ACIT, Circle-10(1), Hyderabad V. Sri G.V.N. Sreedhar Raju, Secunderabad

ITA 1873/HYD/2011

• Counselvise Citation: 187322514 RSA 2011
• Duration Of Justice: 2 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 03-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Document seized; Additional evidence; Documents seized
• Section: 143(3); 142(1); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 1870/HYD/2011 A.Y. 2002-03 I.T.A. NO. 1871/HYD/2011 A.Y. 2003-04 I.T.A. NO. 1872/HYD/2011 A.Y. 2004-05 I.T.A. NO. 1873/HYD/2011 A.Y. 2005-06 THE ASST. CIT CIRCLE-10(1) HYDERABAD VS. SRI G.V.N. SREEDHAR RAJU SECUNDERABAD PAN: ACWPG4559Q APPELLANT RESPONDENT APPELLANT BY: SHRI RAJAT MITRA RESPONDENT BY: SHRI P. MURALI MOHAN RAO DATE OF HEARING: 13 . 1 0.201 4 DATE OF PRONOUNCEMENT: 30.10.2014 O R D E R PER ASHA VIJAYARAGHAVAN, JM: THE APPEALS BY THE REVENUE ARE DIRECTED AGAINST TH E COMMON ORDER OF THE CIT(A)-VI, HYDERABAD DATED 25.0 8.2011 FOR THE ASSESSMENT YEARS 2002-03 TO 2005-06. SINCE THE SE APPEALS INVOLVE AND BELONG TO SAME ASSESSEE, THESE APPEALS ARE CLUBBED TOGETHER, HEARD TOGETHER AND DISPOSED OF BY THIS CO MMON ORDER. 2 BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZU RE OPERATION U/S. 132 OF INCOME-TAX ACT, 1961 WAS COND UCTED IN THE CASE OF SUJANA GROUP OF INDUSTRIES DURING THE F INANCIAL YEAR 2004-05. A NOTICE U/S. 153A WAS ISSUED TO THE ASSE SSEE CALLING FOR RETURNS OF INCOME FOR A.YS. 1999-80 TO 2004-05. ASSESSMENT ORDERS WERE PASSED U/S. 143(3) R.W.S. 153A OF THE A CT ON 28.12.2006 BY THE ACIT, CENTRAL CIRCLE-5, HYDERABAD . THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE WAS OPE RATING AN ACCOUNT IN THE NAME OF M/S. SHASHI ENTERPRISES IN I NDUSIND I.T .A. NOS. 1870-1873/HYD/2011 SRI G.V.N. SREEDHAR RAJU ======================== 2 BANK BEARING A/C. NO. 209617-050 IN WHICH THE FOLLO WING DEPOSITS HAVE BEEN MADE: A.Y. CASH DEPOSITS (RS.) 2002 - 03 68,31,670 2003 - 04 66,78,035 2005 - 06 22,32,160 3 THE ASSESSEE HAD STATED THAT THE BANK ACCOUNT WAS OPERATED AT THE BEHEST OF THE SUJANA MANAGEMENT OF WHICH HE WAS A FORMER EMPLOYEE. THE ASSESSING OFFICER STATE D IN THE ASSESSMENT ORDER THAT THE CASH DEPOSITS HAVE BEEN C ONSIDERED IN THE INDIVIDUAL ASSESSMENT OF THE CHAIRMAN OF THE SUJANA GROUP SRI Y. SATHYANARAYANA CHOWDHURY. HOWEVER, TH E ASSESSING OFFICER BROUGHT THESE AMOUNTS TO TAX IN A SSESSEE'S HANDS ON PROTECTIVE BASIS. THE ASSESSING OFFICER A LSO NOTED THAT THE ASSESSEE HAD BEEN PAID CASH FROM CERTAIN OTHER ACCOUNTS MAINTAINED WITH INDUSIND BANK AS PER THE FOLLOWING DETAILS: A.Y. NAME OF THE ACCOUNT INCOME ASSESSED AS UNEXPLAINED INCOME 2003 - 04 VELANKINI STEELS 11,40,000 2003 - 04 BARHMAN INDL. CORP. 15,00,000 2004 - 05 STAR STEELS 29,11,000 2005 - 06 SHANMUGAM ENTERPRISES 19,00,000 2005 - 06 RM ENTERPRISES 07,00,000 4 THE ASSESSEE ADMITTED THAT HE HAD RECEIVED THE ABOV E CASH AND CLAIMED THAT THE TRANSACTIONS WERE ON BEHA LF OF SUJANA MANAGEMENT. THE ASSESSING OFFICER BROUGHT TO TAX T HESE RECEIPTS IN THE HANDS OF THE ASSESSEE AS HE COULD N OT SUBMIT ANY EVIDENCE IN THIS BEHALF. THE ASSESSING OFFICER ALSO HELD THAT ON THE BASIS OF FIGURES MENTIONED IN ANNEXURE A/GSR /1, THE ASSESSEE WAS RECEIVING RS. 8,000 PER MONTH AS THE I NTEREST ON VARIOUS LOANS ADVANCED BY HIM. SINCE THE ASSESSEE FAILED TO I.T .A. NOS. 1870-1873/HYD/2011 SRI G.V.N. SREEDHAR RAJU ======================== 3 FURNISH ANY INFORMATION FOR THE QUERIES RAISED, THE ASSESSING OFFICER EXTRAPOLATED THE SUM OF RS. 8000 FOR THE EN TIRE YEAR AND BROUGHT THE FOLLOWING AMOUNTS TO TAX: A.Y. INCOME ASSESSED AS UNEXPLAINED INTEREST INCOME 2003 - 04 80,000 2004 - 05 96,000 2005 - 06 96,000 5 AGGRIEVED, THE ASSESSEE PREFERRED APPEAL TO THE CIT (A). THE AR OF THE ASSESSEE FILED COPY OF LETTER DATED 2 6.12.2006 FILED BY SRI P.V. RAMANA REDDY WITH THE ACIT, CENTRAL CIR CLE-5, HYDERABAD, AS ADDITIONAL EVIDENCE. THE ASSESSING O FFICER STATED THAT THE RELEVANT LETTER HAD ALREADY BEEN FILED BEF ORE THE THEN ASSESSING OFFICER AND SHOULD NOT BE CONSIDERED AS A DDITIONAL EVIDENCE. THE ASSESSING OFFICER DID NOT COMMENT ON THE CONTENTS OF THE LETTER OF SRI P.V. RAMANA REDDY AND THE IMPLICATION OF THE LETTER IN THE ASSESSEE'S APPEAL. 6 THE CIT(A), HOWEVER, TOOK COGNIZANCE OF THE LETTER FILED BY SRI P.V. RAMANA REDDY WHICH IS AS FOLLOWS: 'THE AR OF THE ASSESSEE, SRI P. MURALI MOHAN APPEARED ON 26.12.2006 AND STATED THAT THE ASSESSEE IS ACCEPTING THAT HE HAS DONE CASH TRANSACTIONS IN 27 SUJANA EMPLOYEES ACCOUNTS. HE ALSO ADMITTED THAT THE CASH SHORTAGE WAS MET BY THE ASSESSEE FROM HIS SOURCES, WHICH IS NOT OFFERED FOR TAXATION. AFTER CONSULTING THE ASSESSEE, HE ADMITT ED RS. 5,96,767/- FOR THE ASSESSMENT YEAR 2001-02 (PEAK NEGATIVE CASH BALANCE AS ON 02.03.2001), RS. 1,09,80,623 FOR THE ASSESSMENT YEAR 2003-04 (PEAK NEGATIVE CASH BALANCE AS ON 27.06.2002) AND RS. 74,66,662/- FOR THE ASSESSMENT YEAR 2003-04 (PEAK NEGATIVE CASH BALANCE AS ON 07.10.2022). HENCE, THE SAME IS ADDED BACK TO THE INCOME.' I.T .A. NOS. 1870-1873/HYD/2011 SRI G.V.N. SREEDHAR RAJU ======================== 4 7 THE CIT(A) FURTHER OBSERVED THAT THE LIST OF 27 SUJ ANA EMPLOYEES ACCOUNTS REFERRED TO ABOVE IN THE ASSESSM ENT ORDER WAS ENCLOSED TO THE LETTER DATED 26.12.2006 FILED B Y SRI P.V. RAMANA REDDY BEFORE HIS ASSESSING OFFICER. THE CIT (A) OBSERVED THAT THE CREDITS IN THE ACCOUNT OF M/S. SH ASHI ENTERPRISES AS WELL AS THE OTHER FIVE ENTITIES LIST ED IN PARA 4 ABOVE ARE INCLUDED IN THE DISCLOSURE MADE BY SRI P. V. RAMANA REDDY VIDE HIS LETTER DATED 26.12.2006. IN VIEW OF THE FACT THE DEPOSITS IN THESE BANK ACCOUNTS HAVE ALREADY BEEN A CCEPTED BY SRI P.V. RAMANA REDDY AND ASSESSED ACCORDINGLY BY H IS ASSESSING OFFICER, THE ADDITION MADE TOWARDS THE DE POSITS IN THE BANK ACCOUNTS OF M/S. SHASHI ENTERPRISES AND THE CA SH RECEIPTS FROM THE OTHER FIVE ACCOUNTS WAS DELETED BY THE CIT (A). 8 WITH RESPECT TO THE ADDITION OF RS. 8,000 PER MONTH ASSESSED AS UNDISCLOSED INTEREST INCOME, THE AR FIL ED COPY OF ANNEXURE A/GSR/1 RELIED ON BY THE ASSESSING OFFICER IN MAKING THE ADDITION. THE ASSESSING OFFICER INFERRED FROM THE SEIZED DOCUMENTS THAT THE ASSESSEE HAD MADE ADVANCES TO VA RIOUS PERSONS ON WHICH INTEREST OF RS. 8000 PER MONTH WAS BEING CHARGED. HOWEVER, THE CIT(A) HELD THAT THERE IS NO ADMITTED ASSET IN THE FORM OF ADVANCES TO THESE PERSONS BY T HE ASSESSEE NOR ANY ADDITION BEING MADE ON THIS COUNT BY THE AS SESSING OFFICER. THEREFORE, THE CIT(A) HELD THAT IN THE AB SENCE OF ANY EVIDENCE, THE ALLEGED INTEREST INCOME HAS NO BASIS AND DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS COUNT. AGGRIEVED THE DEPARTMENT IS IN APPEAL BEFORE US. 9 FOR THE A.YS. 2002-03 AND 2004-05 THE COMMON GROUND S RAISED BY THE REVENUE ARE AS FOLLOWS: 1. THE CIT(A) ERRED IN FACTS OF THE CASE. I.T .A. NOS. 1870-1873/HYD/2011 SRI G.V.N. SREEDHAR RAJU ======================== 5 2. THE CIT(A) ERRED IN DELETING THE ADDITION MADE TOWARDS CASH RECEIVED FROM OTHER ACCOUNTS OF INDUSLND BANK AND OUGHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSING OFFICER HAS RIGHTLY HELD TH AT THE CASH RECEIPTS BELONGS TO THE ASSESSEE IN THE ABSENCE OF PROPER EVIDENCE PRODUCED BY ASSESSEE. 3. THE CIT(A) OUGHT TO HAVE EXAMINED CASH FLOW STATEMENT FURNISHED BY SRI P.V. RAMANA REDDY. 4. THE CIT(A) OUGHT NOT TO HAVE RELIED ON THE LETTER FILED BY SHRI P.V. RAMANA REDDY, STATING THA T THE ADDITIONS IN THE HANDS OF THE ASSESSEE BELONG T O HIM. 5. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT NOWHERE IT WAS MENTIONED THAT THE SAID DEPOSITS/RECEIPTS ASSESSED IN HANDS OF THE ASSESSEE ARE INCLUDED IN THE ORDER PASSED IN THE CASE OF SRI P.V. RAMANA REDDY. 6. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT NO FRESH EVIDENCE HAS BEEN PROVIDED BEFORE HER , AS THE LETTER OF SHRI P.V. RAMANA REDDY HAS ALREADY BEEN CONSIDERED BY THE ASSESSING OFFICER BEFORE FINALIZING THE ASSESSMENT PROCEEDINGS. 7. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT IN THE ABSENCE OF PROPER EXPLANATION, THE ASSESSING OFFICER HAS RIGHTLY ASSESSED INTEREST RECEIVED ON THE VARIOUS LOANS AND ADVANCES BY THE ASSESSEE. 8. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 10 FOR THE A.YS. 2003-04 AND 2005-06, ONE MORE GROUND OVER AND ABOVE THE GROUNDS RAISED ABOVE HAS BEEN FI LED AS GROUND NO. 9 (AS GIVEN BELOW) AND OTHERWISE THE OTH ER GROUNDS ARE COMMON. 9. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT IN THE ABSENCE OF PROPER EXPLANATION, THE ASSESSING OFFICER HAS RIGHTLY ASSESSED INTEREST RECEIVED ON THIS VARIOUS LOANS AND ADVANCES BY THE ASSESSEE. I.T .A. NOS. 1870-1873/HYD/2011 SRI G.V.N. SREEDHAR RAJU ======================== 6 11 WE HAVE HEARD BOTH THE PARTIES. 12 THE LEARNED DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. 13 THE LEARNED COUNSEL FOR THE ASSESSEE POINTED TO THE PAPER BOOK WHEREIN COPY OF THE LETTER FILED BY SRI P.V. R AMANA REDDY WITH THE ACIT, CENTRAL CIRCLE-5 ALONG WITH DETAILS HAS BEEN ENCLOSED. THE LETTER READS AS FOLLOWS: 'SUB: SUBMISSION OF INFORMATION U/S. 142(1) OF THE IT ACT IN RESPECT OF SRI Y.S. CHOWDARY FURTHER TO THE INFORMATION SUBMITTED AND THE EXPLANATIONS GIVEN, I WISH TO INFORM YOU THAT THE CASH SHORTAGE IN THE 27 PROPRIETARY CONCERNS AMOUNTING TO RS. 1.91 CRORES MAY KINDLY BE ADDED TO MY PERSONAL ACCOUNT.' 14 IT WAS, THEREFORE, SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE SRI MURALI MOHAN RAO THAT THE ENTIRE CASH CREDITS HAVE BEEN INCLUDED IN THE DISCLOSURE MADE BY SRI P.V. RA MANA REDDY AND ASSED IN THE HANDS OF SRI P.V. RAMANA REDDY. W E FIND THAT THE ENTIRE CASH CREDITS HAVE BEEN INCLUDED IN THE D ISCLOSURE MADE BY SRI P.V. RAMANA REDDY AND HAS ALSO BEEN ASS ESSED IN HIS HANDS. WE FIND NO INFIRMITY IN THE ORDER OF TH E CIT(A) AND NO INTERFERENCE IS CALLED FOR AND UPHOLD THE SAME O N THIS COUNT. THE CIT(A) WAS RIGHT AS THE DEPOSITS IN THESE BANK ACCOUNTS HAVE ALREADY BEEN ACCEPTED BY SRI P.V. RAMANA REDDY AND ASSESSED ACCORDINGLY BY THE ASSESSING OFFICER. THE ADDITION MADE BY THE ASSESSING OFFICER IN THE HANDS OF THE A SSESSEE TOWARDS DEPOSITS IN THE BANK ACCOUNTS OF M/S. SHASH I ENTERPRISES AND THE CASH RECEIPTS FROM THE OTHER FI VE ACCOUNTS IS TO BE DELETED. ACCORDINGLY, THE GROUNDS OF THE REVENUE ON THIS ISSUE IN ALL THE APPEALS ARE DISMISSED. I.T .A. NOS. 1870-1873/HYD/2011 SRI G.V.N. SREEDHAR RAJU ======================== 7 15 WITH RESPECT TO THE OTHER ISSUE RAISED AS GROUND NO . 9 IN A.YS. 2003-04 AND 2005-06 ASSESSMENT OF INTEREST RE CEIVED ON THE VARIOUS LOANS AND ADVANCES BY THE ASSESSEE, WE AGREE WITH THE VIEW OF THE CIT(A) THAT AS NOTHING HAS BEEN BRO UGHT OUT BY THE DEPARTMENT TO PROVE THAT ADVANCES HAVE BEEN GIV EN TO VARIOUS PERSONS BY THE ASSESSEE FOR THE ALLEGED INT EREST INCOME TO BE CHARGEABLE. HENCE WE CONFIRM THE ACTION OF T HE CIT(A) WITH REGARD TO THE ADDITION OF RS. 8000 PER MONTH A SSESSED AS UNDISCLOSED INTEREST INCOME OF THE ASSESSEE. THE G ROUNDS RAISED ON THIS ISSUE ARE DISMISSED. 16 IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER, 2014. SD/ - (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD, DATED THE 30 TH OCTOBER, 2014 TPRAO COPY FORWARDED TO: 1 . THE ASST. CIT, CIRCLE - 10(1), ROOM NO. 515, A.C. GUARDS, I.T. TOWERS, HYDERABAD. 2 . SRI G.V.N. SREEDHAR RAJU, 10 - 3 - 112/P, SRI BALAJI NIVAS, ADDAGUTTA, EAST MARREDPALLY, SECUNDERABAD. 3. THE CIT(A) - V I , HYDERABAD. 4 . THE CIT - V , HYDERABAD. 5 . THE DR B BENCH, ITAT, HYDERABAD