Integrated Housing Developers Ltd., CHENNAI V. ACIT, Coimbatore

ITA 1010/CHNY/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8565 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 22-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: SUBADRA MARIMUTHU
• Keywords: Tangible material
• Section: 40A(3); 143(3); 148; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! ' . # , % & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICI AL MEMBER ./ I.T.A.NO.1010/MDS/2014 ( / ASSESSMENT YEAR: 2005-06) M/S. INTEGRATED HOUSING DEVELOPERS LTD. 3 RD FLOOR, 12, SAROJINI STREET, T.NAGAR, CHENNAI. VS THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-I(2), COIMBATORE. PAN: AABCI4387E ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MS. SUBADRA MARIMUTHU, ADVOCATE /RESPONDENT BY : MR. SHIVA SRINIVAS, JCIT /DATE OF HEARING : 13 TH JULY, 2016 /DATE OF PRONOUNCEMENT : 15 TH SEPTEMBER, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)- I, COIMBATORE DATED 13.02.2014 IN ITA NO.60/12/-1 3 PASSED UNDER SECTION 143(3) R.W.S. 147 & 250(6) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL ELABORATE GROUND S, HOWEVER THE CRUXES OF THE ISSUES ARE AS FOLLOWS:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ORDER OF THE LEARNED ASSESSING OFFICER WHO HAD 2 ITA NO.1010 /MDS/2014 DETERMINED THE NET INCOME OF THE ASSESSEE BASED ON THE UNSIGNED PROFIT & LOSS ACCOUNT. II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.15,68,958/- MADE BY THE LEARNED ASSESSING OFFICER UNDER SECTION 269SS/T BEING THE CASH LOAN ACCEPTED/PAID. III) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFICER UNDER SECTION 40A(3) OF THE ACT BEING CASH PAYMENTS EXCEEDING RS.20,000/- 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF HOUSING DEVELOPE RS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 ON 13.03.2006 DECLARING LOSS OF RS.2,56,830/-. A SEARC H WAS CONDUCTED UNDER SECTION 132 OF THE ACT BY THE INCOM E-TAX DEPARTMENT AT TRIVANDRUM IN THE PREMISES OF M/S. AI RTECH GROUP CONSEQUENT TO WHICH SURVEY WAS CARRIED OUT IN THE PREMISES OF THE ASSESSEE ON 21.02.2006 AND DURING T HE COURSE OF SURVEY SEVERAL DOCUMENTS WERE IMPOUNDED. ON PERUSAL OF THE BOOKS AND RETURN FILED BY THE ASSESS EE THE LEARNED ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD NOT DECLARED ITS ACTUAL INCOME AND THEREFORE HE BELIEVE D THAT INCOME HAD ESCAPED ASSESSMENT AND HENCE NOTICE UNDE R 3 ITA NO.1010 /MDS/2014 SECTION 148 WAS ISSUED TO THE ASSESSEE ON 18.3.2011.THEREAFTER THE ASSESSMENT WAS COMPLETED U NDER SECTION 143(3) R.W.S 147 OF THE ACT ON 26.07.2012 M AKING ADDITION OF RS. 71,58,452/- WHICH WAS NOT DISCLOSE D IN THE RETURN FILED BY THE ASSESSEE AND DISALLOWANCE OF RS.34,67,708/- UNDER SECTION 40A(3) OF THE ACT TOW ARDS CASH PAYMENT IN EXCESS OF RS.20,000/- AND DISALLOWANCE O F RS. 15,68,958/- UNDER SECTION 269SS OF THE ACT TOWARDS LOAN RECEIVED AND GIVEN BY CASH. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER AGREEING WITH THE ORDER OF THE LEARNED ASSE SSING OFFICER, AGAINST WHICH THE ASSESSEE IS IN APPEAL BE FORE US. GROUND NO.1 : DETERMINATION OF NET INCOME OF RS.71,58,452 /- BASED ON THE UNSIGNED PROFIT & LOSS ACCOUNT: 5.1 FROM THE FACTS OF THE CASE, IT IS REVEALED THA T THE ASSESSEE IS ASSESSED TO TAX FOR ITS INCOME OF RS. 7 1,58,452/- BASED ON THE ROUGH PROFIT & LOSS ACCOUNT IMPOUNDED DURING THE COURSE OF SURVEY ( MARKED- VVI.55) WHILE AS THE ASSESSEE 4 ITA NO.1010 /MDS/2014 HAD FILED ITS RETURN OF INCOME DECLARING NET LOSS O F RS.2,56,833/-. IT WAS EXPLAINED BY THE ASSESSEE THA T, THE ASSESSEE HAD HANDED OVER A PIECE OF LAND AT TRIVAND RUM FOR JOINT DEVELOPMENT TO M/S. AIRTECH GROUP ENTITLING T HEM FOR 90% SHARE OF PROFIT. IT WAS FURTHER EXPLAINED THAT, M/S .AIRTECH GROUP WAS TO MAINTAIN ACCOUNTS FOR ALL THE RECEIPTS AND PAYMENTS AND THE SHARE OF PROFIT WAS TO BE TRANSFER RED TO THE ASSESSEE ONLY ON THE COMPLETION OF THE ENTIRE PROJE CT. HOWEVER, THE PROJECT WAS STOPPED IN THE YEAR 2007 A FTER THE DATE OF THE SURVEY WHICH TOOK PLAVE ON 21.02.2006. IT APPEARS THAT THE LEARNED ASSESSING OFFICER HAD RELIED ON TH E ROUGH PROFIT & LOSS ACCOUNT IMPOUNDED DURING THE COURSE O F SURVEY FOR ARRIVING AT THE PROFIT OF THE ASSESSEE BECAUSE THE LOAN AMOUNT RECEIVED BY THE ASSESSEE AND THE SALE CONSID ERATION RECEIVED FROM THE SALE OF THE VILLAS WERE DIVERTED TO THE MANAGING DIRECTORS ACCOUNT AND A PORTION OF THE SA ME WAS ALSO EXPENDED TOWARDS CONSTRUCTION EXPENSES. 5.2 ON APPEAL, THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING 5 ITA NO.1010 /MDS/2014 OFFICER BASED ON THE FINDINGS OF THE LEARNED ASSESS ING OFFICER AND BY AGREEING WITH HIS VIEW. 5.3 BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIV E REITERATED ITS SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES BY STATING AS FOLLOWS:- I) THE ENTIRE ADDITION WAS MADE BASED ON THE UNSIGN ED BALANCE SHEET OF THE ASSESSEE FOUND DURING THE COUR SE OF THE SURVEY. II) THE PROJECT PROMOTED BY THE ASSESSEE THROUGH M /S. AIRTECH GROUP OF COMPANIES WAS NOT SUCCESSFUL. III) M/S.AIRTECH GROUP WAS IN FACT ACTUALLY PROMOTI NG THE PROJECT WHILE AS THE ASSESSEE HAD GIVEN ONLY THE POSSESSION OF THE LAND WITH A CONDITION THAT 90% OF THE PROFIT FROM THE PROJECT SHOULD BE TRANSFERRED TO TH E ASSESSEE AFTER COMPLETION OF THE PROJECT. IV) THE ENTIRE PROJECT HAD FAILED AND THE ASSESSEE HAS NOT REALIZED ANY PROFIT OUT OF THE TRANSACTION. WITH THE ABOVE SUBMISSIONS, THE LEARNED AUTHORIZED REPRESENTATIVE PLEADED THAT THE ADDITION MADE IN TH E HANDS OF THE ASSESSEE MAY BE DELETED. 6 ITA NO.1010 /MDS/2014 5.4 THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDERS OF THE REVENUE AN D REQUESTED FOR SUSTAINING THE SAME. 5.5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS OF THE CASE, IT APPEARS THAT THE ENTIRE ADDITION OF RS .71,58,452/- IS MADE ONLY ON THE BASIS OF THE ROUGH PROFIT & LOS S ACCOUNT IMPOUNDED DURING THE COURSE OF SURVEY. THE LEARNED ASSESSING OFFICER HAS NOT BROUGHT OUT ANY OTHER MAT ERIALS TO SHOW THAT THE ASSESSEE HAS REALLY ENJOYED ANY PROFI T OUT OF THE TRANSACTION. FURTHER, THERE IS NO MENTION ABOUT THE ASSESSMENT OF M/S.AIRTECH GROUP WHOM THE ASSESSEE H AS CLAIMED TO BE THE EXECUTIONER OF THE PROJECT. FROM THE OVERALL FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW TH AT THE REVENUE HAS NOT BROUGHT OUT ANY TANGIBLE MATERIALS TO MAKE THE ADDITION IN THE HANDS OF THE ASSESSEE. HOWEVER, IN THE INTEREST OF JUSTICE, WE REMIT BACK THE MATTER TO TH E FILE OF THE LEARNED ASSESSING OFFICER FOR CONSIDERING THE ISSUE AFRESH AND ALSO IN THE LIGHT OF THE ASSESSMENT MADE IN TH E CASE OF M/S.AIRTECH GROUP. IT IS ORDERED ACCORDINGLY. 7 ITA NO.1010 /MDS/2014 6. SINCE THE FACTS WITH RESPECT TO CASH PAYMENT MAD E IN EXCESS OF RS.20,000/- AND THE LOAN OBTAINED AND GIV EN IN CASH WHEREBY THE LEARNED ASSESSING OFFICER HAS INVO KED THE PROVISIONS OF SECTION 40A(3) AND SECTION 269SS/T OF THE ACT RESPECTIVELY IS NOT VIVIDLY BROUGHT OUT IN THE ORDE RS OF THE REVENUE, WE REMIT THESE ISSUES ALSO BACK TO THE FIL E OF THE LEARNED ASSESSING OFFICER FOR FRESH CONSIDERATION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 15 TH SEPTEMBER, 2016 SD/- SD/- ( ! ' . # ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 15 TH SEPTEMBER, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF