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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
Before: Shri R.K. Panda, Vice- & Shri Laliet Kumar
ORDER
Per R.K. Panda, Vice-President ITA No.1008/Hyd/2016 filed by the assessee is directed against the order dated 12.02.2016 of the learned CIT (A)-11, Hyderabad relating to A.Y.2009-10. 24.2.2016 of the learned CIT(A)-11, Hyderabad relating to A.Y 2010-11. The C.O No.60/Hyd/2015 filed by the assessee is directed against the appeal filed by the Revenue vide for the A.Y 2011-12. For the sake of convenience, these two appeals and the C.O were heard together and are being disposed of by this common order.
This is the 2nd round of litigation before the Tribunal. The above two appeals as well as the C.O were earlier dismissed Page 1 of 12 1009 and CO 60 of 2015 AKR Constructions by the Tribunal vide order dated 30.01.2023. Subsequently, vide M.A Nos. 14, 15 & 16/Hyd/2023, order dated 23.02.2024, the Tribunal recalled its earlier order. Hence these are recalled matters.
ITA 1008/Hyd/2016 – A.Y 2009-10 3. Facts of the case, in brief, are that the assessee is a company engaged in the business of civil contract and one of the sub-contractors of M/s NCC Ltd. It filed its original return of income on 24.7.2010 admitting income of Rs.11,50,33,760/-. The return was processed u/s 143(1) of the I.T. Act. A search & seizure operation u/s 132 of the I.T. Act was conducted in the NCC group of cases and a survey operation was conducted at the office premises of the assessee company on 6.10.2020. During the course of survey u/s 133A, incriminating material was found and impounded. During the search and seizure operation, material was seized from the residence of Mr. A. Krishna Reddy out of which page Nos. 124 & 125 of the annexure AKR/R/PO/01 was found to be belonging to the assessee. Similarly, page 71 & 92 of the said annexure were also found to be belonging to the assessee company. Accordingly, the Assessing Officer issued notices u/s 153C of the I.T. Act to the assessee for the A.Y 2005-06 to 2010-11 on 5.8.2011 which was duly served on the assessee. In response to the same, the assessee filed return of income on 13.09.2012 admitting total income of Rs.11,50,33,760/-. The Assessing Officer completed the assessment determining the total income of the assessee at Rs.18,13,68,464/- by making the following additions: i) Unexplained expenditure - Rs. 34,97,000 ii) Recognized income - Rs. 91,83,544 iii) Unaccounted receipt (i) - Rs. 22,00,000 1009 and CO 60 of 2015 AKR Constructions iv) Unaccounted receipt (ii) - Rs. 11,00,000 v) Disallowing interest - Rs. 17,87,483 vi) Undisclosed investment - Rs. 4,85,66,677
In appeal, the learned CIT (A) partly allowed the appeal filed by the assessee wherein he sustained the addition of Rs.34,97,000/- made by the Assessing Officer on account of unexplained expenditure and deleted the remaining additions.
Aggrieved with such order of the learned CIT (A), the assessee is in appeal before the Tribunal by raising the following grounds: “
1. The Learned Commissioner of Income Tax (Appeals)-11, Hyderabad [CIT(A)] has erred on facts and in law.
2. Learned CIT(A) is not justified in sustaining the addition of Rs. 34,97,000/- on account of each payment towards labour charges at various sites of work executed by the assessee.
3. Learned CIT(A) is not justified in not accepting the explanation that the said amount is part of the amount Rs. 1,50,00,000/- admitted by the assessee consequent to survey operations on the assessee’s premises in March 2010.
4. In any case, as regards Rs. 10,00,000/- out of the above amount, Learned CIT{A) failed to notice that the entry of Rs. 10,00,000/- as cash payment, on 27.10.2008 is a mistaken entry at page 125 and the said amount was paid by way of cheque No. 836777 as could be seen from P 124 of the seized documents in the course of search operations at the residence of Sri. Alluru Krishna Reddy, Managing Director of the appellant company. .
5. For these any other grounds that may be raised at/before the date of hearing, it is prayed that the addition of Rs. 34,97,000/- be kindly deleted.”
The assessee has also raised the following additional grounds: “1. Proceedings u/s. 153C are invalid in law. Satisfaction as required before initiating proceedings u/s . 53 C of the Income Tax Act, 1961 has not been recorded by the Assessing Officer in the course of proceedings in the case of the searched person, Sri A. Krishna Reddy. Board circular Page 3 of 12 1009 and CO 60 of 2015 AKR Constructions no. 24/2015, dt.31.12.2015 is applicable to the facts of the case. Proceedings u/s. 153C are invalid in law. 2. A.O has erred in holding that the papers found during the course of search &s seizure proceedings in the case of Sri A. Krishna Reddy, the searched person belong to the assessee. They only pertain to or contain the information about the assessee. Provisions of 153 C(1) before its amendments w.e.f. 01.06.2015 by way of substitution apply. 3. Authorized Representative (A.R) not pressing the grounds of appeal
which were filed by the assessee is against law. Consent giving up jurisdictional grounds of appeal which go to the root of the matter is against law.
4. Learned CIT (A) is not justified in not disposing of the jurisdictional grounds raised by the assessee only because A.R did not press those grounds which is against law. Consent cannot confer jurisdiction.
5. Proceedings u/s. 153C are not legally valid also for the reason that a notice u/s. 153C has not been issued for the current assessment year. A single notice u/s. 153C for all the six preceding assessment years 2005- 06 to 2010-11 is not valid in law.
6. Learned CIT(A) has erred in holding that Ground No. 1 is general in nature and thereby not considering it.”
7. So far as the additional grounds are concerned, in absence of any explanation offered by the assessee towards the admissibility of the additional grounds, the same are dismissed. Therefore, the grounds that remain to be adjudicated are regarding the order of the learned CIT (A) in sustaining the addition of Rs.34,97,000/- made by the Assessing Officer.
7.1 Facts of the case in brief are that during the course of assessment proceedings, the Assessing Officer asked the assessee to explain the cash payment of Rs.34,97,000/- for the impugned A.Y 2009-10 and cheque payment of Rs.70,30,000/- which are appearing in the seized material found during the course of search. From the books of account and other details furnished by the assessee, the Assessing Officer noted that the cheque payments were duly reflected in the books of account whereas the 1009 and CO 60 of 2015 AKR Constructions cash payment are not reflected. He, therefore, confronted the same to the assessee. Rejecting the various explanations given by the assessee and observing that the cash payments were not reflected in the books of account, the Assessing Officer made addition of Rs.34,97,000/- which has been upheld by the learned CIT (A).
The learned Counsel for the assessee strongly challenged the order of the learned CIT (A) on this issue and filed the following written submission:
The learned DR, on the other hand, heavily relied on the order of the learned CIT (A).
We have heard the rival arguments made by both the sides and perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We find the Assessing Officer in the instant case had made addition of cash payment of Rs.34,97,000/- and cheque payment of Rs. 70,30,000/- which were appearing in the seized material found 1009 and CO 60 of 2015 AKR Constructions during the course of search. We find the learned CIT (A) deleted the cheque payment of Rs.70,30,000/- but sustained the addition of Rs.34,97,000/- for which the assessee is in appeal before the Tribunal. It is the submission of the learned Counsel for the assessee that out of the above amount of Rs.34,97,000/-, an amount of Rs.10,00,000/- has been paid by cheque vide cheque No.836777 dated 27.10.2008 drawn on Bank of Baroda, Masab Tank Branch, Hyderabad which was encashed on the same date, i.e. on 27.10.2008, the details are filed in the paper book. However, she could not explain the balance amount. Since out of the cash payment of Rs.34,97,000/- , the learned Counsel for the assessee could prove cash payment of Rs.10,00,000/- being out of withdrawal of equivalent amount from Bank on 27.10.2008, therefore, we direct the Assessing Officer to delete the amount. So far as the balance amount of Rs.24,97,000/- is concerned, in absence of any further material before us, we sustain the addition. The grounds raised by the assessee for the impugned A.Y are accordingly partly allowed for statistical purposes.
A.Y 2010-11 11. Facts of the case, in brief, are that the assessee filed the return of income on 30.09.2011 admitting income of Rs.5,71,94,440/-. In response to notice u/s 153C of the Act, the assessee filed return on 13.09.2012 admitting the same income of Rs.5,71,94,440/-. The Assessing Officer completed the assessment u/s 143(3) r.w.s. 153C determining the total income of the assessee at Rs.12,83,19,811/- wherein he made the following additions:
Description Amount (Rs.) Income returned 5,71,94,440 Add: Unaccounted receipt 23,08,280 Page 7 of 12 1009 and CO 60 of 2015 AKR Constructions Add: Unaccounted income 3,24,01,262 Add: Unexplained expenditure 70,000 Add: Income recognized 98,18,497 Add: Hire charges 49,00,000 Add: Hire charges 2,09,64,922 Add: Unexplained cash credit 6,62,410 Total assessed income 12,83,19,811
In appeal, the learned CIT (A) gave part relief to the assessee wherein he deleted the additions of Rs.23,08,280/- on account of unaccounted receipts, Rs.49,00,000/- on account of hire charges, Rs.2,09,64,922/- on account of hire charges, Rs.98,18,497/-being non recognition of income and Rs.6,62,410/- being unexplained cash credit. He however, confirmed the amount of Rs.70,000/- being unexplained expenditure and gave part relief out of Rs.3,24,01,262/- which was added by the Assessing Officer as unaccounted income.
12.1 Aggrieved with such order of the learned CIT (A) the assessee is in appeal before the Tribunal by raising the following grounds of appeal: “1. The Learned Commissioner of Income Tax (Appeals)-11, Hyderabad [CIT(A)] has erred on facts and in law.
2. Learned CIT(A) is not justified in sustaining the addition of Rs. 18,00,000/- in the case of Sri. R. Venugopala Reddy.
3. Learned CIT(A) is not justified in sustaining the addition of Rs. 3,72,726/- out of Rs. 6,47,726/-, although the remand report is silent on this amount.
4. Learned CIT(A) has unreasonably sustained the addition of Rs. 13,25,581/- subject to a relief of Rs. 4,000/- on account of totaling mistake.
5. Learned CIT(A) has erred in upholding an amount of Rs. 3,24,777/- out of Rs. 20,52,117/- in the case of Sri. Sudhakara Reddy, sub- contractor.
6. Learned CIT(A) is not justified in sustaining the additions of Rs. 26,49,111/- and Rs. 3,74,909/- totaling to Rs. 30,24,020/- in respect of Sri. Krishnam Naidu and Sri. Prahlad. 1009 and CO 60 of 2015 AKR Constructions
7. Having regard to the submissions of the assessee before the lower authorities, it is prayed that all the above additions sustained by the CIT(A) be kindly deleted.”
The assessee has also raised the following additional grounds: “1. Proceedings u/s. 153C are invalid in law. Satisfaction as required before initiating proceedings u/s 153 C of the Income Tax Act, 1961 has not been recorded by the Assessing Officer in the course of proceedings in the case of the searched person. Sri A. Krishna Rec dy. Board circular no. 24/2015, dt.31.12.2015 is applicable to the facts of the case. Proceedings u/s. 153C are invalid in law. 2. A.O has erred in holding that the papers found during the course of search & seizure proceedings in the case of Sri A. Krishna Reddy, the searched person belong to the assessee. They only pertain to or contain the information about the assessee. Provisions of 153 C(1) before its amendments w.e.f. 01.06.2015 by way of substitution apply. 3. Authorized Representative (A. R) not pressing the grounds of appeal
which were filed by the assessee is against law. Consent giving up jurisdictional grounds of appeal which go to the root of the matter is against law.
4. Learned CIT (A) is not justified in not disposing of the jurisdictional grounds raised by the assessee only because A.R did not press those grounds which is against law. Consent cannot confer jurisdiction.
5. Proceedings u/s. 53C are not legally valid also for the reason that a notice u/s. 153C has not been issued for the current assessment year. A single notice u/s 153C for all the six preceding assessment years 2005-06 to 2010-11 is not valid in law.
6. Learned CIT[A) has erred in holding that Ground No. 1 is general in nature and thereby not considering it”.
13.1 The learned Counsel for the assessee did not press the additional grounds for which the learned DR has no objection. Accordingly, the additional grounds are dismissed.
So far as the other grounds are concerned, the learned Counsel for the assessee filed the following written submission:
The learned DR, on the other hand, heavily relied on the order of the learned CIT (A).
We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We find the 1009 and CO 60 of 2015 AKR Constructions Assessing Officer in the instant case had made addition of Rs.7,11,25,371/- under various heads out of which the learned CIT (A) sustained the addition of Rs.68,43,104/-. It is the submission of the learned Counsel for the assessee that out of the same, an amount of Rs.22,14,233/- represents deductions from their bills and the balance amount of Rs.46,32,871/- could not be explainable. The learned Counsel for the assessee filed the following details:
The learned Counsel has also filed the relevant details to explain the material deduction of Rs.22,14,233/-. In view of the details submitted before us now we direct the Assessing Officer to delete the amount of Rs.22,14,233/- and the balance amount is sustained. The grounds raised
by the assessee are partly allowed. 1009 and CO 60 of 2015 AKR Constructions C.O. No.,60/Hyd/2015 – A.Y 2011-12
18. The learned Counsel for the assessee at the outset did not press C.O filed by the assessee. The learned DR has no objection. Accordingly, the C.O. No. 60/Hyd/2015 – A.Y 2011-12 filed by the assessee is dismissed as withdrawn.