Sai Real Estate, Hyd, Hyderabad v. ITO, Ward-8(2), Hyderabad, Hyderabad

ITA 178/HYD/2015 | 2006-2007
Pronouncement Date: 28-09-2016

Appeal Details

RSA Number 17822514 RSA 2015
Assessee PAN ASGPS3030G
Bench Hyderabad
Appeal Number ITA 178/HYD/2015
Duration Of Justice 1 year(s) 7 month(s) 3 day(s)
Appellant Sai Real Estate, Hyd, Hyderabad
Respondent ITO, Ward-8(2), Hyderabad, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2016
Appeal Filed By Assessee
Bench Allotted A
Tribunal Order Date 28-09-2016
Date Of Final Hearing 07-06-2016
Next Hearing Date 07-06-2016
Assessment Year 2006-2007
Appeal Filed On 25-02-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A HYDERABAD BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. ASST. YEAR APPELLANT RESPONDENT 759/HYD/2014 2006 - 07 SAMA VENKAT REDDY RALLAGUDA SHAMSHABAD [PAN: ASGPS3030G] THE INCOME TAX OFFICER WARD-8(2) HYDERABAD 178/HYD/2015 2006 - 07 SAI REAL ESTATE HYDERABAD [PAN: ABGFS7390N] FOR ASSESSEE : SHRI K.C. DEVDAS AR FOR REVENUE : SHRI A. SITARAMA RAO DR DATE OF HEARING : 30-08-2016 DATE OF PRONOUNCEMENT : 28-09-2016 O R D E R PER B. RAMAKOTAIAH A.M. : BOTH THE APPEALS OF TWO ASSESSEES ARE DIRECTED AGAIN ST THE TWO INDEPENDENT ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III HYDERABAD DATED 15-01-2014 (ITA NO. 759/HYD/14) & CIT(A)-2 HYDERABAD DATED 08-12-2014 (ITA NO. 178/ HYD/15). ITA NO. 178/HYD/2015 PERTAINS TO PARTNERSHIP FIRM AND ITA NO. 759/HYD/2014 RELATES TO MANAGING PARTNER OF THE VERY S AME FIRM. SINCE THE ISSUES ARISING FOR CONSIDERATION IN BOTH THE APPEALS ARE SAME WE DISPOSE-OFF THESE APPEALS BY THIS COMMON ORD ER. 2. M/S. SAI REAL ESTATE IS A PARTNERSHIP FIRM AND HAS UNDERTAKEN REAL ESTATE TRANSACTIONS ON COMMISSION BASIS AS WELL I.T.A. NOS. 759 /HYD/2014 & 178/HYD/2015 :- 2 -: AS ON OWN BASIS. IT HAS FIFTEEN PARTNERS AND FILED RE TURN OF INCOME DECLARING TOTAL INCOME OF RS. 59 650/-. A SURVEY OPE RATION U/S. 133A OF THE INCOME TAX ACT [ACT] WAS CONDUCTED ON 01-09 -2006. IN THE COURSE OF ASSESSMENT PROCEEDINGS ON THE REASO N THAT ASSESSEE HAS NOT COMPLIED WITH VARIOUS NOTICES AN ORD ER U/S. 144 OF THE ACT WAS PASSED DETERMINING THE TOTAL INCOME AT RS . 84 94 650/- VIDE ORDER DT. 31-12-2008. IN THAT ORDER AO TREATED THE CAPITAL INVESTED BY THE PARTNERS AT RS. 58 50 000/- A ND ADVANCES RECEIVED FROM FARMERS AT RS. 28 50 000/- AS UNEXPLAINED INVESTMENTS. 2.1. SIMILARLY IN THE CASE OF SHRI SAMA VENKATA RED DY THE MANAGING PARTNER OF THE FIRM CONSEQUENT TO SURVEY PRO CEEDINGS THE SALE OF LAND AT DUBBACHERLA AT MAHESHWARAM MANDAL WAS CONSIDERED AS INDIVIDUAL TRANSACTION AND ALL THE SALE RECEIPTS TO AN EXTENT OF RS. 99 45 000/- WERE CONSIDERED AS CREDITS IN HIS HAND AND WERE BROUGHT TO TAX. IT WAS A SUBMISSION OF ASSES SEE THAT THE ENTIRE SALE PROCEEDS RECEIVED FROM M/S. CRESCENT REAL ESTATES REPRESENTED BY SHRI MD. KHADER BASHA WAS ACCOUNTED FOR IN THE HANDS OF THE PARTNERSHIP FIRM AND ASSESSEE HAS NO IN DIVIDUAL RECEIPTS. HOWEVER AO DID NOT ACCEPT THE ABOVE AND BRO UGHT THE ENTIRE SALE CONSIDERATION RECEIVED AS INCOME IN HIS H AND. ON THE ORDERS OF LD.CIT(A) BOTH ASSESSEE AND REVENUE HAVE COME IN APPEAL BEFORE THE ITAT. ITAT VIDE ITS ORDER IN ITA N O. 289 & 290/HYD/2010 DT. 12-11-2010 HAS SET ASIDE THE ISSUES TO THE FILE OF AO FOR GIVING ANOTHER OPPORTUNITY TO ASSESSEES AND TO CAUSE NECESSARY ENQUIRIES AND TO EXAMINE ALL THE CREDITORS AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE I.T.A. NOS. 759 /HYD/2014 & 178/HYD/2015 :- 3 -: OPPORTUNITY TO ASSESSEES. THESE IMPUGNED ORDERS ARE CONSEQUENT TO THE ABOVE DIRECTIONS OF THE ITAT. 3. IN THE CONSEQUENTIAL ORDERS THE AO REPEATED THE SA ME ADDITION AS WAS DONE ORIGINALLY STATING THAT ASSESSEE- FIRM HAS NOT PRODUCED EITHER THE PARTNERS OR THE CREDITORS. IN THE APPEAL BEFORE CIT(A) ON REMAND THE AO HAS ACCEPTED THE CAPITAL INTRO DUCTION IN THE FIRM BY THE PARTNERS TO AN EXTENT OF RS. 58 50 000/- AND THEREFORE LD.CIT(A) HAS GIVEN RELIEF ON WHICH THERE IS NO APPEAL. HOWEVER WITH REFERENCE TO UNEXPLAINED CASH CREDITS OF RS. 25 85 000/- LD.CIT(A) CONFIRMED THE ADDITION. ASSE SSEE-FIRM IS IN APPEAL ON THE ABOVE SAID AMOUNT. 4. COMING TO THE INDIVIDUAL EVEN THOUGH ASSESSEE SUBMITTED THAT THE SALE CONSIDERATION WAS RECEIVED BY THE FIRM AND WAS ACCOUNTED FOR IN THE FIRMS HANDS AND INCOMES WE RE OFFERED WHICH WERE ALSO ACCEPTED BY AO THE LD.AO HOWEVER ON THE REASON THAT CREDITORS WERE NOT PRODUCED ADDED THE SAME . LD.CIT(A) ON VERIFYING THE SUBMISSIONS OF ASSESSEE H OWEVER DIRECTED THE AO TO EXAMINE WHETHER ASSESSEE HAS SURREN DERED THE AMOUNTS IN THE HANDS OF THE FIRM AND THEN DELETE THE AM OUNT. HIS DIRECTIONS IN PARA 4.2 ARE AS UNDER: 4.2. I HAVE SEEN CAREFULLY THE FACTS AND EVIDENCE. THE APPELLANT HAS CATEGORICALLY STATED THAT ALL THE AFO REMENTIONED CREDITORS HAVE BEEN SURRENDERED IN THE ASSESSMENT O F THE FIRM WHICH HAS BEEN ACCEPTED. THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE CONTENTION OF THE APPELLANT. WHICHEVER CREDITS HAVE BEEN DISCLOSED AS ADDITIONAL INCOME IN THE ASSESSMENT OF THE AFOREMENTIONED FIRM THOSE ARE NOT TO BE ADDED BACK ONCE AGAIN IN THE CURRENT CASE AS THIS WOULD TANTAMOUNT TO DOUBLE ADDITION. IF THERE ARE SOME CREDITORS WHICH HAD NOT BEEN SURREND ERED IN THE CASE OF M/S. SAI REAL ESTATE THE SAME SHALL BE ADDE D BACK IN THE I.T.A. NOS. 759 /HYD/2014 & 178/HYD/2015 :- 4 -: CURRENT CASE AS THE APPELLANT HAS NOT PROVIDED ANY EVIDENCE TO CONFIRM THE CREDITORS. ASSESSEE SHRI VENKAT REDDY IS AGGRIEVED ON THE ABOVE DIRECTIONS OF CIT(A) AS THERE IS NO DISCLOSURE OF CREDITORS AS AD DITIONAL INCOME AS ASSESSEE OFFERED THE ENTIRE RECEIPTS AS INCOME IN T HE HANDS OF THE FIRM. SINCE WRITTEN SUBMISSIONS WERE WRONGLY CONSI DERED BY THE CIT(A) ASSESSEE IS CONTESTING THAT CIT(A) SHOULD HA VE DIRECTED THE AO TO DELETE THE ADDITION OF RS. 99 45 000/- AS TH E SAME WAS CONSIDERED IN THE CASE OF FIRM M/S. SAI REAL ESTATE. 5. LD. COUNSEL REITERATED THE SUBMISSIONS MADE BEFO RE THE AUTHORITIES TO SUBMIT THAT AS FAR AS INDIVIDUAL IS CONCE RNED ENTIRE RECEIPTS OF RS. 99 45 000/- WERE ACCOUNTED FOR IN THE HANDS OF THE FIRM AS SALE PROCEEDS RECEIVED AND THESE WERE ACCEPT ED BY THE AO IN ASSESSMENT. HE REFERRED TO THE ASSESSMENT ORDER OF THE FIRM TO SUBMIT THAT THE TRANSACTIONS OF THE FIRM AS FAR AS BUSI NESS IS CONCERNED WERE ACCEPTED. BUT AO HAD DOUBTED THE CREDI TS MADE BY THE PARTNERS IN THE CAPITAL ACCOUNT AND VARIOUS UNS ECURED LOANS RECEIVED FOR ADVANCING FOR PURCHASE OF LAND FROM VA RIOUS FARMERS. IT WAS HIS SUBMISSION THAT ADDITION IN THE HANDS OF THE INDIVIDUAL DOES NOT ARISE AS INDIVIDUAL HAS NOT RECEIVED THE AMO UNT IN HIS INDIVIDUAL CAPACITY. 5.1. AS FAR AS FIRM IS CONCERNED WHILE SUBMITTING THAT THE CREDITS BY THE PARTNERS WERE ACCEPTED IT WAS THE SUBM ISSION THAT THE AMOUNTS RECEIVED FROM VARIOUS AGRICULTURISTS ALSO SHOULD HAVE BEEN ACCEPTED AS GENUINE. IT WAS FURTHER SUBMITTED TH AT ASSESSEE HAS FILED ALL THE NECESSARY CONFIRMATIONS AND ALSO GI VEN THE ADDRESSES AND DETAILS. INSTEAD OF AO ENQUIRING ASKED ASSESSEE TO I.T.A. NOS. 759 /HYD/2014 & 178/HYD/2015 :- 5 -: PRODUCE THE CREDITORS WHICH HE COULD NOT DO AS THE SAI D TRANSACTION OF PURCHASE OF LAND DID NOT FRUCTIFY AND ASSESSEE HAD RETURNED THE MONEYS AND AT PRESENT BUSINESS WAS ALSO CL OSED. IT WAS THE SUBMISSION THAT ASSESSEE HAS DISCHARGED HIS O NUS BY FURNISHING CONFIRMATIONS AND EVIDENCE IN ORDER TO SUP PORT THAT THE CREDITS ARE GENUINE. 6. LD. DR HOWEVER SUBMITTED THAT ASSESSEE HAS NOT CO- OPERATED WITH THE AO IN SPITE OF GIVING ENOUGH OPPORTUN ITY. HENCE THE ORDERS OF CIT(A) REQUIRE CONFIRMATION. 7. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PERUSIN G THE DOCUMENTS PLACED ON RECORD ALONG WITH NECESSARY CONF IRMATION LETTERS WE ARE OF THE OPINION THAT AO HAS WRONGLY BRO UGHT AN AMOUNT OF RS. 99 45 000/- IN THE HANDS OF THE ASSESSEE INDIVIDUAL AS SALE PROCEEDS. IT IS TO BE NOTED THAT PARTNER SRI RE DDY HAS ENTERED INTO AGREEMENTS FOR PURCHASE AND SALE IN HIS NAME BUT IT WAS THE CONTENTION THAT ENTIRE TRANSACTIONS WERE UNDERTAKEN BY THE PARTNERSHIP FIRM AND THE SALE WAS OFFERED IN THE HANDS OF THE PARTNERSHIP FIRM WITH CORRESPONDING EXPENDITURE IN THAT STATUS. AS SEEN FROM THE ORDERS OF THE AO AND DOCUMENTS PLACED ON RECORD THERE IS NO DOUBT THAT THE SALE TRANSACTION WHICH WAS OFF ERED IN THE HANDS OF THE FIRM WAS AGAIN CONSIDERED IN THE HANDS OF ASSESSEE SUBSTANTIALLY BUT NOT PROTECTIVELY. THEREFORE THERE IS DOUBLE ADDITION OF THE SAME AMOUNT IN TWO STATUSES. AS VERIF IED FROM THE RECORD AND SUBMISSIONS ASSESSEE HAS NOT RECEIVED THE AMOUNTS FROM CRESCENT REAL ESTATE WHEN THE PROPERTY WAS SOLD AND THESE TRANSACTIONS WERE ACCOUNTED FOR IN THE HANDS OF THE FIR M AS SUCH. SINCE AO ACCEPTED THE SAME TRANSACTIONS I.E. SALE OF LANDS AT I.T.A. NOS. 759 /HYD/2014 & 178/HYD/2015 :- 6 -: BACHUPALLY WE ARE OF THE OPINION THAT THE SAME AMOUNT CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE INDIVIDUAL. AS SE EN FROM THE EARLIER ORDERS AO SURPRISINGLY TREATED THE AMOUNTS R ECEIVED FROM CRESCENT REAL ESTATE AS CREDITS IN HIS HANDS. SINCE IT WAS TREATED AS CREDITS THE ITAT HAS NO OPTION THAN TO RESTORING THE SAME TO AO FOR EXAMINATION OF THE CREDITORS. HOWEVER THE SAME CR EDITS WERE EXAMINED BY THE AO IN THE HANDS OF THE FIRM AND ACCEPT ED AS GENUINE. THEREFORE THE SAME FINDING SHOULD HAVE BEEN ACCEPTED IN THE HANDS OF THE INDIVIDUAL AS WELL. INSTEAD AO DIRECTED ASSESSEE TO PRODUCE THE CREDITORS WHO ARE IN FACT WERE EXAMINED IN THE HANDS OF THE FIRM AND THE RECEIPTS WERE TREATED AS SALE PROCEEDS IN THE HANDS OF THE FIRM. THEREFORE ON F ACTS ALSO THE SO CALLED CREDITS BROUGHT TO TAX BY THE AO IN THE HANDS OF THE INDIVIDUAL SHRI VENKAT REDDY ARE NOTHING BUT SALE PROCEEDS ACCEPTED AS SUCH IN THE FIRMS BUSINESS. THEREFORE WE ARE SATISFIED THAT THE AMOUNT SHOULD HAVE BEEN DELETED BY THE CIT(A) RATHER THAN DIRECTING THE AO TO EXAMINE AND DELETE. MOREOVE R ASSESSEE NOWHERE SUBMITTED THAT THE SAME AMOUNT WAS ADDED AS INC OME. WHAT IT WAS CONTENDED BEFORE THE LD.CIT(A) IN WRITTEN SU BMISSIONS WAS THAT THE SAME AMOUNT WAS OFFERED AS INCOME IN THE HA NDS OF THE FIRM THROUGH ITS BOOKS OF ACCOUNT THEREFORE THE S AME AMOUNT CANNOT BE BROUGHT TO TAX. HOWEVER LD.CIT(A) MISCONSTRUE D THE SUBMISSIONS OF ASSESSEE AND DIRECTED THE AO TO EXAMI NE WHETHER ADDITIONAL INCOME WAS OFFERED. CONSEQUENTLY WE ARE OF THE OPINION THAT ORDER OF CIT(A) CANNOT BE SUSTAINED ON THIS ISSUE . WE DIRECT THE AO TO DELETE THE AMOUNT FROM THE HANDS OF THE IN DIVIDUAL AS THE SAME AMOUNT WAS ACCEPTED AS A TRANSACTION OF PURC HASE AND SALE OF LAND IN THE BUSINESS OF THE FIRM M/S. SAI REA L ESTATE. I.T.A. NOS. 759 /HYD/2014 & 178/HYD/2015 :- 7 -: ACCORDINGLY THE GROUNDS RAISED BY ASSESSEE IN ITA N O. 759/HYD/2014 ARE ALLOWED. 8. IN THE RESULT APPEAL OF ASSESSEE IN ITA NO. 759/HYD/2014 IS ALLOWED. 9. COMING TO THE ISSUE OF ADDITION IN THE HANDS OF THE PARTNERSHIP FIRM AS BRIEFLY STATED ABOVE THERE ARE TW O ADDITIONS MADE IN THE HANDS OF THE FIRM: I. CREDITS OF THE PARTNERS; AND II. CREDITS OF THE 15 FARMERS WHO ADVANCED MONEYS FOR PURCHASE OF LAND; 9.1. AS SEEN FROM THE DOCUMENTS ON RECORD ASSESSEE HAS FURNISHED NECESSARY CONFIRMATION LETTERS AND OTHER DO CUMENTS TO PROVE THE GENUINENESS OF THE FUNDS RECEIVED FOR PURCH ASE OF LAND. INSTEAD OF ENQUIRING THE SAID CREDITORS AO IN THE RE MAND REPORT ONLY OBSERVED THAT THE STATEMENTS FILED ARE SELF-SERVING STATEMENTS. WE ARE UNABLE TO UNDERSTAND HOW THE AO CAN GIVE SUCH SWEEPING STATEMENT WITHOUT EXAMINATION REJECTING THE CONFIRMATIONS FILED BY ASSESSEE. HE SHOULD HAVE SUMMONED THOSE PEOPLE DIRE CTLY OR SENT HIS INSPECTORS FOR NECESSARY VERIFICATION FROM THOSE F IFTEEN CREDITORS. INSTEAD AO SIMPLY DISBELIEVED AND ON THAT BASIS LD.CIT(A) CONFIRMED THE CREDITS AS NOT GENUINE. SI NCE ASSESSEE HAS DISCHARGED HIS ONUS IT IS FOR THE REVENUE TO PRO VE THAT THE CONFIRMATIONS FILED AS NOT GENUINE. WITHOUT PROVING S O SUCH STATEMENTS CANNOT BE REJECTED AS SELF-SERVING STATEMENTS. SINCE NO ENQUIRY WORTH WAS CONDUCTED BY THE AO TO REBUT THE CONFI RMATIONS FILED BY ASSESSEE PRIMA-FACIE THEY ARE TO BE ACCEPTED AS GENUINE. I.T.A. NOS. 759 /HYD/2014 & 178/HYD/2015 :- 8 -: HOWEVER IN THE INTEREST OF JUSTICE WE ARE OF THE OPIN ION THAT THIS ISSUE CAN GO BACK TO THE AO FOR PROPER ENQUIRY AND T HEN IF THOSE CONFIRMATIONS PROVED TO BE NOT CORRECT THEN ASSESSEE S HOULD BE GIVEN OPPORTUNITY TO ESTABLISH THAT THE CREDITS ARE GE NUINE. FOR THIS PURPOSE WE SET ASIDE THE ORDERS OF AO AND CIT(A) ON THIS ISSUE AND RESTORE THE ISSUE AGAIN TO AO TO REEXAMINE IT ACCO RDING TO THE FACTS AND LAW. WE ARE ALSO AWARE THAT AT THE REQUEST OF ASSESSEE THIS MATTER WAS ALREADY SET ASIDE TO AO ONCE EARLIER. S INCE AO HAS NOT DONE PROPER ENQUIRIES WE HAVE NO OPTION THAN TO RESTORE IT AGAIN TO THE FILE OF THE AO. WE MAKE IT CLEAR THAT AS SESSEE SHOULD NOT BE DIRECTED TO PRODUCE CREDITORS TO THE OFFICE OF THE AO. AO IS FREE TO MAKE NECESSARY ENQUIRIES. HOWEVER IF ANY AD VERSE OPINION IS BEING TAKEN THEN ASSESSEE SHOULD BE GIVEN DUE OPP ORTUNITY TO MAKE ITS SUBMISSIONS. ACCORDINGLY THE ISSUE OF CRED ITS IN THE APPEAL OF ASSESSEE-FIRM IS RESTORED TO THE FILE OF THE AO FOR FRESH CONSIDERATION AS DIRECTED ABOVE. IN THE RESULT GROU NDS ARE ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT THIS APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. 11. TO SUM-UP APPEAL IN ITA NO.759/HYD/2014 IS ALL OWED AND APPEAL IN ITA NO.178/HYD/2015 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER 2016 SD/- SD/- (P. MADHAVI DEVI) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMB ER HYDERABAD DATED 28 TH SEPTEMBER 2016 TNMM I.T.A. NOS. 759 /HYD/2014 & 178/HYD/2015 :- 9 -: COPY TO : 1. SHRI SAMA VENKAT REDDY RALLAGUDA SHAMSHABAD. C/O. B. NARSING RAO & CO. CHARTERED ACCOUNTANTS P LOT NO. 554 ROAD NO. 92 JUBILEE HILLS HYDERABAD. 2. M/S. SAI REAL ESTATE HYDERABAD. C/O. B. NARSIN G RAO & CO. CHARTERED ACCOUNTANTS PLOT NO. 554 ROAD NO . 92 JUBILEE HILLS HYDERABAD. 3. THE INCOME TAX OFFICER WARD-8(2) HYDERABAD. 4. CIT(APPEALS)-III HYDERABAD. 5. CIT(APPEALS)-2 HYDERABAD. 6. CIT-II HYDERABAD. 7. D.R. ITAT HYDERABAD. 8. GUARD FILE.