Bollam Chinna Pullaiah Tadipatri, Hyderabad V. ACIT, Circle-1, Anantapur, Anantapur

ITA 1354/HYD/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 9782 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-07-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 13-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B NARASIMHA SHARMA SR
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Reopening of assessment; Business income; Tangible material; Condonation of delay; Reason to believe
• Section: 143(3); 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI RIFAUR RAHMAN, ACCOUNTANT MEMBER SL NO. ITA NO. ASST. YEAR APPELLANT RESPONDENT 1 1323/H/16 2009 - 10 RAGENI GAGADHAR, TADIPATRI PAN: AOUPG 7785 G ACIT, CIRCLE - 1, ANANTAPUR 2. 1325/H/16 2009 - 10 SRINIVASULU BANDELA, TADIPATRI. PAN: APXPB 2824 B ACIT, CIRCLE - 1, ANANTAPUR 3. 1326/H/16 2009 - 10 BANDARI KULLAYAPPA, TADIPATRI. PAN: BAXPK1892K ACIT, CIRCLE - 1, ANANTAPUR 4 1327/H/16 2009 - 10 NAGA RANGAIAH BANDELA, TADIPATRI. PAN: APXPB2825A ACIT, CIRCLE - 1, ANANTAPUR 5 1328/H/16 2009 - 10 CHANNA GURAPPA, TADIPATRI PAN: AQDPG 6585 D ACIT, CIRCLE - 1, ANANTAPUR 6 1330/H/16 2009 - 10 GADNAMPALLI GAMPANNA, TADIPATRI. PAN: APGPG0947R ACIT, CIRCL E - 1, ANANTAPUR 7 1332/H/16 2009 - 10 KONDA MADHU KUMAR, TADIPATRI. PAN: AVJPM4148B ACIT, CIRCLE - 1, ANANTAPUR 8 1333/H/16 2009 - 10 MOOTI RAMA SUBBAIAH, TADIPATRI. PAN:AOXPR0602N ACIT, CIRCLE - 1, ANANTAPUR 9 1335/H/16 2009 - 10 VENKATANNA DARA, TADIPATRI PAN: AOGPD 0282 H ACIT, CIRCLE - 1, ANANTAPUR 10 1336/H/16 2009 - 10 DASARI KESHANNA, TADIPATRI PAN: BFAPK 3367 L ACIT, CIRCLE - 1, ANANTAPUR 11 1338/H/16 2009 - 10 NAGESWARA REDDYPALLI, TADIPATRI. PAN: ANZPR4630F ACIT, CIRCLE - 1, ANANTAPUR 12 1339/H/16 2009 - 10 BALA KRISHNA KAMPARAJU, TADIPATRI. PAN:BAWPK1667G ACIT, CIRCLE - 1, ANANTAPUR 13 1340/H/16 2009 - 10 YERRAMMAGARI RAMULU, TADIPATRI. PAN:AOXPR0604L ACIT, CIRCLE - 1, ANANTAPUR 2 14 1341/H/16 2009 - 10 VIKKISALA SOMUSUNDAR, TADIPATRI. PAN:CEMPS9466L ACIT, CIRCLE - 1, ANANTAPUR 15 1343/H/16 2009 - 10 BASAPPAGARI PENCHALA NARASIMHULU, TADIPATRI. PAN: AWSPP5609A ACIT, CIRCLE - 1, ANANTAPUR 16 1344/H/16 2009 - 10 KARIMSETTY RANGAIAH, TADIPATRI. PAN: AOAPR 0053A ACIT, CIRCLE - 1, ANANTAPUR 17 1345/H/2016 2009 - 10 KASULA SURESH, TADIPATRI PAN: CEMPS9208 C ACIT, CIRCLE - 1, ANANTAPUR. 18 1347/H/2016 2009 - 10 AVVARI RAVI SEKHAR, PROP. KAMAKSHMI TRANSPORT, TADIPATRI. PAN: AOXPR 4641 B ACIT, CIRCLE - 1, ANANTAPUR. 19 1348/H/2016 2009 - 10 KOPPELAKONDA PRATAP, TADIPATRI PAN: AZHPP 4500 G ACIT, CIRCLE - 1, ANANTAPUR. 20 1350/H/2016 2009 - 10 SANJEEVAIAH VALKURU, TADIPATRI PAN: AHDPV 4691 C ACIT, CIRCLE - 1, ANANTAPUR. 21 1351/H/2016 2009 - 10 VAKKAPELLA MASTAN VALI, TADIPATRI PAN: AVIPM 2627 E ACIT, CIRCLE - 1, ANANTAPUR. 22 1352/H/2016 2009 - 10 BANDARU LAKSHMI NARAYANA, TADIPATRI. PAN: ADWPL 9698 Q ACIT, CIRCLE - 1, ANANTAPUR. 23 1354/H/2016 2009 - 10 BOLLAM C HINA PULLAIAH, TADIPATRI PAN: AJUPC 1057 A ACIT, CIRCLE - 1, ANANTAPUR. 24 1355/H/2016 2009 - 10 BOLLU LAKSHMI NARAYANA, TADIPATRI . PAN: AECPL 8423 J ACIT, CIRCLE - 1, ANANTAPUR. 25 1356/H/2016 2009 - 10 GOONI VENU GOPAL, TADIPATRI PAN: AHOPV 0793 Q ACIT, CIRCLE - 1, ANANTAPUR. 26 1357/H/2016 2009 - 10 RAMESH GANDIKOTA, TADIPATRI PAN: AOLPG 7759 M ACIT, CIRCLE - 1, ANANTAPUR. 27 1358/H/2016 2009 - 10 KOMALI KHADAR, TADIPATRI PAN: BBIPK 6473 M ACIT, CIRCLE - 1, ANANTAPUR. 28 1359/H/2016 2009 - 10 MANGALA DHAMODHAR, TADIPATRI PAN: AOLPD 9151 N ACIT, CIRCLE - 1, ANANTAPUR. 3 29 1360/H/2016 2009 - 10 NARABOYINA CHINNA OBULESU, TADIPATRI. PAN: AJUPC 7563 R ACIT, CIRCLE - 1, ANANTAPUR. 30 1362/H/2016 2009 - 10 SALVADI SEKHAR, TADIPATRI PAN: CCKPS 4584 D ACIT, CIRCLE - 1, ANANTAPUR. 31 1364/H/2016 2009 - 10 YADAVA CHANDRA SEKHAR, TADIPATRI. PAN: AJZPC 6487 F ACIT, CIRCLE - 1, ANANTAPUR. 32 1365/H/2016 2009 - 10 GADIMANKHAJA MOHIDDIN, TADIPATRI. PAN: AQPPM 1919 D ACIT, CIRCLE - 1, ANANTAPUR. 33 1367/H/2016 2009 - 10 JYOTHI PRASAD JOTTI, TADIPATRI PAN: AJXPJ 3812 D ACIT, CIRCLE - 1, ANANTAPUR. 34 1368/H/2016 2009 - 10 NARABOYINA MADHUSUDHAN, TADIPATRI . PAN: ALPPM 0758 H ACIT, CIRCLE - 1, ANANTAPUR. 35 1324/H/2016 2010 - 11 RAGENI GANGADHAR, TADIPARTI. PAN: AOUPG 7785 A D CIT, CIRCLE - 1, ANANTAPUR. 36 1329/H/2016 2010 - 11 CHANNA GURAPPA, TADIPATRI PAN: AQDPG 6585 D DCIT, CIRCLE - 1, ANANTAPUR. 37 1331/H/2016 2010 - 11 GADNAMPALLI GAMPANNA, TADIPATRI. PAN: APGPG 0947 R DCIT, CIRCLE - 1, ANANTAPUR. 38 1334/H/2016 2010 - 11 MOOTI RAMA SUBBAIAH, TADIPATRI PAN: AOXPR 0602 N DCIT, CIRCLE - 1, ANANTAPUR. 39 1337/H/2016 2010 - 11 DASARI KESHANNA, TADIPATRI PAN: BFAPK 3367 L ITO, WARD - 1, PRODDATUR. 40 1342/H/2016 2010 - 11 VIKISALA SOMUSUNDAR, TADIPATRI. PAN: CEMPS 9466 L ITO, WARD - 1, PRODDATUR. 41 1346/H/2016 2010 - 11 KASULA SURESH, TADIPATRI. PAN: CEMPS 9280 C ITO, WARD - 1, PRODDATUR. 42 1349/H/2016 2010 - 11 KOPPELAKONDA PRATAP, TADIPATRI PAN: AZHPP 4500 G DCIT, CIRCLE - 1, ANANTAPUR. 43 1353/H/2016 2010 - 11 BANDARU LAKSHMI NARAYANA, TADIPATRI. PAN: ADWPL 9698 Q DCIT, CIRCLE - 1, ANANTAPUR. 44 1361/H/2016 2010 - 11 NARABOYINA CHINNA OBULESU, TADIPATRI . PAN: AJUPC 7563 R DCIT, CIRCLE - 1, ANANTAPUR. 45 1363/H/2016 2010 - 11 SALVADI SEKHAR, TADIPATRI DCIT, CIRCLE - 1, ANANTAPUR. 4 PAN: CCKPS 4584 D 46 1366/H/2016 2010 - 11 GADIMANKHAJA MOHIDDIN, TADIPATRI. PAN: AQPPM 1919 D ITO, WARD - 1, PRODDATUR. 47 1369/H/2016 2010 - 11 NARABOYENA GANGARAJU, TADIPATRI. PAN: ARTPG 4702 B DCIT, CIRCLE - 1, ANANTAPUR. 48 1370/H/2016 2010 - 11 KOMALI NAGAYYA, TADIPATRI. PAN: AIYPN 2605 C DCIT, CIRCLE - 1, ANANTAPUR. 49 1371/H/2016 2010 - 11 PINJAR ABDUL SALEEM, TADIPATRI. PAN: CEMPS 9468 E DCIT, CIRCLE - 1, ANANTAPUR. 50 1954/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. BOLLU LAKSHMI NARAYANA, TADIPATRI. PAN: AECPL 8423 J 51 1955/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. B.C. PULLAIAH, TADIPATRI PAN: AJUPC 1057 A 52 1956/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. Y. CHANDRA SEKHAR, TADIPATRI. PAN: AJZPC 6478 F 53 1957/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. R. NAGESWARA, PROP. LAXMI GANESH TRANSPORT, TADIPATRI. PAN: ANZPR 4630 F 54 1958/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. B. PENCHALA NARASIMHULU, TADIPATRI. PAN: AWSPP 5609 A 55 1959/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. N. MADHUSUDHANA, TADIPATRI. PAN: ALLPM 0758 H 56 1960/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. KOMALI KHADER, TADIPATRI PAN: BBIPK 6473 M 57 1961/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. G. VENU GOPAL, TADIPATRI. PAN: AHOPV 0793 Q 58 1962/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. V. MASTHAN VALI, TADIPATRI PAN: AVIPM 2627 E 59 1963/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. B. SREENIVASULU, TADIPATRI PAN: APXPB 2824 B 60 1964/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. A RAVI SEKHAR, TADIPATRI PAN: AOXPR 4641 B 61 1965/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. K. BALA KRISHNA, TADIPATRI PAN: BAWPK 1667 G 62 1966/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. K. MADHU KUMAR, TADIPATRI. PAN: AVJPM 4148 B 5 63 1967/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. B. NAGA RANGAIAH, TADIPATRI. PAN: APXPB 2825 A 64 1968/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. V. SANJEEVAIAH, TADIPATRI PAN: AHDPV 4691 C 65 1969/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. Y. RAMULU, TADIPATRI PAN: AOXPR 0604 L 66 1970/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. B. KULLAYAPPA, TADIPATRI PAN: BAXPK 1892 G 67 1971/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. GANDIKOTA RAMESH, TADIPATRI. PAN: AOLPG 7759 M 68 1972/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. M. DAMODHAR, TADIPATRI PAN: AOLPD 0915 N 69 1973/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. D. VENKATANNA, TADIPATRI PAN: AOGPD 0282 H 70 1974/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. K. RANGAIAH, TADIPATRI PAN: AIAPR 0053 A 71 1975/H/2017 2010 - 11 ACIT, CIRCLE - 1, ANANTAPUR. J. JYOTHI PRASAD, TADIPATRI PAN: AJXPJ 3812 D FOR ASSESSEE : SHRI K.A. SAI PRASAD FOR REVENUE : SHRI B. NARASIMHA SHARMA, SR STANDING COUNSEL DATE OF HEARING : 31.07.2018 DATE OF PRONOUNCEMENT : 26 . 0 9 .201 8 ORDER PER BENCH: IN A LL THE ABOVE , (49) APPEALS ARE FILED BY RESPECTIVE ASSESSEES FOR THE AYS 2009 - 10 AND 2010 - 11 WHILE CROSS APPEALS (22) ARE FILED BY THE REVENUE FOR THE A.Y. 2010 - 11. THE ISSUE S INVOLVED IN THE APPEAL S OF ALL THE ASSESSEES IN BOTH THE YEARS ARE COMMON EXCEPT FOR THE QUANTUM INVOLVED THEREIN AND THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY WE RE CLUBBED & HEARD TOGETHER AND ARE DISPOSED OF B Y WAY OF A COMMON AND CONSOLIDATED ORDER. 6 2. BRIEF FACTS OF THE CASE ARE THAT ALL THE ASSESSEES BEFORE US ARE INDIVIDUALS . THEY FILED THEIR RETURNS OF INCOME FOR THE AYS 2009 - 10 AND 2010 - 11 RESPECTIVELY . ALL OF T HE IR ASSESSMENTS FOR THE A.Y. 2009 - 10 WERE COMPLETED U/S 143(1) OF THE INCOME TAX ACT, 1961 (THE ACT). IN THEIR RETURNS OF INCOME, T HE ASSESSEE S HA VE SHOWN RECEIPTS UNDER THE HEAD TRANSPORT CHARGES DURING THE PREVIOUS YEAR S 2009 - 10 AND 2010 - 11 , FROM WHICH TDS WAS ALSO ALLEGEDLY MADE. THE A SSESSMENT S FOR THE A.Y. 2009 - 10 W ERE COMPLETED INITIALLY U/S 143(1) OF THE ACT AND THEREAFTER COMPLETED U/S 143(3) R.W.S 147 OF THE ACT WHILE THE ASSESSMENTS FOR THE A.Y. 2010 - 11 W ERE COMPLETED U/S 143(3) OF THE ACT. THE FACTS AND CIRCUMSTANCES IN ALL THE CASES BEING SAME, F OR THE SAKE OF CONVENIENCE, THE FACTS IN THE CASE OF SRI RAGENI GANGADHAR ARE TAKEN FOR DISCUSSING THE ISSUE INVOLVED IN THESE APPEALS. 3. DURING THE SCRUTINY PROCEEDINGS FOR THE A.Y. 2010 - 11, THE A.O. OF THE ASSESSEE OBSERVED THAT AGAINST THE GROSS RECEIPTS OF TRANSPORTATION CHARGES OF RS. 7,49,10,293/ - , THE ASSESSEE HA D CLAIMED EXPENDITURE OF RS . 7,46,41,8 54/ - AND DISCLOSED INCOME OF RS. 5,60,621/ - WHICH ALSO INCLUDE D INCOME FROM SHARES AND INCOME FROM OTHER SOURCES. ON PERUSA L OF THE P & L ACCOUNT, THE A.O. OBSERVED THAT THE ASSESSEE HAS CLAIMED A HUGE EXPENDITURE AGAINST THE RECEIPTS TO THE EXTENT OF RS. 98% , WHICH ACCORDING TO HIM WAS AN UNUSUAL PERCENTAGE. THUS, TO VERIFY THE GENUINENESS OF THE EXPENSES CLAIMED BY THE ASSE SSEE, HE ASKED THE ASSESSEE TO PRODUCE VARIOUS DOCUMENTS / BILLS / VOUCHERS AND SUCH OTHER EVIDENCE THAT HE MAY RELY ON TO SUBSTANTIATE THE CLAIM OF EXPENDITURE. DURING THE COURSE ASSESSMENT PROCEEDINGS, ON 28.12.2012 , A STATEMENT OF THE ASSESSEE WAS RECO RDED U/S 131 OF THE ACT , WHEREIN HE IDENTIFIED HIMSELF AND REVEALED THE NATURE OF HIS BUSINESS ACTIVITIES ETC., AND STATED THAT HE HAS DONE THE BUSINESS OF SHIFTING IRON ORE FROM TWO COMPANIES IN BELLARY, KARNATAKA. 7 4. ON VERIFICATION OF THE ASSESSEES BO OKS OF ACCOUNT , A.O. FOUND THAT THEY CONTAIN THE REGISTRATION NUMBER OF THE LORRIES / TRUCKS, WHICH WERE SAID TO HAVE BEEN ENGAGED BY THE ASSESSEE FOR TRANSPORTATION OF IRON ORE . ON VERIFICATION , A.O. NOTED THAT MOST OF THE ALLEGED LORRY NUMBERS WRITTEN IN THE BOOKS OF ACCOUNT WERE FOUND PERTAINING TO AUTO RICKSHAWS, BIKES, SCOOTERS, CARS, AMBULANCES, SCHOOL VANS ETC AND THAT W ITH REGARD TO CERTAIN OTHER ENTRIES, THERE WAS NO DATA AVAILABLE WITH THE TRANSPORT AUTHORITIES. THUS, I T WAS PRESUMED THAT THE VEHICLE NUMBERS WRITTEN IN THE BOOKS OF ACCOUNT ARE FICTITIOUS AND NO VEHICLES EXIST ED WITH SUCH REGISTRATION NUMBERS. THEREFORE, A.O. OBSERVED THAT THE ASSESSEE HAD CLAIMED AN ABNORMAL PERCENTAGE OF HIS GROSS RECEIPTS AS EXPENDITU RE UNDER A SINGLE HEAD TRANSPORT HIRE CHARGES BUT DETAILS SUBMITTED TO SUBSTANTIATE THE SA ID EXPENSES ARE TOTALLY UNRELIABLE. HE FURTHER OBSERVED THAT THE VEHICLES SUCH AS AUTO RICKSHAWS, BIKES, SCOOTERS, CARS, AMBULANCES, SCHOOLS VANS ETC., CANNOT BE U SED TO TRANSPORT OF IRON ORE MATERIAL WITHIN THE MINES AND SOME OF THE VEHICLE NUMBERS MENTIONED IN THE BOOKS OF ACCOUNT WERE TOTALLY NO N - EXISTE NT . 5. THEREFORE, IN ORDER TO VERIFY THIS ASPECT FURTHER, THE ASSESSEE WAS ASKED TO PRODUCE THE BILLS RAISED BY HIM AGAINST MINING COMPA NIES VIZ., M/S. OBULAPURAM MINING COMPANY (P) LTD., BELLARY (OMC) AND M/S. ANANTAPURAM MINING CORPORATION, BELLARY (AMC) . IN RESPONSE TO THE SAID QUERY, THE ASSESSEE STATED THAT THE ORIGINAL BILLS WERE SUBMITTED TO THE MINING COMP A NIES (OMC & AMC ) FOR SETTLEMENT OF TRANSPORT CLAIMS MADE BY HIM AND THEREFORE, HE COULD NOT PRODUCE ANY SUCH BILLS. THE A.O THEREAFTER , CONDUCTED A VERIFICATION OF BANK STATEMENTS AND BOOKS OF ACCOUNTS AND FOUND THAT INVARIABLY EVERY RECEIPT HAS BEEN WIT HDRAWN BY THE ASSESSEE BY CASH ON THE SAME DAY, IN HUGE SUMS AT BELLARY MINING AREA, WHERE CUSTODY OF SUCH CASH IS A VERY HIGH RISKY AFFAIR AND THUS A.O. FOUND THE BANK STATEMENT TO BE VERY UNUSUAL. 8 6. THERE AFTER , THE ASSESSEE WAS ASKED TO PRODUCE KATCHAA BOOKS BASED ON WHICH , THE TRANSPORTATION CHARGES HAVE BEEN CLAIMED BY HIM ON OMC & AMC AND ALSO THE ALLEGED KATCHAA B OOKS BASED ON WHICH THE ASSESSEE HA S PAID HUGE EXPENSES UNDER THE HEAD TRANSPORT HIRE CHARGES PAID. HOWEVER , THE ASSESSEE DID NOT PRODUCE SUCH KATCHAA B OOKS AS WELL . THEREFORE, THE A.O. OBSERVED THAT THE ASSESSEE DID NOT HAVE ANY EVIDENCE FOR HAVING CARRIED OUT TRANSPORT SERVICES AS CLAIMED BY HIM. 7 . THEREFORE, A.O. FELT IT NECESSARY TO VERIFY WHETHER THE ASSESSEE HAS ACTUALLY RENDERED ANY TRANSPORT SERVICES AT ALL . IN THIS CONNECTION, A.O. AGAIN RECORDED A STATEMENT OF THE ASSESSEE ON 11.03.2013 CONFRONTING HIM WITH THE SPECIFIC ISSUES LIKE HIS EXPERIENCE IN THE FIELD OF TRANSPORT BUSINESS, PAYMENT OF FINANCE CHARGES, DETAILS OF UNSECURED LOANS SHOWN IN HIS BALANCE SHEET, DETAILS OF AUDIT FEES SHOWN AS PAYABLE, DETAILS OF TRANSPORT CHARGES SHOWN AS PAYABLE ETC. IN HIS STATEMENT, THE ASSESSEE ADMITTED THAT HE HAS RECORDED FICTITIOUS FINANCIAL TRANSACTIONS IN HIS BOOKS OF ACCOUNT UPON THE DIRECTIONS OF SRI PHANI KISHORE OF OMC (OBULAPURAM MINING COMPANY) . HE STATED THAT NO VEHICLES / LORRIES WERE SUPPLIED BY ANY OF THE TRANSPORT COMPANIES , BUT THAT THE ASSESSEE HA S RECEIVED THE AMOUNTS BY WAY OF CHEQUES AND SUBSEQUENTLY RETURNED THE SAME , IN CASH TO MR. PHANI KISHORE OF OMC ETC . ASSESSEE ALSO AD MITTED THAT HE DOES NOT HAVE ANY SORT OF REGISTRATION WITH ANY GOVERNMENT DEPARTMENT FOR PROVIDING TRANSPORT SERVICES. HE ALSO STATED THAT HE HAS NOT MAINTAINED ANY PRIMARY DOCUMENTARY EVIDENCE VIZ., KATCHAA B OOKS IN SUPPORT OF THE STATED TRANSPORT BUSINESS. ASSESSEE DID NOT PRODUCE THE DETAILS OF THE PERSONS FROM WHOM HE HAD ALLEGEDLY HIRED LORRIES FOR THE PURPOSE OF SHIFTING O F IRON ORE IN THE MINES RELATED TO OMC . IN VIEW OF ALL THE ABOVE FACTS , A.O. CAME TO THE CONCLUSION THAT THERE IS NO AGREEMENT BETWEEN ASSESSEE AND M/S. AMC AND OMC FOR TRANSPORTING OF IRON ORE AND THAT THE CBI ALSO HAD 9 CONDUCTED ENQUIRIES INTO THE TRANSACTIONS OF OMC AND AMC AND THE SIMILARL Y PLACED PERSONS HAVE GIVEN THEIR STATEMENTS BEFORE THE CBI. HE OBSERVED THAT THERE ARE SEVERAL OTHER SIMILAR TRANSACTIONS WHERE THE RESPECTIVE ASSESSEES HAVE CLAIMED REFUND OF THE TDS DEDUCTED BY THE DEDUCTOR OMC AND AMC. HE THEREFORE MADE FURTHER ENQU IRIES AND AFTER GOING THROUGH THE STATEMENTS OF VARIOUS ALLEGED TRANSPORTERS OF IRON ORE, HE CAME TO THE CONCLUSION THAT ALL THE FINANCIAL TRANSACTIONS BETWEEN THE DEDUCTOR (OMC AND OTHERS) AND THE DEDUCTEES (38 OTHER CASES INCLUDING THE ASSESSEE) ARE TAX EVASION PLAN S , TO REDUCE THE TAXABLE INCOME IN THE HANDS OF THE DEDUCTOR. HE ALSO HELD THAT THE DEDUCTOR , AFTER HAVING PAID THROUGH CHEQUE S, HAS GOT BACK THE SAME SUM PAID IN CASH, AND THAT THE TDS DEDUCTED IS JUST TO ADD COLOUR O F SANCTITY TO THE ENTIRE SHAM FINANCIAL TRANSACTION S . P ARA 17 WITH ITS SUB - PARAS , OF THE ASSESSMENT ORDER CONTAIN THE A.O.S CONCLUSIONS ON THIS ISSUE AND THE SAME IS EXTRACTED HERE - UNDER FOR THE SAKE OF CLARITY AND READY REFERENCE : - 17.1. THUS, BASED ON THE EARLIER PARAS IT IS CLEAR THAT, THE ENTIRE FINANCIAL TRANSACTION BETWEEN THE DEDUCTOR (OMC AND OTHERS) AND THE DEDUCTEES (38 CASES INCLUDING THIS ASSESSEE MR. GANGADHAR IS A PLANNED TAX EVASION PLAN, TO REDUCE THE TAXABLE INCOME IN THE HANDS OF THE DEDUCTOR. 17.2. DEDUCTOR AF TER HAVING PAID THROUGH CHEQUE AND GOT BACK THE SAME SUM PAID IN CASH. THE TDS DEDUCTED IS JUST TO ADD COLOUR OF SANCTITY TO THE ENTIRE SHAM FINANCIAL TRANSACTION. 17.3. THESE PAYMENTS HAVE BEEN MADE BY THE DEDUCTOR FOR WHICH NO TRANSPORT SERVICES HAVE BE EN RENDERED BY THE DEDUCTOR. THE DEDUCTORS HAVE PAID AND RECEIVED THEM BACK IN A PLANNED WAY WITH THE HELP OF THIS ASSESSEE SRI R. GANGADHAR WHO IS HAVING THE KNOWLEDGE OF TRANSPORT BUSINESS, WHO HAS ALSO GUIDED INNOCENT 38 OTHER DEDUCTEES ASSESSEE, FRO M DIFFERENT WALKS OF LIFE SUCH AS VE GETABLE VENDORS, HAMALIS, COOLIES, LABORERS ETC TO PARTICIPATE IN THIS TAX EVASION PLAN, WITHOUT THEIR KNOWLEDGE. 17.4. THESE 36 ASSESSEES HAVE DEPOSED UNDER SWORN STATEMENT THAT THEY HAVE SUMS OF RS. 50,000/ - TO RS. 10 60, 000/ - OVER A PERIOD OF TWO YEARS IN LIEU OF LENDING THEIR NAMES IN THIS TAX EVASION PLAN PRACTICED BY THE DEDUCTORS. 17.5 UNDER THESE CIRCUMSTANCES THE ENTIRE PAYMENTS MADE BY THE DEDUCTOR IS HEREBY HELD AS TAXABLE INCOME IN THE HANDS OF THE DEDUCTOR ONLY. 17.6. THUS, THESE ENTIRE GROSS RECEIPTS (ALONG WITH THE TDS CREDIT THEREON) ARE HEREBY HELD AS TAXABLE IN THE HANDS OF THIS ASSESSEE PROTECTIVELY AND ARE TO BE CONSIDERED FOR TAXATION SUBSTANTIVELY IN THE HANDS OF THE RELEVANT DEDUCTORS, IN THE RELEVANT A SSESSMENT YEARS. 8 . TH US , THE A.O. HELD THAT THE SUBSTANTIVE ADDITION IS TO BE MADE IN THE HANDS OF THE RELEVANT DEDUCTORS AND THE PROTECTIVE ADDITION IS TO BE MADE IN THE HANDS OF THE DEDUCTEE I.E., THE ASSESSEE BEFORE US. SIMILAR DISALLOWANCE OF EXPE NDITURE AND THE ADDITION OF THE GROSS RECEIPTS TO THE RETURNED INCOME WAS MADE IN THE HANDS OF ALL THE ASSESSEES BEFORE US FOR THE A.Y. 2010 - 11. 9 . AGGRIEVED BY THE ORDER OF THE A.O, ALL THE ASSESSEE S PREFERRED APPEAL S BEFORE THE CIT (A) , MAINLY ON THE GROUND THAT THE ASSESSMENT WAS MADE PROTECTIVELY IN THE HANDS OF THE ASSESSEE S AND THE GROSS RECEIPTS ARE TO BE CONSIDERED FOR TAXATION SUBSTANTIVELY IN THE HANDS OF THE DEDUCTORS AND THE RESPECTIVE CIT (A) OF THE DEDUCTOR S HA VE CONFIRMED THE SUBSTANTIVE A DDITION S MADE IN THE HANDS OF THE DEDUCTORS. THE CIT (A), KURNOOL OBSER VING THAT THE SUBSTANTIVE ADDITIONS HAVE BEEN CONFIRMED IN THE HANDS OF THE OMC AND OTHER S, DELETED THE PROTECTIVE ADDITIONS MADE IN THE HANDS OF SOME OF THE ASSESSEES BEFORE US. SUBS EQUENTLY, THERE WAS A CHANGE OF INCUMBENT OFFICER IN THE OFFICE OF THE CIT (A), WHO , WHILE ADJUDICATING THE APPEALS OF THE OTHER ASSESSEES , OBSERVED THAT THE SUBSTANTIVE ADDITIONS MADE IN THE HANDS OF OMC AND CONFIRMED BY THE CIT(A), HAVE BEEN DELETED BY THE ITAT. T HEREFORE , HE CONVERTED THE PROTECTIVE ASSESSMENTS IN THE 11 HANDS OF S UCH OF THE ASSESSEES BEFORE HIM INTO THE SUBSTANTIVE ASSESSMENTS. AGAINST THE CONVERSION OF PROTECTIVE ASSESSMENT S TO SUBSTANTIVE ASSESSMENT S , THE RESPECTIVE ASSESSEE S ARE IN APPEAL BEFORE US FOR THE A.Y. 2010 - 11 . 10 . MEANWHILE, O N THE BASIS OF ASSESSMENTS COMPLETED FOR THE A.Y. 2010 - 11, THE A.O. REOPENED THE ASSESSMENTS FOR THE A.Y. 2009 - 10 BY ISSUANCE OF NOTICE S U/S 148 OF THE ACT TO ALL THE ASSESSEES BEFORE US FOR MAKING PR OTECTIVE ASSESSMENTS. IN THE REOPENED ASSESSMENT S , THE ASSESSING OFFICER BROUGHT TO TAX THE GROSS RECEIPTS RECEIVED BY THE RESPECTIVE ASSESSEE S ON PROTECTIVE BASIS , AGAINST WHICH ALL THE ASSESSEE S FILED APPEAL S BEFORE THE CIT (A) , WHO CONFIRMED THE ORDER OF THE A.O. AND ALL THE ASSESSEES ARE IN FURTHER APPEAL BEFORE US. 1 1 . T HUS, IN ALL T HE APPEAL S BEFORE US FOR THE A.Y. 2010 - 11 , THE RESPECTIVE ASSESSEES ARE AGAINST THE ORDER OF THE CIT(A) IN CONVER TING THE PROTECTIVE ASSESSMENT IN TO SUBSTANTIVE ASSESSMENT , WHILE IN THE APPEAL S FOR A.Y. 2009 - 10 , THE RESPECTIVE ASSESSEES ARE AGAINST THE REOPENING OF THE IR ASSESSMENT S U/S 147 OF THE ACT, AND, ALSO ON MERITS OF THE ADDITIONS MADE THEREUNDER . 12. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT W HEN THE ASSESSEES APPEALS FOR BOTH THE A.YS HAD COME UP FOR HEARING BEFORE THE TRIBUNAL IN THE YEAR 2017, THE LEARNED COUNSEL FOR THE ASSESSEE HAD BROUGHT TO THE NOTICE OF THE TRIBUNAL THAT ITAT, BANGALORE HAD DELETED THE SUBSTANTIVE ADDITION S MADE IN TH E HANDS OF OMC AND OTHERS . A T THIS JUNCTURE, THE REVENUE SOUGHT TIME TO FIND OUT THE STATUS OF THE APPEALS FILED BY THE REVENUE IN THE HIGH COURT OF KARNATAKA AND AT THIS STAGE THAT THE CIT HAD TAKEN A DECISION TO FILE APPEALS AGAINST THE ORDER OF THE EAR LIER CIT (A) , KURNOOL, DELETING THE PROTECTIVE ADDITIONS ON THE 12 GROUND THAT THE SUBSTANTIVE ADDITIONS HAVE BEE N CONFIRMED BY THE CIT(A) IN THE HANDS OF OMC. THEREFORE, THE REVENUES APPEALS FOR A.Y. 2010 - 11 HAVE BEEN FILED ALONG WITH A PETITION FOR CONDON ATION OF DELAY OF 902 DAYS . 13. THEREFORE, IN THE APPEALS OF ALL THE ASSESSEES FOR THE A.Y. 2010 - 11, THE GROUNDS RAISED BEFORE US ARE IDENTICAL, EXCEPT THE FIGURES MENTIONED THEREIN, AND THEY ARE AS UNDER : - 1. THE ORDER OF THE FIRST APPELLATE AUTHORITY IS NOT CORRECT ON FACTS IN LAW AND IN BOTH. 2. THE LEARNED FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICER AS A SUBSTANTIVE ADDITION. 3. THE LEARNED FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN CONFIRMIN G THE ADDITION OF RS. 7,52,06,478/ - ON SUBSTANTIVE BASIS. 4. THE FIRST APPELLATE4 AUTHORITY IS NOT JUSTIFIED IN NOT APPRECIATING THE FACT, WHICH IS EVIDENT FROM THE ASSESSMENT ORDER ITSELF, THAT THE TOTAL TRANSPORT RECEIPTS WERE ASSESSED IN THE HANDS OF TH E PAYER, ON SUBSTANTIVE BASIS, DISALLOWING THE CLAIM OF EXPENDITURE UNDER THE HEAD TRANSPORT CHARGES. 5. THE LEARNED FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THE FACT THAT THE ASSESSING OFFICER HIMSELF IN HIS ORDER U/S 143(3) STATED THAT THE MONEY IN QUESTION WAS WITHDRAWN IMMEDIATELY BY THE PAYER AND HENCE THE APPELLANT WAS NOT THE BENEFICIARY OF THE TRANSPORTATION CHARGES. 6. THE FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN CONVERTING, DURING THE APPELLATE PROCEEDINGS, THE PROTECTIVE ASSESSMENT I NTO A SUBSTANTIVE ASSESSMENT WITHOUT GIVING AN OPPORTUNITY TO THE APPELLANT ESPECIALLY WHEN SUBSTANTIVE ASSESSMENT WAS CONFIRMED BY THE APPELLATE AUTHORITY. 7. THE LEARNED FIRST APPELLATE AUTHORITY IN CONFIRMING THE ADDITION ON SUBSTANTIVE BASIS FAILED TO APPRECIATE THE FACT THAT THE SAME AMOUNT GOT TAXED TWICE, ONCE IN HANDS OF THE PAYER AS DISALLOWANCE AND FOR THE SECOND TIME IN THE HANDS OF THE APPELLANT, PAYEE AS ADDITION U/S 68. 8. WITHOUT PREJUDICE TO THE ABOVE, THE FIRST APPELLATE AUTHORITY HAVING H ELD THAT THE APPELLANT RECEIVED TRANSPORTATION CHARGES SHOULD HAVE DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE INCOME THEREON AT REASONABLE RATE INSTEAD OF CONFIRMING THE ADDITION U/S 68 OF THE ACT. 13 14. IN THE APPEALS OF ALL THE ASSESSEES FOR THE A.Y. 2009 - 1 0, THE GROUNDS RAISED BEFORE US ARE IDENTICAL, EXCEPT THE FIGURES MENTIONED THEREIN, AND THEY ARE AS UNDER: - 1. THE ORDER OF THE FIRST APPELLATE AUTHORITY IS NOT CORRECT ON FACTS IN LAW AND IN BOTH. 2. THE LEARNED FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICER AS A SUBSTANTIVE ADDITION. 3. THE LEARNED FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 7,52,06,478/ - ON SUBSTANTIVE BASIS. 4. THE FIRST APPELLATE4 AUTHORITY I S NOT JUSTIFIED IN NOT APPRECIATING THE FACT, WHICH IS EVIDENT FROM THE ASSESSMENT ORDER ITSELF, THAT THE TOTAL TRANSPORT RECEIPTS WERE ASSESSED IN THE HANDS OF THE PAYER, ON SUBSTANTIVE BASIS, DISALLOWING THE CLAIM OF EXPENDITURE UNDER THE HEAD TRANSPORT CHARGES. 5. THE LEARNED FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THE FACT THAT THE ASSESSING OFFICER HIMSELF IN HIS ORDER U/S 143(3) STATED THAT THE MONEY IN QUESTION WAS WITHDRAWN IMMEDIATELY BY THE PAYER AND HENCE THE APPELLANT WAS NOT THE BENEFICI ARY OF THE TRANSPORTATION CHARGES. 6. THE FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN CONVERTING, DURING THE APPELLATE PROCEEDINGS, THE PROTECTIVE ASSESSMENT INTO A SUBSTANTIVE ASSESSMENT WITHOUT GIVING AN OPPORTUNITY TO THE APPELLANT ESPECIALLY WHEN SUBSTANTIVE ASSESSMENT WAS CONFIRMED BY THE APPELLATE AUTHORITY. 7. THE LEARNED FIRST APPELLATE AUTHORITY IN CONFIRMING THE ADDITION ON SUBSTANTIVE BASIS FAILED TO APPRECIATE THE FACT THAT THE SAME AMOUNT GOT TAXED TWICE, ONCE IN HANDS OF THE PAYER AS DISA LLOWANCE AND FOR THE SECOND TIME IN THE HANDS OF THE APPELLANT, PAYEE AS ADDITION U/S 68. 8. WITHOUT PREJUDICE TO THE ABOVE, THE FIRST APPELLATE AUTHORITY HAVING HELD THAT THE APPELLANT RECEIVED TRANSPORTATION CHARGES SHOULD HAVE DIRECTED THE ASSESSING OFF ICER TO ESTIMATE THE INCOME THEREON AT REASONABLE RATE INSTEAD OF CONFIRMING THE ADDITION U/S 68 OF THE ACT. 1 5 . THE LEARNED COUNSEL FOR THE ASSESSEE ARGUED AT LENGTH THAT THE ASSESSMENTS FOR THE A.Y. 2010 - 11 ARE TO BE SET - ASIDE FOR THE REASON THAT A.O. HAS BROUGHT THE ENTIRE GROSS RECEIPTS TO TAX EVEN AFTER GIVING A SPECIFIC FINDING THAT THE ASSESSEES HAVE NOT RECEIVED ANY INCOME FROM THESE TRANSACTIONS. HE DREW OUR ATTENTION TO THE FINDING OF THE A.O. THAT 14 THE AMOUNTS WERE DEPOSITED BY CHEQUES AND THE ENTIRE AMOUNT WAS IMMEDIATELY WITHDRAWN AS CASH IN BELLARY AND TAKEN BACK BY THE DEDUCTOR AND THAT THE ASSESSEES ARE ONLY NAME LENDERS, AND THAT THEY HAVE NEITHER RENDERED ANY SERVICES NOR RECEIVED ANY REMUNERATION. HE SUBMITTED THAT THE ASSESSEES HAVE AT THE MOST RECEIVED A SUM OF RS. 25,000/ - TO 30,000/ - FOR LENDING THEIR NAMES AND THEY HAVE OFFERED THE SAME TO TAX , ALONG WITH OTHER INCOME IN THE RETURN OF INCOME . THEREFORE, ACCORDING TO HIM, THE ASSESSMENT ORDERS HAVE TO BE SET - ASIDE. 1 6 . HE ALSO OBJ ECTED TO THE CONDONATION OF DELAY IN THE CASE OF REVENUES APPEALS FOR THE A.Y. 2010 - 11. WHILE THE LEARNED COUNSEL FOR THE REVENUE HAS FILED AN AFFIDAVIT EXPLAINING THE REASON S FOR THE DELAY OF 902 DAYS, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT WAS HE , WHO HAD BROUGHT TO THE NOTICE OF THE REVENUE THAT THE APPEALS OF THE OMC HAS BEEN ALLOWED BY ITAT AND IT IS ONLY THEREAFTER , THAT THE REVENUE HAD FILED THE APPEALS BEFORE THE ITAT AND THEREFORE, THE REVENUE HAS NOT ACTED DILIGENTLY AND HENCE THE DELAY SHOULD NOT BE CONDONED. 17. AS REGARDS THE REOPENING OF THE ASSESSMENT FOR THE A.Y. 2009 - 10 , THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT EVEN FOR REOPENING OF THE ASSESSMENT COMPLETED U/S 143(1) OF THE ACT, THE A.O. SHOULD HAVE SOME TANGI BLE MATERIAL WHICH HAS COME TO HIS NOTICE AFTER GIVING INTIMATION U/S 143(1) OF THE ACT. HE SUBMITTED THAT IN THE CASE BEFORE US, THERE WAS NO SUCH TANGIBLE MATERIAL WHICH HAS COME TO THE NOTICE OF THE A.O. SUBSEQUENT TO GIVING OF INTIMATION U/S 143(1). HE ALSO SUBMITTED THAT THE REOPENING OF ASSESSMENT CANNOT BE DONE FOR MAKING A PROTECTIVE ASSESSMENT AS FOR THE REOPENING OF THE ASSESSMENT, THE A.O. HAS TO HAVE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. THE VERY FACT THA T THE SUBSTANTIVE ADDITIONS HAVE 15 BEEN MADE IN THE HANDS OF THE OMC FOR A.Y. 2010 - 11, ACCORDING TO HIM, IT GOES TO PROVE THAT THE A.O BELIEVE D THAT THE INCOME BELONGS TO THE DEDUCTORS AND NOT THE DEDUCTEE - ASSESSEES AND THEREFORE, THE BASIC CONDITION FOR REO PENING OF ASSESSMENT HAS NOT BEEN FULFILLED. HE THEREFORE PRAYED FOR DISMISSAL OF THE REVENUES APPEALS AND ALSO FOR SETTING ASIDE OF ALL THE ASSESSMENTS FOR THE A.Y. 2009 - 10. 1 8 . THE LEARNED SENIOR COUNSEL FOR THE DEPARTMENT , SRI B. NARASIMHA SHARMA , PRAYED THAT THE DELAY IN FILING OF THE REVENUES APPEALS BE CONDONED AS THE DELAY HAS OCCURRED DUE TO COMMUNICATION GAP BETWEEN THE ASSESSING OFFICER OF THE ASSESSEES BEFORE US AND THE CIT IN BANGALORE . HE HAS FILED A CHART SHOWING THE CHRONOLOGY OF EVE NTS TO EXPLAIN THAT THE CAUSE FOR DELAY IN FILING THE APPEALS IS BONAFIDE AND GENUINE. AS REGARD THE MERITS OF THE ADDITIONS ARE CONCERNED, HE SUBMITTED THAT THE ASSESSEES HAVE PARTICIPATED IN FICTITIOUS TRANSACTIONS WITH OMC AND HAVE THEREFORE HELPED OMC IN EVASION OF TAX. HE SUBMITTED THAT AL THOUGH THE ASSESSEES ARE NOT INVOLVED IN TRANSPORT BUSINESS , BUT AS PROVED BY THE A.O , THEY CLAIMED TO HAVE BEEN ENGAGED IN SUCH BUSINESS ACTIVITIES. HE SUBMITTED THAT SINCE THE ASSESSEE S HAVE FAILED TO PROVE THE E XPENDITURE CLAIMED BY THEM, THE ENTIRE EXPENDITURE HAS RIGHTLY BEEN DISALLOWED AND THE GROSS RECEIPTS BROUGHT TO TAX. FURTHER, HE ALSO PRAYED THAT SINCE THE APPEALS OF THE REVENUE IN THE CASE OF OMC AGAINST SUBSTANTIVE ASSESSMENTS ARE PENDING ADJUDICATION B EFORE THE HONBLE KARNATKA HIGH COURT, TH ESE BEING THE PROTECTIVE ASSESSMENTS, MAY BE KEPT PENDING TILL THE DISPOSAL OF SUCH APPEALS. 1 9 . HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIAL ON RECORD, WE FIND THAT THE ENQUIRIES CONDUCTED BY THE A.O. D URING THE ASSESSMENT PROCEEDINGS FOR THE A.Y. 2010 - 11 CLEARLY PROVE D THAT THE ASSESSEE S HAVE NOT RENDERED ANY TRANSPORT SERVICES AS CLAIMED BY THEM IN THEIR RETURNS 16 OF INCOME. THEREFORE, T HE A.O. HAS DISALLOWED THE CLAIM OF EXPENDITURE AND HAS BROUGHT THE ENTIRE RECEIPTS TO TAX. THE ASSESSEES ALSO HAVE ADMITTED THAT THEY HAVE NOT RENDERED ANY TRANSPORT SERVICE TO OMC OR AMC AND THAT THEY DID NOT ENGAGE ANY VEHICLES TO DO SUCH BUSINESS. TH E A.O. HAS ALSO RECORD ED THAT THE ASSESSEES HAVE RECEIVED THE MONEYS BY WAY OF CHEQUES AND THE CASH WAS IMMEDIATELY WITHDRAWN AND THE MINING COMPANIES HAVE TAKEN BACK THE SAID AMOUNT. THEREFORE, WE ARE UNABLE TO UNDERSTAND AS TO HOW THE PROTECTIVE ASSESSM ENT CAN BE MADE IN THE HANDS OF THE ASSESSEES BEFORE US IN SPITE OF RECORDING SUCH A FINDING (I) THE HONBLE SUPREME COURT IN THE CASE OF LALJI HARIDAS VS. ITO AND ANOTHER ON 25/07/1961 HAS OBSERVED AS UNDER: - IN CASES WHERE IT APPEARS TO THE IT AUTHORITIES THAT CERTAIN INCOME HAS BEEN RECEIVED DURING THE RELEVANT A.Y. BUT IT IS NOT CLEAR WHO HAS RECEIVED THAT INCOME AND PRIMA FACIE IT APPEARS THAT THE INCOME MAY HAVE BEEN RECEIVED EITHER BY A OR B OR BY BOTH TO GETHER, IT WOULD BE OPEN TO THE RELEVANT INCOME TAX AUTHORITIES TO DETERMINE THE SAID QUESTION BY TAKING APPROPRIATE PROCEEDINGS BOTH AGAINST A AND B. (II) IN THE CASE OF ITO VS. BACHULAL KAPOOR AS REPORTED IN 1966 AIR 1148, THE HONBLE SUPREME COURT HEL D THAT WHEN THERE WAS A DOUBT AS TO WHICH PERSON AMONG TWO WAS LIABLE TO BE ASSESSED, PARALLEL PROCEEDINGS MIGHT BE STARTED AGAINST BOTH. A PROTECTIVE ASSESSMENT CAN THUS BE MADE ONLY WHERE THE A.O. IS NOT SURE OF THE PERSON IN WHOSE HANDS THE INCOME IS T AXABLE. 20 . BUT, IN THE CASE BEFORE US, THE A.O. HAS GIVEN A CLEAR FINDING THAT THE PAYMENTS TO THE ASSESSEES WERE TAKEN BACK BY THE DEDUCTOR, THEREFORE, THERE IS NO DOUBT THAT THE INCOME WAS OF THE DEDUCTOR AND FINALLY WAS TAKEN BACK BY THE DEDUCTOR. TH EN, IN SUCH A SITUATION, CAN THE SAID AMOUNT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEES BEFORE 17 US EVEN IN THE PROTECTIVE ASSESSMENT. THE INTENTION OF THE A.O. SEEMS TO BE THAT THE PAYMENTS / RECEIPTS SHOULD NOT ESCAPE TAXATION AND NOT BECAUSE THERE WAS ANY DOUBT IN HIS MIND AS TO IN WHOSE HANDS, THE INCOME IS TO BE TAXED. IN ORDER TO PROTECT THE INTEREST OF THE REVENUE, THE ASSESSING OFFICERS MAKE SUBSTANTIVE ADDITIONS IN THE HANDS OF THE PERSON S, WHOM THEY BELIEVE , ARE THE ACTUAL RECIPIENTS OF INCOME , WHILE THEY MAKE THE PROTECTIVE ASSESSMENT IN THE HANDS OF THE PERSON S WHO MAY A LTERNATIVELY BE TAXED . WHEN THE ASSESSING OFFICER IS QUITE CERTAIN THAT THE INCOME IS TAXABLE IN THE HANDS OF THE DEDUCTOR ONLY, IT IS NOT UNDERSTANDABLE AS TO HOW HE C AN ALSO MAKE A PROTECTIVE ASSESSMENT IN THE HANDS OF THE DEDUCTEES WHO HE BELIEVES HAVE NOT RECEIVED ANY AMOUNT BUT THEY ARE JUST NAME LENDERS. 21. EVEN PRESUMING THAT THE ASSESSEE S ARE INVOLVED IN TRANSPORT BUSINESS, THE ENTIRE RECEIPTS CANNOT BE BROUG HT TO TAX AND THE EXPENDITURE INCURRED FOR RUNNING OF SUCH BUSINESS IS TO BE ALLOWED. HOWEVER, A.O. AND THE CIT (A) HAVE CLEARLY BROUGHT OUT THAT THE ASSESSEES HAVE NOT RENDERED ANY TRANSPORT SERVICES TO ANY OF THE COMPANIES AND THEREFORE THE ASSESSMENTS OF THE ASSESSEE ARE TO BE CONSIDERED INDEPENDENT OF THE ASSESSMENTS IN THE CASE OF MINING COMPANIES AND IT IS HELD THAT THE ENTIRE RECEIPTS CANNOT BE BROUGHT TO TAX. IF AT ALL , THE ASSESSEES HAVE RECEIVED ANY INCOME, IT IS ONLY A COMMISSION FOR LENDING TH EIR NAMES AND THE ASSESSEES HAVE ALREADY OFFERED SUCH INCOME , WHICH ACCORDING TO THEM IS NOT BUSINESS INCOME , BUT COMMISSION INCOME AND HAS TO BE TAXED AS SUCH. THEREFORE, WE HOLD THAT THE ENTIRE GROSS RECEIPTS CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE S AND THE INCOME OFFERED BY THE RESPECTIVE ASSESSEES HAS TO BE ACCEPTED . WE MAKE IT VERY CLEAR THAT THE FINDINGS IN THESE CASE S ARE INDEPENDENT OF ANY FINDING S IN TH IS CASE OF OMC ON ANY OF THE ISSUES AND THESE FINDINGS SHALL HAVE NO IMPACT, WHATSO EVER , ON THE CASES OF 18 OMC AND AMC WHICH ARE PENDING BEFORE THE HONBLE KARNATAKA HIGH COURT. THUS, THE ASSESSMENTS FOR THE A.Y. 2010 - 11 IN RESPECT OF ALL THE ASSESSEES ARE SET - ASIDE. 22 . AS REGARDS THE REVENUES APPEALS ALSO, SINCE WE HAVE SET - ASIDE THE ASSESSMENTS IN THE CASE OF ALL THE ASSESSEES BEFORE US, THE REVENUES APPEALS DO NOT SURVIVE AND HAVE TO BE DISMISSED ACCORDINGLY . THEREFORE, WE DO NOT SEE ANY PURPOSE IN CONDONING THE DELAY IN REVENUES APPEALS AND THEREAFTER ADJUDICATING THE APPEAL S. THEREFORE, THE REVENUES APPEALS FOR THE A.Y. 2010 - 11 ARE REJECTED. 23 . AS REGARDS THE ASSESSEES APPEALS FOR THE A.Y. 20 09 - 10 , WE FIND FROM THE REASONS RECORDED FOR THE A.Y. 2009 - 10 , THAT THE ASSESSMENTS ARE REOPEN ED ONLY T O MAKE PROTECTIVE ASSESSMEN TS IE., TO BRING THE INCOME TO TAX PROTECTIVELY AS WAS DONE IN A.Y. 2010 - 11. THE ASSESSMENTS FOR A.Y. 2010 - 11 WERE COMPLETED U/S 143(1) IN THE CASE OF ALL THE ASSESSEES . THE LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT THERE WAS NO FRESH & TANGIBLE MATER IAL WHICH HAS COME BEFORE THE A.O. AFTER ISSUING THE INTIMATION U/S 143(1) , TO FORM AN OPINION THAT THERE WAS ESCAPEMENT OF INCOME . T HEREFORE, THE ASSESSMENT S FOR A.Y. 2009 - 10 COULD NOT BE REOPENED U/S 147 OF THE ACT. HE RELIED UPON THE DECISION OF THE H ONBLE DELHI HIGH COURT IN THE CASE OF ORIENT CRAFT LTD REPORTED IN 354 ITR 536 (DELHI) FOR THE PROPOSITION THAT THE CONDITION THAT TANGIBLE MATERIAL IS NECESSARY FOR REOPENING OF THE ASSESSMENT HAS TO BE FOLLOWED EVEN FOR THE ASSESSMENTS WHICH ARE COMPLET ED U/S 143(1) OF THE ACT. BUT WE FIND THAT IN A RECENT JUDGMENT IN THE CASE OF INDULATA RANGWALA VS. DCIT REPORTED IN (2016) 384 ITR 337 (DELHI), THE HONBLE DELHI HIGH COURT HAS HELD THAT IN A CASE WHERE THE INITIAL RETURN IS PROCESSED U/S 143(1) OF THE ACT AND INTIMATION IS SENT TO THE ASSESSEE, THE REOPENING OF SUCH ASSESSMENT NO DOUBT REQUIRES THE A.O. TO FORM 19 REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, BUT SUCH REASONS DO NOT REQUIRE ANY FRESH TANGIBLE MATERIAL. THEREFORE, THERE ARE CONT RARY DECISIONS ON THIS ISSUE BUT THE REQUIREMENT OF RECORDING REASONS FOR REOPENING IS NOT DONE AWAY WITH. 24. THEREFORE , ON THE QUESTION WHETHER THERE IS SATISFACTION FOR REOPENING OF AN ASSESSMENT, WE FIND THAT IN THE ASSESSMENT FOR A.Y. 2010 - 11, THE A. O. HAS COME TO A CONCLUSION THAT THE SUBSTANTIVE ASSESSMENT IS TO BE MADE IN THE HANDS OF THE DEDUCTOR. THEREFORE, THE PROVISIONS OF SECTION 147 ARE VERY CLEAR THAT THE A.O. HAS TO HAVE REASON TO BELIEVE THAT THE INCOME OF THE RELEVANT ASSESSEE FOR THE RELEVANT A.Y. HAS ESCAPED ASSESSMENT . WHEN THE A.O. HAS HIMSELF HELD THAT THE INCOME IS TAXABLE IN THE HANDS OF THE DEDUCTOR, HE COULD NOT HAVE FORMED ANOTHER OPINION THAT THE INCOME IS TAXABLE IN THE HANDS OF THE DEDUCTEE - ASSESSEES WHICH HAS ES CAPED ASSESSMENT. THE A.O. CANNOT BE ALLOWED TO BLOW HOT AND COLD AT THE SAME TIME. IN THE INSTANT CASE, AS THERE IS NO SATISFACTION / OPINION FORMED BY THE A.O. THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT, WE ARE OF THE OPINION THAT THE RE - AS SESSMENT IS NOT VALID. ACCORDINGLY, THE ASSESSEES APPEALS FOR THE A.Y. 2009 - 10 ARE TREATED AS ALLOWED AND THE ASSESSMENTS ARE SET - ASIDE. 25 . IN THE RESULT, THE ASSESSEES APPEALS ARE ALLOWED AND THE REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH SEPTEMBER , 2018. SD/ - SD/ - ( S. RIFAUR RAHMAN) ( SMT. P. MADHAVI DEVI ) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 26 TH SEPTEMBER ,2018 OKK, SR.PS 20 COPY TO 1. THE APPELLANT / C/O. CH. PARTHASARATHY & CO., 1 - 1 - 298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO.1, ASHOKNAGAR, HYDERABAD - 020. 2. ACIT, CIRCLE - 1, ANANTAPUR / ITO, WARD - 1, PRODDATUR. 3. CIT (A) CONCERNED 4. PR.CIT CONCERNED 5. D.R. ITAT , HYDERABAD. 6. GUARD FILE