDICTION ON THE ISSUE OF DEPO SITS IN ONE MORE BANK A/C IS BASED ON ASSUMPTION AND SUSPICION ONLY AND HENCE LEARNED COMMISSIONER OF INCOME TAX IS NOT JUS TIFIED IN HOLDING THAT THE ORDER U/S. 143(3) ERRONEOUS. 4. THE LEARNED COMMISSIONER OF INCOME TAX IS NOT JU STIFIED IN HOLDING THAT THE ASSESSING OFFICER HAD GIVEN EXC ESS TDS CREDIT. 5. THE LEARNED COMMISSIONER OF INCOME TAX FAILED TO APPRECIATE THE FACT THAT THERE IS NO LOSS OF REVENU E SINCE THE MOBILIZATION ADVANCES WERE PART OF THE TURNOVER IN THE SUBSEQUENT ASSESSMENT YEAR. 5. LD. COUNSEL RELYING ON THE DOCUMENTS SUBMITTED B EFORE THE PR.CIT SUBMITTED THAT AO HAS ISSUED A SPECIFIC SHOW CAUSE NOTICE ON 04-02- 2013 ASKING FOR CLARIFICATION ON THE AIR DATA ABOUT DEPOSIT OF RS. 51,36,000/- AND REPLY BY ASSESSEES COUNSEL ON 25-0 2-2013. IT WAS CLARIFIED THAT THERE IS ONLY ONE ACCOUNT, A/C NO. 2 91010100018285, WHICH IS IN THE JOINT NAME ALONG WITH ASSESSEES SP OUSE SMT. K. RAJYALAXMI AND THESE TRANSACTIONS WERE ALREADY REFL ECTED IN THE BOOKS OF ACCOUNTS. COPY OF THE BANK ACCOUNT WAS ALSO FURNIS HED TO AO. IT IS SUBMITTED IN THE COURSE OF PROCEEDINGS U/S. 263, AS SESSEE FILED ANOTHER CERTIFICATE DT. 09-02-2015 BEFORE THE LD. PR.CIT ST ATING THAT THERE IS ONLY ONE ACCOUNT AND ASSESSEE IS NOT MAINTAINING ANY OTH ER SB A/C OR I.T.A. NO. 726/HYD/2015 SRI SRINIVASA RAO KALAGARA :- 4 -: CURRENT A/C. LD. PR.CIT MISTOOK THE CERTIFICATE FI LED BEFORE HIM AS THAT ON ONE FILED BEFORE AO TO STATE THAT IT WAS NOT ON RECORD, WHEREAS IT IS ONLY CLARIFICATION GIVEN BEFORE THE AO. IT WAS FUR THER SUBMITTED THAT AO DEPUTED INSPECTOR TO THE BANK AND ASCERTAINED THAT THERE IS ONLY ONE ACCOUNT. LD. COUNSEL ALSO PLACED ON RECORD THE COP IES OF AIR TRANSACTIONS STATED TO HAVE BEEN RECEIVED BY THE DE PARTMENT. IT WAS POINTED OUT THAT BOTH THE TRANSACTION SLIPS REFERRE D TO THE SAME ACCOUNT AND SAME RRR NUMBER AND THE SAME NAMES OF JOINT HO LDERS. IN ONE SLIP IT WAS SHOWN AS KALAGARA SRINIVASA RAO, AS PARTY O NE, WHEREAS IN OTHER SLIP, IT WAS SHOWN AS KALAGARA RAJYALAXMI AS PARTY ONE. THE PAN REFLECTED THERE IS THAT OF ASSESSEE AND STATEMENT W AS GENERATED ON 31-08-2010 WITH SAME AIR FILER TAN OF MUMU01693G. IT WAS SUBMITTED THAT THE SAME TRANSACTION WAS REPORTED TWICE BY THE BANK, ONE IN THE NAME OF ASSESSEE AND ANOTHER IN THE NAME OF ASSESSE ES WIFE, BEING A JOINT A/C AND THIS WAS MISTAKEN BY THE PR.CIT AS TH AT OF TWO ACCOUNTS. IT WAS SUBMITTED THAT THERE IS ONLY ONE ACCOUNT WHICH THE AO HAS ENQUIRED AND ACCEPTED AND THE AMOUNT OF DEPOSIT ALSO BEING S AME AND WAS ACCOUNTED IN THE BOOKS OF ACCOUNTS, NO ACTION WAS T AKEN BY THE AO. WITH REFERENCE TO THE TURNOVERS, IT WAS SUBMITTED T HAT AO HAS EXAMINED THE ISSUE AND IN THE ASSESSMENT ORDER CLEARLY REDUC ED THE MOBILIZATION ADVANCE OF EXTRA GROSS RECEIPTS CREDIT BY DUPLICATI ON OF TDS ON THE SAME AMOUNT AND THEN ARRIVED AT THE GROSS RECEIPTS AT RS . 13,22,25,424/- AND 5% PROFIT WAS ESTIMATED AT RS. 66,11,712/-. WHILE EXPLAINING THAT THERE IS NO PREJUDICE CAUSED TO REVENUE, LD. COUNSEL SUBM ITTED THAT BEFORE CIT IT WAS SUBMITTED THAT EXTRA CREDIT AMOUNT CAN A T BEST BE CONSIDERED AS TURNOVER, IF ASSESSEES CONTENTIONS ARE NOT ACCE PTED BUT HAS NOT ADMITTED THAT THERE IS A SHORT COMPUTATION BY RS. 1 1,535/-. IT WAS SUBMITTED THAT ORDER OF PR.CIT IS NOT AS PER THE FA CTS AND SINCE AO EXAMINED THE ISSUE, NO PROCEEDINGS U/S 263 CAN BE M ADE. LD. DR. HOWEVER, DEFENDED THE ORDERS OF PR.CIT. I.T.A. NO. 726/HYD/2015 SRI SRINIVASA RAO KALAGARA :- 5 -: 6. WE HAVE EXAMINED THE ISSUE AND CONSIDERED THE RI VAL CONTENTIONS AND ALSO PERUSED THE DOCUMENTS PLACED ON RECORD ALO NG WITH CASE LAW RELIED UPON. AS FAR AS AIR DATA IS CONCERNED, THER E IS ONLY CASH DEPOSITS OF RS. 51,36,000/- IN THE A/C WITH AXIS BANK WHICH WAS ASSESSEES BUSINESS ACCOUNT, THE TRANSACTIONS OF WHICH WERE AL READY ACCOUNTED FOR. AS CAN BEEN SEEN FROM THE DATA SLIPS RECEIVED BY TH E AO FROM THE BANK, IT REFERS TO THE SAME BANK ACCOUNT AND THE TRANSACT ION AMOUNT BUT THE DETAILS WERE SENT TWICE, AS ASSESSEES ACCOUNT IS A JOINT ACCOUNT WITH HIS WIFE. IN FACT AO ISSUED A SHOW CAUSE NOTICE LETTER DT. 04-02-2013, FOR WHICH ASSESSEE REPLIED ON 25-02-2013. LD. PR.CIT W AS NOT CORRECT IN STATING THAT AO HAS NOT EXAMINED VIDE THE NOTICE U/ S. 142(1) DT. 03-07- 2012. HE SIMPLY IGNORED THE SUBSEQUENT NOTICE AVAIL ABLE ON RECORD AND THEREFORE, WE ARE OF THE OPINION THAT THE OPINION E XPRESSED BY THE PR.CIT THAT AO HAS NOT EXAMINED SECOND BANK ACCOUNT IS NOT CORRECT, BOTH ON FACTS AND/OR ON LAW. SINCE THE ISSUE WAS EXAMINED BY THE AO IN THE COURSE OF SCRUTINY PROCEEDINGS AND HAS CONCLUDED TH AT THERE IS ONLY ONE ACCOUNT WHICH WAS ALREADY ACCOUNTED BY ASSESSEE, NO PREJUDICE IS CAUSED TO REVENUE, AT LEAST IN ASSESSEES CASE. TH EREFORE, PR.CIT IS NOT CORRECT IN EXERCISING JURISDICTION ON THIS ISSUE. 7. COMING TO THE EXCESS CREDIT, AO HAD EXAMINED THE TURNOVER IN THIS YEAR AND REDUCED THE MOBILIZATION ADVANCE AND ALSO THE TURNOVER CONSIDERED TWICE FOR DEDUCTION OF TAX BY M/S. ME GHA ENGINEERING & INFRA AND ACCORDINGLY DETERMINED THE GROSS RECEIPTS . HE ALSO CONCLUDED THE ASSESSEE ACCOUNTED THE TURNOVER IN LATER AY. 20 11-12 AND GAVE CREDIT FOR THE TAXES ACCORDINGLY. SINCE THIS ISSUE WAS ALSO EXAMINED AND DETERMINED BY THE AO, WE DO NOT FIND ANY REASON TO HOLD THAT ORDER IS ERRONEOUS. PR.CIT HIMSELF HAS TAKEN THE EXCESS CRE DIT AS TURNOVER, DIRECTED TO BE ADDED AS ESCAPED TURNOVER, WHICH IN OUR VIEW IS NOT CORRECT. MOREOVER, AN ISSUE WHICH WAS ALREADY EXAM INED BY THE AO AND APPLICATION OF MIND BY THE AO BEFORE PASSING THE AS SESSMENT ORDER CANNOT BE RE-EXAMINED BY PR.CIT IN THE COURSE OF PR OCEEDINGS U/S. 263. I.T.A. NO. 726/HYD/2015 SRI SRINIVASA RAO KALAGARA :- 6 -: 8. IN THE CASE OF SPECTRA SHARES & SCRIPS PVT L TD., VS. CIT [354 ITR 35 (AP)], HONBLE JURISDICTIONAL HIGH COURT HAS HELD AS FOLLOWS: IF THERE WAS AN INQUIRY, EVEN INADEQUATE THAT WOUL D NOT BY ITSELF GIVE OCCASION TO THE COMMISSIONER TO PASS OR DERS U/S 263 MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MA TTER. IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTI ON WOULD BE OPEN. AN ASSESSMENT ORDER MADE BY THE INCOME TAX OFFICER CANNOT BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BEC AUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTE N MORE ELABORATELY. THERE MUST BE SOME PRIMA FACIE MATERIA L ON RECORD TO SHOW THAT THE TAX WHICH WAS LAWFULLY EXIGIBLE HAS N OT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION, A LESSER TA X THAN WAS JUST, HAS BEEN IMPOSED. THE POWER OF THE COMMISSIONER U/S 263(1) IS NOT LIMITED ONLY TO THE MATERIAL WHICH WAS AVAILABLE BE FORE THE AO AND IN ORDER TO PROTECT THE INTERESTS OF THE REVENUE, T HE COMMISSIONER IS ENTITLED TO EXAMINE ANY OTHER RECORDS WHICH ARE AVA ILABLE AT THE TIME OF EXAMINATION BY HIM AND TO TAKE INTO CONSIDE RATION EVEN THOSE EVENTS WHICH AROSE SUBSEQUENT TO THE ORDER OF THE ASSESSMENT. 9. THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL COMPANY LTD., VS. CIT [243 ITR 83 (SC)] HELD THAT T HE PHRASE PREJUDICIAL TO THE INTEREST OF REVENUE HAD TO BE READ IN CONJU NCTION WITH AN ERRONEOUS ORDER PASSED BY AO. EVERY LOSS OF REVENU E AS A SEQUENCE OF ORDER OF THE AO CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE. FOR EXAMPLE, WHEN AN AO ADOPTED ONE OF TH E COURSE PERMISSIBLE IN LAW, AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHETHER TWO VIEWS WERE POSSIBLE AND THE AO TAKEN ONE VIEW W HICH THE CIT DID NOT AGREE, IT COULD NOT BE TREATED AS ERRONEOUS ORD ER PREJUDICIAL TO THE INTEREST OF REVENUE, UNLESS THE VIEW TAKEN BY THE A O WAS UN-SUSTAINABLE IN LAW. 10. JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS . ANAND FOOD PRODUCTS [39 TAXMANN.COM 187 (AP) (HC)] WHERE THE AO HAD MADE ENQUIRIES ON ISSUES UNDER CONSIDERATION AND ASSESSE E HAD GIVEN DETAILED EXPLANATION BY THE LATER FURNISHING DATA, THE HON'B LE COURT CONCLUDED I.T.A. NO. 726/HYD/2015 SRI SRINIVASA RAO KALAGARA :- 7 -: THAT THE DECISION OF THE AO CANNOT BE PREJUDICIAL T O THE INTEREST OF REVENUE, SIMPLY BECAUSE HE DID NOT MAKE DETAILED DI SCUSSION. IN THE CASE BEFORE US, AO HAS ENQUIRED ABOUT THE TRANSACTI ONS IN THE AIXS BANK ACCOUNT AND ON THE TURNOVER, HE HAS MADE DETAILED D ISCUSSION IN THE ORDER. IN VIEW OF THIS, FOLLOWING THE PRINCIPLES L AID DOWN ABOVE AND ON THE FACTS, WE ARE OF THE OPINION THAT EXERCISING JU RISDICTION U/S. 263 BY THE PR.CIT IS NOT WARRANTED ON THE FACTS OF THE CAS E. ACCORDINGLY, WE SET ASIDE THE ORDER OF PR.CIT PASSED U/S. 263 AND ALLOW ASSESSEES APPEAL. 11. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH SEPTEMBER, 2015 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 18 TH SEPTEMBER, 2015 TNMM COPY TO : 1. SRI SRINIVASA RAO KALAGARA, 6-70, DHARMRAM (B) V ILLAGE, NIZAMABAD. C/O. CH. PARTHASARATHY & CO., 1-1-298/2 /B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST.NO.1, ASHOKNAGAR, HYDERABAD. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-I, NIZAMABADA. 3. PR.CIT-5, HYDERABAD. 4. D.R. ITAT, HYDERABAD. 5. GUARD FILE.