Jami Bala Bhaskar Rao, Srikakulam V. THE ITO, WARD - 2, Srikakulam

ITA 460/VIZ/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5153 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 24-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DEBAKUMAR SONOWAL
• Assessee Lawyers: C V S MURTHY
• Section: 40A(3); 143(3); 263

Judgement Text

I TA NO. 460 /VIZAG/ 2014 JAMI BALA BHASKARA RAO, SRIKAKULAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D .S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 460 /VIZAG/ 2014 ( / ASSESSMENT YEAR: 2009 - 10 ) JAMI BALA BHASKARA RAO SRIKAKULAM ITO, WARD - 2, SRIKAKULAM ( / APPELLANT) ( / RES PONDENT) / APPELLANT BY : SHRI C.V.S. MURTHY, AR / RESPONDENT BY : SHRI DEBA KUMAR SONOWAL, DR / DATE OF HEARING : 11.07.2018 / DATE OF PRONOUNCEMENT : 20.07.2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST ORDER PASSED BY THE COMMISSIONER OF INCOME TAX - II, {CIT}, VISAKHAPATNAM VIDE F.NO.CIT - 2/VSP/263/2013 - 14 DATED 21.3.2014 U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') FOR THE ASSESSMENT YEAR 2009 - 10. I TA NO. 460 /VIZAG/ 2014 JAMI BALA BHASKARA RAO, SRIKAKULAM 2 2. THERE WAS A DELAY OF 55 DAYS IN FILING THE APPEAL. THE ASSESSEE FILED AFFIDAVIT EXPLAINING THE REASONS FOR DELAY IN FILING OF APPEAL. AFTER HEARING BOTH THE SIDES, THE DELAY IS CO NDONED AND THE APPEAL IS ADMITTED. ALL T HE GROUNDS OF APPEAL ARE AGAINST THE ORDER PASSED BY THE CO MMISSIONER OF INCOME TAX - II, VISAKHAPATNAM (IN SHORT CIT) U/S 263 OF THE ACT. 3. IN THIS CASE, THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL IN COME OF RS. 24,003/ - AND AN AGRICULTURAL INCOME OF RS. 32,700/ - ON 30.9.2009. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT BY AN ORDER DATED 23.12.2011 ON TOTAL INCOME OF RS. 5,42,917/ - . THE CIT HAS TAKEN UP THE CASE FOR REVISION AND ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE ON FINDING THAT THE ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT DATED 23.12.2011 WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE DUE TO THE FOLLOWING REASONS. 3. 1 THE ASSESSEE DERIVED PROFIT OF RS. 96,374/ - AS PER TH E TRADING AND PROFIT & LOSS ACCOUNT IN RESPECT OF THE PROPERTY SITUATED AT GONTI VILLAGE, SRIKAKULAM AND RS. 20,140/ - IN RESPECT OF THE PROPERTY AT ILLISIPURAM JUNCTION. THUS, THE AGGREGATE PROFIT DERIVED WAS RS.1 , 16 , 514/ - AGAINST WHICH THE ASSESSEE ADMIT TED THE NET PROFIT OF RS. 26,514/ - RESULTING SHORT ADMISSION OF RS. 90,000/ - . I TA NO. 460 /VIZAG/ 2014 JAMI BALA BHASKARA RAO, SRIKAKULAM 3 3.2 . S IMILARLY , THE LD. CIT OBSERVED THAT THE ASSESSEE IS IN THE REAL ESTATE BUSINESS AND MADE PAYMENTS OF RS. 2 0 ,86,000/ - IN CASH AS PER THE DETAILS GIVEN BELOW: DOCUMENT NO. PAY MENT OF CASH IN RS. DATE OF SALE DEED 4414/09 4,71,000 06.01.2009 74/09 1,12,000 06.01.2009 2422/08 4,00,000 (1/4 TH SHARE) 04.06.2008 1275/08 41,000 23.07.2008 5212/08 54,000 21.10.2008 TOTAL 20,86,000 ASSESSEE MADE THE ABOVE PAYMENTS IN CASH IN VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT, WHICH REQUIRE TO BE DISALLOWED. THE LD. CIT CALLED FOR THE EXPLANATION OF THE ASSESSEE AND THE ASSESSEE FILED EXPLANATION STATING THAT THE PROPERTIES PURCHASED WERE INVE STMENTS BUT NOT BUSINESS A SSETS, THUS THERE WA S NO APPLICATION OF SECTION 40A(3) IN THIS CASE. THE ASSESSEE FURTHER SUBMITTED BEFORE THE CIT THAT ALL THE ASSETS PURCHASED DURING THE YEAR WERE KEPT IN FIXED ASSETS. AFTER VERIFICATION OF THE EXPLANATION SUBMITTED BY THE ASSESSEE, T HE LD. CIT OBSERVED THAT THE ASSESSEE IS ENGAGED IN THE REAL ESTATE BUSINESS AND THE PROPERTIES PURCHASED WERE RELATING TO THE REAL ESTATE BUSINESS. SIMILARLY, THE ASSESSEE ALSO DID NOT ADMIT THE SUM OF RS. 90,000/ - AS THE PROFIT DERIVED FROM THE REAL ESTAT E BUSINESS IN THE RETURN OF INCOME. THEREFORE, THE LD. CIT HELD THAT THE ORDER PASSED BY THE A.O. U/S 143(3) I TA NO. 460 /VIZAG/ 2014 JAMI BALA BHASKARA RAO, SRIKAKULAM 4 OF THE ACT WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY, SET ASIDE THE ORDER PASSED BY THE A.O. AND REMITTED THE MATT ER BACK TO THE FILE OF THE A.O. TO REFRAME THE ASSESSMENT AFTER TAKING INTO ACCOUNT ALL THE ABOVE ISSUES. 4 . AGGRIEVED BY THE ORDER OF THE LD. CIT, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD. A.R. ARGUED THAT THE ASS ESSEE IS NOT IN THE REAL ESTATE BUSINESS. THE PROPERTIES IN QUESTION WERE NEVER DEBITED TO PROFIT & LOSS ACCOUNT AND THEY WERE CLASSIFIED AS FIXED ASSETS. THE LD. A.R. FURTHER ARGUED THAT THE A.O. VERIFIED ALL THESE ASPECTS DU RING THE ASSESSMENT PROCEEDI NGS, HENCE, THERE WAS NO ERROR IN THE ORDER PASSED BY THE A.O., THUS ARGUED THAT NO INTERFERENCE IS CALLED FOR BY THE LD. CIT. ACCORDINGLY, REQUESTED TO QUASH THE ORDER PASSED BY THE LD. CIT U/S 263 OF THE ACT. 5 . ON THE OTHER HAND, THE LD. D.R. SUPPOR TED THE ORDER OF THE LD. CIT. 6 . WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AS PER THE STATEMENT OF COMPUTATION OF INCOME, THE ASSESSEE DERIVED THE PROFIT OF RS. 20 ,140/ - A S PER THE PAGE 10 OF THE PAPER BOOK FILED BY THE ASSESSEE FOR SALE OF THE PROPERTY IN RESPECT OF ILLISIPURAM JUNCTION VIDE DOCUMENT NO.3344, 3342 SOLD TO KOVVURU ABBI REDDY VIDE DOCUMENT I TA NO. 460 /VIZAG/ 2014 JAMI BALA BHASKARA RAO, SRIKAKULAM 5 NO.4548 AND IN RESPECT OF PROPERTY AT GONTI STREET, THE ASSESSEE DERI VED THE PROFIT OF RS. 96,374/ - AGGREGATING TO RS. 1,16 ,514/ - . AG AINST THE PROFIT OF RS. 1,16 ,514/ - FROM REAL ESTATE BUSINESS, THE ASSESSEE ADMITTED ONLY RS. 20,514/ - RESULTING IN NET DIFFERENCE OF RS. 90,000/ - , WHICH WAS SHORT ADMITTED BY THE ASSESSEE. 7. SI MILARLY, AS PER THE TRADING ACCOUNT, THE ASSESSEE IS ENGAGED IN THE REAL ESTATE BUSINESS AND CLAIM ED THE SITE LEVELING EXPENDITURE, TRAVEL EXPENSES, BROKERAGE, ETC., I.E. EXPENSES WERE RELAT ED TO THE REAL ESTATE BUSINESS. T HE ASSESSEE ALSO STATED THAT H E CONVERTED SOME ASSETS FOR TRADING PURPOSES AND SOLD THE PLOTS. FROM THE REPLY OF THE ASSESSEE AND THE FACTS IT IS ESTABLISHED THAT THAT ASSESSEE IS ENGAGED IN THE REAL ESTATE BUSINESS AND MADE THE PAYMENTS FOR PURCHASE OF VARIOUS PROPERTIES OTHERWISE THAN BY CROSSED CHEQUE . THEREFORE, PRIMA FACIE, THERE IS CASE OF VIOLATION OF THE PROVISIONS SECTION 40A(3) OF THE ACT . THERE WAS NO INDICAT ION FROM THE ASSESSMENT ORDER TH AT THE AO HAS VERIFIED THE DISALLOWANCE U/S 40A(3) IN RESP ECT OF THE ABOVE PAYMEN TS. THE L D.AR ALSO FAILED TO ESTABLISH THAT THE AO HAS VERIFIED THE APPLICATION OF SECTION 40A(3) IN RESPECT OF THE ABOVE MENTIONED TRANSACTIONS. THEREFORE, WE DO NOT HAVE ANY HESITATION TO HOLD THAT THE ASSESSMENT MADE U/S 143(3) OF THE ACT IS ERRONEOUS A ND PREJUDICIAL TO THE INTEREST OF THE REVENUE, ACCORDINGLY, WE UPHOLD THE ORDER OF THE I TA NO. 460 /VIZAG/ 2014 JAMI BALA BHASKARA RAO, SRIKAKULAM 6 LD.CIT PASSED U/S 263 OF THE ACT AND DISMISS THE APPEAL OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. T HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 20 TH JUL18 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM: /DATED : 20.07.2018 VG/SPS / COPY OF THE ORDER FORWARDED TO : - 1. / THE APPELLANT SHRI JAMI BALA BHASKARA RAO, DR.NO.2 - 2 - 72, ILLISIPURAM JUNCTI ON, SRIKAKULAM. 2 . / THE RESPONDENT THE ITO, WARD - 2, SRIKAKULAM 3 . / THE CIT - II, VISAKHAPATNAM 4 . ( ) / THE CIT (A) , VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM