Income Tax Appellate Tribunal - Panji
Smt. M.Praveena,, Visakhapatnam vs The Dy.Cit, Circle - 4(1),, ... on 28 July, 2017
आयकर अपीलीय अधधकरण, धिशाखापटणम पीठ, धिशाखापटणम
IN THE INCOME TAX APPELLATE TRIBUNAL,
VISAKHAPATNAM BENCH, VISAKHAPATNAM
श्री िी. दुगााराि, न्याधयक सदस्य एिं
श्री धड.एस. सुन्दर ससह, लेखा सदस्य के समक्ष
BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER &
SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER
आयकर अपील सं./I.T.A.No.64/Vizag/2013
(धनधाारण िर्ा / Assessment Year: 2008-09)
Smt. M.Praveena Dy.Commissioner of
D.No.39-6-39 Income-Tax
Plot No.125 Circle-4(1)
Muralinagar Visakhapatnam
Visakhapatnam
[PAN :AMZPP2502P]
(अपीलाथी / Appellant) (प्रत्याथी / Respondent)
अपीलाथी की ओर से / Appellant by : Shri G.V.N.Hari, AR
प्रत्याथी की ओर से / Respondent by : Shri S.Ravi Shankar
Narayan, DR
सुनिाई की तारीख / Date of Hearing : 08.06.2017
घोर्णा की तारीख / Date of Pronouncement : 28.07.2017
आदेश / O R D E R
PER D.S. SUNDER SINGH, Accountant Member:
This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), CIT(A), Visakhapatnam vide ITA No.371/10-11/DCIT, C-4(1)/VSP/12-13 dated 30.11.2012 for the A.Y. 2008-09.
2ITA No.64/Viz/2013
M.Praveena
2. Ground No.1 and 7 are general in nature which does not require specific adjudication.
3. Ground No.2 is related to the validity of order passed u/s 143(3) of the Income Tax Act, 1961. The assessee filed the return of income declaring total income of Rs.2,31,840/- on 24.11.2010. The assessment was related to the A.Y 2008-09 and the due date for filing the Return of Income was 31.07.2008 u/s 139(1) of Income Tax Act and extended date u/s 139(4) was 31.03.2010. The assessing officer issued the notice u/s 143(2) on 14.09.2010 and subsequently issued the notices u/s 143(2)/142(1) and completed the assessment u/s 143(3) on total income of Rs.58,35,545/- and made additions of Rs.56,03,705/- pertaining to disallowance of modification expenses of Rs.6,03,705/- and Rs.50,00,000/- representing the on money. Aggrieved by the order of the A.O, the assessee went on appeal before CIT(Appeals) and contested the assessment on merits as well as on technical grounds. The Ld.CIT dismissed technical grounds of the appeal as under :
―4.1. I have carefully considered the above. I have also carefully gone through the decision of the Hon'ble High Court of Calcutta referred to above. There is no dispute that the assessment was made within time limits prescribed by the I.T.Act. I also find that there was compliance to the hearing notices issued u/s 143(2) of the I.T.Act. Technically, in the absence of a return of income, the 3 ITA No.64/Viz/2013 M.Praveena AO should have issued orders u/s 144 of the IT Act instead of mentioning the section 143(3) of the I.T.Act. However, in my view the fact that mentioning of wrong section in the order is not fatal.
4.2. In the case of Maya Debi Bansal 117 ITR 125(CAL), the Hon'ble Court found that the return of income was filed in the wrong form and therefore not valid. Accordingly, Hon'ble High Court held that the assessment made u/s 143(3) was void ab initio and as such the Tribunal was not right in treating the assessment as best judgement assessment as if no return had been filed. 4.3. As can be seen from the above, the facts in the case of the appellant are not same. In the case decided by the Hon'ble High Court, Calcutta, the main issue was that the return of income filed in wrong form was valid or not. In view of the above and also with utmost respect to the Hon'ble Court, it may be stated that it is not having binding force on the instant case. In view of the above, the assessment order issued by the AO is held to be valid and therefore the first two grounds of the appellant are dismissed.‖ 3.1 With regard to the merits, the Ld.CIT(Appeals) deleted the addition of Rs.40 lakhs and confirmed the addition of Rs.10 lakhs. Aggrieved by the order of the CIT, the assessee is in appeal before us. 3.2. Ld.AR appearing for the assessee argued that for the A.Y 2008-09 the assessee filed by the Return of Income on 24.11.2010 beyond the due date specified u/s 139(1) of I.T.Act. There is no valid return available to the assessing officer to make the assessment u/s 143(3) of I.T.Act. The assessing officer should have issued the notices u/s 148 to regularize the return filed belatedly on 24.11.2010. Non issue of notice 4 ITA No.64/Viz/2013 M.Praveena made the return filed as non-est and in capable of making the assessment u/s 143(3) and cannot be survived according to law. 3.3. On the other hand Ld. DR argued that the assessee had not filed the return of income but the AO issued the notice u/s 143(2) and subsequently notices u/s 143(2)/142(1) and framed the assessment u/s 143(3) of I.T Act instead of making assessment under section 144 of I.T.Act. The Ld. DR argued that the assessing officer has misquoted the relevant section of Income Tax Act under which the assessment was made. Merely misquoting the section is not fatal to the assessment. The assessee has not filed the return of income before the due date and non compliance of statute should not conform the undue right to the assessee. Even otherwise the assessing officer had issued show cause notice before passing the assessment order and satisfied the condition for making the assessment u/s 144. Hence it should be construed that the assessment was made u/s 144 and the A.O has erroneously mentioned the section 143(3) instead of 144.
3.4. We have heard both the parties and perused the material on record. In this case, the assessee has filed the return of income on 5 ITA No.64/Viz/2013 M.Praveena 24.11.2010 and the return filed was beyond the due date permitted in law. The Income tax returns filed beyond the due date held to be nonest and cannot be treated as valid returns for further action. Therefore, no action is possible on the return filed by the assessee on 24.11.2010 unless the return is validated by issue of notice u/s 148 for escapement of income. However Ld. DR argued that A.O has misquoted the Section 143(3) instead of Section 144 and mere misquoting of section does not render the valid assessment as invalid. The assessing officer is authorized to make the assessment u/s 144 of Income Tax Act even if there is no return of income. The procedure laid down under section 144 for passing the assessment is as under:
Best judgment assessment.
"144. [(1)] If any person--
(a) fails to make the return required [under sub-section (1) of section 139] and has not made a return or a revised return under sub-section (4) or sub-section (5) of that section, or
(b) fails to comply with all the terms of a notice issued under sub-section (1) of section 142 [or fails to comply with a direction issued under sub- section (2A) of that section], or
(c) having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 143, the [Assessing] Officer, after taking into account all relevant material which the [Assessing] Officer has gathered, 76[shall, after giving the assessee an opportunity of being heard, make the assessment 77] of the total income or loss to the best of his judgment and determine the sum payable by the assessee [* * *] on the basis of such assessment :79
[Provided that such opportunity shall be given by the Assessing Officer by serving a notice calling upon the assessee to show cause, on a date 6 ITA No.64/Viz/2013 M.Praveena and time to be specified in the notice, why the assessment should not be completed to the best of his judgment :
Provided further that it shall not be necessary to give such opportunity in a case where a notice under sub-section (1) of section 142 has been issued prior to the making of an assessment under this section.] 80 [(2) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.]‖ 3.5. According to section 144 the assessing officer is permitted make the best judgment assessment in the following circumstances:
(i) If the assessee fails to furnish the return of Income and
(ii) The assessing officer should issue show cause notice taking in to all the relevant materials and after giving an opportunity the assessing officer can make the assessment u/s 144.
3.6. In the instant case, the assessee has not filed the Return of Income and the assessing officer had issued the show cause notice with all the relevant information vide show cause notice dated28th December, 2010 and made the assessment. Since the 7 ITA No.64/Viz/2013 M.Praveena assessing officer has satisfied all the conditions for completing the assessment u/s 144, the assessment made vide order dated 30.12.2010 should be construed as the assessment rightly made under section 144 of I.T.Act. and the A.O misquoted the Section 143(3) instead of 144. Mere misquoting of section should not be fatal to assessement when the assessee was given due opportunity. Accordingly we uphold the order of the CIT (A) and dismiss the appeal of the assessee on these grounds.
4. Ground no.3 is related to the addition of Rs.10 lakhs as unexplained investment in the house property. During the course of assessment proceedings, the assessing officer has made the addition of Rs.50 lakhs as on money payment to Shri Vijayam Appa Rao by Shri M Jagan Mohan. According to the sale agreement dated 30.03.2007, Shri Vijayam Appa Rao proposed to sell the land admeasuring 284.70 sq.yds of site together with RCC building consisting of ground floor, first floor, second floor and third floor in door no.11-08- 39/3, Daspalla Hills Lay Out for a consideration of Rs.1,30,00,000/- to Mr. M Jagan Mohan. According to the agreement, a sum of Rs.40 lakhs was paid by Shri Jagan Mohan and the balance amount of Rs.90 lakhs required to be paid after three months of the agreement. However the 8 ITA No.64/Viz/2013 M.Praveena assessee has purchased asset and got registered for a consideration of Rs.80,45,950/- including the stamp duty as per agreement between her husband and Shri. Vijayam Appa Rao. Therefore, the assessing officer treated the balance amount of Rs.50 lakhs as unaccounted payment and brought to tax in the hands of assessee. Aggrieved by the order of the assessing officer, the assessee went on appeal before CIT(A). The Ld.CIT(A) deleted the addition of Rs.40 lakhs and confirmed the addition of Rs.10 lakhs and the relevant part of the order of the commissioner in para 5.1 and 5.2 is extracted as under :
―5.1. I have carefully considered the above. I have also perused the assessment record, the sale agreement dt. 30th March, 2007, between the land owner and Shir M.Jagan Mohan (assessee's husband), and the registered deed cum GPA between the land owner and the appellant. Apparently the property was proposed to be acquired by Shri M. Jagan Mohan. However, for the reasons best known to the appellant and her husband the registered sale agreement cum GPA dt. 9th May 2007 was made in the name of appellant. But the fact remains that advance of Rs.40.00 lakhs by way of cash was shown as paid by M. Jagan Mohan but not the assessee (appellant).
5.2. Further, the appellant in her sworn statement admitted that the total sale consideration was Rs.90.00 lakhs which includes Rs.10.00 lakhs in cash paid by her. Apparently, the appellant was referring to the consideration of Rs.90.00 lakhs after taking into account, the advance of Rs.40.00 lakhs paid earlier. Thus considering all the evidences i.e. registered sale agreement cum GPA dt. May, 2007, the sworn statement of Shri M.Jagan Mohan (appellant's husband) and Shri V.Appa Rao (seller of the property) and the sworn statement of the appellant, it is clear that the appellant and her husband paid Rs.50.00 lakhs in cash over and above, the sale consideration recorded in the registered sale agreement / GPA dt. 9th May 2007. However, Rs.40.00 lakhs was shown as paid on 30th March, 2007 as per the sale agreement between Shri V.Appa Rao and Shri M.Jagan Mohan. Therefoere, a sum of Rs.40.00 lakhs paid in cash could not be brought to tax in the Asst. Yer 2008-09. Accordingly, 9 ITA No.64/Viz/2013 M.Praveena the AO is directed to delete Rs.40.00 lakhs. However, the AO is at liberty to consider the same in the hands of appropriate person for the Asst. Year 2007-08. Accordingly, the addition of Rs.10.00 lakhs paid by the appellant over and above the sale consideration recorded in the sale agreemtn cum GPA is found to be correctly treated as unexplained investment in the appellant's hands for the Asst.Year 2008-09. Therefore, the addition of Rs.10.00 lakhs is upheld out of the total addition of Rs.50.00 lakhs.‖ 4.1. Aggrieved by the order of the CIT, the assessee is in appeal before us. Appearing for the assessee, Ld.AR argued that the sale agreement was not a bonafide document and it was not entered into by her and she has not paid any excess amount over and above mentioned in the registered sale deed. The actual amount of consideration was only Rs.80 lakhs but not Rs.90 lakhs as confirmed by the CIT(Appeals).
Though the assessee has accepted the payment of Rs.10 lakhs in cash, it was never paid and there was no evidence of payment of Rs.10 lakhs. Further the Ld. AR argued that even if it is presumed that the payment of Rs.10 lakhs was paid it should be assessed in the hands of her husband but not in her hands since it was stated clearly in the statement recorded on 17.12.2007 that the payment was made from the sources of her husband. This fact was agreed by her husband in his statement dated 17.07.2007. The Ld AR vehemently argued that in any case addition should not be made in the hands of the assessee. The Ld. AR further referred to the decision of this tribunal in the case of Shri 10 ITA No.64/Viz/2013 M.Praveena Vijayam Appa Rao and argued that in the case of seller, this Tribunal has accepted the consideration of Rs.80 lakhs and therefore the Ld.AR argued that there was no truth in the payment of Rs.10 lakhs. On the other hand the Ld.DR argued that Ld CIT(Appeals) has rightly confirmed the addition and requested to uphold the order of the Ld CIT(A).
4.2. We have heard the rival submissions and perused the material on record. An agreement was found showing that Shri Vijayam Appa Rao and Shri Jagan Mohan entered into an agreement for transfer of property for a consideration of Rs.1,30,00,000/-. As on the date of agreement, Rs.40 lakhs was paid and the balance amount of Rs.90 lakhs required to be paid within three months. However, the property was registered in the name of the Assessee Smt. M. Praveena for a purchase consideration of Rs.80,49,950/-. Assessing Officer made the addition of Rs.50 lakhs and the Ld.CIT(Appeals) deleted the addition of Rs.40 lakhs and confirmed the balance amount of Rs.10 lakhs. The assessee in her statement dated 17.12.2007 in response to question No.15 stated that Rs.80 lakhs was paid by cheque and Rs.10 lakhs was paid by cash. The amount of Rs.10 lakhs was paid by Shri M Jagan 11 ITA No.64/Viz/2013 M.Praveena Mohan from his own sources. This fact was accepted by the assessee's husband Mr. Jagan Mohan in his statement dated 17.12.2007. Therefore if at all the payment of Rs.10 lakhs is required to be considered, it should be taxed in the hands of the assessee's husband Mr Jagan Mohan but not in the hands of the assessee. The Hon'ble ITAT while deciding the case of Shri M Vijayam Appa Rao accepted the contention that the payment was only Rs.80 lakhs and accordingly upheld the order of the CIT (Appeals). For ready reference, we extract the relevant paragraphs No. 7 and 8 of the order of the ITAT ITR 122/Vizag/2014 dated 28.11.2016 as under:
―7. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The assessee had purchased a plot of land admeasuring 284.70 sq.yds. from Urban Development Authority of Visakhapatnam for a sale consideration of ` 6,28,800/- on 2.11.1995. Thereafter, he has constructed a multi storied building in the 1st, 2nd & 3rd floors in that plot. The property was sold to Smt. M. Praveena, wife of Shri M. Jagan Mohan on 9.5.2007 through a sale agreement-cum-GPA for a sale consideration of ` 80 lakhs. Subsequently, a search has taken place in the case of third party and in the course of search, they found a document i.e. sale agreement entered between assessee and Sri M. Jagan Mohan dated 30.3.2007. As per the above document, the sale consideration of the property is of ` 1.3 crores, out of which ` 40 lakhs advance was already paid. When the very same fact was brought to the notice of the assessee, it was submitted before the A.O. that he has only agreed for sale-cum-GPA in favour of Smt. M. Praveena for a total sale consideration of ` 80 lakhs and submitted that he has not received any amount over and above the sale consideration. Assessee also filed an affidavit before the A.O. to substantiate his case. The vendor Smt. M. Praveena also stated in the sworn statement deposition dated 17.12.2007 that the said advance of ` 40 lakhs was not paid. In this case, the assessee has 12 ITA No.64/Viz/2013 M.Praveena denied the advance of ` 40 lakhs to be received and the vendor also filed an affidavit to this effect that no advance was paid.
Under these facts and circumstances of this case, when there a registered document is available on record, which is attested by sub-registrar of registration and stamps, authority under the Registration and Stamps Act, it has to be considered as an authenticated document. If the A.O. want to devoid from the registered document, there should be a concrete evidence to substantiate his case. In this case, the assessee denied receipt of the advance and the vendor also submitted that no advance was paid. Under these facts and circumstances of the case, the agreement of sale entered by assessee and vendor's husband i.e. Sri Jagan Mohan cannot be considered as a basis for addition made by the A.O. The Ld. CIT(A) after considering entire facts and circumstances of the case has deleted the addition made by the A.O. The relevant portion of the order is extracted as under:
5.9 I have considered the various details and submissions made. I have also inquired the assessee who appeared before me during the appellate proceedings. I am inclined to believe that the Sale Agreement dtd.30.03.2007 was not a genuine one executed by the assessee. The assessee and his wife has filed affidavits in this regard. Besides, it is seen that the vendors Maddi Jagan Mohan and his wife Maddi Praveena have also admitted in the sworn deposition dtd.17.12.2007 that it was a made over document and the advance of Rs.40 lakhs referred in the agreement was not paid. Therefore, I am of the view that there is no basis to take a view that the consideration for the sale was Rs.130 lakhs. However, it is noted in the sworn deposition of Maddi Jagan Mohan dtd.17.12.2007, he had deposed that Rs.10 lakhs was paid in cash to Appa Rao, son of the assessee. In this regard, the assessee has filed affidavit from Appa Rao who has denied any such receipt. In these factual circumstances, I am of the view that the AO is not justified in making the impugned addition. Accordingly, the AO is directed to take the full value and consideration for the sale of the property at Rs.80 lakhs and to re-compute the capital gains accordingly.‖
8. In view of our findings above, we find no reasons to interfere with the order passed by Ld. CIT(A). This ground of appeal raised by the revenue is dismissed.‖ 13 ITA No.64/Viz/2013 M.Praveena 4.3. As per the order of the Hon'ble ITAT, the full value of the consideration for the sale of property was Rs.80 lakhs. Logically, the consideration paid by the assessee for purchase of the property would be Rs.80 lakhs. Therefore, we hold that purchase consideration made by the assessee was Rs.80 lakhs and no further addition is called for in the hands of the assessee. Accordingly, we set aside the order of the Ld CIT(A) and delete the addition of Rs 10 lakhs conferred by the CIT(A) and allow the assesse's appeal.
5. Ground Nos.4 and 5 are related to the addition of Rs.6,03,705/-. During the assessment proceedings, the assessing officer found that the assessee had purchased property from Vijayam Appa Rao for consideration of Rs.80,49,950/- and incurred a sum of Rs.12 lakhs for making minor structural changes to the building. The three storied building was modified into 5 independent divisions and sold two units during the year under consideration for Rs.46,67,000/- and the balance amount of Rs.47,97,000/- was declared as closing work in progress. A sum of Rs.12,07,410/- was debited to P&L account as modification expenses. Since she failed to furnish the details of expenses and could 14 ITA No.64/Viz/2013 M.Praveena not produce all the bills and vouchers, the assessing officer disallowed 50% of the expenses debited to P&L account. The Ld. AR during the appeal hearing argued that only expenditure incurred by the assessee was modification expenses and the assessing officer has disallowed the 50% of expenses which is unreasonable and unfair. The Ld. AR further argued that consequent to disallowance of expenditure the work in progress goes to reduce the equal amount. Therefore, the Ld.AR argued that the work in progress should be reduced by the equal amount of disallowance.
5.1. On the other hand, the Ld.DR relied on the orders of the assessing officer.
5.2. We have heard both the parties and perused the material placed on record. The Ld.CIT(Appeals) has not decided this issue though this issue was raised before the CIT(Appeals). The only expenditure incurred by the assessee in the P&L account was purchase cost of the building and modification expenses. The assessing officer disallowed the 50% of the expenses for want of evidence. The assessing officer in his order stated that the ―AR of the assessee submitted some of the 15 ITA No.64/Viz/2013 M.Praveena details but was not able to provide all the bills‖. In such circumstances the AO should disallow the expenditure for which the assessee did not submit the details and bills but should not resort to estimated disallowance. The assessing officer did not record any basis for the disallowance of 50% expenses. Therefore we are unable to uphold the addition and the same is deleted and the appeal of the assessee is allowed.
6. Ground no.6 is related to charging of interest u/s 234B which is consequential in nature and mandatory and the same is dismissed.
7. In the result, appeal of the assessee is partly allowed.
The above order was pronounced in the open court on 28th July 2017.
Sd/- Sd/-
(िी. दुगााराि) (धड.एस. सुन्दर ससह)
(V. DURGA RAO) (D.S. SUNDER SINGH)
न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER धिशाखापटणम /Visakhapatnam:
ददनांक /Dated : 28.07.2017 L.Rama, SPS 16 ITA No.64/Viz/2013 M.Praveena आदेश की प्रधतधलधप अग्रेधर्त/Copy of the order forwarded to:-
1. अपीलाथी / The Appellant - Smt. M Praveena, D.No.39-6-39, Plot No.125, Muralinagar, Visakhapatnam
2. प्रत्याथी / The Respondent - Dy.Commissioner of Income Tax, Circle-4(1), Visakhapatnam
3. आयकर आयुक्त / The Commissioner of Income Tax-2, Visakhapatnam
4. आयकर आयुक्त (अपील) / CIT(Appeals), Visakhapatnam
5. धिभागीय प्रधतधनधध, आय कर अपीलीय अधधकरण, धिशाखापटणम /DR, ITAT, Visakhapatnam
6. गाडा फ़ाईल / Guard file आदेशानुसार / BY ORDER // True Copy // Sr. Private Secretary ITAT, VISAKHAPATNAM