Sri Sai Venkateswara Realtors, Hyderabad, Hyderabad V. ACIT, Central Circle-5, Hyderabad, Hyderabad

ITA 1152/HYD/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5934 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 11-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Question of law
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1152/HYD/2015 ASSESSMENT YEAR: 2009-10 SRI SAI VENKATESWARA REALTORS, HYDERABAD. PAN ABLF S3128F VS. ASST. COMMISSIONER OF INCOME-TAX, CC 5, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. MURALI MOHAN RAO REVENUE BY : SHRI A. SITARAMA RAO DATE OF HEARING : 07-12-2016 DATE OF PRONOUNCEMENT : 21-12-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-12, HYDERABAD, DATED 31/03/2015 FOR AY 20 09-10, WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1) THE LD. CIT(A)-12, HYDERABAD ERRED BOTH IN LAW AND ON FACTS IN DECIDING THE APPEAL. 2) THE LD. CIT(A)-12, HYDERABAD ERRED IN NOT ADMITT ING THE APPEAL PREFERRED BY THE APPELLANT ON THE PRETEXT OF NON-PAYMENT OF ADMITTED TAX WHICH IS PREJUDICIAL TO THE INTERES TS OF THE APPELLANT. 3) THE LD. CIT(A)-12, HYDERABAD OUGHT TO HAVE. CONS IDERED THAT THE ADMITTED TAX SHOULD BE ADJUSTED AGAINST THE CAS H SEIZED FROM THE ASSESSEE / FIRM AMOUNTING TO RS. 220 LAKHS. 4) AS THE LD. CIT(A)-12, HYDERABAD HAS DISMISSED TH E APPEAL IN LIMINE IN TERMS OF SEC 249(4)(A) OF THE ACT, THE ME RITS OF THE CASE HAVE NOT BEEN ADJUDICATED. 2 ITA NOS. 1152/H/15 SRI SAI VENKATESWARA REALTORS, HYD. 5) WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE FIR M HAS PAID THE ADMITTED TAX AMOUNTING TO RS. 1,00,000/- ON THE RET URNED INCOME OF RS. 3,28,000/-. COPY OF CHALLAN IS ENCLOSED. 6) AS THE ADMITTED TAX HAS BEEN PAID, THE APPEAL MA Y BE SET ASIDE TO THE FILE OF CIT(A) FOR FRESH CONSIDERATION GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE AND THE DELAY FOR THE A BOVE PERIOD MAY BE CONDONED. 7) THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT TH E AO ERRED WHILE REJECTING THE TRIAL BALANCE AND CONSIDERED R S. 200.00 LACS AS UNRECORDED AND UNACCOUNTED CASH IN THE HANDS OF THE ASSESSEE-FIRM ON PROTECTIVE BASIS WHICH IS NOT CORR ECT AND NOT JUSTIFIED. 8) THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIA TED THE CBDT CIRCULAR NO. 286/2/2003 - IT (INV) WHICH CLARI FIES THAT ADDITIONS CANNOT BE MADE ON THE BASIS OF SWORN STAT EMENT WITHOUT HAVING ANY DOCUMENTARY EVIDENCE. 9) THE LD. CIT(A)-I, HYDERABAD OUGHT TO HAVE ADJUDI CATED THE APPEAL ON MERITS APPRECIATING THAT THE APPELLANT NE ITHER CONCEALED ANY INCOME NOR FURNISHED ANY INACCURATE P ARTICULARS OF INCOME FOR LEVY OF PENALTY U/S. 271(1)(C). 10) THE APPELLANT HEREIN MAY ADD, ALTER, OR MODIFY OR SUBSTITUTE ANY OTHER POINTS TO THE GROUNDS OF APPEAL AT ANY TI ME BEFORE OR AT THE TIME OF HEARING OF THE CASE. 2. THE ASSESSEE FILED THE FOLLOWING ADDITIONAL GROU NDS OF APPEAL RELYING ON THE JUDGMENT OF THE HONBLE SUPREME COUR T IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT, [1998] 229 ITR 383 (SC). 11. WE WOULD LIKE TO SUBMIT THAT AS PER THE RATIO L AID DOWN BY THE HONOURABLE SUPREME COURT OF INDIA IN THE CASE OF NA TIONAL THERMAL POWER CO. LTD V. CIT (1998) 229 ITR 383 (SC ) THE ITAT HAS JURISDICTION TO EXAMINE THE QUESTION OF LAW WHI CH THOUGH NOT AROSE BEFORE THE AO BUT AROSE BEFORE THE ITAT FOR T HE FIRST TIME. 12. THE LD. CIT (A) ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SEC TION 153C OF THE ACT FOR THE ASSESSMENT YEAR 2009-10, THERE BEIN G NO SATISFACTION RECORDED BY HIM AS WELL AS BY THE ASSE SSING OFFICER HAVING JURISDICTION OVER THE COMPANY SEARCHED. 13. THE LD. CIT (A) OUGHT TO HAVE ANNULLED THE ORDE R OF THE ASSESSING OFFICER APPRECIATING THAT INVOKING OF THE PROVISIONS U/S 153C WITHOUT RECORDING SATISFACTION BY HIM AS WELL AS BY THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEAR CHED PARTY 3 ITA NOS. 1152/H/15 SRI SAI VENKATESWARA REALTORS, HYD. BECOMES INVALID AS HELD BY THE HON'BLE A.P HIGH COU RT IN THE CASE OF CIT V S. M/S SHETTYS PHARMACEUTICALS & BIOL OGICALS LTD IN ITT A NOS.662 OF 2014 DATED.26-11-2014. 14. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THAT THE MATERIAL FOUND IN PREMISES OF SRI SAMBASIVA RAO AND OTHERS, DOES NOT BELONG TO APPELLANT FOR THE YEAR UNDER CONSIDERATIO N AND THAT THE PROCEEDING U/S 153C CANNOT BE INITIATED. 15. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE F ACT THAT NO ADDITION CAN BE MADE TO THE INCOME OF THE ASSESSEE WITHOUT THERE BEING ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH WHILE FRAMING ASSESSMENT U/S 143(3) RWS 153C OF THE ACT. 3. AT THE OUTSET, IT MAY BE NOTICED THAT THE REGIS TRY ISSUED A DEFECTIVE MEMO ON THAT GROUND THAT THERE IS A SHORT PAYMENT OF INSTITUTION FEE IN AS MUCH AS RS. 500/- ONLY HAS BE EN PAID BY THE ASSESSEE ON THE GROUND THAT LD. CIT(A) HAS NOT CONS IDERED THE MATTER ON MERITS, IN WHICH EVENT, THE MATTER FALLS WITHIN THE EXCEPTIONS PROVIDED U/S 253(6)(D) OF THE IT ACT. THIS ISSUE HA S BEEN CONSIDERED BY THE ITAT, HYDERABAD BENCHES IN A NUMBER OF CASES WHEREIN IT WAS HELD THAT IN THE EVENT OF DISMISSING THE APPEAL AT THE ADMISSION STAGE, A FURTHER APPEAL CAN BE FILED BEFORE THE TRIBUNAL C HALLENGING THE CORRECTNESS OF THE DISMISSAL U/S 249(4)(A) BY PAYIN G AN INSTITUTION FEES OF RS. 500/- ONLY. IN FACT, THE LD. COUNSEL FO R THE ASSESSEE HAS PLACED BEFORE US A COPY OF THE ORDER OF THE ITAT (S MC BENCH) (WHEREIN ONE OF US A PARTY) IN THE CASE OF SHRI P. MADHUSUDHAN AND M/S SRI SAI PRASANTHI REALTORS (ITA NO. 1126, 1128, 1129, 1164 & 1165/HYD/14, ORDER DATED 21/06/2016) WHEREIN AN IDE NTICAL ISSUE WAS DECIDED BY HOLDING PAYMENT OF INSTITUTION FEES OF R S. 500/- IS SUFFICIENT UNDER SUCH CIRCUMSTANCES. 4. HAVING REGARD TO THE DECISIONS PLACED BEFORE US, WE ADMIT THE APPEAL AND PROCEED TO DISPOSE OF THE GROUNDS URGED BEFORE US. 5. THE MAIN GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS WRONGLY INVOKED THE PROVISIONS OF SECTION 249(4)(A) OF THE ACT; THE FIRST APPELLATE AUTHORITY OUGHT TO HAVE CONSIDERED THAT THE CASH SEIZED 4 ITA NOS. 1152/H/15 SRI SAI VENKATESWARA REALTORS, HYD. FROM THE ASSESSEE FIRM AMOUNTING TO RS. 220 LAKHS S HOULD HAVE BEEN ADJUSTED AGAINST THE ADMITTED TAX, APART FROM THE F ACT THAT THE ASSESSEE HAS PAID ADMITTED TAX AMOUNTING TO RS. 1 L AKH. LD. COUNSEL ALSO PLACED BEFORE US A COPY OF THE ORDER OF THE IT AT IN THE CASE OF MR. RAVELLA RAMAKRISHNA (ITA NOS. 1166 TO 1169/HYD/ 14, ORDER DATED 20/01/16) WHEREIN THE COORDINATE BENCH FOLLOWING TH E RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. PRAMODKUMAR DANG ITA NO. 62 OF 2011, DATED 2014, ACCEPTED, IN P RINCIPLE, THE PLEA OF THE ASSESSEE AND OBSERVED AS UNDER: 21. THE RATIONALE BEHIND SECTION 249(4) APPEARS TO BE THAT WHERE AN ASSESSEE HAS FILED A RETURN OF INCOME, THE N THE TAX WHICH IS ADMITTEDLY PAYABLE BY THE ASSESSEE SHOULD BE PAID PRIOR TO THE HEARING OF ANY APPEAL FILED BY THE ASS ESSEE. THE RATIONALE SEEMS VERY LOGICAL FOR THE REASON THAT NO ASSESSEE CAN BE HEARD IN AN APPEAL WHERE THE TAX WHICH IS AD MITTEDLY PAYABLE BY THE ASSESSEE IS OUTSTANDING. IT IS TO EN FORCE PAYMENT OF TAX ON ADMITTED INCOME . WHERE AN ASSESS EE FILES THE RETURN OF INCOME THEN AT LEAST THE TAX WHICH IS PAYABLE IN TERMS OF THE RETURN INCOME SHOULD BE PAID BY THE AS SESSEE. BUT WHERE THE ASSESSEE EITHER HAS PAID THE TAX ON THE R ETURNED INCOME OR SOUGHT ADJUSTMENT OF THE AMOUNT ADMITTEDL Y LYING WITH THE REVENUE TOWARDS THE TAX PAYABLE ON THE RET URNED INCOME, THE ASSESSEE CANNOT BE DENIED A HEARING. IN THE PRESENT CASE, THE AMOUNT OF RS.4,60,000/- BELONGING TO THE ASSESSEE WHICH WAS ADMITTEDLY AVAILABLE WITH THE AP PELLANT WAS FAR IN EXCESS OF THE AMOUNT OF TAX PAYABLE IN T ERMS OF THE RETURNED INCOME AND WAS EVEN IN EXCESS OF THE DEMAN D CREATED UNDER SECTION 143(1)(A) . THE ASSESSEE COULD NOT HAVE BEEN DENIED A HEARING MERELY ON THE GROUND OF NON P AYMENT OF TAX DUE ON THE RETURNED INCOME. 5.1 IT WAS ALSO SUBMITTED THAT SMC BENCH IN OTHER C ONNECTED CASES OF THIS GROUP I.E. MR. P. MADHUSUDHAN AND M/S SRI S AI PRASANTHI REALTORS, SET ASIDE THE ISSUE TO THE FILE OF THE LD . CIT(A) ON SIMILAR LINES. LD. COUNSEL ALSO SUBMITTED THAT THE ASSESSME NT MADE U/S 153C IS BAD IN LAW AND IN THIS REGARD RAISED ADDITIONAL GROUNDS BY SUBMITTING THAT A LEGAL ISSUE INVOLVED THEREIN DOES NOT REQUIRE FURTHER 5 ITA NOS. 1152/H/15 SRI SAI VENKATESWARA REALTORS, HYD. EXAMINATION OF THE FACTS AND, HENCE, IN THE LIGHT O F THE DECISION OF THE APEX COURT IN THE CASE OF NTPC, 229 ITR 383, THE IS SUE DESERVES TO BE CONSIDERED. 6. WE HAVE ALSO HEARD THE LD. DR AND CAREFULLY PERU SED THE RECORD. ADMITTEDLY, THE CONSISTENT PLEA OF THE ASSE SSEE IS THAT THE CASH SEIZED BY THE DEPARTMENT FROM THE ASSESSEE FIR M IS IN EXCESS OF TAX PAYABLE ON THE RETURNED INCOME. IN THE LIGHT OF THE DECISIONS CITED BEFORE US, LD. CIT(A) WAS NOT JUSTIFIED IN DISMISSI NG THE APPEAL WITHOUT ADJUDICATING THE SAME ON MERITS MERELY ON THE GROUN D THAT THE ADMITTED TAX IS NOT PAID. CONSIDERING THE VIEW TAKE N BY THE TRIBUNAL IN THE CONNECTED GROUP OF MATTERS, WE SET ASIDE THE OR DER PASSED BY THE LD. CIT(A) AND DIRECT HIM TO VERIFY AS TO WHETHER THE CASH SEIZED DURING THE COURSE OF SEARCH IS SUFFICIENT TO MEET T HE TAX LIABILITY FOR THE YEAR UNDER CONSIDERATION AND, IF SO, HE IS DIRECTED TO ADMIT THE APPEAL TO CONSIDER THE ISSUES URGED BEFORE HIM ON MERITS. NEEDLESS TO OBSERVE THAT THE ADDITIONAL GROUNDS URGED BEFORE US ARE PURELY LEGAL ISSUES AND THEREFORE THE CIT(A) WOULD ALSO TAKE THE SE GROUNDS UNDER CONSIDERATION. SINCE THE MATTER IS SET ASIDE, IT I S NOT NECESSARY FOR US TO GO INTO THE MERITS OF THE ISSUES URGED BEFORE US EITHER ON MERITS OR ON THE LEGAL ISSUES, URGED BY THE ASSESSEE IN THE A DDITIONAL GROUNDS. 7. WITH THESE REMARKS, APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 21 ST DECEMBER, 2016 SD/- SD/- (D. MANMOHAN) (S. RIFAUR RAHM AN) VICE PRESIDENT A CCOUNTANT MEMBER HYDERABAD, DATED: 21 ST DECEMBER, 2016 KV 6 ITA NOS. 1152/H/15 SRI SAI VENKATESWARA REALTORS, HYD. COPY TO:- 1) M/S SRI SAI VENKATESWARA REALTORS, C/O P. MURAL I & CO., CAS., 6-3-655/2/3, I FLOOR, SOMAJIGUDA, HYDERABAD 500 082 2) ACIT, CC - 5, HYDERABAD. 3) CIT(A) - 12, HYDERABAD 4 PR. CIT(CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE