----- Forwarded Message -----
From: Kapil Goel <advocatekapilgoel@gmail.com>
To: CA.KAPIL GOEL <kapilnkgoelandco@gmail.com>
Sent: Thursday, 27 June 2013 9:20 AM
Subject: [Gzb_CA Group -CA. VINAY MITTAL] Andhra Pradesh high court approving Hyd bench ITAT order in ECI case on : no proper book only course to estimate profits and no place for making disallowance under deeming provisions of business Head; Madras high court on section 9 retrospective amendment post Vodafone; ITAT duty explained not to casually remand the matters when all materials AVAILABLE before IT Cholamandlam case!
From: Kapil Goel <advocatekapilgoel@gmail.com>
To: CA.KAPIL GOEL <kapilnkgoelandco@gmail.com>
Sent: Thursday, 27 June 2013 9:20 AM
Subject: [Gzb_CA Group -CA. VINAY MITTAL] Andhra Pradesh high court approving Hyd bench ITAT order in ECI case on : no proper book only course to estimate profits and no place for making disallowance under deeming provisions of business Head; Madras high court on section 9 retrospective amendment post Vodafone; ITAT duty explained not to casually remand the matters when all materials AVAILABLE before IT Cholamandlam case!
Included in this update:
a) Andhra Pradesh High Court approving Hyd bench ITAT order : laying down in case of non reliable books only course available to estimate profits and not to make separate and individual disallowances like section 40(a)(ia) TDS default; Cash payment 40A(3); explanation to section 37 illegal payments etc
b) Madras high court explaining at length duty of ITAT in remanding matters back : when all material available before it and no fresh material there; ITAT to decide at its own
I.T.T.A. No. 50 OF 2013 June 21, 2013 AP High court in case of Commissioner of Income Tax-II, Hyderabad ..... Appellant AND M/s. ECI Engineering & Construction Co., Ltd
This appeal is filed against the order of the Income Tax Appellate Tribunal, Hyderabad Bench dated 04.05.2012 in relation to the assessment year 2007-2008. (I.T.A. No. 2048/Hyd/2011 Assessment year 2007-08)
Having heard the learned counsel for the appellant and having gone through the impugned order and judgment, it appears that the Tribunal has rendered the judgment following a decision of this court in Indwell Constructions Vs. CIT (232 ITR 776) (AP). The view taken by this court in the above judgment is also accepted by other Bench of the Tribunal in Income Tax Officer Vs. Kenaram Saha & Subhash Saha (2008) 116 TTJ (Kol.) (SB) 289. Therefore, the learned Tribunal has not committed any illegality or mistake at all.
Hence, this appeal is dismissed. No order as to costs.
Extract from Underlying Hyd bench ITAT order as approved by AP High court in aforesaid judgment :
Since the assessee has not produced proper books of account, true profits or loss cannot be ascertained by the Assessing Officer and the Assessing Officer having no other option has to estimate the income on the basis of the available record. In these circumstances, rejection of books of account and estimation of income of the assessee is justified. In our opinion, estimation of income in this case has to be madeWe are considering the last three years average rate of assessed income
before depreciation and Interest to gross receipts as basis for determining the income of the present assessment year as the past history of the assessee itself is the best yardstick to assess the income of the assessee instead of applying 8% on gross receipt. It is clear from the above judgement that where the books of account have been rejected the revenue cannot rely on the same books of account for making any other addition. It was also held that when an estimate is made towards income of the assessee, it is in substitution of the income that is to be computed u/s. 29 and in other words, all the deductions which are referred to u/s. 29 are deemed to have been taken into account, while making such an estimate. This will also mean that the embargo placed in section 40 is also taken into account In view of the above discussion, there cannot be any further addition u/s. 40A(3), 40(a)(ia) of the act or towards prior period income.
In the High Court of Judicature at Madras Dated: 17.06.2013 M/s.Cholamandalam MS General Insurance Co. Vs. The Assistant Commissioner/ Deputy Commissioner of Income-Tax
14. We have bestowed our careful thought to the issues raised in the appeals. We find that there is absolutely no material which necessitated the remand of the case to the Assessing Officer. On the admitted factual position that the materials, which were relied on by the assessees and the Revenue, were admittedly before the Assessing Officer, who had considered the same while passing the assessment order. We found that the Tribunal had failed to exercise its jurisdiction in the manner known to law. It is one thing to say that the documents were not there before the Assessing Officer, yet, the Officer did not bestow his attention and arrived at a wrong conclusion, which may warrant, at times a remand. However, when materials, which were considered by the Officer are there before the Tribunal on the issue raised, even assuming for a moment that in the course of pendency of the appeals, amendments are effected retrospectively, touching on the very same issue in the context of the amendment provision, however, does not call for any remand, particularly for the reason that the Tribunal with all its wisdom is competent to go into the legal provision, which would govern the issue.
15. On the admitted fact that the materials produced are not new and the applicability of the amended provision does not require further probing of facts, we reject the contention of the learned standing counsel appearing for the Revenue that in the light of the amended provision under Section 9 of the Income Tax Act, the remand is called for. The entire issue rests on the understanding of the materials placed by the assessees on the nature of transaction and ultimately, the applicability of that provisions of the Act. This would be so not only with reference to the issue on TDS on the payment made to Non-Resident Indians, but also on other issues including those which were pointed out by the Revenue in their Miscellaneous Petitions.
16. We may point out herein that the Tribunal's view that the request of the assessees is more in the nature of the review does not rest on any justifiable ground. When there is an apparent error on the face of record of the Tribunal holding that fresh materials have been filed and both sides agree that there were no fresh materials, their request is one for rectification of the error for considering the case of the assessees as well as the Revenue on merits on the basis of materials placed before the Tribunal. Hence, we reject the line of reasoning by the Tribunal in this regard.
17. In the background of the jurisdiction of the Tribunal as a fact finding authority, we feel that the Tribunal should have acted with greater circumspection to order a remand, particularly when the Revenue itself does not dispute that the materials were all those that were considered by the Assessing Officer. Remand is not a power to be exercised in a routine manner and should be used sparingly as an exception only when the facts warranted such course of action. We feel that the Tribunal should have arrived at its own conclusion on facts after due consideration of the materials before it which were no different from which was placed before the authorities below. Hence, we have no hesitation in setting aside the order passed by the Tribunal in remanding the matter back to the Income Tax Appellate Tribunal on the admitted fact that no fresh materials were placed before the Tribunal necessitating remand.
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