Bodiga Ramdas Goud, Hyderabad V. Dy. CIT, Central Circle-7, Hyderabad

ITA 1198/HYD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6271 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 18-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.1198/HYD/2014 ASSESSMENT YEAR 2009-2010 SRI BODIGA RAMDAS GOUD PARVATHAPUR, UPPAL, RR DIST., PAN AROPB8568K VS., THE DCIT, CENTRAL CIRCLE-7, HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. K.C. DEVDAS FOR REVENUE : MR. A. SITARAMA RAO DATE OF HEARING : 15.12.2016 DATE OF PRONOUNCEMENT : 11.01.2017 ORDER SHRI D. MANMOHAN, V.P. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER PASSED BY THE CIT(A), GUNTUR AND IT PERTAINS TO THE A.Y. 2009-2010. THE FOLLOWING GROUNDS WERE URGED BEFORE US. 1. THE ORDER OF THE HONBLE CIT(A) IS ERRONEOUS IN LA W AS WELL AS FACTS OF THE CASE. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON BLE CIT(A) OUGHT NOT TO HAVE SUSTAINED THE ADDITION TO THE EXT ENT OF RS.9.50 LAKHS AND THEREFORE THE SAME IS LIABLE TO BE DELETE D. 3. THE HONBLE CIT(A) OUGHT TO HAVE OBSERVED THAT THE AMOUNT OF RS.2.89 CRORES MENTIONED AT PARA 9.8 OF THE ORDER R EPRESENT ADVANCES RECEIVED AND THEREFORE THERE WOULD NOT BE ANY ELEMENT OF COMMISSION IN SUCH ADVANCES RECEIVED. SIMILARLY THE AMOUNT OF RS.1.83 CRORES WERE THE ADVANCES MADE FOR PURCHA SE OF PROPERTIES AND THEREFORE IN RESPECT OF THOSE ADVANC ES ALSO NO COMMISSION HAS ACCRUED TO THE ASSESSEE. HENCE ESTIM ATION OF 2 ITA.NO.1198/HYD/2014 SRI BODIGA RAMDAS GOUD, PARVATHAPUR, UPPAL, R.R. DISTRICT. COMMISSION AT 2% IN RESPECT OF SUCH TOTAL ADVANCES OF RS.4.75 CRORES IS LIABLE TO BE DELETED. 4. THE HONBLE CIT(A) OUGHT TO HAVE RENDERED A SPECIFI C FINDING WITH REGARD TO ACTION OF THE A.O. IN ADOPTING THE INCOME DECLARED FIGURE AT RS.2,24,440 WITHOUT MENTIONING ANY REASON INSTEAD OF RS.36,520 DECLARED BY THE ASSESSEE. 5. ANY OTHER GROUND WILL BE RAISED AT THE TIME OF HEAR ING OF APPEAL. 1.1 IN ADDITION THERETO, THE ASSESSEE RAISE D THE FOLLOWING ADDITIONAL GROUND. THE LEARNED CIT(A) FAILED TO NOTE THAT THE SATISFA CTION AS ENJOINED IN SECTION 153C OF THE I.T. ACT, 1961 THAT THE APPE LLANT HAD UNDISCLOSED INCOME NOT HAVING BEEN RECORDED BY THE A.O. IN THE ASSESSMENT FILE OF B. RAMDAS GOUD WHO WAS SUBJECT T O PROCEEDINGS U/S.132 OF THE I.T. ACT, 1961 AND THERE FORE THE ORDER PASSED U/S.143(3) R.W.S. 153C OF THE I.T. ACT, 1961 IN THE CASE OF THE APPELLANT FOR THE A.Y. 2009-10 IS WITHOUT JURIS DICTION AND THEREFORE WHOLLY UNSUSTAINABLE IN LAW AND FACTS. 2. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE AS SESSEE, SUBMITTED THAT IDENTICAL ISSUE WAS CONSIDERED BY THE ITAT IN ASSESSEES OWN CASE FOR THE A.YS. 2003-2004, 2007-08 AND 2008-0 9 (ITA.NO.1195 TO 1197/HYD/2014 DATED 09.12.2016). 3. THE ASSESSEE, AGED ABOUT 65 YEARS, IS A LOCAL (V ILLAGE POLITICIAN) FOR THE LAST 03 DECADES. HE WAS ELECTED AS SARPANCH FOR 04 TIMES. ACCORDING TO THE ASSESSEE, THE CONTACTS AS A POLITI CIAN WERE USEFUL IN SETTLING LOCAL DISPUTES AMONGST THE VILLAGERS, AS AN ELDERLY MEMBER OF THE VILLAGE. IN THAT PROCESS, HE ARRANGED SOME LOCAL L AND DEALS AMONG THE INTENDING SELLERS AS WELL AS PURCHASERS. FOR ARRA NGING SUCH LAND DEALS HE WAS GETTING SOME COMMISSION. 4. AS COULD BE NOTICED FROM THE ASSESSMENT ORDER, SEA RCH AND SEIZURE OPERATION UNDER SECTION 132(2) OF THE ACT WAS C ONDUCTED IN THE 3 ITA.NO.1198/HYD/2014 SRI BODIGA RAMDAS GOUD, PARVATHAPUR, UPPAL, R.R. DISTRICT. CASE OF THE GROUP ON 15.09.2008. AS A CONSEQUENCE THE RETO, THE ASSESSEE WAS CALLED-UPON TO FILE ITS RETURN OF INCOME. THE ASSESSEE DECLARED TOTAL INCOME OF RS.9,57,090 AND ALSO AGRICUL TURAL INCOME OF RS.3,13,600. THE NET INCOME DECLARED WAS ONLY RS.2,2 4,440. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THA T THE ASSESSEE FILED AN AFFIDAVIT BEFORE THE INVESTIGATION WING WHEREI N IT WAS STATED THAT FOLLOWING INCOMES WERE HITHERTO UNDISCLOSED BUT NOW OF FERED AS UNDISCLOSED INCOME FOR THE A.Y. 2009-2010. (I) COMMISSION INCOME RS.12,47,000 (II) INTEREST RECEIVED RS. 33,197 (III) SALARY RS. 6,000 (IV) LEASE RENT RS.3,25,000 TOTAL RS.16,11,197 5. HOWEVER ON VERIFICATION OF THE RETURN OF INCOME FI LED IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 153C OF THE ACT, THE ASSESSEE ADMITTED INCOME OF RS.36,520 ONLY. CROSS-VE RIFICATION OF THE INCOME SHOWN IN THE AFFIDAVIT, FILED BEFORE THE INVES TIGATION WING, ALONG WITH THE INCOME ADMITTED AS PER THE RETURN OF INCOME FIL ED UNDER SECTION 153C SHOWED A DIFFERENCE OF RS.15,74,677. THE ASSES SEE HAS NOT FILED ANY REASONS FOR NOT DISCLOSING THE INCOME AS ADMITTED BEFORE THE INVESTIGATION AUTHORITIES. THEREFORE, THE A.O. CONCLUDE D THAT THE ASSESSEE FAILED TO DISCLOSE THE CORRECT INCOME AND TREA TED THE SUM OF RS.15,74,677 AS UNDISCLOSED INCOME. 6. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) TH AT THE A.O. ERRED IN MAKING ADDITION OF RS.15,74,677 WITHOUT FURNISHING ANY BASIS. IT WAS ALSO SUBMITTED THAT THE A.O. HAS NO BASIS TO WORK-OUT THE COMMISSION INCOME OF RS.12,47,000 AND INTEREST OF RS. 33,197, LEASE RENT OF RS.3,25,000. FURTHER, THE A.OS ORDER WAS CHAL LENGED ON THE 4 ITA.NO.1198/HYD/2014 SRI BODIGA RAMDAS GOUD, PARVATHAPUR, UPPAL, R.R. DISTRICT. GROUND THAT THERE WAS NO BASIS FOR ADOPTING THE INCOME DECLARED FIGURE OF RS.2,24,440 AS AGAINST RS.36,520. 7. LD. CIT(A) DISCUSSED THE GROUNDS OF APPEAL FROM PAGE-19 OF HIS ORDER. THE OPERATING PORTION OF THE ORDER IS AT PAG E NOS.22 AND 23 WHEREIN HE OBSERVED THAT THE AFFIDAVIT FILED BY THE ASSE SSEE DURING POST- SEARCH ENQUIRIES REFERRED TO SPECIFIC SOURCE OF INCO ME AND IT WAS NOT A GENERAL STATEMENT WITHOUT ANY BASIS. THEREFORE, THE AF FIDAVIT FILED BY THE ASSESSEE SHOULD BE GIVEN GREATER WEIGHTAGE OVER OTHER EVIDENCE GATHERED AS WELL AS THE EARLIER STATEMENT GIVEN. HE FURTHER OBSE RVED THAT THE RENTAL INCOME PERTAIN TO THE VACANT PLOT GIVEN TO SRI R AM REDDY FOR PETROL PUMP WHICH WAS ADJACENT TO THE APPELLANTS HOUSE AT MEDIPALLY. IN HIS STATEMENT THE ASSESSEE MENTIONED THAT SRI RAM RED DY HAS PAID RENT OF RS.25,000 PER MONTH FROM FEBRUARY-MARCH, 2005 TILL 2008. SINCE THERE IS NOTHING ON RECORD TO INDICATE THAT RENT HA S ALREADY BEEN RECEIVED IN THE F.Y. 2008-09, RELEVANT TO THE PRESENT A SSESSMENT YEAR, THE ADDITION IN RESPECT OF RENTAL INCOME WAS DELETED BY THE CIT(A). 8. AS REGARDS CASH FLOW STATEMENT HE OBSERVED AS UND ER : THE APPELLANT, WHILE PREPARING THE CASH FLOW STATE MENT FOR A.Y. 2008-09, HAS REFLECTED ADVANCES OF RS.2.89 CRORES A ND RS.1.83 CRORES TOWARDS PURCHASE OF PROPERTIES, WHERE THE AP PELLANT IS A BROKER. THUS, THE APPELLANT HAS ACTED AS A BROKER/C ONDUIT FOR PROPERTY ADVANCES AGGREGATING RS.4.75 CRORES (APPRO X.) IN THE IMMEDIATE PRECEDING YEAR. IT IS REASONABLE TO ASSUM E THAT MOST OF THESE TRANSACTIONS WOULD HAVE CONCLUDED IN THE SUBS EQUENT FINANCIAL YEAR I.E., A.Y. 2009-10 AND THE APPELLANT WOULD HAVE RECEIVED COMMISSION ON THE SAME. IN ANY CASE, THE A PPELLANT HAS REGULARLY BEEN REFLECTING INCOME FROM COMMISSION ON SALE OF PROPERTY IN ALL THE YEARS PRIOR TO THE PRESENT ASSE SSMENT YEAR. I AM HENCE INCLINED TO DETERMINE INCOME FROM COMMISSION AT 2% OF THE VALUE OF PROPERTY TRANSACTIONS ROUTED THROUGH THE A PPELLANT I.E., RS.4.75 CRORES, WHICH WORKS OUT TO RS.9.5 LAKHS. TH US, OUT OF COMMISSION INCOME MENTIONED IN THE AFFIDAVIT, RS.9. 50 LAKHS IS BEING SUSTAINED. HENCE, OUT OF THE TOTAL ADDITION O F RS.15,74,677, 5 ITA.NO.1198/HYD/2014 SRI BODIGA RAMDAS GOUD, PARVATHAPUR, UPPAL, R.R. DISTRICT. AN AMOUNT OF RS.9.50 LAKHS IS BEING SUSTAINED AND T HE BALANCE DELETED. IN OTHERWORDS, OUT OF THE TOTAL ADDITION OF RS.15,74,677 AN AMOUNT OF RS.9.50 LAKHS IS SUSTAINED BY THE CIT(A). 9. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THERE IS NOTHING ON RECORD TO IND ICATE AS TO WHETHER REVENUE HAS PREFERRED A CROSS-APPEAL OR CROSS-OBJEC TION ON THE ISSUES WHICH WERE DECIDED IN FAVOUR OF THE ASSESSEE. THEREF ORE, WE CONFINE OURSELVES TO THE GROUNDS URGED BY THE ASSESSEE BEFORE US. THE MAIN CONTENTION OF THE ASSESSEE IS THAT AN AMOUNT OF RS.2.89 C RORES MENTIONED AT PARA 9.8 OF THE ORDER OF THE CIT(A) REPRES ENT ADVANCES RECEIVED AND THEREFORE, THERE WOULD NOT BE ANY ELEMENT OF COMMISSION IN SUCH ADVANCES. SIMILARLY, THE AMOUNT OF RS.1.83 CR ORES WAS THE ADVANCE MADE FOR PURCHASE OF PROPERTIES AND EVEN IN RESPECT OF THOSE ADVANCES NO COMMISSION IS ACCRUED TO THE ASSESSEE. TH US, ESTIMATION OF COMMISSION AT 2% IN RESPECT OF SUCH TOTAL ADVANCES I S LIABLE TO BE DELETED. 10. VIDE GROUND NO.4, IT WAS ALSO CONTENDED THAT THE LD . CIT(A) OUGHT TO HAVE GIVEN A SPECIFIC FINDING WITH REGARD TO A CTION OF THE A.O. IN ADOPTING THE INCOME DECLARED FIGURE OF RS.2.24 LA KHS. IN FACT THE SAID ADDITION WAS DELETED BY THE LD. CIT(A) AND THEREFORE, IT IS NOT NECESSARY TO CONSIDER GROUND NO.4. IN FACT, NEITHER THE LD. D.R. NOR THE LEARNED COUNSEL FOR THE ASSESSEE ADVANCED ANY ARGUMENTS ON TH AT GROUND. 11. THOUGH THE ASSESSEE HAS RAISED AN ADDITIONAL GR OUND WITH REGARD TO REQUIREMENT OF RECORDING SATISFACTION, AS ENJ OINED UNDER SECTION 153C OF THE ACT, NO ARGUMENTS WERE ADVANCED EV EN ON THAT GROUND AND THEREFORE, ADDITIONAL GROUND IS REJECTED. THUS, WE ONLY CONFINE TO THE ISSUE OF ESTIMATION OF COMMISSION INCOME . 6 ITA.NO.1198/HYD/2014 SRI BODIGA RAMDAS GOUD, PARVATHAPUR, UPPAL, R.R. DISTRICT. 12. LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSE SSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT AND NOTES DOWN THE RECEIPTS AND PAYMENTS IN A DAIRY TILL THE TRANSACTIONS ARE FINALISED AND HENCE THERE WILL NOT BE ANY ACCRUAL OF COMMISSION INCOME AND HEN CE, THE CIT(A) ERRED IN BRINGING TO TAX THE COMMISSION INCOME IN THE YEAR UNDER CONSIDERATION. 13. BOTH THE PARTIES ADMITTED THAT THE IDENTICAL ISSUE WAS CONSIDERED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.Y. 2003- 04 TO 2008-09 (ITA.NOS.1195, 1996 & 1197/HYD/2014 DA TED 09.12.2016). VIDE PARA-7 OF THE SAID ORDER THE TRIBUN AL OBSERVED AS UNDER : 7. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PE RUSING THE DOCUMENTS PLACED ON RECORD, WE ARE OF THE OPINION T HAT ASSESSEE HAS CORRECTLY DECLARED THE COMMISSION IN AY. 2008-0 9. ASSESSEE IS NOT MAINTAINING ANY BOOKS OF ACCOUNT AND HAS NOTED DOWN IN THE DIARY ON THE BASIS OF THE RECEIPTS AND PAYMENTS. A DMITTEDLY, THE TRANSACTION BETWEEN SHRI PHOOLCHAND SINGH AND OTHER S AND SHRI SUKENDER REDDY AND OTHERS REGARDING 20 ACRES IN PAR VATHAPUR VILLAGE WAS BEING NEGOTIATED AND ULTIMATELY FINALIS ED IN 2007 ONLY BY WAY OF FINAL REGISTRATION. ACCORDINGLY, THE COM MISSION IS ACCOUNTED FOR BY ASSESSEE IN AY. 2008-09. THE HON' BLE SUPREME COURT IN THE ABOVE CASE OF CIT VS. EXCEL INDUSTRIES LTD., [358 ITR 295] (SUPRA), HAS HELD THAT IT IS WELL SETTLED THAT INCOME TAX C ANNOT BE LEVIED ON HYPOTHETICAL INCOME. INCOME ACCRUES W HEN IT BECOMES DUE BUT IT MUST ALSO BE ACCOMPANIED BY A CORRESPOND ING LIABILITY OF THE OTHER PARTY TO PAY THE AMOUNT ONLY, THEN CAN IT BE SAID THAT FOR THE PURPOSE OF TAXABILITY THAT THE INCOME IS NOT HY POTHETICAL AND IT HAS REALLY ACCRUED TO THE ASSESSEE. KEEPING THE P RINCIPLES IN MIND, WE ARE OF THE OPINION THAT THE ADVANCE RECEIPT OF C OMMISSION CANNOT BE BROUGHT TO TAX IN AY. 2003-04 AND ASSESSEE HAS C ORRECTLY ACCOUNTED FOR THE SAME IN AY. 2008-09. IN VIEW OF THAT, AO IS DIRECTED TO DELETE THE SAID ADDITION MADE IN THIS A SSESSMENT YEAR. THE GROUNDS RAISED BY ASSESSEE ON THIS ISSUE ARE AC CORDINGLY ALLOWED. IN CASE, AO GAVE RELIEF IN AY 2008-09 CONS EQUENT TO LD.CIT(A) ORDER THE SAME CAN BE MODIFIED. 7 ITA.NO.1198/HYD/2014 SRI BODIGA RAMDAS GOUD, PARVATHAPUR, UPPAL, R.R. DISTRICT. 14. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE SET ASIDE THE ISSUE TO THE FILE OF THE A.O. WITH A DIRECTION TO TAKE INTO CONSIDERATION ONLY THE INCOME WHICH IS EARNED IN THE YEAR OF FINA LISATION OF THE DEAL. SINCE NO FINDING WAS GIVEN ON THAT ASPECT THE MATTER IS SET ASIDE TO THE FILE OF THE A.O. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11. 01.2017. SD/- SD/- (S.RIFAUR RAHMAN) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED 11 TH JANUARY, 2017. VBP/- COPY TO 1. SRI BODIGA RAMDAS GOUD, PARVATHAPUR, UPPAL, R.R. DISTRICT. C/O. SRI B. NARSING RAO & CO., CHARTERED ACCOUNTANTS, PLOT NO.554, ROAD NO.92, JUBILEE HILLS, HYDERABAD 5000 96. 2. THE DCIT, CENTRAL CIRCLE-7, HYDERABAD. 3. CIT(A), GUNTUR 4. CIT (CENTRAL), HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE.