THE INCOME TAX OFFICER, WARD-3(2), VIJAYAWADA vs. GVR ASSOCIATES, VIJAYAWADA

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HON’BLE ACCOUNTANT MEMBER ITA No. 571/VIZ/2018 (Asst. Year : 2010-11) ITO, Ward-3(2), vs. M/s. G.V.R. Associates, Vijayawada. # AS-3, Suryabala Apartments, New Ayodhya Nagar, Vijayawada. PAN No. AAGFG 8578 B (Appellant) (Respondent)

Assessee by : Shri G.V.N. Hari, Advocate. Department By : Shri D.V. Subba Rao, Sr.DR

Date of hearing : 24/01/2019. Date of pronouncement : 06/02/2019. O R D E R PER V. DURGA RAO, JUDICIAL MEMBER

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), Vijayawada, dated 10/08/2018 for the Assessment Year 2010-11. 2. Facts of the case, in brief, are that the assessee is a partnership firm engaged in the business of developing properties and construction of apartments, flats etc., filed its return of income by admitting income of Rs. 5,36,160/-. The Assessing

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Officer completed the regular assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'Act') by assessing income of Rs. 13,01,420/- at 12.5% of gross receipts basing on M/s. KNR Constructions case before allowing partners remuneration and interest under section 40(b) of the Act. Subsequently, the ld. Commissioner by invoking section 263 dated 26/03/2015 directed the Assessing Officer to redo the assessment. Accordingly, Assessing Officer passed assessment order under section 144 r.w.s. 263 of the Act dated 26/03/2016. Subsequently order passed by the ld. Commissioner under section 263, dated 26/03/2015 was tested before the ITAT, and the ITAT quashed the same by order dated 20/01/2017. Therefore, ld.CIT(A) by following the same has held that consequential order passed by the Assessing Officer under section 144 r.w.s. 263 does not exist. For the sake of convenience, the relevant portion of the order is extracted as under:- “5. I have perused the assessment order and decision of ITAT order, in appellant's own case. 5.1. The Hon'ble ITAT, Visakhapatnam Bench vide order in ITA No.221/Vizag/2015 dated 20.01 .2017 held in appellant's own case which is reproduced as under: ……………………………………………………………………………………………….. ………………………………………………………………………………………………… 9. The Ld. D.R. on the other hand, strongly supporting the order of the Commissioner of Income Tax submitted that the assessment order passed by the

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Assessing Officer is erroneous is so far as it is prejudicial to the interest of the revenue, because the Assessing Officer has ignored the books of account and estimated net pro/It from the business, even though the assessee has maintained books of accounts. The D.R. further submitted that the Commissioner of Income Tax has rightly pointed out various inconsistencies in the assessment proceedings completed by the Assessing Officer which caused prejudice to the interest of the revenue in terms of Sec. 263 of the Act. The Commissioner of Income Tax for the detailed reasons recorded in his order gave a categorical finding that the Assessing Officer not only failed to examine the core issues, but also failed to apply his mind before completion of assessment, therefore, the order passed by the Commissioner of Tax should be upheld. …………………………………………………………………………………………… ………………………………………………………………………………………….. 17. Now, it is pertinent to discuss the case law relied upon by the assessee. The assessee relied upon the decision of coordinate bench of Visakhapatnam Tribunal in the case of Nu Tech Engineers Vs. Commissioner of Income Tax in ITA No.570/Vizag /2013 dated 10.062016. The coordinate bench of this Tribunal under similar circumstances held that once the Assessing Officer examined the issues n which the Commissioner of Income Tax wants further verification, the Commissioner of Income Tax cannot assume jurisdiction on the same issues which was already examined by the Assessing Of at the time of assessment by stating that the Assessing Officer has conducted inadequate enquiry or there is a lack of enquiry. ……………………………………………………………………………………………… ……………………………………………………………………………………………… 18. Considering the facts and circumstances of the case and also applying ratio of the coordinate bench, we are of the view that the assessment order passed by the Assessing Officer u/s. 143(3) of the Act dated 26.03.2013 is neither erroneous nor prejudicial to the interest of the revenue. Therefore, we quash order passed by the Commissioner of Income Tax u/s. 263 of the Act and restore the assessment order passed by the Assessing Officer u/s. 143(3) of the Act. 19. In the result, the appeal filed by the assessee is allowed.”

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5.3. As the order passed u/s.263 by Commissioner of Income Tax is quashed by the Hon'ble ITAT, Visakhapatnam Bench cited (supra), the consequential order passed by Assessing Officer u/s.144 r.w.s.263 of the Act does not exist.”

(VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Visakhapatnam.