DCIT, CHENNAI V. King Makers Enterprises Pvt. Ltd., CHENNAI

ITA 822/CHNY/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5204 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 03-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASISH TRIPATHY
• Assessee Lawyers: R VISWANATHAN
• Keywords: Unexplained cash credit
• Section: 68; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.822/CHNY/2014 ( )( / ASSESSMENT YEAR : 2007-08 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(4) CHENNAI - 600 034. V. M/S KING MAKERS ENTERPRISE PVT. LTD., NO.61, SAIRAM APARTMENTS, LOGAIAH COLONY, SALIGRAMAM, CHENNAI - 600 092. PAN : AACCK 9936 C (+,/ APPELLANT) (-.+,/ RESPONDENT) ./ ITA NO.2994/CHNY/2017 ( )( / ASSESSMENT YEAR : 2007-08 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 4(2), CHENNAI - 600 034. V. M/S KING MAKERS ENTERPRISE PVT. LTD., NO.22 B & C, BALVADI STREET, NERKUNDRAM, CHENNAI - 600 107. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANTS BY : SHRI ASISH TRIPATHY, JCIT -.+, / 0 / RESPONDENT BY : SHRI R. VISWANATHAN, CA 1 / 2% / DATE OF HEARING : 23.05.2018 3') / 2% / DATE OF PRONOUNCEMENT : 14.06.2018 2 I.T.A. NO.822/CHNY/14 I.T.A. NO.2994/CHNY/17 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE REVENUE ARE DIRECTED AGA INST THE COMMON ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) II, CHENNAI, DATED 18.11.2013. WHEN ONE APPEALS IS AGA INST THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3 ) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'), THE OTHE R APPEAL IS AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER CONSEQUEN T TO THE REVISIONAL ORDER PASSED BY THE COMMISSIONER UNDER S ECTION 263 OF THE ACT. 2. THERE WAS A DELAY OF 1402 DAYS IN FILING THE APP EAL IN I.T.A. NO.2994/CHNY/2017 BY THE REVENUE. THE REVENUE HAS FILED A PETITION FOR CONDONATION OF DELAY. WE HAVE HEARD T HE LD. D.R. AND THE LD. REPRESENTATIVE FOR THE ASSESSEE. WE FIND T HAT THERE WAS SUFFICIENT CAUSE FOR NOT FILING THE APPEAL BEFORE T HE STIPULATED TIME. THEREFORE, WE CONDONE THE DELAY AND ADMIT THE APPEA L. 3. THE FIRST ISSUE ARISES FOR CONSIDERATION IN BOTH THE APPEALS IS WITH REGARD TO DISALLOWANCE OF 50% OF THE PURCHASES MADE BY THE ASSESSEE. 3 I.T.A. NO.822/CHNY/14 I.T.A. NO.2994/CHNY/17 4. SHRI ASISH TRIPATHY, THE LD. DEPARTMENTAL REPRES ENTATIVE, SUBMITTED THAT THE ASSESSEE HAS SHOWN PURCHASES TO THE EXTENT OF 1,75,00.450/- IN THE PROFIT & LOSS ACCOUNT. WHEN T HE ASSESSING OFFICER ASKED FOR DETAILS, ACCORDING TO THE LD. D.R ., THE ASSESSEE COULD NOT FURNISH ANY SUPPORTING MATERIAL. THEREFO RE, THE ASSESSING OFFICER DISALLOWED 50% OF THE PURCHASES WHICH COMES TO NEARLY 87,50,200/-. ACCORDING TO THE LD. D.R., THE CIT(AP PEALS) DELETED THE DISALLOWANCE ON THE GROUND THAT THE ASSESSEE IS ONLY AN AGENT FOR SELLING THE PLOTS. THEREFORE, HE DELETED THE D ISALLOWANCE OF EVEN 50% MADE BY THE ASSESSING OFFICER. ACCORDING TO TH E LD. D.R., IN THE ABSENCE OF ANY DETAILS, THE CIT(APPEALS) IS NOT JUSTIFIED IN DELETING THE ADDITION. 5. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADVA NCE SAID TO BE RECEIVED BY THE ASSESSEE TO THE EXTENT OF 48,61,000/-. HERE ALSO, ACCORDING TO THE LD. D.R., THE ASSESSEE COULD NOT FILE ANY DETAILS BEFORE THE ASSESSING OFFICER. THEREFORE, T HE ASSESSING OFFICER MADE DISALLOWANCE UNDER SECTION 68 OF THE A CT. ACCORDING TO THE LD. D.R., THE CIT(APPEALS) FOUND THAT THE SA LES ADVANCE ARE CONSIDERED AS SALES IN THE NEXT FINANCIAL YEAR ON C OMPLETION OF 4 I.T.A. NO.822/CHNY/14 I.T.A. NO.2994/CHNY/17 REGISTRATION OF PLOTS. THESE DETAILS WERE NOT AVAI LABLE BEFORE THE ASSESSING OFFICER. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) IS NOT JUSTIFIED IN DELETING THE ADDIT ION MADE BY THE ASSESSING OFFICER. 6. ON THE CONTRARY, SHRI R. VISWANATHAN, THE LD. RE PRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE IS ON LY AN AGENT. THE ASSESSEE-COMPANY WAS ENTRUSTED THE RESPONSIBILITY O F SELLING OF PLOTS FOR A COMMISSION OF 7000/- PER PLOT. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE HAS TO CANVASS AND MAR KET THE SALE OF PLOTS. OTHER THAN THAT, THE ASSESSEE HAS NO ROLE T O PLAY. ACCORDING TO THE LD. REPRESENTATIVE, THE AMOUNTS DEPOSITED BY THE PURCHASERS WERE INITIALLY DEPOSITED IN THE ASSESSEES BANK ACC OUNT. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE-COMPANY IS NOT HOLDING ANY GENERAL POWER OF ATTORNEY. THE REGISTRATION OF DOC UMENTS WAS MADE BY THE LANDLORDS IN FAVOUR OF PURCHASERS. EVE N THE APPROVAL FOR LAYOUT WAS OBTAINED BY THE LAND OWNERS ONLY. T HEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE AMOUNT COL LECTED BY THE ASSESSEE, BELONGS TO IT, HENCE THE CIT(APPEALS) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 5 I.T.A. NO.822/CHNY/14 I.T.A. NO.2994/CHNY/17 7. COMING TO THE SALES ADVANCE, THE LD. REPRESENTAT IVE FOR THE ASSESSEE SUBMITTED THAT THESE AMOUNTS WERE IN CONNE CTION WITH THE PLOTS BOOKED DURING THE FINANCIAL YEAR 2006-07. AC CORDING TO THE LD. REPRESENTATIVE, WHAT WAS RECEIVED IS ONLY AN AD VANCE AND REGISTRATION WAS NOT COMPLETED. HENCE, ACCORDING T O THE LD. REPRESENTATIVE, THE ADVANCE RECEIVED AS ON 31.03.20 07 CANNOT BE CONSTRUED AS INCOME. IN THE NEXT FINANCIAL YEAR, S INCE THE REGISTRATION FORMALITIES WERE COMPLETED, ACCORDING TO THE LD. REPRESENTATIVE, THE SAME WAS SHOWN IN THE PROFIT & LOSS ACCOUNT. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER DISALLOWED 50% OF PURCHASES WHICH COMES TO 87,50,200/- ON THE GROUND THAT NO DETAILS WERE AVAILABLE. HOWE VER, THE CIT(APPEALS) DELETED THE SAME ON THE GROUND THE ASS ESSEE IS ONLY AN AGENT FOR MARKETING THE LAYOUT / PLOTS. SINCE T HE ASSESSEE COULD NOT PRODUCE ANY DETAILS EITHER FOR ACTING AS AGENT OR OTHERWISE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATT ER NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER. THE ASSESSI NG OFFICER SHALL RE-EXAMINE THE MATTER WHETHER THE ASSESSEE ACTED ON LY AS AGENT OR OTHERWISE AND THEREAFTER DECIDE THE CASE IN ACCORDA NCE WITH LAW. 6 I.T.A. NO.822/CHNY/14 I.T.A. NO.2994/CHNY/17 ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BEL OW ARE SET ASIDE AND THE DISALLOWANCE OF PURCHASES IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE- EXAMINE THE MATTER ON THE BASIS OF THE MATERIAL THAT MAY BE FIL ED BY THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE A SSESSEE. 9. NOW COMING TO UNEXPLAINED CREDIT OF 48,61,000/-, THE ASSESSEE CLAIMS THAT IT IS ONLY AN ADVANCE RECEIVED AND THE SAME WAS OFFERED FOR THE NEXT FINANCIAL YEAR SINCE THE R EGISTRATION FORMALITIES WERE COMPLETED. HOWEVER, NO DETAILS OF ADVANCES WERE FURNISHED BY THE ASSESSEE. IN THOSE CIRCUMSTANCES , THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THIS MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ISSUE IS RE MITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFIC ER SHALL RE- EXAMINE THE MATTER ON THE BASIS OF THE MATERIAL THA T MAY BE FILED BY THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 7 I.T.A. NO.822/CHNY/14 I.T.A. NO.2994/CHNY/17 10. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 14 TH JUNE, 2018 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 14 TH JUNE, 2018. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-II, CHENNAI 4. 1 92 / CIT-II, CHENNAI. 5. 7: -2 /DR 6. ;( < /GF.