Asst.Commissioner of Income Tax, Circle- 8(1), Hyderabad V. B.Subhash Reddy, Hyderabad

ITA 1707/Hyd/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6962 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 14-07-2021
• Assessment Year: 2008-2009
• Appeal Filed On: 05-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Capital asset; Retraction; Set aside
• Section: 133A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 1707/HYD/2017 ASSESSMENT YEAR: 2008-09 ASST.COMMISSIONER OF INCOME TAX, CIRCLE-8(1), HYDERABAD VS SRI B.SUBHASH REDDY, HYDERABAD [PAN: AAKPB6599F] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI ROHIT MUJUMDAR, DR FOR ASSESSEE : SHRI K.C.DEVDAS, AR DATE OF HEARING : 14-07-2021 DATE OF PRONOUNCEMENT : 07-09-2021 O R D E R PER S.S.GODARA, J.M. : THIS REVENUES APPEAL FOR AY.2008-09 ARISES FROM THE CIT(A)-2, HYDERABADS ORDER DATED 27-07-2017 PASSED IN CASE NO.0001/2016-17, IN PROCEEDINGS U/S.143(3) R.W.S.14 7 OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. COMING TO THE REVENUES SOLE SUBSTANTIVE GRIEVANCE THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN REVERSING ASSESSING OFFICERS ASSESSMENT MAKING ON-MONEY ADDITION OF RS.2,49,75,000/-, WE NOTE THAT THE RELEVANT FACTS ARE IN A VERY NARROW COMPASS. ITA NO. 1707/HYD/2017 :- 2 -: 3. THE ASSESSEE HEREIN IS ADMITTEDLY ASSESSED AS AN INDIVIDUAL. HE HAD SOLD THE LAND/CAPITAL ASSET IN IS SUE TO ONE M/S.CONSORTIUM OF SOFTWARE ENGINEERS WELFARE ASSOCIA TION CSEWA, HYDERABAD FOR RS.27.75 LAKHS VIDE REGISTERE D SALE DEED DT.29-08-2007. THE DEPARTMENT THEREAFTER CARRIED O UT A SURVEY EXERCISE IN THE SAID VENDEES CASE ON 01-02- 2013. 4. MR.MUJUMDAR TOOK US TO THE ASSESSMENT AND CIT(A)S FINDINGS THAT IT WAS THIS SURVEY EXERCISE WHICH ALLEGED LY HAD INDICATED ON-MONEY PAYMENTS IN CASH MADE BY THE FOREGO ING VENDEE TO VARIOUS LAND LORDS INCLUDING THE ASSESSEE. THE TOTAL AMOUNT QUANTIFIED IN THIS TAXPAYERS INSTANT CASE REPRESE NTING SALE CONSIDERATION WAS RS.2,77,50,000/- AS AGAINST TH AT DECLARED OF RS.27.75 LAKHS ONLY. MR.MUJUMDAR REFERRED TO THE ASSESSING OFFICERS DETAI LED DISCUSSION INCLUDING THE SURVEY STATEMENT RECORDED BY THE FOREGOING VENDEES AUTHORISED PERSON / OFFICE BEARER WHEREIN HE ALLEGEDLY ADMITTING ON-MONEY PAYMENTS INCLUDING TH OSE MADE TO THE ASSESSEE. AND THAT THE IMPOUNDED DOCUMENT A/CSE/01 ALSO INDICATED ALL THE LAND OWNERS TO HAVE RE CEIVED ON-MONEY PAYMENTS. THE REVENUES CASE ACCORDINGLY IS THAT THE ASSESSING OFFICER HAD RIGHTLY MADE THE IMPUGNED A DDITION WHICH IN TURN HAS BEEN WRONGLY DELETED IN THE CIT(A )S ORDER. 5. LEARNED AUTHORISED REPRESENTATIVE HAS DRAWN SUPPO RT FROM THE CIT(A)S DETAILED DISCUSSION DELETING THE IMP UGNED ADDITION AS UNDER: 7.2. IN THE ASSESSMENT ORDER, THE AO BASED ON THE STATEMENT RECORDED FROM THE PRESIDENT OF THE AOP. REFERRING T O DISCREPANCY BETWEEN THE DOCUMENTED VALUE AND THE PAYMENTS MADE IN CASH BY THE SOCIETY, THE PRESIDENT OF THE AOP SOCIETY WAS Q UESTIONED ON THE ISSUE AND A STATEMENT WAS RECORDED ON THE DATE OF S URVEY. IN THE ITA NO. 1707/HYD/2017 :- 3 -: STATEMENT GIVEN ON 01.02.2013, THE PRESIDENT HAD CA TEGORICALLY, ADMITTED THAT ON-MONEY WAS PAID TO THE LANDLORDS OV ER AND ABOVE THE DOCUMENTED VALUE AND ADMITTED THE DIFFERENCE AS UNACCOUNTED INVESTMENTS IN THE HANDS OF THE SOCIETY. BY BRINGIN G IN THE ADMISSIONS MADE IN THE STATEMENT UNDER OATH BY THE PRESIDENT OF THE SOCIETY, THE AO CONCLUDED THAT ON-MONEY WAS PAID TO THE ASSESSEE. THE AO ALSO BASED ON THE DETAILS OF EXPENSES CLAIME D BY THE SOCIETY TOWARDS LAND PURCHASES, SUBSEQUENT CONSTRUCTION EXP ENSES AND PORTION OF APPEAL FINDINGS IN THE CASE OF THE AOP S OCIETY AND CONCLUDED THAT THE ASSESSEE IS IN RECEIPT OF ON-MON EY OF RS.2,49,75,000/- AND BROUGHT THE SAME TO TAX AS UND ISCLOSED INCOME FROM BUSINESS. 7.3. ON THE OTHER HAND, THE ASSESSEE SUBMITTED THAT THE AO EXCEPT BRINGING IN THE CONCLUSIONS ARRIVED AT BY THE AO IN THE ASSESSMENT OF SOCIETY IN THE ORDER, HAD NOT BROUGHT IN ANY FURTHE R IOTA OF EVIDENCE TO CONCLUDE THAT ON-MONEY WAS ACTUALLY PAID. THE AR CO NTENDS THAT THE AO HAD NOT BROUGHT IN FURTHER RETRACTION OF ADMISSI ON OF ADDITIONAL INCOME BY THE PRESIDENT OF THE SOCIETY AND THEIR AS SESSMENT BEING ALLOWED IN APPEAL BY THE FIRST APPELLATE AUTHORITY. REFERRING TO THESE FACTS, THE ASSESSEE SUBMITTED A COPY OF THE ASSESSM ENT ORDER IN THE CASE OF M/S CSEWA, WHEREIN THE PURPORTED CASH PAYME NTS WERE ADDED BY THE AO TOWARDS UNEXPLAINED INVESTMENTS IN PURCHASE OF LAND AND APPELLATE ORDER COPY PASSED BY THE FIRST A PPELLATE AUTHORITY GIVING ENTIRE RELIEF ON THE ADDITION MADE ON THIS C OUNT. IT IS THE CLAIM OF THE ASSESSEE THAT SINCE HIS ORDER WAS SOLELY BAS ED ON THE FINDINGS GIVEN IN THE CASE OF M/S CSEWA AND THAT AS THESE FI NDINGS WERE DECIDED AGAINST BY THE FIRST APPELLATE AUTHORITY, T HE CONCLUSIONS DRAWN IN HIS CASE ARE ALSO LIABLE TO BE REVERSED. 7.4. THE AO, WHILE BRINGING IN THE SURVEY FINDINGS IN THE CASE OF M/S CSEWA, HAD NOT REFERRED TO THE ACTUAL MATERIAL FROM WHICH THE CASH PAYMENTS WERE FOUND. THE AO SIMPLY BROUGHT IN THAT FROM THE RECORDS OF THE ASSOCIATION IT IS NOTICED THAT CASH PAYMENTS WERE MADE TO THE LAND OWNERS. NO REFERENCE TO THE RECORD S FOUND IN THE CASE OF SOCIETY WAS BROUGHT IN. THERE IS NO REFEREN CE TO ANY OF THE IMPOUNDED MATERIAL FROM WHICH THE CASH PAYMENTS WER E FOUND, EXCEPT A TABLE INDICATING THE 'APPROXIMATE PAYMENTS ' TO LAND LORDS. HOWEVER, A REFERENCE WAS MADE TO PAGE 18 OF IMPOUND ED MATERIAL A/CSE/01, WHICH INDICATES THAT THE INVESTMENT IN LA ND IS AROUND, RS.20.3 CRORES AND THE PRESIDENT OF THE AOP WAS QUE STIONED ON THIS ASPECT OF INVESTMENT. TO THIS, IT WAS REPLIED BY TH E PRESIDENT THAT CASH PAYMENTS WERE MADE TO THE LANDLORDS AS PER THE IR REQUEST OVER AND ABOVE THE DOCUMENTED VALUE. HOWEVER, THIS STATE MENT WAS FURTHER RETRACTED BY THE PRESIDENT CITING VARIOUS R EASONS. ITA NO. 1707/HYD/2017 :- 4 -: 7.5. THE MOOT POINT THAT ARISES FOR CONSIDERATION I S WHETHER THIS PAGE 18 OF THE IMPOUNDED MATERIAL A/CSE/01 CAN BE THE BA SIS FOR ARRIVING AT THE CONCLUSION THAT ON-MONEY WAS PAID TO THE LAN DLORDS. IT IS TO BE SEEN FROM THE ASSESSMENT ORDER, THERE IS NO MENTION OF WHAT CREDENCE CAN BE GIVEN TO THIS PAGE 18 OF A/CSE/01. IT APPEARS THAT THE NAME OF THE ASSESSEE FIGURES IN THIS PAGE WITH AN ADDITION OF ONE ZERO TO THE DOCUMENTED VALUE OF RS.27,75,000/-. THO UGH THE PURCHASER-AOP INITIALLY ADMITTED THAT CASH PAYMENTS WERE MADE TO THE LANDLORDS, THERE IS NO SPECIFIC QUESTION OR REP LY THAT ON-MONEY WAS PAID TO THE ASSESSEE IN PERSON. HOWEVER, THIS I NITIAL ADMISSION WAS ALSO RETRACTED BY THE PURCHASER-AOP AND, EXCEPT REFERRING TO THE EARLIER ADMISSION BY THE AOP, NO FURTHER MATERIAL W AS BROUGHT IN AS EVIDENCE THAT ON-MONEY WAS PAID TO THE ASSESSEE. IF ONE INTENDS TO TREAT THE NOTINGS IN PAGE 18 AS CORRECT, THEN SUCH FINDINGS ARE TO BE UTILISED FOR MAKING ASSESSMENT IN THE HANDS OF THE AOP-SOCIETY ALSO. HOWEVER, THESE FINDINGS AT PAGE 18 WERE NOT UTILISE D BY THE AO IN THE CASE OF AOP-SOCIETY AS THEY APPEAR, BUT TOTALLY WEN T ON A DIFFERENT FOOTING IN THE ASSESSMENT. FURTHER, IT IS RELEVANT TO REFER TO THE VERACITY OF ADMISSION MADE BY THE AOP-PRESIDENT AND RETRACTION MADE LATER, BECAUSE THE AO PLACED RELIANCE ON THIS VERY ADMISSION FOR MAKING THE ADDITION IN THE HANDS OF THE ASSESSE E. HOWEVER, THIS ADMISSION OF THE PRESIDENT WAS NEVER SUPPLEMENTED B Y ANY OTHER EVIDENCE BY THE AO WITH ANY OTHER MATERIAL FOUND DU RING THE COURSE OF SURVEY OR BY INVESTIGATING THE MATTER FURTHER. 7.6. IN THIS REGARD, THE AR RELIED ON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. S. KHADER KHAN SON (35 2 ITR 480) MADE IN THE CONTEXT OF SURVEY FINDINGS, ADMISSION MADE B Y A PERSON AND ITS RETRACTION LATER. THE OPERATIVE PORTION OF THE OBSE RVATIONS ARE REPRODUCED HEREUNDER: 'A SURVEY WAS CONDUCTED IN THE PREMISES OF THE ASSE SSEE-FIRM. ONE OF THE PARTNERS IN HIS STATEMENT OFFERED AN ADDITIONAL INCOME OF RS.20 LAKHS FOR THE ASSESSMENT YEAR 2001-02 AND RS.30 LAK HS FOR THE ASSESSMENT YEAR 2002-03 BUT THE STATEMENT WAS RETRA CTED BY THE ASSESSEE STATING THAT THE PARTNER FROM WHOM THE STA TEMENT WAS RECORDED DURING THE SURVEY OPERATION UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 WAS NEW TO THE MANAGEMENT AND HAD AGREED TO AN AD HOC ADDITION THE ASSESSING OFFICER BASED O N THE ADMISSIONS MADE BY THE ASSESSEE RECOMPUTED THE ASSESSMENT. THE ORDER WAS SET ASIDE BY THE COMMISSIONER (APPEALS) AND THIS OR DER WAS UPHELD BY THE TRIBUNAL. ON APPEAL TO THE HIGH COURT, THE H IGH COURT HELD THAT IN VIEW OF THE SCOPE AND AMBIT OF THE MATERIAL S COLLECTED DURING THE COURSE OF SURVEY, THE ACTION UNDER SECTION 133A WOULD NOT HAVE ANY EVIDENTIARY VALUE AND THAT IS COULD BE SAID SOL ELY ON THE BASIS OF THE STATEMENT GIVEN BY ONE OF THE PARTNERS OF THE A SSESSEE-FIRM THAT ITA NO. 1707/HYD/2017 :- 5 -: THE DISCLOSED INCOME WAS ASSESSABLE AS LAWFUL INCOM E OF THE ASSESSEE'. 7.7. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE CASE MENTIONED SUPRA, WHICH WAS ALSO FOLLOWED BY THE HON'BLE JURIS DICTIONAL TRIBUNAL IN THE CASE OF SAI PRIYA CONSTRUCTIONS VS. NO (IN I TA NO.532 TO 534/HYD/2014, DATED 29.02.2016), I AM OF THE CONSID ERED OPINION THAT SINCE THE AO HAD NOT BROUGHT ANY OTHER MATERIA L CORROBORATING THE SURVEY FINDING, EXCEPT THE STATEMENT OF THE AOP -PRESIDENT, IT CANNOT BE HELD THAT THE ASSESSEE IS IN RECEIPT OF O N-MONEY ON SALE OF HIS LAND TO THE AOP AND ACCORDINGLY THE ADDITION MA DE IN THIS REGARD IS DIRECTED TO DELETED. AS A RESULT, THE GROUNDS RA ISED ARE ALLOWED. 6. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE FOREGOING RIVAL PLEADINGS AND FIND NO REASON TO EXPR ESS OUR AGREEMENT WITH THE REVENUES STAND. ITS CASE ADMITTEDLY R ESTS ON THE ALLEGED IMPOUNDED DOCUMENT A/CSE/01 AND SURVEYED VENDEES PRESIDENTS STATEMENT DT.01-02-2013. T HE FORMER ONE HEREIN INDEED INDICATED APPROXIMATE PAYME NTS ONLY WITHOUT ANY FURTHER DETAILS SO FAR AS THE ASSESSEE HEREIN IS CONCERNED. THE QUESTION AS TO WHETHER STATUTORY PRESUMPTION U/S.292 COULD BE APPLIED EVEN IN CASE O F IMPOUNDED DOCUMENT WHICH IS VAGUE IN NATURE, OUR ANSW ER IS IN NEGATIVE I.E., IN ASSESSEES FAVOUR AND AGAINST TH E DEPARTMENT. WE WISH TO MAKE IT CLEAR THAT THE FOREGOING PRESUMPTION APPLIES ONLY QUA THE SEARCHED OR SURVEYED ASSESSEE THAN A THIRD PARTY. COUPLED WITH THIS, THE REVENUE HAS PLACED A STRONG RELIANCE ON THE SURVEYED ASSESSEES PRESIDENT STATEMENT WHICH HARDLY CARRIES ANY SIGNIFICANCE AS PER CBDT CIRCULA R(S) DT.10-03-2003 REITERATED ON 18-12-2014 THAT THE DEPARTME NT OUGHT TO COLLECT EVIDENCE THAN SUCH ADMISSIONS AND CONFESSIONS IN THE CORRESPONDING SECTION 132 OR 133 EXERCISE(S); AS THE CASE MAY BE. WE THUS CONCLUDE THA T THE ITA NO. 1707/HYD/2017 :- 6 -: CIT(A) HEREIN HAS RIGHTLY DELETED THE IMPUGNED ON-MO NEY PAYMENT ADDITION OF RS.2,49,75,000/- MADE BY THE ASSES SING OFFICER. THE REVENUES SOLE SUBSTANTIVE GRIEVANCE SE EKING TO REVIVE THE SAME IS REJECTED ACCORDINGLY. 7. THIS REVENUES APPEAL IS DISMISSED IN ABOVE TERMS . ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH SEPTEMBER, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 07-09-2021 TNMM ITA NO. 1707/HYD/2017 :- 7 -: COPY TO : 1.ASST.COMMISSIONER OF INCOME TAX, CIRCLE-8(1), HYDERABAD. 2.SRI B.SUBHASH REDDY, H.NO.1-98-9-3/53, PLOT NO.35 , SILICON VALLEY, MADHAPUR, HYDERABAD. 3.CIT(APPEALS)-2, HYDERABAD. 4.PR.CIT-2, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.