ACIT, Central Circle, Tirupathi V. Sri K. Prabhakar Reddy, Tirupathi

ITA 1882/HYD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74753 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 04-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Unexplained investment; Gift; Search and seizure; Source of fund
• Section: 2

Judgement Text

IN THE INCOME TAX APPELATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.1899/HYD/2011 ASSESSMENT YEAR 2008-2009 K. PRABHAKAR REDDY TIRUPATI PAN AGJPR 0417P VS. ACIT, CENTRAL CIRCLE TIRUPATI (APPELLANT) (RESPONDENT) ITA.NO.1882/HYD/2011 ASSESSMENT YEAR 2008-2009 ACIT, CENTRAL CIRCLE TIRUPATI VS. K. PRABHAKAR REDDY, TIRUPATI PAN AGJPR 0417P (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. K.A. SAI PRASAD FOR REVENUE : MR. SOLGY JOSE T. KOTTARAM DATE OF HEARING : 12.03.2014 DATE OF PRONOUNCEMENT : 21.03.2014 ORDER PER B. RAMAKOTAIAH, A.M. THESE TWO CROSS-APPEALS ARE BY ASSESSEE AND REVENUE AGAINST THE ORDER OF THE CIT(A)-VII, HYDERA BAD DATED 29.08.2011. THE ISSUE IN THIS APPEAL IS WITH REFERE NCE TO THE ADDITION OF UNEXPLAINED INVESTMENT MADE BY THE ASSE SSEE AND DISALLOWANCE OF EXPENDITURE CLAIMED. 2. BRIEFLY STATED, THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED IN THE CASE OF THE ASSESSEE ON 28.11.2008. IN RESPONSE TO NOTICE ISSUED UNDER SECT ION 153C, 2 ITA.NO.1899 & 1882/HYD/2011 K. PRABHAKAR REDDY, TIRUPATI ASSESSEE FILED RETURN OF INCOME ADMITTING TOTAL INC OME OF RS.3,80,150/-.ASSESSEE IS IN THE BUSINESS OF EARNIN G COMMISSION FROM MARGADARSI CHIT FUNDS. ASSESSEE CLA IMED CERTAIN EXPENDITURE TO THE EXTENT OF RS.5,93,819/-. A.O. DISALLOWED THE ENTIRE EXPENDITURE ON THE REASON THA T NO EVIDENCE HAS BEEN FURNISHED. LD. CIT(A) GAVE PARTIA L RELIEF CONFIRMING THE DISALLOWANCE TO THE EXTENT OF RS.1,5 0,000/- AND THE BALANCE WAS DELETED. REVENUE IS AGGRIEVED ON TH IS DISALLOWANCE. 2.1. ASSESSING OFFICER ALSO EXAMINED THE INVESTMEN T MADE BY THE ASSESSEE IN PURCHASE OF IMMOVABLE PROPE RTY FROM M/S. SAI SRINIVASA HOTELS PVT. LTD. TIRUPATI. A.O. NOTED THAT ON THE BASIS OF THE AFFIDAVIT FILED ASSESSEE INVE STED AN AMOUNT OF RS.18,91,462/- AND THE SOURCES CLAIMED TO HAVE B EEN FROM THE FOLLOWING : (I) GIFT FROM FATHER RS. 2,00,000 (II) GIFT FROM WIFE RS.8,00,000 (III) CHITS RECEIVED RS.4,00,000 (IV) OWN FUNDS RS.4,91,862 TOTAL RS.18,91,862 2.2. THE A.O. ON THE REASON THAT ASSESSEE HAS SHOW N GIFT FROM FATHER AT RS. 3.6 LAKHS IN HIS CAPITAL AC COUNT AND HAS FILED CONFIRMATIONS TO AN EXTENT OF RS. 2 LAKHS ONL Y DID NOT BELIEVE THE GIFT AND MADE ADDITION OF THE ENTIRE AM OUNT OF RS. 3.6 LAKHS. A.O. FURTHER NOTED THAT ASSESSEE HAS REC EIVED GIFT OF RS. 2.4 LAKHS FROM THE WIFE WHEREAS, HE HAS ADMITTE D TO HAVE BEEN RECEIVED RS. 8 LAKHS. THEREFORE, A.O. DISBELIE VED THE LOAN STATED TO HAVE BEEN RECEIVED FROM WIFE AT RS. 2.4 L AKHS AND FURTHER ADDED THE DIFFERENCE OF RS. 5.6 LAKHS, THUS , MAKING 3 ITA.NO.1899 & 1882/HYD/2011 K. PRABHAKAR REDDY, TIRUPATI TOTAL ADDITION OF RS. 8 LAKHS. LIKEWISE, EVEN THOUG H ASSESSEE CLAIMED TO HAVE STATED RS. 4 LAKHS RECEIVED FROM TH E CHITS, A.O. MADE AN ADDITION OF RS.4,20,000/- STATED TO HAVE BE EN THE ACTUAL AMOUNT RECEIVED FROM TWO CHITS. FURTHER, ASS ESSEE HAS SHOWN LOANS FROM SOME KNOWN PERSONS TO AN EXTENT OF RS.3,40,000/- AND THE SAME WERE ALSO DISALLOWED DIS BELIEVING THE CONFIRMATIONS LETTERS FILED. THUS, ON VERIFYING THE INVESTMENT OF RS.18,91,462/-, THERE WAS AN ADDITION OF RS. 19.2 LAKHS MADE BY THE A.O. IN ADDITION TO THE ABOV E, ASSESSEE STATED TO HAVE CLAIMED FUNDS AVAILABLE AT RS.4,91,4 62/-. THE A.O. NOTICED THAT ONLY CASH IN BANK BALANCE AVAILAB LE WAS AT RS.95,113/-. THEREFORE, THE BALANCE AMOUNT OF RS.3, 95,887/- WAS ALSO BROUGHT TO TAX AS INCOME FROM UNEXPLAINED SOURCE. THUS, A.O. MADE A TOTAL ADDITION OF RS.23,15,887/- IN THE COURSE OF ASSESSMENT ON THIS ISSUE. 3. THE LD. CIT(A) CONSIDERING THE EXPLANATION GIVE N BY THE ASSESSEE HOWEVER, GAVE PARTIAL RELIEF TO THE EXTENT OF LOANS RECEIVED BY THE ASSESSEE. WITH REFERENCE TO A DDITION OF RS.3,95,887/-, HE HAS ASKED THE A.O. TO VERIFY AND DECIDE AFTER GIVING OPPORTUNITY TO THE ASSESSEE. HE HAS MORE OR LESS CONFIRMED THE AMOUNTS. THEREFORE, ASSESSEE IS AGGRI EVED ON THE ADDITIONS CONFIRMED AND REVENUE IS AGGRIEVED ON THE AMOUNTS DELETED AND HAS RAISED THE GROUNDS ACCORDINGLY. 4. ON CONSIDERING THE RIVAL CONTENTIONS OF THE LD. COUNSEL AND LD. D.R. AND PERUSING THE PAPER BOOK FI LED IN THIS REGARD FROM PAGES 1 TO 20, WE ARE OF THE OPINION TH AT BOTH THE AUTHORITIES HAVE CONSIDERED THE ISSUE WITHOUT EXAMI NING THE FACTS. AS PER THE DOCUMENTS PLACED ON RECORD, ASSES SEE ALONG WITH FOUR OTHERS PURCHASED A SITE FROM M/S. SRI SAI HOTELS PVT. LTD. FOR A CONSIDERATION OF RS.58,57,500/-. INCLUDI NG THE 4 ITA.NO.1899 & 1882/HYD/2011 K. PRABHAKAR REDDY, TIRUPATI REGISTRATION CHARGES, EACH SHARE OF 5 PERSONS COMES TO AROUND RS.12 LAKHS. AS AGAINST THIS AMOUNT, A.O. STATED TO BE ON THE AFFIDAVIT FILED BY ASSESSEE TOOK INTO CONSIDERATI ON THE INVESTMENT IN PURCHASE OF THE SITE AT RS.18,91,462/ -. IT WAS THE SUBMISSION OF THE ASSESSEE THAT THERE IS NO SUC H AFFIDAVIT FILED AND THE ENTIRE AMOUNT WAS CONSIDERED WRONGLY BY THE A.O. FURTHER, AS SEEN FROM THE RECORD ALSO, ASSESSE E TOOK CREDIT FOR THE GIFT AMOUNT OF RS. 2 LAKHS FROM THE FATHER WHICH WAS CONFIRMED WHEREAS, ON THE BASIS OF THE AMOUNT M ENTIONED IN THE BALANCE SHEET, A.O. BROUGHT TO TAX AN AMOUNT OF RS. 3.6 LAKHS. FURTHER, AMOUNT RECEIVED FROM THE WIFE WAS O NLY RS.2.4 LAKHS AS PER THE P & L ACCOUNT WHEREAS, A.O. CONSID ERED AN AMOUNT OF RS. 8 LAKHS. EVEN THE CHIT AMOUNTS AND OT HER AMOUNTS RECEIVED ARE NOT EXAMINED PROPERLY AND AS A GAINST THE SO-CALLED INVESTMENT OF RS.18,91,462/- A.O. BRO UGHT TO TAX A SUM OF RS.23,15,887/-, BY MAKING ADDITIONS MORE T HAN THE AMOUNTS STATED TO HAVE BEEN CLAIMED AS SOURCE. BOTH REVENUE AND ASSESSEE ARE AGGRIEVED ON THE VARIOUS CONFIRMAT IONS/ DELETIONS BY THE CIT(A). IN THE INTEREST OF JUSTICE , WE RESTORE THE ENTIRE ISSUE TO THE FILE OF THE A.O. TO EXAMINE AFR ESH THE ACTUAL INVESTMENT MADE BY THE ASSESSEE, SOURCE OF FUNDS AN D DECIDE ACCORDINGLY. ASSESSEE SHOULD BE GIVEN DUE OPPORTUNI TY TO SUBSTANTIATE THE INVESTMENT IN THE PROPERTY. 5. ONE MORE ISSUE IN THE REVENUE GROUNDS IS THE DELETION MADE BY THE CIT(A), OUT OF THE EXPENDITURE DISALLOWED. AS BRIEFLY STATED ABOVE, ASSESSEE HAS CLAIMED CERTA IN EXPENDITURE AS AGENT OF CHIT FUND COMPANY AND WITHO UT ANY OPPORTUNITY, A.O. DISALLOWED THE ENTIRE AMOUNT OF RS.5,93,829/- AND OUT OF THIS AMOUNT, LD. CIT(A) PA RTLY CONFIRMED THE AMOUNT TO THE EXTENT OF RS.1,50,000/- . 5 ITA.NO.1899 & 1882/HYD/2011 K. PRABHAKAR REDDY, TIRUPATI 6. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE DO NOT SEE ANY REASON TO DIFFER FROM THE DISALLOWANCE SO M ADE BY THE CIT(A). A.O. HAS NO BASIS TO DISALLOW THE ENTIRE EX PENDITURE OUT OF THE COMMISSION EARNED. CONSIDERING THE RECEIPTS ON THE ISSUE AND THE EXPENDITURE CLAIMED, THE DISALLOWANCE AS CONFIRMED BY THE CIT(A) IS REASONABLE. WE DO NOT SE E ANY REASON TO INTERFERE WITH THE ORDER. ACCORDINGLY, TH E REVENUE GROUND IS DISMISSED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES AND REVENUE APPEAL IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 1.03.2014. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACOUNTANT MEMBER HYDERABAD, DATED 21 ST MARCH, 2014 VBP/- COPY TO : 1. MR. K. PRABHAKAR REDDY, 19-4-123/B2/306, MANOHAR RESIDENCY, AIR BYEPASS ROAD, TIRUPATI. 2. ACIT, CENTRAL CIRCLE, TIRUPATI. 3. CIT(A)-VII, HYDERABAD. 4. CIT, (CENTRAL), HYDERABAD 5. D.R. ITAT, B BENCH, HYDERABAD.