Ganna Sarvaiah, Hyderabad V. Income-Tax Officer, Suryapet

ITA 1649/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82384 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 29-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: S RAMA RAO
• Keywords: Business income; Competent authority; Assessment record
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SMT. P.MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1649/HYD/2013 (AS SESSMENT YEAR 2009 - 10) SHRI GANNA SARVAIAH, KODAD, NALGONDA DISTRICT ( PAN - AMKPG 4755 A ) V/S. INCOME TAX OFFICER , SURYAPET (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.RAMA RAO RESPONDENT BY : SHRI P.SOMA SEKHAR RED DY DATE OF HEARING 30 .0 9 .2014 DATE OF PRONOUNCEMENT 1.10.2014 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX VI, HYDERABAD DATED 30.9.2013 PASSE D UNDER S.263 OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A N INDIVIDUAL, WHO IS ENGAGED IN RETAIL CLOTH BUSINESS. A S U R VEY UNDER S.133A WAS CARRIED OUT IN THE BU S IN ES S PREMISES OF THE ASSESSEE ON 8.3.2010. AS FOUND D URIN G THE C OUR S E OF SURVEY, THE ASSESSEE HAD STARTED CONST R UC T ION OF A CENTRALIZED AI R - C ONDITIONED FUNCTION HALL WITH AN INVESTMENT OF AROUN D RS .1 CRORE. TH E REAFTER , ON 1.11.2010, THE ASSESSEE FILED HIS RETURN OF INCOM E FOR THE YEAR UNDER CON S I D ERATION, DECLARIN G TOT AL INCOME OF RS .1,68,740, APART F R O M AGRICULTURAL INCOM E OF R S .2,20,000. DU R IN G TH E COU R SE OF ASSESSMENT P R O C E E D I NGS, THE ISSUE REL A TIN G TO IN V ESTMENT MADE BY THE ASSESSEE IN TH E CON S TRUC T ION OF TH E FUNCTION HALL WAS EXAMINED BY THE I TA NO. 1649 /HYD/201 3 SHRI GANNA SARVAIAH, KODAD, NALGONDA DISTRICT 2 ASSESSING OFFICER AND IN TH E ASSESSMENT COMPLETED UN D ER S.143(3) RE A D WITH S.147, VIDE O R DER DATED 30.12.2011, THE TOTAL IN C OM E O F THE ASSESSEE W A S COMPUTED BY THE ASSESSING OFFICER AT R S .36,85,970, AFTER MAKING AN ADDITION OF R S .35, 1 7 , 2 2 9 ON ACCOUN T OF UNEXPLAINED CASH DEPOS ITS FO U ND TO BE MADE IN THE B A NK ACCOUNT O F TH E ASSESSEE IN S TATE BANK O F HYDERABAD, KODAD BRANCH. 3. THERE A FTER, THE ASSESSMENT RECORD O F THE ASSESSEE FOR THE YEAR UNDER CON S I D ERATION CAME TO BE EXAMINED BY THE LEARNED COMMISSIONER OF INCOME - TAX AND ON SUCH EXAMINA T IO N , HE NOTED THAT THE SOU R CE OF FUNDS FOR THE CON S T R UC T I O N OF FUNCTION HALL WAS EXPLAINED BY TH E ASSESSEE AS THE P R OCEED S SENT BY HIS SON AND D AUGH T ER - IN - LAW F R OM ABROAD, WHICH W E RE DEPOSITED IN TH E BANK AC C OUN T OF THE ASSESSEE WITH INDUSIND BANK, KODAD. ACCOR DI NG TO TH E LEARNED COMMISSIONER , THERE WAS , HOW E VER , FA IL URE ON THE PART OF THE ASSESSING OFFICER TO MAKE NECESSARY VERIFICATION REGARD I NG THE DEPOSITS MAD E BY THE ASSESSEE IN HIS BANK ACCOUNT WITH INDU S IND BANK, KODAD, AND THE ASSE SSMENT MADE BY THE ASSESSING OFFICER THUS WAS ERRONEOUS AS WELL AS P R EJU D I C IAL TO THE IN TE R E STS OF THE RE VENUE. HE TH E R E FORE, ISSUED A NOTICE UNDER S.263 ON 3.9.20 1 3 REQUIRING THE ASSESSEE TO SHOW CAUSE AS TO WHY THE SAID ASSESSMENT SHOULD NO T BE REVISED OR SET ASIDE. IN REPLY, I T WAS SUBMI T TED BY THE ASSESSEE THAT HI S SON AND D AUGH T ER - IN - LAW ARE STAYING IN US A AND THE AMOUNTS REMITTED BY THEM TO HIS BANK ACCOUNT WITH INDUS IND BANK , K ODAD THROUGH BANKING CHANNELS W E RE WITHDRAWN AND D EPOSITED IN ANOTHER B ANK ACCOUNT WITH S T ATE B A NK OF HYDERABAD. IT WAS EXPL A IN E D THAT THE AMOUN T S DEPOSITED WITH STATE BANK OF HY D ERABAD WERE THEN WITHDRAWN AND UTILI S ED FOR THE CON S T R U CT ION OF TH E FUNCTION HALL. I T WAS EXPLAINED THAT WHILE EXAMINING THE ISSUE REL A TIN G TO THE INVESTMENT MADE BY TH E ASSESSEE IN TH E CON S TRUC T ION OF FUNCTION HALL, THE ASSESSING OFFICER I TA NO. 1649 /HYD/201 3 SHRI GANNA SARVAIAH, KODAD, NALGONDA DISTRICT 3 ANALYSED THE BANK DEPO S I T S AN D WITH D RAWL S FROM THE INDUSIND BANK AND THE DEPOSITS WITH STATE BANK OF HYDERABAD AND CAME TO THE CON C LU S ION THAT TH E SOU R CE OF DEPOS ITS WITH STATE BANK OF HYDERABAD TO TH E EXTENT OF RS. 35,17,229 WAS NOT PROPERLY EXPLAINED BY THE ASSESSEE. IT WAS SUBMITTED THAT THE ASSESSING OFFICER HOWEVER, WAS DULY SATISFIED WITH THE DEPOSITS FOUND TO B E MADE IN THE BANK ACCOUNT O F TH E ASSESSEE W ITH INDUSIND BANK AND THE GENUINENESS OF THE SAID DEPOSITS WAS ACCEPTED BY HIM, AF T ER CON S IDERIN G THE ENTRIES IN THE SAID BANK ACC O UN T AS WELL AS THE EXPLANATION OF THE ASSESSEE FOR THE SOURCE OF DEPOSITS FOUND MADE THE R EIN, AS THE PROCE E DS RECEIVED FROM HIS S ON AND D AUGHTER - IN - LAW FROM ABROAD. IT WAS CONTENDED THAT THERE WAS THUS NO ERROR IN TH E ASSESSMENT M A DE BY THE ASSESSING OFFICER, AS ALLEGED BY THE LEARNED COMMISSIONER IN HIS NOTICE ISSUED UNDER S .26 3 CALLIN G FOR ANY R E VISION. 4. THE SUBMISSIONS/EXPL AN A TION OF TH E ASSESSEE WAS NOT FOUN D ACCEPTABLE BY THE LEARNED COMMISSIONER OF INCOME - TAX FOR THE FOLLO W IN G R E ASONS GIVEN IN PARAGRAPH NO.6 OF HIS IMPUGN E D ORDER - 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LEARNED AR AS WELL AS THE FACTS RU LING IN THIS CASE. THERE IS NO DOUBT ABOUT THE FACT THAT THE ASSESSEE IS MAINTAINING 2 ACCOUNTS ONE WITH SBH AND THE OTHER WITH INDUSIND BANK. THE ASSESSING OFFICER EXAMINED THE DEPOSITS WITH THE SBH AND SOUGHT EXPLANATION FROM THE ASSESSEE. IT WAS EXPLA INED BEFORE THE AO THAT THE DEPOSITS ARE LINKED TO WITHDRAWAL FROM INDUSIND BANK, KODAD. THE AO PROCEEDED TO COMPLETE THE ASSESSMENT BY MAKING ADDITIONS HAVING NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AS TO THE SOURCES FOR THE CREDITS APPEARIN G IN THE SBH BANK ACCOUNT. HOWEVER, THE AO HAS FAILED TO EXAMINE THE DEPOSITS APPEARING IN INDUSIND BANK TO A LOGICAL END. IT WAS EXPLAINED THAT THESE CRE D ITS REPR E SENTS REMITTANCES FROM ABROAD BY I TA NO. 1649 /HYD/201 3 SHRI GANNA SARVAIAH, KODAD, NALGONDA DISTRICT 4 THE SON AND DAU GH TER - IN - LAW OF THE ASSESSEE. BUT, AO DID NOT PROCEED FURTHER ABOUT GENUINENESS O F THOSE ENTRIES. THEREFORE, THE AO AS TO T ALLY FAILED TO VERIFY ABOUT THE SOURCES OF TH E SE REMITTANCES AS WELL AS THE NATURE OF SUCH CREDITS ETC. IF TH E SE DEPOSITS REPR E SENT REMITTANCES F R OM ABROAD, THERE SHOULD BE SUP PORTING EVIDENCE IN THE FORM OF CONFIRMATION OF TH E SENDERS ALON G WITH AUTHENTICATION OF SUCH DOCUM E N T S BY COMPETENT AUTHORITY FOR TREATING THE SAID DOCUMENT AS GENUINE . WITHOUT SUCH AUTHENTICATION FROM THE COMPETENT AUTHOR I TY, ANY DOCUM E N T EMANATING FROM O UTSIDE I NDIA HAS NO EVIDENTIAL VALUE. TH E R E FORE, TH E AO FAILED IN HIS BASIC DUTY TO E X AMINE THESE ASPECTS WHILE COMPLETING SCRUTINY ASSESSMENT . HENCE BY DO I NG SO, THERE IS ERROR CREPT IN TH E ASSESSMENT ORDER FRAMED BY THE ASSESSING OFFICER WHICH IS PREJU DICIAL TO THE IN T ER E ST OF THE R E VENUE AND D ESER VE S TO B E SET ASIDE AND THE COMMISSIONER IS EMPOWER E D TO REVISE SUCH ASSESSMENT BY INVOKING P R OVIS I ONS OF SECTION 263.. 5. FOR TH E R E ASONS GIVEN ABOVE, AND RELYING ON VARIO U S JU D I C IAL PRONOUN C EM E NTS, THE LEARNED COMMISSIONER OF INCOME - TAX SET ASIDE THE ASSESSMENT MADE BY TH E ASSESSING OFFICER, WITH A DIRECTION TO HIM TO REDO THE SAME AS PER LAW AFTER PROVIDING OPPORTUNITY TO TH E ASSESSEE . 6. AGGRIEVED BY THE O R DER OF THE LEARNED COMMISSIONER PASSED UNDER S.263, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 7. THE LEARNED C OUN S EL FO R TH E ASSESSEE REIT E R ATE D THE SUBMI S SION S MADE BEFORE THE COMMISSIONER OF INCOME - TAX IN RESPECT OF H I S STAND THAT THERE WAS NO ERROR IN TH E ASSESSME NT MADE BY THE ASSESSING OFFICER, AS ALLEGED BY THE LEARNED COMMISSIONER OF INCOME - TAX. HE INVITED OU R ATTENTION TO THE RELEVANT PO R TION OF THE WRITTEN SUBMI S SION S FIL E D BEFORE THE ASSESSING OFFICER DURING TH E COU R SE OF ASSESSMENT PROCEEDIN G S AS WELL AS T HAT OF THE ASSESSMENT O R DER PASSED BY THE ASSESSING I TA NO. 1649 /HYD/201 3 SHRI GANNA SARVAIAH, KODAD, NALGONDA DISTRICT 5 OFFICER TO POINT OUT THAT THE BANK ACCOUNT O F THE ASSESSEE MAINTAINED WITH INDUSIND BANK WAS NO T ONLY VERIFIED BY THE ASSESSING OFFICER, BUT THE SOU R CE OF THE DEPOSITS FOUND TO BE MADE IN THE SAID BANK AC COUN T WAS A C CEPTED BY HIM, ON APPLICATION OF HIS MIND. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE O T H E R HAND, SUBMITTED THAT ALTHOUGH THE SOURCE OF DEPOSITS FOUND TO B E MADE IN THE BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH INDUSIND BANK WAS E XPLAINED BY THE ASSESSEE AS THE AMOUNT T RANSFERRED BY HIS SON AND DAUGHTER - IN - LAW FROM USA, THE SAME WAS NO T VERIFIED BY THE ASSESSING OFFICER BY MAKIN G PROPER AND SUFFICIENT ENQUI RI ES. HE CONTENDED THAT THERE WAS THUS AN ERROR IN TH E ASSESSMENT MADE BY THE ASSESSING OFFICER, WHICH WAS PREJU DI CIAL TO THE IN T ER E STS OF THE REVENUE AND THE SAID ASSESSMENT W A S RIGHTLY SET ASIDE BY THE LEARNED COMMISSIONER, EXERCISING THE POW E R CONFERRED UPON HIM UNDER S.263 WITH A DIR E CTION TO THE ASSESSING OFFICER TO REDO T HE SAME AS PER LAW. 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OB SE RVED THAT A SU R V E Y UNDER S.133A WAS C A RRIED ON IN TH E CA S E OF THE ASSESSEE, D U R IN G THE COURSE O F WHICH THE ASSESSEE WAS FOUND TO HAVE MADE INVESTMENT IN THE CON S TRUC T ION OF A FUNCTION HALL. DURIN G TH E ASSESSMENT PRO CEEDINGS , THE IS S UE REL A TING TO THE S A ID INVESTMENT MADE BY TH E ASSESSEE WAS EXAMINED BY THE ASSESSING OFFICER AND THE EXPLANATION OF THE ASSESSEE IN RES P ECT O F SOU R CE OF TH E SAID INVESTMENT WITH REFERENCE TO THE ENTRIES MADE IN HIS TWO BANK AC C OUN T S MAINTAINED WITH INDUSIND BANK AND STATE BANK OF HYDERABAD WAS PARTLY ACCEP T ED AND PARTLY REJECTED BY THE ASSESSING OFFICER. AT THE TIME OF HEARING BEFORE US, THE LEARNED I TA NO. 1649 /HYD/201 3 SHRI GANNA SARVAIAH, KODAD, NALGONDA DISTRICT 6 COUN S EL FOR THE ASSESSEE HAS FILED COPIES O F TH E WRITTEN SUBMIS S ION S MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER DURING TH E COU R SE OF ASSESSMENT PRO CEEDINGS AND I T IS WORTHWHILE TO REPRODUCE TH E REL E VANT PO R TION THEREOF, AS CONTAINED IN LET TER DATED 13.10.2011, APP E ARING AT P A GE 64 OF THE PAPER - BOO K, WHICH READS AS UNDER - DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2009 - 10, THE TOTAL AMOUNTS RECEIVED FROM THEM ARE RS.52,51,000/ - WHICH IS EVIDENT FROM THE COPY OF THE INDUS IND BANK ACCOUNT WHICH IS SUBMITTED HEREWITH. THE AMOUNTS SPENT FOR CONSTRUCTION WAS MET ON DIFFERENT DATES IN PIECEMEAL. AT THE SAME TIME THE AMOUNTS WERE RECEIVED FROM MY SONS ON DIFFERENT DATES. AT TIMES IF THERE WAS ANY PAUCITY OF FUNDS IT WAS MET FROM OUT OF MY OWN SOURCES LIKE BUSINESS AND AGRICULTURE AND BY WAY OF HAVING TEMPORARY HAND LOANS FROM FRIENDS AND CLOSE RELATIVES. THE SAME WERE REPAID AS AND WHEN THE FUNDS WERE RECEIVED. (EMPHASIS SUPPLIED) 10. A PERUSAL OF THE ORDER PASSED BY THE ASSES SING OFFICER UNDER S.143 (3) READ WITH S.147 ALSO SHOWS THAT THE EXPLANATION OFFERED BY THE ASSESSEE IN SUPPORT OF SOU R CE OF INVESTMENT MADE IN TH E CON S TRUC T ION OF FUNCTION HALL WAS CONSID E RED AND DEALT WITH BY HIM AT P A GE 2 AS UN D E R - ON 29.08.2011 THE AS SESSEE SRI GANNA SARVAIAH FILED A LETTER DT.01 - 11 - 2010 IN THIS LETTER IT IS STATED BY HIM THAT HE RETURNED THE BUSINESS INCOME UNDER SEC.44AF AND HE PURCHASED A PLOT FOR RS.53,000/ - ON 09 - 02 - 2009 AND STARTED CONSTRUCTION OF FUNCTION HALL AFTER OBTAINING PE RMISSION FROM GRAMA PANCHAYATHI ON 15 - 12 - 2008. AND THE SOURCES FOR THE CONSTRUCTION FOR THIS FUNCTION HALL ARE FROM THE AMOUNTS SENT BY HIS SON AND DAUGHTER - IN - LAW WHO ARE IN USA. IT IS ALSO STATED BY HIM THAT THE AMOUNTS SO RECEIVED FROM USA WERE DIRECT LY ENTERED IN HIS INDUSIND BANK A/C NO.0183H9407900 AND THE CONSTRUCTION WORK WAS NOT I TA NO. 1649 /HYD/201 3 SHRI GANNA SARVAIAH, KODAD, NALGONDA DISTRICT 7 GIVEN TO ANY CONTRACTOR. ON 18 - 11 - 2011, NOTICES U/S. 143(2) AND 142(1) WERE ISSUED ALONGWITH A LETTER CALLING FOR INFORMATION FROM THE ASSESSEE. IN THIS LETTER IT WAS R EQUESTED THE ASSESSEE TO EXPLAIN THE DIFFERENCE BETWEEN THE AMOUNTS INFORMED TO VALUATION OFFICER AND THE ACTUAL AMOUNT SPENT BY HIM TOWARDS CONSTRUCTION OF FUNCTION HALL. IT WAS ALSO REQUESTED TO EXPLAIN THE AMOUNT OF EXPENDITURE WHICH WERE EXCLUDED BY T HE VALUATION OFFICER. ON 13 - 01 - 2011 THE ASSESSEES AR FILED A LETTER SUBMITTING THE INDUSIND BANK A/C. OF THE ASSESSEE AND ALSO SBH KODAD BANK A/C. RELATING TO THE ASSESSEE. IN HIS LETTER THE AR STATED THAT THE AMOUNTS WERE SPENT IN PIECEMEAL ON DIFFEREN T DATES AND THE ASSESSEE ALSO HAS TAKEN LOANS FROM FRIENDS AND RELATIVES WHICH WERE REPAID BY HIM AFTER RECEIVING THE FUNDS. IT IS ALSO STATED BY THE AR THAT THE MONEY SPENT TOWARDS FUNCTION HALL IS OUT OF THE AMOUNTS SENT BY HIS SON AND DAUGHTER - IN - LAW O F THE ASSESSEE WHO ARE STAYING ABROAD. (EMPHASIS SUPPLIED) 11. AS I T IS CLEARLY MANIFEST FORM THE SUBMISSION MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PRO CEEDINGS B E FOR E THE ASSESSING OFFICER AS WELL AS RELEVANT PO R TION OF THE AS ORDE R PASSED BY THE ASSESSING OFFICER DEALI N G WITH TH E SAID EXPLANATION/SUBMISSION, ENTRIES IN THE BANK AC C OUN T O F THE ASSESSEE MAINTAINED WITH INDUSIND BANK WERE NOT ONLY CONSIDERED BY THE ASSESSING OFFICER, BUT THE SOURCE OF DEPOSITS FOUND TO BE MADE IN THE SAID BANK ACCOUNT AS EXPLAINED BY THE ASSESSEE AS THE MONEY RECEIVED BY HIM FROM HIS SON AND DAUGHTER IN LAW IN USA THROUGH PROPER BANKING CHANNEL WAS ACCEPTED BY THE ASSESSING OFFICER, AFTER APPLYING HIS MIND. I N OUR OPINION, IT , THEREFORE, CANNOT BE SA ID THAT THE SOURCE OF DEPOSITS FOUND TO BE MADE IN THE BANK A CCOUNT OF TH E ASSESSEE WITH INDUSIND BANK WAS NO T VERIFIED BY THE ASSESSING OFFICER AND THERE WAS AN ERROR IN THE O R DER OF THE ASSESSING OFFICER, AS AL L EGED BY THE LEARNED COMMISSIONER OF INCOME - TAX IN HIS IMPU G NE D OR D E R UNDER S.263. I F THE LEARNED COMMISSIONER CONTEMPLATES TH A T THE ASSESSING OFFICER SHOULD HAVE I TA NO. 1649 /HYD/201 3 SHRI GANNA SARVAIAH, KODAD, NALGONDA DISTRICT 8 ENQUIRED INTO THE SOU R CE OF FUNDS IN THE HANDS OF THE SON AND DAUGHTER - IN - L A W OF TH E ASSESSEE , THE SAME, IN OUR OPINIO N , WOULD AMOUNT TO VERIFYING TH E SOU R CE OF SOU R CE, WHICH IS NO T PERMISSI B LE. AS SUCH, CON S I DE RING ALL THE FACTS OF THE CASE, WE ARE OF TH E VIEW THAT THERE WAS NO ERROR IN TH E ASSESSMENT MADE BY THE ASSESSING OFFICER AS ALLEGED BY THE LEARNED COMMISSIONER IN HIS IMPUGNED ORD E R PASSED UNDER S.263, AND THE SAID ORDER REVISING THE ASSESSMENT ORDER OF THE ASSESSING OFFICER IS LIABLE TO B E SET ASIDE. W E ORDER AC C OR D INGLY AND ALLOW THIS APPEAL O F TH E ASSESSEE. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. `` ORDER PRONOUNCED IN THE COURT ON 1ST OCTOBER , 2014 SD/ - SD/ - ( P.MADHAVI DEVI) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/ - 1 ST OCTOBER , 2014 CO PY FORWARDED TO: 1. SHRI GANNA SARVAIAH, (KODADA, NALGONDA DISTRICT) C/O. SHRI S.RAMA RAO, FLAT NO.102, SHIRYA'S ELEGANCE, NO.3 - 6 - 643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500029 2 . INCOME TAX OFFICER SURYAPET 3. COMMISSIONER OF INCOME - TAX VI, HYDERABAD 4. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S