Grandhi V.V.S.L.N.Subba Rao, Secunderabad V. THE ACIT, Rajahmundry

ITA 388/VIZ/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8816 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 09-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEBAKUMAR SONOWAL
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 131; 132; 2

Judgement Text

ITA NO.388/VIZAG/2014 GRANDHI V.V.S.L.N. SUBBA RAO, SECUNDERABAD 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.388/VIZAG/2014 ( / ASSESSMENT YEAR: 2009-10) GRANDHI V.V.S.L.N. SUBBA RAO SECUNDERABAD ACIT, CENTRAL CIRCLE RAJAHMUNDRY [PAN NO. ABQPG1247G ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI DEBAKUMAR SONOWAL, DR / DATE OF HEARING : 03.01.2018 / DATE OF PRONOUNCEMENT : 10.01.2018 / O R D E R PER BENCH: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) {CIT(A)}, GUNT UR VIDE ITA NO.457/CIT(A)/GNT/10-11 DATED 18.2.2014 FOR THE ASS ESSMENT YEAR 2009-10. ITA NO.388/VIZAG/2014 GRANDHI V.V.S.L.N. SUBBA RAO, SECUNDERABAD 2 2. THE ASSESSEE FILED RETURN OF INCOME DECLARING TO TAL INCOME OF ` 6,97,010/- ON 30.11.2009. A SEARCH U/S 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') WAS CARRIED OUT IN THE GROUP CASES OF THE ASSESSEE ON 3.2.2009. CONSEQUENTLY, THE CAS E OF THE ASSESSEE WAS CONVERTED INTO SCRUTINY AND THE ASSESSMENT WAS COMPLETED ON TOTAL INCOME OF ` 37,52,060/-. IN THE ASSESSMENT ORDER PASSED U/S 1 43(3) OF THE ACT, THE ASSESSING OFFICER MADE THE FOLLOWING A DDITIONS: INCOME RETURNED 697010 ADD: 1. CAPITAL GAINS ON SALE OF SITE AS ADMITTED DURING ASSESSMENT PROCEEDINGS 2. UNEXPLAINED INVESTMENT IN GOLD JEWELLERY AS IN P ARA 4 3. UNEXPLAINED INVESTMENT IN SILVER AS IN PARA 5 4. UNEXPLAINED CASH AS DISCUSSED IN PARA 6 207410 1758720 788919 300000 3055049 INCOME ASSESSED 3752059 3752060 3. DURING THE COURSE OF SEARCH IN THE RESIDENCE OF THE ASSESSEE, GOLD JEWELLERY WEIGHING 2864 GMS. WAS FOUND AND THE ASSE SSEE HAD ADMITTED JEWELLERY WEIGHING 1210 GMS. VALUED AT ` 13,05,600/- AS AN UNEXPLAINED INVESTMENT IN HIS HANDS. FURTHER, SILVER ARTICLES WEIGHING 59.754 KGS. WAS FOUND AND THE ASSESSEE HAS ALSO ADMITTED 30KGS. OF SILVER VALUED AT ` 5,88,000/- AS UNEXPLAINED INVESTMENT. HOWEVER, IN THE RETURN OF INCOME FILED SUBSEQUENT TO THE SEARCH THE ASSESSEE DID NOT ADMIT THE ADDITIONAL INCOME AND EXPLAINED THE SOURCES AS UN- REFLECTED PROFIT AMOUNTS ON WHICH TAXES WERE PAID FOR THE FINANCIAL YEARS 2004-05, 2005-06 & 2006-07 FOR ACQUIRING THE GOLD OF 1133 GR AMS AS AND WITH ITA NO.388/VIZAG/2014 GRANDHI V.V.S.L.N. SUBBA RAO, SECUNDERABAD 3 REGARD TO 354 GMS. OF GOLD, THE ASSESSEE STATED THA T THE SAME WAS PERTAINING TO CHILDREN AND THE SOURCE OF ACQUISITIO N WAS NOT EXPLAINED. FOR THE BALANCE JEWELLERY OF 77 GMS THE ASSESSEE A DMITTED THE ADDITIONAL INCOME OF RS.83,006/-. NOT BEING SATISFI ED WITH THE EXPLANATION OF THE ASSESSEE, THE AO ASSESSED THE VA LUE OF GOLD ORNAMENTS WEIGHING 1564 GMS AND SILVER WEIGHING 4 0.251 KGS AS UNEXPLAINED INVESTMENT AND BROUGHT TO TAX. 4. AGGRIEVED BY THE ORDER OF THE A.O. THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE A.O. WITH REGARD TO THE GOLD JEWELLERY AND SIL VER ARTICLES AND DISMISSED THE APPEAL OF THE ASSESSEE. DURING THE A PPEAL HEARING, BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE REITERA TED THE STAND THAT THE GOLD WAS STATED TO BE ACQUIRED OUT OF THE INCOME GE NERATED DURING THE ASSESSMENT YEAR 2004-05 TO 2006-07. THE LD.CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE, SINCE THE INCOME ADMITT ED BY THE ASSESSEE WAS NOT COMMENSURATING WITH THE EXPENDITURE INCURRE D BY THE ASSESSEE AS WELL AS ACQUISITION OF THE GOLD. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSES SEE FILED APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, T HE LD. A.R. SUBMITTED THAT THERE WAS A SEARCH IN THE CASE OF THE ASSESSEE ON 3.2.2010 AND DURING THE COURSE OF SEARCH, GOLD JEWELLERY WEIGHIN G 2864 GMS. WAS ITA NO.388/VIZAG/2014 GRANDHI V.V.S.L.N. SUBBA RAO, SECUNDERABAD 4 FOUND AT THE RESIDENCE OF THE ASSESSEE, OUT OF WHIC H 1300 GMS. WAS ALLOWED AS A DEDUCTION FOLLOWING ORDER OF THE CIT(A ), RAJAHMUNDRY IN ACCORDANCE WITH THE PROVISIONS OF INSTRUCTION NO.19 16 DATED 11.5.1994. THE REMAINING GOLD JEWELLERY WEIGHING 1564 GMS. WAS TREATED AS UNEXPLAINED AND ACCORDINGLY MADE THE ADDITION OF ` 17,58,720/-. IN ADDITION TO THE ABOVE, SILVER ARTICLES WEIGHING 59. 754 KGS. WAS FOUND AT THE RESIDENCE OF THE ASSESSEE, OUT OF WHICH THE A.O . TREATED 40.251 GMS. VALUED AT ` 7,88,919/- AS UNEXPLAINED INVESTMENT. THE ASSESSE E ALSO MADE THE DISCLOSURE AT THE TIME OF SEARCH TO T HE EXTENT OF ` 13,50,600/- IN RESPECT OF GOLD JEWELLERY WEIGHING 1 210 GMS. AND ` 5,88,000/- IN RESPECT OF SILVER ARTICLES WEIGHING 30 KGS OF SILVER. HOWEVER, THE ASSESSEE HAS ADMITTED ADDITIONAL INCOM E OF ` 20 LAKHS IN M/S. BALAJI BUILDERS AND ` 20 LAKHS IN M/S. BALAJI CONSTRUCTIONS AGGREGATING TO ` 40 LAKHS FOR THE ASSESSMENT YEAR 2009-10. SINCE T HE GOLD AND JEWELLERY WAS FOUND DURING THE COURSE OF S EARCH AS ON 3.2.2009, REQUIRED TO BE ASSESSED AS UNDISCLOSED IN COME FOR THE ASSESSMENT YEAR 2009-10, THE SOURCES FOR ACQUISITIO N OF THE GOLD AND JEWELLERY AND SILVER ARTICLES REQUIRED TO BE TELESC OPED FROM THE UNDISCLOSED INCOME ADMITTED IN THE HANDS OF BOTH TH E FIRMS I.E. M/S. BALAJI BUILDERS AND M/S. BALAJI CONSTRUCTIONS. THE LD. A.R. OF THE ASSESSEE REFERRING TO PAPER BOOK PAGE NO.51, IN THE STATEMENT RECORDED ITA NO.388/VIZAG/2014 GRANDHI V.V.S.L.N. SUBBA RAO, SECUNDERABAD 5 U/S 131 STATED THAT IN RESPONSE TO QUESTION NO.19 T HE ASSESSEE HAD ADMITTED ADDITIONAL INCOME OF ` 20 LAKHS IN M/S. BALAJI BUILDERS AND ` 20 LAKHS IN M/S. BALAJI CONSTRUCTION FOR THE FINANCIAL YEAR 2008-09 RELATED TO THE ASSESSMENT YEAR 2009-10. REFERRING TO PAGE NO. 47 OF THE PAPER BOOK, THE LD.AR STATED THAT THE FAMILY MEMBERS AND RELATIVES ARE ONLY THE PARTNERS IN THE FIRM AND NO OUTSIDER IS INVOLVE D IN BUSINESS. THE LD. A.R. FURTHER SUBMITTED THAT THE PARTNERS OF BOTH TH E FIRMS ARE MEMBERS OF THE SAME FAMILY AND DURING THE SEARCH, NO OTHER UNACCOUNTED ASSET WAS FOUND AND THE ADDITIONAL INCOME ADMITTED BY THE ASSESSEE AMOUNTING ` 40 LAKHS IN BOTH THE FIRMS REQUIRED TO BE CONSIDER ED FOR TELESCOPING THE ACQUISITION OF THE GOLD AND JEWELLE RY IN THE CASE OF THE ASSESSEE. 6. ON THE OTHER HAND, THE LD. D.R. ARGUED THAT THER E WAS INCONSISTENCY IN THE EXPLANATION OF THE ASSESSEE. BEFORE THE CIT(A) AND THE A.O., THE ASSESSEE TRIED TO EXPLAIN THE SOURCE OF ACQUISITION OF THE GOLD JEWELLERY AS THE INCOME GENERATED FROM A.Y.S 2004-05 TO 2006-07. THE INCOME GENERATED DURING THE ASSESSMENT YEARS 20 04-05 TO 2006-07 WAS MEAGER AMOUNT, AND THE SAME IS NOT SUFFICIENT TO MEET THE REGULAR EXPENDITURE AS WELL AS SOURCES FOR ACQUIRING THE GO LD JEWELLERY AS RIGHTLY OBSERVED BY THE LD. CIT(A). THE ASSESSEE TOOK A DI FFERENT STAND DURING THE APPEAL HEARING BEFORE THE TRIBUNAL REQUESTING F OR TELESCOPING THE ITA NO.388/VIZAG/2014 GRANDHI V.V.S.L.N. SUBBA RAO, SECUNDERABAD 6 BENEFIT OUT OF THE ADDITIONAL INCOME ADMITTED BY TH E ASSESSEE IN THE HANDS OF THE FIRMS, WHICH IS NOT PERMISSIBLE. HENC E, THE LD. D.R. ARGUED THAT NO TELESCOPING BENEFIT SHOULD BE ALLOWED WITH REGARD TO THE SOURCES FOR ACQUIRING THE GOLD JEWELLERY. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. A SEARCH U/S 132 OF THE ACT WAS CARRIED OUT IN THE GR OUP CASES OF THE ASSESSEE ON 3.2.2009. DURING THE COURSE OF SEARCH, GOLD JEWELLERY WEIGHING 2864 GMS. WAS FOUND AND OUT OF WHICH THE A SSESSEE HAD ADMITTED THE VALUE OF GOLD JEWELLERY WEIGHING 1210 GMS. AS UNDISCLOSED INCOME FOR THE ASSESSMENT YEAR 2009-10. SIMILARLY, IN THE CASE OF THE GOLD JEWELLERY RELATING TO THE CHILDREN WEIGHING 35 4 GMS, SOURCE COULD NOT BE EXPLAINED BY THE ASSESSEE. THEREAFTER THE AS SESSEE DID NOT OFFER THE SAME AS INCOME IN RETURNS FILED SUBSEQUENT TO T HE SEARCH. THEREFORE THE ASSESSING OFFICER MADE THE ADDITION OF ` 17,58,720/- IN RESPECT OF UNEXPLAINED INVESTMENT IN GOLD AND JEWELRY AND FURT HER SUM OF RS. 7,88,919/- IN RESPECT OF SILVER ARTICLES. DURING T HE APPEAL HEARING, THE LD. A.R. OF THE ASSESSEE ARGUED THAT THE ASSESSEE H AD ADMITTED ADDITIONAL INCOME OF ` 20 LAKHS IN M/S. BALAJI BUILDERS AND ` 20 LAKHS IN M/S. BALAJI CONSTRUCTIONS FOR THE ASSESSMENT YEAR 2 009-10. BOTH THE BUSINESS CONCERNS ARE FAMILY CONCERNS AND THERE IS NO DISPUTE. NO ITA NO.388/VIZAG/2014 GRANDHI V.V.S.L.N. SUBBA RAO, SECUNDERABAD 7 OTHER UNACCOUNTED ASSET WAS FOUND DURING THE COURSE OF SEARCH INDICATING THE INVESTMENTS MADE BY THE ASSESSEE OUT OF UNDISCLOSED INCOME. BOTH THE FIRMS ARE RUN BY THE FAMILY MEMBE RS OF THE ASSESSEE. BOTH THE COMMISSIONER OF INCOME TAX(A) AND THE AO D ID NOT ACCEPT THE ASSESSEES CONTENTION THAT THE GOLD JEWELLERY WAS A CQUIRED IN THE EARLIER YEARS AND THE SAME IS ASSESSED IN THE YEAR UNDER CO NSIDERATION. DURING THE APPEAL HEARING, THE LD. D.R. DID NOT BRING ANY MATERIAL TO SHOW THAT THE UNDISCLOSED INCOME ADMITTED BY THE ASSESSEE WAS USED IN THE BUSINESS OF THE FIRMS. THEREFORE, AUTOMATIC INFERE NCE IS UNEXPLAINED INVESTMENT IS MADE OUT OF UNACCOUNTED INCOME AND RE QUIRED TO BE ALLOWED AS TELESCOPIC BENEFIT FROM THE UNDISCLOSED INCOME ADMITTED BY THE ASSESSEE. ACCORDINGLY, WE DIRECT THE A.O. TO A LLOW THE TELESCOPIC BENEFIT OF THE GOLD AND JEWELLERY AND SILVER ARTICL ES FROM THE UNDISCLOSED INCOME ADMITTED BY THE ASSESSEE. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 10 TH JAN18. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 10.01.2018 VG/SPS ITA NO.388/VIZAG/2014 GRANDHI V.V.S.L.N. SUBBA RAO, SECUNDERABAD 8 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SRI GRANDHI V.V.S.L.N. SUBBA RAO , C/O M. ANANDAM & CO., CHARTERED ACCOUNTANTS, 7A, SURYA TOWERS, S.P. ROAD, SECUNDERABAD. 2. / THE RESPONDENT THE ACIT, CENTRAL CIRCLE, RAJAH MUNDRY 3. + / THE CIT, GUNTUR 4. + ( ) / THE CIT (A), GUNTUR 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM