P.Laxminarayana, Hyd, Hyderabad V. ACIT, Circle-11(1), Hyd, Hyderabad

ITA 943/HYD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2500 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 29-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 14-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Gift; Additional evidence
• Section: 263; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 943/HYD/2015 ASSESSMENT YEAR: 2007-08 P. LAXMINARAYANA, HYDERABAD [PAN: AIJPP4793L] VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE-11(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI V. SIVA KUMAR, AR FOR REVENUE : SMT N. SWAPNA, DR DATE OF HEARING : 10-10-2017 DATE OF PRONOUNCEMENT : 25-10-2017 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-5, HYDERABAD, DATED 25-02-2015 FOR THE AY. 2007-08. THE GROUNDS RAISED BY ASSESSEE ARE AS UNDER: 2. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) [CIT(A)] ERRED IN CONFIRMING THE DISALLOWANCES, MADE BY THE ASSESSING OFFICER, OF RS. 39,45,000/- BEING DISCOUNT TO CUSTOMERS AND RS. 16, 80,000 BEING COMMISSION CEDED TO OTHERS. 3. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THA T THE ASSESSEE HAS PRODUCED EVIDENCE BEFORE HIM TO SUBSTANTIATE THAT A N AMOUNT OF RS. 49,07,640/- OUT OF THE AFORESAID AMOUNTS OF RS. 39, 45,000/- AND RS. 16,80,000/- WAS ADJUSTED BY M/S. PRAGATHI GREEN MEA DOWS AND RESORTS LTD., FROM THE AMOUNTS PAYABLE TO THE ASSESSEE BEFO RE THE SAME REACHED THE ASSESSEE AND THAT THE BALANCE OF RS. 7,17,360/- CLAIMED BY THE I.T.A. NO. 943/HYD/2015 :- 2 - : ASSESSEE WAS REASONABLE HAVING REGARD TO THE FACTS OF THE ASSESSEES CASE. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE, MADE BY THE ASSESSING OFFICER, OF DEVELOPMENT COST OF RS. 16,34,400/-. GROUND NOS. 1 AND 5 ARE GENERAL IN NATURE. 2. BRIEFLY STATED FACTS ARE THAT, ASSESSEE IS AN INDIVID UAL DERIVING INCOME FROM BUSINESS OF SALE OF PLOTS AS AN AGENT, HA D FILED THE RETURN OF INCOME ON 18-06-2007, ADMITTING A TOTAL INCOME OF RS. 24,45,016/-. THE ORIGINAL ASSESSMENT U/S. 144 OF TH E INCOME TAX ACT [ACT] WAS COMPLETED ON 31-12-2009 DETERMINING THE TOTAL INCOME AT RS. 42,25,016/-. THE CIT BY HIS ORDER U/S. 263 DT. 14-03-2012 DIRECTED THE ASSESSING OFFICER (AO) TO REDO THE ASSESSMENT ORDER. THUS, THE AO PASSED ORDER U/S. 144 R.W.S. 263 OF THE ACT BY MAKING THE FOLLOWING ADDITIONS: RS. 1. DISCOUNT TO CUSTOMERS 39,34,000 2. CO MMISSION PAID TO OTHERS 16,80,000 3. GIFT TO CUSTOMERS 1,86,450 4. OFFICE RENOVATION EXPENSES 1,06,945 5. PRINTING AND STATIONERY CHARGES 2,96,000 6. DEVELOPMENT COST PAID 16,43,000 7. DISALLOWANCE OF DEDUCTION CLAIMED UNDER CHAPTER-VIA 1,00,000 3. BEFORE THE LD.CIT(A) ASSESSEE FURNISHED ADDITIONAL EVIDENCE IN THE FORM OF ACCOUNT COPIES OF M/S. PRAGATI GREEN ME ADOWS & RESORTS (P) LTD., AND MADE VARIOUS CLAIMS. AFTER GETTI NG THE REMAND REPORT OF AO, LD.CIT(A) CONFIRMED THE DISALLOW ANCE OF EXPENDITURE ON COMMISSION AND PARTLY ALLOWED THE CLAIM OF THE EXPENSES BY RESTRICTING IT TO 10% OF THE CLAIM. I.T.A. NO. 943/HYD/2015 :- 3 - : 4. LD. COUNSELS MAIN PLEA WAS THAT THE EXPENDITURE CL AIMED WAS EVIDENCED BY THE ACCOUNT OF M/S. PRAGATI GREEN MEA DOWS & RESORTS (P) LTD., AND REFERRED TO THE COPIES PLACED ON RECORD IN PAPER BOOK AND THE RECONCILIATION SUBMITTED TO THE LD.C IT(A) EXTRACTED IN PARA 5.3 OF THE ORDER. IT WAS HIS SUBMI SSION THAT THE AMOUNTS WERE PAID BY M/S. PRAGATI GREEN MEADOWS & RE SORTS (P) LTD., AND DEBITED TO HIS ACCOUNT AND HE COULD NOT FURNI SH ANY OTHER EVIDENCE EXCEPT THE ACCOUNT COPIES OF THE SAID CO MPANY. 5. LD.DR RELIED ON THE DETAILED ORDER OF THE LD.CIT(A) . 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. THE RECO NCILIATION FURNISHED BY ASSESSEE OF HIS RECEIPTS AND EXPENDITURE IS AS UNDER: RS. RS. TOTAL NET COMMISSION 1,06,12,496 AMOUNTS INCURRED IN CASH AS PER LEDGER ACCOUNTS IN THE BOOKS OF ASSESSEE 39,45,000 16,80,000 NET 56,25,000 LESS: AMOUNTS ADJUSTED THROUGH THE BOOKS OF PGMRPL 32,57,640 16,50,000 49,07,640 BALANCE: 7,17,360 LESS: BALANCE INCURRED IN CASH BY ASSESSEE HIMSELF 7,17,360 BALANCE: NIL 6.1. AS FAR AS THE AMOUNT OF RS. 16,80,000/- IS CONCE RNED, THE SAME WAS DISALLOWED BY THE AO IN THE ORIGINAL ASSESS MENT ORDER U/S. 144 DT. 13-12-2009 WHICH WAS ACCEPTED BY ASSESS EE AND NOT I.T.A. NO. 943/HYD/2015 :- 4 - : CONTESTED. HENCE, CONSIDERING THE SAME IN THE REVISE D PROCEEDINGS DOES NOT ARISE. IN FACT AO SHOULD NOT HAVE DISALLOWE D (AS HIS OWN) IN THE REVISED ORDER AND SHOULD HAVE STARTED COMPUTATIO N FROM THE ORIGINALLY ASSESSED AMOUNT WHICH WAS ACCEPTED BY THE AO. IN VIEW OF THAT, THE CLAIM OF RS. 16,80,000/- CANNOT BE ALLOWE D AND THE GROUND ON THIS HAS TO BE REJECTED. 6.2. AS FAR AS THE CLAIM OF RS. 39,45,000/- IS CONCE RNED, THE SAME WAS PARTLY DEBITED BY M/S. PRAGATI GREEN MEADOWS & RE SORTS (P) LTD., OUT OF THE GROSS COMMISSION CREDITED AND ONLY NE T AMOUNT WAS STATED TO HAVE BEEN PAID TO ASSESSEE. THE RELEVANT EXPENDITURE WAS MADE BY M/S. PRAGATI GREEN MEADOWS & RESORTS (P) LTD., AND NATURALLY ASSESSEE HAS NO CONTROL OR EVI DENCE WITH THE SAID EXPENDITURE. AO SHOULD HAVE EXAMINED THE BOOKS OF M/S. PRAGATI GREEN MEADOWS & RESORTS (P) LTD., WHEN ASSESSE E FURNISHED THE COPIES OF HIS ACCOUNT IN THE BOOKS OF M /S. PRAGATI GREEN MEADOWS & RESORTS (P) LTD. IN VIEW OF THE NATUR E OF EXPENDITURE AND EVIDENCE THROUGH THE ACCOUNT COPIES OF M/S. PRAGATI GREEN MEADOWS & RESORTS (P) LTD., THE EXPENDITU RE IS ALLOWABLE. HOWEVER THE SUBMISSIONS MADE BEFORE LD.CI T(A) DO INDICATE SOME CONFUSION ABOUT THE AMOUNTS DEBITED IN AS SESSEE BOOKS AND AMOUNTS DEBITED IN SAID COMPANY BOOKS. THE AMOUNTS STATED DO NOT TALLY AS CAN BE SEEN FROM THE TABLE. HENCE, THE CLAIM OF RS. 32,57,640/- IS DIRECTED TO BE EXAMINED AFRESH AND IF IT IS DEBITED IN THE BOOKS OF THE SAID COMPANY THE SAME CA N BE ALLOWED. AO IS DIRECTED TO DO ACCORDINGLY AFTER GIVING DUE OPP ORTUNITY TO ASSESSEE. I.T.A. NO. 943/HYD/2015 :- 5 - : 6.3. OUT OF THE BALANCE EXPENDITURE OF RS. 7,17,360/- INCURRED BY ASSESSEE ALONG WITH RS. 16,34,400/- SPENT ON DEVELOP MENT COST, NO EVIDENCE WAS FURNISHED. CONSIDERING THE NATURE OF CL AIM, 10% OF THE EXPENDITURE CLAIMED CAN BE DISALLOWED, AS WAS DON E IN THE CASE OF EXPENDITURE DISALLOWED BY AO AND RESTRICTED BY LD.C IT(A), ON WHICH REVENUE HAS NOT FILED ANY CROSS-APPEAL OR OBJE CTION. 6.4. ACCORDINGLY, THE EXPENDITURE CLAIM OF RS. 32,57 ,640/- IS RESTORED TO AO FOR EXAMINATION AND ALLOWANCE. THE CLA IM OF RS. 16,80,000/- IS REJECTED. FOR THE BALANCE OF EXPENDITU RE OF RS. 7,17,360/- AND RS. 16,34,400/-, AO IS DIRECTED TO RE STRICT IT TO 10% OF THE SAID EXPENDITURE AND ALLOW THE BALANCE. THE G ROUNDS ARE ACCORDINGLY PARTLY ALLOWED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS CONSIDERED PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER, 2017 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 25 TH OCTOBER, 2017 TNMM I.T.A. NO. 943/HYD/2015 :- 6 - : COPY TO : 1. P. LAXMINARAYANA, FLAT NO. 20102, INDU FORTUNE F IELD GARDENIA, KUKATPALLY 13 TH PHASE, HYDERABAD. 2. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-11(1), HYDERABAD. 3. CIT (APPEALS)-5, HYDERABAD. 4. CIT-5, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.