Srinivasa Reddy Sangam, Guntur V. Income Tax Officer, Ward-1(3), Guntur

ITA 386/VIZ/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4708 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 17-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Unexplained investment; Transactions in derivatives; Additional evidence; Corroborative evidences
• Section: 69; 143(3); 142(1); 234B; 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI N.K. CHOUDHRY, HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HON'BLE ACCOUNTANT MEMBER I.T.A. NO. 386 /VIZ/2018 (ASST. YEAR : 2015 - 16 ) SANGAM SRINIVASA REDDY, D.NO. 11 - 5 - 19/13, PROP. SRI RAMA SEEDS AGENCIES, SRINATHPREETAM COMPLEX, RAJAGARITHOTA, GUNTUR. V S. INCOME TAX OFFICER , WARD - 1 ( 3 ) , GUNTUR . PAN NO. BCOPS 5091 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C. SUBRAHMANYAM , FC A DEPARTMENT BY : MS . SUMAN MALIK, SR. DR DATE OF HEARING : 27 / 04 /2021 . DATE OF PRONOUNCEMENT : 13 / 0 5 /2021 . O R D E R PER N.K. CHOUDHRY , JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 29 / 05 /201 8 IMPUGNED HEREIN PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 1 [FOR SHORT , LD. COMMISSIONER] , GUNTUR U/SEC. 250(6) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') FOR THE A.Y. 20 15 - 1 6 . 2 ITA NO. 386/VIZ/2018 ( SANGAM SRINIVASA REDDY ) 2. IN THIS CASE, ASSESSMENT ORDER WAS PASSED U/SEC. 143(3) R.W.S. 144 OF THE ACT. THOUGH WHILE ISSUING STATUTORY NOTICES , SEVERAL OPPORTUNITIES OF BEING HEA RD WERE PROVIDED TO THE ASSESSEE BY THE AO, HOWEVER THE ASSESSEE FAILED TO AVAIL SUCH OPPORTUNITIES AND NEITHER FILE D ANY DOCUMENTS IN SUPPORT OF ITS CASE, NOR MADE ANY COMPLIANCE TO THE NOTICES SENT BY THE AO AND THEREFORE, ON THE BASIS OF MATERIAL AVAILABLE I.E. BANK STATEMENTS RECEIVED FROM THE BANK S OF THE ASSESSEE AND AIR /CIB DATA, THE AMOUNT OF RS. 29,75,000/ - WAS ADDED AS INCOME OF THE ASSESSEE BY TREATING AS UNEXPLAINED INVESTMENT IN SHARES U/SEC. 6 9 OF THE ACT, BY THE A.O. 3 . THE ASSESSEE CHALLENGED THE SAID ASSESSMENT ORDER ON THE FOLLOWING GROUNDS BEFORE THE LD. COMMISSIONER : 1. THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS BOTH ON FACTS AND LAW. 2. THE ASSESSING OFFICER ERRED IN MAKING AN ADDITION OF RS. 29,75,000/ - WITHOUT GIVING ANY NOTICE. 3. SHOW CAUSE NOTICE WAS NOT BEING SERVED ON THE APPLICANT REGARDING PROPOSED ADDITION OF RS. 29,75,0000/ - THROUGH SHARE KHAN LTD., (NSE CASH) . 4. AFTER MAKING OF ADDITION OF RS. 29,75,000/ - TO INCOME RETURNED OF RS. 4,94,610/ - , THE ASSESSED INCOME WILL BE RS. 34,69,610/ - WHEREAS THE ASSESSING OFFICER ADOPTED THE ASSESSED INCOME TO BE RS. 37,69,610/ - AND CALCULATED THE INCOME TAX ACCORDINGLY . 5. THE ASSESSING OFFICER ERRED IN CHARGING INTEREST U/SEC. 234B OF RS. 2,94,327 / - AND INTEREST U/SEC. 234C OF RS. 855/ - . 6. ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 3 ITA NO. 386/VIZ/2018 ( SANGAM SRINIVASA REDDY ) 4. T HE LD. COMMISSIONER SUSTAINED THE ADDITION OF RS. 29,75,000 / - BY PARTLY ALLOWING THE APPEAL OF THE ASSESSEE AND CONCLUD ING AS UNDER: - GROUND NO.2 THE APPELLANT CONTENDS THAT THE AO MADE ADDITION OF RS. 29,75.000/ - WITHOUT GIVING ANY NOTICE. IN THIS CONNECTION IT IS TO BE NOTED THAT THIS BEING A CASE WHERE ASSESSMENT ORDER WAS PASSED U/S. 143(3) R.W.S . 144 OF THE ACT. SUBSTANTIALLY, THE ASSESSMENT WAS PASSED CONSIDERING NON - RESPONSE OF THE APPELLANT AND ALSO NON - PROVIDING OF INFORMATION REQUIRED. IT IS CLEAR FROM THE ASSESSMENT ORDER AND ALSO AS STATED ABOVE IN THIS ORDER, THE AO GAVE SEVERAL OPPORTUNI TIES TO THE APPELLANT TO DEFEND HIS CASE AND APPELLANT WAS REQUESTED TO FILE EVIDENCES/DOCUMENTS SUCH AS BOOKS OF ACCOUNT, BANK ACCOUNTS, PROPERTY DOCUMENTS, DETAILS OF DERIVATIVES TRANSACTIONS, ETC., BUT THE APPELLANT WILLFULLY CHOSEN NOT TO FURNISH THE I NFORMATION CALLED FOR. A FINAL OPPORTUNITY LETTER WAS GIVEN TO THE APPELLANT VIDE A SHOW CAUSE LETTER DATED 10 - 10 - 2017 BY THE AO REQUESTING TO FURNISH SOURCE FOR INVESTMENTS IN THE SHARES BUT THERE WAS NO RESPONSE FROM THE APPELLANT. IN THIS BACK GROUND TH E CONTENTION OF THE APPELLANT THAT ADDITION WAS MADE WITHOUT GIVING ANY NOTICE IS DEVOID OF TRUTH. HENCE, THIS GROUND OF APPEAL IS DISMISSED. GROUND NO.3 THE APPELLANT CONTENDS THAT SHOW CAUSE NOTICE WAS NOT SERVED ON THE APPELLANT PROPOSING ADDITION OF RS . 29,75,000/ DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD AR ALSO ARGUED THAT WITHOUT SERVING THE SHOW CAUSE NOTICE, ASSESSMENT ORDER CANNOT 4 ITA NO. 386/VIZ/2018 ( SANGAM SRINIVASA REDDY ) BE PASSED U/S. 144 OF THE ACT. THE LD AR REQUESTED TO DELETE THIS ADDITION ON THIS COUNT. I HAVE CAREFULLY CO NSIDERED THE ASSESSMENT ORDER, PROVISIONS OF SEC 144 OF THE ACT AND THE ARGUMENTS PUT FORTH BY THE APPELLANT. ON GOING THROUGH THE ASSESSMENT ORDER, IT WAS NOTICED THAT THE AO ISSUED NOTICE U/S . 142(1) DATED 30 - 01 - 2017 WHICH WAS SERVED UPON THE APPELLANT. IT IS ALSO CLEAR FROM THE ASSESSMENT ORDER THAT THE APPELLANT FILED PART INFORMATION IN RESPONSE TO THAT NOTICE. IT IS ALSO FURTHER OBSERVED THAT THE AO SERVE NOTICES U/S. 142(1) D A TED 18 - 07 - 2017 & 08 - 08 - 2017. I N ADDITION TO THE ABOVE , A SHOW CA USE NO TI CE WAS ALSO SERVED ON THE ASSESSEE IN THE LIGHT OF THESE FACTS, IT IS NOT CORRECT ON THE PART OF THE APPELLANT TO STATE THAT SHOW CAUSE NOTICE WAS NOT SERVED UPON HIM. IT IS TO BE NOTED THAT THERE IS NO REQUIREMENT OF SERVING SHOW CAUSE LETTER BEFORE PASSING BEST JUDGMENT ASSESSMENT ORDER, IN CASE NOTICE U/S.142(1) OF IT ACT WAS SERVED UPON BY THE APPELLANT. THE DISCUSSION M ADE ABOVE AMPLY MAKES IT CLEAR THAT NOTICES U/S. 142(1) WERE SERVED UPON THE APPELLANT SEVERAL TIMES. I N VIEW OF THIS, TO PASS ORDER U/S. 144 OF THE ACT, IT IS NOT INCUMBENT UPON THE AO TO ISSUE SHOW CAUSE LETTER. HENCE THE CONTENTION RAISED DOES NOT HOLD ANY MERIT TO STAND FOR THE TEST OF FACTS AND LAW. IN VIEW OF THIS, THE GROUND RAISED BY THE APPELLANT IS HEREBY D ISMISSED. 5 . THE ASSESSEE BEING AGGRIEVED PREFERRED THE INSTANT APPEAL AND DURING THE PENDENCY OF THIS APPEAL, FILED A PETITION DATED 18/06/2019 UNDER RULE 29 OF THE I NCOME T AX (APPELLATE TRIBUNAL) RULES, 1963 (HEREINAFTER CALLED AS THE RULES) FOR ADMISSION OF ADDITIONAL EVIDENCE. 5 ITA NO. 386/VIZ/2018 ( SANGAM SRINIVASA REDDY ) 5.1 T HE LD. AR EMPHASISED THAT THE EVIDENCE FOR WHICH THE PERMISSION IS SOUGHT FOR ADMISSION , IS VERY MUCH IMPORTANT TO SUBSTANTIATE ITS CASE AS OTHERWISE THE ASSESSEE WOULD BE PUT TO LOT OF HARDSHIP . THE ASSESSEE ALSO CONTENDED AND FILED ITS AFFIDAVIT TO THE EFFECT S THAT THE ASSESSEE THOUGH MADE THE INVESTMENT IN SHAREKHAN LTD. , HOWEVER, DURING THE ASSESSMENT PROCEEDINGS COULD NOT PRODUCE THE SUPPORTING EVIDENCE WITH REGARD TO THE SOURCE S FOR THE INVESTMENT QUA THE AMOUNT BORROWED FROM KOTAK MAHINDRA BANK LTD., FULLERTON INDIA CREDIT CO. LTD. AND BAJAJ FINANCE LTD. , S INCE THE LOAN STATEMENTS WERE NOT READILY AVAILABLE AND MISPLACED. WHEN REQUESTED, THESE COMPANIES COULD NOT GIVE IT IMMEDIATELY AS T HE MATTER RELATES TO F.Y. 2014 - 15 , H OWEVER, THESE WERE OBTAINED AFTER THE COMPLETION OF ASSESSMENT AS WELL AS PROCEEDINGS BEFORE THE RESPECTED LD. COMMISSIONER. 5 . 2 ON THE CONTRARY THE LD. D R REFUTED THE CLAIM OF THE ASSESSEE AND VEHEMENTLY SUBMITTED THAT THE ASSESSEE WAS NEGLIGENT IN NOT PRODUCING THE REVENANT DOCUMENTS BEFORE THE AUTHORITIES BELOW AND AT THIS STAGE THE SAME CAN NOT BE ALLOWED TO PRODUCE IN ORDINARY WAY EXCEPT ON EXCEPTION WITH STRINGENT CONDITION. 6. WE MAY OBSERVE THAT THE ADDITION MADE BY THE AO PERTAINS TO THE INVESTMENT MADE BY THE ASSESSEE THROUGH SHAREKHAN LTD. AND IN THE ABSENCE OF MATERIAL/DOCUMENTS QUA THE INVESTMENT OF RS. 29,75,000/ - T HE SAID AMOUNT RESULTED INTO ADDITION AS UN - EXPLAINED INVESTMENT IN SHARES U/SEC. 69 OF THE ACT. THE SAID 6 ITA NO. 386/VIZ/2018 ( SANGAM SRINIVASA REDDY ) ACTION OF THE AO ALSO STANDS AFFIRMED BY THE LD. COMMISSIONER ON THE SAME FOOTING AS OF THE A.O. 6.1 WE MAY ALSO OBSERVE THAT THE ASSESSEE THOUGH AVAILED VARIOUS OPPORTUNITIES FROM THE AUTHORITIES BELOW , BUT FAILED TO FILE ANY SUCH DOCUMENTS TO SUBSTANTIATE ITS CLAIM. ON THIS POINT, THE ASSESSEE REPEATED THE SAME AS PLEADED IN ITS APPLICATION THAT THE DOCUMENTS WERE NOT AVAILABLE WITH THE ASSESSEE AND ALTERNATIVELY PRAYED THAT THE ASSESSEE PRAYER MAY BE ALLOWED SUBJECT TO REASONABLE COST, WHEREAS THE LD. DR EMPHASISED FOR HEAVY COST. 6.2 C ONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES TO THE EFFECTS THAT THOUGH ADDITIONAL EVIDENCE IS VERY MUCH RELATED TO THE ISSUE INVOLVED IN THE APPEAL AND ESSENTIAL FOR PROPER AND JUST DECISION OF THE CASE, HOWEVER AS THE ASSESSEE S REPLY AND CAUSE SHOWN FOR NON - FILING OF DOCUMENTS BEFORE THE AUTHORITIES BELOW FOR A LONG PERIOD , IS NEITHER PLAUSIBLE NOR SATISFACTORY AND SU FFICIENT , HENCE WE DEEM IT APPROPRIATE TO ACCEPT THE PRAYER OF THE ASSESSEE FOR ADMISSION OF ADDITIONAL EVIDENCE , SUBJECT TO DEPOSIT OF RS. 33,000/ - (RS. THIRTY THREE THOUSAND ONLY) IN ANDHRA PRADESH CHIEF MINI STERS WELFARE FUND FOR COVID - 19, WITHIN 15 D AYS FROM THE DATE OF THIS ORDER, AS OFFERED AND AGREED BY THE ASSESSEE. 6.3 CONSEQUENTLY T HE CASE IS REMANDED BACK TO THE FILE OF AO FOR DECISION AFRESH WHILE CONS IDERING THE ADDITIONAL EVIDENCE FILED BEFORE US BY THE ASSESSEE AND WITHOUT BEING INFLUENCED BY ANY OF THE OBSERVATIONS MADE IN THIS ORDER. 7 ITA NO. 386/VIZ/2018 ( SANGAM SRINIVASA REDDY ) 7 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN OPEN COURT ON TH IS 1 3 T H DAY OF MAY , 2021 . S D / - S D / - (D.S. SUNDER SINGH) ( N.K. CHOUDHRY ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 3 T H MAY , 20 2 1 . VR/ - COPY TO: 1. THE ASSESSEE - SANGAM SRINIVASA REDDY, D.NO. 11 - 5 - 19/13, PROP. SRI RAMA SEEDS AGENCIES, SRINATHPREETAM COMPLEX, RAJAGARITHOTA, GUNTUR. 2. THE REVENUE INCOME TAX OFFICER, WARD - 1(3), GUNTUR. 3. THE PR. CIT , GUNTUR 4. THE CIT(A) - 1 , GUNTUR 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.