Asst. Commissioner of Income Tax, Central Circle-1(1), Hyderabad V. Cybercity Builders & Developers Private Limited, Hyderabad

ITA 1554/Hyd/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7381 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2014-2015
• Appeal Filed On: 17-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P CHANDRA SEKHAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 1554/HYD/2019 ASSESSMENT YEAR: 2014-15 ASST.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), HYDERABAD VS M/S.CYBERCITY BUILDERS AND DEVELOPERS PRIVATE LIMITED, HYDERABAD [PAN: AACCC8152C] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI P.CHANDRA SEKHAR, DR FOR ASSESSEE : SHRI K.C.DEVDAS, AR DATE OF HEARING : 21-06-2021 DATE OF PRONOUNCEMENT : 17-08-2021 O R D E R PER S.S.GODARA, J.M. : THIS REVENUES APPEAL FOR AY.2014-15 ARISES FROM THE CIT(A)-11, HYDERABADS ORDER DATED 31-07-2019 PASSED IN CASE NO.11/10025/2018-19, IN PROCEEDINGS U/S.143(3) R.W. S.153A OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUES HAS RAISED THE FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL: 1.THE LD.CIT(A) ERRED BOTH IN LAW AND ON FACTS OF THE CASE IN ALLOWING RELIEF TO THE ASSESSEE. 2.THE LD.CIT(A) ERRED IN RELYING ON THE CASE LAWS I NCLUDING THE HON'BLE SUPREME COURTS DECISION IN THE CASE OF SAR GAM CINEMA VS. ITA NO. 1554/HYD/2019 :- 2 -: CIT (328 ITR 513) (2010) (SC) WHICH WAS PRONOUNCED PRIOR TO 01.10.2014. AFTER THE AMENDMENT TO SECTION 142A OF THE ACT THE AO CAN MAKE A REFERENCE TO THE VALUATION OFFICER EVEN WITHOUT REJECTING THE BOOKS OF ACCOUNT. 3.THE LD.CIT(A) FAILED TO APPRECIATE THE FACT THAT THE PROVISIONS OF SECTION 142A HAVE BEEN AMENDED W.E.F.01.10.2014 AND AS PER SUB- SECTION (2) OF SECTION 142A OF THE ACT, THE AO CAN MAKE A REFERENCE TO THE VALUATION OFFICER WHETHER OR NOT HE IS SATISFIE D ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE. 4.THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD ANY OTHER GROUNDS WHICH MAY BE NECESSARY. 3. BOTH THE LEARNED REPRESENTATIVES NEXT TOOK US TO THE CIT(A)S DETAILED DISCUSSION DECIDING THE IMPUGNED IS SUE OF SECTION 142A APPLICABILITY IN ASSESSEES FAVOUR AS UNDER: 4.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND SUB MISSIONS OF THE APPELLANT. THE APPELLANT FILED RETURN OF INCOME ORI GINALLY ON 28.11.2014. THE SAME WAS, IT APPEARS, PROCESSED U/S .143(1) AND TIME LIMIT FOR ISSUING NOTICE U/S.143(2) HAS EXPIRE D BEFORE THE DATE OF SEARCH I.E 18.02.2016. THE SAME HAS ATTAINED FINALI TY AND WAS NOT ABATED DUE TO SEARCH BEING CONDUCTED. ACCORDINGLY, THE ADDITION IN ASSESSMENT U/S.153A CAN BE MADE WHICH ARE BASED ON/ EMANATE FROM THE SEIZED MATERIAL. THE AO HAS NOT RELIED ON/ DISCUSSED ABOUT ANY SUCH MATERIAL IN THE ASSESSMENT ORDER. FURTHER, THE APPELLANT IS ADMITTING INCOME ESTIMATED @11% ON THE SALES FOR EA CH YEAR ON THE PROJECTS UNDERTAKEN. THE ESTIMATION HAS NOT BEEN DI STURBED BY THE AO IN THE ORDER NOR ANY EVIDENCE WAS FOUND DURING T HE COURSE OF SEARCH WHICH SHOWS THAT THE ESTIMATION WAS INCORREC T/INAPPROPRIATE. THE APPELLANT, ADMITTEDLY MAINTAINED BOOKS OF ACCOU NT AND VOUCHERS, ON WHICH NO ADVERSE FINDING HAS BEEN GIVEN BY THE A O. THE BOOKS OF ACCOUNT WERE NOT REJECTED BY THE AO. MAKING A REFER ENCE TO DVO FOR VALUATION WITHOUT POINTING OUT ANY DEFECTS/INADEQUA CIES IN THE ACCOUNTS AND WITHOUT REJECTING THE BOOKS OF ACCOUNT BY THE AO IS NOT LAWFUL AS HELD IN THE DECISIONS RELIED ON BY THE AP PELLANT (SUPRA). IN VIEW OF THE FOREGOING, THE ADDITION MADE BY THE AO IS WITHOUT THE FORCE OF LAW AND THE SAME IS UNWARRANTED. ACCORDING LY, THE ADDITION MADE BY AO IS DIRECTED TO BE DELETED. THE OTHER GRO UNDS RAISED BY THE APPELLANT ARE NOT ADJUDICATED AS THEY BECOME IN CONSEQUENTIAL/ ACADEMIC IN VIEW OF THE FINDINGS GIVEN ABOVE. THE A PPELLANT SUCCEEDS ON THE ABOVE GROUNDS. 4. MR.CHANDRA SEKHAR VEHEMENTLY CONTENDED DURING THE COURSE OF HEARING THAT THE CIT(A) HAS ERRED IN LAW AN D FACTS IN ITA NO. 1554/HYD/2019 :- 3 -: REVERSING THE ASSESSING OFFICERS ACTION INVOKING SEC TION 142A OF THE ACT WITHOUT EVEN TAKING NOTE OF THE FACT THAT THE SA ID AUTHORITY COULD VERY WELL MAKE THE STATUTORY REFERENCE TO THE DVO WHETHER OR NOT HE IS SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE AS PER TH E LEGISLATIVE AMENDMENT TO THIS EFFECT VIDE FINANCE ACT, 2 014 W.E.F.01-10-2014. HE THEREFORE SOUGHT TO REVIVE THE AS SESSING OFFICERS ACTION TO THIS EFFECT. LEARNED AUTHORISED REPRESENTATIVE HAS DRAWN A STRONG SUPPORT FROM THE CIT(A)S FOREGOING DETAILED DISCUSSIO N. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE FOREGOING RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT WE ARE IN AY.2014-15. THE DEPARTMENT HAD CARRIED OUT THE SEARCH I N ASSESSEES CASE ON 18-02-2016 WHEREIN ITS CHAIRMAN S HRI K.MURALI KRISHNA GOT RECORDED HIS SWORN STATEMENT ON 03 -03- 2016. WE NOTE FROM PARA-6, PG.3 OF THE ASSESSMENT OR DER DT.07-07-2018 THAT THE ASSESSING OFFICER CONSIDERED THE SAID SEARCH STATEMENT ALLEGEDLY ADMITTING PROFIT ON ESTIMATION @11% IN REAL ESTATE DEVELOPMENT BUSINESS AND OBSERVED THAT IT WAS FELT NECESSARY AND PRUDENT IN THE INTEREST OF REV ENUE, TO GET THE VALUE OF INVESTMENT MADE BY THE ASSESSEE IN THE PROJECT (I.E., COST OF CONSTRUCTION) ESTIMATED BY THE DVO . 5.1. IT IS THEREFORE CLEAR IN OTHER WORDS THAT THE ASSESS ING AUTHORITY HAD GONE BY THE ASSESSEES CHAIRMANS SEARC H STATEMENT/ALLEGED ADMISSION WITHOUT EVEN CONSIDERING THE ASSESSEES BOOKS OF ACCOUNT. WE DEEM IT APPROPRIATE A T THIS STAGE TO QUOTE THE CBDTS TWIN CIRCULAR(S) DT.10-03-2003 AND 18-12-2014 THAT SUCH ADMISSION(S) MADE DURING THE CO URSE OF ITA NO. 1554/HYD/2019 :- 4 -: A SEARCH DO NOT HOLD ANY SIGNIFICANCE. WHEN WE APPL Y THESE TWIN CIRCULARS TO THE FACTS OF THE INSTANT CASE, IT IS E VIDENT THAT THE ASSESSING OFFICER HAD PROCEEDED TO INVOKE HIS SEC TION 142A REFERENCE JURISDICTION ON A SEARCH STATEMENT WHICH IS NOT EVEN ADMISSIBLE IN ANY LAW. THE OTHER ASPECT THEREFO RE AS TO WHETHER OR NOT THE ASSESSEES BOOKS WERE COMPLETE OR CORRECT; AS THE CASE MAY BE, NEVER AROSE AT ALL. WE THEREFORE ARE OF THE OPINION THAT THE ASSESSING OFFICERS ACTION EXERCISING HIS JURISDICTION TO INVOKE SECTION 142A REFERENCE ON THE BASIS OF A TOTALLY NON-ADMISSIBLE SEARCH STATEMENT AND WITHOUT EVEN GOING THROUGH THE ASSESSEES BOOKS, HAS BEEN RIGHTLY O VERRULED IN THE LOWER APPELLATE PROCEEDINGS. 6. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH AUGUST, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 17-08-2021 TNMM ITA NO. 1554/HYD/2019 :- 5 -: COPY TO : 1.ASST.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1 (1), HYDERABAD. 2.M/S.CYBERCITY BUILDERS AND DEVELOPERS PRIVATE LIM ITED, 3 RD AND 4 TH FLOORS, PLOT NO.55, KAVURI HILLS, ROAD NO.36, EXTENDED JUBILEE HILLS, OPP:WATER TANK, HYDERABAD. 3.CIT(APPEALS)-11, HYDERABAD. 4.PR.CIT(CENTRAL), HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.