B. Nagabhushanam, Karimnagar V. Income Tax Officer, Ward-1, Karimnagar, Karimnagar

ITA 1008/Hyd/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8747 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Assessment Year: 2005-2006
• Appeal Filed On: 14-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence
• Section: 142(1); 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A - SMC BENCH : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 849/HYD./2016 ASSESSMENT YEAR: 2010 - 11 SHRI B.NAGABHUSHANAM & OTHERS VS. I.T.O. WARD - 1 D.NO: 1 - 6 - 6, SHASTRI ROAD AYAKAR BHAVAN KARIMNAGAR OPP. KIMS COLLEGE NEAR BUS STAND KARIMNAGAR PAN: AAABB0566A & ITA NO. 1008 /HYD./201 7 ASSESSMENT YEAR: 20 05 - 06 SHRI B.NAGABHUSHANAM VS. I.T.O. WARD - 1 D.NO: 1 - 6 - 6, SHASTRI ROAD KARIMNAGAR KARIMNAGAR PAN: ABLPB6222H (APPELLANT) ( RESPONDENT) FOR ASSESSE : SH. RAMA RAO, A.R. FOR REVENUE : SMT. K.KOMALI KRISHNA, D.R. DATE OF HEARING : 04/07/19 DATE OF PRONOUNCEMENT : 12/07/19 O R D E R PER SMT. P. MADHAVI DEVI, J.M. ITA 849/ HYD / 16 IS FILED BY THE AOP WHEREAS ITA 1008/DEL/17 IS FILED BY THE INDIVIDUAL FOR A.Y. 20 05 - 06 AGAINST THE ORDER OF THE CIT(A) - 2 , ITA NO.849/HYD./16 & ITA 1008/HYD./17 A.Y. 2005 - 06 SH. B.NAGABHUSHANAM & OTHERS, KARIMNAGAR 2 HYDERABAD, DATED 22.2.2016 AND CIT(A) - 9, HYDERABAD DATED 13.03.2017 RESPECTIVELY. 2. BRIEF FACTS OF THE CASE ARE THAT THE PERSONS BY NAME SHRI B .NAGABHUSHANAM AND SHRI M. MALLAREDDY HELD A JOINT BANK ACCOUNT WITH UNION BANK OF INDIA, KARIMNAGAR BEARING ACCOUNT NO.18316 AND THERE WERE CASH DEPOSITS TO THE TUNE OF RS.22 LAKHS IN THIS ACCOUNT. NOTICES THEREFORE WERE ISSUED U/S 142(1) OF THE I.T.ACT TO ASSESSEE , TREATING BOTH THE PERSONS AS ASSOCIATION OF PERSONS (AOP) CALLING FOR RETURN OF INCOME FOR ASSESSMENT YEAR (A.Y.) 2005 - 06. THE ASSESSEE FILED A RETURN OF INCOME ON 28/12/2007 ADMITTING THE TAXABLE INCOME AT RS.15,699/ - . THEREAFTER NOTICES U/S 148 AND 143(2) WERE ISSUED ON 2 2 .01.2008 AND 30.6.2008, WHEREIN THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCES FOR CASH DEPOSITS MADE INTO THE BANK ACCOUNT. THE ASSESSEE EXPLAINED THAT A JOINT BANK ACCOUNT WAS OPENED AS ASSESSEE AND 16 OTHER PERSONS , HAD FORMED AN AOP WITH THE OBJECTIVE OF CARRYING ON BUSINESS IN BUYING AND SELLING OF OPEN LANDS ON COMMISSION BASIS OR ANY OTHER BUSINESS ON MUTUAL CONS ENSUS . THE ASSESSEE SUBMITTED THAT THESE PERSONS HAVE CONTRIBUTED RS.2 LAKHS EACH ON DIFFERENT DATES BETWEEN 10.07.2004 AND 30.08.2004 AND HAVE LATER ON WITHDRAWN THE SAME ON 01.10.2004. IT WAS ALSO SUBMITTED THAT CASH DEPOSITED INTO THE BANK ACCOUNT WERE OUT OF THE AMOUNTS CONTRIBUTED BY MEMBERS OF THE AOP TOWARDS CAPITAL AND THE TOTAL INVESTMENT MAD E BY MEMBERS OF THE AOP DURING THE YEAR UNDER CONSIDERATION WAS RS.28 LAKHS. IT WAS ALSO SUBMITTED THAT THE JOINT BANK ACCOUNT WAS CLOSED ON 05.10.2004 AND LATER ON A FRESH ACCOUNT WAS OPENED IN THE NAME OF SHRI B.NAGABHUSHANAM, INDIVIDUAL, WITH UNION BAN K OF INDIA BEARING ACCOUNT NO.18540 AND THE CLOSING BALANCE OF RS.6,07,292/ - LYING IN THE ACCOUNT WAS TRANSFERRED TO THE INDIVIDUAL ACCOUNT. AO ITA NO.849/HYD./16 & ITA 1008/HYD./17 A.Y. 2005 - 06 SH. B.NAGABHUSHANAM & OTHERS, KARIMNAGAR 3 SUMMONED A LL THE MEMBERS OF AOP AND THEIR STATEMENT S WERE RECORDED U/S 131 OF THE I.T.ACT. ALL MEMBERS HA VE APPEARED AND CONFIRMED THE MAKING OF THE INVESTMENT. HOWEVER, A.O. OBSERVED THAT EX CEPT FOR 4 MEMBERS , AND L E AVING SHRI B.NAGABHUSHANAM , ALL OTHER MEMBERS ARE HAVING INCOME FROM AGRICULTURAL ACTIVITIES AND THAT THEY COULD NOT PRODUCE ANY EVIDENC E IN RESPECT OF THEIR AGRICULTURAL INCOME LIKE SALES RECEIPTS ETC. THE AO, THEREFORE, OBSERVED THAT IT CANNOT BE BELIEVED THAT , FROM THE AGRICULTURAL ACTIVITIES , THEY HAVE INVESTED SUCH SUMS IN THE AOP. THEREFORE, HE DISALLOWED THE SAME AND ACCEPTED ON LY AN AMOUNT OF RS.25,000/ - TOWARDS EACH PERSONS CAPITAL TOTALLING TO RS. 4,25,000/ - AND THE BALANCE WAS BROUGHT TO TAX. SIMILARLY , HE ALSO DISBELIEVED THE ASSESSEES SOURCES FOR OTHER CASH DEPOSITS. 3. AGGRIEVED BY THE ADDITION S MADE BY THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) , WHO CONFIRMED THE ORDER OF A.O. THE ASSESSEE IS IN SECOND APPEAL BEFORE US BY RAISING FOLLOWING GROUNDS OF APPEAL. ITA 849/HYD/16: 1. THE ORDER OF THE LD.CIT(A) IS ERRONEOUS BOTH ON FACTS AN D IN LAW. 2. THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO OF RS.32,00,000/ - BY APPLYING THE PROVISIONS U/S 68 OF THE I.T.ACT. 3. THE LD.CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE PROVISIONS OF SEC.68 OF THE I.T.ACT HAVE NO APPLICATI ON AS THE AOP DID NOT CONDUCT ANY ACTIVITY AND DID NOT DERIVE ANY INCOME. 4. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. ITA 1008/HYD/17: 1. THE ORDER OF THE LD.CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. ITA NO.849/HYD./16 & ITA 1008/HYD./17 A.Y. 2005 - 06 SH. B.NAGABHUSHANAM & OTHERS, KARIMNAGAR 4 2. THE LD.CIT(A) ERRED IN DISBELIEVING THE INVESTMENT MADE BY THE MEMBERS OF THE AOP IN BANK ACCOUNT NO.18540. 3. THE LD.CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE MEMBERS OF THE AOP HAD EARLIER DEPOSITED THE AMOUNT AND AGAIN DEPOSITED AMOUNTS IN THE BANK ACCOUNTS. 4. THE LD .CIT(A) ERRED IN REJECTING THE EXPLANATION REGARDING MONEY DEPOSITED INTO BANK ACCOUNT NO.18540. 5. THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.24,68,000/ - MADE BY THE AO. 6. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 4. THE ASSESSEE HAS ALSO FILED ADDITIONAL EVIDENCE IN THE FORM OF AFFIDAVITS AND CONFIRMATION S FROM THE RELEVANT PARTIES AND ALSO THE PAN CARD DETAILS OF SOME OF THE MEMBERS OF AOP. IT WAS SUBMITTED THAT THESE DOCUMENTS, GO TO PROVE THAT THE MEMBERS OF THE AOP HAD FUNDS TO CONTRIBUTE TOWARDS THE CAPITAL AND SOUGHT ADMISSION OF ADDITIONAL EVIDENCE AND REMITTANCE TO THE FILE OF AO. HE SUBMITTED THAT IN ITA 1008/HYD/2007 , THE DEPOSITS MADE INTO INDIVIDUAL ACCOUNT WERE ALSO ADDED AND THE FACTS AND CIRCUMSTA NCES ARE SIMILAR AND, THEREFORE, PRAYED THAT BOTH THE APPEALS BE REMITTED TO THE FILE OF A.O. 4.1. LD.D.R. , HOWEVER, RELIED UPON ORDERS OF AUTHORITIES BELOW . 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL PLACED ON RECORD, WE DEEM IT FIT A ND PROPER TO ADMIT THE ADDITIONAL EVIDENCE AND REMI T IT TO THE FILE OF AO , WITH A DIRECTION TO RE - EXAMINE THE EVIDENCE FILED BY ASSESSEE IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE GIVEN A FAIR OPPORTUNITY OF BEING HEARD . BOTH THE APPEALS OF THE ASSESSEE ARE ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.849/HYD./16 & ITA 1008/HYD./17 A.Y. 2005 - 06 SH. B.NAGABHUSHANAM & OTHERS, KARIMNAGAR 5 6. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 12 TH J ULY, 2019. SD/ - S D/ - ( S.RIFAUR RAHMAN ) (P MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12 TH JULY, 2019. *GMV COPY FORWARDED TO: 1. SH. S.NAGABHUSHANAM & OTHERS, D.NO.1 - 6 - 6, SHASTRI ROAD, KARIMNAGAR 2. ITO, WARD - 1, AYAKAR BHAVAN, OPP:KIMS COLLEGE, NEAR BHUS STAND, KARIMNAGAR 3. PR.CIT - 2, HYD. 4. JCIT, KA RIMNAGAR RANGE, KARIMNAGAR 5. D.R. ITAT HYDERABAD 6. GUARD FILE // C O P Y // ITA NO.849/HYD./16 & ITA 1008/HYD./17 A.Y. 2005 - 06 SH. B.NAGABHUSHANAM & OTHERS, KARIMNAGAR 6 1. DRAFT DICTATED ON 05.07.19 2. DRAFT PLACED BEFORE THE AUTHOR 08.07.19 /09/07/19 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO SRPS 6. KEPT FOR PRONOUNCEMENT 7. FILE SENT TO BENCH CLERK