Shri. S.M. Vibhuthi, Hubli V. ITO, Hubli

ITA 238/BANG/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9439 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-09-2009
• Assessment Year: 1995-1996
• Appeal Filed On: 20-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Assessee Lawyers: A R VIVEK
• Keywords: Unexplained investment
• Section: 143(2); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE B BENCH, BANGALORE BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI A. MOHAN ALANKAMONY, AM ITA NO.237,238,239,240 & 241(BANG.)/2009 (ASSESSMENT YEARS : 1994-95,95-96,96-97,97-98 & 98- 99) SHRI S.M.VIBHUTHI, NO.86, GREEN GARDEN, GOKUL ROAD, HUBLI APPELLANT VS THE INCOME-TAX OFFICER, WARD-2(2), HUBLI RESPOND ENT ASSESSEE BY : SHRI A.R.VIVEK REVENUE BY : SMT. V.S.SREELEKHA O R D E R PER SHAILENDRA KUMAR YADAV, JM: ALL THESE APPEALS PERTAIN TO SAME ASSESSEE ON SIMI LAR ISSUES, SO THEY ARE BEING DISPOSED OF BY A COMMON ORDER FOR TH E SAKE OF CONVENIENCE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL FOR THE ASSESSMENT YEAR 1994-95. 1 THE ORDER OF THE LOWER AUTHORITIES IS BAD IN LAW AND CONTRARY TO THE SETTLED PRINCIPALS OF LAW. THE APP ELLANT DENIES HIMSELF LIABLE TO BE ASSESSED AT RS.1,07,004 /- AS AGAINST THE RETURNED INCOME OF RS.32,004/-. ITA NOS.237 TO 241(B)/09 2 1. THE LEARNED CIT ERRED IN CONFIRMING THE ADDITION MA DE BY THE AO OF RS.75,000/- BEING INVESTMENT IN HOUSE PROPERTY ON THE FACTS AND CIRCUMSTANCES OF THE CASE . 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE EVIDENCE RELIED ON BY THE AO WAS BAD IN LAW AND DO NOT STAND THE TEST OF LAW. THE CIT(A) FAILED TO APPRECI ATE THAT THE AO HAD RELIED ON AN UNREGISTERED DOCUMENT OF SALE TO HOLD THAT THE APPELLANT WAS THE OWNER OF TH E HOUSE PROPERTY. 3. THE CIT(A) FAILED TO APPRECIATE THAT A REGISTERED S ALE DEED WAS IN NAME OF S.S.HUDDAR AND NOT IN THE NAME OF THE APPELLANT. 4. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION BASED IN THE RETRACTED STATEMENT OF THE APPELLANT O N THE FACT AND CIRCUMSTANCES SO THE APPELLANT. 2. APART FROM THIS, THE ASSESSEE HAS RAISED THE ADD ITIONAL GROUNDS, WHICH ARE AS UNDER: 1. THE AO WAS NOT JUSTIFIED IN LAW IN INITIATING THE ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE ORDER OF REASSESSMENT IS BAD IN LAW AND VOID AB INITIO FOR WANT OF REQUISITE JURISDICTION SPECIALLY , THE MANDATORY REQUIREMENT TO ASSUME JURISDICTION U/S 148 OF THE ACT DID NOT EXIST AND HAVE NOT BEEN COMPLIED WITH AND CONSEQUENTLY, THE REASSESSMENT REQUIRES TO BE CANCELLED AS THE REASONS RECORDED WE RE NOT FURNISHED TO THE APPELLANT AS PER THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF M/S GKN DRIVESHAFT (I) VS CIT, REPORTED IN 259 ITR 19. ITA NOS.237 TO 241(B)/09 3 3. AT THE OUTSET OF HEARING, LEARNED AR DID NOT PRE SS THE ISSUES RAISED IN THE ADDITIONAL GROUNDS, SO THE SAME ARE D ISMISSED, AS NOT PRESSED. 4. THE ASSESSEE ENGAGED IN THE REAL ESTATE BUSINESS . A SURVEY WAS CONDUCTED U/S 133 ON 15-12-1998. DURING THE COURSE OF SURVEY, IT WAS NOTICED THAT THE ASSESSEE HAD CONSTRUCTED A HOUSE P ROPERTY AT ANANDNAGAR. THE COST OF CONSTRUCTION WAS UNEXPLAINE D. THE ASSESSEE HAS DECLARED THE COST OF CONSTRUCTION AT RS.5.00 AK HS SPREAD OVER A PERIOD OF FIVE YEARS I.E. 1994-95 RS.75,000/- AY: 1 995-96 RS.85,000/- AY: 1996-97 RS.90,000/- AY: 1997-98 RS.1.00 LAKH AY : 1998-99 RS.1.50 LAKHS. IN RESPONSE TO NOTICE U/S 148, THE ASSESSEE FILED RETURN OF INCOME ON 20-12-1999 DECLARING A TOTAL INCOME OF RS.32,004/- FOR ASSESSMENT YEAR 1994-95. ON 08-02-2002, DURING TH E COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SHRI S.M.VIBHUT HI FILED AN AFFIDAVIT WHICH READS AS UNDER: 1) THAT THE ASSESSEE WAS DOING PETTY CONTRACT WORK S AND COMMISSION AGENCY ON SALE OF PLOTS, BUILDINGS ETC F ROM 1992-93 ONWARDS. 2) THAT HE HAD STOPPED DOING PETTY CONTRACT WORKS F ROM 1993-94 ONWARDS AND WAS DOING ONLY COMMISSION AGENCY ON PUR CHASE AND SALE OF PLOTS, HOUSES ETC. 3) THAT FOR THE AY: 1992-93 AND 2993-94, HIS INCOME WAS JUST ABOVE THE TAXABLE LIMITS ITA NOS.237 TO 241(B)/09 4 4) THAT THERE WAS SURVEY BY INCOME-TAX OFFICER,WARD -2(2), HUBLI ON 15-12-1998 AND THE INCOME TAX OFFICER INSISTED A ND COERCED HIM TO GIVE A STATEMENT OF INCOME FOR THE AY: 1994-95 TO 1 998-99 AND THAT THE STATEMENT WAS DICTATED BY THE CONCERNED INCOME-TAX OFFICER AND WAS WRITTEN BY THE ASSESSEE AS HE REMEMBERS. 5) THAT DUE TO COERCION AND THREAT OF PENALTIES AND PROSECUTION BY THE INCOME-TAX OFFICER AND AS HE WAS SUFFERING FROM HIGH BLOOD PRESSURE, DIABETES AND DYSENTERY AT THAT TIME, HE W ROTE THE STATEMENT AS DICTATED BY THE AO. 6) THAT THE ASSESSMENT YEAR WISE FIGURES ORIGINALLY WRITTEN WERE AS FOLLOWS, WHICH THE INCOME-TAX OFFICER CHANGED AG AIN WHEN FINAL SETTLEMENT WAS GIVEN: ASSESSMENT YEAR ORIGINAL FIGURES REVISED FIGURES 1994-95 65,000 75,000 1995-96 65,000 85,000 1996-97 70,000 90,000 1997-98 1,50,000 1,00,000 1998-99 1,50,000 1,50,000 7) THAT AS SOON AS HE REGAINED HIS COMPOSURE, HE WR OTE A LETTER DATED 16-12-1998 TO THE INCOME-TAX OFFICER, WARD-2(2), HU BLI STATING THAT THE LETTER GIVEN ON 16-12-1998 WAS UNDER PRESSURE AND D ENIED THE INCOMES AS SHOWN IN THE LETTER WRITTEN ON 16-12-1998 AT THE INSTANCE OF ITO, WARD-2(2), HUBLI. 8) THAT HE DENIES AND RETRACTS THE CORRECTNESS OF T HE TRANSACTIONS IN THE SWORN STATEMENT RECORDED AT THE TIME OR SURVEY. 9) THAT HE HAS FILED RETURNS OF INCOME FOR THE AY: 1994-95 TO 1998-99 ON 20-12-1999 IN RESPONSE TO NOTICES U/S 148 FOR TH E AY: 1994-95 TO 1998-99AND THAT NOTICES FOR THE AY: 1994-95 IS DATE D 10-03-1999. AY: ITA NOS.237 TO 241(B)/09 5 1995-96 IS DATED 21-10-1999 AND FOR AY: 1996-97 TO 1998-99, DATED 21-10-1999 RESPECTIVELY. 10) THAT THE INCOME TAX OFFICER, WARD-2(2), HUBLI H AS ISSUED NOTICES U/S 143(2) DATED 28-12-1999 WHICH WERE RECEIVED BY HIM IN THE FIRST WEEK OF JANUARY, 2000. 5. AFTER TAKING INTO CONSIDERATION THE ASSESSEES AFFIDAVIT AND PERSONAL ENQUIRIES WERE CONDUCTED FROM S.S.HUDDAR, THE PURCHASER OF ANANDNAGAR HOUSE PROPERTY AND AUDITORS OF SHAMBHAGI CO-OPERATIVE HOUSING SOCIETY. THE SWORN STATEMENT OF SRI S.S.HUD DAR WAS RECORDED AND DOCUMENTS LIKE COPY OF THE SALE DEED OF HOUSE P ROPERTY, SALE DEED OF PLOT AND BALANCE SHEET OF SHAMBHAGI CO-OP.HOUSIN G SOCIETY WERE OBTAINED. THE SAID SRI S.S. HUDDAR HAD CATEGORICALL Y STATED THAT HE HAS PURCHASED HOUSE PROPERTY FROM SHRI S.M.VIBHUTHI WHO SOLD THE PROPERTY ONLY IN HIS INDIVIDUAL CAPACITY AND NOT AS OFFICE BEARER OF SHAMBHAGI CO-OP.HOUSING SOCIETY. HE ALSO STATED TH AT THE PLOT STOOD IN THE NAME OF SHAMBHAGI CO-OP.HOUSING SOCIETY. TH EREFORE, THE SALE DEED IN RESPECT OF PLOT COMPONENT WAS EXECUTED BY T HE PRESIDENT OF SHAMBHAGI CO.OP. HOUSING SOCIETY AND SRI S.M.VIBHUT HI IN HIS CAPACITY AS SECRETARY OF THE SOCIETY. FURTHER, REG ARDING THE BUILDING COMPONENT, THE BUILDING BELONGED TO SRI S.M.VIBHUTH I FOR WHICH A SALE DEED IS MADE ON STAMP PAPER VALUE OF RS.200/- WHREB Y IT WAS STATED THAT A SUM OF RS.4,60,00/- WHICH WAS PAID TO SRI S. M.VIBHUTHI ARE AS UNDER; ITA NOS.237 TO 241(B)/09 6 DATE CHEQUE NO. AMOUNT 12/11/98 7061 100,000 4/12/98 7062 100,000 4/12/98 7063 100,000 4/12/98 7064 100,000 4/12/98 7065 50,000 CASH 10,000 TOTAL 4,60,000 6. HE FURTHER STATED THAT POSSESSION OF THE PROPERT Y WAS TAKEN FROM SRI S.M.VIBHUTHI AND THAT THE SALE CONSIDERATI ON OF RS.4,60,000/- WAS PASSED ON TO HIM IN THE ABOVE SAID MANNER AND N OT TO SHAMBHAGI CO.OP. HOUSING SOCIETY. THE SIZE OF THE PLOT IS S TATED TO BE 4 GUNTAS AND 11 ANNAS AND CONSTRUCTED PORTION IS STATED TO B E 1400 SQ.FT ON BOTH THE FLOORS TOGETHER. COPIES OF THE BALANCE SH EET AND FINAL ACCOUNTS OF SHAMBHAGI CO.OP. HOUSING SOCIETY WERE OBTAINED F ROM THE ASSISTANT DIRECTOR OF CO.OPERTIVE AUDIT, DHARWAD FOR THE FINA NCIAL YEARS 1993-94 TO 1997-98 FROM WHERE IT WAS FOUND THAT THE BUILDIN G WAS NOT APPEARING FROM THE ASSET SIDE OF THE BALANCE SHEET NOR ANY EXPENDITURE TOWARDS CONSTRUCTION IS DEBITED IN ANY OF THE YEARS . TAKING ALL THESE FACTS INTO CONSIDERATION, IT WAS INFERRED THAT THE BUILDING BELONGED TO SRI S.M.VIBHUTHI. THE AO CONVEYED THE FOLLOWING FAC TS TO THE ASSESSEE WHICH ARE AS UNDER; 1) LETTER DATED 6/12/98 DENYING THE INCOME DECLARED ON 15/12/98 AND 16/12/98 IS NOT ON RECORD AND NO PROOF OF HAVING FILED SUCH LETTER IS PRODUCE D. ITA NOS.237 TO 241(B)/09 7 2) ON THE CONTRARY, A SUBSEQUENT LETTER FILED BY TH E ASSESSEE ON 8/11/99 REVEALS THAT THE ASSESSEE HAS ONLY SOUGHT TIME TO FILE THE RETURNS. 3) IN THE RETURNED INCOME, NO DRAWINGS HAVE BEEN SHOWN TOWARDS CONSTRUCTION OF HOUSE 7. IN THE ABOVE BACKGROUND, IT WAS PROPOSED TO ADD COST OF THE CONSTRUCTION AS ADMITTED AT THE TIME OF SURVEY TO T HE RETURNED INCOME YEAR WISE. THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO VERIFY THE DOCUMENTS AND CROSS EXAMINE SRI S.S.HUDDAR ON 8 TH MARCH, 2002. THE ASSESSEE FILED A LETTER DATED 7/3/2002 REQUESTING T O SUPPLY XEROX COPIES OF THE STATEMENT ON OATH, COPY OF THE SALE DEED AND COPY OF HIS LETTER DATED 2/11/99. ACCORDINGLY, COPIES OF ASSESSEES S WORN STATEMENT DATED 15/12/98 HIS LETTER DATED 16/12/98 AND COPY OF HIS LETTER DATED 9/11/99 WERE SUPPLIED TO HIM AND HE WAS ASKED TO GO THOUGH THE SWORN STATEMENT OF SRI S.S.HUDDAR AND CROSS EXAMINE SRI S .S.HUDDAR ON 8/3/2002. ON 11/3/2002 SRI S.M.VIBHUTHI ALONGWITH HIS AR APPEARED BEFORE THE AO AND WENT THROUGH THE STATEMENT OF S.S .HUDDAR AND NOTED THE CONTENTS FROM IT. ON 12/3/2002, THE ASSESSEE F ILED AN ADJOURNMENT LETTER STATING THAT DUE TO SHIVARATRI FASTING IT WA S NOT POSSIBLE FOR HIM TO APPEAR. HE FURTHER INFORMED WITH REGARD TO APPEARA NCE ON 18/3/2002 WITH THE INFORMATION THAT SRI S.S.HUDDAR WILL BE AV AILABLE FOR CROSS EXAMINATION ON 18/3/2002. UNFORTUNATELY, NONE APPEA RED ON 18/3/2002 TO FILE CROSS EXAMINATION OF THE SAID S.S .HUDDAR. HOWEVER, ITA NOS.237 TO 241(B)/09 8 ON 20/3/2002 THE AR FOR THE ASSESSEE FILED A LETTER DATED 18/3/2002 WITH THE FOLLOWING SUBMISSIONS: I DO REITERATE THAT MY STATEMENT RECORDED BY YOU ON 15/2/98 AND MY LETTER DATED 16/12/98 WERE GIVEN UNDER COERCION AND THREAT AND NOT BASED ON GROUND REALITIES. I HAVE FILED A DENIAL LETTER IMMEDIATELY. THEREAFTER, ON 16/12/98 DENYING THE CONTENTS OF THE STATEMENT 15/12/98 AND LETTER DATED 16/12/98. THE LETTER OF DENIAL DATED 16/12/98 AS SENT BY POST TO YOUR OFFICE UNDER CERTIFICATE OF POSTING. WHAT IS RECORDED UNDER COERCION AND PRESSURE IS NOT BINDING UPON ME. I AM ENCLOSING HEREWITH A COPY OF THE DENIAL LETTER DATED 16/12/98 AND A COPY OF THE CERTIFICATE OF POSTING FOR YOUR REFERENCE AND RECORD. 8. IN THE ABOVE BACKGROUND, THE AO CONCLUDED THAT SRI S.S.HUDDAR HAS MADE PAYMENTS TO THE ASSESSEE FOR RS .4,60,000/- WITH REGARD TO THE HOUSE PROPERTY AT ANANDNAGAR, HUBLI W HICH WAS CONSTRUCTED BY SRI S.M.VIBHUTHI AND THE SAME WAS AD MITTED BY THE ASSESSEE DURING THE COURSE OF SURVEY AT RS.5.00 LAK HS AND WAS SPREAD OVER FOR FIVE YEARS AS UNDER: ASSESSMENT YEAR AMOUNT 1994-95 75,000 1995-96 85,000 1996-97 90,000 1997-98 100,000 1998-99 150,000 ITA NOS.237 TO 241(B)/09 9 9. ACCORDINGLY, THE AO CONCLUDED THE ASSESSMENT AN D COMPUTED THE TOTAL INCOME AT RS.1,07,004/- FOR ASSESSMENT YE AR 1994-95. THE AO MADE AN ADDITION OF RS.75,000/- RELATING TO UNEXPLA INED INVESTMENTS FOR CONSTRUCTION OF RESIDENTIAL HOUSE PROPERTY WHIC H WAS ADMITTED BY THE ASSESSEE DURING THE COURSE OF SURVEY. BEFORE US, LEARNED AR DENIED ALL THE DOCUMENTS AND STATEMENTS WITH REGARD TO WHICH THE ASSESSEE PREFERRED NOT TO CROSS EXAMINE WHEN OPPORT UNITY WAS GIVEN TO HIM WITH REGARDS TO SAME. LEARNED AR DENIED HIMSEL F TO BE THE OWNER OF THE SAID HOUSE PROPERTY AND STATED THAT HE DOES NOT OWN HOUSE PROPERTY BEING SITUATED AT NO.1, ANANDNAGAR, HUBLI. THE ASSESSEE IS TAKING THIS STAND BEFORE US, BUT THE ASSESSEE DID N OT PREFER TO CROSS EXAMINE THE PURCHASER I.E S.S.HUDDAR AND THE ASSESS EE EVEN DID NOT PREFER TO CROSS EXAMINE WITH REGARDS TO DOCUMENTS R ELIED BY THE AO FOR WHICH SUFFICIENT OPPORTUNITY WAS PROVIDED TO THE AS SESSEE AS STATED ABOVE. EVEN BEFORE US, THERE IS NO REASONABLE EXPLA NATION FOR NOT AVAILING CROSS EXAMINATION PROVIDED BY THE AO AT TH E RELEVANT POINT OF TIME. THE ASSESSEE SUBMITTED THAT HE HAD RETRACTED FROM THE STATEMENT RECORDED DURING THE COURSE OF SURVEY, BUT HIS NON-A VAILING OF CROSS EXAMINATION OF S.S.HUDDAR, THE PURCHASER WITH REGAR DS TO DOCUMENTS RELIED BY HIM DOES NOT SUBSTANTIATE THE STAND OF RE TRACTION BY ASSESSEE. MOREOVER, THE ASSESSEE WAS HAVING ELECTRICITY AND T ELEPHONE CONNECTION IN HIS NAME AT THE HOUSE PROPERTY IN QUESTION. UNDE R THE FACTS AND CIRCUMSTANCES, THE AO JUSTIFIED TO MAKE THE ADDITIO N IN QUESTION ON ITA NOS.237 TO 241(B)/09 10 ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION O F HOUSE IN QUESTION. THE SIMILAR ADDITIONS WERE ALSO MADE IN REMAINING FOUR YEARS. THE FACTS BEING SAME, SO FOLLOWING THE SAME REASONING, THE ORDER OF AUTHORITIES BELOW NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 10. IN THE RESULT, THE APPEALS FILED BY THE ASSESS EE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH SEPTEMBER, 2009. ( A. MOHAN ALANKAMONY) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: BANGALORE DATED: 30-09-2009. AM * COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. CIT(A) 4. CIT 5. DR 6. GF(BLORE) 7. GF(DELHI AR, ITAT, BANGALORE