DCIT, Central Circle - 4, Hyderabad V. Sri Mahesh Kumar Kedia, Hyderabad

ITA 190/HYD/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3315 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 04-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: K C DEVADAS
• Keywords: Unexplained investment; Search and seizure; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMBER ITA NO.182/HYD/11 : AS STT. YEAR 2008-09 SHRI MAHESH KUMAR KEDIA, HYDERABAD . ( PAN - ADOPK 8684 K ) V/S. ASSTT. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE-4, HYDERABAD. (APPELLANT) (RESPONDENT) AND ITA NO.190/HYD/11 : AS STT. YEAR 2007-08 DY. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE-4, HYDERABAD. V/S. SHRI MAHESH KUMAR KEDIA, HYDERABAD . ( PAN - ADOPK 8684 K ) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.C.DEVADAS DEPARTMENT BY : SMT. NIVEDITA BISWAS O R D E R PER G.C.GUPTA, VICE PRESIDENT: THESE APPEALS BY THE REVENUE FOR THE ASSESSMENT Y EAR 2007-08 AND BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME- TAX(APPEALS). THESE ARE BEING DISPOSED OFF WITH THI S CONSOLIDATED ORDER. ITA NO.182 & 190/HYD/11 SHRI MAHESH KEDIA, HYDERABAD 2 REVENUES APPEAL ITA NO.190/HYD/11 : ASSESSMENT YEAR 2007-08 2. GROUNDS OF APPEAL OF THE REVENUE ARE AS UNDER- 1. THE ORDER OF THE LEARNED. CIT(A) IS ERRONEOUS ON FA CTS AND IN LAW. 2. THE LEARNED. CIT(APPEALS) ERRED IN DELETING THE ADD ITION OF RS.12 LAKHS MADE BY THE A.O. AS UNEXPLAINED INVEST MENT IN CASH PAID TO SRI VEERABHADRA RAO TO OBTAIN CLEAR ANCE OF LAND AT RAIDURG, SERILINGAMPALLY MANDAL, R.R.DISTRI CT. 3. THE LEARNED. CIT(A) OUT TO HAVE APPRECIATED THE FAC T THAT THE ASSESSEE FAILED TO PRDOCUE ANY EVIDENCE FOR THE SOURCE OF THE CASH OF RS.12 LAKHS EITHER DURING THE SEARCH PROCEEDINGS OR IN THE ASSESSMENT PROCEEDINGS. 4. THE LEARNED. CIT(A) OUGHT TO HAVE GIVEN AN OPPORTUN ITY TO THE A.O. UNDER RULE 46A(III) OF THE I.T. ACT ON ACC OUNT OF ADDITIONAL GROUNDS FILED BY THE ASSESSEE BEFORE HIM , CLAIMING THAT THE SOURCE OF RS.12 LAKHS IS MONEY DR AWN FROM KEDIA OVERSEAS LTD. 3. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) HA S WRONGLY DELETED THE ADDITION OF RS.12 LAKHS MADE BY THE ASSESSING O FFICER AS UNEXPLAINED INVESTMENT IN CASH PAID TO SHRI VEERAB HADRA RAO TO OBTAIN CLEARANCE OF LAND AT RAIDURG, R.R. DISTRICT . SHE SUBMITTED THAT THE ASSESSEE HAS PRODUCED ADDITIONAL EVIDENCE BEFOR E THE CIT(A) REGARDING THE SOURCE OF RS.12 LAKHS AS MONEY DRAWN FROM M/S. KEDIA OVERSEAS LTD AND THEREFORE, THERE IS VIOLATION OF R ULE 46A OF THE I.T. RULES IN THIS CASE. SHE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 4. THE LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOS ED THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTAT IVE. HE SUBMITTED THAT SEARCH IN THIS CASE WAS CONDUCTED ON 1ST FEBRUARY, 2008, WHEREAS THE ENTRIES IN THE ACCOUNT BOOKS WERE MADE PRIOR TO ITA NO.182 & 190/HYD/11 SHRI MAHESH KEDIA, HYDERABAD 3 THE DATE OF SEARCH IN APRIL, 2006, AS PER THE ACCO UNT COPY OF SHRI VEERABHADRA RAO IN THE BOOKS OF M/S. KEDIA OVERSEAS LTD FILED BEFORE THE ASSESSING OFFICER AND A COPY THEREOF ALSO FURNI SHED IN THE COMPILATION BEFORE THE TRIBUNAL. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT THE ENTRIES WITH REGARD TO PAYMENT MADE TO SHRI VEE RABHADRA RAO WERE REFLECTED IN THE BOOKS OF ACCOUNT OF THE FIRM, M/S. KEDIA OVERSEAS LTD. IN APRIL 2006 AND THE SEARCH IN THIS CASE WAS CONDUCTED LATER ON 1 ST OF FEBRUARY, 2008. COPY OF THE ACCOUNT OF SHRI VE ERABHADRA RAO IN THE BOOKS OF M/S. KEDIA OVERSEAS LTD. FOR THE PERIO D FROM 1.4.2006 TO 31.3.2007 WAS FILED BY THE ASSESSEE BEFORE THE ASSE SSING OFFICER AND A COPY THEREOF HAS ALSO BEEN FURNISHED AT PAGE 8 OF T HE COMPILATION FILED BEFORE US. ACCORDINGLY, THERE IS NO VIOLATION OF R ULE 46A OF THE INCOME-TAX RULES IN THIS CASE. THE CIT(A) HAS RECO RDED A FINDING THAT THE AMOUNT OF RS.12 LAKHS PAID TO SHRI VEERABHADRA RAO WAS REFLECTED IN THE BOOKS OF ACCOUNT OF M/S. KEDIA OVERSEAS LTD. AND THEREFORE, THESE EXPENSES COULD NOT BE TREATED AS UNEXPLAINED EXPENSES AND THEREFORE, THE ADDITION MADE IN THIS CASE WAS NOT W ARRANTED. THERE BEING NO MISTAKE IN THE ORDER OF THE CIT(A) ON THIS ISSUE AND THE PAYMENT OF THE AMOUNT OF RS.12 LAKHS TO SHRI VEERAB HADRA RAO HAS BEEN REFLECTED IN THE BOOKS OF ACCOUNT OF M/S. KEDI A OVERSEAS LTD. PRIOR TO THE DATE OF SEARCH, WE HOLD THAT NO CASE O F ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT/EXPENDITURE COULD BE MADE OUT BY THE DEPARTMENT. THE ORDER OF THE CIT(A) IS ACCORDIN GLY CONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE REJECTED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ITA NO.182 & 190/HYD/11 SHRI MAHESH KEDIA, HYDERABAD 4 ASSESSEES APPEAL ITA NO.182/HYD/11 : ASSESSMENT YEAR 2008-09 7. GROUNDS OF APPEAL OF THE ASSESSEE ARE AS UNDER - 1. THE COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN UPHOLDING THE ADDITION OF RS.4,10,800/-, BEING PHYS ICAL CASH FOUND DURING SEARCH & SEIZURE OPERATIONS. 2. THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN IG NORING THE SUBMISSION, ALOGNWITH CORROBORATIVE EVIDENCE OF CASH BOOKS EXTRACT OF KEDIA OVERSEAS LIMITED OF THE APPE LLANT THAT THE CASH FOUND DURING SEARCH & SEIZURE OPERATI ONS BELONGED TO THE AFOREMENTIONED COMPANY. 8. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THA T OUT OF CASH OF RS.4,10,800 FOUND AT THE TIME OF SEARCH, A SUM OF RS.3 LAKHS WAS DULY DEBITED TO THE ACCOUNT OF THE INCOME-TAX D EPARTMENT, SINCE THIS AMOUNT WAS SEIZED BY THE DEPARTMENT AS A RESUL T OF SEARCH, IN THE BOOKS OF M/S. KEDIA OVERSEAS LTD. AND THEREFORE, TH E ADDITION HAS BEEN WRONGLY MADE. HE FURTHER SUBMITTED THAT THE BALAN CE AMOUNT OF RS.1,10,800 IS ALSO COVERED WITH THE PAST WITHDRAWA LS MADE BY THE ASSESSEE AS WELL AS THE CASH AVAILABLE IN THE BOOKS OF ACCOUNT OF THE FIRM IN WHICH THE ASSESSEE WAS A PARTNER. THE LEAR NED DEPARTMENTAL REPRESENTATIVE HAS OPPOSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. SHE SUBMITTED THAT AT THE TIME O F SEARCH, ASSESSEE COULD NOT EXPLAIN THE SOURCE FOR THE CASH FOUND AT HIS PREMISES. SHE RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND T HE CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE ASSESSEE HAS FILED A COPY OF THE INCOME TAX DEPARTM ENT ACCOUNT IN THE BOOKS OF M/S. KEDIA OVERSEAS LTD., WHEREIN THE AMOUNT OF RS.3 LAKHS HAS BEEN DEBITED AS ON 1.2.2008 AS CASH SEIZED BY IT DEPT ITA NO.182 & 190/HYD/11 SHRI MAHESH KEDIA, HYDERABAD 5 ON SEARCH AND SEIZURE OPERATIONS . A COPY THEREOF HAS BEEN FURNISHED BY THE ASSESSEE IN THE COMPILATION FILED BEFORE THE TRIBUNAL. GENUINENESS OF THE SAID ACCOUNT COPY IN THE BOOKS O F M/S. KEDIA OVERSEAS LTD. COULD NOT BE DOUBTED BY THE REVENUE A UTHORITIES. IN THESE FACTS, SINCE THE AMOUNT OF RS.3 LAKHS SEIZED AT THE TIME OF SEARCH WAS COVERED WITH THE AVAILABILITY OF CASH WI TH MS/.KEDIA OVERSEAS LTD., DULY VERIFIABLE FROM THE LEDGER ACCO UNT OF THE FIRM, M/S. KEDIA OVERSEAS LTD., WE HOLD THAT THERE IS NO JUSTI FICATION FOR MAKING THE ADDITION OF RS.3 LAKHS ON THIS ACCOUNT, WHICH I S ACCORDINGLY DELETED. WITH REGARD TO BALANCE ADDITION OF RS.1,10 ,800, THE ASSESSEE HAS GIVEN A GENERAL EXPLANATION OF WITHDRAWALS MADE IN THE PAST YEARS, FOR WHICH THERE IS NO EVIDENCE AVAILABLE WITH EITHE R OF THE PARTIES. IN THESE FACTS, ALLOWING A CREDIT OF RS.50,000 ON ACCO UNT OF CASH AVAILABLE WITH ASSESSEE OUT OF WITHDRAWALS MADE IN THE PAST, WE UPHOLD THE BALANCE ADDITION OF RS.60,800 AS AGAINST TOTAL ADDI TION OF RS.4,10,800 MADE BY THE REVENUE AUTHORITIES, ON ACCOUNT OF CASH FOUND DURING THE SEARCH OPERATIONS. ACCORDINGLY GROUNDS OF APPEAL O F THE ASSESSEE ARE PARTLY ALLOWED. 10. IN THE RESULT, ASSESSEES APPEAL IS PARTLY AL LOWED. 11. TO SUM UP, WHILE THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2007-08, BEING ITA NO.190/HYD/2011 IS DISMISSED, APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2008-09, BEING ITA NO.182/HYD/2011, IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 27 TH MAY, 2011 SD/- SD/- (AKBER BASHA) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 27 TH MAY, 2011 ITA NO.182 & 190/HYD/11 SHRI MAHESH KEDIA, HYDERABAD 6 COPY FORWARDED TO: 1. SHRI MAHESH KUMAR KEDIA, C/O. M/S. V.S.RAO & CO., C HARTERED ACCOUNTANTS, 6-3-609/136, ANANDNAGAR, HYDERABAD 500 004. 2. DY./ASST. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE - 4, HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS), V II , HYDERABAD. 4. COMMISSIONER OF INCOME - TAX , CENTRAL, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.