Kotta Narasimha Reddy, Hyd, Hyderabad V. ITO, Ward - 8(2), Hyderabad, Hyderabad

ITA 384/HYD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6323 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-07-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 08-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 133(6); 148

Judgement Text

ITA NO 384 OF 2015 KOTTA NARASIMHA REDDY HYDERABAD PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P.MADHAVI DEVI, JUDICIAL MEMBER & SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.384/HYD/2015 (ASSESSMENT YEAR: 2007-08) SRI KOTTA NARASIMHA REDDY SHAMSHABAD, HYDERABAD PAN: BXPPK 4077 C VS. INCOME TAX OFFICER WARD 8(2), ROOM NO.847, D BLOCK, IT TOWERS, AC GUARDS, HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.C. DEVDAS FOR REVENUE : SHRI G.S.S.S. GOPINATH, DR DATE OF HEARING : 11.07.2016 DATE OF PRONOUNCEMENT : 29 .07.2016 O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2007-08. IN T HIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF T HE CIT (A) IN CONFIRMING THE ADDITIONS OF (I) RS.56.00 LAKHS MAD E ON ACCOUNT OF UNACCOUNTED INVESTMENT IN LAND; (II) RS.25,000 A S UNACCOUNTED INVESTMENT TOWARDS STAMP DUTY; AND (III ) RS.1,75,000 ON A/C OF FAMILY MAINTENANE EXPENDITURE . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, DID NOT FILE ANY RETURN OF INCOME FOR THE A.Y 2007- 08. IT HAD COME TO THE NOTICE OF THE AO THAT THE ASSESSEE, ALO NG WITH SHRI V.T. VIJAYA KUMAR, HAD ENTERED INTO AN AGREEMENT FO R SALE CUM IRREVOCABLE GENERAL POWER OF ATTORNEY, FOR PURCHASE OF ITA NO 384 OF 2015 KOTTA NARASIMHA REDDY HYDERABAD PAGE 2 OF 6 AGRICULTURAL LAND ADMEASURING ACRES 9.23 GUNTAS SIT UATED AT SURVEY NO.184/1, SURVEY NO.184/2 AND SURVEY NO.185 IN JALPALLI VILLAGE, SAROORNAGAR MANDAL, RANGA REDDY D ISTRICT FOR A CONSIDERATION OF RS.1,12,00,000. SINCE THE ASSESSEE S SHARE OF INVESTMENT IN THE SAID LANDS COMES TO RS.56,00,000, AO ISSUED A NOTICE U/S 148 OF THE ACT TO EXAMINE THE SOURCES FO R THE INVESTMENT AND TO BRING THE SAME TO TAX. ASSESSEE, VIDE LETTERS DATED 16.09.2013 AND 22.10.2013, SUBMITTED THAT HE HAD TAKEN ADVANCES IN CASH FROM 12 PERSONS TOTALING TO RS.42, 00,000. FURTHER, ASSESSEE SOLD AGRICULTURAL LANDS FOR A CON SIDERATION OF RS.18,75,000 SITUATED AT PORANDLA VILLAGE, MAHESWAR AM MANDAL, RANGA REDDY DISTRICT WHICH ALSO HAS BEEN UTILISED F OR PURCHASE OF THE LAND. AO, HOWEVER, OBSERVED THAT AS FAR AS R S.42.00 LAKHS ARE CONCERNED, THEY ARE STATED TO HAVE BEEN RECEIVE D IN CASH FROM VARIOUS PERSONS BUT NEVER RETURNED EVEN AFTER LAPSE OF SEVEN YEARS. HE OBSERVED THAT THE ASSESSEE DID NOT OWN AN Y LAND TO CONSTRUCT FLATS WHICH ARE SUPPOSED TO BE SOLD AND F URTHER THAT THERE IS NO DOCUMENTARY EVIDENCE IN SUPPORT OF THE ADVANCE OF RS.42.00 LAKHS. HE THEREFORE, TREATED RS.42.00 LAKH S AS UNACCOUNTED AND UNEXPLAINED. AS FAR AS THE SUM OF RS.18,75,000 IS CONCERNED, THE AO OBSERVED THAT THE ASSESSEE HAD NEITHER PRODUCED EVIDENCE TO SUPPORT HIS ARGUME NT, NOR FURNISHED THE PERSONS BEFORE HIM FOR EXAMINATION RE GARDING THE SOURCE. HE, THEREFORE, BROUGHT THE SUM OF RS.18,75, 000 TO TAX AS UNACCOUNTED INVESTMENT. IN ADDITION TO THE ABOVE, A O ALSO OBSERVED THAT THE ASSESSEE HAS CLAIMED TO HAVE PAID RS.25,000 TOWARDS REGISTRATION CHARGES AND SINCE THE ASSESSEE FAILED TO FURNISH ANY SOURCES OF THESE AMOUNTS, HE DIRECTED I T TO BE BROUGHT IT TO TAX. THEREAFTER, HE PROCEEDED TO CONS IDER THE FAMILY ITA NO 384 OF 2015 KOTTA NARASIMHA REDDY HYDERABAD PAGE 3 OF 6 EXPENDITURE OF THE ASSESSEE AND ESTIMATED THE SAME AT RS.1,75,000 AND BROUGHT IT TO TAX. AGGRIEVED, ASSES SEE PREFERRED AN APPEAL BEFORE THE CIT (A) AND FILED CONFIRMATION LETTERS FROM THE PARTIES AND ALSO THE PARTIES THEMSELVES IN SUPP ORT OF THE ADVANCES TAKEN OF RS.42.00 LAKHS. THE CIT (A) CALLE D FOR A REMAND REPORT FROM THE AO AND AFTER TAKING THE SAME INTO CONSIDERATION, HE UPHELD THE ADDITIONS MADE BY THE AO. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE IS AN AGRICULTURIST HIMSELF AND HAS PURCHA SED AGRICULTURAL LAND ALONGWITH ONE MR.V.T. VIJAYA KUMA R. IN SUPPORT OF THE INVESTMENT, THE ASSESSEE HAD SUBMITT ED THAT THE SOURCE FOR THE INVESTMENT CONSISTS OF SALE PROCEEDS OF THE LAND SOLD BY HIM AND ALSO AS THE ADVANCES RECEIVED FROM VARIOUS PARTIES. HE SUBMITTED THAT THE PARTIES WHO HAVE ADV ANCED THE MONEY TO THE ASSESSEE ARE ALL INDIVIDUALS AND AGRIC ULTURISTS AND HAD ADVANCED THE MONEY TO THE ASSESSEE FROM THEIR I NCOME ACCUMULATED OVER A PERIOD OF TIME. HE SUBMITTED THA T THE PRESUMPTION OF THE AO THAT THE ADVANCES ARE TAKEN F OR PURCHASE OF FLATS IS NOT CORRECT, BECAUSE THE ASSESSEE HAD N EVER ENTERED INTO ANY AGREEMENT FOR CONSTRUCTION OF FLATS. HE SU BMITTED THAT THE ASSESSEE HAD ENTERED INTO A DEVELOPMENT AGREEME NT WITH SKYPAR BUILDERS & DEVELOPERS ALSO PROVES THAT THE ASSESSEE WAS CONVERTING THE LAND INTO PLOTS ONLY, BUT HOWEVER, E VEN THIS DEVELOPMENT AGREEEMENT DID NOT GO THROUGH. HE SUBMI TTED THAT THE ASSESSEE HAD FILED A REJOINDER TO THE REMAND RE PORT REBUTTING THE FINDINGS OF THE AO AND THAT THE CIT (A) HAD NOT GIVEN ANY REASON FOR NOT CONSIDERING THE REJOINDER AND ALSO F OR ACCEPTING ITA NO 384 OF 2015 KOTTA NARASIMHA REDDY HYDERABAD PAGE 4 OF 6 THE FINDINGS OF THE AO IN THE REMAND REPORT. HE SUB MITTED THAT BY PRODUCING THE PARTIES BEFORE THE AO DURING THE R EMAND PROCEEDINGS, THE ASSESSEE HAS PROVED THE IDENTITY O F THE PARTIES AND ALSO GENUINENESS OF THE TRANSACTIONS AND THE CREDITWORTHINESS ALSO HAS BEEN PROVED BY GIVING THE DETAILS OF THE LANDHOLDING AND THE INCOME FROM AGRICULTURE OF THE RESPECTIVE PARTIES. 4. WITH REGARD TO THE ADDITION OF RS.14.00 LAKHS, T HE LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE HAS PRODUCED CO PIES OF THE SALE DEED AND ALSO THE CONFIRMATION FROM SHRI M.A. MATEEN WHO HAD REPAID THE LOAN TAKEN FROM THE ASSESSEE BUT THE CIT (A) HAS NOT CONSIDERED ANY OF THESE DOCUMENTS. HE ALSO DRAW N OUR ATTENTION TO THE (PAGES 83 & 84 OF THE PAPER BOOK FILED BY HIM) COPIES OF THE BANK ACCOUNT OF THE ASSESSEE AND LETT ER GIVEN TO THE AO BY SHRI M.A. MATEEN IN REPLY TO A PRE-ASSESSMENT NOTICE GIVEN TO HIM U/S 133(6) OF THE ACT, WHEREIN HE HAS CONFIRMED THAT HE HAD TAKEN A LOAN FROM THE ASSESSEE BY CHEQU E AND ALSO REPAID THE SAME THROUGH A CHEQUE. HE SUBMITTED THAT BOTH THE CIT (A) NOR THE AO IN THE REMAND PROCEEDINGS, HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND HAVE MADE THE A DDITION WITHOUT CONSIDERING IT AS A SUFFICIENT SOURCE EVEN FOR THE REGISTRATION CHARGES AND ALSO THE HOUSEHOLD EXPENDI TURE. THUS, ACCORDING TO HIM, THE ORDERS OF THE CIT (A) AND THE AO, HAVE TO BE SET ASIDE. THE LEARNED DR, ON THE OTHER HAND, SUPPO RTED THE ORDERS OF THE AO AND THE CIT (A). THE LEARNED DR, S UBMITTED THAT THE ONUS IS ON THE ASSESSEE TO PROVE THE GENUINENES S OF THE TRANSACTIONS AND THE CREDITWORTHINESS OF THE PARTIE S AND SINCE THE ASSESSEE COULD NOT SUCCEED IN FURNISHING THE RE LEVANT ITA NO 384 OF 2015 KOTTA NARASIMHA REDDY HYDERABAD PAGE 5 OF 6 DOCUMENTARY EVIDENCE BEFORE THE AO AND THE CIT (A), THE ADDITIONS MADE HAVE BEEN RIGHTLY CONFIRMED. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS EXPLAINED THE SOURCES OF RS.14.00 LAKHS AS THE SALE PROCEEDS HE HAS RECEIVED ON SALE OF HIS LAND. ASSESSEE HAS FURTHER SUBMITED THE COPIES OF THE SALE DEED AND ALSO THE BANK STATEMENT TO EXPLAIN THE SOU RCE. HOWEVER, NEITHER THE AO, NOR THE CIT (A) HAVE COMME NTED ON THE ACCEPTABILITY OR OTHERWISE OF THE SAID SOURCE OF IN COME. FURTHER AS REGARDS THE CREDITWORTHINESS OF THE CREDITORS, W E FIND THAT THERE ARE CERTAIN INCONSISTENCIES IN THEIR DEPOSITI ONS BEFORE THE AO IN THE REMAND PROCEEDINGS, BUT THE EXISTENCE AND THE IDENTITY OF THE PARTIES HAVE CLEARLY BEEN ESTABLISHED. THOUG H THE ASSESSEE HAS FILED A REJOINDER TO THE REMAND REPORT, THE CIT (A) HAS CLEARLY NOT CONSIDERED THE SAME AS THERE WAS NO MENTION OF THE SAME IN THE ORDER OF THE CIT (A). THE CIT (A) HAS ALSO NOT GIVEN ANY REASON FOR ACCEPTING THE FINDINGS OF THE AO IN THE REMAND PROCEEDINGS. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO S ET ASIDE THE ORDER OF THE CIT (A) AND REMAND THE SAME TO THE FIL E OF THE CIT (A) FOR RECONSIDERATION IN ACCORDANCE WITH LAW AFTER TA KING INTO CONSIDERATION THE REJOINDER FILED BY THE ASSESSEE. NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE GIVEN A FAIR OPP ORTUNITY OF HEARING. THE OTHER TWO GROUNDS WITH REGARD TO THE R EGISTRATION CHARGES AND THE FAMILY EXPENDITURE SHALL BE TREATED AS PROPERLY EXPLAINED IN VIEW OF THE BANK A/C COPY OF THE ASSES SEE AND ALSO THE REPLY OF SHRI M.A. MATEEN TO THE NOTICE U/S 133 (6) OF THE ACT, IN PROOF OF THE CONTENTION OF THE ASSESSEE THAT THE SALE PROCEEDS ITA NO 384 OF 2015 KOTTA NARASIMHA REDDY HYDERABAD PAGE 6 OF 6 OF THE LAND SOLD BY THE ASSESSEE WAS SUFFICIENT SOU RCE FOR THE SAID INVESTMENT AFTER VERIFICATION OF THE SAME. 6. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2016. S D/ - S D/ - (S.RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 29 TH JULY, 2016. VNODAN/SPS COPY TO: 1. SHRI NARASIMHA REDDY KOTTA, S/O RAM REDDY, SHANKARAPALLI VILLAGE, SHAMSHABAD, HYDERABAD 2. INCOME TAX OFFICER WARD-8(2) ROOM NO.847, D BLOCK, IT TOWERS, AC GUARDS, HYDERABAD 3. CIT(A) -2 HYDERABAD 4. CIT -2 HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER