Rajendra Prasad Jakkampudi, Hyderabad V. ITO,Ward-8(3), Hyderabad

ITA 1316/HYD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2633 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 19-12-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 10-07-2014
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Income from undisclosed sources
• Section: 133A; 131; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ITA NO. ASST. YEAR APPELLANT RESPONDENT 1316/HYD/2014 2007-08 RAJENDRA PRASAD JAKKAMPUDI, HYDERABAD [PAN: ADNPJ2425L] THE INCOME TAX OFFICER, WARD-8(3) HYDERABAD 1317/HYD/2014 2008-09 FOR ASSESSEE : SHRI S. RAMA RAO, AR FOR REVENUE : SHRI A. SITARAMA RAO, DR DATE OF HEARING : 09-02-2017 DATE OF PRONOUNCEMENT : 21-04-2017 O R D E R PER B. RAMAKOTAIAH, A.M. : THESE TWO APPEALS ARE FILED BY ASSESSEE AGAINST THE ORDER(S) OF THE COMMISSIONER OF INCOME TAX (APPEALS)-VIJAYAWADA, BOTH DATED 06-03-2014 CONFIRMING AN AMOUNT OF RS. 18,00,000 IN AY 2007-08 AND RS.49,50,000 IN AY 2008-09. THESE APPEALS ARE FILED WITH ONE DAY DELAY AND AFTER CONSIDERING THE AFFIDAVIT OF THE ASSESSEE AND THE CONDONATION PETITIONS FILED, THE DELAY OF ONE DAY IS CONDONED. 2. BRIEFLY STATED, ASSESSEE IS A SMALL TIME BUILDER A ND IN THE COURSE OF SURVEY U/S. 133A OF THE INCOME TAX ACT [A CT] CONDUCTED ON 09-09-2008, CERTAIN RECEIPT BOOKS AND UNSIGNED AGR EEMENTS WITH TWO PERSONS WERE FOUND. IN THE STATEMENT RECORDE D U/S. 133A, ASSESSEE ADMITTED ADDITIONAL RECEIPTS AT RS. 300 PER SQ. FT., ON 35,000 SQ. FT., OF CONSTRUCTED AREA SOLD, AMOUNTING TO RS. 1 CRORE. HOWEVER, IN THE RETURNS FILED, ASSESSEE HAD NOT ADMITTED I.T.A. NOS. 1316 & 1317/HYD/2014 RAJENDRA PRASAD JAKKAMPUDI :- 2 - : ANY INCOME. FOR AY 2007-08, THE RETURN WAS ALREADY FILED AND ASSESSING OFFICER (AO) IN THE SCRUTINY ASSESSMENT NOTI CED THAT ASSESSEE HAS DEPOSITED CASH OF RS. 21,07,200/- IN AN DHRA BANK, MIYAPUR BRANCH. A SHOW CAUSE NOTICE WAS ISSUED TO AS SESSEE ASKING WHY THE INCOME SHOULD NOT BE ESTIMATED AT RS. 3 00 PER SQ. FT., ON THE SALES MADE DURING THE YEAR I.E., 6,000 SQ. FT ( 6000* 300= 18,00,000). AS THERE IS NO RESPONSE FROM ASSESSEE, AO COMPLETED THE ASSESSMENT U/S. 144 ON 30-12-2009 MAKING AN ADDIT ION OF CASH DEPOSIT OF RS. 21,07,200/- AND UNACCOUNTED SALE PROCEEDS OF RS. 18 LAKHS, THEREBY DETERMINING TOTAL INCOME AT RS. 4 3,73,010/-. SIMILARLY IN AY. 2008-09, ASSESSEE HAS DISCLOSED AN INCOME OF RS. 9,20,250/- AND AO MADE AN ADDITION OF RS. 49,50,000/ - (16,500 X 300) ON SIMILAR WAY AS MADE IN AY. 2007-08. FOR TH E SAKE OF CLARITY, WE ARE CONSIDERING THE APPEAL IN ITA NO. 13 16/HYD/2014 FOR THE AY. 2007-08 IN DETAIL. 3. BEFORE THE LD.CIT(A), ASSESSEE CONTENDED THAT THERE WAS TERRIFIC PRESSURE ON THE DAY OF SURVEY AND WAS FOR CED TO DECLARE INCOME OF RS. 1 CRORE AT RS. 300 PER SQ. FT., OVER AN D ABOVE WHAT HAS BEEN DECLARED IN THE IT RETURNS OR RECORDED IN THE BOOKS OF ACCOUNT. WITH REFERENCE TO TWO UNSIGNED AGREEMENTS, W HEREIN SALE PRICE WAS SHOWN AT RS. 2,000/- AS AGAINST ACTUAL PRICE OF RS. 1,325/- PER SQ. FT., ASSESSEE FILED AFFIDAVITS FROM THE SAID PERSONS AND ALSO REFERRED TO THE STATEMENTS GIVEN DURING THE COURSE OF SURVEY THAT THOSE TWO AGREEMENTS WERE CONSIDERED FOR OB TAINING HIGHER AMOUNT OF LOAN BY THE BUYERS BUT THE PARTY DID NOT TAKE ANY HIGHER AMOUNT OF LOAN AND THEREFORE, THOSE TWO AGREEME NTS HAVE NOT BEEN EXECUTED. IT WAS FURTHER SUBMITTED THAT ASSESSEE HAS NO UNACCOUNTED RECEIPTS AND THE PRICE SHOWN WAS REASONAB LE FOR THE I.T.A. NOS. 1316 & 1317/HYD/2014 RAJENDRA PRASAD JAKKAMPUDI :- 3 - : PROJECT COMPLETED BY HIM. LD.CIT(A) SENT THE INFORMA TION AND CONTENTIONS TO THE AO, WHO IN THE REMAND REPORT HAS ACC EPTED THE CONTENTIONS AND ALSO VERIFIED AND SUBMITTED THAT THOSE TWO AGREEMENTS WERE NOT RELIABLE. WITH REFERENCE TO CASH D EPOSIT ALSO AO ACCEPTED THE SOURCE OF THE AMOUNTS, ACCORDINGLY, REPORT WAS SENT TO THE LD.CIT(A). 3.1. LD.CIT(A) WHILE ACCEPTING THE REPORT OF THE AO WIT H REFERENCE TO ADDITION OF RS. 21,07,200/- HOWEVER, DIFFERED ON I SSUE OF ADDITION OF RS. 18 LAKHS AND CONFIRMED THE SAME BY STA TING AS UNDER: 5.2. THE NEXT ISSUE PERTAINS TO ADDITION MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF ADDITIONAL RECEIPTS OFFERED B Y THE APPELLANT DURING THE COURSE OF SURVEY ON THE SALE OF FLATS. AFTER G OING THROUGH THE SUBMISSIONS OF THE APPELLANT AND THE OBSERVATIONS O F THE ASSESSING OFFICER IN THE REMAND REPORT, I AM NOT IN AGREEMENT WITH TH E SAME IN VIEW OF THE FOLLOWING REASONS. 5.2.1. IT IS A FACT THAT DURING THE COURSE OF SURVE Y OPERATIONS, AN AGREEMENT FOR SALE WAS DETECTED BY THE DEPARTMENT. IT IS ALSO A FACT THAT THE SAME WAS NOT SIGNED BY THE VENDEE. BUT DURING THE COURSE OF SURVEY, CERTAIN RECEIPT BOOKS CONTAINING DETAILS OF RECEIPT OF AMOUNT IN CASH WERE FOUND, WHICH WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. WHEN THE SAME WAS CONFRONTED, THE APPELLANT HIMSELF CAME FOR WARD AND OFFERED ADDITIONAL RECEIPTS @ RS. 300/- PER SQ. FT ON THE S ALE OF FLATS TO COVER UP THE DEFICIENCIES IN THE BOOKS. HOWEVER, THE APPELL ANT HAS COME ALTOGETHER WITH NEW SUBMISSIONS DURING THE APPEAL PROCEEDINGS BEFORE ME BY WAY OF FILING MOUS AND SALE DEEDS FROM TWO VENDEES VIZ. MR . MARAMREDDY MURALIDHAR REDDY AND MR.CHENNURI CHENCHAIAH, WHEREI N THE SALE RATE PER SQ.FT. HAS BEEN ARRIVED AT RS.1,325/- PER SQ.FT . I AM NOT IN AGREEMENT TO ACCEPT THE SUBMISSIONS OF THE APPELLANT IN THIS REGARD AS THE APPELLANT HAS NOT MADE A CLAIM BEFORE THE ASSESSING OFFICER I N THE ASSESSMENT PROCEEDINGS INSPITE OF SUFFICIENT OPPORTUNITIES GIV EN. FURTHER, IT IS A GENERAL PRACTICE THAT THE SALE CONSIDERATION MENTIONED IN T HE SALE DEEDS WILL BE FAR LESS THAN THE AMOUNTS AGREED AS PER THE 'AGREEMENT OF SALE'. THIS PRACTICE IS GENERALLY BEING FOLLOWED IN ORDER TO REDUCE STAM P DUTY AND REGISTRATION CHARGES. HENCE, I AM OF THE OPINION THAT THERE IS E XCESS SALE CONSIDERATION RECEIVED BY THE APPELLANT AS FOUND DURING THE COURS E OF SURVEY, AS ALSO EVIDENT FROM THE CASH FOUND DURING THE COURSE OF SU RVEY. THEREFORE, THE ASSESSING OFFICER IS JUSTIFIED IN BRINGING TO TAX T HE ADDITIONAL RECEIPTS I.T.A. NOS. 1316 & 1317/HYD/2014 RAJENDRA PRASAD JAKKAMPUDI :- 4 - : OFFERED BY THE APPELLANT HIMSELF DURING THE COURSE OF SURVEY THAT WOULD COVER UP THE DEFICIENCIES IN THE BOOKS OF ACCOUNT D ETECTED BY THE APPELLANT. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFF ICER IS SUSTAINED. ASSESSEE IS AGGRIEVED. 4. EVEN THOUGH ASSESSEE HAS RAISED THE GROUND PERTAIN ING TO DELETION OF ADDITION OF RS. 18 LAKHS, (GROUND NOS. 2 & 3), ASSESSEE ALSO RAISED AN ADDITIONAL GROUND THAT ADDITION OF ENTIRE RS. 18 LAKHS IS NOT JUSTIFIED AND ONLY THE ELEMENT OF PROFIT WOULD FORM PART OF THE INCOME. THIS BEING A LEGAL GROUND ON WH ICH NO FACTS NEED TO BE EXAMINED, ADDITIONAL GROUND IS ADMITTED. 5. LD. COUNSEL REFERRING TO THE STATEMENT GIVEN DURING THE COURSE OF SURVEY, THE UNSIGNED DOCUMENTS AND THE AFF IDAVITS FILED BY SHRI MURALIDHAR REDDY AND CHENCHAIAH, IT WAS SUBM ITTED THAT ASSESSEE SOLD AT RS. 1,325 PER SQ. FT. ONLY, AND NOT AT RS. 2,000/- AS STATED IN THE UNSIGNED PAPERS. HE REFERRED TO THE AOS REMAND REPORT WHEREIN ON ENQUIRY, THE AO HAS CONFIRMED THAT AS SESSEE SOLD THE FLATS AT RS. 1,325/- PER SQ. FT., AND NOT AT RS . 2,000/- PER SQ. FT. FURTHER, THERE WERE NO UNACCOUNTED RECEIPTS AN D AO HAS NOT MADE ANY ADDITION OF UNACCOUNTED RECEIPTS, EXPLAIN ING THAT IT WAS ONLY THE RECEIPTS WHICH ARE NOT ACCOUNTED AS ON TH E DATE OF SURVEY BUT SUBSEQUENTLY, THEY WERE TAKEN INTO CONSIDERATI ON AND REFERRED TO THE STATEMENT GIVEN IN THIS CONTEXT THAT ALL AMO UNTS WILL BE ACCOUNTED FOR AS BOOKS OF ACCOUNT WERE NOT CLOSED. IT WAS FURTHER SUBMITTED THAT AO HAS NOT CONSIDERED THE DIFFERENC E OF RS. 700/- IN THOSE UNSIGNED DOCUMENTS BUT HAS TAKEN RS. 300 /- ON THE BASIS OF THE STATEMENT GIVEN IN THE COURSE OF SURVEY , WHICH HAS NO BASIS AT ALL. IT WAS SUBMITTED THAT CIT(A) ERRED IN D IFFERING FROM THE REMAND REPORT OF THE AO WHILE CONFIRMING THE AMOUN T AND HAS I.T.A. NOS. 1316 & 1317/HYD/2014 RAJENDRA PRASAD JAKKAMPUDI :- 5 - : MADE UN-FOUNDED ALLEGATIONS. IT WAS THE SUBMISSION OF LD. COUNSEL THAT NO ADDITION IS WARRANTED. WITH REFERENCE TO ADDITION AL GROUND, IT WAS SUBMITTED THAT IN THE ALTERNATE ONLY A PROFIT PER CENTAGE CAN BE ESTIMATED BUT NOT THE ENTIRE AMOUNT. 6. LD.DR, HOWEVER, SUBMITTED THAT ASSESSEE WAS FOUND WI TH CERTAIN UNACCOUNTED RECEIPTS AND CASH IN THE COURSE O F SURVEY AND SUBSEQUENT STATEMENT WAS RECORDED U/S. 131 IN WHICH ASS ESSEE HAS REITERATED THE STATEMENT GIVEN ON THE DATE OF SURVEY . IT WAS FURTHER SUBMITTED THAT IT IS NOT A FORCED DECLARATION AND A SSESSEE VOLUNTARILY OFFERED AT RS. 300/- AS PROFIT AND NOT RS. 700/- WHICH IS A DIFFERENCE IN SALE CONSIDERATION ON THE BASIS OF THOSE AGREEMENTS. IT WAS SUBMITTED THAT RS. 300/- PER SQ. FT., IS THE PROFIT AND AO HAS BROUGHT THE SAME TO ASSESSMENT. IT W AS FURTHER SUBMITTED THAT ALTERNATE PLEA CANNOT BE ACCEPTED AS THE ENTIRE RS. 300/- IS CONSIDERED AS PROFIT BUT NOT AS SALE CONS IDERATION AS CAN BE SEEN FROM THE STATEMENT. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE DOCUMENTS ON RECORD. AS FAR AS DIFFERENCE IN SALE C ONSIDERATION CONSIDERED BY THE AO IN THE COURSE OF SURVEY, THE SAME WAS BASED ON UNSIGNED AGREEMENTS SUPPOSED TO HAVE BEEN CONSIDER ED FOR OBTAINING A HIGHER AMOUNT OF LOAN FROM BANK. BUT IN THE COURSE OF SURVEY ITSELF, ASSESSEE HAS STATED THE SAME AND THERE IS NO CHANGE IN ASSESSEES STAND. IN FACT, THE OFFICER WHO WAS ON SURVEY WAS SPECIFICALLY ASKED TO MAKE ENQUIRIES IMMEDIATELY. T HEREFORE, THE VERSION STATED BY ASSESSEE THAT THOSE TWO AGREEMENTS ARE MEANT FOR OBTAINING A HIGHER LOAN BUT NOT ACTUAL SALE CONSIDERATIO N HAS TO BE ACCEPTED. MOREOVER, THE SO CALLED UNACCOUNTED RECEIP TS HAVE NOT I.T.A. NOS. 1316 & 1317/HYD/2014 RAJENDRA PRASAD JAKKAMPUDI :- 6 - : BEEN BROUGHT TO TAX AND THE CASH DEPOSIT ADDITION MAD E IN THE BANK ACCOUNTS REPRESENTING AS UNACCOUNTED INCOME BY THE AO, WAS ACCEPTED IN REMAND REPORT AND EVEN LD.CIT(A) ACC EPTED AND DELETED THE SAME. THEREFORE, WHAT IS SURVIVING FOR CO NSIDERATION IS ONLY THE ADDITIONAL INCOME BROUGHT TO TAX ON THE BASIS OF THE STATEMENT DURING THE SURVEY. AS THERE IS NO BASIS FOR THE SAME, WE ARE OF THE OPINION THAT ASSESSEE CANNOT BE PENALISED BY MAKING AN ADDITION OF AN AMOUNT WHICH HE HAS NOT EARNED OR THERE IS ANY EVIDENCE TO SUPPORT THAT THIS MUCH PROFIT HAS BEEN EARNE D BY ASSESSEE. THE ENQUIRY BY THE AO ALSO HAS REVEALED TH AT ASSESSEE HAS SOLD A PLOT ONLY @ 1,325/- PER SQ. FT. THEREFORE , QUESTION OF BRINGING IT TO TAX THE SO CALLED ADDITIONAL SALE CONSID ERATION DOES NOT ARISE AT ALL. IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT NO ADDITION CAN BE MADE TO THE INCOME RETURNED. WE AR E UNABLE TO UNDERSTAND HOW LD.CIT(A) COULD DIFFER FROM THE REMAND REPORT OF THE AO, WHO ACCEPTED THAT THERE IS NO EXTRA SALE CONSIDE RATION, IN THE REMAND REPORT. EVEN THE REASONING GIVEN BY THE CIT (A) IS NOT JUSTIFIABLE IN THE ABSENCE OF ANY EVIDENCE. IN VIEW OF THAT, WE HEREBY DELETE THE ADDITION MADE OF RS. 18 LAKHS. THE GROUNDS ON THIS ARE ALLOWED. APPEAL IN ITA NO. 1317/HYD/2014 AY. 2008-09: 8. AS BRIEFLY STATED EARLIER, IN THIS YEAR ALSO, THE AO BROUGHT TO TAX THE AMOUNT OF RS. 300/- PER SQ. FT., ON THE AREA SOL D DURING THE YEAR MAKING AN ADDITION OF RS. 49,50,000/-. FOR THE R EASONS STATED IN AY. 2007-08, THERE IS NO BASIS FOR MAKING AN ADD ITION. THE SAME HAS TO BE DELETED. THE GROUNDS ON THIS ARE ALLOWED. I.T.A. NOS. 1316 & 1317/HYD/2014 RAJENDRA PRASAD JAKKAMPUDI :- 7 - : 9. HOWEVER, WHILE CONTESTING THAT NO ADDITION OF SALE CONSIDERATION CAN BE BROUGHT TO TAX, ASSESSEE HAS RAI SED ADDITIONAL GROUND IN BOTH THE YEARS THAT ONLY PROFIT SHOULD HAVE B EEN BROUGHT TO TAX AND NOT THE ENTIRE AMOUNT. EVEN THOUGH IT WAS EXPLA INED THAT THE SALE CONSIDERATION WAS ACCORDING TO THE BOOKS OF ACCOUNT, IT CANNOT BE RULED OUT THAT FURTHER PROFIT COULD HAVE BE EN EARNED. ADDITIONAL GROUND RAISED ITSELF INDICATES THAT. IN VI EW OF THAT, WE ARE OF THE OPINION THAT THERE COULD BE MORE PROFIT WHI CH COULD HAVE BEEN RECEIVED BY ASSESSEE THAN WHAT WAS OFFERED IN TH E BUSINESS AND ACCORDINGLY, WE ARE OF THE OPINION THAT 10% OF TH E AMOUNT BROUGHT TO TAX BY AO CAN BE CONSIDERED AS PROFIT EARN ED FROM THE SALE OF PROPERTY DURING THE YEAR. ACCORDINGLY, AS AGAINST RS. 18 LAKHS AND RS. 49,50,000/- ADDITION MADE BY AO, WE CO NFIRM THE PROFIT THERE ON AT 10% WHICH CAN BE BROUGHT TO TAX ON TH E FACTS OF THE CASE. ACCORDINGLY, AN AMOUNT OF RS. 1,80,000/- I N AY. 2007- 08 AND RS. 4,95,000/- IN AY. 2008-09 WAS CONFIRMED AND BALANCE AMOUNT WAS DIRECTED TO BE DELETED. ADDITIONAL GROUND I S ACCORDINGLY ALLOWED. 10. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST APRIL, 2017 SD/- SD/- (G. PAVAN KUMAR) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMB ER HYDERABAD, DATED 21 ST APRIL, 2017 TNMM I.T.A. NOS. 1316 & 1317/HYD/2014 RAJENDRA PRASAD JAKKAMPUDI :- 8 - : COPY TO : 1. RAJENDRA PRASAD JAKKAMPUDI, HYDERABAD. C/O. SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, DOOR NO. 3-6-643, STREET NO. 9, HIMAYAT N AGAR, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-8(3), HYDERABAD. 3. CIT (APPEALS)-VIJAYAWADA. 4. CIT-II, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.