ITO, Ward-7(1), Hyderabad V. M/s Soubhagya Projects, Hyderabad

ITA 702/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74470 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 09-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Cost of acquisition; Corroborative evidences; Revised return
• Section: 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 702/HYD/2013 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER, WARD 7 (1), HYDERABAD. VS. M/S SOUBHAGYA PROJECTS, HYDERABAD. PAN ABHFS3057K APPELLANT RESPONDENT REVENUE BY: SRI SOLGY JOSE T. KOTTARAM ASSESSEE BY: SRI MOHD. AFZA L DATE OF HEARING: 15/01/2014 DATE OF PRONOUNCEMENT: 15/01/2014 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDERS OF THE CIT(A), VIJAYAWADA DATED 27/02/2013 F OR THE ASSESSMENT YEAR 2007-08. 2. THE GRIEVANCE OF THE REVENUE IN THIS APPEAL IS A GAINST THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS . 38,40,000/- MADE BY THE ASSESSING OFFICER. 3. BRIEFLY THE FACTS OF THE CASE ARE DURING THE COU RSE OF SURVEY CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 19/02/2009, CERTAIN INCRIMINATING MATERIAL WAS FOUND AND IMPOUN DED. SUBSEQUENTLY, ASSESSEE FILED A REVISED RETURN OFFER ING ADDITIONAL INCOME OF RS. 10 LAKHS AND ADMITTING THE NET INCOME AT RS. 4,50,870/-. DURING THE COURSE OF SCRUTINY, ON VERIF ICATION OF I.T.A. NO. 702/HYD/2013 M/S SOUBHAGYA PROJECTS 2 IMPOUNDED MATERIAL, THE ASSESSING OFFICER HAD NOTIC ED THAT THE PARTNERS OF THE FIRM PURCHASED FOUR ACRES OF AGRICU LTURAL LAND DURING THE YEAR AND THE ASSESSEE HAD SHOWN THE COST OF THI S LAND AT RS. 40,00,000/- IN THE P&L A/C WHEREAS THE VALUE OF LAN D AS PER THE REGISTERED SALE DEED IS RS. 1,60,000/-. IN THE ABSE NCE OF ANY EXPLANATION FROM THE ASSESSEE FOR VARIATION IN THE VALUE OF THE LAND, THE ASSESSING OFFICER MADE AN ADDITION OF RS. 38.40 LAKHS. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE THE CIT(A). 4. AFTER CONSIDERING THE SUBMISSIONS OF THE APPELLA NT, ASSESSMENT ORDER, REMAND REPORT AND APPELLANT'S REP LY TO REMAND REPORT AND PERUSING ALL OTHER MATERIAL AVAILABLE ON RECORD, THE CIT(A) OBSERVED THAT THIS IS THE FIRST YEAR OF BUSI NESS AND NO SALES HAVE TAKEN PLACE DURING THE PERIOD RELEVANT TO THE SUBJECT ASSESSMENT YEAR. BOOKS OF ACCOUNT WERE IMPOUNDED AN D THE VALUE OF THE COST OF THE LAND AT THE RATE OF RS.10,00,000 /- PER ACRE WAS RECORDED IN THE BOOKS OF ACCOUNT. FURTHER, HE OBSER VED THAT THE ASSESSING OFFICER HAS NOT ALLEGED THAT THE SOURCE O F INVESTMENT IS NOT PROPERLY EXPLAINED AND THE ADVANCES RECEIVED BY THE ASSESSEE WERE ALSO NOT DISPUTED BY THE LEARNED ASSESSING OFF ICER. HOWEVER, THE LEARNED ASSESSING OFFICER IN HER REMAND REPORT ALLEGED THAT MERE ENTRY IN THE BOOKS OF ACCOUNT OR IN ANY DOCUME NT IS NOT A CONCLUSIVE PIECE OF EVIDENCE UNLESS OTHERWISE THE S AME IS PROVED BEYOND DOUBT BY ANY SUPPORTING DOCUMENTARY EVIDENCE . THE LEARNED ASSESSING OFFICER HAS NOT MADE ANY COMMENT ON THE APPLICABILITY OF THE PRESUMPTION UNDER SECTION 292C OF THE I.T. ACT IN RESPECT OF THE BOOKS OF ACCOUNT IMPOUNDED DURING THE COURSE OF SURVEY U/S.133A OF THE I.T. ACT. THE CIT(A) HELD TH AT THAT THE SUBJECT TRANSACTION DOES NOT YIELD TO ANY INCOME CH ARGEABLE TO INCOME TAX. HOWEVER, AS SUBMITTED BY THE ASSESSING OFFICER, THE ASSESSEE ALSO HAS NOT CONCLUSIVELY PROVED THAT THE COST OF ACQUISITION OF LAND IS RS.10,00,000/- PER ACRE EXCE PT RELYING ON THE I.T.A. NO. 702/HYD/2013 M/S SOUBHAGYA PROJECTS 3 BOOKS OF ACCOUNT. CONSIDERING THE FACTS AND CIRCUMS TANCES, THE CIT(A) WAS OF THE OPINION THAT THE TRANSACTION AFFE CTS ONLY THE WORK- IN-PROGRESS. THEREFORE, HE DIRECTED THE AO TO REDU CE THE WORK-IN- PROGRESS TO BE CARRIED FORWARD BY AN AMOUNT OF RS.3 8.40 LAKHS. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 6. BEFORE US, THE LEARNED DR SUBMITTED THAT THOUGH THE ASSESSEE HAS RECORDED THE COST OF LAND IN HIS BOOKS OF ACCOUNT, NO CORROBORATIVE EVIDENCE WAS FURNISHED IN SUPPORT OF ITS CLAIM EITHER IN .POST-SURVEY OR ASSESSMENT PROCEEDINGS. IT IS SU BMITTED THAT A MERE ENTRY IN THE BOOKS OF ACCOUNT OR IN ANY DOCUME NT IS NOT A CONCLUSIVE PIECE OF EVIDENCE UNLESS OTHERWISE THE S AME IS PROVED BEYOND DOUBT BY ANY SUPPORTING DOCUMENTARY EVIDENCE S. IT IS POINTED OUT THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS AFFORDED NUMBER OF OPPORTUNITIES TO FILE NECESS ARY EVIDENCES IN SUPPORT OF ITS CLAIM, HOWEVER, THE ASSESSEE COULD N OT FURNISH ANY EVIDENCE IN THIS REGARD. THE LEARNED DR CONTENDED T HAT IN THE ABSENCE OF ANY SUCH CORROBORATIVE EVIDENCES, THE AS SESSEE'S CLAIM WAS FOUND TO BE UNTENABLE AND THEREFORE, THE SAME W AS NOT ALLOWED. FURTHER, THE DR SUBMITTED THAT THE ASSSSEE EXPRESSED ITS INABILITY EITHER TO PRODUCE THE VENDOR SRI MOINUDDI N OR TO PROVIDE HIS LATEST ADDRESS FOR VERIFICATION. HE, THEREFORE, SUBMITTED THAT UNLESS THE FACTS ARE CROSS-VERIFIED WITH THE VENDOR , THE ASSESSEE'S VERSION CANNOT RELIED UPON. IT IS ALSO PERTINENT TO STATE THAT THE DOCUMENTS OBTAINED FROM SUB REGISTRAR WERE AUTHENTI CATED DOCUMENTS VERIFIED AND REGISTERED BY STATE GOVERNME NT AUTHORITIES WHICH HOLDS WATER IN THE EYES OF LAW WHEN COMPARED TO CERTAIN FIGURES ENTERED BY THE ASSESSEE IN HIS BOOKS OR PAP ERS. 6.1 THE DR SUBMITTED THAT THE ASSESSEES OTHER CONT ENTION THAT THE DIFFERENCE IN THE COST OF THE LAND AS PER BOOK S I.E. RS. 40 LAKHS AND AS PER THE REGISTERED DOCUMENT I.E. RS. 1.60 LA KHS AMOUNTING TO RS. 38.40 LAKHS WAS DISALLOWED BY THE AO FROM THE E XPENDITURE I.T.A. NO. 702/HYD/2013 M/S SOUBHAGYA PROJECTS 4 INCURRED BY THE ASSESSEE AND ADDED BACK AS UNDISCLO SED INCOME. REFERRING TO THE ASSESSEES CONTENTION THAT THE ADD ITION WAS NOT MADE U/S 68 OR 69 OF THE IT ACT AND AS THERE WERE N O SALES IN THE YEAR UNDER CONSIDERATION THE DIFFERENCE, AT BEST, H AS TO BE REDUCED FROM WORKING PROGRESS AND CANNOT BE ADDED TO THE IN COME RETURNED BY THE ASSESSEE, THE LEARNED DR SUBMITTED THAT THE ARGUMENT OF ASSESSEE IS NOT TENABLE SINCE AS PER THE ASSESSMENT ORDER IT IS CLEAR THAT THAT THE ASSESSING OFFICER HAS BROUGHT T HE DIFFERENCE IN COST OF THE LANDS PURCHASED TO TAX AND THE ADDITION MADE WAS NOT ON ACCOUNT OF INFLATED PURCHASE COST OF THE LAND WH ICH HAS THE CHARACTER OF UNEXPLAINED INVESTMENT U/S.69 OF IT AC T. IT IS SUBMITTED THAT BY INFLATING THE RATES THE ASSESSEE SUPPRESSED THE PROFITS AND ARRIVED AT A NET LOSS OF RS.5,49,126/-. THE LEARNED DR SUBMITTED THAT A MINOR LAPSE ON THE PART OF THE ASS ESSING OFFICER IN NOT MENTIONING THE SECTION WILL NOT MAKE THE ADDITI ON NULL OR VOID AS THE MISTAKE IS ONLY TECHNICAL IN NATURE AND, THEREF ORE, THE ACTION OF THE ASSESSING OFFICER IN BRINGING THE DIFFERENCE OF PURCHASE COST OF LAND IS ON STRONG FOOTING AND NEEDS TO BE UPHELD. 7. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON T HE ORDER OF THE CIT(A) IN SUPPORT OF ASSESSEES CASE. 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES, PERUSED THE RECORD AND HAVE GONE THROUGH THE ORDERS OF THE REVENUE AUTHORITIES. ADMITTEDLY, IN THIS CASE THE ADDITION WAS NOT MADE U/S 69 OF THE ACT, BUT, IT WAS MADE ON THE GROUND THAT THE VALUE OF THE LAND WAS INFLATED TOWARDS THE EXPENDITURE ON COST O F LAND PURCHASED BY THE ASSESSEE AND THE SAME WAS DEBITED TO P&L A/C. THE CIT(A) GAVE A FINDING THAT AS THERE IS INFLATIO N OF EXPENDITURE ON COST OF PURCHASE OF LAND, THE TRANSACTION AFFEC TS ONLY THE WORK- IN-PROGRESS. ACCORDINGLY, HE DIRECTED THE AO TO RED UCE THE WORK-IN- PROGRESS TO BE CARRIED FORWARD BY AN AMOUNT OF RS. 38.40 LAKHS. CONSIDERING THE FACTS OF THE CASE, WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF THE CIT(A) AND ACCORDINGLY THE SAME IS HER EBY UPHELD. WE I.T.A. NO. 702/HYD/2013 M/S SOUBHAGYA PROJECTS 5 MAKE IT CLEAR THAT THE CORRESPONDING OPENING WORK-I N-PROGRESS IN SUBSEQUENT ASSESSMENT YEAR TO BE CONSIDERED AS REDU CED BY RS. 38.40 LAKHS. THE GROUNDS RAISED BY THE REVENUE IN THIS REGARD ARE DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 15/01/2014. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 15/01/2014. KV COPY FORWARDED TO: 1. ITO, WARD 7(1), 2 ND FLOOR, B BLOCK, IT TOWERS, HYDERABAD. 2. M/S SOUBHAGYA PROJECTS, 10-3-144/2, 2 ND FLOOR, HUMAYUN NAGAR, HYDERABAD. 3. CIT(A), VIJAYAWADA 4. CIT-IV, HYDERABAD. 5. THE DR, ITAT, HYDERABAD