I. Surendra Babu, Tirupathi, Tirupathi V. Income Tax Officer, Ward-2(2), Tirupathi

ITA 1031/Hyd/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1324 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 18-03-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 19-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A C ROUT
• Keywords: Opportunity of being heard
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A. NO. 1031/HYD/2017 ASSESSMENT YEAR: 2010-11 SHRI SURENDRABABU ISANAKA, TIRUPATI [PAN: AACPI7149C] VS INCOME TAX OFFICER, WARD-2(2), TIRUPATI (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI PAWAN KUMAR CHAKRAPANI, AR FOR REVENUE : SHRI A.C. ROUT, DR DATE OF HEARING : 18-03-2019 DATE OF PRONOUNCEMENT : 22-03-2019 O R D E R THIS IS ASSESSEES APPEAL FOR THE AY. 2010-11, AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-TI RUPATI, DATED 30-03-2017. 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE, AN INDIVIDUAL, DERIVING INCOME FROM PARTNERSHIP FIRM M/ S. SURABHI DISTRIBUTORS AND OTHER SOURCES, FILED HIS RETURN OF INC OME ON 25-10-2010, ADMITTING A TOTAL INCOME OF RS. 3,37,114/- BESIDES AGRICULTURAL INCOME OF RS. 1,37,000/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY, NOTICES HAV E BEEN ISSUED TO ASSESSEE U/S. 143(2) AND 142(1) OF THE INCO ME TAX ACT [ACT] CALLING FOR INFORMATION. I.T.A. NO. 1031/HYD/2017 :- 2 -: 3. THE ASSESSEE, REPRESENTED BY HIS AR, FILED THE RE LEVANT DOCUMENTS ALONG WITH BANK ACCOUNT STATEMENTS. ON PERUS AL OF THE BANK ACCOUNT STATEMENT, ASSESSING OFFICER FOUND THA T THERE ARE CERTAIN CASH DEPOSITS INTO THE BANK ACCOUNT. THE AS SESSING OFFICER RECORDED STATEMENT OF ONE SHRI V. GANGADHAR GUPTA ON 20-12-2012, WHEREIN HE HAD STATED THAT HE HAD TAKEN A L OAN OF RS. 5,50,000/- FROM THE ASSESSEE IN THE EARLIER YEARS AND THAT THE SAME WAS NOT REPAID FOR THE FY. 2009-10 RELEVANT TO THE AY. 2010-11. HE HAD STATED THAT HE HAD PAID RS. 82,500/ - AS INTEREST TO THE ASSESSEE ON THE SAID LOAN DURING THE FY. 2009- 10. THEREFORE, THE ASSESSING OFFICER WAS OF THE OPIN ION THAT ASSESSEES CLAIM OF RECEIPT OF THE ENTIRE LOAN AMOUNT FROM SHRI V. GANGADHAR GUPTA OF RS. 5,50,000/- DURING THE FY. 2009-10 IS NOT IN ORDER. THEREFORE, ASSESSING OFFICER TREATE D IT AS ASSESSEES INCOME AND ALSO BROUGHT TO TAX BOTH THE SUM O F RS. 5,50,000/- AND THE INTEREST OF RS. 82,500/-. 3.1. SIMILARLY, WITH REGARD TO LOAN TAKEN BY SMT. V. B ALA PRASUNA ALSO, SHRI V. GANGADHAR GUPTA STATED THAT HIS WI FE SMT. V. BALA PRASUNA HAD TAKEN LOAN OF RS. 1 LAKH FRO M THE ASSESSEE IN THE EARLIER YEARS BUT THE SAME WAS NOT REP AID DURING THE FY. 2009-10 AND THAT HIS WIFE HAD PAID INTE REST OF RS. 15,000/-. THEREFORE, ASSESSING OFFICER TREATED TH E SUM OF RS. 1,15,000/- ALSO AS INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR. 3.2. FURTHER, ASSESSING OFFICER ALSO NOTICED THAT THE AS SESSEE HAD RECEIVED A SUM OF RS. 1,77,550/- AS INCOME FROM OTHER SOURCES BUT IT WAS NOT OFFERED TO TAX, THINKING THAT THE SAME WAS ELIGIBLE FOR SET-OFF AGAINST THE LOSS ON SALE O F MOTOR CAR. I.T.A. NO. 1031/HYD/2017 :- 3 -: THE ASSESSEE WAS INFORMED THAT SET-OFF IS NOT POSSIBLE UNDER THE PROVISIONS OF INCOME TAX ACT. HENCE, THE ASSESSEE OFFERED THE SAME TO TAX. ACCORDINGLY, THE ADDITION OF RS.1,77, 550/- WAS ALSO MADE. 3.3. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), STATING THAT THE STATEMENT OF SHRI V. GANGADHAR GUPTA WAS OBTAINED BEHIND THE BACK OF ASSESSEE, WITHOUT GIVING A NY NOTICE TO THE ASSESSEE. IT WAS SUBMITTED THAT THE ASSESSEE WAS N OT GIVEN AN OPPORTUNITY TO CROSS-EXAMINE THE DEBTOR, SHRI V. GANGADHAR GUPTA AND SMT. V. BALA PRASUNA AND THEREFORE , THE ADDITION MADE ON THE BASIS OF THEIR STATEMENTS IS NOT SUSTAINABLE. WITHOUT PREJUDICE TO THE SAME, THE ASSESSEE SOUGHT TO TELESCOPE THE SUM OF RS.1,77,500/- TO THE ADD ITIONS MADE ON ACCOUNT OF DISALLOWANCE OF THE DEBTORS. 4. THE CIT(A), HOWEVER, CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER AND THE ASSESSEE IS IN SECOND APPE AL BEFORE US, BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE AUTHORITIES BELOW IN SO FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW, EQUITY, WEIGHT OF EVID ENCE, PROBABILITIES AND THE FACTS AND CIRCUMSTANCES IN THE APPELLANT'S CASE. 2. THE APPELLANT DENIES HIMSELF LIABLE TO BE ASSESS ED FOR AN AMOUNT BEING RS. 12,62,164/-, AS AGAINST THE RETURNED INCO ME OF AN AMOUNT BEING RS. 3,37,114/-, UNDER THE FACTS AND CIRCUMSTA NCES OF THE CASE. 3. THE AUTHORITIES BELOW OUGHT TO HAVE GIVEN, OPPOR TUNITY TO CROSS EXAMINE SHRI V. GANGADHAR GUPTA AND SMT. V. BALA PR ASUNA, BEFORE PROCEEDINGS WITH THE ASSESSMENT AND MAKING ADDITION BASED ON THE STATEMENT RECORDED FROM THEM, UNDER THE FACTS AND C IRCUMSTANCES OF THE CASE. I.T.A. NO. 1031/HYD/2017 :- 4 -: 4. THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN MAKIN G AN ADDITION, OF AN AMOUNT BEING RS. 6,32,500/-, WHICH WAS RECEIVED FRO M SHRI V. GANGADHAR GUPTA, DURING THE IMPUGNED ASSESSMENT YEA R 2010-2011, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN MAKIN G AN ADDITION, OF AN AMOUNT BEING RS. 1,15,000/- WHICH WAS RECEIVED FROM SMT. V. BALA PRASUNA, DURING THE IMPUGNED ASSESSMENT YEAR 2010-2 011, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN MAKIN G AN ADDITION OF AN AMOUNT BEING RS. 7,47,500/-, WHICH THE APPELLANT HA D RECEIVED FROM SHRI V. GANGADHAR GUPTA AND SMT. V. BALA PRASUNA, I N CASH AND CREDITED INTO THE BOOKS OF ACCOUNT OF THE APPELLANT , UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN MAKIN G AN ADDITION OF AN AMOUNT BEING RS. 1,77,550/-, UNDER THE FACTS AND CI RCUMSTANCES OF THE CASE. 8. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER AS PER THE PARITY OF REASONING OF THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF KARANVIR SINGH 349 ITR 692, THE APPELLANT DENIES IT SELF LIABLE TO BE CHARGED TO INTEREST UNDER SECTION 234 A, 234 B & 23 4 C OF THE INCOME TAX ACT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE. 9. WITHOUT PREJUDICE THE PROVISIONS OF SECTION 234 B [3] OF THE ACT IS APPLICABLE AS PER WHICH INTEREST UNDER SECTION 234 B OF THE ACT CAN BE CALCULATED ONLY FROM THE DATE OF 143[1] OR FROM THE DATE OF ORDER OF ASSESSMENT. IN THE INSTANT CASE THERE WAS AN INTIMA TION UNDER SECTION 143[1] OF THE ACT, ONLY FROM SUCH DATE IF AT ALL AN Y INTEREST TO BE CALCULATED TO BE RECKONED. 10. WITHOUT PREJUDICE THE LEVY OF INTEREST UNDER SE CTION 234 A, 234 B & 234 C OF THE ACT IS ALSO BAD IN LAW AS THE PERIOD , RATE, QUANTUM AND METHOD OF CALCULATION ADOPTED ON WHICH INTEREST IS LEVIED ARE ALL NOT DISCERNABLE AND ARE WRONG ON THE FACTS OF THE CASE. 11. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELET E OR SUBSTITUTE ANY OF THE GROUNDS URGED ABOVE. 12. IN THE VIEW OF THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF THE HEARING OF THE APPEAL, THE APPELLAN T PRAYS THAT THE APPEAL MAY BE ALLOWED IN THE INTEREST OF JUSTICE AN D EQUITY. I.T.A. NO. 1031/HYD/2017 :- 5 -: 5. LD. COUNSEL FOR THE ASSESSEE SUPPORTING THE GROUNDS OF APPEAL, SUBMITTED THAT THE ASSESSMENT WAS MADE ONLY ON T HE BASIS OF THE STATEMENT OF THE DEBTOR, SHRI V. GANGADHAR GUPTA WITH REGARD TO LOANS TAKEN BY HIM AND HIS WIFE, SMT. V . BALA PRASUNA, AND SUBMITTED THAT SUCH STATEMENTS WERE TAKEN BEHIND THE ASSESSEES BACK AND ASSESSEE WAS NOT EVEN GIVEN AN OPPORTUNITY TO CROSS-EXAMINE THEM EVEN THOUGH ASSESSEE HAD SPECIFICALLY RAISED A GROUND BEFORE THE CIT(A). HE S UBMITTED THAT SUCH AN ADDITION MADE ON THE BASIS OF A STATEMENT RECORDED BEHIND THE BACK OF ASSESSEE, WITHOUT AN OPPOR TUNITY TO CROSS-EXAMINE THE SAID PARTIES, IS NOT SUSTAINABLE A ND THEREFORE SHOULD BE DELETED. 6. LD.DR, HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITI ES BELOW. 7. HAVING REGARD TO THE RIVAL CONTENTIONS, I AM OF THE O PINION THAT, WHERE ANY STATEMENT IS SOUGHT TO BE RELIED UPON BY THE ASSESSING OFFICER TO MAKE AN ADDITION TO THE RETURNED INCOME OF AN ASSESSEE, THE ASSESSEE SHOULD BE GIVEN A SHOW CAUSE NOTICE AND IF SO REQUESTED, AN OPPORTUNITY TO CROSS- EXAMINE THE SAID PARTIES. IN THIS CASE, THOUGH THE ASSESSEE DID NO T SEEK AN OPPORTUNITY TO EXAMINE BEFORE THE ASSESSING OFFICER, H E DID RAISE A SPECIFIC GROUND BEFORE THE CIT(A), BUT HE FAI LED TO DEAL WITH IT IN HIS ORDER. THEREFORE, I DEEM IT FIT AND PRO PER TO REMAND THE ISSUE BACK TO THE FILE OF ASSESSING OFFICE R WITH A DIRECTION TO ALLOW THE ASSESSEE TO CROSS-EXAMINE SHRI V. GANGADHAR GUPTA AND SMT. V. BALA PRASUNA AND TO RECON SIDER THE ISSUE IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT THE I.T.A. NO. 1031/HYD/2017 :- 6 -: ASSESSEE SHOULD BE GIVEN A FAIR OPPORTUNITY OF BEING HEARD. GROUNDS ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPO SES. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH, 2019 SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 22 ND MARCH, 2019 TNMM I.T.A. NO. 1031/HYD/2017 :- 7 -: COPY TO : 1. SHRI SURENDRABABU ISANAKA, C/O. PAWAN KUMAR CHAKRAPANI, M/S. V.M. CHAKRAPANI & CO., CHARTERED ACCOUNTANTS, #5-5-8/9 & 10, 2 ND FLOOR, SRINIVASA BUILDING, RANIGUNJ, SECUNDERABAD. 2. INCOME TAX OFFICER, WARD-2(2), TIRUPATI. 3. CIT (APPEALS)-TIRUPATI. 4. PR.CIT-TIRUPATI. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.