Y.S. Vidya Reddy, Hyd, Hyderabad V. DCIT, Circle-16(3), Hyderabad, Hyderabad

ITA 1204/HYD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6489 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 13-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Principle of natural justice
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.1204/HYD/2015 ASSESSMENT YEAR 2009-2010 SMT. YS VIDYA REDDY HYDERABAD PAN ABKPY9952A VS. THE DCIT, CIRCLE - 16(3) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. P. MURALIMOHAN RAO FOR REVENUE : MR. B. KURMI NAIDU DATE OF HEARING : 06.06.2016 DATE OF PRONOUNCEMENT : 15 .06.2016 ORDER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y. 2009-10. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE OR DER OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS.2,04,17 ,000 MADE BY THE A.O. TOWARDS UNDISCLOSED INVESTMENT UND ER SECTION 69B OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE, AN INDIVIDUAL, FILED HER RETURN OF INCOME FOR THE A.Y. 2009- 2010 ON 25.06.2009, DECLARING TOTAL INCOME OF RS.9,40,400. THE RETURN WAS ORIGINALLY PROCESSED UN DER SECTION 143(1) OF THE I.T. ACT, 1961. SUBSEQUENTLY, A NOTICE UNDER SECTION 148 HAS BEEN ISSUED AND IN RES PONSE 2 ITA.NO.1204/HYD/2015 SMT. Y.S. VIDYA REDDY, HYDERABAD. TO THE SAME, THE ASSESSEE FILED A LETTER DATED 10.0 4.2013 STATING THAT THE RETURN OF INCOME FILED ON 25.06.20 09 MAY BE TREATED AS THE RETURN FILED WITH REFERENCE TO TH E NOTICE ISSUED UNDER SECTION 148 OF THE I.T. ACT. SUBSEQUEN TLY, DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143 (3) READ WITH SECTION 147 OF THE I.T. ACT, THE A.O. OBS ERVED THAT THE ASSESSEE HAS PURCHASED A VILLA PLOT NO.B 58 FROM M/S. EMMAR HILLS TOWNSHIP P. LTD., THE VALUE OF WHI CH, WAS AGREED AT RS.57,04,750, WHICH WAS PAID BY CHEQU E DATED 12.09.2009. THE A.O. OBSERVED THAT IT HAS COM E TO LIGHT THAT THE ASSESSEE HAS PAID A SUM OF RS.52,88, 000 OVER AND ABOVE THE AGREED VALUE OF THE PLOT WHICH W AS MADE IN CASH. HE ALSO OBSERVED THAT THERE WAS A CBI CASE IN THE CASE OF M/S. EMMAR HILLS TOWNSHIP P. LTD., WHEREIN ONE MR. T. RANGA RAO HAD GIVEN A STATEMENT THAT HE HAS COLLECTED EXCESS AMOUNTS FROM THE BUYERS RAN GING FROM RS.4000 PER SQ. FEET TO RS.45,000 PER SQ. FEET ON THE INSTRUCTIONS OF MR. KONERU RAJENDRA PRASAD. THUS, ACCORDING TO THE A.O., THE ASSESSEE HAS PAID AN EXC ESS AMOUNT OF RS.2,04,17,000. THE ASSESSEES EXPLANATIO N WAS CALLED FOR. THE ASSESSEE EXPLAINED THAT THOUGH THE AGREEMENT OF SALE TOOK PLACE ON 19.11.2009, THE MOU WAS MADE BETWEEN THE ASSESSEE AND M/S. EMMAR HILLS TOWNSHIP P. LTD., FOR A TOTAL CONSIDERATION OF RS.5 7,04,750 TOWARDS LAND ADMEASURING 1201 SQ. YARDS @ RS.5000 P ER SQ. YARD WHICH WAS PAID BY WAY OF CHEQUE NO.231317 DRAWN ON SYNDICATE BANK, SOMAJIGUDA BRANCH, HYDERABAD. IN SUPPORT OF HER CLAIM, THE ASSESSEE AL SO PRODUCED AN AFFIDAVIT AND AGREEMENT OF SALE BETWEEN HER 3 ITA.NO.1204/HYD/2015 SMT. Y.S. VIDYA REDDY, HYDERABAD. AND M/S. EMMAR HILLS TOWNSHIP P. LTD., REGARDING TH E EXCESS PAYMENT OF RS.17000 PER SQ. YARD, THE ASSESS EE MADE NO EXPLANATION OTHER THAN PROVIDING AN AFFIDAV IT. THE A.O. THEREFORE, HELD THAT AS THE ASSESSEE HAS F AILED TO SUBSTANTIATE HER CLAIM OF NOT MAKING THE PAYMENT OF RS.2,04,17,000 OVER AND ABOVE THE SALE CONSIDERATIO N OF RS.57,04,750. HE TREATED THE AMOUNT AS UNDISCLOSED INVESTMENT UNDER SECTION 69B OF THE I.T. ACT AND BR OUGHT IT TO TAX. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE SAID ADDITION AND THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE MR. P. MURALIMOHAN RAO, WHILE REITERATING THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW, SUBMITTED THAT THE ADDITION MADE IN THE HANDS OF TH E ASSESSEE IS SOLELY ON THE BASIS OF THE STATEMENT OF MR. T. RANGA RAO RECORDED BY THE CBI. HE SUBMITTED THAT TH IS ISSUE HAD ARISEN IN THE CASE OF MR. G. MAHESH BABU ALSO WHEREIN AFTER CONSIDERING THE ASSESSEES CONTENTION S AT LENGTH, THE ISSUE HAS BEEN REMANDED TO THE FILE OF THE A.O. WITH A DIRECTION TO RE-DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING REASONABLE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. HE PRAYED FOR SIMIL AR DIRECTIONS IN THE CASE OF THE ASSESSEE HEREIN. 4. THE LD. D.R. HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4 ITA.NO.1204/HYD/2015 SMT. Y.S. VIDYA REDDY, HYDERABAD. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD AND ALSO THE DECISION OF ITAT IN THE CASE OF MR. G. MAHESH BABU VS. DCIT, CENTRAL CIRCLE -7, HYDERABAD IN ITA.NO.256 & 286/HYD/2015, 55 TO 58/HYD/2015 DATED 27.11.2015 IN SIMILAR CIRCUMSTANC ES FOR THE A.YS. 2006-07 AND 2007-08 AND 2009-10 TO 20 12- 2013 RESPECTIVELY, WE FIND THAT THE TRIBUNAL AFTER CONSIDERING THE VARIOUS ISSUES AT LENGTH HAS DIRECT ED AS UNDER : 23. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IT IS VERY MUCH EVIDENT FROM THE ASSESSMENT ORDER THAT MAIN LY RELYING UPON THE MATERIAL GATHERED AS A RESULT OF INVESTIGATION MADE DURING THE ASSESSMENT PROCEEDIN GS OF EHTPL, PARTICULARLY ON THE BASIS OF STATEMENT RECOR DED FROM SHRI T.RANGA RAO, THE ASSESSING OFFICER HAS CO ME TO THE CONCLUSION THAT THE ASSESSEE HAS PAID ON MONEY TO THE EXTENT OF RS.1,99,20,000 OVER AND ABOVE THE RE CORDED SALE CONSIDERATION. OF COURSE, BESIDES THE STATEMEN T OF SHRI T.RANGA RAO, IT IS SEEN THAT THE DEPARTMENT HA S GATHERED INFORMATION IN EXERCISE OF POWER UNDER S.1 33(6) FROM SOME OTHER BUYERS, WHO AGREED TO HAVE PAID ON - MONEY TOWARDS PURCHASE OF PLOTS/VILLAS FROM EHTPL. IT IS RELEVANT TO NOTE THAT WHEN THE ASSESSEE WAS CALLED UPON TO EXPLAIN WHETHER HE HAS PAID ON-MONEY, HE STOUTLY DENIED THE SAME AND INSISTED THAT APART FROM RECORD ED SALE CONSIDERATION, HE HAS NOT PAID ANYTHING MORE. IT IS THE PLEA OF THE ASSESSEE BEFORE THE CIT(A) AS WELL AS BEFORE US THAT THE ASSESSING OFFICER HAS UTILISED T HE MATERIAL GATHERED AS A RESULT OF INVESTIGATION/ENQU IRY ADVERSE TO THE ASSESSEE WITHOUT EITHER SUPPLYING TH E SAME TO HIM OR ALLOWING AN OPPORTUNITY TO THE ASSES SEE TO CROSS EXAMINE SHRI T.RANGA RAO, WHOSE STATEMENT PRIMARILY FORMED THE BASIS OF THE ADDITION. WE FIND THAT THE AFORESAID SUBMISSIONS OF THE ASSESSEE ARE ACCEP TABLE. IT IS VERY MUCH CLEAR FROM THE ASSESSMENT ORDER T HAT THOUGH THE ASSESSING OFFICER HAS REFERRED TO THE INFORMATION RECEIVED TO SUGGEST THAT THE ASSESSEE H AS PAID AMOUNT OF RS.1,99,20,000, NEITHER IN THE ASSESSMENT ORDER NOR EVEN SUBSEQUENTLY NO MATERIAL HAS 5 ITA.NO.1204/HYD/2015 SMT. Y.S. VIDYA REDDY, HYDERABAD. BEEN BROUGHT ON RECORD TO SHOW WHAT EXACTLY IS THE INFORMATION/EVIDENCE, WHICH INDICATED THAT ASSESSEE HAS PAID THE ON MONEY OF RS.1,99,20,000. FURTHER, THE INVESTIGATION RESULTS OF CBI AS WELL AS STATEMENT OF SHRI T.RANGA RAO WHICH HAVE BEEN FOLLOWED BY WAY OF CHARGE SHEETS AND SUPPLEMENTARY CHARGE SHEETS, THOU GH HEAVILY RELIED UPON BY THE ASSESSING OFFICER, BUT ADMITTEDLY THEY WERE NOT SUPPLIED TO THE ASSESSEE. EVEN THE LEARNED DEPARTMENTAL REPRESENTATIVE ACCEPTS THE AFORESAID FACTUAL POSITION. THOUGH IN THE COURSE OF ASSESSMENT PROCEEDINGS THERE IS NO FETTER ON THE ASSESSING OFFICER TO CONDUCT ANY ENQUIRY OR INVESTI GATION AS FOUND NECESSARY FOR ASCERTAINING THE REAL NATURE OF TRANSACTION OR INCOME, AT THE SAME TIME, IT IS SALU TARY PRINCIPLE OF LAW THAT ANY ADVERSE MATERIAL GATHERED BY HIM, WHICH HE PROPOSES TO UTILISE AGAINST THE ASSES SEE, MUST BE CONFRONTED TO THE ASSESSEE FOR ALLOWING HIM AN EFFECTIVE OPPORTUNITY OF REBUTTAL. THIS IS IN KEEPI NG WITH THE PRINCIPLE OF NATURAL JUSTICE THAT NO PERSON SHO ULD BE CONDEMNED WITHOUT GIVING A FAIR OPPORTUNITY OF HEAR ING. IN THE PRESENT CASE, THOUGH THE BASIS FOR ADDITION IS THE STATEMENT RECORDED FROM SHRI T. RANGA RAO, ADMITTED LY, THE ASSESSING OFFICER HAS NEITHER SUPPLIED A COPY O F THE STATEMENT TO THE ASSESSEE NOR ALLOWED HIM AN OPPORTUNITY TO CROSS EXAMINE HIM, THOUGH THE ASSESS EE IN HIS LETTER DATED 13.3.2014 HAS SPECIFICALLY ASKED F OR CROSS EXAMINATION OF SHRI T.RANGA RAO. IN THE AFORESAID V IEW OF THE MATTER, THERE IS VIOLATION OF RULES OF NATURAL JUSTICE BY THE ASSESSING OFFICER WHILE MAKING THE ADDITION OF RS.1,99,20,000. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER, ON ACCOUNT OF ALLEGED PAYMENT OF ON- MONEY, CANNOT BE SUSTAINED. 24. HAVING HELD SO, IT IS NECESSARY TO EXAMINE WHETHER NON-COMPLIANCE OF THE RULES OF NATURAL JUS TICE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE HAS MADE THE ASSESSMENT VOID AB INITIO, OR THE ASSESSING OF FICER CAN BE ASKED TO DECIDE THE ISSUE AGAIN AFTER FOLLOW ING PRINCIPLES OF NATURAL JUSTICE, AS REQUESTED BY THE EARNED DEPARTMENTAL REPRESENTATIVE. AS ALREADY STATED ELSEWHERE IN THE ORDER, THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE DECISION OF THE HON'BL E SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTR IES (SUPRA), TO PLEAD THAT NOT ALLOWING THE ASSESSEE TO CROSS EXAMINE THE WITNESS HAS RENDERED THE ASSESSMENT OR DER VOID. HOWEVER, ON A PERUSAL OF THE SAID JUDGMENT O F THE 6 ITA.NO.1204/HYD/2015 SMT. Y.S. VIDYA REDDY, HYDERABAD. HON'BLE SUPREME COURT IT IS FOUND TO BE FACTUALLY DISTINGUISHABLE. IN THAT CASE, HON'BLE SUPREME COU RT HAS INITIALLY REMITTED BACK THE MATTER TO THE TRIBUNAL FOR DECIDING THE ISSUE IN ONE WAY OR THE OTHER, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE. HOWEVE R, IT IS NOTICED THAT THE HON'BLE SUPREME COURT ULTIMATEL Y ALLOWED ASSESSEES APPEAL BECAUSE THE TRIBUNAL WHIL E EXAMINING THE ISSUE OF CROSS EXAMINATION OF WITNESS HAS MERELY OBSERVED THAT EVEN SUCH CROSS-EXAMINATION WO ULD NOT HAVE IMPROVED THE ASSESSEES CASE. HONBLE SU PREME COURT HELD, AS THE DEMAND RAISED AGAINST ASSESSEE W AS SOLELY RELYING UPON THE STATEMENT OF WITNESS, DENIA L OF CROSS EXAMINATION TO ASSESSEE VITIATED THE ORDER. UNLIKE THE CASE OF ADAMAN TIMBER INDUSTRIES (SUPRA) IN ASSESSEES CASE STATEMENT OF SHRI T.RANGA RAO IS NO T THE ONLY PIECE OF EVIDENCE RELIED UPON BY THE ASSESSING OFFICER. IT IS RELEVANT TO NOTE THAT APART FROM THE STATEMENT OF SHRI T.RANGA RAO, THERE ARE OTHER INFORMATION GA THERED BY THE DEPARTMENT BY TAKING RECOURSE TO S.133(6) A S PER WHICH SOME OF THE BUYERS OF THE PLOTS HAVE ADMITTED OF HAVING PAID ON-MONEY. FURTHER, THROUGH A PROCESS O F INVESTIGATION, CBI HAS FOUND IRREGULARITIES IN THE ACTIVITIES OF EHTPL AND SUBMITTED CHARGE SHEET(S). AS THE STATEMENT OF SRHI T.RANGA RAO, THE ENTIRE CHARGE SH EET(S) FILED BY CBI AND INFORMATION GATHERED BY THE DEPART MENT THROUGH ENQUIRY HAVE NOT BEEN BROUGHT ON RECORD BEF ORE US EITHER BY ASSESSEE OR DEPARTMENT, WE ARE UNABLE TO EXAMINE THE EXTENT OF ASSESSEES INVOLVEMENT, IF AT ALL, IN THE IRREGULARITIES ALLEGED BY CBI OR WHETHER THE AS SESSEE HAS ALSO BEEN IMPLICATED BY THE INVESTIGATION AGENC Y OR ANY OTHER PERSON. THEREFORE, IN OUR VIEW, ISSUE REL ATING TO PAYMENT OF ON-MONEY REQUIRES TO BE EXAMINED AFRESH BY ASSESSING OFFICER AFTER CONFRONTING EVIDENCE/MATERI AL SOUGHT TO BE RELIED UPON TO THE ASSESSEE AND SEEKIN G HIS RESPONSE ON THEM. THE ASSESSING OFFICER MUST ALSO DISCLOSE TO THE ASSESSEE THE MATERIAL/INFORMATION O N THE BASIS OF WHICH HE HAS QUANTIFIED THE ON-MONEY PAYME NT OF RS.1,99,20,000. IF THE ASSESSING OFFICER IS A BLE TO ESTABLISH ON THE BASIS OF EVIDENCE GATHERED THAT TH E ASSESSEE HAS PAID ON-MONEY TO THE EXTENT QUANTIFIED BY HIM, THEN HE CAN MAKE THE ADDITION UNDER S.69B. ON THE FLIP SIDE, IF THERE IS NO EVIDENCE AVAILABLE ON REC ORD TO DIRECTLY LINK THE ASSESSEE TOWARDS PAYMENT OF ON-MO NEY, THEN MERELY ON THE BASIS OF THE FACT THAT SOME OTHE R BUYERS HAVE ACCEPTED PAYMENT OF ON-MONEY, NO ADDITI ON CAN BE MADE. WITH THE AFORESAID OBSERVATIONS, WE R EMIT 7 ITA.NO.1204/HYD/2015 SMT. Y.S. VIDYA REDDY, HYDERABAD. THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO RE-DECIDE THE SAME AFRESH IN ACCORDANC E WITH LAW, AFTER GIVING REASONABLE OPPORTUNITY TO THE ASS ESSEE, DULY COMPLYING WITH THE PRINCIPLES OF NATURAL JUSTI CE. THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5.1. SINCE THE FACTS AND CIRCUMSTANCES BEFORE US ARE ALSO SIMILAR, WE DEEM IT FIT AND PROPER TO REMA ND THE CASE OF THE ASSESSEE HEREIN ALSO TO THE FILE OF THE A.O. WITH SIMILAR DIRECTIONS. THUS, GROUND OF APPEAL NOS.5 TO 9 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6. GROUND NOS. 1 TO 4 ON THE VALIDITY OF THE REOPENING OF THE ASSESSMENT HAS NOT BEEN ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE AND THEREFORE, THESE G ROUNDS ARE REJECTED AS NOT PRESSED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATE D AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15.06.20 16. SD/- SD/- (S. RIFAUR RAHMAN) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 15 TH JUNE, 2016 VBP/- 8 ITA.NO.1204/HYD/2015 SMT. Y.S. VIDYA REDDY, HYDERABAD. COPY TO : 1. SMT. Y.S. VIDYA REDDY, HYDERABAD. C/O. MR. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82. 2. THE DCIT, CIRCLE-16(3), HYDERABAD. 3. CIT(A)-IV, 3 RD FLOOR ANNEXE, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 4. PR. CIT-IV, HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE