THE ACIT, CIRCLE - 1, Rajahmundry V. M/s S.B.Developers, Rajahmundry

ITA 357/VIZ/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2103 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N O N E
• Keywords: Additional evidence
• Section: 142(1); 68; 144

Judgement Text

ITA NO.357/VIZAG/2013 M/S. S.B. DEVELOPERS, RAJAHMUNDRY 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , ' BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.357/VIZAG/2013 ( / ASSESSMENT YEAR : 2009-10) ACIT, CIRCLE-1, RAJAHMUNDRY VS. M/S. S.B. DEVELOPERS RAJAHMUNDRY [ PAN:ABEFS 8882K] ( / APPELLANT) ( / RESPONDENT ) / APPELLANT BY : SHRI M.N. MURTHY NAIK, DR #$ / RESPONDENT BY : N O N E / DATE OF HEARING 27.01.2016 ( / DATE OF PRONOUNCEMENT : 05.02.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE, IS DIRECTED AGAI NST THE ORDER OF CIT(A), VISAKHAPATNAM DATED 15.3.2013 AND IT PERTAI NS TO THE ASSESSMENT YEAR 2009-10. ITA NO.357/VIZAG/2013 M/S. S.B. DEVELOPERS, RAJAHMUNDRY 2 2. THE BRIEF FACTS OF THE CASE, ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM WHICH IS ENGAGED IN THE BUSINESS OF REAL ESTAT E DEVELOPMENT HAS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 31.7.2009 DECLARING LOSS OF RS.70,00,970/-. THE RETURN WAS P ROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) ON 22.3.2010. THE CASE WAS SELECTED FOR SCRUTINY AS P ER THE GUIDELINES OF CBDT AND ACCORDINGLY, NOTICE U/S 143(2) OF THE ACT DATED 29.9.2010 WAS ISSUED FIXING THE CASE FOR HEARING ON 13.10.2010. ON THE DATE OF HEARING, ASSESSEE NEITHER ATTENDED NOR FILED ANY IN FORMATION. THEREFORE, THE A.O. ISSUED ONE MORE NOTICE, U/S 142(1) OF THE ACT ON 28.10.2011 ALONG WITH QUESTIONNAIRE FIXING THE CASE FOR HEARIN G ON 10.11.2011. SINCE, NOBODY APPEARED FOR THE HEARING ON THE DATE FIXED FOR HEARING, A SHOW CAUSE NOTICE DATED 9.12.2011 WAS ISSUED FIXING THE CASE FOR HEARING ON 14.12.2011. THE ASSESSEE NEITHER APPEAR ED NOR FURNISHED ANY DETAILS ON THE DATE FIXED FOR HEARING. SINCE, NO INFORMATION CAME FORWARD FROM THE ASSESSEE, THE A.O. PASSED EX-PARTE ORDER U/S 144 OF THE ACT, ON THE BASIS OF INFORMATION AVAILABLE ON R ECORD. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS CLAIMED DEVELOPMENT CHARGES O F RS.7,22,235/-. HOWEVER, IN SPITE OF REPEATED LETTERS, NO BILLS & V OUCHERS WERE ITA NO.357/VIZAG/2013 M/S. S.B. DEVELOPERS, RAJAHMUNDRY 3 SUBMITTED IN SUPPORT OF EXPENDITURE CLAIMED. IN THE ABSENCE OF ANY SUPPORTING DOCUMENTS, THE A.O. DISALLOWED THE ENTIR E EXPENDITURE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. SIMILAR LY, THE ASSESSEE HAS CLAIMED INTEREST EXPENDITURE OF RS.42,20,395/-. SI NCE, THE ASSESSEE HAS NOT FURNISHED ANY DETAILS FOR EXPENDITURE CLAIMED U NDER THE HEAD INTEREST, THE A.O. DISALLOWED THE ENTIRE INTEREST E XPENDITURE AND ADDED TO THE TOTAL INCOME. DURING THE COURSE OF ASSESSME NT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS SHOWN UNSECURED LOAN OF RS.3,82,91,363/-. THE ASSESSEE HAS NOT COMPLIED WI TH THE SHOW CAUSE NOTICE, BY FURNISHING THE DETAILS OF THE LOANS. IN THE ABSENCE OF ANY DETAILS, THE A.O. TREATED UNSECURED LOANS AS UNEXPL AINED CREDITS U/S 68 OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASS ESSEE. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE HAS FILED ALL THE DETAILS WITH REGARD TO THE VARIOUS ADDITIONS MA DE BY THE A.O.. THE CIT(A), DURING THE APPELLATE PROCEEDINGS FORWARDED THE DETAILS FURNISHED BY THE ASSESSEE TO THE A.O. FOR HIS COMMENTS. THE A.O. HAS ISSUED REMAND REPORT DATED 18.2.2013, WHICH WAS EXTRACTED BY THE CIT(A) IN HIS ORDER AT PAGE 2&3. THE CIT(A), AFTER CONSIDERI NG THE INFORMATION FURNISHED BY THE ASSESSEE AND ALSO TAKING INTO CONS IDERATION OF REMAND ITA NO.357/VIZAG/2013 M/S. S.B. DEVELOPERS, RAJAHMUNDRY 4 REPORT, CONFIRMED THE ADDITIONS MADE UNDER THE HEAD DEVELOPMENT CHARGES AND INTEREST EXPENDITURE. HOWEVER, THE CIT (A) DELETED THE ADDITIONS TOWARDS UNSECURED LOANS MADE U/S 68 OF TH E ACT, AS THE A.O. HAS STATED THAT NO ADDITION IS WARRANTED U/S 68 OF THE ACT, AS THE ASSESSEE HAS SUBMITTED CONFIRMATION LETTERS FROM AL L THE UNSECURED LOAN CREDITORS AND PROVED THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CREDITORS. SIMILARLY, WITH REGARD TO THE OTHER ISSUES, SUCH AS MISMATCH BETWEEN CASH INFLOW AND OUTFLOW, THE CIT(A ) HAS SET ASIDE THE ISSUE TO THE FILE OF THE A.O. WITH A DIRECTION TO V ERIFY EACH ITEM OF CREDITS AND DEBITS CLAIMED IN THE CASH BOOK AND ALLOW RELIE F AS PER HIS VERIFICATION. WITH THESE OBSERVATIONS, THE CIT(A) P ARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE. 4. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFORE US AND RAISED THE FOLLOWING GROUNDS: 1. THE CIT(A) ERRED BOTH IN LAW AND ON FACTS OF THE CAS E. 2. THE CIT(A) OUGHT TO HAVE RECORDED REASONS FOR ADMIS SION OF THE ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE DURING THE APPEL LATE PROCEEDINGS UNDER RULE 46-A INDEPENDENTLY FIRST AND THEN TO REMAND THE SAM E TO THE FILE OF AO. 3. THE POWERS OF CIT(A) ARE COTERMINUS WITH THAT OF TH E ASSESSING OFFICER AND CIT(A) OUGHT TO HAVE VERIFIED THE FACTS INDEPENDENT LY. 4. THE CIT(A) OUGHT TO HAVE SUSTAINED THE ADDITION IN RESPECT OF SUNDRY CREDITORS AS THE GENUINENESS OF THE CREDITORS REMAIN UNVERIFI ED EVEN AFTER THE REMAND REPORT. ITA NO.357/VIZAG/2013 M/S. S.B. DEVELOPERS, RAJAHMUNDRY 5 5. THE CIT(A) OUGHT TO HAVE DIRECTED THE AO TO MAKE ADD ITIONS IN RESPECT OF THE DIFFERENCES IN CASH BOOK AND BANK BOOK OF RS. 16342 45/- AND RS.230000/- RESPECTIVELY. 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF A PPEAL HEARING BEFORE THE HON'BLE ITAT. 5. THE LD. D.R. SUBMITTED THAT THE CIT(A) OUGHT NOT TO HAVE ACCEPTED THE EXPLANATIONS FURNISHED BY THE ASSESSEE , AS THE ASSESSEE HAS FAILED TO FURNISH THE RELEVANT DETAILS BEFORE T HE A.O. THE LD. D.R. FURTHER SUBMITTED THAT THE CIT(A) OUGHT TO HAVE REC ORDED REASONS FOR ADMISSION OF THE ADDITIONAL EVIDENCE UNDER RULE 46A INDEPENDENTLY AND THEN TO REMAND THE ISSUE TO THE FILE OF THE A.O. FO R HIS COMMENTS. THE LD. D.R. FURTHER SUBMITTED THAT THE CIT(A) OUGHT TO HAVE SUSTAINED THE ADDITION IN RESPECT OF CREDITORS, AS THE GENUINENES S OF THE CREDITORS REMAINED UNVERIFIED EVEN AFTER THE REMAND REPORT. AS FAR AS THE OTHER ISSUE IS CONCERNED, THE LD. D.R. SUBMITTED THAT THE CIT(A) OUGHT TO HAVE DIRECTED THE A.O. TO MAKE ADDITIONS IN RESPECT OF D IFFERENCE IN CASH BOOK AND BANK BOOK OF RS.16,34,245/- AND RS.2,30,000/- R ESPECTIVELY. THE LD. D.R. FURTHER SUBMITTED THAT THE ASSESSEE HAS NO T FURNISHED ANY INFORMATION BEFORE THE A.O., THEREFORE, THE A.O. HA S COMPELLED TO PASS ASSESSMENT ORDER UNDER HIS BEST JUDGEMENT BASED ON THE INFORMATION AVAILABLE ON RECORD. THEREFORE, HIS ORDER SHOULD B E UPHELD. ITA NO.357/VIZAG/2013 M/S. S.B. DEVELOPERS, RAJAHMUNDRY 6 6. WE HAVE HEARD LD. D.R. AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE FIRST ISSUE CAME UP FOR OUR CONSIDERATI ON IS ADDITION TOWARDS UNSECURED LOANS U/S 68 OF THE ACT. THE A.O. MADE A DDITIONS U/S 68 OF THE ACT, TOWARDS UNSECURED LOANS FOR THE REASON THA T THE ASSESSEE HAS FAILED TO FURNISH IDENTITY, GENUINENESS AND CREDITW ORTHINESS OF THE UNSECURED LOAN CREDITORS. THE CIT(A) DURING THE CO URSE OF APPELLATE PROCEEDINGS CALLED FOR REMAND REPORT FROM THE A.O. THE A.O. VIDE HIS REMAND REPORT DATED 18.2.2013 HAS ACCEPTED THE EXPL ANATIONS FURNISHED BY THE ASSESSEE WITH REGARD TO THE UNSECURED LOANS AND STATED THAT ALL THE UNSECURED LOANS HAVE BEEN VERIFIED WITH REFEREN CE TO CONFIRMATION LETTERS. THE A.O. FURTHER STATED THAT THE ASSESSEE HAS FURNISHED CONFIRMATION LETTERS FROM ALL THE LOAN CREDITORS AN D PROVED IDENTITY, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE PARTIES. THEREFORE, NO ADDITION IS WARRANTED U/S 68 OF THE A CT. THE CIT(A) AFTER TAKING INTO CONSIDERATION OF REMAND REPORT ISSUED B Y THE A.O. AND ALSO CONSIDERING THE DETAILS FURNISHED BY THE ASSESSEE D ELETED THE ADDITIONS MADE BY THE A.O. U/S 68 OF THE ACT. THE FACTS REMA IN SAME EVEN BEFORE US. THE REVENUE COULD NOT BRING ANY EVIDENCES TO SH OW THAT THE FINDINGS OF THE FACT BY THE CIT(A) IS NOT CORRECT. THEREFORE , WE DO NOT SEE ANY REASONS TO INTERFERE WITH THE ORDER OF THE CIT(A). HENCE, WE INCLINED TO ITA NO.357/VIZAG/2013 M/S. S.B. DEVELOPERS, RAJAHMUNDRY 7 UPHELD THE ORDER PASSED BY THE CIT(A) AND DIRECT TH E A.O. TO DELETE THE ADDITIONS U/S 68 OF THE ACT. 8. THE NEXT ISSUE CAME UP FOR OUR CONSIDERATION, I S WHETHER THE CIT(A) IS RIGHT IN SET ASIDE THE ISSUE TO THE FILE OF A.O. WITH A DIRECTION TO VERIFY THE ISSUE WITH REGARD TO MISMATCH BETWEEN CA SH INFLOW AND OUTFLOW. DURING THE COURSE OF APPELLATE PROCEEDING S, THE CIT(A) HAVE DIRECTED THE A.O. TO VERIFY THE OTHER ISSUES MENTIO NED IN HIS ORDER REGARDING MISMATCH BETWEEN CASH INFLOW AND OUTFLOW AND TAKE APPROPRIATE DECISION AFTER VERIFICATION OF THE ISSU ES. THE CONTENTION OF THE LD. D.R. WAS THAT THE CIT(A) OUGHT TO HAVE DIRE CTED THE A.O. TO MAKE ADDITIONS, AS THERE WAS A CLEAR DIFFERENCE BET WEEN CASH BOOK AND BANK BOOK, WHICH WAS NOT PROPERLY EXPLAINED BY THE ASSESSEE EVEN BEFORE THE APPELLATE PROCEEDINGS. 9. WE HAVE GONE THROUGH THE ASSESSMENT ORDER, REMAND REPORT ISSUED BY THE A.O. AND ALSO ORDER OF THE CIT(A). T HE CIT(A) CATEGORICALLY GIVEN HIS FINDINGS WITH REGARD TO THE OTHER ISSUES, WHEREIN HE HAS STATED THAT THE ASSESSEE HAS FURNISHED DETAI LS ABOUT EACH AND EVERY ITEM APPEARING IN THE CASH BOOK AND BANK BOOK . AFTER VERIFICATION, THE CIT(A) SET ASIDE THE ISSUE TO THE FILE OF THE A.O. WITH A DIRECTION TO VERIFY THE ISSUE INDEPENDENTLY AND TAK E DECISION ACCORDINGLY. ITA NO.357/VIZAG/2013 M/S. S.B. DEVELOPERS, RAJAHMUNDRY 8 THE CIT(A) HAS RIGHTLY TAKEN THE DECISION AFTER CON SIDERING THE DETAILS FILED BY THE ASSESSEE. WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE ORDER PASSED BY THE CIT(A). THEREFORE, WE ARE INCLINED T O UPHELD THE ORDER PASSED BY THE CIT(A) AND REJECT THE GROUND RAISED B Y THE REVENUE. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 5 TH FEB16. SD/- SD/- (. ) ( . ) ( V. DURGA RAO ) ( G. MANJUNATHA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER * /VISAKHAPATNAM: . / DATED : 5.2.2016 VG/SPS # 0* 1*/ COPY OF THE ORDER FORWARDED TO :- 1. / THE APPELLANT THE ACIT CIRCLE-1, RAJAHMUNDRY. 2. #$ / THE RESPONDENT M/S. S.B. DEVELOPERS, 10-7-25, RAN GREEJPETA, RAJAHMUNDRY 3. 4 / THE CIT, VISAKHAPATNAM 4. 4 / THE CIT, RAJAHMUNDRY 5. 4 () / THE CIT (A)-11, MUMBAI, CAMP AT VISAKHAPATNAM 6. * # 9, ( 9 , * / DR, ITAT, VISAKHAPATNAM 7 . / GUARD FILE / BY ORDER // TRUE COPY // >? 9 ( SR.PRIVATE SECRETARY ) ( 9 , * / ITAT, VISAKHAPATNAM