Vishnusree Ventures Pvt Ltd., Hyd, Hyderabad V. DCIT, Central Circle-1(1), Hyd, Hyderabad

ITA 723/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6079 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-12-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 16-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained expenditure; Search and seizure; Opportunity of being heard
• Section: 40A(3); 143(3); 263; 132

Judgement Text

1 ITA.NO.723/HYD/2016 VISHNU SREE VENTURES P. LTD., HYDERABAD. IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.723/HYD/2016 ASSESSMENT YEAR 2008-2009 VISHNU SREE VENTURES P. LTD., HYDERABAD. PAN AACCV4833H VS. DCIT, CENTRAL CIRCLE-1(1) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO FOR REVENUE : SHRI A. SITARAMA RAO DATE OF HEARING : 17.01.2017 DATE OF PRONOUNCEMENT : 10.03.2017 ORDER PER SHRI S. RIFAUR RAHMAN, A.M. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-11, HYDERABAD DATED 29.01.2016 AND IT PERTAINS TO THE A.Y. 2008-09. THE ONLY ISSUE BEFORE US WHETHER THE LD . CIT(A) IS CORRECT IN HOLDING THAT THE APPEAL FILED AGAINST THE ASSESSMEN T ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 153C OF THE ACT I S INFRUCTUOUS OR NOT. 2. ASSESSEE IS A COMPANY INCORPORATED ON 14.04.2007 , ENGAGED IN THE BUSINESS OF REAL ESTATE. IT FILED ITS RETURN OF INCOME ON 12.01.2009 ADMITTING AN INCOME OF RS.15,910. THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED UNDER SECTION 132 OF THE ACT AT THE R ESIDENTIAL PREMISES OF SRI AKKATI KRISHNA REDDY. DURING THE SEA RCH AND SEIZURE PROCEEDINGS, CERTAIN INCRIMINATING MATERIAL WAS FOUND AND SEIZED 2 ITA.NO.723/HYD/2016 VISHNU SREE VENTURES P. LTD., HYDERABAD. RELATING TO THE ASSESSEE. SUBSEQUENTLY, A NOTICE UNDER SECTION 153C OF THE ACT WAS ISSUED. IN RESPONSE TO THE SAID NOTICE, ASSE SSEE FILED ITS RETURN OF INCOME ON 30.08.2013 ADMITTING INCOME OF RS. 5,15,905. A.O. COMPLETED THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 153C BY DISALLOWING AN AMOUNT OF RS.18 LAKHS UNDER SECTION 40A(3) AND AN AMOUNT OF RS.64,17,000 AS UNEXPLAINED EXPENDITURE. 3. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERRE D AN APPEAL BEFORE THE CIT(A). IN THE MEANTIME, THERE WAS A SEPARAT E DEVELOPMENT. THE PR. CIT-(CENTRAL), HYDERABAD HAD INVOKED THE PROV ISIONS UNDER SECTION 263 OF THE ACT AFTER FINDING THAT THE A.O. HAD CO MPLETED THE ASSESSMENT WITHOUT EXAMINING INSTANCE OF CASH PAYMENT OF RS.9,24,100 TOWARDS INTEREST. IT WAS HELD THAT THE IMPUGNE D ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 153C ON 21.03.2014 WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTER ESTS OF THE REVENUE. ACCORDINGLY, THE CIT SET ASIDE THE ASSESSMENT ORDER PA SSED BY THE A.O. FOR A.Y. 2008-09 VIDE ORDER UNDER SECTION 263 DATED 1 5.09.2015 WITH A DIRECTION TO THE A.O. TO RE-DO THE ASSESSMENT AFRESH AS P ER LAW, AFTER EXAMINING THE DETAILS OF INTEREST PAYMENT AND AFTER PRO VIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. CONSIDERIN G THE ABOVE DEVELOPMENT, THE CIT(A) CONCLUDED THAT SINCE THE ORDER U NDER SECTION 143(3) READ WITH SECTION 153C HAD BEEN SET ASIDE TO BE DECIDED AFRESH, THE APPEAL FILED AGAINST THE ORIGINAL ASSESSMENT ORDER BECOMES INFRUCTUOUS AND CANNOT BE ADJUDICATED UPON. ACCORDING LY, THE APPEAL OF THE ASSESSEE WAS DISMISSED BY THE CIT(A). 4. AGGRIEVED BY THE ABOVE ORDER OF THE CIT(A), THE AS SESSEE IS IN APPEAL BEFORE US. THE LEARNED AUTHORISED REPRESENTATIV E FOR THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS IN WHICH IT WAS SUBMITTED AS UNDER : 3 ITA.NO.723/HYD/2016 VISHNU SREE VENTURES P. LTD., HYDERABAD. AGGRIEVED BY THE SAID ORDER OF THE A.O PASSED UNDE R SECTION 143(3) READ WITH SECTION 153C, THE APPELLANT FILED AN APPE AL BEFORE THE LEARNED CIT(APPEALS). BEFORE THE LEARNED CIT (APPEA LS), THE APPELLANT CONTESTED THE ADDITIONS MADE BY THE ASSES SING OFFICER OF RS.18 LAKHS AND RS.64,17,000/-. THE GROUNDS OF APPE AL AGITATED BEFORE THE CIT (APPEALS) ARE REPRODUCED HEREUNDER : 1. THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS, UN JUST AND CONTRARY TO THE FACTS OF THE CASE AND IN LAW. 2. THE A.O. ERRED IN DISALLOWING RS.18,00,000 BY APPLY ING THE PROVISIONS OF SEC.40A(3) OF THE I.T. ACT. 3. THE A.O. ERRED IN HOLDING THAT THERE WAS ANY UNEXPL AINED PAYMENT WHICH AMOUNTED TO RS.46,00,000 AND FURTHER ERRED IN TREATING THE SAME AS THE INCOME OF THE APPELLANT. 4. THE A.O. ERRED IN TREATING AN AMOUNT OF RS.18,70,00 0 BEING THE COST OF CONSTRUCTION OF 2300 SFT. OF AREA AS UNEXPL AINED INVESTMENT AND FURTHER ERRED IN TREATING THE SAME A S THE INCOME OF THE APPELLANT. 5. THE A.O. ERRED IN CHARGING INTEREST U/S.234A OF RS .L,07,940, U/S.234B OF RS.22,02,055 AND U/S.234C OF RS.8,050. 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF H EARING. IN THE MEANTIME, THE LEARNED PRINCIPAL CIT (CENTRAL ) FOUND THAT THERE IS AN ERROR IN THE ASSESSMENT MADE U/S.143(3) R.W.S. 153C AND ISSUED A SHOW CAUSE LETTER REQUIRIN G THE ASSESSEE TO EXPLAIN AS TO WHY THE ASSESSMENT SHOULD NOT BE R EVISED BY PASSING ORDER U/S 263 OF THE I.T. ACT. THE CONTENTS OF THE SHOW CAUSE LETTER OF THE PRINCIPAL CIT (CENTRAL) DATED 6 .8.2015 ARE REPRODUCED HEREUNDER : 'THE THEN DCIT-CENTRAL CIRCLE-1, HYDERABAD HAS COMPLETED ASSESSMENT U/S. 143(3) R.W.S.153C ON 21.O3.2014 OF THE I.T. ACT IN THE ASSESSEE'S CASE F OR THE A.Y. 2008-09, DETERMINING THE INCOME AT RS.87,32,90 5. IT IS NOTICED THAT THE ASSESSEE COMPANY HAS PAID AN AMOUNT OF RS.9,24,100 IN CASH TOWARDS INTEREST. HOW EVER, THE ASSESSEE COMPANY FAILED TO OFFER THE SAME IN TH E 4 ITA.NO.723/HYD/2016 VISHNU SREE VENTURES P. LTD., HYDERABAD. RETURN OF INCOME AND THE SAME WAS OMITTED FOR ADDIT ION IN THE ASSESSMENT ORDER. IN VIEW OF THE ABOVE, I AM OF THE OPINION THAT THE ASSESSMENT ORDERS PASSED U/S.143(3) R.W.S. 153C BY THE ASSESSING OFFICER DATED 21.03.2014 FOR THE ASST. YE AR 2008-09 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, THE ASSESSEE IS GIV EN AN OPPORTUNITY OF BEING HEARD AS TO WHY THE ORDER MADE BY THE ASSESSING OFFICER SHOULD NOT BE REVISED U/S.263 OF THE I.T.ACT. FOR THIS PURPOSE, THE CASE IS POSTED FOR H EARING ON 25.08.2015 AT 11.30 A.M. YOU MAY APPEAR EITHER IN P ERSON ON THE SAID DATE AT MY OFFICE OR THROUGH YOUR AUTHO RISED REPRESENTATIVE AND FURNISH YOUR EXPLANATION IN WRIT ING. IT CAN BE SEEN FROM THE SHOW CAUSE LETTER THAT THE LEARNED PRINCIPAL CIT IS OF THE VIEW THAT THERE WAS AN ERRO R IN THE ASSESSMENT AS THE ASSESSING OFFICER DID NOT CONSIDE R AN AMOUNT OF RS.9,24,100 PAID AS INTEREST. THE PRINCIPAL CIT CLE ARLY INDICATED THAT THE ERROR IS WITH REGARD TO AN ITEM OF PAYMENT OF INTEREST AND THAT HE PROPOSED TO REVISE THE ORDER TO FACILITATE THE ASSESSING OFFICER TO MAKE ENQUIRY AND IF REQUIRED, TO MAKE AD DITION. THE LEARNED PRINCIPAL CIT DIRECTED THE ASSESSING OFFICE R TO VERIFY THE PAYMENT OF RS.9,24,100 AND FOR THIS PURPOSE THE LEA RNED PRINCIPAL CIT SET ASIDE THE ASSESSMENT WITH A DIRECTION TO RE -DO THE ASSESSMENT AFRESH AFTER EXAMINING THE DETAILS OF IN TEREST PAYMENT OF RS.9,24,100. THEREFORE, THE ORDER U/S.263 OF THE I.T. ACT CONTAINED A DIRECTION TO THE LIMITED EXTENT OF CONS IDERING THE INTEREST PAYMENT OF RS.9,24,100. THE OTHER ISSUES WHICH WERE CONCLUDED BY THE ORDER OF THE ASSESSING OFFICER U/S.143(3) R.W.S . 153C DATED 21.3.2014 ARE NOT OPEN TO THE ASSESSING OFFICER AT THE TIME OF RE- ASSESSMENT CONSEQUENT TO THE ORDER OF THE LEARNED P RINCIPAL CIT. THEREFORE, THE ASSESSING OFFICER, I.E., THE ASSISTA NT COMMISSIONER OF INCOME TAX, CENTRAL CIRC1E-1(1) HYDERABAD VIDE ORDE R U/S.143(3) R.W.S. 263 DATED 30.06.2016 ASSESSED THE INCOME OF RS.87,32,905. IN THE REASSESSMENT, HE MENTIONED AT PARA NO.5 OF T HE ASSESSMENT ORDER AS UNDER: '5. AFTER EXAMINING THE INFORMATION PRODUCED AND MATERIAL AVAILABLE ON RECORD, THE ASSESSMENT OF THE ASSESSEE IS COMPLETED ACCEPTING THE RETURN OF INCOM E AS UNDER : 5 ITA.NO.723/HYD/2016 VISHNU SREE VENTURES P. LTD., HYDERABAD. DESCRIPTION AMOUNT RS. INCOME AS PER ORDER U/S.143(3) R.W.S. 153C DATED 21.03.2014 87,32,905 INCOME ASSESSED 87,32,905 THE DIRECTION OF THE PR. CIT IS TO THE LIMITED EXTE NT OF EXAMINING THE INTEREST PAYMENT OF RS.9,24,100. THE ASSESSING OFFICER FOLLOWED THE DIRECTIONS OF THE LEARNED PRINCIPAL COMMISSIONE R OF INCOME-TAX CONTAINED IN THE ORDER PASSED U/S.263 AND LIMITED T HE SCOPE OF ASSESSMENT U/S.143(3) R.W.S. 263 TO THE AMOUNT OF R S.9,24,100. HE DID NEITHER DISCUSS ABOUT THE OTHER ADDITIONS NOR D ISCUSSED ABOUT THE ADDITIONS MADE IN THE ASSESSMENT ORDER U/S. 143 (3) R.W.S. 153C DATED 21.3.2014. IT WAS FURTHER SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE THAT ACCORDING TO T HE PROVISIONS OF SEC.263, THE CIT MAY PASS AN ORDER ENHANCING OR MOD IFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECT ING A FRESH ASSESSMENT. THE LEARNED PRINCIPAL CIT, WHILE PASSIN G THE ORDER U/S.263, DID NOT CANCEL THE ASSESSMENT ORDER PASSED U/S.143(3) R.W.S.153A OF THE ACT. HE ONLY DIRECTED THE ASSESSI NG OFFICER TO EXAMINE THE LIMITED ISSUE OF INTEREST PAYMENT OF RS .9,24,100 AND MAKE ADDITION, IF REQUIRED. THE DIRECTION CONTAINED IS LIMITED TO THE EXTENT OF CONSIDERING THE INTEREST PAYMENT AND IF N ECESSARY MAKE ADDITION OF RS.9,24,100. THE DIRECTION DOES NOT EXT END TO THE WHOLE OF ASSESSMENT MADE U/S.143(3) R.W.S. 153C OF THE I. T. ACT. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U /S.143(3) R.W.S. 263 EXAMINED THE ISSUE WITH REGARD TO INTERE ST OF RS.9,24,100 AND DID NOT MAKE ANY ADDITION. IN FACT, ALL THE FACTS ARE BEFORE THE ASSESSING OFFICER AT THE TIME OF COM PLETION OF ASSESSMENT U/S.143(3) R.W.S. 263 ON 30.06.2016. THE ASSESSING OFFICER WAS HAVING THE ORDER OF CIT (APPEALS); THE EARLIER ORDER OF ASSESSMENT AND THE ORDER U/S 263 PASSED BY THE PRIN CIPAL CIT. THE ASSESSING OFFICER HAVING CONSIDERED ALL THE MATERIA L ON RECORD IS OF THE VIEW THAT THE EARLIER ORDER U/S 143(3) R.W.S, 1 53C EXISTS EVEN AFTER PARTIAL SET ASIDE BY THE PRINCIPAL CIT. IN TH E CIRCUMSTANCES, THE ASSESSEE HUMBLY SUBMITS THAT THE APPEAL FILED AGAIN ST THE ORDER U/S 143(3) R.W.S. 153C DATED 21.3.2014 COULD NOT HA VE BEEN DISMISSED AS INFRUCTUOUS, BUT SHOULD HAVE BEEN DECI DED ON MERITS. 5. THE LD. D.R. ON THE OTHER HAND, SUBMITTED THAT THE CIT (A) IS RIGHT IN DISMISSING THE APPEAL OF THE ASSESSEE AS INFR UCTUOUS 6 ITA.NO.723/HYD/2016 VISHNU SREE VENTURES P. LTD., HYDERABAD. CONSIDERING THE FACT THAT THE ORDER UNDER SECTION 143(3) READ WITH SECTION 153C IS SET ASIDE BY THE PR. CIT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSI ONS AND MATERIAL ON RECORD. THE ASSESSEE PREFERRED THE PRESENT APPEAL BEF ORE THE TRIBUNAL AGAINST THE ORDER OF CIT(A) WHICH WAS DISMISSED AS I NFRUCTUOUS CONSIDERING THE FACT THAT THE ORDER PASSED UNDER SECTION 143(3) R.W.S. 153C WAS SET ASIDE BY THE PR. CIT AS THE SAME WAS ERRO NEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. AS PER THE DIRECTION OF THE PR. CIT THE ASSESSMENT HAS TO BE DONE AFRESH WITH PROPE R OPPORTUNITY TO THE ASSESSEE. THE ABOVE DIRECTION WAS GIVEN UNDER SECTION 263 ORDER ON 15.09.2015. CONSIDERING THE ABOVE DEVELOPMENT, THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE ON 29.01.2016. W E HAVE NOTICED THAT A.O. HAS INTERPRETED THE DIRECTION OF THE PR. CIT AS THOUGH IT WAS TO EXAMINE ONLY THE CASH PAYMENT OF RS.9,24,100 TOWAR DS INTEREST INSTEAD OF MAKING THE ASSESSMENT AFRESH. ACCORDINGLY, THE A.O. HAS PASSED THE CONSEQUENTIAL ORDER ON 30.06.2016. IT IS CL EAR FROM THE LANGUAGE USED BY THE PR. CIT I.E., IN THE ABSENCE OF SUCH EXAMINATION BY THE A.O., THE ASSESSMENT ORDER SO FRAMED BY THE A.O. IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ACCORDINGLY, THE ASSESSMENT ORDER PASSED FOR A.Y. 2 008-09 IS SET ASIDE WITH A DIRECTION TO THE A.O. TO RE-DO THE SAME AFRE SH, AFTER EXAMINING THE DETAILS OF INTEREST PAYMENT OF RS.9,24,100 AND AFTE R PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. FROM THE ABOVE DIRECTIONS OF THE PR. CIT, IT IS CLEAR THAT THE DIRECTION TO A.O WAS TO RE-DO THE ASSESSMENT AFRESH AFTER CONSIDERING THE FRESH FINDIN GS OF THE PR. CIT, IN OUR CONSIDERED VIEW, THE A.O HAS MISUNDERSTOOD THE DI RECTION OF THE PR. CIT AND PASSED THE CONSEQUENTIAL ORDER AFTER CONSIDER ING ONLY THE CASH PAYMENT TOWARDS INTEREST. A.O SHOULD HAVE PASSED THE CON SEQUENTIAL ORDER AFRESH. IF THE INTENTION OF PR. CIT IS TO RE-DO THE ASSESSMENT 7 ITA.NO.723/HYD/2016 VISHNU SREE VENTURES P. LTD., HYDERABAD. CONSIDERING ONLY THE INTEREST, HE WOULD HAVE DIRECTE D ACCORDINGLY AND NOT BY USING THE EXPRESSION AFRESH. PR. CIT HAS AL READY SET ASIDE THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 153C. TECHNICALLY THE ORDER UNDER SECTION 143(3) R.W.S. 153 C IS NON-EXISTENT. IN OUR VIEW, THE CIT(A) HAS RIGHTLY CONCLUDED THAT IT IS INFRUCTUOUS AND CANNOT BE ADJUDICATED. THE ASSESSEE HAS TO TAKE AN APP ROPRIATE REMEDY AGAINST THE ORDER OF THE A.O. UNDER SECTION 143(3) R.W. S. 263 BUT HE CANNOT PROCEED TO FILE AN APPEAL ON THE ORDER WHICH IS NON-EXISTENT. IN OUR VIEW, THE ASSESSEE WILL BE IN A BETTER FOOTING IF HE PREFERS AN APPEAL AGAINST THE ORDER OF THE A.O. PASSED UNDER SECTION 143( 3) R.W.S. 263. WE, THEREFORE, DISMISS THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.03.20 17. SD/- SD/- (D.MANMOHAN) (S. RIFAUR RAHMAN) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD, DATED 10 TH MARCH, 2017. VBP/- COPY TO 1. VISHNU SREE VENTURES P. LTD., HYDERABAD. C/O. SHRI S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYA S ELEGANCE, 3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500 029. 2. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCL E-1(1), AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 3. CIT(A)-11, HYDERABAD. 4. PR. CIT-(CENTRAL), HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE.