A Linga Reddy, Prop: Swapna Wines, Hyderabad V. ITO, Ward-1, Vikarabad

ITA 247/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74615 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 01-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: B SHANTI KUMAR
• Keywords: Unexplained investment; Business income; Additional evidence
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.245/HYD/2013 : ASSTT. YEAR 2006 - 07 ITA NO.246/HYD/2013 : ASSTT. YEAR 2007 - 08 ITA NO.247/HYD/2013 : ASSTT. YEAR 2008 - 09 ITA NO.248/HYD/2013 : ASSTT. YEAR 2009 - 10 SHRI A.LINGA REDDY, SANKARAPALLY, R.R. DISTRICT. ( PAN - AETPA 3504 J) V/S. INCOME TAX OFFICER WARD - 1, VIKARABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.SHANTIKUMAR RESPONDENT BY : SHRI SOLGY JOSE T. KOTTARAM DR DATE OF HEARING 6 .1.2014 DATE OF PRONOUNCEMENT 12.2.2014 O R D E R PER SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THESE FOUR APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST A COMMON ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) III, HYDERABAD, DATED 11.12.2012 FOR THE ASSESSMENT YEARS 2006 - 07 TO 2009 - 10. S INCE COMMON ISSUES ARE INVOLVED, THESE APPEALS ARE BEING DISPOSED OF WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FACTS OF THE CASE IN BRIEF , COMMON IN ALL THESE APPEALS, LEADING TO THE FILIN G O F THE PRESENT APPEALS, AS TAKEN FROM THE APPEAL FOR ASSESSMENT YEAR 2005 - 06 ARE THAT THE ASSESSEE IS CARRYING ON THE BUSINESS O F RUNNING A WINE SHOP UNDER THE NAME M/S.SWAPNA WINES. SURVEY UNDER S. 133A WAS CONDUCTED ON THE PREMISES OF THE ASSESSEE ON 25 TH OF MARCH, 2010. IT WAS FOUND THAT THE ASSESSEE HAD MORE INVESTMENTS IN CHIT FUNDS, LAND, ETC. TH E REAFTER STATUTORY NOTICES WERE ISSUED AND THE ASSESSMENTS WERE COMPLETED UNDER S.143(3) READ WITH S.147 OF THE ACT, FOR THE YEARS UNDER APPEAL, MAKING THE ADDITIONS TO THE I TA NO. 245 - 248 / HYD/201 3 SHRI A.LINGA REDDY, SANKARAPALLY RR DIST. 2 INCOME DISCLOSED FROM THE BUSINESS OF RUNNING THE WINE SHOP AND REAL ESTATE BUSINESS. IN THE ABSENCE OF PROPER EXPLANATION FURNISHED BY THE ASSESSEE TO THE SATISFACTION OF THE ASSESSING OFFICER, ADDITIONS WERE ALSO MADE ON ACCOUNT OF INVE STMENTS OF THE ASSESSEE IN CHITS AND PURCHASE OF LANDS. SUCH ADDITIONS MADE BY THE ASSESSING OFFICER FOR THE YEARS UNDER APPEAL ARE TABULATED BELOW - ADDITION ON ACCOUNT OF ASSESSMENT YEAR 2006 - 07 2007 - 08 2008 - 09 2009 - 10 LAND INVESTMENT 713785 1249158 2334512 144250 CHIT INVESTMENT 293990 219680 639346 560269 INCOME FROM BUSINESS 582476 1303877 1360243 1141250 INCOME FROM REAL ESTATE ---- 11850 788088 1150 THE ASSESSING OFFICER WHILE MAKING THE ADDITIONS ON ACCOUNT OF INCOME FROM WINE SHOP, ESTIMATED THE INCOME AT 3% FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CA S E OF M/S. KANAKADURGA WINES IN ITA NO.591/HYD/2011. SIMILARLY, INCOME FROM OTHER BUSIN E SS WAS ALSO ESTIMATED AT 10% OF TH E SALES. THE VARIOUS ADDITION S ON ACCOUNT OF UNEXPLAINED INVESTMENTS IN CHITS AND LANDS WERE MADE BY THE ASSESSING OFFICER AFTER CONSID E RIN G THE REPLIES FILED BY THE ASSESSEE, OBSERVING THAT THE ASSESSEE HAD NOT BEEN ABLE TO PROVIDE ANY DETAILS WITH RESPE CT TO THE SOU R CES FOR THE VARIOUS INVESTMENTS. THE ASSESSING OFFICER, WHILE FRAMING THE ASSESSMENTS FOR THE YEARS UNDER APPEAL WITH THE ABOVE ADDITIONS, PROVIDED SOME TELESCOPING WITH REGARD TO REAL ESTATE BUSINESS INCOME EARNED DURING THE RELEVANT YEAR AN D THE WITHDRAWALS FROM WINE SHOP, BUT DID NOT PROVIDE ANY TELESCOPING WITH RESPECT TO CARRY FORWARD OF INCOME EARNED DURING ONE YEAR AND INVESTED IN THE NEXT YEARS. 3. AGGRIEVED ASSESSEE PREFERRED APPEALS BEFORE THE CIT(A), CONTENDING INTER ALIA THAT AS THE ASSESSING OFFICER REJECTED THE BOOK R E SUL T S AND ESTIM A TED INCOME FROM WINE SHOP BUSINESS, WHICH RESULTED IN SUBSTANTIAL ADDITIONS, IT SHOULD HAVE BEEN CONSIDERED BY THE ASSESSING OFFICER THAT SUCH ADDITIONAL I TA NO. 245 - 248 / HYD/201 3 SHRI A.LINGA REDDY, SANKARAPALLY RR DIST. 3 INCOME DETERMINED BY HIM WAS AVAILABLE FOR THE ASSESSEE FOR MAKING THE INVESTMENTS IN LANDS AND CHITS. RELIANCE IN THIS BEHALF WAS MADE ON THE DECISION O F THE APEX COURT IN THE CASE OF ANANTHARAM V3EERASINGHAIAH & CO. V/S. CIT(123 ITR 457). THE ASSESSEE ALSO SOUGHT FOR SET OFF SHOULD BE GIVEN, CONS IDERING THE AGRICULTURAL INCOME OF VARIOUS FAMILY MEMBERS. IN THE ABSENCE OF PROPER DETAILS PROVIDED WITH REGARD TO LAND HOLDINGS AND AGRICULTURAL INCOME OF VARIOUS FAMILY MEMBERS, THE CIT(A) REJECTED THE CLAIM OF THE ASSESSEE IN THAT BEHALF. WITH REGARD TO THE PLEA OF THE ASSESSEE FOR TELESCOPING THE INCOME EARNED OVER THE YEARS WHILE DETERMINING THE AMOUNTS OF ADDITIONS MADE TOWARDS UNEXPLAINED INVESTMENTS, THE CIT(A), TAKING INTO ACCOUNT THE FACT THAT THE ASSESSING OFFICER ESTIMATED THE INCOME FROM BUS INESS AND CREDIT HAS BEEN GIVEN FOR THE HOUSE HOLD EXPENSES, OBSERVED THAT THE OBVIOUS PRESUMPTION IS THAT THE BALANCE AMOUNT WAS AVAILABLE FOR INVESTMENTS IN THE NEXT YEARS, AND ACCORDINGLY HELD THAT SOME AMOUNT OF TELESCOPING IS TO BE ALLOWED TO THE ASSESSEE. 4. PROCEEDING TO EXAMINE THE MATTER ON THAT BASIS, THE CIT(A), THOUGH CONFIRMED ALL THE THREE ADDITIONS MADE FOR THE ASSESSMENT YEAR 2006 - 07, GIVING THE ASSESSEE THE BENEFIT OF TELESCOPING OF THE ADDITIONS ON ACCOUNT OF UNEXPLAINED INVESTMENT S BY ESTIMATED ADDITION S TO THE INCOME FROM BUSINESS OF THE PRECEDING YEARS, REDUCED THE ADDITIONS MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS.5,82,475 FOR THE ASSESSMENT YEAR 2007 - 08; TO THE EXTENT OF RS.13,03,877 +11,850 FOR THE ASSESSMENT YEAR 200 7 - 08; AND TO THE EXTENT OF 13,60,243 FOR THE ASSESSMENT YEAR 2009 - 10. THE CIT(A) ACCORDINGLY PARTLY ALLOWED THE APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2007 - 08 TO 2009 - 10, WHILE DISMISSING THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006 - 07. 5. STILL A GGRIEVED BY THE ORDERS OF THE CIT(A), ASSESSEE PREFERRED FURTHER APPEALS BEFORE US. I TA NO. 245 - 248 / HYD/201 3 SHRI A.LINGA REDDY, SANKARAPALLY RR DIST. 4 6. THE GROUNDS OF THE ASSESSEE IN THESE APPEALS, BUT FOR THE AMOUNTS INVOLVED, ARE COMMON, AND THE SAME AS TAKEN FROM THE APPEAL FOR ASSESSMENT YEAR 2006 - 07 READ AS FOLLOWS - 1. THE CIT(A) ERRED IN NOT GIVING BENEFIT OF TELESCOPING THE ESTIMATED ADDITION OF RS.3,67,119 MADE IN CURRENT ASSESSMENT YEAR AGAINST INVESTMENT MADE BY APPELLANT IN LANDS AND CHITS IN CURRENT YEAR INSTEAD OF GIVING CREDIT IN N EXT YEARS. 2. THE CIT(A) IS NOT JUSTIFIED IN NOT CONSIDERING INCOME OF RS.3,45,000 FROM AGRICULTURAL LANDS HELD BY APPELLANTS FAMILY MEMBERS AS SOURCE OF INVESTMENT IN LANDS AND CHITS. 3. 7. THE LEARNED COUNSEL FOR THE ASSESSEE, REITERATING THE CONTENTIONS URGED BEFORE THE R E V E NUE AUTHORITIES, SUBMITTED THAT THE ADDITIONS SUSTAINED BY THE CIT(A) ARE UNJUSTIFIED AND UNCALLED FOR, AND THE ASSESSEE SHOULD HAVE BEEN GIVEN THE BENEFIT OF TELESCOPING OF THE ADDITIONS MADE, EVEN BY THE ESTIMATED ADDITI ONS MADE TO THE BUSINESS INCOME OF THE RELEVANT YEAR; AND ALSO BY THE AGRICULTURAL INCOME OF THE MEMBERS OF THE FAMILY. HE FURTHER SUBMITTED A PETITION UNDER RULE 29 OF ITAT RULES, 1963, WHEREBY HE SOUGHT TO FURNISH BEFORE US, COPIES OF DETAILS OF CROPS G ROWN, CERTIFICATES ISSU E D BY LAND REVENUE OFFIC E R/MRO, ADANGAL/PAHANI PATRAS, IN SUPPORT OF THE CLAIMS RELATING TO AGRICULTURAL INCOME OF THE FAMILY MEMBERS OF THE ASSESSEE, WHICH HAVE NOT BEEN ACCEPTED BY THE REVENUE AUTHORITIES FOR WANT OF EVIDENCE FURNI SHED TO SUBSTANTIATE THE CLAIMS OF THE ASSESSEE. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES AND SUBMITTED THAT THE CIT(A) HAS ALREADY GRANTED REASONABLE RELIEF THROUGH THE IMPUG NED ORDERS, AND THERE IS NO MERIT IN THE CONTENTIONS OF THE ASSESSEE IN THE PRESENT APPEALS, WHICH ARE LIABLE TO BE REJECTED. 9. WE HEARD BOTH SIDES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL AVAILABLE ON RECORD. THE MAIN GRIEV ANCE OF THE I TA NO. 245 - 248 / HYD/201 3 SHRI A.LINGA REDDY, SANKARAPALLY RR DIST. 5 ASSESSEE IN THESE APPEALS IS AGAINST THE NON - GRANTING OF THE BENEFIT OF TELESCOPING OF THE ADDITIONS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENTS, IN CHITS, PURCHASE OF LANDS, AND HOUSE BY THE ASSESSEE IN THE YEARS UNDER APPEAL, BY THE AMOUNTS OF ESTIMATED ADDITIONS MADE TO THE BUSINESS INCOME DECLARED BY THE ASSESSEE AND THE AGRICULTURAL INCOMES OF THE FAMILY MEMBERS OF THE ASSESSEE. THE ASSESSING OFFICER GAVE SOME BENEFIT OF TELESCOPING TO THE ASSESSEE WITH REGARD TO THE REAL ESTATE INCOME EARN ED DURING THE Y E AR AND THE WITHDRAWALS FROM THE WINE SHOP, BUT DID NO T PROVIDE ANY TELESCOPING WITH RESP EC T TO CARRIED FORWARD INCOME EARNED DURING ONE Y E AR AND IN VE STED IN THE NEXT YEARS, AND ALSO THE IN RESPECT OF AGRICULTURAL INCOME CLAIMED BY THE ASS ESSEE IN R E SPE C T OF ITS FAMILY MEMBERS. THE CIT(A) GAVE FURTHER RELIEF BY GRANTING TELESCOPING BENEFIT TO THE ASSESSEE OF THE ADDITIONS MADE TO THE INCOME FROM BUSINESS IN ONE YEAR AGAINST THE ADDITIONS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENTS IN THE SUCCEEDING YEARS. NEITHER THE ASSESSING OFFICER NOR THE CIT(A) GAVE THE A SSESSEE THE BENEFIT OF TELESCOPING OF THE ADDITIONS ON ACCOUNT OF UNEXPLAINED INVESTMENTS MADE IN ONE YEAR, BY THE ADDITION S TO THE BUSINESS INCOME MADE IN THAT VERY YEAR OR BY THE AGRICULTURAL INCOME CLAIMED BY THE ASSESSEE IN RESPECT OF ITS FAMILY MEMBER S. AS FAR AS NON - GRANTING OF TELESCOPING BENEFIT BY THE AMOUNT OF ADDITIONS MADE TO THE BUSINESS INCOME OF THAT VERY YEAR, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES. HOWEVER, AS FAR AS THE TELESCOPING BENEFIT IN REL A TI ON TO THE AGRICULTURAL INCOMES OF THE FAMILY MEMBERS OF THE ASSESSEE, WE FIND THAT THE REVENUE AUTHORITIES REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE COULD NOT ADDUCE ANY EVIDENCE TO SUBSTANTIATE THE CLAIMS OF SUCH AGRICULTURAL INCO ME. NOW THAT THE ASSESSEE HAS FURNISHED BEFORE US, BY WAY OF ADDITIONAL EVIDENCE, CERTIFICATES OF THE LAND REVENUE AUTHORITIES, DETAILS OF CROPS GROWN, ADANGAL/PAHANI PATRA, ETC., AND SIN C E THE SAID EVIDENCE HAS A BEARING ON THE DETERMINATION OF THE ISSUE IN DISPUTE BEFORE US, WE ADMIT SUCH ADDITIONAL EVIDENCE. SINCE THE REVENUE AUTHORITIES DID NO T H A VE OCCASION TO EXAMINE THE SAID EVIDENCE, THE SAME HAVING BEEN FURNISHE D FOR THE FIRST TIM E BEFORE US, WE REMIT THIS ASPECT OF THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE SAID EVIDENCE FUR N ISHED BY TH E ASSESSEE , AND DETERMINE THE I TA NO. 245 - 248 / HYD/201 3 SHRI A.LINGA REDDY, SANKARAPALLY RR DIST. 6 ALLOWABILITY OF THE BENEFIT OF TELESCOPING OF THE ADDITIONS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENTS, BY ANY OF THE AMOUNTS OF AGRICULTURAL INCOM E OF THE FAMILY MEMBERS OF THE ASSESSEE. THE ASSESSING OFFICER SHALL ACCORDINGLY REDETERMINE THE QUANTUM OF ADDITIONS THAT MAY BE WARRANTED TOWARDS UN E XPLAIN E D INVESTMENTS IN THE YEARS UNDER APPEAL, IN ACCORDANCE WITH LAW AND AFTER GIVING REASONABLE OPPOR T UNI T Y OF H E ARING TO THE ASSESSEE. 10. IN THE RESULT, ALL THE FOUR APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 12 TH FEBRUARY, 2014 SD/ - SD/ - (CHANDRA POOJARI ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - JANUARY, 2014 COPY FORWARDED TO: 1. SHRI A.LINGA REDDY, SWAPNA WINES, CHEVELLA ROAD, SANKARAPALLY, R.R. DISTRICT. 2 . INCOME - TAX OFFICER, WARD 1, VIKARABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) III, HYDERABAD 4. COMMISSIONER OF INCOME - TAX II HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S