Shri. M.B. Chidananda, Mysore V. DCIT, Mysore

ITA 5/BANG/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7024 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 19-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 03-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P DINESH SHRI L V BHASKAR
• Keywords: Unexplained investment; Search and seizure; Opportunity of being heard; Principle of natural justice; Assessment record; Reason to believe
• Section: 143(3); 147; 131; 148; 132; 12; 10; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE S HRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T . A. NO. 5 /BANG/201 3 (ASSESSMENT YEAR : 200 7 - 08 ) SHRI M.B. CHIDANANDA, NO.820, 13 TH MAIN, 4 TH STAGE, C HADURANGA ROAD, T.K. LAYOUT, MYSORE - 570 009 . APPELLANT. PAN AENPC2800B VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE , MYS OR E. .. RESPONDENT. ITA NO.35/BANG/2013 (ASSESSMENT YEAR : 2007 - 08) (BY REVENUE) ASSESSEE BY : SHRI P. DINESH, ADVOCATE. REVENUE BY : SHRI L.V. BHASKAR REDDY, JCIT (D.R) DATE OF H EARING : 19.08.2014. DATE OF P RONOUNCEMENT : 17.10. 201 4 . O R D E R PER SHRI JASON P. BOAZ , A.M . : THESE ARE CROSS APPE ALS, ONE BY THE ASSESSEE AND THE OTHER BY REVENUE, DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - VI, BANGALORE DT.5.11.2012 FOR ASSESSMENT YEAR 2007 - 08. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER : - 2 IT A NO S . 5 & 35 /BANG/201 3 2.1 THE ASSESSEE, A RETAIL RICE TRADER ALSO ENGAGED IN THE REAL ESTATE BUSINESS, FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2007 - 08 ON 19.3.2008 DECLARING INCOME OF RS.6,05,681 FROM BUSINESS AND OTHER SOURCES AND AGRICULTURAL INCOME OF RS.89,300. AS PER THE DETAILS ON RECORD, THERE WAS A SEARCH ACTION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS 'THE ACT') IN THE CASE OF ONE S.K. SREENIVASA IN THE COURSE OF WHICH IT CAME TO LIGHT, AS PER DOCUMENTS IN THE SEIZED MATERIAL, THAT THE ASSESSEE HAD PURCHASED 8.04 ACRES OF LAND FROM S.K. SRINIVASA AND CHETAN P. THAYAL FOR A CONSIDERATION OF RS.64.90 LAKHS. ACCORDING TO THE ASSESSING OFFICER, THE SEIZED MATERIAL EVIDENCES THIS TRANSACTION WAS NOT DISCLOSED BY THE ASSESSEE IN ITS ENTIRETY. IN VI EW OF THIS, THE ASSESSING OFFICER INITIATED PROCEEDINGS UNDER SECTION 147 OF THE ACT AS HE HAD REASON TO BELIEVE THAT INCOME OF THE ASSESSEE, ASSESSABLE TO TAX, HAD ESCAPED ASSESSMENT IN THE PERIOD RELEVANT TO ASSESSMENT YEAR 2007 - 08 BY VIRTUE OF FAILURE O N THE PART OF THE ASSESSEE TO FULLY DISCLOSE THE INVESTMENT MADE IN THE ABOVE TRANSACTIONS WITH SRI S.K.SREENIVASA IN THE RETURN OF INCOME. AFTER RECORDING HIS REASONS FOR INITIATING THE PROCEEDINGS UNDER SECTION 147 OF THE ACT, THE ASSESSING OFFICER ISSU ED NOTICE UNDER SECTION 148 OF THE ACT TO THE ASSESSEE ON 29.9.2009. IN RESPONSE THERETO, THE ASSESSEE FILED A COPY OF THE ORIGINAL RETURN OF INCOME FOR ASSESSMENT YEAR 2007 - 08 FILED ON 19.3.2008. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER EXA MINED THE DETAILS OF INVESTMENT MADE BY THE ASSESSEE IN PURCHASE OF LANDS FROM SRI S.K. SREENIVASA & SRI CHETAN P. TAYAL; AND OTHERS LENDS ALONG WITH SRI SATYANARAYANA SETTY AND SRI B.M. SWAMY. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S. 14 7 OF THE ACT BY ORDER DT.31.12.2010 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.95,81,680 AS AGAINST RETURNED INCOME OF RS.6,05,680 IN VIEW OF ADDITIONS 3 IT A NO S . 5 & 35 /BANG/201 3 AMOUNTING TO RS.89,76,000 MADE UNDER SECTION 69B OF THE ACT. AGRICULTURAL INCOME WAS ACCE PTED AS DECLARED AT RS.89, 300 . 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2007 - 08 DT.31.12.2010, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS) VI, BANGALORE. THE LEARNED CIT (APPEALS) DISPOSED OFF THE ASSESSEE'S APPEAL B Y ORDER DT.5.11.2012 ALLOWING THE ASSESSEE PARTIAL RELIEF. 3. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS) VI, BANGALORE DT.5.11.2012, BOTH REVENUE AND THE ASSESSEE HAVE PREFERRED APPEALS BEFORE THIS TRIBUNAL RAISING VARIOUS GROUNDS ON THE ISSUES HELD AGAINST THEM RESPECTIVELY. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : - 1. THE ORDER OF CIT (APPEALS) IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE APPELLANT, IS BAD IN LAW. 2. THE CONDITION PRECEDENT FOR REOPENING BEING ABSENT, TH E ASSESSMENT REOPENED BY THE A.O. SUFFERED FROM SERIOUS LEGAL INFIRMITY AND THEREFORE, CIT (APPEALS) OUGHT TO HAVE HELD THAT THE ASSESSMENT ORDER AS PASSED BY THE ASSESSING OFFICER WAS BAD IN LAW. 3. WITHOUT PREJUDICE, THE CIT (APPEALS) GROSSLY ERRED IN S USTAINING THE ADDITIONS AS MADE BY THE ASSESSING OFFICER UNDER SECTION 69B OF RS.27.55 LAKHS FOR VARIOUS TRANSACTIONS OF THE APPELLANT WITH SRI S.K. SRINIVASA AND OTHERS. 4. WITHOUT PREJUDICE, THE CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER WERE WITHOUT ANY BASIS AND ALSO WITHOUT ANY SUPPORTING DOCUMENTS AND THEREFORE, THE ADDITIONS AS MADE BY HIM WERE LIABLE TO BE DELETED IN TOTO. 5. THE CIT (APPEALS) OUGHT TO HAVE DELETED THE INTEREST CHARGED UNDER SECTIONS 234A, 234B, 234C & 234D OF THE ACT. 6. WITHOUT PREJUDICE, THE ADDITIONS MADE BY A.O. BEING ARBITRARY AND EXCESSIVE, THE SAME REQUIRE TO BE DELETED. 7. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT T HE APPEAL MAY BE ALLOWED. THE GROUNDS RAISED BY REVENUE ARE AS UNDER : - GROUND NO.1 : THE LEARNED CIT (APPEALS) ERRED IN LAW AND IN FACT IN DELETING THE ADDITION OF RS.39,22,000 OUT OF RS.55,21,000 MAD EBY THE ASSESSING OFFICER UNDER SECTION 69B OF THE 4 IT A NO S . 5 & 35 /BANG/201 3 INCOME TAX ACT IN RESPECT OF UNEXPLAINED INVESTMENT MADE IN THE PURCHASE OF PROPERTY FROM SRI S.K. SREENIVASA. GROUND NO.2 : THE LEARNED CIT (APPEALS) ERRED IN LAW AND IN FACT IN DELETING THE ADDITION OF RS.7,00,000 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PROPERTY THROUGH SRI B.M. SWAMY. SINCE THE ISSUES IN THESE APPEALS ARE INTER - CONNECTED, WE PROCEED TO DISPOSE OFF BOTH THE APPEALS OF REVENUE AND THE ASSESSEE TOGETHER. 4. THE GROUNDS RAISED BY THE ASS ESSEE AT S.NOS.1, 6 & 7 ARE GENERAL IN NATURE AND THEREFORE NO ADJUDICATION IS CALLED FOR THEREON. 5. IN THE GROUND RAISED AT S.NO.5 , THE ASSESSEE DENIES ITSELF LIABLE TO BE CHARGED INTEREST UNDER SECTIONS 234A, 234B, 234C AND 234D OF THE ACT. THE CHA RGING OF INTEREST IS CONSEQUENTIAL AND MANDATORY AND THE ASSESSING OFFICER HAS NO DISCRETION IN THE MATTER. THIS PROPOSITION HAS BEEN UPHELD BY THE HON'BLE APEX COURT IN THE CASE OF ANJUM M. H. GHASWALA & OTHERS IN 252 ITR 1 AND WE THEREFORE UPHOLD THE AC TION OF THE ASSESSING OFFICER IN CHARGING THE SAME. THE ASSESSING OFFICER IS, HOWEVER, DIRECTED TO RECOMPUTE THE INTEREST CHARGEABLE UNDER THE AFORESAID SECTIONS 234A, 234B, 234C AND 234D OF THE ACT , IF ANY, WHILE GIVING EFFECT TO THIS ORDER. 6.0 INIT IATION OF PROCEEDINGS U/S.147 OF THE ACT. 6.1 IN THE GROUND AT S.NO.2 , THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE ACTION OF THE ASSESSING OFFICER IN INITIATING PROCEEDINGS UNDER SECTION 147 OF THE ACT. IT IS CLAIMED THAT THE CONDITIONS PRECEDENT FOR THE SAME WERE ABSENT AND THEREFORE THE ACTION OF THE ASSESSING OFFICER SUFFERS FROM SERIOUS LEGAL INFIRMITIES. THE LEARNED AUTHORISED REPRESENTATIVE REITERATED THE ASSESSEE'S SUBMISSIONS PUT FORTH BEFORE THE LEARNED CIT (APPEALS). 5 IT A NO S . 5 & 35 /BANG/201 3 6.2 WE HAVE H EARD THE RIVAL CONTENTIONS OF BOTH THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE AND THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE AND HAVE PERUSED THE MATERIAL ON RECORD AS WELL AS THE ASSESSMENT RECORDS. WE FIND FROM A PERUSAL OF THE ASSE SSMENT RECORDS THAT THE ASSESSING OFFICER HAS RECORDED THE FOLLOWING REASONS FOR INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT ON 29.9.2009 PRIOR TO THE ISSUE OF THE NOTICE UNDER SECTION 148 OF THE ACT : - 29.9.2009 THE CASE OF THE ABOVE A A SSESSED UNDER PAN AENPC 2800B HITHERTO BY ACIT, MYSORE HAS BEEN NOTIFIED TO THIS CIRCLE. DURING COURSE OF SEARCH AND SEIZURE OPERATIONS OF SRI S.K. SRINIVASA & OTHERS, MYSORE , IT HAS COME TO LIGHT ON THE STRENGTH OF SEIZED / IMPOUNDED MATERIALS LIKE A/SKS/3/P14 & D1/SKS/89/P115 - 116 THAT THE ABOVE A IN ADDITION TO HIS RETAIL RICE TRADING BUSINESS HAS SEEN DOING REAL ESTATE BUSINESS IN PURCHASE AND SALE OF AGRICULTURAL LANDS. AS PER PAGE 14 OF A/SKS/3 & PAGE 115 - 116 OF A1/SKS/89 IT IS SEEN THAT DUR ING F.Y. 06 - 07 THE A HAS PURCHASED 8.04 ACRES OF LAND FROM SRI S.K. SRINIVAS AND SRI CHETAN P THAYAL FOR A CONSIDERATION OF RS.64.90 LAKHS AGAINST WHICH PAYMENT TO EXTENT OF RS.28.6 LAKHS WAS MADE BY CASH AND CHEQUE IMMEDIATELY. SIMILARLY AS PER A1/SKS/ 89 HE HAS ENTERED INTO A SALE AGREEMENT WITH S.K. SRINIVAS & OTHERS FOR PURCHASE OF 7.21 ACRES OF LAND IN BOTHAGALLI VILLAGE ON 18.4.2006 FOR A CONSIDERATION OF RS.60.00 LAKHS BY PAYING AN ADVANCE OF RS.14.00 LAKHS. BY REASON OF THE FAILURE ON THE PART OF THE A IN FILING THE RETURN FOR ASST. YEAR 07 - 08 BY DISCLOSING THE ABOVE INVESTMENT, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX IN THE FORM OF INVESTMENT MADE IN ACQUISITION OF AGRL. LANDS TO THE EXTENT OF RS.218.82 LAKHS HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. HENCE ISSUE NOTICE UNDER SECTION 148 FOR THE A.Y. 07 - 08 FOR ASSESSMENT . SD/ - (29.9.2009) FR OM A PERUSAL OF THE REASONS RECORDED BY THE ASSESSING OFFICER (SUPRA), WE FIND THAT THE ASSESSING OFFICER HAS RECORDED ADEQUATE REASONS TO FORM A PRIMA FACIE BELIEF THAT INCOME OF THE ASSESSEE CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE INVESTMENTS MADE BY HIM IN ACQUISITION OF AGRICULTURAL LANDS IN THE RELEVANT PERIOD AND FOR WHICH NOTICE UNDER SECTION 148 OF THE ACT WAS SUBSEQUENTLY ISSUED. 6 IT A NO S . 5 & 35 /BANG/201 3 ADMITTEDLY THE SAME WERE ALSO MADE AVAILABLE TO THE ASSESSEE. IN THIS FACTUAL MATRIX, WE DO NOT FIND ANY MERIT IN THE ASSESSEE'S ALLEGATION THAT CONDITIONS PRECEDENT FOR INITIATION OF PROCEEDINGS UNDER SECTION 147 WERE AB SENT OR THAT THE ASSESSING OFFICER S ACTION SUFFERED FROM SERIOUS LEGAL INFIRMITIES. IN OUR VIEW, THE REASONS RECORDED BY THE ASSESSING OFFICER FOR INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT WERE ADEQUATE TO ESTABLISH THAT HE HAD A PRIMA FACIE BELIEF THAT INCOME OF THE ASSESSEE CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, AND FO R THE SUBSEQUENT ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. WE THEREFORE DISMISS GROUND NO.2 RAISED BY THE ASSESSEE AS BEING DEVOID OF ANY MERIT. 7.0 ADDITIONS U/S.69B OF THE ACT . 7.1 WE WILL NOW ADDRESS GROUNDS NO.3 & 4 OF THE ASSESSEE'S APPE AL AND THE GROUNDS NO.1 & 2 OF REVENUE S APPEAL TOGETHER, AS THEY ARE INTER CONNECTED AND RELATE TO INVESTMENTS REPORTEDLY MADE BY THE ASSESSEE IN PURCHASE / ACQUISITION OF AGRICU LTURAL LANDS, WHICH ARE NOT FULLY DISCLOSED IN THE ASSESSEE'S BOOKS OF ACCOU NT. 7.2 THE FACTS OF THE MATTER, AS EMANATE FROM THE RECORD, ARE AS UNDER : - 7.2.1 IN THE COURSE OF SEARCH ACTION UNDER SECTION 132 OF THE ACT, IN THE CASE OF SRI S.K. SREENIVASA & OTHERS CONDUCTED ON 31.1.2008, IT CAME TO LIGHT , ON VERIFICATION O F SEIZED MATERIAL AT PAGE 14 OF FILE A/SKS/3 , THAT THE ASSESSEE HAD PURCHASED 8.04 ACRES OF LAND FROM SRI SREENIVASA AND CHETAN P TAYAL FOR A TOTAL CONSIDERATION OF RS.64.90 LAKHS, OF WHICH AN ADVANCE OF RS.25,68,000 IS SHOWN TO HAVE BEEN RECEIVED AND THE BALANCE RECEIVABLE IS SHOWN AS RS.39,22,000. THE RECEIPT OF THE ABOVE AMOUNTS TOTALING TO RS.64.90 LAKHS WAS CONFIRMED BY SRI SREENIVASA IN A STATEMENT ON OATH RECORDED UNDER SECTION 131 ON 21.2.2008. AS PER THE 7 IT A NO S . 5 & 35 /BANG/201 3 ASSESSEE'S BOOKS OF ACCOUNT AND THE RETUR N OF INCOME FILED FOR THE RELEVANT PERIOD, THE ASSESSEE CONFIRMED HAVING MADE PAYMENT OF RS.9,69,085 ONLY. THE ASSESSEE DID NOT ACCEPT THAT HE MADE ANY PAYMENT BEYOND THOSE MENTIONED IN THE CONCERNED AGREEMENTS . T HE ASSESSING OFFICER DID NOT ACCEPT THE A SSES SEE'S EXPLANATION IN THE MATTER, AND BROUGHT TO TAX UNDER SECTION 69B OF THE ACT AN AMOUNT OF RS.55,21,000 (I.E. RS.64,90,000 LESS RS.9,69,085), WHICH INCLUDED THE AMOUNT OF RS. 39,22,000 SHOWN AS RECEIVABLE BY SRI SREENIVASA & OTHERS IN THE SEIZED MAT ERIAL (SUPRA). ON APPEAL, THE LEARNED CIT (APPEALS) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS.15,99,000 (I.E. RS.25,68,000 LESS RS.9,69,000) AND DELETED THE ADDITION OF RS.39,22,000 MADE ON ACCOUNT OF BALANCES RECEIVABLES. REVENUE IS IN APPEAL AGAINST THE DELETION OF THE ADDITION OF RS . 39,22,000 ON ACCOUNT OF BALANCES RECEIVABLE AT GROUND NO.1 OF ITS APPEAL. 7.3 THE LEARNED CIT (APPEALS) HAS ALSO DELETED AN AMOUNT OF RS.7 LAKHS ALLEGEDLY INVESTED BY THE ASSESSEE I N A P ROPERTY THROUGH ONE SRI B.M. SWAMY ON THE GROUND THAT THERE WAS NO CORROBORATIVE EVIDENCE TO PROVE THIS AND THE ADDITION WAS MADE BY THE ASSESSING OFFICER MERELY BECAUSE THE OTHER PERSON HAS RECORDED THE FACT THAT HE HAS RECEIVED THIS AMOUNT FROM THE AS SESSEE. REVENUE IS AGGRIEVED BY THE DELETION OF THIS ADDITION BY THE LEARNED CIT (APPEALS) AND GROUND NO.2 IS IN RESPECT OF THIS ADDITION. 7.4 THE LEARNED CIT (APPEALS) HAS SUSTAINED THE FOLLOWING ADDITIONS MADE BY THE ASSESSING OFFICER UNDER SECTION 69B OF THE ACT TOTALING RS.27,55,000 ON ACCOUNT OF UNEXPLAINED INVESTMENTS MADE BY THE ASSESSEE TOWARDS PURCHASE / ACQUISITION OF PROPERTIES BY THE ASSESSEE : - 8 IT A NO S . 5 & 35 /BANG/201 3 I) PURCHASE OF 7.21 ACRES OF LAND IN BONTHAGALLY VILLAGE VIDE AGREEMENT DT.18.4.2006 FROM S. K. SRINIVASA & OTHERS (SEIZED MATERIAL A1/SKS/89 PAGES 115 - 116) RS.10,00,000. II) PURCHASE OF 19.30 ACRES OF DADADAHALLI JAYAPURA VIDE AGREEMENT DT.10.4.2006 ALONG WITH M. SATYANARAYANA SETTY FROM LINGAMMA & OTHERS (SEIZED MATERIAL A/BHB - 1/3 PAGES 72 TO 82) RS.11,05,000. III) PURCHASE OF 4.15 ACRES AT MADAGAHALLI ALONG WITH SATYANARAYANA SETTY VIDE AGREEMENT DT.3.5.2006 FROM JAVARE GOWDA AND OTHERS (SEIZED MATERIAL A/BHB - 1/3 AT PAGES 154 TO 157). RS.5,00,000. IV) PURCHASE OF 12.30 ACRES AT M ADAGARALLI, VARUNA ALONG WITH SATYANARAYANA SETTY VIDE AGREEMENT DT.12.8.2006 FROM SUBBAGOWDA & OTHERS (SEIZED MATERIAL NO.A/BYHB - 1/3 AT PAGES 83 TO 89). RS.1,5 0,000. TOTAL : RS .27,55,000. IN RESPECT OF THE ABOVE ADDITIONS TOTALING RS.27,55,000 SUSTAINED BY THE LEARNED CIT (APPEALS), THE ASSESSEE BEING AGGRIEVED HAS RAISED GROUNDS AT S.NOS.3 & 4 OF ITS APPEAL. 7.5 THE LEARNED AUTHORISED REPRESENTATIVE WAS HEARD A T LENGTH ON THE GROUNDS RAI S ED AT S.NOS.3 & 4 IN THE ASSESSEE'S APPEAL. IT IS SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT IN MAKING THE ADDITION UNDER SECTION 69B OF THE ACT IN THE CASE ON HAND, THE ASSESSING OFFICER HAS SOLELY RELIED ON THE S TATEMENTS OF THE SEARCHED PERSONS AND OTHERS, LETTERS AND BANK STATEMENTS OF OTHER PARTIES, WHICH WAS NOT PUT TO THE ASSESSEE FOR HIS EXPLANATION OR REBUTTAL, BEFORE COMING TO ADVERSE FINDINGS IN THE MATTER. THIS, THE LEARNED AUTHORISED REPRESENTATIVE CON TENDED IS IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. IT IS FURTHER SUBMITTED THAT O N APPEAL ALSO, THE LEARNED CIT (APPEALS) HAS UPHELD THESE ADDITIONS OF THE ASSESSING OFFICER IN A SUMMARY MANNER WITHOUT TAKING INTO ACCOUNT THE LACUNAE POINT ED OUT IN THE ORDER OF ASSESSMENT AND THEREFORE UPHOLDING THE IMPUGNED ADDITIONS AMOUNTING TO 9 IT A NO S . 5 & 35 /BANG/201 3 RS.27,55,000 BY THE LEARNED CIT (APPEALS) ARE NOT PROPER OR MAINTAINABLE AND OUGHT TO BE SET ASIDE. IN THESE CIRCUMSTANCES, THE LEARNED AUTHORISED REPRESENTATIV E PRAYED THAT ORDERS OF THE AUTHORITIES BELOW I.E. THOSE OF BOTH THE LEARNED CIT (APPEALS) AND THAT OF THE ASSESSING OFFICER REQUIRE TO BE SET ASIDE AND THE MATTER BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DOING THE ASSESSMENT DE NOVO. IT IS AL SO PRAYED THAT NECESSARY DIRECTIONS BE ISSUED TO THE ASSESSING OFFICER THAT COPIES OF SUCH STATEMENTS, BANK ACCOUNTS AND SEIZED MATERIAL ON WHICH RELIANCE HAS BEEN PLACED ON BY THE ASSESSING OFFICER BE MADE AVAILABLE TO THE ASSESSEE AND ALSO THAT ADEQUATE OPPORTUNITY OF BEING HEARD IN THE MATTER MAY BE AFFORDED TO THE ASSESSEE. 7.6 THE LEARNED DEPARTMENTAL REPRESENTATIVE WAS HEARD IN SUPPORT OF THE GROUNDS NO.1 AND 2 RAISED BY REVENUE. THE LEARNED DEPARTMENTAL REPRESENTATIVE IN RESPECT OF GROUND NO.1, CONTENDED THAT THE LEARNED CIT (APPEALS) HAS DELETED THE ADDITION OF RS.39,22,000 MADE ON ACCOUNT OF BALANCE RECEIVABLE AS PER SEIZED MATERIAL A/SKS/3, BRUSHING ASIDE THE EVIDENCE BEFORE HER WITHOUT ANY PROPER EXAMINATION THEREOF OR ASSIGNING ANY PR OPER REASON FOR HER ACTION . THIS, EVEN AFTER THE RECEIPT OF THIS AMOUNT IS ACCEPTED BY THE SELLER AND AFTER THE LEARNED CIT (APPEALS) HERSELF ACKNOWLEDGING IN HER ORDER THAT IT IS LIKELY THAT THIS AMOUNT MAY HAVE BEEN PASSED ON AS WELL. IT IS SUBMITTED THAT ISSUE REQUIRES DE NOVO EXAMINATION AND FRESH ADJUDICATION BY THE AUTHORITIES BELOW. IN RESPECT OF G ROUND NO.2, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ADDITION OF RS.7 LAKHS WAS MADE ON THE BAS IS OF STATEMENTS ON OATH AND BAN K STA TEMENT OF THE PAYEE AND THEREFORE OUGHT NOT TO HAVE BEEN DELETED SUMMARILY BY THE LEARNED CIT (APPEALS). THE LEARNED 10 IT A NO S . 5 & 35 /BANG/201 3 DEPARTMENTAL REPRESENTATIVE, PRAYED THAT IN THE INTEREST OF JUSTICE AND EQUITY THE ORDERS OF THE LEARNED CIT (APPEALS) WITH RESPECT TO THE ISSUES RAISED IN GROUND NOS.1 & 2 OF REVENUE S APPEAL BE SET ASIDE AND THESE MATTERS BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH EXAMINATION AND ADJUDICATION. 7.7.1 WE HAVE HEARD BOTH PARTIES AND HAVE PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. FROM THE MATERIAL ON RECORD, IT IS CLEAR THAT THE ASSESSEE'S APPEAL IN GROUNDS 3 & 4 ARE AGAINST THE ORDER OF THE LEARNED CIT (APPEALS), ON THE UPHOLDING OF ADDITIONS MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS.27.55 LAKHS FOR U NDISCLOSED INVESTMENT IN ACQUISITION OF LANDS UNDER SECTION 69B OF THE ACT, THE DETAILS OF WHICH ARE AS UNDER : - I. ON ACCOUNT OF AGREEMENT DT.18.4.2006 FROM S.K. SREENIVASA & OTHERS : RS.10,00,000. II. ON ACCOUNT OF AGREEMENT DT.10.4.2006 ALONG WITH M. SATYANARA YANA SETTY FROM LINGAMMA & OTHERS : RS.11,05,000. III. ON ACCOUNT OF AGREEMENT DT.3.5.2006 ALONG WITH SATYANARAYANA SETTY FROM JAVARE GOWDA AND OTHERS. : RS.5,00,000. IV. ON ACCOUNT OF AGREEMENT DT.12.8.2006 ALONG WIT H SATYAN ARAYANA SETTY FROM SUBBE GOWDA & OTHERS : RS.1,50,000. REVENUE S APPEAL IN GROUNDS AT S.NO.1 AND 2 ARE IN RESPECT OF I. DELETION OF ADDITION OF RS.39,22,000 MADE BY THE ASSESSING OFFICER UNDER SECTION 69B OF THE ACT IN RESPECT OF UNDISC LOSED INVESTMENT IN PURCHASE OF PROPERTIES FROM SRI SREENIVASA & OTHERS; AND II. DE LETION OF THE ADDITION OF RS.7,00,000 MADE BY THE ASSESSING OFFICER UNDER SECTION 69B OF THE ACT IN RESPECT OF UNDISCLOSED INVESTMENT IN PURCHASE OF PROPERTY THROUGH B.M. SWAMY. 11 IT A NO S . 5 & 35 /BANG/201 3 7.7.2 AS CONTENDED BY THE LEARNED AUTHORISED REPRESENTATIVE , ON AN APPRECIATION OF THE FACTS ON RECORD, WE FIND THAT IN COMING TO AN ADVERSE FINDING AND MAKING THE ADDITIONS IN THE ORDER OF ASSESSMENT UNDER SECTION 69B OF THE ACT, THE ASSESSING OFFICER DOES NOT APPEAR TO HAVE CONFRONTED THE ASSESSEE, MADE AVAILABLE TO HIM OR SOUGHT HIS EXPLANATION WITH RESPECT TO THE STATEMENTS OF THE PERSONS SEARCHED AND OTHERS, BANK STATEMENT OF OTHER PARTIES, ETC. RELIED ON BY HIM; WHICH IS IN VIOLATION OF TH E PRINCIPLES OF NATURAL JUSTICE. ON APPEAL ALSO, WE FIND THAT THE LEARNED CIT (APPEALS) HAS UPHELD THE ADDITIONS AMOUNTING TO RS.27,55,000, IN A SUMMARY MANNER, WITHOUT TAKING INTO ACCOUNT THE FACT THAT THE ASSESSING OFFICER HAS MADE THE AFORESAID ADDITIO NS, WITHOUT CONFRONTING THE ASSESSEE WITH THE DOCUMENTS RELIED UPON, AND AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD BEFORE DRAWING AN ADVERSE INFERENCE IN THE MATTER. THE LEARNED DEPARTMENTAL REPRESENTATIVE TOO HAS CONTENDED IN REVENUE S A PPEAL THAT THE LEARNED CIT (APPEALS) HAS DELETED THE ADDITION OF RS.39,22,000 ON ACCOUNT OF BALANCES RECEIVABLE AND RS. 7 LAKHS UNDER SECTION 69B OF THE ACT BRUSHING ASIDE THE SEIZED MATERIAL AND THE ACKNOWLEDGEMENTS ON OATH OF THE SELLERS OF THE CONCERNED LAND THAT THE SAID AMOUNTS WAS RECEIVED. 7.7.3 TAKING INTO ACCOUNT THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON CONSIDERATION OF THE ORDERS OF THE AUTHORITIES BELOW, WE ARE OF THE OPINION THAT THE ORDERS OF THE LOWER AUTHORITIES, I.E. OF BOTH THE AS SESSING OFFICER AND THE LEARNED CIT (APPEALS) REQUIRE TO BE SET ASIDE IN RESPECT OF THE GROUNDS AT S.NOS.3 & 4 OF THE ASSESSEE'S APPEAL AND BOTH GROUNDS 1 AND 2 OF REVENUE S APPEAL. THIS IS BECAUSE, IN THE FACTUAL MATRIX OF THE CASE, WE ARE INCLINED TO AG REE WITH THE AVERMENTS OF THE COUNSELS ON BOTH SIDES THAT THE ADDITIONS MADE IN THE ORDER OF 12 IT A NO S . 5 & 35 /BANG/201 3 ASSESSMENT PASSED HAVE BEEN MADE IN VIOLATION OF THE BASIC PRINCIPLES OF NATURAL JUSTICE AND ALSO THAT THE IMPUGNED ORDER OF THE LEARNED CIT (APPEALS) HAS BEEN PAS SED IN A B A LD, NON - SPEAKING SUMMARY MANNER. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE IMPUGNED ORDERS OF THE LEARNED CIT (APPEALS) AND THE ORDER OF ASSESSMENT ONLY TO THE EXTENT OF THE GROUNDS NO.3 & 4 OF THE ASSESSEE'S APPEAL AND GROUNDS NO.1 & 2 OF R EVENUE S APPEAL. THESE MATTERS ARE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH EXAMINATION AND ADJUDICATION THEREON ONLY AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD IN THE MATTER AND TO FILE DETAILS IN THIS REGARD. THE ASSESSING OFFICER IS ALSO DIRECTED TO MAKE AVAILABLE TO THE ASSESSEE COPIES OF THE SEIZED MATERIAL, STATEMENTS ON OATH AND BANK STATEMENT OF THE PERSONS AND OTHER DOCUMENTS ON THE BASIS OF WHICH ADDITIONS ARE PROPOSED TO BE MADE, SO THAT THE ASSESSEE IS GI VEN ADEQUATE OPPORTUNITY FOR REBUTTAL OF THE SAME BEFORE DECIDING THE ISSUES RESTORED TO HIS FILE. IT IS ORDERED ACCORDINGLY. 8. IN THE RESULT, THE ASSESSEE'S APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND REVENUE S APPEAL IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH OCT., 2014. SD/ - SD/ - ( N.V. VASUDEVAN ) ( JASON P BOAZ ) JUDICIAL MEMBER ACCOUNTANT MEMBER *REDDY GP