Mahalakshmi Liquor Promoters Private Limited, Hyderabad V. Income Tax Officer, Ward-16(2), Hyderabad

ITA 1836/Hyd/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4193 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 21-02-2019
• Assessment Year: 2006-2007
• Appeal Filed On: 10-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATYA PINISETTY
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Application of stay; Condonation of delay
• Section: 263; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER I.T.A. NO. 1836/HYD/2017 ASSESSMENT YEAR: 2006-07 M/S. MAHALAKSHMI LIQUOR PROMOTERS PRIVATE LIMITED, HYDERABAD [PAN: AABCM3739N] VS INCOME TAX OFFICER, WARD-16(2), HYDERABAD (APPELLANT) (RESPONDENT) STAY APPLICATION NO. 29/HYD/2019 (ARISING OUT OF ITA NO. 1836/HYD/2017) ASSESSMENT YEAR : 2006-07 M/S. MAHALAKSHMI LIQUOR PROMOTERS PRIVATE LIMITED, HYDERABAD [PAN: AABCM3739N] VS INCOME TAX OFFICER, WARD-16(2), HYDERABAD (APPLICANT) (RESPONDENT) FOR ASSESSEE : SHRI A.V. RAGHURAM, AR FOR REVENUE : SHRI SATYA PINISETTY, DR DATE OF HEARING : 21-02-2019 DATE OF PRONOUNCEMENT : 13-03-2019 O R D E R PER SMT. P. MADHAVI DEVI, J.M. : THIS IS ASSESSEES APPEAL FOR THE AY. 2006-07, AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-4, HYDERABAD, DATED 22-02-2016. ITA. NO. 1836/HYD/2017 SA NO. 29/HYD/2019 :- 2 -: 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE-COMPAN Y ENGAGED IN THE PROMOTION OF LIQUOR BUSINESS, FILED ITS RETURN OF INCOME FOR THE AY. 2006-07 ON 29-11-2006, DECLARING INCOME OF RS. 18,69,190/-. 3. DURING THE ASSESSMENT PROCEEDINGS FOR THE AY. 2007- 08, PURSUANT TO THE ORDER U/S. 263 OF INCOME TAX ACT [ACT], THE ASSESSING OFFICER THEREIN HAD EXAMINED THE PAYMENT O F RS. 1,40,00,000/- FOR PURCHASE AND DEVELOPMENT OF LAND A ND OBSERVING THAT THE LANDS WERE PURCHASED DURING THE FY. 2005- 06, RELEVANT TO THE AY. 2006-07, IT WAS OBSERVED THAT THE PROCEEDINGS FOR THE AY. 2006-07 HAVE TO BE REOPENED AND THEREFORE, NO ADVERSE VIEW WAS DRAWN FOR THE AY. 2007 -08. ACCORDINGLY, THE ASSESSMENT PROCEEDINGS WERE RE-OPENE D 147 OF THE ACT. DURING THE RE-ASSESSMENT PROCEEDINGS, AS SESSING OFFICER OBSERVED THAT ASSESSEE HAS PURCHASED LANDS DU RING THE YEAR AND THE VALUE OF THE ASSET WAS SHOWN IN THE FIXED ASSET SCHEDULE AT RS. 1,44,89,400/-. AS PER THE INFORMATION AVAILABLE FROM THE LETTER DT. 12-11-2009 OF THE FACILITA TOR FILED DURING THE COURSE OF SCRUTINY ASSESSMENT FOR THE AY. 20 07-08, ASSESSING OFFICER OBSERVED THAT THE ACTUAL COST OF LAND IS RS. 59 LAKHS AND THAT RS. 70 LAKHS IS INCURRED FOR DEVEL OPMENT OF LAND. HE OBSERVED THAT THE ASSESSEE HAS NOT SUBMITTED SUBSTANTIAL EVIDENCE FOR INCURRING THE EXPENSES IN SU PPORT OF THE CLAIM FOR DEVELOPMENT AND HAS NOT PROVED THAT THE CO ST OF THE LAND IS HIGHER THAN WHAT IS SHOWN IN THE FIXED ASSE TS SCHEDULE. THEREFORE, HE HELD THAT THE VALUE OF THE ASSE T HAS BEEN INFLATED BY THE ASSESSEE, LEADING TO DRAW AN INF ERENCE ITA. NO. 1836/HYD/2017 SA NO. 29/HYD/2019 :- 3 -: THAT THE LIABILITIES TO THAT EXTENT ARE NOT GENUINE AND THERE FORE ARE REQUIRED TO BE ADDED AS UN-EXPLAINED CREDIT. HE THEREFORE BROUGHT THE DIFFERENCE OF AMOUNT I.E., RS. 1,44,89,4 00 59,00,000 = RS. 85,89,400/- TO TAX. THE ASSESSMENT W AS COMPLETED U/S. 144 R.W.S. 147 OF THE ACT DUE TO NON CO-OPERATION BY THE ASSESSEE. 3.1. AGGRIEVED BY THE ADDITION MADE BY THE ASSESSING OFFICER, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WITH A DELAY OF 61 DAYS IN FILING OF THE APPEAL. THE ASSESSEE FILED AN APPLICATION FOR CONDONATION OF DELAY AND ALSO FILED D ETAILED SUBMISSIONS ON THE MERITS OF THE ADDITION MADE BY THE ASSESSING OFFICER. THE LD.CIT(A) OBSERVED THAT THE AS SESSEE HAS NOT APPEARED BEFORE THE ASSESSING OFFICER AND ALS O HAS NOT APPEARED BEFORE HER, INSPITE OF SEVERAL OPPORTUNITIE S GIVEN BY HER. SHE THEREFORE CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER. HENCE, THE ASSESSEE IS IN SECOND APPEAL BEFORE US, RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-4, HYDERABAD, IS PERVERSE, ILLEGAL AND UNSUSTAINABLE IN LAW. 2. THE COMMISSIONER (APPEALS) ERRED IN SUSTAINING T HE ILLEGAL AND NON EST ASSESSMENT ORDER WHICH WAS PASSED IN GROSS VIOL ATION OF PRINCIPLES OF NATURAL JUSTICE. 3. THE COMMISSIONER (APPEALS) ERRED IN SUSTAINING T HE ADDITION OF RS.85,89,400 TOWARDS ALLEGED UNEXPLAINED CREDITS BE ING THE EXCESS VALUE OF LAND OVER ASSETS. BOTH THE AUTHORITIES BEL OW FAILED TO APPRECIATE THE EXPLANATION SUBMITTED BY THE APPELLA NT WITH RESPECT TO THE PURCHASE AND SALE OF LAND. ITA. NO. 1836/HYD/2017 SA NO. 29/HYD/2019 :- 4 -: 4. THE COMMISSIONER (APPEALS) AS WELL AS THE ASSESS ING OFFICER HAVE CONSIDERED ONLY HALF THE INFORMATION FILED BY THE A PPELLANT, AND HAVE COME TO A WRONG CONCLUSION RESULTING IN HUGE ADDITI ON OF RS.85,89,400. 5. THE FINDING OF THE AO THAT THE APPELLANT INCURRE D RS.70 LAKHS FOR DEVELOPMENT OF LAND AND WHICH FINDING WAS SUSTAINED BY THE COMMISSIONER (APPEALS) IS FACTUALLY INCORRECT. BOTH THE AUTHORITIES BELOW FAILED TO APPRECIATE THE EXPLANATION OF THE A PPELLANT THAT IT HAS NOT INCURRED ANY EXPENDITURE ON DEVELOPMENT. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED, IT I S PRAYED THAT THE APPEAL MAY BE ALLOWED DELETING THE ADDITION OF RS.8 5,89,400 WITH COSTS IN FAVOUR OF THE APPELLANT. 4. THE LD. COUNSEL FOR THE ASSESSEE, SHRI A.V. RAGHU RAM, WHILE REITERATING THE SUBMISSIONS MADE BEFORE THE CIT( A), HAS DRAWN OUR ATTENTION TO THE ASSESSMENT ORDER FOR THE AY. 2 007- 08, WHEREIN THE PAYMENT OF RS. 1,40,00,000/- DURING TH E FINANCIAL YEAR RELEVANT TO THE AY. 2006-07 IS RECORDED . 4.1. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO DRAWN OUR ATTENTION TO PAGE NO. 13 OF THE PAPER BOOK, WHEREIN THE D ETAILS OF PAYMENTS TO THE EXTENT OF RS. 1,40,00,000/- BY WAY O F CHEQUES IS MENTIONED. IN PARA 3 OF THE SAID LETTER DT. 12-11- 2009 OF THE FACILITATOR, IT IS ALSO MENTIONED THAT A SUM OF RS. 1,40,00,000/- IS AN ADVANCE FOR PURCHASE OF SEVEN A CRES OF LAND AND FUTURE DEVELOPMENT OF LAND, BROKERAGE AND COMMISSION. IT WAS MENTIONED THAT AN AMOUNT OF RS. 70 LA KHS WAS TOWARDS LAND COST AND THE BALANCE OF RS. 70 LAKHS WAS TOWARDS DEVELOPMENT OF LAND AND OTHER RELATED EXPENS ES. IT IS MENTIONED IN THE LETTER, THAT TILL SUCH DATE OF THE LETTER, THE VENTURE HAS REGISTERED ONLY 5.43 ACRES OF LAND AND SI NCE THE ITA. NO. 1836/HYD/2017 SA NO. 29/HYD/2019 :- 5 -: ENTIRE 7 ACRES COULD NOT BE PROCURED, IT WAS AGREED TH AT THIS LAND WILL BE RE-SOLD BY HIM AND PROFIT ON THIS WILL B E PAID TO ASSESSEE, AFTER RETAINING 50% WITH HIMSELF AND IT IS A LSO MENTIONED THAT AS PART OF THIS TRANSACTION, THE SAID FACILI TATOR HAS PAID THROUGH HIS GROUP, A TOTAL SUM OF RS. 155 CR ORES AND THEIR CHEQUE NUMBERS AND DETAILS THEREOF HAVE BEEN CLE ARLY GIVEN. LD. COUNSEL ALSO SUBMITTED THAT ASSESSEE HAD FILED ALL THESE DETAILS BEFORE THE CIT(A), BUT THE CIT(A) HAS DIS MISSED THE APPEAL ON THE GROUND THAT ASSESSEE HAS NOT APPEARED BEFORE HER. HE PRAYED THAT THE ASSESSEE SHOULD BE GIVE N A PROPER OPPORTUNITY OF BEING HEARD IN THIS CASE. 5. THE LD.DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THOUGH SEVERAL OPPORTUNITIES WERE GIVEN BY THE CIT(A), NONE APPEARED BEFORE HER TO EXPLAIN THE CASE. THEREFORE, CIT(A) WAS CONSTRA INED TO CONFIRM THE ASSESSMENT ORDER. 6. HAVING GONE THROUGH THE MATERIAL ON RECORD AND CONSIDERING THE RIVAL CONTENTIONS, WE FIND THAT THE ASSES SING OFFICER HAS MADE AN ADDITION OF RS. 85,89,400/- AS E XCESS LIABILITY OVER ASSETS AND HAS TREATED IT AS ESCAPEMENT OF INCOME. SINCE THE ASSESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFICER AND EXPLAIN THE FACTS TO THE ASSESSING OFFICER AND EVEN THE CIT(A) HAS NOT CONSIDERED THE ISSUE ON MERITS, WE ARE OF THE OPINION THAT THIS ISSUE NEEDS TO BE RE-VERIFIED BY THE ASSESSING OFFICER IN THE LIGHT OF THE ASSESSEES CONTEN TIONS AS ABOVE AND THE MATERIAL FILED BY THE ASSESSEE BEFORE TH E CIT(A). ITA. NO. 1836/HYD/2017 SA NO. 29/HYD/2019 :- 6 -: THEREFORE, WE DEEM IT FIT AND PROPER TO REMAND THE ISSU E TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO RE-CONSI DER THE ISSUE DENOVO IN THE LIGHT OF THE EVIDENCES FILED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. 8. SINCE THE APPEAL OF THE ASSESSEE HAS BEEN DISPOSE D-OF VIDE ORDER EVEN DATED, THE STAY APPLICATION FILED BY TH E ASSESSEE HAS BECOME INFRUCTUOUS. ACCORDINGLY, THE SAM E IS REJECTED. 9. TO SUM-UP, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND THE STAY APPLICATION IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH MARCH, 2019 SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMB ER HYDERABAD, DATED 13 TH MARCH, 2019 TNMM ITA. NO. 1836/HYD/2017 SA NO. 29/HYD/2019 :- 7 -: COPY TO : 1. M/S. MAHALAKSHMI LIQUOR PROMOTERS PRIVATE LIMITE D, C/O. K. VASANT KUMAR, A.V. RAGHU RAM, P. VINOD & M. NEELIMA DEVI, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD. 2. INCOME TAX OFFICER, WARD-16(2), HYDERABAD. 3. CIT(APPEALS)-4, HYDERABAD. 4. PR.CIT-4, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.