DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE- 6(1)(1), BANGALORE vs. M/S. AKASH ENTERPRISES, BANGALORE

ORDER

PER BEENA PILLAI, JUDICIAL MEMBER Present cross appeals filed by revenue and assessee against order dated 12.09.2018 passed by Ld.CIT(A)-13, Bangalore for A.Y. 2014- 15 on following grounds of appeal: Revenue’s appeal:

1. The order of the CIT (Appeals) is opposed to law and the facts and circumstances of the case.

4. The appellant craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of the appeal.” Assessee’s cross objection “1. The Appeal filed by the Appellant Deputy Commissioner of Income Tax, Cirlce-6(1)(1), Bangalore is time barred as the order passed by Commissioner of Income Tax (Appeals)-13, Bangalore u/s 250 of the Income Tax Act, 1961 dated 12/09/2018 was served on the Appellant on 18/09/2018 as admitted by him in the Appeal memo From No.

at 2.1 of the Grounds of Appeal and also stated at Para 2.2 of the Statement of Fact filed along with appeal memo in this regard before him .

6. For these and other reasons which may be urged at the time of the hearing, it's prayed before this Honourable Bench that the order of the Honourable Commissioner of Income Tax (Appeals) may be upheld for substantial cause of justice.

7. The Appellant craves leaves, to add, to alter, to amend and to delete any other grounds of cross objection at the time of hearing.”

2. At the outset we note that, there is a delay of 176 days in filing the present appeal before the Tribunal which is due to covid 19 pandemic that persisted at the relevant period when the impugned order was passed by the Ld.CIT(A)-13, Bangalore.

3. Considering the directions by Hon’ble Supreme Court that prevailed during the relevant period the delay in filing the present appeal before the Tribunal stands condoned.

4. Brief facts of the case are as under: 4.1 Assessee filed its return of income for year under consideration on 31.07.2014 declaring Nil income. The return was processed u/s. 143(1), and the case was selected for scrutiny to examine the high ratio of refund to TDS. In response to statutory notices, Page 4 of C.O. No. 01/Bang/2021 authorised representative of assessee appeared before the Ld.AO and filed requisite details. The Ld.AO observed that, main source of income of assessee was from “Income from house property”, and during the year under consideration, after claiming interest on borrowed capital u/s. 24B of the Act, the assessee claimed loss of Rs. 60,86,832/-. The assessee claimed entire TDS amount of rent receive as refund. The Ld.AO further observed that, the assessee claimed advance received amounting to Rs. 3crores from Shri B.M. Malikarjunaiah and showed it to be under current liabilities in the balance sheet. During the assessment proceedings, the assessee was called upon to furnish confirmation from Shri B.M. Malikarjunaiah. The assessee filed letter along with sale agreement dated 23.06.2012, however, did not furnish confirmation as called for. 4.2 The Ld.AO issued summons u/s. 131 of the Act to Shri B.M. Malikarjunaiah, to which, no response was received. The non- response to such summons was intimated to the assessee and the Ld.AO also informed the failure to make arrangements to produce Shri B.M. Malikarjunaiah would result in addition to the alleged advance received. The assessee failed to comply with the requirements, and therefore addition of Rs. 3 crores was made in the hands of the assessee, as unexplained; The Ld.AO treated as income from other sources. 4.3 Aggrieved by the order of Ld.AO, assessee preferred appeal before the Ld.CIT(A). Before the Ld.CIT(A), vide letter dated 04.01.2018, assessee filed additional evidence under Rule 46A, wherein confirmation letter Page 5 of C.O. No. 01/Bang/2021 from Shri B.M. Malikarjunaiah for due payment of Rs. 3 crores as advance towards the purchase of the property was filed. The Ld.CIT(A) after going through the documents filed by assessee as additional evidence observed and held as under: “6. I have considered the assessee's contentions. There is force in the argument of the Appellant. After the verification of the submission of the AR and additional evidences produced u/s 46A of the Income Tax Rule, in the form of confirmation letter, I direct to delete the addition of Rs.3,00,00,000/-, which is received in advance for the sale of property, as evident by the registered sale agreement and confirmed by Mr. B.M. Malikarjuknaiah. Hence, the appeal of the assessee is allowed.”

5. Aggrieved by the order of Ld.CIT(A), revenue is in appeal before this Tribunal against which assessee has filed cross objection in support.

Page 6 of C.O. No. 01/Bang/2021 8. On the contrary, the Ld.AR submitted that, the assessee could not produce the confirmation letter during the assessment proceedings due to certain personal issues between the assessee and Shri B.M. Malikarjunaiah that existed during the relevant period. He submitted that, subsequently, Shri B.M. Malikarjunaiah gave the confirmation of having paid Rs. 3 crores as advance, which is just in support of the sale agreement. He thus submitted that, therefore the said letter need not be treated as additional evidence. The Ld.AR relied on the observation of Ld.CIT(A).

Page 7 of C.O. No. 01/Bang/2021 11. We further note that, the amount of Rs. 3 crores was received by the assessee on 23.06.2012, which pertains to Financial Year 01.04.2012 to 31.03.2013 being A.Y. 2013-14. The present year under consideration is A.Y. 2014-15. Going by this, the alleged amount even if, is to be verified, does not pertain to the relevant year under consideration. We also note that, the Agreement of sale dated 23.06.2012 is a registered document and the acknowledgement of the said amount by the assessee is not in dispute by the revenue. In any event, even if the revenue seeks to verify the payment having paid by Shri B.M. Malikarjunaiah, it is to be done for A.Y. 2013-14 and not for the relevant year under consideration.