Balraj Goud Balagouni , Hyderabad V. Asst. Commissioner of Income Tax, Circle-4(1), Hyderabad

ITA 1601/Hyd/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5919 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 10-02-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 27-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO
• Keywords: TDS
• Section: 143(3); 40(a)(ia); 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ITA NO. 1601/HYD/2018 AY: 2013 - 14 BALRAJ GOUD BALAGOUNI, HYDERABAD. PAN: AE YPB 6220 P VS. ACIT, CIRCLE - 4(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI S. RAMA RAO REVENUE BY: SHRI SUNIL KUMAR PANDEY, DR DATE OF HEARING: 10/02/2021 DATE OF PRONOUNCEMENT: 22 /04/2021 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A) - 1, HYDERABAD IN APPEAL NO. 0078/CIT (A) - 1, HYD/2016 - 17/2017 - 18, DATED 20/04/2018 PASSED U/S. 143(3) R.W.S 250(6) OF THE ACT FOR THE AY 2013 - 14. 2. THE ASSESSEE HAS RAISED EIGHT GROUNDS IN HIS APPEAL HOWEVER, THE CRUXES OF THE ISSUES ARE AS FOLLOWS: - (I) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE LD. A.O. , WHO HAD TREATED THE TEN PARTNERSHIP FIRMS 2 WHE RE IN THE ASSESS EE HELD 95% SHARE IN THE CAPITAL AS HIS BENAMI FIRMS AND THEREBY ASSESS ED THE INCOME OF ALL THOSE FIRMS ON SUBSTANTIVE BASIS IN THE HANDS OF THE ASSESSEE. (II) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE LD. A.O. , WHO HAD ESTIMATED 5% OF THE AGGREGATE TURNOVER OF THE ASSESSEES BENAMI FIRMS WHICH WORKED OUT TO RS. 2,52,98,399/ - AND ASSESSED THE SAME IN THE HANDS OF THE ASSESSEE . (III) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE LD. A.O. WHO HAD DISALLOWED THE AMOUNT OF RS. 17,41, 978/ - AND RS. 84,66,183/ - BEING THE INTEREST PAID ON LOAN BY THE ASSESSEE WITHOUT DEDUCTING TAX AT SOURCE INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF RETAIL LIQUOR TRADE , FILED HIS RETURN OF INCOME ON 5/4/2014 FOR THE A.Y. 2013 - 14 DECLARING TOTAL INCOME OF R S. 2,69,26,280/ - . SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT VIDE ORDER DATED 31/3/2016 WHEREIN THE LD. A.O. ASSESSED THE INCOME OF HIS BENAMI FIRMS IN HIS HANDS BY ESTIMATING 5% OF THE I R AGGREGATE TURNOVER WHICH WORKS OUT TO RS. 2,52,98,399/ - . THE LD. A.O. ALSO MADE ADDITION 3 OF RS. 17,41,978/ - AND RS. 84,66,183/ - INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ORDER OF THE LD. A.O. BY AGREEING WITH HIS VIEW AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 4. GROUND NO.1 AND 2: - ADDITION OF RS. 2,52,98,399/ - : 5 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , IT WAS OBSERVED BY THE LD. A.O. THAT THE ASSESSEE HAD OBTAINED EXCISE LICENSE IN RESPECT OF 10 WINE SHOPS IN BENAMI NAMES AND IMMEDIATELY AFTER OBTAINING THE EXCISE LICENSES HE HAD CREATED PARTNERSHIP FIRMS WH EREIN THE ASSESSEE WAS H OLDING 95% SHARE AND BALANCE 5% SHARE WAS IN THE NAME OF HIS BENAMI. DURING THE COURSE OF ENQUIRY ALL THE PARTNERS IN THE ASSESSEES BENAMI FIRMS DEPOSED THAT THEY WERE ACTUALLY EMPLOYEES OF THE ASSESSEE AND NOT HIS PARTNERS. IT WA S ALSO SUBMITTED BY THOSE EMPLOYEES THAT THE ENTIRE LICENSE FEES WERE PAID BY THE ASSESSEE AND THEY HAD NOT INVESTED ANY CAPITAL IN THE FIRM AS INVESTMENT. THESE FACTS COULD NOT BE SUCCESSFULLY CONTROVERTED BY THE ASSESSEE. MOREOVER, ALL THE BENAMI PARTNERSHIP FIRMS OF THE ASSESSEE HAD NOT MAINTAINED PROPER BOOKS OF ACCOUNTS. THEREFORE, THE LD. A.O. ESTIMATED THE INCOME OF ALL THE BENAMI FIRMS @ 5% OF THE IR AGGREGAT E TURNOVER WHICH WORKED OUT TO RS. 2,52,98,399/ - AND ADDED TO THE INCOME OF THE ASSESSEE. EVEN BEFORE THE LD. CIT(A), THE ASSESSEE COULD NOT ESTABLISH THAT THE FIRMS IN WHICH THE ASSESSEE WAS A PARTNER IS NOT HIS BENAMI FIRM S AND ALSO FAILED TO 4 F URNISH PROPER BOOKS OF ACCOUNTS. HENCE, THE LD. CIT(A) CONFIRMED THE ORDER OF THE LD. A.O. ON THE ISSUE. 6. BEFORE US, THE LD. AR VEHEMENTLY ARGUED STATING THAT ALL THE ASSESSEES FIRMS ARE INDEPENDENT FIRMS , HENCE THOSE FIRMS CANNOT BE TREATED AS ASSES SEES BENAMI FIRM S . IT WAS THEREFORE ARGUED THAT THE INCOME OF THE OTHER FIRMS CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE. THE LD. AR FURTHER SUBMITTED THAT IN CASE IF THE INCOME OF THE FIRMS WHICH ARE HELD TO BE BENAMI FIRMS ARE ADDED IN THE HANDS OF T HE ASSESSEE, THEN THE SAME MAY NOT BE ASSESSED IN THE HANDS OF TH OSE FIRMS SEPARATELY . THE LD. DR ON THE OTHER HAND ARGUED IN SUPPORT OF THE ORDERS OF THE LD. REVENUE AUTHORITIES. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIAL A VAILABLE ON RECORD. IT IS EVIDENT THAT THE ASSESSEE IS HOLDING 95% SHARE IN ALL THE 10 FIRMS. THE SO - CALLED PARTNER S OF TH OSE FIRMS HAVE ALSO CONCEDED THAT THEY ARE ONLY EMPLOYEES OF THE ASSESSEE AND NOT THE PARTNER OF THE ASSESSEE. THE ASSESSEE HAS ALSO NOT BROUGHT OUT ANY MATERIALS ON RECORD TO ESTABLISH THAT THE PROFITS OF THE FIRMS WERE DISTRIBUTED TO THE PARTNERS OF THE FIRM ACCORDING TO THEIR PROFIT - SHARING RATIO IE ., IN THE RATIO OF THE CAPITAL HELD BY THE ASSESSEE AND THE OTHER PARTNERS . CONSIDERING THESE FACTS AND CIRCUMSTANCES OF THE CASE IT IS APPARENT THAT ALL THE TEN PARTNERSHIP FIRMS ARE THE ASSESSEES BENAMI FIRMS. THEREFORE, WE ARE OF THE VIEW THAT THE LEARNED REVENUE 5 AUTHORITIES HAD RIGHTLY TREAT ED ALL THE RELEVANT FIRMS AS THE ASSESSEES BENAMI FIRMS. FURTHER, THE SE FIRMS HAVE ALSO NOT MAINTAINED THEIR BOOKS OF ACCOUNTS PROPERLY AND PRODUCED COGENT EVIDENCE FOR THE EXPENSE INCURRED BEFORE THE LD. REVENUE AUTHORITIES . UNDER THESE CIRCUMSTANCES, THE LEARNED REVENUE AUTHORITIES HA S ESTIMATED 5% OF THE AGGREGATE TURNOVER OF ALL THE RELEVANT FIRMS AS THE INCOME OF THE ASSESSEE WHICH W E ARE OF THE VIEW IS QUITE REASONABLE AND FAIR . THEREFORE, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF THE LEARNED REVENUE AUTHORITIES ON THIS ISSUE. ACCORDINGLY, GROUNDS NO. 1 AND 2 RAISED BY THE ASSESSEE IS DECIDED AGAINST THE ASSESSEE. HOWEVER , WE ALSO MAKE IT CLEAR THAT SINCE THE INCOME OF ALL THESE FIRMS ARE ASSESSED IN THE HANDS OF THE ASSESSEE THE SAME INCOME CANNOT BE ONCE AGAIN ASSESSED SEPARATELY IN THE HANDS OF THOSE FIRMS . IT IS ORDERED ACCORDINGLY. 8. GROUND NO.3 AND 4: DISALLOWANCE U/S. 40(A)(IA) OF THE ACT: 9. THE LD. A.O. HAS DISALLOWED THE AMO UNT OF RS. 17,41,978/ - AND RS. 84,66,183/ - BEING THE INTEREST PAID BY THE ASSESSEE TO VARIOUS ENTITIES WITHOUT DEDUCTING TDS INVOKED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. EVEN AT THIS STAGE, THE LD. AR COULD NOT CONTROVERT TO THE FINDINGS OF THE LEARNED REVENUE AUTHORITIES ON THIS ISSUE . IN THIS SITUATION, W E ARE OF THE VIEW THAT THE LEARNED REVENUE AUTHORITIES HAD RIGHTLY INVOKED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WHICH IS IN 6 ACCORDANCE WITH THE PROVIS IONS OF THE ACT . HENCE, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDERS OF THE LEARNED REVENUE AUTHORITIES ON THIS ISSUE ALSO. THEREFORE, GROUND NO. 3 AND 4 RAISED BY THE ASSESSEE ARE ALSO DEVOID OF MERITS . 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THE 22 ND APRIL, 2021. SD/ - SD/ - (S.S. GODARA) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 22 ND APRIL, 2021. OKK COPY TO: - 1. SRI BALRAJ GOUD BALAGOUNI, H.NO. 3 - 6 - 673/1 - 2, FLAT NO.302, SMR RESIDENCY, STREET NO.10, HIMAYATNAGAR, HYDERABAD 500 029. 2. ASST. COMMISSIONER OF INCOME TAX, CIRCLE4(1), IT TOWERS, AC GUARDS, HYDERABAD . 3. THE CIT (A) - 1, HYDERABAD. 4. THE PRINCIPAL COMMISSIONER OF INCOME TAX - 1, HYDERABAD. 5. THE DR, ITAT, HYDERABAD. 6. 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