Sri Manorupa Meadows P. Ltd., Hyd, Hyderabad V. DCIT, Circle-3(2), Hyderabad, Hyderabad

ITA 1543/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2552 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 21-03-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 16-11-2016
• Court: TRIBUNAL
• Department Lawyers: S SRINIVAS
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Rejection of books of accounts; Reasonable cause
• Section: 133A; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 156/HYD/2016 ASSESSMENT YEAR: 2008-09 ITA NO. 157/HYD/2016 ASSESSMENT YEAR: 2009-10 & ITA NO. 1543/HYD/2016 ASSESSMENT YEAR: 2012-13 M/S SRI MANORUPA MEADOWS (P) LTD., HYDERABAD PAN AAHCS1721Q VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(2) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.A. SAI PRASAD REVENUE BY : SHRI S. SRINIVAS DATE OF HEARING : 19-04-2017 DATE OF PRONOUNCEMENT : 26-04-2017 ORDER PER B. RAMAKOTAIAH, AM THESE THREE APPEALS ARE BY ASSESSEE AGAINST ORDERS OF LD. CIT(A)-3, HYDERABAD DATED 13-11-2015, CONFIRMING THE PENALTIES U/S 271(1)(C) OF THE IT ACT. SINCE, CIT(A) ORDER IN ALL THE YEARS IS COMMON THOUGH SEPARATELY ISSUED, THESE APPEALS ARE CONSIDERED BY THIS COMMON ORDER. APPEALS HAVE BEEN FILED WITH A DELAY OF FOUR DAYS. CONSIDERING THE AFFIDAVIT FILED BY ASSESSEE, THE DELAY OF FOUR DAYS IS HERE BY CONDONED AND THE APPEALS ARE ADMITTED TO BE HEARD ON MERITS. 2 ITA NOS. 156, 157 & 1543/HYD/2016 M/S. SRI MANORUPA MEADOWS (P) LTD., HYDERABAD 2. BRIEFLY STATED ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE AND HAS NOT FILED THE RETURNS OF INCOME FROM A.Y 2008-09 ONWARDS. THERE WERE SURVEY OPERATIONS IN THE BUSINESS PREMISES ON 04-09-2012. SINCE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS, DUE TO PROJECT DELAY AND CONSEQUENT FINANCIAL PROBLEMS, ASSESSEE HAS ADMITTED INCOMES AND FILED RETURNS OF INCOME FROM A.Y 2008-09 TO 2012-13. ASSESSMENTS WERE COMPLETED ESTIMATING INCOMES AT 8% ON THE DECLARED TURNOVERS IN RESPECTIVE ASSESSMENT YEARS. FOR AY 2008-09 AND AY 2009-10 SINCE DUE DATE FOR FILING RETURN OF INCOME WAS OVER, A.O REGULARISED THE PROCEEDINGS BY ISSUANCE OF NOTICE U/S 148 OF THE IT ACT. PROCEEDINGS U/S 271(1)(C) OF THE IT ACT HAVE BEEN INITIATED TOWARDS CONCEALMENT OF INCOME/FURNISHING INACCURATE PARTICULARS OF INCOME. A.O FINALISED THE PENALTIES IN RESPECTIVE YEARS AS UNDER: 3. BEFORE LD. CIT(A) IT WAS CONTESTED THAT THE ASSESSEE HAS NOT MAINTAINED PROPER BOOKS OF ACCOUNTS AND VOUCHERS. SINCE, ASSESSEE HAS NOT SUPPORTED THE CLAIMS THE INCOME WAS ESTIMATED AT 8% ON TOTAL TURNOVER. EVEN THOUGH ASSESSEE HAS ACCEPTED IT, IT WAS SUBMITTED THAT ASSESSEE WAS NOT DOING WELL IN BUSINESS, IT COULD NOT HANDOVER THE FLATS TO PURCHASERS IN TIME, PURCHASERS ATTACKED THE OFFICE AND DESTRUCTED THE BOOKS OF SL. NO. ASSESSMENT YEAR PENALTY (RS) 1 2008-09 15,50,000 2 2009-10 14,00,000 3 2010-11 5,50,000 4 2011-12 8,00,000 5 2012-13 9,50,000 3 ITA NOS. 156, 157 & 1543/HYD/2016 M/S. SRI MANORUPA MEADOWS (P) LTD., HYDERABAD ACCOUNTS, RETURNS CHOULD NOT BE FILED IN TIME BEFORE THE DUE DATE. SINCE, INCOME WAS ESTIMATED, NO PENALTY CAN BE LEVIED IN THE IMPUGNED ASSESSMENT YEARS. 4. LD. CIT(A) WHILE DELETING PENALTY FOR A.Y 2010-11 & 2011-12, HOWEVER CONFIRMED THE PENALTY FOR THE IMPUGNED PRE- ASSESSMENT YEARS BY HOLDING AS UNDER: ( FROM AY 2012-13 ORDER) 4. THE INFORMATION ON RECORD IS CAREFULLY CONSIDERED. FOR A.Y.2012-13, THE DUE DATE TO FILE THE RETURN OF INCOME WAS 30-09-2012. THERE WAS SURVEY U/S 133A ON 04-09-2012. SUBSEQUENTLY, THE ASSESSEE FILED RETURN OF INCOME OF RS.16,34,230/- ON 30.11.2012. FROM THE REPLY GIVEN BY THE ASSESSEE DURING PENALTY PROCEEDINGS BEFORE THE A.O. IT IS EVIDENT THAT THE APPELLANT HAD DISPUTES WITH THE PLOT PURCHASERS WHO HAD ENCROACHED ITS OFFICE. FROM THE COMMENTS OF THE AUDITOR IN TAX AUDIT REPORT, IT IS EVIDENT THAT BOOKS OF ACCOUNTS WERE NOT MAINTAINED PROPERLY AND THE VOUCHERS DO NOT CONTAIN FULL PARTICULARS OF PAYMENTS. THEREFORE, THE A.O. ESTIMATED ITS INCOME AT 8% OF SALES WHICH WAS ALSO ACCEPTED BY THE APPELLANT. GOING BY THE FACTS, IT IS EVIDENT THAT BUT FOR THE SURVEY, THE ASSESSEE WOULD NOT HAVE FILED THE RETURN OF INCOME. IT IS ONLY ON ACCOUNT OF SURVEY, IT WAS COMPELLED TO DISCLOSE ITS INCOME. THE PRINCIPLE THAT 271 (1) (C) PENALTY CANNOT BE LEVIED IN CASES WHERE INCOME WAS ESTIMATED CANNOT BE APPLIED TO THE FACTS OF APPELLANT'S CASE AS THE APPELLANT HAD NOT FILED RETURN OF INCOME AT ALL. SUCH PRINCIPLE CAN BE APPLIED ONLY IN CASES WHERE RETURN OF INCOME WAS FILED. THEREFORE, THERE IS A CLEAR CASE OF CONCEALMENT ON THE PART OF THE APPELLANT. THEREFORE, PENALTY LEVIED OF RS.9,50,000/- IS CONFIRMED. IT IS ALSO PERTINENT TO MENTION THAT THE HON'BLE ALLAHABAD HIGH COURT IN CASE OF CIT VS RAKESH SURI (2010) 233 CTR (ALL) 184 HELD THAT DISCLOSURE OF INCOME AFTER BEING CORNERED BY THE DEPARTMENT CANNOT BE CONSIDERED AS BONA FIDE AND VOLUNTARY. HENCE, PENALTY U/S 271 (1) (C) IS LEVIABLE. FURTHER, THE HON'BLE KERALA HIGH COURT IN CASE OF P.RAJASWAMY RAJA JEWELLERY VS CIT 4 ITA NOS. 156, 157 & 1543/HYD/2016 M/S. SRI MANORUPA MEADOWS (P) LTD., HYDERABAD (2010) 323 ITR 52, HELD THAT ASSESSEE HAVING DECLARED CONCEALED INCOME ONLY AFTER DETECTION BY DEPARTMENT, PENALTY LEVIED U/S 271 (1) (C) CANNOT BE INTERFERED WITH. SIMILAR ORDER WAS PASSED IN OTHER YEARS AS WELL. 5. IT WAS THE CONTENTION OF THE LD. COUNSEL THAT ASSESSEE HAS REASONABLE GROUND IN NOT FILING THE RETURN OF INCOME AND HAS ADMITTED THE INCOMES AS UNDER IN THE RETURNS FILED: 5.1 IT WAS SUBMITTED THAT WHILE GIVING THE AUDIT REPORT THE CA HAS CLEARLY COMMENTED THAT THE BOOKS OF ACCOUNTS ARE NOT PROPERLY MAINTAINED AND PENALTIES THAT WERE LEVIED U/S 271B OF THE IT ACT HAVE BEEN DELETED BY LD. CIT(A), VIDE THE ORDERS DATED 24-10-2016. FURTHER IT WAS SUBMITTED THAT ON THE SAME FACTS OF THE CASE, LD. CIT(A) DELETED THE PENALTIES FOR A.Y 2010-11 AND 2011-12. 5.2 IN THE COURSE OF PRESENT PROCEEDINGS ASSESSEE FILED ADDITIONAL GROUND AS UNDER: IN THE ABSENCE OF SPECIFIC CHARGE RAISED BY THE A.O THE NOTICE U/S 274 R.W.S 271(1)(C) OF THE IT ACT, THE LEVY OF PENALTY U/S 271(1)(C) IS NOT VALID . A.Y. DATE OF FILING OF RETURN INCOME RETURNED (RS.) INCOME ESTIMATED (RS.) AMOUNT OF SEC. 271B PENALTY LEVIED (RS.) 2008-09 01.02.2013 14,99,610 48,79,684 1,00,000 2009-10 01.02.2013 14,99,610 48,79,684 1,00,000 2010-11 30.11.2012 20,37,342 43,24,200 1,00,000 2011-12 30.11.2012 14,63,034 24,40,741 1,50,000 2012-13 30.11.2012 16,34,230 29,24,016 1,50,000 5 ITA NOS. 156, 157 & 1543/HYD/2016 M/S. SRI MANORUPA MEADOWS (P) LTD., HYDERABAD ON THIS LEGAL GROUND IT WAS SUBMITTED THAT THE PENALTY NOTICE ISSUED DO NOT CONTAIN THE SPECIFIC CHARGE FOR THAT IT WASS ISSUED, WHETHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. LD. COUNSEL RELIED ON THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS MANJUNADHA COTTON & GINNING FACTORY 351 ITR 565. LD. COUNSEL ALSO RELIED IN THE CASE OF MULA CHANDRA MOHAN GOUD IN ITA NO. 594/HYD/2016 DATED 30-12-2016 IN SUPPORT OF THE ABOVE CONTENTION. 6. LD. DR HOWEVER VEHEMENTLY DEFENDED THE ORDER OF CIT(A) TO SUBMIT THAT FOR A.Y 2008-09 & 2009-10 RETURNS FILED BELATEDLY WERE REGULARIZED IN THE PROCEEDINGS U/S 147 OF THE IT ACT AND FURTHER FOR A.Y 2012-13 IN THE RETURN WAS NOT FILED IN THE DUE TIME, EVEN THOUGH FILED WITHIN THE TIME ALLOWED FOR REGULAR RETURNS. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS ON RECORD. IT IS A FACT THAT ASSESSEE HAS NOT FILED RETURNS FOR THE IMPUGNED ASSESSMENT YEARS IN THE REGULAR COURSE OF ITS BUSINESS. IT FILED ALL THE RETURNS SUBSEQUENT TO THE THE SURVEY. ASSESSEE HAS ADMITTED INCOMES AS STATED ABOVE IN THE TABLE, BUT A.O REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED INCOME AT 8% ON THE TURNOVER DECLARED BY ASSESSEE. HE ALSO INITIATED PENALTY PROCEEDINGS U/S 271B OF THE IT ACT FOR NOT COMPLYING WITH AUDIT PROVISIONS, WHICH WAS DELETED BY LD. CIT(A). THESE FACTS DO INDICATE THAT ASSESSEE HAS REASONABLE CAUSE FOR NOT FILING RETURNS IN TIME AND THE INCOMES WERE ASSESSED ON ESTIMATION AT 8% ON THE TURNOVER. 6 ITA NOS. 156, 157 & 1543/HYD/2016 M/S. SRI MANORUPA MEADOWS (P) LTD., HYDERABAD 8. LD. CIT(A) HAS DELETED THE PENALTY IN TWO ASSESSMENT YEARS OF A.Y 2010-11 AND 2011-12 BY STATING AS UNDER: THE INFORMATION ON RECORD IS CAREFULLY CONSIDERED. THE SCRUTINY ASSESSMENTS WERE COMPLETED BY ESTIMATING THE INCOME @8% ON TURNOVER WHICH WAS ALSO ACCEPTED BY THE APPELLANT. IT IS FAIRLY SETTLED PRINCIPLE THAT NO PENALTY CAN BE LEVIED IN CASES WHERE INCOME WAS DETERMINED ON ESTIMATE BASIS AS HELD IN THE FOLLOWING CASES: I. HARIGOPAL SINGH V. CIT[2010] 258 ITR 85 (P&H) (HC) II. CIT V. SUBHASH TRADING CO 221 ITR 110 (GUJ) (HC) III. CIT V. AERO TRADERS PVT LTD [2010] 322 ITR 316 (DEL) (HC) 9. WE DO NOT SEE ANY REASON TO TAKE THE DIFFERENT VIEW THAN THE ABOVE, EVEN THOUGH LD. CIT(A) HERSELF DIFFERED FROM THE ABOVE AND JUSTIFIED BY RELYING ON CERTAIN CASE LAW. AS SEEN FROM THE FACTS, WE ARE OF THE OPINION THAT ASSESSEE HAS FILED RETURNS OF INCOME VOLUNTARILY, EVEN THOUGH BELATEDLY, BY ADMITTING CERTAIN INCOMES. THE PROCEEDINGS FOR A.Y 2008-09 AND 2009-10 WERE REGULARIZED, AFTER ASSESSEE HAD FILED THE RETURN OF INCOME. SINCE, INCOMES ARE ESTIMATED AT 8% ON SALES, WE ARE OF THE OPINION THAT PENALTY U/S 271(1)(C) IS NOT WARRANTED WHERE INCOME WAS DETERMINED ESTIMATION BASIS. THE PRINCIPLES STATED BY CIT(A) WHILE DELETING THE PENALTIES IN A.Y 2010-11 AND 2011-12 WILL EQUALLY APPLY TO THE IMPUGNED ASSESSMENT YEARS. IT IS TO BE NOTED THAT REVENUE HAS NOT COME UP IN APPEAL IN THOSE YEARS. KEEPING THAT ALSO IN MIND AND FACTS OF THE CASE, WE ARE OF THE OPINION THAT THERE IS NO NEED TO LEVY ANY PENALTY U/S 271(1)(C) OF THE IT ACT IN THE IMPUGNED ASSESSMENT YEARS. 10. SINCE, WE HAVE DELETED THE PENALTY ON MERITS, THERE IS NO NEED TO EXAMINE AND ADJUDICATE ON THE ADDITIONAL GROUND 7 ITA NOS. 156, 157 & 1543/HYD/2016 M/S. SRI MANORUPA MEADOWS (P) LTD., HYDERABAD RAISED BY ASSESSEE. IN VIEW OF THAT ADDITIONAL GROUND IS CONSIDERED ACADEMIC IN NATURE AND ACCORDINGLY REJECTED. 11. IN THE RESULT, APPEALS FILED BY ASSESSEE ARE ALLOWED. PRONOUNCED IN OPEN COURT ON 26 TH APRIL 2017. SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 26 TH APRIL, 2017. KRK 1) M/S SRI MANORUPA MEADOWS (P) LTD., C/O CH. PARTHASARATHY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST NO. 1, ASHOKNAGAR, HYDERABAD - 20 2) DCIT, CIRCLE-3(2), HYDERABAD. 3) CIT(A) -3, HYDERABAD 4) PR.CIT-3, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE