M/S Sujana Metal Products Ltd.,, ... vs Department Of Income Tax

ITA Nos.1193 and 1622 of 2014 Sujana Metal Products Ltd Hyderabad

IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad 'B' Bench, Hyderabad

Before Shri P.M. Jagtap, Accountant Member & Smt.Asha Vijayaraghavan, Judicial Member

ITA No.1622/Hyd/2014 (Assessment year: 2010-11 )

M/s. Sujana Metal Products Ltd Dy. Commissioner of Hyderabad Vs. Income Tax, Circle 3(2) PAN: AACCS 8614 H Hyderabad (Appellant) (Respondent)

ITA No.1193/Hyd/2014 (Assessment year: 2010-11 )

Dy. Commissioner of Income M/s. Sujana Metal Tax, Circle 3(2) Hyderabad Vs. Products Ltd Hyderabad PAN: AACCS 8614 H (Appellant) (Respondent)

For Assessee : Shri P. Murali Mohan Rao, CA For Revenue : Shri D. Sudhakar Rao, CIT(DR)

Date of Hearing : 05/03/2015 Date of Pronouncement : 18/03/2015

ORDER

Per Bench:

These are cross appeals filed by the assessee and the

Revenue against the order of the ld CIT (A)-IV Hyderabad, dated

10.04.2014 for A.Y 2010-11.

Page 1 of 5 ITA Nos.1193 and 1622 of 2014 Sujana Metal Products Ltd Hyderabad

2. Briefly stated, assessee is a company, engaged in the

business of manufacturing of Thermo Mechanically Treated

(TMT) Steel Products. Assessee filed its return of income on

15.10.2010 delaring a total income of Rs.4,81,12,323 under

normal provisions and a book profit of Rs.20,11,32,635 u/s

115JB of the I.T. Act, 1961.

3. In the course of assessment proceedings, AO directed the

assessee to furnish information and documents in support of the

entries in its audited results and the return of income. AO also

referred to certain discrepancies, listed vide his letter dated

1.2.2013 issued to the assessee. However, assessee failed to

produce any of these details. Under the circumstnaces, AO

rejected the books of accounts since it was not possible for him

to arrive at the correct income of the assessee from the books of

accounts stated to have been maintained by the assessee. AO

estimated the net income at 1.5% of the total turnover.

4. Aggrieved, assessee preferred appeal before the first

appellate authority. The ld CIT (A) upheld the decision of the AO

in rejecting the books of accounts of the assessee.

Page 2 of 5

ITA Nos.1193 and 1622 of 2014 Sujana Metal Products Ltd Hyderabad

5. The ld CIT (A) held as follows:

"9.............The AO estimated the income at 1.5% of the total turnover of the appellant. For the preceding A.Y 2009-10 in the appellant's own case, I had in my order in ITA No.464/AC 3(2)/CIT (A)-IV/2011-12 dated 22.1.2013, under similar circumstances, had directed the AO to estimate the income of the appellant at 1% of the turnover".

6. Aggrived both the assessee and the Revenue have filed

appeal before the ITAT raising their respective grounds:

ITA No.1622/Hyd/2014-Assessee' appeal

""1. The ld CIT (A) erred both in law and on facts in partly allowing the appeal.

2. The ld CIT (A) erred in upholding the rejection of books by the AO.

3. The ld CIT (A) ought to have appreciated the fact that books cannot be rejected merely on the ground that percentage of profit declared is at lower side.

4. The ld CIT (A) ought to have appreciated the fact that the AO cannot change the method of accounting which is being continuously followed by the appellant without assigning any reason.

5. The ld CIT (A) ought to have considered the returned income filed by the appellant.

6. The reliance has been placed on the following decision of the jurisdictional bench of ITAT in the case of Vishal Infrastructure Ltd vs. ACIT (104 ITD 537 (Hyd.).

7. The ld CIT (A) erred in estimating the income at 1% of the turnover which is a very high percentage in the line of trade of the appellant".

Page 3 of 5 ITA Nos.1193 and 1622 of 2014 Sujana Metal Products Ltd Hyderabad

ITA No.1193/Hyd/2014-Revenue's appeal:

"1. The ld CIT (A) erred in law allowing the assessee's appeal.

2. The ld CIT (A) ought to have upheld the estimation of profit made by the AO @ 1.5% as the estimation was based on the general trends in the line of the business".

7. We find that the issue is covered by the decision of the ITAT

Coordinate Bench, in assessee's own case in ITA Nos. 304 &

305/Hyd/2013 for the A.Y 2009-10. The relevant portion of the

decision at para 10 of the order is extracted below:

"10. Considering the submissions of the parties and keeping in view the interest of justice, we allow one more opportunity to the assessee for production of its books of accounts and other documents before the Assessing Officer to substantiate its claim and accordingly, set aside the Order of the CIT(A) and remit the matter to the file of the Assessing Officer for denovo assessment after examining the books of accounts and other documents. We also direct the assessee to produce all its books of accounts, documents, bills, invoices and any other information called for by the Assessing Officer and cooperate in finalisation of the proceeding. In the event, the assessee does not co- operate by producing the books of accounts and other information called for by the Assessing Officer or if the Assessing Officer on examination of the books of accounts and other documents finds that there are discrepancies which the assessee is not able to explain, the Assessing Officer would be at liberty to take an independent decision in the matter in accordance with law. The Assessing Officer shall afford a reasonable opportunity of being heard to the assessee".

Page 4 of 5 ITA Nos.1193 and 1622 of 2014 Sujana Metal Products Ltd Hyderabad

8. Respectfully following the decision of the Coordinate Bench,

in assessee's own case for A.Y 2009-10, we set aside both the

appeal to the AO to decide the matter after giving reasonable

opportunity to the assessee. Hence, both the appeals are allowed

for statistical purposes.

Order pronounced in the Open Court on 18th March, 2015.

Sd/- Sd/ (P.M. Jagtap) (Asha Vijayaraghavan) Accountant Member Judicial Member

Hyderabad, dated 18th March, 2015.

Vnodan/sps Copy to:

1. M/s. Sujana Metal Products Ltd, C/o P. Murali & Co. CA, 6- 3-655/2/3 1st Floor, Somajiguda, Hyderabad 500082

2. The Dy.CIT Circle 3(2) Hyderabad

3. The CIT(A)-IV Hyderabad

4. The CIT - III Hyderabad

5. The DR, ITAT, Hyderabad

6. Guard File

By Order

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