ACIT, Circle-1, Kurnool, Kurnool V. M.G.Brothers Automobiles (P) Ltd., Kurnool, Kurnool

ITA 785/HYD/2015

• Counselvise Citation: 78522514 RSA 2015
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y SESHA SRINIVASDR
• Keywords: Unexplained expenditure; Search and seizure; Condonation of delay; Revised return
• Section: 69C; 153A; 132

Judgement Text

ITA NO.785 OF 2015 MG BROTHERS AUTOMOBILES P LTD KU RNOOL PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.785/HYD/2015 (ASSESSMENT YEAR: 2008-09) ACIT, CIRCLE - 1 KURNOOL VS. M/S. MG BROTH ERS AUTOMOBILES (P) LTD KURNOOL PAN: AABCM 3712 D (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI Y. SESHA SRINIVAS,DR FOR REVENUE : SHRI K.C. DEVDAS DATE OF HEARING : 22 .09 .2015 DATE OF PRONOUNCEMENT : 09 . 10 . 2015 O R D E R PER SMT.P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y 2008-09. IN T HIS APPEAL, REVENUE IS AGGRIEVED BY THE ORDER OF THE CI T (A) DELETING THE PENALTY OF RS.20,39,400 LEVIED U/S 271(1)(C) OF THE ACT. 2. AT THE OUTSET, IT IS SEEN THAT THE APPEAL IS BAR RED BY LIMITATION BY A PERIOD OF 56 DAYS. THE REVENUE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY STATING THAT T HE DELAY HAS OCCURRED DUE TO PENDANCY OF LARGE NUMBER OF TIME BA RRING SCRUTINY ASSESSMENTS DEMANDING ATTENTION OF THE AO. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT SERIOUSLY OBJECT TO THE CONDONATION OF DELAY AND THEREFORE, THE DELAY OF 56 DAYS IN FILING OF THE APPEAL BY THE REVENUE IS CONDONED. ITA NO.785 OF 2015 MG BROTHERS AUTOMOBILES P LTD KU RNOOL PAGE 2 OF 5 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, CARRYING ON THE BUSINESS OF REAL ESTATE, PURCHASE A ND SALE OF AUTOMOBILES AND AQUA PRODUCTS, FILED ITS RETURN OF INCOME FOR A.Y 2008-09 ELECTRONICALLY ON 30.09.2008 ADMITTING TAXA BLE INCOME OF RS.2,88,51,150. SUBSEQUENTLY THE COMPANY FILED A REVISED RETURN OF INCOME FOR A.Y 2008-09 ON 30.06.2009 ADMI TTING THE TOTAL INCOME OF RS.3,02,38,220. MEANWHILE A SEARCH ACTION U/S 132 OF THE I.T. ACT WAS INITIATED ON THE COMPANY ON 25.07.2008 AND SUBSEQUENTLY NOTICE U/S 153A DATED 16.09.2009 W AS ISSUED TO THE ASSESSEE TO SUBMIT ITS RETURN OF INCOME. THE COMPANY FILED ITS RETURN FOR A.Y 2008-09 FOR THE THIRD TIME ON 30 .08.2010 WITH A TOTAL RETURNED INCOME OF RS.3,02,38,220. THEREAFT ER, AO COMPLETED THE ASSESSMENT ON 24.12.2010 AND MADE THE FOLLOWING ADDITIONS, APART FROM MANY OTHER ADDITIONS: 1. UNEXPLAINED EXPENDITURE U/S 69C - RS.60,00,000 2. DISALLOWANCE OF WORKS CONTRACT PAYMENT- MADE TO MR.A.MADHUSUDHANA NAIDU U/S 40(A)(IA) FOR NO TDS. RS.60,00,000 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE CIT (A), WHO CONFIRMED THE ABOVE ADDITIONS VIDE HIS ORDER DA TED 24.07.2011. CONSEQUENT THERETO, THE AO INITIATED PE NALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T. ACT. DURING T HE PENALTY PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEES AC COUNTANT IN HIS SWORN STATEMENT RECORDED ON 16.10.2008, HAD DEP OSED THAT OUT OF THE CONTRACT VALUE OF RS.1.25 CRORES, ONLY R S.1.2 CRORES IS PAID I.E. RS.60.00 LAKHS BY WAY OF CASH AND RS.60.0 0 LAKHS BY WAY OF CHEQUE. HE OBSERVED THAT THE ASSESSEE HAS NO T ONLY NOT ACCOUNTED FOR THE PAYMENT MADE BY CASH BUT ALSO HAS NOT MADE ITA NO.785 OF 2015 MG BROTHERS AUTOMOBILES P LTD KU RNOOL PAGE 3 OF 5 THE TDS AMOUNT FROM THE SAID PAYMENT. TAKING NOTE O F THE FACT THAT THE CIT (A) HAS CONFIRMED THE ADDITIONS ON MER ITS, THE AO HELD THAT IT WAS PROVED BEYOND DOUBT THAT THE ASSES SEE HAS NOT ACCOUNTED FOR THE PAYMENT OF RS.60.00 LAKHS TO THE CONTRACTOR BY CASH AND THEREFORE, IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE I.T. ACT AND LEVIED THE MINIMUM PE NALTY OF RS.20,39,400. 5. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT (A) WHO DELETED THE PENALTY AND REVENUE IS IN APPEAL BEFORE US. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE REPRODU CED HEREUNDER: 1. THE COMMISSIONER OF INCOMETAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS OF THE CASE. 2. THE CIT (APPEALS) ERRED IN DELETING THE PENALTY OF RS. 20,39,400/- LEVIED U/S 271 (1 )(C) OF THE IT AC T 3. THE CIT(A) 'S DECISION IN DELETING THE PENALTY I S NOT CORRECT AS THE QUANTUM APPEAL WAS CONFIRMED BY THE CIT(A). HOWEVER THE CIT(A) HAS DELETED THE PENALTY LEVIED U/S 271(1) (C) BASING ON ITAT'S DECISION IN RESPECT OF QUANTUM APPEAL. AS THE DEPARTMENT HAS NOT ACCEPTED THE ORDER OF IT AT IN RESPECT OF QUANT UM APPEAL WHICH WAS CHALLENGED IN HON'BLE AP HIGH COURT AND THE SAME IS PENDING, THE CIT(A) OUGHT TO HAVE TAKEN AN INDEPENDENT DECISION INSTEAD OF DEPENDING ON THE DECISION OF IT AT ON THE QUANTUM APPEAL. 4. THE CIT(A)'S ORDER IS NOT CORRECT IN DELETING TH E PENALTY/S 271 (1 HC) BASING ON ITA T'S DECISION ON QUANTUM APPEAL AS THE (A) THE ITAT IS NOT CORRECT IN DELETING THE ENTIRE ADDITION STATING THAT THE STATEMENT RECORDED FROM T HE MANAGER OF THE FIRM SRI A MADHUSUDHANA NAIDU ITA NO.785 OF 2015 MG BROTHERS AUTOMOBILES P LTD KU RNOOL PAGE 4 OF 5 CANNOT BE CONCLUSIVE EVIDENCE, EVEN THOUGH SRI MADHUSUDHAN NAIDU CONFIRMED THE RECEIPT OF RS. 60 LAKHS IN CASH AND RS. 60 LAKHS IN CHQ. (B) THE ITAT IS NOT CORRECT IN DELETING THE ADDITIO N OF RS. 60 LAKHS BY NOTICING THE UNSIGNED NATURE OF THE AGREEMENT IN ISOLATION. TO THE EXCLUSION OF OTHER RELEVANT CIRCUMSTANCES. (C) THE HON'BLE ITAT IGNORED THAT THE ENTIRE TRANSACTION CAME TO LIGHT DUE TO SEARCH AND SEIZURE OPERATION ONLY (D) THE HOBN'BLE ITAT IGNORED THAT EVEN THE SAID CHEQUE TRANSACTION WAS NOT ACCOUNTED WHICH IS EVIDENT FROM THE COPY OF TDS CERTIFICATE FILED ALON G WITH WRITTEN REPLY 5. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 6. AS SEEN FROM THE GROUNDS OF APPEAL, THE PENALT Y HAS BEEN DELETED BY THE CIT (A) ON THE GROUND THAT THE ITAT HAS DELETED THE ADDITION OF RS.60.00 LAKHS. ACCORDING TO THE GR OUNDS OF APPEAL RAISED BY THE REVENUE, THE DECISION OF THE I TAT DELETING THE ADDITION HAS NOT BEEN ACCEPTED BY THE DEPARTMEN T AND THE DEPARTMENT IS IN FURTHER APPEAL BEFORE THE HON'BLE HIGH COURT. HOWEVER, WE FIND THAT THE HON'BLE HIGH COURT HAS NO T STAYED THE ORDER OF THE ITAT, NOR HAS IT BEEN SET ASIDE. MEREL Y BECAUSE THE REVENUE HAS FILED AN APPEAL BEFORE THE HIGHER FORUM , THE ORDER DOES NOT LOOSE ITS PRECEDENTIAL VALUE. WE FIND THAT THE CIT (A) HAS MERELY CONSIDERED THE FACT THAT THE BASIS FOR PENAL TY HAS BEEN QUASHED BY THE ITAT AND THEREFORE, IT HAS NO LEGS T O STAND. SINCE THE ORDER OF THE ITAT HAS NOT BEEN SET ASIDE BY THE HON'BLE HIGH COURT, WE DO NOT SEE ANY REASON TO INTERFERE WITH T HE ORDER OF THE CIT (A) AND THE REVENUE APPEAL IS ACCORDINGLY DELET ED. ITA NO.785 OF 2015 MG BROTHERS AUTOMOBILES P LTD KU RNOOL PAGE 5 OF 5 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH OCTOBER, 2015. S D/ - S D/ - (S.RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 9 TH OCTOBER, 2015. VNODAN/SPS COPY TO: 1. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 1, AAYKAR BHAVAN, OPP: CHILDREN PARK, NR PET, KURNOOL 2. M/S. MG BROTHERS AUTOMOBILES (P) LTD., 1/683, COOP. HOUSING BUILDING, YEMMIGANUR, KURNOOL 3. CIT (A) KURNOOL 4. CIT, KURNOOL 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER