The DCIT, Central Circle, Vijayawada v. Sri M Malakondaiah, Hyderabad

ITA 161/VIZ/2011 | 2002-2003
Pronouncement Date: 09-09-2011 | Result: Allowed

Appeal Details

RSA Number 16125314 RSA 2011
Assessee PAN ADUPM0073A
Bench Visakhapatnam
Appeal Number ITA 161/VIZ/2011
Duration Of Justice 4 month(s) 28 day(s)
Appellant The DCIT, Central Circle, Vijayawada
Respondent Sri M Malakondaiah, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 09-09-2011
Assessment Year 2002-2003
Appeal Filed On 11-04-2011
Judgment Text
ITA NOS.161 TO 166 OF 2011 M. MALAKONDAIAH HYD 1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO S . 161 TO 166 /VIZAG/ 20 11 ASSESSMENT YEAR S : 2002 - 03 2003 - 04 2 004 - 05 2005 - 06 2006 - 07 & 2006 - 07 DCIT CENTRAL CIRCLE VIJAYAWADA VS. M. MALAKONDAIAH HYDERABAD (APPELLANT) (RESPONDENT) PAN NO.ADUPM 0073A APPELLANT BY: S MT. D. KOMALI KRISHNA DR RESPONDENT BY: SHRI A.V. RAGHURAM ADVOCATE DATE OF HEAR I NG: 08 .09.2011 DATE OF PRONOUNCEMENT: 09 .09.2011 ORDER PER BENCH:- THESE APPEALS ARE PREFERRED BY THE REVENUE AGAINST THE RESPECTIVE ORDER OF THE CIT(A) DELETING THE PENALTY LEVIED U/S 271D OF THE I.T. ACT (HEREINAFTER CALLED AS AN ACT) LEVIED BY THE A.O. FOR VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS THESE WERE HEARD TOGETHER AND ARE BEING DI SPOSED OF THROUGH THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT DURING THE SEARCH AND SEIZURE OPERATION SOME INCRIMINATING MATERIAL WAS SEIZED FROM THE RESIDENCE OF THE ASSESSEE AND THE COMMERCIAL PREMIS ES OF THE COMPANY M/S. R.K. PROMOTERS PVT. LTD. IN WHICH THE ASSESSEE IS A MANAGING DIRECTOR. ON THE BASIS OF THE SEIZED DOCUMENT IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS RECEIVED A SUBSTANTIAL AMOUNT IN C ASH FROM DIFFERENT PARTIES FOR WHICH THE PRO-NOTES WERE EXECUTED IN INDIVIDUAL CAPACITY. THE ASSESSING OFFICER HAS PROPOSED TO INITIATE THE PENALTY PROCEE DINGS U/S 271D FOR VIOLATION OF SECTION 296SS OF THE ACT. THE LD. COUNSEL FOR T HE ASSESSEE HAS CONTENDED THAT THE ASSESSEE HAS NOT RECEIVED THE CASH FROM DI FFERENT PERSONS IN HIS INDIVIDUAL CAPACITY. IT WAS RECEIVED ON BEHALF OF THE COMPANY. THOUGH THE ITA NOS.161 TO 166 OF 2011 M. MALAKONDAIAH HYD 2 PRO-NOTES WERE EXECUTED BY THE ASSESSEE IN PERSON B UT THE CORRESPONDING ENTRIES WERE MADE IN THE BOOKS OF ACCOUNTS OF THE C OMPANY. THIS ARGUMENT OF THE ASSESSEE WAS NOT FOUND FAVOUR WITH THE ASSES SING OFFICER AND HE ACCORDINGLY LEVIED THE PENALTY U/S 271D IN ALL THE ASSESSMENT YEARS. 3. THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT(A) AND REITERATED ITS CONTENTIONS. THE CIT(A) CALLED A REMAND REPORT FRO M THE ASSESSING OFFICER WITH REGARD TO THE CONTENTIONS RAISED BY THE ASSESS EE AND RELYING UPON THE REMAND REPORT THE CIT(A) HAS DELETED THE PENALTY L EVIED U/S 271D OF THE ACT. 4. AGGRIEVED THE REVENUE HAS PREFERRED APPEALS BEF ORE THE TRIBUNAL WITH THE SUBMISSION THAT THIS LOAN WAS BORROWED BY THE A SSESSEE IN INDIVIDUAL CAPACITY AFTER EXECUTING THE PRO-NOTES AND THE AMOU NT REFLECTED IN THE PRO- NOTES WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS OF THE COMPANY REGULARLY MAINTAINED FOR THE PURPOSE OF COMPUTING ITS PROFIT. 5. IN CONTRA THE LD. COUNSEL FOR THE ASSESSEE HAS REITERATED ITS CONTENTIONS THAT THE AMOUNT RECEIVED BY THE ASSESSE E IN INDIVIDUAL CAPACITY WAS DULY REFLECTED IN THE BOOKS OF ACCOUNTS OF THE COMPANY. IN ORDER TO RESOLVE THE CONTROVERSY WE DIRECTED THE LD. D.R. T O PRODUCE THE COPY OF THE REMAND REPORT AND TO MAKE A NECESSARY VERIFICATION WITH REGARD TO THE SUBMISSIONS OF THE ASSESSEES. CONSEQUENTLY THE LD . D.R. HAS FILED A COPY OF THE REMAND REPORT ALONG WITH THE ANNEXURES AND THE SEIZED DOCUMENTS AND DURING THE COURSE OF HEARING HE HAS POINTED OUT CE RTAIN INSTANCES WHERE THE ASSESSEE HAS RECEIVED THE LOANS IN INDIVIDUAL CAPAC ITY AFTER EXECUTING THE PRO- NOTES BUT THE SAME AMOUNT WAS NOT REFLECTED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEES. THE LD. COUNSEL FOR T HE ASSESSEE HAS ALSO IDENTIFIED CERTAIN AMOUNTS RECEIVED BY THE ASSESSEE S IN INDIVIDUAL CAPACITY AND THE CORRESPONDING ENTRIES REFLECTED IN THE BOOK S OF ACCOUNTS OF THE COMPANY. SINCE THE AMOUNT INVOLVED IS SUBSTANTIAL AND THE ASSESSEE HAS TAKEN A LOAN AT VARIOUS DATES IT IS NOT POSSIBLE F OR US TO VERIFY EACH AND EVERY ENTRY. BUT FROM A CAREFUL PERUSAL OF RECORD WE FI ND THAT SOME OF THE AMOUNTS RECEIVED BY THE ASSESSEES ARE REFLECTED IN THE BOOKS OF ACCOUNTS OF THE COMPANY AND SOME AMOUNTS ARE NOT REFLECTED IN T HE BOOKS OF ACCOUNTS OF ITA NOS.161 TO 166 OF 2011 M. MALAKONDAIAH HYD 3 THE COMPANY. THEREFORE WE ARE OF THE OPINION THAT LET THIS MATTER BE RE- EXAMINED BY THE ASSESSING OFFICER BY MAKING A NECES SARY VERIFICATION AFTER AFFORDING A PROPER OPPORTUNITY OF BEING HEARD TO TH E ASSESSEES. NEEDLESS TO MENTION HERE THAT THE ASSESSING OFFICER IS REQUIRED TO EXAMINE EACH AND EVERY ENTRY WITH REGARD TO THE LOAN RECEIVED BY THE ASSES SEES AND ITS REFLECTION IN THE BOOKS OF ACCOUNTS OF THE COMPANY. IF THE LOAN AMOUNT RECEIVED BY THE ASSESSEE BY EXECUTING A PRO NOTE IS DULY REFLECTED IN THE BOOKS OF ACCOUNTS OF THE COMPANY ON THE SAME DAY IT CANNOT BE HELD THAT AMOUNT WAS RECEIVED BY THE ASSESSEE IN HIS OWN INDIVIDUAL CAPACITY. TH EREFORE THE PENALTY U/S 271D IS NOT EXIGIBLE. BUT IF THE ASSESSEE IS NOT A BLE TO ESTABLISH THAT THE PARTICULAR AMOUNT RECEIVED BY THE ASSESSEE IS REFLE CTED IN THE BOOKS OF ACCOUNTS OF THE COMPANY THE ASSESSING OFFICER MAY LEVY THE PENALTY AS PER LAW. ACCORDINGLY THE ORDER OF THE LD. CIT(A) IS S ET ASIDE AND THE MATTER IS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER TO RE-ADJUDICATE THE ISSUE IN TERMS INDICATED ABOVE. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 09.09.2011 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOU NTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 9 TH SEPTEMBER 2011 COPY TO 1 DCIT CENTRAL CIRCLE VIJAYAWADA 2 SRI M. MALAKONDAIAH 305 DOYAN CHAMBERS AMEERPET NEAR SARADHI STUDIOS HYDERABAD 3 THE CI T VIJAYAWADA 4 THE CIT (A) VIJAYAWADA 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM