DCIT., Circle-16(1), Hyderabad, Hyderabad V. Shri A Krishna Prasad, Hyderabad

ITA 1589/HYD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2431 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 16-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAN REDDY
• Keywords: Reopening of assessment; Unexplained investment; Salary income
• Section: 147; 148

Judgement Text

ITA NOS 1588 1589 AND 1590 OF 2016 A KRISHNA PRASA D HYDERABAD. PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS.1588 TO 1590/HYD/2014 (ASSESSMENT YEARS: 2007-08, 2009-10 & 2010-11) DCIT, CENTRAL CIRCLE 16(1) HYDERABAD VS SHRI A. KRISHNA PRASAD HYDERABAD PAN: ACCPA 8825 F (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI MOHAN REDDY, DR FOR ASSESSEE : SHRI K.C. DEVDAS O R D E R PER SMT. P. MADHAVI DEVI, J.M. THESE ARE ALL REVENUES APPEALS FOR THE A.YS 2007-0 8, 2009-10 & 2010-11 RESPECTIVELY. THE REVENUE IS AGGR IEVED BY ORDER OF THE CIT (A)-V HYDERABAD DATED 11.6.2014, H OLDING THAT THE ASSESSMENT MADE U/S 147 IS VOID AND THEREAFTER DELETING THE ADDITION OF RS.84,75,000 MADE BY THE AO IN EACH OF THE A.YS TOWARDS UNEXPLAINED INVESTMENTS. FOR THE SAKE OF CL ARITY AND READY REFERENCE, THE GROUNDS OF APPEAL RAISED BY TH E REVENUE FOR THE A.Y 2007-08 ARE REPRODUCED HEREUNDER: 1) THE LEARNED CIT(A) ERRED BOTH IN LAW AND ON FACTS OF THE CASE. 2) THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSMENT MADE U/S 147 IS VOID. DATE OF HEARING: 14.09.2017 DATE OF PRONOUNCEMENT: 15 . 1 1 .2017 ITA NOS 1588 1589 AND 1590 OF 2016 A KRISHNA PRASA D HYDERABAD. PAGE 2 OF 12 3) THE LEARNED CIT(A) ERRED IN DELETING ADDITION OF RS. 84,75,000 MADE TOWARDS UNEXPLAINED INVESTMENT 4) THE LEARNED CIT(A) OUGHT TO HAVE NOTICED THAT THE ASSESSING OFFICER, BEFORE ISSUING NOTICE U/S 148, HAS WITH DUE DILIGENCE HAS DISCOVERED FROM THE MATERIAL EVIDENCE WHICH HAS COME TO HIS NOTICE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT 5) THE LEARNED CIT(A) SHOULD HAVE APPRECIATED THAT AS PER SECTION 24 OF THE INDIAN EVIDENCE ACT, 'CONFESSION' IS A STATEMENT MADE BY AN ACCUSED PERSON WHICH IS SOUGHT TO BE PROVED AGAINST HIM IN CRIMINAL PROCEEDINGS TO ESTABLISH THE COMMISSION OF AN OFFENCE BY HIM. AS SUCH, THE 'CONFESSION' GIVEN BY SRI 1. RANGA RAO, BEFORE THE HON'BLE METROPOLITAN MAGISTRATE, HYDERABAD, THAT EXCESS AMOUNT OVER AND ABOVE THE PRICE MENTIONED IN REGISTERED DOCUMENTS WAS COLLECTED IN CASH BY HIM FROM THE BUYERS OF THE VILLA PLOTS AT GACHIBOWLI IN EMMAR HILLS TOWNSHIP (P) LIMITED, HYDERABAD, IS A VALID SUPPORTING MATERIAL TO CORROBORATE THAT ON MONEY HAS BEEN PAID BY THE ASSESSEE TOWARDS PURCHASE OF LAND RELIANCE IS PLACED ON HON'BLE SUPREME COURT DECISION IN CRIMINAL PROCEEDINGS IN THE CASE OF NISHI KANT JHA VS STATE OF BIHAR WHEREIN IT WAS POINTED OUT THAT THERE WAS NOTHING WRONG OR RELYING ON A PART OF THE CONFESSIONAL STATEMENT 6) THE LEARNED CIT(A) OUGHT TO HAVE NOTICED THAT THE ASSESSEE'S RETURN OF INCOME WAS ONLY PROCESSED U/S 143(1) OF THE ACT AND NO SCRUTINY ASSESSMENT WAS MADE BEFORE REOPENING THE ASSESSMENT, AS SUCH, ANY EVIDENCE GATHERED/INFORMATION RECEIVED IS A VALID GROUND FOR REVOKING THE PROVISIONS OF SECTION 147 OF THE ACT ITA NOS 1588 1589 AND 1590 OF 2016 A KRISHNA PRASA D HYDERABAD. PAGE 3 OF 12 7) THE LEARNED CIT(A) FAILED TO NOTICE THAT THE ASSESSING OFFICER VIDE PROCEEDINGS IN F.NO. DC.CIR-16(1)/11-12/2013-14 DATED 17-07- 2013 REJECTED THE OBJECTIONS RAISED BY THE ASSESSEE BY A SPEAKING ORDER 8) THE LEARNED CIT(A) OUGHT TO HAVE NOTICED THAT THE CONFESSION MADE BY SRI T. RANGA RAO TO A JUDICIAL MAGISTRATE IS NOT AN ORDINARY CONFESSION, BUT IS A JUDICIAL CONFESSION UNDER SECTION 164 CR. PC AND TO PROVE THE JUDICIAL CONFESSION, THE PERSON TO WHOM JUDICIAL CONFESSION IS MADE NEED NOT BE CALLED AS WITNESS. THE CIT(A) SHOULD HAVE APPRECIATED THAT WHEN MORE PERSONS THAN ONE ARE INVOLVED IN AN ACT OF OFFENCE AND ARE TRIED JOINTLY, THE CONFESSION MADE BY ONE OF THEM, ADMITTED AS EVIDENCE BEFORE THE MAGISTRATE, CAN BE TAKEN INTO CONSIDERATION AGAINST ALL AND NOT AGAINST THE PERSON WHO ALONE MADE IT 9) THE LEARNED CIT(A) OUGHT TO HAVE NOTICED THAT THE JUDICIAL CONFESSION MADE BY SRI 1. RANGA RAO THAT ON-MONEY HAS BEEN PAID IS A COGENT EVIDENCE UNDER SECTION 80 OF THE INDIAN EVIDENCE ACT AND IT IS NOT A SUBORDINATE EVIDENCE, AS IT WAS MADE BEFORE A MAGISTRATE AND AS SUCH THE JUDICIAL CONFESSION CAN BE RELIED UPON AS PROOF OF GUILT AND SHOULD HAVE CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THE CIT(A) SHOULD HAVE APPRECIATED THAT A CONFESSIONAL STATEMENT MADE BEFORE A MAGISTRATE IS A GOOD AND SUBSTANTIVE EVIDENCE AND CONVICTION WILL BE BASED ON THE JUDICIAL CONFESSION. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, DERIVING INCOME FROM SALARY, HOUSE PROP ERTY, CAPITAL ITA NOS 1588 1589 AND 1590 OF 2016 A KRISHNA PRASA D HYDERABAD. PAGE 4 OF 12 GAINS AND OTHER SOURCES, FILED HIS RETURN OF INCOME FOR THE A.Y 2007-08 ON 28.3.2008 DECLARING TOTAL INCOME OF RS.1 ,53,00,359 AND AGRICULTURAL INCOME OF RS.1,80,000. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT ON 21.07.2008. SUBSEQUENTLY, THE ASSESSMENT FOR A.Y 2007-08 HAS BEEN REOPENED U/S 14 7 OF THE ACT BY ISSUANCE OF A NOTICE U/S 148 ON 20.03.2013. THE REASON FOR THE REOPENING OF THE ASSESSMENT IS THAT THE DEPARTMENT IS IN RECEIPT OF LETTER DATED 20.11.2012 FROM ACIT, CIRCLE 2(3) H YDERABAD, IN WHICH THE AO IS INFORMED THAT THE ASSESSEE SHRI ANU MOLU KRISHNA PRASAD, DIRECTOR OF M/S. LINKWELL TELESYSTE MS PVT. LTD HAS MADE AN INVESTMENT OF RS.3,39,00,000 TOWARDS PU RCHASE OF A VILLA IN M/S. EMAAR HILLS TOWNSHIPS PVT. LTD DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO THE A.Y 2007-08. THE AO PE RUSED THE RECORDS OF THE ASSESSEE AND FOUND THAT THE ASSESSEE HAS FAILED TO DISCLOSE THE ABOVE INVESTMENT IN HIS RETURN OF INCO ME AND THEREFORE, OBSERVED THAT BY ACCEPTING THE RETURN U/ S 143(1), IT HAS RESULTED IN ESCAPEMENT OF INCOME TO THE EXTENT OF R S.3,39,00,000 DUE TO THE FAILURE OF THE ASSESSEE TO DISCLOSE TRUE FACTS OF THE CASE. 3. IN RESPONSE TO THE NOTICE U/S 148, THE ASSESSEE FILED A LETTER DATED 26.03.2013, STATING THAT THE RETURN FI LED ON 28.03.2008 BE TREATED AS THE RETURN FILED IN RESPON SE TO THE NOTICE U/S 148 AND ALSO REQUESTED THE AO TO FURNISH THE RE ASONS RECORDED AS PER THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF M/S. GKN DRIVE SHAFT (INDIA) LTD VS. ITO AN D OTHERS. THE AO COMMUNICATED THE REASONS RECORDED TO THE ASSESSE E VIDE LETTER DATED 30.05.2013. IN RESPONSE TO THE SAME, THE ASSE SSEE, VIDE LETTER DATED 10.06.2013, RAISED HIS OBJECTION THAT THE ASSESSEE HAS PURCHASED THE VILLA VIDE REGISTERED AGREEMENT OF SA LE DATED ITA NOS 1588 1589 AND 1590 OF 2016 A KRISHNA PRASA D HYDERABAD. PAGE 5 OF 12 15.04.2009 FOR A CONSIDERATION OF RS.84,75,000 AND THAT RS.80,51,250 HAS ALREADY BEEN PAID BY WAY OF CHEQUE S AND THE BALANCE IS TO BE PAID AS AND WHEN DEMANDED BY THE L AND OWNER. HE SUBMITTED THAT THE ASSESSEE HAS MADE THE PAYMENT VIDE CHEQUES WHICH ARE DULY REFLECTED IN THE BOOKS OF AC COUNT AND THEREFORE, THERE IS NO NON-DISCLOSURE OF ANY MATERI AL BY THE ASSESSEE. THE ASSESSEE DENIED MAKING PAYMENT OF RS. 3.39 CRORES AND THAT THERE IS AN ESCAPEMENT OF INCOME TO SUCH A N EXTENT. THE AO REJECTED THE OBJECTIONS OF THE ASSESSEE BY OBSER VING THAT THE ASSESSMENT HAS BEEN REOPENED BASED ON THE CONFESSIO N MADE BY ONE SHRI TUMMALA RANGA RAO, DIRECTOR OF M/S. STYLIS H HOMES & REAL ESTATES PVT. LTD BEFORE THE SECOND METROPOLITA N MAGISTRATE, HYDERABAD U/S 146 OF THE CRIMINAL PROCEDURE CODE (C R.P.C) STATING THAT THE EXCESS AMOUNT OVER AND ABOVE THE P RICE MENTIONED IN REGISTERED DOCUMENT WAS COLLECTED IN C ASH BY HIM FROM THE BUYERS OF THE VILLA PLOTS AT GACHIBOWLI IN EMMAR HILLS TOWNSHIPS PVT. LTD HYDERABAD. THEREFORE, THE AO HEL D THAT THE PROCEEDINGS INITIATED ARE BASED ON SOUND FOOTING AN D THE MATERIAL EVIDENCE AVAILABLE ON RECORD. 4. THEREAFTER, THE AO PROCEEDED TO CONSIDER THAT TH E ASSESSEE HAS INVESTED AN AMOUNT OF RS.3.39 CRORES F OR PURCHASE OF A VILLA FROM M/S. EMMAR HILLS TOWNSHIPS PVT. LTD AND THAT THIS AMOUNT INCLUDES A CASH OF RS.2,54,25,000 PAID BY TH E ASSESSEE OVER AND ABOVE THE REGISTERED VALUE OF RS.84,75,000 . HE OBSERVED THAT THE ASSESSEE HAD ADMITTED PAYMENT OF RS.80,51, 250 ON DIFFERENT DATES BUT HAS FAILED TO SUBMIT ANY DETAIL S OF PAYMENTS MADE IN CASH. THE ASSESSEES EXPLANATION AS TO WHY THE CASH PAYMENT SHOULD NOT BE BROUGHT TO TAX WAS CALLED FOR . THE ITA NOS 1588 1589 AND 1590 OF 2016 A KRISHNA PRASA D HYDERABAD. PAGE 6 OF 12 ASSESSEE DENIED MAKING ANY PAYMENT IN CASH OVER AND ABOVE THE AMOUNT MENTIONED AND REFLECTED IN THE REGISTERED AG REEMENT OF SALE. THE AO HOWEVER, DID NOT ACCEPT THE ASSESSEES CONTENTION AND HELD THAT THE CASH PAYMENT OF RS.2,24,25,000 IS PROPORTIONATELY ATTRIBUTABLE TO THREE DIFFERENT A.Y S I.E. A.YS 2007- 08, 2009-10 & 2010-11 EQUALLY. THUS, HE MADE THE AD DITION OF RS.84,75,000 IN EACH OF THE A.YS AS UNEXPLAINED INV ESTMENT AND BROUGHT IT TO TAX. 5. AGGRIEVED, THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT (A) FOR ALL THE THREE A.YS, BY CHALLENGING THE VALIDITY OF THE ASSESSMENT PROCEEDINGS AND ALSO THE ADDITIONS MADE BY THE AO. THE CIT (A) VIDE ORDERS DATED 11.06.2014 FOR ALL TH E A.YS, HELD THE RE-ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT TO BE VOID ON THE GROUND THAT THE AO DID NOT HAVE ANY MATERIAL TO COR ROBORATE THAT ON MONEY HAS BEEN PAID BY THE ASSESSEE TOWARDS PU RCHASE OF THE VILLA AND THAT INCOME OF RS.3,39,00,000 HAS ESC APED THE ASSESSMENT FOR THE A.YS 2007-08, 2009-10 & 2010-11. HE HELD THAT PRIMA FACIE QUANTIFICATION OF THE INCOME WHICH HAS ESCAPED ASSESSMENT IS AN ESSENTIAL REQUIREMENT U/S 149 OF T HE ACT AND IN THE ABSENCE OF DATE OF PAYMENT WITH EVIDENCE, THE P REVIOUS YEAR IN WHICH THE TRANSACTION FALLS CANNOT BE ASCERTAINED. THE OTHER GROUND ON WHICH HE HAS HELD THE REOPENING OF THE AS SESSMENT TO BE BAD IN LAW ARE THAT THERE IS NO TANGIBLE MATERIA L IN THE POSSESSION OF THE AO OF THE ASSESSEE THAT THE INCOM E OF THE ASSESSEE HAS ESCAPED ASSESSMENT BUT THE AO HAS REOP ENED THE ASSESSMENT ONLY ON THE BASIS OF THE INFORMATION REC EIVED FROM ANOTHER AO AND THE SATISFACTION RECORDED IS BASED O NLY ON A POSSIBILITY AND PRESUMPTION. THE CIT (A) ALSO OBSER VED THAT THE ITA NOS 1588 1589 AND 1590 OF 2016 A KRISHNA PRASA D HYDERABAD. PAGE 7 OF 12 ASSESSEE HAD RAISED DETAILED OBJECTIONS TO THE REOP ENING OF THE ASSESSMENT BEFORE THE AO, BUT THE AO HAS REJECTED T HE SAME WITHOUT PASSING A SPEAKING ORDER. FURTHER, HE ALSO OBSERVED THAT THE ASSESSEE HAD SOUGHT AN OPPORTUNITY TO CROSS EXA MINE MR. TUMMALA RANGA RAO, BUT THE AO NOT AFFORDED SUCH AN OPPORTUNITY TO THE ASSESSEE EVEN THOUGH HE WAS RELY ING ON SUCH STATEMENT TO MAKE THE ADDITION. THUS, FOR ALL THESE REASONS, THE CIT (A) HELD THE REOPENING OF THE ASSESSMENT TO BE BAD IN LAW. THEREAFTER, HE ALSO PROCEEDED TO CONSIDER THE MERIT S OF THE ADDITIONS MADE BY THE AO AND OBSERVING THAT THERE I S NO EVIDENCE ON RECORD THAT THE SUM OF RS.3,39,00,000 HAS ESCAPE D THE ASSESSMENT, HE DELETED THE ADDITION. AGAINST THESE FINDINGS OF THE CIT (A) FOR ALL THE THREE A.YS, THE REVENUE IS IN A PPEAL BEFORE US. 6. THE LEARNED DR, WHILE RELYING UPON THE ORDER OF THE AO SUBMITTED THAT MR. T. RANGA RAO, WHO IS A DIRECTOR OF M/S. STYLISH HOMES REAL ESTATES PVT. LTD, IN HIS STATEME NT BEFORE THE COURT, HAD CLEARLY STATED THAT HE HAS COLLECTED THE AMOUNTS IN CASH OVER AND ABOVE THE REGISTERED SALE CONSIDERATI ON MENTIONED IN THE REGISTERED AGREEMENTS OF SALE AND THAT IT WA S ON THE BASIS OF THESE STATEMENTS THAT THE ASSESSMENTS HAVE BEEN REO PENED IN THE CASE OF THE ASSESSEE. IN SUPPORT OF HIS CONTENTION THAT WHERE THERE IS MATERIAL FOUND DURING THE COURSE OF SEARCH IN TH E CASE OF ANOTHER PERSON, ON THE BASIS OF WHICH THE RE-ASSESS MENT PROCEEDINGS ARE INITIATED, SUCH PROCEEDINGS ARE VAL ID, HE PLACED RELIANCE UPON THE DECISION OF THE HON'BLE BOMBAY HI GH COURT IN THE CASE OF BRIGHT STAR SYNTEX (P) LTD VS. ITO, REP ORTED IN (2016) 71 TAXMANN.COM 64 (BOM). FURTHER, HE SUBMITTED THAT SIMILAR ISSUE HAD ARISEN IN THE CASE OF MR. G. MAHESH BABU AND THE ITA NOS 1588 1589 AND 1590 OF 2016 A KRISHNA PRASA D HYDERABAD. PAGE 8 OF 12 HON'BLE JURISDICTIONAL HIGH COURT IN THE APPEALS FI LED BY BOTH THE REVENUE AS WELL AS MR. MAHESH BABU, VIDE ORDERS DAT ED 6.1.2017, HAS UPHELD THE ORDER OF THE TRIBUNAL IN REMANDING T HE MATTER BACK TO THE FILE OF THE AO TO GIVE THE ASSESSEE AN OPPORTUNITY TO CROSS EXAMINE SHRI TUMMALA RANGA RAO AND FURTHER DI RECTED THAT IF IT IS FOUND THAT THE AO IS ABLE TO ESTABLISH, ON THE BASIS OF EVIDENCE GATHERED, THAT THE ASSESSEE HAD PAID ON-MO NEY TO THE EXTENT QUANTIFIED BY HIM, THEN HE CAN MAKE THE ADDI TION U/S 69B OF THE ACT AND IF THERE IS NO EVIDENCE AVAILABLE ON RECORD TO DIRECTLY LINK THE ASSESSEE TOWARDS PAYMENT OF ON-MO NEY, THEN MERELY ON THE BASIS OF THE FACT THAT SOME OTHER BUY ERS HAVE ACCEPTED PAYMENT OF ON-MONEY, NO ADDITION CAN BE MA DE. 7. THE LEARNED DR SUBMITTED THAT IN THE CASE OF THE ASSESSEE ALSO, THE MATTER MAY BE REMANDED BACK TO T HE FILE OF THE AO FOR FRESH EXAMINATION IN THE LIGHT OF THE DIRECT IONS GIVEN BY THE TRIBUNAL IN THE CASE OF MR. MAHESH BABU. 8. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, SUPPORTED THE ORDERS OF THE CIT (A) AND SUBMI TTED THAT FOR REOPENING OF THE ASSESSMENT AFTER A PERIOD OF FOUR YEARS ON THE BASIS OF MATERIAL AVAILABLE ON RECORD, THE AO HAS T O SATISFY HIMSELF THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSM ENT AND THAT IT IS DUE TO THE FAULT OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ESTIMATION OF HIS INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FILED HIS RETURNS OF INCOME FOR ALL THE THREE YEARS AND EVEN IN THE WEALTH TAX RETURNS, THE ASSESSEE HAS DISCLOSED THE ASSET. HE ALSO ITA NOS 1588 1589 AND 1590 OF 2016 A KRISHNA PRASA D HYDERABAD. PAGE 9 OF 12 SUBMITTED THAT THE ASSESSEE HAS MADE THE PAYMENT ON LY OF RS.84,75,000 TO M/S EMMAR HILLS TOWNSHIP LTD, BY WA Y OF CHEQUES, AND THE SOURCES FOR THE SAID PAYMENTS HAVE BEEN EXPLAINED BY THE ASSESSEE TO THE AUTHORITIES BELOW AND ALL THE PAYMENTS HAVE BEEN REFLECTED IN THE BOOKS OF ACCOUN T AND ALSO EXPLAINED DURING THE RE-ASSESSMENT PROCEEDINGS. THE REFORE, ACCORDING TO HIM, THE AO HAD NO MATERIAL, WHATSOEVE R, TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME DUE TO THE FAULT OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY A LL MATERIAL FACTS. HE ALSO SUBMITTED THAT THE SATISFACTION RECORDED BY THE AO IS NOT ON THE BASIS OF ANY MATERIAL WHICH HAS SUBSEQUENTLY COME TO HIS POSSESSION BUT IT IS ACTUALLY ON THE BASIS OF THE L ETTER WRITTEN BY ANOTHER AO AND HENCE CAN AT BEST BE TERMED AS BORR OWED SATISFACTION. FURTHER, HE ALSO SUBMITTED THAT THE AO HAS RELIED UPON THE STATEMENT OF ONE MR. TUMMALA RANGA RAO, TO MAKE ADDITION WITHOUT GIVING THE ASSESSEE AN OPPORTUNITY TO CROSS EXAMINE SUCH A PERSON. HE PLACED RELIANCE UPON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF HINDUS TAN LEVER LTD. VS. ACIT REPORTED IN 268 ITR 332, FOR THE PROP OSITION THAT THE AO OF THE ASSESSEE ALONE HAS TO REACH TO THE CONCLU SION THAT THERE WAS ESCAPEMENT OF INCOME AND ALSO AS TO WHETHER THE RE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF HIS INCOME FOR THE RELEVANT A.Y. HE THEREFORE, SUBMITTED THAT THE ORDE R OF THE CIT (A) IS TO BE UPHELD. 9. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE AO HAS RESORTED TO REOP ENING OF THE ASSESSMENT FOR ALL THE THREE YEARS SOLELY ON THE BA SIS OF THE LETTER ITA NOS 1588 1589 AND 1590 OF 2016 A KRISHNA PRASA D HYDERABAD. PAGE 10 OF 12 RECEIVED BY HIM FROM ACIT, CIRCLE 2(3), HYDERABAD. IN THE REASONS RECORDED, IT MENTIONED THAT THE ASSESSEE HAS MADE P AYMENT OF RS.3.39 CRORES FOR PURCHASE OF A VILLA, BUT HAS NOT DISCLOSED THE SAID INVESTMENT IN HIS RETURN OF INCOME, THEREBY, T HERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS FOR THE ASSESSMENT OF HIS INCOME FOR THE RELE VANT A.Y. THE ASSESSEE IS AN INDIVIDUAL AND IN THE RETURNS OF INC OME FILED BY HIM, THE ASSESSEE IS SUPPOSED TO DISCLOSE HIS INCOM E OF THE RELEVANT FINANCIAL YEAR AND PAY TAXES THEREON, AND THERE IS NO REQUIREMENT TO DISCLOSE THE INVESTMENTS IN ASSETS M ADE BY HIM. THE ASSESSEE WAS REQUIRED TO FILE THE WEALTH TAX RE TURN DISCLOSING THE ASSETS OWNED BY HIM. AS LONG AS THE ASSESSEE IS ABLE TO SATISFACTORILY EXPLAIN THE SOURCES FOR HIS INVESTME NTS, NO ADDITION CAN BE MADE. WE FIND THAT IN RESPONSE TO THE NOTICE U/S 148, THE ASSESSEE HAS EXPLAINED THE SOURCES TO THE EXTENT OF RS.80,50,250, BUT THE AO HAS MADE THE ADDITION THOUGH THE ASSESSE E HAS CLEARLY DENIED HAVING MADE ANY PAYMENT IN CASH. AS RECORDED BY THE CIT (A), THE AO HAS NOT BROUGHT ON RECORD, ANY EVIDENCE AS TO HOW AND WHEN THE ASSESSEE HAS MADE PAYMENT OF ANY CASH FOR THE PURCHASE OF THE VILLA. THE AO HAS UNILATERALLY APPO RTIONED THE ALLEGED CASH PAYMENT EQUALLY AMONGST THE THREE A.YS . SUCH A PROCEDURE IS NOT ENVISAGED UNDER THE LAW. THE AO IS REQUIRED TO BRING ON RECORD, THE QUANTUM OF INVESTMENT AND THE MODE OF INVESTMENT MADE DURING THE RELEVANT PREVIOUS YEAR B EFORE MAKING ANY ADDITION TO THE RETURNED INCOME OF THE ASSESSEE . NO SUCH EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE AO. THE HON'BLE COURTS HAVE HELD THAT THE AO OF THE RELEVANT ASSESS EE HAS TO RECORD HIS REASONS BEFORE REOPENING OF THE ASSESSME NT AND WHERE THE REOPENING OF ASSESSMENT IS AFTER FOUR YEARS, HE IS REQUIRED ALSO ITA NOS 1588 1589 AND 1590 OF 2016 A KRISHNA PRASA D HYDERABAD. PAGE 11 OF 12 TO RECORD THAT THE INCOME HAS ESCAPED THE ASSESSMEN T DUE TO THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS. THE AO OF THE ASSESSEE BEFORE US HAS NOT BROUGHT ON RECORD ANY MATERIAL ON THE BASIS OF WHICH HE HAD SATISFIED HIM SELF THAT THE ASSESSEE HAS NOT DISCLOSED THE MATERIAL FACTS DUE T O WHICH THERE IS AN ESCAPEMENT OF INCOME FOR THE RELEVANT A.Y. 10. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF HINDUSTAN LEVER LTD (CITED SUPRA) HAS HELD THAT THE AO OF THE ASSESSEE ALONE HAS TO REACH TO THE CONCLUSION AS T O WHETHER THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLO SE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF HIS INCOME FOR THE RELEVANT A.Y. AND HAS HELD THAT THE REASONS RE CORDED SHOULD BE CLEAR AND UNAMBIGUOUS AND SHOULD NOT SUFFER FROM ANY VAGUENESS AS THE REASONS ARE THE MANIFESTATIONS OF THE MIND OF THE AO. THE REASONS RECORDED SHOULD BE SELF-EXPLANA TORY AND SHOULD NOT KEEP THE ASSESSEE GUESSING AS THE REASON S PROVIDE THE LINK BETWEEN THE CONCLUSIONS AND THE EVIDENCE. THE AO, IN THE EVENT OF CHALLENGE TO THE REASONS, MUST BE ABLE TO JUSTIFY BASED ON THE MATERIAL AVAILABLE ON RECORD AND HE MUST DISCLO SE IN THE REASONS AS TO WHICH FACT OR MATERIAL WAS NOT DISCLO SED BY THE ASSESSEE FULLY AND TRULY NECESSARY FOR ASSESSMENT O F THAT A.Y, SO AS TO ESTABLISH THE VITAL LINK BETWEEN THE REASONS AND EVIDENCE. THAT VITAL LINK IS THE SAFEGUARD AGAINST ARBITRARY REOPENING OF THE CONCLUDED ASSESSMENT. THE REASONS RECORDED BY THE A O CANNOT BE SUPPLEMENTED BY FILING AN AFFIDAVIT OR MAKING AN OR AL SUBMISSION, OTHERWISE, THE REASONS WHICH WERE LACKING IN THE MA TERIAL PARTICULARS WOULD GET SUPPLEMENTED, BY THE TIME THE MATTER REACHES THE COURT, ON THE STRENGTH OF THE AFFIDAVIT OR ORAL ITA NOS 1588 1589 AND 1590 OF 2016 A KRISHNA PRASA D HYDERABAD. PAGE 12 OF 12 SUBMISSIONS ADVANCED. THUS, THE RE-ASSESSMENT PROC EEDINGS IN THE CASE BEFORE US ARE NOT SUSTAINABLE. EVEN ON MER ITS, THERE IS NO EVIDENCE BROUGHT ON RECORD TO SHOW THAT THE ASSESSE E HAD THE SOURCES FOR SUCH PAYMENTS IN CASH AND THAT THE ASSE SSEE HAS FAILED TO DISCLOSE THE SAME IN HIS RETURN OF INCOME . THEREFORE, BOTH ON THE VALIDITY OF THE RE-ASSESSMENT AS WELL AS THE ADDITION DELETED BY THE CIT (A), WE DO NOT FIND ANY REASON TO INTERF ERE WITH HIS ORDER. 11. IN THE RESULT, REVENUES APPEALS FOR ALL THE TH REE A.YS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH NOVEMBER, 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 15 TH NOVEMBER, 2017. VINODAN/SPS COPY TO: 1 ACIT, CIRCLE 16(1), 1 ST FLOOR, BLOCK B I.T.TOWERS, MASAB TANK, HYDERABAD 2 SRI A. KRISHNA PRASAD, 1-11-252/1/A GOWRA CLASSIC BEGUMPET, HYDERABAD 3 CIT (A)-V HYDERABAD 4 CIT IV HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER