ACIT, Central Circle, Tirupathi V. Sri M. Radha Krishna, Tirupathi

ITA 1809/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66378 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 21-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS; V SRINIVAS
• Assessee Lawyers: E PHALGUNA KUMAR
• Keywords: Search and seizure; Charitable institution; Opportunity of being heard; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS. 1809 & 1810/HYD/2011 ASSESSMENT YEARS: 2007-08 & 2008-09 ACIT, CENTRAL CIR., TIRUPATI. .... APPELLANT VS. SRI M. RADHAKRISHNA, TIRUPATI. PAN:AGMPM 8676 R RESPONDENT APPELLANT BY : S RI V. SRINIVAS & SMT. NIVEDITA BISWAS RESPONDENT BY : SRI E. PHALGUNA KUMAR DATE OF HEARING : 23-08-2012 DATE OF PRONOUNCEMENT : 19-10-20 12 ORDER PER SAKTIJIT DEY, J.M.: THESE TWO APPEALS FILED BY THE REVENUE ARE DIRECTE D AGAINST SEPARATE ORDERS OF CIT (A)-VII, HYDERABAD BOTH DATE D 12-8-2011 AND THEY PERTAIN TO THE ASSESSMENT YEARS 2007-08 AN D 2008-09. SINCE COMMON ISSUES ARE INVOLVED IN THESE TWO APPEA LS, THESE ARE TAKEN UP TOGETHER AND DISPOSED OF BY THIS COMBINED ORDER FOR THE SAKE OF CONVENIENCE. 2. SINCE THE GROUNDS RAISED IN THESE TWO APPEALS A RE SIMILAR EXCEPTING THE AMOUNT MENTIONED THEREIN, FOR THE SAKE OF BREVI TY, WE REPRODUCE 2 ITA NO.1809 AND 1810 OF 2011 SRI M. RADHAKRISHNA, TIRUPATI. HEREUNDER FOLLOWING TWO EFFECTIVE GROUNDS RAISED BY THE REVENUE FOR THE ASSESSMENT YEAR 2007-08:- 1. THE CIT (A) ERRED IN ALLOWING UNDISCLOSED INCOME UN DER THE HEAD INCOME FROM OTHER SOURCES TO THE TUNE OF RS.29,90,000/- IN VIEW OF THE FACT THAT THE ASSESSE E IS NOT RUNNING ANY TRUST OR INSTITUTION AND ALSO THE CONTR IBUTIONS WERE RECEIVED IN THE INDIVIDUAL CAPACITY. 2. THE CIT (A) IS NOT CORRECT IN ALLOWING UNEXPLAIN ED INVESTMENT U/S 69B TO THE TUNE OF RS.82,58,662/- IN VIEW OF THE FACT THAT THE AMOUNT OF DEPOSIT RECEIVED IN THE NAME OF THE ASSESSEE OR INVESTMENT IN THE LAND BY THE ASSES SEE WITH THE SOURCE OF MONEY RECEIVED IS NOT ALLOWABLE AS PE R THE PROVISIONS OF THE IT ACT. 3. BRIEF FACTS OF THE CASE ARE THE ASSESSEE IS AN I NDIVIDUAL. PURSUANT TO SEARCH AND SEIZURE OPERATION CONDUCTED IN CASE OF M G BROTHERS AND GROUP SOME DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND AND SEIZED. AS A CONSEQUENCE THEREOF NOTICE U/S 153C WAS ISSUED TO T HE ASSESSEE CALLING FOR RETURN OF INCOME. IN RESPONSE TO SUCH NOTICE, THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER DISP UTE BY ADMITTING TOTAL INCOME OF RS.95,390/-. THE DOCUMENTS SEIZED DURING THE SEARCH AND SEIZURE OPERATION ARE AN ORIGINAL AGREEMENT DATED 2 0-10-2006 ENTERED INTO BETWEEN THE ASSESSEE AND SRI BATTAIAH FOR PURC HASE OF A PROPERTY FOR ACTUAL AGREED CONSIDERATION OF RS.1,75,200/- THOUGH THE PROPERTY WAS REGISTERED FOR RS. 1 LAKH. SIMILARLY, ANOTHER PROPE RTY WAS ALSO PURCHASED BY THE ASSESSEE FROM D. SUBADRAMMA FOR ACTUAL CONSI DERATION OF RS.31,79,000/- THOUGH AN AMOUNT OF RS.5,78,000 WAS MENTIONED IN THE DOCUMENT NO.7416/06. THE LAND OWNER WHO SOLD THE PROPERTY TO THE ASSESSEE ALSO CONFIRMED HE ACTUAL RECEIPT BY WRITIN G LETTERS TO DIT (INVESTIGATION), TIRUPATI. 3 ITA NO.1809 AND 1810 OF 2011 SRI M. RADHAKRISHNA, TIRUPATI. 4. ON THE BASIS OF THE AFORESAID INFORMATION, SUM MONS WERE ISSUED TO THE ASSESSEE BY THE ADIT (INV.) AND A STATEMENT WAS RECORDED FROM HIM. ON EXAMINING THE ASSESSEE, IT CAME TO NOTICE THAT H E HAD PURCHASED AC.17.03 OF LAND SITUATED AT KAYAM VILLAGE DURING T HE YEAR 2006-07. THE ASSESSEE ALSO EXECUTED SEVERAL SALE DEEDS AND THE P ROPERTIES WERE PURCHASED IN HIS NAME AND IN SOME OTHER PROPERTIES SRI MOHANA, MANAGER OF M G BROTHERS AUTOMOBILES PVT. LTD., ALSO APPEARE D AS CO-OWNER. THE ASSESSEE HOWEVER CLAIMED ALL INVESTMENTS WERE MADE BY HIM ONLY IN THE STATEMENT RECORDED FROM THE ASSESSEE, HE STATED THA T TOTAL CONSIDERATION PAID FOR PURCHASE OF THE PROPERTY WAS RS.1,12,48,66 2. THE ASSESSEE EXPLAINING THE SOURCE OF SUCH INVESTMENT MADE FOR PURCHASE OF THE PROPERTY STATED THAT THE CONTRIBUTIONS WERE NOT MAD E BY HIM BUT HE WAS ACTING ONLY AS AN AGENT OF THE ABHYASEES WHO HAVE CONTRIBUTED INDIVIDUALLY TO OWN THIS PROPERTY AT KAYAM VILLAGE. THE CONTRIBUTIONS RECEIVED FROM THEM HAVE BEEN POOLED TOGETHER TO OWN THIS PROPERTY. WHEN THE ASSESSEE WAS ASKED TO PRODUCE DOCUMENTARY EVIDENCE IN PROOF OF SUCH CLAIM, THE ASSESSEE HAD FURNISHED A PHOTO-C OPY OF THE DEED OF UNDERSTANDING EXECUTED AMONG THE ABHYASEES AND COPY OF BANK STATEMENT OF THE ACCOUNT HELD IN SBI, TILAK ROAD B RANCH. 5. IN COURSE OF ASSESSMENT PROCEEDINGS, THE AO ASK ED THE ASSESSEE TO FURNISH CONFIRMATION LETTERS FROM THE PERSONS WHO H AVE DEPOSITED THE MONEY INTO THE ASSESSEES BANK ACCOUNT. THE ASSESS EE SUBMITTED SOME DOCUMENTS WHERE SEVERAL PERSONS MADE CLAIMS THAT T HEY HAD DEPOSITED MONIES OUT OF THEIR OWN SAVINGS INTO THE BANK ACCOU NT OF THE ASSESSEE. THE AO HOWEVER ADDRESSED A LETTER TO THE SBI CALLIN G FOR DETAILS OF INVESTMENT. AFTER EXAMINING THE DETAILS, THE AO FO UND THAT THE DEPOSITS OF THE AMOUNT OF RS.30,000 AND RS.60,000 WERE MADE ON SINGLE DAY I.E., ABOUT 20DEPOSITS ON 30-8-2006 AND ABOUT 20 DEPOSITS AGAIN ON 20-8- 2007, THOUGH THE NAME OF THE DEPOSITORS VARIED FROM SLIP TO SLIP OF PAYING SLIPS BUT THEY WERE FILLED UP BY ONE SINGLE PERSO N. FROM THE ABOVE FACTS, 4 ITA NO.1809 AND 1810 OF 2011 SRI M. RADHAKRISHNA, TIRUPATI. THE AO CAME TO A CONCLUSION THAT IT IS NOT ACCEPTAB LE THAT ALL THE PERSONS VISITED THE BANK ON A SINGLE DAY TO MAKE THE DEPOSI TS BECAUSE THE DEPOSITORS ARE SCATTERED OVER VARIOUS PARTS IN AND AROUND TIRUPATI, NELLORE AND NEARBY PLACES OF TIRUPATI. THEREFORE, THE AO AS SUMED THE PAY SLIPS ARE PREPARED AT ONE PLACE AND THE CASH WAS BROUGHT BY THE ASSESSEE AND DEPOSITED INTO THE BANK. THE AO FURTHER OBSERVED T HAT THOUGH THE ASSESSEE HAS SUBMITTED CONFIRMATION LETTERS FROM VA RIOUS PERSONS, IT CANNOT BE HELD THAT THE DEPOSITS MADE INTO BANK AC COUNT IS NOT THE INCOME OF THE ASSESSEE. ACCORDING TO THE AO, ONLY A REGISTERED TRUST OR INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSE OR RELIGIOUS ACTIVITY IS ENTITLED TO RECEIVE VOLUNTARY CONTRIBUTION. SINCE THE ASSESSEE IS NEITHER RUNNING A TRUST NOR CHARITABLE INSTITUTION, IT HAS TO BE TREATED AS HIS INCOME. ON THE AFORESAID CONSIDERATION, THE AO ADD ED AN AMOUNT OF RS.29,90,000 FOR ASSESSMENT YEAR UNDER DISPUTE. 6. THE AO ON THE BASIS OF ENQUIRY CONDUCTED BY HIM CAME TO A CONCLUSION THAT THE ABHYASEES WHO HAD SUBMITTED THE CONFIRMATION AND THE CUSTOMERS APPEARING IN THE BOOKS OF ACCOUNT OF MG BROTHERS AUTO PVT. LIMITED. THE PERSONS MENTIONED IN THE LIST OF MEMB ERS OF RAJA YOGA SUBMITTED BY THE ASSESSEE ARE ALSO APPEARING AS SUN DRY CREDITORS IN THE BOOKS OF MG BROTHERS AUTO PVT. LIMITED. THE AMOUNT S APPEARING AGAINST THOSE PERSONS ALSO TALLIED WITH THE CONFIRMATION LE TTERS FURNISHED BY THOSE PERSONS. IT WAS FOUND BY THE AO THAT ALL THESE 160 PERSONS STATED BY THE ASSESSEE TO BE THE MEMBERS OF RAJA YOGA HAPPENED TO BE CUSTOMERS OF MG BROTHERS AND THEY WERE INTRODUCED BY SRI M. RADH A KRISHNA, THE ASSESSEE. CONSIDERING THESE FACTS, THE AO INFERRED THAT THE ASSESSEE WAS ACTING AS COMMISSION AGENT AND BROUGHT ALL THESE CU STOMERS. THE AO FOUND FROM THE STATEMENT RECORDED FROM THE ASSESSEE THAT THE ASSESSEE HAS ADMITTED OF HAVING PAID AN AMOUNT OF RS.1,12,48 ,662 FOR PURCHASING PROPERTIES. SINCE AS PER THE BANK ACCOUNTS DURING THE RELEVANT FINANCIAL YEAR THERE ARE DEPOSITS TO THE TUNE OF RS.29,90,000 . THE AO TREATED IT AS 5 ITA NO.1809 AND 1810 OF 2011 SRI M. RADHAKRISHNA, TIRUPATI. ASSESSEES INCOME FROM OTHER SOURCES AND THE BALANC E AMOUNT OF RS.82,58,662 WAS TREATAED AS UNEXPLAINED INVESTMEN T OF THE ASSESSEE AND ADDED IT U/S 69B OF THE ACT. THE ASSESSEE BEING AGGRIEVED OF THE ASSESSMENT ORDER FILED AN APPEAL BEFORE THE CIT (A) . 7. IN COURSE OF HEARING BEFORE THE CIT (A) THE AS SESSEE REITERATED HIS STAND TAKEN BEFORE THE AO AND SUBMITTED THAT THE IN VESTMENTS TOWARDS PURCHASE OF THE PROPERTIES WERE MADE BY THE ABHYASE ES AND NOT BY THE ASSESSEE THROUGH THE INDIVIDUAL CONTRIBUTIONS MADE BY THE ABHYASEES WERE DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. THE CIT (A) AFTER CONSIDERING THE CONTENTIONS HELD THAT THE ASSESSEE HAS DISCHARGED HIS DUTY BY SUBMITTING THE CONFIRMATIONS FROM THE MEMBE RS WHO HAVE CONTRIBUTED MONIES FOR COMMON PURPOSE OF MEMBERS. THE CIT (A) FURTHER HELD THAT THE AO HAS NOT MADE ANY FURTHER INVESTIGA TION TO DISPROVE THE CLAIM MADE BY THE ASSESSEE AND THE CONFIRMATION SUB MITTED BY THE ABHYASEES. THE CIT (A) ALLOWED THE APPEAL OF THE A SSESSEE BY OBSERVING IN THE FOLLOWING MANNER:- THE SUBMISSION MADE BY THE AR HAS BEEN CONSIDERED. THE OBSERVATION OF THE AO ALSO HAS BEEN VERIFIED. THE DETAILS FURNISHED BY THE AR WHICH WERE ALSO PRODUCED BEFORE THE AO HAVE BEEN EXAMINED. HAVING VERIFIED THE FACTS AND CIRCUMSTANCES OF THE CASE, IT APPEARS TO ME THAT TH E APPELLANT HAS DISCHARGED HIS DUTY BY PROVIDING CONF IRMATIONS FROM THE MEMBERS WHO HAVE CONTRIBUTED MONEY FOR PUR CHASE OF THE PROPERTY FOR THE COMMON PURPOSE OF THE MEMBE RS. THE AO HOWEVER HAS NOT MADE ANY FURTHER INVESTIGATI ONS AND HE HAS NOT DISPROVED THE CLAIMS MADE BY THE APPELLA NT AND MEMBERS. IT IS SEEN THAT THOUGH THE APPELLANT HIMS ELF HAS NOT CONTRIBUTED FOR THE PURCHASE OF SAID LAND BUT T HE ENTIRE INVESTMENT IN THE LAND IS COMING FROM THE MORE THAN 160 6 ITA NO.1809 AND 1810 OF 2011 SRI M. RADHAKRISHNA, TIRUPATI. MEMBERS WHO ARE ALSO CALLED ABHYASEES. THEREFORE, IN THESE CIRCUMSTANCES, I FIND THAT THE PROPERTY PURCHASED C ANNOT BE CALLED AS APPELLANTS PERSONAL PROPERTY ONLY BECAUS E THE PROPERTY IS IN HIS NAME ONLY TO FORM A REGISTERED S OCIETY AND TO DEVELOP THE COMMUNITY FOR THE ABHYASEES. THEREF ORE, I AM INCLINED NOT TO SUSTAIN BOTH THE ADDITIONS MADE BY THE AO AS DISCUSSED ABOVE. HENCE, ALL THE GROUNDS OF APPE AL PERTAINING TO THE ABOVE ADDITIONS ARE TREATED AS AL LOWED. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON A READING OF THE FINDING OF THE CIT (A) EXTRACTED HEREINABOVE, IT APPEARS THE FINDING OF THE CIT (A) IS BEREFT OF REASONS AND NOT A SPEAKING ONE. THE CIT (A) HAS ACCEPTED THE FACT THA T THE ASSESSEE HAD DISCHARGED HIS ONUS BY MERELY SUBMITTING THE CONFIR MATIONS FROM THE MEMBERS WHO STATED TO HAVE CONTRIBUTED THE MONEY. THE CIT (A) HAS NOT AT ALL LOOKED INTO THE ASPECTS WHICH THE AO HAS DE ALT WITH IN THE ASSESSMENT ORDER WHILE REJECTING THE ASSESSEES CLA IM. THE CIT (A) HAS NOT MENTIONED A SINGLE WORD REGARDING THE RELATIONS HIP BETWEEN M.RADHAKRISHNA AND M.G. BROTHERS WHICH THE AO HAS BROUGHT ON RECORD REFERRING TO THE BOOKS OF ACCOUNT OF M.G. BROTHERS. THE CIT (A) HAS ALSO GLOSSED OVER THE FACT THAT THERE IS NO REGISTERED T RUST OR CHARITABLE INSTITUTION. AS IT APPEARS THAT THE CIT (A) HAS MER ELY GONE BY THE ASSESSEES VERSION WHICH IS NOT SUPPORTED BY ANY VA LID PIECE OF EVIDENCE. IN OUR VIEW THE ASSESSEE HAS NOT PROPERLY DISCHARGE D ITS ONUS IN PROVING THE FACT THAT THE CONTRIBUTIONS WERE MADE BY ABHYAS EES AND THE SOURCE OF INVESTMENTS FOR PURCHASE OF THE PROPERTY WAS ALSO O UT OF THE CONTRIBUTIONS MADE BY ABHYASEES. IN VIEW OF THE AFORESAID FACTUA L POSITION, WE THINK IT PROPER TO RESTORE THE MATTER BACK TO THE FILE OF TH E CIT (A) WHO SHALL HERE THE APPEAL AFRESH AND DECIDE THE ISSUE AFTER TAKING INTO ACCOUNT ALL THE ASPECTS OF THE MATTER AS HAS BEEN DEALT BY THE AO W HILE MAKING ADDITIONS 7 ITA NO.1809 AND 1810 OF 2011 SRI M. RADHAKRISHNA, TIRUPATI. AND ALSO CONSIDERING THE EVIDENCES PRODUCED BY THE ASSESSEE. NEEDLESS TO MENTION THE CIT (A) SHALL AFFORD A REASONABLE OP PORTUNITY OF BEING HEARD TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IN ITA NO.1809 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ITA NO.1810/HYD/2011 - IT IS SEEN FROM THE ORDER OF THE CIT (A) T HAT HE HAS FOLLOWED THE ORDER PASSED BY HIM FOR THE ASS ESSMENT YEAR 2007- 08. IN VIEW OF OUR DECISION IN ITA NO.1809/HYD/201 1 FOR ASSESSMENT YEAR 2007-08 (SUPRA), THE ISSUE INVOLVED IN THIS AP PEAL IS ALSO RESTORED TO THE FILE OF THE CIT (A) FOR FRESH CONSIDERATION IN ACCORDANCE WITH LAW AS MENTIONED ABOVE I.E. IN ITA NO.1809. THE CIT (A) SH ALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE FOR THE YEAR UNDER CONSIDERATION ALSO. 10. IN THE RESULT, BOTH THE APPEALS FILED BY THE DE PARTMENT ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 19-10-2012. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 19 TH OCTOBER, 2012. COPY TO:- 1) SRI M. RADHAKRISHNA, DOOR NO. 5-5-317, SAROJINI DEVI LAYOUT, TIRUPATI. 2)ACIT, CENTRAL CIRCLE, 3 RD FLOOR, AAYAKAR BHAVAN, KT ROAD, TIRUPATI. 3) THE CIT (A)-VII, HYDERABAD. 4) THE CIT CONCERNED, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABA D. JMR* 8 ITA NO.1809 AND 1810 OF 2011 SRI M. RADHAKRISHNA, TIRUPATI.