Alapati Venkateswara Rao, Hyderabad V. The DCIT, Central Circle - 6, Hyderabad

ITA 347/HYD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1408 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKARA RAO
• Assessee Lawyers: GVVS MURTHY
• Keywords: Unexplained investment; Search and seizure; Opportunity of being heard; Principle of natural justice; Additional evidence
• Section: 68; 132; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, J.M. AND SHRI B.R.BASKARAN, A.M. ITA NO.347/HYD/2012 (ASSESSMENT YEAR 200 8-09) SHRI ALAPATI VENKATESWAR RAO, HYDERABAD ( PAN - AEGPA 1293 K ) [ V/S. DY. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE 6, HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI G.V.V.S.MURTHY RESPONDENT BY : S HRI D.SUDHAKARA RAO, CIT - DR DATE OF HEARING 31.12 .2012 DATE OF PRONOUNCEMENT 04.01.2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 23 RD JANUARY, 2012 PASSED BY LEARNED CIT(A)-I, HYDERABA D AND IT RELATES TO THE ASSESSMENT YEAR 2008-09. 2. THE GROUNDS URGED BY THE ASSESSEE GIVE RIS E TO THE FOLLOWING THREE ISSUES:- (A) ADDITION OF AGRICULTURAL INCOME. (B) ADDITION RELATING TO JEWELLERY. (C) ADDITION OF CASH CREDITS. ITA NO.347/HYD/2012 ALAPATI VENKATESWAR RAO 2 3. THE FACTS RELATING TO THE CASE ARE STATED I N BRIEF. THE ASSESSEE WAS SUBJECTED TO SEARCH AND SEIZURE OPERATIONS U/S 132 OF THE ACT ON 03-12-2008. CONSEQUENTLY, THE ASSESSMENT OF THE YE AR UNDER CONSIDERATION WAS COMPLETED U/S 153A OF THE ACT BY MAKING FOLLOWING ADDITIONS, VIZ., (A) AGRICULTURAL INCOME TREATED AS INCOME FROM OTH ER SOURCES RS.1,80,000/-. (B) UNEXPLAINED INVESTMENT IN JEWELLERY RS.26, 13,865/- (C) CASH CREDITS ADDED U/S 68 - RS.75,05,114/- . 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEF ORE LEARNED CIT(A). THE FIRST APPELLATE AUTHORITY GRANTED PART IAL RELIEF IN RESPECT OF ADDITION MADE TOWARDS UNEXPLAINED INVESTMENT IN JEW ELLERY AND CONFIRMED THE OTHER TWO ADDITIONS. STILL AGGRIEVED , THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. THE FIRST ISSUE RELATES TO THE ADDITION OF RS.180,000/- MADE BY THE ASSESSING OFFICER BY TREATING THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES. DURING TH E COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE ASSESSEE IS IN POSSESSION OF ABOUT 15 ACRES OF LAND IN THE RICE BOWL AREA OF ANDHRA PRADESH, VIZ., IN KRISHNA DISTRICT AND AC CORDINGLY SUBMITTED THAT THE INCOME OF RS.1,80,000/- DECLARED OUT OF 15 ACRES OF LAND IS QUIET REASONABLE. HE FURTHER SUBMITTED THAT THE TR IBUNAL HAD AN OCCASION TO CONSIDER THE REASONABLENESS OF AGRICULT URAL INCOME DECLARED BY THE ASSESSEE AS WELL AS HIS SPOUSE IN THE PRECED ING YEARS. IN THE ASSESSEES OWN CASE, THE TRIBUNAL, VIDE ITS ORDER D ATED 16.9.2011 IN ITA NOS. 624 TO 627/HYD/2011, ACCEPTED THE INCOME O F RS.1,35,000 DECLARED FOR THE ASSESSMENT YEAR 2002-03 AND RS.1, 50,000 DECLARED ITA NO.347/HYD/2012 ALAPATI VENKATESWAR RAO 3 FOR EACH OF THE ASSESSMENT YEARS 2003-04 TO 2005-06 . IN THE CASE OF ASSESSEES WIFE, NAMED SMT. MADHAVI, THE TRIBUNAL A CCEPTED THE AGRICULTURAL INCOME OF RS.2,25,000 DECLARED BY HER FOR THE ASSESSMENT YEAR 2008-09 OUT OF 11.76 ACRES OF LAND. ACCORDING LY, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INCOME OF RS.1,80,000 DECLARED BY THE ASSESSEE OUT OF 15 ACRES OF LAND I S QUITE REASONABLE. 6. ON THE CONTRARY, THE LEARNED DEPARTMENTAL REPRE SENTATIVE SUBMITTED THAT THE ASSESSEE DID NOT SUBMIT ANY EVID ENCE TO SUBSTANTIATE ITS CLAIM OF REALIZATION OF AGRICULTUR AL INCOME TO THE TUNE OF RS.1,80,000. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL ON RECO RD. IT IS AN UNDISPUTED FACT THAT THE TRIBUNAL HAS ACCEPTED AGRI CULTURAL INCOME OF RS.1,50,000/- IN THE HANDS OF THE ASSESSEE IN THE I MMEDIATELY PRECEDING YEAR. IT IS ALSO AN UNDISPUTED FACT THAT THE TRIBUNAL HAS ACCEPTED THE AGRICULTURAL INCOME OF RS.2,25,000/- I N THE HANDS OF THE SPOUSE OF THE ASSESSEE FOR ASSESSMENT YEAR 2008-09, WHICH SHE HAD DECLARED OUT OF 11.76 ACRES OF LAND. THERE IS NO DI SPUTE WITH REGARD TO THE FACT THAT THE LANDS HELD BY THE ASSESSEE AND HI S WIFE ARE LOCATED IN THE SAME AREA. IN ITS ORDER DATED 16.9.2011 REFERR ED TO SUPRA, THE TRIBUNAL HAS SPECIFICALLY OBSERVED THAT THE AGRICUL TURAL LANDS WERE HAVING IRRIGATION FACILITIES AND THE SAID FACT COUL D NOT BE CONTROVERTED BY THE REVENUE AUTHORITIES. UNDER THESE CIRCUMSTANCES , WE ARE OF THE VIEW THAT THE AGRICULTURAL INCOME OF RS.1,80,000/- DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS QUITE REASONABLE AND ALSO COMPARABLE WITH THE INCOME DECLARED BY HIM IN THE E ARLIER YEARS. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LEARNED CIT(APPEALS) ON THIS ITA NO.347/HYD/2012 ALAPATI VENKATESWAR RAO 4 ISSUE AND DIRECT THE ASSESSING OFFICER TO DELETE TH E IMPUGNED ADDITION OF RS.1,80,000/- MADE UNDER THE HEAD INCOME FROM OTHE R SOURCES. 8. THE NEXT ISSUE PERTAINS TO THE ADDITION RELATING TO UNEXPLAINED INVESTMENT MADE IN JEWELLERY. THE FACTS RELATING TO THE SAME ARE STATED IN BRIEF. DURING THE COURSE OF SEARCH, THE ASSESSE E FURNISHED THE DETAILS OF GOLD JEWELLERY PURCHASED BY HIM AS UNDER- S.NO. BILL NO. DATE OF PURCHASE SUPPLIERS NAME COST 1 MJS - 3657 30/06/2006 MANGATRAI JEWELLERS 1,50,000/ - 2 4905 19/07/2006 MANGATRAI JEWELLERS 4,00,000/ - 3 316 24/11/2006 KOTHARI JEWLLERS 94,900/ - 4 317 24/11/2006 KOTHARI JEWELLERS 1,50,000/- 5 2679 31/07/2007 MANGATRAI JEWELLERS 1,15,000/- 6 28827 06/09/2007 SIDHI JEWELLERS 1,55,000/- 7 34508 27/10/2007 SIDHI JEWELLERS 3,30,000/- 8 35305 03/11/2007 SIDHI JEWELLERS 1,22,000/- 9 41856 20/12/2007 SIDHI JEWELLERS 1,97,600/- 10 SJPL/HYD747 09/01/2008 SANGHI JEWLLERS 8,71,125/ - 11 SJPL/HYD811 01/02/2008 SANGHI JEWLLERS 5,28,230/ - TOTAL VALUE 31,13,855/ - 9. IT WAS SUBMITTED THAT ALL THE PAYMENTS, EXCEPT O NE PAYMENT OF RS.1,50,000/-, WERE MADE BY WAY OF CASH. ACCORDING TO THE ASSESSING OFFICER, THESE PAYMENTS WERE NOT REFLECTED IN EITHE R THE BANK STATEMENTS OR IN THE BOOKS OF ACCOUNT OF M/S. LAHI RI HOMES. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSE E HAS ADMITTED JEWELLERY WORTH RS.10,61,500/- AS UNACCOUNTED AND A GREED TO OFFER THE SAME AS HIS UNDISCLOSED INCOME, BUT THE ASSESSEE HA S FAILED TO OFFER THE SAID AMOUNT IN HIS RETURN OF INCOME. THE ASSESS ING OFFICER, BY MAKING SOME ADJUSTMENTS DETERMINED THE TOTAL UNEXPL AINED INVESTMENT IN JEWELLERY AT RS.26,13,865/- AND ADDED THE SAME A S THE INCOME OF ITA NO.347/HYD/2012 ALAPATI VENKATESWAR RAO 5 THE ASSESSEE. THE LEARNED CIT(APPEALS) SUSTAINED THE ADDITION TO THE TUNE OF RS.15,03,295/- AND GRANTED RELIEF OF THE RE MAINING AMOUNT, APPARENTLY BY FOLLOWING THE CIRCULAR ISSUED BY CBDT WITH REGARD TO SEIZURE OF JEWELLERIES. 10. DURING THE COURSE OF HEARING, LEARNED COUNSEL F OR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS FAILED TO NOTICE THAT THE ASSESSEE HAS WITHDRAWN AMOUNTS FROM HIS PERSONAL BO OKS FOR PURCHASING THE JEWELLERY. THE LEARNED COUNSEL SUBMI TTED THAT ALL THE JEWELLERY PURCHASES, EXCEPT THOSE LISTED AS ITEMS N O.7 AND 8 IN THE TABLE, EXTRACTED ABOVE, COULD BE LINKED WITH WITHDR AWALS MADE FROM THE PERSONAL BOOKS. WITH REGARD TO THE PURCHASE OF JEW ELLERY LISTED AS 7 AND 8 IN THE TABLE,(SUPRA), THE LEARNED COUNSEL SUB MITTED THAT THE ASSESSEE WAS POSSESSING SUFFICIENT CASH BALANCE IN HIS BOOKS OF ACCOUNT FOR MAKING THE SAID INVESTMENTS. ACCORDINGLY HE SU BMITTED THE OMISSION ON THE PART OF THE ASSESSEE TO ENTER THOSE TWO PURCHASES IN HIS PERSONAL BOOKS MAY NOT BE TAKEN SERIOUSLY. THE LEARNED COUNSEL CARRIED US THROUGH THE COPIES OF CASH BOOK AND LEDG ER, WHICH ARE PLACED IN THE PAPER-BOOK FILED BY THE ASSESSEE, TO SHOW TH AT THE ITEMS LISTED AS SL.NO.1 TO 6 AND SL.NO.9 TO 11 IN THE TABLE EXTR ACTED ABOVE ARE MATCHING WITH THE SPECIFIC WITHDRAWALS MADE FROM TH E BOOKS OF ACCOUNT FOR MAKING THOSE INVESTMENTS. ACCORDINGLY, THE LEA RNED COUNSEL SUBMITTED THAT THE ASSESSEE HAS PROVED THE SOURCES FOR MAKING THE IMPUGNED INVESTMENTS, AND HENCE, THERE IS NO NEED T O MAKE ANY ADDITION ON THIS ACCOUNT. HE FURTHER SUBMITTED TH AT THE ASSESSING OFFICER WAS FACTUALLY WRONG IN STATING THAT THE ASS ESSEE HAD AGREED TO OFFER A SUM OF RS.10,61,500/-. THE FACT REMAINS T HAT THE ASSESSEE HAS PAID THE ABOVE SAID AMOUNT AS TAX IN ORDER TO GET BACK THE JEWELLERY SEIZED BY THE DEPARTMENT. ITA NO.347/HYD/2012 ALAPATI VENKATESWAR RAO 6 11. ON THE CONTRARY, THE LEARNED DEPARTMENTAL REPR ESENTATIVE STRONGLY PLACED RELIANCE ON THE ORDERS PASSED BY TH E ASSESSING OFFICER. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL ON RECORD. AS AGAINST THE ADDITION OF RS. 26,13,865/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INV ESTMENT IN THE JEWELLERY, THE LEARNED CIT(A) SUSTAINED THE ADDITIO N TO THE EXTENT OF RS.15,03,295/- AND ACCORDINGLY DELETED THE BALANCE AMOUNT OF RS.11,10,570/-. IT IS AN UNDISPUTED FACT THAT THE DEPARTMENT HAS NOT PREFERRED ANY APPEAL AGAINST THE RELIEF GRANTED BY LEARNED CIT(A). ACCORDINGLY, THE RELIEF OF RS.11,10,570/- GRANTED B Y THE FIRST APPELLATE AUTHORITY STANDS AS IT IS. WITH REGARD TO THE INV ESTMENTS MADE ON 27.10.2007 AND 3.1.2007, WHICH ARE LISTED AS ITEMS NO.7 AND 8 IN THE TABLE EXTRACTED ABOVE, WHICH AGGREGATE TO RS.4,52,0 00/-, THE LEARNED A.R FAIRLY CONCEDED THAT THE ASSESSEE COULD NOT LIN K THE SAID INVESTMENTS WITH ANY OF THE WITHDRAWALS. IN THE AB SENCE OF ANY CORROBORATIVE EVIDENCE TO SUPPORT THE CLAIM OF THE ASSESSEE, WE ARE CONSTRAINED TO SUSTAIN THE ADDITION TO THE TUNE OF RS.4,52,000/- RELATING TO THE ITEMS NO.7 & 8, REFERRED (SUPRA). WITH REGA RD TO THE BALANCE AMOUNT OF ADDITION SUSTAINED BY THE CIT(A), I.E. RS .10,51,295/- WE NOTICE FROM THE SUBMISSION MADE BY THE LEARNED COUN SEL THAT THE ASSESSEE HAS WITHDRAWN MONEY ON THE RESPECTIVE DAT ES FROM HIS PERSONAL BOOKS FOR MAKING THOSE INVESTMENTS IN JEW ELLERY. FROM THE ASSESSMENT ORDER, WE NOTICE THAT THE ASSESSING OFFI CER HAS REFERRED ONLY TO THE BANK STATEMENTS AND BOOKS OF ACCOUNT OF M/S. LAHIRI HOMES. THE ASSESSING OFFICER DID NOT VERIFY THE PERSONAL B OOKS MAINTAINED BY THE ASSESSEE. WE HAVE ALREADY STATED THAT THE LEA RNED COUNSEL HAS CARRIED US THROUGH THE PERSONAL CASH BOOK AND LEDGE R OF THE ASSESSEE TO SHOW THAT THERE WERE SPECIFIC WITHDRAWALS FOR MA KING INVESTMENTS IN ITA NO.347/HYD/2012 ALAPATI VENKATESWAR RAO 7 THE PURCHASE OF JEWELLERY LISTED AS SERIAL NOS.1 TO 6 AND 9 TO 11 OF THE TABLE EXTRACTED ABOVE. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER SHOULD EXAMINE THE PERSO NAL BOOKS OF THE ASSESSEE AND HENCE THIS ISSUE NEEDS VERIFICATION AT HIS END. WE ACCORDINGLY MODIFY THE ORDER OF THE CIT(APPEALS) AN D RESTORE THE ISSUE OF EXAMINING THE ADDITION TO THE EXTENT OF RS.10,51 ,295/- TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE T HE CLAIM OF WITHDRAWAL OF FUNDS FROM THE PERSONAL BOOKS AND TAK E APPROPRIATE DECISION IN ACCORDANCE WITH LAW. 13. THE NEXT ISSUE RELATES TO CASH CREDIT ADDITION . THE FACTS RELATING TO THE SAME ARE STATED IN BRIEF. THE ASSESSEE HAD DECLARED RECEIPT OF LOANS/ADVANCES FROM THE FOLLOWING PERSONS:- 1. N.SRINIVASA RAO (CHEQUE) RS. 8,00,000/- 2. D.K.NAIDU (CHEQUE) RS. 1,90,000/- 3. JITENDER NRI (CHEQUE) RS.18,50,114/- 4. G.V.V.SATYANARAYANA (CASH) RS. 8,15,000/- 5. G.NAGESWARA RAO (CASH) RS. 8,50,000/- 6. P.MAHIPAL REDDY (CHEQUE) RS.30,00,000/- ----------------- RS.75,05,114/- ========= THE LEARNED COUNSEL FOR THE ASSESSEE CARRIED US THR OUGH THE PAPER BOOK FILED BY THE ASSESSEE TO SHOW THAT THE ASSESSE E HAS DISCHARGED THE BURDEN PLACED UPON HIM U/S 68 OF THE ACT TO PRO VE THE IDENTITY OF THE CREDITOR, THE CREDIT WORTHINESS OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTIONS. HOWEVER, HE FAIRLY CONCEDED T HAT THE ASSESSEE HAS FILED CERTAIN DOCUMENTS ONLY BEFORE LEARNED CIT(A) AND HENCE THE ASSESSING OFFICER DID NOT HAVE THE OCCASION TO VERI FY THEM. HE FURTHER SUBMITTED THAT THE LEARNED CIT(A) HAS TAKEN THE ADV ERSE DECISION WITHOUT CONFRONTING THE ADDITIONAL EVIDENCES TO THE ASSESSING OFFICER. ITA NO.347/HYD/2012 ALAPATI VENKATESWAR RAO 8 14. ON THE CONTRARY, THE LEARNED D.R SUBMITTED THAT THE IMPUGNED CREDITORS WERE NOT ASSESSED TO INCOME TAX. HE FURT HER SUBMITTED THAT THE ASSESSEE HAS CLAIMED THAT HE HAS RECEIVED CERTA IN ADVANCES FROM THE PROSPECTIVE BUYERS OF THE FLAT. HOWEVER THE AS SESSEE COULD NOT SUBSTANTIATE THE SAID CLAIM WITH ANY WRITTEN AGREEM ENT. ACCORDINGLY, THE LEARNED D.R STRONGLY PLACED RELIANCE ON THE ORD ERS OF TAX AUTHORITIES AND CONTENDED THAT THIS ADDITION SHOULD BE SUSTAINED. 15. HOWEVER, THE FACT REMAINS THAT THE ASSESSEE HAS FILED CERTAIN ADDITIONAL EVIDENCES BEFORE THE LEARNED CIT(A). FR OM THE COPIES OF THOSE EVIDENCES, WHICH WERE BROUGHT TO OUR ATTENTIO N, WE NOTICE THAT THE ASSESSEE HAS TAKEN PAINS TO SUBMIT CERTAIN EVID ENCES TO PROVE THE CREDIT WORTHINESS OF THE CREDITORS. HENCE, IN THE INTEREST OF NATURAL JUSTICE, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRE S FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER OF LEARNED CIT(A) ON THIS ISSUE AND RESTORE IT TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE ISSUE AFR ESH BY DULY CONSIDERING THE EVIDENCES THAT ARE FILED OR THAT MA Y BE FILED BEFORE HIM AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH TH E LAW, AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TR EATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ON 04/01/2013 SD/- SD/- (ASHA VIJAYARAGHAVAN) (B,R.BASKARAN) JUDICIAL MEMBER ACCOUTNANT MEMBER DATED/- 4 TH JANUARY, 2013 ITA NO.347/HYD/2012 ALAPATI VENKATESWAR RAO 9 COPY FORWARDED TO: 1. SHRI ALAPATI VENKATESWAR RAO, FLAT NO.303, KRISHE M EADOWS, SRINAGAR COLONY, HYDERABAD 73. 2. 3. 4. 5 . D Y. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE 6, HYDERABAD COMMISSIONER OF INCOME-TAX(APPEALS) I, HYDERABAD COMMISSIONER OF INCOME-TAX CENTRAL, HYDERABAD DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.