K Mastan Rao (HUF), Hyderabad V. ITO,Ward-8(2), Hyderabad

ITA 647/HYD/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7626 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 08-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KIRAN KATTA
• Assessee Lawyers: Y SATYANARAYANA
• Keywords: Corroborative evidences; Non compliance
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 647/HYD/2014 ASSESSMENT YEAR 2007-08 M/S. K. MASTAN RAO (HUF) ATTAPUR, RAJENDRA NAGAR RANGA REDDY DISTRICT. PAN: AAFHK9336N VS. THE INCOME TAX OFFICER WARD-8(2) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI Y. SATYANARAYANA RESPONDENT BY: SRI KIRAN KATTA DATE OF HEARING: 0 5 .0 8 .2014 DATE OF PRONOUNCEMENT: 13 . 1 0 .2014 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A), VIJAYAWADA DATED 17.01.2014 FO R A.Y. 2007-08. 2. THE APPEAL IS TIME BARRED BY 14 DAYS. IT HAS BEEN PLEADED THAT THE WIFE OF THE ASSESSEE HAS TO UNDERG O SPINAL SURGERY AND, THEREFORE, THE ASSESSEE WHO WAS CONSTANTLY ATTENDING TO HER WAS PREOCCUPIED AND COU LD NOT FILE THE APPEAL IN TIME. WE ACCEPT THE REASONS BROUGHT OUT IN THE CONDONATION PETITION AND CONDONE THE DELAY OF 14 DAYS AND ADMIT THE APPEAL. THE ASSESSE E HUF FILED ITS RETURN OF INCOME FOR A.Y. 2007-08 ADMITTI NG INCOME OF RS. 68,835 ON 19.7.2007. THE ASSESSING O FFICER COMPLETED THE ASSESSMENT DETERMINING THE TOTAL INCO ME AT RS. 46,76,526 BY MAKING THE FOLLOWING ADDITIONS/ DISALLOWANCES: 2 ITA NO. 647/HYD/2014 M/S. K. MASTAN RAO (HUF) ===================== I) INTEREST ON LOANS - RS. 5,20,346 II) UNEXPLAINED CASH DEPOSITS - RS. 1,20,000 III) LONG TERM CAPITAL GAINS - RS. 39,67,346 3. THE ASSESSING OFFICER NOTICED THAT CERTAIN AMOUNTS WERE ADVANCED AS LOANS TO VARIOUS PERSONS AND CALCU LATED INTEREST @ 24% ON THESE AMOUNTS AND BROUGHT THE INTEREST AMOUNT TO TAX. THE ASSESSING OFFICER ALSO CALCULATED INTEREST @ 24% ON WITHDRAWALS BY OBSERVI NG THAT THESE AMOUNTS WOULD HAVE BEEN GIVEN AS LOANS T O SOME ONE OR THE OTHER. THE ASSESSING OFFICER BROUG HT THE CASH DEPOSITS OF RS. 1,20,000 AS UNEXPLAINED CASH DEPOSITS U/S. 69 OF THE ACT. FURTHER IN VIEW OF NO N- SUBMISSION OF CERTIFICATE UNDER SECURITIES TRANSACT ION TAX (STT), THE EXEMPTION OF LONG TERM CAPITAL GAINS OF RS. 39,67,000 CLAIMED U/S. 10(38) OF INCOME-TAX ACT, 19 61 WAS ALSO DISALLOWED BY THE ASSESSING OFFICER. 4. ON APPEAL, THERE WAS NO RESPONSE FROM THE ASSESSEE WHEN THE CASE WAS POSTED FOR HEARING ON VA RIOUS DATES. NOTICES WERE SENT TIME AND AGAIN FIXING THE CASE FOR HEARING BUT THERE WAS NEITHER ANY COMPLIANCE FR OM THE ASSESSEE NOR ANY ADJOURNMENT LETTER WAS FILED. THE REFORE, THE CIT(A) PASSED AN EX-PARTE ORDER CONFIRMING THE ORDER OF THE ASSESSING OFFICER. HE HELD THAT THERE HAS B EEN REPEATED NON COMPLIANCE FROM THE ASSESSEE AND IN TH E ABSENCE OF PROPER EXPLANATION FROM THE ASSESSEE CHALLENGING THE ADDITIONS MADE BY THE ASSESSING OFF ICER WITH SUPPORTING EVIDENCES, NO INTERFERENCE IS CALLE D FOR IN THE ASSESSMENT ORDER. AGGRIEVED, THE ASSESSEE IS I N APPEAL BEFORE US. 3 ITA NO. 647/HYD/2014 M/S. K. MASTAN RAO (HUF) ===================== 5. THE LEARNED COUNSEL FOR THE ASSESSEE FILED WRITTEN SUBMISSIONS BEFORE US. THE FIRST GROUND IS GENERAL IN NATURE AND NEEDS NO ADJUDICATION. WITH RESPECT TO THE SECOND GROUND THE LEARNED AR SUBMITTED THAT THIS GR OUND RELATES TO THE ADDITION OF INTEREST OF RS. 5,20,346 AS INCOME ON NOTIONAL BASIS ON 'DEEMED LOANS'. THE ASSESSING OFFICER ASSUMED THAT THE ASSESSEE HAD LEN T AMOUNTS AS BELOW AND COMPUTED INTEREST THEREON @ 24 %: S. NO. LOANEE AMOUNT WITHDRAWN FROM BANK INTEREST (RS.) ASSESSEE'S EXPLANATION VIDE REPLY DT. 16.11.09, 3.12.09 & 16.12.2009 1. KRK PRASAD 150000 36000 PAID TO KRK PRASAD FOR PURCHASE OF A FLAT 2. SOMEBODY 500000 120000 WITHDRAWAL FOR INVESTMENT PURPOSE 3. CHAITANYA CHLORIDES P. LTD. 300000 72000 SUBSCRIPTION TO SHARES 4. N. VEERA RAJU 50000 *82000 HAND LOAN INTEREST-FRE E 5. T. BIKSHAM 330000 39600 HAND LOAN REPAID 6. NARESH BABU 200000 20000 RECEIVED BACK WITHIN 2 DA YS 7. V. BOYAPATI 1000000 100000 INTEREST ON RECEIPT B ASIS ACCOUNTED FOR NEXT YEAR 8. WEIZMANN HOMES LTD. 150000 18000 PREPAYMENT OF H OUSING LOAN 9. SOMEBODY 500000 20000 FOR PURCHASE OF AGRICULTUR AL LAND 10. CL BALANCE WITH DEVELOPERS 53110 12746 LEDGER A/C COPY OF THE FIRM AND FORM 16A GIVEN VIDE LETTER DT. 3.12.2009 520346 * INCORRECTLY COMPUTED AT RS. 82000 INSTEAD OF RS. 8000. 6. IT WAS SUBMITTED THAT THE TABLE SHOWS THAT THE ASSESSING OFFICER'S ASSUMPTION THAT THE MONEY WAS L ENT FOR INTEREST HAS NO BASIS EXCEPT FOR ITEM (7) WHERE INTEREST RECEIVED WAS ACCOUNTED FOR ON RECEIPT BASIS AND EVI DENCE IN SUPPORT THEREOF WAS ALSO FURNISHED. IT WAS SUBMI TTED THAT THERE CAN BE NO TAXATION OF INTEREST ON NOTION AL BASIS. THE AR SUBMITTED THAT THE ADDITION IS BASELESS AND PRAYED THAT THE SAME MAY BE DELETED. 7. WITH RESPECT TO GROUND NO. 3, THE COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS GROUND RELATES TO THE 4 ITA NO. 647/HYD/2014 M/S. K. MASTAN RAO (HUF) ===================== ADDITION OF CASH CREDITS OF RS. 50000 ON 18.9.2006, RS. 20000 ON 17.1.2007 AND RS. 50000 ON 19.1.2007. THE ASSESSEE VIDE LETTER DT. 16.12.2009 INFORMED THE AO THAT THESE DEPOSITS WERE THE SURPLUS OUT OF WITHDRAWALS MADE EARLIER FOR PURCHASE OF LAND. A COPY OF THE BANK A CCOUNT WAS GIVEN TO THE AO. THE AO EXAMINED THE SAME AND YET IN THE ASSESSMENT ORDER, THE AO STATED THAT THE ASS ESSEE DID NOT OFFER ANY EXPLANATION FOR THE CASH DEPOSITS . THE AR SUBMITTED THAT THE ASSESSEE DISCHARGED THE BURDE N ON HIM COMPLETELY WITH EVIDENCE AND, THEREFORE, THE AM OUNTS CREDITED WERE NOT ASSESSABLE AS INCOME. THE ASSESS EE WAS LEFT WITH SURPLUS AFTER PURCHASE OF LAND AND TH AT SURPLUS WAS RE-DEPOSITED IN THE BANK. THE AR PRA YED THAT THE ADDITION MAY BE DELETED. 8. WITH RESPECT TO GROUND NO. 4, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS GROUND RELATES TO EXEMPTION U/S. 10(38) FOR THE LONG TERM CAPITAL GAI NS ARISING OUT OF SALE OF SHARES THROUGH THE STOCK EXC HANGE. IN THE COURSE OF HEARING, THE ASSESSEE SUBMITTED DE TAILS OF SHARES SOLD. THE ASSESSING OFFICER COMPUTED THE LO NG TERM CAPITAL GAINS AS ADMITTED BY THE ASSESSEE BUT TAXED THE SAME @ 20% STATING THAT THE ASSESSEE FAILED TO SUBMIT THE CERTIFICATE OF RECOVERY OF STT. FURTHER, THAT THE AR SUBMITTED THAT THE ASSESSEE VIDE LETTER DATED 16.12 .2009 FURNISHED THE CERTIFICATE ISSUED BY ICICI DIRECT.CO M FOR DEDUCTION OF STT. THE SHARE TRANSACTIONS WERE ALL ROUTED THROUGH THE RECOGNISED STOCK EXCHANGES AND IN RESPE CT OF EACH TRANSACTION, STT WAS DEDUCTED BY THE BROKER. 9. WE FIND THAT BEFORE THE CIT(A) NONE APPEARED ON BEHALF OF THE ASSESSEE AND IT IS AN EX-PARTE ORDER PASSED 5 ITA NO. 647/HYD/2014 M/S. K. MASTAN RAO (HUF) ===================== BY THE CIT(A). IN THE INTEREST OF JUSTICE, THE ASS ESSEE SHOULD BE GIVEN AN OPPORTUNITY TO EXPLAIN HIS CASE WITH RELEVANT SUBMISSIONS AND EVIDENCES WHICH HE HAS FIL ED BEFORE US. IN THESE CIRCUMSTANCES, WE REMIT THE IS SUE TO THE FILE OF THE ASSESSING OFFICER TO PASS A DE NOVO ORDER AFTER THOROUGH EXAMINATION OF THE MATERIALS TO BE SUBMITTED BEFORE HIM. 10. IN THE RESULT, ASSESSEE'S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 13 TH OCTOBER, 2014 SD/ - (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD, DATED THE 13 TH OCTOBER, 2014 TPRAO COPY TO: 1. M/S. K. MASTAN RAO, C/O. SRI C.R. SEKHAR REDDY, ADVOCATE, G-3, RELIANCE HOMSES, 8-2-547/R, ROAD NO. 7, BANJARA HILLS, HYDERABAD-500 034. 2. THE INCOME TAX OFFICER , WARD - 8(2), HYDERABAD. 3 . THE CIT(A), VIJAYAWADA . 4 . THE CIT - II, HYDERABAD. 5 . THE DR, A - BENCH, ITAT, HYDERABAD.