Income-Tax Officer, Hubli V. M/s. Corporate Developers, Hubli

ITA 1295/BANG/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8531 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-12-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 04-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D K JHA J
• Keywords: Opportunity of being heard
• Section: 147; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO.1295/BANG/2016 ASSESSMENT YEAR : 2006-07 THE INCOME TAX OFFICER, WARD 1(1), HUBBALI. VS. M/S. CORPORATE DEVELOPERS, VIDYANAGAR, HUBBALI. PAN: AAHFC 1955B APPELLANT RESPONDENT APPELLANT BY : SHRI D.K. JHA, JCIT(DR) RESPONDENT BY : NONE DATE OF HEARING : 26.12.2016 DATE OF PRONOUNCEMENT : 23.02.2017 O R D E R THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) WAS CORRECT IN ACCEPTING THE VERSION OF THE ASSESSEE THAT THE CONSIDERATION OF RS.30,00,000/- PAID ON 20 -01-2006 WAS OUT OF EXPLAINED SOURCE WHEN NO MATERIAL, WHATSOEVE R, WAS FURNISHED BEFORE THE ASSESSING OFFICER TO EXPLAIN T HE SAME DURING THE ASSESSMENT PROCEEDING. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) WAS CORRECT IN HOLDING THAT THE ASSESSEE HAD PAID THE CONSIDERATION OF RS.30,00,000/- THROUGH BANKING CHA NNEL AND THUS THE SAME CANNOT BE TREATED AS THE INCOME OF TH E ASSESSEE WITHOUT ALLOWING THE ASSESSING OFFICER AN OPPORTUNI TY, UNDER ITA NO.1295/BANG/2016 PAGE 2 OF 5 RULE 46A OF THE INCOME TAX RULES 1962, TO EXAMINE T HE BANK ACCOUNT WITH RESPECT TO CREDITS, IF ANY, IN THE SAI D BANK ACCOUNT. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) WAS CORRECT IN HOLDING THAT THE ASSESSEE HAD INCURRED REGISTRATION EXPENSES OF RS.4,08,268/- OUT OF EXPLA INED SOURCE AND THUS THE SAME CANNOT BE TREATED AS THE INCOME O F THE ASSESSEE WITHOUT ALLOWING THE ASSESSING OFFICER AN OPPORTUNI TY, UNDER RULE 46A OF THE INCOME TAX RULES 1962, TO EXAMINE F RESH EVIDENCE FURNISHED DURING APPELLATE PROCEEDINGS TO EXPLAIN THE SOURCE. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) WAS CORRECT IN HOLDING THAT THE ASSESSMEN T ORDER SUFFERS FROM DEFECTS AS THE BASIS OF TREATING THE A SSESSEE AS AOP AND ASSESSING THE INCOME IN THE HANDS OF AOP IS NOT AT ALL ASCERTAINED AND GIVEN IN THE ASSESSMENT ORDER WHERE AS BASED ON THE MATERIAL AVAILABLE ON RECORD, THE BASIS OF ASCE RTAINING THE STATUS AS 'AOP' WAS PROPERLY ESTABLISHED. 2. THIS APPEAL WAS LISTED FOR HEARING ON 26.12.201 6, BUT NONE APPEARED ON BEHALF OF THE ASSESSEE. ON PERUSAL OF THE RECORD, IT IS NOTICED THAT NOTICE OF HEARING WAS SERVED UPON THE ASSESSEE . SINCE NONE APPEARED ON BEHALF OF ASSESSEE DESPITE VALID SERVIC E OF NOTICE, I HAVE NO OPTION BUT TO HEAR THE APPEAL EX PARTE, QUA THE ASSESSEE. ACCORDINGLY REVENUE WAS HEARD. 3. DURING THE COURSE OF HEARING, THE LD. DR FOR REV ENUE HAS INVITED OUR ATTENTION THAT DURING THE COURSE OF SURVEY UPON THE BUSINESS PREMISES OF ASSESSEE, CERTAIN DOCUMENTS CONTAINING THE DETAILS OF CERTAIN EXPENSES WERE FOUND AND ON THE BASIS OF THIS DOCUMENT, ASSES SMENT WAS REOPENED U/S. 147 OF THE INCOME-TAX ACT, 1961 [THE ACT]. IN THESE DOCUMENTS, IT HAS ITA NO.1295/BANG/2016 PAGE 3 OF 5 BEEN STATED THAT ASSESSEE HAS INCURRED CERTAIN EXPE NSES OF RS.4,08,268 AND RS.30 LAKHS SHOWN AS SULLAD ADVANCES. SINCE T HE DOCUMENT CONTAINED CERTAIN INFORMATION ABOUT THE PAYMENT PER TAINING TO SULLAD GREEN PARK PROJECT, THE ASSESSEE WAS ASKED TO EXPL AIN THE SAID ENTRIES. THE AO ALSO ISSUED A LETTER TO SRI GANGADHAR V SULL AD AND SRI MALLIKARJUN SULLAD REQUESTING THEM TO CONFIRM THAT THEY HAVE RE CEIVED RS.30 LAKHS FROM SHRI MUKESH PATADIA, SRI SAJEEDALI FARASH, SRI MALL IKARJUN B KALLUR AND IN RESPONSE THERETO, IT WAS STATED BY SRI GANGADHAR AN D SRI MALLIKARJUN SULLAD THAT THEY HAVE ENTERED INTO AN AGREEMENT TO DEVELOP THE PLOT ALONG WITH SHRI MUKESH PATADIA, SRI SAJEEDALI FARASH AND SRI M ALLIKARJUN B KALLUR FOR DEVELOPMENT OF THEIR ANCESTRAL LAND AND HAVE RECEIV ED REFUNDABLE SECURITY DEPOSIT OF RS.10 LAKHS EACH. ALL THESE 3 PERSONS W ERE ASKED TO RESPOND WITH REGARD TO THIS LETTER AND IN RESPONSE THERETO, THE BROTHER OF SRI MUKESH PATADIA I.E., SRI RAJU PATADIA ATTENDED AND FILED A LETTER STATING THAT M/S CORPORATE DEVELOPERS HAS COME INTO EXISTENCE ON 07. 08.2006 AS A PARTNERSHIP FIRM, THEREFORE RETURN OF PARTNERSHIP F IRM WAS NOT FILED. THE AO PROCEEDED TO COMPLETE THE ASSESSMENT HOLDING THE DA TE OF PAYMENTS TOWARDS DEVELOPMENT OF LAND ON 21.01.2006 BY SHRI M UKESH PATADIA, SRI SAJEEDALI FARASH AND SRI MALLIKARJUN B KALLUR ARE T HE WORKING PARTNERS IN THE FIRM AS PER PARTNERSHIP DEED DATED 07.08.2006 A ND THE STATUS WAS TAKEN AS AOP FOR AY 2006-07. ACCORDINGLY ASSESSME NT WAS FRAMED ON A TOTAL INCOME OF RS.34,08,268 [30,00,000/- BEING AMO UNT PAID TOWARDS ITA NO.1295/BANG/2016 PAGE 4 OF 5 DEVELOPMENT OF LAND AND RS.4,08,268 BEING EXPENSES INCURRED BY ASSESSEE AS PER IMPOUNDED MATERIAL]. 4. AGGRIEVED, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE CIT(APPEALS) WITH THE SUBMISSION THAT THE AO HAS CO MPLETED THE ASSESSMENT U/S. 144 OF THE ACT WITHOUT LOOKING TO T HE EVIDENCE FILED BEFORE HIM. THE CIT(APPEALS) EXAMINED THE ISSUE IN THE LI GHT OF SUBMISSION OF THE ASSESSEE AND HAS CANCELLED THE ASSESSMENT HAVING OB SERVED THAT THERE WAS NO CASE FOR THE AO TO INITIATE PROCEEDINGS U/S. 147 FOR THE AY 2006-07, WITHOUT ASCERTAINING THE FULL FACTS. 5. THE LD. DR FURTHER CONTENDED THAT DURING THE COU RSE OF SURVEY, CERTAIN DOCUMENTS WERE FOUND ON THE BASIS OF WHICH ENQUIRY WAS CONDUCTED AND WHEN THE ASSESSEE WAS UNABLE TO SATIS FY THE SOURCE OF INVESTMENT, THE ADDITIONS WERE MADE. WHEN IT WAS S TATED THAT RETURN FOR AY 2006-07 WAS NOT FILED BY THE ASSESSEE, THE AO HA S REOPENED THE ASSESSMENT U/S. 147 OF THE ACT. THEREFORE, THERE I S NO INFIRMITY IN THE REOPENING OF THE ASSESSMENT. THE CIT(APPEALS) OUGH T TO HAVE DISPOSED OF THE APPEAL ON MERITS INSTEAD OF QUASHING THE ASSESS MENT. 6. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AU THORITIES, I FIND THAT DURING THE COURSE OF SURVEY, CERTAIN DOCUMENTS WERE FOUND ON THE BASIS OF WHICH IT HAS BEEN REVEALED THAT ASSESSEE HAS MADE C ERTAIN PAYMENTS. WHEN IT WAS CONFRONTED, THE ASSESSEE COULD NOT FURN ISH SATISFACTORY EXPLANATION. MORE SO, IT WAS ALSO STATED THAT ASSE SSEE DID NOT COME INTO ITA NO.1295/BANG/2016 PAGE 5 OF 5 EXISTENCE DURING THE IMPUGNED ASSESSMENT YEAR, THER EFORE NO RETURN WAS FILED. WHEREAS THE AO HAD MADE OUT A CASE THAT INV ESTMENT WAS MADE BY THE PARTNERS OF THE ASSESSEE BEFORE MAKING THE ADDI TIONS. IN THE LIGHT OF THESE FACTS, I AM OF THE VIEW THAT THE CIT(APPEALS) OUGHT TO HAVE ADJUDICATED THE ISSUE ON MERITS INSTEAD OF QUASHING THE ASSESSMENT. I, THEREFORE, SET ASIDE THE ORDER OF CIT(APPEALS) AND RESTORE THE MATTER TO HIS FILE, WITH THE DIRECTION TO ADJUDICATE THE ISSUES O N MERITS, AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF REVENUE STANDS ALLO WED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF FEBRUARY, 2017. SD/- (SUNIL KUMAR YADAV ) JUDICIAL MEMBER BANGALORE, DATED, THE 23 RD FEBRUARY, 2017. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.