Income Tax Officer, Ward-16(2), Hyderabad V. Sri A Srinivasa Reddy (Managing Director), Hyderabad

ITA 457/HYD/2014

• Counselvise Citation: 45722514 RSA 2014
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 14-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B RAMA KRISHNA
• Keywords: Unexplained investment
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO. 457/HYD/2014 ASSESSMENT YEAR 2009-10 THE INCOME TAX OFFICER WARD-16(2) HYDERABAD VS SRI A. SRINIVASA REDDY, HYDERABAD PAN: ACCPA8929L APPELLANT RESPONDENT APPELLANT BY: S RI B. RAMA KRISHNA RESPONDENT BY: SRI K.C. DEVDAS DATE OF HEARING: 23 .0 9 .2014 DATE OF PRONOUNCEMENT: 23 .0 9 .2014 ORDER PER P. MADHAVI DEVI, JM: THIS IS A REVENUE APPEAL DIRECTED AGAINST THE ORDE R OF THE CIT(A)-V, HYDERABAD DATED 25.11.2013 FOR ASSESSMENT YEAR 2009-10. 2. IN THIS APPEAL, THE REVENUE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN ACCEPTING THE ADDITIONAL EVI DENCE FILED BY THE ASSESSEE BEFORE HIM WITHOUT AFFORDING THE ASSESSING OFFICER AN OPPORTUNITY TO EXAMINE THE EVI DENCE IN ACCORDANCE WITH RULE 46A OF INCOME-TAX RULES, 19 62 AND ALSO IN ACCEPTING THE MARKET VALUE OF THE LAND AT RS. 38,79,000 AS AGAINST RS. 41,79,000 AS DETERMINED B Y THE SRO. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR A.Y. 200 9-10 ON 4.10.2010 DECLARING TOTAL INCOME OF RS. 1,92,463. THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE A CT. 2 ITA NO. 457/HYD/2014 SRI A. SRINIVASA REDDY ================== SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UN DER CASS SINCE THE ASSESSEE HAS PURCHASED A PROPERTY FO R RS. 41,79,000. DURING THE ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT, THE ASSESSING OFFICER NOTICED TH AT THE ASSESSEE HAS PURCHASED TWO FLATS BEARING NOS. 202 A ND 203 ON THE 2 ND FLOOR OF VIJETHA PINNACLE SHAMLAL BUILDINGS, BEGUMPET, SECUNDERABAD BY WAY OF AGREEME NT OF SALE CUM GPA DATED 31.7.2008 VIDE DOCUMENT NO. 3128/2008. HE OBSERVED THAT THE PROPERTY WAS PURCHASED FROM ONE SRI B. SRIKANTH FOR A CONSIDERAT ION OF RS. 38,79,000 WHEREAS THE SRO DETERMINED THE MARKET VALUE AT RS. 41,79,000 U/S. 41 AND 42 OF INDIAN STA MP ACT. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF SALE CONSIDERATION PAID BY HIM. THE ASSESSEE HAD EXPLAI NED THAT THE PAYMENT OF RS. 38,79,000 WAS MADE BY WAY O F CHEQUE BEARING NO. 046081 DRAWN ON MAHANAGAR CO- OPERATIVE URBAN BANK LTD., KACHIGUDA, HYDERABAD. T HE ASSESSEE FILED NECESSARY DETAILS IN SUPPORT OF HIS CONTENTION. 4. THE ASSESSING OFFICER CALLED FOR NECESSARY INFORMATION FROM THE BANK U/S. 133(6) OF THE ACT. THE BANK AUTHORITIES, IN REPLY, STATED THAT THE CHEQUE NO. 046081 MENTIONED IN THE SALE DEED IS NOT UTILISED F OR THE PURPOSE AS MENTIONED IN THE SALE DEED BUT IT HAS BE EN UTILISED FOR PAYMENT TO INDIA CEMENTS LTD. FOR A SU M OF RS. 3145 ON 23.10.2008. THE ASSESSING OFFICER, THE REFORE, CAME TO THE CONCLUSION THAT THE CHEQUE MENTIONED IN THE AGREEMENT OF SALE CUM GPA IS NOT CORRECT AND, THERE FORE, DREW AN INFERENCE THAT THE ASSESSEE PAID THE CONSIDERATION IN CASH, THE SOURCE OF WHICH IS NOT EXPLAINED. THEREFORE, A SHOW-CAUSE NOTICE WAS ISSU ED TO 3 ITA NO. 457/HYD/2014 SRI A. SRINIVASA REDDY ================== THE ASSESSEE SEEKING EXPLANATION FOR THE SOURCE OF PURCHASE OF THE PROPERTY. 5. IN RESPONSE TO THE SAME, BOTH THE ASSESSEE AS WELL AS THE VENDOR HAVE FILED AFFIDAVITS STATING THAT CH EQUE BEARING NO. 046081 FOR RS. 38,79,000 DRAWN ON MAHANAGAR CO-OPERATIVE URBAN BANK LTD., KACHIGUDA, HYDERABAD WAS USED BUT THE SAME WAS NOT PRESENTED D UE TO SOME LEGAL PROBLEMS AND IT WAS LATER USED FOR PA YMENT TO INDIA CEMENTS LTD. THE AO DID NOT ACCEPT THIS CONTENTION AND OBSERVED THAT THE AFFIDAVIT IS A SEL F-SERVING DOCUMENT AND TREATED THE TRANSACTION AS COMPLETE AN D TAKEN THE MARKET VALUE AS ADOPTED BY THE SRO AS CONSIDERATION PAID TO THE SELLER. THUS, HE TREATED THE SUM OF RS. 41,79,000 AS INCOME OF THE ASSESSEE AND BROU GHT IT TO TAX AS UNEXPLAINED INVESTMENT. 6. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) RELYING ON THE VERY SAME AFFIDAVITS AND ALSO FILED DOCUMENTS IN SUPPORT OF HIS CONTENTION THAT T HERE WERE LEGAL PROBLEMS ON THE RIGHT OF OWNERSHIP OF TH E PROPERTY DUE TO WHICH SALE CONSIDERATION WAS NOT PA ID TO THE VENDOR AT THE TIME OF REGISTRATION OF THE DOCUM ENT AND ALSO SUBSEQUENTLY THE CONSIDERATION WAS PAID THROUG H CHEQUE NO. 084785 DATED 14.3.2013 DRAWN ON MAHANAGA R CO-OPERATIVE URBAN BANK LTD., KACHIGUDA, HYDERABAD. A COPY OF THE BANK ACCOUNT OF THE ASSESSEE BEARING NO . 598 MAINTAINED BY THE ASSESSEE IN THE SAME BANK WAS ALS O FILED. TAKING NOTE OF ALL THE EVIDENCE FILED BY TH E ASSESSEE, THE CIT(A) HELD THAT THE SOURCE FOR PURCHASE OF THE PROPERTY IS EXPLAINED BY THE ASSESSEE AND ACCORDING LY DELETED THE ADDITION OF RS. 41,79,000. AGGRIEVED B Y THE 4 ITA NO. 457/HYD/2014 SRI A. SRINIVASA REDDY ================== RELIEF GIVEN BY THE CIT(A), THE REVENUE IS IN APPEA L BEFORE US. 7. THE LEARNED DR WHILE STRONGLY RELYING UPON THE ORDER OF THE ASSESSING OFFICER, SUBMITTED THAT THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE BEFORE THE AO IN SUPPORT OF HIS CONTENTION THAT THE CONSIDERATION MENTIONED IN THE AGREEMENT OF SALE CUM GPA IS NOT PASSED ON TO THE VENDOR EXCEPT FILING OF A NOTARISE D AFFIDAVIT. HE SUBMITTED THAT THE ASSESSEE HAS PROD UCED THE RELEVANT DOCUMENTS BEFORE THE CIT(A) BUT THE CI T(A) WITHOUT GIVING THE AO AN OPPORTUNITY TO VERIFY AUTHENTICITY OF THE DOCUMENTS AND WITHOUT CALLING F OR A REMAND REPORT THEREON, ACCEPTED ASSESSEE'S CONTENTI ON WHICH IS IN VIOLATION OF RULE 46A OF IT RULES, 1962 . FURTHER, HE SUBMITTED THAT THE SRO HAD ARRIVED AT T HE MARKET VALUE OF THE PROPERTY AT RS. 41,79,000 WHER EAS THE ASSESSEE HAS CLAIMED IT TO BE AT RS. 38,79,000 AND THE ASSESSEE ALSO HAS ALLEGEDLY PRODUCED THE EVIDENCE T O THE EXTENT OF PAYMENT OF RS. 38,79,000 ONLY BUT THE CIT (A) HAS DELETED THE ADDITION OF RS. 41,79,000 WHICH IS ALSO INCORRECT. 8. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE CIT(A) AND SUBMITT ED THAT THE ASSESSEE HAS FILED ALL THE RELEVANT DETAIL S BEFORE THE CIT(A) WHO AFTER BEING SATISFIED ABOUT THE AUTH ENTICITY OF THE SAME HAS GRANTED RELIEF TO THE ASSESSEE. TH US, ACCORDING TO HIM, THERE WAS NO VIOLATION OF RULE 46 A OF IT RULES, 1962. WITH REGARD TO THE CORRECT VALUE OF T HE PROPERTY PURCHASED BY THE ASSESSEE, THE LEARNED COU NSEL FOR THE ASSESSEE SUBMITTED THAT THE VALUE OF RS. 41 ,79,000 5 ITA NO. 457/HYD/2014 SRI A. SRINIVASA REDDY ================== IS DETERMINED BY THE SRO UNDER THE INDIAN STAMP ACT FOR REGISTRATION OF THE DOCUMENT WHEREAS THERE IS NO DI SPUTE THAT THE ACTUAL CONSIDERATION OF THE PROPERTY IS ON LY RS. 38,79,000 AND, THEREFORE, THE ACTION OF THE CIT(A) IN DELETING THE ENTIRE ADDITION IS JUSTIFIED. 9. HAVING REGARD TO THE CONTENTIONS OF BOTH THE PARTIE S AND THE RELEVANT MATERIAL ON RECORD, WE FIND THAT T HE ASSESSEE HAS FILED ONLY NOTARISED AFFIDAVITS BEFORE THE ASSESSING OFFICER STATING HIS CONTENTIONS, WHEREAS THE RELEVANT DOCUMENTS IN SUPPORT OF THE CLAIM WERE FIL ED BEFORE THE CIT(A). AS SEEN FROM THE ORDER OF THE C IT(A), THE ASSESSING OFFICER WAS NOT CONFRONTED WITH THE DOCUMENTS FILED BY THE ASSESSEE AND THE AUTHENTICIT Y AND VERACITY OF THE DOCUMENTS HAS NOT BEEN VERIFIED BY THE AO. THE POWERS OF THE CIT(A) ARE CO-TERMINUS WITH THE P OWERS OF THE AO AND THE CIT(A) COULD HAVE DONE WHAT THE A O COULD HAVE DONE BUT IN THE CASE BEFORE US, THE CIT( A) HAS ALSO NOT VERIFIED THE DOCUMENTS BUT HAS ACCEPTED TH E CONTENTIONS OF THE ASSESSEE ON THE GROUND THAT THE DOCUMENTS WERE FILED BEFORE HIM. THIS IS IN CLEAR VIOLATION OF RULE 46A OF IT RULES, 1962. THEREFORE, WE SET A SIDE THE ORDER OF THE CIT(A) AND REMIT THE ISSUE TO THE FILE OF THE AO FOR VERIFICATION OF THE AUTHENTICITY OF THE DOCUMEN TS FILED BY THE ASSESSEE AND ALSO THE CONTENTION OF THE ASSE SSEE THAT THE SALE CONSIDERATION HAS BEEN SUBSEQUENTLY PAID TO THE VENDOR THROUGH CHEQUE BEARING NO. 084785 DAT ED 14.3.2013 DRAWN ON MAHANAGAR CO-OPERATIVE URBAN BAN K LTD., KACHIGUDA, HYDERABAD AS OBSERVED BY THE CIT(A ). THE ASSESSEE SHALL SUBMIT ALL THE DETAILS BEFORE TH E ASSESSING OFFICER AND IF THE ASSESSING OFFICER IS S ATISFIED ON THE VERACITY OF THESE DOCUMENTS, HE SHALL TREAT THE 6 ITA NO. 457/HYD/2014 SRI A. SRINIVASA REDDY ================== SOURCE OF SALE CONSIDERATION AS EXPLAINED. THE ASS ESSEE SHALL ALSO FURNISH RELEVANT DOCUMENTS BEFORE THE ASSESSING OFFICER TO PROVE HIS CONTENTION THAT DUE TO LEGAL PROBLEMS ABOUT THE OWNERSHIP RIGHTS, THE CONSIDERAT ION HAS NOT BEEN PAID DURING THE RELEVANT PREVIOUS YEAR . IN VIEW OF THE SAME, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. 10. AS REGARDS THE ACTUAL SALE CONSIDERATION PASSED BETWEEN THE PARTIES, WE ARE CONVINCED BY THE ARGUME NT OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT RS. 38,79 ,000 WHICH IS MENTIONED IN THE SALE DEED IS TO BE TAKEN INTO CONSIDERATION FOR EXAMINING THE SOURCE AND NOT THE SUM OF RS. 41,79,000 WHICH IS THE MARKET VALUE FIXED BY THE SRO FOR REGISTRATION PURPOSES. 11. IN THE RESULT, APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER, 2014 SD/ - (P.M. JAGTAP) ACCOUNTANT MEMBER SD/ - (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED THE 23 RD SEPTEMBER, 2014 TPRAO COPY TO: 1. THE INCOME TAX OFFICER, WARD - 16(2), ROOM NO. 615, 6 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD-500 004. 2. SRI A. SRINIVASA REDDY, MANAGING DIRECTOR, M/S. NAVABHARATH PACKAGING PVT. LTD., 8-2-120/110/ 1/2A, NANDINAGAR ROAD NO. 14, VASANTHVIHAR ENCLAVE, BANJARA HILLS, HYDERABAD. 7 ITA NO. 457/HYD/2014 SRI A. SRINIVASA REDDY ================== 3. THE CIT(A) - V, HYDERABAD. 4. THE CIT - IV, HYDERABAD. 5 . THE DR, A - BENCH, ITAT, HYDERABAD.