T.D. Ramakrishna, Bangalore V. ITO, Bangalore

ITA 1233/BANG/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9419 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-07-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 09-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K KIRAN KUMAR
• Section: 10

Judgement Text

ITA NO.1233/BANG/2011 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'C', BANGALORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO.1233/BANG/2011 (ASSESSMENT YEAR : 2005-06) SHRI. T. D. RAMAKRISHNA, S/O. DESUNAIDU, FLAT NO.203, R. K. HOYSALA RESIDENCY, 3 RD MAIN, 9 TH CROSS, HOYSALANAGAR, BENGALURU 560 016 .. APPELLANT PAN : ABLPR5616F V. INCOME-TAX OFFICER, WARD 12(2), BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. K. KIRAN KUMAR, ADVOCATE REVENUE BY : SHRI. BIPIN C. N, JCIT HEARD ON : 14.07.2016 PRONOUNCED ON : 26 .08.2016 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY ASSESSEE IT IS AGGRIEVED ON AN ADDITION OF RS.11,42,707/- CONFIRMED BY THE CIT (A). ITA NO.1233/BANG/2011 PAGE - 2 02. FACTS APROPOS ARE THAT ASSESSEE, MANAGING DIREC TOR OF A COMPANY CALLED M/S. SUBHA & PRABHA BUILDERS P. LTD, HAD FIL ED A RETURN DECLARING INCOME OF RS.15,53,152/- FOR THE IMPUGNED ASSESSMEN T YEAR. THERE WAS A SURVEY CONDUCTED IN THE PREMISES OF THE SAID COMPAN Y WHEREUPON IT SEEMS CERTAIN DOCUMENTS AND BOOKS OF ACCOUNT WERE IMPOUND ED. DOCUMENTS IMPOUNDED INCLUDED SALE AGREEMENTS AND CERTAIN RECE IPTS. AO ON EXAMINATION OF THE SALE AGREEMENTS AND THE BOOKS OF ACCOUNT OF THE ASSESSEE FOUND THAT THERE WERE DIFFERENCES IN THE A MOUNT RECORDED IN THE SALE AGREEMENT AND IN THE BOOKS. SUCH DIFFERENCES AS PER THE AO WERE THERE IN THE CASE OF 35 DIFFERENT PERSONS WHO HAD A GREED TO PURCHASE FLATS. STATEMENTS WERE RECORDED FROM THE ASSESSEE ON 20.09 .2005, 30.09.2005 AND 20.11.2005. ASSESSEE WAS INTER ALIA REQUIRED TO EX PLAIN THE DIFFERENCE BETWEEN THE AGREEMENT AMOUNT AND WHAT WAS RECORDED IN THE BOOKS OF ACCOUNT. ASSESSEE STATED THAT WHAT WAS STATED IN T HE BOOKS ALONE WERE RECEIVED AND NO AMOUNTS IN EXCESS OF THAT WERE RECE IVED. AS PER THE ASSESSEE THE AGREEMENTS WERE NOT ENTIRELY ACTED UPO N. CONTENTION OF THE ASSESSEE WAS THAT PART OF THE AMOUNTS MENTIONED IN THE SALE AGREEMENT WAS FOREGONE FOR VARIOUS REASONS INCLUDING NON-ADHERENC E TO WORK SPECIFICATION. AO WAS OF THE OPINION THAT SALE AGR EEMENT UNDER THE PARA NOMENCLATURE AS OBLIGATION OF THE PURCHASERS CLE ARLY MENTIONED ITA NO.1233/BANG/2011 PAGE - 3 PURCHASERS LIABILITY TO CARRY OUT EXTRA WORK AFTER TAKING POSSESSION. AS PER THE AO, THE VERSION GIVEN BY ASSESSEE COULD NOT BE ACCEPTED. HE HELD THAT DIFFERENCE BETWEEN THE AMOUNTS MENTIONED IN THE SAL E AGREEMENTS AND THOSE RECORDED IN THE BOOKS COMING TO RS.28,93,188/ - WAS UNDISCLOSED INCOME OF THE ASSESSEE. ADDITION WAS ACCORDINGLY M ADE. 03. AGGRIEVED ASSESSEE MOVED IN APPEAL BEFORE THE C IT (A). ARGUMENT OF ASSESSEE WAS THAT AMOUNTS MENTIONED IN SALE AGRE EMENTS WERE NOT FINAL AND THE ACTUAL RECEIPTS WERE MUCH LESS DUE TO VARIO US REASONS. AS PER THE ASSESSEE THERE WAS NO EVIDENCE TO SHOW THAT HE HAD RECEIVED ANY AMOUNTS MENTIONED IN THE SALE AGREEMENT. ASSESSEE ALSO FIL ED CONFIRMATION LETTERS FROM 22 BUYERS OF FLATS WHEREIN THEY AFFIRMED THAT THEY HAD PAID ONLY THE AMOUNTS RECORDED BY THE ASSESSEE IN THE BOOKS OF AC COUNT AND NOT WHAT WAS STATED IN THE SALE AGREEMENTS. CIT (A) WAS OF THE OPINION THAT IN RESPECT OF THE 22 BUYERS OF FLAT WHOSE CONFIRMATION WERE FILE D BY ASSESSEE HIS CONTENTIONS COULD BE ACCEPTED. HOWEVER IN SO FAR A S 10 CASES WHERE ASSESSEE COULD NOT FILE CONFIRMATION, CIT (A) SUSTA INED THE ADDITION. THESE TEN CASES AND THE AMOUNT INVOLVED WERE AS UNDER : ITA NO.1233/BANG/2011 PAGE - 4 04. NOW BEFORE US LD. AR STRONGLY ASSAILING THE ADD ITION OF RS.11,42,707/- SUSTAINED BY LD. CIT (A), SUBMITTED THAT THE LEARNED AUTHORITIES HAD ASSUMED RECEIPT OF MONEY BY ASSESSE E WITHOUT ANY EVIDENCE. AS PER THE LD. AR, THE SALE AGREEMENT WA S EXECUTORY IN NATURE AND UNLESS AND UNTIL ALL THE CONDITIONS MENTIONED I N THE AGREEMENT WAS ACTED UPON, ASSESSEE WOULD NOT BE ELIGIBLE FOR REC EIVING THE CONSIDERATION. AS PER THE LD. AR WHAT WAS RECEIVED WAS ONLY THE AM OUNTS RECORDED IN THE BOOKS OF ACCOUNT. LD. AR SUBMITTED THAT AFFIDAVITS WERE ALSO FILED BEFORE THIS TRIBUNAL STATING THAT ONLY THE AMOUNTS MENTION ED IN THE BOOKS WERE RECEIVED. FURTHER AS PER THE LD. AR NO INVESTMENTS OR ASSETS WERE FOUND FROM THE ASSESSEE TO REPRESENT THE ALLEGED UNDISCLO SED INCOME. LD. AR FURTHER SUBMITTED THAT SALE AGREEMENTS WERE ALSO NO T STAMPED PROPERLY AND OUGHT NOT HAVE BEEN RELIED UPON FOR MAKING THE ADDI TION. IN ANY CASE AS ITA NO.1233/BANG/2011 PAGE - 5 PER THE LD. AR, IF AN OPPORTUNITY WAS GIVEN ASSESSE E COULD EVEN NOW PRODUCE CONFIRMATION LETTERS FROM TEN PERSONS IN WH OSE CASE ADDITIONS WERE SUSTAINED BY LD. CIT (A). 05. CONTINUING HIS SUBMISSION LD. AR SUBMITTED THAT THE BOOKS OF ACCOUNT WERE MAINTAINED BY THE ASSESSEE AND THESE W ERE NOT REJECTED. ACCORDING TO HIM WITHOUT REJECTING THE BOOKS OF ACC OUNT ADDITION COULD NOT BE MADE BASED ON THE SALE AGREEMENT. AS PER THE L D. AR, EVEN IF THE DEPARTMENT REJECTED THE BOOKS OF ACCOUNT, IT WAS OB LIGED TO FOLLOW THE PROCEDURE MENTIONED IN SECTION 145(3) OF THE ACT. ONCE THE BOOKS OF ACCOUNT WAS ACCEPTED, THERE WAS NO SCOPE FOR ADDITI ON. AS PER THE LD. AR DEPARTMENT WAS ESTOPPED FROM MAKING AN ADDITION BAS ED ON THE SALE AGREEMENT ALONE. RELIANCE WAS PLACED ON THE JUDGME NT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. M/S . ANIL KUMAR & CO [ITA.200001 & 200002/2014, DT.25.02.2016] AND ALSO ON A COORDINATE BENCH DECISION IN THE CASE OF M/S. ANIL KUMAR & CO V. ITO [ITA NO.956/BANG/2011]. 06. PER CONTRA, LD. DR SUBMITTED THAT ASSESSEE COUL D NOT SHOW THAT SALE AGREEMENTS WERE INCORRECT. AS PER THE LD. DR ASSES SEE HIMSELF HAD STATED THAT THE SIGNATURE APPEARING IN THE SALE AGREEMENT WAS OF THE ASSESSEE ITA NO.1233/BANG/2011 PAGE - 6 HIMSELF. ONCE AN AGREEMENT IS SIGNED BY THE ASSESS EE AND THE PARTY, AS PER THE LD. DR IT COULD NOT BE IGNORED. ASSESSEE COULD NOT SHOW WHY THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT SHOULD BE A CCEPTED DISREGARDING THE SALE AGREEMENTS. 07. I HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. OUT OF THE TOTAL ADDITIONS MADE FOR VARIATION BETWEEN THE SALE AGREEMENTS AND WHAT WAS RECORDED IN THE BOOKS OF ACCOUNT BY THE ASSESSE E, CIT (A) HAS GIVEN RELIEF TO THE EXTENT OF RS.17,50,481/- SINCE ASSESS EE COULD PRODUCE CONFIRMATION LETTERS FROM 22 PERSONS. CIT (A) HAD ACCEPTED THE CONTENTION OF THE ASSESSEE THAT WHAT WAS MENTIONED IN THE BOOK S OF ACCOUNT ALONE COULD BE ACCEPTED AS TRUE AND CORRECT SINCE THIS WA S SUPPORTED BY THE CONFIRMATIONS. HOWEVER IT IS AN ADMITTED POSITION THAT ASSESSEE COULD NOT FILE CONFIRMATIONS IN RESPECT OF 10 PARTIES MENTION ED AT PARA THREE ABOVE. NO DOUBT LD. AR STATED THAT BOOKS OF ACCOUNT MAINTA INED BY THE ASSESSEE WAS NOT REJECTED. IN MY OPINION FOR MAKING AN ADDI TION BASED ON A SALE AGREEMENT WHICH WAS DULY SIGNED BY THE ASSESSEE, IT WAS NOT NECESSARY TO REJECT THE BOOKS OF ACCOUNT. WHEN THE AMOUNTS RECO RDED IN THE SALE AGREEMENTS WERE MORE THAN WHAT WAS MENTIONED IN THE BOOKS OF ACCOUNT IT WOULD ONLY MEAN THAT EXCESS AMOUNTS WERE RECEIVED B Y THE ASSESSEE FROM ITA NO.1233/BANG/2011 PAGE - 7 THE PROSPECTIVE BUYERS OVER AND ABOVE WHAT WAS RECO RDED IN THE BOOKS OF ACCOUNT. HENCE I AM UNABLE TO ACCEPT THE CONTENTIO N OF LD. AR THAT THE ONLY COURSE AO WAS LEFT WITH WHAT WAS MENTIONED IN SECTION 145E(3) OF THE ACT. THERE IS NO RULE THAT AN ADDITION COULD B E MADE ONLY AFTER REJECTING THE BOOKS OF ACCOUNTS. CASES RELIED ON B Y THE LD. AR WERE ON ADDITIONS MADE IN GROSS PROFIT AFTER REJECTING THE BOOKS OF ACCOUNTS. THESE ARE NOT APPLICABLE HERE SINCE THE AO HAS NO WHERE S TATED THAT HE WAS REJECTING THE BOOKS OF ACCOUNTS. AS FOR THE RELIAN CE PLACED ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ANIL KUMAR & CO., (SUPRA), THE BOOKS WERE NOT REJECTED BUT THERE WAS ESTIMATION OF INCOME. IN THE CASE BEFORE US THERE IS NO ESTIMATION OF INCOME BECAUSE THE AMOUNT ADDED WAS ONLY THE DIFFERENCE BETWEEN THE SALE AGRE EMENTS AND WHAT WAS RECORDED IN THE BOOKS OF ACCOUNT. ASSESSEE DESPITE VARIOUS OPPORTUNITIES GIVEN WAS NOT ABLE TO FILE CONFIRMATION IN RESPECT OF TEN PERSONS MENTIONED AT PARA THREE ABOVE. PLEADING OF THE ASSESSEE THAT IF GIVEN A CHANCE IT CAN NOW PRODUCE CONFIRMATION LETTERS CANNOT BE ACCEDED TO BECAUSE IT WOULD RESULT IN PROLONGED LITIGATION AND WOULD NOT BE IN THE INTEREST OF JUSTICE. ESPECIALLY SO SINCE SUFFICIENT OPPORTUNITY WAS GIVE N BY THE LOWER AUTHORITIES IN THIS REGARD. IN THE CIRCUMSTANCES, I DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF CIT (A). ITA NO.1233/BANG/2011 PAGE - 8 08. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH DAY OF AUGUST, 2016. SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER MCN COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR