Reliance Builders (Old), Hyderabad V. Asst. Commissioner of Income Tax, Circle-4(1), Hyderabad

ITA 2160/Hyd/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3535 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 19-04-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 09-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROHIT MAJUMDAR
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained cash credit; Reassessment proceedings; TDS
• Section: 143(3); 40(a)(ia); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD. BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER (THROUGH VIRTUAL HEARING) ITA NO.2160/HYD/2018 (ASSESSMENT YEAR : 2013 - 14) M/S. RELIANCE BUILDERS, PLOT NO.124, INTERNAL ROAD NO.15, PRASHASUN NAGAR, JUBILEE HILLS, HYDERABAD - 500 110 PAN AAAFR 9780Q PAN .APPELLANT. VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE 4(1), HYDERABAD. ..RESPONDENT APPELLANT BY : SHRI S. RAMA RAO. RESPONDENT BY : SHRI ROHIT MAJUMDAR (D.R) DATE OF HEARING : 19.04. 2021. DATE OF PRONOUNCEMENT : 07.06 .2021. O R D E R PER S MT. P. MADHAVI DEVI , J.M. : THIS IS ASSESSEE'S APPEAL FILED FOR THE ASSESSMENT YEAR 2013 - 14 AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1, HYDERABAD DT.9.8.2018. 2 ITA NO. 2160/HYD/2018 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE - FIRM , FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013 - 14 ON 27.9.2012 DECLAR ING AN INCOME OF RS.3,53,07,900. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT') WAS COMPLETED ON 21.5.2014 . THE ASSESSING OFFICER MADE AN ADDITION OF RS.1 CRORE ON ACCOUNT OF VOLUNTARY DE CLARATION BY THE ASSESSEE D URING THE COURSE OF SURVEY, TO COVER UP THE DISCREPANCY. T HEREAFTER , THE ASSESSING OFFICER FOUND THAT THERE WERE UNEXPLAINED SUNDRY CREDITORS TO THE EXTENT OF RS.6,43,254 AND TREATED IT AS UNEXPLAINED CASH CREDITS A ND BROUGHT IT TO TAX. FURTHER, ASSESSING OFFICER ALSO MADE AN ADDITION TOWARDS EARLIER YEAR LABOUR CESS OF RS.5 LAKHS. 3. THEREAFTER THE ASSESSING OFFICER REOPENED THE ASSESSMENT U/S. 147 OF THE ACT BY ISSUANCE OF A NOTICE U/S. 148 OF THE ACT ON 29.10.2015. DURING THE REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE THE ADDITION OF (I) RS.16,920 TOWARDS DIFFERENCE IN TOTAL INCOME AS PER THE ASSESSEE'S COMPUTATION OF INCOME AND THE ASSESSED INCOME; (II) RS.1,49,5 34 CONSEQUENT TO DISALLOWANCE U/S. 40(A)(IA) OF THE ACT IN RESPECT OF INTEREST PAID TO M/S. VOLKSWAG A N 3 ITA NO. 2160/HYD/2018 FINANCE LTD., BUT COULD NOT FURNISH THE TDS FORM IN PROOF THEREOF; (III) RS.4,00,000 C ONSEQUENT TO DISALLOWANCE OF SALARY / REMUNERATION AND (IV) RS.4,88,000 PERTAIN TO INTEREST ON UNSECURED LOAN. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(APPEALS) WHO CONFIRMED THE ORDER OF THE ASSESSING OFFICER A ND THE ASSESSEE IS IN SECOND APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL : 1. THE LEARNED CIT APPEALS - L , HYDERABAD ERRED IN FACT AND LAW AND FAILED TO UNDERSTAND THE FACT THAT THE SALARY IS PAID TO THE PARTNER AMOUNTING TO RS.4,OO,OOO / - IN CHEQUE S ON MONTHLY BASIS AND IS DIRECTLY CHARGED TO PROFIT AND LOSS ACCOUNT BY ONE SINGLE ENTRY OF PAYMENT OF PARTNER SALARY INSTEAD OF MAKING TWO ENT R IES I.E, ONE ENTRY AS 'SALARY PAYABLE TO PARTNER' AND THE SECOND AS 'SALARY PAID' .HENCE THE DISALLOWANCE IS BA D IN FACT AND LAW AND PRAY FOR DELETION. 2. THE DISALLOWANCE OF THE 'PARTNER SALARY' IS BAD AT LAW AS IT IS ALLOWABLE AS PER THE PROVISIONS OF SECTION 40B OF THE INCOME TAX ACT AND ALSO AS PER ALL THE RULES AND REGULATIONS OF THE INCOME TAX ACT. 3. THE L EARNED CIT APPEALS - L , HYDERABAD ERRED IN FACT AND LAW CONCLUDING THE TRANSACTION OF PARTNER SALARY OF RS.4,OO,OOO / - AS NOT GENUINE WITHOUT GOING PROPERLY THROUGH THE BOOKS OF ACCOUNTS, PARTNERSHIP DEED AND RECORDS OF THE FIRM. 4. THE ADDITION OF RS.4,8 8,OOO/ - PERTAINING TO INTEREST ON UNSECURED LOANS IS BAD IN FACT AND LAW AS LEARNED CIT - APPEALS HAD FAILED TO UNDERSTAND THE FACT THAT THE ADVANCES RECEIVED FROM THE TWO PARTIES SMT. SWAPNA KALAGARA AND ALSO FAZILATH ZEHAN ARE ADJUSTED TO SALES IN 4 ITA NO. 2160/HYD/2018 THE SUBS EQUENT YEARS AS PER THE BOOKS OF ACCOUNTS AND RECORDS OF THE FIRM I AND ALSO AS PER THE SALE DEEDS AND DOCUMENTS PRODUCED BEFORE THE LEARNED CIT - APPEALS - L ,HYDERABAD. HENCE THE ADDITION IS BAD AT LAW. 5. THE ADDITION OF RS.4,88,000/ - PERTAINING TO INTER EST ON UNSECURED LOAN IS BAD AT LAW, ILLOGICAL AND NOT UNDERSTANDABLE TO THE KNOWN ACCOUNTING TREATMENT CONSIDERING THE FACT THAT WHEN NO INTEREST IS PAID OR CHARGED TO PROFIT AND LOSS ACCOUNT OR IN BOOKS OF ACCOUNTS BY THE ASSESSEE PERTAINING TO THE TWO ADVANCES FROM SMT. SWAPNA KALAGARA AND ALSO FAZILATH ZEHAN, THE ISSUE DISALLOWANCE OF INTEREST DOES NOT ARISE. 6. PRAY TO THE HON'BLE TRIBUNAL TO ALLOW ANY ALTERATION, ADDITION, DELETION OF GROUND OF APPEAL AT THE TIME OF HEARING OF THE APPEAL IN THE INTE REST OF JUSTICE. 3. THE LEARNED COUNSEL FOR THE ASSESSEE , WHILE REITERATING THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES , PRAYED FOR A REMAND TO THE ASSESSING OFFICER ON BOTH THE ISSUES . W ITH REGARD TO THE DISALLOWANCE OF THE EXPENDITURE OF RS.4,88,000 , T HE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT WAS NEVER DEBITED TO THE PROFIT AND LOSS ACCOUNT , BUT THE ASSESSING OFFICER AS WELL AS THE CIT(APPEALS) HAVE NOT EXAMINED THE FACT. HE FURTHER SUBMITTED THAT S IMILARLY, T HE PAYMENT OF RS.4 LAKHS TO THE PARTNER AS SALARY BY WAY OF MONTHLY CHEQUES ALSO WAS NOT E XAMINED. HE THEREFORE PRAYED FOR A REMAND TO THE ASSESSING 5 ITA NO. 2160/HYD/2018 OFFICER. THE LD. DR , ON THE OTHER HAND, SUPPORTED THE ORDER S OF THE LOWER AUTHORITIES. 4. HAVING REGARD TO CONTENTIONS OF THE LD. COUNSEL FOR THE ASSESSEE THAT BOTH THE ISSUES NEED FACTUAL VERIFICATION, WE DEEM IT FIT AND PROPER TO REMIT THE ISSUES TO THE ASSESSING OFFICER FOR DE NOVO CONSIDERATION IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT T HE ASSESSEE SHALL BE GIVEN A FAIR OPPORTUNITY OF HEARING. 5. IN THE RESULT, THE ASSESSEE'S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONO UNCED IN THE OPEN COURT ON 7 TH JUNE, 2021. SD/ - SD/ - (A. MOHAN ALANKAMONY) (SMT. P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DT. 7 TH JUNE , 2021. * REDDY GP COPY TO : 1. M/S. RELIANCE BUILDERS, PLOT NO.124, INTERNAL ROAD NO.15, PRASHASUN NAGAR, JUBILEE HILLS, HYDERABAD - 500 110 2. ACIT, CIRCLE 4(1), HYDERABAD. 3. PR. C I T - 1, HYDERABAD. 4. CIT(APPEALS) - 1, HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE. BY ORDER SR. PVT. SECRETARY, ITAT, HYDERABAD.