Dy.CIT, Central Circle-5, Hyderabad V. Y.Swamy Reddy, Hyderabad

ITA 1140/HYD/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6584 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Keywords: Unexplained investment; Corroborative evidences

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 S.NO. ITA NO. AY APPELLANT RESPONDENT 1 1140/H/14 2008-09 DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 5, HYDERABAD. Y. SWAMI REDDY, HYDERABAD PAN AAMPY 0159 Q REVENUE BY: SRI M. SITARAM ASSESSEE BY: SRI A. SRINIVAS DATE OF HEARING: 30/03/2016 DATE OF PRONOUNCEMENT: 22/04/2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-I, HYDERABAD DATED 20/03/2014 FOR A Y 2008-09 WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS OF APPE AL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDIT ION OF RS. 35 LAKH MADE ON THE BASIS OF THE ENTRIES FOUND IN DOCUMENT A/MSR/RES/16 SEIZED FROM THE PREMISES OF M. SAMBA SIVA RAO IGNORING THE FACT THAT THE ASSES SEE HAS NOT EXPLAINED THE ABOVE MENTIONED ENTRIES. 2. THE APPELLANT PRAY THAT THE ORDER OF THE CIT(A ) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSE SSING OFFICER BE RESTORED. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT DURING TH E COURSE OF SEARCH OPERATION IN THE PREMISES OF SRI M. SAMBASIV A RAO, A NOTE BOOK CONTAINING THE TRANSACTIONS OF THE ASSESS EE WITH M. SAMBASIVA RAO WAS FOUND AND SEIZD VIDE ANNEXURE NO. A/MSR/RES/16 IN WHICH THE AMOUNTS OF RS. 10,00,000/ - AND RS. 25,00,000/- WERE CREDITED ON 06/07/2007 AND 13/ 02/2008 I.T.A. NO. 1140/HYD/2014 Y. SWAMY REDDY, HYD. 2 RESPECTIVELY AGAINST THE NAME OF THE ASSESSEE. WHEN THIS WAS QUESTIONED, THE ASSESSEE REPLIED THAT THIS AMOUNT D OES NOT BELONG TO HIM AND ALSO STATED THAT HE HAS NOT ADVAN CED ANY LOANS TO MR.SAMBASIVA RAO. THE ASSESSING OFFICER HA S NOT ACCEPTED THE ASSESSEES REPLY FOR THE FOLLOWING REA SONS: 1. THE APPELLANT IS ONE OF THE PARTNERS ALONG WITH MR. SAMBASIVA RAO IN SRI SAI VENKATESWARA REALTORS AND BOTH ARE HAYING BUSINESS CONNECTIONS. 2. DURING THE COURSE OF SEARCH OPERATION, THE APPEL LANT STATED THAT HE HAS NOT ADVANCED ANY AMOUNTS TO MR.SAMBASIVA RAO AS A LOAN BUT HAS CONTRIBUTED TO T HE FIRM NAMELY, M/S.SRI SAI VENKATESHWARA REALTORS AND REQUESTED FOR TIME TO FURNISH THE DETAILS. HOWEVER, HE FAILED TO EXPLAIN THE ENTRIES. 3. THERE WAS NO RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE DDIT(INV), UNIT-II(3), HYDERABAD. 4. THE APPELLANT'S CLAIM THAT HE HAS CONTRIBUTED CA PITAL TO THE FIRM, SRI SAI VENKATESWARA REALTORS IS ALSO NOT CORRECT, SINCE THE ABOVE FIRM WAS FORMED ON 2-4-200 8 ONLY. 2.1 IN VIEW OF THE ABOVE, THE ASSESSING OFFICER TRE ATED THE ABOVE INVESTMENTS FOUND IN ANNEXURE-A/MSR/RES/16 AS UNRECORDED AND UNEXPLAINED INVESTMENT AND ACCORDING LY, ADDED TO THE INCOME RETURNED. 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A). 4. BEFORE THE CIT(A), THE AR OF THE ASSESSEE HAS SUBMITTED THAT THE ABOVE ADDITION WAS MADE BASED ON THE DUMB MATERIAL SEIZED DURING THE SEARCH PROCEEDINGS WHICH HAS NO EVIDENTIARY VALUE. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS RELIED ON THESE ROUGH SHEETS WHICH ARE NOT SUPPORTED BY ANY DOCUMENTARY PROOF AND CAME TO A CONCLUSION THAT ENTRIES MADE IN SEIZED MATERIAL ARE TRUE. HE, THEREFORE, CONTENDED THAT ADDITIONS MADE BASED ON D UMB I.T.A. NO. 1140/HYD/2014 Y. SWAMY REDDY, HYD. 3 MATERIAL WITHOUT HAVING ANY CORROBORATIVE EVIDENCES /ANY SUPPORTING EVIDENCES TO THE INCOME OF THE ASSESSEE ARE NOT ONLY INCORRECT BUT ALSO BAD IN LAW AND HENCE SUCH A DDITIONS CANNOT BE SUSTAINED. THE LD. AR RELIED ON VARIOUS CASE LAWS, WHICH WERE MENTIONED BY THE CIT(A) IN HIS ORDER AT PAGE 19, TO SUBMIT THAT ADDITIONS MADE DURING THE SEARCH HA VE BEEN DELETED AS NO CORROBORATIVE EVIDENCE WAS MADE AVAIL ABLE. 5. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: SINCE THE DOCUMENT IN QUESTION WAS FOUND AT THE RESIDENCE OF SRI M. SAMBASIVA RAO AND NOT AT THE RESIDENCE OF THE APPELLANT, THE PRESUMPTION U/S.132 (4) IS APPLICABLE ONLY IN RESPECT OF SRI M. SAMBASIVA RAO AND NOT THE APPELLANT IN VIEW OF THE DECISION OF THE HO N'BLE JURISDICTIONAL TRIBUNAL IN THE CASE OF Y.SIVARAMA KRISHNA(SUPRA). RELYING ON THIS DECISION OF HON'BLE ITAT, I HAVE DECIDED THE ISSUE IN ASST. YEAR 2006-07 AT P ARA-9.3 ABOVE. IN VIEW OF THE SAME, THE ADDITION MADE OF RS.35,00,000/- IN THE ASST. YEAR 2008-09 IS ORDERED TO BE DELETED. 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 7 BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIV E SUBMITTED THAT AS PER THE PROVISIONS, THE ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION BEFORE FORWARDING THE FILES TO THE ASSESSING OFFICER IN WHOSE CHARGE THE ASSESSEE IS A SSESSED. AS PER CBDT CIRCULAR NO. 24/2015, ASSESSING OFFICER HAS TO FOLLOW THE PROCEDURE LAID DOWN BY THE HONBLE SUPRE ME COURT IN THE CASE OF CIT VS. CALCUTTA KNITWEARS, 362 ITR 673. SINCE IT WAS NOT FOLLOWED, DEPARTMENT IS NOT PRESSING FOR THIS GROUND. 8. CONSIDERING THE SUBMISSIONS OF COUNSELS AND MATE RIAL FACTS ON RECORD, IT IS TO BE NOTED HERE THAT WE HAV E ALLOWED THE APPEALS OF THE ASSESSEE FOR AY 2003-04 TO 2008-09 V IDE ITA I.T.A. NO. 1140/HYD/2014 Y. SWAMY REDDY, HYD. 4 NOS. 1131 TO 1136/HYD/2014 ORDER DATED 07/04/2016 B Y OBSERVING THAT THE PROCEEDINGS INITIATED UNDER S.15 3C OF THE ACT IN THE CASE OF THE ASSESSEE FOR THE RELEVANT YE ARS UNDER APPEAL, DESERVE TO BE QUASHED IN AS MUCH AS THE CO NCERNED ASSESSING OFFICER HAS ADMITTEDLY NOT RECORDED ANY S ATISFACTION BEFORE FORWARDING THE FILES TO THE ASSESSING OFFICE R IN WHOSE CHARGE, THE ASSESSEE HEREIN IS ASSESSED. THEREFORE , WE ARE OF THE VIEW THAT ADDITION MADE ON SUCH ASSESSMENT M ADE U/S 153C WHICH WAS QUASHED BY THE ITAT IN THE ABOVE MEN TIONED APPEAL, THE ADDITION CANNOT BE SUSTAINED IN THE EYE S OF LAW. ACCORDINGLY, THIS APPEAL UNDER CONSIDERATION IS ALS O DISMISSED DUE TO NON-COMPLIANCE OF THE PROCEDURE LAID DOWN BY CIRCULAR NO. 24/2015 OF THE CBDT. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 22 ND APRIL, 2016. SD/- (D. MANMOHAN) VICE PRESIDENT SD/- (S. RIFAUR RAHMAN) ACCOUNTANT MEMBER HYDERABAD, DATED 22 ND APRIL, 2016 KV COPY FORWARDED TO: 1. ACIT, CENTRAL CIRCLE 5, 8 TH FLOOR, AAYAKAR BHAVAN, L.B. STADIUM ROAD, BASHEERBAGH, HYDERABAD 500 004. 2. SRI Y. SWAMY REDDY, H. NO. 16-2-738/E, MALAKPET, HYDERABAD. 3. CIT(A) - 1, HYDERABAD 4 CIT (CENTRAL), HYDERABAD 5 THE DR, ITAT, HYDERABAD I.T.A. NO. 1140/HYD/2014 Y. SWAMY REDDY, HYD. 5 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