Satchidananda Rao Mechineni, Hyd, Hyderabad V. ACIT, Circle-6(1), Hyd, Hyderabad

ITA 733/HYD/2015

• Counselvise Citation: 73322514 RSA 2015
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 01-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y SESHA SRINIVAS
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Opportunity of being heard; Question of law; Corroborative evidences
• Section: 143(3); 131; 68; 6

Judgement Text

ITA NO 733 OF 2015 SATCHIDANANDA RAO MECHINENI HYDE RABAD PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.733/HYD/2015 (ASSESSMENT YEAR: 2009-10) SATCHIDANANDA RAO MECHINENI HYDERABAD PAN: AECPM 1610 A VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 6(1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P. MURALI MOHAN RAO FOR REVENUE : SHRI Y. SESHA SRINIVAS, DR DATE OF HEARING : 0 3 .09 .2015 DATE OF PRONOUNCE MENT : 18 .09. 2015 O R D E R PER SMT.P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2009-10. THE GRIEVANCE OF THE ASSESSEE IS AGAINST THE ORDER OF T HE CIT (A) IN UPHOLDING THE ADDITION OF RS.1,16,96,000 MADE U/S 6 8 OF THE ACT. THOUGH THE ASSESSEE HAS RAISED AS MANY AS NINE GROUNDS OF APPEAL, WE FIND THAT GROUND NOS. 1 AND 9 ARE GENERA L IN NATURE, WHILE GROUND NOS. 2 TO 6 ARE AGAINST THE ADDITIONS MADE U/S 68 OF THE ACT AND GROUND NOS. 7 AND 8 ARE AGAINST THE DISALLOWANCE OF RS.58,83,712 BEING THE CLAIM OF COST OF IMPROVEM ENT TO THE PROPERTY WHILE COMPUTING THE CAPITAL GAINS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE A.Y 2009-10 ON 2 1.10.2010, ADMITTING A TAXABLE INCOME OF RS.38,12,040. DURING THE ITA NO 733 OF 2015 SATCHIDANANDA RAO MECHINENI HYDE RABAD PAGE 2 OF 9 ASSESSMENT PROCEEDINGS U/S 143(3) OF THE I.T. ACT, AO OBSERVED THAT THE ASSESSEE HAS DEPOSITED CASH INTO HIS BANK ACCOUNTS TO THE TUNE OF RS.1,91,15,000. ASSESSEE WAS THEREFORE, ASKED TO FURNISH COPIES OF THE BANK ACCOUNT STATEMENTS ALONG WITH THE SOURCES FOR THE CASH DEPOSITS. ASSESSEE SUBMITED CO PIES OF THE BANK STATEMENTS OF THE ACCOUNTS HELD BY THE ASSESSE E IN ANDHRA BANK, BUT DID NOT SUBMIT STATEMENT OF ACCOUNT HELD WITH HDFC BANK. AO OBSERVED THAT THE ASSESSEE COULD NOT EXPLA IN THE DEPOSITS MADE IN THE ANDHRA BANK A/C WHICH WERE TO THE TUNE OF RS.1,70,75,000. IN THE ABSENCE OF THE EXPLANATION O F THE ASSESSEE AS REGARDS THE SOURCES OF CASH CREDITS, THE PEAK BA LANCE STATEMENT WAS PREPARED AND A NEGATIVE PEAK OF RS.96 ,56,000 WAS ARRIVED AT AND TREATED AS INCOME OF THE ASSESSE E U/S 68 OF THE I.T. ACT. SIMILARLY, A CASH DEPOSIT APPEARING I N THE BANK ACCOUNT HELD BY THE ASSESSEE AT HDFC BANK TO THE TU NE OF RS.20,40,000 WAS ALSO TREATED AS UNEXPLAINED CASH C REDIT AND BROUGHT TO TAX U/S 68 OF THE I.T. ACT. AGGRIEVED, A SSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) STATING THAT THE ASSESSEE WAS CARRYING ON ACTIVITY OF CIVIL CONSTRUCTION AND HAD RECEIVED MONEY FROM INDIVIDUAL PARTIES FOR CONSTRUCTION OF RESIDENTIAL/COMMERCIAL UNITS AND THAT THE DEPOSITS IN THE BANK ACCOUNTS REPRESENTS THESE CONTRACT RECEIPTS. IT WAS FURTHER SUBMITTED THAT THE INCOME FROM SUCH CONTRACT RECEIP TS SHOULD BE ASSESSED ON ESTIMATE BASIS AT 8% OF THE GROSS RECEI PTS, AS HELD BY THE ITAT IN THE CASE OF MADHUCON PROJECTS LTD (ITA NO.668/HYD/2010) AND ARIHANT BUILDERS PVT. LTD VS. ACIT (291 ITR 41)(AT)(SB) (AHD.). THE CIT (A) CALLED FOR A RE MAND REPORT FROM THE AO. AO SUBMITTED HIS REPORT VIDE LETTERS D ATED 29.10.2014, 10.11.2014, 05.12.2014 AND 09.02.2015. IN THE REMAND REPORT, AO SUBMITTED THAT THE ASSESSEE HAD C LAIMED TO ITA NO 733 OF 2015 SATCHIDANANDA RAO MECHINENI HYDE RABAD PAGE 3 OF 9 HAVE ENTERED INTO CONSTRUCTION AGREEMENT WITH 17 PE RSONS AND THAT SUMMONS WERE ISSUED TO THOSE 17 PERSONS OF WHI CH SUMMONS TO 9 PERSONS WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES WITH THE COMMENTS ADDRESSEE LEFT OR NO SUCH ADDRESSEE OR THE ADDRESS IS INSUFFICIENT. IT WAS FURTHER SUBMITTED THAT THE SUMMONS WERE SERVED ONLY ON TWO PERSONS WHO FAILED TO APPEAR. IN THE REMAND REPORT, AO ALSO SUBMITTED THAT SIX PERSONS APPEARED AND THEIR STATEMENTS WERE RECORDED WHEREIN THEY DENIED HAVING ENTERED INTO THE ALLEGED AGREEMENTS WITH THE ASSESSEE. IT WAS FURTHER STATED THAT THOU GH SUMMONS WERE ISSUED TO THE ASSESSEE BEFORE 14.01.2015 IN OR DER TO PROVIDE THE ASSESSEE AN OPPORTUNITY TO CROSS EXAMINE THESE SIX PERSONS WHOSE STATEMENTS WERE RECORDED, ASSESSEE DID NOT AP PEAR BEFORE THE AO AND THEREFORE, THE DISALLOWANCES WERE CALLED FOR. IN RESPONSE TO THE REMAND REPORT, ASSESSEE SUBMITTED B EFORE THE CIT (A) THAT THE AO HAD NOT GIVEN ADEQUATE OPPORTUN ITY TO PRODUCE THE PARTIES CONCERNED BEFORE HIM AND HENCE HAD NOT GIVEN ADEQUATE OPPORTUNITY FOR CROSS EXAMINATION. T HE CIT (A) HOWEVER, BRUSHED ASIDE THE ASSESSEES CONTENTIONS A ND HELD THAT THE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITY DURIN G THE REMAND PROCEEDINGS AS WELL AS THE APPELLATE PROCEEDING. S HE FURTHER HELD THAT THE STATEMENTS OF THE SIX PARTIES PROVE T HAT THE ASSESSEES CLAIM OF CONTRACT RECEIPTS FROM THESE PE RSONS IS NOT PROVED. AS REGARDS THE REST OF THE PARTIES, THE CIT (A) HELD THAT THE INITIAL ONUS WAS ON THE ASSESSEE TO ESTABLISH E NTERING INTO AGREEMENT WITH THESE PARTIES AND OF GETTING CONTRAC T RECEIPT FROM THEM AND SINCE THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS, THE DISALLOWANCE MADE BY THE AO IS JUSTIFIED. AGAINST T HIS FINDINGS OF THE CIT (A), ASSESSEE IS IN APPEAL BEFORE US. ITA NO 733 OF 2015 SATCHIDANANDA RAO MECHINENI HYDE RABAD PAGE 4 OF 9 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAD FILED ALL THE DETAILS BEFORE THE CIT ( A) WHO DIRECTED THE AO TO FURNISH THE REMAND REPORT ON THESE DETAIL S. HE SUBMITTED THAT DURING THE REMAND PROCEEDINGS, THE A SSESSEE WAS NOT GIVEN ANOTHER OPPORTUNITY OF REPRESENTING ITS C ASE OR TO PRODUCE THE PARTIES OR CROSS EXAMINE THE PARTIES WH O HAVE GIVEN THEIR STATEMENTS. HE SUBMITTED THAT WHEN THE AO SUB MITTED THE REMAND REPORT TO THE CIT (A), CIT (A) DIRECTED THE AO TO GIVE A FRESH OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE PARTIES AND THEREAFTER FILE A PROPER REMAND REPORT. HE SUBM ITTED THAT THE AO AGAIN DID NOT GIVE OPPORTUNITY OF CROSS EXAMINAT ION AND HAS FILED THE REMAND REPORT AND THEREFORE, THE REMAND R EPORT CANNOT BE RELIED UPON. HE SUBMITTED THAT THE CIT (A) HAS E RRONEOUSLY UPHELD THE FINDINGS OF THE AO WITHOUT OBSERVING THA T THE ASSESSEE HAS NOT BEEN GIVEN A FAIR OPPORTUNITY OF H EARING. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. ON GOING THROUGH THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS FURNISHED THE DETAILS OF THE PERSONS W HO HE CLAIMS TO HAVE MADE PAYMENTS TO THE ASSESSEE BEFORE THE CI T (A) AND THE CIT (A) HAD CALLED FOR A REMAND REPORT. AO HAS ISSUED SUMMONS TO ALL THE PARTIES AND THE SUMMONS TO SEVEN TEEN PARTIES HAVE NOT BEEN SERVED, WHILE SUMMONS WERE SE RVED ON TWO PARTIES WHO FAILED TO APPEAR AND IT WAS ONLY SIX PE RSONS WHO APPEARED AND GAVE STATEMENTS. AS HELD BY THE HON'BL E SUPREME COURT IN THE CASE OF ORISSA CORPORATION PVT. LTD RE PORTED IN 1986 AIR (1849)/1986 (SCR) PART-I, THE ASSESSEE HAS DIS CHARGED ITS BURDEN BY FURNISHING OF THE REQUIRED DETAILS AND IF THE PARTIES ON WHOM THE SUMMONS HAVE BEEN SERVED, DID NOT APPEAR, ASSESSEE ITA NO 733 OF 2015 SATCHIDANANDA RAO MECHINENI HYDE RABAD PAGE 5 OF 9 CANNOT BE FOUND FAULT WITH. THE OBSERVATIONS OF THE HON'BLE SUPREME COURT ARE AS UNDER: TO WHAT EXTENT THE ASSESSEE HAS OBLIGATION TO DISCH ARGE THE BURDEN OF PROVING THAT THESE WERE GENUINE INCOMES H AS BEEN CONSIDERED BY THIS COURT IN LALCHAND BHAGAT AM BICA RAM V. COMMISSIONER OF INCOME-TAX, BIHAR AND ORISSA , 37 ITR 288. THIS COURT WAS CONCERNED THERE WITH THE ENCASHMENT OF HIGH DENOMINATION NOTES. IN THAT CASE SOME UNEXPLAINED HIGH DENOMINATION NOTES WERE TREATED AS THE UNDISCLOSED INCOME OF THE ASSESSEE. THIS COURT HELD THAT WHEN A COURT OF FACT ARRIVES AT ITS DECISION BY CON SIDERING MATERIAL WHICH IS IRRELEVANT TO THE ENQUIRY, OR ACT ON MATERIAL, PARTLY RELEVANT AND PARTLY IRRELEVANT, AN D IT IS IMPOSSIBLE TO SAY TO WHAT EXTENT THE MIND OF THE CO URT WAS AFFECTED BY THE IRRELEVANT MATERIAL USED BY IT IN A RRIVING AT ITS DECISION, A QUESTION OF LAW ARISES, WHETHER THE FINDING OF THE COURT IS NOT VITIATED BY REASON OF ITS HAVING R ELIED UPON CONJECTURES, SURMISES AND SUSPICIONS NOT SUPPORTED BY ANY EVIDENCE ON RECORD OR PARTLY UPON EVIDENCE AND PART LY UPON INADMISSIBLE MATERIAL. ON NO ACCOUNT WHATEVER SHOUL D THE TRIBUNAL BASE ITS FINDINGS ON H SUSPICIONS, CONJECT URES OR SURMISES, NOR SHOULD IT ACT ON NO EVIDENCE AT ALL O R ON IMPROPER REJECTION OF MATERIAL AND RELEVANT EVIDENC E OR PARTLY ON EVIDENCE AND PARTLY ON SUSPICIONS, CONJEC TURES AND SURMISES. IN THAT CASE THE SO- CALLED HUNDI RAC KET IN WHICH THE ASSESSEE WAS ALLEGED TO HAVE BEEN INVOLVE D WAS NOT PROVED. THAT WAS ONLY A SUSPICION OF THE REVENU E. THE QUESTION WAS AGAIN CONSIDERED BY THIS COURT IN HOMI JEHANGIR GHEESTA V. COMMISSIONER INCOME-TAX, BOMBAY CITY , 41 ITR 135, WHEN THIS COURT REITERATED THAT IT WAS NOT IN ALL CASES THAT BY MERE REJECTION OF THE EXPLANAT ION OF THE ASSESSEE, THE CHARACTER OF A PARTICULAR RECEIPT AS INCOME COULD BE SAID TO HAVE BEEN ESTABLISHED; BUT WHERE T HE CIRCUMSTANCES OF THE REJECTION WERE SUCH THAT THE O NLY PROPER INFERENCE WAS THAT THE RECEIPT MUST BE TREAT ED AS INCOME IN THE HANDS OF THE ASSESSEE, THERE WAS NO R EASON WHY THE ASSESSING AUTHORITY SHOULD NOT DRAW SUCH AN INFERENCE. SUCH AN INFERENCE WAS AN INFERENCE OF FA CT AND NOT OF LAW. IT WAS FURTHER OBSERVED THAT IN DETERMI NING WHETHER AN ORDER OF THE APPELLATE TRIBUNAL WOULD GI VE RISE TO A QUESTION OF LAW THE COURT MUST READ THE ORDER OF THE TRIBUNAL AS A WHOLE TO DETERMINE WHETHER EVERY MATE RIAL FACT, FOR AND AGAINST THE ASSESSEE, HAD BEEN CONSID ERED FAIRLY AND WITH DUE CARE; ; WHETHER THE EVIDENCE PR O AND CON HAD BEEN CONSIDERED IN REACHING THE FINAL CONCL USION; AND WHETHER THE CONCLUSION REACHED BY THE TRIBUNAL HAD BEEN COLOURED BY IRRELEVANT CONSIDERATIONS OR MATTE RS OF ITA NO 733 OF 2015 SATCHIDANANDA RAO MECHINENI HYDE RABAD PAGE 6 OF 9 PREJUDICE. IT WAS FURTHER REITERATED THAT THE PREVI OUS DECISIONS OF THIS COURT DID NOT REQUIRE THAT THE OR DER OF THE TRIBUNAL MUST BE EXAMINED SENTENCE BY SENTENCE THRO UGH A MICROSCOPE AS IT WERE, SO AS TO DISCOVER A MINOR LA PSE HERE OR AN INCAUTIOUS OPINION THERE TO BE USED AS A PEG ON WHICH TO HANG AN ISSUE OF LAW. IN CONSIDERING PROBABILITI ES PROPERLY ARISING FROM THE FACTS ALLEGED OR PROVED, THE TRIBUNAL DID NOT INDULGE IN CONJECTURES, SURMISES O R SUSPICIONS. IN SREELEKHA BANERJEE AND OTHERS V. COMMISSIONER OF INCOME-TAX, BIHAR AND ORISSA , 49 ITR 112, THIS COURT HELD THAT IF THERE WAS AN ENTRY IN THE ACCOUNT BOOKS OF THE ASSESSEE WHICH SHOWED THE RECEIPT OF A SUM ON CONVE RSION OF HIGH DENOMINATION NOTES TENDERED FOR CONVERSION BY THE ASSESSEE HIMSELF. IT IS NECESSARY FOR THE ASSESSEE TO ESTABLISH, IF ASKED, WHAT THE SOURCE OF THAT MONEY WAS AND TO PROVE THAT IT WAS NOT INCOME. THE DEPARTMENT WAS NOT AT T HAT STAGE REQUIRED TO PROVE ANYTHING. IT COULD ASK THE ASSESSEE TO PRODUCE ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR EVIDENCE PERTINENT TO THE EXPLANATION IF ONE WAS FU RNISHED, AND EXAMINE THE EVIDENCE AND THE EXPLANATION. IF TH E EXPLANATION SHOWED THAT THE RECEIPT WAS NOT OF AN I NCOME NATURE, THE DEPARTMENT COULD NOT ACT UNREASONABLY A ND REJECT THAT EXPLANATION TO HOLD THAT IT WAS INCOME. IF, HOWEVER, THE EVIDENCE WAS UNCONVINCING THEN SUCH RE JECTION COULD BE MADE. THE DEPARTMENT CANNOT BY MERELY REJE CTING UNREASONABLY A GOOD EXPLANATION, CONVERT GOOD PROOF INTO NO PROOF. IN COMMISSIONER OF INCOME-TAX (CENTRAL), CALCUTTA V . DAULATRAM RAWATMULL , 53 ITR 574, THE PRINCIPLES GOVERNING REFERENCE UNDER SECTION 66 OF 1922 ACT SIMILAR TO SECTION 256 OF 1961 ACT WERE DISCUSSED AND IT WAS HELD THAT THE HIGH COURT HAS NO POWER UNDER SECTION 66(2) OF THE INDIAN INCOME- TAX ACT, 1922 WHICH IS IN PARI-MATER IA WITH SECTION 256(2) OF THE ACT, TO CALL UPON THE APPELLATE TRIBUNAL TO STATE A CASE IF THERE WAS SOME EVIDENCE TO SUPPORT THE FINDING RECORDED BY THE TRIBUNAL, EVEN IF IT APPEARS TO THE HIGH COURT THAT ON A RE-APPRECIATION OF THE EVIDENCE, IT MIGHT ARRIVE AT A CONCLUSION DIFFERENT FROM THAT OF THE TRIBUNAL. IN THIS CASE THE ASSESSEE HAD GIVEN THE NAMES AND A DDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE O F THE REVENUE THAT THE SAID CREDITORS WERE INCOME-TAX ASS ESSEES. THEIR INDEX NUMBER WAS IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUING NOTICES UNDER SECTION 1 31 AT THE INSTANCE OF THE ASSESSEE, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE ITA NO 733 OF 2015 SATCHIDANANDA RAO MECHINENI HYDE RABAD PAGE 7 OF 9 SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WER E CREDIT- WORTHY OR WERE SUCH WHO COULD ADVANCE THE ALLEGED L OANS. THERE WAS NO EFFORT MADE TO PURSUE THE SO CALLED AL LEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE ASSESSEE COU LD NOT DO ANY FURTHER. IN THE PREMISES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAD DISCHARGED THE BUR DEN THAT LAY ON HIM THEN IT COULD NOT BE SAID THAT SUCH A CO NCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENC E. IF THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH ARISES. 5. AS REGARDS THE PARTIES WHO HAVE APPEARED AND GIV EN STATEMENT, THE RELIANCE OF THE AO AND THE CIT (A) O N SUCH STATEMENT TO MAKE THE DISALLOWANCES OR CONFIRMATION OF DISALLOWANCES, WE FIND THAT THESE STATEMENTS CANNOT BE RELIED UPON UNLESS AN ASSESSEE HAS BEEN GIVEN A FAIR OPPOR TUNITY OF CROSS EXAMINATION OF THE PARTIES. IT IS SEEN THAT T HE AO HAS FIXED THE DATE OF HEARING FOR CROSS EXAMINATION OF THE PA RTIES BY THE ASSESSEE ON 14.01.2015, WHICH IS THE DATE OF SANKRA NTI FESTIVAL DUE TO WHICH THE ASSESSEE MAY NOT HAVE BEEN ABLE TO APPEAR AS CONTENTED BY THE LEARNED COUNSEL FOR THE ASSESSEE. THEREFORE, WE ARE OF THE OPINION THAT INSPITE OF A DIRECTION BY T HE CIT (A), AO HAS NOT GIVEN FAIR OPPORTUNITY OF HEARING TO THE AS SESSEE. THE FACT THAT THE AO HAS SUBMITTED 4 REMAND REPORTS ON 29.10 .2014, 10.11.2014, 5.12.2014 AND 9.2.2015 ALSO PROVES THAT HE HAD TO BE DIRECTED BY THE CIT (A) FOR AFFORDING THE ASSESS EE A FAIR OPPORTUNITY OF HEARING. THUS, WE ARE OF THE OPINION THAT THE ASSESSEE SHOULD BE GIVEN ANOTHER OPPORTUNITY OF HEA RING AND OPPORTUNITY TO CROSS EXCAMINE THE SIX PARTIES. IN V IEW OF THE SAME, WE REMAND THE ISSUE BACK TO THE FILE OF THE A O FOR GIVING THE ASSESSEE AN OPPORTUNITY TO CROSS EXAMINE THE PA RTIES WHO HAVE DENIED THE PAYMENTS MADE TO THE ASSESSEE TOWAR DS ITA NO 733 OF 2015 SATCHIDANANDA RAO MECHINENI HYDE RABAD PAGE 8 OF 9 CONSTRUCTION OF THE BUILDING. AO SHALL, THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW. IN THE RESULT, GROUNDS OF A PPEAL NOS. 2 TO 6 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES., 6. AS REGARDS THE 2 ND ISSUE OF DISALLOWANCE OF RS.58,83,712, BRIEF FACTS ARE THAT IN THE COMPUTATION OF INCOME, ASSESSEE HAD ADMITTED SHORT TERM CAPITAL GAIN OF RS.5,16,288 IN RESPECT OF SALE OF PROPERTY. ASSESSEE HAD CLAIMED A SUM OF RS.58,83 ,712 AS IMPROVEMENT COST OF THE PROPERTY. DURING THE ASSESS MENT PROCEEDINGS, ASSESSEE WAS ASKED TO FURNISH REGISTER ED SALE DEED FOR PURCHASE AND SALE OF PROPERTY ALONG WITH THE DE TAILS OF IMPROVEMENT CLAIMED AT RS.58,83,712 WITH SUPPORTING EVIDENCE. IN RESPONSE TO THE SAME, ASSESSEE FILED COPIES OF T HE SALE DEED, BUT DID NOT FURNISH ANY INFORMATION OR SUPPORTING E VIDENCE FOR THE COST OF IMPROVEMENT CLAIMED AT RS.58,83,712. IN VIEW OF THE SAME, THE AO DISALLOWED THE COST OF IMPROVEMENT AND BROUGHT IT TO TAX. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT (A) GIVING DETAILS OF THE EXPENDITURE AS FOLLOWS: 5.3 IN THE COURSE OF THE APPELLATE PROCEEDINGS, THE AR SUBMITTED THAT THE SUM OF RS.58,83,712 CONSISTED OF THE FOLLOWING EXPENDITURE: I) COST OF INTERIORS PAID TO RK INTERIORS RS.55,01,900 II) PINNACLE GENERATOR - RS. 2,50,000 III) PINNACLE GENERATOR - RS. 60,000 (INSTALLATION CHARGES) IV) RAGHURAM CONSTRUCTION - RS. 71,812 THE AR SUBMITTED THAT THE AO HAD NOT GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD BEFORE DISALLOWING THE C LAIM. 7. AO WAS DIRECTRED BY THE CIT (A) TO EXAMINE THE A SSESSEES CLAIM. IN THE REMAND REPORT, AO REPORTED THAT THOUG H SUMMONS HAVE BEEN ISSUED TO THE PARTIES TO WHOM THE ASSESSE E HAS ITA NO 733 OF 2015 SATCHIDANANDA RAO MECHINENI HYDE RABAD PAGE 9 OF 9 CLAIMED TO HAVE MADE THE PAYMENT, THERE WAS NO RESP ONSE FROM THE SAID PARTY I.E. PINNACLE GENERATOR AND THAT SUM MONS COULD NOT BE ISSUED TO THE PRINCIPAL OFFICER OF R.K. INTE RIORS DUE TO NON FURNISHING OF THE POSTAL ADDRESS OF THE PARTY. HE H AS FURTHER SUBMITTED THAT INSPITE OF DIRECTIONS TO PRODUCE THE PARTIES, ASSESSEE HAS FAILED TO DO SO AND THEREFORE, THE DIS ALLOWANCE IS JUSTIFIED. THE CIT (A), HOLDING THAT THE ONUS IS ON THE ASSESSEE TO ESTABLISH THAT THE CLAIM OF RS.58,83,712 FOR IMPROV EMENT COST, CONFIRMED THE DISALLOWANCE MADE BY THE AO. AGGRIEVE D, ASSESSEE IS IN 2 ND APPEAL BEFORE US. ON THIS ISSUE ALSO WE ARE SATISF IED THAT THE ASSESSEE HAS NOT BEEN GIVEN ADEQUATE OPPORTUNIT Y OF HEARING FOR PRODUCING THE RELEVANT PARTIES. IN VIEW OF THE SAME, WE REMAND THIS ISSUE ALSO TO THE FILE OF THE AO FOR RE CONSIDERATION IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE, A FA IR OPPORTUNITY OF HEARING. 8. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH SEPTEMBER, 2015. S D/ - S D/ - (B. RAMAKOTAIAH) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED SEPTEMBER, 2015. VNODAN/SPS COPY TO: 1. P. MURALI & CO. CAS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500082 2. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 6(1),HYDE RABAD 3. CIT(A)-3 HYDERABAD 4. CIT-3 HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER