N.Ramachandra Reddy, Warangal v. CIT, Hyderabad

ITA 745/HYD/2008 | 2003-2004
Pronouncement Date: 08-01-2010 | Result: Allowed

Appeal Details

RSA Number 74522514 RSA 2008
Assessee PAN AARFN4277H
Bench Hyderabad
Appeal Number ITA 745/HYD/2008
Duration Of Justice 1 year(s) 8 month(s) 10 day(s)
Appellant N.Ramachandra Reddy, Warangal
Respondent CIT, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 08-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 08-01-2010
Date Of Final Hearing 04-01-2010
Next Hearing Date 04-01-2010
Assessment Year 2003-2004
Appeal Filed On 28-04-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI G.C.GUPTA VICE PRERSIDENT AND SHRI AKBER BASHA ACCOUNTANT MEMBER ITA NOS.745 & 746/HYD/08 : ASST. YEARS 2003-04 & 200 4-05 N. RAMACHANDRA REDDY MAHABOOBABAD. (PAN: AARFN 4277 H) V/S. DCIT CIR-1 WARANGAL. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.V. CHELLAMAIAH RESPONDENT BY : SHRI A. PATRA O R D E R PER AKBER BASHA ACCOUNTANT MEMBER THESE APPEALS PREFERRED BY THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS DATED 27-3-2008 PASSED BY COMMI SSIONER OF INCOME TAX- VI HYDERABAD FOR THE ASSESSMENT YEARS 2003-0 4 AND 2004-05. SINCE COMMON ISSUES ARE INVOLVED IN THESE TWO AP PEALS THESE ARE TAKEN UP TOGETHER AND DISPOSED OFF BY THIS COMBINED ORDER FOR THE SAKE OF CONVENIENCE. 2. FOR THE SAKE OF BREVITY WE EXTRACT HEREUNDER THE GROUNDS RAISED FOR ASSESSMENT YEAR 2003-04:- '1. THE ORDER OF THE CIT-VI IS NOT BASED ON FACTS AND CIRCUMSTANCES OF THE CASE AND IS AGAINST THE LAW AND PRINCIPLES OF NATURAL JUSTICE. 2 2. THE ORDER OF THE CIT-VI IS BASED ON PRESUMPTIONS AND SURMISES AD COULD BE SEEN FROM THE NOTICE ISSUED U/S 263 ITSELF. 3. THE CONTENTS AND NARRATION IN THE ORDER SUGGEST THAT TH E CIT WAS OBLIVIOUS OF THE FACTS AND HAD NO KNOWLEDGE OF ACCOUNTING SYSTEM. IF HE IS UNABLE TO UNDERSTAND THE I SSUES HE INVOKES THE PROVISIONS OF SECTION 263 IN A LOOSE MANNE R AND DRAWS HIS OWN INFERENCES. SECTION 263 IS NOT MEANT T O SUPPORT HIS MERITS CALIBER ETC. 4. THE OBSERVATION OF CIT TO THE FACT THAT HE DIRECTED TH E ASSESSEE TO APPEAR EITHER IN PERSON OR THROUGH AUTHORIZE D REPRESENT ALONE IS FALSE BUT ALSO HE OFFERED TO THE ASSE SSEE TO FILE WRITTEN REPLY. BUT IN THE ORDER HE STATES TH AT HE STIPULATED THE PHYSICAL PRESENCE OF THE ASSESSEE. 5. INCLUSION OF OTHER MATTERS AND THE MENTIONING OF DEF ERMENT OF THE PROCEEDINGS INITIATED U/S 263 IN THE ORDER UND ER SECTION 263 ARE AGAINST THE LAW. 6. THE CIT ERRED IN HOLDING CONTRACTUAL OBLIGATIONS IN H IS NOTICE U/S 263 AND IN THE ORDER HOLDING THAT THE ASSESSEE DID N OT PRODUCE THE BOOKS OF ACCOUNT TO SATISFY HIS UNCALLED FOR INFERENCE. HIS FURTHER OBSERVATIONS BASED ON THIS OWN PRESUMPTIONS AND DICTATION OF MAINTENANCE OF ACCOUNTS IS NOT JUSTIFIABLE CAUSE TO INDICATE PREJUDICIAL NATURE OF THE ASSESSMENT ORDER. IT IS NOT CLEAR WHETHER ORDER TO BE CONSIDERED SHOULD BE PREJUDICIAL TO THE INTEREST OF REVE NUE OR PREJUDICIAL TO HIS CALIBER OF UNDERSTANDING. IT IS CL EAR FROM THE FACTS THAT HE COULD NOT READ THE ACCOUNT COPIES FURNI SHED BEFORE HIM. 3 7. HIS FINDINGS THAT THE ASSESSING OFFICER LIKE 'OUGHT TO HAVE EXAMINED IN DEPTH INVESTIGATION ETC' CANNOT BE TAKEN A VALID GROUND FOR INVOKING THE PROVISIONS OF SECTION 263.' 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A F IRM HAD FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-04 O N 28-11-2003 ADMITTING TOTAL INCOME OF RS.33 44 670 AND FILED RETU RN OF INCOME FOR THE ASSESSMENT YEAR 2004-05 ON 1-11-2004 ADMITTING TOTA L INCOME OF RS.13 25 796. FOR THE ASSESSMENT YEAR 2003-04 THE ASSESSME NT OFFICER HAD COMPLETED THE ASSESSMENT UNDER SECTION 143(3) B Y MAKING AN ADDITION OF RS.3 50 000 TO THE RETURNED INCOME AND DETERMINING TOTAL INCOME AT RS.36 94 670/-. FOR THE ASSESSMENT YEAR 2004-0 5 THE ASSESSEE'S BUSINESS PREMISES AT MAHABOOBABAD HAD BEEN SURVEYE D ON 21-2-2006 AND THE ASSESSEE HAD FILED A REVISED RETURN OF INCOME ON 9-3- 2006 OFFERING ADDITIONAL INCOME OF RS.10 26 500 AND T HE ASSESSMENT HAD BEEN COMPLETED BY THE DCIT WARANGAL UNDER SECTION 143(3) ON 23- 3-2006 BY ACCEPTING THE TOTAL INCOME DECLARED IN THE RE VISED RETURN AT RS.23 52 300. IN THE COURSE OF THE OBLIGATORY ANNUAL INSPECTION OF ASSESSMENT WORK THE CIT HAD OCCASION TO EXAMINE THE ASSESSMENT RECORDS FOR THE ASSESSMENT YEARS UNDER CONSIDERATION AND FI ND THAT THE ASSESSMENT ORDER DATED 2-3-2006 FOR ASSESSMENT YEAR 2003-04 TO BE BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE THE CIT ACTING UNDER SECTION 263 OF THE IT ACT 1961 HAD ISSUED A NOTICE SETTING OUT THE GROUND OF ERROR AND PREJUDICE AND CALLING UPO N THE ASSESSEE TO SHOW CAUSE AS TO WHY THE ASSESSMENT SHOULD NOT BE REVISED OR SET ASIDE AND THE GROUND OF PROPOSED REVISION WAS THAT IN THE BA LANCE-SHEET AS AT 31-3-2003 THE ASSESSEE HAD REFLECTED AN AMOUNT OF RS.36 86 142 AS RECEIVABLE FROM BHARTI CONSTRUCITON COMPANY AND EXAMI NING THE BALANCE SHEET FOR THE IMMEDIATE PRECEDING ASSESSMENT YEAR 2002-03 IT 4 IS SEEN THAT AS AT 31-3-2002 THE AMOUNT RECEIVABLE FROM THE SAME PARTY BHARTHI/BHATI CONSTRUCTION COMPANY WAS RS.11 22 131. I N OTHER WORDS THE AMOUNT RECEIVABLE FROM BHARTHI CONSTRUCTION COMPAN Y WAS RS. RS.11 22 131 AND ON 31-3-2003 THE RECEIVABLE AMOUNT W AS RS.36 86 142. TAKING ONLY THESE TWO FIGURES INTO ACCOUN T IN HE ABSENCE OF OTHER NECESSARY DETAILS IT CAN SAFELY BE SAID THAT IN THE PREVIOUS YEAR RELEVANT TO THE ASST. YEAR 2003-04 THE ASSESSEE FIRM MUST HAVE DONE CIVIL WORKS OF THE VALUE TO THE TUNE OF AT LEAST OF RS. 25 64 011 BUT IT IS SEEN FROM THE PROFIT AND LOSS ACCOUNT FOR THE THIS YEAR T HAT NO RECEIPT HAS BEEN SHOWN IN THE NAME OF THE ABOVE COMPANY IN T HE PROFIT & LOSS ACCOUNT. THEREFORE THERE IS NO APPARENT SUPPRESSION OF CO NTRACTUAL RECEIPT TO THE EXTENT OF RS.25 64 011 IN THE ASSESSMENT Y EAR 2003-04 WHICH HAD BEEN COMPLETED UNDER SCRUTINY BY THE ASSESSING OFFICER WITHOUT EXAMINING THIS POINT. FOR THE ASSESSMENT YEAR 2 004-05 ALSO THE CIT HAD OCCASION TO EXAMINE THE ASSESSMENT RECORDS AND FINDI NG THE RELEVANT ASSESSMENT ORDER DATED 23-3-2006 TO BE BOTH ER RONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE HE ACTING UNDER SECTION 263 OF THE IT ACT HAD ISSUED A NOTICE SETTING OUT THE GROUNDS OF ERROR AND PREJUDICE AND CALLING UPON THE ASSESSEE TO SHOW CAUSE AS TO W HY THE ASSESSMENT SHOULD NOT BE REVISED OR SET ASIDE. THE CIT NOT SATISFIED WITH THE EXPLANATIONS OF THE ASSESSEE HE HELD THAT THE ASSESSMENT COMPLETED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE THER EFORE SET ASIDE THE SAID ASSESSMENT ORDER WITH THE DIRECTION TO RE-DO THE SAME IN THE LIGHT OF THE FINDINGS OBSERVATIONS AND DIRECTIONS. AGGRIEVE D BY THIS ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE A SSESSEE-FIRM AND BHARATHI CONSTRUCTION COMPANY ARE SISTER CONCERNS DOI NG CIVIL 5 CONTRACTS INDIVIDUALLY AND THEY DO NOT HAVE ANY OTHER CONTRACTUAL OBLIGATIONS AND THEY HAVE INTERNAL TRANSFER OF FUNDS AMONG THEMSELVES THROUGH BANK TRANSACTIONS. IT WAS FURTHER SUBMITTED THA T THE ISSUE COULD HAVE BEEN SETTLED THROUGH VERIFICATION OF RELEVA NT BALANCE SHEET OF M/S. BHARATHI CONSTRUCTION WITHOUT RESORT TO 263 PRO CEEDINGS AND SPECIFIC DETAILS HAD BEEN CALLED FOR BY THE ASSESSING OFFICE R DURING THE ASSESSMENT PROCEEDINGS AND THE SAME DULY SUBMITTED. IT IS FURTHER SUBMITTED THAT IT COULD BE SEEN FROM ASSESSEE'S ACCOUNT IN TH E BOOKS OF M/S. BHARATHI CONSTRUCTIONS THAT THE COMPANY HAVE DRAW N FUNDS MOSTLY FROM OUT OF THEIR TERM LOAN AND OVERDRAFT FACI LITY AVAILABLE WITH THE STATE BANK OF INDIA TO MEET ASSESSEE NEEDS AND REPAI D AS AND WHEN FUNDS ARE AVAILABLE WITH THE ASSESEE AND THERE WAS NOTHING TO SUGGEST FROM TRANSACTIONS ON THE SAID ACCOUNT THAT THEY RE LATED TO ANY SUB CONTRACTUAL DEALINGS AND IT WAS FURTHER STATED THAT T HE PAYMENT TO HPCL IS ON THE CONTRACT WORK RELATING TO SUB CONTRACT FROM SIDDHARTHA CONSTRUCTIONS. THE NAME OF THE THIS CONCERN MENTIONED IN BRACKETS IS ONLY TO IDENTIFY THE TRANSACTION AND THE PAYMENTS TO HP CL ARE FOR PURCHASE OF BITUMEN AND SRI K. GAJJALAIAH WAS A TRANSP ORTER OF BITUMEN FROM HPCL TO THE WORK SPOT. IT IS FURTHER SUBMITTED THA T EITHER IT WAS PERVERSE OR DUE TO LACK OF KNOWLEDGE OF THE MATTERS RE LATING TO CIVIL CONTRACTS AND THE METHOD OF ACCOUNTING OF CONTRACT RECEIPTS AND A DETAILED STATEMENT GIVEN BY THE EE(PR) KOTHAGUDEM SH OWING THE DETAILS OF GROSS AMOUNTS OF RUNNING BILLS PAID VARIOUS R ECOVERIES MADE THERE FROM NET AMOUNT OF BILLS PAID INCLUDING REFU ND OF WITHHELD DEPOSITS AND DAMAGES RECOVERED WAS FILED AMONG WITH THE RETURN OF INCOME. IT WAS FURTHER SUBMITTED THAT WHILE SECURITY DE POSIT IS RECOVERED FROM RUNNING BILLS LIQUIDATED DAMAGES WOUL D BE CHARGED FOR ANY BREACH IN CONTRACTUAL OBLIGATIONS AND IN THE FIRST P LACE THE GROSS BILL AMOUNT WOULD BE OFFERED FOR ASSESSMENT IN THE YEA R IN WHICH SUCH 6 RECOVERIES WERE MADE AND IT WAS CONFIRMED BY THE EE(PR P KOTHAGUDEM IN HIS CERTIFICATE FILED. THE SECURITY DEPOSI T WOULD BE REFUNDED AFTER COMPLETION OF WORK AND THE WARRANTY P ERIOD WHICH COULD NOT HAPPEN DURING THE SAME ACCOUNTING YEAR AND SIMILARL Y LIQUIDATED DAMAGES WOULD ALSO BE REFUNDED ONCE THE CONTRACTUAL OBL IGATIONS ARE MET TO THE SATISFACTION OF THE CONCERNED AUTHORITY AND T HIS SO HAPPENS ONLY AFTER COMPLETION OF THE WORK. IT WAS FURTHER SUB MITTED THAT THERE IS NO PLAUSIBLE REASON TO REJECT THE EXPLANATION OFFER ED BY THIS ASSESSEE IN THIS REGARD AND DOUBTING THE CERTIFICATE ISSUED BY T HE CONCERNED AUTHORITY. IF THE CIT STILL HAS ANY DOUBT HE MAY SU BSTANTIATE HIS STAND BY SHOWING A PRECEDENT OF SUCH A NATURE WHERE THE REFU ND OF SECURITY DEPOSIT AND LIQUIDATED DAMAGES WERE BROUGHT TO TAX IN THE YEAR IN WHICH THEY WERE REFUNDED SINCE THIS IS A COMMON PHENOMEN A IN ALMOST ALL CIVIL CONTRACT CASES AND IT WAS FURTHER SUBMITTED THAT UNFORTUNATELY COPIES OF TDS CERTIFICATES FILED ALONG WITH RETURNS FOR E ARLIER YEARS ARE NOT READILY TRACEABLE WITH THEM. HOWEVER THEY ARE E NCLOSING COPIES OF LEDGER EXTRACTS (ANNEXURE-V) OF EMD & FSDS ACCOUNT FOR THE YEAR ENDING 31-3-2003 AND 31-3-2004 SHOWING THE DETAILS OF RECOVERIES MADE BY EE(PR) KOTHAGUDEM FROM THE EARLIER CONTRACT BILLS. IT WAS FURTHER SUBMITTED THAT THE ORDER OF THE CIT IS NOT BA SED ON FACTS AND CIRCUMSTANCES OF THE AND IS AGAINST THE LAW AND PRINCIPLES OF NATURAL JUSTICE AND IT IS BASED ON PRESUMPTIONS AND SURMISE AS COULD BE SEEN FROM THE NOTICE ISSUED U/S 263 ITSELF AND INCLUSION OF OTH ER MATTERS AND THE MENTIONING OF DEFERMENT OF THE PROCEEDINGS INITIA TED U/S 263 IN THE ORDERS ARE AGAINST THE LAW AND THE CIT FURTHER ERRED IN HOLDING CONTRACTUAL OBLIGATIONS IN HIS NOTICE U/S 263 AND IN THE ORDER HOLDING THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT TO SA TISFY HIS UNCALLED FOR INFERENCE AND HIS OBSERVATIONS BASED ON HIS OWN PRESUMPTIONS OF MAINTENANCE OF ACCOUNTS IS NOT JUSTIFIABLE CAUSE TO 7 INDICATE PREJUDICIAL NATURE OF THE ASSESSMENT ORDER. ON THE OTHER HAND THE LEARNED DR SUBMITTED THAT THE ASSESSEE COULD NOT EXPL AIN THE DIFFERENCE BEFORE THE CIT IN RESPECT OF CONTRACT RECEIPTS. THE ASSESSEE HAS ALSO NOT FILED ANY EVIDENCE TO SUBSTANTIATE HIS CLAIM FOR THE DIFFERENCE. TDS AMOUNT IS NOT EXPENDITURE BUT THE ASSESSE E DEBITED THE TDS AMOUNT TO THE PROFIT AND LOSS A/C IN RESPECT OF SALES -TAX PAYMENT ALSO THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TO PROVE THAT THE SAID PAYMENTS ARE NOT ATTRACTED BY THE PROVISIONS OF SECTION 4 3B OF THE INCOME-TAX ACT. THE ASSESSING OFFICER FAILED TO EXAMINE T HE SAID DIFFERENCES AND OMISSIONS. THE OMISSION HAS CERTAINLY REND ERED THE ASSESSMENT NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN THE AMBIT OF THE DECISION OF APEX COUR T IN THE CASE OF MALABAR INDUSTRIES COMPANY LTD. VS. CIT (243 ITR 83) AND HENCE THE CIT IS RIGHTLY ASSUMED THE JURISDICTION U/S 263 AND HIS O RDERS MAY BE UPHELD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PART IES GONE THROUGH THE ORDERS OF THE AUTHORITIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND FROM THE NOTICE AS WELL THE IMPUGN ED ORDER OF CIT THE ORDER OF CIT IS BASED ON PURELY ON PRESUMPTIONS A ND SURMISES. THE FINDINGS OF THE CIT THAT THE ASSESSING OFFICER OUGHT TO H AVE EXAMINED THE DETAILS IN DEPTH INVESTIGATION ETC CANNOT BE TAK EN AS VALID GROUND FOR ASSUMING THE JURISDICTION UNDER SECTION 263 OF THE ACT . IN RESPECT OF ASSESSMENT YEAR 2003-04 WE FIND FROM THE LEDGER EXTRACT OF BHARATHI CONSTRUCTIONS THAT THE TRANSACTIONS ARE MAINLY RELATED T O TRANSFER OF FUNDS BETWEEN THE ASSESSEE AND THE SAID COMPANY. THERE IS NOTHING TO SUGGEST FROM THE TRANSACTION ON THE SAID ACCOUNT THAT THEY RELATE TO ANY SUB-CONTRACT DEALINGS. SIMILARLY FOR THE ASSESSMENT YEAR 2004-05 BEING THE FIRST ISSUE THE DIFFERENCE OF RS.18 22 814 R EPRESENTS FSD AND 8 WITHHELD/LIQUIDATED DAMAGES. WE FIND MERIT IN THE CON TENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THESE AMOUNTS HAVE B EEN INCLUDED IN THE GROSS RECEIPTS OF EARLIER YEARS AND THE SAME CANNOT BE PART OF GROSS RECEIPTS OF THE ASSESSMENT YEAR IN QUESTION. THE SAID DEDUCTIONS IN THE GROSS RECEIPTS ARE ALSO SUPPORTED BY THE CERTIFICATE ISSUED BY THE CONCERNED AUTHORITIES. IF THE CIT HAD ANY DOUBT HE CO ULD HAVE VERIFIED THE SAME FROM THE RECORDS OF THE ASSESSMENT YEAR IN WHICH T HE REFUND OF SECURITY DEPOSIT AND LIQUIDATED DAMAGES WERE BROUGHT TO TAX. HENCE IT IS QUITE CLEAR THAT THE ALLEGED UNDERSTATED AMOUNT OF RS.18 22 814 HAD BEEN INCLUDED IN THE GROSS RECEIPTS OF THE EARLIER YEAR FOR WHICH TDS HAS BEEN DEDUCTED. THE DEPARTMENT DID NOT BRING ANY MATERIAL ON RECORD TO PROVE THAT THE ASSESSEE HAS UNDERSTATED THE GROSS RECEIPTS TO THE TUNE OF RS.18 22 814. IN OUR CONSIDERED OPINION T HERE ARE NO UNDERSTATED GROSS RECEIPTS ON THIS COUNT. THE SECOND ISSUE IS WITH REGARD TO THE DEBIT IN THE ASSESSEE'S PROFIT AND LOSS ACCOU NT A SUM OF RS.34 276 BY WAY OF TDS ON THE GROSS CONTRACT AMOUNT OF RS.46 19 182 IN THE HANDS OF PRINCIPAL CONTRACTOR M/S SIDDARTH CONST RUCTIONS. WE FIND FROM THE COPY OF THE TDS CERTIFICATE FURNISHED BEFORE U S THAT THE GROSS AMOUNT OF THE BILL WAS RS.46 19 182 AND THE NET AMOUN T PAID WAS RS.28 95 428 AFTER RECOVERIES OF RS.17 23 754. THESE RECOVERIES INCLUDE A SUM OF RS.34 276 TOWARDS TDS. THUS WHILE CRE DITING THE GROSS AMOUNT OF THE CONTRACT RECEIPTS TO THE PROFIT AND L OSS A/C THE ENTIRE RECOVERIES INCLUDING TDS WERE ALSO DEBITED TO PR OFIT AND LOSS A/C IN THE RESPECTIVE HEADS. HENCE WE ARE OF THE VIEW OF T HAT THE AMOUNT OF RS.34 276 DEBITED TO PROFIT AND LOSS A/C TOWARDS TDS IS IN ORDER. 6. THE THIRD ISSUE IS WITH REGARD TO THE UNDERSTATEMEN T OF AN ASSET I.E. UNDERSTATEMENT OF RECEIVABLE FROM M/S SIDDARTH CONSTRUCTIONS IN THE ASSESSEE'S BALANCE-SHEET AS AT 31-3-2004. WE FIND THAT ONCE THE 9 ENTIRE GROSS AMOUNT OF THE CONTRACT RECEIPT IS CREDITED TO THE PROFIT AND LOSS A/C THERE CANNOT BE ANY UNDERSTATEMENT OF ANY ASSET AS RECEIVABLE IN THE BALANCE-SHEET UNLESS THE PARTY OWES SOME AMOUNT TO THE ASSESSEE. SINCE THE ASSESSEE HAD RECEIVED THE ENTIRE AMOUNT DURING THE ASSESSMENT YEAR IN QUESTION THERE CANNOT BE ANY RECEIVABL E IN THE BALANCE-SHEET. HENCE THERE IS NO QUESTION OF UNDERSTATEM ENT OF ANY ASSET IN THE FORM OF RECEIVABLES IN THE BALANCE-SHEET. 7. THE FOURTH ISSUE IS WITH REGARD TO DISALLOWANCE OF R S.3 50 278 UNDER THE PROVISIONS OF SECTION 43B OF THE ACT. WE FIND MERIT IN THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT WHE N THE OUTSTANDING AMOUNT OF RS.3 50 278 HAD NOT FIGURED IN THE BALANCE- SHEET THE SAME CANNOT BE COVERED UNDER SECTION 43B DISAL LOWANCE. THE ASSESSEE APPEARS TO HAVE PAID THE SAID AMOUNT ON 8-3-2004 . HENCE THERE IS NO QUESTION OF ANY DISALLOWANCE UNDER SECTION 4 3B OF THE ACT. IN OUR CONSIDERED VIEW THE ORDER OF THE ASSESSING OFFICER FOR THE TWO YEARS UNDER CONSIDERATION IS NOT ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE. THE CIT IS NOT CORRECT IN SET- ASIDE THE ORDERS OF THE ASSESSING OFFICER TO REDO THE ASSESSMENTS AFRESH. IN V IEW OF OUR ABOVE FINDINGS THE ASSUMPTION OF JURISDICTION BY THE ADMINISTRATIVE COMMISSIONER UNDER SECTION 263 OF THE ACT IS NOT CORRECT. ACCORDINGLY WE CANCEL THE ORDERS OF THE CIT FOR BOTH THE ASSESSMENT YE ARS UNDER CONSIDERATION. 10 8. IN THE RESULT BOTH THE APPEALS FILED BY THE ASSESSE E STAND ALLOWED. ORDER WAS PRONOUNCED IN THE COURT ON 08-1-2010. SD (G.C.GUPTA) SD (AKBER BASHA) VICE PRESIDENT. ACCOUNTANT MEMBER. DT/- 8TH JANUARY 2010. COPY FORWARDED TO: 1. SRI N. RAMACHANDRA REDDY CONTRACTOR 14-46 KORVI ROAD MAHABOOBABAD WARANGAL DISTRICT. 2. DCIT CIRCLE-1 WARANGAL. 3. COMMISSIONER OF INCOME-TAX-VI HYDERABAD. 4. COMMISSIONER OF INCOME TAX HYDERABAD. 5. DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD. JMR *