Sunshine Granites Private Limited, Bengaluru v. Dy. Commissioner of Income Tax , Central Circle-1(2), Hyderabad

ITA 924/Hyd/2018 | 2013-2014
Pronouncement Date: 19-03-2021 | Result: Dismissed

Appeal Details

RSA Number 92422514 RSA 2018
Assessee PAN AAOCS6148Q
Bench Hyderabad
Appeal Number ITA 924/Hyd/2018
Duration Of Justice 2 year(s) 10 month(s) 8 day(s)
Appellant Sunshine Granites Private Limited, Bengaluru
Respondent Dy. Commissioner of Income Tax , Central Circle-1(2), Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 19-03-2021
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB-B
Tribunal Order Date 19-03-2021
Date Of Final Hearing 16-02-2021
Next Hearing Date 16-02-2021
Last Hearing Date 18-03-2019
First Hearing Date 28-09-2018
Assessment Year 2013-2014
Appeal Filed On 11-05-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI SATBEER SINGH GODARA JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU ACCOUNTANT MEMBER IT A NO S . 924 & 925 /H/20 1 8 ASSESSMENT YEAR S : 2 0 13 - 14 & 2014 - 15 SUN SHINE GRANITES PVT. LTD. BENGALURU PAN A A OCS 6148Q VS. DY. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE 1(2) HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI K.A. SAI PRASAD REVENUE BY: SHRI Y.V.S.T. SAI DATE OF HEARING: 16 /0 2 /2021 DATE OF PRONOUNCEMENT: 19 /0 3 /2021 O R D E R PER L.P. SAHU A.M. : BOTH THESE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF PR. CIT(CENTRAL) HYDERABAD FOR AYS. 2013 - 14 & 2014 - 15 PASSED U/S 263 OF THE INCOME - TAX ACT 1961 (IN SHORT THE ACT). AS THE ISSUE IS IDENTICAL IN BOTH THE APPEALS THE SAME WERE CLUBBED AND HEARD TOGETHER AND I TA NO S . 924 & 925 /HYD/ 18 SUNSHINE GRANITES PVT. LTD. BANGALORE. : - 2 - : THEREFORE A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. 2. THE GRIEVANCE OF THE ASSESSEE IN THE GROUNDS OF APPEAL FOR BOTH THE YEARS UNDER CONSIDERATION IS THAT THE PR. CIT IS NOT JUSTIFIED IN INVOKING THE PROVISI ONS OF SECTION 263 AND THE HOLDING THAT APPLICATION OF PROVISIONS OF SECTION 79 DO NOT WARRANT IN ASSESSEES CASE. 3. TO DISPOSE OF THESE APPEALS WE REFER TO THE FACTS FROM AY 2013 - 14 BEING ITA NO. 924/HYD/2018. 4. BRIEF FACTS OF THE CASE ARE THAT ASS ESSE E - COMPANY IS ENGAGED IN THE BUSINESS OF QUARRYING & TRADING OF GRANITE. A SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED ;N THE RESIDENTIAL PREMISES OF SRI AYUB KHAN O N 25 - 02 - 2014 WHEREIN DOCUMENTS PERTAINING TO THE ASSESSE E COMPANY WERE FOUND AND SEIZE D . LATER ON THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS . THE ASSESSE E - COMPANY ORIGINALLY FILED ITS RETURN OF INCOME FOR THE ASST.YEAR 2013 - 14 ON 05 - 10 - 13 ADMITTING LOSS OF RS. 95 75 711/ - WHICH WAS CL AIMED TO BE ALLOWED TO BE CARRIED FORWARD. I TA NO S . 924 & 925 /HYD/ 18 SUNSHINE GRANITES PVT. LTD. BANGALORE. : - 3 - : 4.1 T HE DCIT CENTRAL CIRCLE - 1(2) HYDERABAD HAD COMPLETED THE ASSESSMENT U/S 143(3) OF THE IT ACT ON 31 - 3 - 2016 FOR AY 2013 - 14 AND DISALLOWED CE RTAIN EXPENDITURE AMOUNTING TO RS. 13 97 874/ - AS THE ASSESSEE COULD NOT SUBSTANTIA TED THE EXPENDITURE UNDER THE HEADS CHEMICAL POWDER AND LAND DEVELOPMENT EXPENDITURE BY PRODUCING PROPER VOUCHERS. THE AO FURTHER DISALLOWED THE AMOUNTS OF RS. 30 60 082/ - U/S. 40 A (3) AND RS. 1 51 93 305/ - U/S. 40(A)( IA ). THUS THE LOSS OF RS. 95 75 71 1/ - RETURNED BY THE ASSESSEE HAS BECOME INCOME OF RS. 1 00 75 549/ - . THIS INCOME WAS SET OFF AGAINST THE BROUGHT FORWARD LOSS OF RS 3 90 63 682/ - AND THE BALANCE OF RS. 2 89 88 133/ - WAS ALLOWED TO BE CARRIED FORWARD TO BE SET OFF AGAINST FUTURE PROFITS. 5. BY EXERCISING HIS POWER S VESTED U/S 263 OF THE ACT THE PR. CIT (CENTRAL) HYDERABAD ON PERUSAL OF THE ASSESSMENT RECORD OF THE ASSESSEE OBSERVED THAT THE AO HAS NOT CONSIDERED THE PROVISIONS OF SECTION 79 OF THE IT ACT AND THE ORDER OF THE AO IS NOT ONL Y ERRONEOUS BUT ALSO I TA NO S . 924 & 925 /HYD/ 18 SUNSHINE GRANITES PVT. LTD. BANGALORE. : - 4 - : PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND HENCE SET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO THE AO TO CONSIDER THE PROVISIONS OF SECTION 79 OF THE ACT AND PASS THE ASSESSMENT ORDER AFRESH IN ACCORDANCE WITH LAW AFTER GIV ING AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. FOR THE SAKE OF CLARITY WE REPRODUCE OBSERVATIONS OF THE P R. CIT(A) IN HIS ORDER TO COME TO THE ABOVE CONCLUSION AS UNDER: 3. ON VERIFICATION OF RECORD IT IS NOTICED FROM PART B OF NOTE 1 OF BALANCE SHE ET FOR THE Y EAR ENDED AS ON 31 - 03 - 2013 AS WELL AS 31 - 03 - 2012 THAT THE SHARE HOLDING PATTERN 'JI .NE COMPANY HAS BEEN CHANGED SUBSTANTIALLY AS REPRODUCED BELOW : FY 2012 - 13 FY 2011 - 12 NAME OF THE SHARE HOLDER % OF SHARE HOLDING FOR CURRENT REPORT PERI OD % OF SHARE HOLDING FOR PREVIOUS REPORTING PERIOD AYUB KHAN 0.41% 50% DOU YANGJUN 0.41% 50% YALI STONES HONGKONG LTD. 99.18% 0% 4 I T IS OBSERVED FROM THE ABOVE TABLE THAT THE SHAREHOLDINGS TO THE EXTENT OF 51 % IS NOT ONE AND THE SAME IN THE ASST. YEARS 2012 - 13 (THE YEAR OF BUSINESS TOSS) AND ASST. YEAR 2013 - 14 (THE YEAR OF SET OFF OF BUSINESS LOSS). IT IS VERY MUCH PERTINENT TO MENTION HERE THE PROVISION OF SECTION 79 OF THE INCOME TAX ACT 1961 WHEREIN IT WAS EARLY HELD THAT IN CASE THERE IS A CHANGE I TA NO S . 924 & 925 /HYD/ 18 SUNSHINE GRANITES PVT. LTD. BANGALORE. : - 5 - : IN 51% OF THE SHAREHOLDING THEN THE EARLIER LOSSES CANNOT BE SET OFF AGAINST THE PROFITS OF THE COMPANY IN SUBSEQUENT YEARS. 5 . AS MENTIONED EARLIER THE ASSESSEE COMPANY HAS INCURRED LOSSES OF RS.3 90 63 682 / - U P TO THE ASSESSMENT YEAR 2012 - 13. AT THE SAME TIME THE SHAREHOLDERS UP TO THE ASSESSMENT YEAR 2012' - 13 ARE ONLY SHRI AYUB KHAN (50%) AND SHRI DOU YANGIUN (50%) WHEREAS FOR THE AY 2013 - 14 THE SHARES OF THE COMPANY WERE NOT HELD BY THE SAME PERSONS. AS MENT IONED EARLIER 99.18% SHARES WERE HELD BY YALI STONES HONGKONG LIMITED WHICH IS A NEW COMPANY AND WHICH BECAME A SHAREHOLDER DURING THE YEAR UNDER CONSIDERATION I .E. AY 2013 - 14. THUS IT CAN BE CONCLUDED 51% OF T H E SHAREHOLDING OF THE COMPANY WAS NOT HELD B Y THE SAME SHAREHOLDERS FOR THE AYS 2012 - 13 & 2013 - 14 RESPECTIVELY. SINCE 51% OF THE SHARE HAS BEEN CHANGED FROM EARNER SHAREHOLDERS TO NEWLY JOINED SHAREHOLDERS I.E. YALI STONES HONGKONG LIMITED. 718 ASSESSEE COMPANY IS NOT ELIGIBLE TO SET OFF THE EARLIER YEAR LOSSES AGAINST THE INCOME EARNED FOR THE AY 2013 - 14 AS PER SPECIFIC PROVISIONS OF SECTION 79 OF THE INCOME TAX ACT 1961. FROM A PERUSAL OF THE ASSESS MENT ORDER IT IS OBSERVED THAT THE AO LOST SIGHT OF THE PROVISIONS OF SECTION 79 OF THE INCOME TAX ACT AND SET OFF THE EARLIER YEAR LOSSES AGAINST THE INCOME DETERMINED FOR THE AY 2013 - 14 AS SUCH THE ORDER IS ERRONEOUS. 6. SINCE THE ORDER PASSED U/S. 143(3) WAS ERRONEOUS AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE A NOTICE U/S. 263 WAS ISSUED TO THE 8SSESSEON 16 - 03 - 2017 AND 18 - 09 - 2017. THE ASSESSEE CHOSE NOT TO APPEAR AND ONLY SOUG HT FOR ADJOURNMENT. CONSIDERING THE REQUEST OF THE ASSESSEE THE CASE W AS POSTED FOR HEARING AS ON 11 - 10 - 2017. HOWEVER ON THE DATE OF APPEARING I.E 11 - 10 - 2017 ALSO NON E APPEARED. SINCE THE ASSESSEE IS NOT INTERESTED IN THE PURSUANCE OF THE CASE LAM OPINION THAT THE CASE IS TO B~ FINALIZED. ACCORDINGLY I PROCEED TO DECIDE THE CASE CIS PER THE MATERIA L AVAILABLE ON RECORD. I TA NO S . 924 & 925 /HYD/ 18 SUNSHINE GRANITES PVT. LTD. BANGALORE. : - 6 - : 7. AS MENTIONED IN THE PRECEDING PARAGRAPH OF THIS ORDER THE AO HAS NOT CONSIDERED THE PROVISIONS OF SECTION 79 OF THE INCOME TAX ACT 1961. THEREFORE THE ORDER IS RIOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTERESTS OF REVENUE. ACCORDINGLY THE ASS ESSMENT ORDER PASSED FOR AY 2013 - 14 IS SET ASIDE WITH A DIRECTION TO THE AO TO CONSIDER THE PROVISIONS OF SECTION 79 OF THE INCOME TAX ACT. 1961 AND PASS THE ASSESSMENT ORDER AFRESH IN ACCORDANCE WITH LAW AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE OF BEIN G HEARD. 6. AGGRIEVED BY THE ORDER OF PR. CIT THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 7. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE PR. CIT FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES OF THE CASE AND DID NOT WARRANT APPLICATION OF THE PROVISIONS OF SECTION 79 AND THEREFORE INVOKING THE PROVISIONS OF SECTION 263 IS NO T AS PER LAW HENCE THE ORDER OF THE PR. CIT MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED. 8. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF PR. CIT AND SUBMITTED THAT THE PR. CIT GAVE A CATEGORICAL FINDING THAT THE AO HAS NOT CONSIDERED THE P ROVISIONS OF SECTION 79 OF THE ACT AS PER TABLE GIVEN SUPRA IN CASE OF I TA NO S . 924 & 925 /HYD/ 18 SUNSHINE GRANITES PVT. LTD. BANGALORE. : - 7 - : CHANGE OF SHAREHOLDING PATTERN . HE THEREFORE SUBMITTED THAT THE ORDER OF PR. CIT BE UPHELD. 9. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AS WELL AS GONE THR OUGH THE ORDERS OF REVENUE AUTHORITIES. ON GOING THROUGH THE ASSESSMENT ORDER WE NOTICE THAT THE AO HAS NOT TAKEN ANY COGNIZANCE AS THERE IS A SUBSTANTIAL MATERIAL AVAILABLE ON RECORD THAT THE INCOME HAS ESCAPED ASSESSMENT. AS POINTED OUT BY THE PR. CIT THE ASSESSEE IS NOT ELIGIBLE TO SET OFF THE EARLIER LOSSES AGAINST THE INCOME EARNED FOR THE AY 2013 - 14 AS PER SPECIFIC PROVISIONS OF SECTION 79 OF THE ACT AS THE NEW SHAREHOLDER I.E. YALI HONGKONG LTD. HAS ACQUIRED 99.18% SHARES. FIRSTLY THE AO IS AN INVESTIGATING OFFICER AND THEREAFTER HE IS AN ADJUDICATING OFFICER. IT IS THE DUTY OF THE AO TO MAKE CORRECT ASSESSMENTS AS PER INCOME - TAX LAW APPLICABLE FOR THE RELEVANT ASSESSMENT YEAR. THE AO HAS LOST SIGHT OF THE PROVISIONS OF SECTION 79 OF THE ACT AND SET OFF TH E EARLIER LOSSES AGAINST THE INCOME DETERMINED FOR THE AY 2013 - 14 IS ERRONEOUS. THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF PR. CIT SETTING ASIDE THE ORDER OF I TA NO S . 924 & 925 /HYD/ 18 SUNSHINE GRANITES PVT. LTD. BANGALORE. : - 8 - : THE AO WITH A DIRECTION TO CONSIDER THE PROVISIONS OF SECTION 79 OF THE ACT AND P ASS THE ASSESSMENT ORDER AFRESH AND UPHOLDING THE ORDER OF THE PR. CIT WE DISMISS THE GROUNDS RAISED BY THE ASSESSEE ON THIS COUNT. 10. AS THE FACTS AND GROUNDS ARE MATERIALLY IDENTICAL IN AY 2014 - 15 TO THAT OF AY 2013 - 14 FOLLOWING THE DECISION IN AY 2013 - 14 WE DISMISS THIS APPEAL AS WELL. 1 1 . IN THE RESULT BOTH THE APPEAL S OF THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COUR T ON 19 TH MARCH 2021 . SD/ - SD/ - ( S.S. GODARA ) (LAXMI PRASAD SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDE RABAD DATED : 19 TH MARCH 20 2 1 . K V I TA NO S . 924 & 925 /HYD/ 18 SUNSHINE GRANITES PVT. LTD. BANGALORE. : - 9 - : C OPY TO : 1 SUNSHINE GRANITES (P) LTD. C/O CH. PARTHASARATHY & CO. 1 - 1 - 298/2/B/3 1 ST FLOOR SOWBHAGYA AVENUE ST. NO. 1 ASHOKNAGAR HYDERABAD 500 020. 2 DC IT CENTRAL CIRCLE 1(2) 7 TH FLOOR AAYKAR BHAVAN BASHEERBAGH HYDERABAD 500 004 3 PR. C I T( CENTRAL ) HYDERABAD. 4 ADDL. CIT CR - 1 HYDERABAD 5 ITAT DR HYDERABAD. 6 GUARD FILE.