Income Tax Officer, Ward-15(3), Hyderabad V. Ramanalal Gudivada , Hyderabad

ITA 178/Hyd/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4219 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 31-08-2021
• Assessment Year: 2016-2017
• Appeal Filed On: 10-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Additional evidence; Reasonable cause; Corroborative evidences; Revised return
• Section: 143(3); 133A

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. 178/HYD/2020 ASSESSMENT YEAR: 2016-17 INCOME TAX OFFICER, WARD-15(3), HYDERABAD VS SHRI RAMANALAL GUDIVADA, HYDERABAD [PAN: ACWPG4404E] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI ROHIT MUJUMDAR, DR FOR ASSESSEE : SHRI S. RAMA RAO, AR DATE OF HEARING : 31-08-2021 DATE OF PRONOUNCEMENT : 06-10-2021 O R D E R PER S.S.GODARA, J.M. : THIS REVENUES APPEAL FOR AY.2016-17 ARISES FROM THE CIT(A)-7, HYDERABADS ORDER DATED 18-11-2019 PASSED IN CASE NO.0143 / CIT(A)-7 / 2018-19, IN PROCEEDINGS U/S.14 3(3) OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUE HAS RAISED THE FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL: I.THE LD.CIT(A), HYDERABAD, ERRED IN LAW AND ON FA CTS, IN NOT APPRECIATING THAT THE APPELLANT HAD NOT BEEN MAINTA INING ANY REGULAR ITA NO. 178/HYD/2020 :- 2 -: BOOKS OF ACCOUNTS AND THE ALLEGED BALANCE SHEET AS ON 31.03.2016 WAS DRAWN UP BY THE ASSESSEE, CONSIDERING THE ASSET S AND LIABILITIES AVAILABLE AS ON 01.4.2015 AND 31.3.2016, WITHOUT AN Y SUPPORTING EVIDENCES PROVIDED FOR THE ALLEGED CLAIM. II. THE LD.CIT(A), HYDERABAD, ERRED IN LAW AND ON F ACTS, IN NOT APPRECIATING THAT THE ASSESSEE IN ORDER TO ARRIVE A T THE STOCK AS ON 31.3.2015, ADOPTED THE FIGURE OF STOCK AVAILABLE AS IN F.Y.2004-05 AND THE FACT THAT A SURVEY U/S.133A WAS CONDUCTED O N 14.7.2004 IN THE BUSINESS PREMISES OF THE ASSESSEE AND NAY SUCH ALLEGED WORKING OVER THE SUBSEQUENT YEARS CANNOT BE ACCEPTED, IN A CASE WHERE NO BOOKS OF ACCOUNTS ARE MAINTAINED AND NO SUPPORTING EVIDENCES FOR THE ALLEGED WORKINGS HAVE BEEN FURNISHED BY THE ASS ESSEE. III. THE LD.CIT(A), HYDERABAD, ERRED IN LAW AND ON FACTS, IN NOT APPRECIATING THAT DURING THE ASSESSMENT PROCEEDINGS , THE A.O. REPEATEDLY ASKED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNTS AND SUPPORTING RELEVANT DOCUMENTS/EVIDENCES, BUT HE ASS ESSEE FAILED TO PRODUCE THE SAME AND THEREFORE, THE ADDITIONAL EVID ENCES FILED BY THE ASSESSEE WITHOUT ANY REASONABLE CAUSE, ARE IN CONTR AVENTION TO RULE 46A OF THE INCOME-TAX RULES. IV. THE LD.CIT(A), HYDERABAD, ERRED IN LAW AND ON F ACTS, IN ADMITTING THE ALLEGED ADDITIONAL EVIDENCES FILED BY THE ASSES SEE DURING APPELLATE PROCEEDINGS, WITHOUT PASSING A SPEAKING O RDER AND ASSIGNING ANY REASONS FOR SUCH ADMISSION; IN CONTRA VENTION TO RULE 46A OF THE INCOME TAX RULES. V. THE LD.CIT(A), HYDERABAD, ERRED IN LAW AND ON FA CTS, IN NOT APPRECIATING THAT THE ASSESSEE WAS REQUIRED TO FILE A REVISED RETURN BY ADMITTING THE AGRICULTURAL INCOME OF RS.26,00,00 0/- EARNED BY HIM, WHICH WAS NOT DISCLOSED IN THE ORIGINAL RETURN OF INCOME FILED AND ACCEPTING THE EXPLANATION OF THE ASSESSEE. VI. THE LD.CIT(A), HYDERABAD, ERRED IN LAW AND ON F ACTS, IN DELETING THE ADDITION OF RS.4,62,87,257/- MADE BY THE A.O., IN THE FACTS AND CIRCUMSTANCES OF THE CASE. VII. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ORDER OF LD.CIT(A)- 7, HYDERABAD IS PERVERSE AND DESERVE TO BE SET ASID E. 3. WE COME TO THE REVENUES TWIN SUBSTANTIVE GRIEVANCE S HEREIN SEEKING TO REVERSE THE CIT(A)S FINDINGS ADMITTI NG THE ASSESSEES AGRICULTURAL INCOME OF RS.26 LAKHS WITHO UT FILING THE REVISED RETURN ALONG WITH UN-EXPLAINED STOCK OF RS.4,62,87,257/-. THE CIT(A)S RELEVANT DETAILED DIS CUSSION TO THIS EFFECT READS AS UNDER: ITA NO. 178/HYD/2020 :- 3 -: 4.3 THE ABOVE ADDITIONAL EVIDENCE/SUBMISSIONS WERE FORWARDED VIDE LETTER DATED 02-08-2019, CALLING FOR A REMAND REPORT FROM THE ASSESSING OFFICER AND THE ASSESSING OFFICER VIDE HI S LETTER DATED 25- 09-2019 FORWARDED THE REMAND REPORT THROUGH ADDI.CI T, RANGE-15, HYDERABAD. THE CONTENTS OF THE REPORT ARE AS UNDER: 'PLEASE REFER TO THE ABOVE. 2. THE LD. CIT(A) VIDE LETTER CITED ABOVE FORWARDED THE ADDITION EVIDENCES SUBMITTED BY THE ASSESSEE DURING THE COUR SE OF APPELLATE PROCEEDINGS AND DIRECTED TO SUBMIT THE REMAND REPOR T AFTER EXAMINE AND VERIFY THE ADDITIONAL EVIDENCES ALONG WITH SUPP ORTING DOCUMENTS. 3. IN THIS CASE, THE ASSESSMENT FOR THE A. Y. 2016- 17 WAS COMPLETED 143(3) ON 28.12.2019 BY MAKING AN ADDITION OF RS. 4 ,62,87,257/- ON ACCOUNT OF UNEXPLAINED INVESTMENT. IT IS OBSERVED B Y THE AO DURING THE ASSESSMENT PROCEEDINGS THAT EVEN AFTER EXPIRY O F TIME, THE ASSESSEE HAS NEITHER FURNISHED THE INFORMATION NOR SUBMITTED ANY BOOKS OF ACCOUNTS TO SUBSTANTIATE HIS CLAIM OF CAPI TAL SHOWN IN THE BALANCE SHEET. THE AO FURTHER OBSERVED THAT THE ASS ESSEE NOT EVEN EXPLAINED THE SOURCES FOR ADDITIONAL CAPITAL MADE E VERY YEAR IN THE BALANCE SHEET. IN THE ABSENCE OF THE PROPER EXPLANA TION AND THE SUPPORTING EVIDENCES THE ASSESSING OFFICER HAS MADE THE ADDITION. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE HAS SUBMITTED THE ADDITIONAL EVIDENCE AND REQUESTED THE TA. CIT(A) TO ADMIT THE SAME. IN THE WRITTEN SUBMISSIONS THE ASSE SSEE SUBMITTED THAT WHILE UPLOADING THE RETURN OF INCOME FOR THE A . Y. 2015-16, THE LOSS FIGURE OF RS.2243550/- WAS UPLOADED AS CAPITAL . 5. THE ASSESSEE FURTHER SUBMITTED THE CALCULATION S HEET FOR THE CLOSING STOCK FROM F.Y.2005-06 RELEVANT TO THE A.Y. 2006-07 ONWARDS AND BALANCE SHEET FOR THE YEAR ENDING 31.3.2013. 6. THE ASSESSEE IS GIVEN AN OPPORTUNITY TO SUBSTANT IATE HIS CLAIM OF SHOWING THE CAPITAL IN THE BALANCE SHEET AND INTROD UCTION OF FRESH CAPITAL DURING THE YEAR UNDER CONSIDERATION. 7. DURING THE COURSE OF REMAND REPORT PROCEEDINGS, WITH REGARD TO THE CAPITAL SHOWN AT RS. 22,43,550/-, THE ASSESSEE SUBM ITTED THAT THE AMOUNT SHOWN AS CAPITAL AT RS. 22,43,550/- IS AN IN ADVERTENT MISTAKE CREPT IN WHILE UPLOADING THE RETURN OF INCO ME FOR THE A. Y. 2015-16. IT IS NOTHING BUT A LOSS DERIVED DURING TH E YEAR FROM F 86 O. IT HAS SHOWN AT COLUMN 38 OF THE RETURN OF INCOME F ILED FOR THE A.Y. 2015-16. 7.1 THE SUBMISSION OF THE ASSESSEE IS VERIFIED FROM THE RETURN OF INCOME AND FOUND CORRECT. THEREFORE, THE LD. CIT(A) IS REQUESTED TO CONSIDER THE ISSUE ON MERITS. ITA NO. 178/HYD/2020 :- 4 -: 8. WITH REGARD TO THE ADDITIONAL CAPITAL INTRODUCED DURING THE YEAR OF RS. 42,51,000/- FOR THE YEAR 31.3.2016, RS. 12,51,0 00/- FOR THE YEAR 31.3.2015 AND RS. 5,25,000/- FOR THE YEAR 31.3.2014 THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS OWNED AGRICULTURAL LANDS AND THE ASSESSEE HAS EARNED THE AGRICULTURAL INCOME OF RS. 26,00,000/- FROM A.Y. 2007-08 TO 2013-14. IN SUPPORT OF HIS CLAIM TH E ASSESSEE HAS FILED COPIES OF THE PATTARDAR PASS BOOKS AND MANDAL REVENUE OFFICER'S CERTIFICATE. 8.1 THE CONTENTION OF THE ASSESSEE IS VERIFIED FROM THE RECORDS. THE ASSESSEE HAS NOT DISCLOSED THE AGRICULTURAL INCOME IN HIS RETURN OF INCOME AS THE AGRICULTURAL LANDS ARE HELD BY THE AS SESSEE IN THE CAPACITY OF HUF. HOWEVER, ASSESSEE HAS NOT FILED AN Y RETURN OF INCOME IN THE CAPACITY OF HUF AS THERE IS NO TAXABL E INCOME. THEREFORE, THE LD. CIT(A) MAY PLEASE BE CONSIDERED THE ISSUE ON MERITS. 2. WITH REGARD TO THE OPENING BALANCE OF CAPITAL OF RS.5,31,23,790/- FOR THE A.Y. 2016-17, THE ASSESSEE SUBMITTED THAT T HE ASSESSEE HAS {JOT MAINTAINED ANY BOOKS OF ACCOUNTS UPTO THE ASSE SSMENT YEAR 2015-16. WHEN THERE WERE NO FINAL ACCOUNTS, THE BAL ANCE SHEET HAS TO BE PREPARED BY CONSIDERING THE ASSETS AND LIABILITI ES AVAILABLE AS ON 1.4.2015. THE ASSESSEE FURTHER SUBMITTED THAT IN OR DER TO ARRIVE THE STOCK AS ON 31.3.2015, THE ASSESSEE HAS TAKEN THE S TOCK AVAILABLE AS ON 2004-05 AS THERE WAS A SURVEY UNDER SEC. 133A OF THE I T ACT ON 14.7.2004 AND THE DEPARTMENT FOUND THAT THERE WAS 1 5 KG. OF GOLD JEWELLERY AND 96 KG. OF SILVER ARTICLE AS ON THE DA TE OF SURVEY. THE MODUS OPERANDI OF THE ASSESEE'S BUSINESS IS THAT AS AND WHEN THERE IS SALE OF ANY ARTICLE, IMMEDIATELY THE SAME WEIGHT OF ORNAMENT WILL BE REPLACED WITH NEW ONE. THEREFORE, THE QUANTITY O F THE STOCK WILL REMAIN THE SAME. ONLY THERE IS A FLUCTUATION IN THE RATE, WHICH WILL BE BOOKED AS GROSS PROFIT / GROSS LOSS TO THE PROFIT A ND LOSS ACCOUNT. TO ARRIVE THE OPENING BALANCE OF THE CAPITAL, THE ASSE SSEE HAS FOLLOWED THE PRINCIPLE CAPITAL = ASSETS - LIABILITIES. 9. WITH REGARD TO THE OPENING BALANCE OF CAPITAL OF RS. 5,31,23, 790/- FOR THE A.Y. 2016-17, THE ASSESSEE SUBMITTED THAT T HE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS UPTO THE ASSES SMENT YEAR 2015-16. WHEN THERE WERE NO FINAL ACCOUNTS, THE BAL ANCE SHEET HAS TO BE PREPARED BY CONSIDERING THE ASSETS AND LIABILITI ES AVAILABLE AS ON 1.4.2015. THE ASSESSEE FURTHER SUBMITTED THAT IN OR DER TO ARRIVE THE STOCK AS ON 31.3.2015, THE ASSESSEE HAS TAKEN THE S TOCK AVAILABLE AS ON 2004-05 AS THERE WAS A SURVEY UNDER SEC. 133A OF THE I T ACT ON 14.7.2004 AND THE DEPARTMENT FOUND THAT THERE WAS 1 5 KG. OF GOLD JEWELLERY AND 96 KG. OF SILVER ARTICLE AS ON THE DA TE OF SURVEY. THE MODUS OPERANDI OF THE ASSESEE'S BUSINESS IS THAT AS AND WHEN THERE IS SALE OF ANY ARTICLE, IMMEDIATELY THE SAME WEIGHT OF ORNAMENT WILL BE REPLACED WITH NEW ONE. THEREFORE, THE QUANTITY O F THE STOCK WILL ITA NO. 178/HYD/2020 :- 5 -: REMAIN THE SAME. ONLY THERE IS A FLUCTUATION IN THE RATE, WHICH WILL BE BOOKED AS GROSS PROFIT / GROSS LOSS TO THE PROFIT A ND LOSS ACCOUNT. TO ARRIVE THE OPENING BALANCE OF THE CAPITAL, THE ASSE SSEE HAS FOLLOWED THE PRINCIPLE CAPITAL = ASSETS - LIABILITIES. LIABILITIES ASSETS CAPITAL ACCOUNT FIXED ASSET 2621291 OPENING 52123790 CLOSING STOCK 49410300 RENTAL 1108674 SUNDRY DEBTORS 181500 NET PROFIT 124999 CASH AT BANK 5114555 INCOME FROM OTHER 872632 CASH ON HAND 154532 AGRI INCOME 2269695 LESS: 17612 57482178 57482178 9.1 IN VIEW OF THE ABOVE REASONS, THE SUBMISSIONS M ADE BY THE ASSESSEE IS VERIFIED WITH THE RECORDS. THE ASSESSEE HAS EXPLAINED THE SOURCES FOR THE ADDITIONAL CAPITAL AND THE OPENING BALANCE IN THE CAPITAL ACCOUNT WITH THE DOCUMENTARY EVIDENCE. THER EFORE, THE ID. CIT(A) IS REQUESTED TO DECIDE THE ISSUE ON MERITS. ' 4.4. THE COPY OF THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER WAS FORWARDED TO THE APPELLANT TO SUBMIT THE EXPLAN ATION VIDE LETTER DATED 08-11-2019. IN RESPONSE TO THE REMAND REPORT, THE AR OF THE APPELLANT VIDE LETTER DATED 15-11-2019 STATED AS UN DER: THE ONLY ISSUE IN THIS APPEAL IS WITH REGARD TO TH E ADDITION OF RS.4,62,87,257/- ON ACCOUNT OF ADDITIONAL CAPITAL. ACCORDING TO THE ASSESSING OFFICER, THE OPENING CAPITAL ADMITTED FOR THE YEAR IS NOT PROPERLY EXPLAINED. THE ASSESSING OFFICER CONSIDERE D THE MARKET VALUE OF 15 KG OF GOLD AVAILABLE DURING FINANCIAL Y EAR 2004-05 AND ADDED THE INCOMES RECEIVED AND ARRIVED AT THE AVAIL ABLE CAPITAL AT RS. 1,11,94,921. THE BALANCE OF RS.4,62,87,257/- IS TREATED AS UNEXPLAINED. THE APPELLANT FILED A DETAILED EXPLANATION BY WAY O F WRITTEN SUBMISSIONS ALONGWITH THE PETITION FOR ADMISSION OF ADDITIONAL EVIDENCE. THE APPELLANT SUBMITTED THAT HE WAS CARRY ING ON THE BUSINESS ACTIVITY AND IN THE PROCESS PURCHASING AND SELLING THE GOLD JEWELLERY. THE INCREASED VALUE OF GOLD, THE INCOME DERIVED; THE AGRICULTURAL INCOME FORMED THE BASIS FOR INCREASE I N THE CAPITAL ACCOUNT. IT IS SUBMITTED THAT THERE WAS SUBSTANTIAL CAPITAL IN THE IMMEDIATELY PRECEDING YEARS AND THAT BASED ON THE S AME THE AMOUNT OF THE PRESENT CAPITAL IS SHOWN. THE APPELLANT WORK ED OUT THE AVAILABILITY OF THE FUNDS FROM THE FINANCIAL YEAR 2 004-05 AND ONWARDS AS THE REGULAR BOOKS OF ACCOUNT WERE NOT MA INTAINED FOR ALL THE YEARS. AS THE SAID CLAIM WAS MADE FOR THE FIRST TIME BEFORE THE ITA NO. 178/HYD/2020 :- 6 -: HON'BLE COMMISSIONER OF INCOME TAX (APPEALS), THE L EARNED COMMISSIONER OF INCOME TAX (APPEALS) REFERRED THE M ATTER TO THE ASSESSING OFFICER FOR REMAND REPORT. THE ASSESSING OFFICER WORKED OUT THE AVAILABILITY OF THE CAPITAL, THE STOCKS, SU NDRY DEBTORS, CASH AND BANK AND ALL OTHER DETAILS AND FOUND THAT THE E NTIRE AMOUNT OF THE CAPITAL IS PROPERLY EXPLAINED. IN THE REMAND RE PORT, THE ASSESSING OFFICER MENTIONED THAT THE ASSESSEE EXPLAINED THE S OURCES FOR THE ADDITIONAL CAPITAL AND THE OPENING BALANCE IN THE C APITAL ACCOUNT WITH DOCUMENTARY EVIDENCE. IN THE CIRCUMSTANCES, THE ADD ITION MADE IS NOT JUSTIFIED. THE APPELLANT, THEREFORE, REQUESTS THE HON'BLE COMM ISSIONER OF INCOME TAX (APPEALS) TO KINDLY ALLOW THE APPEAL AS PRAYED FOR.' 4.5 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELL ANT, FINDINGS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND R EMAND REPORT CAREFULLY. THE ASSESSING OFFICER AFTER MAKING DETAI LED ENQUIRY DURING THE REMAND PROCEEDINGS ACCEPTED THE CLAIM OF THE AP PELLANT THAT THERE WAS A MISTAKE OCCURRED AT THE TIME OF FILING RETURN OF INCOME WHILE UPLOADING THE ENTRIES. THE ASSESSING OFFICER ACCEPT ED THE WORKING GIVEN BY THE APPELLANT CONSIDERING THE STOCK AVAILA BLE AS ON 14-07- 2004 AND THE RETURNS OF INCOME FILED FROM A.Y.2005- 06 TO 2016-17. THE ASSESSING OFFICER DID NOT CONTRADICT THE SUBMIS SIONS MADE BY THE APPELLANT IN THE REMAND REPORT WITH ANY EVIDENCE. H ENCE, I ACCEPT THE CLAIM OF THE APPELLANT AND DIRECT THE ASSESSING OFF ICER TO DELETE THE ADDITION OF RS.4,62,87 ,257/-. 4. IT HAS COME ON RECORD THAT THE CIT(A) HAS NOWHERE EV EN DEALT WITH THE ISSUE OF AGRICULTURAL INCOME. THE REVEN UES INSTANT FORMER SUBSTANTIVE GRIEVANCE IS REJECTED THEREF ORE. THE OUTCOME IS NO DIFFERENT QUA THE REVENUES LATTER SUBSTANTIVE GROUND REGARDING UN-EXPLAINED STOCK VALUE AS WELL WH EREIN THE ASSESSING OFFICERS REMAND REPORT DT.25-09-2019 HAD I TSELF ACCEPTED THE SOURCE OF ADDITIONAL CAPITAL AS ON 14-0 7-2004 AND IN THE RETURN(S) OF INCOME FILED FROM 2005-06 TO 2016-17. WE THUS QUOTE CASE LAW CIT VS. DM PURNESH (2020) 4 26 ITR 169 (KA) AND B.JAYALAKSHMI VS. ACIT (2018) [96 TAXMA NN.COM 486] (MAD) AND HELD THAT THE REVENUE CANNOT BE HELD A S AN AGGRIEVED PARTY ONCE THE ASSESSING OFFICER FILES A F AVOURABLE ITA NO. 178/HYD/2020 :- 7 -: REMAND REPORT BEFORE THE CIT(A). WE THUS AFFIRM THE CI T(A)S FINDINGS DELETING THE IMPUGNED ADDITION(S). 5. THIS REVENUES APPEAL IS DISMISSED IN ABOVE TERMS . ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH OCTOBER, 2021 SD/- SD /- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 06-10-2021 TNMM ITA NO. 178/HYD/2020 :- 8 -: COPY TO : 1.INCOME TAX OFFICER, WARD-15(3), HYDERABAD. 2.SRI RAMANALAL GUDIVADA, LIG B-295, DR.A.S.RAO NAG AR, HYDERABAD. 3.CIT(APPEALS)-7, HYDERABAD. 4.PR.CIT-7, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.