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

ITA 1903/HYD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98733 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 04-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 19-12-2014
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Search and seizure; Additional evidence
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 1903/HYD/2014 ASSESSMENT YEAR: 2009-10 SHRI K. RAGHAVA REDDY, HYDERABAD [PAN: AEMPL0325E] VS ASST. DIRECTOR OF INCOME TAX (INV) UNIT-I(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : S HRI P. MURALI MOHAN RAO, AR FOR REVENUE : SHRI B. KURMI NAIDU , DR DATE OF HEARING : 2 6 - 11 - 201 5 DATE OF PRONOUNCEMENT : 27 - 11 - 2015 O R D E R PER SAKTIJIT DEY, J.M. : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 28-08-2014 OF THE LD. COMMISSIONER OF INCOME TAX (A PPEALS)-VI, HYDERABAD FOR THE AY. 2009-10. 2. THE ASSESSEE IS AGGRIEVED WITH THE DECISION OF T HE CIT(A) IN SUSTAINING THE ADDITIONS OF RS. 1,05,400/- AND RS. 1,02,937/- MADE BY THE ASSESSING OFFICER (AO) AS UN-ACCOUNTED INCOME OF THE ASSESSEE. 3. BRIEFLY THE FACTS ARE, ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM REMUNERATION RECEIVED FROM M/S. MIDWEST GRANITES (P) I.T.A. NO. 1903/HYD/2014 SHRI K. RAGHAVA REDDY :- 2 -: LTD. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, ASSESSEE FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 26,74,400/-. IT MAY BE STATED THAT A SEARCH AND SEIZURE OPERATION W AS CONDUCTED IN CASE OF ASSESSEE AS WELL AS M/S. MIDWEST GRANITE S (P) LTD., WHEREIN ASSESSEE IS THE CHAIRMAN. CONSEQUENT TO TH E SEARCH AND SEIZURE OPERATION, A NOTICE U/S. 153A OF THE INCOME TAX ACT [ACT] WAS ISSUED TO THE ASSESSEE. DURING THE ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE AO THAT IN COURSE OF SEARCH AND SEIZURE OPERATION, FOREIGN CURRENCY WORTH RS. 6,22,595/- WA S FOUND IN THE RESIDENTIAL PREMISES OF THE ASSESSEE. OUT OF THE F OREIGN CURRENCY FOUND, THE ASSESSEE HIMSELF OFFERED AS INCOME RS. 2 ,10,022/- IN AY. 2007-08 AND 2008-09. FURTHER, AN AMOUNT OF RS. 1,76,226/- WAS OFFERED BY HIS SON SHRI K. RAMACHANDRA AS ADDIT IONAL INCOME IN THE AY. 2008-09. AS FAR AS THE BALANCE AMOUNT O F FOREIGN CURRENCY IS CONCERNED, THE ASSESSEE EXPLAINED THAT AN AMOUNT OF RS. 1,05,400/- BELONGS TO HIS SON-IN-LAW SHRI K. DE EPAK. HOWEVER, AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE I N RESPECT OF THE FOREIGN CURRENCY WORTH RS. 1,05,400/- IN THE ABSENC E OF ANY CONFIRMATION LETTER FROM SHRI K. DEEPAK AND TREATED IT AS UN- ACCOUNTED INCOME OF THE ASSESSEE. AS FAR AS THE RE MAINING AMOUNT OF RS. 1,02,937/- IS CONCERNED, THEY WERE IN THE FO RM OF TORN NOTES. IT WAS EXPLAINED BY THE ASSESSEE THAT SINCE THEY AR E TORN NOTES, THEY ARE OF NO VALUE, HENCE CANNOT BE TREATED AS IN COME OF THE ASSESSEE. THE AO, HOWEVER, WAS NOT CONVINCED WITH T HE EXPLANATION OF THE ASSESSEE. HE OBSERVED THAT ONLY BECAUSE THE CURRENCY NOTES ARE TORN, THE ASSESSEE CANNOT ESCAPE FROM EXPLAINING THE SOURCES THEREOF. HE FURTHER OBSERVE D, SINCE THE ASSESSEE MUST HAVE PAID INDIAN CURRENCY FOR ACQUIRI NG THE FOREIGN CURRENCY HE IS REQUIRED TO EXPLAIN THE SOURCE AS AL LEGED IN ABSENCE OF VALID EXPLANATION FROM THE ASSESSEE, AO TREATED THE AMOUNT OF I.T.A. NO. 1903/HYD/2014 SHRI K. RAGHAVA REDDY :- 3 -: RS. 1,02,937/- AS UN-ACCOUNTED INCOME OF THE ASSESS EE. BEING AGGRIEVED, ASSESSEE CHALLENGED THE ADDITIONS BEFORE THE CIT(A). LD. CIT(A) ALSO CONFIRMED THE ADDITIONS BY ACCEPTING TH E VIEW EXPRESSED BY THE AO. 4. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS F AR AS SOURCE FOR FOREIGN CURRENCY NOTES WORTH RS. 1,05,400/- IS CONCERNED, THE ASSESSEE IN THE MEAN WHILE, HAS OBTAINED CONFIRMATI ON LETTER FROM HIS SON-IN-LAW, SHRI K. DEEPAK AND SOUGHT TO PRODUC E THE SAME AS ADDITIONAL EVIDENCE. HE SUBMITTED, THE AO MAY VERIF Y THE ADDITIONAL EVIDENCE PRODUCED AND DECIDE THE ISSUE. AS FAR AS THE BALANCE AMOUNT OF RS. 1,02,937/- IS CONCERNED, LD. COUNSEL REITERATING THE STAND TAKEN BEFORE THE DEPARTMENTAL AUTHORITIES SUBMITTED THAT THESE ARE TORN CURRENCY NOTES WHICH HAVE NO VALUE AT ALL. THEREFORE, THEY CANNOT BE TREATED AS UN-AC COUNTED INCOME OF THE ASSESSEE. ALTERNATIVELY IT WAS SUBMITTED IF THIS AMOUNT IS TREATED AS INCOME, THE SAME HAS TO BE TELESCOPED INTO THE INVESTMENT/EXPENDITURE AND NO ADDITION CAN BE MADE. 5. WE HAVE CONSIDERED THE SUBMISSION OF THE PARTIES AND PERUSED THE MATERIALS ON RECORD. AS FAR AS FOREIGN CURRENCY WORTH RS. 1,05,400/- IS CONCERNED, IT IS OBSERVED THAT FR OM THE ASSESSMENT STAGE ITSELF, THE ASSESSEE HAS PLEADED T HAT THE SAME BELONGS TO HIS SON-IN-LAW SHRI K. DEEPAK. HOWEVER, IN THE ABSENCE OF ANY CONFIRMATION LETTER, THE DEPARTMENTAL AUTHOR ITIES HAVE TREATED IT AS UN-ACCOUNTED INCOME OF THE ASSESSEE. IN THIS CONTEXT, IT NEEDS TO BE MENTIONED, BEFORE US, THE ASSESSEE H AS SUBMITTED A CONFIRMATION OBTAINED FROM HIS SON-IN-LAW K. DEEPAK STATING THERE ON THAT HE HAS GIVEN AN AMOUNT OF RS. 1,10,000/- TO THE ASSESSEE DURING THE FINANCIAL YEAR 2008-09. IN VIEW OF THE ADDITIONAL I.T.A. NO. 1903/HYD/2014 SHRI K. RAGHAVA REDDY :- 4 -: EVIDENCE PRODUCED BY THE ASSESSEE BY WAY OF CONFIRM ATION LETTER FROM SHRI K. DEEPAK, WE ARE INCLINED TO REMIT THE I SSUE RELATING TO THE ADDITION OF RS. 1,05,400/- TO THE AO FOR DECIDI NG AFRESH AFTER EXAMINING THE CONFIRMATION LETTER PRODUCED BY THE A SSESSEE. AS FAR AS THE BALANCE AMOUNT OF RS. 1,02,937/- IS CONCERNE D, IT IS AN ADMITTED FACT THAT THIS REPRESENT TORN FOREIGN CURR ENCY NOTES. THEREFORE, AS STATED BY THE ASSESSEE, THEY DO NOT H AVE ANY VALUE. MOREOVER, FROM THE DETAILS OF INCOME RETURNED FROM AY. 2003-04, IT IS SEEN THAT THE ASSESSEE HAS DECLARED SUBSTANTIAL INCOME IN EACH OF THE ASSESSMENT YEAR. IN FACT, IN THE IMPUGNED A SSESSMENT YEAR, ASSESSEE HAS DECLARED INCOME OF RS. 26,74,400/-. T HAT BEING THE CASE, IT IS HARD TO BELIEVE THAT THE ASSESSEE WOULD NOT HAVE DISCLOSED A PETTY AMOUNT OF RS. 1,02,937/- REPRESEN TING THE FOREIGN CURRENCY NOTES. MOREOVER, CONSIDERING THE AMOUNT I NVOLVED, WE ARE OF THE OPINION THAT THE SAME CANNOT BE TREATED AS HAVING COME FROM ANY UNEXPLAINED SOURCE AS THE INCOME DECLARED BY THE ASSESSEE OVER THE YEARS IS SUFFICIENT ENOUGH TO EXP LAIN THE SOURCE OF THE FOREIGN CURRENCY OF RS. 1,02,937/-. ACCORDINGLY , IN OUR VIEW, THE ADDITION OF RS. 1,02,937/- DESERVES TO BE DELET ED. ACCORDINGLY, WE DO SO. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2015. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL ME MBER HYDERABAD, DATED 27 TH NOVEMBER, 2015. TNMM I.T.A. NO. 1903/HYD/2014 SHRI K. RAGHAVA REDDY :- 5 -: COPY TO : 1. SHRI K. RAGHAVA REDDY, C/O. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1ST FLOOR, SOMAJIGUDA, HYDERABAD. 2. ASST. DIRECTOR OF INCOME TAX (INV) UNIT - I(2) , HYDERABAD. 3. CIT(A PPEALS ) - VI , HYDERABAD. 4. THE DIRECTOR OF INCOME TAX (INV), HYDERABAD . 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.