M/s Y.V.R & Co., Visakhapatnam V. THE Addl. CIT., Circle - 5(1), Visakhapatnam

ITA 727/VIZ/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1194 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 20-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M NARAYANA RAO
• Assessee Lawyers: C V S MURTHY
• Keywords: Assessment record
• Section: 143(3); 54; 154; 15

Judgement Text

ITA NO.727/VIZAG/2013 M/S. Y.V.R. & CO., VISAKHAPATNAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.727/VIZAG/2013 ( / ASSESSMENT YEAR: 2008-09) M/S. Y.V.R. & CO. VISAKHAPATNAM VS. ADDL. CIT, CIRCLE - 5(1) VISAKHPATNAM [PAN: AAAFY1642E ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI C.V.S. MURTHY, AR / RESPONDENT BY : SHRI M. NARAYANA RAO, DR / DATE OF HEARING : 12.04.20 16 / DATE OF PRONOUNCEMENT : 06.05.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A), VISAKHAPATNAM DATED 18.10.2013 AND IT PERTA INS TO THE ASSESSMENT YEAR 2008-09. ITA NO.727/VIZAG/2013 M/S. Y.V.R. & CO., VISAKHAPATNAM 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSM ENT OF THE ASSESSEE CASE HAS BEEN COMPLETED U/S 143(3) OF THE INCOME TA X ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') ON 22.12.2010. A T THE TIME OF COMPLETION OF ASSESSMENT U/S 143(3) OF THE ACT, THE A.O. MADE AN ADDITION OF ` 17,76,410/- TOWARDS DISALLOWANCE OF LABOUR EXPENSE S. THEREAFTER, THE A.O. ISSUED A NOTICE U/S 154 OF THE ACT AND PROPOSED TO RECTIFY THE ORDER. THE A.O. ISSUED THE NOTICE WITH THE OBSERVATION THAT WHILE COMPLETING THE ASSESSMENT U/S 143(3) OF THE A CT, AN AMOUNT OF ` 48,59,340/- WAS DETERMINED IS ASSESSED INCOME AFTER MAKING AN ADDITION OF ` 17,76,410/- TOWARDS EXCESS CLAIM OF LABOUR EXPENSE S FOR WHICH NO BILLS & VOUCHERS ARE PRODUCED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED THAT THE AS SESSEE HAD AGREED FOR 20% DISALLOWANCE OF TOTAL LABOUR EXPENSES OF ` 1,58,74,000/-. HOWEVER, WHILE FINALIZING THE ASSESSMENT, BY MISTAK E ONLY AN ADDITION OF ` 17,76,410/- WAS MADE. THEREFORE, OPINED THAT THERE WAS A MISTAKE APPARENT FROM THE RECORDS IN DISALLOWANCE OF LABOUR EXPENDITURE WHICH NEEDS TO BE RECTIFIED U/S 154 OF THE ACT. AFTER CO NSIDERING THE RELEVANT EXPLANATIONS OF THE ASSESSEE, THE A.O. HAS PASSED O RDER U/S 154 OF THE ACT AND DETERMINED TOTAL INCOME OF ` 70,15,907/- BY ADDING DIFFERENCE LABOUR CHARGES OF ` 21,56,567/-. ITA NO.727/VIZAG/2013 M/S. Y.V.R. & CO., VISAKHAPATNAM 3 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE SUBMITTED THAT THE A.O. WAS ERRED IN PASSING RECTIFICATION OR DER U/S 154 OF THE ACT, AS THERE WAS NO MISTAKE APPARENT FROM THE RECORDS W HICH REQUIRES RECTIFICATION. THE A.O. AT THE TIME OF COMPLETION OF ASSESSMENT U/S 143(3) OF THE ACT, AFTER EXAMINING THE BILLS AND VO UCHERS HAVE DETERMINED THE DISALLOWANCE OF ` 17,76,410/-. THE ASSESSEE FURTHER SUBMITTED THAT IN ORDER TO RECTIFY THE ORDER U/S 15 4 OF THE ACT, THERE SHOULD BE A MISTAKE IN THE ORDER WHICH SHOULD BE AP PARENT AND PATENT. THE PROPOSED DISALLOWANCE OF LABOUR CHARGES IS NOT A MISTAKE WHICH IS APPARENT FROM THE ASSESSMENT ORDER, THEREFORE, THE A.O. WAS NOT CORRECT IN INVOKING THE PROVISIONS OF SECTION 154 OF THE AC T TO RECTIFY THE ASSESSMENT ORDER. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT THE A.O. HAS RIGHTLY RECTIFY THE ASSESSMENT ORDER. THE CIT(A) OBSERVED THAT ON PERUSAL OF THE ASSESSMENT R ECORDS, IT WAS OBSERVED THAT THE ASSESSEE HAS AGREED FOR A DISALLO WANCE OF 20% OF LABOUR EXPENSES WHICH WAS DULY RECORDED IN THE ORDE R SHEET FOR WHICH THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS A GREED. THE A.O., WHILE COMPLETING THE ASSESSMENT, BY MISTAKE HAS QUA NTIFIED THE DISALLOWANCE OF ` 17,76,410/- AS AGAINST ` 39,32,977/-. THEREFORE, THERE IS A MISTAKE IN THE ASSESSMENT ORDER WHICH NE EDS TO BE RECTIFIED ITA NO.727/VIZAG/2013 M/S. Y.V.R. & CO., VISAKHAPATNAM 4 U/S 154 OF THE ACT. WITH THESE OBSERVATIONS, DISMIS SED THE APPEAL FILED BY THE ASSESSEE. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. A.R. SUBMITTED THAT THE CIT(A) WAS NOT J USTIFIED IN COMING TO THE CONCLUSION THAT THE ASSESSING AUTHORITY IS J USTIFIED IN MAKING RECTIFICATION BY ADDING THE DIFFERENCE AMOUNT OF ` 21,56,567/-. THE A.R. FURTHER SUBMITTED THAT THE A.O. HAS RIGHTLY QUANTIF IED THAT DISALLOWANCE OF ` 17,76,410/- AFTER VERIFIED BILLS & VOUCHERS WITH R EFERENCE TO THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THOUGH THERE WAS A DISCUSSION AT THE TIME OF ASSESSMENT PROCEEDINGS TO DISALLOW 20% LABO UR CHARGES, THE A.O. AFTER CONSIDERING THE DETAILS QUANTIFIED THE D ISALLOWANCE OF RS. 17,76,410/-. THEREFORE, THE A.O. WAS NOT CORRECT IN COMING TO THE CONCLUSION THAT THERE WAS A MISTAKE IN THE ORDER WH ICH REQUIRES RECTIFICATION U/S 154 OF THE ACT. IT WAS FURTHER A RGUED THAT THE ORDER SHEET ENTRY FOUND IN ASSESSMENT RECORDS IS ONLY A D ISCUSSION THAT WAS RECORDED AT THE TIME OF ASSESSMENT PROCEEDINGS, BUT NOT IN THE ASSESSMENT ORDER. THE MISTAKE POINTED OUT BY THE AS SESSING OFFICER IS NOT FROM THE ASSESSMENT ORDER, BUT FROM THE ASSESSM ENT RECORDS. ANY MISTAKES WHICH CAN BE RECTIFIED U/S 154 OF THE ACT SHOULD BE FROM THE ITA NO.727/VIZAG/2013 M/S. Y.V.R. & CO., VISAKHAPATNAM 5 FACE OF THE ASSESSMENT ORDER. THEREFORE, THE A.O. W AS NOT CORRECT IN RECTIFYING THE ASSESSMENT ORDER BY REFERRING TO THE ORDER SHEET ENTRY. 5. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORT ED THE ORDER OF THE CIT(A). THE LD. D.R. FURTHER SUBMITTED THAT TH ERE IS A MISTAKE IN THE ASSESSMENT ORDER WHICH REQUIRES RECTIFICATION U/S 1 54 OF THE ACT. THE A.O. AT THE TIME OF COMPLETION OF ASSESSMENT U/S 14 3(3) OF THE ACT, INTEND TO DISALLOW 20% LABOUR EXPENDITURE. HOWEVER , WHILE PASSING THE ASSESSMENT ORDER, BY MISTAKE HAS QUANTIFIED THE ADD ITION OF ` 17,76,410/- WITHOUT ANY BASIS. THE SAID MISTAKE WAS POINTED OUT FROM THE ASSESSMENT RECORDS, WHICH CAN BE RECTIFIED U/S 154 OF THE ACT. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIALS AVAILABLE ON RECORD. THE A.O. RECTIFIED THE ASSESSM ENT ORDER PASSED U/S 143(3) OF THE ACT BY INVOKING PROVISIONS OF SECTION 154 OF THE ACT. THE A.O. WAS OF THE OPINION THAT THERE IS A MISTAKE IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT WHICH NEEDS TO BE RECT IFIED U/S 154 OF THE ACT. THE A.O. OBSERVED THAT AT THE TIME OF COMPLET ION OF ASSESSMENT U/S 143(3) OF THE ACT, THE DISALLOWANCE OF LABOUR C HARGES WAS WRONGLY ADDED. IT WAS FURTHER OBSERVED THAT THE ASSESSEE HA S AGREED FOR DISALLOWANCE OF 20% LABOUR CHARGES, WHICH WAS RECOR DED IN THE ORDER ITA NO.727/VIZAG/2013 M/S. Y.V.R. & CO., VISAKHAPATNAM 6 SHEET FOR WHICH THE AUTHORIZED REPRESENTATIVE OF TH E ASSESSEE HAS AGREED. HOWEVER, WHILE COMPLETING THE ASSESSMENT, AN ADDITION OF ` 17,76,410/- HAS BEEN MADE. THEREFORE, THIS IS A MI STAKE APPARENT FROM THE RECORDS WHICH NEEDS TO BE RECTIFIED U/S 154 OF THE ACT. IT IS THE CONTENTION OF THE ASSESSEE THAT THERE IS NO MISTAKE IN THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT. AS PER THE PROVISIONS OF SECTION 154 OF THE ACT, ANY MISTAKE WHICH IS APPARE NT FROM THE FACE OF THE ORDER CAN ONLY BE RECTIFIED. THE MISTAKE MUST B E OBVIOUS AND PATENT. ANY MISTAKES WHICH IS HIGHLY DEBATABLE AND WHICH INVOLVES COMPLICATED PROCESS OF DISCUSSION CANNOT BE RECTIFI ED U/S 154 OF THE ACT. THE ASSESSEE FURTHER CONTENDED THAT THE A.O. WHILE COMPLETING THE ASSESSMENT U/S 143(3) OF THE ACT HAS QUANTIFIED THE DISALLOWANCE OF LABOUR EXPENSES AFTER VERIFIED THE BOOKS OF ACCOUNT S WITH REFERENCE TO BILLS & VOUCHERS AND ARRIVED AT DISALLOWANCE OF ` 17,76,410/-. MERE DISCUSSION FOR ADHOC DISALLOWANCE OF 20% LABOUR EXP ENDITURE CANNOT BE THE BASIS FOR RECTIFICATION OF ASSESSMENT ORDER. 7. SECTION 154 OF THE ACT PROVIDES FOR RECTIFICATIO N OF MISTAKE APPARENT FROM THE RECORDS. AS PER THE SAID SECTION, MISTAKE NOT CONFINED TO MERE CLERICAL OR ARITHMETICAL MISTAKE. THE ONLY POINT IS THAT THE ITA NO.727/VIZAG/2013 M/S. Y.V.R. & CO., VISAKHAPATNAM 7 MISTAKE MUST BE OBVIOUS AND PATENT AND NOT INVOLVIN G A DEBATABLE POINT. SIMILARLY, THE WORD RECORD HAS NOT BEEN DEF INED U/S 154 OF THE ACT OR IN THE DEFINITION SECTION. THEREFORE, THE SA ID WORD WILL HAVE TO BE GIVEN A WIDER IMPORT BY INCLUDING THE RECORDS THAT IS AVAILABLE WITH THE A.O. IN THE PRESENT CASE ON HAND, ON PERUSAL OF THE ASSESSMENT RECORDS, WE FIND THAT THE A.O. AT THE TIME OF FINALIZATION O F ASSESSMENT U/S 143(3) OF THE ACT, INTEND TO DISALLOW 20% LABOUR EXPENSES FOR WHICH THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS AGREE D. HOWEVER, WHILE FINALIZING THE ASSESSMENT ORDER, THE A.O. HAS MADE ADDITION OF ` 17,76,410/- WITHOUT ANY BASIS. THEREFORE, IN OUR C ONSIDERED VIEW, THE SAID MISTAKE IS A MISTAKE APPARENT FROM THE RECORDS WHICH NEEDS TO BE RECTIFIED U/S 154 OF THE ACT. THE ASSESSEES CONTE NTION IS THAT RECORDS MEANS ONLY AN ASSESSMENT ORDER IS NOT ACCEPTABLE FO R THE REASON THAT RECORD MEANS NOT ONLY THE ASSESSMENT ORDER, BUT ALS O INCLUDES ANY RECORDS AVAILABLE WITH THE A.O. AT THE TIME OF PASS ING ASSESSMENT ORDER. THEREFORE, WE ARE OF THE OPINION THAT THE A.O. HAS RIGHTLY RECTIFIED THE ASSESSMENT ORDER U/S 154 OF THE ACT. HENCE, WE INC LINED TO UPHOLD THE ORDER PASSED BY THE CIT(A) AND REJECT THE GROUND RA ISED BY THE ASSESSEE. ITA NO.727/VIZAG/2013 M/S. Y.V.R. & CO., VISAKHAPATNAM 8 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 6 TH MAY16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 06.05.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT M/S. Y.V.R. & CO., MIG-11/A144, GULLALAPALEM COLONY, SRIHARIPURAM, VISAKHAPATNAM. 2. / THE RESPONDENT THE ADDL. CIT, CIRCLE-5(1), RAN GE-5, VISAKHAPATNAM. 3. + / THE CIT, VISAKHAPATNAM 4. + ( ) / THE CIT (A), VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM