Dr. P. Sujith Reddy, Hyd, Hyderabad V. ITO, Ward-6(4), Hyd, Hyderabad

ITA 552/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6294 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-08-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 21-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Keywords: Principle of natural justice
• Section: 142(1); 147; 148

Judgement Text

ITA NO 552 OF 2016 P SUJITH REDDY HYDERABAD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.552/HYD/2016 (ASSESSMENT YEAR: 2004-05) DR. P. SUJITH REDDY HYDERABAD PAN: ANWPP 9561 E VS INCOME TAX OFFICER WARD 6(4) HYDERABAD FOR ASSESSEE SHRI A. HARISH FOR REVENUE SHRI K.J. RAO, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2004-05. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF T HE CIT (A) IN CONFIRMING THE ADDITION OF RS.2,93,400 AS UNEXPLAIN ED INVESTMENT AND ALSO IN UPHOLDING THE ASSESSMENT MADE U/S 147 O F THE ACT PURSUANT TO THE NOTICE U/S 148 OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DI D NOT FILE ANY RETURN OF INCOME FOR THE RELEVANT A.Y. AO RECEIV ED INFORMATION FROM THE ACIT, CIRCLE 4(1) HYDERABAD, THAT THE ASSE SSEE HAS PURCHASED PLOT NO.33 IN MANASA HILLS, BUDVEL VILLAG E, RAJENDRANAGAR MANDAL OF RANGA REDDY DISTRICT ADMEAS URING 978 DATE OF HEARING : 25.08.2016 DATE OF PRONOUNCEMENT : 02.09.2016 ITA NO 552 OF 2016 P SUJITH REDDY HYDERABAD PAGE 2 OF 5 SQ. YARDS DURING THE RELEVANT FINANCIAL YEAR FOR A TOTAL CONSIDERATION OF RS.5,86,800 FROM ONE M/S MANASA ES TATES, HYDERABAD, OUT OF WHICH, 50% OF THE CONSIDERATION WA S PAID THROUGH CHEQUE AND THE BALANCE PORTION WAS PAID IN CASH AND THAT THE SAME WAS NOTICED DURING THE COURSE OF SURV EY. ON THE BASIS OF THE SAID INFORMATION, THE AO ISSUED A NOTI CE U/S 148 OF THE ACT. SUBSEQUENTLY, A NOTICE U/S 142(1) OF THE A CT WAS ALSO ISSUED ON 25.09.2009, CALLING FOR A COPY OF THE RET URN OF INCOME FILED, DETAILS OF INVESTMENTS IN PROPERTIES ALONG W ITH EVIDENCE, BANK ACCOUNT STATEMENTS AND SOURCES FOR INVESTMENTS IN PROPERTIES. THE ASSESSEE, THROUGH HIS AUTHORIZED RE PRESENTATIVE APPEARED AND SUBMITTED THE INFORMATION CALLED FOR D URING THE ASSESSMENT PROCEEDINGS. IN HIS REPLY DATED 9.12.200 9, THE ASSESSEE SUBMITTED THAT HE WAS A STUDENT AND DOING HIS PH.D AND STATED THAT HE DOES NOT HAVE ANY TAXABLE INCOME DUR ING THE PERIOD 1.4.2003 TO 31.3.2004. FURTHER, ASSESSEE ALSO SUBMIT TED THAT THE PLOT MENTIONED ABOVE WAS PURCHASED FROM MANASA ESTA TES, HYDERABAD FOR A TOTAL CONSIDERATION OF RS.2,93,400 ONLY AND THAT HE HAS INCURRED AN AMOUNT OF RS.45,060 TOWARDS STAM P DUTY AS PER THE COPY OF SALE DEED NO.6380/03. HE EXPLAINED THE SOURCE FOR THE SAID INVESTMENT AS THE INCOME OF HIS MOTHER WHO PAID THE CONSIDERATION THROUGH CHEQUE NO.859118 DATED 30.07. 2003 DRAWN ON CANARA BANK, AMEERPET BRANCH, HYDERABAD, A S SHE IS A RETIRED PRINCIPAL FROM THE GOVT. WOMENS COLLEGE, H YDERABAD. HER PAN AND ALSO COPY OF HER BANK STATEMENT WERE FURNIS HED. AFTER GOING THROUGH THE SAID INFORMATION, THE AO HELD THA T THE ASSESSEE ITA NO 552 OF 2016 P SUJITH REDDY HYDERABAD PAGE 3 OF 5 COULD NOT EXPLAIN THE SOURCE FOR INVESTMENT OF RS.2 ,93,400 MADE IN CASH ADDITIONALLY OVER AND ABOVE THE CHEQUE PAYM ENT. THEREFORE, THE AO BROUGHT THE SUM OF RS.2,93,400 TO TAX. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), ALSO RAISING AN ADDITIONAL GROUND THAT REOPENING OF THE ASSESSMENT U/S 147 IS BAD IN LAW AS THE BASIC CONDITION OF HAV ING REASONS TO BELIEVE THAT THE INCOMES HAVE ESCAPED THE ASSESSMEN T NOT BEING FULFILLED. THE CIT(A) UPHELD THE VALIDITY OF THE AS SESSMENT PROCEEDINGS AND ALSO THE ADDITION MADE BY THE AO. A GGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. DURING THE EARLIER DATE OF HEARING THE LEARNED D R WAS DIRECTED TO PRODUCE THE SATISFACTION RECORDED BY TH E AO FOR REOPENING OF THE ASSESSMENT. ON THE FINAL DATE OF H EARING, ON 25.08.2016, THE LEARNED DR HAS PRODUCED BEFORE US A COPY OF THE ORDER SHEET IN WHICH THE AO HAS RECORDED THE SATISF ACTION THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AUTHORI TIES BELOW AND HAS PLACED BEFORE US THE COPY OF THE SALE DEED DATED 28.08.2003 IN RESPECT OF THE ADDITION MADE BY THE A O AND ALSO THE COPY OF THE DECISION OF I BENCH OF THE TRIBUN AL AT NEW DELHI IN THE CASE OF VIJAYA KUMAR IN ITA NO.1202/DEL/09 I N SUPPORT OF HIS CONTENTION THAT WHERE THE AO HAS RECORDED THE S ATISFACTION MECHANICALLY ON THE BASIS OF SOME INFORMATION FURNI SHED BY ITA NO 552 OF 2016 P SUJITH REDDY HYDERABAD PAGE 4 OF 5 ANOTHER AO, SUCH REOPENING IS BAD IN LAW. THE LD. D .R., ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE INFORMATION RECEIVED BY THE AO IS FROM THE AO OF THE PERSON IN WHOSE CASE A SURVEY WAS CON DUCTED. IT IS SEEN FROM BOTH THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE CIT(A) THAT THE ASSESSEE WAS NOT GIVEN THE COPY OF THE STATEMENT OF THE PERSON SURVEYED OR THE INFORMATION WHICH IS THE BASIS FOR COMING TO THE CONCLUSION THAT THE ASSESSEE HAS PAID EXCESS CONSIDERATION IN CASH ALSO. IT IS THE SETTLED PRINC IPLE OF LAW THAT IF THE AO WANTS TO RELY UPON ANY INFORMATION TO MAKE A NY ADDITION IN THE HANDS OF AN ASSESSEE, IT IS HIS DUTY TO CONF RONT THE ASSESSEE WITH THE SAID MATERIAL AND GIVE THE ASSESSEE AN OPP ORTUNITY TO PRESENT HIS CASE BEFORE COMING TO ANY CONCLUSION. FR OM THE MATERIAL ON RECORD, IT CANNOT BE SAID THAT THE ASSE SSEE HAS BEEN GIVEN ANY OPPORTUNITY AS ABOVE. THOUGH THE AO HAS R ECORDED A SATISFACTION THAT THE INCOME OF THE ASSESSEE HAS ES CAPED ASSESSMENT, WE FIND THAT HE HAS FAILED TO FOLLOW TH E PRINCIPLES OF NATURAL JUSTICE BEFORE COMPLETING THE ASSESSMENT MA KING THE ADDITION. IN VIEW OF THE SAME, THOUGH WE UPHOLD THE VALIDITY OF THE RE-ASSESSMENT PROCEEDING, WE DELETE THE ADDITION CO NFIRMED BY THE CIT(A) AS IT HAS NO LEGS TO STAND WITHOUT ANY C OGENT MATERIAL BEING BROUGHT ON RECORD THAT ASSESSEE HAS PAID SALE CONSIDERATION OVER AND ABOVE THE CONSIDERATION RECORDED IN THE SA LE DEED IN CASH AND ALSO AS IN OUR OPINION, THE ASSESSMENT ORD ER IS IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. ASSESSE E ALSO OUGHT TO ITA NO 552 OF 2016 P SUJITH REDDY HYDERABAD PAGE 5 OF 5 HAVE BEEN GIVEN AN OPPORTUNITY TO REBUT THE STATEME NT GIVEN BY THE THIRD PARTY AND IF NECESSARY, AN OPPORTUNITY TO CROSS EXAMINE SUCH A PARTY BEFORE COMING TO ANY CONCLUSION BY THE AO. IN VIEW OF THE SAME, THE ASSESSMENT ORDER IS NOT SUSTAINABL E. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED AND THE ASSESSMENT ORDER IS QUASHED. ORDER PRONOUNCED IN THE OPEN COURT ON 02 ND SEPTEMBER, 2016. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 02 ND SEPTEMBER, 2016. VINODAN/SPS COPY TO: 1 M/S. KALYANDAS & CO. CAS, 15, VENKATESHWARA COLON Y, NARAYANGUDA, HYDERABAD 500029 2 INCOME TAX OFFICER WARD 6(4) HYDERABAD 3 CIT (A)-9, HYDERABAD 4 PR. CIT 6 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER