Dr. Lavu Rathaiah, Guntur V. The DCIT Cent Cir 2 Hyderabad, Hyderabad

ITA 232/VIZ/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56826 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 23-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D KOMALI KRISHNA
• Keywords: Search and seizure; Source of fund; Condonation of delay
• Section: 132

Judgement Text

ITA NO232/VIZ/2011 DR. LAVU RATHAIAH, GUNTUR. 1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 232 /VIZAG/ 20 11 BLOCK PERIOD 1.4.1991 TO 20.2.2001 DR. LAVU RATHAIAH GUNTUR VS. DCIT CENTRAL CIRCLE - 2 HYDERABAD (APPELLANT) (RESPONDENT) PAN NO.AAVPL 5028Q APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SMT. D. KOMALI KRISHNA, SR. DR DATE OF HEAR I NG: 25.08.2011 DATE OF PRONOUNCEMENT: 05 .09.2011 ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED AGAINST THE ORDER OF THE CIT(A) CONFIRMING THE PENALTY LEVIED U/S 158 BFA(2) OF THE INCOME-TAX ACT (HEREINAFTER REFERRED TO AS AN ACT). 2. THE APPEAL IS FILED LATE BY 62 DAYS AND THE ASSE SSEE HAS MOVED AN APPLICATION FOR CONDONATION OF DELAY IN FILING OF A PPEAL STATING THEREIN THAT THE FILE WAS HANDED OVER THE CONCERNED CHARTERED ACCOUN TANT FOR PREPARING THE APPEAL. BUT DUE TO THE DISLOCATION OF THE OFFICE O F THE CHARTERED ACCOUNTANT AND SUDDEN DEMISE OF ONE OF THE SENIOR PARTNERS LOO KING AFTER THE APPELLATE MATTER BEFORE THE TRIBUNAL, THE APPEAL PAPERS THOUG H PREPARED IN TIME WERE NOT FILED. THEN ON 10.6.2011 ONE OF THE EMPLOYEES OF THE LAVU EDUCATIONAL SOCIETY SHRI UMA MAHESWARA RAO VISITED THE OFFICE O F G.V.N. HARI AND COMPANY, CHARTERED ACCOUNTANT WITH REGARD TO THE AP PEAL OF THE SAID SOCIETY, FIXED FOR HEARING ON 15.6.2011. DURING THE COURSE OF SAID VISIT IT CAME TO LIGHT THAT AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A) DATED 28.1.2011 WAS NOT FILED BEFORE THE TRIBUNAL. THE ASSESSEE IMMEDIATEL Y REACTED AND ENSURED THAT APPEAL TO BE FILED WITHOUT FURTHER LOSS OF TIM E. ACCORDINGLY, THE PRESENT ITA NO232/VIZ/2011 DR. LAVU RATHAIAH, GUNTUR. 2 APPEAL WAS IMMEDIATELY FILED. THEREFORE, THE DELAY IN FILING OF THE APPEAL WAS DUE TO THE REASONS BEYOND THE CONTROL OF THE ASSESS EES AND WAS NEITHER INTENTIONAL NOR DELIBERATE. THE LD. COUNSEL FOR TH E ASSESSEE FURTHER MADE A REQUEST FOR CONDONATION OF DELAY. FINDING FORCE IN THE REQUEST OF THE ASSESSEE, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 3. ON MERIT, THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND HAS BEEN RUNNING SEVE RAL EDUCATIONAL INSTITUTIONS IN THE STATE. THE SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WERE CONDUCTED ON 20.2.2001 AT HIS RESIDENCE AS WEL L AS ON EDUCATIONAL INSTITUTIONS. PURSUANT TO THE NOTICE U/S 158BC OF THE ACT, THE ASSESSEE FILED THE RETURN OF INCOME DECLARING UNDISCLOSED INCOME O F ` 21,80,400/-. THE ASSESSMENT WAS HOWEVER MADE ON A TOTAL DISCLOSED IN COME OF ` 3,44,79,283/- WHICH INCLUDES UNDISCLOSED INCOME OF ` 21,80,400/- ADMITTED BY THE ASSESSEE BY MAKING CERTAIN ADDITIONS. 4. AGGRIEVED WITH THESE ADDITIONS, THE ASSESSEE WEN T IN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ADDITION OF ` 10,94,775/- MADE ON ACCOUNT OF ON MONEY PAID IN PURCHASE OF LAND. THE OTHER ADDITION S MADE ON ACCOUNT OF UNACCOUNTED DONATIONS, UNACCOUNTED D AMOUNT, ADMISS ION FEES AND UNEXPLAINED SEIZED CASH WERE DELETED BY THE TRIBUNA L. FOR THIS ADDITION OF ` 10,94,775/-, THE PENALTY U/S 158BFA WAS LEVIED. TH E DEPARTMENT HAS ALSO INITIATED THE PROSECUTION PROCEEDINGS AGAINST THE A SSESSEES IN THE COURT OF SPECIAL JUDGE FOR ECONOMIC OFFENCES AT HYDERABAD. 5. AGGRIEVED WITH THE PENALTY ORDER, ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSION THAT IMPUGNED ADDITI ON IN ASSESSMENT WERE MADE ON CONJECTURES AND PRESUMPTIONS AS THERE WAS N O FINDING OF CONSCIOUS CONCEALMENT OF INCOME WHICH IS NECESSARY FOR LEVYIN G OF PENALTY. IT WAS ALSO CONTENDED BEFORE THE CIT(A) THAT THE SEIZED DOCUMEN T ON THE BASIS OF WHICH IMPUGNED ADDITIONS WERE MADE, WAS NEITHER IN THE HA NDWRITING OF THE ASSESSEES NOR WAS FOUND FROM THE ASSESSEES PREMISE S. THEREFORE, THE SEIZED DOCUMENT CANNOT BE RELIED ON FOR IMPOSING THE PENAL TY. IT WAS ALSO CONTENDED BEFORE THE CIT(A) THAT IN A CRIMINAL COUR T, THE ASSESSEE WAS ITA NO232/VIZ/2011 DR. LAVU RATHAIAH, GUNTUR. 3 ACQUITTED FROM THE CHARGE OF ECONOMIC OFFENCE. THE WRITTEN SUBMISSIONS FURNISHED BY THE ASSESSEE WERE EXAMINED BY THE CIT( A) AND BEING NOT CONVINCED WITH IT HE CONFIRMED THE PENALTY. 6. NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND REITERATED ITS CONTENTIONS. DURING THE COURSE OF H EARING OF THE APPEAL, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE SEIZED DOCUMENT ON THE BASIS OF WHICH IMPUGNED ADDITIONS WERE MADE AND ON WHICH THE PENALTY U/S 158BFA WAS LEVIED WITH THE SUBMISSION THAT IN T HIS DOCUMENT THE SOURCE OF FUND WAS ALSO GIVEN. IF THE DETAILS OF THE ENTR IES ARE TO BE TAKEN INTO ACCOUNT, IT SHOULD BE TAKEN INTO ACCOUNT IN TOTO A ND NOT IN A PIECEMEAL MANNER. WHEREAS, THE ASSESSING OFFICER HAS PICKED UP THE CERTAIN ENTRIES FOR MAKING THE ADDITIONS. THE LD. COUNSEL FOR THE ASSE SSEE HAS SUBMITTED THAT SINCE THE SOURCE OF FUNDS WERE EXPLAINED IN THIS DO CUMENT IF ANY ADDITIONS ARE CALLED, IT CAN BE CALLED IN THE HANDS OF THE PAYERS . THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE TRANSACTIONS OF PURCHASE OF LAND WAS DULY RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSES SEES AND THIS DOCUMENT WAS NEITHER WRITTEN BY THE ASSESSEES NOR FOUND FROM THE ASSESSEES PREMISES. IT WAS FOUND FROM THE OFFICE OF THE ONE OF THE EDUC ATIONAL INSTITUTIONS. IF THE ASSESSING OFFICER INTENDED TO RELY UPON THIS DOCUME NT, HE SHOULD HAVE EXAMINED THE EXECUTANT OF THE DOCUMENT IN ORDER TO ASCERTAIN THE NATURE OF ENTRIES FOUND IN THIS DOCUMENT. INSTEAD OF DOING S O, THE ASSESSING OFFICER HAS DRAWN AN INFERENCE THAT ON MONEY WAS PAID BY THE AS SESSEE ON PURCHASE OF LAND AND MADE THE ADDITIONS. SINCE OTHER ADDITIONS OF SUBSTANTIAL AMOUNT WERE ALSO MADE IN THE HANDS OF THE ASSESSEE, THE AS SESSEE DEVOTED HIS MAIN CONCENTRATION ON THOSE ADDITIONS AND DID NOT OBJECT THIS ADDITION IN QUANTUM PROCEEDINGS. BUT IN ANY CASE, ON PRESUMPTIONS, AN ADDITION CAN BE MADE BUT PENALTY U/S 158BFA(2) CANNOT BE MADE UNLESS AND UNT IL IT IS PROVED THAT ASSESSEE HAS AN INTENTION TO CONCEAL ITS INCOME OR FURNISHED THE INACCURATE PARTICULARS. 7. THE LD. D.R. BESIDES PLACING A HEAVY RELIANCE UP ON THE ORDER OF THE CIT(A), HAS SUBMITTED THAT THIS DOCUMENT WAS FOUND FROM ONE OF THE EDUCATIONAL INSTITUTIONS BEING RUN BY THE ASSESSEE ITSELF. ONCE THE DOCUMENT ITA NO232/VIZ/2011 DR. LAVU RATHAIAH, GUNTUR. 4 WAS FOUND FROM THE ASSESSEES EDUCATIONAL INSTITUTI ON, IT IS FOR HIM TO EXPLAIN THE ENTRIES FOUND THEREIN. IF HE FAILS TO DO SO, T HE A.O. IS WITHIN ITS RIGHT TO DRAW AN INFERENCE. SINCE IT IS CLEAR FROM THE ENTR IES FOUND IN SEIZED DOCUMENT THAT CERTAIN ON MONEY WAS PAID BY THE ASSE SSEE ON PURCHASE OF LAND, THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE ADDITIONS AND LEVYING THE PENALTY U/S 158BFA(2) OF THE ACT. 8. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CA REFUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AV AILABLE ON RECORD, WE FIND THAT THE ADDITIONS WERE MADE ON THE BASIS OF THE DO CUMENT SEIZED FROM THE OFFICE OF THE ONE OF THE EDUCATIONAL INSTITUTION RU N BY THE ASSESSEE. ADMITTEDLY, THE SEIZED DOCUMENT WAS NOT IN THE HAND WRITING OF THE ASSESSEES NOR WAS IT FOUND FROM THE ASSESSEES PREMISES. THO UGH EDUCATIONAL INSTITUTION WAS BEING RUN BY THE ASSESSEE, BUT THE OFFICE FROM WHERE THIS DOCUMENT WAS FOUND WAS NOT IN THE EXCLUSIVE POSSESS ION OF THE ASSESSEE ONLY. BEFORE RELYING UPON THE ENTRIES FOUND IN THE DOCUMENT, THE ASSESSING OFFICER WAS REQUIRED TO EXAMINE THE EXECUTANTS OF T HE DOCUMENT IN ORDER TO UNDERSTAND THE ENTRIES FOUND THEREIN AND TO ASCERTA IN THE VERACITY THERE OF. NOTHING HAS BEEN BROUGHT BEFORE US THAT THE ASSESSE E WAS EVER ASKED BY THE A.O. TO PRODUCE THE EXECUTANTS OF THE DOCUMENT, IN ORDER TO ASCERTAIN THE VERACITY OF THE ENTRIES FOUND IN THE DOCUMENT. NO DOUBT THE ENTRIES FOUND IN THE DOCUMENT SPEAKS ABOUT THE PAYMENT OF ON MONEY B UT BESIDES THAT IT ALSO SPEAKS THE SOURCE OF FUNDS. FROM THIS DOCUMENT, IT IS NOT CLEAR WHETHER THE ON MONEY WAS PAID BY THE ASSESSEE. THE VENDOR OF T HE IMPUGNED LAND WAS ALSO EXAMINED BY THE A.O. AND IN HIS EXAMINATION HE CATEGORICALLY DENIED THE RECEIPT OF ON MONEY. IN THE ABSENCE OF ALL THESE E VIDENCE, THE ASSESSING OFFICER HAS DRAWN AN INFERENCE FROM THE SEIZED DOCU MENT THAT ON MONEY WAS PAID BY THE ASSESSEES. WE HAVE ALSO EXAMINED THE F ACT THAT ON PAYMENT OF ON MONEY THE CRIMINAL PROCEEDINGS WERE ALSO LAUNCHE D AGAINST THE ASSESSEE IN THE COURT OF SPECIAL JUDGE FOR ECONOMIC OFFENCE. BUT THE ASSESSEE WAS ACQUITTED IN THOSE CRIMINAL PROCEEDINGS ALSO. IN T HE LIGHT OF ALL THESE EVIDENCES, IT IS VERY DIFFICULT FOR US TO CONCLUDE THAT THE ON MONEY WAS IN FACT PAID BY THE ASSESSEE AND HE HAS CONCEALED THE FACTS OF PAYMENT OF ON MONEY. SO FAR AS ADDITION IN QUANTUM IS CONCERNED, IT HAS ALREADY ATTAINED ITA NO232/VIZ/2011 DR. LAVU RATHAIAH, GUNTUR. 5 THE FINALITY AND WE HAVE NO JURISDICTION TO MAKE CO MMENTS THEREON. BUT ON THE BASIS OF THE SEIZED DOCUMENT, WE ARE AFRAID THA T THE PENALTY U/S 158BFA IS SUSTAINABLE. FOR IMPOSING A PENALTY U/S 158BFA, THERE SHOULD BE A CONCLUSIVE EVIDENCE THAT THE ASSESSEE HAS EITHER CO NCEALED THE INCOME OR HAS FURNISHED THE INACCURATE PARTICULARS. ON THE BASIS OF THE PRESUMPTIONS, ADDITION CAN BE MADE BUT PENALTY CANNOT BE SUSTAINE D. WE, THEREFORE, OF THE VIEW THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES, PENALTY ON THE SEIZED DOCUMENT IS NOT SUSTAINABLE IN THE EYES OF LAW. AC CORDINGLY, THE ORDER OF THE CIT(A) IS SET ASIDE AND THE PENALTY LEVIED IS HEREB Y DELETED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 05.09.2011 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOU NTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 05 TH SEPTEMBER, 2011 COPY TO 1 DR. LAVU RATHAIAH, H.NO.4 - 7, BRODIPET, GUNTUR 2 DCIT CENTRAL CIRCLE - 2, HYDERABAD 3 THE CIT (CENTRAL), HYDERABAD 3 THE CI T, GUNTUR 4 THE CIT (A) , GUNTUR 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM