R. Jagdish Reddy, Hyderabad V. DCIT, Central Circle-2, Hyderabad

ITA 1419/HYD/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6561 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 13-04-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 03-08-2011
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Search and seizure; Document seized; Documents seized
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH ES B , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1 4 19 /H YD /201 1 ASSESSMENT YEAR: 20 0 5 - 0 6 R. JAGDISH REDDY HYDERABAD [PAN: A A GHR07 01M ] VS DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 2 , HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.A. SAI PRASAD, AR FOR REVENUE : SHRI B .R. RAMESH, D R DATE OF HEARING : 13 - 0 4 - 201 6 DATE OF PRONOUNCEMENT : 13 - 0 5 - 201 6 O R D E R PER B. RAMAKOTAIAH, A.M. : TH I S IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX ( APPEALS ) , GUNTUR DATED 28 - 04 - 2011. E VEN THOUGH ASSESSEE HAS RAISED DETAILED ARGUMENTATIVE GROUND S, IN CONFORMITY WITH RULE 8 OF THE ITAT RULES , ASSESSEE FILED REVISED GROUNDS OF APPEAL AS UNDER: THE LD. FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 26 LAKHS MADE BY THE ASSESSING OFFICER I.T.A. NO. 1 4 19 / HYD / 20 11 : - 2 - : 2. BRIEF LY STATED, ASSESSEE IS A MONEY LENDER/FINA NCIER MAINLY TO M/S. P. MADHUSUDHAN REDDY AND SHRI S. RAMACHANDRA REDDY . ASSESSEE ALSO INVOLVED IN CERTAIN REAL ESTATE BUSINESS ACTIVITY WITH SHRI G. BALREDDY AND OTHER S (AN AOP) WHERE HIS WIFE IS ALSO A MEMBER/PARTNER. A SEARCH AND SEIZURE OPERATION S U/ S. 132 OF THE INCOME TAX ACT [ACT] WERE CARRIED ON IN THE RESIDENCE OF ASSESSEE ALONG WITH GROUP CASES OF SHRI P. MADHUSUDHAN REDDY AND OTHERS. CONSEQUENT TO CERTAIN INCRIMINATING DOCUMENTS SEIZED FROM THE RESIDENCE, ASSESSMENTS U/S. 153A W AS COMPLETED BY THE ASSESSING OFFICER (AO) . E VEN THOUGH APPEALS FOR AYS. 2005 - 06 TO 2008 - 09 WERE COMPLETED AND CONTESTED BEFORE THE LD. CIT(A) AND WAS DECIDED BY THE COMMON ORDER, THE PRESENT APPEAL IS ONLY PERTAINING TO AY. 2005 - 06. 2.1. THE AO IN THE YEAR UNDER CON SIDERATION IN ADDITION TO BRINGING INTO TAX UNDISCLOSED INTEREST INCOME OF RS. 3,82,58,540/ - AND UNDISCLOSED RENTAL INCOME OF RS. 1,80,000/ - , ALSO BROUGHT TO TAX PROFIT EARNED OUT OF REAL ESTATE BUSINESS TO AN EXTENT OF RS. 26 LAKHS , ON THE BA S I S OF THE S EIZED DOCUMENT PG. 114 OF ANNEXURE A/RJR/2 AND ALSO PG. NO. 186 TO 189 OF THE SAME BUNDLE. AO EXTRACTED THE SWORN STATEMENT RECORDED FROM ASSESSEE ON 04 - 11 - 2009 WHEREIN VIDE QUESTION NO. 58 WHEN ASKED ABOUT THE PROFIT OF RS. 26 LAKHS, ASSESSEE ADMITTED TH AT HE HAS NOT OFFERED THIS PROFIT AND WOULD EXPLAIN THE TRANSACTIONS AT A LATER DATE. VIDE QUESTION NO. 67 , WITH REFERENCE TO PAGE NO. 186 TO 189, ASSESSEE ADMITTED THAT THESE WERE WRITTEN BY HIS WIFE AND THERE WAS PROFIT OF RS. 26 LAKHS FROM THE TRANSACT ION OF SAI VENTURE. LD. AO EXTRACTED THE STATEMENT OF ASSESSEE AS WELL AS ENTRIES FOUND IN PAGE NO. 186, ANALYSED THEM AND HELD THAT ASSESSEE HAS RECEIVED PROFIT OF RS. 26 LAKHS. OUT OF THIS, AN AMOUNT OF RS. 7,79,000/ - WAS INVESTED IN I.T.A. NO. 1 4 19 / HYD / 20 11 : - 3 - : MYTHRI ENCLAVE AND AN AMOUNT OF RS. 1,36,100/ - WAS GIVEN TO ONE MR. LINGA REDDY . A N AMOUNT OF RS. 55,000/ - WAS REDUCED OUT OF THE GROSS RECEIPTS AND HIS NET PROFIT WAS AT RS. 16,29,900/. ON THE BASIS OF THESE ENTRIES, THE AMOUNT OF RS. 26 LAKHS STATED TO HAVE EARNED IN SAI VENTURE S WAS BROUGHT TO TAX AS PROFIT UNDISCLOSED. 3. LD. CIT(A) VIDE PARA 6.1 & 6.2 HAS CONFIRMED THE ADDITION STATING AS UNDER: 6.1. WITH REGARD TO THIRD GROUND ON ADDITION OF RS. 26,00,000/ - ON PROFIT EARNED OUT OF REAL ESTATE BUSINESS FOR THE AY. 2 005 - 06, THE APPELLANT HAS EXPLAINED HIS CONTENTIONS AS UNDER: - 'THE AO HAS MADE THE ADDITION RELYING ON PAGE NO.186 OF ANNEXURE A/RJR/2 WHICH CONTAINS CERTAIN NOTING. THE APPELLANT DURING THE COURSE OF ASSESSMENT IN HIS REPLAY DATED 2PT DECEMBER 2009 AGA INST QUESTION NO.19 STATED AS UNDER : - THE PAPER IS (PAGE NO. 186) CONTAINS SOME SCRIBBLING WHICH CANNOT BE DECIPHERED PROPERLY. NONE OF THE NOTHINGS CONTAIN ANY NAME AGAINST THE AMOUNT. THE ONLY INFERENCE THAT CAN BE DRAWN IS EARNING SOME PROFIT FROM A VENTURE NAMED SAI. HOWEVER, I HAVE NEITHER MADE ANY INVESTMENT IN VENTURE CALLED SAI NOR ANY TIME ASSOCIATED WITH SUCH A VENTURE. I HAVE NO EARNED ANY PROFITS FROM THE NON - EXISTENT VENTURE. THE PAPER IS 'DUMB DOCUMENT' WHICH DID NOT CONTAIN FULL DETAILS ABOUT THE DATES OF RECEIPT, BASIS OF PROFIT DETAILS OF THE FIRM ETC., AND ITS CONTENTS WERE NOT CORROBORATED BY ANY MATERIAL AND COULD NOT BE RELIED UPON AND MADE THE BASIS OF ADDITION. FURTHER, THE FIGURES TOO ARE TOTALLY UNEXPLAINED AND ON THE B ASIS OF NOTHINGS AND JOTTINGS, IT CANNOT BE SAID THAT THESE ARE THE TRANSACTIONS CARRIED OUT BY THE ASSESSEE FOR CARRYING ANY BUSINESS OR FOR EARNING ANY SHARE OF PROFIT. IT IS FURTHER CONTENDED THAT THE DOCUMENT IS DUMB DOCUMENT AND IT DOES NOT LEAD TO A NY CONCLUSION. THIS PRINCIPLE WAS LAID OUT IN THE CASE OF CIT CENTRAL - II, VS. S.M. AGARWAL (DELHI HIGH COURT). WE THEREFORE, REQUEST THAT THE ADDITION MADE BY THE AO BE DELETED' 6.2. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT, GONE THROUGH T HE ORDER OF THE AO AND ALSO PERUSED THE OTHER MATERIAL PLACED BEFORE ME. THE AO AT PAGE NO. 3 TO 5 HAS BROUGHT ON RECORD AS TO WHY THE AMOUNT OF RS. 26,00,000/ - HAS TO BE BROUGHT TO TAX FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE SCANNED PORTION OF TH E SEIZED DOCUMENT DURING THE ACTION UNDER SECTION 132(1) HAS CATEGORICALLY AND IN UNEQUIVOCAL TERMS STATED THE AMOUNT OF PROFIT EARNED OUT OF 'SAI' TO BE RS. 26,00,000/ - . THE ACTIVITIES OF THE APPELLANT, HIS WIFE, THE DOCUMENTS SEIZED, THE SOURCES FUNDS AN D THE SURROUNDING CIRCUMSTANCES INDICATE THAT THE DECISION OF THE AO TO BRING THE SAID AMOUNT OF RS. 26,00,000/ - FOR THE I.T.A. NO. 1 4 19 / HYD / 20 11 : - 4 - : YEAR UNDER CONSIDERATION IS BORNE OUT OF THE RECORDS. THE CITATION QUOTED BY THE APPELLANT IS NOT SIMILAR TO FACTS OF HIS CASE AND HEN CE NOT COMPARABLE. THUS, TAKING OVERALL FACTS AND CIRCUMSTANCES INTO ACCOUNT, I DO NOT HAVE ANY HESITATION IN CONFIRMING THE ACTION OF THE AO IN THIS REGARD. 4. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PERUSING THE ORDERS OF THE AUTHORITIES, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). ASSESSEE WHILE ADMITTING THAT HE HAS EARNED THE PROFIT IN THE COURSE OF SEARCH AND SEIZURE PROCE EDINGS DID NOT OFFER THE INCOME. E XCEPT STATING THAT THE DOCUMENT IS DUMB DOCUMENT, NO OTHER CONTEN TIONS WERE RAISED. IT IS VERY CLEAR THAT THE SEIZED DOCUMENTS DO INDICATE ASSESSEES FINANCIAL TRANSACTION S AND THERE WAS PROFIT OF RS. 26 LAKHS , WHICH WAS EARNED BY ASSESSEE. THE NOTINGS ALSO INDICATE OTHER TRANSACTIONS OF INVESTMENTS/ADVANCES. IN VIEW OF THE EVIDENCE AND ALSO ADMISS ION BY ASSESSEE IN THE STATEMENT RECORDED IN THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS, WE CONFIRM THE ADDITION SO MADE BY THE AO. THERE I S NO MERIT IN ASSESSEES GROUND . ACCORDINGLY, THE SAME IS DISMISSED. 5. IN THE RE SULT, APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH MAY , 2016 SD/ - SD/ - (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 13 TH MAY , 2016 TNMM I.T.A. NO. 1 4 19 / HYD / 20 11 : - 5 - : COPY TO : 1. R. JAGDISH REDDY, FLAT NO. 207, ASHOKA ORNATA APTS, STREET NO. 2, ASHOKNAGAR, HYDERABAD. 2 . DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 2 , HYDERABAD. 3 . CIT (APPEALS), GUNTUR. 4. CIT (CENTRAL) , HYDERABAD. 5 . D.R. ITAT, HYDERABAD. 6 . GUARD FILE.