DCIT, Central Circle-9, Hyderabad V. M/s JRB Agro Pvt Ltd., Hyderabad

ITA 583/HYD/2014

• Counselvise Citation: 58322514 RSA 2014
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 01-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Validity of assessment
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER SL.NO. ITA NO. AY APPELLANT RESPONDENT 1 583/H/14 2002-03 DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- 9, HYDERABAD. M/S JRB AGRO PVT. LTD., HYDERABAD. PAN AAACJ9399L 2 584/H/14 2002-03 -DO- M/S SARAYU AGRO FARMS PVT. LTD., HYDERABAD. PAN-AAFCS3125G 3 585/H/14 2002-03 -DO- M/S SABARMATI AGRO FARMS PVT. LTD., HYDERABAD. PAN-AAFCS3127E 4 586/H/14 2002-03 -DO- M/S JESTHA FARMS PVT. LTD., HYDERABAD. PAN-AABCJ2425J 5 587/H/14 2002-03 -DO- M/S CHITTA BIO TECH PVT. LTD., HYDERABAD. PAN-AACCC1179M 6 588/H/14 2002-03 -DO- M/S OCEANIC GREENFIELDS PVT. LTD., HYDERABAD. PAN-AAACO4175F 7 589/H/14 2002-03 -DO- M/S BRNR AGRO PVT. LTD., HYDERABAD. PAN-AABCB5750A 8 590/H/14 2002-03 -DO- M/S ROHINI BIOTECH PVT. LTD., HYDERABAD PAN-AACCR4351E 9 591/H/14 2002-03 -DO- M/S PUNARVASU BIO TECH. PVT. LTD., HYDERABAD. PAN-AACCP9297J 10 592/H/14 2002-03 -DO- M/S HASTHA AGRO TECH PVT. LTD., HYDERABAD. PAN-AABCH2674M 11 593/H/14 2002-03 -DO- M/S SRAVANA AGRO PVT. LTD., HYDERABAD. PAN-AAHCS1741C ITA NOS. 583 TO 594/H/14 & 571 TO 573/H/14 M/S JRB AGRO PVT. LTD. AND OTHERS 12 594/H/14 2002-03 -DO- M/S SATMALA AGRO FARMS PVT. LTD., HYDERABAD. PAN-AAFCS3126F 13 571/H/14 2002-03 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 8, HYDERABAD. M/S NALLAMALA AGRO FARMS PVT. LTD., HYDERABAD. PAN-AABCN2520Q 14 572/H/14 2002-03 -DO- M/S GOMATI AGRO FARMS PVT. LTD., HYDERABAD. PAN-AABCG3988R 15 573/H/14 2002-03 -DO- M/S KANCHENJUNGA GREENLANDS PVT. LTD., HYDERABAD. PAN-AABCK5813H REVENUE BY SHRI SOLGY JOSE T. KOTTARAM ASSESSEE BY SHRI K.C. DEVDAS DATE OF HEARING 07-08-2014 DATE OF PRONOUNCEMENT 08-08-2014 O R D E R PER BENCH: THESE 15 APPEALS ARE PREFERRED BY THE REVENUE AGAIN ST 15 SEPARATE ORDERS PASSED BY THE LEARNED CIT(A)-VII, H YDERABAD, ALL DATED, 28/01/2014 WHEREBY HE CANCELLED THE PENALTI ES IMPOSED BY THE AO U/S 271(1)(C) OF THE ACT, IN CASE OF ALL THE 15 ASSESSEE COMPANIES. 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO TH ESE APPEALS ARE AS FOLLOWS. ALL THE ASSESSEE COMPANIES IN THE PRESE NT CASES ARE STATED TO BE INCORPORATED WITH THE MAIN OBJECT TO C ARRY ON AGRICULTURAL AND ALLIED ACTIVITIES. THEY BELONG TO SATYAM GROUP. IN THEIR CASES, ASSESSMENTS WERE ORIGINALLY COMPLETED BY THE AO U/S 143(3) FOR THE YEAR UNDER CONSIDERATION I.E. 2002-03 INVARIABLY AC CEPTING THE INCOME DECLARED BY THEM IN THEIR RETURNS. SUBSEQUENTLY ON 07/01/2009, SHRI ITA NOS. 583 TO 594/H/14 & 571 TO 573/H/14 M/S JRB AGRO PVT. LTD. AND OTHERS B. RAMALINGA RAJU, THE THEN CHAIRMAN OF M/S SATYAM COMPUTERS LTD., CONFESSED OF HAVING FORGED THE ACCOUNTS OF THE COM PANY FOR THE LAST SEVERAL YEARS. HE ALSO CONCEDED THAT REVENUES AND P ROFITS WERE MANIPULATED BY FALSIFICATION OF ACCOUNTS FOR THE LA ST SEVERAL YEARS. IN HIS SWORN STATEMENT RECORDED ON 21/02/2009 IN CENTR AL PRISON, SHRI B. RAMALINGA RAJU CONFIRMED AND REITERATED HIS CONFESS ION MADE ON 07/01/2009. IT WAS ALSO FOUND THAT SHRI B. RAMALING A RAJU AND HIS FAMILY MEMBERS HAVE FLOATED MORE THAN 350 COMPANIES , WHICH, INTER- ALIA, INCLUDED ALL THE 15 ASSESSEE COMPANIES IN THE PRESENT CASES. IT WAS FURTHER FOUND THAT THE EFFECTIVE CONTROL OF ALL THESE COMPANIES WAS WITH THE FAMILY MEMBERS OF SHRI B. RAMALINGA R AJU. WITH THIS BACKGROUND, ASSESSMENTS OF ALL THE 15 ASSESSEE COMP ANIES FOR AY 2002-03 WERE REOPENED BY THE AO AFTER RECORDING REA SONS AND NOTICES, ACCORDINGLY, WERE ISSUED BY HIM U/S 148 ON 26/03/2009. THEREAFTER, ASSESSMENTS WERE COMPLETED BY THE AO U/ S 143(3) R.W.S. 147 OF THE ACT MAKING VARIOUS ADDITIONS TO THE TOTA L INCOME OF ALL THE 15 ASSESSEE COMPANIES, INTER-ALIA, ON ACCOUNT OF UN EXPLAINED INVESTMENTS FOUND TO BE MADE IN FIXED ASSETS, UNEXP LAINED CASH CREDITS, UNEXPLAINED AGRICULTURAL INCOME, ETC. 3. AGAINST THE ASSESSMENTS MADE BY THE AO U/S 143(3 ) R.W.S. 147, APPEALS WERE PREFERRED BY ALL THE 15 ASSESSEE COMPA NIES BEFORE THE LEARNED CIT(A) CHALLENGING THE VALIDITY OF THE SAID ASSESSMENTS AS WELL AS DISPUTING THE ADDITIONS MADE THEREIN ON MER IT. THE SAID APPEALS WERE DISMISSED BY THE LEARNED CIT(A) UPHOLD ING THE VALIDITY OF ASSESSMENTS MADE BY THE AO U/S 143(3) R.W.S. 147 AND CONFIRMING THE ADDITIONS MADE THEREIN ON MERIT. AGAINST THE OR DERS OF THE LEARNED CIT(A), FURTHER APPEALS WERE PREFERRED BY ALL THE 1 5 ASSESSEE COMPANIES TO THE TRIBUNAL AND VIDE ITS COMMON ORDER DATED 31/12/2013 PASSED IN THE QUANTUM PROCEEDINGS, THE T RIBUNAL CANCELLED ALL THE ASSESSMENTS MADE BY THE AO U/S 14 3(3) R.W.S. 147 HOLDING THE SAME TO BE INVALID ON THE GROUND THAT R EOPENING ITSELF WAS BAD IN LAW. ITA NOS. 583 TO 594/H/14 & 571 TO 573/H/14 M/S JRB AGRO PVT. LTD. AND OTHERS 4. MEANWHILE, ON SUSTENANCE OF THE ADDITIONS MADE T O THE TOTAL INCOME OF THE ASSESSEE COMPANIES BY THE LEARNED CIT (A) IN THE QUANTUM PROCEEDINGS, NOTICES WERE ISSUED BY THE AO REQUIRING THE ASSESSEE COMPANIES TO SHOW CAUSE AS TO WHY PENALTIE S U/S 271(1)(C) SHOULD NOT BE IMPOSED IN RESPECT OF THE SAID ADDITI ONS CONFIRMED BY THE LEARNED CIT(A). SINCE THE EXPLANATION OFFERED B Y THE ASSESSEE COMPANIES IN RESPONSE TO THE SAID NOTICES WAS NOT F OUND ACCEPTABLE BY HIM, THE AO IMPOSED PENALTIES U/S 271(1)(C) IN CASE OF ALL THE 15 ASSESSEE COMPANIES HOLDING THAT THEY WERE GUILTY OF FURNISHING INACCURATE PARTICULARS OF THEIR INCOME. THE PENALTI ES IMPOSED BY THE AO U/S 271(1)(C) WERE CHALLENGED BY ALL THE 15 ASSE SSEE COMPANIES IN APPEALS FILED BEFORE THE LEARNED CIT(A) AND AFTE R TAKING NOTE OF THE FACT THAT THE RELEVANT ASSESSMENTS MADE BY THE AO U /S 143(3) R.W.S. 147 WERE ALREADY CANCELLED BY THE TRIBUNAL IN QUANT UM PROCEEDINGS HOLDING THE SAME TO BE INVALID, THE LEARNED CIT(A) CANCELLED THE PENALTIES IMPOSED BY THE ASSESSING OFFICER U/S 271( 1)(C) IN CASE OF ALL THE 15 ASSESSEE COMPANIES RELYING ON THE DECISI ON OF THE HONBLE SUPREME COURT IN CASE OF K.C. BUILDERS AND ANOTHER VS. ACIT [2004] 265 ITR 562 (SC). 5. AGGRIEVED BY THE ORDERS OF THE LEARNED CIT(A), T HE REVENUE HAS PREFERRED APPEALS BEFORE THE TRIBUNAL ON THE FOLLOW ING IDENTICAL GROUNDS: 1. THE LEARNED CIT(A) HAS ERRED IN BOTH FACTS AND L AW. 2. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE QUANTUM APPEAL OF THE ASSESSEE AGAINST WHICH TH E PENALTY WAS LEVIED WAS EARLIER DISMISSED BY HIM. 3. THE CIT(A) ALSO OUGHT TO HAVE APPRECIATED THE FA CT THAT THOUGH THE ITAT HAD ALLOWED ASSESSEES APPEAL AGAIN ST THE REOPENING U/S 148, THE DEPARTMENT IS IN PROCESS OF APPEALING AGAINST THE SAME BEFORE THE HONBLE HIGH COURT OF A P. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSE RVED THAT ALTHOUGH ITA NOS. 583 TO 594/H/14 & 571 TO 573/H/14 M/S JRB AGRO PVT. LTD. AND OTHERS THE DEPARTMENT IS STATED TO HAVE FILED THE APPEALS BEFORE THE HONBLE AP HIGH COURT AGAINST THE ORDER OF THE TRIBUNAL DAT ED 31/12/2013 CANCELLING THE ASSESSMENTS MADE BY THE ASSESSING OF FICER U/S 143(3) R.W.S. 147 OF THE ACT TREATING THE SAME AS INVALID, THERE IS NOTHING BROUGHT ON RECORD TO SHOW THAT THE SAID ORDER OF TH E TRIBUNAL IS REVERSED OR SET ASIDE BY THE HONBLE AP HIGH COURT. THUS, THE POSITION THAT STANDS TODAY IS THAT THE ORDERS PASSE D BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 147 IN CASE OF ALL THE 15 ASSESSEE COMPANIES NO MORE SURVIVE AND CONSEQUENTLY, PENALTIES IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) IN RESPECT OF ADDIT IONS MADE IN THE SAID ASSESSMENTS ARE LIABLE TO BE CANCELLED HAVING NO LEGS TO STAND. THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF K.C. BUILDERS (SUPRA) RELIED UPON BY THE LEARNED CIT(A) IN HIS IMPUGNED ORDERS ALSO SUPPORTS THIS VIEW WHEREIN IT WAS HELD THAT PENALTY U/S 271(1)(C) CANNOT STAND ON ITS OWN INDEPENDENTLY OF THE ASSESSMENT AND THE SAME IS LIABLE TO BE CANCELLED ONCE THE ASS ESSMENT ITSELF IS SET ASIDE OR CANCELLED. KEEPING IN VIEW THE DECISI ON OF HONBLE SUPREME COURT IN CASE OF K.C. BUILDERS (SUPRA) AND HAVING REGARD TO THE FACTS OF THE CASE AS DISCUSSED ABOVE, WE UPHOLD THE IMPUGNED ORDERS OF THE LEARNED CIT(A) CANCELLING THE PENALTI ES IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) AND DISMISS THESE A PPEALS FILED BY THE REVENUE. 7. IN THE RESULT, ALL THE 15 APPEALS FILED BY THE R EVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 8 TH AUGUST, 2014. SD/- SD/- (SAKTIJIT DEY) (P.M. JAGTAP) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 8 TH AUGUST, 2014 KV ITA NOS. 583 TO 594/H/14 & 571 TO 573/H/14 M/S JRB AGRO PVT. LTD. AND OTHERS COPY TO:- 1. M/S JRB AGRO PVT. LTD., HYDERABAD. H.NO. 8-3-229/D/32, R.K. RESIDENCY, 1 ST FLOOR, VENKATAGIRI, YOUSUFGUDA, HYDERABAD. 2.M/S SARAYU AGRO FARMS PVT. LTD., HYDERABAD. 3. M/S SABARMATI AGRO FARMS PVT. LTD., HYDERABAD. 4. M/S JESTHA FARMS PVT. LTD., HYDERABAD. 5. M/S CHITTA BIO TECH PVT. LTD., HYDERABAD. 6.M/S OCEANIC GREENFIELDS PVT. LTD., HYDERABAD. 7. M/S BRNR AGRO PVT. LTD., HYDERABAD. 8. M/S ROHINI BIOTECH PVT. LTD., HYDERABAD 9.M/S PUNARVASU BIO TECH. PVT. LTD., HYDERABAD. 10.M/S HASTHA AGRO TECH PVT. LTD., HYDERABAD. 11. M/S SRAVANA AGRO PVT. LTD., HYDERABAD. 12. M/S SATMALA AGRO FARMS PVT. LTD., HYDERABAD. 13. M/S NALLAMALA AGRO FARMS PVT. LTD., HYDERABAD. 14.M/S GOMATI AGRO FARMS PVT. LTD., HYDERABAD. 15. M/S KANCHENJUNGA GREENLANDS PVT. LTD., HYDERABAD. PAN-AABCK5813H 16. DCIT, CENTRAL CIRCLE -9, HYDERQABAD 17. ACIT, CENTRAL CIRCLE 9, HYDERABAD 18. CIT(A)-VII, HYDERABAD 19. CIT (CENTRAL), HYDERABAD 20. DR, ITAT, HYDERABAD