K.Ram Reddy, Mahabunagar V. Income Tax Officer, Ward-2, Karimnagar

ITA 1732/Hyd/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4190 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 07-03-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 09-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V RAJITHA
• Assessee Lawyers: T CHAITANYA KUMAR
• Keywords: Unexplained investment; Opportunity of being heard
• Section: 133A; 201; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A ', HYDERABAD BEFORE S HRI V. DURGA RAO , JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN , ACCOUNTANT MEMBER ITA NO. 1732 / HYD/201 7 ASSESSMENT YEAR: 20 12 - 13 K. RAM REDDY, MAHABUBNAGAR. PAN A NNPK6689D VS. INCOME - TAX OFFICER, WARD 2, MAHABUBNAGAR. APPELLANT RESPONDENT ASSESSEE BY: S HRI T. CHAITANYA KUMAR REVENUE BY: S MT. V. RAJITHA DATE OF HEARING: 07 / 0 3 / 201 9 DATE OF PRONOUNCEMENT: 13 / 0 3 /201 9 O R D E R PER S. RIFAUR RAHMAN , AM: T H IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) 4 , HYDERABAD, DATED, 2 3 /0 6 /201 7 FOR AY 20 12 - 13 . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ONE OF THE PARTNERS IN THE FIRM M/S SWATHI SILK CENTRE, JADCHERLA AND M/S SHUBODAYA CONSTRUCTIONS COMPANY JADCHERELA, MAHABUBNAGAR. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD NOT FILED RETURN OF I NCOME. A SURVEY OPERATION U/S 133A OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT) WAS CONDUCTED IN THE CASE OF M/S SWATHI SILK CENTRE, JADCHERLA ON 31/10/2013, IN WHICH THE ASSESSEE WAS A PARTNER, TO EXAMINE THE STOCK AND PROFIT OF THE FIRM. DURING THE C OURSE OF SURVEY, IT WAS NOTICED THAT THE A SSESSEE HAD CONSTRUCTED A RESIDENTIAL CUM COMMERCIAL BUILDING IN HIS INDIVIDUAL CAPACITY AT K.P . STREET, JADCHERLA, MAHABOOBNAGAR AND THE COST OF I.T.A. NO. 1732 /HYD/1 7 K. RAM REDDY, MAHABUBNAGAR 2 CONSTRUCTION OF BUILDING WAS ADMITTED BY THE ASSESSEE AT RS.35 LAKHS . THE ASSESSEE ADMITTED RS.15 LAKHS AS INCOME IN HIS HANDS TOWARDS UNEXPLAINED SOURCES IN CONSTRUCTION DURING SURVEY OPERATION. APART FROM THIS, THE A SSESSEE IN THE CAPACITY OF MA NAGING PARTNER OF THE FIRM M / S. SWATHI SILK CENTRE ADMITTED THE EXCESS STOCK OF RS.15,20,564/ - AS INCOME IN THE HANDS OF FIRM. FURTHER, NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE AND IN RESPONSE TO THAT, ASSESSEE FILED RETURN OF INCOME FOR AYS 2010 - 11, 2011 - 12 AND 2012 - 13 ADMITTING INCOME OF RS.2,23,615/ - , RS.1,28,899/ - AND RS.1,28, 899/ - RESPECTIVELY. THE ASSESSING OFFICER COMPLETED THE ASSESSMENTS BY MAKING ADDITIONS OF RS.10,22,500/ - , RS.18,25, 000/ - AND RS.8,50, 000/ - FOR THE AYS 2010 - 11, 2011 - 12 AND 2012 - 13 RESPECTIVELY TOWARDS UNEXPLAINED INVESTMENT IN HOUSE PROPERTY. 2.1 FOR THE YEAR UNDER CONSIDERATION, I.E . ASST. YEAR 2012 - 13, THE ASSESSEE HAS CLAIMED THE COST OF CONSTRUCTION AT RS.8, 50 ,000/ - AND THE SOURCES FOR THE SAME HAS BEEN EXPLAINED AS UNDER: - WITHDRAWALS FROM SHUBODAYA CONSTRUCTION RS. 1,50,000/ - LOAN FROM BROTHER SRI K. SUDHAKAR REDDY RS. 2,50,00 0/ - LOAN FROM BROTHER SRI K. SRINIVAS REDDY RS. 2,50,000/ - LOAN FROM BROTHER SRI K. THIRUPATHI REDDY RS.3,50, 000/ - LOAN FROM FATHER SRI K. RAGHURAMA REDDY RS.1,25,000/ - OUT OF SOURCES MENTIONED ABOVE, THE ASSESSEE HAS SHOWN RS.8,50, 000 / - AS INVESTME NT IN A.Y. 2012 - 13 AND THE BALANCE AMOUNT IS CLAIMED IN A.Y 2013 - 14 BY CARRY ING F ORWARD THE AMOUNT IN CAPITAL ACCOUNT. IN THE ASST. YEAR 2013 - 14, THE COST OF CONSTRUCTION IS CLAIMED AT R S . 6,00,000/ - AND THE SOURCES FOR THE SAME HAS BEEN EXPLAINED AS UNDER : - OPENING BALANCE OF CAPITAL RS.1,50, 000 / - I.T.A. NO. 1732 /HYD/1 7 K. RAM REDDY, MAHABUBNAGAR 3 LOAN FROM BROTHER SRI K. SRINIVAS REDDY RS. 1,50,000/ - LOAN FROM BROTHER SRI K. THIRUPATHI REDDY RS. 2,50,000/ - 2.2 THE AO OBSERVED THAT THE ASSESSEE HAD NOT CARRIED OUT ANY CONSTRUCTIO N ACTIVITY IN AY 2013 - 14 AND THE PERIOD OF CONSTRUCTION IS TAKEN AS A.YS 2010 - 11, 2011 - 12 AND 2012 - 13 ONLY. THEREFORE, THE CLAIM OF CONSTRUCTION AND SOURCES IN ASST. YEAR 20 13 - 14 IS NOT ACCEPTED. EVEN THOUGH THE ASSESSEE CLAIMED COST OF CONSTRUCTION AT RS. 52,97 , 000 / - , THE COST OF CONSTRUCTION IS ADOPTED AT RS.52,88, 000 / - AS DETERMINED BY V ALUATI ON OFFICER. THE COST CONSIDERED FROM A.YS 2010 - 11 TO 2012 - 13 IS R S. 46.97 LAKHS (RS, 10,22,500 + RS.28,25, 000 + RS. 8,50,000/ - ). THUS, THE DIFFERENCE AMOUNT OF RS. 5 ,91,000/ - IS TREATED AS UNEXPLAINED INVESTMENT IN ASST. YEAR 2012 - 13 AS CONSTRUCTION WAS COMPLETED IN AY 2012 - 13, THE BALANCE AMOUNT OF RS. 5,91,000/ - BEING THE DIFFERENCE BETWEEN COST OF CONSTRUCTION VALUED BY VALUATION OFFICER AND COST OF CONSTRUCTION C LAIMED BY THE ASSESSEE IN RETURNS OF INCOME UPTO AY 2012 - 13 IS TREATED AS UNEXPLAINED INVESTMENT AND ADDED BACK TO THE INCOME RETURNED. 3. WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), THE CIT(A) DELETED THE ADDITION MADE BY THE AO OF RS. 8,50 ,000/ - . HOWEVER, THE CIT(A) H AS NOT ADJUDICATED THE ADDITION OF RS. 5,91,000/ - MADE BY THE AO TOWARDS DIFFERENCE OF CONSTRUCTION COST SHOWN BY THE ASSESSEE AND DETERMINED BY VALUATION OFFICER (RS. 52,88,000 RS. 46,97,000), AS UNEXPLAINED INVESTMENT. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US CONTENDING THAT THE CIT(A) ERRED IN NOT ADJUDICATING THE ADDITION OF RS. 5,91,000/ - MADE BY THE AO AS UNEXPLAINED INVESTMENT. I.T.A. NO. 1732 /HYD/1 7 K. RAM REDDY, MAHABUBNAGAR 4 5. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATER IAL ON RECORD. AS CONTENDED BY THE ASSESSEE, THE CIT(A) HAS NOT ADJUDICATED THE ADDITION OF RS. 5,91,000/ - IN HIS ORDER. THEREFORE, WE REMIT THIS ISSUE TO THE FILE OF CIT(A) WITH A DIRECTION TO ADJUDICATE THE SAME IN ACCORDANCE WITH LAW AFTER PROVIDING REA SONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 13 TH MARCH , 201 9. SD/ - ( V. DURGA RAO ) JUDICIAL MEMBER SD/ - ( S. RIFAUR RAHMAN ) ACCOUNTANT MEMBER HYDERABAD, DATED 13 TH MARCH , 201 9. KV COPY FORWARDED TO: 1. K. RAM REDDY, C/O T. CHAITANYA KUMAR, ADVOCATE, FLAT NO. 102, GOURI APARTMENT, URDULINE, HIMAYATNAGAR , HYDERABAD . 2 . IT O , WARD - 2 , HYDERABAD . 3 . CIT (A) - 4 , HYDERABAD 4. PR. CIT 4 , HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE