ITO, Ward-9(3), Hyderabad, Hyderabad V. Sri P Krishna Reddy, R.R.Dist

ITA 77/HYD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6128 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-01-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 16-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: S RAMA RAO
• Keywords: Tax effect; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P.MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.23/HYD/2015 : ASSESSMENT YEAR 2004-05 SHRI P.KRISHNA REDDY, HYDERABAD (PAN AEYPP 4546 C ) V/S INCOME TAX OFFICER, WARD 9(3), HYDERABAD (APPELLANT) (RESPONDENT) AND ITA NO.77/HYD/2015 : ASSESSMENT YEAR 2004-05 INCOME TAX OFFICER, WARD 9(3), HYDERABAD V/S SHRI P.KRISHNA REDDY, HYDERABAD (PAN AEYPP 4546 C ) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.RAMA RAO DEPARTMENT BY : SHRI M.SITARAM DR DATE OF HEARING 18.1.2016 DATE OF PRONOUNCEMENT 22.1.2016 O R D E R PER P.MADHAVI DEVI, JUDICIAL MEMBER : THESE ARE CROSS APPEALS FOR THE ASSESSMENT YEAR 2 004-05, WHICH ARE DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME- TAX(APPEALS) HYDERABAD DATED 7.10.2014. 2. AT THE TIME OF HEARING, IT IS SUBMITTED BY TH E LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE TAX EFFECT IN THE REVENUES APPEAL IS LESS THAN RS.10 LAKHS. LEARNED COUNSEL FO R THE ASSESSEE HAS ALSO FILED COMPUTATION OF THE TAX EFFECT BEFORE US, ACCORDING TO WHICH THE TAX EFFECT IN THE APPEAL OF THE REVENUE IS RS.8 ,16,310. THE LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER SUBMIT TED THAT THE TAX ITA NO.23 & 77/HYD/2015 SHRI P.KRISHNA REDDY, HYDERABAD 2 EFFECT ACCORDING TO HIS CALCULATION IS RS.8,85,870. SINCE ACCORDING TO BOTH THE PARTIES, THE TAX EFFECT IS LESS THAN RS.10 LAKHS, AS PER THE CBDT CIRCULAR NO.21/2015 DATED 10 TH DECEMBER, 2015, BEARING F.NO.279/MISC.142/2007-ITI(PT), WHICH IS APPLICABLE EVEN TO THE PENDING APPEALS, THIS APPEAL OF THE REVENUE INVOLVI NG TAX EFFECT OF LESS THAN RS.10 LAKHS, IS LIABLE TO BE DISMISSED. WE AC CORDINGLY DISMISS THE SAME. 3. COMING TO THE ASSESSEES APPEAL, ASSESSEE IS AG GRIEVED BY THE CONFIRMATION OF TWO ADDITIONS MADE BY THE ASSES SING OFFICER, VIZ. (I) RS.7 LAKHS REPRESENTING LOAN AMOUNT FROM SUNDAR AM HOME FINANCE AS THE SOURCE OF INVESTMENT IN THE PURCHASE OF LAND BY THE ASSESSEE; AND (II) RS.10,75,000 REPRESENTING THE AMOUNT INVES TED BY SHRI VISWANATH IN THE PURCHASE OF LAND JOINTLY WITH THE ASSESSEE; APART FROM LEVY OF INTEREST UNDER S.234B OF THE INCOME TAX ACT,1961. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME ON 7.9.2004 DECLARING TO TAL INCOME OF RS.1,22,144 APART FROM AGRICULTURAL INCOME OF RS.30 ,000. A SURVEY UNDER S.133A WAS CONDUCTED ON 17.3.2005 ON THE PREM ISES OF THE ASSESSEE. CONSEQUENT TO THE SURVEY, ASSESSEE FILED A REVISED RETURN OF INCOME ON 31.3.2005 ADMITTING TOTAL INCOME OF RS.3, 22,144 APART FROM AGRICULTURAL INCOME OF RS.30,000. DURING THE ASSESS MENT PROCEEDINGS UNDER S.143(3) OF THE ACT, ASSESSEE WAS REQUIRED TO FILE CERTAIN DETAILS. THE ASSESSEE FAILED TO FURNISH THE RELEVANT INFORMA TION CALLED FOR. THE ASSESSING OFFICER NOTICED THAT DURING THE COURSE OF SURVEY UNDER S.133A OF THE ACT, A STATEMENT WAS RECORDED FROM TH E ASSESSEE, ACCORDING TO WHICH THE ASSESSEE PURCHASED A LAND O F 6 ACRES 5 GUNTAS FOR RS.42 LAKHS, WHICH IS REGISTERED FOR RS.2,77,00 0 ONLY IN THE MONTH OF MARCH, 2004. FROM THE STATEMENT RECORDED ON 18. 3.2005, THE ITA NO.23 & 77/HYD/2015 SHRI P.KRISHNA REDDY, HYDERABAD 3 ASSESSING OFFICER NOTICED THAT THE SOURCES OF INVES TMENT IN LAND HAS BEEN STATED TO BE AS UNDER- SUDNARAM FINANCE RS. 7,00,000 POST DATED CHEQUES ISSUED TO SELLERS RS.10,87,000 AMOUNT RECEIVED ON SALE OF LAND TO SHRI K.LAKSHMA REDDY AND OTHERS RS.11,00,000 AUCTION OF RS.5 LAKHS CHIT RS. 3,50,000 INVESTMENT MADE BY VISWANATH RS.10,75,000 ON THE BASIS OF THIS STATEMENT, ASSESSEE WAS ASKED TO PRODUCE/EXPLAIN THE DETAILS ALONGWITH PROOF. THE ASSESSEE, VIDE LET TER DATED 29.12.2006, SUBMITTED THE DETAILS OF THE SOURCES OF INVESTMENT. HOWEVER, FOR THE FOLLOWING REASONS, THE ASSESSEES SUBMISSIONS WERE NOT ACCEPTED BY THE ASSESSING OFFICER. (A) THE LOAN TAKEN FROM SUDNARAM FINANCE WAS ACTUALLY TAKEN BY ASSESSEES WIFE AND THE ASSESSEE HAS FAILED TO PROVE THAT THIS AMOUNT WAS UTILISED FOR THE PURPOSE OF PURCHASING THE LAND. (B) THE ASSESSEE HAS NOT PRODUCED ANY SALE DOCUMENTS OR ANY AGREEMENT OF SALE FOR THE SALE OF AGRICULTURAL LAND TO SHRI K.LAKSHMA REDDY AND OTHERS FOR RS.11 LAKHS. (C) THE ASSESSEE ONLY HAS PURCHASED THE PROPERTY AND THERE IS NO EVIDENCE OF SHRI VISWANATH INVESTING 25% OF THE SHARE, I.E. RS.10,75,000 (D) THERE IS NO EVIDENCE FOR THE PRIVATE CHIT AMOUNT RECEIVED OF RS.3,50,000 AND THE ITA NO.23 & 77/HYD/2015 SHRI P.KRISHNA REDDY, HYDERABAD 4 ASSESSEE FAILED TO GIVE CHIT FUND NAME, ADDRESS AND OTHER DETAILS. (E) THERE IS NO EVIDENCE OF POST DATED CHEQUES ISSUED FOR RS.10,87,000. THUS OBSERVING, ASSESSING OFFICER BROUGHT THE ENTI RE INVESTMENT IN THE PURCHASE OF LAND OF RS.42,00,000 AS UNEXPLAINED INV ESTMENT AND BROUGHT IT TO TAX. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), AND FILED COPIES OF (A) REGISTERED SALE DEED FOR TH E PURCHASE OF AGRICULTURAL LAND; (B) MUTUAL AGREEMENT BETWEEN THE ASSESSEE AND THE SELLER OF LAND IN SUPPORT OF CASH PAYMENT OF RS.21, 50,000 AND ISSUANCE OF POST DATED CHEQUES FOR RS.21,37,500; (III) SALE AGREEMENT DATED 22.2.2004 FOR A TOTAL CONSIDERATION OF RS.42 LAKHS AND ADVANCE PAYMENT OF RS.10,50,000; (D) SALE AGREEMENT DATED 1 5.12.2003 IN SUPPORT OF LAND SOLD TO SHRI R.LAXMA REDDY; AND (E) CONFIRMATORY LETTERS FROM SHRI R.LAXMA REDDY (BUYER OF LAND) AND SHRI M.MALLA REDDY (CHIT FUND OPERATOR); AND (VI) RETURNS FILED BY SHRI VISWANATH FOR ASSESSMENT YEAR 2004-05 AND 2005-06 CLAIMING SHARE OF INVESTMENT; AND (G)ASSESSEES REVISED RETURNS AND FINAL ACCOUNT S. THE CIT(A) FORWARDED THESE DOCUMENTS TO THE ASSESSING OFFICER FOR A REMAND REPORT. THE ASSESSING OFFICER SUBMITTED THE REMAND REPORT TO THE CIT(A) ON 18.2.2009, WHICH WAS FURNISHED TO THE AS SESSEE FOR HIS COMMENTS. THE ASSESSEE FURNISHED HIS REPLY AND AFTE R CONSIDERING THE ENTIRE MATERIAL ON RECORD, THE CIT(A) DID NOT ACCEP T THE SUM OF RS.7 LAKHS BEING THE LOAN TAKEN FROM SUNDARAM HOME FINAN CE AND THE INVESTMENT MADE BY SHRI VISWANATH OF RS.10,75,000 F OR THE PURCHASE OF LAND. THUS, THE CIT(A) GRANTED PARTIAL RELIEF TO THE ASSESSEE, AGAINST WHICH ASSESSEE IS IN APPEAL BEFORE US. ITA NO.23 & 77/HYD/2015 SHRI P.KRISHNA REDDY, HYDERABAD 5 6. AS REGARDS THE SOURCE OF RS.7 LAKHS, THE LEARNE D COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO PAGE 3 OF THE PAPER-BOOK, WHICH IS THE STATEMENT OF ACCOUNT OF SUNDARAM HOME FINANCE LTD. IN FAVOUR OF SMT. VASUMATHI, WIFE OF THE ASSESSEE, SHR I KRISHNA REDDY, IN EVIDENCE OF THE GRANTING OF LOAN OF RS.7 LAKHS IN F AVOUR OF HIS WIFE. THUS, ACCORDING TO THE ASSESSEE, ASSESSEES WIFE HA D SUFFICIENT SOURCES TO COMPLETE THE CONSTRUCTION OF THE HOUSE AND THE ASSESSEE AND HIS WIFE HAVING COMBINED RESOURCES, THE AMOUNT ADVANCE D BY SUNDARAM HOME FINANCE HAS BEEN UTILISED FOR THE PURCHASE OF THE LAND. AS REGARDS THE INVESTMENT MADE BY SHRI VISWANATH ALSO, THE LEARNED COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE INCOME TAX RETURNS OF SHRI VIWANATH AND THE BALANCE SHEETS FOR THE RELEVANT YEARS, WHEREIN THE ADVANCE OF RS.10,75,000 FOR THE PURCHASE OF LAND HAS BEEN INDICATED. THUS ACCORDING TO HIM, THE ASSE SSEE HAS DISCHARGED THE ONUS OF PROVING THE SOURCE OF INVEST MENT, AND THE ADDITIONS ARE THEREFORE, NOT WARRANTED. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE WITH DOCUMENTARY EVIDENCE THAT THE ASSESSEE HAD THE FINDS FOR INVESTMENT IN THE PURCHASE OF THE PROPERT Y. THUS ACCORDING TO HIM, THE ADDITIONS IN QUESTION ARE TO BE SUSTAINED. 8. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT EXCEPT FOR STATING THAT RS.7 L AKHS WHICH HAS BEEN ADVANCED TO THE ASSESSEES WIFE BY SUNDARAM HOME FI NANCE, THE ASSESSEE HAS NOT FILED ANY DOCUMENT BEFORE US TO DE MONSTRATE THAT THESE FUNDS WERE WITHDRAWN FOR PAYMENT OF THE SAME TO THE VENDOR BEFORE THE DATE OF AGREEMENT. THE ASSESSEE HAS NOT FILED COPY OF THE BANK STATEMENT OF THE ASSESSEES WIFE TO PROVE THIS FACT. IN VIEW OF ITA NO.23 & 77/HYD/2015 SHRI P.KRISHNA REDDY, HYDERABAD 6 THE SAME, WE DEEM IT FIT AND PROPER TO REMAND THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION AND VERI FICATION OF BANK STATEMENT OF THE ASSESSEES WIFE, AND IF IT IS FOUN D THAT THE SAID AMOUNT OF RS.7 LAKHS HAS NOT BEEN UTILISED FOR THE PURPOSE OF CONSTRUCTION OF HOUSE OF SMT.VASUMATHI AND IF IT IS FOUND THAT THE SAID AMOUNT HAS BEEN WITHDRAWN VERY MUCH BEFORE THE DA TE OF ENTERING INTO THE AGREEMENT OF SALE FOR PURCHASE OF LAND, TH EN THE SAME SHALL BE ACCEPTED AS PROVED SOURCE FOR INVESTMENT IN THE LAN D. HOWEVER, AS REGARDS THE INVESTMENT MADE BY SHRI VISWANATH, WE F IND THAT SHRI VISWANATH HAS REFLECTED IN HIS BANK STATEMENT, THE ADVANCE PAID FOR THE PURCHASE OF THE LAND THROUGH THE ASSESSEE HEREI N. COPIES OF THE RETURNS OF INCOME FILED BY SHRI VISWANATH ARE ALSO FILED BEFORE US AND THERE IS NO ADVERSE FINDING THAT THE COPIES OF THES E RETURNS FILED BY SRHI VISWANATH ARE NOT CORRECT. THEREFORE, IN OUR OPINION, THE ASSESSEE HAS FILED THE DETAILS BEFORE THE AUTHORITIES BELOW. IN THIS VIEW OF THE MATTER, WE ARE OF THE OPINION THAT SINCE HE HAS REF LECTED THE SAID TRANSACTION IN HIS BALANCE SHEETS AS WELL AS IN THE RETURNS OF INCOME, IT HAS TO BE TAKEN AS PROVED SOURCE FOR INVESTMENT OF AMOUNT. IN THE RESULT, GROUND NO.2 OF THE ASSESSEE IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES, WHILE GROUND NO.3 IS ALLOWED. 9 GROUND NO.4 RELATING TO CHARGING OF INTEREST UN DER S.234B BEING CONSEQUENTIAL IN NATURE, ASSESSING OFFICER IS DIRECTED TO ALLOW CONSEQUENTIAL RELIEF ACCORDINGLY. 10. IN THE RESULT, ASSESSEES APPEAL IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. 11. TO SUM UP, WHILE REVENUES APPEAL, BEING ITA NO.77/HYD/2015, IS DISMISSED ON ACCOUNT OF LOW TAX EFFECT, ASSESSEES ITA NO.23 & 77/HYD/2015 SHRI P.KRISHNA REDDY, HYDERABAD 7 APPEAL, BEING ITA NO.23/HYD/2015, IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 22 ND JANUARY, 2016 SD/- SD/- ( B.RAMAKOTAIAH ) (P.MADHAVI DEVI) ACCOUNTANT MEMBER. JUDICIAL MEMBER DT/- 22 ND JANUARY, 2016 COPY FORWARDED TO: 1. SHRI P.KRISHNA REDDY, C/O. SHRI S.RAMA RAO, FLAT NO.102, SHIRYA'S ELEGANCE, NO.3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500029 2. INCOME TAX OFFICER WARD 9(3), HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS), VIJAYAWADA PR COMMISSIONER OF INCOME-TAX VI, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S.