THE DCIT, Circle-2(1), GUNTUR., Guntur V. M/s Teja Constructions, Guntur

ITA 415/VIZ/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0172 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 09-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K SETHI
• Section: 40A(3); 143(3); 133A

Judgement Text

ITA NO.415/VIZAG/2012 TEJA CONSTRUCTIONS, GUNTUR 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.415/VIZAG/2012 ( / ASSESSMENT YEAR : 2009-10 ) DCIT CIRCLE - 2(1) GUNTUR VS. TEJA CONSTRUCTIONS GUNTUR [ PAN: AAFFT 0709E] ( & & & & / APPELLANT) ( '(& '(& '(& '(& / RESPONDENT ) & ) / APPELLANT BY : SHRI M.K. SETHI, DR '(& ) / RESPONDENT BY : SHRI G.V.N. HARI, AR ) - / DATE OF HEARING : 01. 12.2015 ) - / DATE OF PRONOUNCEMENT : 04.12.2015 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A) GUNTUR FOR THE ASSESSMENT YEAR 2009-10. 2. FACTS ARE IN BRIEF THAT THE ASSESSEE FIRM ENGAGE D IN CONSTRUCTION AND SELLING OF APARTMENTS. A SURVEY OPERATION U/S 133A OF THE INCOME- TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) WAS CARRIED ON THE ITA NO.415/VIZAG/2012 TEJA CONSTRUCTIONS, GUNTUR 2 BUSINESS PREMISES OF THE ASSESSEE ON 26.2.2009. TH E ASSESSEE HAD FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 20.9.2009 ADMITTING TOTAL INCOME OF RS.1,61,800/-. THE RETURN FILED BY THE ASSESSEE WAS PROCESSED U/S 143(1) OF THE ACT, T HEREAFTER, ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT. IN THE ASSESSMENT ORDER, THE A.O. HAS OBSERVED THAT THE ASSESSEE HAS PURCHASED A SITE MEASURING 880 SQ.YDS. AT DESAPATRUNIPALEM, VISAKHAP ATNAM FROM MR. SREEDHAN RAVISANKAR FOR A CONSIDERATION OF RS.16 LA KHS AND A SITE MEASURING 43.4 SQ.YDS. AT PATTABHIPURAM, GUNTUR FRO M MUNAGALA SAMBIREDDY FOR A CONSIDERATION OF RS.3,91,000/- AND PAYMENTS MADE IN CASH TO THE SELLERS IN CONTRAVENTION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. THE A.O. HAS CALLED THE ASSESSEE AND ASKED WH Y THE PAYMENTS WERE MADE IN CASH. THE ASSESSEE VIDE WRITTEN SUBMI SSIONS FILED ON 20.12.2011 SUBMITTED THAT THE LAND PURCHASED AT VIS AKHAPATNAM FOR A AMOUNT OF RS.16 LAKHS WAS NOT USED FOR THE CONSTRUC TION OF THE FLATS TILL TODAY AND IT IS AN INVESTMENT-CUM-CLOSING STOCK. B UT THE CLERK WHO WRITES THE ACCOUNTS HAD WRONGLY CLAIMED AS AN EXPE NDITURE OF RS.16 LAKHS BUT THIS SITE IS NOT USED FOR THE CONSTRUCTIO N OF FLATS AND WRONGLY SHOWN AS A WORK IN PROGRESS AND SUBMITTED THAT DISA LLOWANCE U/S 40A(3) OF THE ACT WILL NOT ARISE AT ALL. ITA NO.415/VIZAG/2012 TEJA CONSTRUCTIONS, GUNTUR 3 3. THE A.O. AFTER CONSIDERING THE EXPLANATION OF TH E ASSESSEE WAS OF THE OPINION THAT DISALLOWANCE U/S 40A(3) OF THE AC T APPLIES TO THE ASSESSEES CASE AND BY INVOKING THE SAME HE HAS DIS ALLOWED THE EXPENDITURE CLAIMED OF THE ASSESSEE AND SAME WAS AD DED TO THE TOTAL INCOME OF THE ASSESSEE. 4. ON APPEAL OF THE ASSESSEE BEFORE THE LD. CIT(A), THE LD. CIT(A) DELETED THE ADDITION MADE BY THE A.O. BY OBSERVING THAT THE PAYMENT FOR THE SITE WAS MADE IN CASH AS INSISTED BY THE SE LLER AND HE ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE CASH WAS PA ID FOR THE PURPOSE OF INVESTMENT WAS NOT AN EXPENDITURE AND DELETED THE A DDITION MADE BY THE A.O. 5. AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIBU NAL. THE LD. D.R. HAS SUBMITTED THAT THE ASSESSEE INITIALLY HAS SHOWN THE AMOUNT OF RS.16 LAKHS AS AN EXPENDITURE AND WHEN THE A.O. HAS CALLE D FOR AN EXPLANATION, IT WAS SUBMITTED BEFORE THE A.O. BY TH E ASSESSEE THAT IT IS AN INVESTMENT BUT NOT AN EXPENDITURE AND HENCE, THE LD. D.R. SUBMITTED THAT THIS IS AN AFTERTHOUGHT OF THE ASSESSEE AND HE STRONGLY SUPPORTED THE ORDER PASSED BY THE A.O. ITA NO.415/VIZAG/2012 TEJA CONSTRUCTIONS, GUNTUR 4 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS SUBMITTED THAT THE ASSESSEE HAS SUBMITTED BEFORE THE A.O. THA T IT IS AN INVESTMENT BUT NOT AN EXPENDITURE. THERE IS A MISTAKE COMMITT ED BY THE ACCOUNTANT AND THE ASSESSING OFFICER WITHOUT MAKING ANY ENQUIRY/INVESTIGATION, SIMPLY INVOKED SECTION 40A(3 ) OF THE ACT AND SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECOR DS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE O NLY ISSUE INVOLVED IN THIS APPEAL IS WHETHER THE AMOUNT OF RS.16 LAKHS IS AN INVESTMENT OR AN EXPENDITURE. ACCORDING TO THE ASSESSEE, IT IS ONLY AN INVESTMENT AND THE ACCOUNTANT OF THE ASSESSEE HAD MISTAKENLY CLAIMED I T AS AN EXPENDITURE. THEREFORE, DISALLOWANCE U/S 40A(3) OF THE ACT HAS N O APPLICATION. THE A.O. HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESS EE AND INVOKED SECTION 40A(3) OF THE ACT. WE FIND THAT WHEN ASSESS EE HAS GIVEN A DETAILED EXPLANATION BY SAYING THAT IT IS ONLY AN I NVESTMENT AND NO CONSTRUCTION WAS TOOK PLACE AND THEREFORE, THERE IS NO WORK IN PROGRESS ALSO. UNDER THESE CIRCUMSTANCES, THE A.O. OUGHT TO HAVE BEEN MADE A FURTHER ENQUIRY. THE LD. CIT(A) DELETED THE ADDITI ON MADE BY THE A.O. BY CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE WITHOUT ANY BASIS. WE THEREFORE IN THE INTEREST OF JUSTICE SET ASIDE TH E ORDER PASSED BY THE ITA NO.415/VIZAG/2012 TEJA CONSTRUCTIONS, GUNTUR 5 LD. CIT(A) AND REMIT THE MATTER BACK TO THE A.O. WE DIRECT THE A.O. TO CALL THE DETAILS AND EXAMINE WHETHER THE AMOUNT INC URRED BY ASSESSEE IS FOR THE PURPOSE OF INVESTMENT OR EXPENDITURE AND DE CIDE THE ISSUE IN ACCORDANCE WITH LAW. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS AL LOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 4 TH DEC15. SD/- SD/- ( . . . . ) ( . ) ( G. MANJUNATHA) ( (( ( V. DURGA RAO ) )) ) / // / ACCOUNTANT MEMBER / // / JUDICIAL MEMBER /VISAKHAPATNAM: 3 / DATED : 04.12.2015 VG/SPS ) ' 4 / COPY OF THE ORDER FORWARDED TO :- 1. & / THE APPELLANT THE DCIT, CIRCLE-2(1), GUNTUR 2. '(& / THE RESPONDENT M/S. TEJA CONSTRUCTIONS, 4-23-66/7, MUTYALAREDDY NAGAR, GUNTUR 3. 5 / THE CIT, GUNTUR 4. 5 () / THE CIT(A),GUNTUR 5. ' , , / // / DR, ITAT, VISAKHAPATNAM 6 . . . . / GUARD FILE / BY ORDER // TRUE COPY // 9: ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM