Kotagiri Bhooma Goud , Karimnagar V. Asst. Commissioner of Income Tax, Circle-(1), Karimangar

ITA 433/Hyd/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4360 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-04-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 05-08-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A VENKATA RAO
• Assessee Lawyers: V SREELATHA REDDY
• Keywords: Loose papers; Retraction
• Section: 133A; 131

Judgement Text

ITA NOS 431 TO 434 OF 2020 RONTALA TIRUMALA AND OTH ERS PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD SMC BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO ASSESSEE & PAN RESPONDENT A.Y 431/HYD/2020 S MT. RONTALA TIRUMALA, KARIMNAGAR AFJPR7315F ACIT, CIRCLE 1(1) KARIMNAGAR 2014 - 15 432/HYD/2020 SRI RONTALA RAJIREDDY KARIMNAGAR AFOPR5625R - DO - 2014-15 433/HYD/2020 SRI KOTAGIRI BHOOMA GOUD, KARIMNAGAR AJBPK7713Q - D O - 2014 - 15 434/HYD/2020 SRI SAMPATH SUDDALA KARIMNAGAR BACPS3467C - DO - 2014-15 ASSESSEE BY: SMT. V. SREELATHA REDDY REVENUE BY : SRI A. VENKATA RAO, DR DATE OF HEARING: 21/04/2021 DATE OF PRONOUNCEMENT: 28/05/2021 ORDER ALL ARE THE APPEALS OF THE RESPECTIVE ASSESSEES FOR THE A.Y 2014-15 AGAINST THE INDIVIDUAL ORDERS OF THE CI T (A)-12, HYDERABAD, DATED 7.2.2020. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEES B EFORE THIS TRIBUNAL ARE THE DIRECTORS OF THE PRIVATE LIMI TED CHIT FUND COMPANY UNDER THE NAME OF M/S. SANNIHITA CHIT FUNDS PVT. LTD. THERE WAS A SURVEY OPERATION U/S 133A OF THE ACT IN THE CASE OF THE COMPANY ON 16.10.2014. DURING THE COURSE OF SUR VEY, CERTAIN MATERIAL SUCH AS SMALL NOTEBOOKS WERE FOUND AND IMP OUNDED. ON GOING THROUGH THESE DIARIES, THE REVENUE AUTHORITIE S OBSERVED ITA NOS 431 TO 434 OF 2020 RONTALA TIRUMALA AND OTH ERS PAGE 2 OF 7 THAT THESE DIARIES WERE CONTAINING CERTAIN ENTRIES, SUCH AS AMOUNTS AND NAMES AND THE NAMES OF THE DIRECTORS OF THE COMPANY, ARE WRITTEN IN SHORT FORMS. ONE OF THE DIR ECTOR, SHRI RONTALA RAJI REDDY WAS PRESENT AT THE TIME OF SURVE Y AND WHEN HE WAS CONFRONTED, HE EXPLAINED THE CONTENTS OF THE NO TE BOOKS, AS THE DETAILS OF THE LOANS/ADVANCES OF THE INDIVIDUAL DIRECTORS TO DIFFERENT PERSONS IN THE FINANCIAL YEAR 2013-14 AND THAT THE SUB- TITLE ON THE NOTE BOOKS DENOTES THE DIRECTORS NAME IN SHORT. HE EXPRESSED HIS INABILITY TO FURNISH THE DETAILS SUCH AS THE ADDRESS AND PAN OF THE PARTIES TO WHOM THE DIRECTORS HAVE A LLEGEDLY ADVANCED THE LOANS AND IT WAS EXPLAINED THAT THESE SMALL NOTE BOOKS WERE KEPT IN THE OFFICE OF THE COMPANY FOR CO NVENIENCE. HE FURTHER OFFERED TO ADMIT ADDITIONAL INCOME (APART F ROM THE REGULAR INCOME) I.E. RS.15.00 LAKHS EACH IN THE HANDS OF SR I SUDDALA SAMPATH, SRI RONTALA RAJI REDDY AND SMT. RONTALA TI RUMALA AND RS.16.00 LAKHS IN THE CASE OF SRI KOTAGIRI BHOOMA G OUD. THUS, THE STATEMENT OF SRI RONTALA RAJI REDDY WAS RECORDE D U/S 131 ON 17.10.2014 AND SHRI RAJI REDDY ASSURED THAT SINCE T HE RETURNS OF THE DIRECTORS IN THEIR INDIVIDUAL CAPACITY FOR THE A.Y 2014-15 WERE NOT YET FILED AND WERE UNDER PROCESS, THE ADDITIONA L INCOME WOULD BE OFFERED. HOWEVER, WHILE FILING THE RETURNS OF IN COME, THE RESPECTIVE ASSESSEES DID NOT OFFER THE ADDITIONAL I NCOME IN THEIR HANDS. 3. THE ASSESSING OFFICER THEREFORE, PROPOSED TO ADD THE SAID ADDITIONAL INCOME BY ISSUING A SHOW-CAUSE NOTI CE TO ALL THE ASSESSEES. THE ASSESSEES EXPLAINED THAT THE SMALL B OOKS/DIARIES WHICH WERE FOUND DURING THE COURSE OF THE SURVEY DI D NOT BELONG TO THE DIRECTORS AND THAT THE STATEMENT GIVEN BY SR I RONTALA RAJI REDDY DURING THE SURVEY PROCEEDINGS WERE UNDER DURE SS AND THAT ITA NOS 431 TO 434 OF 2020 RONTALA TIRUMALA AND OTH ERS PAGE 3 OF 7 THEY HAVE COMPLAINED TO THE CBI IMMEDIATELY THEREAF TER AND THE CBI HAD IMPOUNDED THE BOOKS FROM THE DEPARTMENT AND HENCE THE STATEMENT CANNOT BE RELIED UPON TO MAKE ANY ADD ITIONS. THE ASSESSING OFFICER DID NOT ACCEPT THIS CONTENTION AN D BY TAKING INTO CONSIDERATION THE NOTINGS IN THE SMALL DIARIES , AND ALSO THE STATEMENT OF SRI RAJI REDDY, HE MADE THE ADDITION O F RS.15.00 LAKHS TO THE RETURNED INCOME OF THE ASSESSEES, I.E SRI SUDDALA SAMPATH, SRI RONTALA RAJI REDDY AND SMT. RONTALA TI RUMALA AND RS.16.00 LAKHS IN THE CASE OF SRI KOTAGIRI BHOOMA G OUD. 4. AGGRIEVED, THE RESPECTIVE ASSESSEES PREFERRED AP PEALS BEFORE THE CIT (A), WHO CONFIRMED THE ORDERS OF THE ASSESSING OFFICER AND THE ASSESSEES ARE IN SECOND APPEAL BEFO RE THE TRIBUNAL. FOR THE PURPOSE OF CONVENIENCE AND READY REFERENCE, THE GROUNDS OF APPEAL RAISED BY SHRI RONTALA RAJI REDDY ARE REPRODUCED HEREUNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE AO ERRED IN MAKING AN ADDITION OF _RS.15,00,000/- T O THE TOTAL INCOME OF THE ASSESSEE. 2. THE CIT(A) IS NOT JUSTIFIED FOR NOT CONSIDERING THAT THERE WERE NO COMPELLING CIRCUMSTANCES AS SPECIFIED U/S 1 33A(6) FOR OBTAINING A SWORN STATEMENT U/S 131(1). 3. THE CIT (A) IS NOT JUSTIFIED IN CONSIDERING THE SWORN STATEMENT OF THE ASSESSEE U/S 131 (1) WHICH IS OBTA INED UNLAWFULLY, AS EVIDENTIARY STATEMENT. 4. THE CIT (A) OUGHT TO HAVE APPRECIATED THE FACT T HAT UNDATED DOCUMENTS SHALL BE PRESUMED TO BE BELONGING TO THE PERIOD IN WHICH SURVEY U/S. 133A WAS CONDUCTED I.E. ,F.Y 2014-15. 5. THE CIT (A) IS NOT JUSTIFIED IN SUSTAINING THE A DDITION MADE BASED ON SWORN STATEMENT OF THE ASSESSEE U/S 131(1) , WHICH IS OBTAINED UNLAWFULLY AND BY COERCION AND INTIMIDA TION. AND THE ASSESSEE DISCHARGED THE BURDEN OF PROVING COERC ION AND INTIMIDATION BY WAY OF GIVING CBI COMPLAINT. 6. THE CIT (A) OUGHT TO HAVE APPRECIATED THE FACT T HAT DELAY IN RETRACTION OF THE ASSESSEE FROM THE ADMISSION MADE WAS FOR ITA NOS 431 TO 434 OF 2020 RONTALA TIRUMALA AND OTH ERS PAGE 4 OF 7 THE BONAFIDE REASON OF PENDING CASE BEFORE CBI TO F IND THE FACTS. DENIAL OF RETRACTION IS NOT JUSTIFIED. 7. THE CIT (A) IS NOT JUSTIFIED IN SUSTAINING THE A DDITION BASED ON THE ADMISSION MADE BY THE ASSESSEE WITHOUT ANY CORROBORATIVE EVIDENCE. THE EVIDENCE WHICH IS RELIE D BY THE DEPARTMENT CANNOT BE CONSTITUTED AS A 'DOCUMENT' U/ S 3(18) OF THE GENERAL CLAUSES ACT, WHERE IN THE EVIDENCE D O NOT INDICATE WHETHER THE FIGURES REFERS TO QUANTITATIVE S OF MONEY OR QUANTITATIVES OF GOODS AND IF SO WHICH SIDE REPR ESENTS RECEIPTS AND WHICH SIDE REPRESENTS OUTGOING WHERE T HERE IS NO NARRATION THE CHIT CAN BE CALLED AS DUMB DOCUMEN TS, WITHOUT INDICATING ANY MEANING CANNOT BE TREATED AS DOCUMENTS. 8. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSEE IS B EING ASSESSED FOR THE PAST 15 YEARS. THE ADDITION MADE I N THE HANDS OF THE ASSESSEE MAY BE TELESCOPED WITH THE PR EVIOUSLY TAXED INCOME. 9.THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND A ND/OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEF ORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SMT. V. SREELATHA REDDY SUBMITTED THAT DURING THE COURSE OF SURVEY, THE STATEMENT OF SHRI RONTALA RAJI REDDY WAS RECORDED/O BTAINED BY COERCION AND UNDER DURESS AND THE INCOME TAX OFFICE RS HAD DEMANDED HUGE AMOUNTS FROM THE ASSESSEES AND THEREF ORE, ASSESSEES HAVE MADE COMPLAINTS TO THE CBI AND THE C BI HAD IMPOUNDED ALL THE DOCUMENTS FROM THE DEPARTMENT. SH E SUBMITTED THAT THE DOCUMENTS TAKEN BY THE CBI CONTA INED TWO ORIGINAL CHEQUES AND CASH BOOK OF M/S. SANNIHITA CH IT FUNDS PVT. LTD WHICH WERE NOT PART OF THE IMPOUNDED MATERIAL B Y THE DEPARTMENT. THUS, IT CAN BE SEEN THAT THE DEPARTMEN T HAD NOT ACTED IN GOOD FAITH WHILE CONDUCTING THE SURVEY AND WHILE IMPOUNDING THE DOCUMENTS FOUND DURING SURVEY. SHE A LSO DREW MY ATTENTION TO THE COPIES OF THE DIARIES WHICH ARE PART OF THE PAPER BOOK TO DEMONSTRATE THAT THESE DIARIES ARE DU MB ITA NOS 431 TO 434 OF 2020 RONTALA TIRUMALA AND OTH ERS PAGE 5 OF 7 DOCUMENTS AND THE DETAILS THEREIN CANNOT BE RELIED UPON TO MAKE ANY ADDITIONS. FURTHER SHE ALSO ARGUED THAT THE STA TEMENT GIVEN BY THE MANAGING DIRECTOR OF THE COMPANY AT THE TIME OF SURVEY (TO OFFER ADDITIONAL INCOME) WAS RETRACTED IMMEDIATELY BY ISSUANCE OF A COMPLAINT TO THE CBI AND SUCH STATEMENTS CANNOT B E RELIED UPON TO MAKE ANY ADDITIONS IN THE HANDS OF THE RESP ECTIVE ASSESSEES. SHE, THEREFORE, PRAYED THAT THE ADDITION S MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT (A), BE DELETED. 6. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND ARGUED THAT THE ADDITIONS WERE ON THE BASIS OF THE ENTRIES IN THE BOOKS FOUND AT T HE TIME OF SURVEY WHICH WERE CORROBORATED AND CONFIRMED BY THE STATEMENT OF THE MANAGING PARTNER. THUS, HE PRAYED FOR CONFIR MATION OF THE ADDITIONS. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT THE STATEMENT OF THE M.D SHR I RONTALA RAJI REDDY WAS RECORDED ON 17.10.2014 I.E. A DAY AFTER T HE SURVEY ON 16.10.2014 AND THE DIARIES IMPOUNDED DURING THE COU RSE OF SURVEY ALLEGEDLY CORROBORATED THE STATEMENT. IT IS A SETTLED POSITION THAT NO ADDITION CAN BE MADE SOLELY ON THE BASIS OF A STATEMENT GIVEN DURING THE COURSE OF SEARCH OR SURV EY. IN THIS CASE I FIND THAT THOUGH THE ASSESSEES DID NOT RETRA CT THE STATEMENT OF SRI RAJI REDDY BY FILING ANY LETTER BEFORE THE R EVENUE AUTHORITIES, I FIND THAT THEY HAVE COMPLAINED TO TH E CBI AND THE CBI HAS IMPOUNDED THE MATERIAL FROM THE DEPARTMENT, WHICH CONTAINED NOT ONLY THE SMALL DIARIES BUT ALSO SOME OTHER DOCUMENTS, SUCH AS THE ORIGINAL COPIES OF THE CHEQU ES ALLEGEDLY ISSUED BY THE DIRECTORS UNDER DURESS. THOUGH THE CB I PROCEEDINGS ITA NOS 431 TO 434 OF 2020 RONTALA TIRUMALA AND OTH ERS PAGE 6 OF 7 ARE STILL PENDING, A DOUBT ABOUT THE SURVEY PROCEED ING ARISES. FURTHER, DIARIES ON WHICH THE ASSESSING OFFICER HAS RELIED UPON, DO NOT CONTAIN ANY DETAILS OTHER THAN THE NAMES OF THE LOANEES TO WHOM THE ADVANCES ARE ALLEGEDLY GIVEN BY THE INDIVI DUAL DIRECTORS OF THE COMPANY. FURTHER, THE NAMES OF THE ASSESSEES ARE ALLEGEDLY WRITTEN IN SHORT FORM. THEREFORE, IT IS NOT POSSIBL E TO IDENTIFY THE LOANEES OR VERIFY THE TRANSACTIONS. FURTHER, THE CO MPLAINT GIVEN BY THE INDIVIDUAL DIRECTORS TO THE CBI ALSO THROWS A D OUBT ABOUT THE VOLUNTARINESS OF THE STATEMENT GIVEN BY THE MANAGIN G DIRECTOR. 8. IN VIEW OF THE SAME, I AM INCLINED TO ACCEPT THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEES THAT THE DOCUMENTS ON THE BASIS OF WHICH, THE ADDITIONS ARE MADE BY THE ASSESSING OFFICER ARE NOTHING BUT DUMB DOCUMENTS AN D THE ADDITIONS MADE ON THE BASIS OF SUCH DOCUMENTS CANNO T BE SUSTAINED. IN VIEW OF THE SAME, THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE HANDS OF ALL THE ASSESSEES ARE DELETED. THE ASSESSEES APPEALS ARE ACCORDINGLY ALLOWED. 9. IN THE RESULT, APPEALS OF ALL THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MAY, 2021. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED MAY, 2021. VINODAN/SPS ITA NOS 431 TO 434 OF 2020 RONTALA TIRUMALA AND OTH ERS PAGE 7 OF 7 COPY TO: S.NO ADDRESSES 1 S MT. RONTALA THIRUMALA, H.NO.2 - 10 - 1644, FLAT NO.203, CHAITANYAPURI KARIMNAGAR 505001 2 SRI RONTALA RAJIREDDY, H.NO.2-10-1644, FLAT NO.20 3, CHAITANYAPURI KARIMNAGAR 505001 3 SRI KOTAGIRI BHOOMA GOUD, H.NO.3-7-520 VAVILAPALL I, KARIMNAGAR 4 SRI SAMPATH SUDDALA H.NO.6 - 45/1 MULAKANOOR VILLAGE, BHEEMADEVARAPALLI MANDAL, KARIMNAGAR 505001 5 ACIT , CIRCLE - 1 K ARIMNAGAR 6 CIT (A)-12, HYDERABAD 7 PR. CIT 12, HYDERABAD 8 DR, ITAT HYDERABAD BENCHES 9 GUARD FILE BY ORDER