The ACIT.,Cir-5(1), Hyderabad V. Sri Pilli Anand Rao, Hyderabad

ITA 1046/HYD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6531 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-05-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 01-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: S RAMA RAO
• Keywords: Onus to prove
• Section: 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1046/HYD/2013 ASSESSMENT YEAR: 2003-04 ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 5(1), HYDERABAD. VS. SRI PILLI ANAND RAO, HYDERABAD PAN AEJPP6639R (APPELLANT) (RESPONDENT) ITA NO. 1047/HYD/2013 ASSESSMENT YEAR: 2003-04 ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 5(1), HYDERABAD. VS. SMT. PILLI JAYASREE, HYDERABAD PAN AGHPP5652N (APPELLANT) (RESPONDENT) REVENUE BY : SHRI M. SITARAM ASSESSEE BY : SHRI S. RAMA RAO DATE OF HEARING 19-05-2016 DATE OF PRONOUNCEMENT 08-06-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THESE TWO APPEALS BY TWO ASSESSEES ARE DIRECTED AG AINST THE ORDERS OF CIT(A) V, HYDERABAD DATED 21/03/2013 FO R AY 2003-04. SINCE COMMON ISSUE IS INVOLVED IN BOTH THESE APPEAL S, THEY WERE CLUBBED AND HEARD TOGETHER AND, THEREFORE, A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. 2 ITA NOS. 1046 & 1047 /HYD/2013 SRI PILLI ANAND RAO AND SMT. PILLI JAYASREE 2. TO DISPOSE OF THESE APPEALS, WE REFER TO THE FAC TS FROM ITA NO. 1046/HYD/2013. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT FOR AY 2 003-04, THE ASSESSEE FILED HIS RETURN OF INCOME ON 23/02/2014 D ECLARING AN INCOME OF RS. 3,62,906/- DERIVING INCOME FROM HOUSE PROPERTY AT RS. 2,14,072 AND INCOME FROM TRADING FROM BAMBOO BALLIE S ADMITTED AT RS. 1,48,834 WHICH WAS ESTIMATED AT 5.25% ON THE TU RNOVER IN ACCORDANCE WITH THE PROVISIONS OF SECTION 44AF OF T HE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). AGRICULTURAL INCOME WAS DECLARED AT RS. 55,495/-. 3.1 THE AO AFTER VERIFICATION OF THE BANK ACCOUNTS AND THE RETURN OF INCOME FILED, FOUND THAT AN AMOUNT OF RS. 45 LAKHS DEPOSITED WITH STATE BANK OF HYDERABAD, EXHIBITION GROUNDS BRANCH, HYDERABAD WAS NOT PROPERLY EXPLAINED. ACCORDINGLY, THE AO ADDED T HE SAID AMOUNT BY APPLYING THE PROVISIONS OF SECTION 69 OF THE ACT AN D DETERMINED THE TOTAL INCOME AT RS. 48,94,600/-. TREATING THE SAID ADDITION AS CONCEALED INCOME, THE AO INITIATED PROCEEDINGS U/S 271(1)(C) OF THE ACT. THOUGH THE ASSESSEE FILED A DETAILED EXPLANAT ION BEFORE THE AO, REJECTING THE SAME, THE AO LEVIED PENALTY OF RS. 14 ,27,483/- U/S 271(1)(C). 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A) AND FILED WRITTEN SUBMISSIONS BEFORE THE CIT(A), WH ICH WERE EXTRACTED BY THE CIT(A) AT PAGES 2 & 3 OF HIS ORDER. AFTER CO NSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) DELETED THE PENALTY LEVIED BY THE AO BY OBSERVING AS UNDER: 5. IN VIEW OF THE SUBMISSIONS MADE BY THE APPELLAN T, I PERUSED THE RECORD AND FILED THAT THE DEPOSITS WER E MADE INTO THE BANK ACCOUNT FOR A SHORT PERIOD. THE APPELLANT DID NOT MAINTAIN ANY BOOKS OF ACCOUNT. THE INCOME WAS OFFER ED ON ESTIMATE BASIS. THE AO DID NOT FIND THAT THERE IS ANY CONCEALMENT OF INCOME FOR THE YEAR UNDER CONSIDERAT ION REPRESENTS THE DEPOSITS MADE WITH THE BANK. THE CON TENTION OF 3 ITA NOS. 1046 & 1047 /HYD/2013 SRI PILLI ANAND RAO AND SMT. PILLI JAYASREE THE APPELLANT THAT THE AMOUNT WAS RECEIVED AS ADVAN CES DURING THE COURSE OF BUSINESS ACTIVITY WAS DISBELIEVED. IN SUCH CIRCUMSTANCES, PENALTY IS NOT LEVIABLE. THE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. REPORT ED IN 322 ITR 158 OBSERVED THAT WHERE THE PARTICULARS FURNISHED A RE NOT PROVED TO BE FALSE, THERE CANNOT BE ANY PENALTY U/S 271(1) (C) OF THE ACT. BESIDES, THE DECISIONS CITED BY THE LD. AR IN THE A BOVE PARAGRAPHS ALSO SUPPORT MY VIEW THAT NO PENALTY IS LEVIABLE IN SUCH CIRCUMSTANCES. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US RA ISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE DECISION OF THE CIT (APPEALS) IS ERRONEOUS IN LAW AS WELL AS ON FACTS. 2. THE CIT(A) FAILED TO APPRECIATE THAT IN THE FACT S AND CIRCUMSTANCES OF THE CASE THE ASSESSEE COULD NOT PR ODUCE ANY PROPER EVIDENCE REGARDING THE SOURCE OF DEPOSITS MA DE INTO THE BANK WHICH WAS ALSO ONE OF THE MAIN GROUNDS ON WHIC H THE ASSESSEE'S APPEAL FOR QUANTUM ADDITION WAS DISMISSE D BY THE APPELLATE AUTHORITIES. 3. THE CIT(A) OVERLOOKED THE FACT THAT THE QUANTUM ADDITION WAS MADE AS THE GENUINENESS OF THE TRANSACTION AS WELL AS THE AGREEMENT WAS FOUND TO BE DOUBTFUL AND THE PERSONS SAID TO HAVE ADVANCED THE MONEY WERE ALSO NOT IN EXISTENCE. HENCE, THE CIT(A) OUGHT TO HAVE SUSTAIN THE PENALTY. 4. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 6. LD. DR SUBMITTED THAT ASSESSEE HAD NOT PROVED TH E INFORMATION FURNISHED ARE ACCURATE. LD. CIT(A) HAS NOT APPRECIA TED THE FACTS OF THE CASE AS THE ASSESSEE COULD NOT PRODUCE ANY PRO PER EVIDENCE WITH REGARD TO THE SOURCE OF DEPOSITS MADE. CIT(A) HAD GROSSLY OVERLOOKED THE QUANTUM ADDITION WAS MADE MAINLY AS THE GENUINENESS OF THE TRANSACTION AND AGREEMENT WAS FO UND TO BE DOUBTFUL. IT LOOKED LIKE THE WHOLE DOCUMENTS SUBMIT TED BY THE ASSESSEE ARE SHAM. 7. LD. AR SUBMITTED THAT THE ASSESSEE IS A SMALL TR ADER AND ESTIMATED THE INCOME U/S 44AF. HE SUBMITTED AND STR ESSED THAT THE DEPOSITS MADE WITH THE BANK ARE FOR SHORT DURATION OF 15-20 DAYS 4 ITA NOS. 1046 & 1047 /HYD/2013 SRI PILLI ANAND RAO AND SMT. PILLI JAYASREE (REFER PAGES 5 & 6 OF PAPER BOOK). HE SUBMITTED THA T THE ASSESSEE WAS TAKING ADVANCES FROM THE BUYERS TO BLOCK THE BO MBOOS WITH THE SELLERS. THIS IS THE MODEL OF BUSINESS OF THE ASSES SEE. HE FURTHER SUBMITTED THAT THE ADDITION WAS MADE MERELY ON DOUB T AND DISBELIEF OF THE AO. THIS MAY BE GOOD CASE FOR MAKING ADDITION U /S 69 BUT NOT MAKING PENALTY U/S 271(1)(C) OF THE ACT. 8. CONSIDERED THE SUBMISSIONS OF BOTH THE COUNSELS AND MATERIAL FACTS ON RECORD. THE FACTS ARE THE ASSESSEE IS A SM ALL TRADER DERIVED INCOME FROM BAMBOO BALLIES FOR THE AY 2003-04. HE F ILED HIS RETURN OF INCOME U/S 44AF, ESTIMATED @ 5.25% ON THE TURNOVER AND ADMITTED INCOME OF RS. 1,48,634/-. THE AO HAD CONVERTED THE CASE TO SCRUTINY AND COMPLETED THE ASSESSMENT ON 23/03/2006. SUBSEQU ENT TO FIRST ROUND OF APPEAL AND AS PER THE DIRECTION OF ITAT, T HE REASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 254 ON 30/12/2008. THE AO DETERMINED THE TOTAL INCOME AT RS. 48,94,600/-. ONL Y IN THE SECOND ROUND OF ASSESSMENT, AO RESORT TO VERIFY THE GENUIN ENESS OF THE AGREEMENT FILED BY THE ASSESSEE IN SUPPORT OF THE S HORT TERM DEPOSITS MADE. LD. AR SUBMITTED THE DETAILS OF THREE DEPOSIT S MADE AND SUBSEQUENTLY RENEWED FOR SHORT PERIOD OF 15-20. LD. AR ALSO SUBMITTED THAT THE BUSINESS MODEL OF THE ASSESSEE I S TO TAKE ADVANCE FROM THE BUYERS AND PAYS TO SELLERS ADVANCE FOR BLO CKING THE BAMBOOS. ASSESSEE WAS PARKING THE ADVANCES RECEIVED FROM THE BUYERS IN THE BANK AS SHORT TERM DEPOSITS. THIS SU BMISSION WAS MATCHING WITH THE DEPOSITS DURATION AND SUBSEQUENT WITHDRAWALS. COMING TO THE INVESTIGATION OF AO, THE AO HAD VERIF IED THE GENUINENESS OF THE DOCUMENTS FILED WITH GOVT. EXAM INER OF QUESTIONED DOCUMENTS, DIRECTORATE OF FORENSIC SCI ENCE, MOHA, HYDERABAD. THEY COULD NOT DETERMINE THE ABSOLUTE AG E PRECISELY BUT DID NOT MAKE ANY ADVERSE COMMENTS ON THE GENUINENES S OF THE AGREEMENT. THE RECORD ASPECT OF THE VERIFICATION WA S, THE AO CALLED FOR THE INVESTIGATION REPORTS FROM THE RESPECTIVE J URISDICTION AO OF THE BUYERS AND SELLERS OF THE ASSESSEE WHO HAD ENTERED INTO AGREEMENT. 5 ITA NOS. 1046 & 1047 /HYD/2013 SRI PILLI ANAND RAO AND SMT. PILLI JAYASREE THE RESPECTIVE AO COULD NOT LOCATE THE PERSONS. THI S EXERCISE WAS DONE AFTER ELAPSE OF 5 YEARS. THE REMOTE CHANCES OF POSSIBILITY THAT SUCH PERSONS MUST HAVE MOVED FROM THEIR PLACES. MOR EOVER, THE ASSESSEE HAD DISCHARGED THE ONUS OF BURDEN BY SUBMI TTING THE PARTICULARS OF THE TRANSACTION IN THE AGREEMENT, PA YMENT VOUCHER ETC. AS HELD IN THE CASE OF CIT VS. OASIS HOSPITALITIES PVT. LTD.(333 ITR 119) THAT WHEN THE ASSESSEE DISCHARGED THE INITIAL BURDEN AND COULD NOT PRODUCE THE PERSONS DUE TO SUBSTANTIAL TIME LAG , PENALTY CANNOT BE LEVIED. IN THE PRESENT CASE ALSO, THE AO HAD INI TIATED THE VERIFICATION AND INVESTIGATION OF GENUINENESS OF TH E DOCUMENT AND SUBSEQUENTLY TRIED TO LOCATE THE PERSONS WHO ARE IN VOLVED IN ENTERING INTO THE SALE/PURCHASE AGREEMENTS WITH THE ASSESSEE AFTER LAPSE OF 5 YEARS ONLY DURING RE-ASSESSMENT PROCEEDINGS. THIS I S SUBSTANTIAL TIME LAG AND THE PROBABILITY OF MOVEMENT OF PERSONS DURI NG THIS PERIOD IS TOO HIGH. 9. ON ANALYSING THIS CASE, THE ASSESSEE IS A SMALL TRADER INVOLVED IN BAMBOO BUSINESS AND FILED HIS RETURN OF INCOME B Y ESTIMATING THE INCOME U/S 44AF. THEREFORE, THE ASSESSEE IS NOT REQ UIRED TO MAINTAIN ANY BOOKS OF ACCOUNT AS PER THE PROVISIONS OF SECTI ON 44AF AND RELAXATION AVAILABLE TO THESE KIND OF ASSESSEES. HE NCE, THE ASSESSEE HAD FILED THE RETURN OF INCOME AND AO HAS NOT FOUND ANY MISTAKE OR NOT FOUND ANY DISCREPANCIES IN THE RETURN OF INCOME , IN THIS REGARD, THE CONCEALMENT OF INCOME IS RULED OUT. COMING TO T HE SUBMISSION OF INACCURATE PARTICULARS, AO HAD SENT THE NOTICE U/S 143(2) ASKING FOR INFORMATION ON THE INVESTMENT MADE BY THE ASSESSEE. ASSESSEE HAD FILED THE RELEVANT INFORMATION CALLED FOR. THE ASSE SSING OFFICER HAD ATTEMPTED TO INVESTIGATE THE GENUINENESS OF THE DOC UMENT AND PERSONS INVOLVED IN SIGNING THE AGREEMENT. THE DOCU MENTS WERE FOUND TO BE GENUINE AND THE PERSONS INVOLVED ARE NO T TRACEABLE DUE TO EFFLUX OF TIME I.E. AFTER EXPIRY OF 5 YEARS. SIN CE ASSESSEE HAD DISCHARGED THE INITIAL BURDEN OF PROOF AND CONSIDER ING THE SUBSTANTIAL TIME LAG, WE ARE INCLINED TO ADJUDICATE THE ISSUE I N ASSESSEES FAVOUR 6 ITA NOS. 1046 & 1047 /HYD/2013 SRI PILLI ANAND RAO AND SMT. PILLI JAYASREE AS THIS CASE IS NOT A FIT CASE TO LEVY PENALTY U/ S 271(1)(C) OF THE ACT. ACCORDINGLY, THE PENALTY IS DELETED AND GROUNDS RA ISED BY THE REVENUE ARE DISMISSED. 10. SINCE THE FACTS AND GROUNDS RAISED IN ITA NO. 1 047/HYD/13 ARE MATERIALLY IDENTICAL TO THAT OF ITA NO. 1046/HYD/13 , FOLLOWING THE DECISION TAKEN THEREIN, WE DELETE THE PENALTY IN TH IS APPEAL ALSO AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 11. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 8 TH JUNE, 2016. SD/- SD/- (D. MANMOHAN) (S. RIFAUR RAHMAN) VICE PRESIDENT AC COUNTANT MEMBER HYDERABAD, DATED: 8 TH JUNE, 2016 KV COPY TO:- 1) ACIT, CIRCLE 5(1), 6 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2) SRI PILLI ANAND RAO, 5-5-540, MALAKUNTA ROAD, H YDERABAD. 3) SMT. PILLI JAYASHREE, 5-5-540, MALAKUNTA ROAD, H YDERABAD. 3) CIT(A) V, HYDERABAD 4) CIT - IV, HYD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 7 ITA NOS. 1046 & 1047 /HYD/2013 SRI PILLI ANAND RAO AND SMT. PILLI JAYASREE 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER