DCIT, Hyderabad V. Connor Information Technology Ltd., Hyderabad

ITA 922/HYD/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53615 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-06-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 21-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M JAGADISH BABU
• Assessee Lawyers: S RAMA RAO
• Keywords: Revenue expenditure
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMBER ITA NO.466/HYD/2006 : ASS ESSMENT YEAR 2001-02 ITA NO.799/HYD/2007 : ASS ESSMENT YEAR 2002-03 ITA NO.641/HYD/2007 : ASS ESSMENT YEAR 2003-04 M/S. CONNOR INFORMATION TECHNOLOGY LTD., HYDERABAD (PAN AABCC 4474 E) V/S. INCOME - TAX OFFICER, WARD - 1(1), HYDERABAD (APP ELL ANT) (RESP ONDENT) ITA NO.922/HYD/2008 : ASS ESSMENT YEAR 2002-03 DY. COMMISSIONER OF INCOME-TAX CIRCLE 1(2), HYDERABAD V/S. M/S. CONNOR INFORMATION TECHNOLOGY LTD., HYDERABAD (PAN AABCC 4474 E) (APP ELL ANT) (RESPONDENT) ASSESSEE BY : SHRI S.RAMA RAO DEPARTMENT BY : SHRI M.JAGADISH BABU DATE OF HEARING 12.9.2011 DATE OF PRONOUNCEMENT 16.9.2011 O R D E R PER AKBER BASHA, ACCOUNTANT MEMBER: THERE ARE FOUR APPEALS IN ALL IN THIS BUNCH. FIRS T THREE OF THEM ARE QUANTUM APPEALS FILED BY THE ASSESSEE, WHILE TH E LAST ONE, BEING ITA NO.922/HYD/2008 IS FILED BY THE REVENUE CHALLENGING THE ACTION OF THE CIT(A) IN CANCELLING THE PENALTY LEVIED FOR THE ASS ESSMENT YEAR 2002-03 BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF T HE ACT. THESE APPEALS ARE BEING DISPOSED OFF WITH THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO 466/HYD/2006 & THREE OTHERS M/S.CANNOR INFORMATION TECHNOLOGY LTD., HYD 2 ITA NO.466/HYD/2006 : ASSESSMENT YEAR 2001-02 2. IN THIS APPEAL OF THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE CIT (A) II, HYDERABAD DATED 27.3.2006 FOR THE ASSES SMENT YEAR 2001-02, ASSESSEE HAS TAKEN AS MANY AS THIRTEEN ELABORATE GR OUNDS OF APPEAL. GROUNDS NO.1 AND 13 ARE GENERAL IN NATURE AND NEED NO INDEPENDENT ADJUDICATION. 3. THE FIRST EFFECTIVE GRIEVANCE OF THE ASSESSEE, COVERED BY GROUNDS OF APPEAL NO.2 TO 5, IS THAT THE CIT (A) ER RED IN HOLDING THAT THE ENTIRE AMOUNT FOR WHICH THE ASSESSEE HAS RAISED INV OICE OF RS.3,77,29,513/- ACCRUED TO THE ASSESSEE. 4. LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THA T THE FACT THAT THE US CUSTOMER DID NOT ACCEPT THE INVOICES RAISED BY THE ASSESSEE TO THE EXTENT OF RS.2,26,21,628, AND THE INCOME THAT WAS A CCEPTED BY THE CUSTOMER, WHICH ACCRUED TO THE ASSESSEE FOR THE YEA R UNDER CONSIDERATION IS ONLY TO THE EXTENT OF RS.1,51,07,887. HE THEREFORE , SUBMITTED THAT THE DEPARTMENT WAS NOT JUSTIFIED IN PROCEEDING TO DETER MINE THE INCOME OF THE ASSESSEE BASED ON THE INVOICE RAISED BY THE ASSESSE E, AND THE ASSESSING OFFICER OUGHT TO HAVE CONSIDERED THAT IT IS ONLY TO THE EXTENT OF AMOUNT ACCEPTED BY THE US CUSTOMER THAT THE INCOME AROSE T O THE ASSESSEE AND NOT TO THE EXTENT OF AMOUNT RAISED IN THE INVOICE. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, OPPOSED THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE AND RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE ORDERS OF THE LOWER AUTHORITIES. AT THE TIME OF HE ARING, THE BENCH ASKED FOR ITA NO 466/HYD/2006 & THREE OTHERS M/S.CANNOR INFORMATION TECHNOLOGY LTD., HYD 3 THE CORRESPONDENCE, IF ANY, EXCHANGED BY THE ASSESS EE WITH RESERVE BANK OF INDIA, WITH REGARD TO WAIVER OF THE UNREALIZED B ILLS RAISED BY THE ASSESSEE. BOTH THE PARTIES COULD NOT PLACE BEFORE US, ANY SUC H CORRESPONDENCE IN THIS BEHALF. SINCE SUCH CORRESPONDENCE, IF ANY, WOULD BE CRUCIAL FOR DETERMINATION OF THE ISSUE, AND THE LOWER AUTHORITI ES HAVE NOT EXAMINED THE MATTER FROM THAT ANGLE, IN THE INTERESTS OF JUSTICE , WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ASPECT, AND RESTORE T HE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION OF THE CL AIM OF THE ASSESSEE IN ACCORDANCE WITH LAW. THE ASSESSEE IS DIRECTED TO F ILE CORRESPONDENCE, IF ANY EXCHANGED WITH THE RBI OR ANY SUCH OTHER EVIDENCE I N SUPPORT OF ITS CLAIM THAT THE ENTIRE AMOUNT OF RS.3,77,29,513, FOR WHICH INVOICE HAS BEEN RAISED BY IT ON ITS US CUSTOMER DID NOT ACCRUE TO IT, SINC E THE CUSTOMER HAS REJECTED SUBSTANTIAL PORTION OF THE INVOICE AMOUNT AND ACCEPTED ONLY TO THE EXTENT OF RS.1,51,07,887, ACCEPTED. THE ASSESSING OFFICER IS DIRECTED TO RE- EXAMINE THE CASE OF THE ASSESSEE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE TO PUT FORTH ITS CASE. WE DIRECT ACCORDINGLY. ASSESSEES GROUNDS ON THIS ASPECT ARE THUS ALLOWED FOR STATISTICAL PURPOSES. 7. THE NEXT GRIEVANCE OF THE ASSESSEE, COVERED BY GROUNDS NO.6 AND 7, RELATING TO COMPUTATION OF RELIEF UNDER SECT ION 10B OF THE ACT, IS THAT THE CIT (A) ERRED IN NOT ACCEPTING THE CONTENTION O F THE ASSESSEE THAT THE AMOUNT OF RS.99,60,023/- INCURRED AS AN EXPENDITURE BY THE CUSTOMER IN USA ON BEHALF OF THE ASSESSEE IS DEEMED TO HAVE BEE N RECEIVED IN INDIA. 8. LEARNED COUNSEL FOR THE ASSESSEE, REITERATING THE CONTENTIONS URGED BEFORE THE LOWER AUTHORITIES SUBMITTED THAT T HE AMOUNT OF RS.99,60,023/- REPRESENTS THE EXPENDITURE INCURRED BY THE US CUSTOMER ON BEHALF OF THE ASSESSEE. SINCE SUCH EXPENDITURE HAS BEEN REIMBURSED BY THE ASSESSEE TO THE CUSTOMER, INCOME TO THAT EXTENT SHO ULD BE TREATED TO HAVE BEEN RECEIVED BY THE ASSESSEE IN INDIA, WHILE COMPU TING THE RELIEF UNDER ITA NO 466/HYD/2006 & THREE OTHERS M/S.CANNOR INFORMATION TECHNOLOGY LTD., HYD 4 SECTION 10B OF THE ACT. HE PLACED RELIANCE ON THE DECISION OF THE APEX COURT IN THE CASE OF J.B.BODA & CO. PVT. LTD. V/S. CBDT ( 223 ITR 271). 9. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND, OPPOSED THE CONTENTIONS OF THE ASSESSEE AND SUPPORT ED THE ORDERS OF THE LOWER AUTHORITIES. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE APEX COURT IN THE CA SE OF J.B.BODA & CO. (SUPRA). HOWEVER, IN THAT CASE, THE ASSESSEE OBTAI NED PERMISSION FROM THE RESERVE BANK OF INDIA, WHEREAS IN THE CASE BEFORE U S, THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT BROUGHT ANY MATERIAL ON RE CORD TO SUGGEST THAT THE ASSESSEE IN THIS CASE HAS ALSO OBTAINED SUCH PERMIS SION FROM THE RESERVE BANK OF INDIA. IN THE CIRCUMSTANCES, WE FIND THAT APPROVAL FROM THE RBI OR ANY CORRESPONDENCE MADE BY THE ASSESSEE IN THAT DIR ECTION, WOULD BE CLINCHING. IN THE ABSENCE OF ANY CORRESPONDENCE IN THAT BEHALF, BROUGHT ON RECORD BY THE PARTIES, WE DEEM IT FAIR AND PROPER T O SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ASPECT, AND RESTORE T HE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION OF THE CL AIM OF THE ASSESSEE IN ACCORDANCE WITH LAW. THE ASSESSEE IS DIRECTED TO F ILE CORRESPONDENCE, IF ANY, EXCHANGED WITH THE RBI OR ANY SUCH OTHER EVIDE NCE IN SUPPORT OF ITS CLAIM. THE ASSESSING OFFICER IS DIRECTED TO RE-EXAM INE THE CASE OF THE ASSESSEE IN ACCORDANCE WITH LAW AND IN THE LIGHT OF THE RATIO LAID DOWN BY THE APEX COURT IN THE CASE OF J.B. BODA AND CO. (SU PRA), AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE TO PUT FORTH ITS CASE. WE DIRECT ACCORDINGLY. ASSESSEES GROUNDS ON THIS ASPECT ARE THUS ALLOWED FOR STATISTICAL PURPOSES. 11. NEXT GRIEVANCE OF THE ASSESSEE, COVERED BY GROUND NO.8 RELATES TO REJECTION OF THE ASSESSEES CLAIM FOR DEDUCTION IN RESPECT OF CONSULTANCY FEE OF RS.2,75,000/-, TREATING IT AS REVENUE EXPEN DITURE. ITA NO 466/HYD/2006 & THREE OTHERS M/S.CANNOR INFORMATION TECHNOLOGY LTD., HYD 5 12. WE HAVE HEARD THE PARTIES. WE FIND THAT THE C ONSULTATION FEE OF RS.2,75,000/- HAS BEEN INCURRED IN CONNECTION WITH RAISING OF LOANS BY THE ASSESSEE. IT IS THE CONTENTION OF THE ASSESSEE THA T AS THE BORROWINGS WERE FOR THE BUSINESS PURPOSES, THE CONSULTANCY CHARGES SHOULD BE ALLOWED AS REVENUE EXPENDITURE. THE ASSESSING OFFICER NOTICE D THAT THE AFORESAID PAYMENTS ARE MADE FOR RAISING LOANS FOR THE PURPOSE OF ACQUISITION OF ANOTHER COMPANY. THE ASSESSEE DID NOT CONTRADICT TH E VIEW TAKEN BY THE ASSESSING OFFICER IN THIS BEHALF, AND ALL THAT HE P LEADED BEFORE THE LOWER AUTHORITIES WAS THAT THE EXPENDITURE WAS INCURRED I N CONNECTION WITH THE EXPANSION OF THE EXISTING BUSINESS AND DID NOT BRIN G ANY EVIDENCE ON RECORD TO PROVE ITS CLAIM. THEREFORE, WE DO NOT SEE ANY IN FIRMITY IN THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE. THE GROUND RA ISED BY THE ASSESSEE ON THIS ISSUE IS REJECTED. 13. NEXT GRIEVANCE OF THE ASSESSEE, COVERED BY GROUND NO.9 RELATES TO REJECTION OF THE ASSESSEES CLAIM FOR DEDUCTION IN RESPECT OF AN AMOUNT OF RS.9,21,017/- TREATING IT AS REVENUE EXPENDITURE. 14. WE HAVE HEARD THE PARTIES. IT IS THE CONTENTI ON OF THE ASSESSEE THAT THE AMOUNT OF RS.9,21,017/- REPRESENTS THE EXP ENSES INCURRED BY THE ASSESSEE FOR ACQUISITION OF BUSINESS OF GIT, AND SU CH ACQUISITION OF GIT IS NECESSARY FOR THE EXPANSION OF THE EXISTING BUSINES S FOR THE ASSESSEE. IT IS THE CONTENTION OF THE ASSESSEE THAT EXPENDITURE IN CURRED FOR EXPLORING THE FEASIBILITY OF EXPANDING THE EXISTING BUSINESS IS OF REVENUE NATURE AND AS SUCH, DEDUCTION SHOULD HAVE BEEN ALLOWED IN THAT BE HALF. THE ASSESSING OFFICER NOTICED THAT THIS EXPENDITURE WAS ALSO INCU RRED FOR THE PURPOSE OF ACQUISITION OF ANOTHER COMPANY. THE ASSESSEE DID NOT CONTRADICT THE VIEW TAKEN BY THE ASSESSING OFFICER IN THIS BEHALF, AND ALL THAT HE PLEADED BEFORE THE LOWER AUTHORITIES WAS THAT THE EXPENDITURE WAS INCURRED IN CONNECTION WITH THE EXPANSION OF THE EXISTING BUSINESS BUT DID NOT BRING ANY EVIDENCE ON RECORD TO PROVE ITS CLAIM. THEREFORE, WE DO NOT SEE ANY INFIRMITY IN THE ITA NO 466/HYD/2006 & THREE OTHERS M/S.CANNOR INFORMATION TECHNOLOGY LTD., HYD 6 ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE. THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE IS REJECTED. 15. NEXT GRIEVANCE OF THE ASSESSEE, COVERED BY GROUND NO.10 RELATES TO REJECTION OF THE ASSESSEES CLAIM FOR DE DUCTION IN RESPECT OF AN AMOUNT OF RS.14,94,730 TREATING IT AS REVENUE EXPE NDITURE. THE ASSESSING OFFICER NOTICED THAT THIS EXPENDITURE WAS ALSO INCU RRED FOR THE PURPOSE OF ACQUISITION OF ANOTHER COMPANY. THE ASSESSEE DID NOT CONTRADICT THE VIEW TAKEN BY THE ASSESSING OFFICER IN THIS BEHALF, AND ALL THAT HE PLEADED BEFORE THE LOWER AUTHORITIES WAS THAT THE EXPENDITURE WAS INCURRED IN CONNECTION WITH THE EXPANSION OF THE EXISTING BUSINESS BUT DID NOT BRING ANY EVIDENCE ON RECORD TO PROVE ITS CLAIM. THEREFORE, WE DO NOT SEE ANY INFIRMITY IN THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE. THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE IS REJECTED. 16. NEXT GRIEVANCE OF THE ASSESSEE, COVERED BY GROUND NO.11 RELATES TO REJECTION OF THE ASSESSEES CLAIM FOR DE DUCTION IN RESPECT OF INTEREST OF RS.1,18,029. WE FIND THAT THE INTEREST ON GLOBAL TRUST BANK LOAN RELATES TO THE ACQUISITION OF DEPRECIABLE ASSETS RE LATING TO THE PERIOD, PRIOR TO THE USAGE OF THE ASSETS. WE FURTHER FIND THAT T HE ASSESSEE ITSELF HAS CAPITALIZED THE AMOUNT OF INTEREST AND INCLUDED IN THE COST OF THE ASSETS. THAT BEING SO, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE. THIS GROUND OF THE ASS ESSEE IS REJECTED. 17. NEXT GRIEVANCE OF THE ASSESSEE, COVERED BY GRO UND NO.12 RELATES TO RESTRICTION OF ASSESSEES CLAIM FOR EXEM PTION UNDER S.10B OF THE ACT. IN VIEW OF OUR FINDINGS AND OBSERVATIONS IN THE CONTEXT OF GROUNDS NO.2 TO 7 OF THIS APPEAL HEREINABOVE, ASSESSEES CL AIM FOR EXEMPTION UNDER S.10B NEEDS TO BE RE-EXAMINED. WE ACCORDINGLY DIR ECT THE ASSESSING OFFICER TO RE-WORK OUT THE RELIEF UNDER S.10B OF TH E ACT IN CONSONANCE WITH THE WITH THE VIEW THAT MAY BE TAKEN WHILE REDECIDIN G THE ISSUES INVOLVED IN GROUNDS NO.2 TO 7 HEREINABOVE, IN PURSUANCE OF ORDE R IN THAT BEHALF. ITA NO 466/HYD/2006 & THREE OTHERS M/S.CANNOR INFORMATION TECHNOLOGY LTD., HYD 7 ACCORDINGLY, ORDERS OF THE LOWER AUTHORITIES ON THI S ISSUE ARE ALSO SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE ASSES SING OFFICER FOR RECONSIDERATION IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 18. IN THE RESULT, APPEAL OF THE ASSESSEE FOR ASS ESSMENT YEAR 2001- 02, BEING ITA NO.466/HYD.2006, IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.799/HYD/2007 : ASS ESSMENT YEAR 2002-03 ITA NO.641/HYD/2007 : ASS ESSMENT YEAR 2003-04 19. MAIN GRIEVANCE OF THE ASSESSEE IN THE APPEAL FOR ASSESSMENT YEAR 2002-03 AND THE ONLY GRIEVANCE OF THE ASSESSEE IN THE APPEAL FOR ASSESSMENT YEAR 2003-04, IS THAT THE CIT(A) ERRED IN HOLDING THAT THE ENTIRE AMOUNTS FOR WHICH THE ASSESSEE HAS RAISED IN VOICES OF RS.11,07,60,051 FOR THE ASSESSMENT YEAR 2002-03 AN D OF RS.1,67,08,590 FOR THE ASSESSMENT YEAR 2003-04, REPRESENTED THE IN COMES ACCRUING TO THE ASSESSEE FOR THE RELEVANT YEARS, IGNORING THE FACT THAT THE US CUSTOMER OF THE ASSESSEE HAS NOT ACCEPTED THE AMOUNTS FOR WHICH INVOICES WERE RAISED IN TOTO. 20. WE HAVE DEALT WITH THIS ISSUE, WHILE DEALING WITH THE CORRESPONDING GROUNDS OF THE ASSESSEE, IN ITS APPEA L FOR ASSESSMENT YEAR 2001-02. FOR THE DETAILED REASONS GIVEN IN THAT BE HALF IN PARA-6 OF OUR ORDER FOR THAT YEAR HEREINABOVE, WE SET ASIDE THE I MPUGNED ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND RESTORE THE MAT TER TO THE FILE OF THE ASSESSING OFFICER FOR THESE TWO YEARS ALSO, FOR FRE SH CONSIDERATION. THE ASSESSING OFFICER IS DIRECTED TO RE-EXAMINE THE CAS E OF THE ASSESSEE IN ACCORDANCE WITH LAW WE DIRECT ACCORDINGLY. ASSE SSEES GROUNDS ON THIS ASPECT ARE THUS ALLOWED FOR STATISTICAL PURPOSES. ITA NO 466/HYD/2006 & THREE OTHERS M/S.CANNOR INFORMATION TECHNOLOGY LTD., HYD 8 21. THE NEXT EFFECTIVE GROUND RAISED BY THE ASSESS EE IN APPEAL FOR ASSESSMENT YEAR 2002-03 RELATES TO QUANTUM OF RELIE F UNDER S.10B OF THE ACT. THE ISSUE IS SIMILAR TO THE ONE WE HAVE CONS IDERED WHILE DECIDING THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2001 -02. HENCE, FOR THE REASONS DISCUSSED IN PARA 17 ABOVE WHILE DEALING WI TH THE CORRESPONDING GROUND IN ASSESSEES APPEAL FOR ASSESSMENT YEAR 20 01-02, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE, AND DIRECT THE ASSESSING OFFICER TO RE-WORK OUT THE RELIEF UNDER S.10B OF THE ACT IN CONSONANCE WITH THE WITH THE VIEW THAT MAY BE TAKEN WHILE REDECIDING THE ISS UE INVOLVED IN GROUNDS NO.2 AND 3 HEREINABOVE, IN PURSUANCE OF OUR ORDER I N THAT BEHALF. ACCORDINGLY, ORDERS OF THE LOWER AUTHORITIES ON THI S ISSUE ARE ALSO SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE ASSES SING OFFICER FOR RECONSIDERATION IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 22. THE NEXT EFFECTIVE GROUND IN THE APPEAL FOR A SSESSMENT YEAR 2002-03 RELATES TO CHARGING OF INTEREST UNDER S.234 B OF THE ACT. THIS GROUND IS MERELY CONSEQUENTIAL AND HENCE IT IS DISP OSED OFF ACCORDINGLY. 23. IN THE RESULT, ASSESSEES APPEALS FOR ASSESSME NT YEAR 2002-03 AND 2003-04, BEING ITA NO.799/HYD/2007 AND 641/HYD/ 2007 RESPECTIVELY, ARE ALLOWED FOR STATISTICAL PURPOSES. REVENUES APPEAL: ITA NO.922/HYD/2008 : ASSESS MENT YEAR 2002-03 24. IN THIS APPEAL OF THE REVENUE, THE ONLY GRIEVA NCE OF THE REVENUE IS AGAINST THE ACTION OF THE CIT(A) IN CANC ELLING THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER S.271(1)(C) OF THE A CT. WE HAVE SET ASIDE THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES IN QUA NTUM PROCEEDINGS, WHILE DEALING WITH THE QUANTUM APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2002-03, BEING ITA NO.799/HYD/2007, VIDE PARA 19 TO 22 HEREINABOVE, FOR REDECIDING THE ISSUES INVOLVED THEREIN AFRESH. SIN CE OUR DECISION IN THE ITA NO 466/HYD/2006 & THREE OTHERS M/S.CANNOR INFORMATION TECHNOLOGY LTD., HYD 9 QUANTUM PROCEEDINGS HAS A BEARING ON THE PENALTY IM PUGNED IN THIS APPEAL, WE SET ASIDE THE IMPUGNED ORDERS OF THE LOWER AUTHO RITIES IN THESE PENALTY PROCEEDINGS AS WELL, AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER, FOR APPROPRIATE ACTION AS MAY BE WARRANTED IN CONSONANCE WITH THE VIEW THAT MAY BE TAKEN IN THE QUANTUM PROCEEDINGS I N PURSUANCE OF OUR DIRECTIONS HEREINABOVE. THE ASSESSING OFFICER MAY PASS APPROPRIATE ORDERS IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPO RTUNITY OF HEARING TO THE ASSESSEE. 25. IN THE RESULT, REVENUES APPEAL, ITA NO.922/HY D/2008 IS ALLOWED FOR STATISTICAL PURPOSES. 26. TO SUM UP, WHILE APPEALS OF THE ASSESSEE FOR A SSESSMENT YEAR 2001-02, VIZ. ITA NO.466/HYD/2006, IS PARTLY ALLOWE D FOR STATISTICAL PURPOSES; APPEALS FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04, VIZ. ITA NO.799/HYD/2007 AND 641/HYD/2007 RESPECTIVELY, ARE ALLOWED FOR STATISTICAL PURPOSES. THE ONLY APPEAL OF THE REVENUE, BEING IT A NO.922/HYD/2008, FOR THE ASSESSMENT YEAR 2002-03 IS ALSO ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 16-9-2011 SD/- SD/- (G.C. GUPTA) (AKBER BASHA) V ICE PRESIDENT A CCOUNTANT MEMBER DATED 16 TH SEPTEMBER, 2011 COPY FORWARDED TO: 1. M/S. CONNOR INFORMATION TECHNOLOGY LTD., C/O. SHRI S.RAMA RAO, FLAT NO.102, SHIRYA'S ELEGANCE, NO.3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500029 ITA NO 466/HYD/2006 & THREE OTHERS M/S.CANNOR INFORMATION TECHNOLOGY LTD., HYD 10 2. INCOME TAX OFFICER, WRD - 1)1), HYDERABAD 3. DY. COMMISSIONER OF INCOME-TAX CIRCLE 1(2), HYDE RABAD 4 . COMMISSIONER OF INCOME - TAX(APPEALS) - I I , HYDERABAD. 5 . COMMISSIONER OF INCOME - TAX I HYDERABAD 6 . THE D.R., ITAT, HYDERABAD. B.V.S