Bhagwati Devi, Hyderabad V. ACIT, Central Circle-4, Hyderabad

ITA 214/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66562 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-07-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 08-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMISHA S GUPT
• Keywords: Unexplained investment; Search and seizure; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMB ER ITA NO.214/HYD/2011 : ASSESSME NT YEAR 2008-09 SMT. BHAGWA TI DEVI, HYDERABAD ( PAN - ACGPD 0241 D) V/S. ASST . COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE 4, HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.SRINIVAS RESPONDENT BY : S MT. AMISHA S.GUPT DR DATE OF HEARING 3 . 12 .2012 DATE OF PRONOUNCEMENT 7.12.2012 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-VII, HYDERABAD DATED 18.11.2010 FOR THE ASSESSMENT YEAR 2008-09. 2. THE ONLY EFFECTIVE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS AGAINST AN ADDITION OF RS.1,17,50,000 MADE BY THE A SSESSING OFFICER, AND CONFIRMED BY THE CIT(A), ON ACCOUNT OF UNEXPLAINED INVESTMENT OF THE ASSESSEE IN THE PROPERTY OVER AND ABOVE THE SALE CO NSIDERATION SHOWN IN THE SALE DEED. 3. FACTS IN BRIEF LEADING TO THE FILING OF THE PRE SENT APPEALS ARE THAT THERE WAS SEARCH AND SEIZURE OPERATION CONDUCTED UN DER S.132 OF THE ACT, ITA NO.214/HYD/2011 SMT. BHAGWATI DEVI, HYDERABAD 2 1961 ON THE KEDIA GROUP CASES ON 1.2.2008, DURING W HICH CERTAIN INCRIMINATING MATERIAL RELATING TO THE ASSESSEE AS WELL WERE FOUND AND SEIZED. ONE OF THE MATERIAL FOUND AND SEIZED DURING THE COU RSE OF SEARCH WAS A LEGAL NOTICE DATED 25.11.2006 ISSUED BY ONE SHRI VENKATES H DESHPANDE, AN ADVOCATE TO KEDIA FAMILY UNDER THE INSTRUCTIONS OF HIS CLIENTS (I) SRI MAHAVEER CHAND JAIN, B-12, ANKUR, SHASTRI NAGAR COLONY, JODH PUR, AND (II) SMT.PADMA DEVI W/O. SRI PRAKASH KUMAR JAIN, RESIDENT OF 201, SUKH SAGAR APARTMENTS, 3-5-805, HYDERGUDA, HYDERABAD, ACCORDING TO WHICH THE ABOVE TWO INDIVIDUALS, HAVE PAID A SUM OF RS.1,25,00,000 AS P ART ADVANCE TO KEDIA FAMILY FOR PURCHASE OF 10.45 ACRES OF LAND SITUATED AT HAMEEDULLAHNAGAR VILLAGE AND TONDEPALLI VILLAGE AT RS.28,00,000 PER ACRE. PAGE NOS.53 TO 79 OF THE SEIZED DOCUMENT WAS THE COPY OF THE SALE DEED D ATED 12.4.2007 EXECUTED BY KEDIA FAMILY IN FAVOUR OF THE ASSESSEE (REPRESENTED BY SHRI ASHOK KUMAR JAIN FOR THE PURPOSE OF REGISTRATION) I N RESPECT OF FIVE ACRES OF LAND OF HAMIDULLAHNAGAR VILLAGE, SHAMSHABAD MANDAL, R.R. DISTRICT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, SU MMONS UNDER S.131 WERE ISSUED TO SHRI ASHOK KUMAR JAIN, HUSBAND OF THE ASSESSEE TO VERIFY THE ACTUAL CONSIDERATION PAID BY HER FOR ACQ UIRING THE SAID PROPERTY. IN RESPONSE, SHRI ASHOK KUMAR JAIN, HUSBAND OF THE ASS ESSEE, SMT. BHAWATI DEVI, APPEARED AND A SWORN DEPOSITION WAS RECORDED FORM HIM. IN THE SWORN DEPOSITION, HE WAS SPECIFICALLY ASKED TO EXPLAIN WH Y THE CONSIDERATION SHOWN AS PER THE SALE DEED WAS ONLY RS.4,50,000 PER ACRE, WHEN THE PROPERTIES MENTIONED IN THE SALE DEED ARE FORMING PART OF THE PROPERTIES MENTIONED IN THE LEGAL NOTICE GIVEN BY SHRI VENKATESH DESHPANDE WHICH SHOWS THAT VALUE PER ACRE WAS RS.28,00,000,. HE WAS ALSO ASKED TO E XPLAIN THIS DISCREPANCY AND WAS QUESTIONED AS TO WHY IT SHOULD NOT BE CONCL UDED THAT THE BALANCE OF RS.1,17,50,000 (I.E. RS.28,00,000 RS.,4,50,000 =R S.23,50,00 PER ACRE FOR AN ACREAGE OF 5) WAS PAID IN CASH TO THE VENDORS OF THE PROPERTY. IN REPLY, ITA NO.214/HYD/2011 SMT. BHAGWATI DEVI, HYDERABAD 3 SHRI ASHOK KUMAR JAIN SIMPLY DENIED THIS AND STATED THAT IT IS NOT CORRECT. EVEN IN RESPONSE TO A SUBSEQUENT SHOW CAUSE LETTER ISSUED BY THE ASSESSING OFFICER PROPOSING THE ADDITION OF RS.1,75,50,000, A SSESSEE REITERATED THAT SHE HAS NOT PAID ANY ON-MONEY AMOUNT, BUT ONLY PURCHASE D AC.5 OF LAND WITH THE CONSIDERATION OF RS.22,50,000, AND THE FAIR MARKET VALUE OF THE LAND IN QUESTION WAS ALSO RS.4,00,000 PER ACRE ONLY. NOT C ONVINCED WITH THE EXPLANATION OF THE ASSESSEE, ASSESSING OFFICER MADE AN ADDITION OF RS.1,17,50,000, WHILE COMPLETING THE ASSESSMENT ON A TOTAL INCOME OF RS.1,19,20,610, VIDE ORDER DATED 31.12.2009 PASSED UNDER S.143(3) REGARD WITH S.153C OF THE ACT. 5. ON APPEAL, THE CIT(A), OBSERVING THAT IT IS VER Y MUCH CLEAR THAT THE ASSESSEE HAS PAID ADDITIONAL CONSIDERATION OF R S.1,17,50,000 FOR PURCHASE OF THE PROPERTY, WHICH IS VERY MUCH SUPPORTED BY TH E ADVOCATES NOTICE SINCE THE PROPERTIES MENTIONED IN THE SAID LEGAL NOTICE I NCLUDED THE PROPERTY IN QUESTION IN THE PRESENT CASE, CONFIRMED THE ADDITIO N MADE BY THE ASSESSING OFFICER. 6. AGGRIEVED BY THE ORDERS OF THE LOWER AUTHORITI ES, ASSESSEE PREFERRED THE PRESENT APPEAL BEFORE US. 7. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE A SSESSEE SUBMITTED BEFORE US THAT THE SEIZED DOCUMENT, I.E. THE LEGAL NOTICE OF THE ADVOCATE, ON THE BASIS OF WHICH THE DISPUTED ADDITI ON HAS BEEN MADE ALSO FORMED THE BASIS FOR ADDITION IN THE CASE OF SMT.A. PADMA DEVI, ANOTHER ASSESSEE, WHO IN THE FIRST PLACE HAD GIVEN ADVANCE FOR THE PURCHASE OF A PROPERTY FROM THE KEDIA FAMILY, IN WHICH THE PROPER TY PURCHASED BY THE PRESENT ASSESSEE IS ALSO INCLUDED. WHEN THE ADDITIO N MADE IN THAT CASE BECAME SUBJECT MATTER OF AN APPEAL BEFORE THE TRIBU NAL IN ITA ITA NO.214/HYD/2011 SMT. BHAGWATI DEVI, HYDERABAD 4 NO.1759/HYD/2011 BY THE REVENUE AND ITA NO.1669/HYD /2011 BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08, THE TRIBU NAL VIDE ITS ORDER DATED 10.8.2012, COPY OF WHICH IS FILED BEFORE US, REMITT ED THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR REFRAMING THE ASSESSMENT IN ACCORDANCE WITH THE DIRECTION GIVEN THEREIN. THE LEARNED AUTHORISED RE PRESENTATIVE FOR THE ASSESSEE THEREFORE, SUBMITTED THAT IN VIEW OF THE O RDER PASSED BY THE TRIBUNAL IN THE CASE OF SMT.A.PADMA DEVI, IN THE PR ESENT CASE ALSO, THE MATTER MAY BE REMITTED BACK TO THE ASSESSING OFFICE R FOR FRESH CONSIDERATION IN CONSONANCE WITH THE VIEW THAT MAY BE TAKEN IN TH AT CASE. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE DID N OT RAISE ANY SERIOUS OBJECTION TO THE ABOVE CONTENTIONS OF THE L EARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. WE FIND FROM THE ORDER OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SMT. A.PADMA DEVI (SUPRA), THAT THE SEIZED DOCUMENT, I.E. THE LEGAL NOTICE, ON THE BASIS OF WHICH THE AD DITION HAS BEEN MADE IN THE PRESENT CASE ALSO FORMED THE BASIS FOR THE ADDITION MADE IN THAT CASE. THE TRIBUNAL, AFTER CONSIDERING THE SUBMISSION MADE AND GOING THROUGH THE MATERIALS REMITTED THE MATTER TO THE FILE OF THE AS SESSING OFFICER, WITH THE FOLLOWING OBSERVATIONS/DIRECTIONS- 12. THUS, THE DEPARTMENT IS UNDER AN OBLIGATION TO GATHER SOME MORE EVIDENCE TO CORROBORATE WITH THE C ONTENTS OF THE LEGAL NOTICE IN QUESTION, SO AS TO ESTABLISH TH E GENUINENESS OF THE DOCUMENTS AND THE NEXUS BETWEEN THE ASSESSEE AND THE SAID LEGAL NOTICE. EVEN THOUGH THE SAID LEGAL NOTI CE, THOUGH GIVES RISE TO INFERENCES AS TO THE RIGHTS OF THE AS SESSEE AND ANOTHER IN RESPECT OF AN ACTIONABLE CLAIM, THAT ITS ELF IS NOT ENOUGH TO ARRIVE AT THE CONCLUSIONS AS TO THE INVES TMENT MADE BY THE ASSESSEE IN RELATION TO THE AGREEMENT IN QUE STION, MORE PARTICULARLY, WHEN THE ASSESSEE IS DENYING THE SAME . THE DEPARTMENT, BASED ON SUCH LEGAL NOTICE, SHOULD HAVE CONDUCTED ITA NO.214/HYD/2011 SMT. BHAGWATI DEVI, HYDERABAD 5 INDEPENDENT ENQUIRIES IN RELATION TO HE PROPERTIES IN QUESTION AND WITH THE OWNERS TO WHOM THE NOTICES IN QUESTION WERE SENT. IT IS STRANGE THAT THE ADVOCATE CLAIMS THAT SOME PE RSONS APPROACHED HIM WITH A REQUEST FOR THE ISSUANCE OF T HE LEGAL NOTICE IN QUESTION, AND HE ACTED ACCORDINGLY AS PER THEIR REQUEST, WITHOUT VERIFYING THEIR CREDENTIALS OR EVE N BONA FIDES OF THE PERSONS WHOM THEY CLAIM TO REPRESENT. THE ADVOC ATE MUST AFFIRM THE DOCUMENTS SEEN BY HIM BEFORE THE ISSUE O F THE IMPUGNED LEGAL NOTICE. 13. CONSIDERING TOTALITY OF FACTS AND CIRCUMSTANCE S OF THE CASE, WE SET ASIDE THE IMPUGNED ORDERS OF THE L OWER AUTHORITIES AND SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER, WITH A DIRECTION TO REDETERMINE THE ISSUE, IN THE LIGHT OF THE ABOVE DISCUSSION, AFTER MAKING INDEPENDENT ENQU IRIES AND GATHERING CORROBORATIVE EVIDENCE IN RELATION TO THE TRANSACTIONS IN THE PROPERTIES IN RESPECT OF WHICH THE LEGAL NOT ICE IN QUESTION WAS ISSUED, AND ALSO AS TO THE CORRECTNESS OF THE C LAIM OF THE ADVOCATE IN QUESTION ABOUT THE FACTS AND CIRCUMSTAN CES LEADING TO THE ISSUANCE OF SUCH NOTICE ON BEHALF OF THE ASS ESSEE AND SHRI MAHAVEER CHAND JAIN, AND THE NEXUS OF THE ASSESSEE WITH THE SAID NOTICE. IT IS NOT KNOWN IF THE INCOME-TAX IN SPECTOR IS ALREADY PUT INTO ACTION TO ESTABLISH THE IDENTITY O F SHRI JAIN. THE ASSESSING OFFICER SHALL REDETERMINE THE ISSUE THERE AFTER, IN ACCORDANCE WITH LAW BY PASSING A SPEAKING ORDER AND AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASS ESSEE. FACTS AND CIRCUMSTANCES OF THE CASE BEING IDENTICAL IN THE PRESENT CASE, AND SINCE THE BASIS FOR THE ADDITIONS UNDER DISPUTE IN BOTH THESE CASES BEING COMMON, WE DEEM IT JUST AND PROPER TO SET ASIDE THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES AND RESTORE THE MATTER TO THE FIL E OF THE ASSESSING OFFICER, WITH SIMILAR DIRECTIONS AS GIVEN IN THAT CASE, EXTR ACTED ABOVE. THE ASSESSING OFFICER IS DIRECTED TO REFRAME THE ASSESSMENT IN CO NSONANCE WITH THE VIEW THAT MAY BE TAKEN IN THAT CASE, AND IN ACCORDANCE W ITH LAW, AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.214/HYD/2011 SMT. BHAGWATI DEVI, HYDERABAD 6 ORDER PRONOUNCED IN THE COURT ON 7.12.2012 SD/- SD/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED/- 7 TH DECEMBER, 2012 COPY FORWARDED TO: 1. SMT. BHAGWATI DEVI, C/O. M/S. R.B.KABRA & CO., CHAR TERED ACCOUNTANTS, 1-917, TILAK ROAD, HYDERABAD 500 001. 2. 3. 4. ASST. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE 4 ,HYDERABAD COMMISSIONER OF INCOME-TAX(APPEALS) VII HYDERABAD COMMISSIONER OF INCOME-TAX, CENTRAL, HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.