ACIT, Circle-16(2), Hyderabad, Hyderabad V. Madhava Hytech Engineers P Ltd, Hyderabad, Hyderabad

ITA 997/HYD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6492 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 31-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MYTHLI RANI
• Assessee Lawyers: P MURALI
• Keywords: Rectification of order; Opportunity of being heard; Additional evidence; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.997/HYD/2015 : ASSESSMENT YEARS 2008-0 9 ASST. COMMISSIONER OF INCOME - TAX CIRCLE 16(2), HYDERABAD V/S M / S. MADHAVA HYTECH ENGINEERS PVT. LTD., HYDERABAD (PAN AABCM 3921 A) (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. K.MYTHLI RANI CIT - DR RESPONDENT BY : SHRI P.MURALI DATE OF HEARING 11.5.2016 DATE OF PRONOUNCEMENT 22.6.2016 O R D E R PER D.MANMOHAN, VICE PRESIDENT : THIS APPEAL IS FILED AT THE INSTANCE OF THE REVEN UE AND IT PERTAINS TO ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE COMPANY IS ENGAGED IN CARRYING ON CIVIL CONTRACT WORKS. FOR THE YEAR UNDER CONSIDERATION, I T ADMITTED A TOTAL INCOME OF RS.1.83 CRORES. THOUGH THE RETURN WAS PRO CESSED UNDER S.143(1) OF THE ACT, IT WAS SUBSEQUENTLY REOPENED BY ISSUING NOTICE UNDER SEC.148 OF THE ACT ON 10.5.2011. DURING THE COURSE OF EXAMINATION OF BOOKS OF ACCOUNT, THE ASSESSING OFFI CER NOTICED THAT THE ASSESSEE OFFERED AN AMOUNT OF RS.36,09,65,844 AS SU B-CONTRACT RECEIPTS AND AN AMOUNT OF RS.21,11,500 TOWARDS INTE REST RECEIPTS, BUT AS PER THE TDS CERTIFICATES, PERTAINING TO THE PERI OD FROM 1.4.2007 TO 31.5.2008, THE SUBCONTRACT RECEIPTS WORK OUT TO RS .46,96,09,360. ACCORDING TO THE ASSESSING OFFICER, THE DIFFERENCE BETWEEN SUB- CONTRACT RECEIPTS OFFERED IN THE RETURN OF INCOME A ND THE AMOUNT REFLECTED AS PER THE TDS CERTIFICATES AMOUNTING TO RS.10,86,43,546 ITA NO.997/HYD/2015 M/S. MADHAVA HYTECH ENGINEERS PVT. LTD., HYDERABAD 2 WAS NOT OFFERED TO TAX AND THEREFORE, IS LIABLE TO BE ADDED. THE ASSESSEE SUBMITTED THAT THE GROSS RECEIPTS A PER TH E TDS CERTIFICATES INCLUDE ADVANCES FROM THE DEPARTMENT, I.E. MOBILIZ ATION AND MATERIAL ADVANCES, DURING THE FINANCIAL YEAR 2006-07, THE CO MPANY RECEIVED MAJOR AMOUNT IN THE FORM OF MOBILISATION ADVANCES O N WHICH TDS HAS BEEN DEDUCTED. THUS, THERE IS ALWAYS DIFFERENCE BET WEEN THE GROSS RECEIPTS AS PER THE TDS CERTIFICATE AND TURNOVER A S PER THE PROFIT & LOSS ACCOUNT. THE COMPANY HAS FURNISHED A CHART C ONTAINING DETAILS FOR THE PERIOD FROM 2006-07 TO 2008-09, TO INDICATE THAT THERE IS ALWAYS DIFFERENCE BETWEEN GROSS RECEIPTS AS PER TDS CERTIFICATES AND ACTUAL TURNOVER. THE ASSESSING OFFICER REJECTED THE CONTENTIONS OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE COMPANY DI D NOT SUBMIT THE REQUISITE RA BILLS PERTAINING TO THE RELEVANT FINAN CIAL YEAR TO EVIDENCE THE QUANTUM OF WORK DONE AND AMOUNTS RECEIVED FROM VARIOUS GOVERNMENT DEPARTMENTS. 3. THE ASSESSEE THEREUPON FILED A PETITION UNDER S.154 OF THE ACT BEFORE THE ASSESSING OFFICER AND FURNISHED COMP LETE DETAILS EVIDENCING THE FACT THAT THE ACTUAL TURNOVER IN THI S YEAR IS MUCH LESS THAN THE GROSS RECEIPTS AS PER THE TDS CERTIFICATES . SIMULTANEOUSLY, HE HAS FILED AN APPEAL BEFORE THE CIT(A) V, HYDERABAD BY CONTENDING THAT THERE WAS SUFFICIENT EVIDENCE TO CORROBORATE THE ST AND IN THE FORM OF RA BILLS AND HENCE THE ASSESSING OFFICER SHOULD NOT HAVE MADE THE ADDITION. WHEN THE APPEAL WAS POSTED FOR HEARING, T HE ASSESSEE SOUGHT ADJOURNMENT ON THE GROUND THAT A PETITION BEFORE TH E ASSESSING OFFICER UNDER S.154 IS PENDING. HOWEVER, THE CIT(A) PROCEE DED TO DISPOSE OF THE APPEAL EX-PARTE QUA THE ASSESSEE- WHEREBY HE C ONFIRMED THE ACTION OF THE ASSESSING OFFICER. ITA NO.997/HYD/2015 M/S. MADHAVA HYTECH ENGINEERS PVT. LTD., HYDERABAD 3 4. ON FURTHER APPEAL FILED BY THE ASSESSEE COMPAN Y, THE ITAT, VIDE ITS ORDER DATED 19.12.2014 NOTICED THAT THE AS SESSEE FILED A PETITION UNDER S.154 OF THE ACT FURNISHING COPIES O F RUNNING ACCOUNT DETAILS AND OTHER DOCUMENTS FOR RECONCILING THE DIF FERENCE BETWEEN THE SUB-CONTRACT RECEIPTS SHOWN BY THE ASSESSEE AND AS PER THE TDS CERTIFICATES; AND IN THE CIRCUMSTANCES, THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DISPOSING OF THE APPEAL EX-PARTE. ACCO RDINGLY, THE MATTER WAS SET ASIDE TO THE FILE OF THE CIT(A) WITH A DIRE CTION TO HIM TO GRANT REASONABLE OPPORTUNITY TO THE ASSESSEE AND RE-DECID E THE APPEAL ACCORDINGLY. 5. IT DESERVES TO BE NOTICED THAT THE PETITION UN DER S.154 OF THE ACT WAS ADDRESSED TO THE DCIT CIRCLE 16(2), HYD ERABAD, BUT AS PER THE STANDARD PRACTICE FOLLOWED IN THE OFFICE OF TH E ADDL. COMMISSIONER OF IT, IT WAS ACKNOWLEDGED WITH THE AFFIXTURE OF ST AMP OF O/O. ADDL. COMMISSIONER OF INCOME-TAX, RANGE-16 , WHO SHOULD HAVE FORWARDED THE PETITION TO THE CONCERNED DCIT. S.154 OF THE A CT STATES THAT AN APPLICATION FILED BEFORE THE ASSESSING OFFICER HAS TO BE DISPOSED OF WITHIN SIX MONTHS, BUT IN THE INSTANT CASE, TILL DA TE, THE APPLICATION HAS NOT BEEN DISPOSED OF. REGARDING THE ISSUE ON HAND, THE FIRST APPELLATE AUTHORITY GAVE AN OPPORTUNITY TO THE ASSESSEE AS PE R THE DIRECTION OF THE TRIBUNAL (SUPRA). DURING THE APPELLATE PROCEEDI NGS, THE ASSESSEE FILED ALL THE RELEVANT DOCUMENTS TO HIGHLIGHT THERE IS DIFFERENCE BETWEEN THE GROSS RECEIPTS AS PER THE TDS CERTIFICATES AND THE PROFIT & LOSS ACCOUNT, WHICH INCLUDE MOBILISATION ADVANCES AND SE CURED ADVANCES RECEIVED, WHICH NEED TO BE ADJUSTED WHILE WORKING O UT THE GROSS SALES/TURNOVER. COPIES OF THE RUNNING BILLS AND COP IES OF GUARANTEES SUBMITTED FOR THE ADVANCES GIVEN WERE ALSO FURNISHE D BEFORE THE CIT(A), BY SPECIFICALLY MENTIONING THAT THESE PAPER S WERE ALREADY FILED BEFORE THE ASSESSING OFFICER ALONGWITH THE PETITION FOR RECTIFICATION, AND ITA NO.997/HYD/2015 M/S. MADHAVA HYTECH ENGINEERS PVT. LTD., HYDERABAD 4 THUS THESE PAPERS WERE ALREADY AVAILABLE BEFORE THE ASSESSING OFFICER. LEARNED CIT(A) VERIFIED THE DOCUMENTS, AND NOTICED THAT THE EXPLANATION OF THE ASSESSEE IS CORRECT AND ACCORDIN GLY DELETED THE ADDITION. 6. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US, CONT ENDING INTER ALIA THAT THE CIT(A)-4 ERRED IN ADMITTING AD DITIONAL EVIDENCE WITHOUT RECORDING ANY REASONS ABOUT THE SUFFICIENCY OF THE CAUSE WITH THE ASSESSEE FOR NOT PROVIDING THE SAID EVIDENCE B EFORE THE ASSESSING OFFICER, AND THUS, IT IS IN VIOLATION OF RULE 46A O F THE IT RULES. IT WAS FURTHER CONTENDED THAT THE CIT(A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE OF NON-TAXABILITY OF THE ALLEGED ADVANCE P AYMENTS WITHOUT SIMULTANEOUSLY REJECTING THE CLAIM OF CREDIT OF TDS IN CONTRAVENTION OF THE PROVISIONS OF SECTION 199 OF THE I.T. ACT, 1961 AS APPLICABLE DURING FINANCIAL YEAR 2007-08 RELEVANT TO ASSESSMENT YEAR 2008-09 WHICH MANDATE THAT CREDIT OF TDS SHALL BE GIVEN FOR THE ASSESSMENT YEAR FOR WHICH THE INCOME IS ASSESSABLE. 7. DURING THE COURSE OF HEARING, WE CALLED UPON T HE LEARNED DEPARTMENTAL REPRESENTATIVE TO VERIFY AS TO WHETHER THE ASSESSING OFFICER HAS PASSED ANY ORDER PURSUANT TO THE PETITI ON FILED UNDER S.154 OF THE ACT. LEARNED DEPARTMENTAL REPRESENTATIVE SU BMITTED THAT DURING THE PENDENCY OF APPLICATION FILED UNDER S.15 4 OF THE ACT, THE ASSESSEE REQUESTED THE CIT(A) TO KEEP THE MATTER IN ABEYANCE TILL THE DISPOSAL OF THE APPLICATION UNDER S.154. HOWEVER, THE LEARNED CIT(A) PROCEEDED TO DISMISS THE APPEAL OF THE ASSESSEE EX- PARTE. THIS ORDER WAS SET ASIDE BY THE ITAT WITH A LIMITED DIRECTION TO THE CIT(A) TO GIVE THE ASSESSEE FRESH OPPORTUNITY OF BEING HEARD, AND THE TRIBUNAL HAS NO WHERE STATED THAT THE MATERIAL FURNISHED BY THE ASS ESSEE ALONGWITH THE APPLICATION UNDER S.154 SHOULD BE TAKEN INTO CO NSIDERATION AND ITA NO.997/HYD/2015 M/S. MADHAVA HYTECH ENGINEERS PVT. LTD., HYDERABAD 5 THUS, IT IS THE DUTY OF THE CIT(A) TO GIVE THE AS SESSING OFFICER AN OPPORTUNITY OF BEING HEARD, AS PER RULE 46A OF THE INCOME TAX RULES, 1962, IF HE INTENDS TO ADMIT THE EVIDENCE, WHEREA S THE LEARNED CIT(A) HAS NOT FOLLOWED THE PROCEDURE PRESCRIBED TH EREIN, IN WHICH EVENT THE ORDER PASSED BY THE CIT(A) IS NOT IN ACCO RDANCE WITH LAW. IN FACT, THE CIT(A) OUGHT TO HAVE CALLED FOR THE RE MAND REPORT FROM THE ASSESSING OFFICER. 8. LOOKING AT THE MATER FROM ANOTHER ANGLE, THE L EARNED CIT- DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSE SSEE HAS FILED AN APPLICATION UNDER S.154 BEFORE THE ADDL. COMMISSION ER OF INCOME-TAX, RANGE 16 AND NOT BEFORE THE JURISDICTIONAL ASSESSIN G OFFICER, AND THEREFORE, THE SAID APPLICATION IS NOT ON RECORD OF THE ASSESSING OFFICER, AND THEREFORE, CANNOT BE PROCEEDED WITH, IN WHICH E VENT THE LEARNED CIT(A) COULD NOT HAVE RELIED UPON THE DOCUMENTS FIL ED ALONGWITH THE PETITION UNDER S.154, OTHER THAN BY SEEKING PERMIS SION TO ADMIT THE ADDITIONAL EVIDENCE, WHICH WAS NOT THE CASE HERE. SHE THUS STRONGLY SUPPORTED THE STAND TAKEN BY THE REVENUE. 9. ON OTHER HAND, THE LEARNED COUNSEL APPEARING O N BEHALF OF THE ASSESSEE SUBMITTED THAT RECEIVING SECTION FOR R ECEIPT OF TAPALS OF DCIT/ACIT AND ADDL. COMMISSIONER OF INCOME-TAX IS C ENTRALIZED, AND IT IS FOR THEM TO FORWARD THE SAME TO CONCERNED OFFICE R OR TO MAINTAIN SEPARATE RECEIVING SECTIONS; THE ASSESSEE HAS NO R OLE TO PLAY SO LONG AS THE RECTIFICATION APPLICATION FILED UNDER S.154 CLEARLY MENTIONS THE OFFICER BEFORE WHOM IT IS FILED. IN THE INSTANT C ASE, IT WAS SPECIFICALLY ADDRESSED TO DCIT, CIRCLE-16(2), HYDERABAD, WHEREAS THE TAPAL SECTION HAS AFFIXED THE STAMP OF O/O. ADDL. COMMISSIONER O F INCOME-TAX, RANGE 16, AYAKAR BHAVAN, HYDERABAD, IN WHICH EVENT IT IS THE DUTY OF THAT TAPAL SECTION, AS PER THE INTERNAL NORMS OF TH E REVENUE ITA NO.997/HYD/2015 M/S. MADHAVA HYTECH ENGINEERS PVT. LTD., HYDERABAD 6 DEPARTMENT, TO FORWARD THE SAME TO THE CONCERNED OF FICER. IN OTHER WORDS, THE LATCHES ON THE PART OF THE REVENUE CANNO T CONVENIENTLY BE TAKEN AS THE GROUND TO STATE THAT THERE IS NO APPLI CATION FILED BEFORE THE ASSESSING OFFICER. IN SHORT, THE PLEA OF THE A SSESSEE COMPANY IS THAT ALL THE DETAILS ARE FURNISHED BEFORE THE ASSES SING OFFICER ALONGWITH THE PETITION UNDER S.154 OF THE ACT AND IN FACT, THE LEARNED CIT(A) VERIFIED ALL THE RECORDS AND HAVING NOTICED THAT THE PLEA OF THE ASSESSEE IS IN TUNE WITH THE PLEA ALREADY RAISED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF PROCEEDINGS UNDER S.14 8 AS WELL AS IN THE PETITION UNDER S.154 OF THE ACT, APART FROM THE FAC T THAT HE HAS ARRIVED AT THE CONCLUSION THAT THE SUB-CONTRACT RECEIPTS DI SCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME AND THE FIGURES AS REFLECTED IN THE TDS CERTIFICATES ARE RECONCILABLE, HE DELETED THE A DDITION. SINCE THE COMPARABLE FIGURES OF EARLIER YEARS WERE ALSO FURNI SHED BEFORE THE ASSESSING OFFICER AND MENTIONED IN THE ASSESSMENT O RDER ITSELF, WHICH CLEARLY INDICATE THAT THE GROSS RECEIPTS AS PER THE TDS CERTIFICATES CANNOT BE TAKEN AS FINAL GROSS TURNOVER, AS ACCEPTE D BY THE ASSESSING OFFICER IN THE EARLIER YEARS, THERE WAS NO NEED FO R THE LEARNED CIT(A) TO GIVE DETAILED REASONS IN THIS REGARD. HE THUS S TRONGLY SUPPORTED THE ORDER PASSED BY THE LEARNED CIT(A). 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMIS SIONS AND PERUSED THE RECORD. DURING THE COURSE OF HEARING, W E HAVE CALLED FOR THE ASSESSMENT RECORD AND ALSO CALLED UPON THE LEAR NED CIT- DEPARTMENTAL REPRESENTATIVE TO EXPLAIN THE PROCEDUR E TO BE FOLLOWED WHEN AN APPLICATION UNDER S.154 IS FILED IN THE TAP AL SECTION AD ALSO BROUGHT TO THE NOTICE OF THE LEARNED CIT-DR THE PRO VISIONS OF S.154(8) OF THE ACT, WHICH STATES THAT AN APPLICATION FILED BY AN ASSESSEE FOR RECTIFICATION OF ORDER HAS TO ACTED UPON WITHIN A P ERIOD OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLICATION IS RECEIVED BY IT. ITA NO.997/HYD/2015 M/S. MADHAVA HYTECH ENGINEERS PVT. LTD., HYDERABAD 7 NO INFORMATION COULD BE FURNISHED AS TO WHETHER THE ASSESSEES APPLICATION UNDER S.154 WAS FORWARDED TO THE CONCER NED ASSESSING OFFICER, AND IF SO, THE DATE OF FORWARDING OF THE SAME. SINCE THE APPLICATION IS FILED ON 26.8.2013, WE REASONABLY PR ESUME THAT IT IS FORWARDED WITHIN A PERIOD OF 15 DAYS, AND AT ANY RA TE, BEFORE THE END OF THAT YEAR. TILL DATE, NO ACTION WAS TAKEN BY TH E ASSESSING OFFICER, WHICH IMPLIES THAT THE ASSESSING OFFICER HAS NOT PA SSED ANY ORDER, AND THEREFORE, IT IS DEEMED TO HAVE BEEN ACCEPTED. AT ANY RATE, THIS INFORMATION WAS ALREADY FILED BEFORE THE ASSESSING OFFICER AND IT WAS IN THE KNOWLEDGE OF THE CIT(A) IN THE FIRST ROUND O F LITIGATION AND ALSO BEFORE THE TRIBUNAL, WHICH HAD TAKEN COGNISANCE OF THE PETITION FILED UNDER S.154, TO SET ASIDE THE MATTER FOR RECONSIDE RATION. ASSESSING OFFICER COULD HAVE VERIFIED THE STATUS OF THE PETIT ION FILED UNDER S.154. THIS IS A NORMAL PRACTICE THAT WHEN AN APPEAL IS FI LED BEFORE THE CIT(A), A COPY OF THE APPEAL PAPERS IS SENT TO THE ASSESSING OFFICER AND IT IS THE DUTY OF THE ASSESSING OFFICER TO SEND HIS NOTE ON THE APPEAL FILED BY THE ASSESSEE, SO AS TO ASSIST THE F IRST APPELLATE AUTHORITY IN COMING TO APPROPRIATE CONCLUSION. THE ASSESSING OFFICER HAS NEITHER ACTED UPON THE PETITION FILED UNDER S.1 54 NOR OBJECTED TO THE MATERIAL FILED ALONGWITH THE PETITION FILED UND ER S.154 OF THE ACT. IN FACT, DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSEE FURNISHED THE DETAILS OF EARLIER TWO YEARS TO SUBMI T THAT THE GROSS RECEIPTS AS PER THE TDS CERTIFICATES CANNOT BE TAKE N AS THE BASIS FOR WORKING OUT THE TURNOVER OF A PARTICULAR YEAR. THE ASSESSING OFFICER HAS NOT COMMENTED UPON THE SAME. HAVING REGARD TO THE OVERALL CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE LEARNED CIT(A) WAS JUSTIFIED IN TAKING COGNISANCE OF THE MATERIAL AND UPON VERIFICATION, HE HAS CORRECTLY TAKEN A VIEW THAT THE ADVANCES REC EIVED CANNOT BE TAKEN AS PART OF THE CURRENT YEARS TURNOVER. THE D ETAILS AVAILABLE ON RECORD ARE NOT DOUBTED EVEN AT THIS STAGE BY THE RE VENUE. UNDER ITA NO.997/HYD/2015 M/S. MADHAVA HYTECH ENGINEERS PVT. LTD., HYDERABAD 8 THESE CIRCUMSTANCES, IT IS NOT NECESSARY FOR THE CI T(A) TO GIVE DETAILED REASONS, WHEN HE, UPON VERIFICATION OF THE DETAILS , NOTICES THAT THE FIGURES ARE RECONCILABLE. UNDER THESE CIRCUMSTANCES , WE UPHOLD THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. ORDER PRONOUNCED IN THE COURT ON 22 ND JUNE, 2016 SD/- SD/- (B.RAMAKOTAIAH) (D.MANMOHAN) ACCOUNTANT MEMBER. VICE PRESIDENT DT/- 22 ND JUNE, 2016 COPY FORWARDED TO: 1. M/S. MADHAVA HYTECH ENGINEERS PVT. LTD., DOWN TOWN, NTR GARDEN, NTR MARG, NECKLACE ROAD, HYDERABAD 2. ASST. COMMISSIONER OF INCOME-TAX CIRCLE 16(2), H YDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) I V , HYDERABAD COMMISSIONER OF INCOME-TAX 6, HYDERABAD 5. DEPARTME NTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S. ASTMP