ACIT, Bhubaneswar V. Maruti Estate (INDIA) Pvt. Ltd, Bhubaneswar

ITA 127/CTK/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4496 (ITAT-CUTTACK)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 23-02-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 09-04-2010
• Court: TRIBUNAL
• Department Lawyers: AS WELL AS AGAINST
• Keywords: Unexplained cash credit; Principle of natural justice; Set aside
• Section: 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO S . 127 AND 149/CTK/2010 C.O.NO.10 AND 11/CTK/2010 (FILED BY ASSESSEE) / ASSESSMENT YEAR 2004 - 05 ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), BHUBANESWAR. - - - VERSUS - MAR UTI ESTATE (INDIA) PVT. LTD., HIG - 33, MEHER NAGAR, JAYADEV VIHAR, BHUBANESWAR PAN: AACCM 1339 D ( /APPELLANT ) ( / RESPONDENT ) / I.T.A.NO. 147 AND 148/CTK/2010 / ASSESSMENT YEAR 2004 - 05 MARUTI ESTATE (IND IA) PVT. LTD., HIG - 33, MEHER NAGAR, JAYADEV VIHAR, BHUBANESWAR PAN: AACCM 1339 D - - - VERSUS - ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) FOR THE DEPARTMENT: SHRI P.C.MOHANTY,DR FOR T HE ASSESSEE : SHRI P.R.MOHANTY/S.ACHARYA, ARS / ORDER . . . , , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THESE ARE CROSS APPEALS FILED BY THE DEPARTMENT AS WELL AS THE ASSESSEE AGAINST THE ORDER DT.10.12.2009 OF THE CO MMISSIONER OF INCOME - TAX (APPEALS) IN RELATION TO THE ASSESSMENT MADE BY THE ASSESSING OFFICER U/S.14 4 AND ALSO THE ORDER PASSED BY HIM U/S.271(1)(C) OF THE INCOME - TAX ACT,1961 FOR THE ASSESSMENT YEAR 2004 - 05. THE ASSESSEE HAS FILED THE CROSS OBJECTIONS SUPPORTING THE IMPUGNED ORDERS OF THE LEARNED CIT(A) INSOFAR AS THE ISSUES AGITATED IN THE APPEALS FILED BY THE REVENUE IN THEIR RESPECTIVE APPEALS. ALL THESE APPEALS AND CROSS I.T.A.NOS. 127 AND 149/CTK/2010 C.O.NO.10 AND 1 1/CTK/2010 AND I.T.A.NO. 147 AND 148/CTK/2010 2 OBJECTIONS WERE HEARD TOGETHER AND ARE NOW DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE RELEVANT FACTS GIVING RISE TO THE PRESENT APPEALS FILED BOTH BY THE REVENUE AND ASSESSEE ARE THAT IN THE ASSESSMENT ORDER PASSED U/S.144 OF THE ACT FOR THE IMPUGNED ASSESSMENT YEAR 2004 - 05 , THE ASSESSING OFFICER INTER ALIA MADE THE FOLLOWING ADDITIONS ON ACCOUNT OF 1. UNEXPLAINED CREDITORS .. 1,34,399 2 . UNVERIFIABLE TRADE CREDITS .. 1,82,457 3 . UNVERIFIABLE CREDIT ENTRIES SHOWN AS CUSTOMERS ADVANCE .. 1,41,92,251 4 . DISALLOWANCE OF DEDUCTION CLAIMED U/S.80IB .. 16,65,4 3 3 THE ASSESSING OFFICER ALSO LEVI ED PENALTY U/S.271(1) OF THE I.T.ACT,1961 INTER ALIA CONSIDERING THE ABOVE ADDITIONS, @ 300% OF THE TAX SOUGHT TO BE EVADED . 3. IN APPEAL, THE LEARNED CIT(A) DELETED THE ADDITIONS OF 1,82,457 MADE ON ACCOUNT OF UNVERIFIABLE TRADE CREDIT OR S AND 1,41,92,2 51 MADE ON ACCOUNT OF UNVERIFIABLE CREDIT ENTRIES SHOWN AS CUSTOMERS ADVANCE. HOWEVER, HE DELETED THE ADDITION OF 49,500 OUT OF THE ADDITION OF 1,34,399 MADE ON ACCOUNT OF UNEXPLAINED CREDITORS. IN VIEW OF THIS, HE ALSO DELETED THE PENALTY LEVIED U/S.2 71(1)(C) OF THE ACT INSOFAR AS HE DELETED THE ADDITIONS MADE IN THE QUANTUM ASSESSMENT. BUT HE UPHELD THE ADDITION OF 16,65,433 MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S.80IB AND ALSO SUSTAINED THE ADDITION OF 84,899 OUT OF THE ADDITION OF 1,34,399 AND FURTHER HELD THE PENALTY LEVIED U/S.271(1)(C) RELATING TO SUCH ADDITION S AS JUSTIFIED, HOWEVER, REDUCED THE RATE OF PENALTY IMPOSED BY THE ASSESSING OFFICER AT 300% TO 100% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE. 4. AGGRIEVED, THE REVENUE HAS FILED THE APPEALS AGAINST DELETION OF THE TWO ADDITIONS OF 1,82,457 AND 1,41,92,251 AS WELL AS THE PENALTY LEVIED I.T.A.NOS. 127 AND 149/CTK/2010 C.O.NO.10 AND 1 1/CTK/2010 AND I.T.A.NO. 147 AND 148/CTK/2010 3 U/S.271(1)(C) OF THE ACT IN RESPECT OF THESE ADDITIONS. THE ASSESSEE HAS FILED CROSS OBJECTIONS SUPPORTING THE IMPUGNED ORDERS OF THE LEARNED CIT(A) IN DELETING THE ADDITIONS AS WELL AS THE REDUCTION OF CONSEQUENTIAL PENALTY IN RESPECT OF SUCH ADDITIONS. WHEREAS, THE ASSESSEE HAS FILED THE APPEALS AGAINST CONFIRMATION OF THE ADDITION OF 84,899 OUT OF THE ADDITION OF 1,34,399 MAD E ON ACCOUNT OF UNEXPLAINED CREDITORS AND THE ADDITION OF 16,65,433 MADE ON ACCOUNT DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S.80IB AND ALSO THE SUSTENANCE OF CONSEQUENTIAL PENALTY LEVIED U/S.271(1)(C), THOUGH REDUCED IN RATE. 5. FIRST WE PROCEED TO DECID E THE APPEALS OF THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE THEREIN. 6. IN THE QUANTUM APPEAL BEING ITA NO.127/CTK/2010 , THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN THE GROUNDS OF APPEAL. 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) IS NOT JUSTIFIED IN DEL ETING THE AD DITION ON ACCOUNT OF UNVERIFIABL E TRADE CREDITOR AMOUNTING TO 1,82,457 WITHOUT ESTABLISHING THE IDENTITY AND CREDITWORTHINESS OF THE SAID CREDITOR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ENTIRE ADDITION ON ACCOUNT OF UNVERIFIABLE ADVANCES FROM ALL THE CUSTOMERS AMOUNTING TO 1 ,41 ,92,251 EVEN THOUGH THE CREDITWORTHINESS OF THE CUSTOMERS REMAINED UN - ESTABL ISHED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNVERIFIABLE ADVAN CES F ROM 3 CUSTOMERS AMOUNTING TO 5,67,200/ - ALTHOUGH THE SAID CUSTOMERS CONFIRMED IN WRITING THAT THEY HAD NOT GIVEN ADVANCES TO THE ASSESSEE - COMPANY DURING THE F.Y. 2003 - 04 BUT GIVEN SUBSEQUENT TO THE F . Y. 2003 - 04. 4. ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE, THE LD. CT(A) IS NOT JUSTIFIED TO DELETE THE ENTIRE ADDITION IF 1,41,92,251 , EVEN THOUGH IN HIS ORDER ADVANCES TO THE EXTENT OF RS.98,90,151 I - ONLY HAS BEEN TAKEN INTO CONSIDERATION. I.T.A.NOS. 127 AND 149/CTK/2010 C.O.NO.10 AND 1 1/CTK/2010 AND I.T.A.NO. 147 AND 148/CTK/2010 4 AND IN THE PENALTY APPEAL BEING ITA NO.149/CTK/ 2010 , THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN THE GROUNDS OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN REDUCING THE PENALTY DETERMINED AT THE MAXIMUM RATE TO MINIMUM PARTICULARLY WHEN THE NON - C OOPERATION OF THE ASSESSEE WITH THE DEPARTMENT IN ASSESSMENT AS WELL AS PENALTY PROCEEDINGS AS ELABORATELY DISCUSSED IN THE ORDER PASSED BY THE A.O. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN REDUCING THE QUA NTUM OF PENALTY WHEREAS THE MAJOR PART OF RELIEF SO GRANTED BY THE LD. CIT(A) IS NOT ACCEPTED BY THE DEPARTMENT AND THE DEPARTMENT HAS GONE ON APPEAL SEPARATELY AGAINST THE SAME. 7. THE LEARNED DR CONTENDED BEFORE US THAT THE ORDER OF THE LEARNED CIT(A) WITH REGARD TO THE RELIEF GIVEN BY HIM TO THE ASSESSEE OF 1,82,457 ADDED BY THE ASSESSING OFFICER ON ACCOUNT OF UNVERIFIABLE TRADE CREDITORS AS THE LETTERS ISSUED BY THE CREDITORS SUBSTANTIATED THE ADDITIONS MADE BY THE ASSESSING OFFICER. HE FURTHER ARGUE D THAT THE LEARNED CIT(A) IS ALSO NOT CORRECT IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER OF 1,41,92,251 ON ACCOUNT OF UNVERIFIABLE ADVANCES FROM CUSTOMERS INSPITE OF THE ASSESSEE HAVING NOT ESTABLISHED THE CREDITWORTHINESS OF THOSE CUSTOMERS. THE CIT(A) HAS FURTHER ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNVERIFIABLE ADVANCES FROM THREE CUSTOMERS AMOUNTING TO 5,67,200 INSPITE OF THE SAID CUSTOMERS, ON CONFRONTATION, STATED THAT THEY HAVE NOT GIVEN ADVANCE TO THE ASSESSEE COMPANY DURI NG THE FINANCIAL YEAR 2003 - 04 BUT HAS GIVEN SUBSEQUENT TO THE FY 2003 - 04. SO ALSO THE LEARNED CIT(A) HAS ERRED IN DELETING THE ENTIRE ADDITION OF 1,41,92,251 THOUGH HE HAS CONSIDERED IN THE IMPUGNED ORDER ADVANCES TO THE EXTENT OF 98,90,150 ONLY. THER EFORE, THE CIT(A)S ORDER ON THESE ISSUES MAY BE SET ASIDE BY UPHOLDING THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AND BY ALLOWING THE APPEAL OF THE REVENUE. I.T.A.NOS. 127 AND 149/CTK/2010 C.O.NO.10 AND 1 1/CTK/2010 AND I.T.A.NO. 147 AND 148/CTK/2010 5 8. CONTRARY TO THIS, THE LEARNED AR OF THE ASSESSEE VEHEMENTLY ARGUED IN SUPPORT OF THE CIT(A)S ORDER ON THESE ISSUES , AS SUPPORTED IN THE CROSS OBJECTION FILED BY THE ASSESSEE, CONTENDING THAT THE LEARNED CIT(A) HAS PASSED A REASONED ORDER AFTER CONSIDERING THE ISSUES THREAD BARE WITH REFERENCE TO THE MATERIAL PLACED BEFORE THE ASSESSING OF FICER AND NOT DISPUTED BY THE ASSESSEE. THEREFORE, THERE IS NO INFIRMITY IN THE ORDER PASSED BY THE LEARNED CIT(A) IN REGARD TO THESE ISSUES AND HENCE, HE SOUGHT FOR UPHOLDING THE SAME BY DISMISSING THE APPEAL OF THE REVENUE. 9. ON CAREFUL ANALYSIS OF ORDE RS PASSED BY THE AUTHORITIES BELOW IN THE LIGHT OF RIVAL SUBMISSIONS OF BOTH THE PARTIES AS WELL AS THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL, IT IS FOUND THAT THE LEARNED CIT(A) HAS FOUND, WHILE CONSIDERING THE ISSUE ON UNEXPLAINED CREDITORS, THE ASSESS ING OFFICER HAS NOT CONTROVERTED THE DOCUMENTS THAT WERE RELIED ON BY THE ASSESSEE WHILE MAKING THE ADDITIONS. THEREAFTER CONSIDERING THE ISSUE ON ADVANCES FROM CUSTOMERS OF 1,41,92,251, THE LEARNED CIT(A) HAS CONSIDERED THE STATEMENTS RECORDED FROM THE CUSTOMERS U/S.131 AND FINDING THAT THE AMOUNTS HAVE BEEN PAID IN CHEQUES WHICH HAS ALSO BEEN CONFIRMED BY THE PARTIES VIDE CONFIRMATION LETTERS IN THE REMAND PROCEEDINGS, THE LEARNED CIT(A) HAS DELETED THE ADDITION OF 1,41,92,251 . THEREFORE, WE DO NOT FI ND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT(A) RELATING TO THE ABOVE ISSUES, WHICH WE SUSTAIN AND DISMISS THE APPEAL OF THE REVENUE. ITA NO.127/CTK/2011 FILED BY THE REVENUE IS, THEREFORE, DISMISSED. 9. IN VIEW OF THE ABOVE, THE DELETION OF P ENALTY IN RESPECT OF THE AFORESAID ADDITIONS SO DELETED BY THE LEARNED CIT(A), IS ALSO SUSTAINED AND THE APPEAL OF THE REVENUE BEING ITA NO. 149/CTK/2011 IS DISMISSED. 10. IN VIEW OF THE ABOVE, THE CROSS OBJECTIONS BEARING C.O.NOS.10 AND 11/CTK/2011 FILED B Y THE ASSESSEE IN THE ABOVE APPEALS OF THE REVENUE, I.T.A.NOS. 127 AND 149/CTK/2010 C.O.NO.10 AND 1 1/CTK/2010 AND I.T.A.NO. 147 AND 148/CTK/2010 6 SUPPORTING THE IMPUGNED ORDERS OF THE LEARNED CIT(A) ARE DISPOSED OF ACCORDINGLY. 11. NOW ADVERTING TO THE APPEAL S BEARING NO.147/CTK/2010 AND ITA NO.148/CTK/2010 FILED BY THE ASSESSEE, THE FACTS RELEVANT ARE THAT F OR THE REASONS DISCUSSED IN PARAGRAPHS 3.1 TO 3.7 OF THE ASSESSMENT ORDER, THE LEARNED ASSESSING OFFICER DISALLOW ED THE DEDUCTION OF 16,65,433 CLAIMED BY THE ASSESSEE U/S.80IB OF THE INCOME - TAX ACT,1961 IN RESPE CT OF ITS PROJECTS AT PATIA, P. O. CHANDRASEKHARPUR AND AT CHATIKIA, P.S.KHANDAGIRI. THE LEARNED ASSESSING OFFICER ALSO LEVIED PENALTY U/S.271(1)(C) IN RESPECT OF THE SAID DISALLOWANCE/ADDITION. IN APPEAL, THE LEARNED CIT(A) HAS CONFIRMED THE SAID ADDITION AND ALSO CONFIRMED THE LEVY OF PE NALTY U/S.271(1)(C), HOWEVER, AT REDUCED RATE. 13. DURING THE COURSE OF HEARING, THE LEARNED AR OF THE ASSESSEE HAS VEHEMENTLY ARGUED CONTENDING INTER ALIA THAT THE LEARNED CIT(A) ERRED IN REFUSING THE CLAIM OF THE ASSESSEE U/S.80IB AND IT IS NOT SUSTAINAB LE FOR LEGAL SCRUTINY EVEN ASSUMING , BUT NOT ADMITTING , THAT IT HAS NOT COMPLIED WITH THE CONDITIONS LAID DOWN U/S.80IB IN RESPECT OF SOME UNIT S IN THE PROJECT, THE ASSESSEE IS ENTITLED FOR THE RELIEF U/S.80IB FOR THE REMAINING UNITS WHICH WERE BUILT IN AC CORDANCE WITH THE CONDITIONS LAID DOWN IN SECTION 80IB OF THE ACT. THEREFORE, THE ORDER OF THE LEARNED CIT(A) IN SO FAR AS IT RELATES TO THAT PART IS NOT SUSTAINABLE FOR LEGAL SCRUTINY AND REQUIRES TO BE SET ASIDE BY ALLOWING THE APPEAL OF THE ASSESSEE. A RGUING THE PENALTY APPEAL, THE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT SINCE SUBSTANTIAL PORTION OF THE ADDITIONS MADE BY THE ASSESSING OFFICER WERE SET ASIDE BY THE LEARNED CIT(A) LEAVING ONLY A MEAGER AMOUNT OF ADDITION AS SUSTAINED, THE PENALTY PR OCEEDINGS INITIATED AGAINST THE ASSESSEE ARE NOT JUSTIFIED AND HENCE, HE I.T.A.NOS. 127 AND 149/CTK/2010 C.O.NO.10 AND 1 1/CTK/2010 AND I.T.A.NO. 147 AND 148/CTK/2010 7 SOUGHT FOR ALLOWING THE APPEAL OF THE ASSESSEE BY CANCELLING THE PENALTY IMPOSED U/S.271(1)(C) OF THE ACT. 14. CONTRARY TO THIS , THE LEARNED DR SUPPORTED THE IMPUGNED ORDER S OF THE LE ARNED CIT(A) ON THESE ISSUES . 15. HAVING HEARD BOTH THE PARTIES AND PERUSING THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND MATERIAL AVAILABLE ON RECORD, IT IS FOUND THAT THE LEARNED CIT(A) HAS POINTED OUT THAT THE ASSESSEE HAS NOT SATISFIED THE CONDIT IONS STIPULATED U/S.80IB IN RESPECT OF SOME UNIT S BUILT BY IT. IN THAT VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S.80IB FOR ONLY THOSE UNITS WHICH WERE BUILT BY THE ASSESSEE IN VIOLATION OF THE COND ITIONS LAID DOWN IN SECTION 80IB. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE I S FIT TO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO CONSIDERATION STRICTLY FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE AND PASSING NECESSARY CONSEQ UENTIAL ORDER AS PER LAW. ACCORDINGLY, THE APPEAL OF THE ASSESSEE BEING ITA NO.147/CTK/2010 IS ALLOWED FOR STATISTICAL PURPOSES. 16. NOW COMING TO ITA NO.148/CTK/2010 FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) CONFIRMING PART PENALTY LEVIED BY THE AO U/S.271(1)(C) AGAINST IT. SINCE THE ISSUE OF CLAIM U/S.80IB IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO CONSIDERATION, WE ARE OF CONSIDERED VIEW THAT THE PENALTY AS LEVIED IN RESPECT OF SUCH DISALLOWANCE/ADDI TION ALSO NEEDS RECONSIDERATION BASED ON THE FATE OF THE CLAIM OF THE ASSESSEE U/S.80IB IF THE LEARNED ASSESSING OFFICER STILL FINDS A CASE FOR PENALTY. ACCORDINGLY, THIS APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 17. IN THE RESULT , ITA NO .127/CTK/2011 AND ITA NO.149/CTK/2010 FILED BY THE REVENUE ARE DISMISSED AND THE C.O.NOS.10 AND 11/CTK/2011 FILED BY THE I.T.A.NOS. 127 AND 149/CTK/2010 C.O.NO.10 AND 1 1/CTK/2010 AND I.T.A.NO. 147 AND 148/CTK/2010 8 ASSESSEE IN THESE APPEALS OF REVENUE ARE DISPOSED OF ACCORDINGLY. ITA NO.147 AND 148/CTK/2010 FILED BY THE ASSESSEE ARE ALLOWED FOR STA TISTICAL PURPOSE. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 4 TH APRIL, 2011 S D/ - S D/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL M EMBER. ( ) DATE: 4 TH APRIL, 2011 - COPY OF THE ORDER FORWARDED TO: 1 . THE ASSESSEE : MARUTI ESTATE (INDIA) PVT. LTD., HIG - 33, MEH ER NAGAR, JAYADEV VIHAR, BHUBANESWAR. 2 THE DEPARTMENT : MARUTI ESTATE (INDIA) PVT. LTD., HIG - 33, MEHER NAGAR, JAYADEV VIHAR, BHUBANESWAR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY.