Balraj Goud Balagouni , Hyderabad V. Asst. Commissioner of Income Tax, Circle-4(1), Hyderabad

MA 98/Hyd/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5322 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-01-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB-A
• Assessment Year: 2013-2014
• Appeal Filed On: 08-12-2021

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH “A”, HYDERABAD BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER MA No.98/Hyd/2021 (In ITA No. 1601/Hyd/2018) AY: 2013-14 Balraj Goud Balagouni, Hyderabad. PAN: AEYPB 6220 P VS. ACIT, Circle-4(1), Hyderabad. (Appellant) (Respondent) Assessee by: Shri S. Rama Rao Revenue by: Shri T. Sunil Goutam, Sr. AR Date of hearing: 11/01/2022 Date of pronouncement: 21/01/2022 ORDER PER A. MOHAN ALANKAMONY, AM.: This Miscellaneous Application is filed by the assessee seeking rectification in the order passed by the Tribunal in ITA No. 1601/Hyd/2018, dated 22/04/2021 for the AY 2013-14. 2. At the outset, the Ld. AR submitted before us that the Tribunal in its order dated 22/4/2021 had confirmed the order of the Ld.AO who had estimated the income of all the benami firms of the assessee at 5% of their respective aggregate turnover and assessed the same in the hands of the assessee. The Ld.AR 2 further submitted that, though the Ld. Assessing Officer had stated in his Order that the income of the assessee’s benami firm is estimated @ 5% of the turnover and the aggregate of the same is to be assessed in the hands of the assessee, by oversight, while computing the estimated income, he worked it out @ 8% of the cost of goods sold and also erroneously added the admitted profit of all the benami firms aggregating to Rs.55,67,086/- in the hands of the assessee. Accordingly, the Ld. AO had wrongly computed the estimate income at Rs. 2,52,98,399/- and made addition. The Ld. AR further argued by stating that, since the above fact was not brought to the knowledge of the Bench while hearing the appeal on 10/02/2021, the Tribunal confirmed the addition made by the Ld. AO of Rs. 2,52,98,399/-. Thus, a mistake has crept into the order of the Tribunal which is required to be rectified. The Ld. DR could not controvert to the submission of the Ld. AR. 3. After hearing both sides and examining the materials on record and the order of the Ld. AO as well as the Tribunal order dated 22/4/2021, we find merit in the submission of the Ld. AR. The Ld. AO had concluded in his order dated 31/03/2016 to estimate the turnover of the assessee’s benami firms @ 5% of their respective turnover which is to be assessed in the hands of 3 the assessee. However, the Ld. AO while doing so, estimated the income of the binami firms of the assessee @ 8% of their aggregate cost of goods sold and also added their admitted profit as income in the hands of the assessee. Thus, there is a mistake in the computation made by the Ld. AO while framing his order. Further, though the Ld. AO has mentioned “5% of the turnover of the benami firms” for making addition in the hands of the assessee, he had taken into consideration the “cost of goods sold” by the assesse’s binami firms. Therefore, we are of the view that the Ld.AO had intended in his order to estimate the income of the assessee’s binami firms @ 5% of the cost of the goods sold for assessing the same in the hands of the assessee. 4. Considering the above facts, in order to rectify the mistake which is apparent in the Tribunal’s order and to bring in clarity, we hereby direct the Ld. AO to make the addition in the hands of the assessee @ 5%, the aggregate cost of goods sold by all the binami firms of Rs. 24,66,41,414/- (as stated in the annexure page3 of the assessment order) which works out to Rs. 1,23,32,070/- instead of the addition made for Rs. 2,52,98,399/- (8% of aggregate cost of goods sold viz., 246641414 + aggregate of admitted profit of the binami firms of the assessee viz., 55,67,086. Needless to mention that once the 4 profit of the binami firms are estimated then it is not required to add admitted profit unless there is a specific finding for doing so). 5. The Ld. AR further submitted that the Tribunal in its order dated 22/4/2021 had confirmed the order of the Ld. AO who had disallowed the amount of Rs. 17,41,978/- and Rs. 84,66,183/- invoking the provisions of section 40(a)(ia) of the Act under the belief that the assessee had claimed both the amounts as deduction in its return of income. The Ld. AR further submitted that the assessee had not claimed both the above amounts as deduction in its return of income as the same was not debited to the P & L Account but adjusted in the capital account of the assessee. It was therefore prayed that the mistake which has crept into the order of the Tribunal may be rectified. The Ld. DR argued that the matter needs verification. 6. After hearing both sides, we are of the view that if the submission of the Ld. AR is found to be correct then the disallowance made by invoking the provisions of section 40(a)(ia) of the Act will be erroneous. The fact that the amount of Rs. 17,41,978/- and Rs. 84,66,183/- was not claimed as deduction was not brought to the notice of the Tribunal on the earlier instance. Therefore, we hereby remit the matter back to the Ld. 5 AO to verify the facts presented by the Ld. AR herein above and if it is found that the assessee has not claimed the amount of Rs. 17,41,978/- and Rs. 84,66,183/-as deduction by debiting the same to the P & L Account, then delete the addition and if found otherwise, pass appropriate order in accordance with law and merit. Thus, the Para 9 of the order of the Tribunal dated 22/4/2021 is hereby modified in order to rectify the mistake that has crept into the order of the Tribunal. 7. In the result, Miscellaneous Application of the assessee is partly allowed. Order pronounced in the open court on 21 st January, 2022. Sd/- Sd/- (S.S. GODARA) (A. MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 21 st January, 2022. OKK Copy to:- 1. Sri Balraj Goud Balagouni, H.No. 3-6-673/1-2, Flat No.302, SMR Residency, Street No.10, Himayatnagar, Hyderabad – 500 029. 2. Asst. Commissioner of Income Tax, Circle4(1), IT Towers, AC Guards, Hyderabad. 3. The CIT (A)-1, Hyderabad. 4. The Principal Commissioner of Income Tax-1, Hyderabad. 5. The DR, ITAT, Hyderabad. 6. Guard File