Venkatapathi Raju Kutcherlapati, Cheepurupalli V. The Income Tax Officer, Ward-2, , Vizianagaram

ITA 628/VIZ/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8232 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 31-12-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Keywords: Capital asset
• Section: 40A(3); 143(3); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER I . T . A . NO. 628 /VIZ/2018 (ASST. YEAR : 20 1 4 - 1 5 ) VENKATAPATHI RAJU KUTCHERLAPATI , D.NO. 14 - 394, ANJANEYAPURAM, CHEEPURUPALLI, VIZIANAGARAM DISTRICT . VS. ITO, WARD - 2 , VIZIANAGARAM . PAN NO. ANWPK 3099 A (APP ELLANT ) (RESPONDENT) ASSESSEE BY : SHRI SAMUEL NAGADESI , ADV. DEPARTMENT BY : SMT. U. MINICHANDRAN , SR. DR DATE OF HEARING : 16 / 1 2 /201 9 . DATE OF PRONOUNCEMENT : 22 / 01 /20 20 . O R D E R TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 10 , HYDERABAD , DATED 20 /0 6 /201 8 FOR THE ASSESSMENT YEAR 20 1 4 - 1 5 . 2. THERE IS A DELAY OF 125 DAYS IN FILING THE APPEAL. THE ASSESSEE HAS FILED AN AFFIDAVIT ALONG WITH MEDICAL CERTIFICATE BY STATING AS UNDER: - 1. THE ABOVE APPEAL IS FILED ON THE ORDER OF THE COMMISSIONER (AP P EALS) UNDER SECTION 250 OF THE INCOME - TAX ACT, 1961 CONFIRMING THE ORDER OF THE ASSESSING OFFICER PASSED U/SEC. 143(3) OF THE INCOME - TAX ACT, 1961 . I SUBMIT THAT THE ORDER OF THE COMMIS S IONER (APPEALS) WAS COMMUNICATED TO ME ON 20 TH JUNE 2018. 2 ITA NO. 628 /VIZ/2018 ( VENKATAPATHI RAJU KUTCHERLAPATI ) 2. AS I WAS SUFFERING FROM LUMBER DISC. SYNDROME AND UNDER TREATMENT UPTO 15 TH DECEMBER, 2018 I WAS NOT IN A POSITION TO ATTEND NORMAL DAY TO DAY ACTIVITIES. COPY OF THE CERTIFICATE IS ENCLOSED . AFTER I STARTED RESUMING THE NORMAL WORK I.E. AFTER 15 TH DECEMBER, 2018 I COULD NO T BE IN A POSITION TO FILE THIS APPEAL ON 31 ST DECEMBER, 2018 WITH A DELAY OF 134 DAYS. HENCE, THIS PETITION FOR CONDONATION OF DELAY. I FIND THAT THERE IS A SUFFICIENT CAUSE TO CONDONE THE DELAY. ACCORDINGLY, DELAY IS CONDONED. 3 . FACTS OF THE CASE IN BRIEF ARE THAT ASSESSEE IS IN THE BUSINESS OF CONSTRUCTION OF GROUP HOUSES , APARTMENTS ETC., FILED HIS RETURN OF INCOME BY DECLARING TOTAL INCOME OF RS. 2,64,090/ - AND AGRICULTURAL INCOME OF RS. 1,70,000/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND AFTER FOLLOWING DUE PROCEDURE ASSESSMENT WAS COMPLETED U/SEC. 143(3) , DATED 05/12/2016 . I N THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT ON VERIFICATION OF THE PROFIT & LOSS ACCOUNT , IT IS NOTICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 7,28,816/ - TOWARDS SITE ACCOUNT . WHEN ASKED ABOUT THE SAME, THE ASSESSEES AR HAS EXPLAINED THAT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF GROUP HOUSES, APARTMENTS AND THE EXPENDITURE RELATES TO PURCHASE OF SITE I.E. STOCK - IN - TRADE. ON VERIFICATION OF THE DOCUMENT, IT IS NOTED THAT THE ASSESSEE HAS MADE PAYMENT S IN CASH IN EXCESS OF RS.20,000/ - 3 ITA NO. 628 /VIZ/2018 ( VENKATAPATHI RAJU KUTCHERLAPATI ) FOR PURCHASE OF SITE VIOLATING THE PROVISIONS OF SECTION 40A(3) OF THE ACT . H ENCE, IT IS PROPOSED TO DISALLOW THE SAID EXPENDITURE AND ADDED BACK TO THE TOTAL INCOME AS THE A SSESSEE VIOLATED THE PROVISIONS OF SECTION 40A(3). IN RESPONSE , THE ASSESSEES AR HAS FILED AN EXPLANATION DATED 18/11/2016 WHEREIN THE AR HAS EXPLAINED THAT THE ASSESSEE HAS PURCHASED THE SITE AS STOCK - IN - TRADE, HENCE, THE PROVISIONS OF SECTION 40A(3) AND RULE 6DD OF IT RULES, 1962 ARE NOT APPLICABLE . THE ASSESSING OFFICER AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE HAS OBSERVED THAT THE ASSESSEE HAS PURCHASED THE LAND BY PAYING ENTIRE CONSIDERATION IN CASH ONLY AS PER THE SALE DEE D AND ALSO AS PER BOOKS OF ACCOUNT IN CONTRAVENTION OF THE PROVISIONS OF SECTION 40A(3) . ACCORDINGLY, THE EXPENDITURE OF RS. 7,28,816/ - DEBITED TO THE PROFIT & LOSS ACCOUNT UNDER THE HEAD SITE ACCOUNT IS DISALLOWED U/SEC. 40A(3) AND ADDED BACK TO THE TOT AL INCOME OF THE ASSESSEE. 4 . ON APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 5. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THIS TRIBUNAL. 6 LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS PURCHASED THE LAND AS INVESTMENT, THEREFORE THE ENTIRE SALE 4 ITA NO. 628 /VIZ/2018 ( VENKATAPATHI RAJU KUTCHERLAPATI ) CONSIDERATION IN CASH IS NOT ATTRACTED THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 7 ON THE OTHER HAND, LD.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8 I HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAIL A BL E ON RECORD. 9 THE ASSESSEE HAS PURCHASED THE LAND FOR A SALE CONSIDERATION OF RS. 7,28,816/ - . THE ENTIRE AMOUNT IS PAID IN CASH AND THE SAME IS DEBITED TO THE PROFIT & LOSS ACCOUNT AND CLAIMED THE SAME AS EXPENDITURE. THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM MADE BY THE ASSESSEE ON THE GROUND THAT SALE CONSIDERATION PAID BY THE ASSESSEE IS IN CONTRAVENTION OF SECTION 40A(3) AND THE SAME IS DISAL L OWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSE SSEE. I FIND THAT ASSESSEE HAS PAID THE ENTIRE SALE CONSIDERATION IN CASH AND DEBITED THE SAME TO THE PROFIT & LOSS ACCOUNT AND IT HAS NOT SHOWN BY THE ASSESSEE AS IT IS A CAPITAL INVESTMENT, THEREFORE, THE ARGUMENT OF THE ASSESSEE THAT THE LAND PURCHASED BY THE ASSESSEE FOR ACQUIRING THE CAPITAL ASSET IS NOT ACCEPTED . THE ENTIRE SALE CONSIDERATION IS DEBITED TO THE PROFIT & LOSS ACCOUNT AND CLAIMED THE EXPENDITURE THERE F ORE THE SALE CONSIDERATION PAID BY THE ASSESSEE IN CASH FOR THE PURCHASE OF LAND IS I N CONTRAVENTION TO THE PROVISIONS OF SECTION 40A(3). ACCORDINGLY, THE ASSESSING OFFICER 5 ITA NO. 628 /VIZ/2018 ( VENKATAPATHI RAJU KUTCHERLAPATI ) DISALLOWED THE SAME AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE WHICH WAS CONFIRMED BY THE LD. CIT(A). I FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY T HE LD. CIT(A). THUS, THIS APPEAL FILED BY THE ASSESSEE IS DISMISSED. 10 IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 2 N D DAY OF JAN . , 2020 . S D / - (V. DURGA RAO) JUDICIAL MEMBER DATED : 2 2 N D JANUARY , 20 20 . VR/ - COPY TO: 1. THE ASSESSEE - VENKATAPATHI RAJU KUTCHERLAPATI, D.NO. 14 - 394, ANJANEYAPURAM, CHEEPURUPALLI, VIZIANAGARAM DISTRICT. 2. THE REVENUE ITO, WARD - 2, VIZIANAGARAM. 3. THE PR. CIT - 1, VISAKHAPATNAM. 4. THE CIT(A) - 10 , HYDERABAD. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.