DCIT, Central Circle, Tirupathi V. Sri Grosu Murali Krishna, Nellore

ITA 178/HYD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74668 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 03-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained cash credit; Difference of opinion; Condonation of delay
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 178/HYD/2011 ASSESSMENT YEAR: 2002-03 DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI. VS. SRI GROSU MURALI KRISHNA, NELLORE. PAN ABXPG2036N APPELLANT RESPONDENT C.O. NO. 44/HYD/2011 (IN ITA NO. 178/HYD/2011 ASSESSMENT YEAR: 2002-03) SRI GROSU MURALI KRISHNA, NELLORE. PAN ABXPG2036N VS. DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE, TIRUPATHI. CROSS OBJECTOR RESPONDENT REVENUE BY: SRI JEEVAN LAL LAVIDIYA ASSESSEE BY: SRI A.V. RAGHU RAM DATE OF HEARING: 05/03/2014 DATE OF PRONOUNCEMENT: 05/03/2014 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VII, HYDERABAD DATED 18/11/2010 FOR THE ASSESSMENT YEAR 2002-03. THE ASSESSEE FILED C.O. AG AINST THE SAID ORDER OF THE CIT(A). 2. THE REVENUE HAS RAISE THE FOLLOWING GROUNDS OF A PPEAL: 1. THE CIT(A) HAS ERRED ON LAW IN ALLOWING THE APPE AL OF THE ASSESSEE ON ACCOUNT OF ADDITION MADE TOWARDS THE UN EXPLAINED OPENING BALANCE. 2 ITA NO. 178/H/ 2011 & C.O. NO. 44/H/11 SRI GROSU MURALI KRISHNA 2. THE CIT(A) HAS FAILED TO APPRECIATE THE FACT THA T TO ADD THE UNEXPLAINED OPENING CAPITAL BALANCE THE REQUIREMENT OF SEIZED MATERIAL IS NOT NECESSARY. 3. THE CIT(A) OUGHT NOT TO HAVE CONSIDERED THE DECI SIONS OF VARIOUS ITATS AS THEY ARE AGAINST THE STATUTORY PRO VISION OF SECTION 153A OF THE IT ACT. 4. THE ORDER OF THE CIT(A) IS NOT ACCEPTABLE ON THE GROUND THAT IN THE CASE OF ACIT VS. M/S CH. MARTHANDA RAO & CO. , IT ACT, 1961 NO. 780 TO 784/HYD/2010 THE JURISDICTIONAL ITA T HAS GIVEN ITS CATEGORICAL FINDING THAT THE TOTAL INCOME SHALL BE ASSESSED OR REASSESSED AS PER SECTION 153A OF THE IT ACT. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT IN THE AS SESSMENT ORDER THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD S HOWN OPENING CAPITAL BALANCE OF RS. 12,40,756/- FOR WHICH HE DID NOT FURNISH ANY EVIDENCE INSPITE OF GIVING SUFFICIENT OPPORTUNITIES . HE, THEREFORE, ADDED THE SAID AMOUNT TO THE INCOME RETURNED ON THE GROUND THAT THIS AMOUNT IS INTRODUCED DURING THE PREVIOUS YEAR RELEV ANT TO THE AY 2002-03 FOR THE FIRST TIME. 4. ON APPEAL, BEFORE THE CIT(A), IT WAS CONTENDED T HAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING THE AD DITION OF RS. 12,40,756/-, WHICH IS THE OPENING BALANCE OF THE CA PITAL ACCOUNT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IT WAS ARG UED THAT THE ASSESSING OFFICER HAD NO SEIZED MATERIAL TO MAKE TH IS ADDITION AS UNEXPLAINED CREDITS TO THE CAPITAL ACCOUNT BALANCE SINCE THIS CAPITAL ACCOUNT WAS VERY MUCH FILED WHILE FILING THE RETURN OF INCOME, THEREFORE, THE ASSESSING OFFICER CANNOT MAKE AN ADD ITION ABOUT THE ISSUE WHICH HAS ALREADY BEEN ACCEPTED BY THE DEPAR TMENT. IT WAS CONTENDED THAT THE OPENING BALANCE AFTER CAPITAL AC COUNT WAS VERY MUCH ACCEPTED BY THE DEPARTMENT WHEN THE ORIGINAL R ETURN OF INCOME WAS FILED. IT WAS SUBMITTED THAT EVEN DURING THE SE ARCH OPERATION, NOTHING INCRIMINATING IS FOUND TO DISTURB THE CAPIT AL ACCOUNT BALANCE SINCE THE SAME IS ACCEPTED BY THE DEPARTMENT IN THE PAST. IT WAS, 3 ITA NO. 178/H/ 2011 & C.O. NO. 44/H/11 SRI GROSU MURALI KRISHNA THEREFORE, SUBMITTED THAT THE ASSESSING OFFICER SHO ULD HAVE ACCEPTED THE RETURN OF INCOME FILED. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THERE IS NO SEIZED MATERIAL INDICATING THE SUPPRESS ION OF INCOME AND THE ADDITION IS NOT BASED ON ANY MATERIAL OF UNDISC LOSED INCOME. MORE SO, IT IS THE OPENING BALANCE FOR THE YEAR UNDER CO NSIDERATION WHICH WAS ACCEPTED BY THE DEPARTMENT WHEN THE ORIGINAL RE TURN OF INCOME WAS FILED AND NO INCRIMINATING MATERIAL WAS FOUND D URING THE COURSE OF SEARCH TO DISTURB THE CAPITAL ACCOUNT BALANCE SINCE THE SAME WAS ACCEPTED BY THE DEPARTMENT. AGAINST THIS, THE REVEN UE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD. THE FINDING GIVEN BY THE CIT(A) IS JUST IFIED AS THERE IS NO SEIZED MATERIAL TO DISTURB THE OPENING CAPITAL BALA NCE, WHICH WAS ACCEPTED BY THE DEPARTMENT IN THE ORIGINAL RETURN O F INCOME FILED. IN THIS CONNECTION, WE REFER TO THE DECISION OF COORDI NATE BENCH OF ITAT, HYDERABAD IN CASE OF SMT. SURAPU INDIRA DEVI VS. AC IT IN ITA NO. 96/HYD/2012 VIDE ORDER DATED 08/08/2013 WHEREIN THE COORDINATE BENCH HELD AS FOLLOWS: 15. WE HAVE HEARD BOTH THE PARTIES. WE ARE OF THE O PINION THAT EVEN THOUGH THERE MAY BE DIFFERENCE OF OPINION AS TO THE AMOUNT OF AGRICULTURAL INCOME WHICH COULD BE OBTAIN ED FROM THE LAND AND THE LACK OF EVIDENCE PRODUCED WITH RESPECT TO THE SAME, THE ISSUE OF ASSESSING OFFICER NOT ACCEPTING THE OPENING BALANCE AND TREATING THE SAME AS NIL IS INCORRECT. THE CIT(A) HAS ALSO CONFIRMED THE ORDER OF THE ASSESSING OFFIC ER AND HENCE, THE LOWER AUTHORITIES HAVE ERRED AS THEY HAV E LOOKED THE PRINCIPLE THAT THE OPENING BALANCE CANNOT BE DISTUR BED THIS YEAR. THE AUTHORITIES CAN ONLY REOPEN FOR THE EARLI ER YEAR. WE RELY ON THE DECISION OF ACIT VS. SMT. N. SASIKALA [ 2005] 92 TTJ (CHENNAI) 119 WHEREIN IT HAS BEEN HELD AS FOLLOWS: 5..................THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME FOR THE AY 1991-92 ALONG WITH CASH FLOW STATEMENT A ND 4 ITA NO. 178/H/ 2011 & C.O. NO. 44/H/11 SRI GROSU MURALI KRISHNA THE STATEMENT OF AFFAIRS. CUMULATIVE CASH BALANCE W AS SAVED BY THE ASSESSEE OVER A PERIOD OF TIME. THE ASSESSEE EXPLAINED THE TOTAL ASSETS AND LIABILITIES POSITION AND HE FURTHER SUBMITTED THAT THE ASSESSEE HAS ALSO FILED RETURN OF INCOME FOR THE AY 1990-91. IF THE DEPARTM ENT DOUBTED THE AVAILABILITY OF CASH BALANCE, IT CAN GO TO THE CONCERNED AY 1991-91 AND TREAT IT AS UNEXPLAINED INCOME, BUT IT CANNOT TREAT THE OPENING BALANCE IN THE AY 1991-92 AS UNEXPLAINED. THE LEARNED COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF THE CIT(A) . 6..............THE TRIBUNAL HELD THAT THE ASSESSING OFFICER HAS FAILED TO TAKE COGNIZANCE OF THE RETURN FOR 199 0-91, WHILE DECIDING THE ISSUE OF 1991-92 AS THE RETURN W AS BEFORE HIM. THE OPENING BALANCE OF CASH CANNOT BE TREATED AS UNEXPLAINED IN THE ASSESSMENT YEAR 1991- 92. IN VIEW OF THIS POSITION, WE HAVE NO HESITATION IN CONFIRMING THE ORDER OF THE CIT(A) AND REJECT THE G ROUND TAKEN BY THE REVENUE. 6.1 IN VIEW OF THE ABOVE DISCUSSION, WE DISMISS THE GROUNDS RAISED BY THE REVENUE AGAINST THE ACTION OF THE CIT (A) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF OPENING CAPITAL BALANCE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. C.O. NO. 44/HYD/11 BY THE ASSESSEE 8. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN HIS C.O.: 1. THE LD. CIT(A) ERRED IN HOLDING THAT THERE WAS A SEARCH IN THE CASE OF THE CROSS-OBJECTOR/RESPONDENT MERELY RELYING ON THE STATEMENT OF THE ASSESSING OFFICER I N THE ASSESSMENT ORDER, AND WITHOUT EVEN CALLING FOR THE RECORD IN SPITE OF A SPECIFIC GROUND IN THIS REGARD. 2. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE SE ARCH WAS IN THE CASE OF CROSS OBJECTORS FATHER AND NOT IN THE CASE OF THE CROSS-OBJECTOR AND THEREFORE AN ASSESSM ENT UNDER THE PROVISIONS OF SECTION 153A COULD NOT HAVE BEEN MADE IN THE HANDS OF THE CROSS-OBJECTOR. 5 ITA NO. 178/H/ 2011 & C.O. NO. 44/H/11 SRI GROSU MURALI KRISHNA 3. THE CIT(A) FAILED TO APPRECIATE THAT ONCE THERE IS NO SEARCH IN THE CASE OF THE CROSS-OBJECTOR THE VERY ASSESSMENT MADE WOULD BE INVALID AS THE SAME WAS NO T BASED ON ANY MATERIAL. THE CIT(A) OUGHT TO HAVE ANN ULLED THE ASSESSMENT AS THE SAME WAS MADE WITHOUT JURISDICTION. 9. ON PERUSAL OF RECORD, WE FIND THAT THERE WAS A D ELAY OF 109 DAYS IN FILING THIS CROSS OBJECTION BY THE ASSESSEE . TO THIS EFFECT, THE ASSESSEE FILED AN AFFIDAVIT AFFIRMING THE REASONS T HEREIN FOR DELAY IN FILING THIS C.O., WHICH ARE AS FOLLOWS: 2. THE CROSS-OBJECTOR RECEIVED THE NOTICE OF DEPART MENT APPEAL ALONG WITH GROUNDS FORM THE REGISTRY ON 01/03/2011. THE CROSS- OBJECTIONS SHOULD HAVE BEEN FILED ON OR BEFORE 31/0 3/2011. ON RECEIVING THE DEPARTMENTAL APPEAL, THE CROSS-OBJECT OR WAS UNDER BONA FIDE BELIEF THAT THE APPEAL OF THE DEPAR TMENT IS FRIVOLOUS AND UNSUSTAINABLE IN AS MUCH AS THE CIT(A ) RELYING ON THE DECISION OF THIS HONBLE TRIBUNAL HELD THAT THE ASSESSMENT WAS NOT BASED ON THE MATERIAL FOUND IN THE COURSE O F SEARCH. HOWEVER, WHEN THE CROSS-OBJECTOR APPROACHED ITS COU NSEL ON 10/07/2001, THE CROSS-OBJECTOR WAS ADVISED TO FILE CROSS OBJECTIONS IN THE APPEAL CHALLENGING THE ERRONEOUS FINDING OF THE CIT(A) WITH RESPECT TO SEARCH IN THE HANDS OF T HE CROSS- OBJECTOR. IT WAS POINTED OUT BY MY COUNSEL THAT ONC E THERE IS NO WARRANT IN THE HANDS OF THE CROSS OBJECTOR, THE ASS ESSMENT MADE DE HORS OF MATERIALS IS BAD IN LAW AND SHOULD HAVE BEEN ANNULLED. ACCORDINGLY, THE PRESENT CROSS-OBJECTIONS WERE PREPARED AND FILED BEFORE THE HONBLE TRIBUNAL ON 1 9/07/2011 WITH A DELAY OF 109 DAYS. 10. THE REASONS ADVANCED BY THE ASSESSEE IS NOT ACC EPTABLE, HENCE, THE PETITION FOR CONDONATION OF DELAY IN FIL ING THIS C.O. BY 109 DAYS IS HEREBY REJECTED AND THE C.O. IS UNADMITTED. ACCORDINGLY, THE C.O IS DISMISSED AS UN-ADMITTED. SINCE WE HAVE NOT ADMITTED THE CO FOR ADJUDICATION BY REJECTING THE CONDONATION PETIT ION FOR DELAY IN FILING THIS C.O., DECIDING THE GROUNDS RAISED IN THE C.O, ON MERIT, DOES NOT ARISE AT ALL. 6 ITA NO. 178/H/ 2011 & C.O. NO. 44/H/11 SRI GROSU MURALI KRISHNA 11. IN THE RESULT, APPEAL OF THE REVENUE AS WELL AS THE C.O. BY THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 05/03/2014. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 05/03/2014. KV COPY FORWARDED TO: 1. DCIT, CENTRAL CIRCLE, TIRUPATHI. 2. SRI GROSU MURALI KRISHNA, C/O K. VASANTKUMAR, ADVOCATE, FLAT NO. 610, BABUKHAN ESTATE, BASHEERBAGH, HYD 500 001. 3. CIT(A)-VII, HYDERABAD 4. CIT (CENTRAL), HYDERABAD. 5. THE DR, ITAT, HYDERABAD