ITO, Ward-11(4), Hyderabad V. Sri. K. Jagan Mohan Reddy, Hyderabad

ITA 1666/HYD/2012

• Counselvise Citation: 166622514 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 08-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: A V RAGHURAM
• Keywords: Additional evidence
• Section: 143(3); 133A; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1666/HYD/2012 ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER, WARD 11(4), HYDERABAD SRI K. JAGAN MOHAN REDDY, HYDERABAD PAN AGKPK 3424C (APPELLANT) (RESPONDENT) REVENUE BY SHRI RAJAT MITRA ASSESSEE BY SHRI A.V. RAGHURAM DATE OF HEARING 10-12-2014 DATE OF PRONOUNCEMENT 07-01-2015 O R D E R PER SAKTIJIT DEY, J.M.: AFORESAID APPEAL OF THE DEPARTMENT IS DIRECTED AG AINST ORDER DATED 10/08/20123 OF LD. CIT(A)-VI, HYDERABAD FOR THE ASSESSMENT YEAR 2007-08. 2. THOUGH THE DEPARTMENT HAS RAISED AS MANY AS 7 GR OUNDS, BUT, THE ONLY ISSUE ARISING OUT OF THE GROUNDS RAISED IS RELATING TO ADDITION OF RS. 25 LAKHS MADE BY AO AND DELETED BY LD. CIT(A ). 3. BRIEFLY THE FACTS RELATING TO THE ISSUE IN DISPU TE ARE, ASSESSEE IS AN INDIVIDUAL. A SURVEY WAS CONDUCTED IN CASE OF M/ S S.V. CONSTRUCTIONS U/S 133A ON 31/01/2008. DURING THE SU RVEY, A COPY OF AGREEMENT OF SALE DATED 18/11/2006 WAS FOUND WHICH REVEALED THAT ASSESSEE ALONG WITH THREE OTHERS HAVE ENTERED INTO AN AGREEMENT OF SALE FOR PURCHASE OF 56 ACRES 24.5 GUNTAS OF LAND A T BOGARAM VILLAGE, 2 ITA NO. 1666/HYD/2012 SHRI K. JAGAN MOAHN REDDY KEESARA MANDAL, R.R. DISTRICT AND PAID AN ADVANCE O F RS. 4.90 CRORES. IT WAS ADMITTED BY ASSESSEE DURING SURVEY, OUT OF THE AFORESAID TOTAL SALE CONSIDERATION, ASSESSEES SHAR E WAS RS. 1,22,50,000. ASSESSEE ALSO FILED HIS RETURN OF INCO ME DISCLOSING THE AFORESAID INVESTMENT MADE BY HIM AND ASSESSMENT IN CASE OF ASSESSEE WAS ALSO COMPLETED U/S 143(3) ON 30/06/09. SUBSEQUENTLY, DURING THE ASSESSMENT PROCEEDING IN CASE OF SHRI G. SANJEEVA REDDY, MANAGING PARTNER OF M/S SV CONSTRUCTIONS FOR THE AY 2007-08, AO WHILE VERIFYING THE COPY OF AGREEMENT OF SALE DATED 18/11/06 NOTICED THAT THE PAYMENT BY ASSESSEE AND OTHER THREE PARTNE RS IS NOT RS. 4.90 CRORES, BUT, THEY PAID RS. 5.90 CRORES. THUS, THE E XCESS PAYMENT OF RS. 1.00 CRORE WAS NOT ADMITTED DURING THE SURVEY O UT OF WHICH ASSESSEES 1/4 TH SHARE COMES TO RS. 25 LAKHS. AS AFORESAID INVESTMENT WAS NOT DISCLOSED, AO ALLEGING ESCAPEMEN T OF INCOME, REOPENED THE ASSESSMENT U/S 147 OF THE ACT BY ISSUI NG A NOTICE U/ 148 ON 17/03/11. IN RESPONSE TO THE SAID NOTICE, AS SESSEE VIDE LETTER DATED 13/04/11 REQUESTED AO TO TREAT THE RETURN FIL ED BY HIM EARLIER AS RETURN IN RESPONSE TO NOTICE U/S 148 OF THE ACT. DU RING THE ASSESSMENT PROCEEDING, WHEN AO CALLED UPON ASSESSEE TO EXPLAIN THE SALE CONSIDERATION MENTIONED IN THE AGREEMENT OF SALE DA TED 18/11/06 AND THE PAYMENT RECEIPTS EVIDENCING SUCH PAYMENT WHICH WERE MARKED AS PAGE NO. 44, 45 & 46, ENCLOSED TO THE AGREEMENT OF SALE EVIDENCING SUCH PAYMENT, ASSESSEE SUBMITTED THAT AN ADVANCE OF RS. 3.90 CRORES WAS PAID TO THE VENDORS AT THE TIME OF EXECU TION OF AGREEMENT OF SALE ON 18/11/06. HOWEVER, WHEN THE AGREEMENT WA S DRAFTED, ALL THE VENDORS WERE NOT AVAILABLE TO EXECUTE THE AGREE MENT, THEREFORE, AN AMOUNT OF RS. 1 CRORE FORMING PART OF ADVANCE AM OUNTING TO RS. 3.94 CRORES WAS PAID AND TEMPORARY (KACHHA) RECEIPT WAS OBTAINED FROM THE VENDORS PRESENT AT THAT TIME WITH AN UNDER STANDING THAT THE BALANCE AMOUNT WAS TO BE PAID AFTER ALL THE VENDORS EXECUTE THE AGREEMENT. IT WAS SUBMITTED THAT BALANCE AMOUNT OF RS. 2.90 CRORES WAS ALSO PAID AFTER ALL VENDORS HAVE EXECUTED THE A GREEMENT AND TOTAL SUM AMOUNTING TO RS. 3.90 CRORES WAS PAID AS MENTIONED IN 3 ITA NO. 1666/HYD/2012 SHRI K. JAGAN MOAHN REDDY TYPED RECEIPT DULY ACKNOWLEDGED BY 14 VENDORS. IT W AS SUBMITTED, IMMEDIATELY ON EXECUTION OF THE TYPED RECEIPT, ORIG INAL TEMPORARY RECEIPT FOR RS. 1 CRORE WAS RETURNED TO THE PARTIES ACKNOWLEDGING THE SAID RECEIPT. THUS, ADVANCE PAID ON EXECUTION OF AG REEMENT OF SALE WAS ONLY RS. 3.90 CRORES INCLUDING RS. 1 CRORE MENT IONED IN THE TEMPORARY RECEIPT. IT WAS SUBMITTED BY ASSESSEE THA T THE AGREEMENT OF SALE WAS ENTERED WITH 14 MEMBERS AND UNLESS ALL THE PARTIES ACKNOWLEDGED RECEIPT OF THE AMOUNT, BUYERS COULD NO T PAY THE AMOUNT. IT WAS SUBMITTED, RECEIPT NO. 44 WAS SIGNED BY TWO MEMBERS AND SUBSEQUENTLY PURCHASERS PAID AN AMOUNT OF RS. 2 .90 CRORES AND MADE ONE RECEIPT FOR CONSOLIDATED AMOUNT OF RS. 3.9 0 CRORES INCLUDING RS. 1 CRORE PAID EARLIER AS PER RECEIPT S IGNED BY TWO MEMBERS. THUS, IT WAS SUBMITTED BY ASSESSEE THAT AL LEGED AMOUNT OF RS 1 CRORE OVER AND ABOVE RS. 4.90 CRORES, ADMITTED AT THE TIME OF SURVEY, WAS NOT PAID. AO, HOWEVER, DID NOT FIND T HE EXPLANATION OF ASSESSEE NOT CONVINCED, HENCE, REJECTED THE SAME. A O NOTED THAT AS PER THE AGREEMENT OF SALE DATED 18/11/06, IT IS CLE AR THAT ASSESSEE ALONG WITH THREE OTHERS HAVE PAID AN AMOUNT OF RS. 3.90 CRORES, WHICH IS ACKNOWLEDGED VIDE RECEIPT DATED 18/11/06 IN PAGE NO. 46. AO OBSERVED THAT, SUBSEQUENTLY, AS A PART OF FIRST INS TALMENT OF THE BALANCE AMOUNT OF RS. 2 CRORES, ASSESSEE AND OTHERS HAVE PAID RS. 1 CRORE AS PER PAGE NO. 45 WITHOUT MENTIONING THE DAT E, BUT, MENTIONING THE AGREEMENT OF SALE DATED 18/11/06. AGAIN ON 21/1 2/06, THEY HAVE PAID REMAINING AMOUNT OF RS. 1 CRORE AS PER PAGE 44 . THUS, TOTAL PAYMENT MADE TO THE OWNERS OF THE LAND WAS RS. 5.90 CRORES. ACCORDINGLY, AO CAME TO CONCLUSION THAT THE AMOUNT OF RS. 1 CRORE PAID OVER AND ABOVE, THE DISCLOSED SALE CONSIDERATI ON OF RS. 4.90 CRORES SHOULD HAVE BEEN APPORTIONED EQUALLY AMONGST THE FOUR PERSONS INCLUDING ASSESSEE. ASSESSEES SHARE OF 25% OF 1 CRORE BEING RS. 25 LAKHS WAS, THEREFORE, TREATED AS UNDIS CLOSED INVESTMENT AND ADDED TO THE INCOME OF IMPUGNED ASSESSMENT YEAR . BEING AGGRIEVED OF SUCH ADDITION, ASSESSEE PREFERRED APPE AL BEFORE LD. CIT(A). 4 ITA NO. 1666/HYD/2012 SHRI K. JAGAN MOAHN REDDY 4. LD. CIT(A) TAKING NOTE OF THE FACT THAT SIMILAR ADDITION MADE IN CASE OF OTHER PERSONS, WHO ALONG WITH ASSESSEE HAD PURCHASED THE PROPERTY, WAS DELETED IN THEIR CASES BY HIS PREDEC ESSOR, FOLLOWED THE SAME, AND DELETED THE ADDITION MADE IN CASE OF ASSE SSEE. BEING AGGRIEVED, THE DEPARTMENT IS BEFORE US. 5. LD. DR SUBMITTED BEFORE US THAT THE ORDER OF LD. CIT(A) IN CASE OF SHRI G. SANJEEVA REDDY, HAS BEEN REVERSED BY THE ITAT VIDE ORDER DATED 25/01/12 IN ITA NOS. 509 TO 511/HYD/10. THUS, IT WAS SUBMITTED THAT ADDITION MADE BY AO IS TO BE RESTORED. 6. LD. AR THOUGH AGREED TO THE FACT THAT SIMILAR AD DITIONS MADE IN CASE OF OTHER PURCHASERS HAVE BEEN SUSTAINED BY ITA T REVERSING THE DECISION OF LD. CIT(A), BUT, HE NEVERTHELESS TRIED TO MAKE OUT A CASE THAT ACTUAL SALE CONSIDERATION PAID WAS RS. 4.90 CR ORES AND NOT RS. 5.90 CRORES. IN THIS CONTEXT, LD. AR RELIED UPON A CONFIRMATION LETTER DATED 31/12/10 ISSUED BY SHRI P. RAMACHANDRA REDDY, ONE OF THE VENDORS, AFFIDAVIT DATED 14/02/08 OF THE VENDORS A ND SALE DEEDS EVIDENCING CANCELLATION OF SALE AGREEMENT DATED 18/ 11/06. LD. AR ALSO FILED A PETITION REQUESTING FOR ADMISSION OF T HESE DOCUMENTS AS ADDITIONAL EVIDENCES. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. DURING THE ASSESSMENT PROCEEDING OF SHRI G. SANJEE VA REDDY, ONE OF THE CO-PURCHASERS ALONG WITH ASSESSEE, ON EXAMIN ING THE AGREEMENT OF SALE DATED 18/11/06 ALONG WITH RECEIPT S MARKED AS PAGE 44, 45 & 44, AO FOUND THAT ACTUAL SALE CONSIDERATIO N PAID BY PURCHASERS WAS TO THE TUNE OF RS. 5.90 CRORES AND N OT RS. 4.90 CRORES AS CLAIMED DURING THE SURVEY OPERATION. ACCORDINGLY , ADDITION OF RS. 25 LAKHS EACH WAS MADE BY AO IN CASE OF THREE OTHER CO PURCHASERS OF THE LAND, NAMELY, SHRI Y. SANJEEVA REDDY, SHRI B ALANARASHIMHA, 5 ITA NO. 1666/HYD/2012 SHRI K. JAGAN MOAHN REDDY AND SHRI G. SANJEEVA REDDY. HOWEVER LD. CIT(A) DELE TED THE ADDITIONS. BEING AGGRIEVED OF THE ORDER PASSED BY L D. CIT(A), DEPARTMENT CAME IN APPEAL BEFORE ITAT IN ITA NOS. 5 09 & 5011/HYD/2011. THE TRIBUNAL AFTER PERUSING THE AGRE EMENT OF SALE DATED 18/11/06 AND THE RECEIPTS EXECUTED BY VENDORS MARKED AS PAGE 44, 45 & 46 CONCLUDED THAT PURCHASERS HAVE PAID AN AMOUNT OF RS. 1 CRORE OVER AND ABOVE RS. 4.90 CRORES DISCLOSED BY T HEM TOWARDS SALE CONSIDERATION. THE FINDING OF THE TRIBUNAL IS AS UN DER: 6. WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED TH E MATERIAL AVAILABLE ON RECORD. IN THIS CASE THERE IS A VALID RECEIPT ISSUED BY SHRI P RAM SUNDER REDDY AND MS. P. KARUNA FOR RS . 1 CRORE. THIS AMOUNT HAS BEEN RECEIVED FROM THE PURCH ASER VIZ., SHRI Y. SANJEEVA REDDY, S/O. SHRI SATHI REDDY, M. BALANARSIMHA REDDY, S/O. LATE ADIVI REDDY, SHRI G. SANJEEVA REDDY, S/O. LATE G. MALLA REDDY, K. JAGANMOHAN REDD Y, S/O. LATE ANJI REDDY. THIS RECEIPT BEARS NO DATE, HOWEVE R, WAS WITNESSED BY TWO PERSONS AND SIGNED BY 2 VENDORS OF 14 VENDORS VIZ., 1. P. RAMA SUNDER REDDY AND 2. SMT. P . KARUNA. THE CONTENTION OF THE ASSESSEES' COUNSEL IS THAT TH IS RECEIPT OF RS. 1 CRORE HAS BEEN INCLUDED IN THE SUBSEQUENT REC EIPT WHICH IS SIGNED BY 14 PARTIES ON 18TH NOVEMBER, 2006 FOR RS. 3,90,00,000/-. AS SUCH THE TOTAL PAYMENT MADE BY TH E ASSESSEE TOWARDS PURCHASE OF 56 ACRES AND 24 GUNTAS OF LAND AT BOGARAM VILLAGE, KEESARA MANDAL IS AS FOLLOWS. 18-11-2006 RS. 3.90 CRORES 21-12-2006 RS. 1.00 CRORES -------------------- TOTAL RS. 4.90 CRORES --------------------- 7. ACCORDING TO THE LEARNED AUTHORISED REPRESENTATI VE OF THE ASSESSEE, THE RECEIPTS FOUND DURING THE COURSE OF S URVEY AS DOCUMENT AT PAGE-44 (UNDATED RECEIPT) AT RS. 1 CROR E IS ONLY SIGNED BY TWO PARTIES VIZ., SHRI P RAM SUNDER REDDY AND MS. P. KARUNA AND THIS IS NOT A VALID RECEIPT AND THIS PAYMENT OF RS. 1 CRORE HAS BEEN INCLUDED IN THE RECEIPT DATED 18-1 1-2006 AT RS. 3.90 CRORES AND THE TOTAL CONSIDERATION IS TO B E CONSIDERED AT RS. 4.90 CRORES. THIS CONTENTION OF THE ASSESSEE S COUNSEL HOLDS NO MERIT. THE SALE AGREEMENT COPY DATED 18-11 -2006 WHERE IT IS MENTIONED THAT THE ASSESSEE HAS MADE AN AMOUNT OF RS. 3.90 CRORES AND THIS IS EVIDENCE BY AN INDEPEND ENT RECEIPT DATED 18-11- 2006 MARKED AS DOCUMENT MARKED ON PAGE NO. 46 FOUND DURING THE COURSE OF SURVEY. FURTHER, RS. 1 C RORE HAS 6 ITA NO. 1666/HYD/2012 SHRI K. JAGAN MOAHN REDDY BEEN PAID WHICH IS EVIDENCED BY AN INDEPENDENT RECE IPT FOUND DURING THE COURSE OF SURVEY MARKED AS PAGE NO. 45 W HEREIN THERE WAS NO MENTION OF DATE OF PAYMENT BUT WITH RE FERENCE TO THE ORIGINAL SALE DEED DATED 18-11-2006 AND FINALLY ANOTHER AMOUNT OF RS. 1 CRORE HAS BEEN PAID ON 21-12-2006 A DVANCED BY SEPARATE RECEIPT FOUND DURING THE COURSE OF SUR VEY WHICH WAS MARKED AS PAGE NO. 44. AS SEEN FROM THE RECEIPT DATED 18- 11-2006 FOR RS. 3.90 CRORES, THIS IS AN INDEPENDENT PAYMENT AND WHY THE ASSESSEE HAS TAKEN TWO PARTIES SIGNATUR ES ON SECOND RECEIPT OF RS. 1 CRORE NAMELY SHRI P RAM SUN DER REDDY AND MS. P. KARUNA WHEN ALL THE 14 PERSONS TO THE AG REEMENT ARE AVAILABLE ON THE SAME DAY FOR THE RECEIPT OF MO NEY PAID VIDE RECEIPT FOUND DURING THE COURSE OF SURVEY MARK ED AS PAGE- 46. BEING SO, THE CONTENTION OF THE ASSESSEES COUN SEL THAT WHEN AGREEMENT WAS DRAFTED, ALL THE VENDORS ARE NOT AVAILABLE TO EXECUTE THE RECEIPT, THEREFORE, AN AMOUNT OF RS. 1 CRORE FORMING PART OF THE ABOVE SAID ADVANCE OF RS. 3.90 CRORES WAS PAID AND TEMPORARY RECEIPT WAS OBTAINED FROM THE VE NDOR PRESENTED AT THAT TIME AND THE BALANCE OF RS. 2.90 CRORES ONLY PAID, IS INCORRECT AND CANNOT BE RELIED. HENCE, IN OUR OPINION, WE ARE NOT INCLINED TO HOLD THAT THE RECEIPT DATED 18-11-2006 FOR RS. 3.90 CRORES IS INCLUSIVE OF RS. 1 CRORE AND THE SE TWO RECEIPTS NAMELY, PAGE NO. 46 DATED 18-11-2006 FOR R S. 3.90 CRORES AND RECEIPT UNDATED PAGE NO. 45 FOR RS. 1 CR ORE TO BE CONSIDERED AS INDEPENDENT AND SEPARATE RECEIPTS AND THUS TOTAL CONSIDERATION TO BE CONSIDERED AS RS. 5.90 CRORES, CONSIDERING PAGE NOS. 46, 45 AND 44 AND NOT RS. 4.90 CRORES. AC CORDINGLY, THIS AMOUNT IS TO BE ASSESSED IN COLLECTIVELY ALL T HE ASSESSEES CASES ACCORDING TO THEIR SHARE AND THEREFORE THE DE LETION OF ADDITION MADE BY THE CIT (A) IN ALL THESE CASES IS NOT JUSTIFIED AND WE UPHOLD THE ORDER OF THE ASSESSING OFFICER AN D REVERSE THE ORDERS OF THE CIT (A) FOR THE ASSESSMENT YEAR U NDER CONSIDERATION. THEREFORE, THIS COMMON GROUND OF THE REVENUE IS ALLOWED. 8. THUS, AS CAN BE SEEN FROM THE AFORESAID EXTRACTE D PORTION FROM THE ORDER OF TRIBUNAL, THE COORDINATE BENCH OF THIS TRIBUNAL WHILE CONSIDERING SIMILAR ADDITIONS IN CASE OF OTHER CO-P URCHASERS OF THE LAND, HAS GIVEN A CATEGORICAL FINDING THAT THE AMOU NT OF RS. 1 CRORE WAS PAID OVER AND ABOVE DISCLOSED SALE CONSIDERATIO N OF RS. 4.90 AND ACCORDINGLY, RESTORED THE ADDITION MADE BY AO. IN T HE PRESENT CASE, THE FACTS ARE MATERIALLY SAME AND MOREOVER, LD. CI T(A) HAS ALSO DELETED THE ADDITION BY SIMPLY RELYING UPON THE ORD ER PASSED BY THE FIRST APPELLATE AUTHORITY IN CASE OF ONE OF THE CO- PURCHASERS, NAMELY, 7 ITA NO. 1666/HYD/2012 SHRI K. JAGAN MOAHN REDDY Y. SANJEEVA REDDY AND G. SANJEEVA REDDY. IN THE AFO RESAID FACTS AND CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH AS REFERRED TO HEREINABOVE, WE REVERSE THE OR DER OF LD. CIT(A) AND RESTORE THE ADDITION OF RS. 25 LAKHS MADE BY AO . AS FAR AS THE ADDITIONAL EVIDENCES SOUGHT TO BE RELIED UPON BY L D. AR, WE ARE NOT INCLINED TO ENTERTAIN THEM AT THIS STAGE. AS CAN BE SEEN, THE CONFIRMATION LETTER DATED 31/12/10 AND THE AFFIDAVI T BY VENDORS DATED 14/02/08 WERE PRIOR TO THE ORDER PASSED BY COORDINA TE BENCH IN CASE OF OTHER CO-PURCHASERS AND IN FACT WAS PRIOR TO THE ASSESSMENT ORDER AND ORDER OF LD. CIT(A), HOWEVER, AT NO STAGE, THE Y WERE BROUGHT TO THE NOTICE OF AO OR LD. CIT(A). EVEN THEY WERE NOT BROUGHT TO THE NOTICE OF ITAT WHILE DECIDING THE CASE OF OTHER CO- PURCHASERS. IN THE AFORESAID FACTS AND CIRCUMSTANCES, WE ARE NOT INCLI NED TO ENTERTAIN THE PLEA OF ASSESSEE FOR CONSIDERING THEM AS FRESH EVIDENCES. ACCORDINGLY, GROUNDS RAISED BY DEPARTMENT ARE ALLO WED. THE ORDER OF CIT(A) IS SET ASIDE AND THAT OF AO IS RESTORED. 9. IN THE RESULT, APPEAL OF THE DEPARTMENT IS ALLOW ED. PRONOUNCED IN THE OPEN COURT ON 07/01/2015. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD, DATED: 7 TH JANUARY, 2015 KV COPY TO:- 1) ITO, WARD 11(4), D BLOCK, 5 TH FLOOR, IT TOWERS, AC GUARDS, HYDERABAD 2) SRI K. JAGAN MOHAN REDDY, 1-9-69/35, DR. AS RAO NAGAR, ECIL POST HYDERABAD 500 004 3) CIT(A)-VI, HYDERABAD 4) CIT-V, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.