M/s Parasnath Greenlands Pvt Ltd., Hyderabad V. Income Tax Officer(OSD)-2, Central Range-1, Hyderabad

ITA 896/HYD/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82212 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 09-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K C DEVADAS
• Keywords: Unexplained investment; Source of fund; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B'(SMC), HYDERABAD BEFORE SHRI D.MANMOHAN, HONBLE VICE PRESIDENT ITA NO. ASSESSMENT YEAR APPELLANT RESPONDENT 895/HYD/2014 2007 - 08 M/S. MANAS GREENLAND P VT. LTD., HYDERABAD (PAN AACCM 4813 C) INCOME TAX OFFICER (OSD) - 2, CENTRAL RANGE - 1, HYDERABAD 896/HYD/2014 2007 - 08 M/S. PARASNATH GREENLANDS PVT. LTD., HYDERABAD (PAN AACCP 1717 E) INCOME TAX OFFICER (OSD) - 2, CENTRAL RANGE - 1, HYDERABAD 898/HYD/2014 2007 - 08 M/S. SARAYU AGRO FARMS PVT. LTD., , HYDERABAD (PAN AAECS 3125 G ) INCOME TAX OFFICER (OSD) - 2, CENTRAL RANGE - 1, HYDERABAD APPELLANTS BY : SHRI K.C.DEVADAS RESPONDENT BY : SHRI SOLGY JOSE T.KOTTARAM DR DATE OF HEARING 14.08.2014 DATE OF PRONOUNCEMENT O R D E R THESE THREE APPEALS, THOU G H PERTAIN TO THREE DIFFERENT ASSESSEE S, ARE DI R ECTE D AGAINST THE O R DERS PASSED B Y THE COMMISSIONER OF INCOME - TAX(APPEALS) VII, HYDERABAD, AND THEY PERTAIN TO ASSESSMENT YEARS 2007 - 08. SI N CE THE ISSUE INVOLVED IN ALL TH E SE APPEALS IS IDENTICAL, I PROCEED TO DISPOSE OF THESE APPEALS BY A COMBINED ORD E R , FOR THE SAKE OF CONVENIENCE. 2. THE FACTS IN TH E CA S E OF M /S.MANAS GREENLANDS PVT. LTD. ARE REFERRED TO , TO EXPLAIN THE ISSUE IN DISPUTE. THE ASSESSEE IS ENGAGED IN AGRICULTURAL AND ALLIED ACTIVITY. THIS COMPANY IS ON E O F THE GROUP COMPANIES CONSTITUTED BY SHRI B .RAMA L INGA RAJU AND HIS FAMILY MEMBERS. DURIN G TH E ITA NO.895/HYD/2014 & TWO ORS M/S. MANAS GREENLANDS PVT. LTD. & TWO OTHERS, HYDERABAD 2 COU R SE OF SCRUTINY PROCEEDINGS, THE ASSESSING OFF ICER CALLED FOR THE BOOK S OF AC C OUN T O F THE ASSESSEE , WHEREIN IT WAS FOUND THAT THERE WERE CERTAIN ADDITIONS TO TH E FIXED ASSETS DURING THE P R EVIOU S Y E AR RELEVANT TO THE ASSESSMENT YEAR UNDER CON S ID E RATION. THE ASSESSEE WAS CALLED UPON TO EXPLAIN THE SOURC E OF SUCH IN VE STMENT S . IN THE OPINION OF TH E ASSESSING OFFICER , T H E COMPANY FAIL E D TO PRODUCE ANY EVIDENCE IN SUPPORT OF THE ADDITIONS TO THE FIXED ASSETS, AND THEREFORE, THE SAME WERE TREATED AS UNEXPLAINED INVESTMENTS IN THE HANDS OF THE ASSESSEE UNDER S .69 OF THE ACT. THE ASSESSING OFFICER THUS MADE AN ADDITION OF RS.4,52,713 UNDER S.69 OF THE ACT. 3. SIMILARLY, IN THE CASE OF M/S. PARASNATH GREENLANDS AND M/S. SARAYU AGRO FARMS, THE ASSESSING OFFICER MADE ADDITIONS OF R S .5,55,000 AND RS.1,72,832 R E S PECTIVELY UNDER S.69 OF THE AC T. 4. AGGRIEVED, ASSESSEE S CONTENDED BEFORE THE LEARNED CIT(A) THAT THE ASSESSING OFFICER WRONGLY INVOKED S.69 OF THE ACT, AS IN FACT, CREDIT IN THE BANK ACCOUNT IS SELF - EXPLANATORY TO THE FACT THAT THE PAYMENT WAS BY WAY OF FUND TRANSFER. THE ASSESSING OFFICER , HAVIN G ACCEPTED THE L IABILIT Y S IDE OF THE BALANCE SHEET, IS NOT JUSTIFIED IN ISOLATING THE ASSETS SIDE OF THE BALANCE SHEET, SIN C E SOURCE OF INVESTMENT IS PROVED. 5. HAVING EXPLAINED TH E FACTUAL MATRIX OF THE CASE, THE LEARNED CIT(A) OBSER V ED THAT THESE EXPENSES/INVESTMENTS WERE NOT ITEMS OF EXPENDITURE THAT WERE DEBI T ED TO PROFIT & LOSS ACCOUNT; MORE IMPORTANTLY, THEY CANNOT B E CALLED AS UNEXPLAINED, AS THEY ARE EXTRACTED FROM APPLI C ATION OF FUNDS AND THE A SS E T S IDE OF THE BALANCE SHEET. IN OTHER WORDS, THE SOURCE OF FUND IS EXPLAINED. THOUGH THE LEARNED CIT(A) OBSERVED THAT THESE CANNOT B E TREATED AS UNEXPLAINED, HE PROCEEDED ON A DIFFERENT FOOTING THAT IF THE EXPENSES WERE CAP ITALIZED, THE ALLOWANCE OF THE SAME AS EXPENDITURE CAN BE CONSI DE RED IN A SUBSEQUENT YEAR, I.E. AS AND WHEN THE L A NDS ARE SOLD. THIS IMPLIES THAT THE ITA NO.895/HYD/2014 & TWO ORS M/S. MANAS GREENLANDS PVT. LTD. & TWO OTHERS, HYDERABAD 3 LED CIT(A) HAS NO T GIVEN A CATEGORICAL FIN D IN G ABOUT THE SOU R CE O F FUNDS OR APPLICATION OF FUNDS AND THE FINAL OBSERVATIONS ARE BASED ON INCORRECT APP RE CIATION OF FACTS . 6. ASSESSEE S HEREIN PREFERRED APPEALS BEFORE THE APPELLATE TR IBUNAL CONTENDING INTER ALIA THAT THE ASSESSEES FILED CO M PLETE DETAILS OF THE EXPENSES/INV E STMENTS ALON G WITH SUPPORTING EVIDENCE, AND THUS THE FINDING O F THE LEARNED CIT(A) IS NO T N E CESSARY FOR THE DISPOSAL OF APPEALS. 7. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT T HE APP E AL FILED BY THE ASSESSEES HEREIN ARE ACADEMIC IN NA T UR E , SIN C E THE LE ARNED CIT(A) MERELY DIRECT E D THE ASSESSING OFFICER TO CONSIDER THE ISSUE IN THE YEAR IN WHICH THE ASSETS ARE SOLD, AND HENCE, THE ASSESSEES CANNOT BE SAID TO HAVE BE E N AGGRIEVED IN THE Y EA R UNDER CONSIDERATION. 8. I HAVE CAREFULLY CONSI DE RED THE RIVAL SUBMI S SION S AND PURSED THE RECORD. ADMITTEDLY, ASSESSEE S HAVE MADE INV E STMENTS IN FIXED ASSETS AND THE SOU R CE OF SUCH INVESTMENTS WAS THE INFLOW AVAILABLE ON TH E LIABILITY SIDE OF THE BALANCE SH E ET. SIN C E THE ASSESSING OFFICER HAS NO T PROPERLY APP RE CIATED THE FACTS, BEFORE THE LEARNED CIT(A), THE SOURCE WAS EXPLAINED, AND THE SAME WAS ACCEPTED BY THE LEARNED CIT(A). HAVIN G ACCEPTED THE SOU R CE O F FUN D S, TH E RE CANNOT BE ANY ADDITION MADE IN THIS YEAR AND EVEN IN THE SUBSEQUENT YEAR, I.E. IN THE Y E AR OF SALE , TH E SOU R CE OF INVESTMENT CANNOT BE DI S PUT E D. THEREFORE , THE LEARNED CIT(A) IS NO T JUSTIFIED IN GIVING DIR E CTION TO THE ASSESSING OFFICER TO CONSIDER THE SOU R CE OF IN VE STMENT IN THE YEAR OF SALE. IN TH E SE CIRCUMSTANCES, WE SET ASIDE THE DIRECTION S O F THE LEARNED CIT(A) AND HOL D THAT I T IS NO T A FIT CASE FOR MA K ING THE ADDITION UNDER S.69 OF TH E ACT. ITA NO.895/HYD/2014 & TWO ORS M/S. MANAS GREENLANDS PVT. LTD. & TWO OTHERS, HYDERABAD 4 9. WITH THESE OBSERVATIONS, THE APPEALS FIL E D BY THE ASSESSEE A RE TREATED AS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 14 TH AUGUST, 2014 SD/ - ( D.MANMOHAN ) VICE PRESIDENT DT/ - 14 TH AUGUST, 2014 COPY FORWARDED TO: 1. 2. 3. M/S. MANAS GREENLANDS P. LTD., 392 HMT HILLS, OPP. JNTU COLLEGE, KUKATPALLY, HYDERABAD MS. PARASNATH GREENLANDS PVT. LTD., PLOT NO.80, ROAD NO.9, JUBILEE HILLS, HYDERABAD 500 033. M/S., SARAYU AGRO FARMS PVT. LTD., PLOT NO.80, ROAD NO.9, JUBILLEE HILLS, HYDERABAD 4 . INCOME TAX OFFICER (OSD) - 2, CENTRAL RANGE 1, HYDERABAD 5 . COMMISSIONER OF INCOME - TAX(APPEALS) VI I HYDERABAD 6 . COMMISSIONER OF INCOME - TAX CENTRAL , HYDERABAD 7 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S