Autofin Limited, Secunderabad, Hyderabad V. ITO, Ward-1(1), Hyderabad, Hyderabad

ITA 736/HYD/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2626 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 28-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M NARMADA
• Assessee Lawyers: K SAI PRASAD
• Keywords: Additional evidence
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 736/HYD/2017 ASSESSMENT YEAR: 2010-11 AUTOFIN LTD., SECUNDERABAD. PAN AACCA9402F VS. INCOME TAX OFFICER, WARD 1(1), HYDERABAD. APPELLANT RESPONDENT ASSESSEE BY: SHRI K. SAI PRASAD REVENUE BY: SMT. M. NARMADA DATE OF HEARING: 21/12/2017 DATE OF PRONOUNCEMENT: 24/01/2018 O R D E R PER S. RIFAUR RAHMAN, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF CIT(A) - I, HYDERABAD, DATED 27/01/2017 FOR THE AY 2010-11. 2. BRIEFLY THE FACTS OF THE CASE ARE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 28/09/2010 DECLARING LOSS OF RS . 73,63,645/-. THE CASE WAS SELECTED FOR SCRUTINY UND ER THE CASS AND NOTICES U/S 143(2) & 142(1) WERE ISSUED. T HE ASSESSMENT WAS COMPLETED U/S 143(3) ON 22/03/2013 DETERMINING LOSS AT RS. 50,59,003/-. 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD PAI D RS.18,00,000/- TOWARDS RENT FOR THE LAND TAKEN ON L EASE FROM SRI GAUTAM CHAND JAIN (HUF) OF AROUND 400 SQ. YDS. THE AO OBSERVED THAT AN ENQUIRY WAS CONDUCTED FROM ONE M/S . MOURYA TIMBERS IN THE SAME AREA WHO HAD ALSO TAKEN LAND ON I.T.A. NO. 736/HYD/2017 M/S AUTOFIN LTD. 2 LEASE OF AROUND 250 TO 300 SQ YDS. M/S MOURYA TIMBE RS IN ITS LETTER DT.18.03.2013 SUBMITTED THAT THE LEASE RENT PAID BY THE FIRM WAS RS.33/- PER SQ. YD. IT ALSO SUBMITTED A CO PY OF THE P&L A/C SHOWING RENT DEBITED AND ITS PAN NUMBER. TH E OUTCOME OF THE ABOVE ENQUIRY WAS PUT FORTH TO THE A SSESSEE AND WAS ASKED TO SHOW CAUSE AS TO WHY THE RENT @ RS .33/- PER SQ.YD SHOULD NOT BE ADOPTED. THE ASSESSEE CONTE NDED THAT THE LAND GIVEN ON RENT WAS IN FACT 800 SQ. YDS AND NOT 400 SQ. YDS. HOWEVER, THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE TO JUSTIFY ITS CLAIM OF THE RENT. THEREFOR E, THE ASSESSING OFFICER CONSIDERED THE RENT @ RS.33/- PER SQ.YD. WHICH WORKED OUT TO RS.1,58,400/- (RS.13,200/- PER MONTH) AND THE BALANCE RENT OF RS.16,41,600/ (18,00,000 -1 ,58,400) WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSES SEE AS PER THE PROVISIONS OF SEC. 40A(2)(B). AGGRIEVED WIT H THE ABOVE ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 3. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT T HE TOTAL AREA OF RENT IS 833 SQ.YD. AND IN THE PREVIOUS YEAR , THE ASSESSING OFFICER HAD TAKEN LEASE RENT AS RS. 100/- PER SQ.YD. HE SUBMITTED THAT THE VALUE TAKEN BY THE ASSESSING OFFICER HAS NOT BEEN CONFIRMED BY THE ASSESSEE AFTER THE IT AT HAS SET ASIDE THE ORDER. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) OBSERVED THAT THE ASSESSEE HAD NOT GIVEN ANY SUPPORTING DOCUMENT OF LEASE RENT AND MOREOVER THE AO HAD MADE AN ENQUIRY FROM M/S MOURYA TIMBERS AND CAME TO KNOW THAT THE RENT PER SQ.YD. WAS ONLY RS. 33/-. HE FURT HER OBSERVED THAT THE ASSESSEE HAD NOT GIVEN ANY SUBMISSIONS REG ARDING AS TO WHY THE RENT SHOULD BE ALLOWED ON SUCH A HIGHER AMOUNT. IN VIEW OF THE ABOVE OBSERVATION, THE CIT(A) UPHELD TH E ACTION OF THE AO. I.T.A. NO. 736/HYD/2017 M/S AUTOFIN LTD. 3 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF A PPEAL: 1. THE ORDER OF THE LEARNED FIRST APPELLATE AUTHORI TY CONFIRMING THE DISALLOWANCE MADE U/S 40A(2)(B) IS N OT CORRECT EITHER IN LAW OR ON FACT AND IN BOTH. 2. THE LEARNED FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THE FACT THAT THE PROVISIONS OF SECTION 40A (2)(B) ARE NOT APPLICABLE TO THE FACTS AND CIRCUMST ANCES OF THE CASE. 3. THE LEARNED FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THE FACT THAT THE ASSESSING OFFICER HAS TAKEN IMPROPER MEASUREMENTS OF THE PROPERTY IN WORKING OU T THE ADDITIONS U/S 40A(2)(B). 4. THE LEARNED FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THE ALTERNATE PLEA OF THE APPELLANT THAT THE RENT ALLOWED @RS.33 PER SQ.YD IS LESS THAN THE RENT OF THE RS.100 ALLOWED IN THE EARLIER ASSESSMENTS. 5. THE LEARNED FIRST APPELLATE AUTHORITY IS NOT JUS TIFIED IN CONFIRMING THE DISALLOWANCE OF RS.16,41,600/- MADE BY THE ASSESSING OFFICER U/S 40A(2)(A) OF THE ACT. 6. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE ABOVE GROUNDS. 6. BEFORE US, THE LD. AR OF THE ASSESSEE INVITED OU R ATTENTION TO THE PAGES 11 TO 14 OF THE PAPER BOOK, WHICH IS A COPY OF LEASE DEED DT. 01/04/2008 BETWEEN SRI GAUTA MCHAND JAIN AND M/S AUTOFIN LTD. FILED BEFORE THE AO, TO S UBMIT THAT THE LAND GIVEN ON RENT IS 833 SQ.YDS. AND NOT 400 S Q.YDS. AS MENTIONED BY THE AO AND ALSO THE LEASE RENT OF RS. 1,50,000/- PER MONTH WAS PAID, AS PER THE LEASE DEED. HE RELIE D ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. GOA MINERALS PVT. LTD., [2017] 396 ITR 452 ( BOM.) 7. LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF REVENUE AUTHORITIES. I.T.A. NO. 736/HYD/2017 M/S AUTOFIN LTD. 4 8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON PERUSAL OF RECORD, WE FIND THAT SIMILAR ISSUE AROSE BEFORE THE COORDINATE BENCH OF THIS TRI BUNAL IN ASSESSEES OWN CASE FOR AY 2009-10 IN ITA NO. 57/HY D/2010 VIDE ORDER DATED 25/03/2015 WHEREIN THE COORDINATE BENCH REMITTED THE MATTER BACK TO THE FILE OF THE AO BY O BSERVING AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND EXAMINED THE RECORD. THERE IS NO DISPUTE WITH REFER ENCE TO THE FACT THAT ASSESSEE HAS TAKEN LEASE OF TOTAL 3253 SQ. YARDS AS AGAINST 2820 SQ. YARDS RECORDED BY THE A.O. IN ARRIVING AT THE DISALLOWANCE. ASSESSEE HAS FILED AN AFFIDAVIT MENTIONING AREA LEASED OUT AND ALSO SA LE DEEDS TO SUBMIT THAT AREA OF 833 SQ. YARDS GIVEN BY MR. GOWTHAM CHAND JAIN WAS WRONGLY NOTED AS 400 SQ. YARDS BEFORE THE A.O. WHICH MISTAKE CARRIED BEING I N THE ORDER OF THE LD. CIT(A). ASSESSEE FILED ADDITIONAL EVIDENCE WHICH REQUIRE EXAMINATION BY THE A. O. 7. COMING TO THE ISSUE OF ADOPTING THE FAIR RENTAL VALUE IT IS NOT CLEAR FROM THE ITL REPORT HOW HE ARRIVED AT THE RENTAL VALUES. EXCEPT HIS REPORT THERE IS NO SUPPOR TING EVIDENCE IN THE FORM OF LEASE DEEDS OR AREA MAPS SO AS TO EXAMINE WHETHER LEASE RENTS RECORDED BY HIM ARE REASONABLE OR REPRESENT FAIR RENT OF THE AREA. IN F ACT, THE INSPECTORS REPORT EXTRACTED BY THE LD. CIT(A) IN T HE ORDER DOES NOT EVEN INDICATE WHETHER THERE IS ANY SIMILARITY OR DISSIMILARITY BETWEEN ASSESSEE'S PROP ERTY AND THE PROPERTY'S VALUES HE HAS ENQUIRED. MOREOVER , IT IS ALSO CONTENTION THAT ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY DURING THE ASSESSMENT PROCEEDINGS NOR THERE IS ANY OPPORTUNITY BY THE LD. CIT(A). IN VIEW OF THIS, WE ARE OF THE OPINION THAT WHOLE EXERCISE CONDUCTED BY THE A.O. REQUIRES RE-ADJUDICATION. A.O . SHOULD EXAMINE THE EXTENT OF LAND LEASED AND THEN ESTABLISH THAT THE RENT PAID BY ASSESSEE IS FAIR RE NT OR NOT. MOREOVER, A.O. ALSO SHOULD GIVE DUE OPPORTUNIT Y TO THE ASSESSEE IF ANY ENQUIRES ARE CAUSED BY HIM IN T HIS REGARD. WITH THESE OBSERVATIONS, WE SET ASIDE THE O RDER OF THE A.O. AND LD. CIT(A) AND RESTORE THE MATTER T O THE FILE OF THE A.O. TO CONSIDER THE ADDITIONAL EVIDENC E FILED BEFORE US AND ALSO TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO JUSTIFY THE CLAIMS MADE THEREIN. I.T.A. NO. 736/HYD/2017 M/S AUTOFIN LTD. 5 SINCE THE ISSUE IN THE AY UNDER CONSIDERATION IS SI MILAR TO AY 2009-10, FOLLOWING THE DECISION THEREIN, WE REMIT T HE ISSUE BACK TO THE FILE OF THE AO TO DECIDE THE ISSUE FOLL OWING THE DIRECTIONS OF COORDINATE BENCH IN AY 2009-10. THE A O IS DIRECTED TO ADOPT THE AREA AS WELL AS THE RENT AS D ETERMINED IN THE AY 2009-10. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2017 SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER SD/- (S. RIFAUR RAHMAN) ACCOUNTANT MEMBER HYDERABAD, DATED 24 TH JANUARY, 2017 KV COPY FORWARDED TO: 1. M/S AUTOFIN LTD., C/O CH. PARTHASARATHY & CO., 1 -1- 298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO. 1, ASHOKNAGAR, HYDERABAD 500 020. 2. ITO, WARD 1(1), IT TOWER, 7 TH FLOOR, HYDERABAD 3. CIT(A) -I, HYDERABAD 4 PR. CIT - 1, HYDERABAD 5 THE DR, ITAT, HYDERABAD 6 GUARD FILE