Appeal details
Counselvise Citation
[2011] 140 COUNSELVISE.COM (IT) 53748 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 6 month(s) 10 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-10-2011
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
23-06-2011
Assessment Year
2006-2007
Appeal Filed On
20-04-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, AM AND SMT. ASHA VIJAYARAGHAVAN, JM ITA NO.572/HYD/2010 ASSESSMENT YEAR 2006-07 THE INCOME TAX OFFICER WARD 7(4), HYDERABAD VS SHRI BHARAT KUMAR AILANI, HYDERABAD (PAN ABGPA5774M) APPELLANT RESPONDENT CO.NO.31/HYD/2010 IN ITA NO.572/HYD/2010 ASSESSMENT YEAR 2006-07 SHRI BHARAT KUMAR AILANI, HYDERABAD (PAN ABGPA5774M) VS THE INCOME TAX OFFICER WARD 7(4), HYDERABAD APPELLANT RESPONDENT ASSESSEE BY : SHRI VENKATESWARA RAO REVENUE BY : SHRI A.V. RAGHURAM DATE OF HEARING : 19/10/2011 DATE OF PRONOUNCEMENT : 31.10.2011 ORDER PER ASHA VIJAYARAGHAVAN, JM. THE APPEAL PREFERRED BY THE REVENUE AND THE CROSS OBJECTION PREFERRED BY THE ASSESSEE ARE DIRECTED AG AINST THE ORDER PASSED BY THE 21.1.2010 AND PERTAINS TO THE ASSESSMENT YEAR 2006-07. 2. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND HAS BEEN FILING THE RETURNS OF INCOM E REGULARLY. THE ASSESSEE ALONG WITH ONE MR. SURESH KUMAR PURCHASED AGRICULTURAL DRY LAND ADMEASURING 9.38 AC RES AT ITA NO.572/HYD/2010 SHRI BHARAT KUMAR AILANI, HYDERABAD 2 LILIPUR HAMLET SITUATED AT DUBBACHARLA REVENUE VILL AGE, MAHESWARAM MANDAL FOR A SALE CONSIDERATION OF RS.14 .93 LAKHS ON 27.12.2005. WITHIN A SHORT SPAN OF 11 DAY S, THE SAME WAS SOLD AWAY AT THE SAME SALE CONSIDERATION D UE TO COMPELLING CIRCUMSTANCES IE., THREATENING AND ILLEG AL ENCROACHMENT AND OCCUPATION BY MUSCLE MEN, MIDDLE M EN, POWER CENTRES ETC. BEYOND THE CONTROL OF THE ASSESS EE AND THE ASSESSEE HAD NO ALTERNATIVE EXCEPT TO DISPOSE O F THE LAND. 3. THE ASSESSING OFFICER BASED ON INFORMATION RECE IVED FROM DCIT, CENTRAL CIRCLE, BANGALORE THROUGH HIS LE TTER 11.11.2008 THAT ON MONEY WAS PAID TO THE SELLER FOR THE PURCHASE OF TOTAL LAND ADMEASURING 145 ACRES QUANTI FIED THE ON MONEY RELATING TO THE LAND OF THE ASSESSEE A ND ARRIVED AT HIS SHARE AT RS.59,13,300/-. 4. THE ASSESSEE GAVE A STATEMENT IN RESPONSE TO SUMMONS U/S 131. AS STATED IN THE ASSESSMENT ORDER , THE ASSESSEE HAD CATEGORICALLY DENIED HAVING RECEIVED A NY ON MONEY OVER AND ABOVE THE SALE CONSIDERATION STATED IN THE DOCUMENT FOR SALE OF THE ABOVE AGRICULTURAL LAND. 4.1. THE ASSESSEE WAS NOT PROVIDED WITH THE COPY O F INFORMATION, DOCUMENTS OR MATERIAL WHICH WAS RELIED UPON BY THE ASSESSING OFFICER TO ADD THE ALLEGED ON MONE Y. AS A MATTER OF FACT, THE ASSESSING OFFICER HAD NO MATERI AL WITH HIM EXCEPT THE ABOVE STATED LETTER DATED 11.11.2008 . THE ASSESSMENT ORDER VERY CLEARLY STATES THAT SHRI G. J ANARDHAN REDDY HAS PRINCIPALLY AGREED ON THE ISSUE OF PAYMEN T OF CASH IN THE ABOVE TRANSACTION. IT MEANS THE GENTLE MAN SHRI G. JANARDHAN REDDY HAD NOT CATEGORICALLY ADMITTED H AVING ITA NO.572/HYD/2010 SHRI BHARAT KUMAR AILANI, HYDERABAD 3 PAID ANY ON MONEY. THE IMPUGNED LETTER OF DCIT AGA IN SAYS THAT THE ON MONEY WAS PAID FOR 145 ACRES OF LA ND AND NOTHING IS RELATED TO THE ASSESSEE. THE LETTER DID NOT SPECIFICALLY MENTION ABOUT THE IMPUGNED LAND OR THE IMPUGNED TRANSACTION OF SALE OF THE AGRICULTURAL LA ND. NO SEIZED MATERIAL WAS BEFORE THE ASSESSING OFFICER WH AT IS THE NATURE OF THE SEIZED MATERIAL IS NOT KNOW FURTHER W HO GAVE THE ON MONEY AND WHO HAD RECEIVED THE ON MONEY IS A LSO NOT ASCERTAINABLE. THERE WERE MANY MIDDLE MEN, MUS CLE MEN, POWER CENTRES ETC. IT IS WELL KNOWN FACT THAT THE PURCHASERS WERE BIG AND INFLUENTIAL PEOPLE. THE ON MONEY RELATABLE TO THE ASSESSEE WAS QUANTIFIED AND WORKED OUT IN PROPORTION BASED ON SURMISES, CONJECTURES AND SUSPI CION WITHOUT ANY BASIS. THE ENTIRE ON MONEY FOR 145 ACR ES IS STATED AND HOW CAN IT BE SAID THAT THE PROPORTIONAT E AMOUNT WAS RECEIVED BY THE ASSESSEE WITHOUT ANY SPE CIFIC MATERIAL RELATABLE TO THE ASSESSEE. THE ENTIRE PRO CEEDINGS WERE CARRIED OUT BEHIND THE BACK OF THE ASSESSEE WI THOUT FURNISHING ANY COPY OF THE SEIZED MATERIAL, RECORD ETC. FROM THE ABOVE DISCUSSION, IT IS CLEAR THAT THE MATERIAL RELIED UPON BY THE ASSESSING OFFICER IS UNRELIABLE AND NOT A COGENT ONE AND THEREFORE CANNOT BE USED FOR MAKING THE ADD ITION. 4.2. THE ASSESSING OFFICER IS NOT JUSTIFIED IN COM ING TO THE CONCLUSION ON THE GROUND THAT AS A MATTER OF FACT T HAT IS IMPROBABLE THAT A PRUDENT BUSINESSMAN OR FOR THAT M ATTER ANY SANE PERSON WOULD INVEST LAKHS OF RUPEES IN A P ROPERTY AND SELLS IT AWAY JUST LIKE THAT WITHOUT GETTING AN Y BENEFIT OUT OF THE TRANSACTION. AS SUBMITTED ABOVE, THE AS SESSEE HAD TO MAKE A FORCED SALE TO A HIGHLY INFLUENTIAL P ERSON WITHIN A SHORT SPAN OF 11 DAYS. CAN ANY PRUDENT OR SANE PERSON MAKE ANY PROFIT WITHIN 10 DAYS OF SUCH A HUG E ITA NO.572/HYD/2010 SHRI BHARAT KUMAR AILANI, HYDERABAD 4 AMOUNT I.E. SO CALLED ON MONEY UNDER SUCH COMPELLI NG CIRCUMSTANCES AND DISTRESS SALE? IT IS IMPOSSIBLE, WHETHER ON MONEY WAS PAID TO MIDDLE MEN, MUSCLE MEN, POWER CENTRES ETC. IS NOT KNOWN. THUS THE CONCLUSION ARR IVED AT IS ERRONEOUS AND BAD IN LAW. 4.3. THE REPLY TO THE SHOW CAUSE NOTICE PROPOSING TO ADD THE ON MONEY MAY PLEASE BE READ AS PART OF THESE SUBMISSIONS. 4.4. PRINCIPLES OF NATURAL JUSTICE HAVE NOT BEEN F OLLOWED AND ARE VIOLATED AND AS SUCH, THE ORDER IS BAD IN L AW AS THE ENTIRE PROCEEDINGS WERE CARRIED OUT BEING THE BACK OF THE ASSESSEE WITHOUT FURNISHING ANY MATERIAL TO HIM. T HE ASSESSEE HAS BEEN DENIED THE OPPORTUNITY TO CONFRON T THE MATERIAL AS WELL AS ANY STATEMENT RELIED UPON. REL IANCE IS PLACED ON CIT VS. RAJESH KUMAR (2008) 306 ITR 27 (D ELHI). 4.5. SIMPLY BASED ON THE INFORMATION RECEIVED FROM A THIRD PARTY WITHOUT ANY CORROBORATIVE MATERIAL AND OPPORT UNITY TO CONTROVERT THE SAME, THE ADDITION CANNOT BE MADE AN D SUCH EVIDENCE CANNOT BE USED AGAINST THE ASSESSEE. RELI ANCE IS PLACED ON THE JUDGEMENT OF THE SUPREME COURT IN THE CASE OF KISHAN CHAND CELARAM ITR VOL.125 1980 AT PAGE NO .713 TO 723. 4.6. IT IS HUMANLY IMPOSSIBLE FOR ANY ONE TO MAKE SUCH A HUGE GAIN WITHIN SHORT SPAN OF 11 DAYS. SEC. 69A G IVES DISCRETION TO THE ASSESSING OFFICER THAT EVEN IF EX PLANATION IS FOUND TO BE SATISFACTORY, THE AMOUNT CANNOT AUTOMATICALLY BE ADDED. RELIANCE IS PLACED ON CIT V. SMT. ITA NO.572/HYD/2010 SHRI BHARAT KUMAR AILANI, HYDERABAD 5 PK NOORJAHAN (1977) 11 SCC 198 (201) AFFIRMING CIT VS. SMT. P.K. NORRJAHAN (1980) 123 ITR 3(KER.) 4.7. WITHOUT ACCEPTING ANY CAPITAL GAIN DUE TO ALL EGED ON MONEY, IT IS SUBMITTED THAT THE TRANSACTION RELATES TO AGRICULTURAL LAND AND ANY INCOME ON AGRICULTURAL LA ND IF SITUATED BEYOND 8 KMS. FROM HYDERABAD MCH LIMITS ACTUAL DISTANCE IS 23 KMS. IS EXEMPT U/S 2(14) (III ). 4.8. IN VIEW OF THE ABOVE, THE ASSESSEE PRAYED FOR THE DELETION OF ADDITION OF RS.59,13,300/-. 5. THE SUBMISSION OF THE ASSESSEE WERE FORWARDED T O THE ASSESSING OFFICER VIDE THIS OFFICE LETTER 10.9.2009 CALLING FOR HIS COMMENTS. THE ASSESSING OFFICER SENT HIS REMAN D REPORT THROUGH HIS ADDITIONAL CIT VIDE HER LETTER I N F.NO.R- R-7/HIGH COURT /2009 10 DATED 13 TH OCT. 2009. SUBSEQUENTLY AT THE TIME OF HEARING ON 27.10.2009 T HE AR OF THE ASSESSEE HAS BEEN PROVIDED WITH A COPY OF TH E REMAND REPORT TO OFFER COMMENTS. AR OF THE ASSESSE E HAS FURNISHED THE FOLLOWING SUBMISSIONS IN RESPONSE TO THE OBSERVATIONS MADE BY THE ASSESSING OFFICER IN HIS R EMAND REPORT. 6. THE LEARNED AUTHORIZED REPRESENTATIVE IS NOT JUSTIFIED IN RELYING UPON, THE STATEMENT GIVEN BY G ALI JANARDHAN REDDY, BELLARI, KARNATAKA. IT IS WORTHWH ILE TO EXTRACT THE RELEVANT PORTION OF STATEMENT OF SAID G ALI JANARDHAN REDDY. 7. THE CIT(A) DISCUSSED ELABORATELY DISCUSSED AT P ARAS 5.3 TO PARA 5.5. OF HIS ORDER AND HELD AS FOLLOWS: ITA NO.572/HYD/2010 SHRI BHARAT KUMAR AILANI, HYDERABAD 6 IN VIEW OF THE ABOVE DISCUSSIONS AND BY FOLLOWING T HE ABOVE JUDICIAL DECISIONS, I AM OF THE VIEW THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS WITHOUT A NY BASIS. THE MATERIAL COLLECTED BY THE ASSESSING OFF ICER BEHIND BACK OF THE ASSESSEE WAS USED AGAINST HIM WITHOUT GIVING ANY OPPORTUNITY TO CROSS EXAMINE THE PERSON WHOSE STATEMENT HAD BEEN USED BY THE ASSESSING OFFICER AGAINST THE INTEREST OF THE ASSES SEE AND THERE WAS CLEAR VIOLATION OF PRINCIPLES OF NATU RAL JUSTICE. THEREFORE, THE ASSESSING OFFICER IS DIREC TED TO DELETE THE ADDITION MADE ON ACCOUNT OF ALLEGED ON MONEY. 8. AGGRIEVED THE DEPARTMENT IS IN APPEAL BEFORE US AND RAISED THE FOLLOWING GROUNDS: 1. THE CIT(A) IS ERRED IN ANALYSING THE FACTS OF T HE CASE AND INTERPRETING THE LAW. 2. THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE HA S NOT GIVEN AMPLE OPPORTUNITY TO PROVE GENUINENESS OF THE TRANSACTIONS HELD WITH M/S OBALAPURAM MINING COMPANY P LTD. BELLARY. 3. THE DIRECTOR OF THE COMPANY SRI G. JANARDHAN REDDY HAD CONFIRMED THE ON MONEY PAYMENT BEFORE THE ADIT(INV.) BANGALORE IN HIS DEPOSITION AND THE SAME WAS CONFIRMED BY THE DCIT, CENTRAL CIRCLE, BANGALORE. 4. THE CIT(A) ERRED IN HOLDING THAT THE ASSESSING OFFICER HAS NOT CROSS EXAMINED SHRI G. JANARDHAN REDDY THOUGH SHRI G. JANARDHAN REDDY WAS CROSS EXAMINED BY THE HIGHER AUTHORITIES AND AFTER ITA NO.572/HYD/2010 SHRI BHARAT KUMAR AILANI, HYDERABAD 7 CONFIRMING THE SAME, THE INFORMATION WAS PASSED TO THE ASSESSING OFFICER. 5. ANY OTHER GROUND OF APPEAL THAT MAY BE URGED AT THE TIME OF HEARING. 9. WE HEARD BOTH THE PARTIES. WE FIND THAT IN THE CASE OF SHRI S.K. AGARWAL WHO HAD PURCHASED AGRICULTURAL DR Y LAND ADMEASURING 9.38 ACRES AT LILIPUR HAMLET SITUATED A T DUBBACHARLA REVENUE VILLAGE, MAHESWARAM MANDAL ALON G WITH THE ASSESSEE ON IDENTICAL FACTS, THE TRIBUNAL HAS DECIDED IN ITA NO.995/H/2010 IN THE CASE OF ITO, WA RD 7(4), HYDERABAD VS. SHRI SURESH KUMAR AGARWAL, HYDERABAD FOR THE ASSESSMENT YEAR 2006-07. THE REL EVANT PORTION OF THE TRIBUNAL ORDER IS EXTRACTED HEREIN I S AS FOLLOWS: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. IT IS AN UNDISPU TED FACT THAT THE ASSESSEE SOLD THE PROPERTY WITHIN A S PAN OF 11 DAYS FROM THE DATE OF PURCHASE WHICH PROVES THAT THE ASSESSEE WOULD HAVE SOLD AWAY THE PROPERTY AT THE SAME SALE CONSIDERATION DUE TO COMPELLING CIRCUMSTANCES LIKE THREATENING AND ILLEGAL ENCROACHMENT ETC., WHICH IS BEYOND THE CONTROL OF T HE ASSESSEE AND THE ASSESSEE HAD NO ALTERNATIVE EXCEPT TO DISPOSE OF THE PROPERTY. UNDER THESE COMPELLING CIRCUMSTANCES, THE ASSESSEE CANNOT EXPECT PROFIT OR GAIN ON THE SALE OF THE SAID PROPERTY. THE ASSESSI NG OFFICER NOT DOUBTED THE PURCHASE COST OF THE PROPER TY AT RS.14,93,000/- BUT THE SAME TIME, THE ASSESSING OFFICER ASSUMED THE SALE CONSIDERATION OF THE PROPE RTY INCLUDING THE ON MONEY PAYMENT AT RS.74,06,300. IN ITA NO.572/HYD/2010 SHRI BHARAT KUMAR AILANI, HYDERABAD 8 OUR CONSIDERED OPINION, WITHIN THE SPAN OF 11 DAYS, IT IS IMPRACTICABLE TO IMAGINE THAT THE ASSESSEE MADE A HUGE GAIN OF RS.59,13,300/- FROM THIS TRANSACTION. THE ACTION OF THE ASSESSING OFFICER IN MAKING THE ADDIT ION OF RS.59,13,300/- IS BASED ON PURELY CONJECTURES AN D SUSPICION. THE THEORY OF RECEIPT OF ON MONEY FASTE NED ON THE ASSESSEE IS TOTALLY ARBITRARY WITHOUT ANY BA SIS. WE ALSO FIND THAT THE ASSESSEE GAVE A STATEMENT IN RESPONSE TO SUMMONS U/S 131, AS STATED IN THE ASSESSMENT ORDER, CATEGORICALLY DENIED HAVING RECEI VED ANY ON MONEY OVER AND ABOVE THE SALE CONSIDERATION STATED IN THE DOCUMENT FOR THE SALE OF THE PROPERTY . WE HAVE GONE THROUGH THE ORDER OF THE CIT(A) AND FOUND THAT HE HAS EXTRACTED IN HIS ORDER, ORDER OATH TAKE N ON 16.11.2007, I.E., STATEMENT U/S 132(4) OF THE ACT W HICH WAS RECORDED FROM SHRI G. JANARDHAN REDDY WHICH IS APPEARING AT PAGE 8 AND 9 OF THE CIT(A) ORDER. IT WAS FOUND FROM THE ASSESSMENT ORDER THAT SHRI G. JANARDHAN REDDY HAS PRINCIPALLY AGREED ON THE ISSUE OF PAYMENT OF ON MONEY IN THE SAID TRANSACTION. FURTHER, THE STATEMENT OF SHRI JANARDHAN REDDY DID NOT MENTION ABOUT THE RECEIPT OF MONEY BY THE ASSESSEE. AFTER CONSIDERING THE FACTS AND THE CIRCUMSTANCES OF THE CASE, WE SEE MERIT IN THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ADDITIONS HAVE BEEN MADE BASED ON SURMISES , CONJECTURES AND SUSPICION WITHOUT ANY BASIS BY THE ASSESSING OFFICER AGAINST THE PRINCIPLES OF NATURAL JUSTICE. WE ALSO FIND THAT THE ADDITION MADE BY TH E ASSESSING OFFICER IS WITHOUT ANY BASIS AND THE ASSESSING OFFICER COLLECTED THE MATERIAL BEHIND THE BACK OF THE ASSESSEE WHICH WAS USED AGAINST HIM ITA NO.572/HYD/2010 SHRI BHARAT KUMAR AILANI, HYDERABAD 9 WITHOUT GIVING ANY OPPORTUNITY TO CROSS EXAMINE THE PERSON WHOSE STATEMENT HAD BEEN USED BY THE ASSESSING OFFICER AGAINST THE INTEREST OF THE ASSES SEE. IN VIEW OF THE ABOVE AND AFTER CONSIDERING THE TOTA LITY OF FACTS AND CIRCUMSTANCES OF THE CASE NO INTERFERE NCE IS CALLED FOR. ACCORDINGLY, THE ORDER OF THE CIT(A ) IS CONFIRMED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. SINCE THE REVENUE APPEAL IN ITA NO.572/HYD/2010 HAS BEEN DISMISSED, THE CROSS OBJEC TION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT 3 1.10.2011 SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 31 ST OCTOBER, 2011 COPY FORWARDED TO: 1. THE INCOME TAX OFFICER, WARD 7(4), 1 ST FLOOR, B. BLOCK, IT TOWER, HYDERABAD 2. SHRI BHARAT KUMAR AILANI, 15-8-497, FEELKHANA, HYDERABAD 3. THE CIT-VI, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/
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