ITO, Hyderabad V. M/s. Madhupala Estates Pvt.Ltd, Hyderabad

ITA 1663/HYD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74615 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-05-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 23-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: A SRINIWAS
• Keywords: Principle of natural justice; Reasonable cause
• Section: 40A(3); 143(3); 133A; 131; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER S.NO. ITA NO. AY APPELLANT RESPONDENT 1 TO 3 1663, 1664, & 1665/H/10 2003- 04, 2004-05 & 2005-06 INCOME TAX OFFICER, WARD 16(1), HYDERABAD. M/S MADHUPALA ESTATES (P) LTD., HYDERABAD. PAN AACCM3943R 4 & 5 2055 & 2078/H/11 2005-06 & 2006-07 M/S MADHUPALA ESTATES (P) LTD., HYDERABAD. PAN AACCM3943R INCOME TAX OFFICER, WARD 16(1), HYDERABAD. 6 110/H/10 2002-03 -DO- -DO- ASSESSEE BY: SRI A. SRINIWAS REVENUE BY: SRI P. SOMA SEKHAR REDDY DATE OF HEARING: 24/01/2014 DATE OF PRONOUNCEMENT: 12/02/2014 O R D E R PER CHANDRA POOJARI, AM: ALL THESE APPEALS ARE PERTAINING ONE ASSESSEE, PRE FERRED BY THE ASSESSEE AS WELL AS THE REVENUE DIRECTED AGAINS T SEPARATE ORDERS OF THE CIT(A) FOR THE ASSESSMENT YEARS 2002 -03 TO 2006-07.. SINCE THE FACTS AND ISSUES ARE COMMON IN THESE APPE ALS, THEY WERE CLUBBED AND HEARD TOGETHER, THEREFORE, A COMMON ORD ER IS PASSED FOR THE SAKE OF CONVENIENCE. ITA NOS. 2005 & 2078/HYD/2011 BY THE ASSESSEE FOR A Y 2005-06 & 2006-07 2. ON PERUSAL OF RECORD, WE FIND THAT THERE IS A DE LAY OF 354 DAYS IN FILING THE APPEAL IN ITA NO. 2055/HYD/2011 AND 5 3 DAYS DELAY IN FILING THE APPEAL IN ITA NO. 2078/HYD/2011. 2 ITA NOS. 1663-65 & 110/H/10 & 2078 & 2055/H/11 M/S MADHUPALA ESTATES PVT. LTD. 3. AS REGARDS THE DELAY IN FILING THE APPEAL WITH R ESPECT TO THE APPEAL IN ITA NO. 2055/HYD/2011, THE ASSESSEE FILED AN AFFIDAVIT WHEREIN IT HAD EXPLAINED THE REASONS FOR THE DELAY, WHICH ARE EXTRACTED BELOW: A. THE APPELLANT HAD FILED APPEALS FOR AY 2003-04, 2004-05 AND 2005-06 BEFORE THE CIT(A)-V, HYDERABAD. B. THE GROUNDS FOR ALL THE 3 YEARS WERE COMMON, EXC EPT FOR THE AY 2005-06 WHEREIN THERE WAS ANOTHER GROUND IN ADDI TION TO THE COMMON GROUNDS IN ALL THE 3 YEARS. C. THE ORDERS FOR THE 3 YEARS WERE RECEIVED ON THE SAME DATE. D. OUR AR AFTER GOING THROUGH THE ORDER CONCLUDED T HAT AS APPEALS HAVE BEEN ALLOWED IN FAVOUR OF THE APPELLAN T NO FURTHER APPEAL NEED TO BE PREFERRED. E. WHILE DOING SO THE AR OVERLOOKED THE FACT THAT F OR THE AY 2005-06 THERE WAS AN ADDITIONAL GROUND ON WHICH AN APPEAL HAD TO BE PREFERRED. F. IT WAS SOME TIME IN NOVEMBER 2011, IT WAS NOTICE D THAT THE ADDITIONAL GROUND WAS NOT AGITATED UPON. THIS FACT CAME TO LIGHT WHEN THE ORDER FOR AY 2006-07 WAS RECEIVED AROUND T HAT TIME. G. IMMEDIATELY ON NOTICING THE ERROR THE APPELLANT FILED AN APPEAL BEFORE THE HONBLE INCOME TAX TRIBUNAL. 3.1 AS REGARDS THE DELAY IN FILING THE APPEAL IN IT A NO. 2078/HYD/2011, THE ASSESSEE HAS ALSO FILED AN AFFID AVIT WHEREIN IT WAS AFFIRMED THAT THE AR HAS GIVEN WRONG ADVICE AND BECAUSE OF THAT REASON THERE WAS DELAY IN FILING THIS APPEAL. 4. IT IS OBSERVED THAT NOTHING HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE WITH REGARD TO THE FACT THAT WHICH COUNSEL HAS ADVISED THE ASSESSEE AS STATED IN THE AFFIDAVIT AND THERE IS NO AFFIDAVIT OR LETTER FROM THE CONCERNED COUNSEL, WHO HAS WRONGLY ADVISED THE ASSESSEE. THE LAW ASSISTS THOSE WHO ARE VIGILANT, NOT THOSE W HO SLEEP OVER THEIR RIGHTS. THE DELAY CANNOT BE CONDONED SIMPLY BECAUSE THE ASSESSEES CASE IS HARD AND CALLS FOR SYMPATHY OR MERELY OUT O F BENEVOLENCE TO 3 ITA NOS. 1663-65 & 110/H/10 & 2078 & 2055/H/11 M/S MADHUPALA ESTATES PVT. LTD. THE PARTY SEEKING RELIEF. IN GRANTING THE INDULGENC E AND CONDONING THE DELAY, IT MUST BE PROVED BEYOND THE SHADOW OF DOUBT THAT THE ASSESSEE WAS DILIGENT AND WAS NOT GUILTY OF NEGLIGE NCE, WHATSOEVER. THE SUFFICIENT CAUSE WITHIN THE CONTEMPLATION OF TH E LIMITATION PROVISION MUST BE A CAUSE WHICH IS BEYOND THE CONTR OL OF THE PARTY INVOKING THE AID OF THE PROVISIONS. THE CAUSE FOR T HE DELAY IN FILING THE APPEAL, WHICH BY DUE CARE AND ATTENTION, COULD HAVE BEEN AVOIDED, CANNOT BE A SUFFICIENT CAUSE WITHIN THE MEANING OF THE LIMITATION PROVISION. WHERE NO NEGLIGENCE, OR INACTION, OR WAN T OF BONA FIDES CAN BE IMPUTED TO THE ASSESSEE, A LIBERAL CONSTRUCTION OF THE PROVISIONS HAS TO BE MADE IN ORDER TO ADVANCE SUBSTANTIAL JUST ICE. SEEKERS OF JUSTICE MUST COME WITH CLEAN HANDS. IN THE PRESENT CASE, AS STATED IN THE AFFIDAVIT, THE REASONS ADVANCED BY THE ASSESSEE ARE NOT SUPPORTED BY ANY COGENT EVIDENCE AND HENCE, WE DECL INE TO CONDONE THE DELAY IN FILING THE AFORESAID APPEALS OF THE AS SESSEE ON THE GROUND THAT THE ASSESSEE WAS NOT ABLE TO ESTABLISH THAT IT HAS PREVENTED BY A REASONABLE CAUSE IN FILING THESE APP EALS BELATEDLY. ACCORDINGLY, THESE TWO APPEALS OF THE ASSESSEE ARE DISMISSED IN- LIMINE. 5. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE IN ITA NO. 2055 & 2078/HYD/2011 ARE DISMISSED. ITA NOS. 1663, 1664 & 1665/HYD/2010 BY THE REVENUE FOR AYS. 2003- 04, 2004-05 AND 2005-06 6. THE 1 ST COMMON GROUND IN THESE THREE APPEALS ARE AS FOLLOW S: THE LEARNED CIT(A) OUGHT TO HAVE CONFIRMED THE ADDI TION MADE BY THE ASSESSING OFFICER, WHO HAS COMPLETED REASSES SMENT BASING ON THE FACTS OF PAYMENT AN EXCESS OF RS. 20, 000/- MADE TOWARDS THE PURCHASES, COMMISSION TO BROKERS AND LA ND/SITE DEVELOPMENT CHARGES AND ON ASSESSEES FAILURE TO AD HERE THE PROVISIONS OF SECTION 40A(3), 20% OF EXPENSES IN RE SPECT OF THE PURCHASES, COMMISSION TO BROKERS AND LAND/SITE DEVE LOPMENT CHARGES CLAIMED BY THE ASSESSEE FOR SAID YEAR ARE D ISALLOWED. 4 ITA NOS. 1663-65 & 110/H/10 & 2078 & 2055/H/11 M/S MADHUPALA ESTATES PVT. LTD. 7. TO DISPOSE OF THIS GROUND, WE CONSIDER THE FACTS FROM AY 2003- 04 IN ITA NO. 1663/HYD/2011. 7.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD MADE PAYMENTS T O LANDLORDS, LAND OWNERS AND BROKERS IN EXCESS OF RS. 20,000/- IN CAS H. THE ASSESSING OFFICER ACCORDINGLY DISALLOWED 20% OF THE EXPENSES IN RESPECT OF PURCHASES, COMMISSION TO BROKERS AND LAND SIDE DEVE LOPMENT CHARGES U/S 40A(3) AND MADE AN ADDITION OF RS. 70,2 1,766/-. 7.2 ON APPEAL, BEFORE THE CIT(A), THE ASSESSEE FILE D WRITTEN SUBMISSIONS. IT WAS AGREED TO BY THE ASSESSEE THAT CERTAIN PAYMENTS WERE MADE TO VARIOUS PEOPLE IN CASH IN EXCESS OF RS . 20,000/-. WITH REGARD TO FARMERS, IT WAS ALSO ADMITTED THAT PAYMEN TS WERE MADE TO THEM REGARDING LAND PURCHASES IN CASH. HOWEVER, IT WAS CONTENDED THAT THE FARMERS DO NOT HAVE BANK ACCOUNTS AND THER EFORE THESE TRANSACTIONS SHOULD BE EXEMPTED FROM THE ADDITION U /S 40A(3). THE FOLLOWING ANNEXURE WAS PROVIDED BY THE ASSESSEE WIT H REGARD TO VIOLATION U/S 40A(3): THE DETAILS OF THE PAYMENTS MADE IN CASH EXCEEDING RS. 20,000/- PER TRANSACTION TOWARDS LAND DEVELOPMENT A RE AS PER THE STATEMENT GIVEN BELOW. THIS IS AS PER THE BOOKS OF ACCOUNTS OF THE ASSESSEE: S.NO. DATE DETAILS AMOUNT (RS.) 1 06/05/02 COMMISSION PAID TO SRICHARAN 20,120/- 2 20/06/02 COMMISSION PAID TO SRICHARAN 24,256/- 3 30/11/02 PAID TO K.P. RAJU SITE DEVELOPMENT (COMPANY EMPLOYEE) 30,000/- 4 11/12/021 COMMISSION PAID TO PADMA RAO 20,466/- 5 23/01/03 COMMISSION PAID TO J. NARAYANA 30,320/- TOTAL 1,25,162/- 5 ITA NOS. 1663-65 & 110/H/10 & 2078 & 2055/H/11 M/S MADHUPALA ESTATES PVT. LTD. NOTE: THE PAYMENTS MADE TO LAND LORDS OR CONSIDER A S LAND ADVANCES IN THE YEAR IN WHICH THE PAYMENT IS MADE A ND TAKEN TO THE LAND LORD ACCOUNT. THE LAND ACCOUNT IS DEBITED AND WRITTEN OFF TO THE PROFIT AND LOSS ACCOUNT IN THE YEAR OF R EGISTRATION. FOR THE ASSESSMENT YEAR 2003-04 THE AMOUNT DEBITED TO LAND A/C AS PER PROFIT AND LOSS A/C RS. 14,71,700/-. LOAN ACCOUNT 14,71,000/- 7.3 THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND REFERRING TO THE PROVISIONS OF SECTION 40A(3), HELD AS FOLLOWS: 5.2.1 FROM THE ABOVE, I FIND THAT THE MANDATE OF S ECTION 40A(3) IS TO IDENTIFY THE SPECIFIC VIOLATIONS AND A DD THEM. THEREFORE, IN PRINCIPLE, I DO NOT AGREE WITH THE AC TION OF THE ASSESSING OFFICER ON ARBITRARY ESTIMATIONS. ON THE OTHER HAND, I FIND THAT THE APPELLANT, AS PER THE ANNEXURE QUOTED ABOVE, HAS CLEARLY IDENTIFIED THE VIOLATIONS. WITH RESPECT TO THE COMMISSION PAID TO VARIOUS PERSONS AMOUNTING TO RS. 1,25,162/- THERE IS NO DISPUTE BECAUSE THESE VIOLATIONS HAVE BEEN ADMITTED BY THE APPELLANT. HOWEVER, THE APPELLANT HAS ALSO ADMITTED TO THE VIOLATIONS WITH RESPECT TO THE LAND PAYMENTS AMOUNT ING TO RS. 14,71,000/-. IN THIS RESPECT, I DO NOT AGREE WITH T HE ARGUMENT OF THE APPELLANT THAT ALL FARMERS WERE ILLITERATE AND DID NOT HAVE ANY ACCESS TO ANY BANK. THESE DAYS BANK BRANCHES AR E AVAILABLE IN ALMOST ALL VILLAGES. MOREOVER, SPECIF IC FACTS HAVE TO BE SUBSTANTIATED BY THE APPELLANT, WHICH HAS NOT BE EN DONE. ACCORDINGLY, I HOLD THAT EVEN WITH RESPECT TO PAYME NTS PERTAINING TO PURCHASE OF LAND, THE VIOLATIONS U/S 40A(3) SHOULD BE ADDED BACK. 5.3 GIVEN THE ABOVE FACTS AND CIRCUMSTANCES, RS. 14 ,71,000/- AND RS. 1,25,162/- ARE TO BE ADDED BACK U/S 40A(3). THEREFORE, ADDITIONS TO THIS EXTENT ARE CONFIRMED ON THIS ISSU E AND THE APPELLANT GETS RELIEF ACCORDINGLY. 8. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES, PERUSED THE RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW. IN THIS CASE, THE ASSESSING OFFICER ESTIMATED THE QUAN TUM LIABLE FOR DISALLOWANCE U/S 40A(3) AND HE HAS NOT SPECIFIED PA RTICULAR ITEM WHICH ATTRACTS THE PROVISIONS OF SECTION 40A(3). IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER SHALL SPECIFY AND PIN P OINT EACH ITEM IN 6 ITA NOS. 1663-65 & 110/H/10 & 2078 & 2055/H/11 M/S MADHUPALA ESTATES PVT. LTD. RESPECT OF WHICH PROVISIONS OF SECTION 40A(3) ARE A TTRACTED AND TO DISALLOW THE SAME AND IF THERE ARE ANY EXCEPTIONS M ENTIONED IN RULE 6DD NOT APPLICABLE TO THE PAYMENTS. ACCORDINGLY, TH E ENTIRE ISSUE RELATING TO SECTION 40A(3) DEALT BY THE REVENUE AUT HORITIES IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONS IDERATION IN ALL THE THREE APPEALS UNDER CONSIDERATION. THIS GROUND IN A LL THE THREE APPEALS IS ALLOWED FOR STATISTICAL PURPOSES. 10. GROUND NO. 4 IN ITA NO. 1664/HYD/2011 FOR AY 20 04-05 IS AS FOLLOWS: THE LEARNED CIT(A) OUGHT TO HAVE CONFIRMED THE ADDI TION MADE BY THE ASSESSING OFFICER, WHO HAS COMPLETED THE REA SSESSMENT PROCEEDINGS AND MADE AN ADDITION OF RS. 37,13,702/- AS UNDISCLOSED RECEIPTS WHICH THE ASSESSEE FAILED TO EXPLAIN/PRODUCE WITH EVIDENCE TO HAVE BEEN REFLECTE D IN ITS BOOKS OF ACCOUNT. 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE TRANSACTI ON RELATING TO RECEIPTS AGAINST SALE OF PLOTS TO VARIOUS CUSTOMER S IN DIFFERENT PROJECTS-LAKSHMI MEGA TOWNSHIP, LMC-1 & II(LAKSHMI MEGA CITY), LTC (LAKSHMI THIRUMALA CITY), LMR AND MAHA CITY AL ONG WITH RELEVANT DOCUMENTS AND ACCOUNTS. THE ASSESSEE DID N OT PRODUCE ANY DOCUMENT/ACCOUNTS IN RESPECT OF THE ABOVE TRANSACTI ON. THE ATTENTION OF SRI. S. SURESH, THE DIRECTOR OF THE ASSESSEE COM PANY WAS DRAWN AND EXPLANATION SOUGHT DURING THE PROCEEDING U/S 13 1 ON 30/12/2009. THE EXTRACT OF THE SAME IS REPRODUCED BELOW: Q.6: YOUR ATTENTION IS DRAWN TO THE LOOSE SHEET NOS . 4-11 CONTAINED IN FOLDER LABELLED AS B FORMING PART OF T HE MATERIALS IMPOUNDED DURING THE COURSE OF SURVEY-RELATING TO RECEIPTS AGAINST SALE OF PLOTS TO VARIOUS CUSTOMERS IN DIFFE RENT PROJECTS- LAKSHMI MEGA TOWNSHIP, LMC-1 & II(LAKSHMI MEGA CITY ), LTC (LAKSHMI THIRUMALA CITY), LMR AND MAHA CITY PLEASE EXPLAIN THE TRANSACTION ALONG WITH THE RELEVANT ACCOUNTS AN D DOCUMENTS. ANS.: THE RECEIPTS FROM THE VARIOUS CUSTOMERS IS TA KEN BY THE COMPANY ON A DAY TO DAY BASIS. THESE ARE ENTERED IN TO THE INDIVIDUAL LEDGER OF THE CUSTOMERS. THE TOTAL OF TH E RECEIPTS PERTAINING TO A DAY IS ENTERED INTO THE BANK BOOK / CASH BOOK AS 7 ITA NOS. 1663-65 & 110/H/10 & 2078 & 2055/H/11 M/S MADHUPALA ESTATES PVT. LTD. A SINGLE FIGURE FOR THE DAY SINCE THE NUMBER OF PAR TIES COULD BE AROUND 40 TO 50 IN A DAY. SINCE THE CASH BOOK REFLE CTS A SINGLE AMOUNT, IT IS NOT POSSIBLE FOR US TO SHOW YOU THE I NDIVIDUAL BREAK UP AT THIS POINT OF TIME. Q.7: I DRAW ATTENTION TO THE ANNEXURE TO SWORN STAT EMENT RECORDED BY THE DDIT (INV) ON 14/01/2005 WHERE IT I S FOUND BY THE DDIT THAT THE RECEIPTS IN RESPECT OF THE ABOVE PROJECTS WERE NOT FOUND RECORDED IN YOUR BOOKS AND THE SAME IS CE RTIFIED BY YOU. PLEASE EXPLAIN THE SAME. ANS.: AS EXPLAINED IN ANSWER TO QUESTION 4 ABOVE, W E SUBMIT THAT POINT OF TIME ALSO, WE WERE UNABLE TO SHOW EAC H AND EVERY TRANSACTION FOR THE REASON RECORDED THEREIN. HOWEVE R, WE INFORM YOU THAT THE COMPANY DOES RECORD ALL THE AMOUNTS RE CEIVED FROM THE CUSTOMERS SINCE THE SALE CONSIDERATION IS RECEIVED OVER A PERIOD OF UPTO 60 MONTHS AND IT ISIMPERATIVE FOR THE COMPANY TO MAINTAIN DETAILS OF ALL THE RECEIPTS FRO M ALL THE CUSTOMERS. 11.1 AFTER CONSIDERING THE EXPLANATION OF THE DIREC TOR, THE ASSESSING OFFICER OBSERVED THAT IN VIEW OF THE FAILURE OF THE ASSESSEE TO SHOW DURING THE PROCEEDING THAT THE TRANSACTION UNDER RE FERENCE IS DULY REFLECTED IN ITS BOOKS AND FAILURE TO PRODUCE ANY A NOTHER DOCUMENT LIKE SALE DEED, THE AMOUNT OF RS. 37,13,702/- AS QUANTIFIED FROM THE IMPOUNDED MATERIAL IS ADDED TO THE TOTAL INCOME OF THE COMPANY. 12. ON APPEAL, BEFORE THE CIT(A) THE ASSESSEE STATE D THAT A SURVEY OPERATION WAS CONDUCTED ON THE ASSESSEE COMPANY ON 07/11/2005 U/S 133A OF THE IT ACT. IT WAS STATED THAT THE ASSE SSEE IS IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND IT SELLS PL OTS OF LAND TO VARIOUS CUSTOMERS FOR WHICH PAYMENTS ARE RECEIVED I N ADVANCE. IT WAS FURTHER STATED THERE ARE OVER 10,000 CUSTOMERS AND EVERYDAY PAYMENTS ARE RECEIVED FROM 40 TO 50 MEMBERS. RATHER THAN ENTERING EACH AND EVERY SEPARATE ENTRY IN THE CASH BOOK A CO NSOLIDATED ENTRY IS MADE IN THE CASH BOOK WHERE AS SEPARATE LEDGER A CCOUNTS FOR EACH CUSTOMER ARE ALSO MAINTAINED. THE ASSESSEE DID NOT PRODUCE THE RELEVANT BOOKS OF ACCOUNT DURING APPEAL PROCEEDINGS , BUT STATED THAT THE VERY ENTRY IN THE IMPOUNDED DOCUMENT IS TITLED RECEIPTS AGAINST SALE OF PLOTS TO VARIOUS CUSTOMERS IN DIFFERENT PRO JECTS-LAKSHMI MEGA 8 ITA NOS. 1663-65 & 110/H/10 & 2078 & 2055/H/11 M/S MADHUPALA ESTATES PVT. LTD. TOWNSHIP, LMC-1 & II(LAKSHMI MEGA CITY), LTC (LAKSH MI THIRUMALA CITY), LMR AND MAHA CITY. IT WAS FURTHER STATED TH AT THESE RECEIPTS AND REFLECTED IN THE BALANCE SHEET AS ADVANCE UNDER THE HEAD LOANS AND ADVANCES. 12.1 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSES SEE, THE CIT(A) OBSERVED THAT IT IS NOT THE CASE OF THE ASSESSING O FFICER THAT ALL THE AFOREMENTIONED RECEIPTS ARE UNACCOUNTED AND THE ASS ESSING OFFICER HAS MERELY STATED THAT THE FINAL FIGURES DO NOT TAL LY AND THAT THE DIRECTOR COULD NOT TALLY EACH AND EVERY ENTRY DURIN G THE COURSE OF HIS STATEMENT RECORDED U/S 131 ON 30/12/2009. THE CIT(A ) FURTHER OBSERVED THAT GIVEN THE NUMBER OF TRANSACTIONS, IT IS NOT ALWAYS POSSIBLE FOR A DIRECTOR TO TALLY ALL THE TOTALS DUR ING THE RECORDED STATEMENT U/S 131. MOREOVER, THE ASSESSING OFFICER HAS NOT BROUGHT ANYTHING ON RECORD TO SHOW THAT THE ASSESSEE WAS SE LLING PLOTS OUTSIDE THE BOOKS AND THAT THE ENTRIES IN QUESTION PERTAINED TO SALE OF PLOTS OUTSIDE THE BOOKS. IN VIEW OF THE ABOVE OBSER VATIONS, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO VERIFY THE ENTRIE S FROM THE LEDGER ACCOUNTS AND RELATE THEM WITH CASH BOOK ENTRIES AND TO THE EXTENT THAT THE ASSESSEE IS ABLE TO TALLY THE ENTRIES, THE ADDITION IS TO BE DELETED. 13. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 14. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES , PERUSED THE RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW. THE CIT(A) GAVE A CATEGORICAL FINDING THAT GIVEN THE NU MBER OF TRANSACTIONS, IT IS NOT ALWAYS POSSIBLE FOR A DIREC TOR TO TALLY ALL THE TOTALS DURING THE RECORDED STATEMENT U/S 131 AND MO REOVER, THE ASSESSING OFFICER HAS NOT BROUGHT ANYTHING ON RECOR D TO SHOW THAT THE ASSESSEE WAS SELLING PLOTS OUTSIDE THE BOOKS AND TH AT THE ENTRIES IN QUESTION PERTAINED TO SALE OF PLOTS OUTSIDE THE BOO KS. HE ACCORDINGLY, REMITTED THE ISSUE TO THE FILE OF THE ASSESSING OFF ICER TO VERIFY THE 9 ITA NOS. 1663-65 & 110/H/10 & 2078 & 2055/H/11 M/S MADHUPALA ESTATES PVT. LTD. ENTRIES FROM THE LEDGER ACCOUNTS AND RELATE THEM WI TH THE CASH BOOK ENTRIES AND TO THE EXTENT THAT THE ASSESSEE IS ABLE TO TALLY THE ENTRIES, THE ADDITION IS TO BE DELETED. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUND RAISED BY THE REVENUE IN THIS REGARD. 15. IN THE RESULT, APPEALS IN ITA NO. 1663 & 1665/H YD/2011 ARE ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL IN ITA NO. 1664/HYD/2011 IS PARTLY ALLOWED FOR STATISTICAL PUR POSES. ITA NO. 110/HYD/2010 BY THE ASSESSEE FOR AY 2002-03 16. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOL LOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE ASSESSING OFFICER IS CONTRARY T O LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE ASSESSING OFFICER ERRED IN MAKING ADDITIONS OF RS. 35,00,000/- U/S 69 OF THE ACT, WHEN IN REALITY THE SAME WAS IN THE NATURE OF ADVANCE AND REFLECTED IN THE ACCOUNTS . 3. THE ASSESSING OFFICER ERRED IN MAKING ADDITIONS OF RS. 2,58,65,160/- U/S 69 OF THE ACT, WHEN IN REALITY TH E SAME WAS IN THE NATURE OF ADVANCE. 4. THE ASSESSING OFFICER ERRED IN MAKING ADDITIONS OF RS. 19,00,000/- U/S 69 OF THE ACT, WHEN IN REALITY THE SAME WAS IN THE NATURE OF ADVANCE. 5. THE CIT(A) ERRED IN SUSTAINING THE ABOVE ADDITIO NS MADE BY THE ASSESSING OFFICER. 6. THE CIT(A), OUGHT NOT TO HAVE DECIDED THE CASE E XPARTE. 17. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A PRIVATE LIMITED COMPANY FILED ITS RETURN OF INCOME DECLARIN G AN INCOME OF RS. 24,58,670/-. THE ASSESSING OFFICER COMPLETED THE AS SESSMENT U/S 143(3) R.W.S. 147 OF THE ACT BY MAKING FOLLOWING AD DITIONS: 10 ITA NOS. 1663-65 & 110/H/10 & 2078 & 2055/H/11 M/S MADHUPALA ESTATES PVT. LTD. 1. PAYMENT MADE TO SRI M. RAMI REDDY AND OTHERS U/S 69 OF THE ACT - RS. 35,00,000/- 2. PAYMENT MADE TO SRI RAMI REDDY FOR PURCHASE OF L AND U/S 69 RS. 2,58,65,160/-. 3. PAYMENT MADE FOR PURCHASE OF LAND AT SHAMSHABAD U/S 69 RS. 19,00,000/-. 17.1 ACCORDING TO THE ASSESSEE, THE ASSESSEE HAD MA DE LAND ADVANCE AND EVEN THOUGH THE SAME WERE REFLECTED IN THE BOOKS OF ACCOUNT, THE ASSESSING OFFICER CHOSE TO DISBELIEVE THE SAME AND ADDED THE ABOVE PAYMENTS U/S 69 OF THE ACT. 17.2 WHEN THE MATTER CARRIED BEFORE THE CIT(A), SIN CE THE AR OF THE ASSESSEE DID NOT APPEAR BEFORE THE CIT(A), THE CIT( A) DISMISSED THE APPEAL OF THE ASSESSING OFFICER BASED ON THE SUBMIS SIONS MADE IN THE STATEMENT OF FACTS BY PASSING EX-PARTE ORDER. 18. BEFORE US, THE LEARNED AR OF THE ASSESSEE CONTE NDED THAT THE LEARNED CIT(A) HAS PASSED EX-PARTE ORDER CONFIRMING THE ORDER OF THE ASSESSING OFFICER AND, THEREFORE, THE ISSUES IN DIS PUTE MAY BE REMITTED BACK TO THE FILE OF THE CIT(A) FOR DECIDIN G THE SAME ON MERITS. 19. THE LEARNED DR, ON THE OTHER HAND, HAS NOT CONT ROVERTED THE SUBMISSIONS OF THE ASSESSEE. 20. AFTER HEARING THE PARTIES AND PERUSING THE RECO RD, IN THE INTEREST OF NATURAL JUSTICE, THE REQUEST OF THE ASSESSEE IS CONSIDERED AND THE APPEAL IS REMITTED BACK TO THE FILE OF THE CIT(A) W ITH A DIRECTION TO DECIDE THE ISSUES IN DISPUTE ON MERITS AND IN ACCO RDANCE WITH LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING T O THE ASSESSEE. 21. IN THE RESULT, THE APPEAL IN ITA NO. 110/HYD/20 10 IS ALLOWED FOR STATISTICAL PURPOSES. 11 ITA NOS. 1663-65 & 110/H/10 & 2078 & 2055/H/11 M/S MADHUPALA ESTATES PVT. LTD. 22. TO SUM UP, APPEALS OF REVENUE IN ITA NOS. 1663, & 1665/HYD/2010 ARE ALLOWED FOR STATISTICAL PURPOSES , APPEAL IN ITA NO. 1664/HYD/2010 IS PARTLY ALLOWED FOR STATISTICAL PUR POSES, APPEALS OF ASSESSEE IN ITA NOS. 2055 & 2078/HYD/11 ARE DISMISS ED AND APPEAL IN ITA NO. 110/HYD/2010 IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 12/02/2014. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 12/02/2014. KV COPY FORWARDED TO: 1. M/S MADHUPALA ESTATES PVT. LTD., 11-3-113/12/A, R.K. PURAM, KOTHAPET, HYDERABD. 2. DCIT, CIRCLE 16(2), HYDERABAD. 3. CIT(A)-V, HYDERABAD 4. CIT-IV, HYDERABAD 5. THE DR, ITAT, HYDERABAD S.NO DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 12 ITA NOS. 1663-65 & 110/H/10 & 2078 & 2055/H/11 M/S MADHUPALA ESTATES PVT. LTD. 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