Dy. CIT, CIRCLE - 2(1), Vijayawada V. M/s Durgabhavani Constructions, Vijayawada

ITA 122/VIZ/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0194 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 25-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Loose papers; Question of law; Tax effect; Revised return
• Section: 133A; 139(5); 148

Judgement Text

ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . . . . , ,, , . . . . , , , , % % % % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER . .. ./ // / I.T.A.NOS.122,123&124/VIZAG/2013 ( / ASSESSMENT YEARS : 2007-08, 2008-09 & 2009-10 ) DCIT CIRCLE - 2(1) VIJAYAWADA VS. DURGABHAVANI CONSTRUCTIONS VIJAYAWADA [ PAN: AAFFD 6906P] (, , , , / APPELLANT) (-., -., -., -., / RESPONDENT ) , / / APPELLANT BY : SHRI M.N. MURTHY NAIK, DR -., / / RESPONDENT BY : SHRI C. SUBRAHMANYAM, AR / 3 / DATE OF HEARING : 04.11.2015 / 3 / DATE OF PRONOUNCEMENT : 20.11.2015 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THESE APPEALS FILED BY THE REVENUE IS DIRECTED AGAI NST THE COMMON ORDER OF CIT(A), VIJAYAWADA DATED 27.12.2012 AND PE RTAINS TO THE ASSESSMENT YEAR 2007-08, 2008-09 AND 2009-10. SINC E THE ISSUE ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 2 INVOLVED IN THESE APPEALS IS COMMON, THEY ARE CLUBB ED, HEARD TOGETHER AND DISPOSED OFF BY WAY OF THIS COMMON ORDER FOR TH E SAKE CONVENIENCE. 2. BRIEF FACTS OF THE CASE, ARE THAT ORIGINALLY THE ASSESSEE CLAIMED ITS STATUS AS THAT OF A PARTNERSHIP FIRM, FILED RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEARS U/S 139(1) OF THE INCOME- TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT). A SURVEY OPERATI ON U/S 133A OF THE ACT WAS CONDUCTED ON 30.3.2010 IN THE PREMISES OF THE A SSESSEE FIRM M/S. DURGA BHAWANI CONSTRUCTIONS. DURING THE COURSE OF SURVEY OPERATION, IT WAS COME TO THE KNOWLEDGE OF THE DEPARTMENT THAT TH E ASSESSEE HAS NOT EXPLAINED THE INVESTMENT IN WORKING PROGRESS OF THE PROJECT I.E. SRI SAI RAMA PRIYA ENCLAVE. IT WAS ALSO NOTICED THAT T HE ASSESSEE HAS DECLARED NET PROFIT @ 8% ON CONTRACT RECEIPTS U/S 4 4AD OF THE ACT. DURING THE COURSE OF SURVEY OPERATION, THE SURVEY P ARTY RECORDED THE STATEMENT FROM B. AMARNATH, MANAGING PARTNER OF THE FIRM. AT THE TIME OF SURVEY PROCEEDINGS, SHRI B. AMARNATH, MANAGING P ARTNER OF THE FIRM GIVEN UNDERTAKING AND AS PER THE SAID UNDERTAKING H E WAS AGREED TO DISCLOSE RS. 2.4 CRORES TOWARDS AMOUNT INVESTED IN THE PROJECT SRI SAI RAMA PRIYA ENCLAVE AS UNEXPLAINED INVESTMENT AND AL SO AGREED TO FILE THE REVISED RETURN FOR THE ASSESSMENT YEAR 2007-08 TO 2009-10. IN ADDITION TO THIS, IT IS FURTHER AGREED TO FILE THE REVISED RETURN FOR THE YEAR ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 3 2009-10 ADMITTING NET PROFIT @ 12.5% ON GROSS CONTR ACT RECEIPTS. CONSEQUENT TO SURVEY U/S 133A OF THE ACT, THE ASSES SEE HAS FILED REVISED RETURNS FOR THE ASSESSMENT YEAR 2007-08, 2008-09 & 2009-10 ON 12.4.2010 DECLARING TOTAL INCOME OF RS.3,22,490/-, RS.31,980/- & RS.2,42,08,590/- RESPECTIVELY. AS THE REVISED RETU RN FILED WERE NOT IN CONFORMITY WITH THE PROVISIONS OF SECTION 139(5) OF THE ACT, THE ASSESSING OFFICER ISSUED NOTICE U/S 148 OF THE ACT ON 20.10.2010. IN RESPONSE TO NOTICE U/S 148, THE ASSESSEE FILED REVI SED RETURN ON 10.11.2010 ADMITTING INCOME AS DECLARED IN THE ORIG INAL RETURN OF INCOME FILED U/S 139(1) OF THE ACT. THE ASSESSEE A LONG WITH REVISED RETURN FILED U/S 148 OF THE ACT ON 10.11.2010, FILE D AN EXPLANATORY LETTER EXPLAINING THE REASONS FOR FILING REVISED RETURN AN D WHY THE ADDITIONAL INCOME ADMITTED WAS WITHDRAWN IN THE HANDS OF THE F IRM. THE ASSESSEE FURTHER EXPLAINED THAT IT WAS GUIDED BY AN ACCOUNTA NT AND AS PER THE GUIDANCE IT HAS FILED THE REVISED RETURN ADMITTING ADDITIONAL INCOME OFFERED CONSEQUENT TO SURVEY BECAUSE IT DID NOT HAV E PROPER UNDERSTANDING ABOUT THE ACCOUNTS/INCOME TAX LAW. 3. THE ASSESSING OFFICER TAKEN UP THE CASES FOR SCR UTINY AND ISSUED NOTICES U/S 143(2) OF THE ACT. DURING THE COURSE O F ASSESSMENT PROCEEDINGS, THE AO ISSUED NOTICE DATED 19.12.2011 REQUIRING IT TO EXPLAIN AS TO WHY PROTECTIVE ASSESSMENTS SHOULD NOT BE MADE IN THE ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 4 CASE OF B. AMARNATH THE MANAGING PARTNER AS PER THE REVISED RETURN FILED FOR ALL THE ASSESSMENT YEARS FROM 2004-05 TO 2010-1 1. IN RESPONSE TO THE SAID SHOW CAUSE NOTICE, THE ASSESSEE FILED ITS REPLY ON 9.11.2010 AND STATED THAT THE FIRM IS NON-EXISTENT, AS ALL PARTNE RS OF THE FIRM, OTHER THAN SHRI B. AMARNATH, MANAGING PARTNER DID NOT INV EST ANY AMOUNT FOR THE SAID PROJECT AND ALSO THEY DO NOT HAVE RELEVANT EXPERIENCE IN THE SAID BUSINESS. THE ASSESSEE FURTHER SUBMITTED THAT THE WHOLE PROJECT OF SHRI SAI RAM PRIYA ENCLAVE WAS UNDERTAKEN BY SHRI B . AMARNATH IN HIS INDIVIDUAL CAPACITY IN THE NAME OF VAISHNAVI ENTERP RISES AND ALSO ADMITTED THE UNDISCLOSED INCOME OF RS. 2.4 CRORE, A DMITTED DURING THE COURSE OF SURVEY IN HIS INDIVIDUAL CAPACITY AND FIL ED THE REVISED RETURN FOR THE ASSESSMENT YEAR 2004-05 TO 2010-11. THEREFORE, REQUESTED TO CONSIDER THE INCOME IN THE HANDS OF SHRI B. AMARNAT H AS AGAINST ORIGINALLY ADMITTED IN THE HANDS OF THE PARTNERSHIP FIRM. THE ASSESSING OFFICER, HOWEVER, DID NOT CONVINCED WITH THE EXPLAN ATION, MADE SUBSTANTIAL ADDITION IN THE HANDS OF SRI. B. AMARNA TH AND ALSO MADE PROTECTIVE ASSESSMENT FOR THE VERY SAME INCOME OF R S.2.4 CRORES IN THE HANDS OF THE PARTNERSHIP FIRM. WHILE DOING SO, THE AO OBSERVED THAT THOUGH THE SUBSTANTIAL ADDITIONS IS MADE IN THE HAN DS OF SHRI B. AMARNATH FOR THE ADDITIONAL INCOME OFFERED DURING T HE COURSE OF SURVEY, THE SUBSEQUENT RETURN FILED BY THE FIRM ON 12.4.201 0 CONSEQUENT TO ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 5 SURVEY OPERATIONS WOULD CERTAINLY PREVAIL IN THE IN STANT CASE. THUS, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO TAKEN INTO CONSIDERATION THAT THE FIRM HAS FILED THE REVISED R ETURN ADMITTING THE SAME INCOME AS ADMITTED IN THE ORIGINAL RETURN FILE D U/S 139(1) OF THE ACT CONCLUDED THE ASSESSMENT ON PROTECTIVE BASIS. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE CIT(A), THE ASSESS EE CONTENDED THAT THE ASSESSING OFFICER IS NOT CORRECT IN COMPLETING THE ASSESSMENTS ON PROTECTIVE BASIS IN THE STATUS OF FIRM ON THE BASIS OF REVISED RETURNS FILED ON 12.4.2010. THE ASSESSEE FURTHER CONTENDED THAT EVEN THOUGH, THE FIRM WAS CONSTITUTED UNDER THE PARTNERSHIP DEED DAT ED 1.4.2006 CONSISTING OF 4 PARTNERS, SHRI B. AMARNATH CLAIMED THAT THE BUSINESS CARRIED ON IN THE NAME OF DURGA BHAWANI CONSTRUCTIO NS BELONG TO HIM. THE ASSESSEE FURTHER SUBMITTED THAT THE OTHER PARTN ERS DO NOT HAVE RELEVANT EXPERIENCE AND ALSO DID NOT CONTRIBUTE ANY MONEY FOR THE SAID PROJECT AND ENTIRE INVESTMENTS OF RS.2.4 CRORES WAS CONTRIBUTED BY SHRI B. AMARNATH IN HIS INDIVIDUAL CAPACITY. TO THIS EF FECT, THE FIRM HAS FILED DECLARATIONS FROM THE REMAINING 3 PARTNERS STATING THAT THEY ARE NO LONGER PARTNERS OF SHRI DURGA BHAWANI CONSTRUCTIONS AND THEY DO NOT HAVE ANY INTEREST IN THE BUSINESS OF THE SAID FIRM. THE ASSESSEE FURTHER CONTENDED THAT THE ASSESSING OFFICER IS NOT CORRECT IN MAKING PROTECTIVE ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 6 ASSESSMENT IN THE HANDS OF THE FIRM, WHEN SRI. B.AM ARNATH, PARTNER OF THE FIRM ADMITTED THE BUSINESS IN HIS INDIVIDUAL CA PACITY AND ALSO FILED REVISED RETURNS, ADMITTING THE INCOME FROM BUSINESS CARRIED ON IN THE NAME OF SHRI DURGA BHAWANI CONSTRUCTIONS IN HIS IND IVIDUAL CAPACITY. IT IS FURTHER CONTENDED THAT THE ADDITIONAL INCOME OFF ERED CONSEQUENT TO SURVEY WAS ALSO ADMITTED BY SHRI B. AMARNATH IN HIS INDIVIDUAL RETURNS FILED FOR THE ASSESSMENT YEAR 2004-05 TO 2010-11. THE ASSESSEE FURTHER EXPLAINED THAT THE ASSESSING OFFICER ACCEPTED THE R EVISED RETURNS OF SHRI B. AMARNATH AND ALSO THE ASSESSMENT OF B. AMARNATH FOR THE ASSESSMENT YEAR 2004-05 TO 2010-11 WERE ALREADY COM PLETED AND THE ADDITION OF RS.2.4 CRORES ADMITTED IN THE SURVEY PR OCEEDINGS WAS CONSIDERED IN THE HANDS OF SHRI B. AMARNATH THEREFO RE, THERE IS NO NECESSITY OF CONSIDERING THE VERY SAME INCOME IN TH E HANDS OF PARTNERSHIP FIRM ON PROTECTIVE BASIS. THE CIT(A) A FTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE HELD ALLOWING THE ASSESSEES APPEAL THAT THE ASSESSING OFFICER ACCEPTED THE ADDITIONAL INCOME DECLARED BY SHRI B. AMARNATH ON SUBSTANTIAL BASIS. THEREFORE, ADDITIONS MADE ON THE VERY SAME INCOME IN THE HANDS OF ASSESSEE FIRM ON P ROTECTIVE BASIS CANNOT SUSTAIN IN THE EYES OF LAW. 5. THE D.R. SUBMITTED THAT THERE IS A SURVEY IN THI S CASE AND DURING THE COURSE OF SURVEY, THE ASSESSEE ADMITTED THAT IT HAS UNDERTAKEN THE ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 7 CONSTRUCTION WORK IN THE NAME OF PARTNERSHIP FIRM A ND MADE INVESTMENTS. THE DR FURTHER SUBMITTED THAT THE ASS ESSEE ADMITTED UNEXPLAINED INVESTMENTS IN WORK IN PROGRESS OF RS.2 .4 CRORES IN THE FIRMS HANDS AND FILED THE REVISED RETURNS ACCORDIN GLY. THEREFORE, NOW AT THE APPELLATE STAGE IT CANNOT CHANGE ITS VERSION STATING THAT THE SAID BUSINESS WAS UNDERTAKEN IN THE INDIVIDUAL CAPACITY OF ONE OF ITS PARTNERS. THE D.R. FURTHER SUBMITTED THAT THE FIRM IS VERY MU CH IN EXISTENCE, WHICH WAS EVIDENCED BY THE PARTNERSHIP DEED AND ALS O IT HAS FILED ITS RETURNS U/S 139(1) OF THE ACT FOR THE RELEVANT ASSE SSMENT YEARS, THEREFORE, THE FIRM DOES NOT EXIST CANNOT BE CONSID ERED. THE DR FURTHER ARGUED THAT CONSEQUENT TO SURVEY, THE ADDITIONAL IN COME ADMITTED WAS RS.2.4 CRORES WHEREAS THE ADDITIONAL INCOME ADMITTE D BY SHRI B. AMARNATH IN HIS INDIVIDUAL CAPACITY IS AT RS.1,90,9 9,642/-. THUS, THERE IS A DIFFERENCE OF RS.49,00,886/- WHICH NEEDS TO BE BR OUGHT TO TAX IN THE HANDS OF THE FIRM, THEREFORE REQUESTED TO CONFIRM T HE ASSESSMENT ORDER AND REVERSE THE CIT(A) ORDER. 7. ON THE OTHER HAND, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE STRONGLY SUPPORTED THE CIT(A) ORDER. THE A.R. FURT HER SUBMITTED THAT THE ASSESSING OFFICER COMPLETED THE ASSESSMENT OF S HRI B. AMARNATH FOR THE RELEVANT ASSESSMENT YEARS AND ACCEPTED THE ADDI TIONAL INCOME DECLARED BY SHRI B. AMARNATH ON SUBSTANTIVE BASIS. THEREFORE, A ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 8 PROTECTIVE ADDITION IN THE HANDS OF FIRM IS NOTHING BUT DOUBLE ADDITION WHICH IS NOT PERMISSIBLE UNDER LAW. THE A.R. FURTHE R SUBMITTED THAT THE ASSESSMENT ORDER OF SHRI. B. AMARNATH FOR THE ASSES SMENT YEAR 2007-08, 2008-09 & 2009-10 HAVE BECOME FINAL, AS THERE IS NO PROCEEDING PENDING BEFORE ANY APPELLATE AUTHORITY. UNDER THES E CIRCUMSTANCES, A SEPARATE ADDITION ON PROTECTIVE BASIS FOR THE VERY SAME INCOME IN THE PARTNERSHIP FIRM IS NOT CORRECT. THE A.R. FURTHER SUBMITTED THAT THE REVENUE CANNOT QUESTION THE QUANTUM OF APPEAL, BECA USE THE INCOME OFFERED IN SURVEY HAS BEEN ASSESSED IN THE HANDS OF SHRI B. AMARNATH TO THE EXTENT OF RS.1.9 CRORES OUT OF THE TOTAL ADMITT ED ADDITIONAL INCOME OF RS.2.4 CRORES AND THE REMAINING BALANCE AMOUNT WAS EXPLAINED BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS ACCEPTED THE ASSESSEES EXPLANATIONS WHILE COMPLETING THE ASSESS MENT OF SHRI B. AMARNATH AT PARA-5 OF THE ASSESSMENT ORDER. THE A. R. FURTHER SUBMITTED THAT FOR THE ASSESSMENT YEAR 2007-08 AND 2008-09, THE TAX EFFECT OF RS.1,08,550/- AND RS.1,95,285/- RESPECTIV ELY, IS LESS THAN THE MONETARY LIMIT PRESCRIBED FOR FILING APPEAL. THERE FORE, THE APPEALS FOR THE ABOVE TWO YEARS ARE NOT MAINTAINABLE IN VIEW OF THE BOARD INSTRUCTIONS NO.05/2014. THEREFORE, REQUESTED TO U PHOLD THE ORDER OF THE CIT (A). ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 9 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIALS AVAILABLE ON RECORD. ADMITTEDLY, IN THIS CASE THER E WAS A SURVEY U/S 133A OF THE ACT ON 30.3.2010. DURING THE COURSE OF SURVEY, THE AO NOTICED THAT THE ASSESSEE HAS NOT DECLARED INVESTME NTS MADE IN THE PROJECT SRI SAI RAMA PRIYA ENCLAVE. WHEN THIS FACT WAS CONFRONTED TO SHRI B. AMARNATH, PARTNER OF THE FIRM, HE AGREED TO DISCLOSE ADDITIONAL INCOME OF RS.2.4 CRORES IN THE HANDS OF THE PARTNER SHIP FIRM AND TO FILE REVISED RETURNS FOR THE ASSESSMENT YEAR 2007-08 TO 2009-10. CONSEQUENT TO SURVEY OPERATIONS, THE ASSESSEE HAS F ILED ITS REVISED RETURN ADMITTING TOTAL INCOME OF RS.1,10,290/-, RS. 6,31,980/- AND RS.2,42,08,593/- FOR THE ASSESSMENT YEARS 2007-08, 2008-09 & 2009-10 RESPECTIVELY. SUBSEQUENTLY, ON 20.10.2010 THE ASSE SSEE HAS FILED REVISED RETURN IN RESPONSE TO NOTICE U/S 148 OF THE ACT, ADMITTING SAME INCOME AS ADMITTED IN THE ORIGINAL RETURN FILED U/S 139(1) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS CONTENDED THAT THE ADMISSION MADE BEFORE THE SURVEY IN THE HANDS OF TH E PARTNERSHIP FIRM WAS BY MISTAKEN OF FACT AND ALSO ON THE BASIS OF WR ONG ADVICE GIVEN BY ONE OF THE ACCOUNTANT. THE ASSESSEE FURTHER CONTEN DED THAT THE INCOME ADMITTED DURING THE COURSE OF SURVEY PROCEEDINGS WA S IN TOTAL CONSIDERED IN THE HANDS OF SHRI B. AMARNATH, MANAGI NG PARTNER IN HIS INDIVIDUAL CAPACITY AND EXPLAINED THE FACT TO THE A SSESSING OFFICER. THE ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 10 ASSESSING OFFICER HAS COMPLETED THE ASSESSMENTS IN THE CASE OF SHRI B. AMARNATH FOR THE ASSESSMENT YEAR 2007-08 TO 2009-10 AND ACCEPTED THE ADDITIONAL INCOME DECLARED IN THE COURSE OF SURVEY PROCEEDINGS. THEREFORE, THE AO WAS NOT CORRECT IN MAKING PROTECT IVE ASSESSMENTS IN THE HANDS OF THE PARTNERSHIP FIRM FOR THE VERY SAME INCOME WHICH WAS ALREADY ADMITTED AND CONSIDERED IN THE HANDS OF SHR I B. AMARNATH. 9. IT WAS AN ADMITTED FACT THAT SRI. B.AMARNATH HAS ACCEPTED THE BUSINESS OF DURGA BHAVANI CONSTRUCTIONS IN HIS INDI VIDUAL CAPACITY AND FILED THE REVISED RETURN ADMITTING THE ADDITIONAL I NCOME OF RS. 2.4 CRORES OFFERED IN THE SURVEY PROCEEDINGS. THE ASSESSING OF FICER, WHILE COMPLETING THE ASSESSMENT OF SHRI B. AMARNATH FOR T HE ASSESSMENT YEAR 2007-08, 2008-09 & 2009-10, OBSERVED THAT THE ASSES SEE IN THE CAPACITY OF MANAGING PARTNER OF THE FIRM M/S. DURGA BHAWANI CONSTRUCTIONS, ADMITTED AN AMOUNT OF RS.2.4 CRORES INVESTMENT IN L AND AND CONSTRUCTION OF SAID PROJECT DURING THE COURSE OF S URVEY. BUT, SUBSEQUENTLY SHRI B. AMARNATH CLAIMED TO HAVE MADE THE UNEXPLAINED INVESTMENT IN THE SAID PROJECT IN HIS INDIVIDUAL CA PACITY STATING THAT THE FIRM ON ITS OWN CANNOT MAKE ANY INVESTMENT. CONSID ERING THE ASSESSEES EXPLANATIONS, THE ASSESSING OFFICER ACCE PTED THE ADDITIONAL INCOME OF RS.1,90,00,000/- AFTER DEDUCTING RS.49 LA KHS TOWARDS CREDITORS AND OTHER SOURCES IN THE HANDS OF SHRI B. AMARANTH WHICH WAS ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 11 EVIDENT FROM THE PARA 5 OF THE ASSESSMENT ORDER. T HEREFORE, IN OUR OPINION, THE A.O. IS NOT CORRECT IN MAKING SEPARATE ADDITIONS TOWARDS THE VERY SAME INCOME IN THE HANDS OF THE PARTNERSHIP FI RM ON PROTECTIVE BASIS, WHEN THE PROCEEDINGS ARE FINAL AND NO APPEAL IS PENDING IN THE CASE OF SHRI B. AMARNATH. 10. THERE IS NO EXPRESS PROVISION PROVIDED FOR MAKI NG PROTECTIVE ASSESSMENT UNDER THE INCOME TAX ACT. BUT, THE ASSE SSING OFFICER CAN MAKE PROTECTIVE ASSESSMENT IN THE INTEREST OF REVEN UE, WHERE THERE IS NO POSSIBILITY OF TAKING CLEAR DECISION TO ASSESS P ARTICULAR INCOME IN THE PARTICULAR CASE. UNDER THE LAW, IT IS OPEN FOR THE DEPARTMENT TO MAKE ASSESSMENT ON TWO PERSONS FOR THE SAME INCOME, WHER E THERE IS SOME AMBIGUITY ON THE BASIS OF SOME DOCUMENTS OR MATERIA L, WHICH SAYS THAT THE INCOME PERTAINS TO A OR B, TO SAFEGUARD THE INT EREST OF THE REVENUE. THE ASSESSING OFFICER HAS LIBERTY TO PASS AN ORDER ON PROTECTIVE BASIS IN ONE CASE AND ON SUBSTANTIVE BASIS IN ANOTHER CASE. IN THE PRESENT CASE ON HAND, THE ASSESSING OFFICER HAS MADE PROTECTIVE ASSESSMENT IN THE NAME OF FIRM AND THE SUBSTANTIAL ADDITION IS MADE I N THE HANDS OF SHRI B. AMARNATH, PARTNER OF THE FIRM. DURING THE COURSE O F HEARING, THE A.R. OF THE ASSESSEE MADE IT CLEAR THAT THE SUBSTANTIAL ASS ESSMENTS MADE IN THE NAME OF SHRI B. AMARNATH WAS BECOME FINAL AND NO PR OCEEDINGS ARE PENDING WITH ANY APPELLATE AUTHORITY, THIS FACT WAS NOT DISPUTED BY THE ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 12 REVENUE. ONCE, THE SUBSTANTIAL ADDITION IS MADE AN D WHICH WAS ACCEPTED BY BOTH THE PARTIES, THE QUESTION OF MAKIN G PROTECTIVE ADDITIONS FOR THE VERY SAME INCOME IN THE HANDS OF THE PARTNERSHIP FIRM IS NOT CORRECT. ON GOING THROUGH THE RETURNS OF IN COME AND ASSESSMENT ORDERS OF SHRI B. AMARNATH FOR THE ASSESSMENT YEARS 2007-08 TO 2009- 10, IT WAS NOTICED THAT THE INCOME ADMITTED DURING THE COURSE OF SURVEY PROCEEDINGS WAS IN TOTAL ADMITTED IN THE HANDS OF S HRI B. AMARNATH FOR THE RELEVANT ASSESSMENT YEARS AND WHICH WAS ACCEPTE D BY THE DEPARTMENT IN THE ASSESSMENT PROCEEDINGS. THE LD. D.R. ARGUED THAT THE ASSESSEE HAS ADMITTED ADDITIONAL INCOME OF RS.2 .4 CRORES DURING THE COURSE OF SURVEY PROCEEDINGS, AS AGAINST THIS SHRI B. AMARNATH HAS ADMITTED AN ADDITIONAL INCOME OF RS.1.9 CRORES IN H IS INDIVIDUAL CAPACITY, THUS, THERE IS A DIFFERENCE OF RS.49 LAKHS WHICH NE EDS TO BE BROUGHT TO TAX IN THE HANDS OF THE PARTNERSHIP FIRM. THIS ISS UE WAS EXAMINED BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSME NT IN THE CASE OF SHRI B. AMARNATH AND DISCUSSED THE ISSUE IN DETAIL, WHER EIN HE HAS ACCEPTED THE SOURCE FOR INVESTMENT OF RS.49 LAKHS, CONSEQUEN TLY MADE ADDITION OF RS.1,90,00,000/-. IN VIEW OF THIS FACTUAL POSITION , WE ARE OF THE OPINION THAT THE INCOME ADMITTED DURING THE COURSE OF SURVE Y PROCEEDINGS, WAS IN TOTAL CONSIDERED IN THE HANDS OF SHRI B. AMARNAT H. THEREFORE, SEPARATE ADDITION ON PROTECTIVE BASIS IN THE HANDS OF THE PARTNERSHIP ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 13 FIRM IS NOTHING BUT DOUBLE ADDITION WHICH CANNOT BE SUSTAINED. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO DELET E THE ADDITIONS MADE IN THE HANDS OF THE PARTNERSHIP FIRM ON THE ADDITIO NAL INCOME ADMITTED DURING THE COURSE OF SURVEY. 11. DURING THE COURSE OF HEARING, THE A.R. OF THE A SSESSEE REFERRED THE DECISION OF HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CIT VS. SOBHRAJMAL (2015) 228 TAXMAN 308. HE FURTHER R ELIED UPON THE HONBLE M.P. HIGH COURT JUDGEMENT IN THE CASE OF SM T. DAYABAI VS. CIT IN 154 ITR 248. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SOBHRAJMAL, WHILE DEALING WITH THE ISSUE HELD AS UNDER: 10. UNDER THE INCOME TAX ACT THOUGH THERE IS NO SUCH WOR D AS SUBSTANTIVE ADDITION/ASSESSMENT OR PROTECTIVE ADDIT ION/ ASSESSMENT, HOWEVER, THE COURTS HAVE HELD THAT IN CASE WHERE IT APPEARS TO THE INCOME TAX AUTHORITIES THAT CERTAIN INCOME HAS BEEN RECEIVED DURING THE RELEVANT YEAR OR FOR THAT MATTER DOCUMENTS/LOOSE PA PERS HAVE BEEN FOUND AND IT IS NOT DEAR TO WHOM IT PERTAINS OR IT IS NOT CLEAR WHO HAS RECEIVED THAT INCOME AND PRIMA-FACIE IT APPEARS THAT THE INC OME OR/AND DOCUMENTS/LOOSE PAPERS PERTAINS TO EITHER A OR B OR BY BOTH TOGETHER AND THUS IT WILL BE OPEN TO THE RELEVANT INCOME TAX AUTHORITY TO DETERMINE THE SAID QUESTION BY TAKING APPROPRIATE PROCEEDINGS BOTH AGAINST A AND B. 11. UNDER THE LAW, IT IS OPEN FOR THE DEPARTMENT TO MAK E ASSESSMENTS ON TWO PERSON OF THE SAME INCOME WHERE THERE IS SOM E AMBIGUITY AS TO THE LIABILITY TO CHARGE OR TO MAKE AN ADDITION ON T HE BASIS OF INCRIMINATING DOCUMENTS OR LOOSE PAPERS OR OTHER MA TERIAL OR OTHER INCOME IN RESPECT WHEREOF A SAYS, IT PERTAINS TO B AND B SAYS IT PERTAINS TO A BUT IN THAT CASE, TO SAFEGUARD THE IN TEREST OF THE REVENUE, THE ASSESSING OFFICER HAS LIBERTY TO PASS ORDER ON PROTECTIVE BASIS OR ON SUBSTANTIVE BASIS IN ONE HAND AND VICE-VERSA. 12. IT IS ONLY TO PROTECT THE INTEREST OF THE REVENUE AS , IF THE ACTION IS NOT TAKEN IN THE CASE OF A WHO SAYS THAT IT PERTAIN S TO B AND ADDITION IS MADE IN THE CASE OF B AND LATER ON, ON THE BASIS OF EVIDENCE IT IS FOUND THAT IT PERTAINED TO A AND IF NO ACTION IS TA KEN IN THE CASE OF A, THEN POSSIBLY THE ASSESSMENT OR THE PROCEEDINGS MAY GET TIME BARRED. ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 14 THEREFORE, TO AVOID SUCH EVENTUALITIES, THE REVENUE HAS AUTHORITY AND RIGHT TO MAKE PROTECTIVE ASSESSMENT AS WELL AS SUBS TANTIVE ASSESSMENT IN ANOTHER CASE, HOWEVER, WITH THE RIDER THAT ULTIMATELY AND FINALLY, THE INCOME/TRANSACTION/ADDI TION, IF AT ALL WOULD BE IN THE HANDS OF A OR B BUT IT CANNOT BE SU STAINED IN BOTH THE HANDS. 13. WHEN WE PERUSE THE FACTS IN THE PRESENT REFERENCE A PPLICATION, THEN IT IS AN ADMITTED FACT AND THE REVENUE ALSO DO ES NOT DENY THAT PROTECTIVE ADDITION WAS MADE IN THE CASE OF ASSESSE E WHEREAS SUBSTANTIVE ADDITION WAS EITHER MADE IN THE CASE OF M/S. GHINDMAL KAUROMAL OR/AND IN THE CASE OF ROOP CHAND OR/AND IN THE CASE OF NAN AK RAM (DROPADI DEVI) AND WHEN THE ABOVE ADDITIONS HAVE FINALLY BEE N SUSTAINED, AS OBSERVED BY THE ITAT IN THE CASE OF M/S. GHINDMAL K AUROMAL OR/AND IN THE CASE OF ROOP CHAND OR/AND NANAK RAM (DROPADI DE VI), THEN IT IS A FINDING AT FACT AND NO QUESTION OF LAW CAN BE SAI D TO ARISE WITH THE FACTS FOUND BY THE ITAT. WHEN ULTIMATELY, THE ADDI TION OF THESE VERY DOCUMENTS HAD BEEN SUSTAINED IN SOME OTHER CASE REL ATING TO THE SEARCH OR OTHER PARTNERS OR IN THE CASE OF M/S. GHI NDMAL KAUROMAL OR/AND IN THE CASE OF ROOP CHAND OR/AND NANAK RAM ( DROPADI DEVI), THEN THE ITAT, THEN THE ITAT HAD RIGHTLY DELETED TH E ADDITION AS THE SAME CANNOT BE OR COULD NOT HAVE BEEN MADE IN TWO H ANDS. THE REVENUE SHOULD NOT HAVE BEEN AGGRIEVED AS THE ADDIT IONS ON THE BASIS OF LOOSE PAPERS/DOCUMENTS HAS ULTIMATELY BEEN MADE/ SUSTAINED IN OTHER CASES OF THE GROUP. 14. WE ARE ALSO IN CONFORMITY WITH THE VIEW OF THE ITAT THAT THE ITAT, WHILE PASSING THE ORDER DT.29/10/1992, DECIDED THE CASE ON THE BASIS OF APPRECIATION OF RELEVANT FACTS AND EVIDENCE ON RECO RD AND THUS ARE ESSENTIALLY FINDING OF FACT AND IN OUR VIEW, THE IT AT RIGHTLY REJECTED THE REFERENCE APPLICATION AS IT DOES NOT GIVE RISE TO ANY QUESTION OF LAW FIT FOR REFERENCE TO THIS COURT. IT IS ALSO A FINDING OF FACT THAT THE ITAT HAS ALSO OBSERVED THAT THE CASE OF FIRM M/S GHINDMAL KA UROMAL OR THE OTHER CASES HAVE BECOME FINAL AS THE REVENUE DID NO T EVEN SOUGHT ANY REFERENCE IN THE MAIN CASE. 15. IN VIEW OF WHAT WE HAVE OBSERVED HEREIN ABOVE, THE REFERENCE APPLICATION DOES NOT INVOLVE ANY QUESTION OF LAW AN D ACCORDINGLY THE SAME STANDS REJECTED. NO COSTS. 12. THE HONBLE M.P. HIGH COURT IN THE CASE OF SMT. DAYABAI VS. CIT(SUPRA) WHILE, CONSIDERING THE ISSUE OF PROTECTI VE ASSESSMENT, HELD THAT SAME INCOME CANNOT BE ASSESSED ALWAYS AND HENC E WHEN THE ORIGINAL ASSESSMENT IS CONFIRMED, PROTECTIVE ASSESS MENT IN THE HANDS OF ANOTHER PERSON ALSO CANNOT BE CONFIRMED. ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 15 13. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO APPLYING THE RATIOS OF THE JUDGMENTS CITED ABOVE, W E ARE OF THE OPINION THAT THE PROTECTIVE ASSESSMENTS MADE IN THE HANDS O F THE ASSESSEE FOR THE ADDITIONAL INCOME ADMITTED DURING THE COURSE OF SURVEY CANNOT SUSTAIN IN THE EYES OF LAW. THEREFORE, WE DIRECT T HE ASSESSING OFFICER TO DELETE THE ADDITIONS MADE ON PROTECTIVE BASIS. 14. NOW, COMING TO THE SECOND ARGUMENT OF THE ASSES SE. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSE, DURING TH E COURSE OF HEARING ARGUED THAT THE TAX EFFECT FOR THE ASSESSMENT YEAR 2007-08 & 2008-09 IS LESS THAN THE MONETARY LIMIT FIXED BY THE CBDT FOR FILING THE APPEAL BEFORE ITAT. THE A.R. FURTHER SUBMITTED THAT IN VI EW OF THE CBDT CIRCULAR NO.05/2014, THE DEPARTMENT CANNOT FILE SEC OND APPEAL BEFORE THE ITAT, IN CASE THE DISPUTED TAX IS LESS THAN RS. 4 LAKHS. 15. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORDS. AT THE OUTSET, IT IS OBSERVED THAT THE TAX EFFECT INVOLVED IN THIS APPEAL OF THE REVENUE I S LESS THAN THE MONETARY LIMIT OF RS.4 LAKHS PRESCRIBED BY THE CBDT FOR FILING THE APPEALS BEFORE THE TRIBUNAL, AND THE SAME, THEREFOR E, IS NOT MAINTAINABLE. ALTHOUGH THE LEARNED DEPARTMENTAL REP RESENTATIVE HAS NOT DISPUTED THE FACT THAT THE TAX EFFECT INVOLVED IN THIS APPEAL OF THE REVENUE IS LESS THAN RS.4 LAKHS, HE HAS CONTENDED T HAT THE REVISED ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 16 MONETARY LIMIT OF RS.4 LAKHS FIXED BY THE CBDT VIDE INSTRUCTION NO.5 OF 2014 ISSUED ON 10 TH JULY, 2014 FOR FILING OF THE DEPARTMENTAL APPEALS BEFORE THE TRIBUNAL IS APPLICABLE ONLY TO THE APPEA LS FILED ON OR AFTER 10 TH JULY,2014. WE HAVE CONSIDERED SIMILAR CONTENTIONS O F THE REVENUE IN THE CASE OF ITO V/S. SRI SANTHOSHI TRANSPORT, YELLA NDU (KHAMMAM DISTRICT) IN ITA NO.615/HYD/2013 FOR ASSESSMENT YEA R 2006-07, AND DECIDED THE ISSUE RELATING TO THE APPLICABILITY OF THE CBDT INSTRUCTION NO.5 OF 2014 ISSUED ON 10 TH JULY, 2014 IN RESPECT OF APPEALS FILED PRIOR TO 10.7.2014, AGAINST THE DEPARTMENT VIDE PARA 2 OF OU R ORDER DATED 23.2.2015, WHICH READS AS FOLLOWS- 2. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORDS. AS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE OUTSET, TH E TAX EFFECT INVOLVED IN THIS APPEAL OF THE REVENUE IS LESS THAN THE MONETARY LIMIT OF RS.4 LAKHS PRESCRIBED BY THE CBDT FOR FILI NG THE APPEALS BEFORE THE TRIBUNAL, AND THE SAME, THEREFORE, IS NO T MAINTAINABLE. ALTHOUGH THE LEARNED DEPARTMENTAL REPRESENTATIVE HA S NOT DISPUTED THE FACT THAT THE TAX EFFECT INVOLVED IN T HIS APPEAL OF THE REVENUE IS LESS THAN RS.4 LAKHS, HE HAS CONTENDED T HAT THE REVISED MONETARY LIMIT OF RS.4 LAKHS FIXED BY THE CBDT VIDE INSTRUCTION NO.5 OF 2014 ISSUED ON 10 TH JULY, 2014 FOR FILING OF THE DEPARTMENTAL APPEALS BEFORE THE TRIBUNAL IS APPLICA BLE ONLY TO THE APPEALS FILED ON OR AFTER 10 TH JULY,2014. HE HAS CONTENDED THAT SINCE THE PRESENT APPEAL WAS FILED BY THE DEPARTMEN T ON 4.7.2013, THE REVISED MONETARY LIMIT OF RS. 4 LAKHS IS NOT AP PLICABLE TO THE SAME. IN THIS REGARD, THE LEARNED COUNSEL FOR THE A SSESSEE HAS RELIED ON THE DECISION OF THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF ITO, WARD 3, MURSHIDABAD V/S. NABIKCHUDDIN SK. RENDERED VIDE ITS ORDER DATED 12.8.2014 PASSED IN ITA NO.340 /KOL/2012, WHEREIN A SIMILAR ARGUMENT RAISED ON BEHALF OF THE DEPARTMENT WAS REJECTED BY THE TRIBUNAL RELYING INTER ALIA ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SURESHCH ADNRA DURGA PRASAD KHATOD(HUF) (253 CTR 492)(GUJ), WHEREIN IT WAS HELD, KEEPING IN VIEW THE MAIN OBJECTIVE OF THE INSTRUCTI ON ISSUED BY THE CBDT TO REDUCE THE PENDING LITIGATION WHERE THE TAX EFFECT IS ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 17 CONSIDERABLY LOW OR SMALL, THAT THE SAME WOULD APPL Y TO PENDING APPEALS ALSO. KEEPING IN VIEW THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF NABIKCHUDDIN SK.(SUP RA), WE HOLD THAT THE PRESENT APPEAL FILED BY THE DEPARTMENT INV OLVING A TAX EFFECT OF LESS THAN THE MONETARY LIMIT OF RS.4 LAKH S FIXED BY THE CBDT IN ITS INSTRUCTION NO.5 OF 2014 DATED 10 TH JULY, 2014 FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE THE TRIBUNAL, I S NOT MAINTAINABLE. THE SAME IS ACCORDINGLY DISMISSED. 16. KEEPING IN VIEW THE CONSISTENT VIEW TAKEN BY THE CO ORDINATE BENCHES OF THIS TRIBUNAL, WE HOLD THAT THE PRESENT APPEAL F ILED BY THE DEPARTMENT INVOLVING A TAX EFFECT OF LESS THAN THE MONETARY LI MIT OF RS.4 LAKHS FIXED BY THE CBDT IN ITS INSTRUCTION NO.5 OF 2014 DATED 1 0 TH JULY, 2014 FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE THE TRIB UNAL, IS NOT MAINTAINABLE. THE SAME IS ACCORDINGLY DISMISSED. 17. IN THE RESULT, THE REVENUES APPEALS IN ITA NOS.122,123&124/VIZAG/2013 ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 20 TH NOV15. SD/- SD/- ( (( ( . .. . ) ) ) ) ( (( ( . . . . ) ) ) ) ( (( ( V. DURGA RAO ) )) ) ( (( ( G. MANJUNATHA) / // / JUDICIAL MEMBER / // / ACCOUNTANT MEMBER /VISAKHAPATNAM: 6 / DATED : 20.11.2015 VG/SPS / - 7 / COPY OF THE ORDER FORWARDED TO :8 1. , / THE APPELLANT THE DCIT, CIRCLE-2(1), VIJAYAWADA 2. -., / THE RESPONDENT M/S. DURGABHAVANI CONSTRUCTIONS, D.NO.23-6-14, KOMMUVARI STREET, VIJAYAWADA ITA NOS.122,123&124/VIZAG/2013 DURGABHAVANI CONSTRUCTIONS, VIJAYAWADA 18 3. : / THE CIT, VIJAYAWADA 4. : () / THE CIT(A), VIJAYAWADA 5. -, , / // / DR, ITAT, VISAKHAPATNAM 6 . . . . / GUARD FILE / BY ORDER // TRUE COPY // @A ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM SL. NO. DESCRIPTION DATE INITIALS 1. DATE OF DICTATION BY THE AUTHOR SR.PS 2. DRAFT PLACED BEFORE THE DICTATING MEMBER SR.P S 3. DRAFT PLACED BEFORE THE SECOND MEMBER SR. PS 4. DRAFT APPROVED BY THE SECOND MEMBER SR. PS 5. DATE OF APPROVED ORDER COMES TO THE SR. PS SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER SR. PS 7. DATE OF FILE SENT TO THE BENCH CLERK SR. PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK HD. C LK 9. DATE OF DISPATCH OF ORDER SR. PS