Sri Pradeep Kumar Agarwal, Hyderabad V. ACIT, Central Circle-6, Hyderabad

ITA 1094/HYD/2013

• Counselvise Citation: 109422514 RSA 2013
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 25-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Unexplained investment; Unexplained expenditure; Search and seizure; Salary income
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1092/HYD/13 : ASSESSMENT YEAR 2002 - 03 ITA NO.1093/HYD/13 : ASSESSMENT YEAR 2004 - 05 ITA NO.1094/HYD/13 : ASSESSMENT YEAR 2005 - 06 ITA NO.1095/HYD/13 : ASSESSMENT YEAR 2006 - 07 ITA NO.1096/HYD/13 : ASSESSMENT YEAR 2007 - 08 ITA NO.1158/HYD/13 : ASSESSMENT YEAR 2008 - 09 ITA NO.1097/HYD/13 : ASSESSMENT YEAR 2009 - 10 SHRI PRADEEP KUMAR AGARWAL, HYDERABAD ( PAN - ABAPA 0114 C) V/S. ASST. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE 6, HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.A. SAI PRASAD REVENUE BY : SHRI SOLGY JOSE T.KOTTARAM DR DATE OF HEARING 0 9 .0 7 .2014 DATE OF PRONOUNCEMENT 13.08.2014 O R D E R PER BENCH : THE RE ARE SEVEN APPEALS IN THIS BUNCH. THEY ARE ALL DIRECTED AGAINST A COMMON CONSOLIDATED ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) I, HYDERABAD DATED 16.4.2013, PASSED IN THE CONTEXT OF ASSESSMENT S MADE UNDER S.143(3) READ WITH S.153A FOR THE ASSES SMENT YEARS 2003 - 04 TO 2008 - 09 AND UNDER S.143(3) FOR ASSESSMENT YEAR 2009 - 10. SINCE COMMON ISSUES ARE INVOLVED, THESE APPEALS ARE BEING DISPOSED OF WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E IS AN INDIVIDUAL, DERIVING INCOME FROM SALARY, BESIDES EARNING COMMISSION FROM PE A RLS BUSINESS. A SEARCH AND SEIZURE OP E RATION WAS CON D UCTED IN THE ASSESSEES CASE AT HIS RESIDENCE ON 29.4.2008. SUBSEQUENTLY, A NOTICE U/S. 153A WAS ISSUED CALLING ITA NO. 1 092 /HYD/201 3 & SIX OTHERS SHRI PRADEEP KUMAR AGARWAL , HYDERABAD 2 FOR THE RETURNS FOR THE ASSESSMENT YEARS 2003 - 04 TO 2008 - 09 ON 20.10.2008. PARTICULARS OF INCOME SHOWN IN TH E ORIGINAL RETURNS AND IN THE R E TURNS FILED IN RESPONSE TO NOTICE UNDER S.153A, ARE TABULATED BELOW - ASSESSMENT YEAR DATE OF FILING ORIGINAL RETURN INCOME AS PER ORIGINAL RETURN RS. INCOM E SHOWN IN RETURN FILED IN R E SPO N SE TO NOTICE UNDER S.153A OF THE ACT. RS. 2003 - 04 31.03.2004 1,27,750 1,27,750 2004 - 05 31.3.2005 1,74,680 1,74,680 2005 - 06 31.3.2006 1,74,870 1,74,870 2006 - 07 31.3.2007 2,05.070 4,05,070 2007 - 08 31.3.2008 2,70,430 5,70,430 2008 - 09 - - 3,79,540 3 . A SSESSMENTS WERE COMPLETED UNDER S.143(3) READ WITH S.153A FOR THE ASSESSMENT YEAR S 2003 - 04 TO 2008 - 09 AND UNDER S.143(3) FOR THE ASSESSMENT YEARS 2009 - 10. IN THE COURSE OF ASSESSMENTS THUS COMPLETED FOR ASSESSMENT YEARS 2003 - 04 TO 2008 - 09 , THE ASSESSING OFFICER NO T ICED THAT THE ASSESSEE WAS ENGAGED IN THE BU S IN E SS O F ARRANGING PU R CHA S E AND SALE OF PEARLS AND PRECOCIOUS STONES ON COMMISSION BASIS, AND HIS PASSPORT REVEALED THAT HE MADE NUMEROUS VISITS TO CHINA AND H ONGKONG. AS PER THE STATEMENT OF THE ASSESSEE RECORDED ON 15.5.2008, ASSESSEE HAD VISITED CHINA AND HONGKONG ABOUT 5 TO 6 TIMES IN A YEAR FOR AND ON BEHALF O F S O M E COMPANIES BASED IN MUMBAI AND JAIPUR, WHICH ARE TRADING IN PEARLS, GEMS, PRECIOUS AND S EMI - PRECIOUS STON E S, ETC. FOR THE PU R PO S E O F SELECTING ITEMS AS PER THEIR REQUIREMENT. IT WAS ALSO STATED BY THE ASSESSEE THAT THOSE COMPANIES WERE PAYING THE ASSESSEE NOT ONLY COMMISSION TH E REON BUT WERE ALSO BEARING THE EXPENSES IN CONNECTION WITH HIS VISITS. HE ALSO STATED THAT HE WOULD FURNI SH DETAILS OF SUCH COMPANIES AFTER SOME TIME TO SUBSTANTIATE SUCH CLAIM. ASSESSEE FURNISHED NO SUCH DETAILS, BUT MADE WRITTEN SUBMISSIONS BEFORE THE ASSESSING OFFICER, WHEREIN IT WAS ONLY STA T ED THAT BUSINESS FIRMS OF J AIPUR HAD SENT HIM TO CHINA FOR PRO CURING PE A RLS AND THE TOTAL TRAVEL EXPENDITURE BOOK E D ITA NO. 1 092 /HYD/201 3 & SIX OTHERS SHRI PRADEEP KUMAR AGARWAL , HYDERABAD 3 BY THOSE CONCERNS CAME TO AROUND RS.25,000 TO R S .40,000 AND THAT HE WAS PAID COMMISSION ONE E ACH VISIT. IT WAS ALSO STATED THAT HE HAD ALSO PARTICIPATED IN SOME PEARL EXHIBITIONS. 4 . FROM THE PASSPORT OF THE ASSESSEE, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD VISITED CHINA, HONGKONG AND BANG K OK ON FIVE OCCASIONS IN THE FINANCIAL YEAR 2003 - 04. DURING THE COU R SE OF ASSESSMENT PROCE E DIN G S, ASSESSEE WAS REQUIRED TO FURNISH DETA ILS OF EXPENSES INCURRED FOR THE FOREIGN TRAVE L , SOURCES FOR THE SAME, TRAVEL TICKETS, ALON G WITH HIS BANK STATEM E NTS. IN RESPONSE , THE ASSESSEE REI T ERATED THE CONTENTION BEFORE THE INVESTIGATION WING AND ALSO FIL E D COPIES OF LED G ER ACCOUNT OF CUSTOMERS ON WHOSE BEHALF VISITS WERE CLAIMED AS MADE. IT WAS NOTICED THAT THE LEDGER ACCOUNTS FURNISHED BY THE ASSESSEE WERE FROM M/S. GANESH NARAYAN & CO, A PROPRIETARY CONCERN OF THE ASSESSEES WIFE AND PERTAINED TO ASSESSMENT YEAR S 2007 - 08 AND 2009 - 10. A S PER TH E LEDGER FOR ASSESSMENT YEAR 2008 - 09, ALLOWANCE OF IMPORT WITH NARRATION BEING AMOUNT CASH PAID TO PRADEEP KUMAR TOWARDS ALLOWANCE AGAINST IMPORT WAS GIVEN AND THIS WAS A JOURNAL ENTRY CRE D ITING THE ASSESSEES ACCOUNT WITH RS.40,000 ON EACH OCCASION. THE TOTAL OF CREDITS BY JOURNAL EN T RY WAS OF R S .2,40,000 AND THE AMOUNT ACTUALLY PAID TO HIM WAS RS.85,000, WHILE RS.1,55,000 WERE PAYABLE. THE ASSESSING OFFICER FOUND THAT THE BALANCE OF R S .1,55,000, HO W E V ER, HAD NOT BEEN SHOWN AS A LIABILITY OF BY M /S. GANESH NARAYAN & CO. LIKEWISE, IN THE L EDGER FOR THE ASSESSMENT YEAR 2007 - 08 GIVEN FOR BROKERAGE, COMMISSION, TRAVEL EXPENSES ETC. THE ASSESSING OFFICER NOTED, ENTRIES WERE NO T VERI FI ABLE SINCE THOSE EXPENSES WERE NO T SEPAR A TELY CLAI M ED BY THE ASSESSEE. THAT APART, ASSESSEE SUBMITTED ANOTHER LEDGER FROM THE BOOKS OF THE SAME CONCERN SHOWING ALLOWANCE OF IMPORT AT R S .2,40,000 BUT THE PAYMENT OF RS .85,000 SHOWN IN THE E AR LIER LEDGER WAS MISSING THEREIN AND THE TOTAL AMOUNT OF RS .2,40,000 WAS SHOWN AS THE C LOSING BALANCE. 5 . THE ASSESSING OFFICER OPINED THAT EXCEPT FOR THE ABOVE SELF SERVING AND CONTRADICTING LEDGERS OF M/S. GANESH NARAYAN CO., THE ASSESSEE COULD NO T FURNISH ANY NAME/ADDRESS OF ANY OTHER FIRM ON WHOSE BEHALF COMMISSION ITA NO. 1 092 /HYD/201 3 & SIX OTHERS SHRI PRADEEP KUMAR AGARWAL , HYDERABAD 4 BU S IN E SS IN PEARLS WAS CL A IM E D AS DON E AND FOREIGN TRAVELS WERE CLAIMED AS UN D ERTAKEN. 6 . ASSESSEE FURTHER CLAIMED BEFORE THE ASSESSING OFFICER THAT HE HAD ADMITTED GROSS COMMISSION OF R S .8,24,984 FOR THE ASSESSMENT YEAR 2007 - 08 AND NET INCOME OF R S .2,44,3386 HAD BEEN O FFERED TO TAX AFTER DEDUCTING EXPENDITURE OF R S .5,80,598 TOWARDS FOREIGN TRAVEL AND INCIDENTAL EXPENDITURE . SINCE NO BREAK UP OF SUCH EXPENDITURE COULD BE FURNISHED, THOUGH CALLED FOR SP EC IFICALLY, THE ASSESSING OFFICER OPINED THAT IN THE ABSENCE O F ANY SUB STANTIATING MATERIAL IN SUPPORT OF THE EXPENDITURE CL A IM E D OR THE BASIS FOR THE ESTIM A TED COMMISSION, THE ASSESSEE COULD NO T HAVE B E EN CONSIDERED AS HAVING DISCHARGED THE ONUS OF EXPLAININ G TH E SOU R CES AND SUB S TANTIATING THE EXPENDITURE . 7 . DEALING WITH THE CLAIM O F TH E ASSESSEE THAT FOREIGN TRAVEL EXPENDITURE WERE BORNE BY TH E CU S TOM E RS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD ADMITTED ADDITIONAL INCOME OF R S .2 LAKHS AND RS.3 LAKH S FOR THE ASSESSMENT YEAR 2006 - 07 AND 2007 - 08 RESPECTIVELY I N THE COU R SE OF SEA R CH TO COVER UP THE DEFICIENCIES IN TH E COMMISSION INCOME, IN C LU D IN G TH E RELATED EXPENDITURE. HE FELT THAT THOUGH SUCH CLAIM O F THE ASSESSEE WAS ACCEPTABLE AS ADMISSION OF ADDITIONAL INCOME TOWARDS COMMI S SION FOR SOME YEARS , THE SAME C OULD NOT TAKE CARE OF THE SOU R CES TO SUBSTANTIATE THE CLAIMS MADE FOR EARLIER OR O T H E R YEARS. IN T H E ABSENCE OF ANY CORROBORATIVE EVID E NCE THER E F O RE, THE ASSESSING OFFICER PROCEEDED TO ESTIM A TE THE EXPENDITURE INCURRED BY THE ASSESSEE ON EACH SUCH FOR E I G N VISIT. HE NO T ED THAT THE NUMB E R OF FOREIGN VISITS MADE IN TH E ASSESSMENT YEAR 2004 - 05 WERE SIX. CON S I D ERIN G TH E COUN T RIES VISITED AND THE NUMBER OF DAYS SPENT BY HIM OUTSIDE I NDIA, THE TOTAL EXPENDITURE ON TR A VEL AND INCIDENTAL EXPENDITURE WERE ESTIMATED AT, BASED ON TH E ACTUAL RATES F O R TICKETS AT THE RELEVANT TIME AND THE UNEXPLAINED EXPENDITURE ON FOREIGN TR A VEL FOR THE ASSESSMENT YEAR 2004 - 05 WAS ESTIM A TED AT R S .6,47,000 . THE ASSESSING OFFICER ACCORDINGLY COMPLETED THE ASSESSMENT , MAKING A DDITION OF SUCH AMOUNT FOR THE ASSESSMENT YEAR 2004 - 05 . ITA NO. 1 092 /HYD/201 3 & SIX OTHERS SHRI PRADEEP KUMAR AGARWAL , HYDERABAD 5 8 . LIKEWISE FOR THE ASSESSMENT YEARS 2003 - 04, 2005 - 06 TO 2009 - 10, THE UNEXPLAINED EXPENDITURE WAS ESTIMATED AT RS.5,19,000, RS.7,79,000, RS.6,99,000, RS.7,67,29000 AND RS.7,00,000 RESPECTIVELY, AFT ER CONSIDERING THE NUMBER OF VISITS, COUNTRIES VISITED, DAYS SPENT OUTSIDE INDIA IN THE RESPECTIVE YEARS. 9 . ON APPEAL, THE CIT(A) , IN THE FIRST PLACE FOUND NO MERIT IN THE CONTENTION OF THE AUTHORISED REPRESENTATIVE THAT NOTWITHSTANDING THE ABSENCE OF INCRIMINATING MATERIAL OR DEFICIENCIES OR INACCURACIES IN THE BOOKS OF ACCOUNT FOUND AT THE TIME OF SEARCH, THE ASSESSEE, VOLUNTEERED TO DECLARE ADDITIONAL INCOME OF R S .5,00,000 IN ORDER TO BUY PEACE FOR ASSESSMENT YEARS 2007 - 08 AND 2006 - 07, AND AS SU CH, THERE WAS NO SCOPE FOR ANY ADDITION OR IMPUGNED ASSESSMENTS MADE FOR THE YEARS UNDER CONSIDERATION, AFTER COMPLETION OF ASSESSMENTS ORIGINALLY UNDER S.143(3) OR 143(1) OF THE ACT. HE FURTHER OPINED T HAT THE ASSESSING OFFICER REASONABLY CONCLUDED THAT A LARGE PART OF EXPENDITURE ON FOREIGN TRIPS WAS MET, NOT BY THE CUSTOMERS AS CLAIMED, BUT BY THE ASSESSEE HIMSELF OUT OF UNEXPLAINED SOURCES. AS FOR ESTIMATION OF F ARE COMPONENT IN THE ESTIMATED EXPENDITURE, HE FOUND NO JUSTIFICATION TO INTERFERE WITH T HE VIEW TAKEN BY THE ASSESSING OFFICER, SINCE HE HAS ADOPTED THE SAME AS PER THE TARIFF PREVAILING AT THE RELEVANT TIME. HE HOWEVER, FOUND THE INCIDENTAL EXPENDITURE ESTIMATED BY THE ASSESSING OFFICER TO BE SLIGHTLY ON A HIGHER SIDE. HE ESTIMATED THE IN CIDENTAL EXPENDITURE AT R S .4,000 PER DAY FOR ASSESSMENT YEARS 2003 - 04 TO 2005 - 06; AT RS.5,000 PER DAY FOR ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 AND AT R S .6,000 PER DAY FOR ASSESSMENT YEARS 2008 - 09, AND ACCORDINGLY, GAVE A RELIEF OF R S .33,000 FOR ASSESSME NT YEAR 2003 - 04; R S .93,000 FOR ASSESSMENT YEAR 2004 - 05, RS.1,77,000 FOR ASSESSMENT YEAR 2005 - 06, R S .70 - ,000 FOR ASSESSMENT YEAR 2006 - 07; RS.1,45,000 FOR ASSESSMENT YEAR 2007 - 08; RS.96,000 FOR ASSESSMENT YEAR 2008 - 09 AND R S .6,000 FOR ASSESSMENT YEAR 2009 - 10. ITA NO. 1 092 /HYD/201 3 & SIX OTHERS SHRI PRADEEP KUMAR AGARWAL , HYDERABAD 6 10 . STILL AGGRIEVED, ASSESSEE PREFERRED THE PRESENT APPEALS BEFORE US ON THIS ISSUE. 1 1 . THE LEARNED COUNSEL FOR THE ASSESSEE, REITERATING THE CONTENTION S URGED BEFORE THE REVENUE AUTHORITIES SUBMITTED THAT SINCE TH E ASSESSEE HAS OFFERED THE NET INCOME FOR ASSESSMENT ON ESTIMATE BASIS, TAKING INTO ACCOUNT ALL THE EXPENDITURE INCURRED ON FOREIGN TRIPS, THERE IS NO SCOPE FOR ANY ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN FOREIGN TRIPS. HE FURTHER SUBMITTED T HAT IN THE ABSENCE O F ANY INCRIMINATING MATE R IAL FOUND DURING THE COURSE OF SEARCH, NO ESTIMATED ADDITION CAN BE MADE IN AN ASSESSMENT MADE IN T E RMS OF S.153A OF THE ACT. THOUGH THE LEARNED CIT(A) IN THE IMPUGNED ORDER HAS RELIED ON THE DECISION OF THE DELHI HIGH COU R T IN THE CASE OF CIT VS/.S ANIL KUMAR BHATIA(352 ITR 493) WHILE REJ E CTING THE ABOVE CONTENTION, THE SAID DECISION IS NO T ON THE POINT IN DISPUTE IN THI S APPEAL, AND HEN C E THAT DECISION HAS NO APPLI C ATION TO THE FACTS OF THE PRESENT CASES. 1 2 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE CONTRARY, STRONGLY SUPPORTED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE FIRST APPELLATE AUTHORITY HAVING ALREADY GIVEN REASONABLE RELIEF TO THE ASSESSEE, THE PRESENT APPEALS OF THE ASSESSEE ARE LIABLE TO BE DISMISSED. 1 3 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES, AND OTHER MATERIAL AVAILABLE ON RECORD. WE DO NOT FIND MERIT IN THE LEGAL OBJECTIONS OF THE ASSESSEE WITH REGARD TO PERMISSIBILITY OF ESTIMAT ED ADDITIONS MADE ON ACCOUNT OF EXPENDITURE INCURRED BY THE ASSESSEE ON FOREIGN TRAVELS OUT OF UNEXPLAINED SOURCES, WHILE COMPLETING THE ASSESSMENT IN TERMS OF S.153A OF THE ACT. THE HONBLE DELHI HIGH COURT IN THE CA S E OF ANIL KUMAR BHATIA (SUPRA) CLEARL Y HELD THAT DETERMINATION OF INCOME IN THE O R DERS PASSED IN TERMS OF S.153 A WOULD B E SIMILAR TO THE ORDERS PASSED IN ANY RE - ASSESSMENT, WHERE THE TOTAL INCOME D E TERMIN E D IN THE ORIGINAL ASSESSMENT ORDER AND THE INCOME THAT ESCAPED ARE CLUBBED TOGETHER AND ASSESSED AS TOTAL INCOME. THERE IS NO MERIT IN THE POINTS OF DISTINCTION PLEADED ITA NO. 1 092 /HYD/201 3 & SIX OTHERS SHRI PRADEEP KUMAR AGARWAL , HYDERABAD 7 BY THE LEARNED COUNSEL FOR THE ASSESSEE, AND THIS DECISION CLEARLY APPLIES TO THE FACTS OF THIS CASE. AS FOR THE QUANTUM OF ADDITIONS SUSTAINED BY THE CIT(A), WE FIND THAT AS FOR THE AIR - FARES, SINCE THE SAME ARE BASED ON THE FARES OF THE RELEVANT TIME, THE CIT(A) FOUND NO JUSTIFICATION TO TINKER WITH THE ADDITIONS MADE BY THE ASSESSING OFFICER ON THAT COUNT. AS FOR THE ADDITIONS MADE TOWARDS D A ILY EXPENSES INCURRED ON THE DAYS SPENT OUT OF INDIA, FINDING THE EXPENDITURE PER DAY ES T IMATED BY THE ASSESSING OFFICER, TO BE ON HIGHER SIDE, THE CIT(A) REDUCED THE RATES ADOPTED BY THE ASSESSING OFFICER, AND GAVE APPROPRIATE RELIEF. WE FIND THAT THE RELIEFS GRANTED BY THE CIT(A) FOR THE YEARS UNDER APPEAL IS QUITE REASONABLE, AND THERE IS NO JUSTIFICATION FOR ANY FURTHER RELIEF FROM OUT OF THE ADDITIONS SUSTAINED BY THE CIT(A) ON ACCOUNT OF DAILY EXPENDITURE INCURRED BY THE ASSESSEE FOR THE DAYS SPENT ABROAD IN EACH OF THESE YEARS . WE ACCORDINGLY UPHOLD THE ORDERS OF THE CIT(A) ON THIS ISSUE, AND THE GROUNDS OF THE ASSESSEE IN THESE APPEALS, ON THE ISSUE OF UNEXPLAINED EXPENDITURE INCURRED ON FOREIGN TRIPS IN THE YEARS UNDER APPEAL, BEING DEVOID OF MERIT, ARE REJECTED. 1 4 . TH E RE IS ONE MORE ISSUE IN THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2008 - 09, VIZ. ITA 1158/ H YD/2013, WHEREIN THE GRIEVANCE OF THE ASSESSEE RELATES TO AN ADDITION OF R S .74,22,385 MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PROPERTY . 1 5 . FACTS IN BRIEF ARE THAT IT WAS NOTICED THAT THE BUILDING AT 21 - 3 - 75, CHELAPURA, HYDERABAD, WHE R E THE ASSESSEE H A D BEEN RESIDING BELONGED TO HI S MO T H E R. INVE S TMENT IN TH E CON S TRUCTION OF THE SAID HOU S E WAS REFLECTED IN TH E RETURN OF HI S MOTHER, WHO WAS RESIDING AND B E IN G ASSESSED AT JAIPUR. IT WAS OB S ERVED THAT THE LAND WHEREUPON THE SAID BUILDING WAS CONSTRUCTED ADMEASURED 438 SQ. YARDS AND HAD A TOTAL BUILT UP AREA OF 10958 SQ. FT. ON BEIN G REQUIRED TO FURNISH THE PARTICULARS OF IN COME AND THE ADMITTED COST OF CON S TRU C T I ON, IT WAS EXPLAINED BY THE ASSESSEE HAT HIS MOTHER HAD ADMITTED THE COST OF CONSTRUCTION AT R S .15,66,615, EXCLUDING COST OF LAND OF R S .11 LAKHS. SIN C E THE VALUE OF THE BUILDING SHOWN IN THE RETURN WAS VERY LOW, TH E MATTER ITA NO. 1 092 /HYD/201 3 & SIX OTHERS SHRI PRADEEP KUMAR AGARWAL , HYDERABAD 8 OF VALUATION AS REFERRED TO VALUATION CELL, WHICH VALUED THE SAME AT R S .89,89,000. THE ASSESSING OFFICER FURTHER NOTICED HAT DURING THE COURSE O F SEARCH, CERTAIN BILLS/DELIVERY CHALLANS STANDING IN THE NAME OF THE ASSESSEE W E RE FOUND, WHICH INDI C A TED T H A T THE ASSESSEE H A D INVESTED IN TH E CON S TRUC T ION OF THE SAID HOUSE. TAKING CUE FROM THE DELIVERY CHALLANS STANDING IN THE NAME OF TH E ASSESSEE , IN TH E COU R SE OF ASSESSMENT PROC E EDIN G S, THE ASSESSEE WAS REQUIRED TO FURNISH DE T AILS OF INVESTMENT MADE IN CON S TRUC T ION OF THE SAID HOU S E. ASSESSEE, IN RESPONSE REITERATED T H A T THE LAND BELONGED TO HI S MOTHER, RESIDING AT J AIPUR AND THAT THE CON S TRUC T ION WAS CARRIED OUT OF TH E FUN D S OF HIS MOTH E R. HE CLAIMED T H A T HE HAD ONLY SUPERVISED THE CON S TRUC T ION ACTIVITY, AND THEREFORE, CERTAIN BILLS/VOUCH E RS MIGHT HAVE BEEN WRITTEN IN HIS NAME. THE ASSESSING OFFICER, HOWEVER, WAS NO T SATISFIED WITH THE EXPLANATION O F THE ASSESSEE. HE OB S ERVED T H A T EVEN I F THE VERSION OF THE ASSESSEE WAS ACCEPTED, THERE WAS STI LL UNEXPLAINED IN VE STMENT IN TH E CON S TRUC T ION OF TH E HOU S E TO THE EXTENT OF R S .74,22,385 (RS.88,89,000 15,66,615), BEING THE DIFFER E NCE BETWEEN THE VALUE AS PER THE V A LUER AND THE IN VE STMENT ADMITTED BY THE ASSESSEES MOTHER IN HER BALANCE SHEET. TH E AS SESSING OFFICER ACCORDINGLY CON C LU D ED THAT SUCH DIFFE RE NCE HAS TO BE CON S I D ERED FOR ASSESSMENT AS UN E XPLAIN E D IN V ESTMENT. SIN C E THE TITLE OVER THE PROPERTY STOOD IN THE NAME OF THE MO T H E R O F THE ASSESSEE, AND CERTAIN EVIDENCES INDICATED T H A T THE ASSESSEE HAD INCURRED CERTAIN EXPENDITURE IN TH E CON S TRUC T ION OF THE SAID HOUSE, THE UNEXPLAINED INVESTMENT OF R S .74,22,385 WAS CONSIDERED IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS. 1 6 . ON APPEAL, THE CIT(A) HELD IN THE FIRST PL A CE THAT IN TH E ABSENCE O F ANY EVIDENCE THAT THE UN E XPLAINED INCOME UNDER CONSIDERATION HAS BEEN ASSESSE D T O TAX ON A SUBSTANTIVE BASIS IN THE H A NDS OF ANY OTHER PERSON, THE ADDITION MADE IN THE HANDS OF THE ASSESSEE CANNOT B E CON S I D ERED AS A PROTECTIVE ASSESSMENT, BUT HAS TO B E CON S I D ERED AS S UBSTANTIVE ADDITION ONLY AND DEALT WITH ACCORDINGLY. FOR THIS REASON AND ALSO LOOKING TO THE FACTUAL ASPECTS OF THE MATTER, INCLUDING THE FACT THAT THE PROPERTY WAS UNDER EXCLUSIVE POSSESSION AND ENJOYMENT OF THE ASSESSEE, NOTWITHSTANDI NG THE FACT THAT THE ITA NO. 1 092 /HYD/201 3 & SIX OTHERS SHRI PRADEEP KUMAR AGARWAL , HYDERABAD 9 PROPERTY STOOD IN THE NAME OF HIS MOTHER, HELD THAT THE ADDITION MADE IN THIS BEHALF HAS TO BE TREATED AS SUBSTANTIVE. 1 7 . AGGRI E VED, ASSESSEE IS IN SECOND APPEAL BEFORE US ON THIS ISSUE. 1 8 . THE LEARNED COUNSEL FOR THE ASSESSEE, REITERATING THE CONTENTIONS URGED BEFORE THE REVENUE AUTHORITIES, SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN TREATING THE PROTECTIVE ADDITION MADE IN THE HANDS OF THE ASSESSEE, AS A SUBSTANTIVE ONE. ON THE MERITS OF THE MATTER, HE SUBMITTED THAT THE PROPERTY IN QUESTION STANDS IN THE NAME OF THE MOTHER OF THE ASSESSEE, AND AS SUCH, ANY ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE CONSTRUCTION OF THE PROPERTY HAS TO BE CONSIDERED IN THE FIRST PLACE IN THE ASSESSMENT OF THE OWNER, I.E. ASSESSEE S MOTHER. MERELY BECAUSE THE ASSESSEE IS IN POSSESSION OR ENJOYMENT OF THE PROPERTY, OR SOME OF THE BILLS FOR MATERIAL, ETC. WERE IN ASSESSEES NAME, IT CANNOT BE CONCLUDED THAT THE UNEXPLAINED INVESTMENT HAS TO BE ASSESSED IN THE HANDS OF THE ASSESSEE. IN THE CIRCUMSTANCES, IT WAS SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN C ONV E RTING THE ADDITION MADE ON PROTECTIVE BASIS INTO SUBSTANTIVE ONE, FIRSTLY WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSEE TO SUBMIT HIS OBJ E CTION S , AND SECONDLY, WITHOUT ESTA B LISHING THE F A CT THAT THE AMOUNTS WERE SP E NT BY THE ASSESSEE HIMSELF. BY WAY OF ADDITIONAL GROUND, I T HAS ALSO BEEN URGED THAT THE ASSESSEE, IN THE APPEAL BEFORE THE CIT(A) HAS RAISED A GROUND TO THE EFFECT THAT BEFORE FIXING THE Q UANTUM O F UNEXPLAINED INVESTMENT, THE ASSESSEE WAS NO T G I V EN ANY OPPORTUNITY. 1 9 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE CONTRARY, STRONGLY SUPPORTED THE ORDER OF THE CIT(A), AND SUBMITTED THAT THE GROUNDS OF THE ASSESSEE, BEING DEVOID OF MERITS, SHOU LD BE REJECTED. 20 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE IMPUGNED ORDERS OF THE REVENUE AUTHO R ITI E S AND OTHER MATERIAL AVAILABLE ON RECORD. IT IS AN UNDISPUTED FACT THAT THE LAND ON WHICH BUILDING WAS ITA NO. 1 092 /HYD/201 3 & SIX OTHERS SHRI PRADEEP KUMAR AGARWAL , HYDERABAD 10 CONSTRUCTED, WAS IN THE NAME O F ASSESSEES MOTHER . IT IS FOR THIS REASON THAT THE ASSESSING OFFICER HAS MADE ONLY PROTECTIVE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE CONTRITION OF THE BUILDING, IN THE HANDS OF THE ASSESSEE. OBSERVING THAT THERE IS NO EVIDENCE AS TO THE P ERSON IN WHOSE HANDS THE UNEXPLAINED INVESTMENT WAS ASSESSED ON SUBSTANTIVE BASIS, THE CIT(A) TREATED THE PROTECTIVE ADDITION MADE IN THE HANDS OF THE ASSESSEE, AS A SUBSTANTIVE ONE. WE ARE NOT IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A) IN THIS BEHAL F. IT IS SETTLED PRINCIPLE OF LAW THAT ANY INCOME HAS TO BE ASSESSED IN THE HANDS OF RIGHT PERSON. SINCE THE LAND ON WHICH THE BUILDING WAS CONSTRUCTED AS IN THE NAME OF ASSESSEES MOTHER, RIGHT PERSON TO BE ASSESSED IN RESPECT OF UNEXPLAINED INVESTMENT I N THE CONSTRUCTION, WAS ASSESSEES MOTHER AND NOT THE ASSESSEE, AND IT ON THIS GROUND ONLY THAT THE ASSESSING OFFICER, HAS MADE ONLY PROTECTIVE ADDITION IN THE ASSESSMENT OF THE ASSESSEE. UNLESS FATE OF THE ASSESSMENT OF THE PERSON, IN WHOSE HANDS, SUBSTA NTIVE ADDITION IS DUE IS DECIDED, THERE IS NO WARRANT TO TINKER WITH THE PROTECTIVE NATURE OF THE ADDITION MADE. THE PROTECTIVE ADDITION MADE BECOMES SUBSTANTIVE ONE, ONLY IF, IN THE CASE OF THE PERSON, IN WHOSE HANDS SUBSTANTIVE ADDITION WAS TO BE MADE, I T WAS FOUND THAT THAT PERSON WAS NOT THE RIGHT PERSON TO BE ASSESSED IN RESPECT OF SUCH INVESTMENT , AND THE PERSON, IN WHOSE HANDS PROTECTIVE ADDITION HAS BEEN MADE, IS THE RIGHT PERSON TO BE ASSESSED IN RESPECT OF SUCH INVESTMENT. FURTHER, MERELY BECAUSE THE ASSESSEE IS IN EXCLUSIVE POSSESSION AND ENJOYMENT OF THE PROPERTY, IT CANNOT BE SAID THAT HE IS THE PERSON IN WHOSE HANDS SUBSTANTIVE ADDITION IS DUE. EVEN THE OTHER FACTS, SUCH AS, BILLS FOR MATERIAL, ETC. ARE IN THE NAME OF THE ASSESSEE, DO NOT CLINC H THE ISSUE, AGAINST THE ASSESSEE, BECAUSE ASSESSEES MOTHER BEING A LADY, AND MAY BE EVEN AGED AND NOT STAYING LOCALLY , IT IS QUITE POSSIBLE THAT THE ASSESSEE HAS PLAYED KEY ROLE IN THE CONSTRUCTION OF THE PROPERTY, ON BEHALF OF HIS MOTHER. FURTHER, ON PURCHASE BILLS AND OTHER PAPERS, OFTEN, FOR THE CONVENIENCE OF DELIVERY OF MATERIAL, EASY IDENTIFICATION ETC., INSTEAD OF EXPOSING THE WOMAN, NAMES OF HEAD OF FAMILY OR OTHER PROMINENT MALE MEMBERS OF THE FAMILY ARE MENTIONED. IN ANY EVENT, REVENUE HA S NOT BROUGHT ON RECORD ANY CLINCHING EVIDENCE, TO CONCLUDE THAT THE UNEXPLAINED ITA NO. 1 092 /HYD/201 3 & SIX OTHERS SHRI PRADEEP KUMAR AGARWAL , HYDERABAD 11 INVESTMENT HAS INDEED BEEN MADE BY THE ASSESSEE ONLY. FOR ALL THESE REASONS, WE DO NOT AGREE WITH THE VIEW TAKEN BY THE CIT(A), IN TREATING THE ADDITION MADE ON PROTECTIVE B ASIS BY THE ASSESSING OFFICER, INTO A SUBSTANTIVE ONE AND IN CONFIRMING THE SAME. IF AT ALL, ANY ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IS WARRANTED, IT WOULD LIE IN THE ASSESSMENT OF ASSESSEES MOTHER, WHO IS THE ACTUAL OWNER OF THE LAND AND THE C ONSTRUCTED PROPERTY, AND NOT IN THE HANDS OF THE ASSESSEE. WE ACCORDINGLY ALLOW THE GROUNDS OF THE ASSESSEE ON THIS ISSUE, IN HIS APPEAL FOR ASSESSMENT YEAR 2008 - 09. 2 1 . IN THE RESULT, ASSESSEES APPEAL FOR ASSESSMENT YEAR 2008 - 09, VIZ. ITA NO.1158/HYD /2013 IS PARTLY ALLOWED. ALL OTHER APPEALS ARE DISMISSED. O RDER PRONOUNCED IN THE COURT ON 13 TH AUGUST, 2014 SD/ - SD/ - ( B.RAMAKOTAIAH ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 13 TH AUGUST , 2014 COPY FORWARDED TO: 1. SHRI PRADEEP KUMAR AGARWAL, C/O. CH.PARTHASARATHY & CO., 1 - 1 - 2098/2/B/3, 1ST FLOOR, SOWBHAGYA AVENUE, STREET NO.1, ASHOKNAGAR, HYDERABAD 500 020. 2 . ASST. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE 6 , HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) I HYDERABAD 4. COMMISSIONER OF INCOME - TAX, CENTRAL, HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S