Raasi Associates, Hyderabad, Hyderabad V. ITO, Ward-11(5), Hyderabad, Hyderabad

ITA 1498/HYD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0615 (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: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-07-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 07-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Keywords: Agreed addition; Condonation of delay; Revised return
• Section: 133A

Judgement Text

ITA NO 14 98 OF 2016 RAASI ASSOCIATES HYDERABAD. 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.1498/HYD/2016 (ASSESSMENT YEAR: 2012-13) M/S. RAASI ASSOCIATES HYDERABAD PAN: AA JFT7212A 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 T HERE WAS NO SUPPORTING MATERIAL ON RECORD TO COMPUTE THE INCOME AT SUCH A SUBSTANTIALLY HIGH FIGURE AND THER EFORE DATE OF HEARING: 02.07.2018 DATE OF PRONOUNCEMENT: 1 4 . 0 9 .2018 ITA NO 14 98 OF 2016 RAASI ASSOCIATES HYDERABAD. PAGE 2 OF 6 CONSIDERED THE MATTER ON MERITS INSTEAD OF MENTIONI NG THAT THE ADDITION WAS MADE ON AGREED BASIS. 5. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT T HE OFFICIALS OF THE DEPARTMENT DID NOT IDENTIFY ANY MA TERIAL DURING THE COURSE OF SURVEY OPERATION U/S.133A OF T HE IT ACT TO MENTION THAT THE ASSESSEE REALIZED PROFIT AT RS.500/- PER SFT IN RESPECT OF AREA OF 77835 SFT SO LD BY HIM AND THEREFORE THE ESTIMATION MADE BY THE ASSESS ING OFFICER IS LIABLE TO BE DELETED. 6. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED IN SPI TE OF SURVEY OPERATION U/S.133A OF THE IT ACT THE DEPARTM ENT COULD NOT IDENTIFY ANY MATERIAL TO ESTABLISH THAT T HE PROFIT FOR SFT WAS RS.500/- AND THEREFORE THE ACTION OF ASSESSING OFFICER IN ESTIMATING THE PROFIT IN THE L IGHT OF THE STATEMENT OF THE ASSESSEE IS WITHOUT ANY BASIS AND THEREFORE THE ADDITION MADE WAS ILLOGICAL, ILLEGAL AND OUGHT TO HAVE DELETED THE SAME. 7. 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. 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. RAASI ASSOCIATES, HYDERABAD, FILED ITS RETURN OF INCOME O N 29.09.2012 BY DECLARING AN INCOME OF RS.75,40,170. THEREAFTER, THERE WAS A SURVEY OPERATION U/S 133A OF THE ACT ON 24.01.2013 IN THE CASE OF THE ASSESSEE, DURING THE COURSE OF WHICH IT WAS OBS ERVED THAT THE ASSESSEE HAD TAKEN LAND FOR DEVELOPMENT ON 50:50 BA SIS AND THE MANAGING PARTNER SHRI P.V.S.N. RAJU AGREED TO ADMIT THE INCOME BY ADOPTING RS.500/- PER SQ. FT AS PROFIT ON THE AS SESSEES SHARE OF CONSTRUCTED AREA OF 2,20,000 SFT. HOWEVER, WHILE FI LING THE RETURN OF INCOME, THE ASSESSEE DID NOT OFFER THE INCOME WH ICH WAS ACCEPTED DURING THE COURSE OF SURVEY TO TAX. OBSERV ING THAT THE ITA NO 14 98 OF 2016 RAASI ASSOCIATES HYDERABAD. PAGE 3 OF 6 ASSESSEE DURING THE SURVEY PROCEEDINGS HAD ADMITTED THE PROFIT @ RS.500/- PER SQ.FT, AS PER WHICH THE PROFIT OF THE FIRM SHOULD BE RS.3,89,17,500 ON SALE OF 77,835 SQ. FT, WHEREAS TH E ASSESSEE IN THE RETURN OF INCOME HAS OFFERED ONLY A SUM OF RS.7 5,40,165 AS ITS PROFIT, THE AO BROUGHT THE DIFFERENCE OF PROFIT OF RS.3,13,77,355 TO TAX. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BE FORE THE CIT (A) WITH A DELAY OF 146 DAYS. THE CIT (A) HOWEVER, HELD THAT THE DELAY IS NOT PROPERLY EXPLAINED AND REFUSED TO CONDONE TH E DELAY. FURTHER, HE ALSO OBSERVED THAT THE ADDITION IS ON A CCOUNT OF AGREEMENT BY THE MANAGING PARTNER OF THE ASSESSEE A ND THEREFORE, THE APPEAL IS NOT MAINITAINABLE. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAD ADMITTED THE ADDITIONAL INCOME DUR ING THE COURSE OF SURVEY, BUT LATER ON, AFTER VERIFYING ITS BOOKS OF ACCOUNT, FOUND THAT THE PROFIT DECLARED DURING THE COURSE OF SURVEY WAS VERY HIGH AND THEREFORE, THE SAME WAS NOT OFFERED I N THE RETURN OF INCOME FILED BY THE ASSESSEE. HE SUBMITTED THAT THE STATEMENT OF THE MANAGING PARTNER DURING THE COURSE OF SURVEY OR DURING THE COURSE OF ASSESSMENT PROCEEDINGS WOULD BE BINDING O N THE ASSESSEE ONLY, IF ANY CORROBORATING EVIDENCE WAS FO UND DURING THE COURSE OF SURVEY. SINCE, THE ASSESSEE HAD CHALLENGE D THE ADDITION BEFORE THE CIT (A), THE CIT (A) SHOULD HAVE CONSIDE RED THE ISSUE ON MERIT. IN SUPPORT OF THIS CONTENTION THAT WITHOUT S UPPORTING EVIDENCE, NO ADDITION CAN BE MADE AND FOR THE PAYME NTS THAT THE ASSESSEE CAN ALWAYS DEMONSTRATE AND SATISFY THE CON CERNED AUTHORITY THAT A PARTICULAR INCOME WAS NOT TAXABLE IN HIS HANDS AND THAT IT WAS RETURNED UNDER AN ERRONEOUS IMPRESS ION OF LAW, HE PLACED RELIANCE UPON THE FOLLOWING DECISIONS: ITA NO 14 98 OF 2016 RAASI ASSOCIATES HYDERABAD. PAGE 4 OF 6 A) HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SIN HGAD 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 , 4. FURTHER, HE ALSO SUBMITTED THAT THE CIT (A) IN T HE SUBSEQUENT A.Y I.E. 2013-14 (THE YEAR OF SURVEY) HA S ACCEPTED THE VALUATION OF THE PROPERTY AS DECLARED BY THE ASSESS EE AT RS.272/- PER SQ.FT AND THEREFORE, IT COULD NOT BE VALUED AT RS.500/- IN THE EARLIER A.Y. HE FILED A COPY OF THE SAME AND SUBMIT TED THAT THE ASSESSEES BOOKS OF ACCOUNT WHICH WERE AUDITED SHOU LD BE ACCEPTED. 5. 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. DA TA 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. 6. FURTHER, SHE ALSO DREW OUR ATTENTION TO THE FACT THAT THE SURVEY WAS IN 2013 WHEREIN THE MANAGING PARTNER HAD ADMITTED TO THE INCOME @ RS.500/- PER SQ.FT WHEREAS THE ASSESSMENT WAS COMPLETED IN 2015, DURING THE COURSE OF WHICH ALSO, THE MANAGING PARTNER HAD AGREED TO THE ADDITI ON AND ITA NO 14 98 OF 2016 RAASI ASSOCIATES HYDERABAD. PAGE 5 OF 6 THEREFORE, ACCORDING TO HER, THE ADMISSION WAS OF F REE WILL AND THE APPEAL FILED BEFORE THE CIT (A) IS THUS NOT MAINTAI NABLE AND THE CIT (A) HAS RIGHTLY REFUSED TO CONDONE THE DELAY AN D ALSO TO DECIDE THE APPEAL ON MERITS. 7. 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 AND ASSESSMENT WAS COMPLETED ON 31.03.201 5. THUS, THERE WAS A GAP OF NEARLY TWO YEARS BETWEEN THE TWO DATES. THE ASSESSEE HAS NOT FILED ANY REVISED RETURN SUBSEQUEN T TO THE DATE OF SURVEY AND THEREFORE, THE INCOME RETURNED BY THE ASSESSEE ORIGINALLY ONLY WAS COMPARED TO THE ADDITIONAL INCO ME ADMITTED BY THE ASSESSEE DURING THE COURSE OF SURVEY AND SINCE THE MANAGING PARTNER HAD AGREED TO THE ADDITION, THE SAME WAS MA DE. HOWEVER, BEFORE THE CIT (A), THE ASSESSEE HAD RAISED A GROUN D THAT THE DEPARTMENT COULD NOT IDENTIFY ANY MATERIAL DURING T HE COURSE OF SURVEY U/S 133A OF THE ACT TO THE EFFECT THAT THE A SSESSEE HAS REALIZED THE PROFIT @ RS.500 SQ.FT IN RESPECT OF TH E AREA OF 77,835 SQ.FT SOLD BY HIM AND THEREFORE, THE INCOME COULD N OT HAVE BEEN ESTIMATED. IN THE DECISIONS RELIED UPON BY THE LEAR NED COUNSEL FOR THE ASSESSEE, THE HON'BLE COURTS HAVE HELD THAT EVE N THOUGH THE ASSESSEE HAD ADMITTED THE INCOME DURING THE COURSE OF SURVEY, THE SAME CANNOT BE THE BASIS FOR SUSTAINING THE ADD ITION. FURTHER, IN THE CASE BEFORE US, THE CIT (A) HAS REFUSED TO C ONDONE THE DELAY OF 146 DAYS. ACCORDING TO US, THE ASSESSEE DOES NOT STAND TO GAIN ANYTHING BY FILING THE APPEAL BELATEDLY. THEREFORE, AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF COLLECTOR, LAN D ACQUISITION VS. MST.KATIJI & ORS., (167 ITR 471) (SC), WHEN SUB STANTIAL JUSTICE AND TECHNICAL CONSIDERATION ARE PITTED AGAI NST EACH OTHER, ITA NO 14 98 OF 2016 RAASI ASSOCIATES HYDERABAD. PAGE 6 OF 6 CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERR ED FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE DONE BECAUSE OF A NON-DELIBERATE DELAY. RESPECTFULLY FOLLOWING THE SAME, WE ARE INCLINED TO CONDONE THE DELAY OF 146 DAYS. 8. AS REGARDS THE MERITS OF THE ADDITIONS ARE CONCE RNED, SINCE THE CIT (A) HAS NOT DECIDED THE APPEAL ON MER ITS ON THE GROUND THAT IT IS AN AGREED ADDITION, WE ARE OF THE OPINION THAT SINCE THE AO IN THE A.Y 2013-14 HAS ACCEPTED THE VA LUATION AT RS.272/-, THE VALUATION FOR THE EARLIER YEAR CANNOT BE HIGHER AT RS.500/-SQ. FT. THEREFORE, THERE IS CLEAR DICHOTOMY IN THE STAND OF THE DEPARTMENT IN THESE TWO YEARS. THEREFORE, WE DE EM IT FIT AND PROPER TO REMAND THE ISSUE TO THE FILE OF THE CIT ( A) FOR RE- CONSIDERATION IN ACCORDANCE WITH LAW AFTER GIVING T HE ASSESSEE A FAIR OPPORTUNITY OF HEARING. 9. 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