Rainbow Constructions, Hyderabad, Hyderabad V. ITO, Ward-11(5), Hyderabad, Hyderabad

ITA 1497/HYD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0607 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-07-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 07-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Keywords: Condonation of delay
• Section: 133A

Judgement Text

ITA NO 1497 OF 2016 RA INBOW CONSTRUCTIONS HYDERABAD PAGE 1 OF 5 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.1497/HYD/2016 (ASSESSMENT YEAR: 2012-13) M/S. RA INBOW CONSTRUCTIONS HYDERABAD P AN: AALFR5029F VS INCOME TAX OFFICER WARD 11(5) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.C. DEVDAS FOR REVENUE : SMT. N. SWAPNA, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE OR DER OF THE CIT (A)-5, HYDERABAD, DATED 31.08.2016. THE ASS ESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE HON'BLE CIT(A) IS ERRONEOUS IN LAW AS WELL AS FACTS OF THE CASE. 2. THE HON'BLE CIT(A) OUGHT TO HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES UNDER WHICH THE DELAY OCCURRED IN FILING OF THE APPEAL AND OUGHT TO HAVE CONDONED THE DELAY BY TAKING A LENIENT VIEW. 3. THE HON'BLE C1T(A) OUGHT TO HAVE OBSERVED THAT N ON- ADMISSION OF APPEAL BY CONDONING THE DELAY CAUSED HEAVY FINANCIAL LIABILITY THOUGH THERE WAS NO STRON G GROUND FOR RAISING SUCH SUBSTANTIAL TAX DEMAND. 4. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT A CTION OF THE AO IN ESTIMATING THE DIFFERENCE OF UNDISCLOS ED DATE OF HEARING: 02.07.2018 DATE OF PRONOUNCEMENT: 1 4 . 0 9 .2018 ITA NO 1497 OF 2016 RA INBOW CONSTRUCTIONS HYDERABAD PAGE 2 OF 5 PROFIT OF RS.1,08,88,001 IS UNSUSTAINABLE AND THERE FORE, THE SAME OUGHT TO HAVE BEEN DELETED. 5. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT T HE AO ERRED IN DISALLOWING PART OF THE PAYMENTS MADE TO LANDLORDS WITHOUT ANY BASIS AND THEREFORE, THE SAME WAS OUGHT TO HAVE BEEN DELETED. 6. THE HON'BLE CIT(A) ERRED IN DECIDING THE APPEAL ON MERITS WITHOUT CONDONING THE DELAY AND ADMIT THE SA ME FOR CONSIDERATION AND HENCE THE DECISION OF THE HON 'BLE CIT(A) IS LIABLE TO BE SET ASIDE IN THE LIGHT OF DE CISION OF HON'BLE ITAT IN THE CASE OF DR.MURARI MOHAN KOKEY V S. ITO WARD 55(3), KOLKOTA DECISION DATED 05.11.2014. 7. ANY OTHER GROUND WILL BE RAISED AT THE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI RM, ENGAGED IN THE BUSINESS OF DEVELOPMENT OF LANDS AND CONSTRUCTION OF RESIDENTIAL FLATS IN THE NAME AND STYLE AS M/S. RAINBOW CONSTRUCTIONS. THERE WAS A SURVEY OPERATION U/S 133 A OF THE ACT ON 24.01.2013 IN THE CASE OF THE ASSESSEE DURING TH E COURSE OF WHICH THE MANAGING PARTNER SHRI P.V.S.N. RAJU ADMIT TED TO HAVE ACHIEVED A NET PROFIT OF RS.4,37,67,935/-. THEREAFT ER, THE ASSESSEE FILED ITS RETURN OF INCOME BELATEDLY ON 30.03.2013 BY DECLARING AN INCOME OF RS.3,99,17,910 ONLY. OBSERVING THAT THE N ET PROFIT DECLARED BY THE ASSESSEE INCLUDED THE INADMISSIBILI TY OF STATUTORY DISALLOWANCE U/S 40 OF THE ACT TO THE EXTENT OF RS. 70,37,976/-, AO HELD THAT THE ASSESSEE HAS ADMITTED A NET PROFIT OF RS.3,28,79,934/- ONLY, LEADING TO A DIFRERENCE OF U NDISCLOSED PROFIT OF RS.1,08,88,001/-. WHEN THE AO POINTED THI S OUT TO THE ASSESSEE, IT WAS SUBMITTED THAT DURING THE SURVEY P ROCEEDINGS ITSELF, IT WAS STATED THAT SOME OF THE PAYMENTS TO THE EXTENT OF RS.46,10,000 IS YET TO BE PAID. RELEVANT DETAILS WE RE SUBMITTED. TAKING THE SAME INTO CONSIDERATION, AO ARRIVED AT T HE TOTAL ITA NO 1497 OF 2016 RA INBOW CONSTRUCTIONS HYDERABAD PAGE 3 OF 5 INCOME OF RS.4,61,95,910 AND BROUGHT IT TO TAX. AGG RIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WIT H A DELAY OF 146 DAYS. THE CIT (A) HOWEVER, HELD THAT THE DELAY IS N OT PROPERLY EXPLAINED AND REFUSED TO CONDONE THE DELAY. FURTHER , HE ALSO OBSERVED THAT THE ADDITION IS ON ACCOUNT OF AGREEME NT BY THE MANAGING PARTNER OF THE ASSESSEE AND THEREFORE, THE APPEAL IS NOT MAINTAINABLE. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAD ADMITTED TO THE INCOME DURING THE COURSE OF SURVEY, BUT LATER ON, AFTER VERIFYING ITS BOOKS OF ACCOUNT FOUND THAT THE PROFIT DECLARED DURING THE COURSE OF SURVE Y WAS VERY HIGH AND THEREFORE, HAS FILED THE RETURN OF INCOME WHICH COULD HAVE BEEN ACCEPTED BY THE AO. HE SUBMITTED THAT THE AGRE EMENT DURING THE COURSE OF SURVEY OR DURING THE COURSE OF ASSESS MENT PROCEEDINGS WITHOUT ANY CORROBORATIVE EVIDENCE IS N OT BINDING ON THE ASSESSEE AND THAT THE CIT (A) SHOULD HAVE CONSI DERED THE ISSUE ON MERIT. IN SUPPORT OF THIS CONTENTION, HE P LACED RELIANCE UPON THE FOLLOWING DECISIONS: A) HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SINHGA D TECHNICAL EDUCATION SOCIETY REPORTED IN 378 ITR 84 (BOM] AFFIRMED BY THE IN 297 CTR 441 (SC) B) HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF ABDUL QAYUME VS COMMISSIONER OF INCOME-TAX ON 22 DECEMBER, 1989, RE PORTED IN 1990 184 ITR 404 (ALL) C) HON'BLE DELHI HIGH COURT IN THE CASE OF PCIT VS. BEST INFRASTRUCTURE (INDIA) P. LTD. (DELHI HIGH COURT) 397 ITR 82 , ITA NO 1497 OF 2016 RA INBOW CONSTRUCTIONS HYDERABAD PAGE 4 OF 5 4. THE LEARNED DR, ON THE OTHER HAND, OPPOSED THE CONDONATION OF DELAY AND ALSO PLACED RELIANCE UPON THE FOLLOWING DECISIONS: A) HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF M/S. DATA CARRIERS AND AYUSH CARRYING CORPORATION REPORTED IN 56 TAXMA NN.COM 214 (ALL.) B) ITAT CHENNAI BENCH IN THE CASE OF JT.CIT VS. TRA CTORS & FARM EQUIPMENTS LTD REPORTED IN 104 ITD 149 (CHENNAI). C) ITA NOS.1025 & 1024/HYD/2016 DATED 26.05.2017. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE SURVEY WAS CONDUCTED U/ S 133A ON 24.1.2013 WHEREAS THE ASSESSMENT WAS COMPLETED ON 3 1.03.2015. THUS, THERE WAS ALMOST A GAP OF TWO YEARS. THE ASSE SSEE HAS NOT FILED THE RETURN SUBSEQUENT TO THE DATE OF SURVEY. IN THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE , THE HON'BLE COURTS HAVE HELD THAT EVEN THOUGH THE ASSESSEE HAS ADMITTED THE INCOME DURING THE COURSE OF SURVEY, THE SAME CANNOT BE MADE THE SOLE BASIS FOR SUSTAINING THE ADDITION. FURTHER, IN THE CASE BEFORE US, THE CIT (A) HAS REFUSED TO CONDONE THE DELAY OF 146 DAYS. ACCORDING TO US, THE ASSESSEE DOES NOT STAND TO GAI N ANYTHING BY FILING THE APPEAL BELATEDLY. THEREFORE, AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF COLLECTOR, LAND ACQUIS ITION VS. MST.KATIJI & ORS., (167 ITR 471) (SC), (AS IN THE C ASE OF RAASI ASSOCIATES VS. ITO IN ITA NO.1498/HYD/2016). THEREF ORE, WE ARE INCLINED TO CONDONE THE DELAY OF 146 DAYS. AS REGAR DS THE MERITS OF THE ADDITIONS ARE CONCERNED, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE FILE OF THE CIT (A) FOR RE- CONSIDERATION IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A FAI R OPPORTUNITY OF HEARING. ITA NO 1497 OF 2016 RA INBOW CONSTRUCTIONS HYDERABAD PAGE 5 OF 5 6. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH SEPTEMBER, 2018. SD/- SD /- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 14 TH SEPTEMBER, 2018. VINODAN/SPS COPY TO: 1 B. NARSING RAO & CO. CAS, PLOT NO.554, ROAD NO.92 , JUBILEE HILLS, HYDERABAD 500096 2 ITO WARD 11(5) HYDERABAD 3 CIT (A) - 5, HYDERABAD 4 PR. CIT 5, HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER