Nikhilesh Konidela, Hyd, Hyderabad V. ITO, Ward-13(2), Hyderabad, Hyderabad

ITA 1453/HYD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6563 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-04-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 30-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B RAMANJANEYULU
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained investment; Principle of natural justice
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NO.1453/HYD/2015 ASSESSMENT YEAR 2010-2011 MR. NIKHILESH KONIDELA HYDERABAD. PAN BGYPK1967K VS. THE INCOME TAX OFFICER, WARD-13(2), HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. A.V. RAGHURAM FOR REVENUE : MR. B. RAMANJANEYULU DATE OF HEARING : 05 .0 4 .2016 DATE OF PRONOUNCEMENT : 13 .05.2016 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y. 2010-11. IN THIS APPEAL THOUGH THE ASSESSEE HAS RAISED AS MA NY AS SEVEN GROUNDS OF APPEAL, AT THE TIME OF HEARING, TH E LD. COUNSEL FOR THE ASSESSEE, SUBMITTED THAT GROUND NO. 1 IS GENERAL IN NATURE AND GROUND NOS. 2 AND 3 DO NOT AR ISE OUT OF THE ORDER OF THE CIT(A). THEREFORE, THESE GR OUNDS ARE REJECTED. AS REGARDS GROUND NOS. 4 TO 7 ARE CON CERNED, THEY ARE AGAINST THE ADDITION OF RS.60,67,780 MADE BY THE A.O. AND CONFIRMED BY THE CIT(A). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, IS A GOVERNMENT EMPLOYEE, WORKING AS A 2 ITA.NO.1453/HYD/2015 MR. NIKHILESH KONIDELA, HYDERABAD. RADIOLOGIST IN NIZAMS INSTITUTE OF MEDICAL SCIENCES (NIMS), HYDERABAD. THE A.O. RECEIVED INFORMATION THAT THE ASSESSEE HAS PAID EXCESS PAYMENTS OVER AND ABOV E REGISTERED RATE OF RS.5000 PER SQ. FEET FOR PURCHAS E OF A VILLA IN M/S. EMMAR HILLS TOWNSHIP P. LTD., AS PE R CBI PROCEEDINGS AND NO RETURN OF INCOME WAS FILED BY TH E ASSESSEE FOR THE A.Y. 2010-2011. THEREFORE, THE ASSESSMENT WAS REOPENED UNDER SECTION 148 OF THE I. T. ACT TO BRING TO TAX THE UNACCOUNTED INVESTMENT IN T HE SAID PROPERTY IN THE FORM OF ON-MONEY OF RS.60,65,000. ACCORDINGLY, THE A.O. ISSUED NOTICE TO THE ASSESSEE TO EXPLAIN THE SOURCE OF THE INVESTMENT OF ON-MONEY. T HE ASSESSEE HOWEVER, DENIED MAKING OF ANY ON-MONEY PAYMENT AND SUBMITTED THAT THE ASSESSEE HAD ONLY PA ID A SUM OF RS.57,61,750 AND BALANCE OF RS.3,03,250 WAS YET TO BE PAID. HOWEVER, THE A.O. BY RELYING ON THE STA TEMENT OF ONE MR. T. RANGA RAO MADE BEFORE THE CBI HELD TH AT THE ASSESSEE HAS NOT EXPLAINED THE CASH COMPONENT O F RS.60,65,000 FOR PURCHASE OF 1230 SQ. YARDS, OVER A ND ABOVE THE RECORDED PRICE OF RS.60,65,000 AND BROUGH T IT TO TAX AS UNEXPLAINED INVESTMENT. AGGRIEVED, ASSESS EE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE SAME AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US . 3. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE, SUBMITTED THAT SIMILAR ISSUE HAD ARISEN I N THE CASE OF MR. G. MAHESH BABU, HYDERABAD VS. DCIT, CEN TRAL CIRCLE-7, HYDERABAD IN ITA.NO.256 & 286/HYD/2015, 5 5 TO 58/HYD/2015 DATED 27.11.2015 FOR THE A.YS. 2006- 07 3 ITA.NO.1453/HYD/2015 MR. NIKHILESH KONIDELA, HYDERABAD. AND 2007-08 AND 2009-10 TO 2012-2013 RESPECTIVELY, AND THAT THIS TRIBUNAL AT PARAS 23 AND 24 OF ITS ORDER DEALT WITH THE ISSUE AT LENGTH AND HAS REMANDED THE ISSUE TO THE FILE OF THE A.O. TO RE-DECIDE THE SAME AFRESH, IN ACCORDANCE WITH LAW. A COPY OF THE SAID ORDER IS AL SO FILED BEFORE US. 4. THE LD. D.R, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW BUT FAIRLY AGREED T HAT THE ISSUE IS SIMILAR TO THE FACTS OF MR. G. MAHESH BABU (CITED SUPRA). 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ISSUE BEFORE U S IS SAME AS IN THE CASE OF MR. G. MAHESH BABU AND THE TRIBUNAL HAS EXTENSIVELY DEALT WITH THE SAME IN ITA.NO.256 & 286/HYD/2015, 55 TO 58/HYD/2015 DATED 27.11.2015 FOR THE A.YS. 2006-07 AND 2007-08 AND 20 09- 10 TO 2012-2013 RESPECTIVELY. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HEREUNDER FOR READY REFERENCE : 23. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IT IS VERY MUCH EVIDENT FROM THE ASSESSMENT ORDER THAT MAINLY RELYING UPON THE MATERIAL GATHERED AS A RESU LT OF INVESTIGATION MADE DURING THE ASSESSMENT PROCEEDINGS OF EHTPL, PARTICULARLY ON THE BASIS OF STATEMENT RECORDED FROM SHRI T.RANGA RAO, THE ASSESSING OFFICER HAS COME TO THE CONCLUSION THAT T HE ASSESSEE HAS PAID ON MONEY TO THE EXTENT OF RS.1,99,20,000 OVER AND ABOVE THE RECORDED SALE CONSIDERATION. OF COURSE, BESIDES THE STATEMENT OF SHRI T.RANGA RAO, IT IS SEEN THAT THE DEPARTMENT HA S GATHERED INFORMATION IN EXERCISE OF POWER UNDER 4 ITA.NO.1453/HYD/2015 MR. NIKHILESH KONIDELA, HYDERABAD. S.133(6) FROM SOME OTHER BUYERS, WHO AGREED TO HAVE PAID ON-MONEY TOWARDS PURCHASE OF PLOTS/VILLAS FROM EHTPL. IT IS RELEVANT TO NOTE THAT WHEN THE ASSESSEE WAS CALLED UPON TO EXPLAIN WHETHER HE HAS PAID ON-MONEY, HE STOUTLY DENIED THE SAME AND INSISTED THAT APART FROM RECORDED SALE CONSIDERATIO N, HE HAS NOT PAID ANYTHING MORE. IT IS THE PLEA OF T HE ASSESSEE BEFORE THE CIT(A) AS WELL AS BEFORE US THA T THE ASSESSING OFFICER HAS UTILISED THE MATERIAL GATHERED AS A RESULT OF INVESTIGATION/ENQUIRY ADVER SE TO THE ASSESSEE WITHOUT EITHER SUPPLYING THE SAME T O HIM OR ALLOWING AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SHRI T.RANGA RAO, WHOSE STATEMENT PRIMARILY FORMED THE BASIS OF THE ADDITION. WE FIND THAT THE AFORESAID SUBMISSIONS OF THE ASSESSEE ARE ACCEPTABLE. IT IS VERY MUCH CLEAR FROM THE ASSESSMENT ORDER THAT THOUGH THE ASSESSING OFFICE R HAS REFERRED TO THE INFORMATION RECEIVED TO SUGGEST THAT THE ASSESSEE HAS PAID AMOUNT OF RS.1,99,20,000, NEITHER IN THE ASSESSMENT ORDER NOR EVEN SUBSEQUENTLY NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW WHAT EXACTLY IS THE INFORMATION/EVIDENCE, WHICH INDICATED THAT ASSESSEE HAS PAID THE ON MONEY OF RS.1,99,20,000. FURTHER, THE INVESTIGATION RESULTS OF CBI AS WELL AS STATEM ENT OF SHRI T.RANGA RAO WHICH HAVE BEEN FOLLOWED BY WAY OF CHARGE SHEETS AND SUPPLEMENTARY CHARGE SHEETS, THOUGH HEAVILY RELIED UPON BY THE ASSESSING OFFICER, BUT ADMITTEDLY THEY WERE NOT SUPPLIED TO T HE ASSESSEE. EVEN THE LEARNED DEPARTMENTAL REPRESENTATIVE ACCEPTS THE AFORESAID FACTUAL POSITI ON. THOUGH IN THE COURSE OF ASSESSMENT PROCEEDINGS THERE IS NO FETTER ON THE ASSESSING OFFICER TO CON DUCT ANY ENQUIRY OR INVESTIGATION AS FOUND NECESSARY FOR ASCERTAINING THE REAL NATURE OF TRANSACTION OR INCO ME, AT THE SAME TIME, IT IS SALUTARY PRINCIPLE OF LAW T HAT ANY ADVERSE MATERIAL GATHERED BY HIM, WHICH HE PROPOSES TO UTILISE AGAINST THE ASSESSEE, MUST BE CONFRONTED TO THE ASSESSEE FOR ALLOWING HIM AN EFFECTIVE OPPORTUNITY OF REBUTTAL. THIS IS IN KEEPI NG WITH THE PRINCIPLE OF NATURAL JUSTICE THAT NO PERSO N SHOULD BE CONDEMNED WITHOUT GIVING A FAIR OPPORTUNITY OF HEARING. IN THE PRESENT CASE, THOUG H 5 ITA.NO.1453/HYD/2015 MR. NIKHILESH KONIDELA, HYDERABAD. THE BASIS FOR ADDITION IS THE STATEMENT RECORDED FR OM SHRI T. RANGA RAO, ADMITTEDLY, THE ASSESSING OFFICE R HAS NEITHER SUPPLIED A COPY OF THE STATEMENT TO TH E ASSESSEE NOR ALLOWED HIM AN OPPORTUNITY TO CROSS EXAMINE HIM, THOUGH THE ASSESSEE IN HIS LETTER DATE D 13.3.2014 HAS SPECIFICALLY ASKED FOR CROSS EXAMINATION OF SHRI T.RANGA RAO. IN THE AFORESAID VIEW OF THE MATTER, THERE IS VIOLATION OF RULES OF NATURAL JUSTICE BY THE ASSESSING OFFICER WHILE MAKI NG THE ADDITION OF RS.1,99,20,000. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER, ON ACCOUNT OF ALLEGED PAYMENT OF ON-MONEY, CANNOT BE SUSTAINED. 24. HAVING HELD SO, IT IS NECESSARY TO EXAMINE WHETHER NON-COMPLIANCE OF THE RULES OF NATURAL JUSTICE IN THE FACTS AND CIRCUMSTANCES OF THE PRESE NT CASE HAS MADE THE ASSESSMENT VOID AB INITIO, OR TH E ASSESSING OFFICER CAN BE ASKED TO DECIDE THE ISSUE AGAIN AFTER FOLLOWING PRINCIPLES OF NATURAL JUSTICE , AS REQUESTED BY THE EARNED DEPARTMENTAL REPRESENTATIVE. AS ALREADY STATED ELSEWHERE IN THE ORDER, THE LEARNED COUNSEL FOR THE ASSESSEE HAS REL IED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN T HE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA), TO PLEAD THAT NOT ALLOWING THE ASSESSEE TO CROSS EXAMINE THE WITNESS HAS RENDERED THE ASSESSMENT ORDER VOID. HOWEVER, ON A PERUSAL OF THE SAID JUDGMENT OF THE HON'BLE SUPREME COURT IT IS FOUND TO BE FACTUALLY DISTINGUISHABLE. IN THAT CASE, HON'BLE SUPREME COU RT HAS INITIALLY REMITTED BACK THE MATTER TO THE TRIBU NAL FOR DECIDING THE ISSUE IN ONE WAY OR THE OTHER, AFT ER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE. HOWEVER, IT IS NOTICED THAT THE HON'BLE SUPREME COU RT ULTIMATELY ALLOWED ASSESSEES APPEAL BECAUSE THE TRIBUNAL WHILE EXAMINING THE ISSUE OF CROSS EXAMINATION OF WITNESS HAS MERELY OBSERVED THAT EVEN SUCH CROSS-EXAMINATION WOULD NOT HAVE IMPROVED THE ASSESSEES CASE. HONBLE SUPREME COURT HELD, AS THE DEMAND RAISED AGAINST ASSESSEE WAS SOLELY RELYING UPON THE STATEMENT OF WITNESS, DENIAL OF CROSS EXAMINATION TO ASSESSEE VITIATED TH E ORDER. UNLIKE THE CASE OF ADAMAN TIMBER INDUSTRIES 6 ITA.NO.1453/HYD/2015 MR. NIKHILESH KONIDELA, HYDERABAD. (SUPRA) IN ASSESSEES CASE STATEMENT OF SHRI T.RANG A RAO IS NOT THE ONLY PIECE OF EVIDENCE RELIED UPON B Y THE ASSESSING OFFICER. IT IS RELEVANT TO NOTE THAT APART FROM THE STATEMENT OF SHRI T.RANGA RAO, THERE ARE OTHER INFORMATION GATHERED BY THE DEPARTMENT BY TAKING RECOURSE TO S.133(6) AS PER WHICH SOME OF TH E BUYERS OF THE PLOTS HAVE ADMITTED OF HAVING PAID ON - MONEY. FURTHER, THROUGH A PROCESS OF INVESTIGATION , CBI HAS FOUND IRREGULARITIES IN THE ACTIVITIES OF E HTPL AND SUBMITTED CHARGE SHEET(S). AS THE STATEMENT OF SRHI T.RANGA RAO, THE ENTIRE CHARGE SHEET(S) FILED BY CBI AND INFORMATION GATHERED BY THE DEPARTMENT THROUGH ENQUIRY HAVE NOT BEEN BROUGHT ON RECORD BEFORE US EITHER BY ASSESSEE OR DEPARTMENT, WE ARE UNABLE TO EXAMINE THE EXTENT OF ASSESSEES INVOLVEMENT, IF AT ALL, IN THE IRREGULARITIES ALLEG ED BY CBI OR WHETHER THE ASSESSEE HAS ALSO BEEN IMPLICATED BY THE INVESTIGATION AGENCY OR ANY OTHER PERSON. THEREFORE, IN OUR VIEW, ISSUE RELATING TO PAYMENT OF ON-MONEY REQUIRES TO BE EXAMINED AFRESH BY ASSESSING OFFICER AFTER CONFRONTING EVIDENCE/MATERIAL SOUGHT TO BE RELIED UPON TO THE ASSESSEE AND SEEKING HIS RESPONSE ON THEM. THE ASSESSING OFFICER MUST ALSO DISCLOSE TO THE ASSESSE E THE MATERIAL/INFORMATION ON THE BASIS OF WHICH HE H AS QUANTIFIED THE ON-MONEY PAYMENT OF RS.1,99,20,000. IF THE ASSESSING OFFICER IS ABLE TO ESTABLISH ON TH E BASIS OF EVIDENCE GATHERED THAT THE ASSESSEE HAS PAID ON-MONEY TO THE EXTENT QUANTIFIED BY HIM, THEN HE CAN MAKE THE ADDITION UNDER S.69B. ON THE FLIP SIDE, IF THERE IS NO EVIDENCE AVAILABLE ON RECORD T O DIRECTLY LINK THE ASSESSEE TOWARDS PAYMENT OF ON- MONEY, THEN MERELY ON THE BASIS OF THE FACT THAT SO ME OTHER BUYERS HAVE ACCEPTED PAYMENT OF ON-MONEY, NO ADDITION CAN BE MADE. WITH THE AFORESAID OBSERVATIONS, WE REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO RE-DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE, DULY COMPLYING WITH THE PRINCIPLES OF NATURAL JUSTICE. T HIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7 ITA.NO.1453/HYD/2015 MR. NIKHILESH KONIDELA, HYDERABAD. 5.1. RESPECTFULLY FOLLOWING THE SAME, WE DEEM IT F IT AND PROPER TO REMAND THIS CASE OF THE ASSESSEE BEFO RE US ALSO TO THE FILE OF THE A.O. FOR RE-CONSIDERATION O F THE SAME AFRESH IN THE LIGHT OF THE DIRECTIONS GIVEN IN THE CASE OF MR. G. MAHESH BABU (CITED SUPRA). 6. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13.05.2016. SD/- SD/- (B. RAMAKOTAIAH) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 13 TH MAY, 2016 VBP/- COPY TO : 1. MR. NIKHILESH KONIDELA, HYDERABAD. C/O. MR. A.V. RAGHURAM, ADVOCATE, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD 1. 2. THE INCOME TAX OFFICER, WARD - 13(2), AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 1. 3. CIT(A) - I V, HYDERABAD. 4. PR. CIT-IV, HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE