Lakshmi Narayana konda , Gudur V. Income Tax Officer, Ward-2, Gudur

ITA 383/Hyd/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8885 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 27-07-2020
• Assessment Year: 2016-2017
• Appeal Filed On: 22-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence; Capital receipt
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER I.T.A. NO. 383/HYD/2019 ASSESSMENT YEAR: 2016-17 LAKSHMI NARAYANA KONDA, GUDUR [PAN: AERPK0750J] VS INCOME TAX OFFICER, WARD NO.2, GUDUR, NELLORE DIST., (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.PANDURANGAIAH, AR FOR REVENUE : SHRI SUNIL KUMAR PANDEY, DR DATE OF HEARING : 27-07-2020 DATE OF PRONOUNCEMENT : 29-07-2020 O R D E R PER A. MOHAN ALANKAMONY, A.M. : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD.CIT(A)-TIRUPATI, IN APPEAL NO.10146/2017-18/ CIT(A)/TPT, DATED 25-02-2019, FOR THE AY 2016-17. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, DERIVING INCOME FROM MULTIPLE SOURCES, SUCH AS, COMMISSION, INCOME FROM PARTNERSHIP FIRM, LIC COMMIS SION, TRADING IN REAL ESTATE AND OTHER SOURCES, FILED HIS RETU RN OF INCOME ON 14-03-2017 FOR THE AY.2016-17, ADMITTING INC OME OF RS.11 LAKHS. INITIALLY THE RETURN WAS PROCESSED U/S.143(1) OF THE INCOME TAX ACT AND THEREAFTER THE CASE OF THE ASS ESSEE WAS SELECTED FOR SCRUTINY BECAUSE IT WAS REVEALED TH AT THE ITA NO. 383/HYD/2019 :- 2 -: ASSESSEE HAS DEPOSITED LARGE AMOUNT OF CASH IN HIS SA VINGS BANK ACCOUNT AND, THEREFORE, IT WAS NECESSARY TO VERIFY THE SOURCE OF SUCH DEPOSITS AND TO ASCERTAIN THAT THE INCOM E OF THE ASSESSEE HAS NOT ESCAPED TAX. SUBSEQUENTLY, THE ASSESSMENT WAS COMPLETED ON 26/12/2018 U/S 143(3) OF THE ACT WHEREIN THE LD. AO MADE SEVERAL ADDITIONS. ON APPE AL, THE LD. CIT(A) CONFIRMED THE ORDER OF LD. AO. 3. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSES SEE HAS COME IN APPEAL BEFORE US, RAISING SEVERAL ELABORATE GROUNDS AND THEY ARE EXTRACTED HEREINBELOW FOR REFERENCE: 1. REALISATION OF DEBTS FROM THE SUNDRY DEBTORS RS .32,00,000- 00 AND REMITTED IN BANK TREATED AS INCOME BROUGHT F ROM UNDISCLOSED SOURCES AND MADE ADDITION U/S.68 OF THE INCOME TAX ACT 1961 IS UNWARRANTED AND OBJECTIONS RAISED B Y THE APPELLANT ON THE FOLLOWING CROSS OBJECTIONS. A. THE APPELLANT HAS DISCHARGED THE GENUINENESS OF TRANSACTION THAT THE AMOUNTS LENT TO OTHERS ARE REALIZED AND DE POSITED IN BANK ACCOUNT. IT IS CLEARLY EXPLAINED THE NATURE OF TRANSACTION FROM WHERE MONEY IS BROUGHT INTO BOOKS OF ACCOUNTS I.E., 'REALIZATION OF EXISTING DEBT GIVEN BY THE APPELLAN T'. B. THE APPELLANT MAINTAINED SUNDRY DEBTORS ACCOUNT WHICH IS AN AGE OLD PRACTICE FOLLOWED. THE APPELLANT CASE IN RESPECT OF A.Y.2015-16 WAS SCRUTINIZED BY THE ITO WARD-2, GUDU R AND IN SO FAR AS SUNDRY DEBTORS REALIZATIONS ARE DEPOSITED IN BANK HAS GRACIOUSLY ACCEPTED. THE PRESENT AO ONLY HAS TA KEN A DIFFERENT STAND. C. IT IS SUBMIT THAT REALISATION OF THE SUNDRY DEBT ORS AMOUNT DEPOSITED IN BANK TREATED AS INCOME FROM UNEXPLAINE D SOURCES IS UNJUST ON THE PART OF THE AO AS WELL AS CIT (A) SINCE IN ABSENCE OF INCRIMINATING EVIDENCES AND MAT ERIAL HAS BEEN FOUND TO BE UTILISED IN REMITTING IN BANK. ITA NO. 383/HYD/2019 :- 3 -: D. THE APPELLANT HEREBY REPRODUCED ABRIDGED SUNDRY DEBTORS ACCOUNT GRAWN FROM THE LEDGER BOOK AS DETAI LED BELOW: PARTICULARS CREDIT DEBIT OPENING BALANCE AS ON 01-04- 2015 66,76,391-85 AMOUNTS GIVEN TO DEBTORS 71,57,224 - 00 AMOUNTS TAKEN BACK FROM DEBTORS 33,30,027-00 INTEREST ACCRUED DURING THE YEAR 16,92,759 - 00 CLOSING BALANCE WITH SUNDRY DEBTORS AS ON 31 - 03 - 2016 1,21,96,347-85 TOTALS 1,55,26,374 - 85 1,55,26,374 - 85 IT IS SURPRISING TO NOTE THAT THE AO AS WELL AS CIT (A) HAVE ACCEPTED THE AMOUNTS GIVEN TO SUNDRY DEBTORS RS.71, 57,224- 00 AND INTEREST EARNED RS.16,92,759-00 BUT DISALLOW ED THE REALISATION OF DEBTS I.E., RS.32,00,000-00. SO, WHILE ACCEPTING INTEREST AS INCOME IN RESPECT O F SUNDRY DEBTORS ACCOUNT NET REALISATION I.E., (RS.32 ,00,000-00 MINUS RS.16,92,759-00 = RS.15,07,241-00 HAS TO BE DISALLOWED. SO, IT IS CLEARLY INDICATED THAT THE IN TEREST AMOUNT REALISATION OF SUNDRY DEBTORS IS TAXED TWICE. E. FOR THESE AND OTHER REASONS AS MAY BE URGED AT T HE TIME OF HEARING OF THE APPEAL AND THE ADDITION MADE MAY BE DELETING. II. SALE PROCEEDS OF CAR RS.3,00,000-00 TREATED AS INCOME FROM UNEXPLAINED SOURCES AND MADE ADDITION U/S.68 OF THE INCOME TAX ACT, 1961 IS UNWARRANTED AND OBJECTIONS RAISED BY THE APPELLANT ON THE FOLLOWING CROSS OBJECTIONS. A. THE APPELLANT WAS SOLD CAR FOR RS.3,00,000-00 AN D CREDITED TO CAR ACCOUNT AND THE AMOUNT UTILIZED TO PURCHASE OF NEW CAR. B. IN ABSENCE OF SALE RECEIPT THE APPELLANT HAS REQ UESTED THE AO TO ENQUIRE ABOUT THE SALE OF CAR, HOWEVER THE AO DID NOT MAKE ANY ENQUIRY AND SIMPLY REJECTED AND TREATED TH E CAPITAL RECEIPT I.E., SALE OF CAR AMOUNT RS.3,00,000-00 UNE XPLAINED SOURCES AND MADE ADDITION U/S.68 OF THE INCOME TAX ACT WITHOUT MAKING ANY ENQUIRY FROM RTA OFFICE. IN FACT THE AO DID NOT DISPROVE THE SALE OF CAR. ITA NO. 383/HYD/2019 :- 4 -: C. THE APPELLANT HAS FILED CONFIRMATION OF SALE FRO M THE PURCHASER BEFORE THE COMMISSIONER OF INCOME TAX, AP PEALS AT THE TIME OF HEARING AND SAME TAKEN BY CIT (A). D. THE LEARNED CIT (A) ON THE BARRED GROUND THAT TH E APPELLANT BROUGHT NEW EVIDENCE WITHOUT REQUEST UNDER RULE 46A OF THE IT RULES, AND DISMISSED THE GROUND RAISED BY APPELLANT IS A VAGUE AND BASELESS. E. IT IS SUBMITTED THAT APPELLANT FILED CONFIRMATIO N LETTER BEFORE THE CIT (A) AND HE WAS TAKEN SAME AND SIGNED ON THE CONFIRMATION LETTER AND TAGGED TO FILE. AT THAT INS TANCE THE CIT (A) HOW HE ACCEPTED AT THE TIME OF HEARING WITHOUT REJECTING THE SAME. IT IS CLEARLY INDICATING THAT CIT (A) HAS ACT ED IN UTTER DISREGARDED TO THE PROVISIONS WHILE UPHOLDING THE C ONTENTION OF THE AO. F. FOR THESE AND OTHER REASONS AS MAY BE URGED AT T HE TIME OF HEARING OF THE APPEAL THE ADDITION MAY BE DELETED. III. REGARDING LIC POLICY PREMIUM COLLECTIONS RS.5, 93,880-00 TREATED AS INCOME OF THE ASSESS FROM UNDISCLOSED SO URCES AND MADE ADDITION U/S.68 OF THE INCOME TAX ACT, 1961 IS UNWARRANTED AND OBJECTIONS RAISED BY THE APPELLANT ON THE FOLLOWING CROSS OBJECTIONS. A. THE APPELLANT IS AN LIC AGENT AND PAID RS.5,93,8 80-00 TO LIC BY WAY OF CHEQUE DRAWN FROM HIS BANK ACCOUNT. L ATTERLY THE APPELLANT WAS COLLECTED MONEY FROM THE POLICY H OLDERS AND CREDITED TO THE ACCOUNT. B. THE AO AS WELL CIT (A) MISCONSTRUED THE TRANSACT IONS THAT LIC POLICY HOLDERS PAID IN PIECE MEAL PREMIUM WHICH WERE DEPOSITED WITH LIC SUBSEQUENTLY. C. THE BOOKS OF ACCOUNTS WITH THE AO AS WELL AS LED GER EXTRACT WAS FILED WITH THE CIT(A) IT IS CLEARLY INDICATES T HAT FIRST THE APPELLANT WAS PAID LIC PREMIUM RS.5,93,880-00 BY WA Y BANK CHEQUE AND LATELY, THE AMOUNTS ARE REALIZED BY THE APPELLANT. D. IT IS SUBMITTED THAT WITHOUT PROPER VERIFICATION BY THE AO AND CIT (A) REALISATION OF LIC POLICY PREMIUM REALIZED FROM THE POLICY HOLDERS TREATED AS UNEXPLAINED INCOME U/S.68 OF THE INCOME TAX ACT IS UNWARRANTED AND ERRED IN APPLICAT ION OF MIND. ITA NO. 383/HYD/2019 :- 5 -: 4. AT THE OUTSET, LD.AR SUBMITTED BEFORE US THAT HE HAS FILED ADDITIONAL EVIDENCE TO ESTABLISH THE GENUINENESS OF THE SUNDRY DEBTORS, THE SOURCE FOR THE INVESTMENT MADE FOR PURCHASE OF CAR AND RECEIPTS FROM LIC PARTIES. HE TH EREFORE PLEADED THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF LD.AO FOR FRESH CONSIDERATION AND THEREBY AFFORDING O NE MORE OPPORTUNITY OF BEING HEARD BEFORE THE LD. REVENUE AUTH ORITIES. 5. LD.DR, STRONGLY OPPOSED TO THE SUBMISSIONS OF THE ASSESSEE AND REQUESTED FOR CONFIRMING THE ORDERS OF L D. REVENUE AUTHORITIES. 6. AFTER HEARING BOTH THE PARTIES THROUGH VIDEO CONFEREN CE, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITIONAL EVIDEN CE SUBMITTED BY THE ASSESSEE IS REQUIRED TO BE EXAMINED BY THE LD.AO IN ORDER TO CONSIDER THE MATTER ON MERITS, THOUGH, THERE IS GROSS NEGLIGENCE AND LAPSE ON THE PART OF THE ASSES SEE TO SUBMIT THE SAME BEFORE THE LD. REVENUE AUTHORITIES AT THE APPROPRIATE TIME OF HEARING. THEREFORE, IN THE INTERES T OF JUSTICE, WE HEREBY REMIT THE MATTER BACK TO THE FILE OF LD .AO WITH DIRECTIONS TO ADMIT AND CONSIDER THE FRESH EVIDENC E FILED BY THE ASSESSEE AND ALSO ANY OTHER EVIDENCE FILED BY THE ASSESSEE, EVEN, IF IT IS FOR THE FIRST TIME AND, THEREA FTER, DECIDE THE MATTER IN ACCORDANCE WITH LAW AND MERIT AFTER AFFORD ING PROPER OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. WE ALSO HEREBY DIRECT THE ASSESSEE TO PROMPTLY COOPERATE BEFORE THE LD. REVENUE AUTHORITIES IN THEIR PROCEEDINGS, FAILING WH ICH, THEY SHALL BE AT LIBERTY TO PASS APPROPRIATE ORDERS BASED O N THE MATERIALS ON RECORD. ITA NO. 383/HYD/2019 :- 6 -: 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES AS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2020 SD/- SD/- ( P. MADHAVI DEVI ) ( A. MOHAN ALANKA MONY ) JUDICIAL MEMBER ACCOUNTANT MEMBE R HYDERABAD, DATED: 29-07-2020 TNMM COPY TO : 1.SHRI LAKSHMI NARAYANA KONDA, D.NO.13/123-1, RAJA STREET, GUDUR, NELLORE DIST., 2.THE INCOME TAX OFFICER, WARD NO.2, GUDUR. 3.CIT(APPEALS)-TIRUPATI. 4.THE PR.CIT-TIRUPATI. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.