Sreemitra Maga Corp Private Limited, Secunderabad V. Income Tax Officer, Ward-3(1), Hyderabad

ITA 1234/Hyd/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6894 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 08-10-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 14-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALKA RAJVANSHI JAINDR
• Keywords: Additional evidence; Reasonable cause; Right to appeal
• Section: 69C; 143(3); 37

Judgement Text

ITA NO.1234 OF 2017 SREEMITRA MEGA COOP. P LTD SEC UNDERABAD. PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.1234/HYD/2017 (ASSESSMENT YEAR: 2007-08) SREEMITRA MEGA CORPN. PRIVATE LIMITED SECUNDERABAD PAN: AAKCS4656F VS INCOME TAX OFFICER WARD 3(1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.C. DEVDAS FOR REVENUE : SMT. ALKA RAJVANSHI JAIN,DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2007-08 AGAIN ST THE ORDER OF THE CIT (A)-3, HYDERABAD, DATED 7.3.20 17. THE ASSESSEE HAD INITIALLY RAISED GROUNDS OF APPEAL ALO NG WITH FORM NO.36 AND LATER ON FILED ABRIDGED GROUNDS OF APPEAL S WHICH ARE AS FOLLOWS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS)- 3, HYDERABAD. ('THE LD. CIT(A)') IN CONF IRMING THE ADDITION OF RS 10,10,10,000 UNDER SECTION 69C OF TH E INCOME TAX ACT 1961 ('THE ACT') IS ERRONEOUS BOTH IN LAW AND O N FACTS. 2. THE OBSERVATION OF THE LD.CIT(A) THAT THE UNREGI STERED AGREEMENT OF SALE DATED 07.12.2006 WAS NOT IN EXIST ENCE DURING THE ASSESSMENT PROCEEDING IS TOTALLY CONTRARY TO FI NDINGS OF THE HON'BLE TRIBUNAL IN THE APPELLANT'S OWN CASE IN ITA NO DATE OF HEARING: 08.10.2018 DATE OF PRONOUNCEMENT : 07.01.2019 ITA NO.1234 OF 2017 SREEMITRA MEGA COOP. P LTD SEC UNDERABAD. PAGE 2 OF 6 1206/H/2011. THEREFORE, THE ADDITION OF RS 10,10,10 ,000 TO BE DELETED. 3. THE LD.CIT (A) HAVING ACCEPTED THE SALES, PURCHA SES AND CLOSING STOCK RECORDED BY THE APPELLANT ERRED IN CO NFIRMING THE ADDITION OF RS 10,10,1000 UNDER SECTION 69C OF THE ACT. THEREFORE, THE ORDER IS DEVOID OF MERIT AND BAD IN LAW. 4. THE LD.CIT (A) FAILED TO APPRECIATE THAT IN ABSE NCE OF ANY EVIDENCE/MATERIAL IN POSSESSION OF THE DEPARTMENT S O AS TO ESTABLISH THAT THE APPELLANT HAS DISCHARGED THE IMP UGNED LIABILITY FROM UNEXPLAINED SOURCES, THE PROVISIONS OF SECTION 69C WERE NOT APPLICABLE. THEREFORE, ERRED IN CONFIRMING THE ADDI TION OF RS 10,10,10,000 ON SURMISE AND PRESUMPTIVE BASIS. 5. THE LD.CIT FAILED TO NOTE THAT THE PROVISIONS OF SECTION 69C IS NOT APPLICABLE TO THE FACTS OF THE CASE AS THE SOUR CES FOR ACC 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY WHICH DEALS IN REAL ESTATE, FILED ITS RETURN OF INC OME ON 31.07.2007 DECLARING TOTAL INCOME OF RS.2,51,130. T HE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICE FOR TH E ASSESSMENT U/S 143(3) WAS ISSUED TO THE ASSESSEE. THE ASSESSEE FILED THE INFORMATION CALLED FOR AND PRODUCED BOOKS OF ACCOUN T AND THE RELEVANT VOUCHERS. ON VERIFICATION OF THE SAME, THE AO FOUND THAT THE ASSESSEE IS SHOWING SUNDRY CREDITORS AT RS.10,1 0,10,000. HE OBSERVED THAT THE ASSESSEE HAS NOT PRODUCED ANY DET AILS OF PURCHASES FOR SUCH AN AMOUNT, NOR HAS FILED CONFIRM ATIONS FROM THE SUNDRY CREDITORS. THE ASSESSEES REPRESENTATIVE FILED THE CONFIRMATION LETTERS STATING THAT THE SUNDRY CREDIT OF RS.10,10,10,000 REPRESENTS THE AMOUNTS PAYABLE TO T HE LANDLORD FOR THE PURCHASE OF LAND OF 12.95 ACRES. THE AO HOW EVER, OBSERVED THAT THE ASSESSEE HAS NOT FURNISHED ANY DETAILS OF PURCHASES OR CONFIRMATIONS FROM THE SUNDRY CREDITORS. THE ASSESS EE REQUESTED FOR TIME TO FURNISH THE SAID INFORMATION. INSPITE O F GIVING SUFFICIENT TIME, THE ASSESSEE DID NOT FURNISH THE SAID INFORMA TION AND ITA NO.1234 OF 2017 SREEMITRA MEGA COOP. P LTD SEC UNDERABAD. PAGE 3 OF 6 THEREFORE, THE AO TREATED THE ALLEGED EXPENDITURE I NCURRED FOR PURCHASE OF LAND AMOUNTING TO RS.10,10,10,000 AS UN EXPLAINED EXPENDITURE U/S 69C OF THE ACT AND BROUGHT IT TO TA X. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO AND THE ASSESSEE FILED FURTHER APPEAL BEFORE THE ITAT. 3. THE ITAT IN ITA NO.1206/HYD/2011 VIDE ORDERS DAT ED 25.05.2012 REMANDED THE ISSUE TO THE FILE OF THE CI T (A) WITH THE FOLLOWING DIRECTIONS: 6. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE IN GENERAL AND PARAS 8.1 AND 8.2 IN PARTICULAR OF THE IMPUGNED ORDER OF THE CIT(A). IT IS A FACT THAT BOTH THE AGREEMENTS WERE IN EXISTENCE AT THE RELEVANT POINT OF TIME. BUT, FOR THE REASONS GIVEN IN THE ORDERS, THEY COULD NOT BE SUBMITTED BY THE ASSESSEE TO THE ASSESSING OFFICER, AS A PART OF HIS DUTY IN MAT TERS RELATING TO DISCHARGE OF ONUS. BUT THIS FAILURE OF THE ASSESSEE, IN OUR OPINION, IS NOT WITHOUT ACCEPTABLE REASON, I.E. EXISTENCE OF DIFFERENCES AMONG THE PEO PLE CONCERNED WITH THE IMPUGNED SALE TRANSACTIONS. SUCH FAILURE, IN OUR OPINION SHOULD NOT COST THE ASSESSE E SO HEAVILY THAT LED TO THE DISMISSAL OF THE ASSESSEE'S REQUEST FOR ADMISSION OF ADDITIONAL EVIDENCE. RIGHT OF APPEAL CONFERRED ON THE ASSESSEE UNDER 5.253 OF THE ACT IS A VERY PRECIOUS ONE. SIMILARLY, THE ADMISSIO N OF ADDITIONAL EVIDENCE IS EQUALLY A PRECIOUS RIGHT AND , OF COURSE, IT IS SUBJECTED TO CONDITIONS PRESCRIBED IN THE RULES. THEREFORE, IN OUR OPINION, THE CIT(A) ERRED IN DISMISSING THE REQUEST OF THE ASSESSEE TO ADMIT THE ADDITIONAL EVIDENCE. WE HAVE CONSIDERED THE A.P. HI GH COURT JUDGMENT IN THE CASE OF A.K. SABU KHAN (1102 ITR 757), WHICH IS RELIED UPON BY THE ASSESSING OFF ICER. FACTS IN THE CASE OF A.K. BABU KHAN VS. CWT (102 IT R 757) BEFORE THE HON'BLE A.P. HIGH COURT, RELIED UPO N BY THE REVENUE, ARE DISTINGUISHABLE TO THE EXTENT THAT THE ASSESSEE COULD NOT FILE THE IMPUGNED ADDITIONAL EVIDENCE EVEN BEFORE THE CIT(A), BUT FILED FOR THE FIRST TIME BEFORE THE ITAT, WHEREAS IN THE PRESENT CASE, THE CIT(A) DECLINED TO ENTERTAIN THE ADDITIONAL EVIDENC E FILED BY THE ASSESSEE. EXISTENCE OF DISPUTES AMONG THE CONCERNED PARTIES CONSTITUTES A REASONABLE CAUSE AN D IT IS ADEQUATE ENOUGH FOR THE ASSESSEE'S FAILURE TO ITA NO.1234 OF 2017 SREEMITRA MEGA COOP. P LTD SEC UNDERABAD. PAGE 4 OF 6 FURNISH THE IMPUGNED AGREEMENTS BEFORE THE ASSESSIN G OFFICER DURING THE ASSESSMENT PROCEEDINGS. THERE IS NO EVIDENCE ON RECORDS TO DECIPHER THAT THE IMPUGNED AGREEMENTS ARE CREATED ONES SUBSEQUENTLY AND THEREFORE, ARE THE SHAM AGREEMENTS, THEREFORE, WE DIRECT THE CIT(A) TO ADMIT THE SAME, AND IF NECESSA RY TO REFER THE ADDITIONAL EVIDENCE TO THE FILE OF THE ASSESSING OFFICER AND REQUIRE HIM TO SUBMIT A REMAN D REPORT IN SUPPORT OF ITS CASE. THE CIT(A) SHALL THE REAFTER PASS A SPEAKING ORDER ON THE ISSUES RAISED IN THE GROUNDS OF THE ASSESSEE IN THE APPEAL BEFORE HIM IN ACCORDANCE WITH LAW AND AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 7. SINCE WE HAVE SET ASIDE THE IMPUGNED ORDER OF TH E CIT(A). IN THE CONTEXT OF THE GROUNDS OF THE ASSESS EE AGAINST NON-ADMISSION OF THE ADDITIONAL EVIDENCE, A ND HAVING DIRECTED THE CIT(AL TO RE-ADJUDICATE THE ISS UES BEFORE HIM ON MERITS, WE ARE NOT INCLINED TO GO INT O OTHER ISSUES RAISED BY THE ASSESSEE IN THE OTHER GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL. 4. CONSEQUENT TO THE SAME, THE CIT (A) PASSED THE IMPUGNED ORDER AGAINST WHICH THE ASSESSEE IS IN APP EAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ITAT HAD ACCEPTED THE EXISTENCE OF THE UN-REGIS TERED AGREEMENT OF SALE BETWEEN THE MANAGING DIRECTOR AND THE ASSESSEE COMPANY AND THEREFORE, THE CIT (A) OUGHT N OT TO HAVE AGAIN HELD THAT IT IS A SHAM DOCUMENT. HE SUBMITTED THAT THE CIT (A) INSTEAD OF CALLING FOR A REMAND REPORT HAS AGAI N RECONSIDERED THE FINDINGS OF THE AO IN THE REMAND REPORT IN THE EARLIER PROCEEDINGS TO HOLD AGAINST THE ASSESSEE. THEREFORE , ACCORDING TO HIM, THE ORDER OF THE CIT (A) HAS TO BE SET ASIDE A ND SINCE THE ITAT HAS ALREADY ACCEPTED THE EXISTENCE OF THE AGRE EMENT OF SALE AND THE AUTHORITIES HAVING ACCEPTED THE SALE PROCEE DS RECORDED BY THE ASSESSEE AS WELL AS OF THE CLOSING STOCK OUGHT NOT TO HAVE DISTURBED THE SUNDRY CREDITORS AND MADE THE ADDITIO N OF ITA NO.1234 OF 2017 SREEMITRA MEGA COOP. P LTD SEC UNDERABAD. PAGE 5 OF 6 RS.10,10,00,000 U/S 69C OF THE I.T. ACT. THUS, HE P RAYED THAT THE ADDITION BE DELETED. 6. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE TRIBUNAL IN THE EARLIER PROCEEDINGS HAD ONLY ACCEPTED THE ASSESSEES EXPLANATION FOR NOT BE ING ABLE TO PRESENT THE UN-REGISTERED AGREEMENT BEFORE THE CIT (A) AND HAD DIRECTED THE CIT (A) TO ADMIT THE SAME AND IF NECES SARY, REFER THE MATTER TO THE FILE OF THE AO AND REQUIRE HIM TO SUB MIT THE REMAND REPORT IN SUPPORT OF HIS CASE AND FURTHER DIRECTED THE CIT (A) TO PASS A SPEAKING ORDER THEREAFTER ON THE ISSUES RAIS ED BY THE ASSESSEE. WE FIND THAT THE CIT (A) HAS NOT CALLED F OR A REMAND REPORT, BUT HAS CONTINUED TO MAKE HER OWN ASSESSMEN T OF THE DOCUMENT AND HAS COMPLETED THE ASSESSMENT BY TREATI NG THE AMOUNT OF RS.10,10,00,000 AS BOGUS EXPENDITURE CLAI MED TO AVOID TAXES AND THEREFORE, AS NOT ALLOWABLE U/S 37 OF THE ACT. THUS, WE FIND THAT THIS IS NOT IN CONSONANCE WITH THE DIRECT IONS OF THE ITAT. THE ASSESSEE HAS FILED THE UNREGISTERED SALE AGREEM ENT AT PAGES 75 TO 80 OF THE PAPER BOOK AND ALSO SUBSEQUENT SALE DEEDS, THE PROCEEDS OF WHICH, HAVE BEEN ACCEPTED IN THE HANDS OF THE COMPANY. THEREFORE, THE DEPARTMENT ON THE ONE HAND IS ACCEPTING THAT THE COMPANY HAS BECOME THE OWNER OF THE LAND, BUT IS NOT ACCEPTING THAT THERE IS A SALE AGREEMENT BETWEEN TH E M.D AND THE COMPANY. THE VALUE OF THE CLOSING STOCK HAS ALSO NO T BEEN DISTURBED BY THE AUTHORITIES BELOW. IN VIEW OF THE SAME, WE ARE OF THE OPINION THAT THE CIT (A), NEEDS TO RECONSIDER T HE ISSUE DE NOVO ITA NO.1234 OF 2017 SREEMITRA MEGA COOP. P LTD SEC UNDERABAD. PAGE 6 OF 6 AFTER OBTAINING A REMAND REPORT FROM THE AO ON THE ACCEPTABILITY OF THE UNREGISTERED AGREEMENT OF SALE FILED BY THE ASSESSEE. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO REMAND TH IS ISSUE TO THE FILE OF THE CIT (A) FOR RE-CONSIDERATION AFRESH. 8. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH JANUARY, 2019. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 7 TH JANUARY, 2019. VINODAN/SPS COPY TO: 1 SREEMITRA MEGACORP PVT. LTD, PLOT NO.107, 1-11-25 6/B/1, 2 ND FLOOR, B BLOCK, BHAGWANTH NAGAR, BEGUMPET, SECUNDER ABAD 500016 2 ITO WARD 3(1) HYDERABAD 3 CIT (A)-3, HYDERABAD 4 PR. CIT 3, HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER