ACIT, Tirupathi V. Dr R.Asalatha, Tirupathi

ITA 1042/HYD/2010

• Counselvise Citation: 104222514 RSA 2010
• Duration Of Justice: 4 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-06-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 23-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: C P RAMASWAMY
• Keywords: Search and seizure; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.1042/HYD/2010 ASSESSMENT YEAR 2006-2007 ACIT, CENTRAL CIRCLE TIRUPATI VS. DR. SMT. R. ASALATHA, TIRUPATI PAN ACFPA-6715-P (APPELLANT) (RESPONDENT) FOR REVENUE MR. SOLGY JOSE T. KOTTARAM FOR ASSESSEE MR. C.P. RAMASWAMY DATE OF HEARING 14.08.2014 DATE OF PRONOUNCEMENT 28.08.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS IS A REVENUE APPEAL AGAINST THE ORDER OF LD. CIT(A), TIRUPATI DATED 13.05.2010. INITIALLY REVENU E RAISED GROUND ON VALUATION OF PROPERTY WHICH IS NOT AN ISS UE IN APPEAL BEFORE THE LD. CIT(A). LATER REVISED GROUNDS ARE FILED WHICH ARE VERY ELABORATE AND CONTAINS DETAILED SUBM ISSIONS AS WELL. REVENUE CONTENDS TWO ISSUES ON WHICH A.O. IN HIS REMAND REPORT DID NOT ACCEPT ASSESSEE CONTENTIONS, BUT LD. CIT(A) ACCEPTED AND GAVE RELIEF TO ASSESSEE. 2. BRIEFLY STATED, ASSESSEE IS A MEDICAL PRACTITIO NER AND WAS RUNNING A CLINIC. THERE WAS SEARCH AND SEIZ URE OPERATIONS CONDUCTED ON 18.01.2006. IN THE ASSESSME NT FOR A.Y. 2006-07 A.O. MADE ADDITION ON SIX ISSUES AND I N THE 2 ITA.NO.1042/HYD/2010 DR. SMT. R. ASALATHA, TIRUPATI REMAND PROCEEDINGS BEFORE LD. CIT(A) ACCEPTED CONTE NTIONS ON FOUR ISSUES WHICH ARE NOT SUBJECT MATTER OF PRESENT APPEAL. TWO ISSUES WHICH A.O. DID NOT ACCEPT ARE (1) PART D ISALLOWANCE OF AGRICULTURAL INCOME AND (2) UNEXPLAINED CASH AND JEWELLERY. LD. CIT(A) GAVE RELIEF. HENCE, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. P ART DISALL OWANCE OF AGRICULTURAL INCOME OF RS. 96,000 : ASSESSEE HAS DECLARED RS.1,20,000 AS AGRICULTURAL INCOME FROM 8 ACRES OF LAND OWNED. AO HAS OBSERVED THAT NO EVIDENCE COULD BE FURNISHED BY THE ASSESSEE TOWARDS CROPS GROWN SUCH AS SALE PATTIES, EXPENDITURE DETAILS ETC., AND HENCE RESTRICTED THE INCOME TO RS.24,000 ONLY FROM ALL THE 8 ACRES A ND DISALLOWED THE BALANCE OF RS.96,000 AS INCOME FROM OTHER SOURCES. 3.1. IN RESPONSE TO THIS, THE ASSESSEE HAS SUBMITT ED THAT THIS IS A JOINT HOLDING ON CONTIGUOUS LAND OUT OF WHICH 8 ACRES ARE STANDING IN THE NAME OF THE ASSESSEE AND AGRICULTURAL OPERATIONS ARE BEING CARRIED OUT IN AL L LANDS. THE ASSESSEE ALONG WITH HER OTHER FAMILY MEMBERS IS DEC LARING AGRICULTURAL INCOMES FROM YEAR TO YEAR AND THE SAME HAVE BEEN ACCEPTED BY THE A.O. FROM AY 2000-01 TO AY 2005-06 AND NO OBJECTION HAS BEEN RAISED AS TO THE GENUINENESS OF THE AGRICULTURAL INCOME IN THE EARLIER YEARS NOR OBJECT ION WAS RAISED IN THE ASSESSMENTS OF THE OTHER FAMILY MEMBE RS. HENCE, PLEADED THAT THE DISALLOWANCE MAY BE DELETED. IT IS FURTHER SUBMITTED THAT FOLLOWING THE SEARCH AND SEIZURE OPE RATIONS, THE ADIT (INV.) TIRUPATI HAD ALSO CAUSED ENQUIRIES REGA RDING AGRICULTURAL INCOME AND NOTHING INCRIMINATING HAS BEEN DETECTED DURING SEARCH ENQUIRIES WHICH WAS BROUGHT TO THE NOTICE OF THE AO VIDE ASSESSEES REPLY LETTER DATED 10.12.2007. 3 ITA.NO.1042/HYD/2010 DR. SMT. R. ASALATHA, TIRUPATI 3.2. LD CIT(A) HAS CONSIDERED THE ISSUE AS UNDER: HOWEVER, THE AO IGNORED THE OUTCOME OF THE ENQUIRIE S CAUSED BY THE ADIT (INV.) TIRUPATI. IT IS ALSO NOTI CED THAT THE ASSESSEE HAS BEEN GROWING CROPS LIKE PAPAYA, GU AVA, GROUND NUT, COCONUT AND MANGOS. IT IS TRUE THAT THE ASSESSEE HAS TO SUBSTANTIATE THE GENUINENESS OF THE AGRICULTURAL INCOME BUT IN THE LIGHT OF ENQUIRIES C ONDUCTED BY THE OFFICE OF THE ADIT(INV.), TIRUPATI FOLLOWING THE SEARCH AND NOTHING INCRIMINATING BEING DETECTED DUR ING SUCH ENQUIRIES, THE ASSESSEE CANNOT BE AXED FOR NOT PROVING THE GENUINENESS OF THE AGRICULTURE. BESIDES THE AGRICULTURAL INCOMES IN THE HANDS OF THE ASSESSEE I N PRIOR AND LATER YEARS HAS BEEN ACCEPTED AND SO IS THE CAS E WITH AGRICULTURAL INCOMES OFFERED IN THE HANDS OF OTHER FAMILY MEMBERS WHO ARE HAVING HOLDINGS ADJACENT TO THESE LANDS. HENCE, I DO NOT FIND ANY REASON TO DISBELIEV E THE GENUINENESS OF OF THE AGRICULTURAL INCOMES DECLARED . ACCORDINGLY, IT IS HELD THAT THE DISALLOWANCE OF PA RT AGRICULTURAL INCOME OF RS.96,000 IS HELD WRONG FOR WANT OF MATERIAL EVIDENCE WITH THE AO. 4. UNEXPLAINED CASH OF RS.6,50,000 AND JEWELLERY WORTH RS.7,75,650 : COMING TO THE FACTS, ONE SECRET CHAMBER WAS FOUND DURING THE COURSE OF SEARCH IN TH E BEDROOM OF ASSESSEE WHEREIN CASH OF RS.6,50,000 AND JEWELLERY WEIGHING 1450 GMS WORTH RS.7,75,650 WAS FOUND. AT T HE COMMENCEMENT OF SEARCH PROCEEDINGS AT 10 AM ON 18.01.2006, DR. R.ASALATHA HAS NOT DISCLOSED THE PR ESENCE OR CONTENTS OF THE CONCEALED CHAMBER IN THE PRELIMINAR Y STATEMENT. HENCE, IT IS INFERRED BY THE A.O. THAT S HE HAD 4 ITA.NO.1042/HYD/2010 DR. SMT. R. ASALATHA, TIRUPATI INTENTIONALLY NOT DISCLOSED THE PRESENCE AS WELL AS THE CONTENTS OF THE CONCEALED CHAMBER AND HELD THE CONTENTS TO B E UNDISCLOSED ASSETS AND CALLED FOR EXPLANATION. 4.1. IT WAS SUBMITTED BY THE ASSESSEE THAT THE ASS ESSEE WAS IN A NERVOUS AND CONFUSED STATE OF MIND AT THE BEGINNING OF THE SEARCH PROCEEDINGS AS SHE WAS ALONE IN THE H OUSE AND HENCE AT THE TIME OF RECORDING PRELIMINARY STATEMEN T SHE COULD NOT INFORM ABOUT THE PRESENCE AND CONTENTS OF SECRE T CHAMBER. 4.2. THE ASSESSEE RELIED UPON THE STATEMENT DURING THE COURSE OF SEARCH U/S. 132(4) VIDE QUESTIONS 11 TO 2 3 WHEREIN IT WAS EXPLAINED THAT THE SAID CASH BELONGS TO M/S. AS ALATHA TEST TUBE BABY AND RESEARCH CENTRE (ATTBRC), TIRUPATI, A FAMILY CONCERN AND THE JEWELLERY OF GOLD AND SILVER BELONG TO THREE LADIES OF THE FAMILY. IN SUPPORT THEREOF, THE ASSES SEE HAS FURNISHED COMPUTERIZED BOOKS OF ACCOUNTS OF ATTBRC AND ALSO RELIED UPON STATEMENTS/AFFIDAVITS GATHERED BY THE A O FROM THE PARENTS OF TWO DAUGHTERS-IN-LAW. AO HAS REJECTED THE CONTENTION OF ACCOUNTING IN THE BOOKS OF ACCOUNTS A S THE SAME WERE NOT PRODUCED DURING THE SEARCH BUT THEY WERE O NLY FURNISHED AS AN AFTERTHOUGHT DURING ASSESSMENT PROC EEDINGS. HE HAS ALSO HELD THAT IT IS UNUSUAL TO KEEP BUSINES S CASH IN A SECRET CHAMBER. THE STATEMENTS FROM THE PARENTS OF THE DAUGHTERS-IN-LAW ABOUT JEWELLERY WERE ALSO NOT BELI EVED. HENCE, THE CASH AND JEWELLERY WERE ADDED AS UNEXPLA INED INVESTMENTS. 4.3. DURING THE APPEAL, THE ASSESSEE HAD SUBMITTE D THAT THE ENTIRE CASH OF RS.6,50,000 FOUND IN THE SE CRET CHAMBER BELONGS TO THE ATTBRC AND THE A.O. FAILED T O GIVE 5 ITA.NO.1042/HYD/2010 DR. SMT. R. ASALATHA, TIRUPATI CREDIT TO THE BOOKS OF ACCOUNTS. A COPY OF THE ASSE SSMENT ORDER OF ATTBRC FOR AY 2006-07 DT.26.12.2008 WAS FURNISHED AS ADDITIONAL EVIDENCE ALONG WITH COPIES OF THE BALANCE SHEET AND THE CASH FLOW STATEMENT FILED BEFORE THE ITO W-1 (2 ), TIRUPATI, STATING THAT THE CASH BOOK AND CASH AS ON 18.01.200 6 AND RELEVANT STATEMENTS HAD BEEN ACCEPTED BY THE AO. TH E ADDITIONAL EVIDENCE HAS BEEN FORWARDED TO THE AO FO R HIS EXAMINATION AND COMMENTS. HOWEVER, THE AO HAS ONCE AGAIN REJECTED THE COMPUTERIZED BOOKS OF ACCOUNTS AS ACCO MMODATIVE AND AS AN AFTERTHOUGHT TO EXPLAIN THE SOURCES OF CA SH FROM ATTBRC AS NO REGULAR BOOKS OF ACCOUNTS WERE FOUND O N THE DATE OF SEARCH. IN HIS REJOINDER, THE ASSESSEE HAS TAKEN THE LD. CIT(A) THROUGH THE QUESTIONS FROM 12 TO 21 OF THE S TATEMENT U/S 132(4) WHEREIN IT WAS STATED THAT THE CASH BELO NGS TO ATTBRC AND THAT LARGE INFLOW OF CASH WOULD BE COMIN G FROM ATTBRC ONLY. IT IS ALSO ARGUED BY THE ASSESSEE THAT THE BOOKS OF ACCOUNTS IN THE CASE OF ATTBRC WERE EXAMINED BY THE ITO W-1 (2), TIRUPATI AND THE SAME WERE ACCEPTED AND IN CLUDING CASH BALANCE OF RS.6,55,043 AS ON 18.01.2006. IT IS STATED THAT THE SAME HAS BEEN OFFERED FOR TAXATION IN THE HANDS OF THE ATTBRC AND THERE IS NO REASON WHY THE BOOKS CAN BE CATEGORIZED AS DEFECTIVE AND HENCE NOT ACCEPTABLE. HE HAS PLACED RELIANCE IN THE CASE OF AISHWARYA K. RAI (20 06) 105 TTJ 825 (MUM.) TM AND ARGUED THAT NON-AVAILABILITY OF B OOKS OF ACCOUNTS AT THE TIME OF SEARCH CANNOT LEAD TO THE C ONCLUSION THAT THE BOOKS OF ACCOUNTS ARE NOT MAINTAINED OR BO OKS PRODUCED LATER CANNOT BE DISREGARDED IN THE ABSENCE OF ANY SPECIFIC DEFECT. 4.4. LD CIT(A) CONSIDERED THE ISSUE AS UNDER: 6 ITA.NO.1042/HYD/2010 DR. SMT. R. ASALATHA, TIRUPATI THE CHALLENGE AND EXPLANATIONS HAVE BEEN CONSIDERED . THE CASH OF RS.6,50,000 HAS BEEN FOUND TO BE RECORD ED IN THE BOOKS OF ATTBRC AS SUBSTANTIAL AMOUNTS OF FEES ARE BEING COLLECTED FROM THIS CENTRE. A MERE ABSENCE OF BOOKS OF ACCOUNTS DURING THE SEARCH CANNOT BE HELD AGAINS T THE GENUINENESS OF THE BOOKS ESPECIALLY IN THE LIGHT OF THE FACT THAT THE SAME HAVE BEEN ACCEPTED INDICATING SUBSTAN TIAL CASH BALANCES OF ATTBRC AS ON 18.01.2006. MOREOVER, THE AO COULD NOT COME UP WITH COGENT BASIS TO REJEC T THE BOOKS AS COOKED-UP FOR CONVENIENCE. THE AO HAD FAIL ED TO BRING OUT ANY ANOMALIES IN THE SAID BOOKS EITHER DU RING THE ASSESSMENT PROCEEDINGS OR DURING THE REMAND PROCEEDINGS. HENCE, IT CANNOT BE STATED THAT THERE IS ANY DETECT IN THE BOOKS OF ACCOUNTS PRODUCED BEFORE THE AO. BESIDES, THE AO WAS HARPING ON THE DISCREPANCY BETW EEN THE PRELIMINARY STATEMENT ON THE BEGINNING OF SEARC H AND THE SUBSEQUENT EXPLANATIONS OFFERED BY THE ASSESSEE . IT IS QUITE COMMON FOR INDIVIDUALS, ESPECIALLY A LADY PROFESSIONAL TO GET CONFUSED AND NERVOUS AT THE INI TIATION OF SEARCH PROCEEDINGS. THUS, NON-INTIMATION ABOUT PRESENCE AND CONTENTS OF THE SECRET LOCKER IN THE PRELIMINARY STATEMENT CANNOT BE HELD AGAINST HER AS A MATERIAL EVIDENCE. THIS DISCREPANCY WOULD HAVE BEEN MATERIAL, HAD THE BOOKS BEEN FOUND DEFECTIVE, EVEN THOUGH PRODUCED LATER. MOREOVER, IT IS ALSO VERIFIED THAT THE LARGE REMITTANCES OF FEE WERE NOTICED IN ATTBRC BY VIRTUE OF LINE OF PROFESSION IT IS IN. THE BALANCE SHEET AND ASSESSMENT ORDER OF ATTBRC WERE ALSO ELIGIBLE FOR ADMISSION AS ADDITIONAL EVIDENCE UNDER RULE 46A SIN CE THEY WERE NOT AVAILABLE DURING ASSESSMENT PROCEEDIN GS. 7 ITA.NO.1042/HYD/2010 DR. SMT. R. ASALATHA, TIRUPATI THIS MATERIAL PROVES THE GENUINENESS OF THE ASSESSE E'S CLAIM ABOUT THE SOURCE OF CASH. THE ARGUMENT THAT W HY THE CASH OF ATTBRC IS KEPT AT HOUSE IS ALSO ILLOGIC AL, WHEN ASSESSEE IS THE LEAD PROFESSIONAL OF THE CENT RE AND IT IS HER FAMILY CONCERN. THUS, IT IS HELD THAT THE CASH OF RS.6,50,000 IS FULLY EXPLAINED AS BELONGING TO ATTB RC AND HENCE THE ADDITION IS TO BE DELETED. 4.6. REGARDING THE GOLD JEWELLERY WEIGHING 1450 GMS, IT IS ARGUED BY THE ASSESSEE THAT THE AO HAS CONDUCTED ENQUIRIES WITH DR.T.KALPANA, MOTHER OF SM T. LAVEENA AND FROM SRI R. DORASWAMY, FATHER OF SMT. R . YAMINI PRIYA BOTH DAUGHTER-IN-LAW OF ASSESSEE. IT I S STATED BY DR. T. KALPANA THAT JEWELLERY OF ABOUT 47 2 GMS. WAS GIVEN TO HER DAUGHTER SMT. LAVEENA AS STHREEDHA N AND SRI R. DORASWAMY HAD STATED THAT 497 GMS OF GOL D HAS BEEN GIVEN TO HIS DAUGHTER SMT. YAMINI PRIYA AS STHREEDHAN. IT IS ALREADY ON THE RECORD THAT THE AS SESSEE HAS BEEN BEQUEATHED GOLD OF ABOUT 200 GMS BY HER MOTHER AS EVIDENCED BY DR.R. PREMANAND, BROTHER OF THE ASSESSEE. THUS, ABOUT 1169 GMS OF JEWELLERY STAND EXPLAINED LEAVING THE BALANCE OF ABOUT 300 GMS WHIC H CAN BE ACCEPTED IN LIEU OF THE BOARD'S INSTRUCTION DT.11.5.1994. HENCE THE ASSESSEE PLEADED FOR DELETI NG THE ADDITION ON THIS COUNT. 4.7. THE REMAND REPORT OF THE A.O. IS SILENT ON TH E EXPLANATION OFFERED BY THE ASSESSEE ON THE JEWELLER Y FOUND IN SECRET LOCKER. HENCE, IT IS PRESUMED THAT THE CONTENTION RAISED BY THE ASSESSEE IN THE WRITTEN STATEMENTS AS WELL AS THE EXPLANATION FURNISHED WER E 8 ITA.NO.1042/HYD/2010 DR. SMT. R. ASALATHA, TIRUPATI DEEMED TO BE ACCEPTED BY THE A.O. HENCE, IT IS HELD THAT THE JEWELLERY IS FULLY EXPLAINED AND NO ADDITION IS CALLED FOR. 5. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE WELL REASONED ORDER OF LD. CIT(A). NOTHING WAS BROUGHT ON RECORD TO COUNTER TH E FINDINGS OF THE LD. CIT(A). AS FAR AS AGRICULTURAL INCOME IS CONCERNED, THE SAME WAS ACCEPTED IN EARLIER YEARS AND THERE IS NO REASON WHY A.O. HAD TO RESTRICT IN THIS YEAR. AS FAR AS CA SH SEIZED IS CONCERNED, SINCE THE SAME IS ARISING AND ACCOUNTED IN CLINIC BOOKS, THERE IS NO NEED TO TREAT IT AS UNACCOUNTED SOLELY ON THE REASON THAT THE SAME WAS FOUND IN SECRET CHAMBER. L IKEWISE, LD. CIT(A) GAVE CREDIT TO JEWELLERY IN RESPECTIVE I NDIVIDUAL HANDS AFTER EXAMINING THE EVIDENCE AND CONTENTIONS AND FOLLOWED THE BOARD CIRCULAR IN PRINCIPLE. WE AFFIRM HIS ORDER. 6. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.08.2014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMB ER HYDERABAD, DATED 28 TH AUGUST, 2014 VBP/- COPY TO 1. ACIT, CENTRAL CIRCLE, TIRUPATI 2. DR. SMT. R. ASALATHA, 9 & 10 K.K. LAYOUT, TIRUPA TI. 4. CIT(A), TIRUPATI. 4. CIT-(CENTRAL), HYDERABAD. 5. D.R. B BENCH, ITAT, HYDERABAD.