L. Purushotham Naidu, R.R.Dist, R.R.Dist V. DCIT, Central Circle, Tirupathi, Tirupathi

ITA 718/HYD/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0849 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 03-02-2021
• Assessment Year: 2007-2008
• Appeal Filed On: 27-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SIBENDU MOHARANA
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained investment; Unexplained expenditure; Business income
• Section: 143(3); 153A; 13; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 787/HYD/13 2007 - 08 L.PURUSHOTHAM NAIDU, RAJENDRA NAGAR MANDAL, R.R.DISTRICT [PAN: ABGPL4958H] DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, TIRUPATI 713/HYD/17 2007 - 08 717/HYD/17 2006 - 07 718/HYD/17 2007 - 08 719/HYD/17 2008 - 09 720/HYD/17 2009 - 10 FOR ASSESSEE : SHRI S.RAMA RAO, AR FOR REVENUE : SHRI SIBENDU MOHARANA, CIT-DR DATE OF HEARING : 03-02-2021 DATE OF PRONOUNCEMENT : 24-02-2021 O R D E R PER BENCH : THE INSTANT BATCH OF SIX CASES PERTAINS TO A SINGLE ASSESSEE, SHRI L.PURUSHOTHAM NAIDU, FOR AYS.2006-07 TO 2009-10. APPEALS ITA NO.717/HYD/2017 TO 720/HYD/2017 ARISE FROM CIT(A)-3, VISAKHAPATNAMS AS MANY ORDERS, ALL DATED 09-01-2017 PASSED IN CASE NOS.79, 80, 81 & 82/ 2014- 15/CIT(A)-3/VSP/2016-17. HIS NEXT TWO APPEALS 787/HYD/2013 & 713/HYD/2017 FOR AY.2007-08 EMANATE FROM CIT(CENTRAL)S AND THE CIT(A)-3, VISAKHAPATNAMS ORDERS IN CASE NOS.CIT(C)/H/263/49/11-12, DT.18-03-2013 AND 491/2015-16/CIT(A)-3/VSP/2016-17. RELEVANT PROCEEDIN GS IN FORMER THREE CASES ARE U/S.143(3) R.W.S153A, 143(3) (4 TH CASE) ITA NOS. 787/HYD/2013, 713, 717, 718, 719 & 720/HYD/2017 :- 2 -: & 143(3) R.W.S.263 (FIFTH AND SIXTH CASES) OF THE INC OME TAX ACT, 1961 [IN SHORT, THE ACT] APPEAL-WISE; RESPECTIVE LY. HEARD BOTH THE PARTIES. CASE FILES/PAPER BOOKS PERUS ED. WE NOTICE THAT ALMOST ALL THE ISSUES RAISED IN THE INSTANT SIX APPEALS ARE IDENTICAL. THE SAME ARE THEREFORE TAKEN UP TOGETHER FOR DISPOSAL FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. IT TRANSPIRES DURING THE COURSE OF HEARING THAT THE ASSESSEES FIRST SUBSTANTIVE GRIEVANCE IN FORMER THREE APPEALS ITA NOS.717/HYD/2017, 718/HYD/2017 AND 719/HYD/2017 IN AYS.2006-07 TO 2008-09 CHALLENGES CORRECTNESS OF B OTH THE LOWER AUTHORITIES ACTION TREATING SALE CONSIDERATION( S) FROM TRANSFER OF HIS ALLEGED AGRICULTURAL LANDS INVOLVING RS.1,32,18,225/-, RS.45,00,000/- AND RS.4,29,25,000 /-; RESPECTIVELY AS REPRESENTING BUSINESS INCOME ASSESSA BLE U/S.28 OF THE ACT. WE NOTICE THAT THE DEPARTMENT HAD CARRIE D OUT A SEARCH ACTION IN ASSESSEES CASE ON 25-07-2008 CULMINATING IN INITIATION OF SECTION 153A PROCEEDINGS AS PER THE ALLEGED INCRIMINATING DOCUMENTS FOUND/SEIZED DURIN G THE SOURCE OF SEARCH. 3. COMING TO THE LEAD AY.2006-07 BEFORE US, THE ASS ESSING OFFICER NOTICED DURING THE COURSE OF ASSESSMENT THAT THE ASSESSEE HAD PURCHASED A PARCEL OF LAND MEASURING A C.4.10 GUNTAS SITUATED AT S.NO.240/A IN SRINAGAR VILLAGE NEAR HYDERABAD ON 15-11-2008 FOR RS.12.75 LAKHS AND SOLD THE SAME VIDE SALE DEEDS; BOTH DT.09-12-2005 TO SRI P.CHAK RADARA RAO & P.VIJAYALAXMI, W/O. SRI P.CHAKRADARA RAO AND SHRI K.VENKAT REDDY TO THE TUNE OF RS.10.20 ACRES IN FORMER TWO AND 1.10 ACRE IN THE LAST CASE; INVOLVING THE CORRESPO NDING SALE ITA NOS. 787/HYD/2013, 713, 717, 718, 719 & 720/HYD/2017 :- 3 -: CONSIDERATION(S) OF RS.65 LAKHS EACH AND RS.15 LAKHS ; RESPECTIVELY. THE ASSESSING OFFICER SOUGHT TO TREAT THE SAME AS AN ADVENTURE IN THE NATURE OF REAL ESTATE LIABLE TO BE TA KEN AS BUSINESS. WE NOTICE FROM A PERUSAL OF PARAS 1.2 TO 1.4 OF THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER TOOK NOTE OF THE ASSESSEES REAL ESTATE TRANSACTIONS RIGHT FROM 17-04-2 006 TO 31-01-2008 AND HELD THAT THE IMPUGNED SALE CONSIDERATI ON RESULTED IN BUSINESS INCOME OF RS.1,32,18,225/- ONLY . HE ADOPTED THE VERY COURSE OF ACTION IN AYS.2007-08 AND 2 008-09 AS WELL. 4. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) HAS A FFIRMED THE ASSESSING OFFICERS ACTION AFTER RECEIVING THE ASSE SSING OFFICERS REMAND REPORT (DISCUSSED IN PARA 5 OF THE L OWER APPELLATE ORDER) AS UNDER: 8.5, I HAVE EXAMINED THIS TRANSACTION IN THE CONTE XT OF WRITTEN SUBMISSIONS OF THE APPELLANT. THE SUBMISSIONS OF TH E APPELLANT ARE THAT THE LAND UNDER CONSIDERATION WAS ACQUIRED WITH HIS OWN FUNDS NOT FROM BORROWED FUNDS, HENCE NO ADVENTURE. I AM N OT INCLINED TO AGREE WITH THIS ARGUMENT DUE TO THE FACT THAT THE I NTENTION IS ESTABLISHED TO BE PROFIT. IT IS IMMATERIAL WHETHER OWN FUNDS OR BORROWED FUNDS. ANOTHER ARGUMENT OF THE APPELLANT I S THAT THE PROPERTY WAS ENTANGLED IN LEGAL ISSUES IS ALSO REJE CTED. THE APPELLANT HAD PURCHASED THE PROPERTY KNOWINGLY FOR LESS PRICE WITH SPECULATION AND RISK. IT MEANS THE APPELLANT IS KNOWING THE UNC ERTAINTIES FOR CONVERSION OR SALE DUE TO DEFECTS AND DISPUTE TO TH E TITLE. IN THESE CIRCUMSTANCES, THE CONCLUSION IRRESISTABLE FOR ADVE NTURE. HENCE THIS ARGUMENT CAN'T BE ACCEPTED. THE APPELLANT IS WELL A WARE OF THE MARKET CONDITIONS AND KNOWINGLY TOOK THE RISK OF PU RCHASING SUCH PROPERTY AT LOW PRICE IS VERY WELL AN ADVENTURE IN THE NATURE OF TRADE. SUCH KIND OF RISK WAS NORMALLY AVOIDED BY THE BUYER S. MOREOVER, THE THEORY OF NOT KNOWING THE LEGAL ISSUES IS NOT POSSI BLE ESPECIALLY IN THE LAND DEALINGS, THE 'PAHANAS', LINK DOCUMENTS ARE AL WAYS PERUSED BY THE BUYERS AND THE MARKET INFORMATION ABOUT LITIGAT ION PROPERTIES IS A FIRST ALERT IN THE REAL ESTATE TRANSACTIONS. THEREF ORE THE APPELLANT TOOK THE PLUNGE KNOWINGLY WHILE ENTERING IN TO THE TRANS ACTION. ITA NOS. 787/HYD/2013, 713, 717, 718, 719 & 720/HYD/2017 :- 4 -: 8.6 THE OTHER ARGUMENT OF THE APPELLANT THAT THE PE RIOD OF HOLDING IS LESS HENCE IT SHOULD BE CONSIDERED AS INVESTMENT AN D CAPITAL GAIN SHOULD BE ACCEPTED. LESSER THE PERIOD OF HOLDING MO RE THE RISK AND SPECULATION IN REAL ESTATE HENCE THE PLEA IS REJECT ED. ANOTHER CONTENTION OF THE APPELLANT IS THAT THE LAND IS AGR ICULTURAL LAND AND IT RETAINS THE CHARACTER AS IT APPEARS IN REVENUE RECO RDS. THIS ARGUMENT WILL NOT COME TO THE RESCUE OF THE APPELLANT. THE L AND AT ISSUE IS SITUATED IN MAHESWARAM MANDAL WHICH IS THE HUB FOR PUBLIC ENTERPRISES AND LARGE SIZE PRIVATE ENTREPRENEURS. T HE LANDS IN MAHESWARAM THOUGH REMAIN AGRICULTURAL ON RECORDS, T HERE IS HARDLY ANY AGRICULTURAL ACTIVITY. IN THE INSTANT CASE, THE RE ARE NO FACTS SUPPORTING THE ARGUMENTS OF THE APPELLANT. EITHER THE ORIGINAL OWNER SRI BUGGA RAMREDDY OR THE APPELLANT HAVE CARRIED AN Y AGRICULTURAL ACTIVITY. IT IS SEEN FROM RECORDS THAT THE ORIGINAL VENDERS SRI BUGGA RAMREDDY FAMILY HAS AGREED TO GIVE 30 FEET ROAD TO THE LAND. IT SUGGESTS THE FUTURE PLANS FOR REAL ESTATE AS THE MI NIMUM ROAD REQUIREMENT FOR HOUSE SITES IS TO BE A 30 FEET ROAD . IN THE VICINITY OF HYDERABAD, WHAT IS AVAILABLE IN LARGE TRACKS IS ONL Y DRY LAND WHICH IS TERMED AS NON ARABLE AGRICULTURAL LAND ENCOMPASS ED WITH HEAPS, STONES AND SHRUBS. TO CULTIVATE SUCH LAND IS MORE B URDENSOME AND EXPENSIVE THAN KEEPING IT IN LOCK STOCK AND BARREL. THESE CONDITIONS OF LAND APPEAR TO HAVE WELL KNOWN TO THE APPELLANT SIN CE HE CLAIMED THAT HE HAS BEEN ASSOCIATED WITH VRO AND SURVEYED T HE LANDS EXTENSIVELY. IN THE LIGHT OF THESE FACTS, THE ARGUM ENT OF THE APPELLANT IS VIEWED AS A LAST RESORT OR AIMED AT EVADING TAX ON THE TRANSACTION. THE APPELLANT'S INTENTION OF HOLDING THE LAND DID N OT PERSIST LEAVE ALONE AGRICULTURAL ACTIVITY NOR ANY REGULAR INCOME WAS COMING OUT OF THIS LAND. 8.7 I HAVE PERUSED THE ORIGINAL PURCHASE DEED AND T HE SUBSEQUENT SALE DEEDS CONCERNING THE PROPERTY OF AC 4.10 CENTS . PRIMA-FACE IT APPEARS FROM THE SUBMISSION MADE BY THE APPELLANT T HAT THERE EXISTS AN 'AGREEMENT OF SALE' BETWEEN THE ORIGINAL LAND OW NERS (BUSSU FAMILY) AND THE APPELLANT IN 2000. IT SEEMS THAT TH E AGREEMENT WAS THE PRECEDENT FOR ALL SUBSEQUENT TRANSACTIONS. ACCO RDING TO THIS AGREEMENT, THE APPELLANT HAD PAID RS.1,00,000/-. IT IS ALSO NOT KNOWN HOW THE APPELLANT GOT POSSESSION OF LAND WITH A MINIMUM PAYMENT OF RS.1,00,000/-. FURTHER, IN ALL THE DOCUM ENTS THE APPELLANT IS DESCRIBED AS 'DOING BUSINESS' NO WHERE HE WAS DE SCRIBED AS AGRICULTURIST BUYING THE LAND FOR INVESTMENT OR FOR PRIDE OF POSSESSION. AFTER PURCHASING AC 4.10 CENTS INITIALLY FROM BUSSU FAMILY, THE APPELLANT HAS DISPOSED BYWAY OF EXECUTING 3 SALE DE EDS TO AN EXTENT OF LAND ADMEASURING AC 3.50 CENTS. IT MEANS THAT TH E APPELLANT IS LEFT WITH AC 0.60 GUNTAS OUT OF TOTAL LAND OF AC 4.10 CE NTS ORIGINALLY PURCHASED (4.10 -3.50 = 0.60). THEREFORE, THE THEOR Y OF INVESTMENT CLEARLY GOES AGAINST THE APPELLANT OWING TO THE NAT URE OF TRANSACTION ITA NOS. 787/HYD/2013, 713, 717, 718, 719 & 720/HYD/2017 :- 5 -: BEING TRADE AND COMMERCE. IN THESE CIRCUMSTANCES 0. 60 GUNTAS CAN BE ATTRIBUTABLE TO PROVISION OF ROAD OF 30 FEET TO THE PROPERTY. WHEN THE APPELLANT PAID ADVANCE IN THE YEAR 2000, H E IS WELL WITHIN THE KNOWLEDGE OF ANY RISK AND SPECULATION IN VOLVED IN THE DEAL. THE FREQUENCY OF PURCHASE AND SALES ARE RECOR DED BY THE ASSESSING OFFICER IN EIGHT INSTANCES BESIDES THE ON E AS MENTIONED ABOVE IS A TESTIMONY TO THE FACT THAT THE ACTIVITY OF APPELLANT IS BUSINESS BUT NOT INVESTMENT. NO ONE HATES MONEY, NO ONE ADVANCES MONEY TO ANY PERSON WITHOUT ANY BENEFIT IN COMMERCI AL SENSE. IT IS SEEN FROM THE RECORDS THAT NO AGRICULTURAL ACTIVITY WAS CARRIED OUT BY THE APPELLANT. THE APPELLANT HAILING FROM AGRICULTU RAL FAMILY HAS NO QUALIFICATION FOR MAKING A CLAIM OR CHARACTER OF LA ND TO BE AGRICULTURAL LAND. THE LAND AT RAJENDRANAGAR, A HUB OF RESIDENTI AL CONSTRUCTION AND CORPORATE VENTURES CAN NO LONGER BE CALLED AGRI CULTURAL LAND IRRESPECTIVE OF THE FACT THAT IT IS BEYOND 8 KM FRO M HYDERABAD. IN FACT, THE GRATER, HYDERABAD MUNICIPAL CORPORATION L IMITS ARE EXTENDED UP TO 50KM RADIUS OF GHMC. THE AGRICULTURAL ACTIVIT Y HAS NO PLACE IN THIS RADIUS NOR ANY FARMER CAN BUY AGRICULTURAL LAN D AND CULTIVATE ANY CROPS IS A REALITY. IN VIEW OF THE FACTS AND CI RCUMSTANCES OF THIS CASE, I FIND NO REASON TO INTERFERE IN THE DECISION OF ASSESSING OFFICER. ACCORDINGLY, IT IS HELD THAT THE ACTIVITY OF THE AP PELLANT IN PURCHASE AND SALE OF LAND IS AN ADVENTURE IN THE NATURE OF T RADE AND THE ADDITION MADE BY THE ASSESSING OFFICER TO THE TUNE OF RS.1,32,18,225/- IS HEREBY CONFIRMED. 5. MR. RAMA RAO VEHEMENTLY CONTENDED DURING THE COUR SE OF HEARING THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND FACTS IN TREATING THE ASSESSEES SALE CONSIDERATION( S) ARISING FROM TRANSFER OF AGRICULTURAL LANDS AS BUSINE SS INCOME IN ALL THESE ASSESSMENT YEARS. AND PARTICULARLY IN AY .2006-07 WHEREIN THE ASSESSEE HAS ENTERED INTO A SINGLE TRANSAC TION OF AGRICULTURAL LAND PURCHASED IN NOVEMBER 2005 AND SO LD AFTER ALMOST TWO MONTHS HOLDING PERIOD ONLY. HE THEN INVITED OUR ATTENTION TO THE ASSESSEES PAPER BOOK IN THIS FIRST AY. 2006-07 THAT HE HAD SIMPLY PURCHASED AGRICULTURAL DRY LAND WI THOUT MAKING ANY ADDITION THERETO AND SOLD IT THE VERY FINANCI AL YEAR AFTER DERIVING A HEAVY SUM I.E., ALMOST 12 TIMES THE P URCHASE PRICE (SUPRA). IT IS FURTHER REITERATED THAT THE ASSESSEE HAD IN ITA NOS. 787/HYD/2013, 713, 717, 718, 719 & 720/HYD/2017 :- 6 -: FACT BEEN ENGAGED IN TRANSPORT BUSINESS ONLY. HE HAS A LSO DREW OUR ATTENTION TO THE LIST OF THE CORRESPONDING FIXED ASSETS TO THIS EFFECT. LEARNED COUNSELS CASE ACCORDINGLY IS THAT IMPUGNED ADDITION OF BUSINESS INCOME IN THE ASSESSEE S HANDS IS NOT SUSTAINABLE IN LAW AS WELL AS ON FACTS. 6. MR.MOHARANA, ON THE OTHER HAND HAS STRONGLY SUPPORTE D BOTH THE LOWER AUTHORITIES ACTION TREATING THE ASSESSEES SALE CONSIDERATION DERIVED FROM TRANSFER OF AGRICULTURAL D RY LAND AS BUSINESS INCOME AS ENUMERATED IN THE ASSESSING OFFIC ERS AND CIT(A)S DETAILED DISCUSSION EXTRACTED IN THE PRECEDING PARAGRAPHS. HE SOUGHT TO BUTTRESS THE POINT THAT THIS ASSE SSEE HAD INFACT GOT RECORDED HIS SUB-STATEMENT AS WELL DURIN G SEARCH CLEARLY ADMITTING THEREIN THAT HE KNEW ALL THE NUA NCES OF THE REAL ESTATE BUSINESS. AND THAT HE HAD SHIFTED FRO M TIRUPATI TO HYDERABAD IN PURSUIT OF CARRYING REAL ESTA TE BUSINESS ACTIVITY ONLY. MR.MOHARANA THEREFORE URGED TO UPHELD BOTH THE LOWER AUTHORITIES ACTION TREATING THE ASSESSEES INCOME DERIVED FROM SOLE OF AGRICULTURAL DRY LANDS AS BUSINESS INCOME. 7. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE FOREGOING RIVAL PLEADINGS. THE ISSUE THAT ARISES FOR OUR APT ADJUDICATION IN ALL THESE THREE ASSESSMENT YEARS IS PU RELY A FACTUAL ONE THAT AS TO WHETHER THIS ASSESSEE HAS BEEN RI GHTLY HELD AS ENGAGED IN ADVENTURE IN REAL ESTATE BUSINESS OR NOT. OUR REPLY TO THE SAME COMES IN REVENUES FAVOUR AND A GAINST THE TAXPAYER. WE WISH TO MAKE IT CLEAR THAT NOT ONLY THIS ASSESSEE HAD PURCHASED AND SOLD THE ALLEGED PARCEL O F DRY AGRICULTURAL LAND WITHIN A TIME SPAN OF HARDLY TWO MO NTHS BUT ITA NOS. 787/HYD/2013, 713, 717, 718, 719 & 720/HYD/2017 :- 7 -: ALSO HE HAD ENGAGED HIMSELF IN THE VERY LINE BUSINE SS RIGHT FROM 02-04-2005 ONWARDS I.E., AT LEAST FROM THE RELEV ANT ACCOUNT PERIOD STARTING FROM 01-04-2005 TO 31-03-2006 AND SO ON. APART FROM THE ASSESSING OFFICER HAVING PREPAR ED A DETAILED CHART OF THE ASSESSEES SALE/PURCHASE TRANSAC TIONS IN HIS ASSESSMENT ORDERS; ALTHOUGH NOT IN THE RELEVANT PRE VIOUS YEAR, IT ALSO EMERGES QUA THE ASSESSEES SECOND SUBSTANTIVE GROUND THAT HE HAD SOUGHT TO PURCHASE A PARCEL OF LAND FROM M/S. SHRUTHI ESTATES BY WAY OF AN AGREEMENT DT.02-04-20 05 WHICH IN TURN WAS REVISED TO 13-02-2006 AS PER BOTH TH E LOWER AUTHORITIES ORDERS PERTAINING TO THE SECOND ISSUE OF UNEXPLAINED INVESTMENT. AS WE SEE IN SUCCEEDING PARA GRAPHS, LEARNED COUNSEL HAS HIMSELF CLARIFIED AS PER THE ASS ESSEES STAND THROUGH THAT HE HAD BEEN EXECUTING SIMILAR MOUS I N ALL THESE YEARS. COUPLED WITH THIS, HIS BALANCE SHEET HAS ALSO PREPARED A LIST OF FIXED ASSETS AT SR.NOS.9 TO 15 (AS P OINTED OUT BY THE REVENUE) WHICH SUFFICIENTLY THROWS LIGHT ON THE ASSESSEES BUSINESS ACTIVITY CARRIED OUT IN REAL ESTATE BUSINESS. WE SOUGHT TO KNOW FROM LEARNED COUNSEL AS TO WHEN THE A BOVE STATED ASSETS/PARCELS OF LAND AT SR.NOS.9 TO 15 HAD BEEN ACQUIRED BY THE ASSESSEE, NO CLEAR CUT REPLY HAS COM E FROM THE TAXPAYERS SIDE. IT IS FURTHER NOTED THAT THIS ASSESSEE HAD NOT FILED HIS BOOKS OF ACCOUNT IN ANY OF THE LOWER PROCEE DINGS ON THE PRETEXT THAT THE SAME HAD BEEN LOST WHILE SHIFTING THE O FFICE FROM TIRUPATI TO HYDERABAD. ALL THESE FACTS LEAD US TO TH E IRRESISTIBLE CONCLUSION THAT THERE HAS BEEN SOME MISSTA TEMENT ON ASSESSEES PART IN NOT ONLY PRODUCING THE CORRESPON DING BOOKS OF ACCOUNT BUT ALSO THE RELEVANT SALE/PURCHASE D EEDS, WHICH COULD HAVE BEEN EASILY OBTAINED FROM THE CONCER NED ITA NOS. 787/HYD/2013, 713, 717, 718, 719 & 720/HYD/2017 :- 8 -: OFFICES FOR OUR PERUSAL. WE THUS INVOKE THE PRESUMP TIONS PROVIDED U/S.114(G) OF THE INDIAN EVIDENCE ACT, EVEN IF THE SAID DOCUMENT COULD HAVE BEEN PRODUCED BEFORE THE TRIBUNAL, THE ISSUE COULD HAVE BEEN REASONABLE DECIDED IN FAVOUR OF THE DEPARTMENT AND AGAINST THE ASSESSEE. WE THEREFORE UPHOLD BOTH THE LEARNER LOWER AUTHORITIES ACTION TREATING THE ASSESSEES RECEIPTS FROM SALE OF ALLEGED AGRICULTURAL LAND(S) AS ADVENTURE IN NATURE OF REAL ESTATE BUSINESS INVOLVING VARYING SUMS (SUPRA) IN THE RESPECTIVE ASSESSMENT YEARS. THI S FIRST SUBSTANTIVE GROUND IN ASSESSEES FORMER THREE APPEALS ITA NOS.717/HYD/2017, 718/HYD/2017 & 719/HYD/2017 FOR AYS.2006-07 TO 2008-09 IS DECLINED THEREFORE. 8. WE NOW PROCEED TO DECIDE THE SECOND ISSUE OF UN- EXPLAINED INVESTMENT ADDITION OF RS.1,15,00,000/- IN A Y.2006- 07. IT IS NOT IN DISPUTE THAT THE ASSESSING OFFICER HA D TAKEN NOTE OF AN AGREEMENT DT.13-02-2006 FOUND/SEIZED DURING THE COURSE OF SEARCH ALLEGEDLY INDICATING THE ASSESSEE TO HAVE PAID RS.85 LAKHS AND RS.35 LAKHS VIDE CHEQUE AND DD; RES PECTIVELY. HE THUS TREATED THE SAME AS UN-EXPLAINED AFTER QUOTING THE ASSESSEES FAILURE IN PROVING THE SOURCE THEREOF DUR ING THE COURSE OF SCRUTINY. THE ASSESSEE PREFERRED APPEAL. HE CHOSE TO FILE ADDITIONAL SUBMISSIONS BEFORE THE CIT(A). A RE MAND REPORT WAS CALLED FOR. THE SAME CAME FROM THE ASSESSI NG OFFICERS END REITERATING THE IMPUGNED ADDITION. IT IS IN THIS FACTUAL BACKDROP THAT THE ASSESSEE IS IN APPEAL BEFORE US. 9. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE ASSESSEES AND REVENUES ARGUMENTS AGAINST AND IN SUP PORT OF THE IMPUGNED ADDITION. IT PRIMA-FACIE EMERGES THAT BOTH THE ITA NOS. 787/HYD/2013, 713, 717, 718, 719 & 720/HYD/2017 :- 9 -: LEARNED LOWER AUTHORITIES HAVE IGNORED THE CLINCHING ASPECT THAT THE AGREEMENT DT.13-02-2006 WAS INFACT IN CONTINUATION OF HIS EARLIER SIMILAR DOCUMENT DT.02-04-2005 WHEREI N A SUM OF RS.80 LAKHS HAD BEEN PAID. CASE RECORDS INDICATE THAT M/S. SHRUTHI ESTATES (THE VENDOR HEREIN) HAD ALSO SOUGHT TO A DJUST EARLIER SUM OF RS.80 LAKHS IN THE SECOND AGREEMENT. WE WISH TO OBSERVE HERE THAT THIS SALE DEED FINALLY TOOK PLACE I N THE NEXT AY.2007-08. ALL THESE FACTUAL MATRIX APPEARS TO H AVE ESCAPED LEARNED LOWER AUTHORITIES RESPECTIVE ORDERS AS WELL AS THE ASSESSING OFFICERS REMAND REPORT. WE THEREFORE DE EM IT APPROPRIATE TO RESTORE THIS SECOND ISSUE IN AY.2006-07 BACK TO THE ASSESSING OFFICER FOR HIS AFRESH FACTUAL VERIFICA TION AS PER LAW. THE ASSESSEE OR HIS AUTHORISED REPRESENTATIVE SH ALL APPEAR BEFORE THE ASSESSING OFFICER ON OR BEFORE 31-07-2021 WITH ALL THE RELEVANT EVIDENCE EXPLAINING THE SOURCE OF THE INVE STMENTS MADE RELATING TO THE TWIN AGREEMENTS HEREINABOVE AS WE LL AS THE BANK ACCOUNT STATEMENT SO AS TO PROVE SOURCE OF HIS INVESTMENT TREATED AS UN-EXPLAINED. THE ASSESSING OFF ICER THEREAFTER SHALL VERIFY ALL THE NECESSARY FACTS WITHIN THE THREE EFFECTIVE OPPORTUNITIES OF HEARING. IT IS FURTHER CLARIF IED THAT ALL THE FACTUAL VERIFICATION SHALL BE DONE AT ASSESSEES RI SK AND RESPONSIBILITY ONLY. THE SECOND SUBSTANTIVE GROUND I N AY.2006-07 IS TAKEN AS ACCEPTED FOR STATISTICAL PURPOSES IN FOREGOING TERMS. 9A. NEXT COMES THE THIRD ISSUE DISALLOWANCE OF RS.5,13 ,320/- @6% INVOLVING VARIOUS MISCELLANEOUS EXPENSES IN AY. 2006-07. BOTH THE LEARNED LOWER AUTHORITIES ARE FAIR ENOUGH THAT TH IS IS THE ESTIMATED DISALLOWANCE ONLY WHEREIN ASSESSEE HAD N OT BEEN ABLE TO PROVE EACH AND EVERY HEAD OF EXPENDITUR E. ITA NOS. 787/HYD/2013, 713, 717, 718, 719 & 720/HYD/2017 :- 10 -: NEITHER OF THE LEARNED LOWER AUTHORITY HAS ALSO NOT PIN-POINTED ANY SPECIFIC FAILURE ON THE FORMERS PART. IT IS FURTH ER STATED THAT THE TRIBUNALS ORDER IN AY.2005-06 HAS ALREADY DEC IDED THE ISSUE IN TAXPAYERS FAVOUR KEEPING IN MIND THE FA CT THAT HE WAS ENGAGED IN TRANSPORT BUSINESS ELIGIBLE FOR PRESU MPTIVE TAXATION SCHEME U/S.44AE OF THE ACT. BE THAT AS IT MAY, W E KEEP IN MIND THE FACT THAT IT IS PURELY AN ESTIMATION DISALLOWANCE, CARRYING NO PRECEDENT. WE THEREFORE OF THE OPINION THAT LUMPSUM DISALLOWANCE OF RS.1,50,000/- OU T OF RS. 5,13,320/- IN ISSUE WOULD MEET THE ENDS OF JUSTIC E. NECESSARY COMPUTATION TO FOLLOW AS PER LAW. THE ASSE SSEES APPEAL ITA NO.717/HYD/2017 FOR AY.2006-07 IS PARTLY ALLOWED IN ABOVE TERMS. 10. WE NOW COME TO THE IDENTICAL SECOND COMMON ISSUE OF UNEXPLAINED EXPENDITURE/UNEXPLAINED INVESTMENT ADDITIO N(S) OF RS.1,06,51,340/- IN AY.2007-08 AND RS.1,62,82,99 3/- IN AY.2008-09 RESPECTIVELY. A LOT OF ARGUMENTS HAVE TAKEN PLACE BETWEEN THE AUTHORITIES QUA THE ALLEGED CREDITOR, MR.CHAKRADAR HAVING ADVANCED THE LOAN(S) IN QUESTION TO ASSESSEE IN LIEU OF CHARGING INTEREST; BOTH OUT OF BOOKS. 11. MR.RAO VEHEMENTLY CONTENDED DURING THE COURSE OF HEARING THAT THIS MR.CHAKRADHAR IS A FICTITIOUS PERSON, WHOSE IDENTITY AS NOWHERE BEEN ESTABLISHED KEEPING IN MIND THE FACT THAT THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE G ONE ON ASSUMPTIONS AND PRESUMPTION WHILE MAKING THE IMPUGN ED ADDITION. HE MADE A VERY STRONG ENDEAVOUR TO HIGHLIGHT THAT THE CONCERNED PERSON AS PER THE INCRIMINATING DOCUMEN TS FOUND AND SEIZED WAS CHF ONLY WHICH HAS BEEN WRON GLY ITA NOS. 787/HYD/2013, 713, 717, 718, 719 & 720/HYD/2017 :- 11 -: ADOPTED AS SHRI CHAKRADHAR AS WELL AS VARIOUS OTHER NAMES LIKE OF LPN (REPRESENTING THE ASSESSEE HIMSELF) ETC . WE FIND NO MERIT IN ASSESSEES FOREGOING CONTENTIONS. WE NOTICE T HAT THE ASSESSING OFFICERS ASSESSMENT ORDER DT.31-12-2010 AT PG.14 HAS PREPARED A TABULATION BY EXTRACTING CONTENTS OF THE DOCUMENTS FOUND/SEIZED IN THE COURSE OF SEARCH AT AS SESSEES PREMISES AND ON TOP OF THAT IS A CLEAR CUT PERSON NAME AS CHAKRADAR. THAT BEING THE CASE, IT WAS THE ASSESSEE S BURDEN TO REBUT THE PRESUMPTION OF CORRECTNESS THEREOF AS CONTEMPLATED U/S.292C R.W.S.132 OF THE ACT. WE THUS UPHO LD BOTH THE LOWER AUTHORITIES ACTION IN PRINCIPLE MAKING THE IMPUGNED ADDITION(S) OF UNEXPLAINED INVESTMENT/EXPENDI TURE IN AY.2007-08 AND 2008-09 (SUPRA). 12. NEXT COMES EQUALLY IMPORTANT ASPECT OF QUANTIFICATI ON OF THE IMPUGNED ADDITION. LEARNED CIT-DR FAILS TO DISPUTE THAT EVEN IF WE UPHOLD THE ASSESSING OFFICERS AS WELL A S THE CIT(A)S ACTION, THE FACT REMAINS THAT THEY HAVE THEMSELVES HELD THA T CHAKRADHAR OR CHF; AS THE CASE MAY BE, HAVE ADVANCED LOANS TO THE ASSESSEE OUT OF BOOKS AND INTEREST THEREUPON WAS ALSO REPAID IN CASH. WE FAIL TO UNDERSTAND IN THIS FA CTUAL BACKDROP AS TO HOW THE PRINCIPAL AMOUNT OF THE SAID LOA N(S) COULD BE ADDED AS UN-EXPLAINED SINCE THE IDENTITY OF THE CREDITOR PARTY HAS ITSELF BEEN ESTABLISHED VERY FAIRLY IN BOTH THE LOWER PROCEEDINGS. THE IMPUGNED ADDITION THEREFORE D ESERVES TO BE UPHELD TO THE EXTENT OF THE INTEREST AMOUNT PAID OVER AND ABOVE THE ALLEGED PRINCIPAL SUM IN BOTH THESE ASSESSME NT YEARS. WE THUS DIRECT THE ASSESSING OFFICER TO FINALIS E NECESSARY COMPUTATION ADDING THE INTEREST COMPONENT PERTAINING TO THIS IDENTICAL ISSUE IN AYS.2007-08 AND 2008-09. ITA NOS. 787/HYD/2013, 713, 717, 718, 719 & 720/HYD/2017 :- 12 -: THIS SECOND COMMON ISSUE IN BOTH THESE ASSESSMENT YEA RS IS ALLOWED FOR STATISTICAL PURPOSES IN ABOVE TERMS. THESE APPEALS ITA NOS.718/HYD/2017 AND 719/HYD/2017 ARE PARTLY ALL OWED. 13. WE NOW ADVERT TO ASSESSEES APPEAL ITA NO.720/HYD/2017 FOR AY.2009-10. THERE IS NO DISPUT E THAT THE SECOND ISSUE RAISED HEREIN PERTAINS TO AN ADDITION OF RS.3,93,668/-, REPRESENTING SHRI CHAKRADHAR AS WA S THE CASE IN AY.2007-08 AND 2008-09 (SUPRA) ADJUDICATED IN PR ECEDING PARAGRAPHS. WE THUS RESTORE THIS GROUND BACK TO THE ASSE SSING OFFICER IN VERY TERMS. 14. THIS LEAVES US WITH AN ADDITION OF RS.9 LAKHS TRE ATED AS UN-EXPLAINED CASH CREDITS IN BOTH THE LOWER PROCEED INGS. IT IS AN UNDISPUTED FACT THAT ALTHOUGH THE ASSESSEE HAD CLAIM ED THE SAME TO HAVE COME FROM ONE SMT.SWARNA, HE COULD NEITH ER PRODUCE THE SAID CREDITOR IN ASSESSMENT NOR IN THE CIT (A) PROCEEDINGS. ALL HE HAS DONE IS TO FILE AN AFFIDAVI T BEFORE THE CIT(A). THE SAME SUFFICIENTLY INDICATES THAT THE CLINC HING THREE ASPECTS I.E., IDENTITY, GENUINENESS AND CREDITWORTHIN ESS OF THIS CREDITOR PARTY SMT.SWARNA HAVE GONE UN-DISCHARGED FR OM THE ASSESSEE SIDE. WE THUS FIND NO REASON TO INTERFERE WI TH THE LEARNED LOWER AUTHORITIES ACTION OF MAKING THE IMPUGN ED ADDITION. THE SAME STANDS CONFIRMED. THIS APPEAL ASSE SSEE ITA NO.720/HYD/2017 IS PARTLY ALLOWED IN ABOVE TERMS. 15. WE ARE NOW LEFT WITH ASSESSEES TWIN APPEALS 787/HYD/2013 AND 713/HYD/2017 INVOLVING SECTION 263 AND SECTION 143(3) R.W.S.263 PROCEEDINGS IN AY.2007-08. IT IS NOT IN DISPUTE THAT THE CORRESPONDING SECTION 153A R.W.S.143 (3) ASSESSMENT ON 31-12-2010 (SUPRA) WHICH FORMS SUBJECT MATTER ITA NOS. 787/HYD/2013, 713, 717, 718, 719 & 720/HYD/2017 :- 13 -: OF THE CITS REVISION DIRECTIONS FOR THE SOLE REASON THAT SINCE THE ASSESSING OFFICER HAD NOT EVEN CONDUCTED ANY ENQU IRY REGARDING THE SUM OF RS.60 LAKHS COMING FROM ONE SH RI SUNIL KUMAR AHUJA AND THEREFORE THE SAME DESERVES TO BE TAKEN AS ERRONEOUS ONE CAUSING PREJUDICE TO THE INTEREST OF THE REVENUE. IT TRANSPIRED DURING THE COURSE OF HEARING; AND MORE PARTICULARLY, FROM A PERUSAL OF PG.4 PARA 3 OF THE AS SESSMENT ORDER THAT THE TOTAL AMOUNT IN CASE OF SHRI AHUJA IS RS.18,800,000/- IN THE RELEVANT PREVIOUS YEAR. PAGES 14 AND 15 OF THE PAPER BOOK FURTHER SUGGEST THAT ALL THESE SIX TRANSACTIONS HAVE TAKEN PLACE BETWEEN 26-02-2007 TO 03- 03- 2007. IT IS THEREFORE CLEAR IN OTHER WORDS THAT THE CIT H AS HIMSELF TREATED TRANSACTIONS OF RS.1,28,00,000/- AS HA VING SATISFIED THE REQUIRED PARAMETERS OF AN ENQUIRY CONDUC TED DURING THE COURSE OF SCRUTINY. WE THEREFORE SEE NO RE ASON TO CONFIRM THE CITS ORDER UNDER CHALLENGE. COUPLED WIT H THIS, THE FACT REMAINS THAT THE ASSESSING OFFICER HAD FIRST CONSID ERED ALL THE CREDIT SUMS OF RS.7,73,73,826/-, AND MADE ADDITION OF RS.4,29,25,000/-. WE THUS, CONCLUDE THAT IT HARDLY TURN S OUT TO BE A CASE OF NO ENQUIRY PER SE AS IT HAS BEEN TREATED WHILE EXERCISING THE IMPUGNED SECTION 263 REVISION JURISDIC TION. HIS REVISION DIRECTIONS UNDER CHALLENGE THEREFORE ARE ALS O NOT SUSTAINABLE. WE ORDER ACCORDINGLY. THE ASSESSING OFF ICERS CONSEQUENTIAL ASSESSMENT DT.31-12-2010 STANDS REVIVED. THE ASSESSEE SUCCEEDS IN APPEAL ITA NO.787/HYD/2013. SA ME ORDER TO FOLLOW IN ASSESSEES CONSEQUENTIAL ASSESSME NT APPEAL ITA NO.713/HYD/2017 AS IT HAS NO LEGS TO STAND IN VIEW OF THE FACT THAT THE CITS REVISION DIRECTIONS HAVE BEEN HELD A S NOT SUSTAINABLE. THIS LAST APPEAL ITA NO.713/HYD/2017 IS ALLOWED. ITA NOS. 787/HYD/2013, 713, 717, 718, 719 & 720/HYD/2017 :- 14 -: 16. TO SUM UP, THE ASSESSEES APPEALS ITA NOS.787/HYD/2013 AND 713/HYD/2017 ARE ALLOWED AND I TA NOS.717, 718, 719 & 720/HYD/2017 ARE PARTLY ALLOWED IN ABOVE TERMS. ORDERED ACCORDINGLY. A COPY OF THIS COM MON ORDER BE PLACED IN THE RESPECTIVE CASE FILES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH FEBRUARY, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 24-02-2021 TNMM ITA NOS. 787/HYD/2013, 713, 717, 718, 719 & 720/HYD/2017 :- 15 -: COPY TO : 1.SHRI L.PURUSHOTHAM NAIDU, 3-6/9, NASINGI HEIGHTS, NARSINGI VILLAGE, RAJENDRA NAGAR MANDAL, R.R.DIST., 2.THE COMMISSIONER OF INCOME TAX(CENTRAL), HYDERABA D. 3.THE DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE , TIRUPATI. 4.CIT(APPEALS)-3, VISAKHAPATNAM. 5.PR.CIT(CENTRAL), VISAKHAPATNAM. 6.D.R. ITAT, HYDERABAD. 7.GUARD FILE.