Thamanampudi Venkata Rama Krishna Reddy, Palangi, Undrajavaram Mandal, W.G.Dt. V. THE ITO, WARD - 1, Tanuku

ITA 283/VIZ/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6679 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V MADHUVANI
• Keywords: Gift
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 283 / VIZ /201 4 (ASST. YEAR : 2009 - 10 ) THAMANAMPUDI VENKATA RAMAKRISHNA REDDY , S/O BULI VENKATA REDDY, BRAHMINS STREET, NEAR OLD ALUMINIUM FACTORY, PALANGI, UNDRAJAVARAM MANDAL, W EST G ODAVARI DISTRICT. V S . CIT, RAJAHMUNDRY. PAN NO. ABJPT 4979 M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SMT. V. MADHU VANI CIT DR DATE OF HEARING : 14 / 0 9 /201 7 . DATE OF PRONOUNCEMENT : 21 / 0 9 /201 7 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD.CIT, RAJAHMUNDRY DATED 19/03/2014 FOR THE ASSESSMENT YEAR 2009 - 10. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN LUBRICANTS , FILED HIS RETURN OF INCOME BY ADMITTING TOTAL INCOME OF 2,63,038/ - . RETURN FILED BY THE ASSESSEE WAS INITIALLY PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 2 ITA NO. 283 /VIZ/2014 ( T. VENKATA RAMAKRISHNA REDDY ) (HEREINAFTER REFERRED TO AS THE 'ACT') AND THEREAFTER , NOTICE UNDER SECTION 143(2) WAS ISSUED AND ASSESSMENT IS COMPLETED UNDER SECTION 143(3) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER HAS FOUND THAT ASSESSEE IS IN RECEIPT OF GIFTS FROM HIS FAMILY MEMBERS AND NEAR RELATIVES AGGREGATING TO 14 LAKHS . THE ASSESSING OFFICER ASKED THE ASSESSEE TO SUBMIT CONFIRMATIONS FOR THE GIFTS RECEIVED FROM HIS FAMILY MEMBERS . IN RESPONSE TO THAT, ASSESSEE HAS FILED CONFIRMATION LETTERS . THE ASSESSING OFFICER , BY CON SIDERING THE CONFIRMATION LETTE RS , OBSERVED THAT IT IS SEEN THAT THE DON O RS ARE AGRICULTURISTS AND THEY DO NOT HAVE SUFFICIENT LAND HOLDINGS TO GIVE SUCH HUGE GIFTS TO THE ASSESSEE. THOUGH , THE AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS SUBMITTED A CALCULATION SHEET OF THEIR AGRICULTURAL INCOME AND NOTE S THEREON , THE ASSESSING OFFICER HAS OBSERVED TH A T THE CALCULATION OF AGRICULTURAL INCOME IS VERY HIGH. THE ASSESSING OFFICER, THEREFORE, KEEPING IN VIEW OF THE SUBMISSIONS MADE, FOUND THAT ALL THE DONORS ARE CLOSE RELATIVES OF THE ASSESSEE AND THEY HAVE AGRICULTURAL INCOME TO SOME EXTENT AND ALSO DONE AGRICU L TURAL OPERATION S IN SOME LEASED LANDS ALSO . I N THE ABSENCE OF CORROBORATIVE EVIDENCE, 1/3 RD OF THE GIFTS I.E. 4,68,333/ - WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. THEREAFTER, LD. COMMISSIONER WHILE EXERCISING HIS POWERS CONFERRED UNDER SECTION 263, A SHOW - CAUSE NOTICE DATED 27/12/2012 HAS BEEN ISSUED BY CA L LING EXPLANATION , AS TO WHY THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) DATED 26/12/2011 SHOULD NOT BE RECALLED FOR THE REASON THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL 3 ITA NO. 283 /VIZ/2014 ( T. VENKATA RAMAKRISHNA REDDY ) TO THE INTEREST OF THE REVENUE. IN RESPONSE TO THE NOTICE, THE ASSESSEE HAS FILED A DETAILED REPLY VIDE LETTER DATED 18/01/2013, WHEREIN HE STATED THAT AFTER CONSIDERING ALL THE DETAILS OF THE DONORS AND CONFIRMATIONS FILED , THE ASSESSING OFFICER HAS TAKEN A VIEW THAT THE ENTIRE GIFTS CANNOT BE ACCEPTED , T HEREFORE, HE DISALLOWED 1/3 GI FTS RECEIVED HIM . SINCE , LD. COMMISSIONER HAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE, THE ORDER PASSED BY THE ASSESSING OFFICER WAS SET ASIDE BY OBSERVING THAT THERE IS NO PROVISION IN THE ACT TO ALLOW THE 1/3 RD GIFTS RECEIVED AND , THEREFORE, THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. COMMISSIONER HAS MADE VARIOUS OBSERVATIONS AND FOUND THAT ASSESSEE FAILED TO SUBSTANTIATE THE GIFTS RECEIVED ; AND DIRECTED THE ASSES SING OFFICER TO REDO THE ASSESSMENT BY KEEPING IN VIEW OF THE OBSERVATION S MADE BY HIM. 3 . ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL . 4 . LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSING OFFICER , AFTER EXAMINING THE NATURE OF GIFTS AND CREDIT W O RTHINESS AND ALSO IDENTITY OF THE DONORS , 1/3 RD GIFTS RECEIVED BY THE ASSESSEE IS DISALLOWED. THEREFORE, THE VIEW TAKEN BY THE ASSESSING OFFICER IS AFTER MAKING A DETAILED ENQUIRY, WHICH CANNOT BE SUBSTITUTED BY THE LD. COMMISSIONER IN EXERCISE OF POWERS VESTED WITH HIM UNDER SECTION 263 ON ACCOUNT OF INSUFFICIENT ENQUIRY MADE BY THE ASSESSING 4 ITA NO. 283 /VIZ/2014 ( T. VENKATA RAMAKRISHNA REDDY ) OFFICER. IT IS FURTHER SUBMITTED THAT THE ORDER PASSED BY THE LD.COMMISSIONER UNDER SECTION 263 , MAY BE SET ASIDE. 5. ON THE OTHER HAND, L EARNED DEPARTMENTAL REPRESENTATIVE HEAVILY RELIED ON THE ORDER PASSED BY THE LD. COMMISSIONER. 6 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 7 . IN THIS CASE, THE ASSESSEE HAS RECEIVED GIFTS TO THE EXTENT OF 14 LAKHS , FOR WHICH HE FILED CONFIRMATIONS , LAND HOLDINGS AND AGRICULTURAL OPERATIONS CARRIED OUT BY THE DONORS BEFORE THE ASSESSING OFFICER . THE ASSESSING OFFICER , AFTER CONSIDERING THE CREDITWORTHINESS OF EACH OF THE DONOR AND ALSO THE EXTENT OF LAND QUANTIFIED BY THEM AND BY TAKING INTO CONSIDE RATION OF LEASEHOLD LANDS, HAS DISALLOWED 1/3 RD OF THE GIFTS RE CEI VED BY THE ASSESSEE I.E. 4,68,333/ - . WE FIND THAT THE ASSESSING OFFICER HAS EXAMINED ALL THE DETAILS OF EACH OF THE DONOR WITH REGARD TO EXTENT OF LAND HOLD BY THEM AND WHETHER IT IS A LEASE D OUT LAND OR OWN LAND . AFT E R EXAMINING ALL THE DETAILS SCRUPULOUSLY , HE HAS TAKEN A CONSCIOUS VIEW THAT THE GIFTS TO THE EXTENT OF 1/3 RD COULD BE DISALLOWED. WE FIND THAT THE ASSESSING OFFICER HAS MADE NECESSARY ENQUIRIES BEFORE COMPLETING THE ASSESSMENT. THEREFORE, THE LD. COMMISSIONER IS NOT CORRECT IN OBSERVING THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN FACT, THE ASSESSING OFFICER A FTER EXAMINING ALL THE DETAILS OF THE DONORS, HE EXPRESSED A VIEW THAT 1/3 RD OF THE GIFTS HA VE TO BE DISALLOWED AND NOW THE LD. COMMISSIONER IS OF THE OPINION THAT THE ASSESSING OFFICER HAS NOT 5 ITA NO. 283 /VIZ/2014 ( T. VENKATA RAMAKRISHNA REDDY ) MADE PROPER ENQUIRY AND ALSO DOUBTED THE GENUINENESS OF THE GI FTS RECEIVED . ONCE THE ASSESSING OFFICER HAS MADE A DETAILED ENQUIRY BY DOUBTING THE GENUINENESS OF THE GIFTS, FOR WANT OF STRICT PROOF HE DISALLOWED 1/3 RD OF THE GIFTS. THEREFORE, THE ORDER PASSED BY THE ASSESSING OFFICER, IN OUR OPINION, CANNOT BE CONS IDERED AS ERRONEOUS O R PREJUDICIAL TO THE INTEREST OF THE REVENUE . T HEREFORE, IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER PASSED BY THE LD. COMMISSIONER AND UPHOLD THE ORDER OF THE ASSESSING OFFICER. 8 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TH IS 21 ST DAY OF SEP ., 201 7 . SD/ - SD/ - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21 ST SEPTEMBER , 201 7 . VR/ - COPY TO: 1. THE ASSESSEE THAMANAMPUDI VENKATA RAMAKRISHNA REDDY, S/O BULI VENKATA REDDY, BRAHMINS STREET, NEAR OLD ALUMINIUM FACTORY, PALANGI, UNDRAJAVARAM MANDAL, WEST GODAVARI DISTRICT. 2. THE REVENUE CIT, RAJAHMUNDRY. 3. THE D.R . , VISAKHAPATNAM. 4. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.