DCIT, Circle-3(1), Hyderabad V. Sabbineni Hotels & Resorts Pvt.Ltd., Hyderabad

CO 89/HYD/2012

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4316 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 13-06-2016
• Assessment Year: misc
• Appeal Filed On: 31-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Search and seizure; Block assessment; Set aside
• Section: 132

Judgement Text

ITSSA NO 10 AND CO 89 OF 2012 SABBINENI HOTELS HYDE RABAD PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER IT(SS)A NO.10/HYD/2010 (BLOCK PERIOD 1.4.1996 TO 04.07.2002) DY. COMMISSIONER OF INCOME TAX, CIRCLE 3(1) HYDERABAD VS M/S. SABBINENI HOTELS & RESORTS PVT LTD HYDERABAD PAN: AAFCS 1979 J C.O. NO.89/HYD/2012 (ARISING OUT OF IT(SS)A NO.10/HYD/2010) (BLOCK PERIOD 1.4.1996 TO 04.07.2002) M/S. SABBINENI HOTELS & RESORTS PVT LTD, HYDERABAD PAN: AAFCS 1979 J VS DY. COMMISSIONER OF INCOME TAX, CIRCLE 3(1) HYDERABAD FOR REVENUE: SHRI K.J. RAO, DR FOR ASSESSEE: SHRI S. RAMA RAO O R D E R PER SMT. P. MADHAVI DEVI, J.M. THESE ARE REVENUES APPEAL AND ASSESSEES CROSS OBJECTIONS FOR THE BLOCK PERIOD 1.4.1996 TO 4.7.200 2. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS FORMED WITH AN OBJECT OF CONSTRUCTING A HOTEL AT NE W DELHI TO CARRY ON HOTEL BUSINESS. A SEARCH AND SEIZURE OPE RATION U/S 132 OF THE ACT WAS CARRIED OUT AT THE RESIDENCE OF ONE MR. S. SUBHASH AND ALSO IN THE BUSINESS PREMISES OF M/S SHRI RAVIT EJA DATE OF HEARING : 14.09.2016 DATE OF PRONOUNCEMENT : 21.09.2016 ITSSA NO 10 AND CO 89 OF 2012 SABBINENI HOTELS HYDE RABAD PAGE 2 OF 4 RESTAURANTS & RESORTS (P) LTD, BANJARA HILLS, HYDER ABAD. DURING THE COURSE OF SEARCH, CERTAIN LOOSE SHEETS WERE FOU ND AT THE BUSINESS PREMISES OF M/S SHRI RAVITEJA RESTAURANTS & RESORTS (P) LTD (SRRPL) WHICH SHOWED THAT MR. S. SUBHASH, ALONG WITH OTHER PERSONS, HAS INVESTED RS.118.00 LAKHS IN RESTAURANT PROJECT AT DELHI STARTED BY THE ASSESSEE HEREIN. IT WAS OBSERV ED THAT OUT OF THE SAID INVESTMENT, AN AMOUNT OF RS.52.50 LAKHS WA S INVESTED BY MR. S. SUBHASH, OUT OF WHICH, MR. SUBHASH COULD PROVE ONLY RS.38.59 LAKHS. AO ADDED THE BALANCE OF RS.13.91 LA KHS IN THE INDIVIDUAL HANDS OF MR. SUBHASH. THEREAFTER, TO EXA MINE THE GENUINENESS OF THE INVESTMENT MADE BY THE OTHER PER SONS IN THE ASSESSEE COMPANY, NOTICE U/S 158BD WAS ISSUED TO TH E ASSESSEE. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED THE RETURN OF INCOME FOR THE BLOCK PERIOD ON 25.10.2004 DECLARING TOTAL UNDISCLOSED INCOME AT RS.NIL. 3. DURING THE BLOCK ASSESSMENT PERIOD PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE SOURCES FOR THE DEPOSITS TO THE EXTENT OF RS.44,57, 400. HE THEREFORE, BROUGHT IT TO TAX AS UNDISCLOSED INCOME. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO ALLOWED THE SAME, EXCEPT TO THE EXTENT OF RS.37,000. AGAINST TH E RELIEF GRANTED BY THE CIT (A), THE REVENUE IS IN APPEAL BEFORE US AND IN SUPPORT OF THE ORDER OF THE CIT (A), THE ASSESSEE IS IN CRO SS OBJECTION BEFORE US. 4. AT THE TIME OF HEARING, IT IS NOTICED THAT THE A PPEAL IS BARRED BY LIMITATION BY A PERIOD OF 3 DAYS AND THE REVENUE HAS FILED AN APPLICATION FOR CONDONATION OF THE SAME. S INCE THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT SERIOUSLY OBJECT T O THE ITSSA NO 10 AND CO 89 OF 2012 SABBINENI HOTELS HYDE RABAD PAGE 3 OF 4 CONDONATION OF THE SAME, THE DELAY IS CONDONED FOR THE REASONS MENTIONED IN THE APPLICATION FOR CONDONATION OF DEL AY. ON GOING THROUGH THE GROUNDS OF APPEAL RAISED BY THE REVENUE , WE FIND THAT THE GRIEVANCE OF THE REVENUE IS THAT THE CIT (A) HA S ERRED IN VIOLATION OF RULE 46A OF THE ACT AND ALSO IN ACCEPT ING THE ASSESSEES PLEA TO TELESCOPE THE INVESTMENT TO THE INCOME DETERMINED BY THE CIT (A) IN THE HANDS OF THE ALLEG ED INVESTORS. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS FAIL ED TO PRODUCE ANY EVIDENCE BEFORE THE AO BUT HAS FILED ADDITIONAL INFORMATION BEFORE THE CIT (A) IN THE FORM OF CONFIRMATION LETT ERS AND SETTLEMENT DEED GIVEN BY MR. M. SARVESHWAR REDDY AN D WITNESSED BY SHRI Y.S. REDDY TO DELETE THE ADDITION TO THE EXT ENT OF RS.15.00 LAKHS. THUS, ACCORDING TO HIM, THE CIT (A) OUGHT TO HAVE GIVEN AN OPPORTUNITY TO THE AO TO VERIFY THE SAID DOCUMENT A ND THEREFORE, THERE IS A VIOLATION OF RULE 46A OF IT RULES. THE L EARNED COUNSEL FOR THE ASSESSEE, HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE BEFORE THE AO, BUT HAS FILED CERTAIN EVIDE NCE BEFORE THE CIT (A). ON GOING THROUGH THE ORDER OF THE CIT (A) WE FIND THAT THE CIT (A) HAS ACCEPTED THE ASSESSEES CONTENTION OF T ELESCOPING THE INCOME ASSESSED IN THE HANDS OF M/S. SHRI RAVITEJA RESTAURANTS & RESORTS (P) LTD AS SOURCE FOR THE INVESTMENTS MAD E BY MR. NAVEEN AND MR.SUBHASH IN THE CASE OF THE ASSESSEE O N THE BASIS OF THE ORDER OF THE CIT (A) GUNTUR IN THE CASE OF M R. SUBHASH. FURTHER, THE CIT(A) HAS ACCEPTED THE CONFIRMATION OF SETTLEMENT LETTER FILED BEFORE HIM WITHOUT REFERRING THE MATTE R TO THE AO FOR VERIFICATION. WE ALSO FIND THAT THOUGH AS HIS POWER S ARE CO- ITSSA NO 10 AND CO 89 OF 2012 SABBINENI HOTELS HYDE RABAD PAGE 4 OF 4 TERMINUS WITH THAT OF THE AO, THE CIT (A) HAS ALSO NOT BY HIMSELF VERIFIED THE SAME. THEREFORE, IN OUR OPINION, THE C IT (A) HAS VIOLATED THE PROVISIONS OF RULE 46A IN ACCEPTING TH E EVIDENCE FILED BY THE ASSESSEE WITHOUT ANY VERIFICATION BY THE AO. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO SET ASIDE THE OR DER OF THE CIT (A) AND REMAND THE ISSUE TO THE FILE OF THE AO FOR RECONSIDERATION IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT TH E ASSESSEE SHALL BE GIVEN A FAIR OPPORTUNITY OF HEARING. SINCE THE ORDER OF THE CIT (A) HAS BEEN SET ASIDE, THE CROSS OBJECTION IS LIABLE TO BE REJECTED. 6. IN THE RESULT, REVENUES APPEAL IS TREATED AS AL LOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION FI LED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER, 2016. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 21 ST SEPTEMBER, 2016. VINODAN/SPS COPY TO: 1 DY.CIT, CIRCLE 3(1) ROOM NO.714, 7 TH FLOOR, SIGNATURE TOWERS, OPP: BOTANICAL GARDEN, KONDAPUR, HYDERABAD 2 M/S. SABBINENI HOTELS & RESORTS PVT LTD, 8-2-602/ E, ROAD NO.4 STREET NO.7, BANJARA HILLS, HYDERABAD 3 CIT (A)-TIRUPATI 4 CIT 3 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER