Sri Naseer Aziz A.N., Bangalore V. Dy.CIT., Central Circle-3, Hyderabad, Hyderabad

ITA 1657/HYD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6132 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 31-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: B SAI PRASAD
• Keywords: Bad and doubtful debts
• Section: 143(3); 153A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1657/HYD/2014 ASSESSMENT YEAR: 2008-09 SHRI NASEER AZIZ A.N., HYDERABAD PAN ACYPA 3986 K VS. DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 3, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI B. SAI PRASAD REVENUE BY : SHRI M. SITARAM DATE OF HEARING 06-01-2016 DATE OF PRONOUNCEMENT 22-01-2016 O R D E R PER P. MADHAVI DEVI, J.M.: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE OR DER DATED 28/08/2014 OF LD. CIT(A)-I, HYDERABAD, FOR THE ASSE SSMENT YEAR 2008- 09. 2. IN THIS APPEAL, ASSESSEE IS AGGRIEVED BY THE OR DER OF CIT(A) IN UPHOLDING THE ADDITION OF RS. 20 LAKHS MADE BY THE AO AS UNDISCLOSED INCOME OF THE ASSESSEE. 3. BRIEF FACTS OF THE CASE ARE THAT THERE WAS A SEA RCH AND SEIZURE OPERATION ON 07/02/2009 IN THE CASE OF ONE SRI SYE D MOHAMMAD MEHDI AND ALSO THE ASSESSEE ON THE INFORMATION THAT SRI SYED MOHAMMAD MEHDI IS SELLING 4,876 SQ.YDS. OF LAND TO ASSESSEE AND IS RECEIVING HUGE ON MONEY PAYMENT IN CASH. ASSESSE E IS AN ARCHITECT BY PROFESSION AND IS THE MANAGING DIRECTOR OF M/S S PAN DESIGN AND DEVELOPMENT PVT. LTD. AND IS RESIDENT OF BANGALORE. CONSEQUENT TO SEARCH, VARIOUS INCRIMINATING MATERIAL WERE FOUND AND SEIZED AND 2 ITA NO. 1657 /HYD/2014 NASEER AZIZ A.N. ACCORDINGLY, NOTICE U/S 153A OF THE ACT WAS ISSUED TO THE ASSESSEE. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) READ W ITH SECTION 153A OF THE ACT, AO NOTICED THAT SEIZED DOCUMENT IS IN T HE HAND WRITING OF THE ASSESSEE AND THE HEADING ON THE DOCUMENT IS WRI TTEN AS BAD DEBTS. HE OBSERVED THAT IT IS A TABULAR COLUMN GIV ING DETAILS LIKE NAME, PRINCIPAL INVESTMENT, RETURN AT MATURITY, PER SONS, STATUS, LOCATION & REMARKS AND THAT THIS IS PREPARED BY ASS ESSEE ON 02/01/2009. HE FURTHER OBSERVED SL. NO. 1 IS IN T HE NAME OF SRI GANGADHARA REDDY WITH PRINCIPAL INVESTMENT OF RS. 2 5 LAKHS ON 31/05/2007, LOCATION CHIKBALLAPUR, STATUS AGREE MENT FROM AGREEMENT HOLDER. WITH REGARD TO THIS ENTRY, THE AS SESSEE HAD STATED THAT SHRI GANGADHAR REDDY POSED AS OWNER OF THE PRO PERTY AND OFFERED TO SELL 3 ACRES OF LAND AT AGALAGURKHI VILL AGE, CHIKBALLAPUR @ RS. 32.95 LAKHS PER ACRE AND ASSESSEE HAS PAID AN A DVANCE OF RS. 20 LAKHS. SINCE SHRI GANGADHAR REDDY IS ABSCONDING, TH E DEAL IS YET TO BE FINALIZED AND A SUIT IN CIVIL COURT FOR SPECIFI C PERFORMANCE OF THE CONTRACT HAS BEEN FILED. AO NOTED THAT THOUGH ASSES SEE HAS SAID TO HAVE PAID ONLY RS. 20 LAKHS, IN THE DOCUMENT, ASSES SEE HAD WRITTEN RS. 25 LAKHS AS PAID ON 31/05/2007. HE, THEREFORE, TREATED THE SAID AMOUNT OF RS. 25 LAKHS TO BE UNDISCLOSED INCOME OF THE ASSESSEE REPRESENTING THE ABOVE ADVANCE PAID FOR PURCHASE OF PROPERTY AT CHIKBALLAPUR AND HE ACCORDINGLY, BROUGHT IT TO TA X. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE CIT(A), WHO PARTLY ALLOWED THE SAME AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US AGAINST THE CONFIRMATION OF THE PART OF T HE ADDITION. 5. LD. COUNSEL FOR THE ASSESSEE, SHRI SAI PRASAD, W HILE REITERATING THE ASSESSEES SUBMISSIONS BEFORE THE AUTHORITIES B ELOW, SUBMITTED THAT BEFORE THE CIT(A), ASSESSEE HAD STATED THAT TH E ACTUAL INVESTMENT IN THE LAND WAS ONLY RS. 20 LAKHS AND NO T RS. 25 LAKHS AND THAT THE SAME IS APPEARING IN THE BALANCE SHEET OF ASSESSEES WIFE FILED ALONG WITH THE RETURN OF INCOME. HE SUBMITTED THAT IT IS FOR THIS REASON THAT THE ABOVE TRANSACTION IS NOT REFLECTED IN THE RETURN OF 3 ITA NO. 1657 /HYD/2014 NASEER AZIZ A.N. INCOME OF ASSESSEE. HE ALSO SUBMITTED THAT ASSESSEE HAD FILED AN APPLICATION U/S 154 OF THE ACT FOR RECTIFICATION OF THE MISTAKES IN THE ORDER OF THE AO BY BRINGING TO HIS NOTICE THE ABOV E FACTUAL INCONSISTENCY, BUT, THE AO HAS DISMISSED THE APPLIC ATION IN LIMINE WITHOUT LOOKING INTO THE DETAILS. ASSESSEE HAD ALSO FURNISHED THE COPY OF THE AGREEMENT FOR SALE DATED 01/06/07 AND A COPY OF THE SUIT FILED IN CIVIL COURT AT CHIKBALLAPUR MANDAL, BY ASSESSEE S WIFE WHEREIN ASSESSEES WIFE HAD REQUESTED FOR THE REFUND OF ADV ANCE OF RS. 20 LAKHS. HE SUBMITTED THAT THE CIT(A) HAS CONSIDERED THE FACTS AND HELD THAT SINCE THERE IS DOCUMENTARY EVIDENCE SHOWI NG THE PAYMENT OF RS. 20 LAKHS ONLY, THE AMOUNT OF RS. 20 LAKHS ON LY NEEDS TO BE CONSIDERED FOR THE PURPOSE OF ADDITION. HE FURTHER SUBMITTED THAT CIT(A), HOWEVER, ERRONEOUSLY HELD THAT THE ADDITION OF RS. 20 LAKHS IS TO BE CONFIRMED AND THE BALANCE OF RS. 5 LAKHS IS T O BE DELETED EVEN THOUGH THE ASSESSEE HAS FILED ALL THE RELEVANT DOCU MENTS TO SHOW THAT THE AMOUNT HAS BEEN ADVANCED BY ASSESSEES WIFE. TH EREFORE, ACCORDING TO THE LD. COUNSEL, THE AMOUNT CANNOT BE BROUGHT TO TAX IN THE HANDS OF ASSESSEE. HE ALSO SUBMITTED THAT THE R EVENUE AUTHORITIES HAVE BROUGHT THE SAID AMOUNT TO TAX IN THE HANDS OF ASSESSEES WIFE AND THE SAME HAS BEEN ACCEPTED BY ASSESSEES WIFE. HE, THEREFORE, PRAYED THAT THIS FACT MAY ALSO BE TAKEN INTO CONSID ERATION. 6. THE LD. DR, SHRI M. SITARAM, ON THE OTHER HAND, BESIDES SUPPORTING THE ORDERS OF THE REVENUE AUTHORITIES, S UBMITTED THAT THOUGH IT IS CLAIMED THAT THE ADVANCE WAS GIVEN BY ASSESSEES WIFE, ASSESSEE HAS NOT PROVED THE SOURCE OF HIS WIFE FOR MAKING SUCH PAYMENT AND, THEREFORE, AO HAS RIGHTLY TREATED THE ADVANCE AS UNDISCLOSED INCOME OF THE ASSESSEE. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATER IAL ON RECORD, WE FIND THAT THE DOCUMENT FOUND IN THE POSSESSION O F ASSESSEE IS NOT DISPUTED BY ASSESSEE NOR IS IT DISPUTED THAT IT IS IN HIS OWN HAND WRITING. THE FACT THAT THE ASSESSEE HAS PAID ADVANC E TO ONE SHRI GANGADHAR REDDY FOR PURCHASE OF LAND IS ALSO NOT IN DISPUTE. THE ONLY 4 ITA NO. 1657 /HYD/2014 NASEER AZIZ A.N. CONTENTION WHICH MERITS CONSIDERATION IS THAT THE A GREEMENT OF SALE IS IN THE NAME OF ASSESSEES WIFE AND ALSO THAT SHE HA S FILED A SUIT FOR SPECIFIC PERFORMANCE OF THE CONTRACT. THEREFORE, IT IS CLEAR THAT EVEN IF THE SEIZED DOCUMENT IS TO BE TAKEN INTO CONSIDERATI ON FOR MAKING THE ADDITION, THE RECITALS ABOUT THIS TRANSACTION IS T O BE CONSIDERED IN THE HANDS OF ASSESSEES WIFE IN VIEW OF THE ABOVE CORRO BORATORY DOCUMENTARY EVIDENCE AND NOT IN THE HANDS OF ASSESS EE. ASSESSEE HAS FILED ALL THE NECESSARY DOCUMENTS TO PROVE THAT THE INVESTMENT HAS BEEN MADE BY ASSESSEES WIFE. IN SUCH CIRCUMSTA NCES, UNLESS THE ASSESSEES WIFE IS NOT AN INCOME-TAX ASSESSEE, THE SAME CANNOT BE TREATED AS INCOME OF THE ASSESSEE. IT IS STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT PROTECTIVE ASSESSMENT IN THE HANDS OF ASSESSEES WIFE HAS BEEN ACCEPTED AND A COPY OF TH E SAME HAS ALSO BEEN FILED BEFORE US, WHICH IS AT PAGE 47 OF THE AS SESSEES PAPER BOOK. FURTHER, IT IS ALSO SEEN THAT THE PAYMENTS OF RS. 20 LAKH HAS BEEN MADE BY ISSUING CHEQUES FROM PARTNERSHIP FIRM OF THE ASSESSEE I.E. THE PAYMENT OF RS. 10 LAKHS PAID BY CHEQUE FRO M PARTNERSHIP FIRM AND FURTHER PAYMENT OF RS. 10 LAKHS PAID BY CASH. IT IS ONLY A SUM OF RS. 5 LAKHS, WHICH IS NOT FOUND RECORDED IN THE BOO KS OF ACCOUNT OF THE FIRM. HOWEVER, SINCE THE CIT(A) HAS CONSIDERED DOCUMENTARY EVIDENCE TO HOLD THAT IT IS ONLY RS. 20 LAKHS THAT HAS BEEN INVESTED FOR PURCHASE OF PROPERTY, WE FIND THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF THE PAYMENT TO THE EXTENT OF RS. 20 LAKHS IN THE HANDS OF HIS WIFE. HOWEVER, THE ASSESSMENT IN THE HANDS OF A SSESSEES WIFE HAVING BEEN CONCLUDED, WE ARE NOT PASSING ANY ORDER S AS TO WHETHER SHE EXPLAINED THE SOURCE OF PAYMENT IN HER HANDS OR NOT. IN VIEW OF THE ABOVE DISCUSSION, WE DELETE THE ADDITION OF RS. 20,00,000/- MADE IN THE HANDS OF ASSESSEE. IF AT ALL, ANY ADDITION I S TO BE SUSTAINED, IT IS RS. 5 LAKHS. BUT, SINCE THE REVENUE HAS NOT FILED A NY APPEAL AGAINST THE DELETION OF THE SAID AMOUNT BY THE CIT(A), WE A RE NOT INTERFERING WITH THE ORDER OF THE CIT(A) ON THIS ISSUE. 5 ITA NO. 1657 /HYD/2014 NASEER AZIZ A.N. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY, 2016. SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER J UDICIAL MEMBER HYDERABAD, DATED: 22 ND JANUARY, 2016 KV COPY TO:- 1) SRI NASEER AZIZ A.N., NO. 46, AZIZ COTTAGE, 60 FT. ROAD, BHOOPASANDRA LAYOUT, SANJAY NAGAR POST, BANGAL ORE 560 094. 2) DCIT, CENTRAL CIRCLE 3, HYDERABAD. 3 CIT(A)- 1, HYDERABAD 4) CIT(CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.