Dr. Mohan Gupta, Hyderabad V. ACIT,Circler-5(1), Hyderabad

ITA 118/HYD/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82616 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V RAGHURAM
• Assessee Lawyers: RAMAKRISHNA BANDI
• Keywords: Principle of natural justice
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 118/HYD/2014 ASSESSMENT YEAR: 2009-10 DR. MOHAN GUPTA, HYDERABAD PAN ACWPG 9934H THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 5(1), HYDERABAD (APPELLANT) (RESPONDENT) REVENUE BY SHRI A.V. RAGHURAM ASSESSEE BY SHRI RAMAKRISHNA BANDI DATE OF HEARING 17-12-2014 DATE OF PRONOUNCEMENT 19-12-2014 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST OR DER DATED 29/11/2013 OF LD. CIT(A)-V, HYDERABAD FOR THE ASSE SSMENT YEAR 2009-10. 2. BRIEFLY THE FACTS ARE, ASSESSEE IS AN INDIVIDUAL . FOR AY UNDER CONSIDERATION, ASSESSEE FILED HIS RETURN OF INCOME ON 31/07/2009 DECLARING TOTAL INCOME OF RS. 23,57,770. A SURVEY U /S 133A WAS CONDUCTED IN CASE OF M/S SRI VENKATESWARA BUILDERS AND DEVELOPERS, NIZAMABAD. DURING THE SURVEY, PARTNERS OF THE SAID PARTNERSHIP FIRM STATED THAT THEY HAVE PAID AN AMOUNT OF RS. 2.5 CRO RES TOWARDS SALE CONSIDERATION OF LAND ADMEASURING 1177 SQ.YDS. AT K HALEELWADI, NIZAMABAD PURCHASED FROM ASSESSEE AND HIS WIFE SMT. USHA RANI, WHO WERE THE JOINT OWNERS OF THE PROPERTY HAVING SH ARE IN 2/3:1/3 RATIO. HOWEVER, FROM THE RETURN OF INCOME FILED BY ASSESSEE, IT WAS 2 ITA NO. 118/HYD/2014 DR. MOHAN GUPTA NOTICED BY AO THAT ASSESSEE HAS SHOWN SALE CONSIDER ATION AT RS. 1.06 CRORES AND THE BALANCE AMOUNT OF RS. 1.44 CROR ES RECEIVED TOWARDS SALE CONSIDERATION WAS NOT DISCLOSED TO THE DEPARTMENT. IN COURSE OF THE ASSESSMENT PROCEEDING, AO CONFRONTED THE STATEMENT RECORDED FROM THE PARTNERS OF M/S SRI VENKATESWARA BUILDERS AND DEVELOPERS, NIZAMABAD AND AS WELL AS THE AFFIDAVITS FURNISHED BY THEM STATING THEREIN THAT THEY HAVE PURCHASED LAND FOR TOTAL CONSIDERATION OF RS. 2.5 CRORES. AO ON THE BASIS OF THE STATEMENTS AND AFFIDAVITS FILED BY PARTNERS OF M/S SRI VENKATE SWARA BUILDERS AND DEVELOPERS, NIZAMABAD, CALLED UPON ASSESSEE TO SHOW CAUSE AS TO WHY ON MONEY PAID OF RS. 1.44 CRORES OVER AND ABOVE THE DISCLOSED SALE CONSIDERATION OF RS. 1.06 CRORE SHALL NOT BE T REATED AS INCOME OF ASSESSEE. THOUGH, ASSESSEE OBJECTING TO THE PROPOSE D ADDITION, REQUESTED AO TO ALLOW HIM TO CROSS-EXAMINE THE PART NERS OF M/S SRI VENKATESWARA BUILDERS AND DEVELOPERS, NIZAMABAD, WH O ALLEGEDLY STATED THAT THEY HAVE PAID A TOTAL CONSIDERATION OF RS. 2.5 CRORES, BUT, AO WITHOUT ALLOWING ASSESSEE TO CROSS-EXAMINE THE P ARTNERS OF M/S SRI VENKATESWARA BUILDERS AND DEVELOPERS, NIZAMABAD , CAME TO CONCLUDE THAT ASSESSEE HAS RECEIVED AN AMOUNT OF RS . 1,44,76,625 IN CASH OVER AND ABOVE THE DISCLOSED SALE CONSIDERATIO N OF RS. 1,06,23,000 AND ACCORDINGLY, MADE ADDITION OF THE S AID AMOUNT. BEING AGGRIEVED OF THE ASSESSMENT ORDER, SO PASSED, ASSES SEE PREFERRED APPEAL BEFORE LD. CIT(A). 3. LD. CIT(A) ALSO CONFIRMED THE ADDITION BY OBSERV ING AS UNDER: 8. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF T HE APPELLANT, ASSESSMENT ORDER, REMAND REPORT AND COMM ENTS OF THE APPELLANT ON REMAND OF THE AO. I FULLY CONCUR W ITH THE ELABORATE FINDINGS OF THE AO IN THE ASSESSMENT ORDE R, REMAND REPORT AND FIND NO INFIRMITY IN THE SAME, AND HENCE , THE APPELLANTS SUBMISSIONS CANNOT BE ACCEPTED. THEREFO RE, I CONFIRM THE ADDITION OF RS. 1.44 CRORES MADE TOWARD S ADDITIONAL CAPITAL GAINS RECEIVED BY THE APPELLANT IN CASH OVE R AND ABOVE THE REGISTRATION CHARGES AND TREATED AS SUPPRESSION OF RECEIPTS. 3 ITA NO. 118/HYD/2014 DR. MOHAN GUPTA 4. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WELL AS OTHER MATE RIALS ON RECORD. THE MAIN GRIEVANCE OF ASSESSEE, AS SUBMITTED BY LD. AR IS, AO DENYING THE OPPORTUNITY OF CROSS-EXAMINATION TO ASS ESSEE HAS MADE ADDITION BY RELYING UPON THE STATEMENTS AND AFFIDAV ITS OF THIRD PARTIES, LD. AR SUBMITTED THAT EVEN THOUGH SPECIFIC REQUEST WAS MADE BEFORE AO AS WELL AS LD. CIT(A), BUT, COMPLETELY OVERLOOKI NG/IGNORING REQUEST OF ASSESSEE, AO PROCEEDED TO MAKE ADDITION ON THE B ASIS OF THE STATEMENT RECORDED FROM THIRD PARTIES BY HIM BEHIND BACK OF ASSESSEE WITHOUT ALLOWING AN OPPORTUNITY TO CROSS-EXAMINE. T HUS, IT WAS SUBMITTED BY LD. AR, AS THERE IS GROSS VIOLATION O F RULES OF NATURAL JUSTICE, ASSESSMENT ORDER SHOULD BE SET ASIDE. 5. LD. DR, HOWEVER, CONTENDED THAT STATEMENTS AND A FFIDAVITS OF PARTNERS OF M/S SRI VENKATESWARA BUILDERS AND DEVEL OPERS, NIZAMABAD CLEARLY ESTABLISHED THE FACT THAT ASSESSE E HAS RECEIVED SALE CONSIDERATION OF RS. 2.5 CRORES AS AGAINST THE DISCLOSED SALE CONSIDERATION OF RS. 1.06 CRORES. THEREFORE, THERE IS PRIMA-FACIE MATERIAL BEFORE AO TO COME TO THE CONCLUSION THAT A SSESSEE HAS RECEIVED OF RS. 1.44 CRORES OVER AND ABOVE THE DISC LOSED SALE CONSIDERATION, HENCE, ADDITION MADE BY HIM WAS JUST IFIED. HOWEVER, LD. DR SUBMITTED THAT ASSESSEE COULD BE GRANTED AN OPPORTUNITY TO CROSS-EXAMINE THE CONCERNED PERSONS, WHO HAVE GIVEN THE STATEMENTS AND FURNISHED AFFIDAVITS ON THE BASIS OF WHICH ASSESSMENT WAS MADE. 6. HAVING HEARD THE PARTIES, WE ARE OF THE VIEW, T HOUGH AO IN COURSE OF ASSESSMENT PROCEEDING IS EMPOWERED TO CON DUCT ENQUIRIES AND GATHER MATERIAL FOR THE PURPOSE OF DETERMINING REAL INCOME OF ASSESSEE AND IN THE PROCESS CAN SUMMON WITNESSES AN D RECORD THEIR STATEMENT EVEN BEHIND THE BACK OF ASSESSEE, BUT, IF ANY STATEMENT OR MATERIALS GATHERED BY AO IS ADVERSELY USED AGAINST ASSESSEE, PRINCIPLES OF NATURAL JUSTICE DEMAND ASSESSEE MUST BE GIVEN FAIR 4 ITA NO. 118/HYD/2014 DR. MOHAN GUPTA OPPORTUNITY TO REBUT ADVERSE MATERIALS BROUGHT ON R ECORD. IN THE PRESENT CASE, THERE IS NO DISPUTE TO THE FACT THAT DURING THE COURSE OF SURVEY IN CASE OF M/S SRI VENKATESWARA BUILDERS AN D DEVELOPERS, NIZAMABAD, PARTNERS OF THE FIRM STATED OF HAVING PA ID SALE CONSIDERATION OF RS. 25 CRORE AS AGAINST THE DISCLO SED SALE CONSIDERATION OF RS. 1.06 CRORE IN THE REGISTERED S ALE DEED. DURING THE ASSESSMENT PROCEEDING ALSO, IT IS APPARENT AND OBVI OUS FROM THE ASSESSMENT ORDER, AO RELIED UPON THE AFFIDAVITS AND STATEMENTS OF THE PARTNERS OF M/S SRI VENKATESWARA BUILDERS AND DEVEL OPERS, NIZAMABAD TO INFER THAT ASSESSEE HAS RECEIVED ADDIT IONAL AMOUNT OF RS. 1.44 CRORES OVER AND ABOVE THE DISCLOSE SALE CO NSIDERATION. THEREFORE, WHEN AO IS UTILIZING MATERIAL ADVERSE TO ASSESSEE FOR THE PURPOSE OF MAKING ADDITION AND WHEN ASSESSEE SPECIF ICALLY REQUESTED FOR CROSS-EXAMINATION OF THE CONCERNED PE RSONS ON WHOSE STATEMENTS AND AFFIDAVITS, AO IS PROPOSING TO MAKE ADDITION, IT WOULD HAVE BEEN FAIR AND REASONABLE ON THE PART OF AO TO AFFORD OPPORTUNITY TO ASSESSEE TO CROSS-EXAMINE THOSE PERSONS FOR REBU TTING THE CHARGES BROUGHT AGAINST HIM. CROSS EXAMINATION OF THE CONCE RNED PERSONS BECOMES MORE RELEVANT AND NECESSARY CONSIDERING THE FACT THAT CONCERNED PERSONS WERE PARTIES TO THE REGISTERED SA LE DEED AS PER WHICH DISCLOSED SALE CONSIDERATION ACCORDING TO MA RKET VALUE IS RS. 1.06 CRORES. THEREFORE, WHEN THE PURCHASERS WERE P ARTIES TO THE SALE DEED, WHICH IS AN AUTHENTIC DOCUMENT IN THE EYE OF LAW, A STATEMENT CONTRARY TO THE RECITALS OF THE SALE DEED MADE BY O NE OF THE PARTIES TO THE SALE DEED IS REQUIRED TO BE TESTED BY ALLOWING AN OPPORTUNITY TO ASSESSEE TO CROSS-EXAMINE THE PERSONS TO ASCERTAIN WHETHER STATEMENTS GIVEN BY THE SAID PERSONS AT THE TIME O F SURVEY OR IN THE AFFIDAVITS DISCLOSE THE CORRECT FACTS OR NOT. LAW I S WELL SETTLED THAT BEFORE USING ANY ADVERSE MATERIAL, ASSESSEE MUST BE GIVEN FAIR OPPORTUNITY TO REBUT THEM. WHEN STATEMENTS OR AFFID AVITS OF THIRD PARTIES ARE USED AGAINST ASSESSEE, ASSESSEE MUST BE GIVEN OPPORTUNITY TO CROSS-EXAMINE THEM. FOR THIS VIEW, W E RELY ON THE DECISION OF HONBLE SUPREME COURT IN CASE OF KISHA NCHAND 5 ITA NO. 118/HYD/2014 DR. MOHAN GUPTA CHELARAM, 125 ITR 713. THOUGH THERE ARE NUMBER OF O THER DECISIONS OF DIFFERENT HIGH COURTS PROPOUNDING SAME PRINCIPLE OF LAW, IT IS NOT NECESSARY TO QUOTE ALL OF THEM HERE. HOWEVER, SUFF ICE TO SAY, SINCE AO HAS RELIED UPON THE STATEMENTS AND AFFIDAVITS OF THIRD PARTIES WITHOUT AFFORDING AN OPPORTUNITY TO ASSESSEE TO CRO SS-EXAMINE THEM, THERE IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE . LD. CIT(A) HAS ALSO FAILED TO APPRECIATE THE FACTS IN PROPER PERSPECTIV E. IN THE AFORESAID VIEW OF THE MATER, WE ARE CONSTRAINED TO SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF AO WITH A DIRECTION TO SUMMON THE CONCERNED PERSONS AND ALLOW ASSESSEE TO CROSS-EXAMINE THE PERSONS RELYING UPON WHOSE STATEMENTS AND AFFI DAVITS AO HAS MADE ADDITION. ASSESSEE IS ALSO DIRECTED TO COOPERA TE WITH AO IN FINALIZING THE PROCEEDING. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 19/12/2014. SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT D EY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD, DATED: 19 TH DECEMBER, 2014 KV COPY TO:- 1) DR. MOHAN GUPTA, C/O K. VASANTKUMAR & AV RAGHURA M, ADVOCATES, 610, 6 TH FLOOR, BABHUKAHN ESTATE, BASHEERBAGH, HYDERABAD 500 001 2) ACIT, CIRCLE 5(1), HYDERABAD 3) CIT(A)-V, HYDERABAD 4) CIT-IV, HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6 ITA NO. 118/HYD/2014 DR. MOHAN GUPTA DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S. 2. DRAFT PLACED BEFORE AUTHOR SR.P.S 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER VP 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S. 6. KEPT FOR PRONOUNCEMENT ON SR.P S. 7. FILE SENT TO THE BENCH CLERK SR.P.S. 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER