Kanakadhara Ventures Private Limited, Hyderabad V. Dy. Commissioner of Income Tax , Circle-2(1), Hyderabad

ITA 716/Hyd/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3145 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Assessment Year: 2012-2013
• Appeal Filed On: 18-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Recovery proceedings; Condonation of delay
• Section: 40(a)(ia); 13; 68; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD (THROUGH VIRTUAL HEARING) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO.716/HYD/2018 A.Y: 2012 - 13 KANAKADHARA VENTURES PRIVATE LIMITED, HYDERABAD. PAN: AACCK 6555 H VS. DCIT, CIRCLE - 2(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: 17/05/2021 REVENUE BY: 09 /06/2021 DATE OF HEARING: SHRI MO HD . AFZAL DATE OF PRONOUNCEMENT: SMT. AMISHA S. GUPT, DR ORDER PER S.S. GODARA, J.M: THIS ASSESSEES APPEAL FOR A.Y. 2012 - 13 HAS ARISEN AGAINST THE CIT(A) - 2, HYDERABADS ORDER DATED 31/01/2017 PASSED IN CASE NO.0207/2015 - 16 INVOLVING PROCEEDINGS U/S. 144 R.W.S 250(6) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE ASSESSEE HAS RAISED THE FOL LOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL: - 1. THE ORDER OF THE LD. CIT(A) IS AGAINST THE LAW, WEIGHT OF EVIDENCE AND PROBABILITIES OF CASE. 2 2. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT WHEN THE BOOKS OF ACCOUNTS ARE REJECTED TO ESTIMATE THE PROFIT, NO FURTHER ADDITION SHOULD HAVE BEEN MADE CONSIDERING THE SAME BOOKS OF ACCOUNTS. 3. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION U/S. 40(A)(IA) TO THE EXTENT OF RS. 17,88,70,742/ - IN VIEW OF THE REJECTIONS OF BOOKS OF ACCOUNTS. 4. THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE CASE WAS SELECTED FOR A LIMITED PURPOSE OF EXAMINING SHARE PREMIUM RECEIVED AND INCREASE IN UNSECURED LOANS, THEREFORE, OUGHT TO HAVE DELETED THE ADDITIONS MADE ON ACCOUNT OF OTHER ISSUES. 5. THE LD. CIT(A) OUGHT TO HAVE APPREC IATED THAT THE ASSESSEE CLARIFIED THAT THERE IS NO SHARE PREMIUM AND UNSECURED LOANS RECEIVED DURING THE PERIOD RELEVANT TO THE SUBJECT ASSESSMENT YEAR, THEREFORE, THE ADDITIONS MADE BY THE ASSESSING OFFICER ARE WITHOUT JURISDICTION, ARE REQUIRED TO BE DEL ETED IN TOTO. 6. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ADDITIONS ARE MADE BY THE ASSESSING OFFICER ARE AGAINST THE CBDT INSTRUCTIONS NO.7/2014, DATED 26/09/2014 AND THEREFORE, SHOULD HAVE BEEN DELETED IN TOTO. 7. THE LD. CIT(A) ERRED IN RESTORING THE PROFIT RATE @ 8% WITHOUT CONSIDERING THE SUB - CONTRACTS PAYMENTS MADE TO SEVERAL PERSONS, WHERE THERE IS NO PROFIT ELEMENT TO THE ASSESSEE. 8. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR MODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL, IF IT IS CONSIDERED NECESSARY. 3 . AT THE OUTSET, LD. AR SUBMITTED BEFORE US THAT THERE IS A DELAY OF 344 DAYS IN FILING THE INSTANT APPEAL . T HE ASSESSEE HA S FILED AN AFFIDAVIT SEEKING CONDONATION OF DELAY WHEREIN THE REASONS FOR NO T FILING THE APPEAL WITHIN THE PRESCRIBED TIME LIMIT ARE EXPLAINED. FOR REFERENCE, THE RELEVANT PORTION FROM THE AFFIDAVIT IS EXTRACTED HEREIN BELOW: - .AS THE MANAGING DIRECTOR AND THE DIRECTORS WERE BUSY WITH PERSUASION WITH CONCERNED AUTHORITIES FOR THE RELEASE OF FUNDS AND ALSO AT THE WORK SITES AND FURTHER THERE IS NO VISIT TO THE ADMINISTRATIVE OFFICE BY THESE PERSONS, THE ORDER WAS NOT BROUGHT TO THE NOTICE OF THE MANAGING DIRECTOR / DIRECTOR. HOWEVER, RECENTLY A NOTICE WAS ISSUED BY THE ASSESSING OFFICER FOR THE RECOVERY OF TAXES FOR THE SUBJECT ASSESSMENT YEAR, AT THIS STAGE THE DIRECTOR OF THE COMPANY REALIZED THAT AN ORDER HAS BEEN PASSED BY THE APPELLATE COMMISSIONER AND THE SAME IS RECEIVED BY ONE OF THE EX - EMPLOYEES OF THE C OMPANY ON 10/03/2017. IMMEDIATELY, A COUNSEL IS IDENTIFIED AND AN APPEAL IS BEING FILED BEFORE THE HONBLE ITAT, HYDERABAD WITH A DELAY OF 344 DAYS. THE DELAY IS RESULTED ON ACCOUNT OF NO ADMINISTRATIVE STAFF AT THE ADMINISTRATIVE OFFICE AND THE PERSON WH O HAS RECEIVED THE ORDER FAILED TO CONTACT THE MANAGING DIRECTOR / DIRECTOR OF THE COMPANY FOR APPROPRIATE ACTION. IT IS FURTHER SUBMITTED THAT THE DELAY OF 344 DAYS IS NOT ON ACCOUNT OF CONTUMACIOUS CONDUCT OR DELIBERATE. 3 CONSIDERING THE FACTS AND CIRCUM STANCES OF THE CASE, THE HONBLE BENCH IS REQUESTED TO CONDONE THE DELAY OF 344 DAYS TO ADMIT THE APPEAL TO DECIDE THE ISSUES ON MERITS. 4 . ON PERUSAL OF THE AFFIDAVIT FILED BY THE ASSESSEE, W E ARE OF THE VIEW THAT THE REASON FOR THE DELAY WAS AS THE ASSESSEE - COMPANYS EMPLOYEE WHO RECEIVED THE CIT (A)S ORDER AND DID NOT INFORM TO THE CONCERNED HIGHER OFFICIALS AND THEREFORE , THE ASSESSEE COULD NOT FILE THE APPEAL WITHIN THE STIPULATED TIME. T HOUGH THE REASONS ADVANCED BY THE ASSESSEE FOR THE BELATED FILING OF THE APPEAL CANNOT BE APPRECIATED, HOWEVER, CONSIDERING THE ISSUES INVOLVED IN THE APPEAL IN THE INTEREST OF JUSTICE, W E HEREBY CONDONE THE DELAY OF 344 DAYS IN FILING THE APPEAL AND PROCE ED TO ADJUDICATE THE APPEAL ON MERITS . 5. IT TRANSPIRES AT THE OUTSET THAT THE ASSESSEES FIRST AND SEVENTH SUBSTANTIVE GROUNDS CHALLENG E 40(A)(IA) DISALLOWANCE / ADDITION OF RS. 17,88,70,742/ - AND ESTIMATION OF PROFIT RATE @ 8% ON CONTRACT TURNOVER IN C IV IL C ONSTRUCTION BUSINESS OF RS. 2,33,03,11,441/ - ; COMING TO RS. 23,30,31,144/ - ; ARE VERY MUCH INTER - CONNECTED. 6. MR. MOHD. AFZALS FIRST AND FOREMOST ARGUMENT IS THAT BOTH THE L OWER A UTHORITIES HAVE ERRED IN LAW AND ON FACTS IN ESTIMATING THE ASSESSEES INCOME @ 8% IN ISSUE , IS NOT SUSTAINABLE SINCE THE ASSESSEES TURNOVER PERTAINS TO SUB - CONTRACT BUSINESS ONLY. HE FAILS TO DISPUTE THAT THE ASSESSEE HA D NOT GIVEN FULL DETAILS OF THE SUB - CONTRACT RECEIPTS RIGHT FROM SCRUTINY TILL DATE. WE, THUS, FIND NO REASON TO ACCEPT HIS 4 TECHNICAL AS WELL AS FACTUAL ARGUMENTS REGARDING TO BOOK S REJECTION RESULTING IN THE IMPUGNED PROFIT ESTIMATION. WE ACCORDINGLY DECLINE THE ASSESSEES 7 TH SUBSTANTIVE GROUND TO THIS EFFECT. 7. NOW COMES THE LATTER COMPONENT OF SECTION 40(A)(IA) DISALLOWANCE / ADDITION OF RS. 17,88,70,742/ - . WE ARE OF THE OPINION THAT THE SAME HAS NO LEGS TO STAND ONCE THE ASSESSEES BOOKS STOOD REJECTED (SUPRA) AS PER H ONBLE J URISDICTIONAL H IGH C OURTS DECISION IN INDWELL CONSTRUCTIONS VS. CIT (1998) 232 ITR 771 (AP) THAT NO DISALLOWANCE COULD BE MADE ONCE AN ASSESSEES PROFITS ARE ESTIMATED AT THE FIXED PERCENTAGE OF ITS TURNOVER . W E, THUS, ACCEPT THE ASSESSEES INSTANT T HIRD SUBSTANTIVE GRIEVANCE. 8. THIS LEAVES US WITH THE ASSESSEES SE COND SUBSTANTIVE GRIEVANCE OF UNEXPLAINED CASH CREDITS ADDITION OF RS. 1,43,67,992/ - IN RESPECT OF ALLEGED SHARE APPLICATION / PREMIUM AND UNSECURED LOAN, AS THE CASE MAY BE. 9. LEARNED C OUNSELS ONLY PLEA IS THAT NO SUCH AMOUNTS HAD BEEN COLLECTED IN THE RELEVANT PREVIOUS YEAR SO AS TO FORM SUBJECT MATTER OF SECTION 68 ADDITION. F ACED WITH TH IS SITUATION, WE ARE OF THE OPINION THAT THE SAME REQUIRES AFRESH FACTUAL VERIFICATION AT THE ASSESSING OFFICERS END AS PER LAW. WE ORDER ACCORDINGLY. THE ASSESSEE OR ITS L EARNED A UTHORISED R EPRESENTATIVE SHALL APPEAR BEFORE THE ASSESSING OFFICER ON OR BEFORE 30/09/2021 WITH ALL THE RELEVANT DETAILS TO BE 5 FOLLOWED BY THREE EFFECTIVE OPPORTUNITIES OF HEARING AT ITS OWN RISK AND RESPONSIBILITY. 10. THUS , ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOVE TERMS. PRONOUNCED IN THE OPEN COURT ON 09 TH JUNE, 2021. SD/ - SD/ - (L.P. SAHU) ( S.S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 09 TH JUNE , 2021. OKK COPY TO: - 1) KANAKADHARA VENTURES PRIVATE LIMITED C/O. MODH. AFZAL, ADVOCATE, 11 - 5 - 465, SHERSONS RESIDENCY, FLAT NO. 402, CRIMINAL COURT ROAD, RED HILLS, HYDERABAD 500 004. 2) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 2(1), SIGNATURE TOWERS, KONDAPUR, HYDERABAD. 3) THE CIT(A) - 2, HYDERABAD . 4) THE PR. CIT - 2, HYDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE