Sri T V Raghava Rao, Visakhapatnam V. The ITO, Ward-3(1), Visakhapatnam, Visakhapatnam

ITA 46/VIZ/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80142 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 24-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D MANOJ KUMAR
• Assessee Lawyers: C R HEMANT KUMAR
• Section: 143(3); 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 46/VIZ/2012 ASSESSMENT YEAR : 2006-07 SMT. T.V. RAGHAVA RAO VISAKHAPATNAM PAN AAQPT4668K INCOME-TAX OFFICER, WARD 3(1), VISAKHAPATNAM (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI C.R. HEMANT KUMAR REVENUE BY SHRI D. MANOJ KUMAR DATE OF HEARING 09-07-2014 DATE OF PRONOUNCEMENT 09-07-2014 O R D E R PER BENCH: THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF CIT(A), VISAKHAPATNAM DATED 25/11/2011 FOR AY 2006- 07. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN INDIVIDUAL AND IS IN THE BUSINESS OF CONSTRUCTION OF APARTMENT S. HE IS ALSO PARTNER OF THE FIRM CALLED M/S SWARNA DEVELOPERS. A SURVEY U /S 133A OF THE ACT WAS CONDUCTED ON THE FIRM. CONSEQUENTLY, A NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE AND THE ASSESSEE FILED RETURN OF INCOME FO R AY 2007-08 ADMITTING INCOME OF RS. 1,90,760/-. THE AO COMPLETE D THE ASSESSMENT U/S 143(3) DETERMINING THE TOTAL INCOME AT RS. 13,90,76 0, INTER-ALIA, MAKING THE FOLLOWING ADDITIONS TOWARDS, A) CLOSING WORK-IN-PROGRESS RS. 50,000/- B) RECEIPTS AS PER LOK ADALAT AWARD RS. 6,50,000 /- C) ADVANCE TAKEN FROM DR. G. SATYARANARAYA NOT ACCOUNTED FOR RS. 3,00,000/- 2 ITA NO. 46/VIZ/12 SMT. T.V. RAGHAVA RAO D) ADVANCE TAKEN FROM SMT. DIMPLE JAIN NOT ACCOUNTED FOR RS.1,00,00 0/- E) INCOME OFFERED BY THE ASSESSEE FROM OUT OF DEVELOPMENT CHARGES RS. 1,00,000/- 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE FIRST APPELLATE AUTHORITY. THE FIRST APPELLATE AUTHORITY, GRANTED PART RELIEF. FURTHER, AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US RAISING THE FOLLOWING GROUNDS: 1. THE ORDER OF THE CIT)A) IS AGAINST THE FACTS OF THE CASE AND LAW. 2. A) THE CIT(A) ERRED IN HIS FINDING THAT THE ADDI TION OF RS. 3,00,000/- MADE TOWARDS ALLEGED RECEIPT FROM SRI G. SATYANARAYANA IS NOT REFLECTED IN THE APPELLANTS BOOKS. B) THE CIT(A) FAILED TO APPRECIATE THAT THE AGREEME NT WAS NOT ENTERED INTO BY THE APPELLANT AND IT WAS WITH THE L AND OWNER. C) THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE AD DITION WITHOUT TAKING INTO CONSIDERATION THE FACTS STATED BY SRI G . SATYANARAYANA IN HIS AFFIDAVIT. 3) THE CIT(A) IS NOT JUSTIFIED IN DELETING ONLY RS. 50,000/- OUT OF RS. 1,00,000/- RECEIVED FROM SMT. DIMPLE JAIN SINCE ENT IRE RS. 1,00,000/- WAS ACCOUNTED BY THE APPELLANT. 4) THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE AD DITION OF RS. 1,00,000/- SEPARATELY WITHOUT OFFSETTING WITH OTHER ADDITIONS. THE APPELLANT OFFERED THIS RS. 1,00,000/- TO COVER ANY DEFICIENCIES WITHOUT ANY SPECIFIC ITEM OF ADDITION. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI C.R. H EMANT KUMAR SUBMITTED THAT THERE ARE THREE ISSUES THAT ARISE FO R ADJUDICATION, FIRST BEING A) RECEIPT OF RS. 3 LAKHS FROM SRI G. SATYAN ARAYANA, B) RECEIPT OF RS. 50,000/- FROM MS. DIMPLE JAIN AND C) RS. 1.00 L AKH BEING SURRENDER MADE BY THE ASSESSEE. 6. ON THE ADDITION OF RS. 3 LAKHS, THE LEARNED COUN SEL SUBMITTED THAT CONFIRMATION GIVEN BY DR. G. SATYANARAYANA BY WAY O F AN AFFIDAVIT WAS IGNORED BY THE FIRST APPELLATE AUTHORITY. THE SUM A ND SUBSTANCE OF HIS SUBMISSIONS ARE THAT MR. G. SATYANARAYANA ENTERED I NTO AGREEMENT FOR PURCHASE OF FLAT NO. 203 AND PAID AN AMOUNT OF RS. 3 LAKHS TO MR. S. KRISHNA PRASAD IN JULY, 2006, AS THE FLAT BELONGS T O SHRI KRISHNA PRASAD, WHO WAS OWNER OF THE LAND. SUBSEQUENTLY, THE OWNER OF THE LAND TOOK FLAT 3 ITA NO. 46/VIZ/12 SMT. T.V. RAGHAVA RAO NO. 503 VIDE AGREEMENT DATED 14/07/2005 IN EXCHANGE OF FLAT NO. 203, DUE TO THIS EXCHANGE OF FLAT, THE ASSESSEE HAD RIGH T TO SALE FLAT NO. 203. CONSEQUENTLY, THE LAND OWNER SHRI KRISHNA PRASAD RE TURNED THE AMOUNT OF RS. 3 LAKHS TO MR. G. SATYANARYANA. THUS, THE ADDIT ION IN THE HANDS OF THE ASSESSEE MR. T.V. RAGHAVA RAO IS BAD IN LAW. 7. ON THE ADDITION REGARDING THE ADVANCE RECEIVED F ROM MS. DIMPLE JAIN IS CONCERNED, IT WAS SUBMITTED THAT AS PER THE AGREEMENT RS. 1.00 LAKH WAS PAID IN ADVANCE. HE EXPLAINED THAT THE AMO UNT WAS RECEIVED IN TWO PARTS BEING RS. 50,000/- IN JUNE 06 AND BALANC E OF RS. 50,000/- ON 1 ST AUGUST, 2006. THE AO ADDED THE ENTIRE AMOUNT. THE C IT(A) SUSTAINED THE ADDITION OF RS. 50,000/- ON THE GROUND THAT STAMP P APER WAS PURCHASED ON 01/07/2006 AND RS. 50,000/- WAS ENTERED IN THE BOOK S PRIOR TO THIS DATE AND, HENCE, NO ADDITION COULD BE MADE ON THIS AMOUN T. THE ASSESSEES CASE IS THAT THE AGREEMENT IS UNDATED AND THE DATE OF PURCHASE ON STAMP PAPER CANNOT BE TAKEN AS THE DATE OF AGREEMENT AND CONSIDERATION OF RS. 1 LAKH RECORDED IN THE UNDATED AGREEMENT WAS DULY R EFLECTED IN THE BOOKS OF ACCOUNT AND, HENCE, NO ADDITION CAN BE MADE. 8. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT THE CIT(A) WAS RIGHT TAKING THE DATE OF PURCHASE OF STAMP PAPER AS THE DATE OF THE AGREEMENT IN GRANTING PART RELIEF. IN REPLY, THE LE ARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS NO POSITIVE EVIDEN CE WITH THE DEPARTMENT THAT THE ASSESSEE HAS RECEIVED HIGHER AMOUNT THAN W HAT WAS MENTIONED IN THE AGREEMENT TO SELL. 9. ON THE THIRD ISSUE, THE LEARNED COUNSEL SUBMITTE D THAT AN AMOUNT OF RS. 1.00 LAKH ADMITTED BY THE ASSESSEE AS A MATTER OF ABUNDANT CAUTION SO AS TO TAKE CARE OF UNINTENDED DEFICIENCIES AND U NDER THOSE CIRCUMSTANCES, SEPARATE ADDITION ON THE GROUND THAT THERE IS A SURRENDER WITHOUT TELESCOPING IS NOT WARRANTED. 4 ITA NO. 46/VIZ/12 SMT. T.V. RAGHAVA RAO 10. THE LEARNED DR DISPUTED THE SUBMISSIONS OF THE LEARNED COUNSEL AND SUBMITTED THAT THERE WERE CERTAIN MATERIAL ON W HICH THE ASSESSEE HAD MADE SURRENDER AND HE SHOULD NOT BE ALLOWED RETRACT . ON THE ADDITION OF RS. 3.00 LAKHS, THE LEARNED DR RELIED ON THE ORDER OF THE AO AS WELL AS THE ORDER OF CIT(A). 11. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, PERUS ED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE REVENUE A UTHORITIES. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCE S OF THE CASE, WE HOLD AS FOLLOWS: 12. ON THE FIRST ISSUE OF ADDITION OF RS. 3.00 LAKH S, MR. G. SATYANARAYANA FILED THE FOLLOWING AFFIDAVIT AT PAGE S 24 & 25 OF THE PAPER BOOK: I. G. SATYANARAYANA S/O G. APPA RAO AGED ABOUT 42 YEARS RESIDENT AT FLAT NO. 203, SWARNA PARADISE, OFFICIAL COLONY, 1 ST LANE, MR PET, VISAKHAPATNAM, DO HEREBY SOLEMNLY AFFIRM AND STATE AS UNDER: 1. THAT I APPROACHED SRI T.V. RAGHAVA RAO THE BUILD ER OF THE BUILDING SWARNA PARADISE FOR PURCHASE OF A FLAT AND I CHOSE FLAT NO. 203 FOR PURCHASE. 2. THAT THE BUILDER INFORMED ME THAT THE SAID FLAT BELONGS TO THE LAND OWNER SRI S. KRISHNA PRASAD AS PER THEIR AGREEMENT AND BUILDER SUGGESTED THAT I TAKE FLAT NO. 503. 3. THAT UPON MY INSISTENCE THAT I BUY ONLY FLAT NO. 203 AN AGREEMENT WAS ENTERED INTO WITH THE SAID SRI S. KRI SHNA PRASAD IN JULY, 2006 AND AN AMOUNT OF RS. 3 LAKHS WAS PAID TO HIM. 4. THAT SUBSEQUENTLY THE BUILDER AND LAND OWNER AG REED FOR EXCHANGE OF FLAT NO. 203 FOR FLAT NO. 503 VIDE THEI R AGREEMENT DATED 14/03/2007. 5. THAT THE AGREEMENT ENTERED INTO BY ME WITH SRI S . KRISHNA PRASAD FOR PURCHASE OF FLAT NO. 203 WAS CANCELLED A ND THE AMOUNT OF RS. 3 LAKHS PAID BY ME TO SRI S. KRISHNA PRASAD WAS RETURNED TO ME BY HIM AND THE AGREEMENT WAS CANCELL ED BY STRIKING THE CONTENTS THEREOF. 6. THAT THE PAYMENTS RELATING TO COST OF THE FLAT W ERE MADE SUBSEQUENTLY BY ME TO T.V. RAGHAVA RAO AS PER THE S ALE DEED AND CONSTRUCTION AGREEMENTS ENTERED INTO WITH HIM. 13. FROM THE ABOVE EVIDENCE, IT IS CLEAR THAT SHRI G. SATYANARAYANA PAID AN AMOUNT OF RS. 3 LAKHS TO THE LANDLORDS AND THE S AME WAS RETURNED TO 5 ITA NO. 46/VIZ/12 SMT. T.V. RAGHAVA RAO HIM UPON CANCELLATION OF AGREEMENT. SO, THE QUESTIO N THAT THE ASSESSEE ACCOUNTING FOR THIS AMOUNT OF RS. 3.00 LAKHS IN HIS BOOKS OF ACCOUNT WHEN MR. G. SATYANARAYANA PURCHASED THE FLAT NO. 203 FRO M THE LAND OWNERS, AND NOT FROM THE ASSESSEE DOES NOT ARISE. HENCE, WE DELETE THIS ADDITION. 14. ON THE ADDITION OF RS. 50,000/- IN THE CASE OF MS. DIMPLE JAIN, THE AGREEMENT STATES THAT AN ADVANCE OF RS. 1.00 LAKH H AS BEEN PAID AND THE ASSESSEE HAS ACCOUNTED FOR THIS AMOUNT OF RS. 1.00 LAKH. TO ASSUME THAT THE AGREEMENT WAS ENTERED INTO BETWEEN THE ASSESSEE AND MS. DIMPLE JAIN PRIOR TO RECEIPT OF RS. 50,000/- RECORDED IN T HE BOOKS OF ACCOUNT OF THE FIRM ON 1ST AUGUST, 2006 IS WITHOUT ANY EVIDENC E. THE AO DID NOT MAKE ANY ENQUIRY WITH MS. DIMPLE JAIN. THE ADDITION IS MADE PURELY ON SURMISES. IN THE RESULT, THIS ADDITION IS DELETED. 15. ON THE THIRD ADDITION OF RS. 1 LAKH BEING SURRE NDER MADE BY THE ASSESSEE, WE FIND THAT THIS IS A GENERAL SURRENDER AND, HENCE, THE SAME SHOULD BE TELESCOPED INTO OTHER ADDITIONS THAT WAS MADE DURING THE ASSESSMENT. 16. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. PRONOUNCED IN THE OPEN COURT ON 09/07/2014. SD/- SD/- (SAKTIJIT DEY) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM, DATED: 9 TH JULY, 2014 KV 6 ITA NO. 46/VIZ/12 SMT. T.V. RAGHAVA RAO COPY TO:- 1) SMT. T.V. RAGHAVA RAO, FLAT NO. 3, 4 TH FLOOR, MIG-72, SWARNA ENCLAVE, SEETHAMMADHARA NORTH EXTENSION, VISAKHAPAT NAM 13. 2) ITO, WARD 3(1), VISAKHAPATNAM 3) CIT(A), VISAKHAPATNAM 4) CIT-I, VISAKHAPATNAM 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., V IZAG.