KRR Infra Projects Pvt.Ltd., Hyd, Hyderabad V. DCIT, Circle-2(1), Hyderabad, Hyderabad

ITA 22/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6399 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 27-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 08-01-2016
• Court: TRIBUNAL
• Department Lawyers: S NARASAMMA
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Bogus Share capital; Revised return
• Section: 133A; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. 22/HYD/2016 ASSESSMENT YEAR : 2010-11 M/S KRR INFRA PROJECTS PVT. LTD., HYDERABAD VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1), HYDERABAD. PAN: AADCK 8254 A APPELLANT RESPONDENT FOR ASSESSEE: SHRI P. MURALI MOHAN RAO (AR) FOR REVENUE: SMT. S. NARASAMMA (CIT D.R.) DATE OF HEARING: 27/07/2016 DATE OF PRONOUNCEMENT: 03/08/2016 O R D E R PER: LALIET KUMAR, J.M. : THIS IS THE APPEAL FILED BY THE ASSESSEE ARIS ES AGAINST THE ORDER DATED 30/10/2015 PASSED BY THE LD. CIT(A)-2, HYDERABAD FOR THE A.Y. 2010-11, WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS:- 1. THE ORDER OF THE LD. CIT(A)-2, HYDERABAD IS ERRONEOUS BOTH ON FACTS AND IN LAW. I.T.A. NO. 22/HYD/2016 M/S KRR INFRA PROJECTS PVT. LTD. VS DCIT :- 2 -: 2. THE LD. CIT(A)-2, HYDERABAD HAS ERRED IN UPHOLDI NG THE INCOME DETERMINED BY A.O. AT RS. 16,32,53,340/- AS AGAINST THE INCOME RETURNED OF RS. 4,31,54,716/-. 3. THE LD. CIT(A)-2, HYDERABAD HAS ERRED IN CONFIRM ING THE ADDITION OF RS. 7,69,33,625/- MADE ON ESTIMATING THE PROFIT AT 8% OF TURNOVER. 4. THE LD. CIT(A)-2, HYDERABAD OUGHT TO HAVE ACCEPT ED THE RETURNED INCOME OF RS. 4,31,54,716/- BY APPRECIATING THE EXPLANATIONS SUBMITTED FOR LOW PROFIT RATE OF 2.87%. 5. THE LD. CIT(A)-2, HYDERABAD HAS ERRED IN CONFIRM ING THE ADDITIONS OF RS. 60,28,000/- AND RS. 7,50,000/- TOWARDS UNEXPLAINED SHARE CAPITAL FROM PROMOTERS AND OTHERS RESPECTIVELY (WHICH ARE INCLUDED IN THE AMOUNT OF RS. 4,31,65,000/- ADDED U/S 68 OF THE ACT) EVEN THOUGH THE GENUINENESS OF THE TRANSACTION S WAS PROVED. 6. THE LD. CIT(A)-2, HYDERABAD HAS ERRED IN CONFIRM ING THE ADDITIONS OF RS. 1,20,96,000/- AND RS. 7,34,000/- MADE TOWARDS UNEXPLAINED SHARE APPLICATION MONEY (WHICH IS INCLUDED IN THE AMOUNT OF RS. 4,31,65,000/- ADDED U/S 68 OF THE ACT. 7. THE LD. CIT(A)-2, HYDERABAD HAS ERRED IN CONFIRM ING THE ADDITION OF RS. 40,27,000/- AND RS. 1,95,30,000/- TOWARDS UNSECURED LOANS (WHICH ARE INCLUDED IN THE AMOUNT OF RS. 4,31,65,000/-). 8. THE LD. CIT(A)-2, HYDERABAD HAS ERRED IN NOT APPRECIATING THE SUBMISSIONS MADE BY THE ASSESSEE IN RESPECT OF SHARE CAPITAL, SHARE APPLICATION MONE Y AND UNSECURED LOANS FROM PROMOTERS AND OTHERS. I.T.A. NO. 22/HYD/2016 M/S KRR INFRA PROJECTS PVT. LTD. VS DCIT :- 3 -: 9. THE LD. CIT(A)-2, HYDERABAD OUGHT TO HAVE ALLOWE D TELESCOPING OF THE ADDITION MADE TO THE INCOME AGAINST THE ADDITIONS TOWARDS UNEXPLAINED SHARE CAPITAL, SHARE APPLICATION MONEY, AND UNSECURED LOANS. 10. THE LD. CIT(A)-2, HYDERABAD OUGHT TO HAVE APPRECIATED THAT ONCE THE INCOME IS ESTIMATED, NO FURTHER ADDITIONS CAN BE MADE TO THE INCOME OF THE ASSESSEE AS HELD BY THE HONBLE A.P. HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS VS. CIT (1998) 23 2 ITR 776 (AP). 11. THE LD. CIT(A)-2, HYDERABAD OUGHT TO HAVE APPRECIATED THAT NO ADDITION CAN BE MADE TO THE INCOME MERELY BASED ON THE STATEMENT WITHOUT THERE BEING ANY EVIDENCE ON RECORD. 12. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, LD. CIT OUGHT TO HAVE APPRECIATED THAT THE INCOME ESTIMATED AT 8% IS VERY HIGH IN THE LINE OF BUSINESS OF THE APPELLANT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF CONTRACT WORKS. IT FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 25/10/2 010 DECLARING TOTAL INCOME OF RS. 4,31,54,716 AND REVISED RETURN WAS FILED ON 3/11/2010. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT. A SURVEY OPERATION U/S 133A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) TOOK PLACE IN THE CASE OF ASSESSEE ON 24/10/2010. DURING THE SURVEY PROCEED INGS, THE STATEMENT OF MANAGING DIRECTOR WAS RECORDED AND I.T.A. NO. 22/HYD/2016 M/S KRR INFRA PROJECTS PVT. LTD. VS DCIT :- 4 -: THEREAFTER THE STATEMENT U/S 131 OF THE ACT WAS ALSO RECO RDED ON 25/10/2011 AND 08/12/2011. THE LD A.O. HAS DETER MINED THE TOTAL INCOME OF RS. 16,32,53,340/-. THE LD A.O. HA S MADE ADDITION OF RS. 4,31,65,000/- ON ACCOUNT OF UNEXPLAIN ED CASH CREDIT AND HAS ALSO ESTIMATED THE INCOME FOR RS. 7,69,33,625/- ON THE BASIS OF NET PROFIT @ 8% ON THE TU RNOVER. 3. BEING AGGRIEVED BY THE ORDER OF THE LD A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD NOT GI VEN ANY RELIEF TO THE ASSESSEE AND UPHELD THE ORDER OF THE LD A.O. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT A PETITION FOR FILING OF THE ADDITIONAL DOCUMENTS/ EVIDENCE IN FORM OF PAPER BOOK BEFORE THIS TRIBUNAL AND ON THE BASIS OF THE SAID PAPER BOOK , IT WAS SUBMITTED THAT BY THE ASSESSEE, THAT HE WOULD BE ABLE TO EXPLAIN HIS POSITION IN RESPECT OF SHARE APPLICATION M ONEY (UNSECURED CASH DEPOSIT) AS WELL AS WITH RESPECT TO ES TIMATION OF INCOME, WHICH WAS WRONGLY QUANTIFIED @ 8% BY THE LD A.O. AS THESE DOCUMENTS/ EVIDENCE WERE NOT FILLED BEFORE THE AUTHORITIES BELOW. ON THE BASIS OF THE APPLICATION, IT WAS SUBMITTED THAT THE MATTER MAY KINDLY BE REMANDED BACK TO I.T.A. NO. 22/HYD/2016 M/S KRR INFRA PROJECTS PVT. LTD. VS DCIT :- 5 -: THE FILE OF THE A.O. WITH A DIRECTION FOR DE NOVO EXAMI NATION OF THE CASE OF THE ASSESSEE ON THE BASIS OF THESE DOCUMENTS /EVIDENCES. THE LD AR FURTHER SUBMITTED THAT ON ACCOUNT O F THE PRESSURE FROM THE REVENUE AGENCY AS WELL AS ON TH E ACCOUNT OF POLITICAL PRESSURE, HE WAS NOT ABLE TO SUBMI T THESE DOCUMENTS DURING THE ASSESSMENT PROCEEDINGS OR APPELLA TE PROCEEDINGS. HOWEVER, IT WAS SUBMITTED THAT THESE DOCUME NTS GOES TO THE ROOT OF THE MATTER AND WILL PROVE THE CASE O F THE ASSESSEE TO THE EXTENT OF INTRODUCTION OF SHARE MONEY AN D IN DETERMINING THE INCOME OF THE ASSESSEE. 5. AT THE OUTSET, THE LD CIT DR HAS SUBMITTED THAT THE DOCUMENTS SHOULD HAVE BEEN SUBMITTED BY THE ASSESSEE BE FORE THE AUTHORITIES BELOW AND FILING THE DOCUMENTS BEFORE THE HONBLE BENCH IS NOT APPROPRIATE AND IS NOT REQUIRED TO BE PERMITTED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN OUR VIEW, THE ENDS OF JUSTICE WOULD BE SERVED IF THE MATTER IS RE MANDED BACK TO THE FILE OF THE LD. A.O. AS THE ASSESSEE HAS F AILED TO PRODUCE THE DOCUMENTS RELEVANT FOR PROPER AND JUST I.T.A. NO. 22/HYD/2016 M/S KRR INFRA PROJECTS PVT. LTD. VS DCIT :- 6 -: ADJUDICATION OF MATTER. THE PURPOSE OF ASSESSMENT PROC EEDING IS TO TAX THE TAXABLE INCOME AND IF THE PROPER DOCUME NTS ARE NOT PRODUCED THAN THE ASSESSMENT PROCEEDING SHALL NOT END UP IS ASSESSING THE CORRECT TAXABLE INCOME THEREFORE THE PETITION FILLED BY THE ASSESSEE FOR ADDITIONAL DOCUMENTS / EVIDENCE DESERVED TO BE ALLOWED. AS WE HAVE ALLOWED THE PLACING OF ADDITIONAL DOCUMENTS/ EVIDENCE, THEREFORE E NDS OF JUSTICE REQUIRED THAT THE MATTER BE REMANDED BACK TO THE F ILE OF AO, AS THE AO SHALL HAVE OPPORTUNITY TO EXAMINE THESE DOCUMENTS/ EVIDENCE AND DECIDE THE MATTER ON MERIT. IN THE LIGHT OF ABOVE, THE ORDER PASSED BY THE AUTHORITIES BELO W ARE SET ASIDE AND THE MATTER IS REMANDED BACK TO THE FILE O F THE LD. A.O. WITH DIRECTION TO DECIDE THE ASSESSMENT PROCEEDINGS ON THE BASIS OF DOCUMENTS NOW SUBMITTED BEFORE US IN ACCORDANCE WITH LAW. THE ASSESSEE SHALL ENSURE THAT THE SE DOCUMENTS ALONG WITH OTHER DOCUMENTS, IF ANY, SHALL BE PRODUCED BY THE ASSESSEE BEFORE THE LD. A.O. ON THE D ATE AND TIME FIXED BY THE A.O. IT IS ALSO DIRECTED THAT THE ASSES SEE SHALL NOT TAKE UNDUE ADJOURNMENT IN THE MATTER. WE EXPECT THE L D A.O. TO DECIDE THE MATTER ON MERIT WITHOUT BEING INFLUE NCED BY I.T.A. NO. 22/HYD/2016 M/S KRR INFRA PROJECTS PVT. LTD. VS DCIT :- 7 -: ANY OBSERVATION MADE HEREINABOVE. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES ONLY ORDER PRONOUNCED IN THE OPEN COURT ON 03/08/2016 SD/- SD/- ( B. RAMAKOTAIAH ) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 03/08/2016 *RANJAN COPY FORWARDED TO: 1. M/S KRR INFRA PROJECTS PVT. LTD., C/O- P. MURALI & CO. CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD-82. 2. THE DCIT, CIRCLE-2(1), HYDERABAD. 3. THE CIT(APPEALS)-2, HYDERABAD. 4. THE PR.CIT-2, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.