Chava Prakash Rao, Hyderabad V. Asst. Commissioner of Income Tax, Central Circle-7(1), Hyderabad

ITA 2286/Hyd/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4740 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 08-05-2019
• Assessment Year: 1999-2000
• Appeal Filed On: 29-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH PADUCHURI
• Assessee Lawyers: S RAMA RAO
• Keywords: Search and seizure; Salary income; Assessment record; Set aside
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A ', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN , ACCOUNTANT MEMBER ITA NO. 2286 HYD/201 7 BLOCK PERIOD : 1990 - 91 TO 1999 - 2000 CHAVA PRAKASH RAO, HYDERABAD. PAN A CVPC 5809N VS. ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 7 ( 1 ) , HYDERABAD . ASSESSEE RESPONDENT ASSESSEE BY: S H RI S. RAMA RAO REVENUE BY: S HRI DINESH PA D UCHURI DATE OF HEARING: 0 8 / 0 5 / 201 9 DATE OF PRONOUNCEMENT: 27 / 0 5 /201 9 O R D E R PER S. RIFAUR RAHMAN , AM: T H IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) 3 , HYDERABAD, DATED, 23 / 1 0/201 7 FOR BLOCK PERIOD 1990 - 91 TO 1999 - 2000 & UP TO 04/11/1999. 2. BRIEF FACTS OF THE CASE ARE, THE ASSESSEE, AN INDIVIDUAL , RETIRED AS A JUNIOR LECTURER AND IS DERIVING INCOME FROM PENSION FROM GOVT OF ANDHRA PRADESH. THE DEPARTMENT CONDUCTED SEARCH AND SEIZURE OPERATIONS IN THE CASE OF DR. B. CHANDRAKANTHA RAO ON 4.11.1999. T HE A SSESSEE WAS STAYING WITH SRI B. CHANDRAKANTHA RA O AT THE RELEVANT POINT OF TIME AS THE A SSESSEE IS THE FATHER - IN - LAW OF DR. B. CHANDRAKANTHA RAO. THE DEPARTMENT FOUND THAT THE A SSESSEE ACQUIRED SOME SHARES. THE ASSESSING OFFICER ISSUED NOTICE U / S 158BD AND IN RESPONSE THERETO THE A SSESSEE FILED THE RETU RN OF INCOME IN FORM 2B ADMITTING THE UNDISCLOSED INCOME TO BE RS. NIL. THE ASSESSING OFFICER LATER ISSUED NOTICES AND COMPLETED THE I.T.A. NO. 2286 /HYD/1 7 CHAVA PRAKASH RAO, HYD. 2 ASSESSMENT ON 27.9.2002 DETERMINING THE TOTAL UNDISCLOSED INCOME AT RS.9,60,690 / - . WHILE DOING SO, HE TREATED THE ENTIRE PE NSION RECEIVED AS THE UNDISCLOSED INCOME. BESIDES A PART OF THE INVESTMENTS MADE WERE ALSO ADDED AS UNEXPLAINED. 2.1 THE ASSESSEE FILED DETAILS BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS). THE LEARNED CIT (APPEALS) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PENSION WHEREAS THE INVESTMENTS MADE IS CONFIRMED BY THE LEARNED CIT(A) ON THE GROUND THAT TH E INVESTMENT WAS NOT PROPERLY EXPLAINED. 2.2 BOTH THE ASSESSEE AND THE DEPARTMENT FILED APPEALS BEFORE THE HON'BLE ITAT. THE HON'BLE ITAT VIDE ORDER IN IT( SS ) A NO.94 / H / 05 DATED 19.6.2009 SET ASIDE THE ISSUE AND DIRECTED THE AO TO VERIFY THE INVESTMENT A FRESH WHETHER MADE BY ASSESSEE OR HUF. BASED ON THE DIRECTION, AO ISSUED NOTICE U/S 142(2) AND CALLED FOR THE RELEVANT INFORMATION. 2.3 IN SO FAR AS INVESTMENTS ARE CONCERNED, THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT: A) THE ASSESSEE HAS DUAL STATUS - ONE AS 'INDIVIDUAL' AND ANOTHER AS 'KARTHA OF HUF' CONSISTING OF HIMSELF, HIS WIFE AND HIS DAUGHTER; B) HE INHERITED AGRICULTURAL LANDS SITUATED AT CHIRUNOMULA VILLAGE OF BONKAL MANDAL, KHAMMAM DIST AND THE SAID AGRICULTURAL LANDS YIEL DED INCOME; C) AS THE ASSESSEE WAS DERIVING SEPARATE INCOME FROM SALARY AND AS THE DEPENDENTS ARE ONLY TWO I.E. HIS WIFE AND DAUGHTER, THE ENTIRE AGRICULTURAL INCOME DERIVED WAS SAVED AND WAS INVESTED. I.T.A. NO. 2286 /HYD/1 7 CHAVA PRAKASH RAO, HYD. 3 THE ASSESSEE PREPARED RECEIPTS AND PAYMENTS ACCOUN T FOR BOTH 'INDIVIDUAL' AND 'HUF' AND EXPLAINED THE RECEIPTS AND PAYMENTS WHICH INCLUDE THE INVESTMENTS MADE. 2.4 IT WAS ALSO EXPLAINED THAT THERE WAS SUBSTANTIAL SURPLUS FOR THE HUF BECAUSE OF THE AGRICULTURAL INCOME AND ON ACCOUNT OF SALE OF CERTAIN AS SETS INCLUDING A HOUSE SITUATED AT KHAMMAM AND, THEREFORE, THE ASSESSEE AS KARTHA OF HUF POSSESSED REQUIRED FUNDS. THE ASSESSEE FILED ALL THE DETAILS BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER ACCEPTED THE EXISTENCE OF THE HUF. HOWEVER, HE REFUSED TO ACCEPT THE SOURCE OF INVESTMENT BY THE HUF TO THE EXTENT OF RS . 4,03,700/ - . ACCORDING TO THE ASSESSING OFFICER, THE AGRICULTURAL INCOME SHOULD BE ONLY RS.6,95, 000/ - AND NOT RS.9,38,700 / - OVER A PERIOD OF TIME AND, THEREFORE, HELD THAT THE DIFFERENCE OF RS.2,43,700 / AND THE OPENING BALANCE OF RS. 1,60,000/ - COULD NOT BE EXPLAINED PROPERLY. ACCORDINGLY, HE ARRIVED AT THE UNDISCLOSED INCOME AT RS . 4 ,03,700 / - . 3. WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), THE CIT(A) DELETED THE ADDITION OF R S. 2,43,700/ - MADE TOWARDS AGRICULTURAL INCOME AND SUSTAINED THE ADDITION OF RS. 1,60, 000/ - BY HOLDING THAT NO EVIDENCES OR MATERIAL WERE FURNISHED BY THE ASSESSEE IN SUPPORT OF THE CLAIM FOR HAVING AN OPENING BALANCE OF RS. 1,60,000/ - . 4. AGGRIEVED BY TH E ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IS ERRONEOUS TO THE EXTENT IT IS PREJUDICIAL TO THE APPELLANT. I.T.A. NO. 2286 /HYD/1 7 CHAVA PRAKASH RAO, HYD. 4 2) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.1,60,000 / - AS REPRESENTING UNDISCLOSED INCOME WITHOUT CONSIDERING THE FACT THAT THE SAID AMOUNT REPRESENTS OPENING BALANCE IN THE CAPITAL ACCOUNT OF THE APPELLANT. 3) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE ASSESSING OFFICER ACCEPTED THE EXISTENCE OF THE HUF AND, THEREFORE, OUGHT NOT TO HAVE CONFIRMED THE ADDITION OF RS.1,60,000 / - . 4) ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 5. BEFORE US, THE LD. AR SUBMITTED THAT ASSESSING OFFICER FAILED TO SEE THAT IF THE AGRICULTURAL INCOME WERE TO BE ESTIMATED AND IF THERE WERE TO BE ANY DIFFERENCE FROM THE ASSESSMENT YEAR 1989 - 90 TO 1998 - 99 OR FOR THE LATER PERIOD, THE DIFFERENCE IS BELOW THE TAXABLE MINIMUM FOR EACH OF THE AS SESSMENT YEAR AND IS NOT LIABLE FOR TAXATION. HE FURTHER, SUBMITTED THAT T HE ASSESSING OFFICER ALSO FAILED TO APPRECIATE THE FACT THAT THE AGRICULTURAL INCOME IS ARRIVED AT BY HIM ON A MERE ESTIMATE WITHOUT REFERENCE TO ANY BASIS AND WHEREAS THE A SSESSEE WORKED OUT THE AGRICULTURAL INCOME BASED ON THE CERTIFICATES ISSUED BY THE MRO. THEREFORE, AR SUBMIT TED THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN ARRIVING AT THE UNDISCLOSED INCOME AT RS 1,60,000 / - AND FURTHER ERRED IN TAXING THE SAME AS THE UNDISCLOS ED INCOME. 6. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORDER OF CIT(A). 7. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE NOTICE FROM THE ASSESSMENT RECORDS THAT AO HAS ACCEPTED THE EXISTENCE OF HUF AND ACCEPTED THE INVESTM ENTS MADE OUT OF AGRICULTURAL INCOME. AO MADE TWO ADDITIONS, FIRST DIFFERENCE IN ARRIVING SOURCES FOR INVESTMENT TO I.T.A. NO. 2286 /HYD/1 7 CHAVA PRAKASH RAO, HYD. 5 THE EXTENT OF RS. 2,43,700/ - , WHICH WAS DELETED BY LD. CIT(A). BUT, THE SECOND PART OF RS. 1,60,000/ - , WHICH IS THE OPENING BALANCE OF HUF, WHICH WAS NOT BELIEVED BY AO, AS THE SOURCE FOR MAKING INVESTMENT. WHEN AO ACCEPTED THAT THERE IS EXISTENC E OF HUF, HE COULD HAVE MADE THE ADDITION ONLY IN THE HANDS OF HUF AND NOT IN THE HANDS OF INDIVIDUAL. PARTICULARLY, ASSESSEE HAS CLEARLY SUBMITTED THE RECE IPTS & PAYMENTS OF HUF AND INDIVIDUAL SEPARATELY FOR THE BLOCK PERIOD. IT IS CLEAR THAT THE OPENING BALANCE OF RS. 2,50,000/ - WAS DECLARED ONLY IN HUF. THEREFORE, AO IS DIRECTED TO MAKE THE ADDITION OF RS. 1,60,000/ - IN THE HANDS OF HUF AND NOT IN THE HAND S OF INDIVIDUAL. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 27 TH MAY , 201 9. SD/ - ( P. MADHAVI DEVI ) JUDICIAL MEMBER SD/ - ( S. RIFAUR RAHMAN ) ACCOUNTANT MEMBER HYDERABAD, DATED 27 TH MAY , 201 9. KV COPY FORWARDED TO: 1. SHRI CHAVA PRAKASH RAO, 10 - 2 - 8/6A, AC GUARDS, HYDERABAD 500 004 2 . AC IT , CIRCLE 7 ( 1) , HYDERABAD 3 . CIT (A) - 3 , HYDERABAD 4. PR. CIT - 3 , HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE