Suttari Rekha (LR of M. Ramachandramma), Hyd, Hyderabad V. ITO, Ward-1, Karimnagar, Karimnagar

ITA 790/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2391 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 26-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: A V RAGHURAM
• Keywords: Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 790/HYD/2016 ASSESSMENT YEAR: 2007-08 SMT. SUTTARI REKHA, (LR OF LATE SMT. M. RAMACHANDRAMMA) HYDERABAD [PAN: BDMPS0490Q] VS THE INCOME TAX OFFICER, WARD-1, KARIMNAGAR (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A.V. RAGHU RAM, AR FOR REVENUE : SMT N. SWAPNA, DR DATE OF HEARING : 12-06-2017 DATE OF PRONOUNCEMENT : 14-06-2017 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE (REPRESENTED BY SMT S. REKHA AS LR) AGAINST THE ORDER OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-10, HYDERABAD DATED 31-12-2015. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-10, HYDERABAD, DISMISSING THE APPEAL IS ERRONEOUS, ILLEGAL AND UNSUSTAINABLE IN L AW. 2. THE COMMISSIONER (APPEALS) ERRED IN SUSTAINING T HE ADDITION OF RS. 8,61,740 BEING PART OF THE SOURCE OF RS.29,11,740, EXPLAINED AS EARNED FROM PAST MANY YEARS FROM AGRICULTURAL ACTIVITY. TH E COMMISSIONER (APPEALS) FAILED TO APPRECIATE THAT THE APPELLANT'S MOTHER WAS HOLDING AGRICULTURAL LANDS SINCE MANY YEARS AND WAS DEPENDE NT ONLY ON THE AGRICULTURAL INCOME, AND ADMITTEDLY HAD NO OTHER KN OWN SOURCE OF INCOME. 3. THE COMMISSIONER (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER HAS NOT DISBELIEVED THE FACTUM OF HAVING AG RICULTURAL LANDS BUT HAD I.T.A. NO. 790/HYD/2016 :- 2 - : SUSPENSION ONLY ABOUT THE INCOME DERIVED FROM SUCH AGRICULTURAL LANDS. THE COMMISSIONER (APPEALS) OUGHT TO HAVE APPRECIATE D THAT EVEN ON A VERY CONSERVATIVE ESTIMATE OF THE INCOME FROM AGRICULTUR AL LANDS WOULD LEAVE SUFFICIENT FUND IN THE HANDS OF THE APPELLANT'S MOT HER FOR THE PURPOSE OF INVESTMENT AND THEREFORE THE ADDITION OF RS.8,61,74 0 FROM THE SAID SOURCE IS UNSUSTAINABLE ON FACTS AND IN LAW. 4. THE COMMISSIONER (APPEALS) ERRED IN SUSTAINING T HE ADDITION OF RS.15 LAKHS BEING PART OF THE SOURCE OF RS.29,11,740, EXP LAINED AS RECEIVED BY APPELLANT'S MOTHER FROM SRI K.Y.CHARY. THE AUTHORIT IES BELOW FAILED TO APPRECIATE THAT THE SAID AMOUNT WAS AGREED TO BE PA ID BY THE APPELLANT'S MOTHER ONLY AFTER FINALIZATION OF DEVELOPMENT AGREE MENT WITH M/S.PRUTHVIRAJ PROJECTS PVT. LTD., IN RESPECT OF TH E LAND PURCHASED BY HER AS SHE STRONGLY APPREHENDED THAT THE SAID SMALL PIE CE OF LAND IS OTHERWISE NOT USEFUL. 5. THE COMMISSIONER (APPEALS) FAILED TO APPRECIATE THE BASIC FACTS WITH RESPECT TO M/S.SMR BUILDERS PVT. LTD., ENTERING INT O MOU WITH THE ORIGINAL LAND OWNER, AND FURTHER FACT THAT THEY HAVE BROUGHT IN VARIOUS OTHER PURCHASERS INTO PICTURE AS THEY FAILED TO CONCLUDE THE MOU. THE COMMISSIONER (APPEALS) OUGHT TO HAVE APPRECIATED TH AT ALL THE TRANSACTIONS RELATING TO PURCHASE OF PLOTS BY VARIO US BUYERS WAS AT THE INSTANCE OF M/S.SMR BUILDERS PVT. LTD., WHICH UNDER TOOK TO DEVELOP THE PROPERTY OVER THE ENTIRE EXTENT OF LAND AND THEREFO RE ONE OF THE ESSENTIAL CONDITIONS INSISTED BY THE APPELLANT'S MOTHER IS FO R MAKING BALANCE PAYMENT OF RS.23,61,740 ONLY AFTER ENTERING INTO DE VELOPMENT AGREEMENT. 6. THE FINDING OF THE COMMISSIONER (APPEALS) THAT T HE WILL DATED 08.10.2008 OF APPELLANT'S MOTHER DOES NOT HAVE A ME NTION OF THE AMOUNT PAYABLE TO MR.K.Y.CHARY AND THEREFORE THE STAND OF APPELLANT FOR THE SOURCE OF INVESTMENT TO HAVE BEEN RECEIVED FROM MR. K.Y.CHARY IS AN AFTERTHOUGHT, IS AN INCORRECT INFERENCE. THE COMMIS SIONER (APPEALS) FAILED TO APPRECIATE THAT IT IS NOT ESSENTIAL THAT A 'WILL ' SHOULD CONTAIN THE DETAILS OF THE LOAN IN AS MUCH IT ALL DEPENDS ON THE PERSON WHO IS WRITING THE 'WILL' AND AS TO WHETHER HE WANTS TO PASS ON THE LIABILITY ALONG WITH THE ASSETS. THE INFERENCE OF THE COMMISSIONER (APPEALS) IS INCO RRECT AND IS UNSUSTAINABLE ON FACTS AND IN LAW. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT TH E TIME OF HEARING, IT IS PRAYED THAT THE HON'BLE TRIBUNAL MAY BE PLEASED TO ALLOW THE APPEAL. 2. LD. COUNSEL SUBMITTED THAT ASSESSEE HAS PURCHASED SI TE OF 133 SQ. YDS., WHICH IN TURN WAS TRANSFERRED TO A DEVEL OPER AND ASSESSEE WAS INSTRUMENTAL ONLY IN GETTING THE PROPERTY R EGISTERED I.T.A. NO. 790/HYD/2016 :- 3 - : AND GIVING IT TO DEVELOPMENT. THE AMOUNT WHICH WAS REF LECTED IN THE DOCUMENT WAS PAID BY HER GRANDSON AND THE SO CALLE D CASH SUPPOSED TO HAVE BEEN PAID IN THE TRANSACTION WAS SOUR CED PARTLY FROM HER AGRICULTURAL INCOME AND PARTLY FROM BORROWA L FROM ONE MR. K. RAM MOHAN THROUGH SHRI K.Y. CHARY. IT WAS THE SUBMISSION THAT BOTH THE AUTHORITIES HAVE NOT ACCEPTED AS SESSEES CONTENTIONS AND INSPITE OF FILING SUBMISSIONS, THEY HAV E NOT BEEN ACCEPTED. IT WAS THE SUBMISSION THAT ASSESSEE IS IN A POSITION TO SUBSTANTIATE THE CONTENTIONS AND ALSO PRODUCE MR. K.Y. CHARY FOR VERIFICATION OF THE DEPARTMENT IF ONE MORE OPPORTUNITY IS GIVEN. 3. LD.DR, HOWEVER OBJECTED TO STATE THAT ASSESSEE WAS GIVEN AMPLE OPPORTUNITY AND PRINCIPLES OF NATURAL JUSTICE H AVE BEEN FOLLOWED. IT WAS THE SUBMISSION THAT ASSESSEE DID NOT A VAIL ALL THE OPPORTUNITIES, HENCE, THERE IS NO NEED TO SET ASIDE TO T HE AO. LD.DR REFERRED TO THE ORDERS OF THE AO AND CIT(A) TO SU BSTANTIATE THAT THERE IS NO MERIT IN ASSESSEES CONTENTIONS. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDER. AS SEEN FROM THE SEQUENCE OF THE EVENTS OF THE PROPERTY TRANSACTIONS, ASSESSEE ALONG WITH OTHERS HAVE PURCHASE D SMALL BITS OF LAND OF 133 SQ. YDS., GAVE IT IN TURN TO THE DEVEL OPER. IT IS ALSO NOTICED THAT THE DEVELOPER IS ALSO A CONFIRMING PARTY IN THE PURCHASE TRANSACTION. IT IS THE SUBMISSION OF ASSESSE E THAT THE SO CALLED ON MONEY WAS NOT PAID BY ASSESSEE BUT ROUTED THR OUGH HER. IN ORDER TO EXPLAIN THE AMOUNT WHICH WAS ULTIMATELY PAI D TO THE LAND OWNERS, SHE HAS STATED THAT SHE IS HAVING AGRICULT URAL INCOME AS WELL AS A BORROWAL FROM SHRI K. RAM MOHAN. EVEN THOUGH CONFIRMATION WAS FILED SUBSTANTIATING HER STAND, ON THE REASON THAT I.T.A. NO. 790/HYD/2016 :- 4 - : SHRI K.Y. CHARY WAS NOT PRODUCED BEFORE THE AO, THE AU THORITIES CONFIRMED THE AMOUNT. ASSESSEE RAISED THE CONTENTION BEF ORE THE CIT(A) THAT AO NEVER ASKED FOR PRODUCTION OF SHRI K.Y. CHARY. WITH REFERENCE TO THE DISCREPANCY OF BORROWAL LATER THAN THE DATE OF REGISTRATION, IT WAS THE SUBMISSION THAT ASSESSEE HAS PAI D THE AMOUNT LATER, AFTER THE DEVELOPMENT WAS CONFIRMED AND R EFERRED TO THE REGISTRATION OF DOCUMENT OF DEVELOPMENT IN THE MONTH OF JANUARY. AS SEEN FROM THE DEVELOPMENT DOCUMENT THEY AR E DATED 20-01-2007 AND SOME OF THE NOTINGS BY THE REGISTRATION O FFICE ALSO REFLECTS JANUARY 29 TH , SO THERE SEEMS TO BE SOME GENUINENESS IN ASSESSEES CLAIM THAT THE SO CALLED ON MONEY WAS PAID SUBSEQUENTLY ONLY AFTER THE DEVELOPMENT AGREEMENT WAS E NTERED. IT IS ALSO TO BE NOTED THAT THE DEVELOPER IS ALSO A CONF IRMING PARTY IN THE PURCHASE AGREEMENT. CONSIDERING THESE FACTS, W E ARE OF THE OPINION THAT ASSESSEES CONTENTIONS HAVE NOT BEEN VERIFI ED OR ANALYSED IN THE CORRECT PERSPECTIVE. SINCE ASSESSEE HAS STATED TO HAVE GIVEN THE RELEVANT INFORMATION TO THE AO, WE ARE OF THE OPINION THAT THE MATTER CAN BE RE-EXAMINED BY THE AO AFT ER GIVING ANOTHER OPPORTUNITY TO ASSESSEE TO SUBSTANTIATE. ACCORDI NGLY, WE SET ASIDE THE ORDERS OF THE AO AND CIT(A) FOR FRESH CO NSIDERATION AFTER GIVING DUE OPPORTUNITY TO ASSESSEE. 5. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JUNE, 2017 SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMB ER HYDERABAD, DATED 14 TH JUNE, 2017 TNMM I.T.A. NO. 790/HYD/2016 :- 5 - : COPY TO : 1.SMT. SUTTARI REKHA (LR OF LATE SMT. M. RAMACHANDRAMMA), C/O. K. VASANT KUMAR, A.V. RAGHU RAM, ADVOCATES, 610, BABUKHAN ESTATE, BASHEER BAGH, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-1, KARIMNAGAR. 3. CIT (APPEALS)-10, HYDERABAD. 4. CIT (IT&TP), HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.