A. Suvarna, Kadapa, Hyderabad V. ITO, Ward-1, Kadapa, Kadapa

ITA 762/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2498 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 27-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2016
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources; Tangible material
• Section: 143(3); 147; 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. ASST. YEAR APPELLANT RESPONDENT 761/HYD/16 2009-10 SRI A. MALLIKARJUNA REDDY, KADAPA [PAN: ACBPA3505B] THE INCOME TAX OFFICER, WARD-1, KADAPA 762/HYD/16 SMT. A. SUVARNA, KADAPA [PAN: AHVPA2272N] FOR ASSESSEE : SHRI K.A. SAI PRASAD, AR FOR REVENUE : SHRI A. SITARAMA RAO, DR DATE OF HEARING : 12-04-2017 DATE OF PRONOUNCEMENT : 23-05-2017 O R D E R PER B. RAMAKOTAIAH, A.M. : THESE APPEALS ARE BY TWO ASSESSEES AGAINST THE ORDER( S) OF THE COMMISSIONER OF INCOME TAX (APPEALS)-KURNOOL, BOTH DATED 24-03-2016. SINCE THE FACTS ARE SIMILAR IN BOTH THE CA SES, WE DECIDE THESE TWO APPEALS IN THIS ORDER ITSELF. ASSESSEES ARE AGGRIEVED ON THE RE-ASSESSMENT PROCEEDI NGS AS WELL AS THE ADDITION MADE OF RS. 33,33,088/- AND RS. 27,81,761/- RESPECTIVELY. THE APPEAL IN THE CASE OF SRI A MALLIK ARJUNA REDDY IS DISCUSSED IN DETAIL. I.T.A. NOS. 761 & 762/HYD/2016 :- 2 - : ITA NO. 761/HYD/2016: 2. THE FACTS LEADING TO THE PRESENT APPEAL ARE THAT ASSE SSEE IS AN INDIVIDUAL DERIVING INCOME FROM CAR HIRES, COMMI SSION AND BROKERAGE ETC. HE FILED RETURN OF INCOME FOR AY. 200 9-10 ON 05-03- 2010 ADMITTING TOTAL INCOME OF RS. 1,72,130/- AND AGR ICULTURAL INCOME OF RS. 2,19,130/-. THERE WAS AN ASSESSMENT CO MPLETED U/S. 143(3) OF THE INCOME TAX ACT [ACT] ORIGINALLY. A S THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS IN CYCLE NO. 1 OF A ST PACKAGE FOR THE AY. 2010-11 TO VERIFY THE TAXABILITY OF SALE OF PRO PERTY FOR THE TRANSACTION AMOUNT OF RS. 63,89,000/- ON 05-06-2008, W HICH WAS REGISTERED AT SRO, GANGAMMA GUDI ROAD, TATA NAGAR, TIR UPATI. DURING THE COURSE OF SCRUTINY PROCEEDINGS, ASSESSING OFFICER (AO) NOTICED THAT ASSESSEE ALONG WITH HIS WIFE SMT. S. SUVAR NA, JOINTLY PURCHASED AN IMMOVABLE PROPERTY FOR A CONSIDERATION OF RS. 63,89,000/- ON THE SAID DATE. HENCE, THE TRANSACTION R ELATES TO PURCHASE OF PROPERTY AND NOT SALE OF PROPERTY. SINCE THE ISSUE WAS OF LIMITED SCRUTINY UNDER CASS, THE AO ACCEPTED ASSESSEES CONTENTIONS AND COMPLETED THE ASSESSMENT, ACCEPTING THE INCOME RETURNED VIDE ORDER DT. 12-10-2011. IT WAS STATED IN THE BODY OF THE ORDER THAT IN RESPONSE TO THE NOTICES ISSUED, ASSESSEE S AR SHRI B. MOHAN, CA APPEARED FROM TIME TO TIME AND FURNISHED THE INFORMATION CALLED FOR. AFTER EXAMINING THE DETAILS A ND FACTS OF THE CASE, THE INCOME RETURNED IS ACCEPTED AND ASSESSMENT I S COMPLETED ACCORDINGLY. 3. LATER IT HAS COME TO THE NOTICE, DUE TO AN AUDIT OBJEC TION AS ADMITTED IN THE COURSE OF PRESENT PROCEEDINGS, THAT ASSES SEE HAD INCREASED THE CAPITAL AMOUNT BY AN AMOUNT OF RS. 33,33, 088/- AS ON 01-04-2008. IN THE SATISFACTION RECORDED AS COMMUN ICATED BY I.T.A. NOS. 761 & 762/HYD/2016 :- 3 - : ASSESSEE, AO RECORDED THAT AS SEEN FROM THE CAPITAL ACC OUNT FOR THE PERIOD ENDED 31-03-2008 (AY. 2008-09), THE CLOSING C APITAL STOOD AT RS. 8,49,427/-, WHEREAS AS SEEN IN THE CAPITAL ACCO UNT COPY FURNISHED FOR AY. 2009-10, THE OPENING CAPITAL BALAN CE IS SHOWN AT RS. 41,82,515/-. THUS, THERE WAS A SUDDEN HUGE INCRE ASE IN CAPITAL BALANCE OF RS. 33,33,088/- WHICH IS NOT PROPE RLY SUPPORTED WITH NECESSARY EVIDENCES NOR SAID TO HAVE BEEN EXAMI NED BY AO DURING SCRUTINY. THE AO RECORDED THAT THE UNEXPLAINED INTRODUCTION OF CAPITAL OF RS. 33,33,088/- SHOULD BE B ROUGHT TO TAX U/S. 68 OF THE ACT. ACCORDINGLY, AO HAS INITIATED PR OCEEDINGS U/S. 147 AND ISSUED NOTICE U/S. 148. IN THE RE-ASSESSMEN T PROCEEDINGS, THE AO RECORDS THAT THE AR HAS APPEARED INITIALLY ON 30- 12-2013, WHEREAS HE HAS ISSUED VARIOUS OTHER NOTICES AND THERE WAS NO RESPONSE TO SUBSEQUENT NOTICES ISSUED BY THE OFFICE. A SHOW CAUSE LETTER WAS ISSUED ON 07-02-2014 AND SAME WAS SERVED ON ASSESSEE BY SPEED POST. A SCANNED COPY OF THE SHOW CAUSE NOT ICE WAS MADE PART OF ASSESSMENT ORDER AND AS ASSESSEE HAS NOT RESP ONDED TO THE SAID NOTICE, THE AO COMPLETED THE ASSESSMENT U/S. 144 BY BRINGING TO TAX THE DIFFERENCE OF RS. 33,33,088/-. 4. BEFORE THE LD.CIT(A), ASSESSEE CONTENDED THAT THE SAI D NOTICES REFERRED TO BY THE AO WERE NOT RECEIVED AND TH E SAID SPEED POST WAS RECEIVED BY HIM ON 22-02-2014 AFTER THE DUE D ATE. ASSESSEE SUBMITTED HIS REPLY ON 24-02-2014 THROUGH IN WARD SECTION, EXPLAINING THE REASONS FOR THE DIFFERENCE WHI CH WAS NOT CONSIDERED BY THE AO, THOUGH THE ORDER WAS PASSED LA TER ON 21-03- 2014. ASSESSEE EXPLAINED THAT ASSESSEE HAS ADVANCED AN AMOUNT OF RS. 36 LAKHS FOR LAND PURCHASES BEFORE 31-03-200 7 WHICH WAS DEBITED TO THE CAPITAL ACCOUNT IN THOSE YEARS AND A SU M OF RS. I.T.A. NOS. 761 & 762/HYD/2016 :- 4 - : 35,07,400/- WAS RECEIVED BACK AND CREDITED TO THE CAP ITAL ACCOUNT ON 01-04-2008. INSTEAD OF REFLECTING THE OPENING BAL ANCE AND FRESH ADDITION ON 01-04-2008, THE AMOUNT WAS WRONGLY UPLOAD ED IN THE ELECTRONIC FILING OF THE RETURN AT THE GROSS AMOUNT. TH US, THE SO CALLED DISCREPANCY WAS NOTHING BUT RECEIPT OF RETURN O F ADVANCES GIVEN IN EARLIER YEAR. ASSESSEE HAS FILED THE CAPITA L ACCOUNT AND BALANCE SHEETS IN SUPPORT OF THE ABOVE CONTENTIONS. A DDITIONAL EVIDENCE WAS ALSO FURNISHED IN THE FORM OF STATEMENT OF EARLIER YEARS WHICH IN FACT WERE ON THE RECORD OF THE AO AS AS SESSEE WAS ON RECORD IN EARLIER YEARS. LD.CIT(A), GUNTUR SENT TH E ADDITIONAL INFORMATION ON REMAND TO THE AO, WHO VIDE LETTER DT. 0 9-10-2014, DID NOT AGREE ON VERIFICATION OF THE CAPITAL ACCOUNT FOR THE AY. 2008-09, WHEREAS ASSESSEE STATED THAT HE HAS ADVANCED THE AMOUNTS IN THE EARLIER YEAR RELEVANT FOR AY. 2007-08. HOWEVER, AT THE END, AO ALSO REPORTS THAT EXTRACTS OF COPIES OF ALL R ETURNS FILED BY ASSESSEE WERE FORWARDED TO CBI IN CONNECTION WITH ANOTHER CASE AND DUE TO MISPLACEMENT OF FILES AT THAT TIME, RETURNS OF INCOME FOR AY. 2006-07 AND 2007-08 WERE NOT READILY TRACEABLE. WHILE SENDING THE REPORT, THERE ARE CERTAIN WILD ALLEGATIONS MADE BY THE AO THAT ASSESSEE SEEMS TO HAVE PRODUCED FALSE/FABRICA TED EVIDENCE BEFORE THE HON'BLE CIT(A). ASSESSEE, HOWEVER, GAVE A REJOINDER MAKING DETAILED SUBMISSIONS AND AS THE FILE GOT TRANSFE RRED FROM GUNTUR TO KURNOOL AGAIN, SUBMITTED BEFORE CIT(A), KU RNOOL DETAILED SUBMISSIONS WHICH WERE AGAIN SENT ON REMAND TO THE AO. AO IN THE REPORT DT. 28-12-2015 EXAMINED THE CAPITAL ACCOUNTS A ND THE PERSONS AND STATES THAT ASSESSEE HAD A CAPITAL OF RS. 41 ,51,965/- FOR THE YEAR ENDING 31-03-2006 WHICH WAS REDUCED TO R S. 5,25,658/- AS ON 31-03-2007 AND RS. 6,75,115/- AS O N 31-03- 2008 AND BEGINNING OF THE YEAR AT 01-04-2008 AT RS. 41 ,82,515/-. I.T.A. NOS. 761 & 762/HYD/2016 :- 5 - : THE ASPECT OF PAYMENT OF ADVANCE OF RS. 30 LAKHS BY A SSESSEE TO FIVE DIFFERENT PERSONS TOWARDS PURCHASE OF AGRICULTU RAL LANDS IN FY.2006-07 RELEVANT TO AY. 2007-08, BY SHOWING DRAWI NGS OF RS. 36 LAKHS FROM CAPITAL AVAILABLE WITH ASSESSEE AS ON D ATE WAS ACCEPTED. NOT ONLY THAT, AO ALSO ENQUIRED FROM ALL T HE SAID PERSONS WHO HAVE STATED TO HAVE RETURNED THE ADVANCES A S ON 01- 04-2008. AO VIDE PARA 4.3 OF THE REMAND REPORT SUBMITTE D THE CIT(A) THAT THE PAYMENT OF ADVANCE OF RS. 36 LAKHS BY A SSESSEE FOR PURCHASE OF AGRICULTURAL LAND IS FOUND IN ORDER, AS ASSESSEE IS HAVING SUFFICIENT CAPITAL FOR PAYMENT OF ADVANCES. HO WEVER, THE AO DID NOT AGREE WITH THE RETURN OF THE AMOUNTS AS CLAIMED. HIS REPORT IN PARA 6 OF THE REMAND REPORT IS AS UNDER: 6. IT IS NOTICED THAT RECEIVING BACK OF ADVANCE MONEY PAID TO THE ABOVE PERSONS ON 01.04.2008 WAS FOUND TO BE NOT GENUINE, THOUGH THE PARTIES HAVE DEPOSED THAT THEY HAVE RETURNED THE ADVANCE MO NEY TO THE ASSESSEE FOR THE FOLLOWING REASONS. I. THE ASSESSEE PAID THE ADVANCE MONEY IN THE F.Y.2 006-07 ON DIFFERENT DATES. II. AS PER SALE AGREEMENT, THERE IS NO SUCH CONDITI ON OF RETURN OF ADVANCE MONEY BY THE PARTIES FOR THE DEFAULT OF THE INTENDE D PURCHASER OF LANDS. THE SELLER OF THE LAND HAS TO FORFEIT THE ADVANCE M ONEY, AS THE ASSESSEE WENT BACK FROM THE PURCHASE OF LAND AS PER THE AGRE EMENT ENTERED BY THE PARTIES. III. THE PERSONS WHO RECEIVED THE ADVANCES FROM THE ASSESSEE HAVE ALREADY UTILIZED THE AMOUNTS TOWARDS ADVANCES FOR P URCHASE OF FERTILE LANDS FROM THE PROSPECTIVE SELLERS. IT IS DEPOSED B Y THE SELLERS THAT THEY HAVE RECOVERED THE ADVANCES GIVEN BY THEM TO PROSPE CTIVE SELLERS OF FERTILE LANDS AND THE SAME WAS REPAID TO THE ASSESSEE ON 01 .04.2008 IS APPEARED TO BE FAR AWAY FROM THE REALITY SINCE NO M ATERIAL EVIDENCE IS PRODUCED IN SUPPORT OF THEIR CLAIM AND ALSO FOR THE REASON THAT NUMBER OF PERSONS INVOLVED IN THE SAID TRACTIONS. IV. IT IS ALSO OBSERVED THAT THE ASSESSEE HAS PURCH ASED HALF SHARE OF ANOTHER PROPERTY AT TIRUPATHI VALUED AT RS.63,89,00 0/- WHICH WORKS OUT TO RS.31,94,500/- ON 05.06.2008, BUT THE CAPITAL AV AILABLE AS ON I.T.A. NOS. 761 & 762/HYD/2016 :- 6 - : 31.03.2008 IS ONLY RS. RS.6,75,115/-. UNDER THESE C IRCUMSTANCES, THE ASSESSEE RESORTED TO INCREASE CAPITAL BY WAY OF RET URN OF ADVANCE MONEY WHICH WAS FORFEITED AS ON 01.04.2008, SINCE THE REP AYMENT OF SUCH HUGE AMOUNTS EXCEEDING RS.L0 LAKHS BY THE PARTIES ON SAM E DAY I.E. ON 01.04.2008 WAS UNUSUAL. IT IS ONLY AFTER THOUGHT OF THE ASSESSEE TO INCREASE THE CAPITAL BY SHOWING RECEIPT OF ADVANCE MONEY WHICH WAS FORFEITED BY THE LANDLORDS AS THE LANDLORDS WILL NE VER REPAY THE HUGE AMOUNT OF ADVANCE MONEY WHICH WAS FORFEITED BY THEM FOR THE DEFAULT OF THE ASSESSEE. 5. CONSEQUENT TO THE ABOVE REPORT OF AO, LD.CIT(A) CONF IRMED THE ADDITION BY STATING AS UNDER: 9. GROUND NO.1 IS GENERAL IN NATURE AND DO NOT CAL L FOR ANY COMMENTS. 9.1 GROUND NOS.2, 3, 4 & 5 ARE RELATED TO COMPLETIO N OF ASSESSMENT U/S. 144 AND TREATING RS.33,33,080 AS UNEXPLAINED CASH C REDITS U/S. 68 OF THE ACT. I FIND FROM THE ASSESSMENT ORDER OF THE AO THA T THE CASE WAS CONVERTED TO SCRUTINY FOR VERIFICATION OF THE TAXAB ILITY OF ESCAPEMENT OF INCOME OF A IMMOVABLE PROPERTY LOCATED AT GANGAMMA GUDI ROAD, TATA NAGAR, TIRUPATI. THE SAID PROPERTY WAS PURCHASED BY THE APPELLANT FOR A CONSIDERATION OF RS 63,89,000/- ON 5-6-2008 VIDE DO C NO-3003/2008. THE RELATED TRANSACTION TO THE ABOVE MENTIONED TRANSACT ION WAS WITH REFERENCE TO THE INCREASE IN CAPITAL OF RS 33,33,088/- BEING THE SUM IN QUESTION TOWARDS THE PAYMENT OF PURCHASE OF IMMOVABLE PROPERTY WHICH WAS NOT SUBSTANTIATED WITH EVIDENCE BY THE APPELLANT AT THE TIME OF ASSES SMENT PROCEEDINGS. 9.2 THE AO POINTED OUT IN HIS ASSESSMENT ORDER (PAR A 8 OF PAGE 7) AS FOLLOWS :_ THE REASON FOR THE DISCREPANCY OF DIFFERENCE IN CA PITAL BALANCES CAN EASILY BE DEDUCED THAT DURING PY 2008-09 RELEVANT T O AY 2009-10, THE ASSESSEE ALONG WITH HIS WIFE SMT. A. SUVARNA PURCHA SED AN IMMOVABLE PROPERTY AT TIRUPATI FOR RS.63,89,000 ON 05-06-2008 . TO ACCOMMODATE HIS HALF-SHARE OF THIS PURCHASE CONSIDERATION, THE ASSE SSEE RESORTED TO INCREASE HIS CAPITAL SUDDENLY WITH UNEXPLAINED CREDITS. THIS MAY BE THE MAIN REASON FOR NOT FURNISHING THE EXPLANATION/EVIDENCE FOR UNEXPLA INED INCREASE IN HIS OPENING CAPITAL BALANCE FOR AY 2009-10 DESPITE SEVE RAL OPPORTUNITIES GIVE. 9. IN THE VIEW OF THE ABOVE, THERE IS NOTHING LEFT EXCEPT TO BRING TO TAX THE UNEXPLAINED INCREASE OF RS.33,33,088 IN HIS OPE NING CAPITAL BALANCE AS ON 01-04-2008. REJECTION OF OPENING CAPITAL ON THE GRO UND THAT ASSESSEE FAILED TO PROVE SOURCE WAS ALSO JUSTIFIED IN THE CASE OF C.PA CKIRISAMY VS ACIT 315 ITR 293 (MAD). HENCE, THE DIFFERENCE OF RS. 33,33,088 B ETWEEN THE CLOSING CAPITAL I.T.A. NOS. 761 & 762/HYD/2016 :- 7 - : BALANCE FOR AY 2008-09 AND THE OPENING BALANCE FOR AY 2009-10 IS, ADDED U/S 68 OF THE INCOME TAX ACT, 1961 AS UNEXPLAINED CREDI TS SINCE THE ASSESSEE FAILED TO PROVE THE SOURCE OF CAPITAL. ' 9.3 IT IS SIGNIFICANT TO MENTION HERE THAT IN THE O RIGINAL ASSESSMENT COMPLETED IN THIS CASE, THE ISSUE OF PURCHASE OF PR OPERTY WAS NOT EXAMINED BY THE AO AND THE APPELLANT ALSO DID NOT S UBMIT ANY INFORMATION RELATING TO THE SAID TRANSACTION. 9.4 I HAVE CAREFULLY EXAMINED THE VARIOUS SUBMISSIO NS OF THE APPELLANT WHICH ARE ON RECORD AS WELL AS THE REMAND REPORT OF THE AD WHICH HAS BEEN HIGHLIGHTED ABOVE. THE ISSUE IN QUESTION IS TH E UNACCOUNTED MONEY INTRODUCED INTO THE CAPITAL ACCOUNT OF THE APPELLAN T IN THE GUISE OF REPAYMENTS RECEIVED BACK FROM THE PROSPECTIVE SELLE RS IS IN MY CONSIDERED VIEW A AFTER THOUGHT OF THE APPELLANT. 9.5. EVEN ASSUMING THAT THE ENTRIES INTO THE CAPITA L ACCOUNT DEPICT SUCH A FUND FLOW, THE MERE INTRODUCTION OF SUMS INTO THE C APITAL ACCOUNT DOES NOT CONFER ANY SORT OF IMMUNITY FROM TAXATION TO THE AP PELLANT UNDER THE PRETEXT THAT THEY ARE ALL TAX PAID REMITTANCES UNLE SS THE APPELLANT ESTABLISHES THIS FACT. AS CAN BE SEEN FROM THE REMA ND REPORT OF THE AO, IT IS A CASE OF UNACCOUNTED INVESTMENT OF MONEY IN THE GUISE OF INVESTMENT MADE BEING RETURNED AND THE CLAIM OF THE APPELLANT IS UNTENABLE FOR THE FOLLOWING REASONS :- A) THERE IS NO CLARITY ON THE SUMS ADVANCED AND RET URNED BY THE APPELLANT B) THE APPELLANT HAS ROUTED HIS UNACCOUNTED MONEY I NTO THE BOOKS IN THE GUISE OF ADVANCES RETURNED C) IN ORDER TO JUSTIFY THE SOURCES FOR INVESTMENT, THE APPELLANT RETORTED TO THIS ACT OF BRINGING IN UNACCOUNTED MONEY BACK INTO THE BOOKS IN THE GUISE OF LOANS/ADVANCES 9.6 THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSME NT WAS MADE U/S 144 R.W SEC 147. THE CASE CAME UP PRIMARILY THROUGH CASS TO VERIFY THE TAXABILITY OF THE PROPERTY TRANSACTION AMOUNTING TO RS 63.89 LACS ON 5-6- 2008. IT IS NOT A CASE OF THE APPELLANT VOLUNTARILY DISCLOSING TO THE DEPARTMENT THE TRANSACTION AND THE RESULTANT ENTRIE S MADE. IF NOT FOR THE DETAILED ENQUIRY LAUNCHED BY THE AO, THE WHOLE UNAC COUNTED GAMUT OF THE TRANSACTIONS WOULD NOT HAVE COME TO THE FORE. ACCOR DINGLY, I PROPOSE TO CONFIRM THE ACTION OF THE AO IN BRINGING TO TAX THE DIFFERENTIAL SUM OF MONEY AMOUNTING TO RS. 33,33,080 U/S 68 OF THE INCO ME TAX ACT. I.T.A. NOS. 761 & 762/HYD/2016 :- 8 - : 6. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS A PPEAL: 1. THE ORDER OF THE LEARNED FIRST APPELLATE AUTHOR ITY IS NOT CORRECT EITHER IN LAW OR ON FACTS AND IN BOTH. 2. IN THE ABSENCE OF FRESH TANGIBLE MATERIAL ON REC ORD AFTER COMPLETION OF ASSESSMENT U/S.143(3), INITIATION OF REASSESSMENT P ROCEEDINGS U/S 147 IS BAD IN LAW. (THIS GROUND IS RAISED FOR THE FIRST TI ME). 3. THE LEARNED FIRST APPELLATE AUTHORITY, IS NOT JU STIFIED IN CONFIRMING THE ADDITION OF RS.33,33,080 MADE BY ASSESSING OFFICER U/S.68 OF THE IT ACT. 4. THE LEARNED FIRST APPELLATE AUTHORITY, FAILED TO APPRECIATE THE FACT THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND SUST AINED BY HIM IS ONLY ON ASSUMPTIONS AND PRESUMPTIONS AND HENCE, ADDITION IS UNWARRANTED. 5. THE LEARNED FIRST APPELLATE AUTHORITY, FAILED TO APPRECIATE THE FACT THAT THE RECEIPT BACK OF THE ADVANCES GIVEN EARLIER ARE THE SOURCES FOR INCREASE IN CAPITAL IN THE ASSESSMENT YEAR UNDER APPEAL. 6. THE LEARNED FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THE FACT THAT THE ASSESSING OFFICER HAVING ACCEPTED THE CONTENTIO N OF THE APPELLANT THAT ADVANCES WERE GIVEN IN EARLIER YEARS, IS NOT JUSTIF IED IN NOT ACCEPTING THE CLAIM OF RECEIPT BACK OF SUCH ADVANCES, ESPECIALLY WHEN BOTH THE FACTS ARE CONFIRMED BY THE CONCERNED PARTIES IN THEIR SWORN D EPOSITIONS. 7. THE OBSERVATIONS OF THE LEARNED FIRST APPELLATE AUTHORITY AT PARAS 9.4; 9.5 & 9.6 ARE NOT BASED ON ANY MATERIAL FACTS AND A RE DEVOID OF MERITS. 8. THE LEARNED FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THE FACT THAT THE CASS REASONS WERE ALREADY EXAMINED IN THE INITI AL PROCEEDINGS U/S. 143(3) AND HENCE HIS OBSERVATIONS AT PARA 9.6 ARE F ACTUALLY NOT CORRECT. 9. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL. 7. SINCE GROUND NO. 2 RAISED ABOVE IS NOT CONTESTED B EFORE THE CIT(A), SUBSEQUENTLY ASSESSEE FILED PETITION FOR ADMIS SION OF ADDITIONAL GROUND WHICH IS NOTHING BUT GROUND NO. 2 AB OVE. THIS ADDITIONAL GROUND IS LEGAL GROUND WHICH WAS ADMITTED. I.T.A. NOS. 761 & 762/HYD/2016 :- 9 - : 8. LD. COUNSEL REFERRING TO THE ORDER OF THE AO, TWO REMAND REPORTS AND THE ORDER OF THE CIT(A) SUBMITTED THAT THE IS SUE OF INCREASE IN SHARE CAPITAL WAS JUSTIFIED BY ASSESSEE, AS HE HAS RECEIVED BACK THE ADVANCE PAID EARLIER, ON 01-04-200 8. IT WAS WRONGLY UPLOADED IN THE RETURN FOR THAT YEAR BY INCLUD ING THE AMOUNT ON THE FIRST DAY ITSELF, WHICH LEAD TO THE DISCREP ANCY. INSTEAD OF ACCEPTING THE SAME, AO MADE WILD ALLEGATIONS AGAINST ASSESSEE IN THE REMAND REPORTS WHICH ARE NOT WARRANTED . FURTHER AO ALSO CONFIRMED THAT ASSESSEE WAS HAVING SUFFICIENT CAPITAL TO ADVANCE THE AMOUNTS FOR PURCHASE OF AGRICULTURAL LAN D. THOSE PERSONS ALSO WERE SUMMONED AND STATEMENTS WERE RECOR DED, WHO CONFIRMED THAT THEY HAVE RETURNED THE ADVANCES ON ADVICE FROM THE ELDERS OF THE VILLAGE WITHOUT FORFEITING ANY AMOUNT. H AVING CONFIRMED THE AMOUNTS, AO STILL WENT ON MAKING CERTAIN W ILD ALLEGATIONS AND AO ALSO HAS THREATENED THOSE PEOPLE A LSO THAT THE AMOUNT WHICH WAS PAID TO ASSESSEE WILL BE ASSESSED AS OTHER SOURCES, AS CAN BE SEEN FROM THE STATEMENT RECORDED VID E QUESTION NO. 11 (PLACED IN PAPER BOOK AT PG. 53 & 56). IT WAS THE SUBMISSION THAT THE DISCREPANCY FOR WHICH THE NOTICE U/S. 147 WAS INITIATED HAVING BEEN SATISFIED BY ASSESSEE, ASSESSEE WAS PUT TO INCONVENIENCE BY MAKING WILD ALLEGATIONS AND WITHOUT ANY PROPER BASIS. 9. REFERRING TO THE ORDER OF THE CIT(A), IT WAS SUBMITTE D THAT THE FINDINGS IN PARA 9.1 BY THE CIT(A) IS ENTIRELY WRONG. IN FACT THE AO EXAMINED ASSESSEES SUBMISSION AND BOOKS OF ACCOUNT AND WAS SATISFIED ABOUT THE SOURCE OF PURCHASE CONSIDERATION. ACCORDINGLY, THE ASSESSMENT WAS ACCEPTED. THEREFORE, THE FINDINGS OF THE CIT IN PARA 9.1 IS DEVOID OF ANY BASIS. I.T.A. NOS. 761 & 762/HYD/2016 :- 10 -: 10. COMING TO PARA 9.3 OF THE ORDER, IT WAS SUBMITTED TH AT LD.CIT(A) STRANGELY GAVE A FINDING THAT IN THE ORIGIN AL ASSESSMENT COMPLETED IN THIS CASE THE ISSUE OF PURCHASE OF PROPE RTY WAS NOT EXAMINED BY THE AO AND THE APPELLANT ALSO DID NOT SUBMI T ANY INFORMATION RELATING TO THE SAID TRANSACTION. IT WAS SUB MITTED THAT THE ABOVE STATEMENT OF CIT(A) IS TOTALLY FALLACIOUS IN THE SENSE THAT ENTIRE ORDER OF 143(3) PASSED BY THE AO ON 12-10-2011 IS ON THE PURCHASE TRANSACTION, HAVING SELECTED UNDER CASS. IN FACT THE INFORMATION RECEIVED BY THE AO WAS FOR SALE OF PROPE RTY WHICH ON EXAMINATION, AO GAVE A FINDING THAT IS FOR PURCHASE OF PROPERTY. IT IS ALSO VERY CLEARLY STATED IN THE ORDER THAT INFORMATION WAS CALLED FOR AND WAS FURNISHED AND AFTER EXAMINING THE DETAILS AND FACTS OF THE CASE, THE INCOME RETURNED WAS ACCEPTED. WHEN AO G AVE SUCH CLEAR FINDINGS, ON ENQUIRY ON PURCHASE OF PROPERTY, LD. COUNSEL SUBMITTED THAT THE FINDING GIVEN BY THE CIT(A) THAT NO EN QUIRY WAS DONE BY THE AO IS TOTALLY OUT OF CONTEXT AND ON PRESUMP TIONS, SO AS TO PUT ASSESSEE IN BAD COLOUR. 11. COMING TO PARAS 9.4 & 9.5 OF THE IMPUGNED ORDER THE OBSERVATIONS OF CIT(A) WERE TOTALLY UNWARRANTED, AS ASS ESSEE WAS CLEARLY STATING THAT THE ADVANCES ISSUED EARLIER WERE R ETURNED, SUPPORTED BY THE AGREEMENTS OF SALE OF 2006 AND CANCEL LATION OF THE SAME AND ALSO AS AFFIRMED BY THE PARTIES IN THE STATE MENTS U/S.131 RECORDED BY AO. IT WAS SUBMITTED THAT THE ORDER O F THE CIT(A) IS NOT BASED ON FACTS AND THEREFORE, SAME IS R EQUIRED TO BE QUASHED. 12. LD.DR, IN REPLY SUBMITTED THAT THERE WAS AN AUDIT OBJ ECTION AND THE PROCEEDINGS EMANATED FROM THE AUDIT. THERE WAS I.T.A. NOS. 761 & 762/HYD/2016 :- 11 -: DISCREPANCY IN THE UPLOADED FIGURES AS POINTED OUT BY THE AO AS ON 31-03-2008 AND 01-04-2008 WHICH LEAD TO THE PRESENT PROCEEDINGS. HOWEVER, LD.DR FAIRLY ADMITTED THAT ORDER SHEET ENTRIES IN THE ORIGINAL ASSESSMENT TIME CLEARLY INDICAT E THAT BOOKS OF ACCOUNT WERE PRODUCED AND THE TRANSACTIONS WERE VERI FIED. HOWEVER, SINCE THE ASSESSMENT WAS REOPENED WITHIN FOU R YEARS, LD.DR RELIED ON THE PRINCIPLES LAID DOWN BY THE HON' BLE BOMBAY HIGH COURT IN THE CASE OF EXPORT CREDIT GUARANTEE CORPO RATION OF INDIA LTD., VS. ADDL. CIT [350 ITR 651] (BOMBAY). 13. IN REPLY, LD. COUNSEL SUBMITTED THAT THE BOOKS WERE PRODUCED AT THE TIME OF ORIGINAL ASSESSMENT, THE ORDER SHEET ENTRIES INDICATE THAT THE PURCHASE TRANSACTIONS WERE EXAM INED AND ASSESSEE, AS ADMITTED BY THE AO, HAS SUFFICIENT CAPITAL TO ADVANCE THE AMOUNT OF RS. 36 LAKHS WAY BACK IN AY. 2006-07 A ND RECEIPT OF THOSE AMOUNTS AFTER CANCELLATION OF SUCH AGREEMENTS WAS NOT AN AFTER THOUGHT. IT WAS ONLY A MISTAKE IN ENTERING THE O PENING FIGURE AS THE ADVANCES RECEIVED ON 01-04-2008 ITSELF AND INS TEAD OF REFLECTING THE SAME SEPARATELY, THE CONSOLIDATED AMOUN T ON 01-04- 2008 WAS UPLOADED BY MISTAKE. FOR THIS MISTAKE, ASSES SEE SHOULD NOT BE PUNISHED AND REQUESTED FOR EXPUNGING ALL THE ALLEGATIONS MADE IN THE REMAND REPORTS AND ALSO IN THE ORDER OF THE CIT(A). 14. WITH REFERENCE TO REOPENING THE ASSESSMENT, IT WAS C ONTENDED THAT ALL THE INFORMATION WAS FURNISHED BEFORE THE AO AN D THE PROCEEDINGS BEING WITHOUT ANY TANGIBLE MATERIAL AND BA D IN LAW. HE RELIED ON THE DECISION OF MADHUKAR KHOSLA VS. ACI T [367 ITR 165] (DEL). I.T.A. NOS. 761 & 762/HYD/2016 :- 12 -: 15. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUS ED THE DOCUMENTS PLACED ON RECORD. AS SEEN FROM THE REPORTS, THE ORDER OF THE CIT(A), ASSESSEE WAS PUT TO LOSS OF INCONVENIE NCE DUE TO AN ARITHMETIC MISTAKE COMMITTED WHILE UPLOADING THE AMOUNTS IN THE RETURN FILED FOR AY. 2009-10. INSTEAD OF SHOWING THE O PENING CAPITAL AS SHOWN IN THE CAPITAL AS ON 31-03-2008, ASSESSEE AL SO ADDED THE ADVANCE RECEIVED ON THAT DATE I.E., 01-04-2008 AND SH OWN THAT HIGHER FIGURE AS OPENING CAPITAL. THERE IS NO DISPU TE THAT ASSESSEE HAD CAPACITY TO ADVANCE THE AMOUNTS IN AY. 2006-07, WHICH WAS ALSO REFLECTED IN THE STATEMENTS FILED IN THOSE YEARS A ND AS CERTIFIED BY THE AO, ASSESSEE HAS CERTAINLY ADVANCED THE AMOUNTS . THERE IS ALSO NO DISPUTE THAT THE SAID AGREEMENTS OF SALE WITH FI VE PERSONS WERE CANCELLED AND THEY HAVE ADMITTED RETURNING THE ADV ANCE AMOUNTS, INSTEAD OF FORFEITING. ASSESSEE ALSO SUBMITS THAT THE FORFEITURE WILL COME INTO PLAY ONLY AFTER TWO YEARS, BUT NOT AS CONTENDED BY AO IN THE REPORT. BE THAT AS IT MAY, SINCE THOSE PEOPLE HAVE CONFIRMED RETURNING OF THE AMOUNTS, IT IS NOT PROPER ON THE PART OF THE AO, TO DENY THE FACTS BASED ON ALLEGATIONS AND WILD GUESS. LD.CIT(A) ALSO DID NOT EXAMINE THE FACTS PROPER LY AND IN FACT HIS ORDER HAD MORE ERRONEOUS FINDINGS, AS POINTED OU T BY THE LD. COUNSEL IN THE COURSE OF ARGUMENTS. 15.1. AFTER CONSIDERING THE FACTS ON RECORD, WE ARE SA TISFIED THAT ASSESSEE HAS THE CAPACITY TO ADVANCE THE AMOUNTS EARLI ER AND AS CONFIRMED BY THE PARTIES, ASSESSEE RECEIVED THE AMOUNT S ON 01-04- 2008. IT WAS A SIMPLE MISTAKE IN UPLOADING THE DATA, W HILE FILING THE RETURN OF INCOME FOR AY. 2009-10 AND THERE IS NO U NACCOUNTED INCOME WHICH WAS BROUGHT TO CAPITAL ACCOUNT. THE ALLEG ATIONS OF AO ARE UNFOUNDED AND THE PRESUMPTIONS OF THE CIT(A) ARE EQUALLY I.T.A. NOS. 761 & 762/HYD/2016 :- 13 -: UNFOUNDED. BEING A SENIOR OFFICER OF THE DEPARTMENT IT IS NOT EXPECTED FROM THE CIT(A) TO GIVE WRONG FINDINGS, SO A S TO CONFIRM THE ORDER OF THE AO. SINCE WE HAVE EXAMINED THE FACTS, WE ARE SATISFIED THAT THERE IS NO UNACCOUNTED INCOME BROUGHT TO CAPITAL ACCOUNT BY ASSESSEE. ACCORDINGLY, GROUNDS ARE ACCEPTE D. EVEN THOUGH ASSESSEE CONTENDED THAT THE PROCEEDINGS ARE WRONG LY INITIATED, WE ARE OF THE OPINION THAT PRIMA-FACIE THERE SEEMS TO BE SOME DISCREPANCY, ON THE BASIS OF WHICH AO HAS REOP ENED THE ASSESSMENT. BE THAT AS IT MAY, AS WE ARE SATISFIED THAT THE RE IS NO UNACCOUNTED INCOME TO BE BROUGHT TO TAX U/S. 68 OF THE A CT, THE ISSUE OF REOPENING BECOMES ACADEMIC. 16. IN THE RESULT, THIS APPEAL OF ASSESSEE IS ALLOWED. ITA NO. 762/HYD/2016: 17. THE FACTS PERTAINING TO ADDITION ARE SIMILAR TO THE E ARLIER APPEAL, EXCEPT THE AMOUNT INVOLVED AND THAT THERE WAS N O SCRUTINY ASSESSMENT IN THIS CASE EARLIER. THE REPORTS OF AO AN D ORDER OF CIT(A) ARE ALSO SIMILAR. FOR THE DETAILED DISCUSSION MADE ABOVE IN ASSESSEE HUSBANDS CASE, WE ARE SATISFIED THAT THE ADDI TION CANNOT BE SUSTAINED. AS STATED IN THE SAID CASE, ISSUE OF REOP ENING OF ASSESSMENT BECOMES ACADEMIC. THE GROUNDS RAISED BY T HIS ASSESSEE ARE ALSO ALLOWED. 18. TO SUM-UP BOTH THE APPEALS OF ASSESSEE ARE ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MAY, 2017 SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMB ER HYDERABAD, DATED 23 RD MAY, 2017 TNMM I.T.A. NOS. 761 & 762/HYD/2016 :- 14 -: COPY TO : 1. SRI A. MALLIKARJUNA REDDY, KADAPA. C/O. CH. PARTHASARATHY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST.NO.1, ASHOK NAGAR, HYDERABAD. 2. SMT A. SUVARNA, KADAPA. C/O. CH. PARTHASARATHY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST.NO.1, ASHOK NAGAR, HYDERABAD. 3. THE INCOME TAX OFFICER, WARD-1, KADAPA. 4. CIT (APPEALS)-KURNOOL. 5. PR.CIT-KURNOOL. 6. CIT-V, HYDERABAD. 7. D.R. ITAT, HYDERABAD. 8. GUARD FILE.