AP Rajiv Swagruha Corporation Limited, Hyderabad, Vijayawada V. DCIT, Circle-1(1), Hyderabad, Hyderabad

ITA 889/HYD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1249 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 27-02-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 23-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEEJU GUPTA
• Keywords: Revised return
• Section: 143(3); 142(1)

Judgement Text

` IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A ', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN , ACCOUNTANT MEMBER ITA NO. 889 / HYD/201 7 AND SA NO. 23/HYD/2019 ASSESSMENT YEAR: 20 13 - 14 AP RAJIV SWAGRUHA CORPORATION LTD., HYDERABAD. PAN A A GCA 5561 K VS. DY . COMMISSIONER OF INCOME - TAX, CIRCLE 1 ( 1 ), HYDERABAD. APPELLANT RESPONDENT ASSESSEE BY: S HRI A. SRINIVAS REVENUE BY: S MT. NEEJU GUPTA DATE OF HEARING: 2 7 / 0 2 / 201 9 DATE OF PRONOUNCEMENT: 20 / 0 3 /201 9 O R D E R PER S. RIFAUR RAHMAN , AM: T H IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) 1 , HYDERABAD, DATED, 01 /0 2 /201 8 FOR AY 20 13 - 14 . 2. BRIEF FACTS OF THE CASE ARE , ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME DECLARING LOSS BASED ON UNAUDITED BALANCE SHEET. SUBSEQUENTLY, ON 29/11/2014, FILED REVISED RETURN OF INCOME DECLARING PROFIT OF RS. 57,57,61,542/ - AND BOOK PROFIT OF RS. 41,04,71,982/ - . THE CASE WAS TAKEN UP FO R SCRUTINY AND NOTICES U/S 143(2) AND 142(1) WERE ISSUED AND SERVED ON THE ASSESSEE. DURING ASSESSMENT PROCEEDINGS, ASSESSEE FILED A LETTER INFORMING AO THAT COMPTROLLER & AUDITOR GENERAL (C&AG) MADE AN OBSERVATION THAT ASSESSEE HAS NOT FOLLOWED THE AS2 ON VALUATION OF CLOSING STOCK. IT RESULTED IN OVER VALUATION OF STOCK TO THE EXTENT OF RS. 60.83 CRORES. HOWEVER, AO HAS NOT I.T.A. NO. 889 /HYD/1 7 A P RAJIV SWAGRUHA CORPORATION LTD., HYD 2 ACCEPTED THE ABOVE SUBMISSION AND COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT. 3. AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE CIT (A) AND THE CIT(A) HAS DISMISSED THE APPEAL AS NOT MAINTAINABLE. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE APPELLATE COMMISSIONER IS CONTRARY TO THE LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE APPELLATE COMMISSIONER ERRED IN CONFIRMING THE ORDER OF THE A.O WHO DID NOT TAKING INTO COGNIZANCE, THE LETTER FILED BY THE ASSESSEE ON 18.09.2015, WHICH INDICATED THE CORRECT PROFIT / LOSS. 3. THE APPELLATE COMMIS SIONER ERRED IN CONFIRMING THE ORDER OF THE A.O WHO DID ADOPTED THE PROFITS AS PER THE REVISED RETURN INSTEAD OF TAKING INTO COGNIZANCE, THE REVISED LETTER FILED BY THE ASSESSEE BASED ON COMPTROLLER & AUDITOR GENERAL'S OBSERVATION DURING THE COURSE OF ASSE SSMENT PROCEEDINGS. 4. ANY OTHER GROUNDS WHICH THE APPELLANT MIGHT URGE EITHER AT OR BEFORE THE DATE OF HEARING. 5. LD. AR BROUGHT TO OUR NOTICE THE FACTS OF THE CASE AND SUBMITTED THAT C&AG IS A CENTRAL GOVERNMENT AGENCY, ITS OBSERVATION IS BINDING O N THE IT DEPARTMENT. HE RELIED ON THE CASE LAWS TO SUBMIT THAT ASSESSEE CAN FILE REVISED COMPUTATION BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS AND AO SHOULD HAVE CONSIDERED THE LEGAL CLAIM OF THE ASSESSEE. 6. ON THE OTHER HAND, LD. DR RELIED ON TH E ORDERS OF REVENUE AUTHORITIES. 7. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE BEFORE US IS, ASSESSEE HAS FILED I.T.A. NO. 889 /HYD/1 7 A P RAJIV SWAGRUHA CORPORATION LTD., HYD 3 REVISED RETURN OF INCOME BASED ON THE AUDITED BALANCE SHEET. SUBSEQUENTLY, C& A G FOUND THAT ASSESSEE HAS NOT FOLLOWED THE METHOD OF VALUATION AS PER A S2. IT IS NOT THE CASE THAT ASSESSEE HAS NOT FOLLOWED AS2 COMPLETELY. IT IS ONLY THE METHOD OF VALUATION AS PER WHICH THE ADMINISTRATIVE OVERHEAD AND SELLING OVERHEADS SHOULD NOT HAVE APPLIED ON VALUATION OF WORK - IN - PROGRESS. THIS IS OBVIOUS MISTAKE POINTED OUT BY THEM . THIS MISTAKE HAS MATERIAL EFFECT ON THE RESULT OF THE COMPANY. IT WILL CHANGE THE COMPLETE BALANCE SHEET NOT JUST THE PROFIT & LOSS OF THE COMPANY. 7.1 WE NOTICE THAT LD. AR RELIED ON THE CASE LAWS, WHICH ARE MOSTLY BASED ON THE HONBLE SUPREME COURT C ASE OF GOETZE (INDIA) LTD. VS. CIT, 284 ITR 323 (SC). ALL THE DECISIONS WERE ON ALLOWING THE CLAIM OF THE ASSESSEE ON DEDUCTION OR EXEMPTIONS, WHICH IS LEGALLY AVAILABLE TO THE RESPECTIVE ASSESSEES. THERE IS NO DOUBT ON THIS LEGAL ASPECT. BUT, IN THE GIVEN CASE, C&AG POINTED OUT THE MISTAKE IN VALUATION OF CLOSING STOCK WHICH HAS MATERIAL EFFECT ON THE BALANCE SHEET. HAS THE COMPANY REVISED THE BALANCE SHEET WHICH WAS ADOPTED IN THE AGM AND FILED BEFORE REGISTRAR OF COMPANIES (ROC). WE HAVE DOUBT ON THAT, B UT, ASSESSEE MUST HAVE MADE THE CHANGES IN THE SUBSEQUENT YEAR. 7.2 THE BASIS OF ASSESSMENT IS THE BALANCE SHEET WHICH WAS ADOPTED BY THE COMPANY AND THE SAME IS USED TO DETERMINE THE TAXABLE INCOME FOR THE INCOME - TAX. WHEN THE ASSESSEE IS NOT IN A POSIT ION TO MAKE THE CHANGES IN THEIR BALANCE SHEET, THE SAME ALSO CANNOT BE DONE IN THE INCOME - TAX ASSESSMENT. THE ASSESSEE HAS NOT FILED ANY SUBMISSION ON THIS ASPECT BEFORE US. 7.3 IN CASE, ASSESSEE HAS MADE THE ABOVE CHANGES IN THE BALANCE SHEET SUBMITTED BEFORE ROC, THEN IT CHANGES THE I.T.A. NO. 889 /HYD/1 7 A P RAJIV SWAGRUHA CORPORATION LTD., HYD 4 WHOLE ASPECT AND IT IS BINDING ON THE AO AND DETERMINE THE LIABILITIES AS PER INCOME - TAX ACT. THEREFORE, WE ARE INCLINED TO REMIT THIS ISSUE BACK TO AO TO VERIFY WHETHER ASSESSEE HAS FILED REVISED BALANCE SHEET BEFORE RO C, IF YES, AO IS DIRECTED TO RE - DO THE ASSESSMENT DE - NOVO. OTHERWISE, THE LIABILITIES DETERMINED U/S 143(3) ARE SUSTAINED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 9. THE SA FILED BY THE ASSESSEE BECOMES I NFRUCTUOUS AS THE CORRESPONDING APPEAL WAS HEARD AND ADJUDICATED AS ABOVE. 10. TO SUM UP , APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND THE SA IS DISMISSED AS INFRUCTUOUS. PRONOUNCED IN THE OPEN COURT ON MARCH , 201 9. SD/ - ( P. MADHAVI DEVI ) JUDICIAL MEMBER SD/ - ( S. RIFAUR RAHMAN ) ACCOUNTANT MEMBER HYDERABAD, DATED 20 TH MARCH , 201 9. KV COPY FORWARDED TO: 1. E CENTRIC SOLUTIONS PVT. LTD., C/O P.R. DATLA & CO., CAS., 6 - 3 - 788/A/9, FIRST FLOOR, DURGA NAGAR, AMEERPET, HYDERABAD 16 2 . A C IT, CIRCLE 1 7 ( 1 ), HYDERABAD . 3 . CIT (A) - 5 , HYDERABAD 4. PR. CIT 5 , HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE