Image Homes and Dovelopers, Visakhapatnam V. THE CIT, Guntur

ITA 481/VIZ/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6414 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 08-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G GURUSWAMY
• Keywords: Revision of order; Non-deduction of tax; Assessment record
• Section: 40A(3); 143(3); 142(1); 14A; 263

Judgement Text

ITA NO.481/VIZAG/2014 M/S. IMAGE HOMES AND DEVELOPERS, 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.481/VIZAG/2014 ( / ASSESSMENT YEAR: 2009-10) M/S. IMAGE HOMES AND DEVELOPERS, GUNTUR CIT, GUNTUR [PAN NO. AACFI1370B ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI G. GURUSWAMY, DR / DATE OF HEARING : 21.03.2017 / DATE OF PRONOUNCEMENT : 28.03.2017 / O R D E R PER SHRI MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE CIT, GUNTUR DATED 4.3.2014 U/S 263 OF THE INCOME TA X ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') FOR THE ASSESSMEN T YEAR 2009-10. ITA NO.481/VIZAG/2014 M/S. IMAGE HOMES AND DEVELOPERS, GUNTUR 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM ENGAGED IN REAL ESTATE BUSINESS, FILED ITS RET URN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 25.9.2009 ADMITTING TOTA L INCOME OF ` 8,58,540/-. THE CASE HAS BEEN SELECTED FOR SCRUTIN Y UNDER CASS AND ACCORDINGLY, NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED REQUIRED I NFORMATION. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT, ON 8.11.2011 DETERMINING TOTAL INCOME OF ` 20,08,036/- INTER-ALIA MAKING ADDITION OF ` 8,12,500/- U/S 40A(3) OF THE ACT FOR CASH PAYMENTS IN EXCESS OF ` 20,000/-, DISALLOWANCE OF INTEREST PAID TO M/S. IMA GE SHELTERS PVT. LTD. U/S 14A OF THE ACT AND DISALLOWANCE OF ROAD ROLLER RENT U/S 40(A)(IA) OF THE ACT, FOR FAILURE TO DEDUCT TAX AT SOURCE. 3. THE CIT, GUNTUR ISSUED A SHOW CAUSE NOTICE ON 6. 2.2014 AND ASKED TO EXPLAIN AS TO WHY THE ASSESSMENT ORDER PAS SED BY THE A.O. U/S 143(3) OF THE ACT, DATED 8.11.2011 SHALL NOT BE REV ISED UNDER THE PROVISIONS OF SECTION 263 OF THE ACT. THE CIT, PRO POSED TO REVISE THE ASSESSMENT ORDER FOR THE REASON THAT ON EXAMINATION OF ASSESSMENT RECORDS, IT WAS NOTICED THAT CERTAIN OMISSIONS AND COMMISSIONS WERE NOTICED, WHICH RENDERED THE ASSESSMENT ORDER ERRONE OUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE CI T, IN THE SAID SHOW ITA NO.481/VIZAG/2014 M/S. IMAGE HOMES AND DEVELOPERS, GUNTUR 3 CAUSE NOTICE, OBSERVED THAT THE ASSESSING OFFICER H AS FAILED TO EXAMINE THE APPLICABILITY OF PROVISIONS OF SECTION 40A(3) O F THE ACT, FOR CASH PAYMENTS IN EXCESS OF ` 20,000/- EVEN THOUGH THE BANK STATEMENTS FURNISHED BY THE ASSESSEE INDICATE THAT THE BANK HA S COLLECTED BANKING TRANSACTION TAX OF ` 170/- ON 10.6.2008 & ` 200/- ON 4.6.2008. THE CIT, FURTHER, OBSERVED THAT THE TAX SO COLLECTED IS ATTRIBUTABLE TO THE PAYMENTS MADE BY THE ASSESSEE TO THE LAND OWNERS FO R ACQUIRING THE LANDS. IT EMERGE FROM THE ABOVE THAT THE ASSESSEE HAS NOT MADE PAYMENT TO LAND LORDS THROUGH THE ACCOUNT PAYEE CHE QUES/DRAFTS, BUT PAID THE SAME THROUGH BEARER/CASH CHEQUES WHICH DO NOT SATISFY THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE A.O. NOT ONLY EXAMINED THE ISSUE, BUT ALSO FAILED TO APPLY HIS MIND TO DISALLO W THE EXPENDITURE INCURRED OTHER THAN BY WAY OF ACCOUNT PAYEE CHEQUE/ DRAFT, U/S 40A(3) OF THE ACT, WHICH RENDERED THE ASSESSMENT ORDER ERR ONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 4. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE S UBMITTED THAT THE ASSESSMENT ORDER PASSED BY THE A.O. IS NEITHER ERRO NEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE, AS THE A.O. HAS VER IFIED THE ISSUE OF PAYMENTS TOWARDS PURCHASE OF LAND OTHER THAN BY WAY OF ACCOUNT PAYEE CHEQUE/DRAFTS AND DISALLOWED AN AMOUNT OF ` 8,12,500/- WHERE THE ASSESSEE HAS MADE PAYMENTS IN EXCESS OF ` 20,000/- FOR PURCHASE OF ITA NO.481/VIZAG/2014 M/S. IMAGE HOMES AND DEVELOPERS, GUNTUR 4 LANDS. THE ASSESSEE FURTHER SUBMITTED THAT THE A.O . HAS CALLED NECESSARY DETAILS AND THE ASSESSEE HAS FURNISHED CO PIES OF BANK STATEMENTS. THE A.O. AFTER SATISFIED WITH THE EXPL ANATIONS, COMPLETED THE ASSESSMENT BY MAKING DISALLOWANCE OF ` 8,12,500/- U/S 40A(3) OF THE ACT, THEREFORE, THE ASSESSMENT ORDER PASSED BY THE A.O. CANNOT BE CONSIDERED AS ERRONEOUS IN SO FAR AS IT IS PREJUDIC IAL TO THE INTEREST OF THE REVENUE. 5. THE CIT, AFTER CONSIDERING THE EXPLANATIONS OF T HE ASSESSEE, HELD THAT THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 14 3(3) OF THE ACT, DATED 8.11.2011 IS ERRONEOUS IN SO FAR AS IT IS PRE JUDICIAL TO THE INTEREST OF THE REVENUE, AS THE A.O. NOT ONLY FAILED TO EXAM INE THE ISSUE OF APPLICABILITY OF PROVISIONS OF SECTION 40A(3) OF TH E ACT, TOWARDS CASH PAYMENTS FOR PURCHASE OF LAND, BUT ALSO FAILED TO A PPLY HIS MIND BEFORE COMPLETION OF ASSESSMENT. THE CIT, FURTHER OBSERVED THAT ALTHOUGH THE A.O. HAS DISALLOWED CERTAIN PAYMENTS U/S 40A(3) OF THE ACT, IGNORED CERTAIN PAYMENTS, EVEN THOUGH THE BANK STATEMENT FU RNISHED BY THE ASSESSEE INDICATES THAT THE BANK HAS COLLECTED BANK ING TRANSACTION TAX IN RESPECT OF CERTAIN PAYMENTS, WHICH PROVE THAT THE A SSESSEE HAS MADE THE PAYMENTS BY WAY OF BEARER CHEQUES TOWARDS PURCH ASE OF LAND. THE A.O. OUGHT TO HAVE DISALLOWED AMOUNT BASED ON THE E VIDENCE IN THE FORM OF BANKING TRANSACTION TAX BUT FAILED TO DO SO . THEREFORE, OPINED ITA NO.481/VIZAG/2014 M/S. IMAGE HOMES AND DEVELOPERS, GUNTUR 5 THAT THE ASSESSMENT ORDER PASSED BY THE A.O. IS ERR ONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACC ORDINGLY, SET ASIDE THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 143(3) OF T HE ACT, DATED 8.11.2011 AND DIRECTED THE A.O. TO MODIFY THE ASSES SMENT ORDER AS PER THE DIRECTIONS AND BRING TO TAX CORRECT AMOUNT CONS IDERING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. AGGRIEVED BY THE CIT ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD. A.R. FOR THE ASSESSEE, SUBMITTED THAT TH E LD. CIT IS NOT JUSTIFIED IN ASSUMING JURISDICTION U/S 263 OF THE A CT, IN AS MUCH AS THE ASSESSMENT ORDER DATED 8.11.2011 IS NEITHER ERRONEO US NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE A.R. FURTHER SUBM ITTED THAT THE LD. CIT IS NOT JUSTIFIED IN DIRECTING THE A.O. TO ENHANCE T HE DISALLOWANCE U/S 40A(3) OF THE ACT, WITHOUT POINTING OUT ANY SPECIFI C DEFECTS IN THE DETAILS SUBMITTED BY THE ASSESSEE AND DID NOT MAKE OUT EVEN A PRIMA FACIE CASE OF ANY PREJUDICE CAUSED TO THE INTEREST OF THE REVE NUE. THE A.R. FURTHER SUBMITTED THAT THE ASSESSEE HAS FURNISHED NECESSARY DETAILS BEFORE THE A.O. AND THE A.O. AFTER THOROUGH EXAMINATION OF BAN K STATEMENTS DISALLOWED AN AMOUNT OF ` 8,12,500/- U/S 40A(3) OF THE ACT, TOWARDS PAYMENTS IN EXCESS OF ` 20,000/- OTHER THAN BY WAY OF CROSSED CHEQUE/DEMAND DRAFT. THE LD. A.R., REFERRING TO TH E BANK STATEMENTS AND ORDER OF THE CIT, SUBMITTED THAT THE CIT FAILED TO CORRELATE THE ITA NO.481/VIZAG/2014 M/S. IMAGE HOMES AND DEVELOPERS, GUNTUR 6 AMOUNTS REFLECTED IN THE BANK STATEMENTS WITH DATES MENTIONED IN HIS ORDER TO MATCH BANKING TRANSACTION TAX WITH CORRESP ONDING PAYMENTS TO DIRECT THE A.O. TO DISALLOW AMOUNT U/S 40A(3) OF TH E ACT. THE CIT, WITHOUT ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUN TS, MERELY ON SUSPICIOUS GROUNDS SET ASIDE THE ORDER PASSED BY TH E A.O. AND DIRECTED THE A.O. TO ENHANCE THE ASSESSMENT TO BRING TO TAX CERTAIN PAYMENTS U/S 40A(3) OF THE ACT. 7. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORT ED THE ORDER OF THE CIT. THE D.R. FURTHER SUBMITTED THAT THERE IS NO WHISPER IN THE ASSESSMENT ORDER THAT THE A.O. HAS EXAMINED THE ISS UE POINTED OUT BY THE CIT WITH REFERENCE TO BANK STATEMENTS AND BANKI NG TRANSACTION TAX RECOVERED BY THE BANK TOWARDS PAYMENT MADE IN CASH. THOUGH THE A.O. HAS DISALLOWED CERTAIN PAYMENTS U/S 40A(3) OF THE ACT, IGNORED MAJORITY PAYMENTS EVEN THOUGH THE BANK STATEMENT CL EARLY INDICATES THAT THERE ARE CASH PAYMENTS FOR PURCHASE OF LAND. THEREFORE, THE CIT RIGHTLY ASSUMED JURISDICTION TO REVISE THE ASSESSME NT ORDER AND HIS ORDER SHOULD BE UPHELD. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE CIT, ASSUMED JURISDICTION TO REVISE THE ASSESSMENT ORDER FOR THE REASON ITA NO.481/VIZAG/2014 M/S. IMAGE HOMES AND DEVELOPERS, GUNTUR 7 THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUIRY OF A PPLICABILITY OF SECTION 40A(3) OF THE ACT FOR PAYMENTS TOWARDS PURC HASE OF LAND. THE CIT, FURTHER OBSERVED THAT THE BANK STATEMENTS FURN ISHED BY THE ASSESSEE INDICATE THAT THE BANK COLLECTED BANKING T RANSACTION TAX ON 2 OCCASIONS WHICH ATTRIBUTES TO THE PAYMENT MADE BY T HE ASSESSEE TO THE LAND OWNERS FOR ACQUIRING THE LANDS. IT EMERGE FRO M THE RECORDS THAT THE ASSESSEE HAS NOT MADE PAYMENTS TO THE LANDLORD THROUGH THE ACCOUNT PAYEE CHEQUES/DRAFTS BUT PAID THE SAME THRO UGH BEARER/CASH CHEQUES WHICH DO NOT SATISFY THE PROVISIONS OF SECT ION 40A(3) OF THE ACT. THEREFORE, OPINED THAT THE A.O. FAILED TO EXAMINE T HE ISSUE AND ALSO FAILED TO APPLY HIS MIND BEFORE COMPLETION OF ASSES SMENT, WHICH RENDERED THE ASSESSMENT ORDER ERRONEOUS IN SO FAR A S IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 9. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATER IAL ON RECORD, WE FIND THAT THERE IS NO MERIT IN THE FINDINGS OF T HE CIT, FOR THE REASON THAT DURING THE ASSESSMENT PROCEEDINGS, THE A.O. HA S VERIFIED CASH PAYMENTS WITH REFERENCE TO BOOKS OF ACCOUNTS AND BA NK STATEMENT FILED BY THE ASSESSEE AND DISALLOWED CERTAIN CASH PAYMENT S U/S 40A(3) OF THE ACT. WE FURTHER OBSERVED THAT THE CIT FAILED TO POI NT OUT SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNTS AND DID NOT MAKE OUT EVEN A PRIMA FACIE CASE OF ANY PREJUDICE CAUSED TO THE INTEREST OF THE REVE NUE. THE CIT, MERELY ITA NO.481/VIZAG/2014 M/S. IMAGE HOMES AND DEVELOPERS, GUNTUR 8 ON SUSPICIOUS GROUNDS DIRECTED THE A.O. TO DISALLOW CERTAIN PAYMENTS ON THE PRETEXT OF BANKING TRANSACTION TAX DEBITED BY T HE BANK IN THE STATEMENT. ON PERUSAL OF THE BANK STATEMENT FILED BY THE ASSESSEE, WE FIND THAT ON THE DATE MENTIONED BY THE CIT IN HIS O RDER, THERE IS NO CASH PAYMENTS OR BEARER/CASH CHEQUES PAYMENTS TOWARDS PU RCHASE OF LAND. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSMENT O RDER PASSED BY THE A.O. IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE IN TEREST OF THE REVENUE. HENCE, WE SET ASIDE THE ORDER PASSED BY THE CIT, U/ S 263 OF THE ACT AND RESTORE THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28 TH MAR17. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 28.03.2017 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SHRI G.V.N. HARI & CO., ADVOCATE , FLAT NO.302, SIRI AVENUE, D.NO.10-51- 13, KAILASH UPLANDS, NEAR SRI PRAKASH VIDYA NIKETAN , VIAKHAPATNAM-530 003. 2. / THE RESPONDENT THE CIT, GUNTUR 3. + ( ) / THE CIT (A), GUNTUR 4. # . , . , # / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM