K Raghava Reddy, Hyderabad V. ADIT (Inv.), Unit -I(2), Hyderabad, Hyderabad

ITA 1899/HYD/2014

• Counselvise Citation: 189922514 RSA 2014
• Duration Of Justice: 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-08-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 19-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MOHARANA
• Assessee Lawyers: M V JOSHI
• Keywords: Unexplained investment; Income from undisclosed sources; Search and seizure; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B'(SMC), HYDERABAD BEFORE THE HONBLE VICE PRESIDENT, SHRI D.MANMOH AN ITA NO.1898/HYD/2014 : ASST. YEAR 2004-05 ITA NO.1899/HYD/2014 : ASST. YEAR 2005-06 ITA NO.1900/HYD/2014 : ASST. YEAR 2006-07 ITA NO.1901/HYD/2014 : ASST. YEAR 2007-08 SHRI K.RAGHAVA REDDY, HYDERABAD ( PAN - AEMPL 0325 E) V/S. ASST. DIRECTOR OF INCOME - TAX (INVESTIGATION), UNIT 1(2), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.V.JOSHI RESPONDENT BY : SHRI MOHARANA DATE OF HEARING 28.8.2015 DATE OF PRONOUNCEMENT 21.10.2015 O R D E R THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAIN ST SIMILAR BUT SEPARATE ORDERS PASSED BY THE COMMISSIONER OF INCOM E-TAX(APPEALS) VI, HYDERABAD AND THEY PERTAIN TO ASSESSMENT YEARS 2004 -05 TO 2007-08. SINCE THE ONLY ISSUE INVOLVED IN THE FIRST THREE YEARS AN D THE MAJOR ISSUE INVOLVED IN THE ASSESSMENT YEAR 2007-08, BEING IDENTICAL, I PROCEED TO DISPOSE OF THESE APPEALS BY A COMBINED ORDER FOR THE SAKE OF C ONVENIENCE. 2. THESE APPEALS WERE ORIGINALLY FIXED FOR HEARING ON 7.4.2015 AND AT THE REQUEST OF THE ASSESSEE, THEY WERE ADJOURNED TO 4.8.2015, AND THEREAFTER POSTED FOR HEARING ON 28.8.2015. ON BEH ALF OF THE ASSESSEES COUNSEL, SHRI M.V.JOSHI, CHARTERED ACCOUNTANT APPEA RED AND SOUGHT ADJOURNMENT ON THE GROUND THAT LEARNED COUNSEL IS O UT OF INDIA. IN ORDER TO GO ABROAD, ONE HAS TO SEEK VISA AND FOLLOW OTHER FO RMALITIES, WHICH ARE BEING ORDINARILY DONE AT LEAST THREE WEEKS IN ADVANCE, AN D THUS, THE COUNSEL IS WELL AWARE THAT HE WOULD BE OUT OF INDIA, IN WHICH EVENT , IT IS HIS DUTY TO FILE AN ITA NO.1898/HYD/2014 & 3 ORS SHRI K.RAGHAVA REDDY, HYDERABAD 2 APPLICATION SEEKING ADJOURNMENT, EXPLAINING THE URG ENCY OF GOING ABROAD, AS OTHERWISE, ADJOURNMENT IS NOT A MATTER OF RIGHT. I N FACT, HAD THE ASSESSEE SOUGHT ADJOURNMENT WELL IN ADVANCE, SOME OTHER CASE S WOULD HAVE BEEN ACCOMMODATED ON THAT DATE. THE PRACTICE OF ASSUMING THAT THE CASES WOULD BE AUTOMATICALLY ADJOURNED, AND SEEKING ADJOURNMENT ON THE DAY WHEN THE CASES ARE LISTED FOR HEARING, CANNOT BE ENCOURAGED. UNDER THESE CIRCUMSTANCES, I REFUSED TO GRANT ADJOURNMENT AND R EQUESTED, SHRI JOSHI, CHARTERED ACCOUNTANT (WHOSE NAME IS MENTIONED IN TH E POWER OF ATTORNEY, BUT HE HAS NOT APPENDED HIS SIGNATURE) TO ARGUE T HE MATTER, BUT HE MERELY PLEADED THAT HE IS NOT AWARE OF THE FACTS AND HE HA S TAKEN IT FOR GRANTED THAT ADJOURNMENT WOULD BE AUTOMATIC. THE BENCH HAVING REFUSED TO GRANT ADJOURNMENT, REQUESTED THE LEARNED DEPARTMENTAL RE PRESENTATIVE TO BRIEFLY EXPLAIN THE FACTS. HE MERELY READ OUT THE ORDER OF THE CIT(A) AS WELL AS THE GROUNDS OF APPEAL AND SUBMITTED THAT THE MATTER WAS MERELY SET ASIDE AND THUS NO PREJUDICE IS CAUSED TO THE ASSESSEE. 3. PARTIES ARE DIRECTED TO FILE WRITTEN SUBMISSIO NS. LEARNED CIT-DR, SHRI MOHARANA HAS NOT FILED WRITTEN SUBMISSIONS, BU T AFTER LONG LAPSE OF TIME, ANOTHER CIT-DR SOUGHT TO FILE WRITTEN SUBMISSIONS, WHICH ARE NOT TAKEN ON RECORD, SINCE SHE HAS NOT REPRESENTED THE MATTER. 4. SIMILARLY, THE LEARNED COUNSEL FOR THE ASSESSE E FILED THE WRITTEN SUBMISSIONS, WHEREIN IT IS MERELY CONTENDED THAT IN THE LIGHT OF THE SPECIAL BENCH(MUMBAI) DECISION OF THE TRIBUNAL IN ALL CARGO GLOBAL LOGISTICS LTD. (137 ITD 287), WHEN THERE IS NO INCRIMINATING MATER IAL FOUND DURING THE COURSE OF SEARCH, NO ASSESSMENT CAN BE MADE UNDER S.143(3) READ WITH S.153A OF THE ACT. IN HIS OPINION, THE MATTER HAVI NG BEEN SET ASIDE PURELY ON THE GROUND THAT THE ASSESSING OFFICER MADE THE A DDITIONS ON THE BASIS OF ASSUMPTIONS, IT IMPLIES THAT THERE IS NO INCRIMINAT ING MATTERIAL FOUND AT THE TIME OF SEARCH. ITA NO.1898/HYD/2014 & 3 ORS SHRI K.RAGHAVA REDDY, HYDERABAD 3 5. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES. THE FACTS CONSIDERED FOR THE ASSESSMENT YEAR 2004-0 5 ARE AS UNDER- 5.1 THE ASSESSEE IS A DIRECTOR OF M/S. MIDWEST GRA NITES PVT. LTD. (MGPL). SEARCH AND SEIZURE ACTION HAS TAKEN PLACE IN THE BUSINESS PREMISES OF M/S. MIDWEST GRANITES PVT. LTD. AS WELL AS THE R ESIDENTIAL PREMISES OF THE ASSESSEE. CONSEQUENT THERETO, NOTICE WAS ISSUED UND ER S.153A. IT MAY BE NOTICED HAT THE ASSESSEE PURCHASED LAND SITUATED AT SURVEY NO.15/2/E1, K.SAMUDRAM, URPANAPALLI, NARSAMPET, WARANGAL FOR A CONSIDERATION OF RS.50,000 AND INCLUDING STAMP DUTY AND REGISTRATION CHARGES, THE TOTAL SUM SPENT WORKED OUT TO RS.57,750, WHICH WAS NOT REFLEC TED IN THE PAYMENT SIDE OF THE RECEIPTS AND PAYMENTS ACCOUNT FURNISHED BY T HE ASSESSEE. ACCORDING TO THE ASSESSING OFFICER, THE AMOUNT WAS ROUTED THR OUGH THE UNACCOUNTED INCOME OF THE ASSESSEE, AND THEREFORE, IT WAS ADDED AS UNEXPLAINED INVESTMENT. 5.2. ON THE OTHER HAND, THE CASE OF THE ASSESSEE B EFORE THE CIT(A) IS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER HAS NEITHER RAISED ANY PROPOSAL TO MAKE THE ADDITION, N OR CALLED FOR ANY EXPLANATION IN THIS REGARD. IT WAS ALSO CONTENDED THAT IT WAS REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND ALL THE ABOVE MENTIONED EXPENDITURE HAS BEEN MET BY THE COMPANY, I.E. M/S. MIDWEST GRAN ITES PVT. LTD. OF WHICH THE ASSESSEE IS A DIRECTOR IN THE LIGHT OF THE NEW ARGUMENT URGED BEFORE THE CIT(A), THE MATTER WAS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY THE FACT AND IF THE CLAIM OF TH E ASSESSEE IS FOUND TO BE TRUE, NO ADDITION CAN BE MADE, AS OBSERVED BY THE L EARNED CIT(A). 6 SIMILARLY, FOR THE ASSESSMENT YEAR 2005-06, THE ASSESSING OFFICER NOTICED INVESTMENT OF RS.89,300 TOWARDS PUR CHASE OF LAND SITUATED IN K.SAMUDRAM, URPANAPALLI, NARSAMPET, WARANGAL, WHICH HAS TO BE TREATED AS ITA NO.1898/HYD/2014 & 3 ORS SHRI K.RAGHAVA REDDY, HYDERABAD 4 UNEXPLAINED INVESTMENT, WHEREAS THE LEARNED CIT(A), HAVING NOTICED THAT THE ASSESSING OFFICER HAS NOT GIVEN AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, SET ASIDE THE MATTER TO THE FILE OF THE A SSESSING OFFICER FOR VERIFICATION OF THE SPECIFIC CONTENTION OF THE ASS ESSEE THAT THE PAYMENT WAS MADE THROUGH THE BOOKS OF THE COMPANY, AND IF IT I S FOUND TO BE TRUE, NO ADDITION CAN BE MADE. 7. SIMILARLY, FOR THE ASSESSMENT YEAR 2006-07, TH E ASSESSEE PURCHASED LANDS IN THIGALAVENU, GADUR PARISHAD, WAR ANGAL FOR A CONSIDERATION OF RS.2,47,630 AND RS.1,33,900 RESPEC TIVELY, WHEREAS IN THE RECEIPTS AND PAYMENTS ACCOUNT, AN AMOUNT OF RS.2,47 ,630 AND RS,44,425 ONLY WERE REFLECTED AND THE BALANCE OF RS.89,475 WA S NOT REFLECTED, AND THE SAME WAS ADDED AS UNEXPLAINED INVESTMENT. BEFORE TH E LEARNED CIT(A), LEARNED COUNSEL SUBMITTED THAT THE PAYMENTS WERE MA DE BY THE COMPANY, I.E. M/S. MIDWEST GRANITES PVT. LTD. ON BEHALF OF T HE ASSESSEE, WHO IS ITS DIRECTOR. FOR VERIFICATION OF THE SAID CONTENTION OF THE ASSESSEE, THE MATTER WAS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. 8. IN THE APPEAL FOR ASSESSMENT YEAR 2007-08, THE FOLLOWING TWO GROUNDS WERE RAISED- 1. . 2. THE LD. CIT(A)-IV, HAVING HELD THAT THERE IS NO B ASIS FOR MAKING THE ADDITION OF RS.2,72,160/- AND THAT THE ADDITION MADE ONLY ON THE BASIS OF ASSUMPTION IN A SEARCH RELATED ASSESSMENT DOES NOT SURVIVE, HAS ERRED IN DIRECTING THE ASSESSING OFFICER FOR VERIFICATION OF SPECIFIC PAYMENT THROUGH THE BOOKS OF THE COMPANY. 3. THE LD. CIT(A) IV, HAVING HELD THAT THE AMOUNT O F RS.2,116/- HAS ALREADY BEEN TAXED, ERRED IN DIRECTIN G THE ASSESSING OFFICER TO VERIFY FURTHER IN THIS REGARD. . 4. . ITA NO.1898/HYD/2014 & 3 ORS SHRI K.RAGHAVA REDDY, HYDERABAD 5 8.1 FACTS CONCERNING THE FIRST ISSUE ARE IDENTICA L TO THE FACTS OF THE EARLIER YEARS, I.E. ASSESSEE PURCHASED LAND SITUATE D AT URGPANAPALLI, THIGALVENI AND K.SAMUDRAM VILLAGE FOR A CONSIDERATI ON OF RS.2,72,160 (INCLUDING REGISTRATION CHARGES ETC.), WHICH WERE N OT REFLECTED IN THE RECEIPTS AND PAYMENTS ACCOUNT, AND HENCE THE ASSESSING OFFIC ER PRESUMED THAT THESE INVESTMENTS WERE MADE FROM UNEXPLAINED SOURCES. HE RE ALSO, THE ASSESSEE CONTENDED BEFORE THE CIT(A) THAT THE SAID AMOUNTS W ERE PAID BY THE COMPANY, M/S. MIDWEST GRANITES PVT. LTD., ON BEHAL F OF THE ASSESSEE. HENCE, FOR VERIFICATION OF THESE FACTS AND REDECIDI NG THE MATTER ACCORDINGLY, THE MATTER WAS SET ASIDE TO THE FILE OF THE ASSESSI NG OFFICER. 8.2. AS REGARDS THE SECOND ASPECT, INTEREST AMOUNT OF RS.2,116 WAS ADDED BECAUSE THE INFORMATION BROUGHT ON RECORD IND ICATES THAT THE ASSESSEE RECEIVED INTEREST INCOME OF RS.43,756 AS PER THE RE CEIPTS AND PAYMENTS ACCOUNT, WHEREAS THE INCOME OFFERED TO TAX WAS ONLY RS.41,630. HERE ALSO, THE CASE OF THE ASSESSEE WAS THAT THE ASSESSING OFF ICER HAS NOT GIVEN AN OPPORTUNITY OF BEING HEARD. BEFORE THE CIT(A), IT WAS CONTENDED THAT THIS AMOUNT WAS OFFERED TO TAX IN THE EARLIER YEAR, AND IT HAS ALREADY BEEN TAXED. SINCE THIS ARGUMENT WAS NOT CONSIDERED BY THE ASSES SING OFFICER, THE MATTER WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER F OR VERIFICATION. 9. CONTENTION OF THE ASSESSEE IN ALL THESE CASES IS THAT HE LEARNED CIT(A) HAVING ACCEPTED THAT THE ADDITIONS HAVE BEE N MADE ON ASSUMPTIONS, ASSESSMENTS WOULD NOT SURVIVE AND HENCE, THERE IS N O NEED FOR SETTING ASIDE OF THESE MATTERS TO THE FILE OF THE ASSESSING OFFIC ER. 10. I HAVE CAREFULLY PERUSED THE RECORD. CASE OF THE ASSESSING OFFICER IS THAT DURING THE COURSE OF SEARCH PROCEED ING, CERTAIN INCRIMINATING MATTERIAL WAS FOUND, WHICH INDICATED THAT THE ASSES SEE HAS MADE CERTAIN INVESTMENTS IN THE PURCHASE OF LAND, BUT THE SOURCE OF PAYMENTS WAS NOT ITA NO.1898/HYD/2014 & 3 ORS SHRI K.RAGHAVA REDDY, HYDERABAD 6 REFLECTED IN THE BOOKS. NO MATERIAL WAS PLACED BEF ORE THE TRIBUNAL TO INDICATE THAT INCRIMINATING MATERIAL WAS NOT FOUND DURING THE COURSE OF SEARCH, EXCEPT MERELY ADVANCING THE ARGUMENT THAT N O ADDITION CAN BE MADE IN THE ABSENCE OF INCRIMINATING MATERIAL. HAVING R EGARD TO THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) IN FACT ALLOWED ALL THE CLAIMS OF THE ASSESSEE, SUBJECT TO VERIFICATION OF FACTS BROUGHT TO THE NOT ICE OF CIT(A) FOR THE FIRST TIME. THUS, ORDER OF THE CIT(A) IS IN ACCORDANCE W ITH LAW. 11. NEEDLESS TO OBSERVE, IF THE COMPANY, M/S. MID WEST GRANITES PVT. LTD., HAS MADE THE INVESTMENTS ON BEHALF OF THE ASS ESSEE, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE, AND SIMILARLY , IF THE INTEREST RECEIVED IS ALREADY TAXED IN THE EARLIER YEARS, THE SAME CAN NOT BE TAXED IN THE ASSESSMENT YEAR 2007-08. WITH THESE OBSERVATIONS, THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. 12. IN THE RESULT, APPEALS FIELD BY THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE COURT ON 21 ST OCTOBER, 2015 SD/- (D.MANMOHAN) VICE PRESIDENT DT/- 21 ST OCTOBER, 2015 COPY FORWARDED TO: 1. SHRI K.RAGHAVA REDDY, C/O. M/S.P.MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-6755/2/3, 1ST FLOOR, SOMAJIGUDA, HYDERABAD-82 2 . ASSTT. DIRECTOR OF INCOME - TAX(INV) HYDERABAD 3 . 4. COMMISSIONER OF INCOME - TAX(APPEALS) VI, HYDERABAD DIRECTOR OF INCOME-TAX(INV) HYDERABAD 5 . DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S ITA NO.1898/HYD/2014 & 3 ORS SHRI K.RAGHAVA REDDY, HYDERABAD 7