Nsl Textiles Limited, Hyderabad vs Department Of Income Tax

Dy. Commissioner of Income- M/s NSL Textiles Ltd., tax, Circle - 16(1), Hyderabad Hyderabad

PAN AABCJ1299A (Appellant) (Respondent)

Revenue by Shri D. Sudhakar Rao Assessee by Shri V. Raghavendra Rao

Date of hearing 25-02-2015 Date of pronouncement 04-03-2015

O RDE R

PER ASHA VIJAYARAGHAVAN, J.M.:

This appeal by the Revenue is directed against the order of ld. CIT(A)-V, Hyderabad dated 11/08/2014 for AY 2010-11.

2. The sole grievance of the department is against the order passed by the CIT(A) deleting the addition made by the Assessing Officer by admitting additional evidence in violation of Rule 46A of the IT Rules.

3. Briefly the facts of the case are, assessee is a company engaged in the business of manufacturing of grey fabric and dyeing, yarn, ginning and pressing of cotton. For the year under consideration, assessee filed its return of income on 30/09/2011 admitting total loss of Rs. 102,91,20,171. Subsequently, assessee 2 ITA No. 1587/Hyd/2014 NSL Textiles Ltd.

furnished revised return of income on 25/09/2012 admitting total loss of Rs. 156,52,01,368. The assessment was completed at Rs. 23,05,90,534 u/s 115JB on the book profits as there was loss of Rs. 52,21,82,353 under normal provisions by making an addition of Rs. 104,29,76,420 on account of unaccounted sales. Aggrieved, the assessee carried the matter in appeal before the CIT(A).

4. The CIT(A) after considering the submissions of assessee, deleted the addition made by AO on account of unaccounted sales by observing as under:

"4.3 I have carefully considered the submissions of the appellant, assessment order and the consequential order of the Asst. Commissioner (CT) (LTU), Guntur-II, Division. The Asst. Commissioner (CT), Guntur, vide his order dated 02/05/2012, had not deleted the inter-divisional transactions amounting to Rs. 260.92 crores from the total turnover and arrived at the total turnover of the assessee at Rs. 828.44 crores. On appeal by the assessee, the Appellate Dy. Commissioner (CT), Guntur, vide order dated 25/11/2013 had remanded back the matter to the Asst. Commissioner (CT) Guntur, for fresh consideration. The Asst. Commissioner (CT) Guntur, vide his order dated 20/05/2014, for the FY 2010-11, has deleted the turnover of Rs. 237,71,93,143 comprising of (a) intercompany transactions (Rs.133,42,16,723) and (b) Inter-divisional transactions (Rs.104,29,76,420) from the total turnover of Rs. 828,44,71,612. The AO disallowed the inter-divisional transactions of Rs. 104,29,76,420 on the VAT order of the Asst. Commissioner (CT) Guntur dated 02/05/2012. Since the Appellate Dy. Commissioner (CT), Guntur, vide order dated 20/05/2014, had deleted, inter-alia, the turnover of Rs. 104,29,76,420 on account of inter-divisional transactions from the total turnover of Rs. 828.44 crores, the addition made by the AO basing on the VAT order cannot be sustained. Therefore, the addition of Rs. 104,29,76,420 added on account of unaccounted sales is deleted."

Aggrieved by the order of CIT(A), the revenue is in appeal before us.

5. The learned Departmental Representative strongly objecting to admission of additional evidence by the CIT(A) while deleting the addition submitted that the CIT(A) was not justified in considering the 3 ITA No. 1587/Hyd/2014 NSL Textiles Ltd.

additional evidence filed by the assessee for the first time before him without giving an opportunity to the Assessing Officer to have his say on such additional evidence. The additional evidence is that the Appellate Dy. Commissioner (CT), Guntur, vide order dated 20/05/2014, had deleted, inter-alia, the turnover of Rs. 104,29,76,420 on account of inter-divisional transactions from the total turnover of Rs. 828.44 crores, the addition made by the AO basing on the VAT order cannot be sustained. The learned Departmental Representative, therefore, urged for remitting the matter back to the Assessing Officer for reconsidering the entire issue afresh.

6. The learned counsel for the assessee also did not dispute the fact that certain additional evidences were produced for the first time before the CIT(A) and considering the same, the CIT(A) deleted the addition.

7. We have heard submissions of the parties and perused the materials on record. It is a fact on record that the CIT(A) on considering certain additional evidence produced before him for the first time by the assessee has deleted the addition which is clearly in violation of the provisions contained in Rule 46A of the IT Rules, 1962. When additional evidence was submitted for the first time before the CIT(A), in all fairness, he should have forwarded the same to the Assessing Officer for examining it and offer his comments on such evidence. Only after giving Assessing Officer an opportunity to examine the additional evidence, the CIT(A) could have considered the same for deciding the issue involved in the appeal before him on their merits. The CIT(A) having not done so in compliance with the provision contained under Rule 46A of the IT Rules, 1962 we are inclined to set aside the impugned order of CIT(A) and restore the matter back to the file of the Assessing Officer by directing him to reexamine the issue afresh in its entirety and in accordance with law 4 ITA No. 1587/Hyd/2014 NSL Textiles Ltd.

after duly considering all the materials available on record and such other further evidence that may be produced by the assessee in support of its claim. Accordingly, we remit the matter back to the file of the Assessing Officer, who shall complete the proceeding after affording reasonable opportunity of being heard to the assessee. We also direct the assessee to cooperate with the Assessing Officer for finalisation of the proceeding by complying to the notices that may be issued by Assessing Officer and should also furnish such information as may be called for by the Assessing Officer, as otherwise, the Assessing Officer would be at liberty to draw his own inferences and decide the matter in accordance with law on the basis of materials already available on record. The grounds raised by the department are allowed for statistical purposes.

8. In the result, appeal of the revenue is allowed for statistical purposes.

Pronounced in the open court on 4 th March, 2015

Sd/- Sd/-

(P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER

Hyderabad, Dated: 4 th March, 2015 kv Copy to:- . 1. Dy. Commissioner of Income-tax,

Circle - 16(1), Room No. 612, 6 t h Floor, Aayakar Bhavan, L.B. Stadium Road, Basheerbagh, Hyderabad

- 500 004.

M/s NSL Textiles Ltd., 8-2-684/2/A, 4 t h Floor, NSL Icon, Road No. 12, Banjara Hills, Hyderabad

3. CIT(A)-V, Hyderabad

11. CIT-IV, Hyderabad

12. The DR, ITAT, Hyderabad