Smt T V Padmini, Visakhapatnam V. The ITO, Ward-3(1), Visakhapatnam, Visakhapatnam

ITA 45/VIZ/2012

• Counselvise Citation: 4525314 RSA 2012
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-07-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 24-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D MANOJ KUMAR
• Assessee Lawyers: C R HEMANT KUMAR
• Keywords: Unexplained investment
• Section: 143(3); 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 45/VIZ/2012 ASSESSMENT YEAR : 2006-07 SMT. T.V. PADMINI, VISAKHAPATNAM PAN ACJPT 1111A INCOME-TAX OFFICER, WARD 3(1), VISAKHAPATNAM (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI C.R. HEMANT KUMAR REVENUE BY SHRI D. MANOJ KUMAR DATE OF HEARING 09-07-2014 DATE OF PRONOUNCEMENT 09-07-2014 O R D E R PER BENCH: THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF CIT(A), VISAKHAPATNAM DATED 25/11/2011 FOR AY 2006- 07. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS A PARTNER IN M/S SWARNA DEVELOPERS, A PARTNERSHIP FIRM, WHICH IS IN THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL APARTMENTS. A SURVEY U/ S 133A OF THE ACT WAS CONDUCTED ON THE FIRM. CONSEQUENTLY, NOTICE U/S 1 48 WAS ISSUED TO THE ASSESSEE, IN RESPONSE TO WHICH, ASSESSEE FILED A RE TURN OF INCOME ADMITTING TOTAL INCOME OF RS. 1,45,880/-. THE ASSES SMENT WAS COMPLETED U/S 143(3) BY MAKING AN ADDITION OF RS. 4,33,000/- TOWARDS UNEXPLAINED INVESTMENT IN PURCHASE OF FLAT AND RS. 34,805/- TOW ARDS INSURANCE PAID ON HOUSE. ON APPEAL, THE FIRST APPELLATE AUTHORITY CON FIRMED THE SAME. 2 ITA NO. 45/VIZ/12 SMT. T.V. PADMINI 3. AGGRIEVED, THE ASSESSEE IS BEFORE US ON THE FOLL OWING GROUNDS: 1. THE ORDER OF THE CIT(A) IS AGAINST THE FACTS OF THE CASE AND LAW. 2. THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE AD DITION OF RS. 4,33,000/- WITHOUT CONSIDERING THE EXPLANATIONS OF THE APPELLANT. 3. THE CIT(A) FAILED TO APPRECIATE THE FACT THAT TH E APPELLANT BEING PARTNER TO AN EXTENT OF 50%, ALREADY ENTITLED FOR T HE PROPERTY TO THAT EXTENT AND ALSO THE REMAINING PARTNER IS HER HUSBAN D AND AS SUCH THE TRANSFER OF PROPERTY WAS ONLY TO FACILITATE THE LOAN. 4. THE CIT(A) FAILED TO APPRECIATE THAT THE AMOUNTS RECEIVED BY HER SON TSR KIRAN WITH WHOM THE APPELLANT ENTERED INTO AGREEMENT FOR ADDITIONAL WORKS TO GET HIGHER LOAN, HAVE ALSO BEEN ADJUSTED TOWARDS THE SALE CONSIDERATION. 5) THE CIT(A) ERRED IN HIS FINDING THAT ADDITIONAL AMOUNT OF RS. 4,35,000/- WAS PAID FOR EXTRA WORKS BY THE APPELLAN T WHEN THERE WAS NO EVIDENCE THAT THIS AMOUNT WAS PAID BY THE APPELL ANT. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI C.R. H EMANT KUMAR SUBMITTED THAT THE ASSESSEE AND HER HUSBAND ARE PA RTNERS IN A FIRM CALLED M/S SWARNA DEVELOPERS, WHICH DERIVES INCOME FROM T HE BUSINESS OF CONSTRUCTION OF RESIDENTIAL FLATS. HE ARGUED THAT T HE FIRM WAS IN DIRE REQUIREMENT OF FUNDS AND IN ORDER TO MOBILIZE FUNDS BY WAY OF LOANS, IT WAS DECIDED THAT ONE OF THE FLAT OF THE FIRM WOULD BE R EGISTERED IN THE NAME OF THE PARTNERS FOR RAISING A HOUSING LOAN FROM THE BA NK, WHICH IN TURN WOULD BE UTILIZED FOR THE PURPOSE OF BUSINESS OF THE FIRM . TO DEMONSTRATE THIS INTENTION OF THE FIRM, THE LEARNED COUNSEL FOR THE ASSESSEE FILED A PAPER BOOK, WHICH CONTAINED LEDGER EXTRACTS FROM THE BOOK S AS WELL AS COPIES OF THE BANK STATEMENTS OF THE ASSESSEE TO ESTABLISH TH AT THE AMOUNTS RECEIVED FORM THE BANKS WERE DIRECTLY TRANSFERRED T O THE PARTNERSHIP FIRM. FURTHER, HE SUBMITTED THAT AN AGREEMENT WAS ENTERED WITH THE SON OF THE ASSESSEE FOR PROVISION OF FURNISHINGS FOR AN AMOUNT OF RS. 4,35,000/- FOR AVAILING HIGHER AMOUNT OF HOUSING LOAN. HE ARGUED T HAT THIS AGREEMENT WAS NEVER ACTED UPON NOR ANY MONEY WAS PAID TO SRI T.S.R.K. KIRAN, SON OF THE ASSESSEE. HE POINTED OUT THAT, EVEN, DURING THE COURSE OF SURVEY, NO EVIDENCE WHATSOEVER WAS FOUND TO SUPPORT THE CON TENTION OF THE 3 ITA NO. 45/VIZ/12 SMT. T.V. PADMINI REVENUE THAT THE EXPENDITURE HAS BEEN INCURRED IN P URSUANCE TO THIS AGREEMENT. HE ALSO CONTENDED THAT THERE IS NO EVID ENCE TO PROVE THAT THE ASSESSEE HAS PAID ANY AMOUNT OTHER THAN THAT WHICH IS RECORDED IN THE BOOKS BY THE FIRM TOWARDS THE COST OF THE FLAT. HE EXPLAINED THAT THE AMOUNT DEBITED TO THE FIRMS BOOKS WAS RS. 10,50,00 0/-. HE POINTED OUT THAT THE ASSESSEE HAS SURRENDERED THE AMOUNT OF RS. 2 LAKHS TOWARDS UNEXPLAINED INVESTMENT IN FLAT WITH A VIEW TO BUY P EACE WITH THE DEPARTMENT AND COVER UP THE DEFICIENCIES. UNDER SUC H CIRCUMSTANCES, NO FURTHER ADDITION IS WARRANTED. 5. THE LEARNED DR OPPOSED THE CONTENTIONS OF THE AS SESSEE AND SUBMITTED THAT THE CIT(A) HAS DEALT WITH THE ISSUE AT PARA 5 OF HIS ORDER. HE SUBMITTED THAT RECITALS IN REGISTERED DOCUMENTS HAVE TO BE GIVEN EVIDENTIARY VALUE AND UNDER THOSE CIRCUMSTANCES, TH E ADDITION, IN QUESTION, HAS TO BE UPHELD. HE POINTED OUT THAT THE FLAT ITSELF IS SEMI- CONSTRUCTED FLAT, HENCE, IT REQUIRES FURNISHINGS. 6. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE FIND THAT THE ONLY ISSUE THAT HAS TO BE ADJUDICATED IS THE ADDITION OF RS. 4 ,33,000/- BEING THE VALUE OF THE AGREEMENT BETWEEN THE ASSESSEE AND HER SON. IN PURSUANCE TO THE AGREEMENT, THE SON OF THE ASSESSEE WAS TO FURNISH T HE SAID APARTMENT. THIS AGREEMENT HAS NOT BEEN ACTED UPON AND THERE IS NO PROOF WITH THE REVENUE THAT THE ASSESSEE HAS, IN FACT, PAID ANY AM OUNT TO HER SON. IN ADDITION TO THIS AGREEMENT, DURING THE COURSE OF SU RVEY, NO EVIDENCE WHATSOEVER WAS FOUND TO SUPPORT THE CONCLUSION DRAW N BY THE AO THAT THE ASSESSEE HAS INCURRED ANY EXPENDITURE ON FURNISHING S. THE ADDITION HAS BEEN MADE BASED ON INFERENCE. THUS, THIS ADDITION O F RS. 4,33,000/- HAS TO BE DELETED. WE ORDER ACCORDINGLY. 7. ON THE ISSUE OF COST OF FLAT AND REGISTRATION OF CHARGES, THE ASSESSEE HAS EXPLAINED THE SAME BY WAY OF DEBIT IN PARTNERSH IP FIRMS BOOKS AND 4 ITA NO. 45/VIZ/12 SMT. T.V. PADMINI THE OFFER OF RS.2 LAKHS MADE AS UNEXPLAINED INVESTM ENT. THUS, NO ADDITION IS CALLED FOR ON THAT ACCOUNT. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 09/07/2014. SD/- SD/- (SAKTIJIT DEY) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM, DATED: 9 TH JULY, 2014 KV COPY TO:- 1) SMT. T.V. PADMINI, FLAT NO. 3, 4 TH FLOOR, MIG-72, SWARNA ENCLAVE, SEETHAMMADHARA NORTH EXTENSION, VISAKHAPATNAM 13. 2) ITO, WARD 3(1), VISAKHAPATNAM 3) CIT(A), VISAKHAPATNAM 4) CIT-I, VISAKHAPATNAM 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., VIZAG.