Sree Nagendra Constructions, Hyderabad V. DCIT., Central Circle-3, Hyderabad, Hyderabad

ITA 1832/HYD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5907 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-05-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 04-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VASUNDHARA SINHA
• Assessee Lawyers: MURALIMOHANA RAO
• Keywords: Search and seizure
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P.MADHAVI DEVI, JUDICIAL MEMBER A ND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. ASST YEAR APPELLANT RESPONDENT 1832/HYD/2014 1833/HYD/2014 1834/HYD/2014 1835/HYD/2014 2005-06 2006-07 2007-08 2008-09 M/S. SREE NAGENDRA CONSTRUCTIONS, KHAMMAM (PAN AAUFS 4784 M) DY. COMMISSIONER OF INCOME-TAX., CENTRAL CIRCLE 3, HYDERABAD 1836/HYD/2014 1837/HYD/2014 2005 - 06 2006-07 M/S. MAA HIGHWAYS KHAMMAM (PAN AAIFM 0756 B) DY. COMMISSIONER OF INCOME-TAX., CENTRAL CIRCLE 3, HYDERABAD 1838/HYD/2014 1839/HYD/2014 1840/HYD/2014 1841/HYD/2014 2005 - 06 2006-07 2007-08 2008-09 M/S. RAGINI CONSTRUC - TIONS KHAMMAM (PAN AAFFR 7361 G) DY. COMMISSION ER OF INCOME-TAX., CENTRAL CIRCLE 3, HYDERABAD APPELLANTS BY : SHRI MURALI MOHANA RAO RESPONDENT BY : SMT. VASUNDHARA SINHA CIT - DR DATE OF HEARING 16.3.2016 DATE OF PRONOUNCEMENT 24.3.2016 O R D E R PER BENCH : THESE TEN APPEALS ARE FILED BY THE ASSESSEES OF A COMMON GROUP AND THEY PERTAIN TO ASSESSMENT YEARS 2005-06 AND 2006-07 IN THE CASE OF MAA HIGHWAYS AND ASSESSMENT YEARS 2005- 06 TO 2008-09 IN THE CASES OF OTHER TWO ASSESSEES. SINCE THE FAC TUAL BACKGROUND AND THE ISSUES INVOLVED IN ALL THESE APPEALS ARE COMMON AND THEY ARE DIRECTED AGAINST A COMMON ORDER OF THE COMMISSIONER OF INCOME- TAX(APPEALS) VII, HYDERABAD, THESE APPEALS ARE BEIN G DISPOSED OF BY THIS COMMON AND CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ALL THE APPEALS, THE ASSESSEES HAVE RAISED S EVERAL GROUNDS OF APPEAL. THEY HAVE ALSO RAISED ADDITIONA L GROUNDS OF APPEAL ITA NO.1832 TO 1841/HYD/2014 M/S. SREE NAGEENDRA CONSTRUCTIONS & TWO OTHERS, KHAMMAM 2 IN ALL THESE CASES. HOWEVER, AT THE TIME OF HEARIN G, THE LEARNED COUNSEL FOR THE ASSESSEES SUBMITTED THAT HE IS MAIN LY CONTESTING GROUND OF APPEAL NO.2, WHEREIN IT IS CONTENDED THAT COMPLETED ASSESSMENTS OR WHERE THE TIME LIMIT FOR ISSUING NOT ICES UNDER S.143(2) HAS LAPSED, SUCH ASSESSMENT S CANNOT BE DISTURBED A ND NO ADDITION CAN BE MADE TO THE INCOME OF ASSESSEE IN ASSESSMENT UNDER S.143(3) READ WITH S.153A WITHOUT THERE BEING ANY INCRIMINAT ING MATERIAL FOUND DURING THE COURSE OF SEARCH AND SUBMITTED THAT IF T HIS GROUND IS ALLOWED, REST OF THE GROUNDS BECOME ACADEMIC. 3. BRIEF FACTS OF THE CASE COMMON IN ALL THESE CAS ES, AS TAKEN FROM THE APPEAL, ITA NO.1832/HYD/2014 IN THE CASE O F SREE NAGENDRA CONSTRUCTIONS, KHAMMAM FOR ASSESSMENT YEAR 2005-06, ARE THAT THERE WAS A SEARCH AND SEIZURE OPERATION UNDER S.13 2 OF THE ACT IN THE CASE OF MADHUCON PROJECTS LIMITED AND GROUP OF CASE S ON 4.2.2011. IN CONNECTION WITH THE SEARCH IN MADHUCON LTD., ASSES SEE FIRM BEING ONE OF THE SUB-CONTRACTORS WAS ALSO SEARCHED. ACCORDING LY, NOTICE UNDER S.153A OF THE ACT WAS ISSUED TO THE ASSESSEE, AND I N THE ASSESSMENT ORDER ULTIMATELY PASSED UNDER S.143(3) READ WITH S. 153A OF THE ACT ON 28.3.2013, THE ASSESSING OFFICER OBSERVED VIDE P ARA.3.3 THEREOF, AS UNDER- 3.3 THIS PREMISES INCIDENTALLY BELONGS TO ONE OF T HE RELATIVES OF THE FOUNDER CHAIRMAN OF M/S.MADHUCON PROJECTS LIMITED. ON THE DAY OF SEARCH I.E. 4.02.2 011, WHEN THE SEARCH PARTY REACHED THIS PREMISES, THE PREMISES WAS FOUND TO BE UNDER LOCK AND KEY AND THE AUTHORISED OFFICER HAS TO PLACE RESTRAIN U/S. 132(3 ) ON THE ENTIRE PREMISES. DURING THE COURSE OF POST SEARCH E NQUIRY IT WAS REVEALED THAT SRI. MAAREDDY SEETHARAMAIAH PA RTNER OF M/S. MAA HIGHWAYS WAS IN POSSESSION OF KEY OF TH E SAID PREMISES. AFTER OBTAINING THE KEY FROM SRI. MA AREDDY SEETHARAMAIAH, THE SEARCH WAS CARRIED OUT ON 07.03.2011. DURING THE COURSE OF SEARCH, NEITHER TH E BOOKS OF ACCOUNTS OF M/S. SREEE NAGENDRA COSNTRUCTI ONS NOR ANY SUPPORTING VOUCHERS FOR THE HUGE EXPENDITUR E ITA NO.1832 TO 1841/HYD/2014 M/S. SREE NAGEENDRA CONSTRUCTIONS & TWO OTHERS, KHAMMAM 3 INCURRED WERE FOUND OR SEIZED FROM THE PREMISES. TH E MANAGING PARTNER SRI.K.BABU RAO ORIGINALLY CLAIMED T HAT THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS WERE KEPT WITH THE AUDITOR. REGARDING THE BILLS ETC., HE STAT ED THAT THE SAME WERE AVAILABLE AT RESPECTIVE SITES. THEREAFTER, HE OBSERVED THAT THE REPRESENTATIVE OF THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT AND OTHER VOUCHERS, EVEN AFTER ALLOWING SUBSTANTIAL TIME FOR PRODUCTION OF THE SAM E. ON THE BASIS OF THE STATEMENT RECORDED OF SHRI K.BABU RAO, MANAGING PARTNER, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE FIRM IS NOT MAINTAINING ANY BOOKS OF ACCOUNT OR SUPPORTING VOUCHERS ON DAY TO DAY BASIS AND THEREFORE, THE BOOK RESULTS AS SUBMITTED BY THE ASS ESSEE CANNOT BE ACCEPTED. HE THEREAFTER PROCEEDED TO REJECT THE BOO KS OF ACCOUNT AND ASSESS THE INCOME OF THE ASSESSEE, ESTIMATING THE I NCOME OF THE ASSESSEE AT 8% OF THE GROSS RECEIPTS. HE ACCORDING LY BROUGHT THE ESTIMATED INCOME OF THE ASSESSEE TO TAX. 4. AGGRIEVED, ASSESSEES PREFERRED APPEALS BEFORE T HE CIT(A), WHO DISMISSED THE SAME AND HENCE, THE ASSESSEES ARE IN SECOND APPEAL BEFORE US. 5. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT FROM PARA 3.3 OF THE ASSESSMENT ORDER REPRODUCED ABOVE, WHIC H IS SIMILAR AND MATERIALLY SAME, IN THE CASE OF ALL THESE ASSESSEES , IT IS CLEAR THAT THERE WAS NO INCRIMINATING MATERIAL FOUND DURING TH E COURSE OF SEARCH IN THE CASE OF THE ASSESSEES HEREIN AND THEREFORE, THE ASSESSMENTS COULD NOT HAVE BEEN COMPLETED U/S.143(3) READ WITH S.153A OF THE ACT. HE ALSO SUBMITTED THAT IN ALL THESE CASES, AS SESSMENTS FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09 WERE EITHER COM PLETED UNDER S.143(3) OF THE ACT OR THE TIME FOR ISSUANCE OF N OTICE UNDER S. 143(2) HAS ALREADY LAPSED BY THE DATE OF SEARCH AND THEREF ORE, UNLESS THERE ITA NO.1832 TO 1841/HYD/2014 M/S. SREE NAGEENDRA CONSTRUCTIONS & TWO OTHERS, KHAMMAM 4 WAS INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH RELATING TO THE RELEVANT ASSESSMENT YEAR, ASSESSMENT COULD N OT HAVE BEEN MADE UNDER S.143(3) READ WITH S.153A OF THE ACT, MU CH LESS ESTIMATION OF INCOME AT A PERCENTAGE OF THE TURNOVE R. IN SUPPORT OF THIS CONTENTION, LEARNED COUNSEL FOR THE ASSESSEE A LSO PLACED RELIANCE UPON THE FOLLOWING DECISIONS. (I) DCIT V/.S. MIDWEST GOLD LIMITED (1ITA NO.1062/HYD/2 014) (II) DCIT V/S.AMR INDIA LIMITED (ITA NO.1828/HYD/2012) 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, SUBMITTED THAT FROM PARA 3.3 OF THE ASSESSMEN T ORDER, IT IS CLEAR THAT THE ASSESSEES DID NOT COOPERATE WITH THE REVEN UE AUTHORITIES, AND AS SUCH, THERE WAS NO MATERIAL FOUND DURING THE COU RSE OF SEARCH. SHE SUBMITTED THAT THIS ITSELF RAISES A DOUBT ABOUT THE CORRECTNESS OF THE BOOKS OF ACCOUNT , IF AT ALL, MAINTAINED BY THE ASS ESSEE, AND THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN REJECTING TH E BOOKS OF ACCOUNT AND ESTIMATING THE INCOME. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSMENTS IN THE CASE OF ALL OF THESE ASSESSEES WERE EITHER COMPLETED OR THE TIME FOR ISS UANCE OF NOTICES UNDER S.143(2) HAD ALREADY LAPSED BY THE DATE OF SE ARCH. IT IS ALSO FURTHER NOTICED THAT THERE WAS NO MATERIAL WHATSOEV ER FOUND DURING THE COURSE OF SEARCH RELATING TO ANY OF THE ASSESSE ES HEREIN AND THEREFORE, IT CAN SAFELY BE CONCLUDED THAT THERE WA S NO INCRIMINATING MATERIAL WAS FOUND RELATING TO THE ASSESSEES FOR TH E RELEVANT ASSESSMENT YEARS DURING THE COURSE OF SEARCH. IT H AS BEEN HELD IN VARIOUS CASES THAT UNLESS AND UNTIL THERE IS INCRIM INATING MATERIAL RELATING TO THE ASSESSEE FOUND DURING THE COURSE OF SEARCH, THERE ITA NO.1832 TO 1841/HYD/2014 M/S. SREE NAGEENDRA CONSTRUCTIONS & TWO OTHERS, KHAMMAM 5 CANNOT BE ANY ASSESSMENT UNDER S.143(3) READ WITH S.153A, AS FAR AS THE CONCLUDED ASSESSMENTS ARE CONCERNED. LEARNED C OUNSEL FOR THE ASSESSEE HAS SUCCESSFULLY DEMONSTRATED BEFORE US TH AT IN ALL THESE CASES, EITHER ASSESSMENTS WERE COMPLETED OR THE DU E DATE FOR THE ISSUANCE OF NOTICE UNDER S.143(2) HAS LAPSED PRIOR TO THE DATE OF SEARCH. THEREFORE, FOLLOWING THE DECISIONS OF THE C OORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF MIDEWEST GOLD LTD. (S UPRA) AND ALSO AMR INDIA LTD (SUPRA) , WE QUASH THE IMPUGNED ASSESSMEN TS MADE UNDER S.143(3) READ WITH S.153A OF THE ACT AND ALLOW GROU ND NO.2 OF THE ASSESSEES IN ALL THESE APPEALS. 8. IN VIEW OF THE ABOVE, ALL OTHER GROUNDS OF THE ASSESSEE HAVE BECOME ACADEMIC AND HENCE, WE DO NOT SEE ANY R EASON TO ADJUDICATE UPON THE SAME. 9. IN THE RESULT, ALL THE TEN APPEALS OF THE ASSES SEES ARE TREATED AS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 24 TH MARCH, 2016 SD/- SD/- (S.RIFAUR RAHMAN) ( P.MADHAVI DEVI) ACCOUNTANT MEMBER. JUDICIAL MEMBER DT/- 24 TH MARCH, 2016 ITA NO.1832 TO 1841/HYD/2014 M/S. SREE NAGEENDRA CONSTRUCTIONS & TWO OTHERS, KHAMMAM 6 COPY FORWARDED TO: 1. M/S. SREE NAGENDRA CONSTRUCTIONS, (KHAMMAM) C/O. M/S.P.MURALI & CO., CHARTERED ACCOUNTANTS, 6-3 -655/2/3, 1ST FLOOR, SOMAJIGUDA, HYDERABAD-82. 2. M/S. MAA HIGHWAYS (KHAMMAM) C/O. M/S.P.MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1ST FLOOR, SOMA JIGUDA, HYDERABAD-82. 3. M/S. RAGINI CONSTRUCTIONS (KHAMMAM) C/O. M/S.P.MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1ST FLOOR, SOMA JIGUDA, HYDERABAD - 82 4. DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 3, HYDERABAD 5. COMMISSIONER OF INCOME - TAX(APPEALS) VII, HYDERABAD 6. COMMISSIONER OF INCOME - TAX (CENTRAL), HYDERABAD 7. DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S.