KONERU RAJENDRA PRASAD,CHENNAI vs. ACIT CENTRAL CIRCLE 1(3), CHENNAI

By way of this appeal, the assessee assails the invocation of revisionary jurisdiction u/s 263 for Assessment Year (AY) 2010-11 as exercised by Ld. Pr. Commissioner of Income Tax, Central-1, Chennai (Pr. CIT) vide impugned order dated 06-03-2019 in the matter an assessment framed by Ld. AO u/s.143(3) r.w.s. 147 of the Act on 26-12- 2016. The grounds taken by the assessee are as under: - 1.The order under Sec.263 passed by the Principal Commissioner of lncome tax, Central - 1, Chennai for the assessment year 2010-11 in the appellant's case is contrary to law, facts of the case and material on record.

The Ld. AR, Shri D. Anand, advanced arguments and submitted that the assessee is a director in a corporate entity. The substantive addition has already been made in the hands of that entity and therefore, adding the same in the hands of the director amount to double addition. The Ld. CIT-DR, on the other hand, opposed any interference in the impugned order. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.

The assessee has been assessed u/s 143(3) r.w.s. 147 of the Act on 26.12.2016. The assessee was found to be a director of M/s Emaar Hills Township Private Ltd. (EHTPL). Relying upon findings in assessee’s own case for AY 2009-10, Ld. AO made addition of unexplained cash credit u/s 69A for Rs.60.81 Crores. The said assessment is stated to be pending before first appellate authority. In AY 2009-10, the assessee was saddled with addition u/s 69A for Rs.101.22 Crores. 4. This order is subjected to revision by Ld. Pr. CIT on the ground that the assessee had received excess amounts in cash in respect of sale of certain plots over and above the officially recorded price. The excess amount was quantified at Rs.85.58 Crores by DCIT. Circle-2(3), Hyderabad. On that basis, the case was reopened to tax the amount of Rs.85.58 Crores. However, while completing the assessment, only an addition of Rs.60.81 Crores was made and the balance sum of Rs.24.77 Crores was omitted to be added. The assessee was show-caused accordingly. The assessee opposed the same on the ground that impugned amount was already taxed in the hands of the company and reassessment proceedings were under challenge before first appellate authority. However, Ld. Pr. CIT observed that there were evidences that M/s EHTPL collected money for Rs.60.81 Crores from 51 buyers out of 70 buyers. For the remaining 19 buyers, AO of M/s EHTPL had taken average on-money received from 51 buyers and added further amount of Rs.24.77 Crores. Therefore, AO of the assessee should have brought to tax this amount also for taxation but he failed to take note of it. The AO ought to have called for the details from the AO who had made substantiative addition in the hands of M/s EHTPL before passing the assessment order. Accordingly, assessment order was held to be erroneous and prejudicial to the interest of the revenue u/s 263 and Ld. AO was directed to consider the taxability of remaining amount of Rs.24.77 Crores on protective basis. Aggrieved, the assessee is in further appeal before us.

From the fact, it emerges that certain additions of on-money have been made in the hands of the assessee on protective basis. However, it was noted by revisionary authority that the figures of on-money, on substantive basis was much higher and a portion of the same was omitted to be considered by AO while framing the assessment order. It is a clear case where error has incurred which is prejudicial to the interest of the revenue. Therefore, no fault could be found in the revision of the order. However, as noted from the impugned order, the addition has to be made on protective basis only.

The appeal stand dismissed in terms of our order. Order pronounced on 27th June, 2023.