KOLORS HEALTHCARE LLP,HYDERABAD V. ACIT, CENTRAL CIRCLE-3(4), HYDERABAD

SA 29/HYD/2024

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The case involves Kolors Healthcare LLP, which filed stay applications against the recovery of an outstanding tax demand amounting to Rs. 94,06,600. The demand arose from additions sustained by the CIT (A) at a rate of 15% on unaccounted or non-reconciled gross receipts. The assessee argued that the profit rate applied by the CIT (A) was arbitrary and not based on reasonable criteria, as the average net profit declared by the assessee was 7.5%, and the prevailing rate in the industry was 6%. The Tribunal noted that the assessee had already paid a significant portion of the demand and had received a refund for the assessment year 2019-20, which indicated that the assessee had paid more than 50% of the total demand. The Tribunal also criticized the Department for its casual approach towards the proceedings, highlighting the absence of any representative from the Department at the hearing.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 40049 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 28 day(s)
• Appeal Type: Others
• Pronouncement Date: 22-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 22-11-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 25-09-2024
• Other Referred Cases: Kolors Healthcare India (P) Ltd vs. ACIT
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Application of stay

Judgement Text

" SA Nos 28 to 31 of 2024 Kolors Healthcare LLP Page 1 of 6 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad Before Shri Vijay Pal Rao, Vice-President A N D Shri Madhusudan Sawdia, Accountant Member S.A Nos 28 to 31/Hyd/2024 आ.अपी.सं /ITA Nos. 937 to 940/Hyd/2024 (िनधाŊरण वषŊ/Assessment Years: 2015-16 to 2018-19) Kolors Healthcare LLP Hyderabad PAN:AAOFK6305L Vs. Asstt. Commissioner of Income Tax, Central Circle 3(4) Hyderabad (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: Shri P Murali Mohan Rao, CA राज̾ व Ȫारा/Revenue by:: N O N E सुनवाई की तारीख/Date of hearing: 22/11/2024 घोषणा की तारीख/Pronouncement: 22/11/2024 आदेश/ORDER Per Vijay Pal Rao, Vice President By way of these stay applications, the assessee is seeking stay against the recovery of outstanding demand arising from the additions sustained by the learned CIT (A) @15% of unaccounted/non-reconciled gross receipts. 2. None appeared on behalf of the Department when these stay petitions were called upon for hearing on today i.e. SA Nos 28 to 31 of 2024 Kolors Healthcare LLP Page 2 of 6 22/11/2024. It transpires from the record that, on the last date of hearing i.e. on 8/11/2024, the hearing of the stay petitions were adjourned at the joint request of the parties i.e. learned AR and the learned DR. Even on the earlier dates of hearing, all these stay petitions were adjourned at the request of the assessee. The learned DR has sent an application for adjournment of hearing, on the ground that, she is suffering from low BP with nausea. However, nobody has appeared on behalf of the Department despite the fact that, there are 4 Departmental Representatives deputed for representing the Department before the Tribunal. Even in case of absence of a particular Departmental Representative due to health issue, the Department ought to have assigned the duties to the other Officer to appear before the Bench and participate in the proceedings. The non-appearance on behalf of the Department at the time of hearing of the stay petitions clearly manifest the casual approach of the Department towards the proceedings of the Tribunal. Even otherwise, the Department is not to take repeated adjournment of hearing as clarified by the CBDT in the instructions issued from time to time. This Bench takes a serious view of the non-appearance of the Department not only in one case but on all cases fixed for hearing for 22/11/2024 which shows that the Department is not taking hearing of stay matters as well as miscellaneous applications before the Tribunal seriously. We accordingly propose to hear and dispose of these stay petitions ex-parte. SA Nos 28 to 31 of 2024 Kolors Healthcare LLP Page 3 of 6 3. The learned AR of the assessee has submitted that the assessee has prima facie good case on merit of the appeals as the learned CIT (A) has confirmed the additions made by the Assessing Officer by taking net profit @ 15% of the unaccounted receipts which is not based on any proper or reasonable criteria or prevailing net profit in the industry. The learned AR has further submitted that the assessee has declared average net profit @ 7.5% for these six A.Ys and the profit rate prevailing in the industry is only 6% against which the learned CIT (A) has applied net profit at 15% which is highly arbitrary and unjustified. Thus, the learned AR has contended that the additions confirmed by the learned CIT (A) is not sustainable in view of the facts that the rate applied by the learned CIT (A) is exorbitant and arbitrary. He has further pointed out that the against the demand of Rs.94,06,600/-, the assessee has already deposited/paid the tax to the tune of Rs.50 lakhs as per challan for respective years, whereas 20% of the demand comes to Rs.18,81,320/-. Further, the Assessing Officer for A.Y 2019-20 has passed a consequential order and granted refund of Rs.48,49,006/- vide order dated 9/9/2024 placed at Page No.9 of the synopsis. Thus, it is clear that the assessee has paid more than 50% of the total demand and also received a tax refund order of the Assessing Officer to the tune of Rs.48,49,006/-. Therefore, both these amounts together are more than the total demand raised by the Assessing Officer. Thus, the learned AR of the assessee pleaded that the balance SA Nos 28 to 31 of 2024 Kolors Healthcare LLP Page 4 of 6 outstanding demand may be stayed for a period of 180 days or till the disposal of the appeals whichever is earlier. 4. Since none appeared on behalf of the Revenue at the time of hearing of these stay petitions, therefore, we do not have the privilege of hearing the arguments of the Department. 5. We have considered the submissions of the learned AR and carefully perused the impugned order passed by the Assessing Officer as well as by the learned CIT (A). We have also gone through the details of the payment of taxes made by the assessee. Against the outstanding demand or Rs.94,06,600/-, the assessee has already paid a sum of Rs.50.00 lakhs through various challans for the respective years and also got refund of Rs.48,49,006/- as per the consequential order dated 9/9/2024 passed by the Assessing Officer for the A.Y 2019-20 and therefore, the assessee has already paid almost entire demand in this case. Further, on identical facts, we have considered and decided the stay petitions in the case of Kolors Healthcare India (P) Ltd vs. ACIT, a group concern of assessee vide even dated order in SA Nos.22 to 27/Hyd/2024 and relevant observations in Para 6 in the said order are as under: “6. The Revenue has not challenged the impugned orders of the learned CIT (A). The assessee has made out a prima facie case on merits, particularly, on the point that the learned CIT (A) has applied net profit @ 15% without any basis and without considering the fact that that the average net profit declared by the assessee is 7.5% and the average net profit SA Nos 28 to 31 of 2024 Kolors Healthcare LLP Page 5 of 6 prevailing in the industry is about 6%. Accordingly, in the facts and circumstances as discussed above, we are inclined to stay the recovery of outstanding demand of tax for a period of 180 days or till the disposal of the appeals, whichever is earlier, subject to further payment of Rs.25.00 lakhs as agreed by the learned AR of the assessee on or before 4/12/2024. Accordingly, parties are directed not to take any adjournment of hearing of these appeals and also file paper books, if any, well in advance. “ 6. Accordingly, in the facts and circumstances of the matter, and in view of our orders in Stay Petition Nos.22 to 27/Hyd/2024, dated 22/11/2024, we inclined to stay the recovery of any tax demand in respect of these A.Ys for a period of 180 days or till the disposal of the appeals whichever is earlier. The hearing of the appeals is already fixed on 4/12/2024 and the parties are directed not to take any adjournment and also file paper book, if any, well in advance. 7. In the result, Stay Applications filed by the assessee is allowed. Order pronounced in the Open Court on the conclusion of the hearing on 22nd November, 2024. Sd/- Sd/- (MADHUSUDAN SAWDIA) ACCOUNTANT MEMBER (VIJAY PAL RAO) VICE-PRESIDENT Hyderabad, dated 22nd November, 2024 Vinodan/sps SA Nos 28 to 31 of 2024 Kolors Healthcare LLP Page 6 of 6 Copy to: S.No Addresses 1 Kolors Healthcare LLP c/o P Murali & Co. CAs, 6-3-655/2/3 Somajiguda, Hyderabad 500082 2 ACIT Central Circle 3(4) Hyderabad 3 Pr. CIT – Central, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order "