ITO Ward -1, Adilabad V. Sri B Bhaskar Reddy, Adilabad

ITA 1117/HYD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53629 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 09-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: A V RAGHURAM
• Keywords: Search and seizure; Principle of natural justice
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, AM AND SMT. ASHA VIJAYARAGHAVAN, JM ITA NO.1117/HYD/2011 ASSESSMENT YEAR 2005-06 THE ITO, WARD NO. 1, MANCHERIAL-504 208 VS SRI B. BHASKAR REDDY MANCHERIAL PAN: AAGHB3276H APPELLANT RESPONDENT APPELLANT BY: SMT. NIVEDITA BISWAS RESPONDENT BY: SHRI A.V. RAGHURAM DATE OF HEARING: 1 5 .9.2011 DATE OF PRONOUNCEMENT: 29.9.2011 ORDER PER ASHA VIJAYARAGHAVAN, JM THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER PASSED BY THE CIT(A)-VI, HYDERABAD DATED 15.3.2011 AND PERTAINS TO ASSESSMENT YEAR 2005-06. 2. FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPE RATION U/S. 132A OF INCOME-TAX ACT, 1961 WAS CONDUCTED ON THE PREMISES M/S. DECCAN GRAMEENA BANK, FORMERLY KNOWN AS M/S. SRI SARASWATI GRAMEENA BANK, ON 13.4.2005. TH E ASSESSING OFFICER REQUISITIONED BOOKS OF ACCOUNT, E TC., U/S. 132A OF THE ACT FROM M/S. DECCAN GRAMEENA BANK. TH E WARRANT OF SEARCH WAS SERVED ON THE ASSESSEE AND PR OHIBITORY ORDERS WERE ISSUED FOR THE DEMAND DRAFTS FOR RS. 32 .45 LAKHS AND BASED ON THE INFORMATION NOTICE U/S. 153A OF TH E ACT WAS ISSUED ON MR. B. BHASKAR REDDY CALLING FOR RETURN O F INCOME. SINCE THERE WAS NO RESPONSE FROM THE ASSESSEE, SUMM ONS U/S. ITA NO.1117/HYD/2011 SHRI P. BHASKAR REDDY ===================== 2 131 OF THE ACT WAS ISSUED. IN RESPONSE TO THE SAME , THE ASSESSEE FILED THE RETURN OF INCOME. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED A COPY O F THE MOU ENTERED INTO WITH 32 PERSONS TO CONTRIBUTE FUNDS AN D PURCHASE DDS OF RS. 34.25 LAKHS TO MAKE A BID FOR ALLOTMENT OF LIQUOR LICENCE ALONG WITH OTHERS. 3. THE AFORESAID DDS WERE PURCHASED THROUGH ACCOUNT OF ONE MR. KARIPE SHAKAR WHO HAS SB ACCOUNT WITH THE SAID BANK. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE PRODUCED BEFORE THE INVESTIGATING WING, 14 OF THE M EMBERS WHO WERE PARTIES TO THE MOU AND WHO HAVE STATED THAT TH EY HAVE DEPOSITED AS PER MOU MONEY INTO THE BANK ACCOUNT OF K. SHEKAR FOR PURCHASE OF DDS. THE ASSESSING OFFICER ADDED THE ENTIRE AMOUNT OF RD. 35,15,640 INCLUDING THE DDS PU RCHASED AS UNDISCLOSED INCOME STATING THAT THERE IS NO EVIDENC E FOR INVESTMENT OF THE ENTIRE AMOUNT BY THE MEMBERS OF T HE SO- CALLED AOP. AGGRIEVED, THE ASSESSEE PREFERRED AN A PPEAL BEFORE THE CIT(A). 4. THE CIT(A) HELD THAT THE ASSESSING OFFICER OUGHT TO HAVE ASSESSED SHRI K. SHEKAR IN WHOSE BANK ACCOUNT THE E NTIRE MONEY WAS DEPOSITED AND STATED TO HAVE BEEN COLLECT ED FROM VARIOUS PARTIES TO THE MOU. THE CIT(A) FURTHER HE LD THAT THE ASSESSING OFFICER SHOULD HAVE ALSO ENQUIRED THE SOU RCE OF FUNDS OF OTHER PARTIES BY ISSUING SUMMONS U/S. 131 OF THE ACT OR SHOULD HAVE ASKED THE ASSESSEE FOR CONFIRMATION OF SUCH PERSONS ALONG WITH THEIR INCOME-TAX PARTICULARS AND INFORM JURISDICTIONAL ASSESSING OFFICERS WHO CAN EXAMINE T HEM INSTEAD OF CONCLUDING THAT THE ASSESSEE HAS NOT PRODUCED AN Y ONE FOR VERIFICATION AND THEN COMPLETING THE ASSESSMENT PRE SUMING THAT THE ENTIRE FUNDS BELONGED TO THE ASSESSEE. THE CIT (A), THEREFORE, HELD THAT THE ADDITION MADE BY THE ASSESSING OFFICE R AMOUNTING ITA NO.1117/HYD/2011 SHRI P. BHASKAR REDDY ===================== 3 TO RS. 35,55,145 HAS TO BE DELETED AND DIRECTED THE SAME TO THE ASSESSING OFFICER. AGGRIEVED THE REVENUE IS IN APP EAL BEFORE US. 5. THE DEPARTMENT HAS RAISED THE FIRST GROUND WHICH IS AS FOLLOWS: 'THE CIT(A) ERRED BOTH IN FACTS AND IN LAW AND ALLOWED RELIEF WITHOUT GIVING OPPORTUNITY. THIS IS IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE.' 6. IN SHORT, THE CIT(A) INSTEAD OF MERELY OBSERVING TH AT SUMMONS SHOULD HAVE BEEN ISSUED U/S. 131 OF THE ACT BY THE ASSESSING OFFICER WHEN THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD NOT PRODUCED ANY ONE FOR VERIFICATION BEFORE MAKING THE ADDITION, SHOULD HAVE REMANDED THE MATTE R TO THE ASSESSING OFFICER AND SHOULD HAVE GIVEN AN OPPORTU NITY TO THE ASSESSING OFFICER UNDER RULE 46A OF INCOME-TAX RULE S, 1962. IN THESE CIRCUMSTANCES, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF THE CIT(A) AND REMAND THE ISSUE BACK TO TH E FILE OF THE ASSESSING OFFICER, THEREBY GIVING ANOTHER OPPORTUNI TY TO THE ASSESSING OFFICER TO DIRECT THE PRODUCTION OF ANY D OCUMENTS OR THE EXAMINATION OF ANY WITNESSES TO ENABLE HIM TO D ISPOSE OF THE APPEAL IN ACCORDANCE WITH LAW. SINCE THE ENTIRE MA TTER IS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER, WE REFRAIN OURSELVES FROM GOING INTO OTHER GROUNDS RAISED BY T HE REVENUE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 29 TH SEPTEMBER, 2011 SD/ - (CHANDRA POOJARI) SD/ - (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED THE 29 TH SEPTEMBER, 2011 ITA NO.1117/HYD/2011 SHRI P. BHASKAR REDDY ===================== 4 COPY FORWARDED TO: 1. THE INCOME - TAX OFFICER, WARD - 1, MONICA LODGE, 1 ST FLOOR, BPL CHOWRASTHA, MANCHERIAL-504 208. 2. SHRI B. BHASKAR REDDY, S/O. B. GANGA REDDY, SRIRAMP UR (V), MANCHERIAL, ADILABAD DIST., AP. 6. THE CIT(A) - VI, HYDERABAD 7. THE CIT - V, HYDERABAD 8. THE DR, A BENCH, ITAT, HYDERABAD TPRAO