Asst.C.I.T., Mysore V. Shri. C.C. Kondaiah, Mysore

ITA 880/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8664 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-01-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 09-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T N PRAKASH
• Keywords: Opportunity of being heard
• Section: 40A(3); 143(3); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.880/BANG/2015 ASSESSMENT YEAR : 2011-12 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1), MYSORE. VS. SHRI C.C. KONDAIAH, NO.192, 2 ND CROSS, 2 ND MAIN, BRINDAVAN EXTENSION, MYSORE. PAN: ACZPK 8094M APPELLANT RESPONDENT APPELLANT BY : SHRI T.N. PRAKASH, ADDL. CIT(DR) RESPONDENT BY : NONE DATE OF HEARING : 20.01.2016 DATE OF PRONOUNCEMENT : 05.02.2016 O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF THE CIT(APPEALS), MYSURU DATED 20.01.2015 FOR THE ASSES SMENT YEAR 2011-12. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE CIT(A) ERRED IN DIRECTING THE ASSESSING OF FICER TO DELETE THE ADDITION MADE BEING THE DIFFERENCE IN OP ENING AND CLOSING OF WORK IN PROGRESS BASED ON THE CLAIM OF T HE ASSESSEE ITA NO.880/BANG/2015 PAGE 2 OF 6 THAT IT IS AN ACCOUNTING ERROR OF NOT ACCOUNTING PI PES PURCHASE OF RS. 20 LAKHS. 2. THE CIT(A) HAS FAILED TO TAKE NOTE OF THE FACT THAT THE ASSESSEE HAD MADE THE CLAIM OF PURCHASE OF PIPE ONL Y AT THE TIME OF APPELLATE PROCEEDINGS AND EVEN IN THE GROUNDS OF APPEAL THE ASSESSEE HAS NOT RAISED THE PLEA OF PURCHASE OF PIP ES SUBSTANTIATING THE DIFFERENCE. 3. THE CIT(A) ERRED IN DIRECTING THE AO TO DELETE THE ADDITION MADE U/S. 37 OF THE ACT OF RS.1,09,561/-, BY HOLDING THAT IT IS NOT A PENALTY ABOUT DEPARTMENTAL RECOVERY FO R DELAY FOR DELAYED PROJECT COMPLETION AND FAILED TO TAKE NOTE OF THE FACT THAT THOUGH DIFFERENT NOMENCLATURE THE SAME HAS TO BE TR EATED AS PENALTY. 4. THE CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDITION MADE U/S. 40A(3) OF THE I T ACT ON THE GROUND THAT NO SPECIFIC DEFAULTS ARE POINTED OUT, WITHOUT CONSIDERING THE FACT THAT THE AO HAS CATEGORICALLY POINTED OUT THE REASONS FOR DISALLOWANCE MADE U/S. 40A(3) IN THE ASSESSMENT ORD ER. 5. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING, THE ORDER OF THE CIT(A) BE SET ASI DE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE RESPO NDENT-ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM HOUSE PROPERTY, INCOME FROM BUSINESS AND OTHER SOURCES. RETURN OF INCOME FOR THE AY 201 1-12 WAS FILED ON 8.3.2012 DECLARING TOTAL INCOME OF RS.22,96,120. A GAINST SUCH RETURNED INCOME, ASSESSMENT WAS COMPLETED BY THE DCIT, CIRCL E 1(1), MYSURU VIDE ORDER DATED 30.1.2014 PASSED U/S. 143(3) OF THE INC OME-TAX ACT, 1961 [THE ACT] AT A TOTAL INCOME OF RS.66,11,090. WHILE DOI NG SO, THE AO MADE THE FOLLOWING ADDITIONS:- ITA NO.880/BANG/2015 PAGE 3 OF 6 (A) DISCREPANCY IN THE CLOSING WORK-IN-PROGRESS AS ON 31.3.2010 AND OPENING WORK-IN-PROGRESS AS ON 1.4.2010 20,00,000 (B) ADDITION ON ACCOUNT OF UNDISCLOSED RENTAL INCOME 2,00,000 (C) PENALTY DEBITED TO P&L ACCOUNT 1,09,561 (D) ADDITION ON ACCOUNT OF CASH PAYMENTS 20,00,000 4. BEING AGGRIEVED BY THE ABOVE ADDITIONS, AN APPEA L WAS FILED BEFORE THE CIT(APPEALS), MYSURU, WHO VIDE HIS IMPUGNED ORD ER HELD THAT ADDITION OF RS.20 LAKHS ON ACCOUNT OF DISCREPANCY IN THE CLO SING WORK-IN-PROGRESS AS ON 31.3.2010 AND OPENING WORK-IN-PROGRESS AS ON 1.4.2010 CANNOT BE SUSTAINED AS IT IS ONLY AN ACCOUNTING ERROR AND IT IS NOT THAT THE PURCHASES ARE MADE OUTSIDE THE BOOKS OF ACCOUNT. IN RESPECT OF THE ADDITION MADE ON ACCOUNT OF CASH PURCHASE ACCOUNT, THIS ITEM WAS DEL ETED BY THE LD. CIT(A) BY HOLDING THAT THE AO HAD FAILED TO BRING ON RECOR D THE SPECIFIC INSTANCES WHERE THE CASH PAYMENTS EXCEEDED RS.20,000. IN RES PECT OF PENALTY PAYMENT, THE LD. CIT(A) HELD THAT THE AMOUNT WAS PA ID ONLY FOR THE DELAY IN EXECUTION OF WORKS CONTRACT AND IT DOES NOT AMOUNT TO BREACH OF ANY PROVISIONS OF LAW AND THEREFORE DELETED THE ADDITIO N. BEING AGGRIEVED, THE REVENUE HAS FILED THE PRESENT APPEAL. 5. THE LD. SR. DR VEHEMENTLY CONTENDED THAT LD. CIT (APPEALS) OUGHT NOT TO HAVE DELETED THE ADDITION OF RS.20 LAKHS ON ACCOUNT OF DISCREPANCY BETWEEN THE CLOSING WORK-IN-PROGRESS AS ON 31.3.20 10 AND OPENING WORK- ITA NO.880/BANG/2015 PAGE 4 OF 6 IN-PROGRESS AS ON 1.4.2010 INASMUCH AS THERE WAS NO EVIDENCE FILED RECONCILING THE DIFFERENCE BETWEEN THE TWO AND THAT THE LD. CIT(A) SIMPLY DELETED THE ADDITION WITHOUT REFERRING TO ANY MATER IAL IN SUPPORT OF CONTENTION URGED BY THE ASSESSEE THAT IT WAS ONLY A N ACCOUNTING ERROR. IN RESPECT OF CASH PURCHASES, THE LD. SR. DR SUBMITTED THAT THE ISSUE MAY BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 6. NONE APPEARED ON BEHALF OF THE ASSESSEE. 7. WE HAVE HEARD THE LD. SR. DR AND PERUSED THE MAT ERIAL ON RECORD. AS REGARDS THE ADDITION ON ACCOUNT OF DISCREPANCY I N THE CLOSING WORK-IN- PROGRESS AS ON 31.3.2010 AND OPENING WORK-IN-PROGR ESS AS ON 1.4.2010, THE DISCREPANCY NEEDS TO BE RECONCILED WITH THE MAT ERIAL. IF THE CONTENTION OF THE ASSESSEE THAT THE PIPES PURCHASE OF RS.20 LA KHS WERE NOT INCLUDED IN THE CLOSING WORK-IN-PROGRESS AS ON 31.3.2010 IS TO BE ACCEPTED, THE SAME NEEDS TO BE CORROBORATED WITH THE PURCHASE INV OICES AND ALSO PROVED THAT IT REMAINS UNUTILIZED. BUT THE LD. CIT(A) WIT HOUT CONSIDERING OR REFERRING TO ANY MATERIAL, ACCEPTED THE PLEA OF THE ASSESSEE THAT IT IS ONLY AN ACCOUNTING ERROR. THE EXPLANATION OF THE ASSESSEE N EEDS TO BE CORROBORATED WITH EVIDENCE. IN THE ABSENCE OF EVID ENCE, THE MERE PLEA CANNOT BE ACCEPTED. THEREFORE, IN THE INTEREST OF J USTICE, THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR F RESH ADJUDICATION, AFTER AFFORDING DUE OPPORTUNITY OF HEARING TO THE ASSESSE E. ITA NO.880/BANG/2015 PAGE 5 OF 6 8. ON THE SECOND ISSUE RELATING TO DELETION OF ADDI TION ON ACCOUNT OF PENALTY OF RS.1,09,651, THE ADDITION WAS DELETED BY THE CIT(A) BY ACCEPTING THE SUBMISSIONS OF THE ASSESSEE THAT IT I S ONLY A PENALTY LEVIED FOR DELAY IN EXECUTION OF THE CONTRACT, BUT THE LD. CIT(A) HAS NOT REFERRED TO ANY MATERIAL IN SUPPORT OF THE PLEA RAISED BY THE A SSESSEE. THEREFORE, THIS ISSUE IS ALSO REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. WE DIRECT THE ASSESSEE TO PRODUCE TH E EVIDENCE BEFORE THE AO IN SUPPORT OF THE CONTENTION THAT PENALTY WAS LE VIED ONLY FOR DELAY IN EXECUTION OF THE CONTRACT. 9. AS REGARDS THE GROUND CHALLENGING THE DELETION O F ADDITION ON ACCOUNT OF CASH PAYMENTS EXCEEDING RS.20,000, WE FI ND THAT THE AO HAD FAILED TO BRING ON RECORD THE SPECIFIC INSTANCES WH ERE THE CASH PAYMENTS EXCEEDED RS.20,000. HOWEVER, FROM THE ASSESSMENT O RDER IT IS OBSERVED THAT THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO EXPLA IN THE CASH PAYMENTS. THE ASSESSEE ALSO FAILED TO EXPLAIN AS TO UNDER WHA T CIRCUMSTANCES THE CASH PAYMENTS WERE MADE. FURTHER, THE ASSESSEE HAD NOT DENIED HAVING MADE ANY CASH PAYMENTS. IN THE CIRCUMSTANCES, WE A RE OF CONSIDERED OPINION THAT THE INTEREST OF JUSTICE WOULD BE MET I F THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDIC ATION, AFTER AFFORDING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE DIR ECT ACCORDINGLY. ITA NO.880/BANG/2015 PAGE 6 OF 6 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF FEBRUARY, 2016. SD/- SD/- (VIJAY PAL RAO ) ( INTURI RAMA RAO ) JUDICIAL MEMBER ACCOUNTANT MEMBE R BANGALORE, DATED, THE 5 TH FEBRUARY, 2016. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.