ITO, Bangalore V. Sri. M. Srinivas Naidu, Bangalore

ITA 591/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63744 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 20-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Keywords: Opportunity of being heard; Principle of natural justice; Revised return
• Section: 143(3); 133A; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO.591/BANG/2011 (ASSESSMENT YEAR : 2006-07) INCOME TAX OFFICER, WARD 3(4), BANGALORE. . APPELLANT. VS. SHRI M. SRINIVAS NAIDU, CHANDRAMOULESHWARA BUILDING, 2 ND FLOOR, NEXT TO KAPALI THEATRE, GANDHINAGAR, BANGALORE-560 009, .. RESPONDENT. PAN AIDPM 0991K APPELLANT BY : SMT. SUSAN THOMAS JOSE. RESPONDENT BY : SHRI KASHINATH KALAMATH. DATE OF HEARING : 17.09.2012. DATE OF PRONOUNCEMENT : 28.09.2012. O R D E R PER SHRI JASON P. BOAZ : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, BANGALORE DT.7.1.2011 FOR ASSESSMENT YEAR 2006-07. 2. THE FACTS OF THE CASE, IN BRIEF, ARE AS UNDER : 2.1 THE ASSESSEE, IN THE BUSINESS OF MONEY LENDING, FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2006-07 ON 25.9.2006 DECLARING INCOME OF RS.1, 19,580. A SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS ' THE ACT') WAS CONDUCTED AT THE ASSESSEE BUSINESS PREMISES ON 31.1.2008 FOLLOWING WHICH THE ASSESSEE FILED A REVISED RETURN OF INCOME ON 18.2.2008 DECLARING INCOME OF RS.20,07,380. THE AS SESSING OFFICER ON THE BASIS OF EXAMINATION 2 ITA NO.591/BANG/11 OF CERTAIN DOCUMENTS, BOOKS AND OTHER PAPERS FOUND IN THE COURSE OF SURVEY AND THE ADMISSIONS MADE BY THE ASSESSEE IN STATEMENT ON OATH CAME TO T HE VIEW THAT INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT OVER AND ABOVE WHAT WAS DECLARE D IN THE REVISED RETURN OF INCOME. THE ASSESSING OFFICER, THEREFORE, INITIATED PROCEEDINGS UNDER SECTION 147 OF THE ACT IN ORDER TO BRING THIS INCOME TO TAX AND ISSUED NOTICE UNDER SE CTION 148 OF THE ACT ON 3.3.2008. IN RESPONSE THERETO THE ASSESSEE BY REPLY DT.13.3.2008 REQUESTE D THE ASSESSING OFFICER TO TREAT THE REVISED RETURN FILED ON 18.2.2008 AS ONE FILED IN RESPONSE TO THE NOTICE UNDER SECTION 148. 2.2 IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER NOTICED THAT THE ASSESSEE HAD MADE INVESTMENT TOWARDS PURCHASE OF AGRICULTURA L LAND FOR WHICH HE PAID ADVANCE TO ONE SRI R.S. NANJE GOWDA AND IN WHICH CONTEXT THE ASSESSEE HAD OFFERED A SUM OF RS.8,50,000 IN THE REVISED RETURN FILED ON 18.2.2008. THE ASSESSING O FFICER, ON EXAMINATION OF THE AGREEMENT DT.16.2.2005 ENTERED INTO BY THE ASSESSEE WITH NANJ E GOWDA, OBSERVED THAT THE ASSESSEE HAD GIVEN THE LATTER AN ADVANCE OF RS.60,00,000 OUT OF RS.95,00,000 BEING THE TOTAL CONSIDERATION FIXED FOR PURCHASE OF THE AGRICULTURAL LAND. THE A SSESSEE CLAIMED THAT HE HAD ACTUALLY PAID SRI R.S. NANJE GOWDA ONLY RS.6 LAKHS SINCE THE SALE TRA NSACTION DID NOT GO THOUGH DUE TO LITIGATION. ON PERUSAL OF THE PETITION AND AFFIDAVIT FILED BY T HE ASSESSEE BEFORE THE JURISDICTIONAL COURTS, THE ASSESSING OFFICER FOUND THAT THERE WAS A REFERE NCE OF THE ASSESSEE HAVING PAID SRI NANJE GOWDA RS.60 LAKHS AS ADVANCE. SINCE THE ASSESSEE H AD ALREADY OFFERED A SUM OF RS.6 LAKHS FOR TAX IN RESPECT OF THIS TRANSACTION, THE ASSESSING O FFICER BROUGHT THE DIFFERENCE OF RS.54 LAKHS (VIZ. RS.60 LAKHS LESS RS.6 LAKHS) TO TAX AS UNDISC LOSED INCOME OF THE ASSESSEE AND COMPLETED THE 3 ITA NO.591/BANG/11 ASSESSMENT BY AN ORDER UNDER SECTION 143 R.W.S. 147 OF THE ACT DT.26.12.2008 DETERMINING THE INCOME OF THE ASSESSEE AT RS.74,07,380. 2.3 AGGRIEVED BY THE ORDER OF ASSESSMENT DT.26.12.2 008, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE LEARNED CIT(A) NOTED THAT THE ASSE SSEE HAD FILED A CIVIL SUIT (O.S. NO.706/2007) BEFORE THE ADDL. CIVIL JUDGE, BANGALOR E RURAL DISTRICT, BANGALORE ON 29.3.2007 AGAINST WHICH THE DEFENDANTS HAD FURNISHED REPLY DT .2.1.2008 AND THAT THIS MATTER WAS PENDING AT THE TIME OF COMPLETION OF ASSESSMENT PROCEEDINGS UN DER SECTION 143(3) OF THE ACT. THE ASSESSEE IN THE COURSE OF APPELLATE PROCEEDINGS FILED BEFORE THE LEARNED CIT(A) A COPY OF A COMPROMISE PETITION DT.16.12.2010 FILED BEFORE THE PRINCIPAL C IVIL JUDGE (JR. DN), BANGALORE DISTRICT, BANGALORE RURAL AND HIS ORDER THEREON ALSO DT.16.12 .2010 (DETAILS OF WHICH FORM PART OF THE ORDER OF THE LEARNED CIT(A) AT PARAS 4.1 AND 4.2 ON PAGES 4 AND 5 THEREOF). ON AN EXAMINATION OF THE COMPROMISE PETITION AND THE ORDER OF THE LEARNED PR INCIPAL CIVIL JUDGE (JR. DN.), THE LEARNED CIT(A) CAME TO THE VIEW AND DIRECTED THE ASSESSING OFFICER TO ACCEPT THE INCOME OF THE ASSESSEE ON THIS TRANSACTION AS RS.6 LAKHS AND DELE TED THE ADDITION OF RS.54 LAKHS MADE BY ASSESSING OFFICER IN TOTO; THEREBY ALLOWING THE ASS ESSEES APPEAL. 3. REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE O RDER OF THE LEARNED CIT(A) DT.7.1.2011. THE GROUNDS OF APPEAL RAISED BY REVENUE ARE AS UNDE R : 1. THE ORDERS OF THE CIT (APPEALS) IS CONTRARY T O THE FACTS OF THE CASE. 2. THE CIT (APPEALS) IS NOT CORRECT IN DELETING TH E ADDITION OF RS. 54,00,000 MADE BY THE ASSESSING OFFICER. 3. THE CIT (APPEALS) DECISION BASED ON THE COMPROM ISE PETITION FILED BY THE ASSESSEE BEFORE THE JURISDICTIONAL COURT THAT HE HAS PAID ON LY RS.6,00,000 TO SRI NANJE GOWDA IS NOT ACCEPTABLE FOR THE REASON THAT IT WAS ONLY A N INTERNAL COMPROMISE FORMULA BETWEEN THE ASSESSEE AND SRI NANJE GOWDA. 4 ITA NO.591/BANG/11 4. THE DECISION OF THE CIT (APPEALS) IS NOT ACCEP TABLE AS THE ASSESSMENT WAS MADE BASED ON THE AGREEMENT OF SALE ENTERED INTO BY THE ASSESSEE WITH SRI NANJE GOWDA WHICH CLEARLY INDICATES THAT THE ASSESSEE HAS PAID RS.60,00,000 AS ADVANCE TO SRI NANJE GOWDA AND THE SAME HAS BEEN ACKNOWLEDGED BY T HE ASSESSEE HIMSELF. 5. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE U RGEDAT THE TIME OF HEARINGOF THE APPEAL, THE ORDER OF THE LEARNED CIT (APPEALS) MAYB E SET ASIDE AND THAT THE ORDER OF THE ASSESSING OFFICER MAY BE RESTORED. 4. THE GROUNDS RAISED AT S.NOS.1 AND 5 ARE GENERAL IN NATURE AND THEREFORE NO ADJUDICATIO N IS CALLED FOR THEREON. 5.1 THE GROUNDS RAISED AT S.NOS.2 TO 4 , ALL RELATE TO THE SINGLE ISSUE AS TO WHETHER THE UNDISCLOSED INCOME INVESTED BY THE ASSESSEE TOWARDS PURCHASE OF AGRICULTURAL LAND FROM SRI R.S. NANJE GOWDA WAS RS.6 LAKHS AS ADMITTED BY THE ASSES SEE IN HIS REVISED RETURN OF INCOME FILED ON 18.2.2008 AND UPHELD BY THE LEARNED CIT(A) OR RS.60 LAKHS AS HELD BY THE ASSESSING OFFICER IN THE ORDER OF ASSESSMENT. 5.2 THE LEARNED DEPARTMENTAL REPRESENTATIVE CONTEND ED THAT THE LEARNED CIT(A)S DECISION WAS NOT ACCEPTABLE AS IT WAS BASED ON THE COMPROMIS E PETITION FILED BY THE ASSESSEE BEFORE THE JURISDICTIONAL PRINCIPAL CIVIL JUDGE (JR.DN.), BANG ALORE RURAL DISTRICT IN WHICH THE ASSESSEE STATED HE HAD PAID ONLY RS.6 LAKHS AS ADVANCE TO SRI NANJE GOWDA TOWARDS PURCHASE OF AGRICULTURAL LAND. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT THIS ARGUMENT OF THE ASSESSEE IS NOT ACCEPTABLE AS THE ASSESSMENT BY THE ASSESSING OFFIC ER WAS BASED ON - (I) THE AGREEMENT OF SALE DT.10.6.2005 WHEREIN IT IS RECORDED THAT THE ASSESS EE HAD PAID SRI NANJE GOWDA RS.60 LAKHS AS ADVANCE OUT OF THE TOTAL SALE CONSIDERATION OF RS.9 5 LAKHS FOR PURCHASE OF THE AGRICULTURAL LAND AND (II) CIVIL PETITION IN OS NO.706/2007 FILED BY THE ASSESSEE AGAINST SRI NANJE GOWDA BEFORE CIVIL JUDGE, ACJ (JR.DN.) ON 29.3.2007 WHEREIN AT P ARA 8 AT PAGES 4 AND 5 THEREOF THE ASSESSEE 5 ITA NO.591/BANG/11 HAD STATED THAT AS PER AGREEMENT TO SALE DT.10.6.20 05, HE HAD PAID AN ADVANCE OF RS.60 LAKHS OUT OF THE TOTAL CONSIDERATION OF RS.95 LAKHS TO SRI NA NJE GOWDA. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT BOTH THESE DOCUMENTS AT (I) AND (II) ABOVE HAVE THE SIGNATURES OF THE ASSESSEE HIMSELF IN CONFIRMATION OF THE SAME. IT WAS FURTHER ARGUED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT LEARNED CIT(A) HAD NOT MADE AVAILABLE TO THE ASSESSING OFFICER THE DOCUMENTS SUCH AS COMPROMISE PETITION E TC., ON THE BASIS OF WHICH HE GRANTED RELIEF TO THE ASSESSEE AND DID NOT AFFORD THE ASSESSING OF FICER AN OPPORTUNITY TO OFFER HIS COMMENTS THEREON WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. IN THESE CIRCUMSTANCES, THE LEARNED DEPARTMENTAL REPRESENTATIVE ARGUED THAT IN THE INTE REST OF JUSTICE AND EQUITY, THE MATTER BE REMITTED TO THE FILE OF THE ASSESSING OFFICER TO CO NSIDER THE ISSUE DE NOVO AND PASS FRESH ORDERS AFTER EXAMINING THE COMPROMISE PETITION DT.16.12.20 10, THE ORDERS OF THE PRINCIPAL CIVIL JUDGE (JR. DN.), BANGALORE RURAL DISTRICT DT.16.12.2010 V IS--VIS THE AGREEMENT FOR SALE DT.10.6.2005, CIVIL PETITION IN OS NO.706/2007 DT.29.3.2007, ASSE SSEES STATEMENT ON OATH, ETC. WHICH ARE ON RECORD. 5.3 THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDERS OF THE LEARNED CIT(A) ON THIS ISSUE BUT FAIRLY ACCEDED TO THE PROPOSITION PUT FOR TH BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR CONSIDERING THE ISSUE AFRESH STATING THAT HE HA D NO OBJECTION IF THE MATTER WAS REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO CONSI DERATION. 5.4 WE HAVE HEARD BOTH PARTIES AND CAREFULLY PERUSE D THE MATERIAL ON RECORD. WE FIND FROM THE RECORD, AS STATED BY THE LEARNED DEPARTMENTAL R EPRESENTATIVE THAT THE LEARNED CIT(A) IN HIS ORDER HAS ALLOWED THE ASSESSEES APPEAL ON THE BASI S OF THE COMPROMISE PETITION DT.16.12.2010 6 ITA NO.591/BANG/11 FILED BY THE ASSESSEE BEFORE THE ADDL. CIVIL JUDGE, (JR.DN.), BANGALORE RURAL DISTRICT AND THE ORDER OF THE PRINCIPAL CIVIL JUDGE (JR. DN.), BANGA LORE RURAL DISTRICT ALSO DT.16.12.2010, BOTH OF WHICH WERE NOT AVAILABLE WITH THE ASSESSING OFFICER WHEN HE PASSED THE ORDER OF ASSESSMENT ON 26.12.2008. WE ALSO FIND, AS POINTED OUT BY THE LE ARNED DEPARTMENTAL REPRESENTATIVE, THAT THE LEARNED CIT(A) HAD NOT MADE BOTH THESE DOCUMENTS AV AILABLE TO THE ASSESSING OFFICER FOR HIS COMMENTS/VIEWS THEREON WHICH IS NOT IN ACCORDANCE W ITH THE PRINCIPLES OF NATURAL JUSTICE. IN THIS VIEW OF THE MATTER, WE IN THE INTEREST OF JUSTICE A ND EQUITY REMIT THIS MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT THIS ISSU E CAN BE CONSIDERED AFRESH, TAKING INTO ACCOUNT THE TWO DOCUMENTS ON THE BASIS OF THE LEARNED CIT(A ) GRANTED RELIEF (I.E. COMPROMISE PETITION DT.16.12.2010 AND ORDER THEREON ALSO DT.16.12.2010) ALONG WITH THE OTHER MATERIAL ON RECORD AND PASS ORDERS THEREON EXPEDITIOUSLY AFTER AFFORDING T HE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD IN THE MATTER. IT IS ORDERED ACCORDINGLY. 6. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28.09.2012. SD/- SD/- (GEORGE GEORGE K) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMB ER *REDDY GP COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, - B BENCH. 6.GUARD FILE. (TRUE COPY ) BY ORDE R SR. PRIVATE SECRETARY, ITAT, BANGALORE