Kuntluru Anil Kumar, Hyderabad V. Income Tax Officer, Ward-4(5), Hyderabad

ITA 513/Hyd/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7378 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 11-08-2020
• Assessment Year: 2007-2008
• Appeal Filed On: 15-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KIRAN KATTA
• Keywords: Unexplained investment
• Section: 271(1)(c); 64; 153C; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.513 & 514/H/2018 ASSESSMENT YEARS:2007 - 08 & 2008 - 09 SRI KUNTLURU ANIL KUMAR, HYDERABAD. PAN: APAPK 0256 M VS. INCOME TAX OFFICER, WARD - 4(5), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI A. HARISH, AR REVENUE BY: SRI KIRAN KATTA, DR DATE OF HEARING: 11/08/2020 DATE OF PRONOUNCEMENT: 25/08/2020 ORDER PER A. MOHAN ALANKAMONY, AM.: THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE LD. CIT (A) - 1, HYDERABAD IN APPEAL NOS.0098 & 0104/CIT(A) - 1/HYD/2016 - 17/201 7 - 18, BOTH DATED 08/12/2017 PASSED U/S. 271(1)(C) R.W.S 250(6) OF THE ACT FOR THE AYS: 2007 - 08 AND 2008 - 09 RESPECTIVELY. SINCE BOTH THE APPEALS ARE WITH RESPECT TO THE SAME ASSESSEE AND ON THE IDENTICAL ISSUES AND GROUNDS, FOR THE SAKE OF CONVENIENCE THEY ARE TAKEN UP FOR HEARING TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER. 2. THE ASSESSEE HAS RAISED SEVERAL IDENTICAL GROUNDS IN BOTH THESE APPEALS HOWEVER, THE CRUXES OF THE ISSUES ARE AS FOLLOWS: - 2 (I) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE PENALTY LEVIED BY THE LD. AO INVOKING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS. 17,403/ - FOR THE AY 2007 - 08 AND RS. 1,11,021/ - FOR THE AY 2008 - 09. (II) THE ORDER OF THE LD. AO CANNOT BE SUSTAINED AND REQUIRED TO BE QUASHED BY VIRTUE O F THE DECISION OF THE HONBLE SUPREME COURT, JURISDICTIONAL HIGH COURT AND THE TRIBUNAL BECAUSE THE NOTICE FOR LEVY OF PENALTY DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT THE PENALTY IS REQUIRED TO BE LEVIED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF OPERATING SAW MILL. A SEARCH & SEIZURE OPERATION U/S. 132 OF THE ACT WAS CONDUCTED IN THE CASE OF SHRI B. RAM DAS GOUD AND DESAGONI RAGHUPATHI GOUD GROUP ON 15/9/ 2008 WHEREIN CERTAIN INCRIMINATING MATERIALS PERTAINING TO THE ASSESSEE WERE FOUND AND SEIZED. THEREAFTER, NOTICE U/S. 153C OF THE ACT WAS ISSUED TO THE ASSESSEE ON 27/8/2010 AND IN RESPONSE TO THE NOTICE THE ASSESSEE FILED HIS RETURN OF INCOME ON 4/11/20 10 AND 8/11/2010 DECLARING TOTAL INCOME OF RS. 1,21,757/ - AND RS. 1,25,957/ - FOR THE AY 2007 - 08 AND 2008 - 09 RESPECTIVELY. 3 AY: 2007 - 08: 4. DURING THE COURSE OF POST SEARCH PROCEEDINGS THE ASSESSEE IN HIS SWORN STATEMENT ON 20/10/2008 HAD STATED THAT D URING THE PREVIOUS YEAR RELEVANT TO THE AY 2007 - 08 THE ASSESSEE HAD PURCHASED ONE PLOT AT ANNOJIGUDA ADMEASURING 400 SQ YDS FOR AN AMOUNT OF RS. 4,80,000/ - . TOWARDS THE SAME THE ASSESSEE FURNISHED TWO SALE DEEDS DATED 14/6/2006 WHEREIN THE SALE CONSIDERATI ON WAS MENTIONED AS RS. 1 LAKH IN EACH OF THE SALE DEEDS AGGREGATING TO RS. 2 LAKHS EXCLUDING STAMP DUTY. HOWEVER IN THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE ON 31/3/2008 ALONG WITH THE BALANCE SHEET IT WAS REVEALED THAT THE VALUE OF THE PROPERT Y PURCHASED BY THE ASSESSEE WAS MENTIONED AS RS. 2 LAKHS. BASED ON THE ADMISSION OF THE ASSESSEE THAT THE ACTUAL SALE CONSIDERATION PAID BY THE ASSESSEE WAS RS. 4,80,000/ - FOR THE PLOTS OF LAND, THE LD. AO OPINED THAT THE DIFFERENCE OF THE AMOUNT ADMITTED BY THE ASSESSEE OF RS. 4,80,000/ - AND RS. 2 LAKHS DECLARED IN THE RETURN OF INCOME SHOULD BE TREATED AS THE UNDISCLOSED INCOME. ACCORDINGLY, HE MADE THE ADDITION WHICH WAS FURTHER CONFIRMED BY THE LD. CIT (A). DURING THE COURSE OF PENALTY PROCEEDINGS THE ASSESSEE NEITHER APPEARED BEFORE THE ASSESSEE NOT SUBMITTED ANY WRITTEN SUBMISSIONS. THEREFORE, THE LD. AO LEVIED MINIMUM PENALTY OF RS. 70,403/ - . BEFORE THE LD. CIT (A) THE ASSESSEE RAISED SEVERAL PLEAS, HOWEVER, THE LD. CIT (A) CONFIRMED THE ORDER OF T HE LD. AO BY FINDING THE CASE OF THE ASSESSEE TO BE A FIT CASE FOR LEVY OF PENALTY, AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4 AY: 2008 - 09: 5. DURING THE COURSE OF SEARCH PROCEEDINGS IT WAS REVEALED FROM THE CASH RECEIPT DATED 25/10/2007 THAT THE ASSESSEE HAD PAID RS. 5 LAKHS TO SHRI BAKARAM EASHWAR FOR PURCHASE OF A PLOT OF LAND. SINCE THE ASSESSEE COULD NOT EXPLAIN THE SOURCE FOR THE AMOUNT PA ID TO MR. BAKARAM, THE LD. AO TREATED THE SAME AS THE UNEXPLAINED INVESTMENT INVOKING THE PROVISIONS OF SECTION 69 OF THE ACT. IT WAS ALSO REVEALED FROM THE SWORN STATEMENT OF THE ASSESSEE THAT HE HAD PURCHASED ANOTHER PROPERTY FOR RS. 5,05,620/ - HOWEVER IT WAS DECLARED IN THE RETURN OF INCOME AS RS. 3,47,170/ - . THEREFORE THE LD. AO TREATED THE ENTIRE AMOUNT OF RS. 5,05,620/ - ALSO AS THE UNDISCLOSED INVESTMENT OF THE ASSESSEE U/S. 69 OF THE ACT. THUS, AN AGGREGATE ADDITION OF RS. 10,05,620/ - WAS MADE IN T HE HANDS OF THE ASSESSEE. ON APPEAL, THE LD. CIT (A) GRANTED PARTIAL RELIEF OF RS. 3,47,170/ - BEING THE AMOUNT DISCLOSED IN THE RETURN OF THE ASSESSEE FOR THE PURCHASE OF THE IMMOVABLE PROPERTY AND CONFIRMED THE ADDITION OF RS.6,58,150/ - [ 5,00,000/ - + ( 5,05,620 - 3,47,170/ - )]. DURING THE COURSE OF PENALTY PROCEEDINGS THE ASSESSEE NEITHER APPEARED BEFORE THE LD. AO NOR SUBMITTED ANY WRITTEN SUBMISSIONS. THEREFORE, THE LD. AO LEVIED MINIMUM PENALTY OF RS. 1,11,021/ - IN THE HANDS OF THE ASSESSEE. BEFORE TH E LD. CIT (A) THE ASSESSEE RAISED SEVERAL PLEAS, HOWEVER, THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. AO BY FINDING THE CASE TO BE A FIT CASE FOR LEVY OF PENALTY, AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE OUTSET, WE DO NOT FIND THE CASE OF THE ASSESSEE TO BE A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT BECAUSE THE ENTIRE ADDITION IS MADE ONLY ON THE BASIS OF MERE ADMISSION MADE BY THE ASSESSEE DURING THE COURSE OF POST SEARCH PROCEEDING S IN THE CASE OF SHRI B. RAM DAS GOUD AND DESAGONI RAGHUPATHI GOUD GROUP AND THE 5 CASH RECEIPT OF RS. 5 LAKHS FOUND DURING THE COURSE OF THE SEARCH. IT IS QUITE OBVIOUS THAT THE CASH RECEIPT IS THE ACKNOWLEDGEMENT OF SHRI BAKARAM EASHWAR FOR HAVING RECEIVE D THE AMOUNT OF RS. 5 LAKHS FROM THE ASSESSEE TOWARDS THE PROPOSED SALE OF THE PROPERTY. SINCE THE CASH RECEIPT IS NOT GENERATED OR SIGNED BY THE ASSESSEE IT CANNOT BE TREATED AS CONCLUSIVE EVIDENCE TO ESTABLISH THAT THE ASSESSEE HAD PAID THE AMOUNT TO SHR I BAKARAM EASHWAR. FURTHER, IT IS QUITE POSSIBLE THAT THE SOURCE FOR THE AMOUNT OF RS. 5 LAKHS MIGHT HAVE BEEN FROM THE ACCUMULATED SAVINGS OF THE ASSESSEE BECAUSE HE HAS BEEN CONSISTENTLY DECLARING INCOME OVER A LAKH OF RUPEES PER ANNUM. FURTHER EVEN WITH RESPECT TO THE ADMISSIONS MADE BY THE ASSESSEE FOR PAYMENT OF ON - MONEY FOR THE PURCHASE OF THE LAND, THERE IS NO CORROBORATIVE AND CONCLUSIVE EVIDENCE. CONSIDERING THESE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE VIEW THAT THERE IS EVERY POSSIBILIT Y THAT THE ADMISSIONS MADE BY THE ASSESSEE MIGHT HAVE BEEN OUT OF DURESS BECAUSE THERE IS NO OTHER PRUDENT REASON FOR THE ASSESSEE TO MAKE SUCH STATEMENTS WHEN THERE IS NO COGENT EVIDENCE AGAINST HIM. THE HONBLE APEX COURT IN THE CASE OF SATINDER KUMAR HU F VS. CIT REPORTED IN 106 ITR 64 HAS CATEGORICALLY HELD THAT THOUGH ADMISSION MADE BY THE ASSESSEE CONSTITUTES A RELEVANT PIECE OF EVIDENCE BUT IF THE ASSESSEE CONTENDS THAT IN MAKING THE ADMISSION HE HAD PROCEEDED ON A MISTAKEN UNDERSTANDING OR ON MISCONC EPTION OF FACTS OR ON UNTRUE FACTS SUCH AN ADMISSION CANNOT BE RELIED UPON WITHOUT FIRST CONSIDERING THE AFORESAID CONTENTION. FURTHER, THE HONBLE APEX COURT IN THE CASE CIT VS. ANWAR ALI REPORTED IN 76 ITR 696 HAS HELD THAT IT CANNOT BE SAID THAT THE FIN DINGS GIVEN IN THE ASSESSMENT PROCEEDINGS FOR DETERMINING OR COMPUTING THE TAX IS CONCLUSIVE. HOWEVER, IT IS GOOD EVIDENCE. BEFORE PENALTY CAN BE IMPOSED THE ENTIRETY OF CIRCUMSTANCES MUST REASONABLY POINT TO THE CONCLUSION THAT THE 6 DISPUTED AMOUNT REPRES ENTED INCOME AND THAT THE ASSESSEE HAS CONSCIOUSLY CONCEALED THE PARTICULARS OF HIS INCOME OR HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS. FROM FACTS OF THE CASE IT IS APPARENT THAT THE ASSESSEE HAD FAILED TO APPEAR BEFORE THE LD. AO IN THE PENALTY PROCEEDINGS HOWEVER, HE HAS RAISED SEVERAL OBJECTIONS BEFORE THE LD. CIT (A) AGAINST INVOKING THE PENAL PROVISIONS OF SECTION 271(1)(C) OF THE ACT BY RETRACTING THE STATEMENTS GIVEN AT THE TIME OF POST SEARCH PROCEEDINGS. THEREFORE, THOUGH THE CASE MAY BE A FIT CASE FOR SUSTAINING THE ADDITION, WE ARE OF THE CONSIDERED VIEW THAT THE CASE OF THE ASSESSEE IS NOT A FIT CASE FOR INVOKING THE PENAL PROVISIONS OF SECTION 271(1)(C) OF THE ACT. HENCE, WE HEREBY SET - ASIDE THE ORDERS OF THE LD. CIT (A) AND DIRECT T HE LD. AO TO DELETE THE PENALTY LEVIED IN THE HANDS OF THE ASSESSEE U/S. 271(1)(C) OF THE ACT FOR THE AY 2007 - 08 AND 2008 - 09. 7. SINCE WE HAVE DECIDED BOTH THE APPEALS ON MERITS, WE DO NOT FIND IT NECESSARY TO ADDRESS THE SECOND GROUND RAISED BY THE ASSESSEE AS IT WOULD BE ONLY ACADEMIC. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 25 TH AUGUST, 2020. SD/ - SD/ - (P. MADHAVI DEVI) (A. MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 25TH AUGUST, 2020. OKK 7 COPY TO: - 1) SRI KUNTLURI ANIL KUMAR, C/O. M/S. KALYANDAS & CO., CHARTERED ACCOUNTANTS, 15, VENKATESWARA COLONY, NARAYANAGUDA, HYDERABAD. 2) INCOME TAX OFFICER, WARD - 4(5), HYDERABAD. (II) DCIT, CENTRAL CIRCLE - 7, HYDERABAD. 3) THE CIT(A) - 1, HYDERABAD. 4) THE PR. COMMISSIONER OF INCOME TAX - 1, HYDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE