DCIT, Circle-2(2), Hyd, Hyderabad V. Sanjay Swarup, Hyd, Hyderabad

ITA 870/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6246 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 08-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Keywords: Corroborative evidences
• Section: 133A; 69; 148

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. 870/HYD/2016 ASSESSMENT YEAR: 2007-08 DY. COMMISSIONER OF INCOME- TAX, CIRCLE 2(2), HYDERABAD. VS. SANJAY SWARUP, HYDERABAD. PAN ANTPS 8609R (APPELLANT) (RESPONDENT) REVENUE BY : SHRI A. SITARAMA RAO ASSESSEE BY : NONE DATE OF HEARING : 09-01-2017 DATE OF PRONOUNCEMENT : 18-01-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)- 4, HYDERABAD, DATED 22/02/2016. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM PRODUCTION OF FILMS A ND DIRECTOR'S REMUNERATION FROM M/S INDIRA PRODUCTIONS PVT. LTD ( IPPL). THE ASSESSEE FILED RETURN OF INCOME ON 12.03.2008 ADMIT TING AN INCOME OF RS.10,73,840/-. THE DEPARTMENT ACQUIRED INFORMATION FROM THE CHARGE SHEET FILED BY THE CBI IN THE CASE OF M/S EMMAR HIL LS TOWNSHIP PVT. LTD, THAT ASSESSEE PAID EXCESS PAYMENT TO THE M/S E MMAR HILLS TOWNSHIP PVT. LTD FOR ACQUIRING A PROPERTY. NOTICE U/S 148 WAS ISSUED. THE ASSESSEE WAS NOT PROVIDED REASONS FOR ISSUE OF NOTICE. HOWEVER, TO COOPERATE WITH THE DEPARTMENT THE ASSESSEE FURNI SHED THE ENTIRE INFORMATION SOUGHT BY THE ASSESSING OFFICER. THE AS SESSEE SUBMITTED THAT A SURVEY U/S 133A WAS CONDUCTED IN THE CASE OF M/S IPPL WHEREIN THE COMPANY HAS OFFERED RS. 1,42,73,400/- A DDITIONAL INCOME 2 ITA NO. 870/H/2016 SANJAY SWARUP FOR THE ASSESSMENT YEAR 2007-08, A PART OF THIS AMO UNT WAS GIVEN TO M/S EMMAR HILLS TOWNSHIP PROPERTIES PVT. FOR ACQUIR ING A PLOT IN THEIR VENTURE. THE ASSESSEE ALSO BROUGHT TO THE NOTICE OF ASSESSING OFFICER THAT THE AMOUNT GIVEN TOWARDS PURCHASE OF PROPERTY TO M/ EMMAR HILLS TOWNSHIP PVT. LTD. IS REFLECTED IN THE STATEMENT OF ACCOUNTS FOR THE YEAR ENDING 31.03.2009. THE LEARNED ASSESSING OFFIC ER OPINED THAT THE AMOUNT REFLECTED IN THE FINANCIAL STATEMENT OF FINANCIAL YEAR 2008- 09 WAS NOT SHOWN AS PER THE ACCOUNTING STANDARD-5 I N THE CASE OF IPPL. THEREFORE, THE LEARNED ASSESSING OFFICER OPIN ED THAT THE EXPLANATION OF THE ASSESSEE IS NOT SATISFACTORY AND MADE AN ADDITION OF RS,49,50,000/-. 3. AGGRIEVED BY THE ADDITION, SO MADE, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) AND SUBMITTED BE FORE THE CIT(A) AS UNDER: 1. IN THIS REGARD IT IS SUBMITTED THAT THE ASSESSEE PRODUCED THE ACCOUNT COPIES OF THE ASSESSEE IN THE BOOKS OF INDI A PRODUCTIONS PVT. LTD., FOR THE PERIOD 01-042008 TO 31-03-2009 B EFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2. THE LEARNED AO NEVER DOUBTED THE TRANSACTION I.E ., PAYMENT OF RS. 99,00,000/- IN CASH BY THE COMPANY INDIRA PRODU CTIONS PVT. LTD., TO M/S EMAAR HILLS TOWNSHIP PVT. LTD., HOWEVE R, NOT ACCEPTED THE TRANSACTION BECAUSE THE COMPANY IPPL H AS NOT RECORDED THE TRANSACTION AS PER THE PROCEDURE LAID DOWN BY THE ACCOUNTING STANDARAD-5(AS-5) PRESCRIBED BY THE INST ITUTE OF CHARTERED ACCOUNTANTS FOR THE PURPOSE OF MAINTAININ G BOOKS OF ACCOUNTS AS PER THE COMPANIES ACT. THE COMPANY IS R EQUIRED TO MAINTAIN BOOKS OF ACCOUNTS AS PER THE ACCOUNTING ST ANDARD PRESCRIBED BY THE INSTITUTE. IT IS SUBMITTED THAT I F THE COMPANY OMITTED ANY OF THE TRANSACTION TO REFLECT AS PER TH E ACCOUNTING STANDARDS IT IS THE COMPANY WHICH IS LIABLE FOR THE ACTION AS PER THE COMPANIES ACT. HOWEVER, THE INCOME OF THE COMPA NY IS TO BE ASSESSED AS PER THE PROVISIONS OF THE I.T. ACT, IN CASE THE ACCOUNTING STANDARDS ARE NOT IN CONSONANCE WITH THE PROVISIONS OF THE I.T. ACT. HOWEVER, THIS ISSUE OF MAINTENANCE OF ACCOUNTS AS PER THE ACCOUNTING STANDARDS IS NOT RELEVANT TO DECIDE WHETHER THE COMPANY ADVANCED RS. 99,00,000/- TO PUR CHASE THE LAND. 3 ITA NO. 870/H/2016 SANJAY SWARUP 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FURNISHED AUDITED FINANCIAL STATEMENTS OF THE COMPA NY IPPL FOR THE ASSESSMENT YEARS 2008-09 & 2009-10 AND ALSO ASS ESSEE PRODUCED THE ACCOUNT COPY OF THE COMPANY IN RESPECT OF LOANS AND ADVANCES FOR THE PERIOD 01-04-2008 TO 31-03-200 9 WHEREIN, THE AMOUNT ADVANCED FOR PROPERTY TO THE ASSESSEE A ND TO SMT. G.MANJULA, ARE CLEARLY REFLECTED. IN RESPONSE TO SH OW CAUSE LETTER ISSUED DATED 19/02/2014 THE ASSESSEE CLARIFIED THE TRANSACTION ONCE AGAIN AND REQUESTED NOT TO CONSIDER THE AMOUNT OF RS. 49,50,000/- AS INCOME IN THE HANDS OF THE ASSESSEE. 4. ADDITION OF RS. 49,50,000/- IS MADE TO THE INCOM E RETURNED, PROBABLY U/S 69 OF THE I.T. ACT, HOWEVER, THE LEARN ED ASSESSING OFFICER HAS NOT MENTIONED ANY SECTION IN THE ASSESS MENT ORDER. THE INITIAL BURDEN FOR PROVING THE NATURE AND SOURC E FOR THE INVESTMENT IS EXPLAINED BY SUBMITTING THE DETAILED SUBMISSION BEFORE THE AO. THE ASSESSEE EXPLAINED THAT THE INVE STMENT IS MADE OUT OF THE DECLARATIONS MADE IN THE HANDS OF C OMPANY DURING THE PERIOD RELEVANT TO THE SUBJECT ASSESSMEN T YEAR. IN RESPECT OF THIS EXPLANATION THE LEARNED AO HAS NOT MADE ANY ENQUIRIES TO DISPROVE THE SAME AS FALSE OR UNTRUE. THE ADDITION IS MADE WITH CERTAIN ASSUMPTIONS SUCH AS THE TRANSACTI ON IS NOT RECORDED BY THE COMPANY AS PER THE ACCOUNTING STAND ARD-5. THE LEARNED AO HAS NOT STATED THAT THE ASSESSEE HAS NOT UTILIZED THE AMOUNT OF RS. 99,00,000/- FOR ADVANCING FOR PURCHAS E OF LAND BY MAKING ENQUIRIES THAT THE AMOUNT DISCLOSED BY THE C OMPANY IS ALREADY UTILIZED BY THE COMPANY FOR CERTAIN OTHER P URPOSES, THEREFORE, IT IS RESPECTFULLY SUBMITTED THAT THE BU RDEN OF PROOF LAID UPON THE ASSESSEE BY THE SECTION 69 OF THE I.T. ACT IS DISCHARGED BY THE ASSESSEE TO THE SATISFACTION OF THE AO. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) OBSERVED THAT THE AO MAINLY MADE THE ADDITION OF RS . 49,50,000/- AS INVESTMENT IN EMMAR HILLS AND TOWNSHIPS BY NOT ACCE PTING THE ASSESSEES SUBMISSION THAT THESE PAYMENTS WERE MAD E FROM THE INCOME IN THE HANDS OF THE COMPANY AND ADVANCES GIV EN FOR THE PROPERTY OUT OF SAID INCOME AS THERE WAS NO OTHER I NCOME FOR THE ASSESSEE AND THERE WAS NO CASH AT THE TIME OF SURV EY AND IT HAS BEEN ACCEPTED THAT CASH HAS BEEN RECEIVED AND UTILI ZED BY THE DIRECTORS AT THE TIME OF SURVEY OPERATIONS. CIT(A) OBSERVED THAT THE ASSESSEE FURNISHED THE SAME REPLY DURING THE COURSE OF APPEAL PROCEEDINGS ALSO. FROM THE COPY OF LOANS AND ADVANC ES AND LEDGER AS ON 09/02/2009 OF INDIRA PRODUCTIONS PVT. LTD. ADVAN CES FOR PURCHASE OF PROPERTY WAS FIGURED AS RS. 47,50,000/-. CIT(A) NOTED THAT AS 4 ITA NO. 870/H/2016 SANJAY SWARUP STATED BY THE ASSESSEE, A SURVEY OPERATION WAS COND UCTED ON 25/02/2008 AND AN AMOUNT OF RS. 1,42,73,400/- WAS O FFERED AS ADDITIONAL INCOME IN THE HANDS OF THE COMPANY AND R EQUIRED ENTRIES WERE PASSED DURING THE AY 2009-10, SEEMS TO BE LOGI CAL AND ACCEPTABLE. IN VIEW OF THE ABOVE OBSERVATIONS, THE CIT(A) HELD THAT SINCE THE AMOUNT WAS ALREADY OFFERED AS ADDITIONAL INCOME IN THE HANDS OF THE COMPANY AND THE COMPANY HAD PASSED THE NECESSARY ENTRIES SHOWING AS ADVANCE GIVEN TO THE ASSESSEE, H ENCE, THE SOURCES FOR THIS INVESTMENT WAS EXPLAINED AS EXPEND ITURE, THEREFORE, THE ADDITION MADE BY THE AO IS DELETED. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. WHERE IN THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE CIT(A) IS CORRECT IN ALLOWING THE ADDITIONAL INFORM ATION IN THE FORM OF COPY OF LOANS AND ADVANCES AND LEDGER AS ON 09.0 2.2009 (F. Y 2008-09 RELEVANT TO A. Y. 200910) OF INDIRA PRODUCT IONS PRIVATE LIMITED, THE ADVANCES FOR PURCHASE OF PROPERTY WAS FIGURED AT RS. 47,50,000/- WHICH WAS NOT AVAILABLE BEFORE THE ASSE SSING OFFICER WITHOUT REMANDING THE MATTER TO THE AO IN CONTRAVEN TION OF RULE 46A ? 2. WITHOUT PREJUDICE TO THE ABOVE, WHETHER IN THE F ACTS AND CIRCUMSTANCES OF THE CASE, THE EXPLANATION OF THE A SSESSEE THAT THE COMPANY HAS ADVANCED THE AMOUNT IN CASH ON BEHA LF OF HIM FOR PURCHASE OF PROPERTY IS ACCEPTABLE WHEN THE SAI D TRANSACTION WAS NOT REFLECTED IN THE COMPANY'S ANNUAL REPORT FO R F.Y. 2007- 08 RELEVANT TO A.Y. 2008-09 ? 6. AT THE TIME OF HEARING OF THIS APPEAL, NONE APPE ARED ON BEHALF OF THE ASSESSEE. HOWEVER, WE PROCEED TO DISPOSE OF THIS APPEAL AFTER HEARING THE LD. DR AND ON MERITS. 7. BEFORE US, THE LD. DR SUBMITTED THAT THE EXPLANA TIONS OFFERED BY THE ASSESSEE ARE NOT SUBSTANTIATED BY CORROBORATIVE EVIDENCES AND THE AUDITED FINANCIAL STATEMENT OF THE COMPANY M/S IPPL DID NOT REFLECT THE TRANSACTIONS, CLAIMED BY THE ASSESSEE. HE SUBMITTED THAT THE COMPANY AND THE DIRECTORS OF THE COMPANY ARE TW O DIFFERENT 5 ITA NO. 870/H/2016 SANJAY SWARUP PERSONS AS PER THE PROVISIONS OF THE IT ACT. HE VEH EMENTLY ARGUED THAT THE ADDITION MADE BY THE AO IS JUSTIFIED AND P ROPER. 8. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIA L FACTS ON RECORD. AO MADE THE ADDITION OF RS. 49,50,000/- AS INVESTMENT IN EMMAR HILLS AND TOWNSHIPS AND NOT ACCEPTING THE ASS ESSEES SUBMISSION THAT THESE PAYMENTS WERE MADE FROM THE I NCOME IN THE HANDS OF THE COMPANY, ADVANCES GIVEN FOR THE PROPER TY OUT OF SAID INCOME AS THERE WAS NO OTHER INCOME FOR THE ASSESSE E. THERE WAS NO CASH AT THE TIME OF SURVEY AND IT HAS BEEN ACCEPTE D THAT CASH HAS BEEN RECEIVED AND UTILIZED BY THE DIRECTORS AT THE TIME OF SURVEY OPERATIONS. WHEN THE SAME REPLY WAS FURNISHED BEFOR E THE CIT(A), HE ACCEPTED THE SAME AND DELETED THE ADDITION MADE BY THE AO BY HOLDING THAT THE AMOUNT WAS ALREADY OFFERED AS ADDI TIONAL INCOME IN THE HANDS OF COMPANY AND THE COMPANY HAS PASSED THE NECESSARY ENTRIES SHOWING AS ADVANCE GIVEN TO THE ASSESSEE AN D HENCE THE SOURCES FOR THE INVESTMENT WAS EXPLAINED AS EXPENDI TURE. THEREFORE, CONSIDERING THE FACTS OF THE CASE, WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF THE CIT(A) IN DELETING THE ADDITION MADE B Y THE AO AND THE SAME IS HERE BY UPHELD DISMISSING THE GROUNDS RAISE D BY THE REVENUE ON THIS ISSUE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 18 TH JANUARY, 2017 SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 18 TH JANUARY 2017. KV 6 ITA NO. 870/H/2016 SANJAY SWARUP COPY TO:- 1) DCIT, CIRCLE 2(2), ROOM NO. 513, SIGNATURE TOW ERS, OPP. BOTANICAL GARDEN, KONDAPUR, HYDERABAD. 2) SRI SANJAY SWARUP, PLOT NO. 2, NAVODAYA COLONY, ROAD NO. 14, BANJARA HILLS, HYDERABAD 500 033. 3) CIT(A) - 4, HYDERABAD 4 PR. CIT 4, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE