M/S Sujana Towers Ltd.,, Hyderabad vs Department Of Income Tax

Page 1 of 6 ITA Nos.1621 & 1191 of 2014 Sujana Towers Ltd Hyderabad

2. Brief facts are that the assessee is in the business of

manufacturing of re-rolled steel products, trading in steel

components and construction of telecom towers. It filed its

return of income belatedly on 31.03.2012 declaring a total

income of Rs.95,34,350 under normal provisions and

Rs.14,67,89,622 u/s 115JB of the Act.

3. In the course of assessment proceedings, AO directed

assessee to furnish information and documents in support of the

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

issued a final show cause letter dated 1.2.2013 to the assessee.

However, assessee failed to produce any of these details. Under

the circumstances, AO rejected the books of accounts as it was

not possible to arrive at the correct income of the assessee from

the books of accounts. AO estimated the net income at 1.5% of

the total turnover.

4. Aggrieved, assessee preferred appeal before the first

appellate authority, who upheld the decision of the AO in

rejecting the accounts. AO estimated income at 1.5 of the total

turnover of the assessee. For the preceding A.Y 2009-10 in

assessee's own case vide CIT (A)'s order in ITA No.522/AC

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3(2)/CIT(A)-IV/2011-12 dated 30.8.2012 under similar

circumstances, he had directed the AO to estimate the income of

the assessee at 1% of the turnover. Since the facts and

circumstances are similar in the present appeal, CIT (A) following

his decision in the assessee's own case for preceding year,

directed the AO to estimate the income at 1% of the turnover.

5. Aggrieved, both assessee and Revenue are in appeal before

us raising the following grounds:

ITA No.1621/Hyd/2014- Assessee's 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.).

Page 3 of 6 ITA Nos.1621 & 1191 of 2014 Sujana Towers Ltd Hyderabad

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".

ITA No.1191/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".

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

Coordinate Bench in assessee's own case in ITA

Nos.1360/Hyd/2013 & ITA No.1409/Hyd/2013 for the A.Y

2009-10. The relevant portion of the decision at Para No.8 of the

order is extracted below:

"8. Learned Departmental Representative, on the contrary, opposing the relief granted by the CIT(A) on the ground that the rate of 1.5% adopted by the Assessing Officer was in line with the trend in the market in assessee's line of business, submitted that the order of the Assessing Officer be restored.

9. We have considered the rival submissions and perused the orders of the Revenue authorities and other material available on record. We have also considered the specific plea of the assessee for one more opportunity for furnishing the relevant books of account and other details, if the matter is restored to the file of the Assessing Officer for fresh consideration. We find that this Tribunal, in the context of additions made similar circumstances and considering similar pleas of the assessee, in the cases of assessee's own group, vide its order dated 13.8.2013, restored the matter

Page 4 of 6 ITA Nos.1621 & 1191 of 2014 Sujana Towers Ltd Hyderabad

back to the file of the Assessing Officer, in the following manner-

"10. Considering the submissions of the parties and keeping in view the 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."

10. Considering totality of facts and circumstances of the present case and the specific plea of the assessee, in the interests of justice in this case also, we are inclined to set aside the impugned order of the CIT(A) and restore the matter to the file of the Assessing Officer with similar directions. We do so and direct the Assessing Officer to re- examine the matter, after giving reasonable opportunity to the assessee to produce the books of account and other information, and re-determine the income accordingly. The directions given in the order of this Tribunal dated 13.8.2013, extracted above, apply mutatis mutandis to this case as well. Assessee is directed to cooperate with the Assessing Officer and comply with the notices, and the Assessing Officer is ITA No.1360 & 1409/Hyd/2013 M/s. Sujana Towers Ltd., Hyderabad directed to complete the assessment afresh in accordance with law after giving reasonable opportunity of hearing to the assessee".

7. Respectfully following the decision of the Coordinate Bench

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

the file of the AO to decide the matter after giving one more

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opportunity to the assessee. 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 Towers Ltd, Plot No.18 Sujana Plaza, Nagarjuna Hills, Hyderabad 500082

2. The Asstt. CIT, Circle 3(2) 7th Floor, B Block IT Towers, AC Guards, Hyderabad 500004

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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