ACIT Vs Rohini Hotel (Madras) Pvt. Ltd. (ITAT Chennai)
A perusal of the Page Nos. 6-13 of the Paper Book filed by the assessee shows that the assessee has filed certain reconciliation statements in respect of the shortfall of investments u/s. 68 added by the AO. The same are scanned and made a part of this order. As these additions were not produced before the AO or the Ld. CIT(A), in the interest of natural justice, the issues in these appeals are restored to the file of the AO for re-adjudication after granting the assessee adequate opportunity of being heard. Here, we must mention that as the Ld. CIT(A) has accepted the explanation and has given the benefit of telescope for the AY, in respect of which, the Revenue is on appeal, it would not be appropriate to restore only those appeals where the assessee is on appeal on account of the addition being confirmed by the Ld. CIT(A). In these circumstances, as the investment in the Hotel building in its entirety is under consideration, all the issues in the two appeals filed by the Revenue and in the two appeals filed by the assessee are restored to the file of the AO for re-adjudication after granting the assessee adequate opportunity of being heard.
FULL TEXT OF THE ITAT JUDGEMENT
ITA Nos.1627 & 1687/Chny/2017 are the appeals filed by the Revenue and ITA Nos.1841 & 1842/Chny/2018 are the appeals filed by the assessee against the consolidated Order of the Commissioner of Income Tax (Appeals)-3, Chennai, in ITA Nos.60, 61, 62 & 63/2013-14/CIT(A)-3 dated 31.03.2017 for the AYs 2006-07, 2007-08, 2005-06 & 2008-09 respectively.
2. Shri R.Clement Ramesh Kumar, Addl.CIT, represented on behalf of the Revenue and Shri R.S.Balaji, Adv., represented on behalf of the assessee.
3. The appeals filed by the assessee are time barred by 355 days, for which, the assessee has filed the necessary affidavit for condonation of delay, wherein, it has been submitted that the delay was on account of change of Auditor of the assessee as the Auditor at that time 80 years old and suffering from multiple illnesses. It was a further submission that as the assessee’s counsel fallen sick, the assessee had to get the seized material from the AO again and also on account of the damage to the computer systems of the assessee. The affidavit filed by the assessee has not been found to be false nor as the Revenue has been able to produce any ground against the said affidavit filed, consequently, the delay in filing of the assessee’s appeals stand condoned and the appeals are disposed off on merits.
4. It was submitted by the Ld.AR that there was a survey on the premises of the assessee on 27.02.2008, certain incriminating material have been found in the course of survey. On the basis of survey, the assessments had been completed, wherein, substantial additions had been made representing the investments in the hotel building which is assessed as unexplained investments. It was a submission that in course of the appeal before the Ld.CIT(A), evidences had been produced to show that certain term loans from ITDC and TFCI had not been taken into consideration though evidences were available. It was a further submission that certain sundry creditors/payables had also not been considered though substantiated. It was a submission that consequently, the Ld.CIT(A) had considered various evidences as extracted, the addition made in Table-A at Page No.4 of his order had re-worked the additions at Page No.5 of his order at Page No.4 in Table-B. It was a submission that consequently, it was found for the AY 2005-06, there was a shortfall representing unexplained investment to the extent of Rs.34,90,817/-. It was a submission that in respect of the same, the Ld.CIT(A) had confirmed the addition. Similarly, for the AY 2006-07, it was found that there was surplus funds available for investments to the extent of Rs.22,21,613/- and consequently, he had deleted the addition made by the AO. For the AY 2006-07, the Ld.CIT(A) considered the addition made for the AY 2005-06 as also the surplus available for the AY 2006-07 and telescoped the same when considering the addition for the AY 2007-08 and consequently, as there was adequate funds on account of the telescope deleted the addition for the AY 2007-08. For the AY 2009-10, again, it was found that there was a shortfall of Rs.72,38,948/-, for which, the assessee was not able to give any explanation and consequently, he confirmed the addition to the extent of Rs.72,38,948/-. It was a further submission that there was an issue of pre-operative expenses which had been raised by the assessee before the Ld.CIT(A). The Ld.CIT(A) had restricted the disallowance in respect of pre-operative expenses @ 20%. It was a submission that the assessee is on appeal for the AY 2005-06 & 2008-09, which are the AYs, in respect of which, the Ld.CIT(A) has confirmed the addition. The Revenue is on appeal for the AYs 2006-07 & 2007-08 being the AYs, in respect of which, the Ld.CIT(A) has deleted the addition. It was a submission that the assessee has raised Ground No.5 in respect of the issue of the pre-operative expenses. It was a submission that the assessee did not wish to press the ground in respect of the disallowance @20% of the pre-operative expenses and has also signed to that effect. In respect of the unexplained investments, the Ld.AR placed before us a copy of the statement of reconciliation. It was a submission that no addition was liable to be made in respect of the investments in so far as the total investments stand fully explained. The same are as follows:
D) Assessment year 2008-09
