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Income Tax Appellate Tribunal, HYDERABAD BENCH “B”, HYDERABAD
Before: SHRI C.N. PRASAD & SHRI M. BALAGANESH
Both these appeals are cross appeals filed by the Assessee as well as revenue are directed against the order of CIT(A) – 1, dated 23/03/2016, Hyderabad for AY 2011-12.
The only issue to be decided in the appeal of the assessee is whether the ld. CIT(A) was justified in estimating the income of the 2 & 916/Hyd/2016 AP Tourism Development Corporation Ltd., Hyd. assessee @ 25% of gross receipts after rejection of books of account. While, the interconnected issue involved in the revenue’s appeal is whether the ld. CIT(A) was justified in directing the AO to grant deduction towards depreciation and financial charges when income was estimated @ 25% of gross receipts.
We have heard the rival submissions and perused the material on record. We find that the assessee company is engaged in the business of tourism and had filed its return of income for AY 2011-12 on 30/09/2011 (on the due date) admitting the income of Rs. 66,82,010/- under the normal provisions of the Act and Rs. 2,09,72,240/- u/s 115JB of the Act. Later, the assessee filed its revised return of income on 31/03/2013 declaring total income of Rs. 15,33,140/- under normal provisions of the Act and Rs. 2,68,26,857/- u/s 115JB of the Act. Both these returns were admittedly filed without completion of statutory audit of the assessee company. Later, the assessee company completed its statutory audit on 11/02/2014 and filed revised computation of income before the ld. AO, which was not considered by the ld. AO. The ld. AO observed that there was three different figures of gross receipts, which are as under:
Gross receipts as per original return Rs. 119,54,33,271 Gross receipts as per revised return Rs. 120,55,15,709 As per audit report Rs. 122,98,96,653 The ld. AO observed that since three different turnover figures were reflected by the assessee, in the interest of revenue, highest turnover figure should be considered and accordingly computed the estimated income of the assessee @ 25% of such turnover and completed the assessment u/s 144 of the Act determining the total income at Rs. 30,74,74,163/-.
3.1 In the first appeal, the assessee requested the ld. CIT(A) to consider the profits declared as per the audit report dated
3 & 916/Hyd/2016 AP Tourism Development Corporation Ltd., Hyd. 11/02/2014. After obtaining the remand report from the ld. AO, the ld. CIT(A) upheld the action of the ld. AO in rejecting the books of account of the assessee and estimating the income @ 25% of the gross receipts. However, he directed the ld. AO that assessee should be entitled for deduction towards interest and bank charges of Rs. 76,53,045/- and depreciation of Rs. 12,86,12,826/- from the estimated income as determined (supra).
3.2 It is not in dispute that both the original and revised returns of income were filed by the assessee without completion of statutory audit of the assessee company and that the figures mentioned thereon were provisional. It is not in dispute that the statutory audit of the assessee company was completed on 11/02/2014. We find that the audited books were indeed furnished before the lower authorities, which were ignored on the pretext that the audit ought to have been completed on or before the due date of filing of return of income u/s 139(1) of the Act. For failure to get the accounts audited, the Legislature provides for separate penal provisions in terms of section 271B of the Act. When the audited books of account were furnished before the lower authorities, the said books cannot be ignored without assigning any reasons and getting rejected and assessee’s income determined on an estimate basis.
3.3 The ld. AR before us prayed for remanding these appeals to the file of the ld. AO for denovo adjudication for determination of total income of the assessee based on the audited books of account. Ld. DR fairly agreed for the submission of the ld. AR. Hence, we deem it fit and proper to remand these appeals to the file of ld. AO for de- novo adjudication for determination of total income of the assessee based on the audited books of accounts in accordance with law after providing reasonable opportunity of hearing to the assessee. Accordingly, the grounds raised by the assessee as well as revenue
In the result both the appeals of the assessee as well as revenue are allowed for statistical purposes.
Pronounced in the open Court on 3rd September, 2020.