Sri. S. Chandra Shekhar, V. ACIT,

ITA 630/BANG/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76991 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS PRATIBHA R
• Keywords: Search and seizure
• Section: 40A(3); 143(3); 153A; 37(1); 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.630/BANG/2013 ASSESSMENT YEAR : 2009-10 SRI S. CHANDRASHEKAR, NO.90, 3 RD MAIN, J.H.B.C.S. LAYOUT 1 ST STAGE, PADMANABHA NAGAR, BANGALORE 560 070. PAN : ABPPC 8107J VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : MRS. PRATIBHA R, ADVOCATE RESPONDENT BY : SHRI FARAHAT HUSSAIN QURESHI, CIT-II(DR) DATE OF HEARING : 29.05.2014 DATE OF PRONOUNCEMENT : 29.05.2014 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 20.03.2013 OF THE COMMISSIONER OF INCOME-TAX [CIT], BANGALORE PASSED U/S. 263 OF THE ACT. ITA NO.630/BANG/2013 PAGE 2 OF 6 2. THE ASSESSEE IS AN INDIVIDUAL. HE IS A PARTNER I N M/S. MOOKAMBIKA ASSOCIATES, MOOKAMBIKA PROMOTERS AND MOOKAMBIKA DEV ELOPERS, CARRYING ON BUSINESS FOR PURCHASE OF LANDS AND DEVELOPING TH EM INTO SITES FOR RESIDENTIAL PURPOSES AND SELLING THE SAME. THERE W AS A SEARCH AND SEIZURE ACTION U/S. 132 OF THE ACT CONDUCTED IN THE CASE OF THE ASSESSEE ON 6.1.2010. THE ORDER OF ASSESSMENT WAS PASSED ON 30 .12.2010 U/S. 153A R.W.S. 143(3) OF THE ACT DETERMINING TOTAL INCOME O F RS.1,23,60,556. 3. THE CIT, IN EXERCISE OF HIS POWERS U/S. 263 OF T HE ACT, WAS OF THE VIEW THAT THE AFORESAID ORDER OF THE AO WAS ERRONEO US AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE FOR THE FOLLOWING REAS ONS:- ON PERUSAL OF THE RECORDS FOR THE ABOVE ASSESSMEN T YEAR, IT IS NOTICED THAT THE ASSESSING OFFICER WHILE PASSING TH E ORDER UNDER SECTION 143(3) READ WITH SECTION 153C OF THE INCOME TAX ACT ON 30-12-2010, MADE THE DISALLOWANCE OF RS.8,00,000/- UNDER SECTION 40A(IA) IN RESPECT OF INTEREST PAYABLE TO NIPMO IGNORING THE FACT THAT THE INTEREST PAYABLE TO NIPMO WAS R S.29,18,000/- AND THEREFORE, THE DISALLOWANCE UNDER SECTION 40A(I A) SHOULD HAVE BEEN MADE OF RS.29,18,000/-, THE ASSESSING OFFICER ALSO FAILED TO EXAMINE THE GENUINENESS OF THE PROPERTY DEVELOPMENT EXPENSES AMOUNTING TO RS.27,00,000/-, COMMISSION EXPENSES OF RS.9,28,000/- AND SALARY EXPENSES OF RS. 4,92,600/- CLAIMED TO HAVE BEEN INCURRED IN CASH, IN RESPECT OF THESE EXP ENSES, THE ASSESSING OFFICER ALSO FAILED TO EXAMINE THE APPLIC ABILITY OF PROVISIONS OF SECTION 40A(3) OF THE INCOME TAX ACT. 4. A SHOW CAUSE NOTICE DATED 20.11.2012 WAS ACCORDI NGLY ISSUED CALLING UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY : ITA NO.630/BANG/2013 PAGE 3 OF 6 (I) THE DISALLOWANCE UNDER SECTION 40A(IA) SHOULD NOT BE ENHANCED TO RS.29,18,000/-; (II) EXPENSES INCURRED IN CASH UNDER THE HEAD LAND DEVELOPMENT EXPENSES, COMMISSION AND SALARY SHOULD NOT BE DISALLOWED AND ADDED TO THE TOTAL INCOME IN ABSE NCE OF EVIDENCES TO PROVE THAT SUCH EXPENSES HAVE BEEN INC URRED FOR THE PURPOSE OF THE BUSINESS; AND (III) THE EXPENSES UNDER THE HEAD LAND DEVELOPMENT EXPENSES, COMMISSION AND SALARY INCURRED IN VIOLATION OF PROV ISIONS OF SECTION 40A(3) OF THE INCOME TAX ACT SHOULD NOT BE DISALLOWED AND ADDED TO THE TOTAL INCOME. 5. THE ASSESSEE DID NOT RESPOND TO THE AFORESAID NO TICE AND ANOTHER NOTICE DATED 14.12.2012 WAS ISSUED TO THE ASSESSEE. IN RESPONSE, THE AR OF THE ASSESSEE, ONE SHRI V. SREENIVASAN, C.A., REQ UESTED THAT TIME MAY BE GRANTED TILL FIRST WEEK OF JANUARY, 2013. THE S AID AR DID NOT, HOWEVER, HAVE ANY AUTHORISATION IN HIS FAVOUR FROM THE ASSES SEE. ANOTHER SHOW CAUSE NOTICE DATED 27.12.12 WAS ISSUED BY THE CIT G IVING FINAL OPPORTUNITY TO THE ASSESSEE. THE ASSESSEE FILED A LETTER DATED 3.1.13 REQUESTING TWO WEEKS TIME. THE CIT ISSUED ONE MORE SHOW CAUSE NOTI CE DATED 6.2.13. THE ASSESSEE DID NOT COMPLY WITH THIS NOTICE ALSO. THE CIT PASSED AN ORDER U/S. 263 OF THE ACT REVISING THE ORDER OF ASS ESSMENT DATED 30.12.13 PASSED U/S. 143(3) OF THE ACT R.W.S. 153A OF THE AC T OBSERVING AS FOLLOWS:- 3. THE FACTS DISCUSSED IN PARAGRAPH 2 ABOVE MAKES IT CLEAR THAT EVEN AFTER ALLOWING REPEATED OPPORTUNITIES, TH E ASSESSEE FAILED TO FURNISH ANY EXPLANATION IN REGARD TO THE ISSUES RAISED IN THE NOTICE ISSUED UNDER SECTION 263 OF THE INCOME T AX ACT ON 20.11.2012 WHICH PROVES THAT THE ASSESSEE DO NOT AN Y HAVE EXPLANATION IN REGARD TO ISSUES RAISED IN THE SAID NOTICE. ITA NO.630/BANG/2013 PAGE 4 OF 6 ACCORDINGLY, IT IS HELD THAT THE ASSESSING OFFICER COMMITTED ERROR IN DISALLOWING ONLY RS.8,00,000/- UNDER SECTION 40A (IA) OF THE INCOME TAX ACT IN RESPECT OF INTEREST PAYABLE TO N IPMO AS AGAINST THE DISALLOWANCE WORKS OUT TO RS.29,18,000/ -, SIMILARLY, THE ASSESSING OFFICER ALSO COMMITTED ERROR IN ALLOW ING THE PROPERTY DEVELOPMENT EXPENSES OF RS.27,00,000/-, CO MMISSION EXPENSES OF RS.9,28,000/- AND SALARY EXPENSES OF RS . 4,92,600/- UNDER SECTION 37(1) OF THE INCOME TAX ACT EVEN THOU GH THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCES TO PROVE T HE GENUINENESS OF SUCH EXPENSES AND THEREFORE, THE SAME ARE NOT AL LOWABLE UNDER SECTION 37(1) OF THE INCOME TAX ACT. DURING THE PRO CEEDINGS UNDER 263 OF THE INCOME TAX ACT ALSO, THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCES TO SUPPORT THAT THE TDS HAS B EEN DEDUCTED AND PAID WITHIN THE DUE TIME PRESCRIBED UNDER SECTI ON 40A(IA) OF THE INCOME TAX ACT IN RESPECT OF INTEREST OF RS.29, 18,000/- CLAIMED AS DEDUCTION AND THEREFORE, THE SAID AMOUNT IS NOT ALLOWABLE AS DEDUCTION AS PER PROVISIONS OF SECTION 40A(IA) OF THE INCOME TAX ACT, SIMILARLY, THE ASSESSEE FAILED TO P RODUCE ANY EVIDENCES TO PROVE THAT EXPENSES CLAIMED ON PROPERT Y DEVELOPMENT OF RS.27,00,000/-, COMMISSION OF RS.9,2 8,000/- AND SALARY OF RS.4,92,600/- (IN CASH) ARE GENUINE AND H AVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND THEREFORE, THE SAME ARE NOT ALLOWABLE AS DEDUCTION UNDER SECTION 37(1) OF THE INCOME TAX ACT. THE ABOVE FACTS ALSO E STABLISHES THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING ( OFFICER) UNDER SECTION 143(3) OF THE INCOME TAX ACT FOR THE ASSESSMENT YEAR ON 30.12.2010 IS ERRONEOUS AND ALSO PREJUDICIA L TO THE INTEREST OF REVENUE. ACCORDINGLY, THE ASSESSING OFF ICER IS DIRECTED TO ENHANCE THE ASSESSMENT BY DISALLOWING R S.29,18,000/- UNDER SECTION 40A(IA) OF THE INCOME TAX ACT(INSTEAD OF RS.8,00,000/-) AND DISALLOWING THE EXPENSES OF RS.4 1,26,600 UNDER SECTION 37(1) OF THE INCOME TAX ACT. 6. AGGRIEVED BY THE AFORESAID ORDER OF THE CIT, THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 7. WE HAVE HEARD THE SUBMISSIONS OF THE LD. DR AND THE LD. COUNSEL FOR THE ASSESSEE. ITA NO.630/BANG/2013 PAGE 5 OF 6 8. BEFORE US, THE LD. AR FILED THE FOLLOWING DOCUME NTS AND SUBMITTED THAT THESE DOCUMENTS WOULD CLEARLY EXPLAIN AS TO WH Y THE ORDER PASSED U/S. 263 OF THE ACT IS UNSUSTAINABLE:- SL. NO. PARTICULARS PAGE NOS. FILED BEFORE AO FILED BEFORE CIT(A) 1. COPY OF NOTICE U/S.263 FOR AY:2009- 10 1-2 YES YES 2. COPY OF RETURN FILED FOR AY: 2009- 10 3-11 YES YES 3. COPY OF BANK PASS BOOK FOR INTEREST PAID TO NIPMO 12-13 YES YES 4. COPY OF CHART TOWARDS LABOUR CHARGES PAID 14-20 YES YES 5. COPY OF LETTER DTD. 31.03.2009 FROM ENGINEERS TOWARDS DEVELOPMENT CHARGES 21-22 YES YES 9. IT WAS FURTHER SUBMITTED THAT THE AFORESAID DOCU MENTS HAD BEEN FILED BEFORE THE AO IN THE PROCEEDINGS U/S. 143(3) R.W.S. 153A OF THE ACT AND ALSO BEFORE THE CIT(APPEALS) AGAINST THE SAID ORDER OF THE AO. THE LD. COUNSEL FOR THE ASSESSEE ACCORDINGLY REQUESTED THAT THE ASSESSEE HAS PROPER EXPLANATION FOR ALL THE QUERIES RAISED IN TH E SHOW CAUSE NOTICE ISSUED U/S. 263 OF THE ACT. 10. THE LD. DR RELIED ON THE ORDER OF THE CIT. 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT IT WOULD BE JUST AND APPROPRIATE TO SET ASIDE THE IMPU GNED ORDER OF THE CIT AND DIRECT THE LD. CIT TO CONSIDER THE DOCUMENTS FI LED BY THE ASSESSEE ITA NO.630/BANG/2013 PAGE 6 OF 6 BEFORE US AND THEREAFTER PASS APPROPRIATE ORDERS U/ S. 263 OF THE ACT. WE ARE OF THE VIEW THAT THE CONTENTIONS PUT FORTH BY T HE ASSESSEE BEFORE US CANNOT BE EXAMINED, UNLESS THE CIT EXPRESSES HIS OP INION ON THE SAID DOCUMENTS AND EXPLANATIONS. IT IS UNDER THESE CIRC UMSTANCES THAT WE FEEL THAT IT WOULD BE APPROPRIATE TO SET ASIDE THE IMPUG NED ORDER OF THE CIT AND DIRECT HIM TO CONSIDER THE OBJECTIONS RAISED BY THE ASSESSEE AND THEREAFTER PASS A FRESH ORDER. WE MAKE IT CLEAR THAT THE ASS ESSEE SHALL EXTEND COOPERATION AND DILIGENTLY COMPLY WITH THE DIRECTIO NS OF THE CIT TO ENABLE THE CIT TO CONCLUDE THE PROCEEDINGS U/S. 263 OF THE ACT. 12. FOR STATISTICAL PURPOSES, THE APPEAL IS TREATED AS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF MAY , 2014 . SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 29 TH MAY , 2014 . /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. DR, ITAT, BANGALORE. 4. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.