Sai Priya Constructions, Hyderabad V. ITO,Ward - 8(2), Hyderabad

ITA 1812/HYD/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98627 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 26-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITHARAM
• Assessee Lawyers: T CHAITANYA KUMAR
• Keywords: Source of fund; Difference of opinion
• Section: 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC) : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH : ACCOUNTANT MEMBER ITA.NO.1812/HYD/2013 ASSESSMENT YEAR 2008-2009 SAI PRIYA CONSTRUCTIONS HYDERABAD. PAN ABBFS4062Q VS. THE ITO, WARD 8(2) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. T. CHAITANYAKUMAR FOR REVENUE : MR. M. SITHARAM DATE OF HEARING : 23.10.2015 DATE OF PRONOUNCEMENT : 28 .10.2015 ORDER THIS APPEAL PREFERRED BY THE ASSESSEE AGAINST THE PENALTY CONFIRMED BY THE LD. CIT(A)-III, HYDERA BAD VIDE ORDER DATED 07.10.2013 LEVIED BY AO UNDER SECT ION 271(1)(C) OF THE I.T. ACT, 1961. 2. THE ASSESSEE IS A FIRM (WRONGLY SHOWN AS COMPANY IN CIT(A) ORDER) ENGAGED IN THE BUSINESS OF CONSTRUCTION AND SALE OF FLATS. IT HAD FILED RETURN OF INCOME FOR A.Y. 2008-09 ON 19.01.2009 DECLARING INCOME OF RS.30,37,180. ASSESSING OFFICER COMPLETED THE ASSESSMENT ON 21.12.2009 DETERMINING THE TOTAL INCO ME AT RS.64,47,100 INTER ALIA , MAKING TWO ADDITIONS I.E., (A) ONE AMOUNT OF RS.22 LAKHS MADE ON THE BASIS OF ADMISSION DURING THE COURSE OF SURVEY PROCEEDINGS A ND (B) ADDITION OF RS. 8 LAKHS TOWARDS UNVERIFIABLE EXPENS ES 2 ITA.NO.1812/HYD/2013 SAI PRIYA CONSTRUCTIONS, HYDERABAD WHICH WORKED OUT TO NET PROFIT ESTIMATION AT 13.20% . BOTH THESE AMOUNTS ARE CONSIDERED FOR LEVY OF PENALTY BY THE A.O. VIDE ORDER DATED 28.06.2011. 3. LD. COUNSEL REITERATING THE FACTS SUBMITTED BEFORE THE LD. CIT(A), SUBMITTED THAT ASSESSEE HAS MADE VARIOUS INVESTMENTS AND THE EXPLAINED THE SOURCE OF AMOUNT AND A.O. DID NOT BELIEVE SUCH INVESTMENTS. ACCORDINGLY, AN AMOUNT OF RS. 22 LAKHS WAS ADDED IN THE ASSESSMENT ORDER. LIKEWISE, EVEN THOUGH ASSESSEES NET PROFIT OFFERED IS REASONABLE AS STATED BY THE A.O. IN THE ORDER ITSELF, A.O. MADE ADDITION OF FURTHER RS. 8 L AKHS ON ESTIMATION BASIS SUPPOSEDLY DISALLOWING THE AMOUNTS . HE ALSO PLACED ON RECORD THE ORDER OF THE COORDINATE B ENCH IN THE CASE OF ASSESSEE FOR A.Y. 2007-08 WHEREIN ON SIMILAR FACTS WHERE AO MADE ADDITION OF RS.64,50,00 0 PENALTY WAS CANCELLED BY THE COORDINATE BENCH IN ITA.NO.15/H/2013 DATED 16.07.2014. 4. LD. D.R. ON THE OTHER HAND, SUPPORTED THE ORDERS OF A.O. LEVYING PENALTY. 5. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE ORDERS PLACED ON RECORD. COORDINATE BENCH IN ASSESSEES OWN CASE ON SIMILAR FACTS HAS EXAMINED T HE FACTS IN THAT ORDER AND DELETED THE PENALTY BY STAT ING AS UNDER : 3 ITA.NO.1812/HYD/2013 SAI PRIYA CONSTRUCTIONS, HYDERABAD 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND EXAMINED THE INFORMATION AVAILABLE ON RECORD. AS SE EN FROM THE DOCUMENTS PLACED ON RECORD AND ALSO FROM T HE ORDERS IN OTHER YEARS, ASSESSEE DID INVEST AMOUNTS IN THE PURCHASE OF LAND AND AS CAN BE SEEN FROM THE EXTRAC TS ABOVE, ALL THE INVESTMENTS MADE IN THE SALE AGREEME NT ARE HAVING PROPER SOURCES. MOREOVER, LD. CIT(A) ORDER A LSO MENTIONS ABOUT CERTAIN NEW PARTNERS BEING ADMITTED AT A LATER DATE WHO ADVANCED FUNDS AT THE RELEVANT TIME. SINCE THEY COULD NOT BE ADMITTED RETROSPECTIVELY, A.O. TR EATED THE AMOUNTS AS LOAN CREDITORS. THE SUBMISSIONS OF T HE ASSESSEE WERE EXTRACTED BY THE LD. CIT(A) IN THE IMPUGNED ORDER. THIS ALSO INDICATES THAT EVEN THOUG H ASSESSEE RECEIVED FUNDS FROM THE PERSONS WHO ARE GO ING TO BE PARTNERS AT THE RELEVANT POINT OF TIME, THEY WERE TREATED AS LOAN CREDITORS AND THAT IS THE REASON WH Y A.O. DID NOT ACCEPT THE SOURCE OF INVESTMENTS. BE THAT A S IT MAY, ASSESSEE IS A FIRM AND THESE INVESTMENTS WERE REFLECTED IN THE BOOKS OF ACCOUNTS. THE SOURCES WER E ALSO THROUGH THE BANK ACCOUNTS AND THROUGH BOOKS OF ACCOUNTS. THEREFORE, JUST BECAUSE THE A.O. DID NOT ACCEPT THE ASSESSEES EXPLANATION WITH REFERENCE TO SOURCE OF FUNDS, THE SAME IN OUR VIEW DOES NOT BECOME CONCEAL ED INCOME. FURTHER, ASSESSEE HAS INVESTED TOTALLY RS.64,50,000/- WHEREAS, A.O. CONSIDERED ONLY RS.42,50,000/- AS AN ADDITION, GIVING CREDIT FOR TH E AMOUNT OF RS. 22,00,000/- EVEN THOUGH DECLARED IN T HE SURVEY. THIS INDICATES THAT IT IS ONLY A DIFFERENCE OF OPINION BETWEEN THE ASSESSEES EXPLANATION AND A.OS PERCEPT ION. 9. IN THE CASE OF SARAN KUMAR GOEL VS. ITO (SUPRA), THE HONBLE COORDINATE BENCH OF DELHI TRIB UNAL HAS CONSIDERED SIMILAR SITUATION AND HELD AS UNDER : MERE INADVERTENCE IN NOT SHOWING THE AMOUNT SURRENDERED DURING THE COURSE OF SURVEY, ON WHICH T AX HAD ALSO BEEN PAID BEFORE FILING THE RETURN, IN THE ABSENCE OF ANY CONCEALMENT OR FURNISHING OF INACCUR ATE PARTICULARS, IS NO GROUND FOR LEVYING PENALTY. 10. IN THE CASE OF S.K. BUILDERS, HYDERABAD VS. DCIT ITA.NO.818/HYD/2013 PENALTY LEVIED ON INCOME ADMITTED IN CASE OF SURVEY WAS ALSO DELETED, FOLLOW ING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SAS PHARMACEUTICALS ITA.NO.1058/2009 DATED 8 TH APRIL, 2011. 4 ITA.NO.1812/HYD/2013 SAI PRIYA CONSTRUCTIONS, HYDERABAD 11. IN THE CASE OF RELIANCE PETRO PRODUCTS V S. CIT 322 ITR 158, THE HONBLE SUPREME COURT EXAMINED THE SCO PE OF INACCURATE PARTICULARS AND HELD THAT A MERE M AKING OF A CLAIM, WHICH IS NOT ASSESSABLE IN LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. EVEN THOUGH THE ABOVE JUDGMENT IS RENDERED IN THE CONTEX T OF FURNISHING INACCURATE PARTICULARS, IN THIS CASE, AS SESSEE DID EXPLAIN THE SOURCE OF FUNDS IN THE COURSE OF SU RVEY ITSELF WHICH THE AO DID NOT ACCEPT. THAT MAY BE SUF FICIENT FOR MAKING THE ADDITION IN ASSESSMENT, BUT MAY NOT JUSTIFY LEVY OF PENALTY AS CONCEALMENT OF INCOME. 12. IN THE CASE OF GODAVARI TOWNSHIPS (P.) LTD. VS. DCIT, VISAKHAPATNAM (2014) 148 ITD 463 THE COORDINATE BENCH OF ITAT, VISAKHAPATNAM CONSIDERED THE SCOPE OF LEVY OF PENALTY ON DECLARATION OF INCOME I N THE COURSE OF SURVEY AND HELD AS UNDER : 16.4. THERE IS ONE MORE ASPECT TO THE ISSUE. UNLIKE IN A SEARCH CASE THERE IS NO PRESUMPTION THA T THE AMOUNT UNEARTHED DURING THE COURSE OF SURVEY WI LL AUTOMATICALLY BE CONSIDERED AS CONCEALED INCOME. NO PROVISION/EXPLANATION SIMILAR TO EXPLANATION-5 WAS PROVIDED IN THE SECTION TO COVER SURVEY CASES. SINC E, THE INCOME DETECTED/OFFERED IN SURVEY CANNOT BE DEEMED TO BE CONCEALED INCOME, TREATING THE SAME AS CONCEALED INCOME AS WAS DONE BY A.O. DOES NOT ARISE. A.O. HAS TO ESTABLISH THE NATURE OF INCOME A S CONCEALED INCOME BEFORE LEVY OF PENALTY. AS DISCUSSED EARLIER, NOTHING WAS DONE BY A.O. EXCEPT ACCEPTING THE REVISED INCOME RETURNED IN THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT. 13. CONSIDERING THE PRINCIPLES LAID DOWN BY HONBLE HIGH COURT AND COORDINATE BENCHES ON THE IS SUE, WE ARE OF THE OPINION THAT A MERE ADDITION MADE IN THE ASSESSMENT WITHOUT ACCEPTING ASSESSEES EXPLANATION DOES NOT RESULT IN LEVY OF PENALTY UNDER SECTION 27 1(1)(C). ACCORDINGLY, ORDERS OF THE A.O. AND LD. CIT(A) ON T HIS ISSUE ARE CANCELLED AND ASSESSEES GROUNDS ARE ALLO WED. 5 ITA.NO.1812/HYD/2013 SAI PRIYA CONSTRUCTIONS, HYDERABAD 5.1. SIMILAR TO THE ABOVE, IN THIS YEAR ALSO IN SP ITE OF CLEAR EXPLANATION GIVEN BY THE ASSESSEE THAT ALL THE AMOUNTS INVESTED IN PURCHASE OF LANDS ARE THROUGH B ANK CHEQUES, THROUGH PROPER SOURCE, A.O. IN THE ASSESSM ENT ORDER WITHOUT ANY ENQUIRY OR CONTRADICTION SIMPLY N OTES THAT ASSESSEE AGREED VIDE ORDER SHEET NOTING DATED 30.11.2010, WITHOUT MENTIONING THE REASONS FOR SUCH ADDITION. AS DECIDED BY THE COORDINATE BENCH, I AM OF THE OPINION THAT MERE ADDITION MADE IN THE ASSESSMENT WITHOUT DISPROVING ASSESSEES EXPLANATION, DOES NOT RESULT IN LEVY OF PENALTY UNDER SECTION 271(1)(C). EVEN DISALLOWANCE OF RS. 8 LAKHS TOWARDS UN-VOUCHED EXPENDITURE IWA ALSO ON ESTIMATION BASIS AND WITHOU T ANY ESTABLISHMENT OF CONCEALMENT ON THE PART OF ASSESSE E. I AM OF THE OPINION THAT FACTS OF THE CASE DOES NOT W ARRANT LEVY OF PENALTY U/S 271(1)(C). IN VIEW OF THIS, THE PENALTY UNDER SECTION 271(1)(C) LEVIED BY AO IS CANCELLED A ND ASSESSEES GROUNDS ARE ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 28.10.2015. SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER DATED 28 TH OCTOBER, 2015. VBP/- 6 ITA.NO.1812/HYD/2013 SAI PRIYA CONSTRUCTIONS, HYDERABAD COPY TO 1. SAI PRIYA CONSTRUCTIONS, KUKATPALLY, HYDERABAD. C/O. B. NARSING RAO & CO. C.A. PLOT NO.554, RD. NO. 92, JUBILLEE HILLS, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD 8(2), HYDERABAD. 3. CIT(A)-III, HYDERABAD. 4. CIT-II, HYDERABAD 5. D.R. ITAT A (SMC) BENCH, HYDERABAD. 6. GUARD FILE