Ferdous Estates Pvt Ltd., CHENNAI V. ITO Company Ward II(1), CHENNAI

ITA 1550/CHNY/2017

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 4964 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 18-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Additional evidence
• Section: 148; 144

Judgement Text

आयकर अपीलीय अिधकरण ‘सी’ ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI माननीय +ी महावीर िसंह, उपा01 एवं माननीय +ी मनोज कु मार अ6वाल ,लेखा सद9 के सम1। BEFORE HON’BLE SHRI MAHAVIR SINGH, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA Nos.1550 & 1551/Chny/2017 (िनधाBरण वषB / Assessment Years: 2002-03 & 2003-04) & आयकर अपील सं./ ITA Nos.975 to 977/Chny/2018 ( िनधाBरण वषB / Assessment Years: 2004-05 to 2006-07) & आयकर अपील सं./ ITA Nos.3411 to 3415/Chny/2019 (िनधाBरण वषB / Assessment Years: 2010-11 to 2014-15 ) M/s. Ferdous Estates Private Limited 26-27, R-8, Marina Square, Santhome High Road, Mylapore, Chennai – 600 004. बनाम/ V s. ITO Corporate Ward-2(2), Chennai. थायी लेखा सं./जीआइ आर सं./P AN /GI R No . AAAC F -6 7 1 0 -F (अपीलाथ /Appellant) : ( थ / Respondent) अपीलाथ की ओरसे/ Appellant by : Ms. T.V. Muthu Abirami (Advocate) – Ld. AR थ की ओरसे/Respondent by : Shri P. Sajit Kumar (JCIT) –Ld. DR सुनवाई की तारीख/ Date of Hearing : 07-04-2022 घोषणा की तारीख / Date of Pronouncement : 07-04-2022 आदेश / O R D E R Per Bench 1. Aforesaid appeals by assessee for Assessment Years (AY) 2002- 03 to 2006-07 and 2010-11 to 2014-15 arises out of the separate orders ITA Nos. 1550 & 1551/Chny/2017 - 2 - ITA Nos.975 to 977/Chny/2018 & ITA Nos. 3411 to 3415/Chny/2019 of learned first appellate authority. However, facts as well as issues are common / consequential in all the years and adjudication in one year shall have material bearing on the other years. 2. The Registry has noted a delay of 157 days in appeals for AYs 2004-05, 2005-06 & 2006-07. The condonation of the same has been sought by the assessee on the strength of affidavit of Director of the assessee company. It has been submitted that one of the Director expired whereas other two Directors did not have any knowledge about the business and were unaware of the order passed by Ld. CIT(A). It took some time for the other two Directors to understand the business which led to delay in filing the appeals. The Ld. AR submitted that the delay was neither willful nor wanton but due to the reasonable cause. The assessee has also filed affidavit of Chartered Accountant Shri G. Natrajan, partner in Chartered Accountant Firm M/s. Natraj Associates which supports the affidavit filed by the director. The Ld. Sr. DR opposed the condonation of delay and submitted that there was no sufficient cause demonstrated by the assessee in late filing of the appeals. However, keeping in view that the issue is recurring in nature and other appeals are filed in time, we condone the delay and proceed for adjudication on merits. 3. The appeal for Assessment Year (AY) 2002-03 arises out of the order of Ld. Commissioner of Income Tax (Appeals)-9, Chennai [CIT(A)] dated 30.03.2017 in the matter of assessment framed by Ld. Assessing Officer (AO) u/s. 144 r.w.s. 147 of the Act on 14.12.2009. The appellate order is common order for AYs 2002-03 & 2003-04. The concise grounds filed by the assessee for AY 2002-03 read as under: ITA Nos. 1550 & 1551/Chny/2017 - 3 - ITA Nos.975 to 977/Chny/2018 & ITA Nos. 3411 to 3415/Chny/2019 1. For that the order of the Commissioner of Income Tax (Appeals) is contrary to law, facts and circumstances of the case and at any rate against the principles of equity, natural justice and fair play. 2. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the order of the Assessing Officer is without jurisdiction. 3. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the reopening is bad in law and that the Assessing Officer did not have reasons to believe that the income has escaped assessment. 4. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the reassessment is bad in law. 5. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the assessment order passed u/s.144 is bad in law, as the conditions for passing the best judgment assessment is absent. 6. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the Assessing Officer failed to consider the documents and evidences submitted by the appellant with respect to the addition made on account of share application money pending allotment. 7. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the Assessing Officer failed to consider the documents and evidences submitted by the appellant with respect to the addition made on account of unsecured loans borrowed for the purpose of construction of house property. 8. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the Assessing Officer erred in disallowing the interest expenditure incurred in respect of the unsecured loans borrowed for the purpose of construction of house property. 9. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the Assessing Officer equally went wrong in disallowing the expenses incurred on account of electricity, water supply, property tax and claimed against the income from house property. 10. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the Assessing Officer ought to have allowed the entire expenses claimed against the commission income of the appellant. All grounds are taken without prejudicial to one another. 4. The Ld. AR advanced arguments and submitted that additions of unsecured loans as well as share application money is not sustainable in view of the fact that these transactions happened in earlier years. The Ld. AR also submitted that expenditure as claimed under Income from House Property was paid through banking channels. To support the same, Ld. AR placed on record additional evidences in separate paper- book containing 242 pages along with an application under Rule 29 for admission of the same. The Ld. AR also concurred that the legal ITA Nos. 1550 & 1551/Chny/2017 - 4 - ITA Nos.975 to 977/Chny/2018 & ITA Nos. 3411 to 3415/Chny/2019 grounds as raised in the appeal may not be adjudicated since the issue is substantially the factual one and once it is established that the additions were merely for opening balances, the same would lose relevance and would become infructuous. The Ld. Sr. DR, on the other hand, refuted the submissions and stated that there is no evidence that the loans and share application money was merely opening balances. Having heard rival submissions and upon due consideration of documents on record, our adjudication would be as under. 5. Based on findings of AY 2004-05 that the assessee was in receipt of rental income, the case for this year was reopened vide notice u/s 148 dated 13.06.2008 calling for the return of income. The assessee was a non-filer. In response, the assessee only furnished partial details including list of unsecured loans stated to be received from 21 persons. The confirmation letters did not have any date of loan, mode of loan, rate of interest or other corroborative information. Though the confirmatory letters were sent by Ld. AO to 21 persons, no satisfactory response was received from any one of them. Consequently, Ld. AO proceeded to complete the assessment on best judgment basis u/s 144. Going by the material as available on record, Ld. AO computed income of Rs.134.74 Lacs including addition of Unsecured Loans for Rs.90.33 Lacs and addition of unexplained share application money for Rs.32.62 Lacs. It was noted that no books were maintained prior to period relevant to AY 2002-03. The income from house property was determined without granting deduction of property tax, water supply, water tax and interest on loans in the absence of any satisfactory evidences forthcoming from ITA Nos. 1550 & 1551/Chny/2017 - 5 - ITA Nos.975 to 977/Chny/2018 & ITA Nos. 3411 to 3415/Chny/2019 the assessee. The commission income of Rs.76,100/- was assessed as business income. 6. The Ld. CIT(A) confirmed computation of Income from House Property. The deduction of business expenditure was allowed to the extent of 40% of the commission income earned by the assessee. The additions of unsecured loans and share application money were confirmed since no satisfactory evidences could be furnished by the assessee. Aggrieved, the assessee is in further appeal before us. 7. It is the submission of Ld. AR that the unsecured loans and Share Application Money was not taken in this year and the addictions are substantially for opening balances only. For the same, Ld. AR has placed on record additional evidences and pleaded for admission of the same. The same include Annual Accounts of the assessee for 31.03.1999, periodical ledger extracts of lenders / share applicants and the bank statement of the assessee. The Ld. AR also submitted that the deduction of expenditure as claimed under Income from House Property is paid through banking Channels and therefore, the expenditure is admissible to the assessee. After going through the additional evidences, we concur with these submissions and find that the additional evidences would have material bearing on the impugned additions. Keeping in view the principle of natural justice, the same are admitted. Accordingly, we set aside the impugned order and restore the matter back to the file of Ld. AO for denovo assessment after considering the additional evidences as well as the submissions of the assessee. Needless to add that adequate opportunity of hearing shall be granted to the assessee. The assessee, in turn, is directed to furnish the requisite ITA Nos. 1550 & 1551/Chny/2017 - 6 - ITA Nos.975 to 977/Chny/2018 & ITA Nos. 3411 to 3415/Chny/2019 information / evidences and substantiate its case failing which Ld. AO shall be at liberty to proceed with the assessment on the basis of material on record. The legal ground stand dismissed as infructuous. The appeal stand partly allowed for statistical purposes. 8. The only issue in AY 2003-04 is deduction of interest on unsecured loans and other expenditure under the head Income from House Property and under the head commission expenses. The issue of deduction of interest on unsecured loans would be consequential to the view taken on quantum of unsecured loans as added to the income of the assessee in AY 2002-03. Therefore, since the issue of unsecured loans, in that year, has been set aside to the file of Ld. AO, consequentially the matter of interest, in this year, also stand restored back to the file of Ld. AO for reconsideration in the light of view taken on unsecured loans in AY 2002-03. The issue of deduction of other expenditure also stands restored back to the file of Ld. AO in view of the additional evidences furnished by the assessee. The appeal stands partly allowed for statistical purposes. 9. As per the chart furnished by Ld. AR, the only issue in remaining appeals is deduction of interest on unsecured loans. Since the issue of quantum of unsecured loans in AY 2002-03 has been restored back by us to the file of Ld. AO and the interest is consequential in nature, this issue, for all the years, stands restored back to the file of Ld. AO for reconsideration in the light of view taken on unsecured loans in AY 2002- 03. All these appeals stands partly allowed for statistical purposes. ITA Nos. 1550 & 1551/Chny/2017 - 7 - ITA Nos.975 to 977/Chny/2018 & ITA Nos. 3411 to 3415/Chny/2019 10. All the appeals stands partly allowed for statistical purposes in terms of our above order. Order pronounced on 07 th April, 2022. Sd/- (MAHAVIR SINGH) उपा01 /VICE PRESIDENT Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद9 / ACCOUNTANT MEMBER चे*ई / Chennai; िदनांक / Dated : 07-04-2022 JPV आदेश की Vितिलिप अ 6ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. यथ /Respondent 3. आयकर आयु (अपील)/CIT(A) 4. आयकर आयु /CIT 5. िवभागीय ितिनिध/DR 6. गाड फाईल/GF