Shri Raghavendra Builders, Chennai V. DCIT, Non Corporate Circle-22, , Chennai

ITA 2199/CHNY/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2586 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 08-09-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AR V SREENIVASANJCITD R
• Keywords: Reopening of assessment; Difference of opinion; Commercial expediency; Change of opinion
• Section: 40A(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , . , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NOS.2199 & 2200/CHNY/2017 / ASSESSMENT YEARS : 2009-10 & 2009-10 M/S.SHRI RAGHAVENDRA BUILDERS , NEW NO.9, OLD NO.5, NETHAJI NAGAR, NEW PERUNGALATHUR, CHENNAI-600 053. VS. DEPUTY COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE-22, 7,RAMAKRISHNA STREET, WEST TAMBARAM TAMBARAM 600 045. [PAN ABDFS 4282 Q ] ( / APPELLANT) ( /RESPONDENT) ! ' # / APPELLANT BY : MR.Y.SRIDHAR, C.A $% ! ' # /RESPONDENT BY : MR.AR.V.SREENIVASAN, JCIT D.R & ' ' () / DATE OF HEARING : 07 - 11 - 201 8 * ' () / DATE OF PRONOUNCEMENT : 07 - 11 - 201 8 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER ITA NO.2199/CHNY/2017 IS THE QUANTUM APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME-TAX (APPEALS)-10, CHENNAI IN ITA NO.39/2015-16/CIT(A)-1 0, DATED 27.06.2017 FOR THE ASSESSMENT YEAR 2009-10, AND IT A ITA NOS.2199,2200/CHNY/2017 :- 2 -: NO.2200/CHNY/2017 IS THE PENALTY APPEAL FILED BY TH E ASSESSEE AGAINST THE ORDER OF THE CIT(APPEALS)-10, CHENNAI IN ITA NO .7/2012- 13/CIT(A)-10 DATED 29.06.2017 FOR THE ASSESSMENT YE AR 2009-10 CONFIRMING THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT MADE BY LD. ASSESSING OFFICER. SINCE THE QUANTUM APPEAL AND THE PENALTY APPEAL ARE INTERLINKED, THEY ARE DISPOSED OF BY THIS COMMO N ORDER FOR THE SAKE OF CONVENIENCE. 2. SHRI Y.SRIDHAR REPRESENTED ON BEHALF OF THE ASSE SSEE, AND SHRI AR.V.SREENIVASAN REPRESENTED ON BEHALF OF THE REVENUE. 3. IN RESPECT OF ITA NO.2199/CHNY/2017, IT WAS SUBMITTED BY LD.A.R THAT THE ASSESSEE IS A FIRM, WHICH IS DOING THE BUSINESS OF MANUFACTURING AND CIVIL WORKS CONTRACT & CONSTRUCTI ON OF FLATS IN THE NAME AND STYLE OF M/S.RAGHAVENDRA BUILDERS. IT WAS A SUBMISSION THAT ORIGINALLY THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ON 28.12.2011 WHEREIN THE INCOME OF ASSESSEE WAS ASSES SED AT ` 41,98,540/- AS AGAINST THE RETURNED INCOME AT ` 32,89,895/-. IT WAS A SUBMISSION THAT THE ASSESSMENT CAME TO BE REOPENED BY ISSUANCE OF NOTICE U/S.148 OF THE ACT ON 27.02.2014 FOR THE PUR POSE OF DISALLOWING ALL THE CASH PAYMENTS ON PURCHASE OF PROPERTY BY AP PLYING THE PROVISIONS OF THE SECTION 40A(3) OF THE ACT. IT WA S A SUBMISSION THAT ITA NOS.2199,2200/CHNY/2017 :- 3 -: THE ASSESSMENT CAME TO BE PASSED U/S.143(3) R.W.S. 147 OF THE ACT ON 16.03.2015 DISALLOWING THE PURCHASE OF A PARTICULAR PROPERTY FOR CONSIDERATION OF ` 25 LAKHS PAID IN CASH ON 19.11.2008 AND ` 4,68,888/- PAID IN CASH ON 06.11.2008 IN CASH IN RESPECT OF T HE PAYMENTS MADE TO SHRI P.KANAGALINGAM, PROP.M/S.SRI LINGAM BUILDER & PROPERTIES DEVELOPER, CHENNAI, AND ALSO DISALLOWING AN AMOUNT OF ` 12,38,400/- PAID IN CASH ON 04.03.2009 TO SHRI P.SELVANAYAGAM F OR LAND CLEARANCE IN RESPECT OF PROJECT LAND. IT WAS A SUBMISSION THA T IN THE COURSE OF ORIGINAL ASSESSMENT, NOTICE U/S.142(1) OF THE ACT H AD BEEN ISSUED WHEREIN IN PARA-6, THE COST OF LAND PURCHASED HAD B EEN CONSIDERED BY THE LD. ASSESSING OFFICER. IT WAS A SUBMISSION THAT AS THE ISSUE HAD ALREADY BEEN CONSIDERED BY THE LD. ASSESSING OFFICE R, WHAT IS NOW BEING DONE UNDER THE GUISE OF RE-OPENING IS ONLY A CHANGE OF OPINION AND WAS NOT PERMISSIBLE. ON MERITS, IT WAS A SUBMIS SION THAT PROVISIONS OF THE RULE 6DD(K) APPLIED, AND AS THE P AYMENTS WERE MADE FOR COMMERCIAL EXPEDIENCY IN RESPECT OF PURCHA SE OF PROPERTY, IN VIEW OF THE DECISION OF CO-ORDINATE BENCH OF THE TR IBUNAL IN THE CASE OF M/S.OM SHAKTHY AGENCIES (MADRAS) (P.) LTD., VS. DCI T, CHENNAI REPORTED IN [2016] 66 TAXMANN.COM 287 (CHENNAI-TRIB ), NO ADDITION WAS CALLED FOR. ITA NOS.2199,2200/CHNY/2017 :- 4 -: 4. IN REPLY, LD.D.R SUBMITTED THAT THE ISSUE HAD N OT BEEN CONSIDERED IN THE COURSE OF ORIGINAL ASSESSMENT, A ND EVEN IN THE AUDIT REPORT SUBMITTED BY THE ASSESSEE IN CLAUSE-17(H) IN RESPECT OF ISSUE OF CASH PAYMENTS U/S.40A(3) OF THE ACT, THE AUDITORS H AD MARKED THE SAME AS NIL. IT WAS A SUBMISSION THAT THE ORDER OF LD. ASSESSING OFFICER AND THE ORDER OF THE CIT(APPEALS) ARE LIABLE TO BE UPHELD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PE RUSAL OF THE NOTICE U/S.142(1) OF THE ACT, MOST SPECIFICALLY CLA USE-6, WHICH HAS BEEN REFERRED TO BY THE ASSESSEE, SHOWS THAT THE ISSUE O F SECTION 40A(3) HAS NOT BEEN CONSIDERED BY THE LD. ASSESSING OFFICE R IN COURSE OF ORIGINAL ASSESSMENT. FURTHER, THE PERSONS REFERRED TO IN THE ASSESSMENT ORDER U/S.143(3) R.W.S.147 OF THE ACT ARE NOT THE P ERSONS REFERRED TO THE NOTICE U/S.142(1) OF THE ACT. EVEN OTHERWISE, A PERUSAL OF PROVISIONS OF EXPLANATION 2(C) TO SECTION 147 OF TH E ACT GIVES LIBERTY TO THE LD. ASSESSING OFFICER TO RE-OPEN THE ASSESSMENT IN SUCH EVENTUALITIES. IN THE CIRCUMSTANCES, THE RE-OPENING OF ASSESSMENT AS DONE BY THE LD. ASSESSING OFFICER, AND ISSUANCE OF NOTICE U/S.148 OF THE ACT STAND UPHELD. IN REGARD TO THE MERITS, THE ASS ESSEE HAD BEEN SPECIFICALLY ASKED AS TO THE DATES ON WHICH THE PAY MENTS WERE MADE AND THE PROPERTIES IN RESPECT OF WHICH PAYMENTS HAV E BEEN MADE. THE LD.A.R SUBMITTED THAT HE WAS NOT IN A POSITION TO G IVE THE DETAILS ITA NOS.2199,2200/CHNY/2017 :- 5 -: IMMEDIATELY. PERUSAL OF THE ORDER OF THE CIT(APPEA LS) ALSO CLEARLY SHOWS THAT THE DETAILS IN RESPECT OF THE CASH PAYME NTS HAD ALSO NOT BEEN PRODUCED BEFORE HIM. THE ARGUMENT OF THE ASSES SEE IS ONLY THAT THE PROVISIONS OF THE SECTION 40A(3) OF THE ACT IS TO STOP THE BLACK MONEY TRANSACTIONS. THE SUBMISSIONS OF THE ASSESSEE WOULD NOT HOLD WATER IN SO FAR AS THE ASSESSEE IS UNABLE TO EXPLAI N AS TO WHY CASH HAS TO BE PAID. ADMITTEDLY, PROVISIONS OF THE SECTION 4 0A(3) OF THE ACT CLEARLY STATES UNDER THE HEAD EXPENSES AND PAYMEN TS ARE NOT DEDUCTIBLE IN CERTAIN CASES. IT IS CLEARLY NOT FO R THE AVOIDANCE OF UNACCOUNTED TRANSACTIONS. COMMERCIAL EXPEDIENCY ADM ITTEDLY IS A GROUND FOR CONDONEING CASH PAYMENTS BEYOND THE PRES CRIBED LIMIT. HOWEVER, IT IS FOR THE ASSESSEE TO POINT OUT THE CO MMERCIAL EXPEDIENCY, MERELY STATING COMMERCIAL EXPEDIENCY DO ES NOT GO SUBSTANTIATE COMMERCIAL EXPEDIENCY. IT HAS TO BE SU BSTANTIATED WITH SOME EVIDENCES SUCH AS LETTER FROM THE RECIPIENTS O F THE CASH PAYMENT, THAT HE WILL ACCEPT THE PAYMENT ONLY IN CA SH, WHICH IS IN THE PRESENT CASE, IS NOT AVAILABLE. PART OF THE AMOUNT HAS BEEN PAID IN CASH ON 06.11.2008 AND THE BALANCE AMOUNT HAS BEEN PAID IN CASH ON 19.11.2008 IN RESPECT OF SHRI P.KANAGALINGAM, AND I N RESPECT OF SHRI P.SELVANAYAGAM, THE PAYMENT HAS BEEN MADE ON 04.03. 2009 FOR LAND CLEARANCE. WHO IS SHRI P.SELVANAYAGAM? HAS HE SHOWN THE RECEIPTS IN HIS RETURN, WHAT IS THE SERVICE RENDERED BY HIM TO THE ASSESSEE. ITA NOS.2199,2200/CHNY/2017 :- 6 -: NOTHING HAS BEEN SHOWN. WHY SHRI P.SELVANAYAGAM NEE DED THE AMOUNT IN CASH HAS ALSO NOT BEEN EXPLAINED. THIS BE ING SO, WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE CIT(APPEALS ) ON MERITS AND CONSEQUENTLY WE DISMISS THE APPEAL OF THE ASSESSEE. 6. IT MUST BE MENTIONED HEREIN THAT WHEN THE ORDER OF THE APPEAL HAD BEEN PRONOUNCED IN THE OPEN COURT, LD.A.R SUBMI TTED THAT HE HAS FILED VARIOUS PAPER BOOKS, WHICH IS TO BE RELIED UP ON. IT WAS THEN INFORMED TO HIM THAT IN COURSE OF THE APPEAL HEARIN G, NO PAPER IN THE PAPER BOOKS HAS BEEN REFERRED TO AND ONLY AFTER THE PRONOUNCEMENT OF THE ORDER, HE IS REFERRING TO THE PAPER BOOKS. THE ORDER HAVING BEEN PRONOUNCED, UNLESS THE ASSESSEE IS ABLE TO POINT OU T ANY SPECIFIC EVIDENCES, WHICH ARE AVAILABLE IN THE PAPER BOOKS, STATING THAT THERE ARE CASE LAWS, WHICH NEEDS TO BE CONSIDERED, WOULD NOT BE CONSIDERED AT ALL. LD.A.R HAS ALSO NOT BEEN ABLE TO POINT OUT ANY EVIDENCES FILED IN THE PAPER BOOKS TO SUBSTANTIATE ITS CASE. IN THE A BSENCE OF ANY FACTUAL EVIDENCES, MERE RELIANCE ON CASE LAWS OR PRECEDENCE S WOULD BE OF NO HELP TO THE ASSESSEE IN SO FAR AS THE FACTS IN EACH CASE ARE DIFFERENT. 7. IN THE RESULT, THE QUANTUM APPEAL IN ITA NO.219 9/CHNY./2017 STANDS DISMISSED. ITA NOS.2199,2200/CHNY/2017 :- 7 -: 8. IN RESPECT OF ITA NO.2200/CHNY/2017, IT WAS SU BMITTED BY LD.A.R THAT IN THE COURSE OF ORIGINAL ASSESSMENT U /S.143(3) OF THE ACT, THE LD. ASSESSING OFFICER HAD MADE AN ADDITION ON A CCOUNT OF DIFFERENCE BETWEEN THE CLOSING WORK IN PROGRESS AS ON 31.03.2008 AND OPENING WORK IN PROGRESS AS ON 01.04.2008 TO AN EXTENT OF ` 9,08,644/- AND THE SAME HAD BEEN ADDED TO THE RETUR NED INCOME. IT WAS A SUBMISSION THAT THE ASSESSEE HAS NOT ADJUS TED THE OPENING STOCK AS ON 01.04.2009, NOR HAS HE ADJUSTED THE DIF FERENCE OF ` 9,08,644/- WHEN SELLING THE PROPERTY. IT WAS A PRAY ER THAT THE PENALTY MAY NOT BE LEVIED. 9. IN REPLY, LD.D.R SUBMITTED THAT HE HAD NO OBJEC TION, IF THE ISSUES WERE RESTORED TO THE FILE OF THE AO TO VERIFY AS TO WHETHER THE ASSESSEE HAS ADJUSTED THE CLOSING STOCK FOR THE YEAR ENDING 31.03.2008, WHEN ASSESSEE BE RE-ADJUSTING THE OPENING STOCK AS ON 01 .04.2009, OR WHETHER THE AMOUNT OF ` 9,08,644/- HAS BEEN ADJUSTED IN THE SALE CONSIDERATION. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS T HE ASSESSEE-FIRM HAS SUBMITTED THAT IT HAS NOT RE-WORKED THE OPENING STOCK AS ON 01.04.2008, OR SUBSEQUENTLY IN RESPECT OF ADJUSTED AMOUNT OF ` 9,08,644/-, THEN THE ISSUE IS RESTORED TO THE FILE OF LD. ASSESSING ITA NOS.2199,2200/CHNY/2017 :- 8 -: OFFICER FOR VERIFICATION TO SUBSTANTIATE THE SAID A MOUNT HAS BEEN ADJUSTED IN THE OPENING STOCK OR CLOSING STOCK FOR ASSESSMENT YEAR 2009-10, OR IN SUBSEQUENT ASSESSMENT YEARS, AND WHE THER THE SAME HAS BEEN ADJUSTED, WHEN CONSIDERING THE SALE CONS IDERATION OF THE PROPERTIES. IF THE SAME HAS NOT BEEN DONE, THEN LEV YING OF PENALTY U/S.271(1)(C) OF THE ACT IS TO BE DELETED. 11. IN THE RESULT, THE APPEAL ON PENALTY IN ITA NO .2200/CHNY./2017 STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 12. TO SUMMARIZE THE RESULT, THE QUANTUM APPEAL FI LED BY THE ASSESSEE IS DISMISSED AND THE APPEAL ON PENALTY FI LED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 07 TH NOVEMBER, 2018, AT CHENNAI. SD/ - SD/ - ( . ) (A.MOHAN ALANKAMONY) ! '# / ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) $ '# / JUDICIAL MEMBER - ' / CHENNAI . / DATED: 07 TH NOVEMBER, 2018. K S SUNDARAM / ' $(01 2 1( / COPY TO: 1 . ! / APPELLANT 3. & 3( () / CIT(A) 5. 145 $(6 / DR 2. $% ! / RESPONDENT 4. & 3( / CIT 6. 57 8' / GF