Venkat Reddy Etikala, Hayathnagar, Hyderabad V. ACIT, Central Circle-3, Hyd, Hyderabad

ITA 1289/HYD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2501 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 05-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SIRI KUMAR
• Assessee Lawyers: P VINOD
• Keywords: Unexplained cash credit; Search and seizure
• Section: 143(3); 153A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1289/HYD/2016 ASSESSMENT YEAR: 2005-06 E. VENKAT REDDY, R.R. DISTRICT. PAN AAFPE 1250M VS. ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 3, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. VINOD REVENUE BY : SHRI J. SIRI KUMAR DATE OF HEARING 13/12/2017 DATE OF PRONOUNCEMENT 28/02/2018 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 24 TH MARCH, 2016 PASSED BY CIT(A) 7, HYDERABAD RELATI NG TO AY 2005-06. 2. ON PERUSAL OF RECORD, WE FIND THAT THERE WAS A D ELAY OF 11 DAYS IN FILING THE APPEAL BEFORE US. IN THIS CONNECTION, AS SESSEE FILED AN AFFIDAVIT FOR CONDONATION OF THE SAID DELAY AFFIRMING THEREIN THAT AT THE RELEVANT POINT OF TIME THERE WAS A DEATH OF A CLOSE RELATIVE, DUE TO WHICH, THE DELAY OF 11 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. CONS IDERING THE SUBMISSIONS OF THE ASSESSEE AND THE OBJECTION OF THE LD. DR, WE HEREBY CONDONE THE DELAY AS THE ASSESSEE WAS PREVENTED BY REASONABLE C AUSE IN NOT FILING THE APPEAL WITHIN THE STIPULATED TIME. 2 ITA NO. 1289 /HYD/2016 E. VENKAT REDDY, R.R. DIST. 3. BRIEF FACTS OF THE CASE ARE, ASSESSEE, AN INDIVI DUAL, DERIVES INCOME FROM COMMISSION AND BROKERAGE IN REAL ESTATE BUSINESS. HE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 DECLARING TOTAL INCOME OF RS.60,175/- AND AGRICULTURAL INCOME OF RS.35,860/-. SEARCH AND SEIZURE OPERATION U/S.132 WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 24.08.2007. THE ASSESSING OFFICER C OMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 153A OF THE ACT BY MAK ING ADDITION TOWARDS UNEXPLAINED CASH CREDIT OF RS.5,50,000/- AN D DETERMINED THE TOTAL INCOME AT RS.6,46,035/-. 3.1 FROM THE CASH BOOK FURNISHED, THE AO NOTICED T HAT THE ASSESSEE HAS ON 15.5.2004 GIVEN CASH LOAN TO SRI E . SHAM REDDY AMOUNTING TO RS.2,10,000/- AND HAS ALSO MADE INVEST MENT IN CASH OF RS.3,00,000/- IN THE NAME OF HIS WIFE SMT. C. ARUNA DEVI FOR PURCHASE OF SERILINGAMPALLY PROPERTY. THE OPENING CASH IN HA ND AVAILABLE WITH THE ASSESSEE WAS ONLY RS.86,450/- AS ON 15.5.2004 A ND HE HAS CLAIMED TO HAVE RECEIVED AN AMOUNT OF RS.5,50,000/- IN CASH FROM M/S MAHALAKSHMI PROPERTIES TOWARDS REFUND OF ADVANCE. I T WAS STATED BY THE ASSESSEE THAT THE ABOVE AMOUNT WAS RETURNED BY M/S MAHALAKSHMI PROPERTIES ON ACCOUNT OF CANCELLATION O F SALE DEED, WHICH WAS MADE IN 2001 FOR PURCHASE OF PROPERTY. 3.2 IN SUPPORT OF HIS CONTENTION THE ASSESSEE HAS PRODUCED A COPY OF THE CANCELLATION OF SALE DEED DATED 3.2.2005 WHI CH STATES THAT SALE DEED REGISTERED VIDE DOCUMENT NO. 2333 OF 2001 IS C ANCELLED. FROM THE CANCELLATION DEED IT TRANSPIRED THAT THE ASSESS EE HAS AGREED TO PURCHASE A SHOWROOM FROM M/S MAHALAKSHMI PROPERTIES BUT HAS NOT PAID THE ENTIRE SALE CONSIDERATION AND HENCE THE SA LE DEED REGISTERED IN 2001 HAS BEEN CANCELLED. THE AO OPINED THAT IN T HE CANCELLATION DEED NEITHER THERE IS ANY MENTION OF AMOUNT PAID BY THE ASSESSEE IN 2001 NOR ANY ADVANCE RETURNED BY M/S MAHALAKSHMI PR OPERTIES IN TERMS OF THE ABOVE CANCELLATION DEED AND THE ASSESS EE WAS UNABLE TO PRODUCE ANY INDEPENDENT CONFIRMATION OR SUPPORTING DOCUMENT EVIDENCE FROM M/S MAHALAKSHMI PROPERTIES REGARDING RECEIVING BACK 3 ITA NO. 1289 /HYD/2016 E. VENKAT REDDY, R.R. DIST. THE ADVANCE OR SALE CONSIDERATION PAID EARLIER IN 2 001. HE, THEREFORE, HELD THAT THE ASSESSEE WAS UNABLE TO SATISFACTORIL Y EXPLAIN THE CASH CREDIT OF RS. 5,50,000/- AND THE SAME WAS THEREFORE TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND ADDED THE SAME TO THE RETURNED INCOME. 4. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT(A). 5. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT T HE AO MADE ADDITION OF RS.5,50,000/- ON THE GROUND THAT SOURCE FOR THIS IS NOT PROVED. THE ASSESSEE SUBMITTED BEFORE THE CIT(A) TH AT THIS AMOUNT WAS RECEIVED CONSEQUENT TO CANCELLATION OF AN AGREE MENT OF SALE AND FILED COPY OF CANCELLATION DEED DATED 03.02.2005. T HE ASSESSEE SUBMITTED THE FOLLOWING EVIDENCES UNDER RULE 46A RE QUESTING TO ADMIT THE SAME: 1 COPY OF AGREEMENT OF SALE DATED 04.03.2000 IN F AVOUR OF MAHALAKSHMI PROPERTIES. 2 COPY OF CHEQUE RETURNED MEMO WITH COPY OF CHEQUE IN FAVOUR OF THE ASSESSEE FOR RS.6,00,000 DT. 12.11.2000. 3 COPY OF SALE DEED DT. 03.08.2001 IN FAVOUR OF THE ASSESSEE. 4 COPY OF O.S.NO.549 FILED BY THE ASSESSEE BEFORE C ITY CIVIL COURT PRAYING FOR SPECIFIC PERFORMANCE WHEREIN PAYM ENT OF RS. 6,00,000/- IS NARRATED. 6. ACCORDINGLY, THE CIT(A) CALLED FOR THE REMAND FR OM THE AO WITH REFERENCE TO THE ABOVE SUBMISSIONS OF THE ASSESSEE. THE AO IN HIS REMAND REPORT, INTER-ALIA, STATED THAT AS PER THE C ASH BOOK PREPARED AN AMOUNT OF RS. 5,50,000/- WAS RETURNED BY M/S MAH ALAKSHMI PROPERTIES ON 15/04/2004, BUT, THE CANCELLATION OF AN AGREEMENT OF SALE DEED WAS DATED 03/02/2005 AND, THEREFORE, THE ASSESSEES SUBMISSIONS ARE SELF-CONTRADICTING, INCONCLUSIVE AN D DESERVE NO MERITS FOR CONSIDERATION. 7. AFTER CONSIDERING THE FACTUAL MATRIX OF THE CASE AND REFERRING TO THE CONTENTS IN THE CANCELLATION DEED, WHICH WERE E XTRACTED AT PAGES 4 ITA NO. 1289 /HYD/2016 E. VENKAT REDDY, R.R. DIST. 6 & 7 OF HIS ORDER, THE CIT(A) UPHELD THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER: 7.2 ON EXAMINATION OF FACTUAL POSITION AS ABOVE EM ANATING FROM THE DOCUMENTS, IT IS SEEN THAT THE CONTENTS AR E CONTRADICTORY AND DOES NOT REVEAL THE COMPLETE FACT S. THE APPELLANT IS NOT COMING OUT WITH CLEAN HANDS. THE E XPLANATION GIVEN LACKS CREDIBILITY. IN VIEW OF THE ABOVE AND T HE FACT THAT THERE IS NO CONFIRMATION FROM THE SELLER AS TO RETU RN OF MONEY, AND THE TIME LAG BETWEEN THE ALLEGED TRANSACTIONS, IT IS HELD THAT THE APPELLANT HAS NOT EXPLAINED THE SOURCE FOR THE CASH CREDITS AND THE ASSESSING OFFICER HAS RIGHTLY ASSESSED THE SAME U/S 68 OF THE I.T. ACT, 1961. THE ACTION OF THE AO IS UPHE LD AND THE GROUNDS RAISED BY THE APPELLANT ARE DISMISSED. 8. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US: 1. THE ORDER OF THE CIT(A) UPHOLDING THE ORDER OF A SSESSMENT IS ERRONEOUS BOTH ON FACTS AND IN LAW TO THE EXTENT IT IS PREJUDICIAL TO THE ASSESSEE. 2. THE LD. CIT(A) ERRED IN UPHOLDING THE ADDITION O F RS. 5,50,000/- AS UNEXPLAINED CASH CREDIT. 9. LD. AR OF THE ASSESSEE SUBMITTED WHAT WAS SUBMIT TED BEFORE CIT(A) AND PRAYED FOR CONSIDERING THE ADDITIONAL EV IDENCE WHICH WAS SUBMITTED BEFORE THE LD. CIT(A). 10. LD. DR SUBMITTED THAT THE DOCUMENTS, WHICH ARE PRESENTED, ARE NOT IN SUPPORT OF ASSESSEES CLAIM DUE TO TIME GAP IN INVESTMENT AND DATE OF CANCELLATION OF SALE DEED. 11. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL ON RECORD. THE ASSESSEE HAS MADE THE INVESTMENT DURING THIS YEAR TO THE EXTENT OF RS. 5,10,000/-, FOR WHICH HE HAS DECLARED CASH CREDIT TO THE EXTENT OF RS. 5,50,000/-. FOR THIS CASH CREDIT, ASS ESSEE SUBMITTED THE RECEIPT OF ADVANCE DUE TO CANCELLATION OF SALE DEED . ON PERUSAL, IT IS NOTED THAT THE CASH CREDITS WERE MADE ON 15/05/2004 TO THE EXTENT OF RS. 5,50,000/- OUT OF WHICH THE INVESTMENTS WERE MA DE, WHEREAS THE DATE OF CANCELLED DEED WAS 03/02/2005. IN THE CANCE LLED DEED, THERE IS NO EVIDENCE OF QUANTUM OF CASH REFUND. IN THE AD DITIONAL EVIDENCE 5 ITA NO. 1289 /HYD/2016 E. VENKAT REDDY, R.R. DIST. SHOWN BEFORE LD. CIT(A), WHICH IS THE CIVIL COURT P ROCEEDINGS, AS PER WHICH THE ASSESSEE CLAIMED TO HAVE PAID RS. 8,00,00 0/-. HOWEVER, WE NOTICE THAT THE SALE DEED HAS A VALUE OF PROPERTY, WHICH WAS DECLARED FOR REGISTRATION AT RS. 4,00,000/-. THE ASSESSEE HA S NOT BROUGHT ON RECORD ANY OTHER MATERIAL IN SUPPORT OF PAYMENT NOR RECEIPT DUE TO CANCELLATION OF SALE DEED. HOWEVER, WE NOTICE THAT THERE IS A SOURCE OF RECEIPT FOR RS. 4,00,000/- DURING THIS AY, WHICH IS THE DECLARED VALUE IN SALE DEED. THERE IS POSSIBILITY THAT ASSES SEE MUST HAVE RECEIVED PRIOR TO CANCELLATION OF SALE DEED. THEREF ORE, IN OUR CONSIDERED VIEW, WE CAN ACCEPT THE SOURCE OF RS. 4, 00,000/- DURING THIS AY AND ACCORDINGLY, WE DIRECT THE A O TO REDUC E THE ADDITION U/S 68 TO THE EXTENT OF RS. 4,00,000/-. THE GROUNDS RAI SED BY THE ASSESSEE ARE PARTLY ALLOWED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2018. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 28 TH FEBRUARY, 2018 KV COPY TO:- 1) SHRI E. VENKAT REDDY, C/O S/SHRI K. VASANTKUMAR, AV RAGHURAM, P. VINOD & M. NEELIMA DEVI, ADVOCATES, 610 BABUKH AN ESTATE, BASHEERBAGH, HYDERABAD 500 001. 2) ACIT, CENTRAL CIRCLE 3, AAYAKAR BHAVAN, BASHE ERBAGH, HYD. 3) CIT(A) 7, HYD. 4) PR. CIT 7, HYD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE