Jitender Kumar Kedia, Hyderabad V. DCIT, Central Circle-4, Hyderabad

ITA 591/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66595 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 23-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: H SRINIVASULU
• Assessee Lawyers: SYED ZAMEELUDDIN
• Keywords: Income from undisclosed sources; Search and seizure; Principle of natural justice; Assessment record
• Section: 143(3); 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO .591/HYD/12 ASST . YEAR 2008-09 SRI JITENDER KUMAR KEDIA, HYDERABAD. PAN:ADOPK8686M V/S. THE DCIT, CENTRAL IRCLE-4, HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SRI SYED ZAMEELUDDIN RESPONDENT BY : SRI H. SRINIVASULU (DR) DATE OF HEARING 31 - 10 - 2012 DATE OF PRONOUNCEMENT 20-12-2012 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THE ASSESSEE HAS FILED THIS APPEAL BEING AGGRIEVED BY THE ORDER DATED 26-3-2012 OF THE CIT, HYDERABAD VIDE ORDER NO. CIT (C)/263/62/11-12 PERTAINING TO THE ASSESSMENT YEARS 2005 -06 AND 2008-09. 2. THE ASSESSEE HAS CHALLENGED THE ACTION OF THE CIT IN CA NCELLING ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT BY EXERCISING P OWER U/S 263 OF THE ACT AND DIRECTING THE AO TO BRING TO TAX AN AMOUNT OF RS.4,57,645 BEING CASH SEIZED AT THE TIME OF SEARCH AND SEIZURE OPERATION. ITA NO.591 OF 2012 JITENDER KUMA R KEDIA, HYD. 2 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED U/S 132 OF THE ACT IN CASE OF KEDIA GROUP INCLUDING THE ASSESSEE. DURING SEARCH VARIOUS INCRIMI NATING MATERIAL, CASH AND OTHER VALUABLE THINGS WERE FOUND AN D SEIZED. IN COURSE OF THE SEARCH OPERATION A STATEMENT WAS RECORDED FR OM THE ASSESSEE U/S 1323(4) OF THE ACT. DURING THE RECORDING OF STATEMENT ON 28-3-2008 WHEN THE ASSESSEE WAS APPRAISED F THE INCRIMINA TING MATERIALS SEIZED, THE ASSESSEE CAME FORWARD AND VOLUNTARIL Y OFFERED AN AMOUNT OF RS.2 CRORES AS ADDITIONAL INCOME FOR THE IMPU GNED ASSESSMENT YEAR. SUBSEQUENTLY, IN RESPONSE TO NOTICE ISSUED BY THE DEPARTMENT THE ASSESSEE FILED HIS RETURN OF INCOME DECLARI NG A TOTAL INCOME OF RS.2,15,43,660/- WHICH INCLUDED THE ADDITION AL INCOME OF RS.2,00,65,500/- THE ASSESSEE VOLUNTARILY OFFERED AT THE TIME F SEARCH OPERATION. THE AO COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ON 30-12-2009 BY ACCEPTING THE INCOME DISCLOSED BY THE ASSESSEE. 4. THE CIT IN EXERCISE OF THE REVISIONARY POWER VESTED WITH HIM U/S 263 OF THE ACT CALLED FOR THE ASSESSMENT RECORDS OF THE ASSE SSEE FOR THE IMPUGNED ASSESSMENT YEAR FOR EXAMINATION. ON EXAMINING THE RECORDS THE CIT NOTICED THAT DURING THE COURSE OF SEARCH OPERATI ON THE ASSESSEE HAD VOLUNTARILY OFFERED ADDITIONAL INCOME OF RS.2,00, 65,500 ON ACCOUNT OF UNACCOUNTED ADVANCES AND INTEREST THEREON APART FROM THAT CASH FOUND AT THE RESIDENCE AND BUSINESS PREMISES OF THE ASSESSEE AMOUNTING TO RS.3,03,770/- AND RS.1,53,875 RESPECTIVELY TOTALING TO RS.4,57,645. THE SOURCE OF CASH FUND WAS ALSO NOT EXPLAI NED PROPERLY, HENCE THE ASSESSEE ALSO ADMITTED THE CASH FOUND AS HIS UNDISCLO SED INCOME FOR THE ASSESSMENT YEAR 2008-09. HOWEVER, IN THE RETURN OF INCOME THE ASSESSEE ONLY ADMITTED ADDITIONAL INCOME OF R S.2,00,65,500 WITHOUT DISCLOSING THE CASH FOUND DURING SEARCH. SINCE TH E AO ACCEPTED ITA NO.591 OF 2012 JITENDER KUMA R KEDIA, HYD. 3 THE INCOME DECLARED BY THE ASSESSEE WITHOUT BRINGING TO T AX THE CASH FOUND AT THE TIME OF SEARCH. THE CIT HELD THE ASSESSMENT ORDER PASSED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REV ENUE AND ISSUED A NOTICE U/S 263 OF THE ACT TO THE ASSESSEE TO SHOW CAUSE. 5. THE ASSESSEE SUBMITTED BEFORE THE CIT THAT THE ADDITI ONAL INCOME OF RS.2,00,65,500 IS INCLUDING THE CASH FOUND OF RS.4,57, 645. THE CIT FOUND THE SUBMISSIONS OF THE ASSESSEE UNACCEPTABLE BECAUSE IN CO URSE OF RECORDING OF HIS STATEMENT WHILE GIVING THE BIFURCAT ION OF ADDITIONAL INCOME OF RS. 2 CRORES OFFERED BY HIM THE ASSESSEE HAD EXPL AINED THE ADDITIONAL INCOME IS ON ACCOUNT OF UNEXPLAINED ADVANCES/ INVESTMENTS AND INTEREST THEREON. THE CASH FOUND AT THE TIME OF SE ARCH DID NOT FORM A PART OF THE ADDITIONAL INCOME OF RS. 2 CRORES. SINCE THE AO DID NOT CONSIDER IT AND NO VERIFICATION HAS BEEN MADE BY HI M IN THIS REGARD THE CIT SET ASIDE THE ASSESSMENT ORDER U/S 263 OF THE AC T BY HOLDING IT TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF RE VENUE AND DIRECTED THE AO TO REFRAME THE ASSESSMENT BY BRINGING THE CASH FOU ND AMOUNTING TO RS.4,57,645 TO TAX. 6. THE LEARNED AR HAS SUBMITTED BEFORE US THAT APART F ROM SOME LOOSE SHEETS AND CASH AMOUNTING TO RS.4,57,645 NO OTHER I NCRIMINATING MATERIAL OR VALUABLE ARTICLES WERE FOUND DURING THE SE ARCH. LD. AR SUBMITTED THAT IN THE NOTARIZED DECLARATION FILED ON 24-3-2008 THE ASSESSEE HAS CLEARLY STATED THAT THE DISCLOSURE OF RS.2 CRORES CO VERS ALL HIS INCOME, DEPOSITS INVESTMENTS AND EXPENDITURE. THE LD. AR SUBMITTED THAT THIS FACT HAS BEEN FURTHER CLARIFIED IN R EPLY TO THE QUESTIONNAIRE ISSUED BY THE AO. THE LEARNED AR SUBMITTE D THE AO HAVING VERIFIED ALL THE MATERIALS HAS COMPLETED THE A SSESSMENT AND THERE BEING NO INFIRMITY OR ERROR IN THE ORDER OF T HE AO, THE CIT WAS NOT ITA NO.591 OF 2012 JITENDER KUMA R KEDIA, HYD. 4 JUSTIFIED IN EXERCISING POWER U/S 263 OF THE ACT. THE L EARNED AR SUBMITTED THAT IF THE STATEMENT RECORDED FROM THE ASSESSEE , THE DECLARATION SUBMITTED BY HIM AND THE REPLY TO THE QUE STIONNAIRE ISSUED BY THE AO ARE CONSIDERED TOGETHER THEN IT WILL MAKE T HE FACT CLEAR THAT THE ASSESSEE RIGHT FROM THE BEGINNING HAS INTENDED TO DE CLARE THE INCOME OF RS.2 CRORES ONLY WHICH HAS BEEN OFFERED AS ADDIT IONAL INCOME. THE LEARNED AR SUBMITTED THAT IF THE ASSESSEE HA S GIVEN REPLY TO SOME QUESTIONS PUT TO HIM WITHOUT PROPERLY UNDERSTAN DING THE TECHNICALITIES INVOLVED THEREIN IT SHOULD NOT BE UTIL IZED AGAINST HIM. THE LEARNED AR FURTHER SUBMITTED THAT IF THE AO AFTE R PROPER EXAMINATION HAS ACCEPTED THE EXPLANATION OF THE ASSESSEE A ND HAS TAKEN ONE OF THE POSSIBLE VIEWS THEN THE CIT CANNOT EXE RCISE POWER U/S 263 OF THE ACT. IN SUPPORT OF HIS CONTENTION, THE LEA RNED AR RELIED UPON THE FOLLOWING DECISIONS:- I) CIT VS. HINDUSTAN COCACOLA BEVERAGES P.LTD.(331 ITR 192) (DEL) II) MALABAR INDUSTRIAL CO. LTD. VS. CIT (243 ITR 83) (SC ) III) CIT VS. SALUJA EXIM LTD. (329 ITR 603) ( P & H) IV) PIEM HOTELS LTD. VS. DCIT (2011) 135 TTJ 33 (DEL) 7. THE LEARNED DR SUBMITTED THAT THE AO HAVING NOT CO NSIDERED THE CASH FOUND AT THE TIME OF SEARCH FOR ASSESSMENT, THE ORDER PASSED BY HIM IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. THE LEARNED DR REFERRING TO THE STATEMENT RECORDED F ROM HIM U/S 132(4) OF THE ACT SUBMITTED THAT THE ADDITIONAL INCOM E OF RS.2 CRORES DISCLOSED BY THE ASSESSEE IS WITHOUT TAKING INTO ACCOUNT THE CASH FOUND AT THE TIME OF SEARCH. THE LEARNED DR SUBMITTED THE A O WHILE COMPLETING THE ASSESSMENT HAS NOT AT ALL VERIFIED THIS AS PECT AND HAS ACCEPTED THE INCOME DECLARED IN THE RETURN OF INCOME. ITA NO.591 OF 2012 JITENDER KUMA R KEDIA, HYD. 5 8. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE WRITTEN SUBMISSI ONS OF THE ASSESSEE AND ALSO EXAMINED THE DECISIONS CITED BEFORE US. T HE SOLE ISSUE TO BE DECIDED IS WHETHER THE ADDITIONAL INCOME OF RS. CRORE DECLARED BY THE ASSESSEE ALSO INCLUDES THE CASH FOUND DURING SEARCH AS CLAIMED BY THE ASSESSEE OR IT DOES NOT INCLUDE THE CASH CO MPONENT AS HELD BY CIT AND WHETHER NON CONSIDERATION OF THE CASH F OUND AT THE TIME OF SEARCH BY THE AO FOR THE PURPOSE OF ASSESSMENT HA S RENDERED THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INT EREST OF REVENUE. UNDISPUTEDLY, AT THE TIME OF SEARCH OPERATION APART FROM CERTAIN INCRIMINATING MATERIALS CASH AMOUNTING TO RS.4,5 7,645 WAS ALSO FOUND. IN COURSE OF RECORDING OF STATEMENT FROM THE ASSE SSEE U/S 132(4) ON 28-3-2008 IN REPLY TO THE QUESTION PUT ON THE INCRIMINATING MATERIAL FOUND AT THE TIME OF SEARCH THE ASSESSEE REPLIED IN THE FOLLOWING MANNER:- 5. SUBSEQUENT TO THE SEARCH AND SEIZURE OPERATIONS IN YOUR CASE, VARIOUS INCRIMINATING DOCUMENTS OF THE MATERI AL WERE SEIZED FROM YOUR RESIDENCE, BAHADURPUR OFFICE PREM ISES AND MOGILIGADDA FACTORY PREMISES. YOU HAVE GONE THROUG H ALL THIS SEIZED MATERIAL DURING YOUR INSPECTION OF THEM AT O UR OFFICE. AFTER HAVING GONE THROUGH, THE ABOVE SEIZED MATERIA L WOULD YOU LIKE TO SAY ANYTHING IN THIS MATTER? ANS. IN CONFIRM THAT I HAVE GONE THROUGH ALL THE S EIZED MATERIAL IN ABOVE THREE PREMISES. HAVING GONE THROUGH THIS MATERIAL, I CAME FORWARD VOLUNTARILY TO OFFER AN ADDITIONAL INC OME OF RS.2,00,00,000/- (RUPEES TWO CRORES ONLY) IN MY IND IVIDUAL CAPACITY FROM 1-4-2001 TO TILL 31-1-2008. THIS AD DITIONAL INCOME IS DISCLOSED VOLUNTARILY TO AVOID ANY LITIGA TION WITH THE ITA NO.591 OF 2012 JITENDER KUMA R KEDIA, HYD. 6 DEPARTMENT. HENCE I REQUEST YOU NOT INITIATE ANY P ENALTY OR PROSECUTION. AGAIN DURING FURTHER RECORDING OF STATEMENT FROM THE ASSESSEE ON 9-5- 2008 WHEN THE ASSESSEE WAS SPECIFICALLY ASKED TO GIVE THE DE TAILS OF THE ADDITIONAL INCOME OF RS.2 CRORE DECLARED BY HIM THE ASSESS EE REPLIED IN THE FOLLOWING MANNER:- Q.4. IN YOUR SWORN DEPOSITION DATED 28-3-2008, YOU HAVE ADMITTED AN ADDITIONAL INCOME OF RS.2,00,00,000/- I N YOUR INDIVIDUAL CAPACITY. PLEASE GIVE THE DETAILS OF TH E SAME ALONG WITH FINANCIAL YEAR WISE. A. I HAVE REFERRED TO THE SEIZED MATERIAL AS MENTIONED ABOVE. IN PAGE NO.45 OF ANNEXURE A/JK/5, I HAVE ADVANCED AN A MOUNT OF RS.10,00,000/- AND RECEIVED AN INTEREST OF RS.65 ,500/- ON IT DURING THE FINANCIAL YEAR 2007-08. IN PAGE NO.40 OF ANNEXURE- A/JK/5, I HAVE ADVANCED A TOTAL AMOUNT OF RS.15,00,000/- DURING THE FINANCIAL YEAR 2007-08. SIMILARLY, THERE ARE FEW MORE ADVANCES AND INVESTME NTS MADE BY ME DURING THE FINANCIAL YEAR 2007-08 WHICH ARE APPROXIMATELY RS.1,75,00,000/-. THESE DETAILS ARE NOT FORMING PART OF THE SEIZED MATERIAL BUT I WISH TO D ISCLOSE EVERYTHING TO THE DEPARTMENT AND KEEP MY AFFAIRS NE AT AND CLEAN. HENCE, I ADMIT THIS AMOUNT ALSO FOR THE FIN ANCIAL YEAR 2007-08. Q.5. PEASE GIVE THE FULL DETAILS OF ADDITIONAL IN COMES OFFERED BY YOU OF RS.10,65,500/- OF RS.15,00,000/- AND RS.1,75 ,00,0000/-. ITA NO.591 OF 2012 JITENDER KUMA R KEDIA, HYD. 7 A. I SUBMIT THAT THESE ARE IN MY INDIVIDUAL NAME A ND I CANNOT READILY SUBMIT THE DETAILS AS I DO NOT HAVE A PERSO NAL ACCOUNTANT. HOWEVER, I PROMISE THAT WHILE FILING T HE RETURNS OF INCOME IN RESPONSE TO NOTICES TO BE ISSUED, I WILL REFLECT THE DISCLOSURE OF RS.2,00,00,000/- PERTAINING TO MY ADV ANCES AND INVESTMENTS IN INDIVIDUAL CAPACITY FOR THE FINANCIA L YEAR 2007-08 RELEVANT TO THE ASSESSMENT YEAR 2008-09 AND PROMISE TO PAY TAXES THEREON. 9. ON READING THE AFORESAID QUESTIONS AND ANSWERS IT I S QUITE PERTINENT THAT THE ADDITIONAL INCOME OF RS.2 CRORE COMP RISED OF ONLY UNDISCLOSED ADVANCES AND INVESTMENTS AND INTEREST THEREO N AND THE CASH FUND OF RS.4,57,645 DOES NOT FORM A PART OF IT. T HE DECLARATION DATED 24-3-2008 ON WHICH MUCH EMPHASIS HAS BEEN PUT BY T HE ASSESSEE ALSO DOES NOT SAY THAT THE AMOUNT OF RS.2 CRORE ALSO INCLUDES THE CASH. IN RESPONSE TO THE INFORMATION CALLED FOR THE AO AT THE TIME OF ASSESSMENT PROCEEDING THE ASSESSEE IN HIS REPLY DATED 9-12-02 009 HAS COME UP WITH THE STORY THAT THE OFFERED ADDITIONAL I NCOME OF RS.2 CRORES ALSO INCLUDES THE CASH FOUND DURING SEARCH AMOUNTI NG TO RS.4,57,645. IF THE ASSESSEE REALLY HAD INTENDED THAT T HE ADDITIONAL INCOME OFFERED BY HIM ALSO INCLUDED THE CASH AMOUNT THEN HE SHOULD HAVE DISCLOSED IT IN CLEAR TERMS WHEN STATEMENT WAS RECORD ED FROM HIM U/S 132(4) ON 28-3-2008. EVEN DURING POST SEARCH E NQUIRY ON 9-5- 2008 WHEN THE ASSESSEE WAS SPECIFICALLY ASKED TO GIVE THE D ETAILS OF RS.2 CRORES OFFERED AS INCOME BY HIM THE ASSESSEE DID NOT M ENTION ABOUT THE CASH AMOUNT OF RS.4,57,645. THEREFORE, THE A SSESSEES CLAIM THAT ADDITIONAL INCOME OF RS.2 CRORES ALSO INCLUDED THE CA SH AMOUNT IS UNACCEPTABLE. IT IS SEEN FROM THE RECORD THAT THE AO I N HIS LETTER DATED 14-9-2009 HAS SPECIFICALLY ASKED THE ASSESSEE TO EXPLAIN WH Y THE CASH ITA NO.591 OF 2012 JITENDER KUMA R KEDIA, HYD. 8 FOUND AMOUNTING TO RS.3,03,770 SHALL NOT BE TREATED AS UNACCOUNTED INCOME IN ADDITION TO THE ADDITIONAL INCOME OFFERED OF RS.2,00,65,500/-. HOWEVER, WHILE COMPLETING THE ASSESSMENT HE HAS SIMPLY ACCE PTED THE EXPLANATION OF THE ASSESSEE MECHANICALLY WITHOUT PROPERL Y VERIFYING IT KEEPING IN VIEW THE STATEMENT RECORDED FROM THE ASSESSEE. THIS REVEALS NON APPLICATION OF MIND BY THE AO. THEREFORE , NON CONSIDERATION OF THE CASH FOUND AT THE TIME OF SEARCH FOR TAXATION WHILE COMPLETING THE ASSESSMENT HAS RENDERED THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN OUR VIEW THE CIT WAS JUSTIFIED IN REVISING THE ASSESSMENT ORDER U/S 263 OF THE ACT. THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDU STRIAL COMPANY LTD., VS. CIT (243 ITR 83) HAS OBSERVED THAT AN INCORRE CT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. SIMILARLY ORDERS PASSED WIT HOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND ARE ALSO ERRONEOUS. IN THE LIGHT OF THE AFORESAID OBSERVATION O F THE HONBLE APEX COURT IT HAS TO BE HELD THAT ASSESSMENT ORDER PASSED FOR THE IMPUGNED ASSESSMENT YEAR IS ERRONEOUS AND PREJUDICIAL TO THE INTER EST OF REVENUE AS THE AO HAS NOT APPLIED HIS MIND AND PASSED THE ORDER WITHOUT PROPERLY VERIFYING WHETHER THE CASH FOUND OF RS.4,57,6 45/- ACTUALLY FORMS PART OF THE ADDITIONAL INCOME DECLARED OF RS.2,00 ,65,500/-. WE AGREE WITH THE CONTENTION OF THE LEARNED AR THAT REV ISION U/S 263 OF THE ACT IS NOT POSSIBLE WHERE THE AO AFTER APPLYING HIS MIND HAS TAKEN ONE OF THE POSSIBLE VIEW. WE ALSO ACCEPT THE RATIO LAID DOW N IN THIS CONTEXT IN THE DECISIONS CITED BEFORE US. HOWEVER, THEY DO NOT APPLY TO THE FACTS OF THE PRESENT APPEAL. IN AFORESAID VIEW OF THE MATTER, WE UPHOLD THE ORDER PASSED U/S 263 OF THE ACT. THE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. ITA NO.591 OF 2012 JITENDER KUMA R KEDIA, HYD. 9 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STAN DS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 20-12-2012. SD/- SD/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/- 20 TH DECEMBER, 2012 COPY FORWARDED TO: 1. C/O SYED JAMEELUDDIN, IT CONSULTANT, 16-7-302, ERRA M COTTAGE, AZAMPURA, HYDERABAD. 2. 3. DCIT, CC-4, AAYAKAR BHAVAN, HYDERABAD. COMMISSIONER OF INCOME-TAX (CENTRAL), HYDERABAD. 4. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. JMR *