Janardhana Rao Kovelamudi, Hyderabad, Hyderabad V. ACIT,Cent Cir-5, Hyderabad, Hyderabad

ITA 132/HYD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7865 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 10-04-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 30-01-2017
• Court: TRIBUNAL

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. 1 3 2 / HYD/201 7 ASSESSMENT YEAR: 20 0 9 - 1 0 JANARDHANA RAO KOVELAMJUDI, HYDERABAD. PAN A HDPK 0219M VS. INCOME - TAX OFFICER, WARD 10(1), HYDERABAD APPELLANT RESPONDENT ASSESSEE BY: S H RI V. RAGHAVENDRA RAO REVENUE BY: S MT. AMISHA S. GUPT DATE OF HEARING: 10 / 0 4 / 201 9 DATE OF PRONOUNCEMENT: 24 / 0 4 /201 9 O R D E R PER S. RIFAUR RAHMAN , AM: T H IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) 2 , HYDERABAD, DATED, 24 / 11 /201 6 FOR AY 20 0 9 - 10 . 2. BRIEF FACTS OF THE CASE ARE, A SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED IN THE CASE OF SRI VENKATA KUTUMBA RAO & OTHERS ON 28/07/2008. SEARCH OPERATIONS WERE ALSO CONDUCTED AT THE RESIDENTIAL PREMISES OF THE ASSESSEE, WHO IS THE MANAGING DIRECTOR IN I KON VISIONS PVT. LTD. AND IKON FINANCIAL SERVICES LTD. 2.1 DURING THE COURSE OF SEARCH CONDUCTED AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 28.07.2008, CASH OF RS.26,25,700/ - WAS FOUND. WHEN HE WAS ASKED TO EXPLAIN THE SOURCES FOR THE CASH FOUND, IN HIS SWORN DEPOSITION RECORDED ON 28/7/2008, THE ASSESSEE DEPO SED THAT OUT OF THE CASH OF I.T.A. NO. 132 /HYD/1 7 JANARDHANA RAO KOVELAMUDI, HYD. 2 RS.26,25,700/ - FOUND, AN AMOUNT OF RS.25,00,000/ - BELONGS TO M/S. IKON VISION PVT. LTD, FOR WHICH HE IS THE MANAGING DIRECTOR, AND THE BALANCE CASH OF RS.1,25,000/ - BELONGS TO HIS FAMILY MEMBERS ACCUMULATED OVER A LONG PERIOD OF TIME. AS HE COULD NOT EXPLAIN THE SOURCES FOR THE CASH AVAILABLE, HE VOLUNTARILY OFFERED AN AMOUNT OF RS.25,00,000/ - AS THE ADDITIONAL INCOME OF M/S. LKON VISION P. LTD. F OR THE FIN. YEAR 2008 - 09 RELEVANT TO ASST. YEAR 2009 - 10. ACCORDINGLY, CASH OF RS.2 5 LAKHS WAS SEIZED. IT WAS FURTHER OBSERVED BY THE ADIT THAT NO REGULAR BOOKS OF ACCOUNT OF IKON VISION PVT. LTD. WERE MAINTAINED AND IT COULD NOT PRODUCE ANY EVIDENCE FOR THE CASH AVAILABLE OR CASH BOOK DULY REFLECTING THE CASH BALANCE AS ON THE DATE OF S EARCH. 2.2 THE AO OBSERVED THAT DURING THE COURSE OF ASST. PROCEEDINGS, THE ASSESSEE HAS PRODUCED BOOKS OF ACCOUNT OF IKON VISIONS PVT. LTD. WHICH WERE NOT PROPERLY MAINTAINED. NO DAY - TO - DAY CASH BOOK WAS FOUND TO BE MAINTAINED. ON VERIFICATION OF THE R ETURN OF INCOME FILED BY IKON VISION PVT. LTD., FOR THE ASST. YEAR 2009 - 10, IN WHICH ASSESSMENTS WERE TAKEN UP SIMULTANEOUSLY, IT WAS FOUND THAT THE ASSESSEE - COMPANY HAS NOT OFFERED THE AMOUNT OF RS.25 LAKHS, AS DEPOSED BY THE MANAGING DIRECTOR . T HE ASS ESSEE, SRI K.JANARDHANA RAO , H OWEVER, PRODUCED A COPY OF SALE DEED BEARING NO. 9061/2008 DATED 29.07.2008, TO SHOW CASH AVAILABILITY OF RS.44 LAKHS. HOWEVER, THIS DOCUMENT WAS REGISTERED ON 29.07.2008 WHEREAS SEARCH WAS CONDUCTED IN THE CASE OF THE ASSESSE E ON 28.07.2008. THE CASH WAS FOUND IN THE PREMISES OF THE ASSESSEE ON 28/7/2008. HENCE, THE CASH FOUND IN THE PREMISES OF THE ASSESSEE HAS NO NEXUS WITH THE CASH RECEIVABLE AS PER THE SALE DEED. FURTHER, THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF CASH F OUND NEITHER AT THE TIME OF SEARCH NOR THEREAFTER. IT IS ONLY DURING THE ASST. I.T.A. NO. 132 /HYD/1 7 JANARDHANA RAO KOVELAMUDI, HYD. 3 PROCEEDINGS, THAT THE ASSESSEE IS TRYING TO LINK UP THE CASH FOUND WITH THE CASH RECEIVABLE AS PER SALE DEED WHICH IS PURELY AN AFTERTHOUGHT TO AVOID TAX LIABILITY. 2.3 THE A O OBSERVED THAT THE CASH IN QUESTION I.E., RS.25 LAKHS WAS FOUND AT THE RESIDENCE OF THE ASSESSEE, SRI K.JANARDHANA RAO. IN VIEW OF NOT HONOURING THE ADMISSION IN THE CASE OF M/S. IKON VISION PVT. LTD., THE SAME WAS TREATED AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE ITSELF BY THE AO AND ADDED THE SAME TO THE RETURNED INCOME OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 4. THE CONTENTIONS OF THE ASSESSEE WERE EXTRACTED BY THE CIT(A) IN H IS ORDER AT PAGES 5 & 6 AND AFTER CONSIDERING THE SAME, THE CIT(A) HELD THAT THE AO IS JUSTIFIED IN BRINGING TO TAX RS. 25,00,000/ - WHICH WAS FOUND DURING THE COURSE OF SEARCH ACTION IN ASESSEES PREMISES. FURTHER, HE OBSERVED THAT THE ASSESSEE HAS NOT SUB STANTIATED ITS EXPLANATION WITH ANY COGENT EVIDENCE WITH REGARD TO THE SOURCES OF CASH FOUND EVEN DURING THE APPEAL PROCEEDS ALSO. SINCE THE ONUS LIES ON THE ASSESSEE WHICH WAS NOT DISCHARGED, THE CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. 5. AGGRIE VED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 5 [CIT(A)] HAS ERRED ON FACTS AND IN LAW WHILE PASSING THE APPELLATE ORDER. 2. THE LEARNED CIT( A) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 25,00,000/ - IN THE CASE OF THE ASSESSEE. I.T.A. NO. 132 /HYD/1 7 JANARDHANA RAO KOVELAMUDI, HYD. 4 3. THE LEARNED CIT(A) HAS FAILED TO CONSIDER THE EVIDENCE BY WAY OF P&L A/C OF IKON VISION (P) LTD SHOWING THE AMOUNT OF RS. 25,00,000/ - IN ACCORDANCE WITH THE STATEM ENT OF THE ASSESSEE, THE MANAGING DIRECTOR RECORDED U/S 132(4) OF THE I. T. ACT. 4. THE LEARNED CIT(A) HAS FAILED TO LOOK INTO THE COPY OF THE REGISTERED SALE DEED EXECUTED BY IKON VISION (P) LTD IN WHICH THE RECEIPT OF THE AMOUNT AS ADVANCE FROM THE VEND EE AND THE DATE OF ITS RECEIPT 24.07.2008 IS RECORDED (THE SEARCH TOOK PLACE ON 28.07.2008). 5. FOR THESE ANY OTHER GROUNDS THAT MAY BE RAISED AT/BEFORE HEARING, IT IS PRAYED THAT THE ADDITION OF RS. 25,00,000/ - BE DELETED. 5.1 THE ASSESSEE FILED A LETTER PRAYING TO ADMIT THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL: 1. ASSESSMENT OF THE SAME AMOUNT IN THE HANDS OF TWO PERSONS IS NOT CORRECT IN LAW. 2. PROCEEDINGS U/S 153C OF INCOME TAX ACT HAVING BEEN INITIATED IN THE CASE OF IKON VISIONS PVT LTD AFTER BEING SATISFIED THAT RS. 25,00,000/ - OF SEIZED CASH BELONGED TO IT, IT IS NOT CORRECT IN LAW TO ASSESS THE SAME AMOUNT IN THE HANDS OF THE ASSESSEE U / S. 153A OF THE INCO ME TAX ACT. 5.2 AS THE SAID A DDITIONAL GROUND S ARE LEGAL GROUND S , WHEREIN, THE FACTS ARE ON RECORD AND FACTS D O NOT REQUIRE FRESH INVESTIGATION, FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO., LIMITED VS. CIT 22 9 ITR 38 3 (SC), WE ADMIT THE SAID ADDITIONAL GROUNDS OF ASSESSEE. 6 . LD. AR SUBMITTED THAT THE CASH SEIZED AT THE RESIDENCE OF THE ASSESSEE BELONG ED TO M/S IKON VISIONS PVT. LTD. AND TH AT THIS PROCEED IS OUT OF SALE CONSIDERATION RECEIVED ON 24/07/2008, THE IKON V ISIONS HAS DECLARED THE SAME AS THEIR INCOME IN THEIR RETURN OF INCOME. THE SAME WAS ACCEPTED BY I.T.A. NO. 132 /HYD/1 7 JANARDHANA RAO KOVELAMUDI, HYD. 5 DEPARTMENT AND ASSESSMENT WAS COMPLETED IN THEIR HANDS. HE BROUGHT TO OUR NOTICE THE RETURN OF INCOME, ASSESSMENT U/S 143(3), AND LETTER OF CONFIRMATION BY THE COMPANY. HE SUBMITTED THAT THE ADDITION MADE BY THE AO IS ON MERE SUSPICION. 7 . LD. DR RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 8 . CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD . THE ASSESSEE WAS SEARCHED ON 28/07/2008 AND IN HIS PREMISES, DEPARTMENT FOUND CASH OF RS. 26,25,700/ - . AT THE TIME OF SEARCH, ASSESSEE DEPOSED U/S 132(4) OF THE ACT THAT RS. 25,00,000/ - BELONGS TO M/S IKON VISIONS PVT. LTD., IN WHICH ASSESSEE IS MANAGING DIRECTOR. THE SAME WAS ACKNOWLEDGED BY THE COMPA NY IKON VISIONS LTD. AND DECLARED THE SAME IN THEIR RETURN OF INCOME. ASSESSEE SUBMITTED COPY OF REGISTERED SALE DEED IN SUPPORT OF THE SALE TRANSACTION. AS PER THE SALE DEED, M/S IKON VISIONS LTD. SOLD THE LAND MEASURING 1100 SQ. YARDS FOR THE CONSIDERATI ON OF RS. 38.50 LAKHS AND RECEIVED RS. 22,00,000/ - IN CASH ON 24/07/2008 FROM B. SREE LAKSHMI. ASSESSEE ALSO FILED COPY OF THE ASSESSMENT ORDER OF B. SREE LAKSHMI, IN WHICH B. SREE LAKSHMI HAS ACKNOWLEDGED THAT SHE HAS PAID RS. 22 LAKHS ON 24/07/2008 AS AD VANCE AND SPENT ADDITIONAL AMOUNT OF RS. 3,65,000/ - IN PLOT REGISTRATION CHARGES. THEREFORE, IT CLEARLY ESTABLISHED THAT SREE LAKSHMI PAID RS. 22,00,000/ - ON 24/07/2008 TO M/S IKON VISIONS LTD. IN OUR VIEW, THE CASH FOUND IN THE PREMISES OF THE ASSESSEE TO THE EXTENT OF RS. 22 LAKHS IS ESTABLISHED. WE NOTICED THAT THOUGH ASSESSEE SUBMIT TED THAT IT HAS RECEIVED RS. 25 LAKHS FROM SREE LAKSHMI AGAINST THE SALE TRANSACTION , THE ASSESSEE HAS NOT SUBMITTED ANY OTHER DOCUMENTARY EVIDENCE IN SUPPORT OF RS. 3 LAKHS. I.T.A. NO. 132 /HYD/1 7 JANARDHANA RAO KOVELAMUDI, HYD. 6 THEREFORE, WE ARE INCLINED TO ACCEPT THE CONTENTION OF THE ASSESSEE ONLY TO THE EXTENT OF RS. 22 LAKHS. 8 .1 ACCORDINGLY, AO IS DIRECTED TO SUSTAIN THE ADDITION TO THE EXTENT OF RS. 3 LAKHS, AS AGAINST RS. 25,00,000/ - MADE AS UNEXPLAINED CASH. HENCE, GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 24 TH APRIL , 201 9. SD/ - ( P. MADHAVI DEVI ) JUDICIAL MEMBER SD/ - ( S. RIFAUR RAHMAN ) ACCOUNTANT MEMBER HYDERABAD, DATED 24 TH APRIL , 201 9. KV COPY FORWARDED TO: 1. SHRI JANARDHANA RAO KOVELAMUDI, PLOT NO. 1, REKAH VILLA, 8 - 2 - 120/120/A/14, ROAD NO. 14, BANJARA HILLS, HYDERABAD. 2 . AC IT , CENTRAL CIRCLE 5, AYAKAR BHAVAN, HYD . 3 . CIT (A) - 2 , HYDERABAD 4. PR. CIT 2 , HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE