Ahmed Kader Ali Khan, Visakhapatnam V. The Income Tax Officer, Ward-5(1), Visakhapatnam

ITA 10/VIZ/2020

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The case revolves around the reassessment of Md. Ahmed Kader Ali Khan's income for the Assessment Year 2010-11, where the Income Tax Officer (ITO) added Rs.17,80,000 to the assessee's income, treating it as unexplained investment in a property. This addition was based on information from the DDIT (Inv) that the assessee had invested Rs.65,00,000 in the Green City Project. The assessee contested this addition, arguing that he had only documented investments amounting to Rs.47,20,000 and was not given a fair opportunity to contest the additional amount. The CIT(A) upheld the ITO's decision, leading the assessee to appeal to the Tribunal, which ultimately ruled in favor of the assessee, citing a lack of proper evidence and opportunity for rebuttal.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 135941 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 31-10-2022
• Assessment Year: misc
• Appeal Filed On: 07-01-2022
• Other Referred Cases: CIT Vs. Kelvinator of India Ltd (2010) 320 ITR 561
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tangible material; Corroborative evidences

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM ‘SMC’ BENCH, VISAKHAPATNAM श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER आयकर अपील सं./I.T.A.No.10/Viz/2020 (ननधधारण वर्ा / Assessment Year : 2010-11) Md. Ahmed Kader Ali Khan H.No.70, Green City Vaddlapudi P.O. Visakhapatnam [PAN : AIGPA8334D] Vs. Income Tax Officer Ward-5(1) Visakhapatnam (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : Shri B.Shanti Kumar, AR प्रत्यधथी की ओर से / Respondent by : Shri ON Hari Prasad Rao, DR सुनवधई की तधरीख / Date of Hearing : 01.11.2022 घोर्णध की तधरीख/Date of Pronouncement : 16.11.2022 आदेश /O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals)-2, Visakhapatnam in ITA No.250/2014-15/ITO/W-5(1)/VSP/2019-20 dated 18.10.2019 for the Assessment Year (A.Y.) 2010-11. 2 I.T.A. No.10/Viz/2020, A.Y.2010-11 Md.Ahmed Kader Ali Khan, Visakhapatnam 2. Brief facts of the case are that the assessee is an individual, filed his return of income for the A.Y.2010-11 on 10.08.2010, admitting total income of Rs.1,76,230/-. Based on a piece of information received from DDIT (Inv), Unit-III(1), Visakhapatnam vide letter No.DDIT/U- III(1)/VSP/132/VPG/2012-13 dt.24.07.2012 during the course of post search investigation of the said officer in the case of M/s Vizag Profiles Group, that the assessee has invested an amount of Rs.65,00,000/- viz., Rs.21,66,000/- for civil works, Rs.12,60,000/- for land and a portion of cash worth Rs.30,74,000/- in Green City Project of Vizag Profiles group during the F.Y.2009-10, the Assessing Officer(AO) reopened the case by issue of notice u/s 148. During the course of assessment proceedings, the assessee was asked to produce the books of account, bills / vouchers and other related information for verification. The assessee was also asked to produce the details of investments made for purchase of the house property in Green City of M/s Vizag Profiles Group. In response, the assessee produced the books of account, bills / vouchers, other related information and also filed a letter stating that the assessee has purchased a flat from VPL Projects Pvt. Ltd. in the joint names of himself and his wife, Smt. Gowsiya Khan and furnished the sources and supporting documents towards purchase of the house property to the tune of 3 I.T.A. No.10/Viz/2020, A.Y.2010-11 Md.Ahmed Kader Ali Khan, Visakhapatnam Rs.47,20,000/- and for the remaining amount of Rs.17,80,000/-, no evidence was submitted. Accordingly, a show cause notice was issued to the assessee, as to why the difference amount of Rs.17,80,000/- should not be taxed on such unexplained investment. In response to the show cause notice, the assessee submitted a letter dated 18.03.2014 and stated as under : “the assessee has invested a sum of Rs.47,20,000/-, but not Rs.65,00,000/- as they are not aware of the said balance amount if any, come to the knowledge of the Department in the name of the assessee.” However, basing on the information available on record, the AO made an addition of Rs.17,80,000/- to the income returned, treating the same as unexplained income. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and submitted that the assessee was not provided with company’s admission so as to rebut the statement. The Ld.CIT(A) dismissed the appeal of the assessee, holding as under : “that the reasons to be recorded by the AO for taking decision to reopen the escaped assessment does not mean that such reasons are to be communicated along with the notice itself. The notice directed the appellant to submit his returns. If the appellant was of an opinion that he required the reasons recorded by the Assessing Officer for reopening of the assessment, then he would make a request and accordingly the same shall be furnished by the Assessing Officer to the appellant. Therefore, the contentions made by the appellant 4 I.T.A. No.10/Viz/2020, A.Y.2010-11 Md.Ahmed Kader Ali Khan, Visakhapatnam are not acceptable. Hence, I do not find any reason to interfere in the action of the Assessing Officer in making the impugned addition of Rs.17,80,000/- towards unexplained income of the appellant in the investment in the property. Thus, the appeal made by the appellant on this ground is hereby dismissed.” 4. Aggrieved by the order of the Ld.CIT(A), the assessee preferred appeal before the Tribunal and raised the following grounds :- (1) CIT(Appeals) erred on facts and in law while upholding the validity of reassessment u/s 147. (2) CIT(Appeals) erred in sustaining the addition of Rs.17,80,000/-. (3) Any other ground that may be urged at the time of hearing. 5. Ground No.1 and 3 are general in nature which do not require specific adjudication. 6. Ground No.3 relates to the addition of Rs.17,80,000/- made by the AO and sustained by the Ld.CIT(A). The Ld.AR contended that the assessee has not paid anything more than the documented value of Rs.47,20,000/- for purchase of the impugned property. The AO completed the assessment by making an addition of Rs.17,80,000/- as per the information received from the DDIT (Inv) that the assessee had invested an amount of Rs.65,00,000/-. The assessee furnished the sources and supporting documents towards purchase of the house property to the tune of Rs.47,20,000/- and for the remaining amount of Rs.17,80,000/- no evidence was furnished. The assessee received notice 5 I.T.A. No.10/Viz/2020, A.Y.2010-11 Md.Ahmed Kader Ali Khan, Visakhapatnam u/s 148 for reassessment. The assessee submitted a letter requesting the AO to give reasons for reopening of his assessment for the A.Y.2010-11, but the AO failed to provide the information / evidence basing on which he proposed to make the addition and deprived the assessee of the opportunity to put forth his submissions. Therefore the assessment is bad in law. The Ld.AR relied on the judgement of Hon’ble Supreme Court in the case of CIT Vs. Kelvinator of India Ltd (2010) 320 ITR 561 and submitted that the Apex Court held that the Assessing Officer has power to reopen, provided there is tangible material to come to conclusion that there is escapement of income from assessment. Hence, the Ld.AR prayed for annulling the assessment and delete the addition made by the AO and sustained by the Ld.CIT(A). 7. Per contra, the Ld.DR contended that during the search, information was received from DDIT(Inv), Unit-III(1), Visakhapatnam that the assessee has invested an amount of Rs.65,00,000/- in Green City Project of Vizag Profile Group during the F.Y.2009-10. The assessee was asked to furnish the details of investments made for purchase of the property. The assessee furnished the sources and supporting documents towards the purchase of the house property to the tune of Rs.47,20,000/- , but has not submitted any evidence for the remaining amount of 6 I.T.A. No.10/Viz/2020, A.Y.2010-11 Md.Ahmed Kader Ali Khan, Visakhapatnam Rs.17,80,000/-. Hence, submitted that the assessment made by the AO is correct and the Ld.CIT(A) is justified in upholding the assessment made by the AO. Therefore, requested to uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee. 8. We have heard both the parties and perused the material placed on record. As seen from the material available on record, except the admission of the vendor, that the assessee had paid unaccounted cash for purchase of villa to the extent of Rs.30,74,000/- in Green City Project of Vizag Profiles group, there is no supporting evidence placed before us by the revenue establishing that the assessee has paid extra amount. The revenue authorities has placed one appraisal report, wherein at Sl.No.22, the name of the assessee was mentioned showing that the assessee has paid Rs.30,74,000/- in cash. Based on that, the case was reopened and the AO examined the issue and came to conclusion that the assessee has not established an amount of Rs.17,80,000/-, therefore, he treated the said amount of Rs.17,80,000/- as unexplained investment. The assessee was not given the copy of the said statement of admission, nor he was given any opportunity for the purpose of rebutting the said statement. Mere admission of the third party cannot be a basis for making addition in the hands of the assessee without confronting the assessee about the 7 I.T.A. No.10/Viz/2020, A.Y.2010-11 Md.Ahmed Kader Ali Khan, Visakhapatnam incriminating material. Apart from this, M/s Vizag Profiles made a general statement that they have received some amount from the purchasers. Therefore, I am of the opinion, that the addition of unaccounted investment in the hands of the assessee cannot be sustained. Therefore, the ground raised by the assessee is allowed. So far as reopening is concerned, since I have already disposed off this appeal on merits in favour of the assessee, therefore, reopening of assessment needs no adjudication. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 16 th November, 2022. Sd/- (द ु व्वूरु आर.एल रेड्डी) (DUVVURU RL REDDY) न्याधयक सदस्य/JUDICIAL MEMBER Dated : 16.11.2022 L.Rama, SPS 8 I.T.A. No.10/Viz/2020, A.Y.2010-11 Md.Ahmed Kader Ali Khan, Visakhapatnam आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Md. Ahmed Kader Ali Khan, H.No.70, Green City, Vaddlapudi P.O., Visakhapatnam 2. रधजस्व/The Revenue – Income Tax Officer, Ward-5(1), Visakhapatnam 3. The Principal Commissioner of Income Tax-2, Visakhapatnam 4. आयकर आयुक्त (अपील)/ The Commissioner of Income Tax (Appeals)-2, Visakhapatnam 5. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम / DR,ITAT, Visakhapatnam 6.गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam