ACIT, Circle-9(1), Hyderabad V. M/s Anantha Sai Realtors, Hyderabad

ITA 1421/HYD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2465 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 27-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Onus to prove
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1421/HYD/2014 ASSESSMENT YEAR: 2008-09 ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 9(1), HYDERABAD. VS. M/S ANANTHA SAI REALTORS, HYDERABAD. PAN AANFA 1691 G (APPELLANT) (RESPONDENT) REVENUE BY : SMT. SUMAN MALIK ASSESSEE BY : SHRI MOHD. AFZAL DATE OF HEARING 28/02/2018 DATE OF PRONOUNCEMENT 28/02/2018 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 31/03/2014 OF LD. CIT(A) V, HYDERABAD RELAT ING TO AY 2008-09 WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: . 1. THE ORDER OF LD. CIT(A) IS AGAINST THE FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSE E PROVED THE TRANSACTION AND THAT THE DEPARTMENT HAS NOT DISCHAR GED IRS BURDEN OF DISPROVING THE CLAIM OF EXPENDITURE EVEN THOUGH THE ASSESSEE DID NOT FURNISH EVIDENCES FOR INCURRING OF SUCH LAND DEVELOPMENT EXPENSES. 3. THE LD. CIT(A) ERRED IN HOLDING THAT THE PAYMENT S MADE BY THE ASSESSEE LE., MIS ANANTHA SAI REALTORS WERE DUL Y REFLECTED IN THE BOOKS OF ACCOUNT OF MIS SAGAR THERMIT CORPOR ATION LTD.(NOW RENAMED AS SAGAR INFRA RAIL INTERNATIONAL LTD.), BASING ON THE SUBMISSIONS OF THE ASSESSEE, WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER UNDER RULE 46 A OF THE I.T. RULES. 2 ITA NO. 1421 /HYD/2014 M/S ANANTHA SAI REALTORS. 4. THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSE E INCURRED EXPENDITURE TOWARDS LAND DEVELOPMENT EXPENSES IN VI EW OF THE FACT THAT THE INCOME-TAX INSPECTOR, WHO IS ALSO AN INCOME-TAX AUTHORITY UNDER THE LAW, HAD, IN HIS REPORT SUBMITT ED FOR THE ASSESSMENT YEAR 2009-10 HAD STATED THAT THERE WAS N OT MUCH OF DEVELOPMENT IN THE SAID LAND AND THERE ARE TREES WH ICH ARE 6 TO 7 YEARS OLD, WHICH CLEARLY SHOWS THAT NO DEVELOPMEN T ACTIVITY AS CLAIMED BY THE ASSESSEE WAS UNDERTAKEN EITHER BY TH E APPELLANT OR BY MIS SAGAR THERMIT CORPORATION LTD. 5. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 2. BRIEFLY THE FACTS OF THE CASE ARE, DURING THE CO URSE OF ASSESSMENT PROCEEDINGS FOR THE AY 2009-10, THE ASSE SSING AUTHORITY INVESTIGATED INTO THE ASSESSEES CLAIM OF LAND DEVE LOPMENT EXPENSES OF RS. 81,95,600/- AND HELD THAT THE ENTIRE CLAIM OF LAND DEVELOPMENT EXPENSES AS BOGUS. BASED ON THIS FINDING, ASSESSMEN TS FOR THE AYS 2007-08 AND 2008-09 WAS REOPENED AS SIMILAR ISSUES ARE INVOLVED IN BOTH THE AYS. 2.1 IN THE AY UNDER CONSIDERATION, THE AO OBSERVED THAT THE ASSESSEE CLAIMED LAND DEVELOPMENT EXPENSES OF RS. 9 ,21,55,541/-. OUT OF THE TOTAL EXPENDITURE, PAYMENT OF RS. 9,73,0 00/- (INCLUDING PAYMENT OF RS. 5,56,500 MADE ON 31/08/2017) TO SRI SAI KIRAN, CONTRACTOR FOR SUPPLY OF MORRUM ETC. AND REST OF TH E PAYMENTS WERE LESS THAN RS. 20,000 MADE IN CASH ON DIFFERENT DATE S BETWEEN THE PERIOD 01/04/2007 TO 28/02/2008 AMOUNTING TO RS. 20 ,82,541, TOTALING RS. 30,55,541/-. THE MAJOR PAYMENT OF RS. 8,91,00,0 00/- WAS PAID TO M/S SAGAR THERMIT CORPORATION LTD. (STCL). THE AO O PINED THAT THE ASSESSEE FAILED TO PROVE WITH ALL THE REQUIRED EVID ENCES IN SUPPORT OF ITS CLAIM FOR PAYMENT OF CONTRACTUAL AMOUNTS TO M/S STCL AND M/S STCL COULD NOT PRODUCE ANY OTHER EVIDENCES EXCEPT T HE BILLS AND HELD THAT THE LAND DEVELOPMENT HAD NOT TAKEN PLACE AND A CCORDINGLY, DISALLOWED THE ENTIRE EXPENDITURE OF RS. 8,91,00,00 0 PAID TO STCL. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT(A). 3 ITA NO. 1421 /HYD/2014 M/S ANANTHA SAI REALTORS. 4. THE SUBMISSIONS SUBMITTED BY THE ASSESSEE BEFORE THE CIT(A) WERE EXTRACTED BY THE CIT(A) IN HIS ORDER AT PAGES 3 TO 8. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CI T(A) DISCUSSED THE ISSUE ELABORATELY AND DELETED THE DISALLOWANCE OF RS. 8,91,00,000/- MADE BY THE AO. THE RELEVANT FINDINGS ARE REPRODUCED BELOW FOR THE SAKE OF CLARITY: 5. THE OBSERVATION AND ASSUMPTIONS OF THE ASSESSING OFFICER ARE NOT CULLED OUT OF ANY MATERIAL GATHERED OR OUT OF ANY ENQUIRIES MADE, BUT GENERATED ONLY ON SURMISES AND CONJECTURES. THE EVENTS TAKEN PLACE IN THE COURSE O F PERIOD I.E. FROM THE PURCHASE OF LAND TO SALE OF LAND TO M/S BH OOMIPOOJA SHELTERS (P) LIMITED, BOMBAY, CLEARLY PROVES THE CO NTENTION OF THE APPELLANT THAT THE LAND IS DEVELOPED BY THE CON TRACTOR M/S STCL. IN MY VIEW, THE APPELLANT HAS DISCHARGED THE BURDEN OF PROOF IN RESPECT OF THE GENUINENESS OF THE TRANSACT ION, NOW, THE ONUS SHIFTS TO THE ASSESSING OFFICER. IT IS A TRITE LAW THAT THE ONUS TO PROVE THAT THE APPARENT IS NOT REAL IS ON T HE PARTY WHO CLAIMS IT TO BE SO, AS OBSERVED BY THE HON'BLE SUPR EME COURT IN THE CASE OF CIT VS DURGA PRASAD MORE (1971) 82 ITR 540 AND ALSO IN THE CASE OF CIT VS DAULAT RAM RAWATMUL (197 3) 87 ITR 349. IN MY CONSIDERED OPINION, THE ASSESSING OFFICE R ALLEGED THAT NO DEVELOPMENT ACTIVITY BY M/S STCL HAS TAKEN PLACE, BUT COULD NOT PROVE THE ALLEGATION CONCLUSIVELY, WHEREA S THE ASSESSEE ESTABLISHED HIS CASE THAT THERE WAS DEVELO PMENT ACTIVITY BY M/S STCL, DURING THE PERIOD RELEVANT TO THE SUBJECT ASSESSMENT YEAR. 6. IN VIEW OF MY ABOVE OBSERVATIONS AND AGREEING WI TH THE VARIOUS SUBMISSIONS OF THE APPELLANT, I HOLD THAT T HE EXPENDITURE INCURRED TOWARDS LAND DEVELOPMENT BY M/S STCL AMOUN TING TO RS.8,91,00,000 WAS A GENUINE EXPENDITURE, FOR MY SP ECIFIC FINDINGS MENTIONED AT PARA.4.3 (VII), (LX) & (X) AN D PARA. 5 OF THIS ORDER. THEREFORE, I HOLD THAT THE A.O. WAS NOT JUSTIFIED IN DISALLOWING THE LAND DEVELOPMENT EXPENSES OF RS.8.9 1 CRORES AND HENCE, DELETE THE ADDITION. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 6. LD. DR RELIED ON THE ORDER OF AO. 7. LD. AR OF THE ASSESSEE FILED WRITTEN SUBMISSIONS , WHEREIN, THE ASSESSEE, INTER-ALIA, STATED AS UNDER: 5. IT IS PERTINENT TO MENTION HERE THAT IN THE ORIG INAL ORDER U/S 143(3) R.W.S 147 OF THE IT ACT, THE DEVELOPMENT EXP ENDITURE AMOUNTING TO RS.8,91,00,000/- WAS DISALLOWED. THE L EARNED 4 ITA NO. 1421 /HYD/2014 M/S ANANTHA SAI REALTORS. CIT-(A) ALLOWED THE CLAIM. IN RESPECT OF THIS ORDER OF THE CIT- (A), THE DEPARTMENT IS IN APPEAL, IN ITA NO.1421/H/ 2014. IN VIEW OF THE FACT THAT IN THE REVISED ORDER U/S 143( 3) R.W.S 263 DT: 31.03.2016, THE LEARNED ASSESSING OFFICER ALLOWED T HE CLAIM OF EXPENDITURE FOR DEVELOPMENT, INCURRED THROUGH M/S S AGAR THERMIT CORPORATION LTD, THEREFORE, THE APPEAL OF T HE DEPARTMENT HAS BECOME INFRUCTUOUS AS THE APPELLANT I.E. THE ASSESSING OFFICER HIMSELF ACCEPTED THE CLAIM OF THE ASSESSEE IN RESPECT OF EXPENDITURE INCURRED AMOUNTING TO RS.8,9 1,00,000/- THROUGH M/S SAGAR THERMIT CORPORATION LTD., THEREFO RE, THE APPEAL IS TO BE DISMISSED, PREFERRED AGAINST THE OR DER OF CIT(A) IN APPEAL NO. 1421/HYD/2014. 8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS PER THE SUBMISSIONS OF THE ASSESSEE, IN THE ORIGINAL ORDER PASSED U/S 143(3) RWS 147 OF THE ACT, THE DEVELOPME NT EXPENDITURE AMOUNTING TO RS. 8,91,00,000/- WAS DISALLOWED AND T HE CIT(A) ALLOWED THE CLAIM, AGAINST WHICH, THE REVENUE IS IN APPEAL BEFORE US. THE CONTENTION OF THE LD. AR OF THE ASSESSEE IS THA T IN THE REVISED ORDER PASSED U/S 143(3) RWS 263, DATED 31/03/2016, THE ORIGINAL ORDER PASSED BY AO IS MERGED WITH THE REVISED ORDER PASSE D U/S 143(3) RWS 263. THERE CANNOT BE AN APPEAL AGAINST THE ORIGINAL ORDER. WE ARE IN AGREEMENT WITH THE SUBMISSIONS OF THE LD. COUNSEL F OR THE ASSESSEE. HENCE, THE APPEAL FILED BY THE REVENUE AGAINST SUCH ORDER IS INFRUCTUOUS. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED AS INFRUCTUOUS. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2018. SD/- SD/- (D. MANMOHAN) (S. RIFAUR RAHMAN) VICE PRESIDENT A CCOUNTANT MEMBER HYDERABAD, DATED: 28 TH FEBRUARY, 2018 KV 5 ITA NO. 1421 /HYD/2014 M/S ANANTHA SAI REALTORS. COPY TO:- 1) ACIT, CIRCLE 9(1), BLOCK NO. 2D, INCOME TAX T OWERS, AC GUARDS, HYDERABAD 4. 2) M/S ANANTHA SAI REALTORS, 16-2-10/5/16, 2 ND FLOOR, SAI KRUPA MARKET, MALAKPET, HYDERABAD.. 3) CIT(A) V, HYDERABAD 4) CIT VI, HYD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE