Ramsri Infratech Private Limited, Hyderabad V. Income Tax Officer, Ward-3(2), Hyderabad

ITA 2191/Hyd/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7069 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 15-10-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 21-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M NARMADA
• Assessee Lawyers: T RAJENDRA PRASAD
• Keywords: Principle of natural justice; Onus to prove; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B: HYDERABAD BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER I.T.A. NO. 2191/HYD/2017 ASSESSMENT YEAR: 2013-14 M/S.RAMSRI INFRATECH PRIVATE LIMITED, HYDERABAD [PAN: AADCR6513K] VS INCOME TAX OFFICER, WARD-3(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI T. RAJENDRA PRASAD, AR FOR REVENUE : SMT. M. NARMADA, DR DATE OF HEARING : 15-10-2019 DATE OF PRONOUNCEMENT : 18-10-2019 O R D E R PER D.S. SUNDER SINGH, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-3, HYDERABAD, DATED 11-09-2017. 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE IS A COMPANY, ENGAGED IN THE BUSINESS OF CONSTRUCTIONS AND CONTRACTS, FILED ITS RETURN OF INCOME ON 19-09-2013, D ECLARING TOTAL INCOME OF RS.20,64,140/- FOR THE AY.2013-14. T HE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE ASSE SSMENT WAS COMPLETED U/S.143(3) OF THE INCOME TAX ACT [ACT] ON TOTAL INCOME OF RS.1,11,56,778/-. THE ASSESSING OFFICER (AO) MADE THE FOLLOWING ADDITIONS TO THE RETURNED INCOME: ITA NO. 2191/HYD/2017 :- 2 -: AMOUNT (RS) 1. ADDITION U/S.68 OF THE ACT 81,15,000 2 . DIFFERENCE IN SUB - CONTRACT PAYMENTS 7,89,138 3. DIFFERENCE IN PROFIT 1,88,500 2.1. AGAINST THE SAID ORDER OF ASSESSMENT, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). NONE APPEARED BEFORE THE CIT(A). THEREFORE, THE LD.CIT(A) CONFIRMED THE OR DER OF AO. 2.2. AGAINST THE SAID ORDER OF THE LD.CIT(A), THE ASSES SEE IS IN APPEAL BEFORE THE TRIBUNAL AND HAS RAISED TWO GROUND S. 3. GROUND NO.1 IS RELATED TO DISPOSAL OF APPEAL BY THE LD.CIT(A), WITHOUT GIVING PROPER OPPORTUNITY TO THE ASS ESSEE. 3.1. DURING THE APPEAL PROCEEDINGS BEFORE US, LD.AR ARGUED THAT THE LD.CIT(A) HAS NOT GIVEN SUFFICIENT OPPORTUNITY TO THE ASSESSEE AND DECIDED THE APPEAL OF THE ASSESSEE EX-PARTE , WITHOUT GIVING PROPER OPPORTUNITY TO THE ASSESSEE. THER EFORE, HE CONTENDED THAT THE LD.CIT(A) COMMITTED GROSS ERROR VIOLATING THE PRINCIPLES OF NATURAL JUSTICE AND HENCE REQUESTED TO SET ASIDE THE ORDER OF THE LD.CIT(A). 3.2. PER CONTRA, LD.DR VEHEMENTLY SUPPORTED THE ORDER O F LD.CIT(A). 3.3. WE HAVE GONE THROUGH THE ORDER OF THE LD.CIT(A) A ND FIND THAT THE LD.CIT(A) POSTED THE PRESENT CASE FOR HEARING ON TWO OCCASIONS. BUT, THE ASSESSEE DID NOT APPEAR BEFORE TH E LD.CIT(A) AND THERE WAS NO RESPONSE FROM THE ASSESSEE ON ITA NO. 2191/HYD/2017 :- 3 -: BOTH THE OCCASIONS. ON THIRD OCCASION, THE ASSESSEE HA S REQUESTED FOR ADJOURNMENT. SUBSEQUENTLY, THE ASSESSEE NEITHER APPEARED PERSONALLY NOR MADE ANY WRITTEN SUBMISSIONS. HENCE THE LD.CIT(A) DISPOSED-OF THE APPEAL ON MERITS. SINCE THE CIT(A) HAS GIVEN SUFFICIENT OPPORTUNITY BY POSTING TH E CASE FOR HEARING ON THREE OCCASIONS, WE DO NOT FIND ANY ERROR IN DISPOSAL OF APPEAL BY THE LD. CIT(A). HENCE, WE DISM ISS THIS GROUND RAISED BY THE ASSESSEE. 4. GROUND NO.2(A) IS GENERAL IN NATURE, WHICH DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 5. GROUND NO.2(B) IS RELATED TO ADDITION MADE BY THE AO OF RS.81,15,000/- U/S.68 OF THE ACT. SUBSEQUENTLY, THE A SSESSEE HAS RAISED TWO ADDITIONAL GROUNDS, SPLITTING THE ADDITI ON OF RS.81,15,000/- IN TO TWO PARTS. THE FIRST PART IS WITH RESPECT TO ADDITION OF RS.74,75,000/-, WHICH WAS RELATED TO SUBSCRIPTION OF SHARE CAPITAL RECEIVED IN THE EARLIER YEARS AND THE SECOND PART IS RELATED TO THE ADDITION OF RS.6,40,000 /-, WHICH WAS INFUSED IN THE IMPUGNED ASSESSMENT YEAR. 5.1. AS FAR AS ADDITION OF RS.74,75,000/-IS CONCERNE D, THE AO STATED IN THE ASSESSMENT ORDER THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE-COMPANY HAS RECEIVED THE A MOUNT OF RS.74,75,000/- FROM OLD INVESTORS. SINCE THE COMPANY HAS NOT FURNISHED ANY CONFIRMATION LETTERS ALONG WITH INCOME TA X RETURNS, COMPANYS CAPITAL A/C AND BANK ACCOUNT STATEMEN T ETC., THE AO TREATED THAT THE ASSESSEE HAS NOT DISCHARGED TH E ONUS TO PROVE THE GENUINENESS OF THE INTRODUCTION OF SH ARE ITA NO. 2191/HYD/2017 :- 4 -: CAPITAL AND THEREFORE, MADE THE ADDITION OF RS.74,75,0 00/- U/S.68 OF THE ACT. 5.2. AGAINST THE SAID ORDER, THE ASSESSEE WENT ON APPEA L BEFORE THE CIT(A). SINCE THERE WAS NO RESPONSE FROM TH E ASSESSEE, THE LD.CIT(A) CONFIRMED THE ADDITION MADE BY THE AO AND DISMISSED THE APPEAL OF ASSESSEE. 5.3. AGAINST THE SAID ORDER OF LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. DURING THE APPEAL PROCEEDINGS BEF ORE US, LD.AR SUBMITTED THAT THERE WAS NO INTRODUCTION OF FRESH SHARE CAPITAL DURING THE YEAR UNDER CONSIDERATION EXCEPT THE SUM OF RS.6,40,000/- WHICH IS ALSO AGITATED IN THIS APPEAL. L D.AR FURTHER SUBMITTED THAT THERE WAS CHANGE IN THE SHAREHOLDIN G PATTERN OF COMPANY, BUT NEITHER THE FRESH EQUITY SHARES WERE ISSUED NOR BOUGHT BACK THE SHARES FROM THE SHAREHOLDER S. REFERRING TO PG.52 OF THE PAPER BOOK, LD.AR TAKEN OUR ATTENTION TO THE BALANCE SHEET AND STATED THAT THE OUTSTANDI NG SHARE CAPITAL WAS RS.97,45,000/- FOR THE YEAR ENDING 31-03- 2012 AND THE SAME REMAINED FOR THE YEAR ENDING 31-03 -2013. REFERRING TO PG.56 OF THE PAPER BOOK, THE ASSESSEE HAS SHOWN THE CHANGES OF SHAREHOLDINGS OF VARIOUS SHAREHOLDERS AND DEMONSTRATED THAT SHARES OF THE COMPANY WERE ACQUIRED B Y SOME NEW SHAREHOLDERS FROM THE EXISTING SHAREHOLDERS AND ARGUED THAT THERE WAS CHANGE IN THE PATTERN OF SHAREHOLDI NG AND SUBMITTED THAT NEITHER THE COMPANY HAS ISSUED FRESH SHARE CAPITAL NOR INTRODUCED ANY CASH CREDITS DURING T HE YEAR UNDER CONSIDERATION. THEREFORE, SUBMITTED THAT THERE IS NO CASE FOR MAKING THE ADDITION U/S.68 OF THE ACT AND HEN CE ITA NO. 2191/HYD/2017 :- 5 -: REQUESTED TO SET ASIDE THE ORDERS OF THE LOWER AUTHORIT IES AND ALLOW THE APPEAL OF ASSESSEE. 5.4. PER CONTRA, THE LD.DR STRONGLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 5.5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL PLACED ON RECORD. FROM THE PERUSAL OF THE BAL ANCE SHEET, WE FIND THAT THERE IS NO CHANGE IN THE PAID UP S HARE CAPITAL FOR THE YEAR ENDING 31-03-2012 OR 31-03-2013. THE PAID UP SHARE CAPITAL REMAINED AT RS.97,45,000/-. THU S, THERE IS NO INFUSION OF FRESH SHARE CAPITAL IN THE COMPANY. FOR A QUERY FROM THE BENCH, THE LD.AR REPLIED THAT THE ORIGIN AL SHARE CAPITAL WAS ISSUED IN AY.2006-07/2007-08 AND THEREAFTER, NO FRESH SHARE CAPITAL WAS RECEIVED BY THE COMPANY. THE THEN EXISTING SHAREHOLDERS HAVE TRANSFERRED THE SH ARES TO NEW SHAREHOLDERS. THUS, THERE IS NO IMPACT ON THE SHAR E CAPITAL OF THE COMPANY. WE HAVE GONE THROUGH THE BALANCE SHEET AND ALSO THE LIST OF SHAREHOLDERS AND CHANGE IN PATTERN OF SHAREHOL DING, FURNISHED IN THE STATEMENT OF FACTS AND FIND THAT THERE IS NO FRESH SHARE CAPITAL INTRODUCED IN THE COMPANY FOR MAK ING ADDITION U/S.68 OF THE ACT. FOR THE PURPOSE OF MAKING ADDITION U/S.68 OF THE ACT, ANY CREDIT FOUND DURING THE YEAR, FO R WHICH THE SOURCE WAS NOT EXPLAINED REQUIRED TO BE CONSIDERED FOR ADDITION. IN THE INSTANT CASE, THERE IS NO CREDIT FOUND TO BE CREDITED IN THE BOOKS OF ACCOUNT FOR WHICH THE SOURC E REMAINED UN-EXPLAINED. THUS, THERE IS NO CASE FOR MAKING THE A DDITION U/S.68 OF THE ACT. HENCE, WE SET ASIDE THE ORDER OF LD. CIT(A) ITA NO. 2191/HYD/2017 :- 6 -: AND DELETE THE ADDITION MADE BY THE AO. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 6. AS FAR AS THE SECOND PART OF THE ADDITION OF RS.6,40 ,000/- IS CONCERNED, IT RELATES TO MS. CH.PUSHPAVATHI AND WAS ACCEPTED DURING THE YEAR UNDER CONSIDERATION. THE AS SESSEE FURNISHED CONFIRMATION LETTERS BUT FAILED TO FURNISH THE OTHER DOCUMENTS SUCH AS PAN AND OTHER DETAILS. THEREFORE, TH E AO DOUBTED THE GENUINENESS OF THE SHARE APPLICATION MONEY RECEIVED IN THE YEAR AND MADE ADDITION U/S.68 OF THE A CT. THE LD.CIT(A) CONFIRMED THE ADDITION IN THE EX-PARTE ORDER. 6.1. AGAINST THE SAID ORDER OF LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6.2. DURING THE APPEAL PROCEEDINGS BEFORE US, THE LD. AR ARGUED THAT THE ASSESSEE SUBMITTED COPIES OF THE CONFIRM ATION LETTER AND BANK ACCOUNT ALONG WITH PROOF OF IDENTIFICAT ION AND GENUINENESS OF THE INVESTMENT BEFORE THE AO AND THE AO DOUBTED THE GENUINENESS OF THE INVESTMENT OF THE SHARE CA PITAL IN THE COMPANY WITHOUT MAKING ANY FURTHER ENQUIRIES. REFERRING TO PG.65 OF THE PAPER BOOK, THE LD.AR SUBMITT ED THAT THE ASSESSEE HAS FURNISHED THE CONFIRMATION LETTER WITH COMPLETE ADDRESS, CONFIRMING THE SUBSCRIPTION TOWARDS SHARE APPLICATION MONEY. THE AMOUNT WAS PAID THROUGH BANK CHEQUE. AT PG.66 OF THE PAPER BOOK, LD.AR FURNISHED C OPY OF THE BANK ACCOUNT OF RAMSRI INFRATECH PRIVATE LIMITED, SUPPORTING THE RECEIPT OF SHARE APPLICATION MONEY THRO UGH BANKING CHANNELS. AT PG.67 OF THE PAPER BOOK, THE ASSE SSEE ITA NO. 2191/HYD/2017 :- 7 -: FURNISHED A COPY OF THE AADHAR CARD, WHICH CONTAINS TH E COMPLETE AND CLEAR ADDRESS OF SHARE APPLICANT MS. CH.PUSHPAVATHI. THEREFORE, ARGUED THAT THE ASSESSEE HA S DISCHARGED THE BURDEN AND THERE IS NO CASE FOR MAKING THE ADDITION U/S.68 OF THE ACT. HENCE, REQUESTED TO DELETE THE ADDITION MADE BY THE AO AND TO SET ASIDE THE ORDER OF LD.CIT(A). 6.3. THE LD.DR STRONGLY SUPPORTED THE ORDERS OF THE LO WER AUTHORITIES. 6.4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL PLACED BEFORE US. IT IS TRUE THAT DURING THE YE AR UNDER CONSIDERATION, THE AMOUNT OF RS.6,40,000/- WAS RECEIVE D AS SHARE APPLICATION MONEY IN THE ACCOUNT OF ASSESSEE-COM PANY. THE SAID SHARE APPLICATION MONEY WAS RECEIVED THROUG H CHEQUE, WHICH WAS ESTABLISHED FROM THE BANK ACCOUNT CO PY. THE SAME CHEQUE WAS CREDITED INTO BANK ACCOUNT OF ASS ESSEE- COMPANY. IN THE CONFIRMATION LETTER THOUGH THE ASSESSEE FAILED TO FURNISH PAN DETAILS, COMPLETE ADDRESS WAS GIVEN AL ONG WITH A COPY OF AADHAR CARD. IN THE AADHAR CARD ALSO THE CO MPLETE ADDRESS WITH DOOR NUMBER ETC., OF THE ASSESSEE WAS AV AILABLE. THEREFORE, THE IDENTITY OF THE PARTIES IS ESTABLISHED A ND THE SUBSCRIBER HAD CONFIRMED THE PAYMENT OF SHARE APPLICA TION MONEY TO THE COMPANY. HENCE, THE ASSESSEE HAD DISCHARG ED THE ONUS WITH REGARD TO THE RECEIPT OF SHARE APPLICATION MONEY FROM THE SUBSCRIBER. THOUGH LD.DR RELIED ON THE ORDER OF HON'BLE DELHI HIGH COURT IN THE CASE OF PR.CIT VS. B IKRAM SINGH, ITA NO.55 OF 2017, DT.25 TH AUGUST, 2017, THE CASE RELIED ITA NO. 2191/HYD/2017 :- 8 -: UPON BY THE LD.DR IS NOT OF MUCH HELP SINCE IN THE S AID CASE, THE AO CONDUCTED ENQUIRIES AND CAME TO THE CONCLUSION THAT THE CREDITORS HAVE NO CREDITWORTHINESS AND INTRODUCTION OF SHARE CAPITAL WAS NOT GENUINE. IN THE INSTANT CASE, THE AO NEITHER CONDUCTED THE ENQUIRY NOR DISPROVED THE IDENTITY OF THE CREDITORS. T HEREFORE, THE CASE LAW RELIED UPON BY THE LD.DR IS DISTINGUISH ABLE ON FACTS AND NOT APPLICABLE IN THE INSTANT CASE. SINCE THE ASSESSEE HAS DISCHARGED ITS BURDEN WITH REGARD TO SOURCE OF SH ARE APPLICATION MONEY AND ESTABLISHED THE IDENTITY OF PARTI ES AND THE MONEY WAS RECEIVED THROUGH CHEQUE, WE DO NOT FIND ANY REASON TO DOUBT THE GENUINENESS OF THE INTRODUCTION OF SH ARE APPLICATION MONEY WITHOUT BRINGING ANY EVIDENCE TO CON TROVERT THE SUBMISSION MADE BY THE ASSESSEE. THEREFORE, WE S ET ASIDE THE ORDER OF LD.CIT(A) AND DELETE THE ADDITION MADE BY THE AO. THIS GROUND OF APPEAL IS ALLOWED. 7. GROUND NO.2(C) IS WITH REGARD TO ADDITION MADE BY THE AO OF RS.7,89,138/-, RELATING TO DIFFERENCE IN PAYMEN TS OF SUB- CONTRACTS. DURING THE ASSESSMENT PROCEEDINGS, THE AO F OUND THAT ASSESSEE HAS MADE PAYMENT OF RS.1,73,82,082/- AGA INST THE BILLS RAISED BY THE SUB-CONTRACTORS TO THE EXTENT OF RS.1,65,92,944/-, AS PER THE DETAILS GIVEN IN PARA 5 OF THE ASSESSMENT ORDER, WHICH IS REPRODUCED HEREUNDER FOR READY REFERENCE: ITA NO. 2191/HYD/2017 :- 9 -: S.NO. NAME OF THE CONTRACTOR AMOUNT PAID (RS) BILL SUBMITTED FOR THE AMOUNT (RS) DIFFERENCE 1 AJAY MAHAJAN 21,82,100 20,49,455 1,32,645 2 BHAGH SINGH 41,61,702 41,61,702 0 3 BATT HYDRO POWER 1,10,38,280 1,03,81,787 6,56,493 4 DILDAR ALI BHATT 1,44,200 1,43,566 634 TOTAL : 7,89,138 THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE HAD DE BITED THE SUM OF RS.1,73,82,082/- AGAINST THE LIABILITY INCU RRED DURING THE YEAR AT RS.1,65,92,944/-. THUS, THE DIFFER ENCE OF RS.7,89,138/- WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE AS EXCESS EXPENDITURE. 7.1. AGAINST THE SAID ORDER, THE ASSESSEE WENT ON APP EAL BEFORE THE CIT(A), WHO CONFIRMED THE ADDITION IN THE EXPARTE ORDER. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL B EFORE THE TRIBUNAL. 7.2. DURING THE APPEAL PROCEEDINGS BEFORE US, THE LD. AR SUBMITTED THAT THOUGH THE ASSESSEE HAS MADE THE PAYMENT OF RS.1,73,82,082/-, THE AMOUNT ACTUALLY CHARGED TO P&L A /C WAS ONLY RS.1,65,92,944/- BUT NOT THE SUM OF RS.1,73,82,082/- AS CONTENDED BY THE LD.AO. REFERRING TO PG.60 OF THE PAPER BOOK, THE LD.AR DRAWN OUR ATTENTION TO THE AMOUNTS DEBITED TO OTHER CIVIL AND LABOUR AND SITE EX PENSES AND SUBMITTED THAT THE AMOUNT DEBITED WAS RS.3,14,12,205 /- TOWARDS CIVIL AND LABOUR EXPENSES. REFERRING TO PG.70 OF THE PAPER BOOK, THE LD.AR SUBMITTED THAT OUT OF THE AMOUNTS DEBITED UNDER THE HEAD CIVIL, LABOUR AND SITE EXPEN SES OF RS.3,14,12,205/-, TO CIVIL CONTRACTS WAS RS.1,86,85,7 57/-, ITA NO. 2191/HYD/2017 :- 10 -: FROM WHICH THE AO MADE THE DISALLOWANCE. REFERRING TO PG.87 OF THE PAPER BOOK, THE ASSESSEE SUBMITTED THAT OUT OF THE S UM OF RS.1,86,85,757/- THE ASSESSEE TRANSFERRED TO P&L A/ C RELATING TO THE PAYMENTS MADE TO AJAY MAHAJAN, BATT HYDR O POWER & CONSTRUCTIONS AND BHAG SINGH ANOTHER TO THE EXTE NT OF RS.1,65,92,944/- AND DEBITED TO THE P&L A/C, THUS, TH E LD.AR SUBMITTED THAT NO EXCESS EXPENDITURE WAS CHARGED TO P&L A/C, HENCE, THERE IS NO CASE FOR MAKING THE ADDITI ON U/S.68 OF THE ACT ON ACCOUNT OF PAYMENT OF SUB-CONTRACTS . ACCORDINGLY REQUESTED TO SET ASIDE THE ORDER OF THE LOWE R AUTHORITIES AND ALLOW THE APPEAL OF THE ASSESSEE. 7.3. ON THE OTHER HAND, LD.DR ARGUED THAT THE SUBMISS IONS MADE BY THE ASSESSEE WERE NOT COMING OUT FROM THE ASSESSMENT ORDER, HENCE, SHE SUBMITTED THAT THE ISSUE NE EDS VERIFICATION AT THE END OF THE AO AND THUS REQUESTED TO R EMIT THE MATTER BACK TO THE FILE OF AO FOR RECONSIDERATION . 7.4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL PLACED BEFORE US. IN THE INSTANT CASE, THE AO IS OF THE VIEW THAT THE AMOUNT DEBITED TO P&L A/C WAS OF RS.1,73,82,082/- AGAINST THE BILLS RAISED BY THE SUB- CONTRACTORS TO THE TUNE OF RS.1,65,92,944/-. THE CONTENTI ON OF ASSESSEE IS THAT THE AMOUNT CHARGED TO P&L A/C WAS ONLY RS.1,65,92,944/- AND SOME ADVANCE PAYMENTS WERE ALS O MADE TO THE SUB-CONTRACTORS, THEREFORE, THERE IS NO CASE FOR MAKING THE ADDITION. GOING THROUGH THE PAPER BOOK AND THE PARTICULARS PLACED BEFORE US, SHOWS THAT THE AMOUNT CHA RGED TO P&L A/C WAS RS.1,65,92,944/- BUT NOT RS.1,73,82,082 /-. ITA NO. 2191/HYD/2017 :- 11 -: THE LD.CIT(A) DECIDED THE APPEAL EX-PARTE, WITHOUT GOING INTO THE FACTS OF THE CASE. THE FACT WHETHER THE AMOUNT CHARGE D TO P&L A/C REPRESENTED RS.1,65,92,944/- OR RS.1,73,82,0 82/- WAS NOT CLEARLY DISCUSSED IN THE ASSESSMENT ORDER. TH EREFORE, IN THE INTEREST OF JUSTICE, WE ARE OF THE CONSIDERED V IEW THAT THE ISSUE NEEDS TO BE VERIFIED AT THE END OF THE AO. HENCE, WE REMIT THE MATTER BACK TO THE FILE OF AO AND DIRECT THE AO TO RECONSIDER THE ISSUE AND DECIDE THE SAME AFRESH ON ME RITS, AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE . THIS GROUND RAISED BY ASSESSEE IS TREATED AS ALLOWED FOR S TATISTICAL PURPOSES. 8. GROUND NO.2(D) IS WITH REGARD TO ADDITION MADE BY TH E AO OF RS.1,88,500/- RELATING TO ADDITIONAL PROFIT. THE AO FOUND THAT THE ASSESSEE IS ENGAGED IN TWO DIFFERENT BUSINESSE S. ONE IS CONTRACT OF POWER PROJECT AND THE OTHER IS REAL ESTATE SUCH AS CONSTRUCTIONS. AO ALSO FOUND THE CLOSING BALANCE OF RS.2,72,46,580/-, RELATING TO FINISHED GOODS OF FLATS , WHICH WAS SOLD DURING THE YEAR UNDER CONSIDERATION FOR A SUM O F RS.2,94,99,600/-. THUS, HE CAME TO THE CONCLUSION THAT ASSESSEE HAD EARNED THE PROFIT OF RS.22,53,000/-, BUT ADMITTED THE NET PROFIT OF ONLY RS.20,64,500/-, WHICH RESULTED I N DIFFERENCE OF RS.1,88,500/- AND ACCORDINGLY MADE THE ADDITION. ON APPEAL BY THE ASSESSEE, THE LD.CIT(A) DISMISSED THE APPEAL OF ASSESSEE, HENCE THE ASSESSEE IS IN APPEAL BEFORE US. 8.1. DURING THE APPEAL HEARING, THE LD.AR SUBMITTED T HAT THE CLOSING BALANCE OF STOCK WAS RS.2,72,46,580/- IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR WHICH WAS SOLD FOR A ITA NO. 2191/HYD/2017 :- 12 -: CONSIDERATION OF RS.2,94,99,600/-. THE LD.AR FURTHER SUBMITTED THAT THERE WAS EXPENDITURE INCURRED BY THE AS SESSEE DURING THE YEAR UNDER CONSIDERATION I.E., THE ADMINISTR ATIVE AND MARKETING EXPENSES AND THUS, THERE WAS REDUCTION IN THE PROFIT. THE EXPENDITURE WAS DULY ACCOUNTED IN THE BOO KS OF ACCOUNTS WHICH THE AO DID NOT CONSIDER. HENCE, HE ARG UED THAT THERE IS NO CASE FOR MAKING ADDITION. ACCORDINGLY, HE REQUESTED TO DELETE THE ADDITION MADE BY THE AO. 8.2. ON THE OTHER HAND, LD.DR SUPPORTED THE ORDERS OF L OWER AUTHORITIES. 8.3. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL PLACED BEFORE US. IT IS TRUE THAT THERE WAS A C LOSING BALANCE OF RS.2,72,46,580/-, RELATING TO FINISHED GOO DS OF FLATS. IT WAS ALSO TRUE THAT THE SALE CONSIDERATION OF RS.2,94, 99,600/- WAS DECLARED IN THE P&L A/C. THE AO HAS SIMPLY TAKEN THE CLOSING BALANCE OF THE EARLIER YEAR AND SALE CONSIDE RATION OF THE FLATS AND BROUGHT THE DIFFERENCE AS INCOME, WHICH WAS INCORRECT. THE AO ALSO REQUIRED TO CONSIDER THE EXPEND ITURE INCURRED AND ACCOUNTED RELATING THE MARKETING AND DISTRIBUTION AND ADMINISTRATIVE EXPENSES TO DETERMINE THE PROFIT. IN THE INSTANT CASE, THE ASSESSEE HAS MAINTAINE D THE BOOKS OF ACCOUNT, WHICH WERE DULY AUDITED BY THE QUALI FIED ACCOUNTANT U/S.44AB OF THE ACT AS WELL AS THE COMPANIES ACT. NO DEFECTS WERE POINTED OUT BY THE AO IN SPITE OF PROD UCTION OF BOOKS OF ACCOUNT DURING THE ASSESSMENT PROCEEDINGS. THEREFORE, WE FIND NO REASON TO MAKE THE ADDITION, W ITHOUT HAVING CONSIDERED THE EXPENDITURE. HENCE, WE SET ASID E THE ITA NO. 2191/HYD/2017 :- 13 -: ORDER OF LD.CIT(A) AND DELETE THE ADDITION MADE BY THE AO. THE GROUND RAISED BY ASSESSEE IS ALLOWED. 9. GROUND NO.2(E) IS WITH REGARD TO CHARGING OF INTERE ST U/S.234B AND 234C OF THE ACT, WHICH IS MANDATORY AND CONSEQUENTIAL IN NATURE AND WE DIRECT THE AO TO CHARGE TH E INTEREST U/S.234B AND 234C CORRECTLY WHILE GIVING EFF ECT TO THIS ORDER. 10. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH OCTOBER, 2019 SD/- SD/- (V. DURGA RAO) (D.S. SUNDER SINGH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED: 18-10-2019 TNMM ITA NO. 2191/HYD/2017 :- 14 -: COPY TO : 1. M/S.RAMSRI INFRATECH PRIVATE LIMITED, C/O.P.ROSI REDDY, ADVOCATE AND RAJENDRA PRASAD TALLURI, FCA, FLAT NO. 401 AND 402 A BLOCK, SRI DATTASAI APARTMENTS, RTC X R OADS, HYDERABAD. 2.THE INCOME TAX OFFICER, WARD-3(2), HYDERABAD. 3. CIT(APPEALS)-3, HYDERABAD. 4. THE PR.CIT-3, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.