Arumalla Venugopala Reddy, Guntur V. The ITO, Guntur

ITA 170/VIZ/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1804 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 31-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SONAWAL
• Keywords: Sale consideration of property below Jantri Value; Gift; Salary income; Set aside
• Section: 148; 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 170 / VIZ /201 7 (ASST. YEAR : 20 1 0 - 11 ) ARUMALLA VENUGOPALA REDDY, D.NO. 3 - 642/1, UNDAVALLI, GUNTUR DISTRICT . V S . IT O , WARD - 2 ( 3 ), GUNTUR . PAN NO. ADIPA 4347 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI I. KAMA SASTRY C A. DEPARTMENT BY : SHRI D.K. SONAWAL CIT DR DATE OF HEARING : 10 / 0 1 /201 9 . DATE OF PRONOUNCEMENT : 20 / 0 3 /201 9 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF PR INCIPAL COMMISSIONER OF INCOME TAX , GUNTUR , DATED 25 /0 1 /201 7 FOR THE ASSESSMENT YEAR 20 1 0 - 11 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN EMPLOYEE OF A PRIVATE ORGANIZATION AND DERIVING INCOME FROM SALARY, RENTS & INTEREST. IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT, DATED 07/01/2014 , ASSESSEE FILED HIS RETURN OF INCOME ADMITTING TOTAL INCOME OF RS. 9,26,334/ - 2 ITA NO. 170/VIZ/2017 ( ARUMALLA VENUGOPALA REDDY ) INCLUDING LONG TERM CAPITAL GAIN OF RS. 6,84,449/ - . THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 148 ON 31/03/2015 BY MAKING ADDITION UNDER SECTION 50C OF RS. 4,84,700/ - AND ASSESSED INCOME OF RS. 13,11,030/ - . SUBSEQUENTLY, BY VIRTUE OF POWERS VESTED UNDER SECTION 263, THE PR.CIT HAS CALLED THE RECORDS , EXAMINED AND FOUND THAT THE ASSESSING OFFICER NOT MADE ANY ENQUIRY IN RESPECT OF GI FTS RECEIVED BY THE DAUGHTER OF THE ASSESSEE AND THEREFORE, ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND ISSUED SHOW - CAUSE NOTICE DATED 03/11/2016 CALLED EXPLANATION FROM THE ASSESSEE. THE ASSESSEE HAS FILED A DETAILED REPLY , WHICH IS REPRODUCED AS UNDER: - 1. I AM A RETIRED INDIAN ARMY EMPLOYEE. I HAVE PERFORMED MARRIAGE OF MY ONLY DAUGHTER MISS DEEPTHI ARUMALLA WITH PRAMODH REDDY SANGA S/O PRAKASH REDDY ON 07/04/20 10 . ON THE OCCASION OF HER MARRIAGE MY RELATIVES HAVE GIVEN CASH GIFTS OF RS.30,16,116/ - TO HER. SHE HAS ALSO RECEIVED ON SUCH OCCASION GOLD JEWEL LE RY AS GIFTS FROM HER GRAND AND GREAT GRANDMOTHER. IN REPLY TO A QUERY RAISED I HAVE FURNISHED DETAILED LIST OF SUCH GIFTS BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. AS SRI PRAKASH REDDY SANGA HAS DEMANDED DOWRY I HAVE GIVEN RS. 30 LAKHS OUT OF SUCH GIFTS AT THE REQUEST OF MY DAUGHTER AND RS.10 LAKHS OUT OF MY DRAWINGS OF RS.11,34,025/ - . AS PER OUR FAMILY CUSTOMS ENTIRE MARRIAGE EXPENSES ARE TO BE BORNE BY THE BRIDEGROOM PARENTS AND ACCORDINGLY I HAVE NOT MET ANY SUCH EXPENDITURE. THE CASH GIFTS AS WELL AS JEWELLERY GIFTS WERE GIVEN BY MY RELATIVES ONLY TO MY DAUGHTER ON THE OCCASION OF HER MARRIAGE. LAM UNDER THE IMPRESSION THAT THE GIFTS RECEIVED BY MY 3 ITA NO. 170/VIZ/2017 ( ARUMALLA VENUGOPALA REDDY ) DAUGHTER ON THE OCCASION OF HER MARRIAGE ARE EXEMPT FROM TAX. 2. DURING THE YE AR I HAVE SOLD ONE OF MY PROPERTIES FOR RS.8,07,300/ - AND OFFERED GAIN OF RS.6,84,449/ - AS INCOME AND PAID NECESSARY TAXES. 3. WHILE PREPARING THE STATEMENTS, INADVERTENTLY, INVESTMENT OF RS.2,25,000/ INCLUDED IN SUNDRY DEBTORS OF RS.7.00 LAKHS, I HAVE SUB MITTED REVISED FINANCIAL STATEMENTS WHEREIN INVESTMENT IN SHARES SHOWN SEPARATELY AND THE OTHER RS.4.75 LAKHS ARE DUE FROM SOME OF MY RELATIVES FROM WHOM I HAVE NEVER CHARGED ANY INTEREST. IN VIEW OF ABOVE SUBMISSIONS WHAT I HAVE CLAIMED IN OUR RETURN OF I NCOME IS IN ORDER AND NOTHING IS PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER IS NOT ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE AND NOT REQUIRED TO BE SET - ASIDE.' 3 . THE PR.CIT AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, HE HAS OBSERVED AS UNDER: - 4. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT. ON VERIFICATION OF RECORD, IT IS NOTICED THAT THE AO HAS NOT EXAMINED THE ABOVE ISSUES PROPERLY. THE JEWELLERY IS STA TED TO BE RECEIVED FROM GRAND AND GREAT GRANDMOTHERS NAMELY SMT.B.THIRUPATHAMMA AND SMT. A.SARAJYAMMA (MOTHER AND GRAND - MOTHER OF ASSES S EE) TOTALING TO 70 TULAS. WITH REGARD TO CASH G IFTS, THERE ARE 3 PERSONS STATED TO HAVE GIVEN RS.4 LAKHS EACH, ONE PERSO N GIVING RS.3 LAKHS, 4 PERSONS GIVING RS.2 LAKHS EACH, ONE PERSON GIVING RS.1.6 LAKHS, 2 PERSONS GIVING RS.1 LAKHS EACH AND ONE PERSON GIVING RS.51,116/ - , ALL TOTALING TO RS.26.6 LAKHS. THE REST OF THE GIFTS RANGE BETWEEN RS.5 TO 10 THOUSAND EXCEPT ONE WHI CH IS RS.20,000/ - . APART FROM THESE AMOUNTS, THE ASSESSEE HIMSELF GIVEN AN AMOUNT OF RS.10 LAKHS OUT OF HIS OWN SOURCES. WHILE COMPLETING THE ASSESSMENT THE ASSESSING OFFICER HAS NOT VERIFIED THE ABOVE ISSUES THOROUGHLY. THE AO HAS TOTALLY RELAYED ON THE E NQUIRY REPORT OF THE OFFICE INSPECTOR WHO HAS OBTAINED CONFIRMATIONS FROM ONLY 4 DONORS OUT OF TOTAL 51 DONORS. EVEN THOUGH GIVING CASH GIFTS AT THE TIME OF MARRIAGE IN HINDU FAMILIES BY NEAR & DEAR, GIVING SHRI DHAN IN THE FORM OF LANDS & GOLD TO HINDU WO MEN ON THE OCCASION OF MARRIAGE IS A PREVAILING 4 ITA NO. 170/VIZ/2017 ( ARUMALLA VENUGOPALA REDDY ) CUSTOM, THE ASSESSING OFFICER SHOULD EXAMINE THE GENUINENESS OF THE TRANSACTIONS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A O HAS FAILED TO CONSIDER RELEVANT FACTORS, THE ISSUES SUCH AS CREDIT WORTHI NESS AND CAPACITY OF THE DONORS, PROBABILITY OF H U MAN NATURE AS WELL AS EVIDENCE OF EARLIER GIFTS BETWEEN THESE PARTIES AS RECIPROCAL.' FURTHER, THE ASSESSEE HAS REPLIED THAT WHILE PREPARING THE STATEMENTS, INADVERTENTLY, INVESTMENT OF RS.2,25,000/ - INCLUD ED IN SUNDRY DEBTORS OF RS.7.00 LAKHS AND SUBMITTED REVISED FINANCIAL STATEMENTS WHEREIN INVESTMENT IN SHARES SHOWN SEPARATELY AND THE OTHER RS.4.75 LAKHS ARE DUE FROM SOME OF HIS RELATIVES FROM WHOM HE NEVER CHARGED ANY INTEREST. THIS ISSUE ALSO TO BE EXA MINED. HENCE, THE ORDER PASSED BY THE A.O. U/S.143(3) DT.09/03/2015 IS ERRONEOUS & PREJUDICIAL TO THE INTERESTS OF REVENUE. SINCE, THE AO HAS MISSED HIS ATTENTION TO CONSIDER THE ABOVE AT THE TIME OF CONCLUDING THE ASSESSMENT, THE AO IS DIRECTED TO EXAMINE ALL THE ISSUES ON RECORD AND ACCORDINGLY DECIDE THE ISSUE IN ACCORDANCE WITH LAW. THE PR.CIT BY OBSERVING ABOVE, SET ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER DATED 31/03/2015 AND DIRECTED THE ASSESSING OFFICER TO REDO ASSESSMENT IN THE LINES INDICATED ABOVE. 4 . ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THIS TRIBUNAL. 5. LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS EXAMINED THE ISSUE AND CALLED THE CONFIRMATION LETTERS, SAME HAVE BEEN FILED BY THE ASSESSEE AND AFTER CONSIDERING ALL THE DETAILS, THE ASSESSING OFFICER HAS PASSED T HE ASSESSMENT ORDER UNDER SECTION 143(3) R.W.S. 148 OF THE ACT, HENCE, IT CANNOT BE SAID THAT THE ORDER PASSED BY THE ASSESSING 5 ITA NO. 170/VIZ/2017 ( ARUMALLA VENUGOPALA REDDY ) OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE . THEREFORE, THE ORDER PASSED BY THE PR.CIT MAY BE CANCELLE D. LD. AR HAS ALSO POINTED OUT FROM THE PAPER BOOK AT PAGE NO. 19 TO 70 IN RESPECT OF CONFIRMATION LETTERS , GIFTS RECEIVED BY THE ASSESSEES DAUGHTER. 6 . ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS STRONGLY SUPPORTED THE ORDER PASSED BY THE PR. CIT. 7 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 8 . THE CASE OF THE PR.CIT IS THAT ASSESSEE IN HIS SWORN STATEMENT DATED 09/02/2015 ADMITTED THAT HE GAVE RS. 40.00 LAKHS AS DOWRY AT THE TIME OF HIS DAUGHTERS MARRIAGE AND EXPLAINED THE SOURCE TO THE EXTENT OF 30.00 LAKHS AND OUT OF RS.10.00 LAKHS, SALE PROCEEDS OF INDUSTRIAL SITE FOR RS. 8.07 LAKHS. THE ASSESSEE ALSO REPAID HOUSING LOAN OF RS. 2,14,285/ - . THE ASSESSEES ALSO INVESTED IN SHARES, PURCHASED GOLD AND MAKE SOME ADVANCES TO THE TUNE OF RS. 7.00 LAKHS DURING THE YEAR. THEREFORE, PR.CIT IS OF THE OPINION THAT THE ASSESSING OFFICER HAS NOT EXAMINED THESE ASPECTS , THEREFORE, ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. WE FIND FROM THE PAPER BOOK AT PAGE NO S . 17 & 18 , WHICH IS A SALE DEED , DATED 30 / 0 1/20 1 0 FILED BY THE ASSESSEE 6 ITA NO. 170/VIZ/2017 ( ARUMALLA VENUGOPALA REDDY ) BEFORE THE ASSESSING OFFICER IS F OR RS. 8,07,300/ - , PAGE NO. 19 OF THE PAPER BOOK IS A CONFIRMATION LETTER OF ASSESSEES DAUGHTER WHEREIN SHE STATED TH A T ON THE OCCASION OF MARRIAGE ON 07/04/2010 , HER RELATIVES HAD GIVEN GIFTS OF ABOUT RS. 30.00 LAKHS APART FROM GOLD JEWELLERY FROM HER GRAND AND GREAT GRANDMOTHERS. PAGE NO. 20 IS THE REPLY FILED BY THE ASSESSEE IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSING OFFICER , WHICH WAS FOLLOWED BY ANOTHER REPLY AT PAGE NO. 21 . THE ASSESSEE ALSO FILED CONFIR MATION LETTER S BEFORE TH E ASSESSING OFFICER WHICH ARE PLACED AT PAGE NOS. 22 TO 63 OF THE PAPER BOOK. THE ASSESSING OFFICER AFTER EXAMINING THE DETAILS FILED BY THE ASSESSEE AND ALSO CONSIDERING THE CONFIRMATION LETTERS AND SOURCE EXPLAINED BY THE ASSESSE E, ASSESSMENT WAS COMPLETED. WE , THEREFORE , ARE OF THE OPINION THAT WHEN THE ASSESSING OFFICER AFTER EXAMINING THE DETAILS BY CALLING REMAND REPORT AND ALSO CONSIDERING THE CONFIRMATION LETTERS AND OTHER DETAILS FILED BY THE ASSESSEE, ASSESSMENT IS COMPLE TED. THEREFORE, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER CANNOT BE SAID THAT IT IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. WE FIND THAT PR.CIT WITHOUT APPRECIATING THE EXERCISE DONE BY THE ASSESSING OFFICER SIMPLY SET ASIDE THE ASSESSMENT ORDER DATED 31/03/2015 AND DIRECTED THE ASSESSING OFFICER TO REDO THE ASSESSMENT . WE FIND THAT ORDER PASSED BY THE 7 ITA NO. 170/VIZ/2017 ( ARUMALLA VENUGOPALA REDDY ) PR.CIT DESERVES TO BE SET ASIDE. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE PR.CIT. THUS, THIS APPEAL FILED BY THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCE D IN OPEN COURT ON TH IS 2 0 TH DAY OF MARCH , 201 9 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 0 T H MARCH , 201 9 . VR/ - COPY TO: 1. THE ASSESSEE ARUMALLA VENUGOPALA REDDY, D.NO. 3 - 642/1, UNDAVALLI, GUNTUR DISTRICT. 2. THE REVENUE - ITO, WARD - 2(3), GUNTUR. 3. THE PR. CIT , GUNTUR. 4. THE D.R . , VISAKHAPATNAM. 5. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.