ITO, Ward-9(1), Hyderabad V. Sri Durga Prasad V, Hyderabad

ITA 993/HYD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74672 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO
• Section: 194C; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 993/HYD/2011 ASSESSMENT YEAR : 2007-08 THE ITO WARD-9(1) HYDERABAD VS. SRI DURGA PRASAD V HYDERABAD PAN: ADZPV1448B [APPELLANT] [RESPONDENT] APPELLANT BY: SRI JEEVAN LAL LAVIDIYA RESPONDENT BY: SRI S. RAMA RAO DATE OF HEARING: 04.03.2014 DATE OF PRONOUNCEMENT: 04.03.2014 ORDER PER CHANDRA POOJARI, AM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT-VI, HYDERABAD DATED 31.1.2011 FOR ASSESSMENT YEAR 2007-08. 2. THE FIRST GROUND OF THE REVENUE IS THAT THE CIT(A) OUGHT TO HAVE CONFIRMED THE ADDITION OF RS. 1,71,766 AS T HE ASSESSEE FAILED TO FURNISH VALID EXPLANATION FOR SO URCES OF INVESTMENT. ITA NO. 993/HYD/2011 SRI DURGA PRASAD V ===================== 2 3. BRIEF FACTS OF THE ISSUE ARE THAT ON VERIFICATION OF BANK STATEMENT THE AO FOUND THAT THERE WAS A DEPOSIT OF RS. 1,71,766 ON 12.6.2006 FOR WHICH EXPLANATION WAS CAL LED FOR. HOWEVER, THE ASSESSEE HAS NOT FURNISHED PROPER EXPL ANATION. BEING SO, THE AO MADE THE ADDITION U/S. 69 OF INCOM E-TAX ACT, 1961 AT RS. 1,71,766. 4. ON APPEAL, THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT HE HAD RECEIVED TWO CHEQUES BEARING NOS. 35004 8 AND 350045 ON 12.6.2006 FOR AN AMOUNT OF RS. 1,07,260 A ND RS. 1,71,766, RESPECTIVELY, FOR BEING PAID TO THE LANDL ORDS AND THE ASSESSEE HAD WITHDRAWN RS. 3 LAKHS ON 16.6.2006 VID E CHEQUE NO. 202583 AND PAID TO THE LANDLORDS. AFTER HEARIN G THE ARGUMENT OF THE ASSESSEE'S COUNSEL, THE CIT(A) DELE TED THE ADDITION. AGAINST THIS, THE REVENUE IS IN APPEAL B EFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS SEEN FROM THE ORDER OF THE CIT(A), IT IS OBSERVED THAT THE ASSESSEE EXPLAINED USAGE OF RECEI PT OF RS. 1,71,766 WHICH WAS USED FOR PAYMENT TO THE LANDLORD S. HOWEVER, IT REMAINS THAT THE ASSESSEE HAS NOT EXPLA INED THE SOURCES FROM WHOM HE HAD RECEIVED RS. 1,71,766 AND THE PURPOSE FOR WHICH IT WAS RECEIVED. IN THE ABSENCE OF SOURCE AND NATURE OF EXPENDITURE, WE ARE INCLINED TO HOLD THAT THE ITA NO. 993/HYD/2011 SRI DURGA PRASAD V ===================== 3 SAID RECEIPT IS TO BE CONSIDERED AS TRADING RECEIPT AND INCOME ON THIS IS TO BE ESTIMATED, AS THE ASSESSEE ESTIMAT ED ON OTHER RECEIPTS, AT 25%. ACCORDINGLY, THIS GROUND OF THE REVENUE IS PARTLY ALLOWED. 6. THE NEXT GROUND OF THE REVENUE IS THAT THE CIT(A) O UGHT TO HAVE SUSTAINED THE ADDITION OF RS. 20,00,000 MAD E U/S. 69A OF THE ACT, AS THIS REPRESENTS THE AMOUNT RECEI VED BY THE ASSESSEE FROM M/S. JANA CHAITANYA HOUSING LTD., ON 3 .8.2006 WHICH IS NOT DECLARED IN THE RETURN OF INCOME. 7. ON VERIFICATION OF FORM NO. 26AS (TDS) IT WAS NOTIC ED BY THE AO THAT THE ASSESSEE RECEIVED FROM M/S. JANA CHAITANYA HOUSING LTD., A SUM OF RS. 20 LAKHS ON 3. 8.2006 WHICH IS SUBJECTED TDS U/S. 194C OF THE ACT AT RS. 4 4,880. HOWEVER, THIS WAS NOT SHOWN AS TRADING RECEIPT BY T HE ASSESSEE. BEING SO, THE AO TREATED THE ENTIRE AMOU NT OF RS. 20,00,000 AS INCOME OF THE ASSESSEE AND MADE ADDITI ON U/S. 69A. 8. BEFORE THE CIT(A), IT WAS SUBMITTED BY THE AR OF TH E ASSESSEE THAT THE ASSESSEE HAD NEVER UNDERTAKEN ANY SORT OF CONTRACT WORKS DURING THE YEAR UNDER CONSIDERATION AND HE WAS ONLY ACTING AS AN AGENT AND WAS GETTING COMMISS ION. IT ITA NO. 993/HYD/2011 SRI DURGA PRASAD V ===================== 4 WAS SUBMITTED THAT M/S. JANA CHAITANYA HOUSING (P) L TD., HAD ISSUED TWO CHEQUES FOR RS. 10 LAKHS EACH ON 12.4.20 06 AND 14.7.2006 TOWARDS DEVELOPMENT CHARGES PAYABLE TO TH E LANDLORDS. THESE TWO CHEQUES WERE DEPOSITED IN THE BANK ON 15.4.2006 AND 15.7.2006 RESPECTIVELY. THESE WERE C REDITED BY THE BANK ON 18.4.2006 AND 18.7.2006 RESPECTIVELY . THE ASSESSEE HAD PAID A SUM OF RS. 9,75,000 AND RS 10 L AKHS TO THE LANDLORDS SUBSEQUENTLY. CONFIRMATION LETTERS WE RE PRODUCED BEFORE THE ITO TO THIS EFFECT. AS THE AO H AD NOT SOUGHT FOR ANY FURTHER CLARIFICATION, THE ASSESSEE FELT THAT THE AO HAD SATISFIED HIMSELF WITH THE ABOVE SUBMISSION. HOWEVER, THE AO HAD MADE THE ADDITION AS HE HAD FOU ND THE SAME IN 26AS STATEMENT. IT WAS SUBMITTED THAT THE A SSESSEE HAD OBTAINED A CERTIFICATE FROM M/S. JANA CHAITANYA HOUSING (P) LTD., WHICH CLEARLY INDICATED THAT THE CHEQUES FOR RS. 20 LAKHS IN 26AS ARE THE SAME WHICH WERE EXPLAINED EAR LIER. IN SUPPORT OF THE CLAIM, THE ASSESSEE HAD FILED COPIES OF THE BANK ACCOUNT STATEMENT, CONFIRMATION LETTERS OF SHR I. P. RAMULU AND SHRI. P. LAXMAIAH IN TOKEN OF RECEIPT OF AMOUNT AND A LETTER DATED 08.01.2010 FROM M/S. JANA CHAITAN VA HOUSING (P) LTD., CERTIFYING THE PAYMENT THROUGH CH EQUES FOR RS. 10 LAKHS EACH WHICH MATCH WITH THE DETAILS OF B ANK ACCOUNT STATEMENT. IT WAS SUBMITTED BY THE ASSESSEE THAT WHATEVER PAPERS HE HAD RECEIVED IN RESPECT OF FILIN G OF RETURN ITA NO. 993/HYD/2011 SRI DURGA PRASAD V ===================== 5 FROM M/S. JANA CHAITANYA HOUSING (P) LTD. AND M/S. RA TNA HOUSING OF WHICH HE HAD ACTED AS AGENT WERE FURNISH ED ALONG WITH THE RETURN OF INCOME FILED BY HIM AND HE WAS N OT AWARE OF THE TDS MADE BY M/S. JANA CHAITANYA HOUSING (P) L TD. AND THE PURPOSE THEREOF AND DUE TO THIS REASON ONLY HE HAD NOT CLAIMED THE REFUND OF RS. 44,880/-, WHICH WAS ALSO CERTIFIED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 9. ON HEARING THE ASSESSEE, THE CIT(A) OBSERVED THAT T HE ASSESSMENT HAD BEEN COMPLETED BY THE ASSESSING OFFI CER TAKING THE BANK ACCOUNT OF THE ASSESSEE AS A BASE. IT WAS STATED BY THE AO THAT THE BANK STATEMENT INDICATED TRANSACTIONS TO THE TUNE OF RS. 27,24,860/-. THE C IT(A) OBSERVED THAT FROM THE CONFIRMATION LETTER OF M/S. J ANA CHAITANYA HOUSING (P) LTD., IT HAD ISSUED TWO CHEQ UES OF RS. 10 LAKHS EACH AND THE SAME AMOUNT WAS WITHDRAWN BY THE ASSESSEE AND WAS DISBURSED TO THE LANDLORDS I.E., S RI. P. RAMULU AND SRI. P. LAXMAIAH AND THE CHEQUE NUMBERS DO TALLY WITH THE BANK STATEMENT FURNISHED. HE ALSO OBSERVE D THAT THE ASSESSEE HAD NOT CLAIMED THE TDS REFUND AS WAS ALSO STATED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE ASSESSEE HAD NOT UNDERTAKEN ANY CONTRACT WORK AND I T IS NOT KNOWN WHY M/S. JANA CHAITANYA HOUSING (P) LTD., HAD RECOVERED THE TDS. UNDER THE CIRCUMSTANCES, AS THE BANK ITA NO. 993/HYD/2011 SRI DURGA PRASAD V ===================== 6 STATEMENT AND THE LETTER ISSUED BY M/S. JANA CHAITAN YA HOUSING (P) LTD., WITH CHEQUE NUMBER DETAILS AND AM OUNTS ARE TALLYING, THE CIT(A) HELD THAT THE ASSESSEE HAD NOT RECEIVED ANY AMOUNT TOWARDS THE CONTRACT WORKS AS DEEMED BY THE ASSESSING OFFICER. ACCORDINGLY, HE DELETED THE ADD ITION OF RS. 20 LAKHS. AGAINST THIS, THE REVENUE IS IN APPEAL B EFORE US. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR OPINION, THE OBSERVATIO N OF THE CIT(A) IS NOT PROPER. WHEN THE AMOUNT IS INCLUDED IN FORM NO. 26AS THE CIT(A) IS NOT PROPER TO HOLD THAT THE ASSESSEE RECEIVED THE AMOUNT FROM M/S. JANA CHAITANYA HOUSING LTD., AND PAID TO THE LANDLORDS AND THE ASSESSEE ACTED ON LY AS AN AGENT. THE ASSESSEE PLEADED BEFORE US THAT THERE W AS A CONFIRMATION LETTER FROM M/S. JANA CHAITANYA HOUSING LTD.. IT IS THE MOBILISATION ADVANCE GIVEN TO THE ASSESSEE W HICH IS LIABLE FOR TDS TOWARDS LAND DEVELOPMENT EXPENDITURE . WHEN THE ASSESSEE UNDERTAKES THE LAND DEVELOPMENT, IT CA NNOT BE SAID THAT THE ASSESSEE CARRIED OUT THE WORK WITHOUT ELEMENT OF PROFIT. BEING SO, AS IT IS A REGULAR WORK CARRI ED ON BY THE ASSESSEE, APPLYING NET PROFIT RATE AS ADOPTED BY TH E ASSESSEE ON REGULAR TRADING RECEIPTS, WE ARE INCLINED TO DIR ECT THE AO TO ADOPT 25% OF THIS RECEIPT AS INCOME OF THE ASSES SEE, ON THIS ITA NO. 993/HYD/2011 SRI DURGA PRASAD V ===================== 7 RS. 20 LAKHS ALSO. THIS GROUND OF THE REVENUE IS P ARTLY ALLOWED. 11. IN THE RESULT, REVENUE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH, 2014. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 4 TH MARCH, 2014 TPRAO COPY FORWARDED TO: 1. THE ITO, WARD-9(1), BLOCK NO. 2D, IT TOWERS, AC GUARDS, HYDERABAD-500 004. 2. SRI DURGA PRASAD V, 5-5-325-263, PRASHANTH NAGAR , SAHAB NAGAR, HYDERABAD-500 070. 3. THE CIT(A)-VI, HYDERABAD. 4. THE CIT-VI, HYDERABAD. 5. THE DR BENCH 'B', ITAT, HYDERABAD