ITO, Ward-2, Kurnool V. D. Viswanath Reddy & Company, Kurnool

MA 78/HYD/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 2055 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-07-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 24-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S RAMA RAO
• Assessee Lawyers: ESTHER N HANGHAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER MA NO. 78/HYD/2014 IN ITA NO. 147/HYD/2013 ASSESSMENT YEAR 2005-06 M/S. D. VISWANATHA REDDY & CO., KURNOOL PAN: AAEFV5865C VS. THE INCOME TAX OFFICER WARD-2 KURNOOL APPELLANT RESPONDENT APPELLANT BY: SRI S. RAMA RAO RESPONDENT BY: SMT. ESTHER N. HANGHAL DATE OF HEARING: 13.06.2014 DATE OF PRONOUNCEMENT: 09.07.2014 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: BY THIS MA THE REVENUE SEEKS RECTIFICATION IN THE ORDER OF THE TRIBUNAL 28.8.2013 IN ITA NO. 147/HYD/ 2013 FOR A.Y. 2005-06. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM HA S FILED ITS RETURN OF INCOME ON 1.11.2005 ADMITTING A N INCOME OF RS. 26,624/- ON THE TURNOVER OF RS. 1,58,74,587/ -. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143( 2) WAS ISSUED ON 24.10.2006. THE ASSESSMENT WAS COMPLETED U/S. 143(3) BY ASSESSING THE INCOME OF RS. 49,10,620/- O N THE TURNOVER OF RS. 3,90,72,000 BY ADOPTING A RATE OF 1 2.5% PROFIT ON TURNOVER. THE TURNOVER OF RS. 3,90,72,00 0/- HAS BEEN ADOPTED ON THE BASIS OF THE COMMERCIAL DEPARTM ENT FEEDBACK. 2 MA NO. 78/HYD/2014 M/S. D. VISWANATHA REDDY & CO. ======================== 3. AGGRIEVED BY THE ABOVE ASSESSMENT U/S. 143(3), THE ASSESSEE FIRM HAS PREFERRED AN APPEAL BEFORE THE CI T(A)- IV, HYDERABAD. THE CIT(A) HAD UPHELD THE DECISION OF THE AO ON ADOPTION OF THE TURNOVER AND GIVEN PART RELIE F TO THE ASSESSEE FIRM BY DECREASING THE PERCENTAGE OF PROFI T FROM 12.5% TO 6% ON THE TURNOVER. 4. AGGRIEVED, THE ASSESSEE FIRM HAS APPEALED BEFORE THE TRIBUNAL. THE TRIBUNAL HAS UPHELD THE DECISION OF THE CIT(A) ON ADOPTION OF THE TURNOVER AND HAS GIVEN RE LIEF TO THE ASSESSEE FIRM IN CASE OF PER CENT OF PROFIT TO BE ADOPTED FOR DETERMINING THE INCOME. THE TRIBUNAL H AS DIRECTED THE AO TO CONSIDER THE LAST THREE YEARS AV ERAGE NET PROFIT RATE OF THE ASSESSEE TO DETERMINE THE IN COME OF THE ASSESSEE AND THEREAFTER ALSO DIRECTED THAT DEDU CTION U/S. 40(B) HAS TO BE ALLOWED, IF THE ASSESSEE HAS C LAIMED THE SAME IN ITS RETURN OF INCOME. 5. BY THIS MA, THE AO HAS BROUGHT TO OUR NOTICE THAT I T IS NOT POSSIBLE TO CALCULATE THREE YEARS AVERAGE NET P ROFIT MARGIN AS DIRECTED BY THE TRIBUNAL, AS THE ASSESSEE FIRM WHICH IS A PARTNERSHIP FIRM, WAS STARTED WITH EFFEC T FROM 20.05.2003. THE ASSESSEE FIRM HAS FILED ITS RETURN OF INCOME FOR A.Y. 2004-05 ONLY AND FOR THE A.YS. 2002 -03 AND 2003-04 THE ASSESSEE FIRM WAS NOT IN EXISTENCE AND HENCE NO RETURN OF INCOME WAS FILED FOR THESE ASSESSMENT YEARS. 6. FURTHER, THE AO IN HIS PETITION HAS POINTED THAT TH E TRIBUNAL IN MA NO. 154/HYD/2013 IN ITA NO. 1505/HYD /2012 FOR A.Y. 2004-05 REMITTED AN IDENTICAL ISSUE BACK T O THE FILE OF THE CIT(A) FOR FRESH CONSIDERATION. THE TRIBUNA L WHILE REMITTING BACK HELD THAT INCOME AT 8% OF THE GROSS RECEIPTS IS TO BE ADOPTED TAKING IN VIEW THE ORDER OF THE TR IBUNAL 3 MA NO. 78/HYD/2014 M/S. D. VISWANATHA REDDY & CO. ======================== AHMEDABAD SPECIAL BENCH IN THE CASE OF ARIHANT BUIL DERS PVT. LTD. VS. ACIT (291 ITR 41) (AT) (SB) (AHD) WHE REIN THE SPECIAL BENCH HELD THAT ESTIMATION OF INCOME AT 8% OF THE GROSS RECEIPTS IS JUSTIFIED. 7. WE HAVE HEARD BOTH THE PARTIES AND ARE CONVINCED THAT AN ERROR HAS CREPT IN THE ORDER OF THE TRIBUNA L DATED 28.8.2013. THE ASSESSEE HAS COME UP ON APPEAL AGAI NST ESTIMATION OF INCOME AT 6% OF TURNOVER. WE CANNOT INCREASE IT TO 8% AS DECIDED IN ITA NO. 1505/HYD/20 12 FOR THE A.Y. 2004-05. IN THESE CIRCUMSTANCES, WE RECAL L THE TRIBUNAL ORDER IN ITA NO. 147/HYD/2013 DATED 28.8.2 013. THE REGISTRY OF THE ITAT IS DIRECTED TO POST THE AP PEAL FOR HEARING IN DUE COURSE AND ISSUE NOTICE TO BOTH THE PARTIES ACCORDINGLY. 8. IN THE RESULT, THE MA IS TREATED AS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 9 TH JULY, 2014 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD, DATED THE 9 TH JULY, 2014 TPRAO COPY TO: 1. THE INCOME TAX OFFICER, WARD - 2, KURNOOL 2. M/S. D. VISWANATHA REDDY & CO., C/O. SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYA'S ELEGANCE, H. NO. 3-6-643, ST. NO. 9, HIMAYATHNAGAR, HYDERABAD- 500 029. 3. THE CIT(A) - IV, HYDERABAD. 4. THE CIT - III, HYDERABAD. 5. THE DR, A - BENCH, ITAT, HYDERABAD.