ACIT., Central Circle-3(2), Hyderabad, Hyderabad V. Sri N Rama Raju, (Erstwhile Dirctor of Liquidated Company M/s Jyotsna Property Pvt. Ltd.), Hyderabad

ITA 1881/HYD/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0308 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-07-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 11-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Keywords: Unexplained cash credit
• Section: 142(1); 147; 68; 148; 56; 144

Judgement Text

ITA NOS. 1877 TO 1881 OF 2014 NSLR PRASAD RAJU AND OTHERS HYDERABAD PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTAN T MEMBER & SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. APPELLANT RESPONDENT A.Y 1877/HYD/2014 ACIT CENTRAL CIRCLE 3(2) HYDERABAD N.S.L.R. PRASAD RAJU (ERSTWHILE DIRECTOR OF LIQUIDATED CO. M/S. PALLAVI REAL ESTATE & DEVELOPERS P LTD) HYDERABAD PAN: AADCP 1994 J 2004 - 05 1878/HYD/2014 ACIT CENTRAL CIRCLE 3(2) HYDERABAD D.SRINIVASA RAJU, (ERSTWHILE DIRECTOR OF LIQUIDATED CO. M/S. UGANDHAR ESTATES P LTD) HYDERABAD PAN: AGVPD 3460 D 2004 - 05 1879/HYD/2014 ACIT CENTRAL CIRCLE 3(2) HYDERABAD D.SRINIVASA RAJU, (ERSTWHILE DIRECTOR OF LIQUIDATED CO. M/S. GIRIVARDHAN ESTATES (P) LTD HYDERABAD PAN: AACCG 8035 C 2004 - 05 1880/HYD /2014 ACIT CENTRAL CIRCLE 3(2) HYDERABAD N. RAMA RAJU, (ERSTWHILE DIRECTOR OF LIQUIDATED CO. M/S. YESHWANT PROPERTY DEVELOPERS PVT LTD HYDERABAD PAN: AAACY 2118 A 2004 - 05 1881/HYD/2014 ACIT CENTRAL CIRCLE 3(2) HYDERABAD N. RAMA RAJU, (ERSTWHILE DIRECTOR OF LIQUIDATED CO. M/S. JYOTSNA PROPERTY P LTD HYDERABAD PAN: AABCJ 3728 N 2004 - 05 FOR REVENUE : SHRI RAJAT MITRA, DR FOR ASSESSEE : SHRI K.C. DEVDAS DATE OF HEARING : 29.07.2015 DATE OF PRONOUNCEMENT : 29 .07.2015 ITA NOS. 1877 TO 1881 OF 2014 NSLR PRASAD RAJU AND OTHERS HYDERABAD PAGE 2 OF 9 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, J.M. THESE ARE THE APPEALS PREFERRED BY THE REVENUE AGAI NST THE ORDER OF THE COMMISSIONER OF WEALTH TAX (APPEALS) V II, HYDERABAD DATED 30.09.2014 FOR A.Y 2004-05: ITA NO.1877/HYD/2014 1. THE ASSESSEE IS AN INDIVIDUAL AND THE ERSTWHILE DIRECTOR OF A LIQUIDATED COMPANY M/S PALLAVI REAL ESTATES & DEV ELOPERS PVT. LTD. THE ASSESSMENT WHICH WAS APPEALED AGAINST BEFO RE THE CIT (A) WAS M/S. PALLAVI REAL ESTATES & DEVELOPERS PVT. LTD FOR A.Y 2004-05, AGAINST THE ORDER OF THE AO WHO COMPLETED THE ASSESSMENT U/S 144 R.W.S. 147 OF THE INCOME TAX ACT DATED 30.12.2011. THE AO MADE AN ADDITION U/S 68 FOR RS.4,16,33,166. 2. THE AR OF THE ASSESSEE APPEARED BEFORE THE AO AN D SUBMITTED THAT THE INCOME RETURNED WAS RS.1,74,567 BY RETURN FILED ON 8.11.2004 AND THE COMPANY WAS LIQUIDATED O N 25.3.2008. IT WAS SUBMITTED THAT NOTICE U/S 148 WAS ISSUED ON THE COMPANY DATED 14.03.2011. FURTHER NOTICE U/S 14 8 WAS SERVED ON M/S SRSR ADVISORY PVT. LTD (ANOTHER COMPA NY). IT WAS FURTHER STATED THAT IN RESPONSE TO THE NOTICE ISSUE D U/S 148 TO THE COMPANY, THE ERSTWHILE DIRECTOR OF THE COMPANY SHRI N.S.L.R. PRASAD RAJU REPLIED THAT THE COMPANY WAS LIQUIDATED ON 25.03.2008. ASSESSMENT PROCEEDINGS CONTINUED BY WAY OF ISSUE OF NOTICE U/S 142(1) DATED 16.08.2011. ITA NOS. 1877 TO 1881 OF 2014 NSLR PRASAD RAJU AND OTHERS HYDERABAD PAGE 3 OF 9 3. SHRI N.S.L.R. PRASAD RAJU AGAIN REPLIED TO THE A O THAT THE COMPANY IS NO LONGER IN EXISTENCE AND ITS NAME WAS ALSO STRUCK OFF BY THE REGISTRAR OF COMPANIES AS PER SECTION 56 0 OF THE COMPANIES ACT. HE OBJECTED TO THE ACTION OF THE AO TO ASSESS THE LIQUIDATED COMPANY. AO, HOWEVER, OVERRULED THE OBJE CTION STATING THAT SINCE THE COMPANY WAS EXISTENT DURING FINANCIA L YEAR 2003- 04, ASSESSMENT CAN BE MADE AND THE AO COMPLETED THE ASSESSMENT. AO EXAMINED THE BALANCE SHEET AND NOTED THAT THE FOLLOWING WERE SHOWN AS SOURCES OF FUNDS: SOURCES OF FUNDS/LIABILITIES AMOUNT CREDITED IN THE BOOKS (RS.) SHARE CAPITAL 1,00,000 SHARE APPLICATION MONEY 24,00,000 OUTSTANDING LIABILITIES 3,91,33,166 TOTAL 4,16,33,166 4. AO HELD THAT NO INFORMATION OR CONFIRMATION IN R ESPECT OF FUNDS WERE FILED AND TREATED THE ENTIRE AMOUNT OF R S.4.16 CRORES AS UNEXPLAINED CREDIT U/S 68 AND RAISED A TAX DEMAN D OF RS.2.88 CRORES ON THE COMPANY M/S PALLAVI REAL ESTATES & DE VELOPERS PVT. LTD. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFO RE THE CIT (A). 5. THE AR STATED BEFORE THE CIT (A) THAT ASSESSMENT ON THE COMPANY WHICH IS LIQUIDATED AND STRUCK OFF BY THE R EGISTRAR OF COMPANIES IS INVALID. HE ALSO FILED THE JUDICIAL DE CISIONS IN SUPPORT OF HIS CONTENTIONS. THE CIT (A) WHILE GIVIN G HIS FINDINGS HELD AS FOLLOWS: 6.1 CHAPTER XV OF THE INCOME TAX ACT SPEAKS OF LIA BILITY IN SPECIAL CASES. SECTION 178 SPEAKS OF COMPANY IN ITA NOS. 1877 TO 1881 OF 2014 NSLR PRASAD RAJU AND OTHERS HYDERABAD PAGE 4 OF 9 LIQUIDATION AND SECTION 179 SPEAKS OF LIABILITY OF DIRECTOR OF PVT. CO. IN LIQUIDATION. THE PROVISIONS THUS HAV E BEEN MADE IN THE ACT FOR TAKING ACTION AGAINST A COMPANY WHO IS UNDERGOING THE PROCESS OF LIQUIDATION AND IS YET TO BE LIQUIDATED OR WHERE THERE ARE ANY TAX DUES/LIABILIT Y OF A LIQUIDATED PRIVATE COMPANY, WHICH CANNOT BE RECOVER ED. THESE PROVISIONS WERE MADE SO THAT WHAT IS DUE TO T HE STATE IS RECOVERED. BY NO STRETCH OF IMAGINATION TH ESE PROVISIONS CAN BE EXTENDED TO MAKE AN ASSESSMENT ON A COMPANY LIQUIDATED FOUR YEARS AGO AND THAT TOO BY INVOKING THE PROVISIONS OF SECTION 148 AND THAT TOO SERVING THE NOTICE ON AN ALTOGETHER DIFFERENT COMPANY, A SE PARATE LEGAL ENTITY AND ISSUING NOTICE U/S 142(1) OF THE E RSTWHILE DIRECTOR WHO REPEATEDLY DREW ATTENTION OF THE AO TO THE LIQUIDATED STATUS OF THE COMPANY. AFTER ALL THIS, T HE AO HAD SIMPLY ADDED WHATSOEVER WAS SHOWN IN BALANCE SHEET AS SOURCES OF FUNDS AND THAT TOO FOR THE REAS ON THAT NO INFORMATION WAS BEING FILED BY THE ASSESSEE. 6. AGGRIEVED, DEPARTMENT IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS: 1. THE LD CIT (A)-VII HYDERABAD HAS ERRED IN BOTH FACTS AND IN LAW. 2. THE LD CIT (A) VII HYDERABAD ERRED IN HOLDING TH AT JURISDICTION OVER THE ASSESSEE WAS NOT VESTING WITH AO. 3. THE LD CIT (A)VII HYDERABAD ERRED IN HOLDING TH AT NO ORDER COULD BE PASSED ON THE LIQUIDATED COMPANIES. 4. THE LD CIT (A) VII HYDERABAD ERRED IN HOLDING TH AT THE NOTICE WAS NOT SERVED ON THE ASSESSEE. 7. WE HEARD BOTH PARTIES. WE FIND THAT THE AO HAS I NVOKED THE PROVISIONS OF SECTION 147 AND SERVED THE NOTICE ON A COMPANY WHICH IS ALTOGETHER A DIFFERENT COMPANY AND HAS ALS O ISSUED NOTICE U/S 142(1) TO THE ERSTWHILE DIRECTOR WHO HAS ALREADY SUBMITTED THAT THE COMPANY WHICH HAS BEEN ASSESSED HAS BEEN ITA NOS. 1877 TO 1881 OF 2014 NSLR PRASAD RAJU AND OTHERS HYDERABAD PAGE 5 OF 9 LIQUIDATED ON 25.03.2008. WE ARE OF THE OPINION THA T THE ISSUANCE OF NOTICE U/S 148 ON A (DIFFERENT COMPANY) I.E. ANOTHER LEGAL ENTITY NAMELY M/S. SRSR ADVISORY (P) LTD MAKE S THE PROCEEDINGS VOID AB INITIO AS NOTICE HAS BEEN ISSUE D TO THE WRONG ENTITY. HENCE WE CONFIRM THE ORDER OF THE CIT (A) A ND DISMISS THE REVENUES APPEAL. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ITA NO.1878/HYD/2014 1. THE ASSESSMENT WHICH WAS BEING APPEALED AGAINST BEFORE THE CIT (A) IS ON THE COMPANY M/S UGANDHAR ESTATES PVT. LTD FOR A.Y 2004-05. AO COMPLETED ASSESSMENT U/S 144 R.W.S. 147 OF THE I.T. ACT. ON 30.12.2011. THE ONLY ADDITION MADE WAS U/S 68 WAS RS.4,26,50,380. 2. THE FACTS OF THE CASE ARE THAT ORIGINAL RETURN O F INCOME OF THE COMPANY FOR THE YEAR UNDER CONSIDERATION WAS FI LED ON 8.11.2004, RETURNING AN INCOME OF RS.1,04,918. THE COMPANY WAS LIQUIDATED ON 15.03.2008 AND NOTICE U/S 148 WAS ISSUED ON THE COMPANY ON 14.03.2011. IN RESPONSE TO THE NOTIC E ISSUED TO THE COMPANY, THE ERSTWHILE DIRECTOR OF THE COMPANY SHRI D. SRINIVASA RAJU REPLIED THAT THE COMPANY WAS LIQUIDA TED ON 15.03.2008. HOWEVER, ASSESSMENT PROCEEDINGS CONTINU ED BY WAY OF ISSUE OF NOTICE U/S 142(1) DATED 16.08.2011. AGG RIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT (A). 3. THE FACTS ARE IDENTICAL TO THAT AS IN THE CASE O F N.S.L.R. PRASADA RAJU IN ITA NO.1877/HYD/2014. THE CIT (A) H AD REPEATED HIS FINDING WHICH IS AS FOLLOWS: ITA NOS. 1877 TO 1881 OF 2014 NSLR PRASAD RAJU AND OTHERS HYDERABAD PAGE 6 OF 9 BY NO STRETCH OF IMAGINATION, THESE PROVISIONS CAN BE EXTENDED TO MAKE AN ASSESSMENT ON A COMPANY LIQUIDATED FOUR YEARS AGO AND THAT TOO BY INVOKING THE PROVISIONS OF SECTION 148 AND THAT TOO SERVING THE NOTICE ON AN ALTOGETHER DIFFERENT COMPANY (A SEPARATE LEGA L ENTITY) AND ISSUING NOTICE U/S 142(1) TO THE ERSTWH ILE DIRECTOR WHO REPEATEDLY DREW ATTENTION OF THE AO TO THE LIQUIDATED STATUS OF THE COMPANY. 4. SINCE WE HAVE ALREADY DECIDED SIMILAR ISSUE IN I TA NO.1877/HYD/2014, THE SAME CONCLUSIONS SHALL BE ADO PTED IN THIS CASE ALSO. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ITA NO.1879/HYD/2014: 1. THE ASSESSMENT WHICH WAS BEING APPEALED BEFORE T HE CIT (A) IS ON THE COMPANY, M/S GIRIVARDHAN ESTATES PVT. LTD FOR A.Y 2004-05 AGAINST ORDER OF AO. THE AO HAD COMPLETED A SSESSMENT U/S 144 R.W.S. 147 OF THE I.T. ACT ON 30.12.2011. T HE DEMAND RAISED WAS RS.2,88,30,095. THE ONLY ADDITION MADE U /S 68 WAS RS.4,16,35,355. 2. THE FACT IN THIS CASE IS THAT ORIGINAL RETURN OF INCOME FOR A.Y WAS FILED ON 8.11.2004 RETURNING AN INCOME OF R S.1,46,880. THE COMPANY WAS LIQUIDATED ON 27.03.2008 AND NOTICE U/S 148 WAS ISSUED ON THE COMPANY ON 14.03.2011. NOTICE U/S 148 WAS SERVED ON M/S SRSR ADVISORY PVT LTD. IN RESPONSE TO THE NOTICE ISSUED U/S 148 TO THE COMPANY, THE ERSTWHILE DIRECT OR OF THE COMPANY SRI D. SRINIVASA RAJU REPLIED THAT THE COMP ANY WAS LIQUIDATED ON 27.03.2008. ASSESSMENT PROCEEDINGS CO NTINUED BY WAY OF ISSUE OF NOTICE U/S 142(1) DATED 16.08.2011. ITA NOS. 1877 TO 1881 OF 2014 NSLR PRASAD RAJU AND OTHERS HYDERABAD PAGE 7 OF 9 3. WE FIND THAT THE CIT (A) FINDINGS ARE SIMILAR TO THAT OF IN ITA NO.1877/HYD/2014. HENCE WE ARE OF THE OPINION T HAT THE ISSUANCE OF NOTICE U/S 148 ON A DIFFERENT COMPANY N AMELY M/S. SRSR ADVISORY (P) LTD MAKES THE PROCEEDINGS VOID AB INITIO AS NOTICE HAS BEEN ISSUED TO THE WRONG ENTITY. HENCE W E CONFIRM THE ORDER OF THE CIT (A) AND DISMISS THE REVENUES APPE AL. 4. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED . ITA NO.1880/HYD/2014 1. THE ASSESSMENT WHICH WAS ACTUALLY APPEALED AGAIN ST BEFORE THE CIT (A) WAS ON THE COMPANY M/S YESHWANT PROPERT Y DEVELOPERS PVT. LTD FOR A.Y 2004-05, AO COMPLETED T HE ASSESSMENT U/S 144 R.W.S. 147 OF THE I.T. ACT ON 30 .12.2011. THE DEMAND RAISED WAS RS.2,88,30,896. THE ONLY ADDI TION MADE U/S 68 WAS RS.4,16,36,625. 2. BRIEFLY STATED, THE ORIGINAL RETURN OF INCOME OF THE COMPANY FOR A.Y 2004-05 WAS FILED ON 8.11.2004 RETURNING AN INCOME OF RS.1,40,090. THE COMPANY WAS LIQUIDATED ON 27.03.20 08 AND NOTICE U/S 148 WAS ISSUED ON THE COMPANY ON 14.03.2 011. NOTICE U/S 148 WAS SERVED ON M/S SRSR ADVISORY PVT LTD. IN RESPONSE TO THE NOTICE ISSUED U/S 148 TO THE COMPAN Y, THE ERSTWHILE DIRECTOR OF THE COMPANY SRI N. RAMA RAJU REPLIED THAT THE COMPANY WAS LIQUIDATED ON 27.03.2008. ASSESSMEN T PROCEEDINGS CONTINUED BY WAY OF ISSUE OF NOTICE U/S 142(1) DATED 16.08.2011. 3. WE FIND THAT THE CIT (A) FINDINGS ARE SIMILAR TO THAT OF IN ITA NO.1877/HYD/2014. HENCE WE ARE OF THE OPINION T HAT THE ITA NOS. 1877 TO 1881 OF 2014 NSLR PRASAD RAJU AND OTHERS HYDERABAD PAGE 8 OF 9 ISSUANCE OF NOTICE U/S 148 ON A DIFFERENT COMPANY N AMELY M/S. SRSR ADVISORY (P) LTD MAKES THE PROCEEDINGS VOID AB INITIO AS NOTICE HAS BEEN ISSUED TO THE WRONG ENTITY. HENCE W E CONFIRM THE ORDER OF THE CIT (A) AND DISMISS THE REVENUE APPEAL . 4. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED . ITA NO.1881/HYD/2014 1. THE ASSESSMENT WHICH WAS BEING APPEALED AGAINST BEFORE THE CIT (A) IS ON THE COMPANY M/S JYOTSNA PROPERTIE S PVT. LTD FOR A.Y 2004-05. THE AO COMPLETED THE ASSESSMENT U/S 14 4 R.W.S. 147 OF THE I.T. ACT ON 30.12.2011. THE DEMAND RAISE D WAS RS.2,88,50,431. THE ONLY ADDITION MADE U/S 68 WAS RS.4,16,65,700. 2. BRIEFLY STATED, THE ORIGINAL RETURN OF INCOME OF THE COMPANY FOR A.Y 2004-05 WAS FILED ON 8.11.2004 RETURNING AN INCOME OF RS.93,280. THE COMPANY WAS LIQUIDATED ON 15.03.2008 AND NOTICE U/S 148 WAS ISSUED ON THE COMPANY ON 14.03.2 011. NOTICE U/S 148 WAS SERVED ON M/S SRSR ADVISORY PVT LTD. IN RESPONSE TO THE NOTICE ISSUED U/S 148 TO THE COMPAN Y, THE ERSTWHILE DIRECTOR OF THE COMPANY SRI N. RAMA RAJU REPLIED THAT THE COMPANY WAS LIQUIDATED ON 15.03.2008. ASSESSMEN T PROCEEDINGS CONTINUED BY WAY OF ISSUE OF NOTICE U/S 142(1) DATED 16.08.2011. 3. WE FIND THAT THE CIT (A) FINDINGS ARE SIMILAR TO THAT OF IN ITA NO.1877/HYD/2014. HENCE WE ARE OF THE OPINION T HAT THE ISSUANCE OF NOTICE U/S 148 ON A DIFFERENT COMPANY N AMELY M/S. SRSR ADVISORY (P) LTD MAKES THE PROCEEDINGS VOID AB INITIO AS ITA NOS. 1877 TO 1881 OF 2014 NSLR PRASAD RAJU AND OTHERS HYDERABAD PAGE 9 OF 9 NOTICE HAS BEEN ISSUED TO THE WRONG ENTITY. HENCE W E CONFIRM THE ORDER OF THE CIT (A) AND DISMISS THE REVENUE APPEAL . 4. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED . 5. TO SUM UP, APPEALS FILED BY THE REVENUE ARE DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2015. S D/ - S D/ - (B. RAMAKOTAIAH) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 29 TH JULY, 2015. VNODAN/SPS COPY TO: 1. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3 (2) 3 RD FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 04 2. SHRI N.S.L.R. PRASAD RAJU, H.NO.B-55 FLAT NO.202, S AI VAISHNAVI VIHAR, VENGALA RAO NAGAR, SR NAGAR, HYDER ABAD 500038 3. SHRI D.SRINIVASA RAJU, H.NO.75, MADHURA NAGAR, HYDE RABAD 500038 4. SHRI N. RAMA RAJU,H.NO.1-11-191/1, FLAT NO.302 SHAM ALA BUILDINGS, BEGUMPET, HYDERABAD 500016 5. COMMISSIONER OF WEALTH TAX(A)-VII HYDERABAD 6. COMMISSIONER OF WEALTH TAX (CENTRAL) HYDERABAD 7. THE DR, ITAT, HYDERABAD 8. GUARD FILE BY ORDER