Sri Radha Krishna Vihar, Kakinada V. THE CIT (A) - 2, Visakhapatnam

ITSSA 2/VIZ/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3887 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 29-07-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DEBA K SONOWAL
• Keywords: Unexplained investment; Rectification of order; Block assessment
• Section: 143(3); 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T . (SS) A.NO. 2 /VIZ/ 201 6 ( / BLOCK ASSESSMENT1997 - 98 TO 2003 - 04 ) M/S SRI RADHA KRISHNA VIHAR 2 - 2 - 8, BRINDAVAN STREET KAKINADA 533003 [PAN :A AEFS4555N ] VS. THE INCOME TAX OFFICER WARD - 2 KAKINADA ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI, AR / RESPONDENT BY : SHRI DEBA K SONOWAL , DR / DATE OF HEARING : 2 5 . 0 7 . 2018 / DATE OF PRONOUNCEMENT : 08 .0 8 .2018 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX ( APPEALS) [CIT(A)] , VISAKHAPATNAM VIDE I . T . A . NO. 10 1 / 201 0 - 1 1/CIT(A) - 2/CC/RJY/2015 - 16 DATED 20 .0 6 .2016 F OR THE ASSESSMENT YEAR (BLOCK) 1997 - 98 TO 2003 - 04 . 2 I T (SS) A NO . 02 / V IZ/201 6 M/S SRI RADHA KRISHNA VIHAR , KAKINADA 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ORDER PASSED BY THE AO IN GIVING EFFECT TO THE ORDER OF THE ITAT . 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: T HE ASSESSEE FILED RETURN OF INCOME ADMITTING THE UNDISCLOSED INCOME OF RS.35,00,000/ - FOR THE BLOCK PERIOD 1997 - 2004. THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 158BC ON TOTAL INCOME OF RS.77,71,782/ - . V ERIFICATION OF THE BLOCK ASSESSMENT ORDER REVEALS THAT THE ASSESSING OFFICER (AO) HAS MADE THE FOLLOWING ADDITIONS TO THE INCOME RETURNED. (I) DIFFERENCE IN COST OF CONSTRUCTION RS.50,30,933 ( II ) UNDISCLOSED INCOME ON ACCOUNT OF SUPPRESSION OF CANTEEN RENT AS PER PARA NO.6 OF THE ORDER RS.5,56,800 ( III ) UNDISCLOSED INCOME ON ACCOUNT OF INFLATION IN SALARIES AS DISCUSSED IN PARA NO.7 OF THE ASSESSMENT ORDER RS.65,785 ( IV ) UNDISCLOSED INCOME ON ACCOUNT OF UNACCOUNTED CREDIT VOUCHERS AS DISCUSSED IN PARA 8 RS.1,36,566 TOTAL RS.57,90,084 THUS THE TOTAL UNDISCLOSED INCOME WORKED OUT TO RS.92,90,0984/ - AS UNDER: UNDISCLOSED INCOME AS PER RETURN OF INCOME RS.35,00,000/ - ADDITION MADE AS ABOVE RS.57,90,084/ - _________________ TOTAL UNDISCLOSED INCOME RS.92,90,084/ - 3 I T (SS) A NO . 02 / V IZ/201 6 M/S SRI RADHA KRISHNA VIHAR , KAKINADA 2.1. THE AO ALLOWED TELESCOPIC BENEFIT OF THE ADDITIONS MADE IN ITEM NO.( II ) TO ( IV ) FROM THE COST OF CONSTRUCTION AND ARRIVED AT THE TOTAL UNDISCLOSED INCOME OF RS.77,71,782/ - IN HIS ORDER PASSED U/S 143(3) ON 31.03.2005 AS UNDER: RETURNED INCOME AS BLOCK RETURN RS.35,00,000/ - ADD DIFFERENCE IN COST OF CONSTRUCTION RS.50,30,933 / - RS. 85,30,933/ - LESS: TELESCOPIC BENEFIT ALLOWED (II) UNDISCLOSED INCOME ON ACCOUNT OF SUPPRESSION OF CANTEEN RENT AS PER PARA NO.6 OF THE ORDER RS. 5,56,800 (III) UNDISCLOSED INCOME ON ACCOUNT OF INFLATION IN SALARIES AS DISCUSSED IN PARA NO.7 OF THE ASSESSMENT ORDER RS. 65,785 (IV) UNDISCLOSED INCOME ON ACCOUNT OF UNACCOUNTED CREDIT VOUCHERS AS DISCUSSED IN PARA 8 RS. 1,36,566 TOTAL UNDISCLOSED INCOME RS.77,71,782/ - AGAINST THE ORDER PASSED U/S 143(3) R.W.S.158BC THE ASSESSEE FILED APPEAL AND THE APPEAL TRAVELLED TO THE ITAT. 3. DURING THE PENDENCY OF APPEAL AGAINST THE ORDER U/S 143(3) , THE AO FOUND THAT THERE WAS MISTAKE IN THE ORDER PASSED ON 31 . 03 . 2005, HENCE ISSUED NOTICE U/S 154 AND PASSED THE RECTIFICATION ORDER U/S 154 4 I T (SS) A NO . 02 / V IZ/201 6 M/S SRI RADHA KRISHNA VIHAR , KAKINADA DATED 31.08 ..2005 RECTIFYING THE MISTAKE. THE AO COMPUTED THE TOTAL UNDISCLOSED INCOME AT RS. RS.85,30,933/ - AS UNDER : TOTAL INCOME ORIGINALLY ASSESSED RS.77,71,782/ - ADD : TELESCOPIC BENEFIT ALLOWED TO THE ASSESSEE ON THE FOLLOWING ITEMS : 1. UNDISCLOSED INCOME ON ACCOUNT OF SUPPRESSION OF CANTEEN RENT 2. UNDISCLOSED INCOME ON ACCOUNT OF INFLATION ON SALARIES 3. UNDISCLOSED INCOME ON ACCOUNT OF UNACCOUNTED CREDIT VOUCHERS. REVISED TOTAL UNDISCLOSED INCOME RS.5,56,800/ - RS.65,785/ - RS.1,36,566/ - -------------------- RS.7,59,151/ - RS.85,30,933/ - ------------------- 4. AGAINST THE ORDER U/S 154, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) VIDE ORDER DATED 12.01.2006 OBSERVED THAT IN THE COMPUTATION OF INCOME, THE AO ACCEPTED THE CLAIM O F THE ASSESSEE TO ALLOW THE BENEFIT OF TELESCOPING , IN RESPECT OF SUPPRESSION OF CANTEEN RENT, INFLATION IN SALARIES AND UNACCOUNTED CREDIT VOUCHERS AGAINST THE INVESTMENT IN CONSTRUCTION. HOWEVER, IN COMPUTATION OF INCOME THE AO FORGOT TO MAKE THE ABOVE ADDITIONS AND ALLOWED THE TELESCOPIC BENEFIT AND REDUCED SUMS IN RESPECT OF THE SAID THREE ADDITIONS WITHOUT MAKING THE ADDITIONS , WHICH IS INCORRECT COMPUTATION OF INCOME . THE LD.CIT(A) WAS OF 5 I T (SS) A NO . 02 / V IZ/201 6 M/S SRI RADHA KRISHNA VIHAR , KAKINADA THE VIEW THAT THE AO SHOULD HAVE COMPUTED THE TOTAL INCOME BY AGGREGATING ALL THE ADDITIONS TO THE INCOME RETURNED AND THEN ALLOW THE TELE SCOPIC BENEFIT. HAVING REDUCED THE SUM S RELATING TO THE TELESCOPIC BENEFIT WITHOUT ADDING TO THE INCOME RETURNED , THE LD.CIT(A) HELD THAT THE AO COMMITTED AN ERROR AND IT IS A MISTAKE AP PARENT FROM THE RECORD WHICH NEEDS TO BE RECTIFIED U/S 154. THE LD.CIT(A) RECOMPUTED THE INCOME AS PER THE DISCUSSION MADE IN THE ASSESSMENT ORDER DATED 31.03.2005 ACCORDING TO THE LD.CIT(A) , THE COMPUTATION OF INCOME SHOU L D BE AS UNDER : UNDISCLOSED INCOME RETURNED IN THE BLOCK RETURN RS.35,00,000 DIFFERENCE IN COST OF CONSTRUCTION RS.50,30,933 ---------------- RS.85,30,933 ADD : TELESCOPING BENEFIT ALLOWED TO THE ASSESSEE IN THE FOLLOWING ITEMS : (II ) UNDISCLOSED INCOME ON ACCOUNT OF SUPPRESSION OF CANTEEN RENT AS PER PARA NO .6 OF THE ORDER RS.5,56,800 (III ) UNDISCLOSED INCOME ON ACCOUNT OF INFLATION IN SALARIES AS DISCUSSED IN PARA NO.7 OF THE ASSESSMENT ORDER RS.65,785 (IV ) UNDISCLOSED INCOME ON ACCOUNT OF UNACCOUNTED CREDIT VOUCHERS AS DISCUSSED IN PARA 8 RS.1,36,566 -------------- RS.7,59,151/ - ------------------- TOTAL UNDISCLOSED INCOME ASSESSED RS .92,90,084/ - LESS: TELESCOPIC BENEFIT (II TO IV ABOVE) RS. 7.59.151/ - TOTAL UNDISCLOSED INCOME RS.85,30,933/ - 6 I T (SS) A NO . 02 / V IZ/201 6 M/S SRI RADHA KRISHNA VIHAR , KAKINADA 4.1. ACCORDINGLY, THE L D.CIT(A) HELD THAT THE RECTIFICATION ORDER PASSED U/S 154 BY THE AO ON 31.08.2005 DETERMIN ING UNDISCLOSED INCOME AT RS.85,30,933/ - IS CORRECT AND IN ACCORDANCE WITH THE DISCUSSION MADE IN THE ASSESSMENT ORDER. S INC E IT WAS A MISTAKE APPARENT FROM RECORD, THE LD.CIT(A) CONFIRMED THE RECTIFICATION ORDER OF THE AO. THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THE ORDER OF THE LD. CIT(A) DATED 12.01.2016, HENCE AS FAR AS THE COMPUTATION OF TOTAL UNDISCLOSED INCOME IS CO NCERNED THE ORDER OF THE LD. CIT(A) BECA ME FINAL. 5. THE ASSESSEE WENT ON APPEAL BEFORE THE APPELLATE AUTHORITIES AGAINST ASSESSMENT ORDER PASSED U/S 143(3) R.W.S.158BC DATED 31 . 03 . 2005 ON THE ADDITION OF UNEXPLAINED INVESTMENT IN CONSTRUCTION MADE BY THE AO AMOUNTING TO RS. 50,30,393/ - . THE MATTER WENT UPTO THE TRIBUNAL AND THE HONBLE ITAT IN IT(SS)A NO.2/VIZAG/2007 DATED 21.08.2009 DELETED THE ADDITION IN RESPECT OF UNEXPLAINED INVESTM ENT IN COST OF CONSTRUCTION AMOUNTING TO RS.50,30,933/ - . THE AO HAS GIVEN EFFECT TO THE ORDER OF THE HONBLE ITAT, VISAKHAPATNAM ON 26.10.2009 AND REVISED UNDISCLOSED INCOME AT RS.42,59,151/ - . THE ASSESSEE FILED APPEAL AGAINST THE CONSEQUENTIAL ORDER OF THE AO DATED 26.10.2009, BUT DID NOT SUCCEED BEFORE THE LD.CIT(A). HENCE, THE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL. 7 I T (SS) A NO . 02 / V IZ/201 6 M/S SRI RADHA KRISHNA VIHAR , KAKINADA 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. AS PER THE ASSESSMENT ORDER, THE AO MADE THE FOLLOWING A DDITIONS TO THE RETURNED INCOME : (I) DIFFERENCE IN COST OF CONSTRUCTION RS.50,30,933 (II) UNDISCLOSED INCOME ON ACCOUNT OF SUPPRESSION OF CANTEEN RENT AS PER PARA NO.6 OF THE ORDER RS. 5,56,800 (III) UNDISCLOSED INCOME ON ACCOUNT OF INFLATION IN SALARIES AS DISCUSSED IN PARA NO.7 OF THE ASSESSMENT ORDER RS. 65,785 (IV) UNDISCLOSED INCOME ON ACCOUNT OF UNACCOUNTED CREDIT VOUCHERS AS DISCUSSED IN PARA 8 RS. 1,36,566 RS.57,90,084 THE ASSESSEE REQUESTED THE BENEFIT OF TELESCOP E OF ADDITION S IN RESPECT OF CANTEEN RENT, INFLATION OF SALARIES AND UNACCOUNTED VOUCHERS AMOUNTING TO RS.7,59,151/ - WHICH WAS ALLOWED BY THE AO AND AFTER ALLOWING TELESCOPIC BENEF IT , THE TOTAL UNDISCLOSED INCOME WORK ED OUT TO RS.85,30,933/ - WHICH WAS CORRECTLY COMPUTED BY THE LD. CIT (A) VIDE HIS ORDER DATED 12.01.2006 AND NO APPEAL WAS FILED BY THE ASSESSEE , AGAINST THE ORDER OF THE LD.CIT(A). HENCE THE COMPUTATION MADE BY THE LD. CIT(A) BEC A ME FINAL . WE HAVE ALSO GONE THROUGH THE ORDER OF THE AO PASSED U/S 143(3) R.W.S.158BC AND SUBSEQUENT RECTIFICATION ORDER . T HE LD. CIT (A) VIDE 8 I T (SS) A NO . 02 / V IZ/201 6 M/S SRI RADHA KRISHNA VIHAR , KAKINADA ORDER DATED 12.0 1.2006 HELD THAT THE AO HAS CORRECTLY MADE THE COMPUTATION OF TOTAL INCOME AT RS.92,90, 084/ - AND THEN REDUCED THE TELESCOPIC BENE FIT . SINCE THE AO HAS MADE THE ADDITIONS INDEPENDENTLY IN RESPECT OF THE INVESTMENTS IN CONSTRUCTION, SUPPRESSION OF CANTEEN RENT RECEIVED, INFLATION IN SALARIES AND UNACCOUNTED CREDIT VOUCHERS, BEFORE TELESCOPIC BENEFIT, THE TOTAL UNDISCLOSED INCOME WOULD BE RS.92,90,084/ - WHICH WAS CORRECTLY ARRIVED AT BY THE LD.CIT(A) . SUBSEQUENTLY, THE HONBLE ITAT HAS DELETED THE ADDITION OF RS.50,30,933/ - . SINCE ADDITION RELATING TO UNEXPLAINED INVESTMENT IN CONSTRUCTION WAS DELETED BY THE ITAT NO FURTHER BENEFIT ON ACCO UNT OF TELESCOPI NG REQUIRED TO BE ALLOWED IN RESPECT OF OTHER ADDITIONS MADE BY THE AO. THEREFORE, THE CONSEQUENTIAL ORDER WOULD RESULT INTO TOTAL UNDISCLOSED INCOME OF RS.42,59,151/ - AS UNDER: GROSS TOTAL INCOME RS.92,9 0,084/ - LESS RELIEF GRANTED BY THE ITAT RS.50,30,933/ - TOTAL UNDISCLOSED INCOME. RS.42,59.151/ - THEREFORE, THE AO HAS CORRECTLY ARRIVED AT THE REVISED UNDISCLOSED INCOME AT RS.42,59,151/ - AND GIVEN EFFE CT TO THE ITATS ORDER CORRECTLY. THERE WAS NO ERROR COMMITTED BY THE AO OR THE LD. CIT(A), HENCE WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE. 9 I T (SS) A NO . 02 / V IZ/201 6 M/S SRI RADHA KRISHNA VIHAR , KAKINADA 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 8 TH AUGUST , 201 8 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 08 . 0 8 .2018 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1 . / THE ASSESSEE - M/S SRI RADHA KRISHNA VIHAR , 2 - 2 - 8, BRINDAVAN STREET , KAKINADA 533003 2 . / THE REVENUE COMMISSIONER OF INCOME TAX (APPEALS) - 2, VISAKHAPATNAM 3 . THE COMMISSIONER OF INCOME TAX (CENTRAL), VI SAKHAPATNAM 4. THE COMMISSIONER OF INCOME TAX(APPEALS) - 2, VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6. / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM