R.Girish Kumar, Suryapet, Secunderabad V. Addl. CIT, Range-9, Hyd, Hyderabad

ITA 1005/HYD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2555 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-01-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 12-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K GOPALAKRISHNA
• Assessee Lawyers: M V ANIL KUMAR

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH SMC, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NOS. 877/HYD/2014 & 1005/HYD/2016 ASSESSMENT YEAR: 2010-11 SHRI R. GIRISH KUMAR, SURYAPET PAN AKEPR6662H VS. ADD. CIT, RANGE-9, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.V. ANIL KUMAR REVENUE BY : SHRI K. GOPALA KRISHNA DATE OF HEARING : 18-01-2018 DATE OF PRONOUNCEMENT : 31-01-2018 ORDER THESE TWO ARE APPEALS BY ASSESSEE AGAINST THE COMMON ORDER OF LD. CIT (A)-18, BOMBAY DATED 05-02-2014 HAVING CONCURRENT JURISDICTION AT HYDERABAD. A.O LEVIED PENALTY U/S 271D OF THE IT ACT FOR ACCEPTING LOANS IN CASH TO AN EXTENT OF RS. 33,50,000/- AND PENALTY U/S 271E OF THE IT ACT FOR PAYMENT IN CASH OF THE LOANS RECEIVED TO AN EXTENT OF RS. 6 LAKHS. LD. CIT(A) CONFIRMED THE SAME. HENCE THE PRESENT APPEALS. 2. BRIEFLY STATED FACTS ARE THAT THERE WERE SURVEY OPERATIONS IN THE PREMISES OF M/S SRI SURYA CONSTRUCTIONS ON 08-03-2010. ASSESSEE IS A PARTNER AND ALSO HAVING INDIVIDUAL CONSTRUCTION ACTIVITY. IN THE COURSE OF SURVEY CERTAIN PROMISSORY NOTES HAVE BEEN IMPOUNDED AND ASSESSEE WAS ASKED TO EXPLAIN THE RECEIPT OF CASH. ON THE DAY OF SURVEY, ASSESSEE ADMITTED TO HAVE RECEIVED VARIOUS LOANS IN CASH, WHEREAS SUBSEQUENTLY, IT WAS EXPLAINED THAT 2 ITA NO. 877/HYD/2014 & 1005/HD/2016 SHRI R. GIRISH KUMAR, SURYAPET. THESE ARE ADVANCES FOR SALE OF APARTMENTS WHICH HE IS SELLING AND RELIED ON VARIOUS AGREEMENTS OF SALE IMPOUNDED ALONG WITH THE SAID PROMISSORY NOTE COPIES. ASSESSEE ALSO DISPUTED ABOUT TWO AMOUNTS STATED TO HAVE BEEN CONSIDERED ON THE BASIS OF ORIGINAL PROMISSORY NOTES STATING THAT NO MONIES ARE RECEIVED AND ORIGINAL PROMISSORY NOTES WOULD NOT HAVE BEEN AVAILABLE HAD ASSESSEE RECEIVED THE FUNDS. SUBSEQUENTLY WHILE CONTENDING THAT THE ASSESSEE HAS RECEIVED ADVANCES TO AN EXTENT OF RS. 19.50 LAKHS BY WAY OF SIX AGREEMENTS (IMPOUNDED IN THE MATERIAL) ASSESSEE OFFERED AN AMOUNT OF RS. 13.50 LAKHS AS INCOME, IN THE RETURN FILED SUBSEQUENTLY. HOWEVER, A.O WITHOUT EXAMINING THE CONTENTIONS OR NOTICING THAT ASSESSEE HAS OFFERED INCOME, CONSIDERED THE STATEMENT DURING THE SURVEY AND LEVIED THE ABOVE PENALTIES. LD. CIT(A) HAS CONFIRMED THE SAME IN THE DETAILED ORDER. 3. LD. COUNSEL SUBMITTED THAT ASSESSEE HAS RECEIVED AMOUNTS TO AN EXTENT OF RS. 37.50 LAKHS. DURING THE YEAR RS. 33.50 LAKHS WAS IDENTIFIED, IN THE SURVEY AS AN AMOUNT OF RS. 4 LAKHS WAS RECEIVED IN THE EARLIER YEAR FROM MR. D RAJU. THE BIFURCATION OF THE AMOUNT AND THE REPAYMENTS ARE AS UNDER: SL. NO DATE DETAILS OF PROMISSORY NOTES AMOUNT RECEIVED AMOUNT REPAID 1 06.05.2010 P. VENKATESWARLU 5,00,000 2 06.05.2010 KONDA VENKATESWARLU 2,50,000 3 2008 D RAJU 4,00,000 4 2009 D RAJU 4,00,000 5 2009 D RAJU 4,00,000 6 2009 D SRINU 4,00,000 7 2009 D SRINU 2,00,000 8 2009 Y MURTHY 2,00,000 10 2008 N MALLA REDDY 3,00,000 3 ITA NO. 877/HYD/2014 & 1005/HD/2016 SHRI R. GIRISH KUMAR, SURYAPET. 11 2009 J SATTAIAH 4,00,000 12 2009 P RAM REDDY 2,00,000 13 2009 K RAMESH 2,00,000 14 2009 T HARSHAVARDHAN 3,00,000 15 2009 B VENKATAPATHI RAJU 2,00,000 TOTAL 37,50,000 6,00,000 LESS D RAJU 2008 LOAN 4,00,000 NET AMOUNT U/S 271D 33,50,000 NET AMOUNT U/S 271E 6,00,000 3.1 IT WAS SUBMITTED THAT THE SOME AMOUNTS ARE COVERED BY AGREEMENT OF SALE, AND THE BALANCE AMOUNT TO AN EXTENT OF RS. 13.50 LAKHS WAS OFFERED AS INCOME, WHICH INCLUDED THE AMOUNTS STATED TO HAVE BEEN REPAID IN THE NAME OF MR. D RAJU AND D. SRINU. SINCE THE AMOUNTS ARE OFFERED AS IN INCOME, QUESTION OF PENALTY U/S 271D AND 271E OF THE IT ACT DOES NOT ARISE ON THE AMOUNT OF RS. 13.50 LAKHS. WITH REFERENCE TO BALANCE AMOUNT, IT WAS SUBMITTED THAT THESE ARE COVERED BY AGREEMENT OF SALES AND REFERRED TO THE IMPOUNDED MATERIAL AS UNDER: SL. NO NAME OF THE BUYER AMOUNT RECEIVED FLAT NO. PAGES 1 P. VENKATESWARLU 5,00,000 208 & 210 PAGES 38 TO 41 2 KONDA VENKATASWARLU 2,50,000 303 PAGES 34 TO 37 AR-PB 3 JALLA SATTAIAH 4,00,000 206 PAGES 67 TO 70 AR-PB 4 K RAMESH 2,00,000 302 PAGES 79 TO 82 AR-PB 5 T HARSHAVARDHAN 3,00,000 203 PAGES 75 TO 78 AR-PB 6 N MALLA REDDY 3,00,000 307 PAGE 71 TO 74 AR-PB TOTAL 19,50,000 BALANCE OFFERED TO TAX FOR A.Y 2010-11 14,00,000 4 ITA NO. 877/HYD/2014 & 1005/HD/2016 SHRI R. GIRISH KUMAR, SURYAPET. 4. LD. DR HOWEVER, SUBMITTED THAT ASSESSEE HAS NOT SUPPORTED THE CONTENTIONS AND REFERRED TO THE DETAILED ORDER OF THE CIT(A). IT WAS SUBMITTED THAT THE ASSESSEE ADMITTED THAT THESE ARE CASH LOANS AND AGREEMENT OF SALE IS AN AFTERTHOUGHT. 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND THE PAPER BOOK PLACED ON RECORD. AS FAR AS THE DOCUMENTS STATED HAVE BEEN IMPOUNDED AND PLACED ON RECORD, THERE ARE CERTAIN AGREEMENTS OF SALES WHICH INDICATE RECEIPT OF MONEY. HOWEVER A STATEMENT PLACED AT PAGE NO. 33 WITH THE INDEX LIST OF SALE AGREEMENTS INDICATE THE FOLLOWING DETAILS: SL. NO NAME FLAT ADVANCE AMOUNT 1 KONDA VENKATESWARLU 303 1,00,000 22,72,700 2 POLISETTI VENKATESWRLU 208 & 210 1,00,000 14,08,475 3 GADHE SANTOSH KUMAR 204 50,000 11,66,000 4 GOLI MALLESHAM 209 75,000 10,66,625 5 A.K BAKSHI 306 1,35,000 12,03,100 6 Y SUDARSHAN 201 50,000 11,13,000 7 GOLLA KIRAN KUMAR 301 80,000 11,13,000 8 MADIGA SAILAJA 207 1,00,000 12,03,100 9 JALLA SATTAIAH 206 4,00,000 10,72,500 10 N MALLA REDDY 307 4,00,000 9,24,300 11 T HARSHAVARDHAN 203 3,00,000 10,26,375 12 K RAMESH 302 3,50,000 11,47,500 TOTAL ADVANCES 21,40,000 6. AS CAN BE SEEN FROM THE ABOVE, THERE ARE VARIATION IN THE AMOUNTS MENTIONED IN THE LIST OF SALE AGREEMENTS AS ABOVE, WITH THAT OF AMOUNT STATED HAVE BEEN RECEIVED AS STATED IN THE SUMMARY IN LD. COUNSEL ARGUMENT. HOWEVER, THERE IS NO DISPUTE WITH THE REFERENCE TO AMOUNTS OFFERED AS INCOME WHICH ARE SUPPORTED BY LETTER WRITTEN BY ASSESSEE TO THE ADDL.CIT DATED 28-09-2010 AND SUBSEQUENT 5 ITA NO. 877/HYD/2014 & 1005/HD/2016 SHRI R. GIRISH KUMAR, SURYAPET. FILING OF RETURN ON 05-08-2011. AN AMOUNT OF RS. 13.50 LAKHS HAS BEEN ADMITTED AS INCOME OUT OF THE AMOUNT RECEIVED IN CASH. PAYMENTS MADE TO MR. D RAJU AND MR. D SRINU TO AN EXTENT OF RS. 6 LAKHS ARE PART OF THE AMOUNTS OFFERED AS INCOME. CONSEQUENTLY, THE REPAYMENT IN CASH DOES NOT ARISE. ACCORDINGLY LEVY OF PENALTY U/S 271E OF THE ACT BECOMES INFRUCTUOUS, IN THE LIGHT OF THE FACTS THAT BORROWED AMOUNT WAS TREATED AS INCOME OF THE ASSESSEE. THE REPAYMENT IN CASH DOES NOT VIOLATE THE PROVISIONS OF SEC. 269I, THEREFORE LEVY OF PENALTY U/S 271E OF THE ACT IS NOT WARRANTED. THEREFORE THE LEVY OF PENALTY U/S 271E IS CANCELLED AND APPEAL IN ITA NO. 1005 IS ACCORDINGLY ALLOWED. 7. NOW COMING TO THE LEVY OF PENALTY U/S 271D, BOTH A.O AND CIT(A) ERRED IN CONFIRMING THE AMOUNT WITHOUT EXAMINING THE FACTS. TO THE EXTENT, ASSESSEE HAS ADMITTED THE INCOME, OUT OF THE BORROWED AMOUNTS, THERE CANNOT BE ANY PENALTY U/S 271D, THEREFORE RS. 13.50 LAKHS ADMITTED BY ASSESSEE SHOULD NOT HAVE BEEN CONSIDERED FOR LEVY OF PENALTY. COMING TO THE BALANCE AMOUNT, IT IS THE ASSESSEES CONTENTIONS THAT THESE ARE ADVANCES RECEIVED FOR SALE OF APARTMENTS. THE STATEMENT RECORDED IN THE COURSE OF SURVEY DO INDICATE THAT ASSESSEE HAS TAKEN OVER CERTAIN FLATS BEING CONSTRUCTED BY THE FIRM FOR INDIVIDUAL TRADING / CONSTRUCTION BUSINESS, BUT ASSESSEE ADMITTED IN THE COURSE OF SURVEY THAT THESE ARE BORROWED ON PROMISSORY NOTES. SUBSEQUENTLY ASSESSEE RETRACTED STATEMENT TO SUBMIT THAT THESE WERE ADVANCES RECEIVED AND RELIED ON COPIES OF THE AGREEMENT OF SALE IMPOUNDED ALONG WITH PROMISSORY NOTES. 6 ITA NO. 877/HYD/2014 & 1005/HD/2016 SHRI R. GIRISH KUMAR, SURYAPET. DURING THE COURSE OF PRESENT HEARING, IT WAS POINTED OUT THAT THERE ARE ONLY THREE PROMISSORY NOTES INVOLVING SRI POLISETTY VENKATESWARLU (RS. 5 LAKHS) KONDA VENKATESWALU (RS. 2.50) LAKHS AND T. HARSHAVARDHAN (RS. 3 LAKHS) AND FOR THE BALANCE OF AMOUNTS, THERE WERE NO PROMISSORY NOTES AT ALL. A.O DID NOT EXAMINE THESE ASPECTS AND RELIED ON THE STATEMENT ALONE HOLDING THAT ALL THE AMOUNTS WERE RECEIVED BY WAY OF PROMISSORY NOTES. THIS ASPECT REQUIRE EXAMINATION BY A.O. MOREOVER, THE CONTENTION THAT ASSESSEE HAS RECEIVED AMOUNTS TOWARDS ADVANCE FOR SALE OF APARTMENT IS ALSO SUPPORTED BY STATEMENT FROM TWO PERSONS, WHEREAS THESE ARE DISCREPANCIES IN THE CASE OF MR. T HARSHAVARDHAN. BE THAT AS IT MAY, THE A.O DID NOT GIVE ANY FINDING WHETHER AMOUNTS ARE RECEIVED THROUGH AGREEMENT OF SALE OR NOT, EVEN THOUGH THE SAID AGREEMENTS ARE STATED TO HAVE BEEN IMPOUNDED IN THE COURSE OF SURVEY. I AM NOT ABLE TO UNDERSTAND, HOW THIS CONTENTION WILL BECOME AN AFTERTHOUGHT, WHEN THE SAID AGREEMENTS OF SALE, INDICATING THE ACCEPTANCE OF ADVANCES FROM THE SAID PERSONS COULD BE AN AFTERTHOUGHT WHEN THE COPIES ARE IMPOUNDED DURING THE COURSE OF SURVEY ITSELF. BUT, AS SEEN FROM THE STATEMENT PLACED AT PAGE 33 (EXTRACTED ABOVE) THERE ARE VARIATIONS OF THE AMOUNT RECEIVED. THEREFORE, IN THE INTEREST OF JUSTICE, I SET ASIDE THE ORDER OF THE A.O U/S 271D OF THE ACT AND RESTORE THE ENTIRE ISSUE TO THE FILE OF THE A.O FOR EXAMINATION OF FACTS AND DECIDE THE ISSUE WHETHER THE AMOUNTS ARE RECEIVED BY WAY OF AGREEMENT OF SALE OR NOT AND IF SO TO, WHAT EXTENT. THE AMOUNT ADMITTED AS INCOME SHOULD NOT BE CONSIDERED AS AMOUNTS RECEIVED IN VIOLATION OF SEC. 269SS. THEREFORE A.O IS DIRECTED TO 7 ITA NO. 877/HYD/2014 & 1005/HD/2016 SHRI R. GIRISH KUMAR, SURYAPET. RESTRICT THE PENALTY ONLY TO THE AMOUNT WHICH ARE RECEIVED IN VIOLATION OF THE PROVISIONS (EXCLUDING THE AMOUNTS RECEIVED BY WAY OF AGREEMENT OF SALE AND INCOME OFFERED). ASSESSEE SHOULD BE GIVEN DUE OPPORTUNITY IN THE PROCEEDINGS AND HIS SUBMISSIONS SHOULD BE VERIFIED / CONSIDERED. ON THE BASIS OF IMPOUNDED MATERIAL AVAILABLE WITH THE DEPARTMENT. WITH THESE DIRECTIONS APPEAL IN ITA NO. 877/HYD/2014 IS CONSIDERED AS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, ITA NO. 877/HYD/2014 IS ALLOWED FOR STATISTICAL PURPOSES WHEREAS ITA NO. 1005/HYD/2016 IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 30 TH JANUARY, 2018. SD/- (B. RAMAKOTAIAH ) ACCOUNTANT MEMBER HYDERABAD, DATED: 30 TH JANUARY, 2018. KRK 1) SHRI R GIRISH KUMAR, SURYAPET C/O M. ANANDAM & CO. CAS, 7A, SURYA TOWERS, S.P ROAD, SECUNDERABAD. 2) ADDL. CIT, RANGE-9, HYDERABAD. 3) CIT(A) -18, MUMBAI. 4) THE CIT-5/6, HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE