Income Tax Officer Ward-4(3)(5), Bangalore V. Sri Sagiraju Narasaraju , Bangalore

ITA 2470/BANG/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7360 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-07-2020
• Assessment Year: 2007-2008
• Appeal Filed On: 21-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MUZAFFAR HUSSAIN CIT DR SHRI V
• Keywords: Unexplained investment
• Section: 69; 154; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI. B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.2470/BANG/2017 ASSESSMENT YEARS : 200708 THE INCOME TAX OFFICER. WARD-4(3)(5), BANGALORE. VS. SRI SAGIRAJU NARASARAJU (LATE)L/R BY SRI S.N.V.L NARASIMHA RAJU, NO.40, 1 ST PHASE, J.P NAGAR, BENGALURU-560 078. PAN AATPN 4172 B APPELLANT RESPONDENT APPELLANT BY : SHRI MUZAFFAR HUSSAIN, CIT - DR RESPONDENT BY : SHRI V SRINIVASAN, ADVOCATE DATE OF HEARING : 08-07-2020 DATE OF PRONOUNCEMENT : 14-08-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY REVENUE AG AINST ORDER DATED27/09/2017, PASSED BY LD.CIT(A) BANGALORE FOR ASSESSMENT YEAR 2007-08, ON FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. CIT (A), IN SO FAR AS IT I S PREJUDICIAL TO THE INTEREST OF THE REVENUE, IS OPPOSED TO LAW AND THE FACT AND CIRCUMSTANCES OF THE CASE. 2. ON FACTS OF THE CASE, WHETHER THE DECISION OF TH E LD CIT (A) IS RIGHT IN ALLOWING THE APPEAL OF ASSESSEE, WHEN THE ASSESSEE GAVE A COMMITMENT PAGE 2 OF 8 ITA 2470/BANG/2017 BEFORE THE ASSESSING OFFICER DURING SURVEY PROCEEDI NGS THAT ASSESSEE WILL DECLARE ADDITIONAL INCOME OF RS. 7 CRORES. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT (A) IN SO FA R AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSESSING O FFICER MAY BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND / OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED. BRIEF FACTS OF THE CASE ARE AS UNDER: 2. ONLY ISSUE ALLEGED BY REVENUE IS REGARDING DELET ING ADDITION OF RS.7CRORES, EVEN AFTER COMMITMENT BY ASSESSEE TO OFFER IT TO TAX DURING SURVEY PROCEEDINGS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE APPELL ANT IS AN INDIVIDUAL AND CHAIRMAN OF M/S. CHILDREN EDUCATION SOCIETY. THE APPELLANT FILED HIS RETURN OF INCOME ON 12.09.2 007 DECLARING INCOME OF RS. 3042030/-. A SURVEY WAS CONDUCTED I N THE PREMISES OF M/S. CHILDREN EDUCATION SOCIETY AND THE ASSESSEE GAVE A COMMITMENT BEFORE THE A.O. ON 29.03.2007 TH AT HE WILL DECLARE IN HIS INDIVIDUAL CAPACITY A TOTAL INCOME O F RS.7 CRORES IN THE NAME OF THE APPELLANT, SHRI S.N.V.L.NARASIMHA R AJU AND SMT. SHAKUNTHALA. THE ABOVE COMMITMENT GIVEN BY THE APPELLANT WAS FURTHER CONFIRMED BY THE LETTER DATED 18.04.200 7 FILED BEFORE THE A.O. ALTHOUGH THE APPELLANT GAVE THE ABOVE COMM ITMENT, HE DID NOT DISCLOSE THE ADDITIONAL INCOME OF RS.7 CROR ES AS PER THE COMMITMENT EITHER IN HIS HANDS OR IN THE NAMES OF T HE OTHER FAMILY MEMBERS MENTIONED ABOVE. HENCE, THE A.O. ASK ED THE APPELLANT TO CLARIFY HIS STAND WITH REGARD TO THE A DDITIONAL INCOME TO BE DISCLOSED IN THE ASSESSMENT. THE APPELLANT CO NTENDED THAT HE HAD DECLARED NON-EXISTING INCOME OUT OF DESPERAT ION SINCE CERTAIN ORIGINAL PAPERS WERE IMPOUNDED IN COURSE OF SURVEY. THE PAGE 3 OF 8 ITA 2470/BANG/2017 A.O. HAS EXAMINED THIS STAND OF THE APPELLANT AND H AS REJECTED THE SAME OBSERVING THAT THE APPELLANT HAD GIVEN THE COMMITMENT ON 2 OCCASIONS WITH A TIME GAP OF 20 DAYS. HENCE, T HE PLEA OF THE DESPERATION BEHIND GIVING THE ABOVE COMMITMENT OF O FFERING ADDITIONAL INCOME WAS REJECTED BY THE AO. 4. IN SURVEY, AN ORIGINAL AGREEMENT TO SELL EXECUTE D ON 17.04.2006 BETWEEN SRI NAGABHUSHAN AND CHILDREN EDU CATION SOCIETY AS PER WHICH SALE CONSIDERATION OF RS.7,05, 67,200/- WAS AGREED UPON FOR PURCHASE OF 45 GUNTAS OF LAND, WAS FOUND. THE A.O. HAS SET-OUT THE PAYMENTS MADE IN CASH AND CHEQ UE TO THE EXTENT OF RS.6.35 CRORES IN RESPECT OF THE ABOVE AG REEMENT. THE A.O. HAS ALSO MENTIONED THAT IN THE SURVEY, A SALE DEED EXECUTED BY SRI NAGABHUSHAN ON 08.06.2006 SHOWING CONSIDERAT ION OF RS.1 CRORE ONLY WAS FOUND AND THE APPELLANT HAD AGR EED THAT THE ACTUAL SALE CONSIDERATION FOR PURCHASE OF THE LANDS WAS RS.7,05,67,200/- IN A STATEMENT U/S.131 ON 08.12.20 0. 5. THE A.O. HAS OBSERVED IN THE ASSESSMENT ORDER T HAT THE INVESTMENT IN PURCHASE OF LAND WAS MADE BY M/S. CHI LDREN EDUCATION SOCIETY AND AN ADDITION TOWARDS UNEXPLAIN ED INVESTMENT TOWARDS PURCHASE OF CONVERTED LAND BY M/ S. CHILDREN EDUCATION SOCIETY IN RESPECT OF THE ABOVE TRANSACTI ON HAS ALREADY BEEN MADE. THE A.O. NOTED THAT THE DIFFERENCE BETWE EN THE CONSIDERATION AS PER THE ABOVE SALE AGREEMENT AND S ALE DEED HAS BEEN ASSESSED ON SUBSTANTIVE BASIS IN THE HANDS OF MIS. CHILDREN EDUCATION SOCIETY AND SINCE THE APPELLANT HAD AGREE D TO OFFER THE ADDITIONAL INCOME OF RS.7 CRORES IN HIS HANDS AND H IS OTHER FAMILY MEMBERS, THE SAME IS CONSIDERED IN THE APPEL LANT'S CASE ON PROTECTIVE BASIS. THE A.O HAS OBSERVED THAT THE OTHER FAMILY PAGE 4 OF 8 ITA 2470/BANG/2017 MEMBERS OF THE APPELLANT WERE NOT PARTY TO THE UNDE RTAKING OF THE APPELLANT AND HENCE, NO ADDITION WAS MADE IN TH EIR HANDS. FOR THIS REASON, THE A.O. MADE THE PROTECTIVE ADDIT ION OF RS. 7 CRORES IN THE CASE OF THE APPELLANT 6. AGGRIEVED BY ORDER OF LD.AO ASSESSEE PREFERRED A PPEAL BEFORE LD.CIT(A) 7. LD.CIT(A) DECIDED THE ISSUE AS UNDER: 6.2 AFTER CONSIDERING THE ABOVE SUBMISSIONS, I AM OF THE VIEW THAT THE PROTECTIVE ADDITION MADE IN THE CASE OF THE APPELLA NT HAS TO BE DELETED. IT IS SEEN THAT THE APPELLANT HAD VOLUNTARILY ADMITTED TH AT A SUM OF RS.7 CRORES WILL BE OFFERED AS ADDITIONAL INCOME IN HIS HANDS A ND IN THE HANDS OF 2 OTHER FAMILY MEMBERS BEFORE THE A.Q. THE A.O. HAS HELD TH AT THE ABOVE ADMISSION OF THE APPELLANT WAS DUE TO THE DISCOVERY OF THE UNEXP LAINED INVESTMENT IN PURCHASE OF PROPERTY BY MIS. CHILDREN EDUCATION SOC IETY IN COURSE OF SURVEY. SINCE THE UNEXPLAINED INVESTMENT RELATED TO NI/S. C HILDREN EDUCATION SOCIETY, THE A.O. HAS TAXED THE APPELLANT ONLY ON PROTECTIVE BASIS AND NOT SUBSTANTIVE BASIS. AS SUCH, THERE IS NO DISPUTE THAT THE MATERI AL FOUND IN COURSE OF SURVEY RELATED TO M/S. CHILDREN EDUCATION SOCIETY AND NOT THE APPELLANT. 6.3 IT HAS BEEN BROUGHT TO MY NOTICE THAT THE A.O. IN THE CASE OF MIS. CHILDREN EDUCATION SOCIETY HAD ORIGINALLY MADE AN ADDITION O F RS.6,05,67,200/- AS UNEXPLAINED INVESTMENT IN PURCHASE OF LAND ON THE BASIS OF THE DOCUMENTS FOUND IN COURSE OF SURVEY. THIS ADDITION WAS MADE O N THE BASIS OF THE CONSIDERATION OF RS.7,05,67,200/AS PER THE SALE AGR EEMENT AND DEDUCTING THE SUM OF RS. 1,00,00,000/- SHOWN IN THE SALE DEED. MI S. CHILDREN EDUCATION SOCIETY FILED AN APPLICATION U/S.154 OF THE ACT, BE FORE THE A.O. THAT THE ENTIRE CONSIDERATION OF RS.7,05,67,200/- WAS REFLECTED IN ITS BOOKS OF ACCOUNTS AND THERE WAS NO UNEXPLAINED INVESTMENT. THE A.O. AFTER EXAMINING THE SAID CLAIM HAS PASSED AN ORDER U/S.154 OF THE ACT ON 02.06.20 10 REDUCING THE ADDITION TO RS.4,05,67,200/- AFTER ACCEPTING THAT A SUM OF R S.2,00,00,000/- PAID BY CHEQUE WAS TO BE ACCEPTED AS EXPLAINED. THE A.O. HE LD THAT THE CASH PAYMENTS WERE NOT EXPLAINED AND REJECTED THE CLAIM OF F'41S. CHILDREN EDUCATION SOCIETY AT THE CASH PAYMENTS WERE RECORD. ..D IN ITS BOOKS OF ACCOUNTS. HENCE, EVEN THE UNEXPLAINED INVESTMENT HA S BEEN WORKED OUT TO RS. 4,05,67,200/- AND NOT RS. 7,00,00,000/- 6.4 I ALSO FIND THAT THE COMMISSIONER OF INCOME-TA X [APPEALS]-14, LTU, BANGALORE VIDE ORDER IN ITA NO.608/DCJT/CC-1(3)/CIT (A)14/2009-10 DATED 20.09.2016 HAS DELETED THE ADDITION OF RS.6,05,67,2 00/- HOLDING THAT THE INVESTMENT MADE BY M/S. CHILDREN EDUCATION SOCIETY IN PURCHASE OF LAND WAS REFLECTED IN THE BALANCE SHEET AND THE PROVISIONS O F SECTION 69 OF THE ACT, CANNOT BE INVOKED. HENCE, THERE IS NO UNEXPLAINED I NVESTMENT MADE BY M/S. CHILDREN EDUCATION SOCIETY AS PER THE APPELLATE ORD ER PASSED BY THE CIT [A] - 14, BANGALORE. PAGE 5 OF 8 ITA 2470/BANG/2017 6.5 THUS THE SUBSTANTIVE ADDITION MADE IN THE CASE OF M/S. CHILDREN EDUCATION SOCIETY HAS BEEN DELETED ON MERIT HOLDING THAT THERE IS NO UNEXPLAINED INVESTMENT AT ALL. CONSIDERING THE FACT THAT THE ADDITIONAL INCOME WAS AGREED TO BE OFFERED BY THE APPELLANT ON THE BA SIS OF THE ABOVE FINDINGS IN SURVEY REGARDING UNEXPLAINED INVESTMENT MADE BY NI/S. CHILDREN EDUCATION SOCIETY AND ALSO CONSIDERING THE FACT THA T THE ADDITION HAS BEEN DELETED ON MERITS, THE PROTECTIVE ADDITION MADE IN THE HANDS OF THE APPELLANT DOES NOT REQUIRE TO BE SUSTAINED EITHER ON PROTECTI VE BASIS OR ON SUBSTANTIVE BASIS. THE FACT THAT THE APPELLANT AGREED TO OFFER THE INCOME CANNOT BE THE SOLE BASIS FOR MAKING ANY ASSESSMENT AS THE INCOME HAS T O BE ASSESSED ONLY IN THE I1.NLUS O1T ILIC PROPER PERSON AND NOT MERELY O IL THE BASIS OF THE ADMISSION. ACCORDINGLY, THE PROTECTIVE ADDITION IS HEREBY DELETED. 8. AGGRIEVED BY ORDER OF LD.CIT(A), REVENUE IS IN A PPEAL BEFORE US. 9. LD.CIT.DR PLACED RELIANCE ON ORDER OF LD.AO. 10. LD.AR SUBMITTED THAT, ALLEGED UNEXPLAINED INVES TMENT WAS SUBSTANTIVELY ASSESSED IN THE HANDS OF M/S CHILDREN S EDUCATION SOCIETY FOR AN AMOUNT OF RS.6,05,67,200/-. LD.AR SU BMITTED BEFORE US THAT M/S.CHILDRENS EDUCATION SOCIETY FILE D RECTIFICATION APPLICATION BEFORE ASSESSING OFFICER, FOR A MISTAKE ARISEN IN QUANTUM OF ADDITION. HE PLACED RELIANCE ON ORDER UN DER SECTION 154 PLACED AT PAGE 33 OF PAPER BOOK, WHEREIN, ADDIT ION SUBSTANTIALLY STOOD REDUCED TO RS.2,00,00,000/-. 11. LD.AR SUBMITTED THAT PROTECTIVE ADDITION RS.7, 00,00,000/- MADE IN HANDS OF ASSESSEE FOR YEAR UNDER APPEAL I S UNJUSTIFIED AND UNWARRANTED. 12. LD.AR BROUGHT TO OUR NOTICE ORDER OF THIS TRIBUNAL DATED 28.08.2019, PASSED IN CASE OF M/S.CHILDRENS EDUCATI ON SOCIETY IN ITA NO.2164/BANG/2016 FOR ASSESSMENT YEAR 2007-0 8 IN RESPECT TO SUBJECT ISSUE AS UNDER: 15. WE FIND THAT THERE IS NO OTHER ISSUE IN THE APP EAL OF THE REVENUE FOR A. Y. 2011 12 BUT IN A. Y. 2007 08, THERE IS ONE MORE I SSUE RAISED BY THE REVENUE. THIS ISSUE IS RAISED BY THE REVENUE AS PER GROUND N O. 3 IN RESPECT OF ADDITION PAGE 6 OF 8 ITA 2470/BANG/2017 MADE BY THE AO FOR ALLEGED UNEXPLAINED INVESTMENT D ELETED BY CIT (A). WE FIND THAT THAT AS PER THE ORIGINAL ASSESSMENT ORDER DATED 31.12.2009, ADDITION ON THIS ACCOUNT WAS MADE OF RS. 665672001- BUT AS PER THE ORDER DATED 02.06.2010 PASSED U/S 154 COPY AVAILABLE ON P AGES 28 TO 30 OF THE PAPER BOOK, THIS ADDITION WAS REDUCED BY RS. 2 CROR ES. WE ALSO FIND THAT THIS ADDITION WAS MADE BY THE AO ON THIS BASIS THAT AS P ER THE AGREEMENT TO SELL DATED 17.04.2006 IMPOUNDED, THE ACTUAL CONSIDERATIO N IS RS, 7,05,67,200/- AS AGAINST THE REGISTERED CONSIDERATION OF RS. 1 CR ORE AND IN THIS MANNER, THE AO MADE ADDITION OF RS. 665,67,200/- LATER REDUCED BY RS. 2 CRORES AS PER ORDER U/S 154 BECAUSE IT WAS SHOWN THAT OUT OF THIS PAYMENT OF RS. 665,67,200/-, RS. 2 CRORES WAS PAID BY WAY OF TWO C HEQUES. ALTHOUGH, THIS WAS THE SUBMISSION THAT ENTIRE PAYMENT IS ACCOUNTED FOR AND HENCE, NO ADDITION JUSTIFIED BUT THE AO ALLOWED RELIEF U/S 15 4 TO THE EXTENT OF RS.2 CRORES BEING TWO PAYMENTS MADE BY CHEQUE AN US, THE LEARNE D AR OF THE ASSESSEE HAS PRODUCED THE BALANCE SHEET OF THE ASSESSEE ALSO AS ON 31.03.2007 AND IN THE SAME, INVESTMENT IN LAND AT SY. NO. 6/9 AND 6/1 1 (45 GUNTAS) SHOWN AT RS.716,71,470!-N AS PER COPY OF LEDGER ACCOUNT AVAI LABLE ON PAGES 16 &B 17 OF THE PAPER BOOK INITIAL CASH PAYMENT WAS MADE OF RS. 1 CRORE IN MARCH 2006 AND IN F. Y. 2006 - 07 TWO PAYMENTS TOTALLING RS. 2 CRORES WEREMADE BY CHEQUES AND AN AMOUNT OF RS. 405,67,2001- WAS MADE BY CASH ON VARIOUS DATES. THE A0 HAS ACCEPTED THE CASH PAYMENT OF RS. 1 CRORE PAID IN F. Y. 2005 - 06 IN THE ASSESSMENT ORDER ITSELF AND MADE A DDITION OF THE BALANC. AMOUNT OF RS. 605.67200!- AND LATER IN THE ORDER U/ S 154, HE ACCEPTED THE CHEQUE PAYMENTS. AS PER NOTE 5 ATTACHED TO THE SAID BALANCE SHEET AS ON 31.03.2007 SHOWING BREAK UP OF CASH AND BANK BALANC ES, THERE WAS CASH IN HAND OF RS 46853,019.09 AS ON 31.03.2007 EVEN AFTER THIS CASH PAYMENT OF RS. 405,67,200/- AND HENCE, CASH AVAILABILITY CANNO T BE DOUBTED. ENTIRE CASH PAYMENT AND CHEQUE PAYMENT FOR THIS LAND IS SHOWN I N THE BALANCE SHEET AS INVESTMENT IN FIXED ASSETS. IN VIEW OF THESE ENTIRE FACTS, IT CANNOT BE SAID THAT THERE IS ANY UNEXPLAINED INVESTMENT IN THIS LAND IN QUESTION AND THEREFORE, WE FIND NO REASON TO INTERFERE IN THE ORDER CIT (A) ON THIS ISSUE ALSO. 13. LD.AR SUBMITTED THAT THIS TRIBUNAL HAS RENDERED A F INDING REGARDING RS.7,05,67,200/- STOOD ACCOUNTED FOR IN T HE HANDS OF M/S CHILDRENS EDUCATION SOCIETY, AND THEREFORE PROT ECTIVE ASSESSMENT IN THE HANDS OF ASSESSEE TO BE DELETED. 14. LD.CIT,DR WOULD NOT CONTRADICT THE ABOVE FACTUA L OBSERVATION BY THIS TRIBUNAL. 15. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SI DES IN LIGHT OF RECORDS PLACED BEFORE US. PAGE 7 OF 8 ITA 2470/BANG/2017 16. IN THE PRESENT CASE SUM OF RS.7,05,67,200/- HAS BEEN ADDED IN THE HANDS OF ASSESSEE ON PROTECTIVE BASIS. THIS TRIBUNAL DELETED ADDITION IN CASE OF M/S CHILDREN E DUCATION BY HOLDING THAT RS.7,05,67,200/- STOOD EXPLAINED AND A CCOUNTED FOR AND THAT BALANCE SHEET OF M/S CHILDREN EDUCATION SO CIETY REVEALED SUFFICIENT CASH AVAILABILITY AS ON 31/03/2 007. UNDER SUCH CIRCUMSTANCES WE DO NOT FIND ANY MERIT I N ASSESSING THE AMOUNT IN THE HANDS OF ASSESSEE ON PROTECTIVE B ASIS. ACCORDINGLY, GROUNDS RAISED BY REVENUE STANDS ALLOW ED. IN THE RESULT, APPEAL BY REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH AUGUST, 2020. SD/- SD/- (B. R. BASKARAN) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL ME MBER BANGALORE, DATED, THE 14TH AUGUST, 2020 /VMS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL. BANGALORE PAGE 8 OF 8 ITA 2470/BANG/2017 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -08-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -08-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -08-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -08-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -08-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -08-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -08-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS