Jt. Commissioner of Income Tax (OSD), Central Circle -1(3), Hyderabad V. Narayana Reddy Vakati, Hyderabad

ITA 1226/Hyd/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6145 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 04-03-2021
• Assessment Year: 2010-2011
• Appeal Filed On: 08-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Keywords: Unexplained expenditure; Income from undisclosed sources; Salary income; Revised return; Capital Gains
• Section: 143(3); 153A; 250; 201; 139(1); 13; 11; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD. BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER (THROUGH VIRTUAL HEARING) ITA NO. 1226 TO 1230 /HYD/2018 (ASSESSMENT YEAR S : 201 0 - 1 1 TO 2014 - 15 ) JT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(3), HYDERABAD. VS. SHRI NARAYANA REDDY VAKATI, 8 - 2 - 293/82/4/60/C, ROAD NO.12, MLA COLONY, HYDERABAD - 500 034 PAN ABHPV 8473G APPELLANT RESPONDENT APPELLANT BY : SMT. NIVEDITA BISWAS (D.R.) RESPONDENT BY : NONE. DATE OF HEARING : 04.03 .2021. DATE OF PRONOUNCEMENT : 21 .0 4 . 2021. O R D E R PER SHRI S.S. GODARA, J.M. : TH ESE R EVENUES FIVE APPEAL S FOR ASSESSMENT YEARS 2010 - 11 TO 2014 - 15 ARISE FROM THE COMMISSIONER OF INCOME TAX (APPEA LS) - 1 1 , HYDERABAD COMMON ORDER DT. 27.02. 201 8 PASSED IN CASE NO S . 130 TO 134/2016 - 17/DCIT - TC - 1(3), HYD/17 - 18 INVOLVING PROCEEDINGS UNDER SECTION 143(3) R.W.S . 153A IN FORMER FOUR AND U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT') IN LAST ASSESSMENT Y EAR ; RESPECTIVELY . 2 ITA NOS.1226 TO 1230/HYD/2018 HEARD THE LEARNED DEPARTMENT REPRESENTATIVE . C ASE FILE S PERUSED. 2. IT TRANSPIRES DURING THE COURSE OF HEARING THAT THE R EV ENUES IDENTICAL SUBSTANTIVE GRIEVANCE ( S ) IN ALL THESE FIVE ASSESSMENT YEARS PLEAD THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN REVERSING THE ASSESSING OFFICERS ACTION ADDING UNEXPLAINED EXPENDITURE OF RS.2,55,20,578; RS.2,22,10,994; RS.43,94,74,187; RS.6,53,44,000 AND RS.7,09,61,473 (ASSESSMENT YEAR - WISE) AND UNEXPLAINED INCOME ADDITION OF RS.1 CR ORE IN A.Y. 2013 - 14 AND RS.2.10 CRORE AND RS.4,99,61,473 IN A.Y. 2014 - 15; RESPECTIVELY ALLEGED BASED ON THE ASSESSEE'S STATEMENT RECORDED DURING THE COURSE O F SEARCH . 3. T HE LEARNED DEPARTMENT REPRESENTATIVES TOOK US TO PARAS 2 TO 5.5 OF THE CIT(A)S COMMO N LOWER APPELLATE DISCUSSION TO THE ABOVE EFFECT AS UNDER : 2. THE FACTS OF THE CASE ARE AS UNDER. THE APPELLANT, AN INDIVIDUAL, IS MD OF M/S. VNR INFR ASTRUCTURES LTD., DERIVES INCOME FROM SALARY. SEARCH IN THIS CASE WAS CONDUCTED ON 23.10.2013. LAS T AUTHORIZATION FOR S& S WAS EXECUTED ON 19/11/2013. THE FACTUAL INFORMATION WITH REGARD TO DATE OF FILING OF ORIGINAL RETURN OF INCOME, DETAILS OF INCOME RETURNED IN THE, ETC. ARE TABULATED BELOW FOR READY REFERENCE : - SL. ASST. DATE OF AMOUNT DATE OF AMOUNT INCOME AGRICULTURAL ADD \ . AMOUNT OF NO YEAR FILING OF DECLARED FILING OF D< ICLARED ASSESSED U/S INCOME INCOME ADDITION ORIGINAL IN THE RETURN OF IN 143(3) RWS (RS.) ADMITTED MADE IN THE RETURN OF ORIGINAL INCOME I N RESPONSE 153A DURING ASSESSMENT INCOME RETURN OF RESPONSE TO NOTICE (RS.) SEARCH ULS 143(3) RWS INCOME TO NOTICE U/S 153A 153A (RS.) U/S 153A (RS.) I 2 3 4 5 6 7 8 9 10 I. 2008 - 09 13/4/2009 3105900 2 3/2/2015 2671900 12395500 428000 9717600 9717600 2. 2010 - 11 04/3/2011 4186980 23/2/2015 63221870 121723980 412400 58502113 117537003 3. 201112 6/1212012 10357919 23/2/2015 10357920 32568913 1760000 22210994 22210994 4. 2012 - 1 3 23/2/2015 10843920 23/2/2015 10843920 450618107 300000 439474187 439474187 5. 201314 ... --- 23/2/2015 11233170 86571170 --- 65344000 75344000 6. 201415 16/9/2015 21373270 NOT NOT 126658998 1760000 88461473 103525728 APPLICABLE APPLICABLE L43(3) 3 ITA NOS.1226 TO 1230/HYD/2018 3. THE ASSESSING OFFICER MADE MOST OF THE ADDITIONS AS MENTIONED IN COLUMN 10 OF THE TABLE ABOVE IN THE HANDS OF THE ASSESSEE ON SUBSTANTIVE BASIS AND IN THE HANDS OF M/S. VNR INFRASTRUCTURE LIMITED ON PROTECTIVE BA SIS. 4. AGGRIEVED OVER SUCH ASSESSMENTS, THE ASSESSEE PREFERRED APPEALS AGAINST ALL THESE ASSESSMENT YEARS, VIZ., AYS 2008 - 09, 2010 - 11 TO 2014 - 15 RAISING THE GROUNDS, ASSESSMENT YEAR - WISE, AS UNDER : SL.NO. ASST. YEAR GROUND NO.1 GROUND NO.2 GROUND NO .2(A) GROUND NO.2(B) GROUND NO.2(C) GROUND NO.3 GROUND NO.4 1. 2008 - 09 ON THE FACTS AND IN THE CIRCUM - STANCE OF THE CASE THE ORDER OF THE LEARNED A.O. IS CONTRARY TO LAW AND FACTS OF THE CASE. THE LEARNED A.O. ERRED IN ADDING AN AMOUNT OF RS.97,17,600 AS ADDITIONAL INCOME TO THE TOTAL INCOME. -- -- -- -- FOR THE ABOVE GROUNDS AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING THE APPELLANT PRAYS THAT THE APPEAL BE ALLOWED. THE APPELLANT CRAVE LEAVE TO ADD/TO SUBSTITUTE/ ALTER/ M ODIFY/ DELETE AL L OR ANY OF THE GROUNDS. 2. 2010 - 11 - DO - THE LEARNED A.O. ERRED IN ADDING AN AMOUNTS RS.4890578 ON ACCOUNT OF THE PAGE NOS.66, 67 - 75 & 81 IN ANNEXURE A/SSE/HYD/06 RS.2,06,30,000 ON ACCOUNT OF PAGE NO.23 TO 24 OF A/VNR/RES/01/NELLORE RS.32981535 ON ;ACCOUN T OF CAPITAL GAINS IN THE CASE OF VNR POWERTECH PVT LTD SHARES; AS ADDITIONAL INCOME OF THE ABOVE TO THE EXTENT OF RS.58502113 TO TOTAL INCOME. - DO - - DO - 3. 2011 - 12 - DO - - DO - RS.6121994 ON ACCOUNT OF PAGE NO.5 O F A/GBR/02. RS.14000000 ON ACCOUNT OF PAGE NO.5 OF A/GBR/02. RS.2089000 ON ACCOUNT OF PROPERTY PURCHASED IN THE HANDS OF K. SUBBA REDDY, FATHER OF THE APPELLANT; AS ADDITIONAL INCOME OF THE ABOVE TO THE EXTENT OF RS.2,22,10,994 TO TOTAL INCOME. - DO - - DO - 4. 2012 - 13 DO - - DO - RS.52467136 ON ACCOUNT OF BANK TRANSACTIONS AS WELL AS CASH IN ANNEXURE A/VNRIL/HO/04. RS.387007051 ON ACCOUNT OF PAGE NO.33 OF ANNEXURE A/VNR/A/1; THEREFORE, THE ADDITIONAL INCOME OFFERED BY THE COMPANY ON ACCOUNT OF THIS RS.439474187 (RS.52467136 + RS.387007051) IS CONSIDERED ON PROTECTIVE BASIS IN THE HANDS OF COMPANY AND IN THE HANDS OF SHRI VAKATI NARAYANA REDDY ADDITION IS MADE ON SUBSTANTIVE BASIS. ---- - DO - - DO - 4 ITA NOS.1226 TO 1230/HYD/2018 5. 2013 - 14 - DO - - DO - RS.65344000 ON ACCOUNT OF A/VNRIL/HO/3 RS.1 CRORE ON ACCOUNT OF ADVANCE RECEIVED FROM SRI GANGA PRASAD; THEREFORE, THE ADDITIONAL INCOME OFFERED BY THE COMPANY ON ACCOUNT OF THIS RS.75344000 (RS.65344000 + RS.10000000) IS CONSIDERED ON PROTECTIVE BASIS IN THE HANDS OF COMPANY AND IN THE HANDS O F SHRI VAKATI NARAYANA REDDY ADDITION IS MADE ON S UBSTANTIVE BASIS. ----- - DO - - DO - 6. 2014 - 15 - DO - - DO - RS.88461473 ON ACOCUNT RS.15064255 ON ACCOUNT OF DIFFERENCE IN REMUNERATION FORM VNR INFRASTRUCTURE LTD AS PER 26AS. THEREFORE THE ADDITIONAL INCOME OFFERED BY THE COMPANY ON ACCOUNT OF RS.103525728 (RS.88461473 + RS.15064255) IS CONSIDERED ON PROTECTIVE BASIS IN THE HANDS OF C OMPANY AND IN THE HANDS OF SHRI VAKATI NARAYANA REDDY ADDITION IS MADE ON SUBSTANTIVE BASIS. --- - DO - - DO - 5. GROUNDS NOS. 1, 3 AND 4 ARE GENERAL IN NATURE WHICH DO NOT REQUIR E SPECIFIC ADJUDICATION. THE GROUND NO. 2 IS AGAINST ADDITION MADE ON ACCOUNT OF THE ADDITIONAL INCOME ADMITTED DURING THE SEARCH U/S 132(4) OF THE LT. ACT, 1961. THE ADMISSION WAS MADE ON THE BASIS OF MATERIAL SEIZED DURING THE COURSE OF SEARCH AND SEIZUR E OPERATIONS BY THE ASSESSEE. LATER ON, IT WAS CLAIMED THAT THE 'INCOME/ENTRIES' IN THE SEIZED MATERIAL BELONG TO THE COMPANY - M/S. VNR INFRASTRUCTURE LIMITED AND OFFERED AS INCOME IN THE HANDS OF THE COMPANY. 5.1 THE ISSUE IS DISCUSSED BY THE ASSESSING OFFICER IN THE ORDER AS UNDER: '3. UNDISCLOSED INCOME OFFERED DURING THE SEARCH: 3.1. DURING THE SURVEY, LOOSE SHEET BUNDLE MARKED AS ANNEXURE A/SSE/HYD/02 WAS IMPOUNDED. THE PAGE 159 OF THIS ANNEXURE CONTAINS DETAILS OF RECEIPTS AND PAYMENTS. WHEN AS KED SRI ANNAMREDDY SRINIVASULU REDDY, HE STATED THAT THESE RECEIPTS WERE PROVIDED BY SRI VAKATI NARAYANA REDDY. OPERATIVE PORTION OF THE SWORN STATEMENT OF SRI A SRINIVASULU REDDY, PROPRIE TOR OF S&S ENTERPRISES RECORDED ON 27 - 02 - 2014 IS REPRODUCED HERE UND ER: 'Q9 NOW I AM SHOWING YOU THE LOOSE SHEET BUNDLE MARKED AS ANNEXURE - A/SSE/HYD/02 PAGE NO. 159. PLEASE GO THROUGH THE CONTENTS AND OFFER YOUR EXPLANATION. ANS. THE PAGE CONTAINS THE D ETAILS OF SITE EXPENSES TO THE TUNE OF RS. 97,17,600/ - . THE AMOUNT W AS GIVEN BY SRI V NARAYANA REDDY WHO CAN EXPLAIN ALL THE DETAILS. ' 3.2 THE VERSION OF SRI SRINIVASULU REDDY WAS ACCEPTED AND CONFIRMED BY SRI VAKATI NARAYANA REDDY. RELEVANT PORTION OF THE WRITTEN SUBMISSION DT NIL. IS REPRODUCED HERE UNDER: 'SOME OF T HE TRANSACTIONS RELATING TO THE PAYMENTS WHICH HAVE APPEARED IN PAGE NO. L59 OF A/ SSE/ HYDERABAD/ 02. IMPOUNDED FROM THE OFFICE OF S&S ENTERPRISES. THE SOURCES FOR THE SAID EXPENDITUR E OFRS.97, 17,600 RELATE TO THE FINANCIAL YEAR 2007 - 08, WERE PROVIDED BY SRI VNR. HENCE, THE TOTAL AMOUNT OF RS.97, 17,600 IS CONSIDERED AS ADDITIONAL INCOME IN THE HANDS OF SRI VNR IN THE FINANCIAL YEAR 2007 - 08. ' 5 ITA NOS.1226 TO 1230/HYD/2018 3.3 FINALLY, RS.97, 17,600/ - WAS ADMITT ED AS ADDITIONAL UNDISCLOSED INCOME IN THE INDIVIDUAL STATUS OF SRI VAKATI NARAYANA REDDY FOR THE A.Y. 2008 - 09. SUBSEQUENTLY, IT IS OBSERVED THAT THE ASSESSEE DID NOT OFFER THE ABOVE INCOME IN THE RETURN FLIED IN RESPONSE TO THE NOTICE ISSUED U/ S 153A. THE REFORE, HE WAS ASKED TO FURNISH FINANCIAL STATEMENTS/RECEIPTS AND PAYMENTS ACCOUNT AND PRODUCE BOOKS OF ACCOUNT. AS THE ASSESSEE DID NOT FURNISH THE INFORMATION AND PRODUCE BOOKS FOR VERIFICATION, A SHOW CAUSE NOTICE DATED 11 - 02 - 2016 WAS ISSUED TO THE ASSE SSEE AS TO WHY THE UNDISCLOSED INCOME ADMITTED DURING THE SEARCH/POST SEARCH PROCEEDINGS RS.97, 17,600/ - FOR ASST. YEAR 2008 - 09 SHOULD NOT BE ADDED TO THE TOTAL INCOME. THE ASSESSEE FILED REPLY DATED 'NIL' IN THE MINUTE I.E. ON 28 - 03 - 2016. HE S TATED THAT ON THE DAY OF SEARCH WITHOUT KNOWING THE AFTER RECONCILING THE DETAILS OF INCOME ADMITTED AND WITH REGULAR BOOKS OF ACCOUNT, IT IS FOUND THAT THE INCOME WAS INAPPROPRIATELY ADMITTED IN THE IN CASE OF VAKATI NARAYANA REDDY INSTEAD OF M/S. VNR INF RASTRUCTURE S LTD, AS THESE TRANSACTIONS ARE RELATED TO THE COMPANY AND HE SUBMITTED YEAR WISE STATEMENT FOR ASSESSMENT YEARS 2008 - 09, 2010 - 11, 2011 - 12, 2012 - 13, 2013 - 14 AND 2014 - 15 STATING THAT THESE AMOUNTS ARE NOT BELONGING TO SHRI. VAKATI NARAYANA REDDY . THE ASSES SEE'S REPLY IS NOT ACCEPTABLE. THE ASSESSEE HAS NOT RETRACTED FROM HIS DISCLOSURE OF INCOME TILL FILING OF RETURN. THERE IS ALMOST 16 MONTHS GAP APPROXIMATELY FROM SEARCH CONDUCTED. IN THIS PERIOD, HE NEVER BROUGHT HIS VERSION BEFORE DDIT(INV.) 90R BEFORE ASSESSING OFFICER THAT THE AMOUNTS DISCLOSED ARE RELATED TO M/S. VNR INFRASTRUCTURES LUI.. IT IS APPARENT THAT THE ASSESSEE ADOPTED DEVISE TO EVASION OF TAXES ON ADMITTED INCOME BY OFFERING THE SAME IN THE HANDS OF COMPANY M/S. VNR INFRASTRUCTUR ES LIMITED. THE ASSESSEE HAS NEVER FURNISHED THE REQUIRED INFORMATION SUCH AS BOOKS OF ACCOUNTS, RECEIPTS AND PAYMENTS ACCOUNT ETC., FINALLY, HE SUBMITTED REPLY TO SHOW CAUSE NOTICE IN THE LAST MINUTE I.E. ON 28 - 032016 DELIBERATELY TO AVOID VERIFICATION OF THE TRANSA CTIONS. THEREFORE, THE SAME IS NOT CONSIDERED. 3.5 THE ASSESSEE'S CONTENTION THAT THE AMOUNT ADMITTED BY ASSESSEE ARE NOW OFFERED IN THE HANDS OF COMPANY M/S VNR INFRASTRUCTURE LID., IN THE REVISED RETURN FILED ON 26 - 03 - 2016 IS NOT TENABLE. D URING THE S EARCH/POST SEARCH PROCEEDINGS, THE ADDITIONAL INCOME WAS OFFERED IN THE HANDS OF SHRI VAKATI NARAYANA REDDY. THE ASSESSEE HAS NOT GIVEN ANY COGENT EXPLANATION WITH RELEVANT DOCUMENTS FOR NOT OFFERING THE ADMITTED INCOME IN THE HANDS OF SRI VAKAT I NARAYANA REDDY. THEREFORE, THE ADDITIONAL INCOME OFFERED BY THE COMPANY ON ACCOUNT OF THIS RS. 97,17,600/ - IS CONSIDERED ON PROTECTIVE BASIS IN THE HANDS OF COMPANY WHILE IN THE HANDS OF SHRI VAKALI NARAYANA REDDY ADDITION IS MADE ON SUBSTANTIVE BASIS. 3.6 AS DISCUSSED IN ABOVE PARAS, DURING THE SEARCH PROCEEDINGS SHRI ANNAMREDDY SRINIVASU1U REDDY PROPRIETOR OF S&S ENTERPRISES IN HIS SWORN STATEMENT DATED 27 - 02 - 2014 STATED THAT THE AMOUNT WAS GIVEN BY SLIRI VAKATI NARAYANA REDDY. THE VERSION OF A NNAMREDDY S RINIVASU1U REDDY WAS ACCEPTED BY THE ASSESSEE AND ADMITTED ADDITIONAL INCOME BEFORE DDIT (INV). IN VIEW OF THE ABOVE RS. 97,17,600/ - WAS ADDED TO THE TOTAL INCOME OF THE VAKATI NARAYANA REDDY. 5.2 DURING THE COURSE OF APPELLATE PROCEEDINGS, WH ILE REITERA TING THE SUBMISSIONS MADE DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED AS UNDER: - THE ASSESSEE IS THE MANAGING DIRECTOR OF M/S VNR INFRASTRUCTURE LTD, HAVING INCOME FROM SALARY FROM THE COMPANY AND OTHER SOURCES. SEARCH AND SEI ZURE OPERAT IONS WERE CONDUCTED IN THE CASE OF M/S VNR INFRASTRUCTURES LTD AND ALSO IN THE CASE OF ITS MANAGING DIRECTORS AND OTHER DIRECTOR. DURING THE COURSE OF SEARCH CERTAIN INCRIMINATING MATERIAL PERTAINING TO THE COMPANY WAS FOUND AT THE PREMISES OF M/S. VNR INFRASTRUCTURES LTD, STATEMENT OF THE MANAGING DIRECTOR AND THE OTHER DIRECTOR AND ALSO THE STATEMENTS OF OTHER PERSONS WERE RECORDED U/S 132(4) OF THE IT ACT. DURING THE COURSE OF STATEMENT THE MANAGING DIRECTOR NARAYAN REDDY. V AND OTHER DIREC TOR PRAVEEN KUMAR.G HAVE MADE DISCLOSURES U/S 132(4) OF THE IT ACT, AMOUNTING TO RS.74,27,47,257/ - AND RS.3,00,00,000 CRORES 6 ITA NOS.1226 TO 1230/HYD/2018 RESPECTIVELY, IN THE HANDS OF COMPANY A FURTHER AMOUNT OF RS.23,80,37,378/ - WAS MADE, THE AGGREGATE DISCLOSURE MADE IS AT RS.101 CR ORES. THE D ETAILS OF DISCLOSURE MADE ARE AS UNDER: S. NO ASST YEAR NAME OF THE ASSESSEE/AMOUNT DISCLOSED (IN RS) TOTAL VNR G. PRAVEEN INFRASTRU CTURE V NARAYAN REDDY KUMAR LTD 1 2008 - 09 13,00,000/ - 97,17,600 0 1,10,17,600 2 2009 - 10 4,24,19,355 A A 4,24,19,355 3 2010 - 11 99,02,500 11,75,37,003 0 12,74,39,503 4 2011 - 12 70,17,450 2,22,10,994 1,40,00,000 4,32,28,444 5 2012 - 13 7,74,86,823 43,94,74,187 0 51,69,61,010 6 2013 - 14 8,27,09,250 6,53,44,000 70,00,000 15,50,53,250 7 2014 - 15 1,72,02,000 8,84,61,473 90,00,000 11,46,63,473 TOTAL 23,80,37,378 74,27,45,257 3,00,00,000 101,07,82,635 NOTICE ULS 153A WAS ISSUED IN THE CASE OF ASSESSEE AND ALSO THE COMPANY AND G.PRAVEEN KUMAR, THE DE TAILS OF RETURNS OF INCOME FILED BY THE ASSESSEE ULS 139(1) AND ALSO IN RESPONSE TO NOTICE ULS 153A ARE AS UNDER: ASST YEAR AMOUNT OF INCOME INCOME ASSESSED INCOME ADMITTED U/S INCOME DECLARED U/S 139 U/S 143(3) 153A ASSESSED U/S 143(3) 2008 - 09 31,05,900 31,05,900 26,77,900 1,23,95,500 2009 - 10 - - - 2010 - 11 41,86,980 41,86,980 6,32,21,870 12,17,23,980 2011 - 12 1,03,57,919 1,03,57,919 1,03,57,919 3,25,68,913 2012 - 13 - - 1,08,43,920 45,03,18,107 2013 - 14 - - 1,12,33,170 8,65,77,170 2014 - 15 - - 2,13,73,270 12,48,98,998 AS SUBMITTED ABOVE THE ASSESSEE ADMITTED AN AGGREGATE AMOUNT OF RS.74,27,45,257 IN HIS HANDS DURING THE COURSE OF STATEMENT ULS 132(4) OF THE IT ACT. HOWEVER, THE SEIZED MATERIAL ON W HICH THE ADDITIONS ARE OBTAINED, BELONGS TO THE COMPANY THEREFORE WHILE FILING THE RETURN OF INCOME THE ASSESSEE RECONCILED THE MATERIAL AND SUBMITTED A LETTER BEFORE THE ASSESSING OFFICER ON 14.03.2016, CLARIFYING THE ISSUES ALONG WITH NATURE OF SEIZED MA TERIAL AND ITS DESCRIPTION ETC. THE LEARNED ASSESSING OFFICER WAS PLEADED TO ASSESSE THE INCOME DECLARE D ULS 132(4) IN THE HANDS OF COMPANY AFTER ANALYZING THE MATERIAL SEIZED,' HOWEVER, THE LEARNED ASSESSING OFFICER HAS NOT ACCEPTED THE PLEADING OF THE A SSESSEE AND HAS NOT TAKEN ANY PAIN TO VERIFY WHETHER THE SEIZED MATERIAL STATED IN THE LETTER. SUBMITTE D ON 14.03.2016 TO CONFIRM WHETHER IT BELONGS TO 7 ITA NOS.1226 TO 1230/HYD/2018 THE COMPANY OR TO THE ASSESSEE V.NARAYAN REDDY. THE ADDITIONS ARE MADE ONLY ON THE BASIS OF STATEMENT OF THE ASSESSEE ULS 132(4) IGNORING THE FACT THAT THE SEIZED MATERIAL BELONGS TO COMPANY MIS VNR INFRASTR UCTURES LTD. THEREFORE, IT IS SUBMITTED THAT IN THE ABSENCE OF ANY SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH BELONGING TO THE ASSESSEE NO ADDITIO N CAN BE MADE. THE CBDT IN THEIR CIRCULAR IN LETTER F.NO.286/98/20L3 - LT (INV - II), DT:18.12.2014, INSTRU CTED THE ASSESSING OFFICER NOT TO OBTAIN DISCLOSURES, RATHER FOCUS ON GATHERING EVIDENCES DURING THE SEARCH. THEREFORE, IN THE CASE OF ASSESSEE THE ADDIT IONS ARE MADE ONLY ON THE BASIS OF STATEMENT MADE ULS 132(4) WHICH IS GIVEN BY THE ASSESSEE IN A STATE OF CONFUSION AND WITHOUT THINKING OF CONSEQUENCES, AND ITS IMPACT IN THE FUTURE. THE COMPANY IS A SEPARATE ENTITY AND THE ASSESSEE IS A SEPARATE ENTITY, THEREFORE, ANY DISCREPANCIES FOUND DURING THE COURSE OF SEARCH IN RESPECT OF MATERIAL SEIZED, THE COMPA NY IS ANSWERABLE AND THE COMPANY HAS TO PAY THE TAXES ON ITS INCOME, DETERMINED AS PER THE BOOKS OF ACCOUNTS WITH REFERENCE TO SEIZED MATERIAL. THE INCOM E CANNOT BE ASSESSED IN THE HANDS OF ASSESSEE WHICH IS BELONGING TO THE COMPANY ON THE DISCREPANCIES IF ANY. RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: 1. THE HON'BLE ITAT, HYDERABAD, 'A' BENCH IN THE CASE OF AC1T VS P.AJAY KUMAR, ITA N O'S 1121/HYD/2015, DT: 21.09.2016. 2. THE HON 'BLE HIGH COURT OF DELHI IN THE CASE OF PRINCIPAL CIT VS PPC BUSINESS AND PRODUCTS PVT LTD AND OTHERS ITA NO. 290/20 1 6 ETC, DT: 17.07.2007. 3. THE HO N 'BLE ITAT JA IPUR IN THE CASE OF BASANTH BANSAL VS ACIT ITA NO. 5 34/ J P/2012, DT: 29.05.2015. CONSIDERING THE RATIONALE OF THE JUDICIAL PRONOUNCEMENTS AND ALSO CONSIDERING THE FACTS THAT NO SEIZED MATERIAL WAS FOUND BELONGING TO THE ASSESSEE, THEREFORE, THE ASSESSMENTS ORIGINALLY COMPLETED U/S 143(3) IN RESPECT OF ASSESSMENT YEARS 2008 - 09, 2010 - 11 & 2011 - 12 SHOULD NOT HAVE BEEN DISTURBED AND FOR THE ASSESSMENT Y EAR 2012 - 13, 2013 - 14 AND 2014 - 15 NO ADDITIONS SHOULD HAVE BEEN MADE IN THE ABSENCE OF ANY SEIZED MATERIAL. ' 5.4 DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE ASSESSEE GAVE A DETAILED EXPLANATION AS TO THE CONTENTS OF THE SEIZED MATERIAL AND FILED EVIDENCES SUBSTANTIATING THEIR CLAIM, VIDE IETTERFILED ON 14/03/2016, WHICH ARE AS UNDER: - 8 ITA NOS.1226 TO 1230/HYD/2018 KIND ATTENTION IS INVITED TO THE LETTER CITED UNDER REFERENC E WHEREIN WE ARE HEREWITH SUBMITTING THE FOLLOWING INFORMATION FOR YOUR KIND CONSIDERATION: WE BRING T O YOUR KIND INFORMATION THAT THERE WAS SEARCH ON THE PREMISES OF VNR INFRASTRUCTURE LIMITED AND ITS GROUP OF COMPANIES AND ON ITS DIRECTORS MR. V.NARAYAN A REDDYAND V.PRAVEEN KUMAR AND OTHER SUB CONTRACTORS OF THE COMPANY ON 23 - 10 - 2013. ON THE DAY OF SEARCH WITHOUT KNOWING THE IMPLICATIONS AND TO PURCHASE PEACE, MR. V.NARAYANA REDDY HAS GIVEN A STATEMENT BEFORE THE DEPUTY DIRECTOR OF INCOME TAX INVESTIGATIO N, GUNTUR, THAT THE DISCREPANCIES FOUND IN THE GROUP COMPANIES, SUB CONTRACTORS AND IN THE CASE OF DIRE CTORS HAS BEEN CONSIDERED AND PROPOSED TO ADMIT ADDITIONAL INCOME OF RS. 101 CRORES. WE BRING TO YOUR KIND NOTICE THAT THE ASSESSE MR. V.NARAYANA REDDY DO ES NOT HAVE ANY BUSINESS ON HIS OWN DURING THE FINANCIAL YEARS 2007 - 08 TO 2013 - 14 EXCEPT BEING A MANAGI NG DIRECTOR IN VNR INFRASTRUCTURE LIMITED AND OTHER GROUP COMPANIES AS DIRECTOR. THE STATEMENT GIVEN AT THE TIME OF SEARCH AND SUBSEQUENT PROCEEDINGS BEF ORE THE INVESTIGATION AUTHORITIES THAT THE DETAILS OF ADDITIONAL INCOME OF RS. 101 CRORES WAS AS FOLLOW S: S.NO ASST. YEAR NAME OF THE ASSESSEE TOTAL RS. VNR INFRASTRUCTURE LID V.NARAYANA GPRAVEEN REDDV KUMAR 1 2008 - 09 1300,000 97, 17600 0 11017600 2 2009 - 10 42419355 0 0 42419355 3 2010 - 11 9902500 117537003 0 12,7439503 4 2011 - 12 7017450 22210994 14000000 43228444 5 2012 - 13 77486823 439474187 0 516961010 6 2013 - 14 82709250 6.5344000 7000000 !55Q53 250 7 2014 - 15 17202000 8,8461473 9000000 11,463473 238037378 742745257 30000000 1010782835 HOWEVER, HOWEVER, AFTER VERIFYING AND RECONCILING THE DETAILS OF INCOME ADMITTED AS PER THE SEIZED MATERIAL WITH REGULAR BOOKS OF ACCOUNTS AND BUS INESS OF THE VNR INFRASTRUCTURE LIMITED AND ITS GROUP COMPANIES IT HAS BEEN FOUND THAT THE INCOME WAS INAPPROPRIATELY A DMITTED IN THE CASE OF V.NARAYANA REDDY INSTEAD OF THE COMPANY M/S VNR INFRASTRUCTURE LIMITED ~ THOSE TRANSACTIONS ARE RELATED TO THE COM PANY OR REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS OF THE SAID COMPANY AND HENCE THEY ARE TO BE ADMITTED OR TO BE VERIF IED IN DIE COMPANY M/S VNR INFRASTRUCTURE LIMITED. IN VIEW OF THE ABOVE, THE ASSESSEE HAS REVISED THE ADMISSION IN THE HANDS OF ASSESSE M R V NARAYANA REDDY AND IN THE HANDS OF M/S VNR INFRASTRUCTURE LIMITED AND THE REASONS FOR THE ADMISSION IN RESPECTIVE H EADS AND FOR 9 ITA NOS.1226 TO 1230/HYD/2018 THE NON ADMISSION IN CERTAIN AMOUNTS AS IT WAS NOT INCOME EITHER IN THE HANDS OF THE ASSESSE OR IN THE HANDS OF VNR INFRASTR UCTURE LIMITED AS THEY ARE REGULAR TRANSACTIONS REFLECTED IN REGULAR BOOKS OF ACCOUNTS AND THE TRANSACTIONS WHICH ARE N OT RELATED TO THE ASSESSE OR HIS GROUP OF COMPANIES CONSIDERED ASSESSMENT YEAR WISE AS FOLLOWS: FOR THE ASST. YEAR 2008 - 09 : PARTICULA RS AMOUNT RS. ADMITTED INCOME BEFORE INVESTIGATION AUTHORITY IN THE HANDS OF V NARAYANA REDDY 9717600 LESS: AS THE AMOUNT RELATES TO SITE EXPENSES OF KIR - JBN SECTION OF N. F RAILWAY WHICH HAS BEEN REFLECTED IN BOOKS OF ACCOUNTS AS PER THE STATEMENT ENCLO SED ALONG WITH THE CASH BOOK OF M/S VNR INFRASTRUCTURE LIMITED IN RELATES TO THE KLR - JBN SECTION OF NF R AILWAY. 8712600 LESS: AN AMOUNT OF RS. 10,05,000 NOT CONSIDERED IN THE BOOKS OF ACCOUNT 0 1005000 THE COMPANY ON THE RELEVANT DATES AND HENCE THE SAME HAS BEEN ADMITTED AS INCOME AND THE SAME MAY BE CONSIDERED AS PART OF ADDITIONAL INCOME OFFERED INCLUDED IN RS. 13,00,000 ADMITTED AT THE TIME OF SEARCH BEFORE INV. AUTHORITIES. 1005000 NET INCOME TO BE OFFERED NIL FOR THE ASST. YEAR 2009 - 10 : NIL . ------- SPACE LEFT INTENTIONALLY ---- 10 ITA NOS.1226 TO 1230/HYD/2018 11 ITA NOS.1226 TO 1230/HYD/2018 12 ITA NOS.1226 TO 1230/HYD/2018 13 ITA NOS.1226 TO 1230/HYD/2018 14 ITA NOS.1226 TO 1230/HYD/2018 15 ITA NOS.1226 TO 1230/HYD/2018 TO THE BUSINESS OF THE COMPANY, THE INCOME IS NOT TAXABLE IN INDIVIDUAL HANDS. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. 4. IT EMERGES FROM A PERUSAL OF CIT(A) LOWER APPELLATE DISCUSSION THAT HE HA S DELETED ALL THE IMPUGNED TWIN ADDITIONS O F UNDISCLOSED UNACCOUNTED EXPENDITURE AND UNDISCLOSED INCOME (SUPRA) FOR THE SOLE REASON THAT THEY PERTAIN TO ASSESSEE'S COMPANY M/S. VNR INFRASTRUCTURE LIMITED AND DULY STAND ASSESSED IN THE LATTERS HANDS. 5. THE REVENUE VEHEMENTLY CONTENDED DURING THE COURSE OF HEARING THAT THE CIT(A) OUGHT TO HAVE AFFIRMED BOTH THE IMPUGNED ADDITIONS IN THE ASSESSEE'S HANDS AS PER THE ASSESSING OFFICERS STAND. WE MAKE IT CLEAR THAT THERE IS NO T EVEN AN I NDICATION IN THE R EVEN UES GROUND S THAT THE IMPUGNED ADDITION S PERTAIN TO THE ASSESSEE HIMSELF TH A N HIS COMPANY M/S. VNR INFRASTRUCTURE LIMITED. HONBLE APEX COURT S LANDMARK DECISION IN ITO VS. C H ATCHAIAH 218 ITR 239 (SC) HELD LONG BACK THAT THE ASSE SSING OFFICER CAN AND HE MUST, TAX THE RIGHT PERSON AND THE RIGHT PERSON ALONE. BY 'RIGHT PERSON' IT IS MEANT THE PERSON WHO IS LIABLE TO BE TAXED ACCORDING TO LAW WITH RESPECT TO A PARTICULAR INCOME. BY THE CON NOTATION OF RIGHT PERSON , IT IS MEANT THE PERSON WHO IS LIABLE TO BE TA XED, ACCORDING TO LAW, WITH RESPECT TO A PARTICULAR INCOME. AND THAT T HE EXPRESSION 'WRONG PERSON' IS OBVIOUSLY USED AS AN ANTITHESIS OF THE EXPRESSION 'RIGHT PERSON' ONLY. W E OBSERVE THAT TH IS ASSESSEE IS THE MANAGING DIRE CTOR OF M/S. VNR INFRASTRUCTURE LIMITED . AND THAT IT IS THIS LATTER ENTITY WHICH THE FACT IS ENGAGED IN ALL THE BUSINESS ACTIVITY(IES) AND HA S BEEN ASSESSED SEPARATELY THROUGHOUT. THERE 16 ITA NOS.1226 TO 1230/HYD/2018 IS YET ANOTHER LANDMARK DECISION SOLEMAN VS. SALOMAN AND CO. LTD. (189 7 A C 22) H O LD LONG BACK IN C ORPORATE PARLANCE THAT A COMPANY IS VERY A BODY CORPORATE AND A DISTINCT ENTITY APART FROM ITS DIRECTOR. 6. WE CONCLUDE IN THESE CIRCUMSTANCES THAT THE CIT(A) HAS RIGHTLY DELETED THESE TWIN ADDITIONS IN THE ASSESSEE/ I NDIVIDUALS HANDS SINCE CORRESPONDING UNDISCLOSED AND UNACCOUNTED INCOME PERTAINS TO ITS COMPANY M/S. VNR INFRASTRUCTURE LIMITED CARRYING OUT THE BUSINESS IN ITS OWN NAME. WE MAKE IT CLEAR WHILE HOLDING SO THAT THE REVENUE HAS NOT EVEN INDICATED THE FACT ABOVE THE COMPANYS ASSESSMENT QUA THE VERY INCOME(S). WE THUS SEE NO REASON TO REVERSE THE CIT(A) DETAILED FINDING S FOR TH ESE PRECISE REASON S . 7. NO OTHER ARGUMENT HAS BEEN RAISED AT THE REVENUES BEHEST . 8. THESE R EVENUES APPEALS ARE DISMISSED. A COPY OF TH IS COMMON ORDER BE PLACED IN THE RESPECTIVE CASE FILES. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST APRIL , 2021. SD/ - SD/ - (LAXMI PRASAD SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DT. 21 .0 4 .2021. * REDDY GP 17 ITA NOS.1226 TO 1230/HYD/2018 COPY TO : 1. SHRI NARAYANA REDDY VAKATI, 8 - 2 - 293/82/4/60/ C, ROAD NO.12, MLA COLONY, HYDERABAD - 500 034 2. J.CIT(OSD), CENTRAL CIRCLE (3), HYDERABAD. 3. PR. C I T - CENTRAL , HYDERABAD. 4. CIT(APPEALS) - 11, HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE. BY ORDER SR. PVT. SECRETARY, ITAT, HYDERABAD.