M/s Maganti Constructions, Hyderabad v. DCIT, Hyderabad

ITA 733/HYD/2009 | 2004-2005
Pronouncement Date: 09-04-2010 | Result: Allowed

Appeal Details

RSA Number 73322514 RSA 2009
Bench Hyderabad
Appeal Number ITA 733/HYD/2009
Duration Of Justice 10 month(s) 7 day(s)
Appellant M/s Maganti Constructions, Hyderabad
Respondent DCIT, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 09-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 09-04-2010
Date Of Final Hearing 30-03-2010
Next Hearing Date 30-03-2010
Assessment Year 2004-2005
Appeal Filed On 02-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI G.C. GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.733/HYD/2009 A.Y. 2004-05 M/S MAGANTHI CONSTRUCTIONS BANJARA HILLS HYDERABAD (PAN (AAEFM1542 M) VS DCIT CIRCLE 7(1) HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V. RAGHAVENDRA RAO RESPONDENT BY : B. SENTHIL KUMAR O R D E R PER CHANDRA POOJARI ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER PASSED BY THE CIT U/S 263 OF THE IT ACT. THE ORIG INAL ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) OF THE IT ACT ON 27 .12.2006 DETERMINING THE TOTAL INCOME AT RS.4 45 53 890/-. 2. THE ASSESSEE IN THIS CASE ENGAGED IN EXECUTING CIVIL W ORKS ON SUB CONTRACT BASIS FROM M/S SOMA ENTERPRISES LTD. THE ASSESSEE SHOWN SECURED ADVANCE IN ITS BALANCE SHEET AS ON 31.3.2004 AT RS.1 54 87 969/- IN THE ASSESSMENT YEAR UNDER CONSIDERATI ON AS A LIABILITY. FURTHER THE ASSESSEE SHOWN AN AMOUNT OF RS.1 0 55 33 309/- AS RECEIVABLE FROM PRINCIPAL CONTRACTOR MRS. SOMA ENTERPR ISES AS ON 2 2 31.3.2004. ACCORDING TO CIT THE SECURED ADVANCE OF RS.1 54 87 969 TO BE ADJUSTED AGAINST THE AMOUNT RECEIVABLE FROM PRINCIPA L CONTRACTOR I.E. M/S SOMA ENTERPRISES OUT OF RS.10 55 33 309/- AND THUS THIS AMOUNT OF RS.1 54 87 969/- TO BE CONSIDERED AS PART OF CONTRACTUAL RECEIPT AND SHOULD HAVE BEEN CONSIDERED IN THE PROFIT AND LOSS OF T HE ASSESSEE. ACCORDINGLY HE DIRECTED THE ASSESSING OFFICER TO ASSESS THE A MOUNT OF RS.1 54 87 969/- AS CONTRACTUAL RECEIPTS OF THE ASSESSEE. ACCO RDING TO CIT THE ASSESSEE HAS UNDER STATED THE GROSS RECEIPTS TO THAT EXTENT. AGGRIEVED AGAINST THIS THE ASSESSEE IS IN APPEAL BEFORE U S. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THIS CASE THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE IT ACT. THE ASSESSING OFFICER QUESTIONED THE IMPUGNED ISSUE AT THE TIME OF COMPLETION OF THE ASSESSMENT WHICH IS EVIDENT FROM HIS L ETTER DATED 15.12.2006 ISSUED BY ASSESSING OFFICER TO THE ASSESSEE WHICH IS PLACED AT PAPER BOOK AT PAGE NO.21. THE ASSESSEE HAS GIVEN REP LY ON THIS ISSUE VIDE HIS LETTER DATED 21.11.2006 STATING THAT TH E ASSESSEE HAD RECEIVED SECURED ADVANCE AGAINST MATERIAL FROM M/S SOMA E NTERPRISES AND ALSO ASSESSEE ENCLOSED A COPY OF CERTIFICATE ISSUED BY M/S S OMA ENTERPRISES. AFTER CONSIDERING THIS ISSUE THE ASSESSING OFFICE R OBSERVED IN THE ASSESSMENT ORDER ON THIS ISSUE AS FOLLOWS: EXCESS OF TDS MATERIAL ADVANCE THE ASSESSEE HAS SHOWN AN AMOUNT OF RS.1 54 87 969/ - AS MATERIAL ADVANCE IN LIABILITY SIDE OF BALANCE SHEET ON WHICH TDS AMO UNTING TO RS.1 58 752/- HAS BEEN DEDUCTED AND CLAIMED. AS PER THE PROVISIONS O F SECTION 199 THE CREDIT 3 3 FOR THE TDS CAN BE CLAIMED ONLY IN THOSE YEARS IN W HICH THE ADVANCE IS ADJUSTED AND NOT IN THE YEAR UNDER CONSIDERATION A S WAS CLAIMED BY THE ASSESSEE. SINCE THE ADVANCE DID NOT FROM PART OF T HE ASSESSEES INCOME FOR THE YEAR THE CREDIT OF TDS MADE FROM SUCH ADVANCE IS NOT ALLOWABLE IN THIS YEAR AND SAME IS ALLOWABLE IN THE YEAR IN WHICH REV ENUE IS RECOGNIZED. TDS CREDIT IS RESTRICTED TO RS.51 61 562/- (I.E. 532031 4 - RS.158752). 3.1. FROM THE ABOVE FINDINGS OF THE ASSESSING OFFICER IT IS APPARENT THAT THE ASSESSING OFFICER ENQUIRED THIS SECURED L OAN RECEIVED FROM M/S SOMA ENTERPRISES. AFTER ENQUIRY HE WAS SATISF IED BY THE TREATMENT GIVEN TO THE IMPUGNED AMOUNT BY THE ASSESSEE AND HE OPTED NOT TO MAKE AN ADDITION ON THIS COUNT. THIS IS A CONSCIOU S DECISION OF THE ASSESSING OFFICER. IF AN INCOME TAX OFFICER ACTING IN ACCORDANCE WITH LAW MAKES CERTAIN ASSESSMENT THE SAME CANNOT BE BRAND ED AS ERRONEOUS BY THE CIT SIMPLY BECAUSE ACCORDING TO HIM T HE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NOT VISUALIZE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE CIT FOR THAT OF THE ITO WHO PASSED THE ORDER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. THE ASSESSING OFFICER WHILE MAKING ASSESSMENT EXAMINED THE ACCOUNTS MAKES ENQUIRIES APPLIES HIS MIND TO THE FACTS AND CIRCUMSTA NCES OF THE CASE AND DETERMINES THE INCOME. THE CIT ON PERUSAL OF R ECORDS MAY BE OF THE OPINION THAT THE ADDITION MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND HE MUST HAVE MADE AN ADDITION ON A CCOUNT OF IMPUGNED ISSUE AND THE CIT WAS OF THE OPINION THAT H AD HE LEFT THE ASSESSMENT HE WOULD HAVE ESTIMATED THE INCOME BY MAKING AN ADDITION TOWARDS THIS AMOUNT AND IT WOULD HAVE RESULTED IN HIGH ER INCOME. THIS IS NOT POSSIBLE AS PER SECTION 263 SINCE LD. CIT WOULD NOT VE ST WITH THE POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCO ME AT HIGHER FIGURE. THIS IS BECAUSE THE ITO HAS EXERCISED THE QUASI-JU DICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE CIT DOES NOT FEEL SATISFIED WITH THE CONCLUSION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE CIT THE ORDER IN QUEST ION IS PREJUDICIAL TO 4 4 THE INTERESTS OF THE REVENUE. BUT THAT BY ITSELF WOULD NOT BE ENOUGH TO VEST THE CIT WITH THE POWER OF SUO MOTTO REVISION AND THAT CANNOT BE EXERCISED. ANY AND EVERY ERRONEOUS ORDER CANNOT BE THE SUBJECT MATTER OF REVISION BECAUSE THE SECOND REQUIREMENT MUST BE FULFI LLED. THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE IN TERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. WHEN EXER CISE OF STATUTORY POWER IS DEPENDENT UPON THE EXISTENCE OF CERTA IN OBJECTIVE FACTS THE AUTHORITY BEFORE EXERCISING SUCH POWER MUST HAV E MATERIALS ON RECORD TO SATISFY IN THAT REGARD. AS SEEN FROM THE F ACTS THE ASSESSING OFFICER MADE AN ENQUIRY REGARDING THE IMPUGNED ISSUE AND AFTER COLLETING THE REPLY FROM THE ASSESSEE HE IS BEING SATI SFIED WITH THE EXPLANATION OF THE ASSESSEE HE OPTED NOT TO MAKE ADDI TION ON THIS COUNT. SUCH DECISION OF THE ITO CANNOT BE HELD ERRONEOU S SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE ELABORATE DISCUSSION IN THAT REGARD. THE DOCUMENTS PRODUCED BY THE LD. COUNSEL FOR T HE ASSESSEE AT PAGE NOS.16 17 18 21 25 26 OF THE PAPER BOOK SHOWS THAT THE ASSESSING OFFICER CARRIED OUT THE ENQUIRY AND CAME TO THE CONCLUSION THE ADDITION IS UNWARRANTED. HENCE IN OUR OPINION NO ADD ITION CAN BE MADE AT THE INSTANCE OF THE LD. CIT UNLESS THE EARLIER DECISIO N OF THE ASSESSING OFFICER IS ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF T HE REVENUE. THE LD. CIT CANNOT PUT HIS WORDS IN THE MOUTH OF THE ASSESSING OF FICER AS THE ASSESSING OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE UNDE R THE LAW AND IF RESULTED IN LOSS AND WHERE TWO VIEWS ARE POSSIBLE AND ITO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE IT CANNOT BE TREATED AS ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE REV ENUE UNLESS VIEW TAKEN BY THE ITO IS UNSUSTAINABLE IN LAW. MERELY BECAUSE DIFFERENT VIEWS ARE POSSIBLE IT IS NOT ENOUGH TO HOLD THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICE TO THE INTEREST OF TH E REVENUE. 5 5 ACCORDINGLY THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT 9 TH APRIL 2010 SD/- SD/- G.C. GUPTA CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 9 TH APRIL 2010 COPY FORWARDED TO: 1. M/S MAGANTI CONBSTRUCTIONS 8-2-623/5/1/1 14 AVENU E 4 BANJARA HILLS HYDERABAD 2. DCIT CIRCLE 7 (1) HYDERABAD 3. CIT(A)-VI HYDERABAD. 4. CIT HYDERABAD 5. THE D.R. ITAT HYDERABAD. NP