DCIT, Hyderabad V. Sri Mukesh Kumar Vijaywargi, Hyderabad

ITA 1648/HYD/2010

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6247 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 22-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A SITARARAMA RAODR
• Keywords: Search and seizure; Principle of natural justice
• Section: 143(3); 153A; 132

Judgement Text

ITA NO 1648 AND CO 8 MUKESH KUM AR VIJAYAWARGI HYDERABAD PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.1648/HYD/2010 (ASSESSMENT YEAR: 2008-09) DY. COMMISSIONER OF INCOME TAX (CENTRAL CIRCLE 2) HYDERABAD VS SRI MUKESH KUMAR VIJAYAWARGI HYDERABAD PAN: AENPK 9824P C.O. NO.8/HYD/2011 (ARISING OUT OF ITA NO.1648/HYD/2010) (A.Y 2008-09) SRI MUKESH KUMAR VIJAYAWARGI HYDERABAD PAN: AENPK 9824P VS DY. COMMISSIONER OF INCOME TAX (CENTRAL CIRCLE 2) HYDERABAD FOR REVENUE: SHRI A. SITARARAMA RAO,DR FOR ASSESSEE: SHRI K.C. DEVDAS O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL AND CROSS OBJECTION IS BY THE ASSESSEE FOR THE A.Y 2008-09. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. THERE WAS A SEARCH AND SEIZURE OPERATIO N U/S 132 OF THE I.T. ACT IN THE BUSINESS PREMISES OF M/S. DHATR I CONSTRUCTIONS DATE OF HEARING : 08.09.2016 DATE OF PRONOUNCEMENT : 21.09.2016 ITA NO 1648 AND CO 8 MUKESH KUM AR VIJAYAWARGI HYDERABAD PAGE 2 OF 9 PVT. LTD ON 10.10.2007. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, CERTAIN DOCUMENTARY EVIDENCE RELATING TO ON MONEY PAYMENT MADE BY THE SAID COMPANY TO THE ASSESSEE AN D OTHERS FOR PURCHASE OF CERTAIN IMMOVABLE PROPERTY WAS FOUN D AND SEIZED. ACCORDING TO THE EVIDENCE FOUND, THE ASSESSEE HAS E NTERED INTO AN AGREEMENT FOR SALE OF HIS LANDED PROPERTY TO M/S DH ATRI CONSTRUCTIONS FOR A SUM OF MONEY. IN VIEW OF THE SA ME, IMMEDIATELY, A CONSEQUENTIAL SEARCH U/S 132 OF THE I.T. ACT WAS CARRIED OUT BY EXECUTING THE WARRANT IN THE NAME OF THE ASSESSEE. DURING THE SAID SEARCH, THE ASSESSEE ADMITTED TO HA VING SIGNED ON THE AGREEMENT OF SALE ALONG WITH ALL THE OTHER LAND OWNERS, BUT HOWEVER, HE DENIED THE RECEIPT OF ON MONEY IN CASH. SUBSEQUENTLY, NOTICE U/S 153A OF THE ACT DATED 26.0 6.2008 WAS ISSUED AND SERVED ON THE ASSESSEE. IN RESPONSE TO T HE SAME, THE ASSESSEE FILED HIS RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.5,22,450. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 153A OF THE ACT, THE AO OBSERVED THAT THE AGREEMENT OF SALE WAS FOR THE LAND PROPERTY SITUATED AT SURVE Y NO.129/77, BLOCK-K, WARD NO.12, SYED NAGAR, FIRST LANCER, SHAIK PET VILLAGE, HYDERABAD, ACCORDING TO WHICH THE ASSESSEE ALONG WI TH OTHER LAND OWNERS AGREED TO SELL THE PROPERTY ADMEASURING 6204 .76 SQ. YARDS FOR A TOTAL CONSIDERATION OF RS.41.25 CRORES AND TH AT THE AGREEMENT WAS SIGNED BY ALL THE LAND OWNERS. HE ALS O OBSERVED THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERAT ION, THE MANAGING DIRECTOR OF M/S DHATRI CONSTRUCTIONS (P) L TD SHRI M. MANJUNATHA REDDY ALSO ADMITTED IN HIS SWORN STATEME NT THAT THE ITA NO 1648 AND CO 8 MUKESH KUM AR VIJAYAWARGI HYDERABAD PAGE 3 OF 9 ENTIRE CONSIDERATION OF RS.41.25 CRORES WAS PASSED ON TO THE RESPECTIVE SELLERS. HE ALSO OBSERVED THAT ON THE DA TE OF SEARCH, THE ASSESSEE ALSO HAD ADMITTED A FACT THAT HE HAD SIGNE D ON THE AGREEMENT, THOUGH HE DENIED THE RECEIPT OF ON MONEY . HOWEVER, HE NOTICED THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE RETRACTED FROM HIS ORIGINAL STATEMENT AND STATED THAT HE HAS NOT SIGNED ON THE AGREEMENT. AFTER CONSIDERI NG THE ABOVE FACTS, THE AO CAME TO THE CONCLUSION THAT THE ASSES SEE HAS FURNISHED FALSE REPLY BEFORE THE AO WHILE RECORDING THE SWORN STATEMENT, BUT IN VIEW OF THE DOCUMENTARY AND OTHER EVIDENCE FOUND DURING THE COURSE OF SEARCH AND ALSO IN VIEW OF THE FACT THAT THERE IS SUFFICIENT GAP BETWEEN THE DATE OF AGREEME NT AND DATE OF SALE, HE CAME TO THE CONCLUSION THAT THE AGREEMENT WAS ACTED UPON AND HENCE THE ASSESSEE IS ALSO IN RECEIPT OF U NDISCLOSED ON MONEY. 4. THE AO, THEREAFTER, PROCEEDED TO CONSIDER THAT T HE ASSESSEE OWNED THE SAID PROPERTY ALONG WITH ONE MR. DEEPAK. ASSESSEE WAS THEREFORE DIRECTED TO PRODUCE MR. DEEP AK FOR EXAMINATION, BUT SINCE THE ASSESSEE FAILED TO PRODU CE HIM FOR EXAMINATION, THE AO BROUGHT THE ENTIRE AMOUNT OF RS.4,22,37,524/- FALLING TO THEIR SHARE OUT OF THE TOTAL CONSIDERATION AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. 5. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT (A) REITERATING THE SUBMISSIONS MADE BEFORE THE AO AND ALSO BRINGING TO THE NOTICE OF THE CIT (A) THAT THE BROK ER ONE MR.MOHD. KAREEM HAS ALSO FILED AN AFFIDAVIT STATING THAT THE SIGNATURE OF THE ITA NO 1648 AND CO 8 MUKESH KUM AR VIJAYAWARGI HYDERABAD PAGE 4 OF 9 ASSESSEE ON THE AGREEMENT OF SALE WAS FORGED BY HIM . THE CIT (A) HOWEVER, GRANTED RELIEF TO THE ASSESSEE ON THE GROU ND THAT THE ALLEGED ON MONEY WAS IN FACT PAID ON FEBRUARY, 2007 WHICH DOES NOT FOR IN THE RELEVANT A.Y AND THEREFORE, HE DELETE D THE ADDITION AND AGAINST THE DELETION OF THE ADDITION, THE REVEN UE IS IN APPEAL BEFORE US, WHILE THE ASSESSEE IS IN APPEAL AGAINST THE FINDING OF THE CIT (A) THAT THE ALLEGED ON MONEY WAS RECEIVED BY THE ASSESSEE. IT IS THE CASE OF BOTH THE ASSESSEE AS WE LL AS THE REVENUE THAT THE INCOME IS TO BE BROUGHT TO TAX IN THE YEAR OF REGISTRATION OF THE DOCUMENT, WHICH IS A.Y 2009-10. THUS, BOTH THE ASSESSEES AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US. 6. THE LEARNED COUNSEL FOR THE ASSESSEE, SHRI K.C.DEVDAS, WHILE REITERATING THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW, SUBMITTED TH AT AT THE TIME OF SEARCH, THE ASSESSEE WAS SUFFERING FROM HIGH FEV ER AND WHEN QUESTIONED BY THE SEARCH PARTY, HAD ADMITTED THE SI GNATURES ON THE XEROX COPY PRODUCED BY THE AO. HE SUBMITTED THA T SUBSEQUENTLY, THE BROKER, MR. MOHD. KAREEM HAD FILE D AN AFFIDAVIT BEFORE THE AO STATING THAT IN ORDER TO ACCELERATE T HE TRANSACTION, HE HAD FORGED THE SIGNATURES OF THE ASSESSEE. HE SU BMITTED THAT THE AO HAS NOT CONSIDERED THE AFFIDAVIT OF MR. MOHD . KAREEM AND HAS NOT STATED AS TO WHY THE SAME WAS NOT ACCEPTED. FURTHER, HE HAS ALSO SUBMITTED THAT THE ASSESSEE HAD ASKED FOR THE COPY OF THE STATEMENT OF MR. MANJUNATHA REDDY ON THE BASIS OF WHICH, THE AO HAS MADE ADDITION. HE SUBMITTED THAT THE COP Y OF THE STATEMENT HAS NOT BEEN FURNISHED TO THE ASSESSEE AN D THEREFORE, THERE IS CLEAR VIOLATION OF THE PRINCIPLES OF NATUR AL JUSTICE. HE ALSO ITA NO 1648 AND CO 8 MUKESH KUM AR VIJAYAWARGI HYDERABAD PAGE 5 OF 9 SUBMITTED THAT THE MANAGING DIRECTOR, MR. MANJUNATH A REDDY, DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF THE COMPANY, HAS ALSO DENIED THE PAYMENT OF RS.42.12 CRORES TO THE V ENDORS STATING THAT THE COMPANY DOES NOT HAVE THE FINANCIAL CAPACI TY TO MAKE SUCH A PAYMENT. THUS, WHEN THE STATEMENTS HAVE BEEN RETRACTED BY BOTH THE SEARCHED PARTIES, ACCORDING TO HIM, THE AO HAS NO RIGHT TO MAKE THE ADDITION WITHOUT ANY FURTHER CORR OBORATIVE AND SUBSTANTIAL EVIDENCE. THE LEARNED COUNSEL FOR THE A SSESSEE ALSO SUBMITTED THAT THOUGH THE LAND STOOD JOINTLY IN THE NAME OF THE ASSESSEE AND MR. DEEPAK, THE AO HAS BROUGHT THE ENT IRE INCOME TO TAX IN THE HANDS OF THE ASSESSEE ALONE, ONLY BEC AUSE THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE MR. DEEPAK BE FORE THE AO. HE SUBMITTED THAT THE ASSESSEE WAS NOT UNDER ANY OB LIGATION TO PRODUCE MR. DEEPAK BEFORE THE AO AND FOR FAILURE TO DO SO, THE AO CANNOT BRING THE ENTIRE INCOME TO TAX IN THE HANDS OF THE ASSESSEE ALONE. HE ALSO SUBMITTED THAT NO ASSESSMENTS WERE M ADE IN THE CASE OF THE OTHER 8 LANDLORDS TO BRING TO TAX THE R ECEIPT OF THE ALLEGED BALANCE ON MONEY AND THAT THIS CLEARLY SHOW S THAT THE REVENUE HAS TAKEN ACTION ONLY AGAINST ANY OF THE AS SESSEE AND HAS NOT TAKEN AGAINST ANY OTHER LANDLORDS. FURTHER, HE ALSO SUBMITTED THAT THE ASSESSMENT IN THE CASE OF M/S. D HATRI CONSTRUCTIONS HAS BEEN MADE BY BRINGING TO TAX, THE SUM OF RS.41.25 CRORES AND AN APPEAL AGAINST THE SAME IS P ENDING BEFORE THE CIT (A). FURTHER, HE ALSO PLACED RELIANCE UPON THE FOLLOWING DECISIONS IN SUPPORT OF HIS ABOVE PROPOSITIONS: I) RAJENDER NATH VS. CIT, 120 ITR 14 (S.C) ITA NO 1648 AND CO 8 MUKESH KUM AR VIJAYAWARGI HYDERABAD PAGE 6 OF 9 II) ITO V. MURLIDHAR BHAGWAN DAS [1964] 52 ITR 335. (S.C) III) CIT. VS DR. P.L. NARULA , 150 ITR 71 7. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AO AND SUBMITTED THAT THE ASSESSEE HI MSELF HAD ADMITTED DURING THE COURSE OF SEARCH THAT HE HAD AP PENDED HIS SIGNATURES TO THE AGREEMENT OF SALE AND THE FACT TH AT THE TRANSACTION WAS CONCLUDED BY EXECUTION OF THE REGIS TERED SALE DEED SUBSEQUENTLY CONFIRMED THE VERACITY AND AUTHEN TICITY OF THE AGREEMENT OF SALE. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT THE SIGNATURES ARE VARYING AND THEREFORE, THE CONTE NTION OF SHRI MOHD.KAREEM THAT HE HAD FORGED THE SIGNATURE HAS TO BE ACCEPTED, THE LEARNED DR SUBMITTED THAT THE VARIANC E IN SIGNATURE IS NATURAL OVER A PERIOD OF TIME. FURTHER, HE SUBMIT TED THAT IF THE CONTENTION OF MR. MOHD. KAREEM IS TRUE, THEN THE TR ANSACTION WOULD NOT HAVE GONE THROUGH AND THAT IT IS ALSO TO BE NOTED THAT THE ASSESSEE HAS NOT TAKEN ANY CRIMINAL ACTION AGAI NST THE BROKER. THEREFORE, ACCORDING TO HIM, THE AFFIDAVIT OF MR. MOHD. KAREEM IS ONLY TO ACCOMMODATE THE CONTENTION OF THE ASSESSEE AND THEREFORE, CANNOT BE RELIED UPON. 8. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE UNDISPUTED FACTS ARE TH AT THE ASSESSEE IS THE OWNER OF A PIECE OF LAND WHICH HAS BEEN SOLD TO M/S. DHATRI CONSTRUCTIONS (P) LTD AND THE ALLEGED AGREEMENT OF SALE IS DATED 12.02.2007, WHILE THE REGISTERED SALE DEED HAS BEEN EXECUTED 20 DAYS PRIOR TO SEARCH I.E. ON 21.09.2007. THEREFORE, IT IS CLEAR THAT ITA NO 1648 AND CO 8 MUKESH KUM AR VIJAYAWARGI HYDERABAD PAGE 7 OF 9 THE AGREEMENT OF SALE HAS BEEN GIVEN EFFECTIVE TO B Y THE REGISTERED SALE DEED. THOUGH THE ASSESSEE HAS ADMITTED TO HIS SIGNATURES ON THE AGREEMENT OF SALE AT THE TIME OF SEARCH, HE DEN IED THE RECEIPT OF ON MONEY. ACCORDING TO HIM, THE SALE CONSIDERATI ON MENTIONED IN THE REGISTERED SALE DEED ONLY HAS BEEN RECEIVED BY HIM. WE FIND THAT THE BASIS FOR MAKING THE ADDITION IN THE CASE OF THE ASSESSEE IS THE AGREEMENT OF SALE AND ALSO THE STATEMENT OF MR. MANJUNATHA REDDY. THE STATEMENT OF MR. MANJUNATHA R EDDY IS SUPPORTED BY THE AGREEMENT OF SALE, WHICH IS NOT RE GISTERED. IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH, THE ASSESSEE HAD ADMITTED TO HIS SIGNATURES ON THE AGREEMENT OF SALE THOUGH HE HAS THEREAFTER RETRACTED THE SAME. THE ASSESSEES CONTE NTION THAT HE WAS IN A CONFUSED STATE OF MIND AT THE TIME OF SEAR CH AND THEREFORE, HAD ADMITTED TO HIS SIGNATURES ON THE AG REEMENT OF SALE CANNOT BE ACCEPTED IN VIEW OF HIS DETAILED REPLY TO Q. NO.31 WHICH IS AS UNDER: Q.NO.31:- I AM HERE WITH SHOWING YOU THE EXHIBIT- 'A' WHICH IS ALREADY SHOWN TO YOU AND ON WHICH YOU HAVE SIGNED AS TOKEN OF IDENTIFICATION. PLEASE RECOLLECT YOUR MEMORY AND EXPLAIN THE ENTIRE TRANSACTION RELATED TO THIS TRANSACTION. PLEASE STA TE WHETHER YOU IDENTIFY THE EXHIBIT- 'A ' BEING SHOWN TO YOU WHICH IS A COPY OF THE AGREEMENT OF SALE (WITH POSSESSION) DATED 12-02-2007 . ANS:- I HAVE GONE THROUGH THE EXHIBIT - 'A' WHICH I S THE AGREEMENT OF SALE (WITH POSSESSION) DT. 12-02- 2007 WHICH IS SHOWN TO ME. I IDENTIFY THIS DOCUMENT AND CONFIRM THAT IT IS NOTHING BUT THE DOCUMENT ON A RS. 100/- NON-JUDICIAL PAPER WHICH WAS SENT TO ME BY SRI. SARDAR IQBAL SINGH THROUGH HIS MESSENGER, SRI PRAMOD, FOR MY SIGNATURE APPROXIMATELY 7 TO 8 MONTHS AGO. AS PER THE REQUEST OF MR. IQBAL SINGH I HAD SIGNED ON THIS ITA NO 1648 AND CO 8 MUKESH KUM AR VIJAYAWARGI HYDERABAD PAGE 8 OF 9 DOCUMENT AND SENT IT BACK TO HIM. SUBSEQUENTLY, LAST MONTH, I WENT TO ATTAPUR, SUB-REGISTRAR OFFICE AS PER THE REQUEST OF SRI. IQBAL SINGH TO REGISTER A PART OF THE LAND MENTIONED IN THE EXHIBIT - 'A' (AGREEMENT OF SALE - WITH POSSESSION, DT. 12-02- 2007). 9. HOWEVER, THIS REPLY IS NOW BEING SOUGHT TO BE NEGATIVED ON THE BASIS OF THE AFFIDAVIT OF MR. MOHD . KAREEM THAT THE SIGNATURE OF THE ASSESSEE HAS BEEN FORGED BY HI M. BUT, WE FIND THAT THE CONTENTS OF THE SAID AFFIDAVIT HAVE NOT BE EN CONTROVERTED OR REJECTED BY THE AO. AO HAS NOT TAKEN COGNIZANCE OF THE SAME. FURTHER, THE ENTIRE AMOUNT HAS BEEN BROUGHT TO TAX I N THE HANDS OF THE ASSESSEE ALONE, WHEREAS MR. DEEPAK IS ALSO A SHAREHOLDER. FURTHER, THE ISSUE AS TO WHETHER M/S DHATRI CONSTRUC TIONS (P) LTD HAS THE FINANCIAL CAPACITY TO MAKE THE PAYMENT TO T HE ASSESSEE AND WHETHER THE ADDITIONS CAN BE SUSTAINED OR NOT I S BEFORE THE CIT (A) IN RESPECT OF M/S DHATRI CONSTRUCTIONS (P) LTD. FURTHER, WE ALSO FIND THAT THOUGH THE AO AND THE CIT (A) HAVE R ELIED UPON THE STATEMENT OF MR. MANJUNATHA REDDY DURING THE COURSE OF SEARCH, TO MAKE THE ADDITION IN THE HANDS OF THE ASSESSEE, THOUGH THE ASSESSEE HAS REQUESTED FOR FURNISHING OF A COPY OF THE STATEMENT, HE HAS NOT BEEN FURNISHED WHICH IS AGAINST THE PRIN CIPLES OF NATURAL JUSTICE. IN VIEW OF ALL THE ABOVE, WE ARE O F THE OPINION THAT THE ISSUES NEED RECONSIDERATION AFTER VERIFICATION OF THE AFFIDAVIT OF MR. MOHD. KAREEM AND AFTER GIVING THE ASSESSEE A CO PY OF THE STATEMENT OF MR. MANJUNATHA REDDY AND ALSO A FAIR O PPORTUNITY OF CROSS EXAMINATION OF MR. MANJUNATHA REDDY, IF THE A SSESSEE IS SO REQUESTED. SINCE THE ASSESSMENT OF M/S DHATRI CONST RUCTIONS (P) LTD IS PENDING CONSIDERATION BEFORE THE CIT (A), WE DEEM IT FIT AND ITA NO 1648 AND CO 8 MUKESH KUM AR VIJAYAWARGI HYDERABAD PAGE 9 OF 9 PROPER TO SET ASIDE THE ORDER OF THE CIT (A) ON THE YEAR OF TAXABILITY AS WELL AS THE MERITS OF THE FINDINGS ON RECEIPT OF ON-MONEY AND REMIT THE SAME TO THE FILE OF THE CIT(A) FOR RECONS IDERATION ALONG WITH THE APPEAL OF M/S DHATRI CONSTRUCTIONS (P) LTD . NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE GIVEN A FAIR OPP ORTUNITY OF HEARING IN ALL THE ISSUES RAISED BY HIM BEFORE US. 10. IN THE RESULT, BOTH THE REVENUES APPEAL AND TH E CROSS OBJECTION ARE TREATED AS ALLOWED FOR STATISTICAL PU RPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER, 2016. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 21 ST SEPTEMBER, 2016. VINODAN/SPS COPY TO: 1 DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2, 7 TH FLOOR, AAYAKAR BHAVAN, LB STADIUM ROAD, BASHEERBAGH, HYDER ABAD 04 2 SRI MUKESH KUMAR VIJAYWARGI, H.NO.8-2-293/82/2 PL OT NO.76, MLA COLONY, ROAD NO.12, BANJARA HILLS, HYDERABAD 3 CIT (A)-I HYDERABAD 4 CIT CENTRAL, HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER