What did the Tribunal hold?

The Tribunal found that the estimated income at 20% of gross turnover appeared high, especially for the first year of commercial production. Therefore, the issue was remitted to the AO for fresh consideration.

The assessee's appeal for AY 2013-14 was against the CIT(A)'s order confirming an ex-parte assessment. The CIT(A) had dismissed the appeal without discussing the grounds on merit, and the assessee claimed denial of natural justice and an unjustified addition of income.

What were the issues?

Whether the CIT(A) erred in dismissing the appeal without merit and denying the principles of natural justice. Whether the addition of income on an estimated basis was justified without proper material.

Greenko Budhil Hydro Power… vs ACIT | ITAT Hyderabad 2019

Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad

Before: Smt. P. Madhavi Devi & Shri A. Mohan Alankamony

Hearing: 18.06.2019Pronounced: 21.06.2019

Per Smt. P. Madhavi Devi, J.M.

This is assessee’s appeal for the A.Y 2013-14 against the order of the CIT (A)-2, Hyderabad, dated 15.05.2017. The assessee has raised the following grounds of appeal: “ 1. In the facts and Circumstances of the case, the Ld. CIT(A) erred in summarily dismissing the appeal filed by the Appellant without discussing the grounds on merit which is unjustified and against the provisions of the Act. 2. In the facts and Circumstances of the case, the Ld. CIT(A) erred in stating the Appellant have not attended the hearings on various dates when the Appellant have actually taken adjournments on three occasions on receipt of the hearing notices and it was only one hearing which was skipped as the management of the company and AR were occupied with search proceedings initiated on the group companies of the Appellant.

Page 1 of 3

ITA No 1344 of 2017 Greenko Budhil Hydro Power P Ltd Hyderabad.

In the facts and Circumstances of the case, the Appellant was denied of the principles of natural justice by the Ld.CIT(A) also and no sufficient opportunity of hearing was granted to the Appellant before passing the Appellate order. 4. In the facts and Circumstances of the case, the Ld. CIT(A) erred on both facts and in law by adding the amount of Rs.6,56,76,169/- on estimation/adhoc basis at an unimaginable rate of 20% of Gross Turnover without considering the fact that the Appellant had started its commercial production in A.Y.2013-14 only. 5. In the facts and Circumstances of the case, the Ld. CIT(A) erred in estimating the income at a rate of 20% without any cogent or credible material on record. The Ld. CIT(A) ought to have compared the Appellant's results with another comparable business entity in the same filed, to support his conclusions. 6. The Appellant craves to insert new grounds, and to add, amend, alter, insert delete any of the above grounds of appeal either in full or in part on or before the final hearing of the appeal”.

The learned Counsel for the assessee submitted that due to change in management, the assessee could not appear before the AO and also before the CIT (A) and therefore, the assessment is completed ex-parte the assessee by the AO by estimating the income at 20% of the gross turnover which is quite high in this line of business. Even before the CIT (A), the assessee could not appear and therefore, the estimation of income at 20% of the gross turnover was confirmed by the CIT (A). He prayed for another opportunity before the authorities below to present his case as this is the first year of assessment.

The learned DR was also heard.

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ITA No 1344 of 2017 Greenko Budhil Hydro Power P Ltd Hyderabad.

Considering the contentions of both the parties, we are of the opinion that since the income of the assessee has been estimated at 20% of the gross turnover which appears to be on the higher side and this being the first year of assessment after its formation, we deem it fit and proper to remit the issue to the file of the AO for denovo consideration in accordance with law. Needless to mention that the assessee shall be given a fair opportunity of hearing and the assessee also shall appear and file the required details before the AO and cooperate with the AO for early completion of the assessment.

In the result, assessee’s appeal is treated as allowed for statistical purposes. Order pronounced in the Open Court on 21st June, 2019.

Sd/- Sd/- (A. Mohan Alankamony) (P. Madhavi Devi) Accountant Member Judicial Member

Hyderabad, dated 21st June, 2019. Vinodan/sps

Copy to:

1 M/s. Greenko Budhil Hydro Power Private Ltd, Plot No.1367 Road No.45, Jubilee Hills, Hyderabad 500033 2 Dy.CIT, Circle 2(2) Room No.513, 5th Floor, Signature Towers, Opp. Botanical Garden, Kondapur, Hyderabad 500084 3 CIT (A)-2 Hyderabad 4 Pr. CIT – 2 Hyderabad 5 The DR, ITAT Hyderabad 6 Guard File

By Order

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GREENKO BUDHIL HYDRO POWER PRIVATE LIMITED.,HYDERABAD vs. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2(2)., HYDERABAD

What did the Tribunal hold?

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