Smt. Sarnala Sandhya, Hyderabad V. ACIT, Central Circle-6, Hyderabad

ITA 1319/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66421 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 14-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G SRINIVASA RAO
• Assessee Lawyers: P MURALI MOHANA RAO
• Keywords: Unexplained cash credit; Search and seizure; Opportunity of being heard; Additional evidence; Assessment record
• Section: 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.1319/HYD/2011 ASSESSMENT YEAR: 2004-05 SMT. SARNALA SANDHYA HYDERABAD. .... APPELLANT PAN:AMWPS 5119 C VS. ACIT, CC-6, HYDERABAD. RESPONDENT APPELLANT BY : SHRI P. MURALI MOHANA RAO RESPONDENT BY : SHRI G. SRINIVASA RAO DATE OF HEARING : 17-10-2012 DATE OF PRONOUNCEMENT : 31-10-2012 ORDER PER SAKTIJIT DEY, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 15-06-2011 PASSED IN ITA NO.0456/CI T(A)-III/08- 09 AND IT PERTAINS TO THE ASSESSMENT YEAR 2004-05. 2. THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING T HE ADDITION OF RS.30,95,000/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. BRIEFLY THE FACTS ARE THE ASSESSEE IS AN INDIVIDUAL DERIVING IN COME FROM HOUSE PROPERTY. A SEARCH AND SEIZURE OPERATION U/S 132 O F THE ACT WAS CONDUCTED IN THE RESIDENTIAL PREMISES OF THE ASSESS EES HUSBAND SRI SARNALA SRIDHAR RAO ON 4-8-2005. AS A CONSEQUENCE OF THE SEARCH OPERATION, NOTICE U/S 153C WAS ISSUED CALLING UPON THE ASSESSEE TO FILE 2 ITA NO.1319 OF 2011 SMT. SARNALA SANDHYA, HYD... RETURN OF INCOME FOR THE ASSESSMENT YEAR 2001-02 TO 2006-07. IN RESPONSE TO NOTICE, THE ASSESSEE FILED A RETURN OF INCOME ON 16-6-2006 ADMITTING AN INCOME OF RS.3,86,521/- FOR THE IMPUGN ED ASSESSMENT YEAR AS AGAINST RS.3,14,040/- DECLARED IN THE ORIGINAL R ETURN. IN COURSE OF ASSESSMENT PROCEEDINGS, THE AO WHILE EXAMINING THE BALANCE-SHEET AS ON 31-3-2004 NOTICED THAT AN AMOUNT RS.30,95,000 WAS SHOWN AS LIABILITY BEING ADVANCE RECEIVED FOR PURCHASE OF PROPERTY AT SAIFABAD. THE AO ASKED THE ASSESSEE TO FURNISH DETAILS OF ADVANCES R ECEIVED AS WELL AS CONFIRMATION FROM THE PERSONS FROM WHOM ADVANCES WE RE CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE. THE AO ALSO EXAMINE D ASSESSEES HUSBAND SRI SARNALA SRIDHAR RAO ON THE ISSUE OF ADV ANCES RECEIVED. SINCE THE ASSESSEE DID NOT FURNISH THE DETAILS LIKE NAMES AND ADDRESSES OF THE PERSONS FROM WHOM THE ADVANCES WERE CLAIMED TO HAVE BEEN RECEIVED, THE AO TREATED THE ENTIRE AMOUNT OF RS.30,95,000 AS UNEXPLAINED CREDIT U/S 68 OF THE ACT AND ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE BEING AGGRIEVED OF THE ASSESSMENT ORDER, F ILED AN APPEAL BEFORE THE CIT (A). 3. IN COURSE OF HEARING BEFORE THE CIT (A), THE ASS ESSEE SUBMITTED COPIES OF CONFIRMATION LETTERS OF SOME PERSONS IN S UPPORT OF HER CLAIM OF RECEIPT OF ADVANCES FROM THOSE PERSONS AND PRAYED F OR ADMISSION OF THE CONFIRMATION LETTERS AS ADDITIONAL EVIDENCE. IN HE R WRITTEN SUBMISSIONS, THE ASSESSEE ALSO STATED TO HAVE FURNISHED THE VERY SAME CONFIRMATION LETTER BEFORE THE AO BUT, THE AO HAS NOT CONSIDERED THE SAME. THE CIT (A) AFTER EXAMINING THE ASSESSMENT RECORDS FOUND TH E STATEMENT OF THE ASSESSEE TO THE EFFECT THAT SHE HAD SUBMITTED THE C ONFIRMATION LETTERS BEFORE THE AO TO BE INCORRECT. THE CIT (A) OBSERV ING THAT THE ASSESSEE HAS NOT EXPLAINED WITH SUFFICIENT CAUSE AS TO HOW S HE WAS PREVENTED FROM PRODUCING EVIDENCE BEFORE THE AO, THE ADDITIONAL EV IDENCE SUBMITTED AT THE TIME OF HEARING OF THE APPEAL CANNOT BE ADMITTE D. THE CIT (A) AFTER REJECTING THE ASSESSEES PLEA FOR ADMITTING CONFIRM ATION LETTERS AS 3 ITA NO.1319 OF 2011 SMT. SARNALA SANDHYA, HYD... ADDITIONAL EVIDENCE PROCEEDED TO DECIDE THE APPEAL ON MERIT BY SUSTAINING THE ADDITIONS MADE BY THE AO HOLDING THAT SINCE THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF THE ADVANCE RECEIVED OF RS .30,95,000/- AND HAS ALSO FAILED TO PRODUCE EVIDENCE WITH REGARD TO THE ADVANCE RECEIVED, THE ADDITION U/S 68 WAS JUSTIFIED. 4. THE LEARNED AR SUBMITTED BEFORE US THAT THE CIT (A) WAS NOT JUSTIFIED IN REFUSING TO ADMIT THE COPIES OF THE CO NFIRMATION LETTERS SUBMITTED BEFORE HIM AS ADDITIONAL EVIDENCE AND DEC IDE THE APPEAL ON MERIT AFTER CONSIDERING THE SAME. THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAVING PRODUCED EVIDENCE IN SUPPORT OF ADV ANCES RECEIVED FROM DIFFERENT PERSONS, THE CIT (A) SHOULD HAVE CONSIDER ED THE SAME. THE LEARNED AR URGED FOR CONSIDERATION OF THE CONFIRMAT ION LETTERS PRODUCED BEFORE THE CIT (A). 5. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SUPP ORTING THE ORDERS OF THE LOWER AUTHORITIES SUBMITTED THAT THE ASSESSE E HAVING FAILED TO PRODUCE ANY EVIDENCE WITH REGARD TO THE ADVANCES CL AIMED TO HAVE BEEN RECEIVED AT THE TIME OF ASSESSMENT PROCEEDINGS, THE CIT (A) WAS JUSTIFIED IN NOT ACCEPTING THE CONFIRMATION LETTERS AS ADDITI ONAL EVIDENCE. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD. FROM THE ASSESSMENT ORDER, IT IS QUITE EVI DENT THAT THE ASSESSEE HAS CLAIMED THE AMOUNT OF RS.30,95,000/- SHOWN AS L IABILITY IN THE BALANCE-SHEET AS ON 31-3-2004 WAS TOWARDS ADVANCE R ECEIVED FOR PURCHASE OF PROPERTY AT SAIFABAD FROM DIFFERENT PER SONS. THE AO HAS SPECIFICALLY ASKED THE ASSESSEE AS WELL AS HER HUSB AND TO SUBMIT CONFIRMATIONS IN RESPECT OF THE ADVANCES RECEIVED A S WELL AS OTHER DETAILS NAMES AND ADDRESSES OF THE PERSONS FROM WHOM THE AD VANCES WERE CLAIMED TO HAVE RECEIVED. HOWEVER, SIN E THE ASSES SEE FAILED TO FURNISH EITHER CONFIRMATION OR OTHER DETAILS LIKE NAMES AND ADDRESSES OF THE 4 ITA NO.1319 OF 2011 SMT. SARNALA SANDHYA, HYD... PERSONS FROM WHOM THE ADVANCES WERE RECEIVED, THE A O COMPLETED THE ASSESSMENT BY ADDING THE AMOUNT OF RS.30,95,000/- T REATING IT AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. BEFORE THE F IRST APPELLATE AUTHORITY, THE ASSESSEE HAS PRODUCED CONFIRMATION LETTERS IN S UPPORT OF THE ADVANCES RECEIVED FROM DIFFERENT PERSONS. THE CIT (A) REJE CTED THE ASSESSEES PLEA FOR ADMITTING THE CONFIRMATION LETTERS AS ADDITIONA L EVIDENCE ON THE GROUND THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SUFFICIENT CAUSE WHICH PREVENTED HER FROM SUBMITTING THE SAME BEFORE THE A O. IN OUR CONSIDERED VIEW, SUCH TECHNICAL APPROACH OF THE CIT (A) IS NOT CORRECT. CONSIDERING THE FACT THAT THE ADDITION MADE IS OF A HUGE AMOUNT OF RS.30,95,000/-, THE EVIDENCE PRODUCED BY THE ASSESSEE DESERVES TO B E CONSIDERED BY THE CIT (A). THE ASSESSEE MAY NOT HAVE BEEN ABLE TO PR ODUCE THE CONFIRMATION LETTERS BEFORE THE AO FOR VARIOUS REAS ONS, BUT, THE NON PRODUCTION OF CONFIRMATION LETTERS AT THE ASSESSMEN T STAGE BY ITSELF CANNOT BE A GROUND TO REJECT THE SAME BY THE CIT (A). THE POWERS OF THE CIT (A) ARE CO-TERMINUS WITH THAT OF THE AO. THEREFORE, TH E CIT (A) CAN CONSIDER ANY EVIDENCE OR DOCUMENT WHICH WERE NOT PRODUCED AT THE ASSESSMENT STAGE PROVIDED THE AO IS GIVEN AN OPPORTUNITY TO C OMMENT UPON THE EVIDENCES PRODUCED BEFORE THE FIRST APPELLATE AUTHO RITY. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE THEREFO RE OF THE VIEW THAT THE ASSESSEE DESERVES AN OPPORTUNITY TO SUBSTANTIATE HE R CLAIM BY PRODUCING THE EVIDENCES AS MAY BE AVAILABLE WITH HER. WE THE REFORE REMIT THE MATTER BACK TO THE CIT (A) WHO SHALL CONSIDER THE E VIDENCES PRODUCED BY THE ASSESSEE ON THEIR OWN MERIT. THE CIT (A) MAY AL SO CAUSE ANY ENQUIRY AS DEEMED FIT OR CALL FOR ANY OTHER INFORM ATION FROM THE ASSESSEE TO FIND OUT THE GENUINENESS OF THE CLAIM OF THE ASS ESSEE WITH REGARD TO THE ADVANCE OF RS.30,95,000/- AND TAKE A DECISION IN THE MATTER IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THE CIT (A ) SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE BEFORE FINALLY DECIDING THE ISSUE. 5 ITA NO.1319 OF 2011 SMT. SARNALA SANDHYA, HYD... 11. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 31-10-2012. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 31 ST OCTOBER, 2012. COPY TO:- 1) C/O P. MURALI & CO., CAS, 6-3-655/2/3, IST FLOOR , SOMAJIGUDA, HYDERABAD. 2) ACIT, CC-6, HYDERABAD. 3) THE CIT (A)-III, HYDERABAD 4) THE CIT CONCERNED, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABA D. JMR * 6 ITA NO.1319 OF 2011 SMT. SARNALA SANDHYA, HYD...