Sri Nilaya AR Projects, Hyderabad V. ITO,Ward 8(1), Hyderabad

ITA 1572/HYD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6258 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 31-10-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 25-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1572/HYD/2013 ASSESSMENT YEAR: 2006-07 SRI NILAYA AR PROJECTS, HYDERABAD. PAN ABZFS 6028 D VS. INCOME-TAX OFFICER, WARD 8(1), HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SHRI A. SITARAMA RAO DATE OF HEARING : 15-12-2016 DATE OF PRONOUNCEMENT : 04-01-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS IS AN APPEAL OF THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - III, HY DERABAD, DATED 10/09/2013, FOR AY 2006-07. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT IN THE CA SE OF THE ASSESSEE, A SURVEY U/S 133A WAS CONDUCTED ON 25/08/ 2008 AND CERTAIN MATERIAL WAS IMPOUNDED WHEREIN TRANSACTIONS PERTAINING INTO THE PREVIOUS YEAR RELEVANT TO THE AY 2006-07. IN TH E RETURN OF INCOME THE ASSESSEE HAS SHOWN ONLY AN AMOUNT OF RS. 72,00, 000/- AS INVESTMENT MADE IN THE LAND PURCHASE. HOWEVER, FROM THE IMPOUNDED MATERIAL, IT WAS FOUND THAT AN AMOUNT OF RS. 90,00, 000/- HAD BEEN INVESTED IN THE PURCHASE OF LAND. THE DIFFERENCE AM OUNT OF RS. 18,00,000/- WAS TREATED AS UNEXPLAINED INCOME IN TH E HANDS OF THE ASSESSEE FIRM BY THE AO. THE SAID ADDITION WAS CONF IRMED BY THE CIT(A) AS WELL AS ITAT. 2 ITA NO. 1572/H/13 SRI NILAYA AR PROJECTS 3. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT BY ISSUING NOTICE DATED 24/10/2011 ON TH E GROUND THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME WH ILE FURNISHING THE RETURN OF INCOME. AFTER CONSIDERING THE RESPONSE OF THE ASSESSEE DATED 28/10/2011, THE AO LEVIED A MINIMUM PENALTY O F RS. 6,05,880/- U/S 271(1)(C) OF THE ACT. 4. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL AGAIN ST THE PENALTY ORDER BEFORE THE CIT(A). 5. BEFORE THE CIT(A), THE ASSESSEE STATED THAT IT H AD PURCHASED LAND FROM VIJAY KUMAR AND TIRUMALA RAO. AN AMOUNT O F RS. 72 LAKHS HAD BEEN PAID TO MR. VIJAY. FURTHER, THE AMOUNTS OF RS. 10 LAKHS AND RS. 8 LAKHS WERE ALSO PAID TO THE AFOREMENTIONED PE RSONS AS ADVANCE. IT WAS CONTENDED THAT THE ASSESSEE HAD NOT CONCEALED ANY PARTICULARS OF INCOME AND THE DEPARTMENT HAD ACCEPT ED THE BOOKS OF ASSESSEE AND THE ADDITION WAS MADE ONLY ON THE BASI S OF PIECE OF PAPER WHERE CERTAIN AMOUNTS WERE NOTED. IT WAS FURT HER STATED THAT THE ASSESSEE HAD FURNISHED LETTERS FROM MR. VIJAY K UMAR CONFIRMING THAT HE HAD ONLY RECEIVED RS. 72 LAKHS AND THAT THE OTHER AMOUNT OF RS. 18 LAKHS HAD NOT BEEN RECEIVED. 6. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) HAS ELABORATELY DISCUSSED THE ISSUE AT LENGTH WITH VARIOUS CASE LAWS. RELEVANT OBSERVATIONS OF THE CIT(A) ARE AS UNDER: 5.9 COMING TO THE FACTS OF THE CASE OF THE APPELLAN T, IT IS CLEAR THAT THE APPELLANT HAD PAID AN AMOUNT OF RS. 18 LAK HS OVER AND ABOVE WHAT WAS RECORDED IN THE BOOKS OF ACCOUNT AND WHAT WAS SHOWN IN THE RETURN OF INCOME. THE PAPER HAS BEEN F OUND AND IMPOUNDED FROM THE CUSTODY OF THE APPELLANT DURING THE COURSE OF SURVEY AND IT IS CLEARLY MENTIONED THE ENTIRE TRANS ACTION. IT IS CLEAR THAT THE APPELLANT HAD MADE THE PAYMENT OF RS . 18 LAKH OUT OF UNDISCLOSED SOURCES AND THIS REPRESENTED THE APP ELLANT UNACCOUNTED INCOME WHICH HAD NOT BEEN DISCLOSED TO THE DEPARTMENT EVEN AFTER SURVEY. THE HONOURABLE ITAT V IDE IT'S ORDER ITA NUMBER 664/HYD/10 IN THE CASE OF THE APPE LLANT HAS 3 ITA NO. 1572/H/13 SRI NILAYA AR PROJECTS CLEARLY HELD THAT THE AMOUNT OF RS. 18 LAKHS REPRES ENTED THE UNACCOUNTED INVESTMENT IN THE HANDS OF THE APPELLAN T. 5.10 5.11 IT IS VERY CLEAR FROM THE ABOVE FACTS THAT THE APPELLANT HAD EARNED UNACCOUNTED INCOME AND HAD MADE THE PAYMENTS OF RS. 18 LAKHS OUT OF THAT UNACCOUNTED INCOME. EVEN AFTER A PAPER WAS FOUND FROM THE PREMISES OF THE APPELLANT AN IMPOUND ED DURING THE COURSE OF SURVEY, THE APPELLANT DID NOT COME CL EAN. THE AUTHENTICITY OF THE DOCUMENT AND ITS ENTRIES WAS CO NFIRMED AND EVEN THEN THE APPELLANT DID NOT COME FORWARD WITH T HE TRUTH AND INSTEAD STARTED TO MAKE STORIES ABOUT THE RETURN OF THE MONEY WHICH WERE NOT BACKED BY EVEN A SHRED OF EVIDENCE. THESE WERE OBVIOUSLY SELF-SERVING ARGUMENTS AND WERE FOUND TO BE FALSE BY THE HONOURABLE ITAT. IT IS OBVIOUS THAT THE APPELLA NT HAS DELIBERATELY FILED INACCURATE PARTICULARS OF INCOME AND HAS CLEARLY INDULGED IN TAX EVASION. IT IS A WELL-PLANNED STRAT EGY AND THE CONDUCT OF THE APPELLANT CATEGORICALLY REFLECTS THE INTENT AND PLANNING OF TAX EVASION. IT IS THEREFORE A FIT CASE FOR LEVY OF PENALTY AND THE SAME WHICH HAS BEEN LEVIED BY THE A SSESSING OFFICER IS HEREBY CONFIRMED.. 7. AGGRIEVED BY THE ACTION OF THE CIT(A) IN CONFIRM ING THE PENALTY LEVIED BY THE AO, THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN L EVYING PENALTY U/S 271(1)(C) OF THE I.T. ACT OF RS.6,05,880/- WITH OUT CONSIDERING THE EXPLANATION SUBMITTED AND INSPITE OF THE FACT T HAT THE APPELLANT HAS RECORDED ALL THE BUSINESS TRANSACTION S PROPERLY IN THE BOOKS OF ACCOUNT MAINTAINED AND THERE IS NO CON CEALMENT OF ITS INCOME OR FURNISHING OF INACCURATE PARTICULARS. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT THE PENALTY ORDER WAS NOT PASSED WITHIN TIME ALLOWED U/S 275 OF THE I. T. ACT. 7.1 THE ASSESSEE FILED A PETITION REQUESTING FOR A DMISSION OF THE ADDITIONAL GROUND, WHICH IS AS UNDER: THE INITIATION OF PROCEEDINGS U/S 271(1)(C) OF THE INCOME-TAX ACT, IS NOT VALID AS THE AO DID NOT STRIKE OFF THE INAPPROPRIATE PORTION OF THE NOTICE. THE AO OUGHT TO HAVE STRUCK OFF THE 4 ITA NO. 1572/H/13 SRI NILAYA AR PROJECTS INAPPROPRIATE PORTION AND INDICATED TO THE APPELLA NT THE APPLICABLE PORTION IN THE NOTICE. 8. AS THE SAID ADDITIONAL GROUND IS A LEGAL GROUND, WHEREIN, THE FACTS ARE ON RECORD AND FACTS DO NOT REQUIRE FRESH INVESTIGATION, FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO., LIMITED VS. CIT 229 ITR 383 (SC), WE ADMIT THE SAID ADDITIONAL GROUND OF ASSESSEE. 9. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS BY ISSUE OF A NOTICE U/S 274 R.W.S. 271(1)(C) ON 24.10.2011. HE SUBMITTED THAT W HILE ISSUING THE SAID NOTICE, THE ASSESSING OFFICER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CONCEALMENT OF INCOME OR FOR FURNISHI NG OF INACCURATE PARTICULARS OF INCOME. THEREFORE, THE NOTICE IS NOT VALIDLY ISSUED. CONSEQUENTLY, THE ORDER PASSED U/S 271(1)(C) ALSO I S NOT VALID. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC). 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 11. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD. THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SS AS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC) WHEREIN THE APEX COURT UPHELD THE DECISION OF THE HONBLE HIGH COURT, IN W HICH, THE HONBLE HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL AND DISMISSED THE APPEAL OF THE REVENUE, WHO CAME IN APPEAL AGAINST T HE ORDER OF THE TRIBUNAL. THE TRIBUNAL RELYING ON A DECISION OF KA RNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACT ORY, [2013] 359 ITR 565/210 ALLOWED THE APPEAL OF THE ASSESSEE HOLD ING THAT NOTICE ISSUED BY ASSESSING OFFICER U/S 274 READ WITH SECTI ON 271(1)(C) WAS 5 ITA NO. 1572/H/13 SRI NILAYA AR PROJECTS BAD IN LAW, AS IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) PENALTY PROCEEDINGS HAD BEEN INITIATED, I.E. WHETHE R FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME. 11.1 IN THE CASE UNDER CONSIDERATION, ON PERUSAL OF THE SHOW CAUSE NOTICES ISSUED BY THE ASSESSING OFFICER U/S 274 R.W .S. 271 OF THE IT ACT, 1961, DATED 31/12/2008 AND 24/10/2011 IT IS S EEN THAT THE ASSESSING OFFICER DID NOT MENTION WHETHER THE NOTIC E IS ISSUED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURA TE PARTICULARS OF INCOME. THEREFORE, AS PER THE RATIO LAID DOWN BY TH E HONBLE SUPREME COURT IN THE CASE OF SSAS EMERALD MEADOWS, THE NO TICE ISSUED BY THE ASSESSING OFFICER IS NOT VALID AND CONSEQUENTLY , THE ORDER PASSED U/S 271(1)(C) IS ALSO NOT VALID. HENCE, WE SET ASID E THE ORDER OF THE CIT(A) AND QUASH THE ORDER PASSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. ACCORDINGLY, THE APPEAL OF TH E ASSESSEE IS ALLOWED. 12. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 4 TH JANUARY, 2017. SD/- SD/- (D. MANMOHAN) (S. RIFAUR RAHMAN) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD, DATED:4 TH JANUARY, 2017 KV COPY TO:- 1) SRI NILAYA AR PROJECTS, C/O SRI S. RAMA RAO, FLA T NO. 102, SHRIYAS ELEGANCE, H. NO. 3-6-643, ST. NO. 9, H IMAYATNAGAR, HYDERABAD 500 029. 2) ITO, WARD 8(1), HYD. 3) CIT(A) - III, HYDERABAD 4 CIT - II, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE 6 ITA NO. 1572/H/13 SRI NILAYA AR PROJECTS S.NO. DESCRIPTION DATE INTLS DS1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER