ITO, Ward-1(3), Hyd, Hyderabad V. Bhavya Estates Pvt.Ltd., Hyd, Hyderabad

ITA 910/HYD/2016

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7843 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 13-01-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 16-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR PANDEY
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained investment; Capital asset; Business income; Additional evidence; Set aside
• Section: 143(3); 143(1)

Judgement Text

ITA NO 910 OF 2016 BHAVYA ESTATES P LTD HYDERABAD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO.910/HYD/2016 ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER WARD 1(3) HYDERABAD VS. M/S. BHAVYA ESTATES (P) LTD, HYDERABAD PAN:AABCB0100C (APPELLANT) (RESPONDENT) REVENUE BY: SRI SUNIL KUMAR PANDEY, DR ASSESSEE BY : SRI S. RAMA RAO DATE OF HEARING: 13/01/2021 DATE OF PRONOUNCEMENT: 20/01/2021 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y 2012-13 AGAINS T THE ORDER OF THE CIT (A)-1, HYDERABAD, DATED 18.03. 2016. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY FILED ITS RETURN OF INCOME ON 29.9.2012 DECLARING I TS TAXABLE INCOME AT RS.2,97,003/- APART FROM AGRICULTURAL INC OME OF RS.1,50,000/- AT NORMAL PROVISIONS FOR THE A.Y 2012 -13. THE RETURN WAS INITIALLY PROCESSED U/S 143(1) OF THE AC T AND SUBSEQUENTLY SELECTED FOR SCRUTINY UNDER CASS. 3. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE RELEVANT INFORMATION WAS CALLED FOR BY THE AO, BUT ONLY PART INFORMATION WAS FURNISHED BY THE ASSESSEE. THE REFORE, THE AO ITA NO 910 OF 2016 BHAVYA ESTATES P LTD HYDERABAD PAGE 2 OF 5 PROCEEDED TO COMPLETE THE ASSESSMENT IN THE ABSENCE OF FULL INFORMATION/DETAILS ON THE BASIS OF THE RETURN OF I NCOME FILED AND ALSO PART INFORMATION FILED IN TAPPAL. THE AO OBSER VED THAT THE ASSESSEE HAD SOLD CERTAIN LAND BUT DID NOT OFFER CA PITAL GAIN ON THE SAME ON THE GROUND THAT IT IS AGRICULTURAL LAND . THE AO HOWEVER, HELD THAT THE LAND CANNOT BE TREATED AS AG RICULTURAL LAND AS IT HAS BEEN CONVERTED INTO VARIOUS PLOTS TO EARN MORE PROFITS AND SOME OF THE PLOTS WERE ALSO SOLD. THEREFORE, TH E AO DID NOT ACCEPT THE AGRICULTURAL INCOME OFFERED BY THE ASSES SEE ON THE GROUND THAT NO EVIDENCE WAS PRODUCED WITH REGARD TO THE SAME AND THEREFORE, TREATED THE SAME AS INCOME FROM OTH ER SOURCES. FURTHERMORE, THE AO OBSERVED THAT THE ASSESSEE HAS LONG TERM BORROWINGS/UNSECURED LOANS OF RS.1,22,00,000/-, BUT NO CONFIRMATION LETTERS WERE FILED EXPLAINING THE GENU INENESS OF THE TRANSACTION AND THE IDENTITY AND CREDITWORTHINESS O F THE PARTIES. THEREFORE, THE AO DISALLOWED THE ABOVE CLAIM AND BR OUGHT IT TO TAX. FURTHERMORE, THE AO OBSERVED THAT THE ASSESSEE HAS NOT PERFORMED ANY BUSINESS ACTIVITY AND NEITHER WAS ANY BUSINESS INCOME OFFERED BY THE ASSESSEE BUT THE ASSESSEE HAS MADE HUGE TRANSACTIONS WITH THE PARTIES AND HAS DEPOSITED A S UM OF RS.3,61,56,424/-. THEREFORE, HE TREATED THE SAME AS UNEXPLAINED DEPOSITS AND BROUGHT IT TO TAX. THUS, HE ASSESSED I NCOME AT RS.5,77,33,689/-. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT (A) WHO ALLOWED THE SAME AND THEREFORE, THE REVENUE IS IN APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS O F APPEAL: 1. THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.89,30,262/ - MADE ON ACCOUNT OF TRANSFER OF LAND BY HOLDING THAT ASSET TRANSFERRED WAS AGRICULTURAL LAN D DISREGARDING THE FACT THAT LAND WAS CONVERTED INTO PLOTS AND SOLD AS AN ADVENTURE IN THE NATURE OF TRADE. ITA NO 910 OF 2016 BHAVYA ESTATES P LTD HYDERABAD PAGE 3 OF 5 2. THE CIT(A) ERRED IN DELETING THE ADDITION OF UNEXPLAINED INVESTMENT OF RS.1,22,00,000/ - BY ADMITTING ADDITIONAL EVIDENCE WITHOUT AFFORDING AN OPPORTUNITY TO THE AO THEREBY, CONTRAVENING RULE 46 A OF I.T. RULE. 3. THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,50,000/ - MADE UNDER INCOME FROM OTHER SOURCES BY HOLDING THAT SAME REPRESENTED AGRICULTURAL INCOME MERELY RELYING ON THE FACT THAT AGRICULTURAL INCOME WAS ADMITTED IN EARLIER YEAR WITHOUT APPRECIATING THE F ACT THAT ASSESSEE DID NOT PRODUCE ANY COGENT EVIDENCE IN RES PECT OF EARNING OF AGRICULTURE INCOME EITHER DURING ASSE SSMENT OR IN APPELLATE PROCEEDINGS. 4. THE CIT(A) ERRED IN DELETING THE ADDITION OF UNEXPLAINED DEPOSITS OF RS.3,61,56,424/- BY ADMITTI NG ADDITIONAL EVIDENCE WITHOUT AFFORDING AN OPPORTUNIT Y TO THE AO THEREBY, CONTRAVENING RULE 46A OF I.T. RULE. 5. THE APPELLANT CRAVES LEAVE TO ADD, DELETE, SUBST ITUTE, AND AMEND ANY OF THE GROUNDS OF APPEAL BEFORE THE HEARING OF APPEAL AND/OR AT THE TIME OF HEARING OF THE APPEAL. 3. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAD F ILED ONLY PART INFORMATION BEFORE THE AO AND HAS FILED C ERTAIN ADDITIONAL INFORMATION BEFORE THE CIT (A) WHO GRANT ED RELIEF TO THE ASSESSEE BY ACCEPTING THE SAID EVIDENCE. HE SUBMITT ED THAT THE CIT (A) HAS NEITHER VERIFIED THE EVIDENCE NOR CALLE D FOR A REMAND REPORT FROM THE AO AND THEREFORE, THE ORDER OF THE CIT (A) IS IN VIOLATION OF RULE 46A OF I.T. RULES. 4. THE LEARNED AR WAS ALSO HEARD WHO SUBMITTED THAT ALL THE INFORMATION WHICH WAS FILED BEFORE THE AO WAS A LSO FILED BEFORE THE CIT (A) AND THE CIT (A) HAS GRANTED RELIEF BY V ERIFYING THE EVIDENCE FILED BY THE ASSESSEE. ITA NO 910 OF 2016 BHAVYA ESTATES P LTD HYDERABAD PAGE 4 OF 5 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAD FILED ONLY PART INFORMATION BEFORE THE AO AND BEFORE THE CIT (A) TH E ASSESSEE HAS FILED THE FOLLOWING ADDITIONAL EVIDENCE: (A) WITH REGARD TO THE SALE OF AGRICULTURAL LAND, T HE ASSESSEE HAS FILED PATTEDAR PASS BOOKS; (B) WITH REGARD TO THE LONG TERM BORROWINGS, THE CO PY OF THE AGREEMENT OF SALE EVIDENCING THE ADVANCE PAYMENT VE RIFIED; (C) WITH REGARD TO THE AGRICULTURAL INCOME, THE ASS ESSEE FILED EVIDENCE THAT HE HAS OFFERED AGRICULTURAL INCOME IN THE EARLIER YEARS WHICH WAS ACCEPTED BY THE AO; (D) WITH REGARD TO BANK TRANSACTIONS IN HDFC BANK, THE EVIDENCE TO THE EFFECT THAT THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY FROM VARIOUS PARTIES DURING THE RELEVANT A.YS WAS FILED. 6. WE FIND THAT THE CIT (A) HAS NEITHER VERIFIED TH E EVIDENCE BY HERSELF NOR HAS CALLED FOR ANY REMAND R EPORT FROM THE AO, BUT HAS SUMMARILY ACCEPTED THE EVIDENCE FILED B Y THE ASSESSEE. THE ADDITIONAL EVIDENCE FILED BY THE ASSE SSEE BEFORE THE CIT (A) OUGHT TO HAVE BEEN VERIFIED BY THE AO. IN V IEW OF THE SAME, WE DEEM IT FIT AND PROPER TO SET ASIDE THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO THE ASSESSEE TO FILE ALL THE RELEVANT INFORMATION BEFORE THE AO AND THE AO SHALL RE-ADJUD ICATE THE ISSUE DENOVO IN ACCORDANCE WITH LAW. NEEDLESS TO ME NTION THAT THE AO SHALL PROVIDE AN OPPORTUNITY OF HEARING TO THE A SSESSEE. ITA NO 910 OF 2016 BHAVYA ESTATES P LTD HYDERABAD PAGE 5 OF 5 7. IN THE RESULT, REVENUES APPEAL IS TREATED AS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JANUARY, 2021. SD/- SD/- (LAXMI PRASAD SAHU) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 20 TH JANUARY, 2021. VINODAN/SPS COPY TO: 1 ITO WARD 1(3), 7 TH FLOOR, B BLOCK, IT TOWERS, AC GUARDS, MASAB TANK, HYDERABAD 500004 2 M/S. BHAVYA ESTATES (P)M LTD., B-80 MADURANAGAR, HYDERABAD- 38 3 CIT (A)-1 HYDERABAD 4 PR. CIT 1 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER