M/s. R.R. Shamala & Co., Nizamabad, Hyderabad V. ITO, Ward-2, Nizamabad

ITA 1205/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66500 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 20-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1205/HYD/2011 ASSESSMENT YEAR : 2005-06 R.R. SHAMALA & CO., APPELLANT NIZAMABAD. (PAN/GIR R-357) VS. INCOME-TAX OFFICER, RESPONDENT WARD-2, NIZAMABAD. APPELLANT BY : SHRI MOHD. AFZAL RESPONDENT BY : SMT. VIDISHA KALRA DATE OF HEARING : 19/11/2012 DATE OF PRONOUNCEMENT : 23/11/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF CIT-IV, HYDERABAD DATED 31/03/2011, FOR THE ASS ESSMENT YEAR 2005-06. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN AOP, WHO PARTICIPATED IN THE LIQUOR LICENSE TENDERS ISSU ED BY THE STATE EXCISE DEPARTMENT ON RECEIVING INFORMATION THAT DEM AND DRAFTS FOR AN AMOUNT OF RS. 40 LAKHS WERE TAKEN FROM A BANK AC COUNT STANDING IN THE NAME OF RR SHAMALA TO PARTICIPATE IN LIQUOR LICENSE PROCESS, A SURVEY U/S 133A WAS CONDUCTED ON 08/04/2005 BY THE AO, WHO 2 ITA NO. 1205/HYD/2011 M/S R.R. SHAMALA & CO. WANTED TO VERIFY THE SOURCES FOR THE AMOUNTS. AFTER REPEATED REMINDERS THE RETURN WAS FILED ON 30/09/2005 BY THE ASSESSEE. THE CASE WAS TAKEN UP FOR SCRUTINY AND STATUTORY NOTICE S WERE ISSUED. IT WAS OBSERVED BY THE AO THAT ON THE DATE OF SURVEY A MOU ENTERED INTO BETWEEN 32 PERSONS OF THE AOP WAS SUBMITTED A ND IT WAS EXPLAINED THAT THE AMOUNT OF RS. 41,50,000/- WAS DE POSITED IN THE BANK ACCOUNT, WHICH WERE INVESTMENTS OF THE 32 MEMB ERS. THE AO WHILE INVESTIGATING ABOUT THE STAMP PAPER ON WHICH MOU WAS SIGNED FOUND THAT THE STAMP PAPER WAS PURCHASED ON 11/02/2 005 FOR AN AMOUNT OF RS. 50/- FROM A STAMP VENDOR SRI K. VID YA NAGAR, NIZAMABAD. THE AO ADDRESSED A LETER TO THE SRO, NIZ AMABAD TO CONFIRM THE DATE OF SALE OF THE STAMP PAPER. THE SR O HAD FORWARDED A COPY OF THE REGISTER MAINTAINED BY THE STAMP VEND OR FOR THE SALE OF STAMP PAPERS, CONTAINING THE DETAILS OF THE SALE OF STAMP PAPERS ON 11/02/2005. FROM THE SAID REGISTER, THE AO GATHE RED THAT THERE WAS NO SALE OF SUCH STAMP PAPER ON 11/02/2005. IT W AS FURTHER OBSERVED BY THE AO THAT THE STAMP PAPER WAS NOTARIZ ED ON 11/02/2005 VIDE SERIAL NO. 353, RECEIPT NO. 353 DT. 11/02/2005. FURTHER IT WAS OBSERVED THAT ALONG WITH THE MOU TWO PARTNERSHIP DEEDS, ONE IN THE NAME OF M/S RR SHAMALA & CO. WITH 18 MEMBERS I.E. COVERING ALL THE 32 MEMBERS OF THE AOP WITH SR I S. RANJIT REDDY AS COMMON PARTNER IN BOTH THE FIRMS, WERE SUBMITTED . IT WAS OBSERVED BY THE AO THAT PARTNERSHIP DEEDS WERE ENTE RED INTO EACH ON RS. 300/- STAMP PAPER. THE SET OF STAMP PAPERS W ERE PURCHASED ON 11/02/2005 AND THE OTHER SET ON 14/02/2005. THE SET PURCHASED ON 11/02/2005 ALSO DOES NOT FIGURE IN THE REGISTER MAINTAINED BY THE STAMP VENDOR. THE SET OF STAMP PAPERS PURCHASED ON 11/02/2005 WERE NOTARIZED ON THE SAME DAY VIDE SERI AL NO. 352, RECEIPT NO. 352 DT. 11/02/2005. THE SET OF STAMP PA PERS PURCHASED 3 ITA NO. 1205/HYD/2011 M/S R.R. SHAMALA & CO. ON 14/02/2005, WERE NOTARIZED ON THE SAME DAY VIDE SERIAL NO. 351, RECEIPT NO. 351 DT. 14/02/2005, I.E., THE NOTARY DO NE ON 14/02/2005 WAS SERIALLY NUMBERED BEFORE THAN THAT OF THE NOTAR Y DONE ON 11/02/2005. 3. FROM THE FACTS NOTED ABOVE, THE AO CONCLUDED THA T THE MOU ENTERED INTO BY THE ASSESSEE WAS NOT GENUINE AND SU MMONS WERE ISSUED TO ALL THE MEMBERS OF MOU TO FURNISH COPIES OF STATEMENTS OF ALL BANK ACCOUNTS ALONG WITH SUPPORTING DOCUMENTS/E VIDENCES. OUT OF 32 MEMBERS, 30 OF THEM APPEARED BEFORE THE AO AN D MOST OF THEM EXPLAINED THE SOURCE AS BORROWINGS FROM PARENT S, OTHERS ETC. AND SOURCE OF AGRICULTURAL INCOME WAS ONLY SUPPORTE D BY LANDHOLDING PASS BOOKS BUT NO PROOF OF AGRICULTURAL ACTIVITIES WERE FURNISHED. THE AO OBSERVED THAT SOME OF THE MEMBERS WERE INCOM E-TAX ASSESSEES AND SOME OF THEM HAVE NOT SHOWN THEIR IN VESTMENT IN THE RETURNS OF INCOME FILED. HE FURTHER OBSERVED T HAT SOME OF THE MEMBERS HAD RETURNED BACK THEIR INVESTMENTS BY ACCO UNT PAYEE CHEQUES, WHILE SOME OF THEM BY SELF CHEQUES. THE AO HAD IN DETAIL RECORDED REASONS FOR NON ACCEPTANCE OF CONFIRMATION LETTERS IN THE ASSESSMENT ORDER IN RESPECT OF EACH PERSON. HE FURT HER STATED THAT THE DEFICIENCIES OF THE MOU ENTERED INTO, CLEARLY P ROVED THAT THE PLOY OF MOU IS ONLY AN AFTERTHOUGHT AFTER THE INVES TMENT. THE AO CONCLUDED THAT SHRI S. RANJIT REDDY, HIS FRIENDS AN D RELATIVES HAVE DEPOSITED THE MONIES IN THE PERSONAL ACCOUNT OF SHR I RANJIT REDDY AND IN VIEW OF THE ABOVE, THE MOU ENTERED INTO WAS NOT GENUINE AND BROUGHT TO TAX IN THE HANDS OF AOP A SUM OF RS. 28, 75,000/-. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). 4 ITA NO. 1205/HYD/2011 M/S R.R. SHAMALA & CO. 5. THE CIT(A) OBSERVED THAT THE CASE WAS POSTED FOR HEARING MANY TIMES, AND IN SPITE OF THE NOTICES BEING SERVE D ON THE ASSESSEE, THERE WAS NO RESPONSE FROM THE ASSESSEE. HE, THEREFORE, HELD THAT THE ASSESSEE HAD NO SUBMISSIONS TO MAKE O N THE APPEAL PREFERRED BY IT AND, HENCE, THE CIT(A) DISMISSED TH E APPEAL. 6. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 7. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SHRI MOHD. AFZAL SUBMITTED THAT THE LEARNED CIT(A) ERRED IN CO NFIRMING THE ADDITION OF RS. 28,75,000/- IN SPITE OF CONFIRMING THE INVESTMENT BY THE 30 INDIVIDUALS, WHICH WAS POOLED TOGETHER FOR O BTAINING LICENSE FOR IMFL SHOP FROM THE EXCISE DEPARTMENT, IN THE NA ME OF ANY OF THE MEMBER SO AS TO FORM A PARTNERSHIP CONCERN. HE FURTHER SUBMITTED THAT THE MOU ENTERED INTO BY 32 INDIVIDUA LS WAS FOUND DURING THE COURSE OF SURVEY ON 08/04/2005, THE LEAR NED AO HAS NOT DISPROVED THE GENUINENESS OF THIS DOCUMENT, THEREFO RE, THE AO AND THE CIT(A) OUGHT TO HAVE HELD THE DOCUMENTS AND ITS CONTENTS AS TRUE AS PER THE PROVISIONS OF SECTION 292C OF THE A CT. 8. ON THE OTHER HAND, THE LEARNED DR SMT. VIDISHA K ALRA HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF TH E AUTHORITIES BELOW. FROM THE FACTS NARRATED ABOVE, WE FIND THAT A DETAILED INVESTIGATION HAS TO BE MADE BY THE CIT(A) AS TO WH ETHER I) THE AO HAD RIGHTLY CONCLUDED THAT THE MOU IS NON GENUINE, II) SOURCE OF THE PERSONS, WHO HAVE MADE INVESTMENTS AND, III) WHETHE R THE AMOUNTS 5 ITA NO. 1205/HYD/2011 M/S R.R. SHAMALA & CO. HAVE BEEN RETURNED BY THE EXCISE DEPARTMENT WERE TA KEN BACK BY THE RESPECTIVE PERSONS. , IN THESE CIRCUMSTANCES, W E ARE OF THE VIEW THAT SINCE THE CIT(A) HAS PASSED AN EX-PARTE ORDER, THE MATTER MAY BE RESTORED TO THE FILE OF THE CIT(A) TO GIVE AN O PPORTUNITY TO THE ASSESSEE TO REPRESENT ITS CASE BEFORE HIM AND THERE AFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW. WE ORDER ACCORDINGLY. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 23 RD NOVEMBER, 2012. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGHAVA N) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 23 RD NOVEMBER, 2012 KV COPY TO:- 1) M/S R.R. SHAMALA & CO., C/O MOHD. AFZAL, ADVOCATE, 11-5-465, FLAT NO. 402, SHERSONS RESIDENCY, CRIMIN AL COURT ROAD, RED HILLS, HYDERABAD 500 004. 2) ITO, WARD 2, NIZAMABAD 3) THE CIT(A)-VI, HYDERABAD 4) CIT-V, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T. , HYDERABAD.