Dr. K. Harinath, Nalgonda, Hyderabad V. ITO, Ward-1, Nalgonda

ITA 829/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66599 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 25-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K GNANAPRAKASH
• Assessee Lawyers: S RAMA RAO
• Section: 143(3); 133A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 829/HYD/2012 ASSESSMENT YEAR: 2007-08 DR. K. HARINATH, APPELLANT NALGONDA (PAN/GIR NO. AEOPK6417P/GH-0899) VS. INCOME-TAX OFFICER,WARD-1, RESPONDENT NALGONDA APPELLANT BY : SHRI S. RAMA RAO RESPONDENT BY : SHRI K. GNANA PRAKASH DATE OF HEARING : 12/12/2012 DATE OF PRONOUNCEMENT : 20/12/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE CIT-VI, HYDERABAD DATED 26/03/2011, PA SSED U/S 263 OF THE IT ACT, FOR THE ASSESSMENT YEAR 2007-08. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED HIS RETURN OF INCOME ON 01/11/2007, ADMITTING TOTAL IN COME OF RS. 15,20,690/- AND AGRICULTURAL INCOME OF RS. 1,00,000 /-. THE AO ACCEPTED THE INCOME RETURNED U/S 143(3) OF THE ACT. ITA NO. 829/HYD/2012 DR. K. HARINATH 2 3. THE CIT UNDER SECTION 263 OF THE ACT, HELD THAT WHILE COMPLETING THE ASSESSMENT OF THE ASSESSEE, THE AO H AD NOT VERIFIED CERTAIN ASPECTS, WHICH HAD LED TO ERRORS IN ASSESSM ENT ORDER COMPLETED BY THE AO AND THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. 4. THE CASE WAS POSTED FOR HEARING AND THE AR OF TH E ASSESSEE ATTENDED ON 06/03/2012 AND FURNISHED THE WRITTEN SU BMISSIONS BEFORE THE CIT. IT WAS THE CONTENTION OF THE AR TH AT SINCE THERE WAS A SURVEY AND THE SURVEY PARTY HAD POINTED OUT CERTA IN SHORT COMINGS DURING SURVEY OPERATION, THEREFORE, THE ASSESSEE HA D GIVEN ADEQUATE EXPLANATION AND THEREBY ALSO HAD OFFERED T O DISCLOSE TOTAL INCOME AT RS. 15,20,690/- WHICH HAD BEEN ACCEPTED B Y THE AO WHILE COMPLETING THE ASSESSMENT. THEREFORE, WHILE DISCLOS ING THE RETURN OF INCOME AT RS. 15,20,690/-, THE ASSESSEE HAD TAKEN C ARE TOWARDS DEFICIENCIES POINTED OUT WHICH INCLUDES THE CASH FO UND AND OTHER ASPECTS. THEREFORE, IT WAS CONTENDED THAT THE PROPO SAL TO REVIEW THE ASSESSMENT ORDER PASSED BY THE AO IS NOT WARRANTED. 5. AFTER CONSIDERING THE SUBMISSIONS, THE CIT HELD THAT THE ASSESSEE IS HAVING UNSECURED LOANS OF RS. 8,00,000/ -AND THE BALANCE SHEET WHICH IS IN FACT LESSER THAN PREVIOUS ASSESSMENT YEAR HAD UNSECURED LOANS AT RS. 12,60,000/-. IT WAS THE CLAIM OF THE AR THAT SINCE THE UNSECURED LOANS ADMITTED BY THE ASSE SSEE WERE MUCH LESSER THAN PREVIOUS ASSESSMENT YEAR, THE SAME HAD BEEN ACCEPTED BY THE AO. ITA NO. 829/HYD/2012 DR. K. HARINATH 3 6. THE CIT OBSERVED THAT EVEN THOUGH THE UNSECURED LOANS ADMITTED BY THE ASSESSEE ARE MUCH LESSER THAN BY TH E PREVIOUS ASSESSMENT YEAR, IT APPEARS THAT THE AO HAD NOT EXA MINED THE SAID UNSECURED LOANS TO FIND OUT WHETHER THERE ARE ANY N EW LOANS. THE AO ALSO SHOULD HAVE VERIFIED THE FACT WITH REGARD T O THE SOURCE FOR THE REPAYMENT OF THE UNSECURED LOANS TO THE EXTENT OF RS. 4,60,000/-. THEREFORE, IT APPEARS TO THIS EXTENT TH E AO HAD COMMITTED ERROR WHILE PASSING THE ASSESSMENT ORDER BY SIMPLY ACCEPTING THE INCOME RETURNED. HENCE, THE CIT FOUND THAT THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 7. THE CIT FURTHER OBSERVED THAT THE AO ALSO HAD AC CEPTED THE AGRICULTURAL INCOME RETURNED AT RS. 1,00,000/- WITH OUT MAKING ANY ENQUIRIES ABOUT THE AGRICULTURAL INCOME RETURNED AN D THE AO SHOULD HAVE VERIFIED THE LAND DETAILS AND OTHER NECESSARY DETAILS RELATING TO AGRICULTURAL INCOME CLAIMED. THEREFORE, THE CIT HEL D THAT THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 8. THE CIT CONCLUDED THAT THE AO HAS TO MAKE NECESS ARY ENQUIRIES WITH REGARD TO UNSECURED LOANS AND AGRICU LTURAL INCOME ADMITTED AND SET ASIDE THE ORDER OF THE AO U/S 263 OF THE IT ACT. 9. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US A ND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE LEARNED CIT IS ERRONEOUS BOTH O N FACTS AND IN LAW. 2. THE LEARNED CIT ERRED IN HOLDING THAT THERE IS A NY ERROR IN THE ORDER OF ASSESSMENT WHICH IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ITA NO. 829/HYD/2012 DR. K. HARINATH 4 3. THE LEARNED CIT ERRED IN HOLDING THAT THE AO DID NOT EXAMINE THE UNSECURED LOANS. THE LEARNED CIT OUGHT TO HAVE SEEN THAT THERE WAS NO ERROR IN THE ORDER OF ASSESS MENT. 4. THE LEARNED CIT ERRED IN HOLDING THAT THE AO DID NOT VERIFY THE AGRICULTURAL INCOME ADMITTED IN THE RETURN OF I NCOME. THE LEARNED CIT OUGHT TO HAVE SEEN THAT THE APPELLANT P OSSESSED 50% OF THE RIGHT IN 17 ACRES OF AGRICULTURAL LAND A ND THE INCOME ADMITTED OF RS. 1 LAKH IS QUITE FAIR. THE LE ARNED CIT OUGHT TO HAVE OBSERVED THAT THE SAID INFORMATION WA S ALREADY ON RECORD. 5. THE LEARNED CIT ERRED IN SETTING ASIDE THE ORDER OF ASSESSMENT WHEN THE ORDER OF ASSESSMENT IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 10. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI S. RA MA RAO INVITED OUR ATTENTION TO PAGE NO. 13 OF THE PAPER BOOK WHER EIN DURING THE COURSE OF SURVEY, SURVEY PARTY HAS POINTED OUT CERT AIN SHORTCOMINGS AND THE ASSESSEE HAD GIVEN AN EXPLANATION AND ALSO OFFERED TO DISCLOSE TOTAL INCOME OF RS. 15,20,690/- FOR THIS A SSESSMENT YEAR AND THE SAME WAS ACCEPTED BY THE AO WHILE COMPLETIN G THE ASSESSMENT AND, HENCE, THE AO HAD ACCEPTED THE INCO ME RETURNED U/S 143(3) OF THE IT ACT. 11. ON THE OTHER HAND, THE LEARNED DR K. GNANA PRAK ASH RELIED UPON THE ORDER OF THE CIT. 12. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES , PERUSED THE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT DURING THE PREVIOUS YEAR UNDER CONSIDERAT ION THE AO CONDUCTED SURVEY U/S 133A OF THE ACT, WHEREIN HE RE CORDED A STATEMENT AND REQUIRED THE ASSESSEE TO EXPLAIN ALL THE DETAILS WITH REGARD TO ASSETS AND LIABILITIES. DURING THE COURSE OF SURVEY, THE ASSESSEE HAS OFFERED THE INCOME OF RS. 15,20,860/-, WHICH WAS ARRIVED BASED ON THE DETAILS OBTAINED DURING THE CO URSE OF SURVEY. ITA NO. 829/HYD/2012 DR. K. HARINATH 5 THE DETAILS HAVE BEEN EXAMINED BY THE AO WITH REGAR D TO UNSECURED LOANS OF RS. 8 LAKHS. IT APPEARS THAT EVEN FOR IMM EDIATELY PRECEDING YEAR THE UNSECURED LOANS SHOWN BY THE ASS ESSEE WAS ACCEPTED BY THE AO. FURTHER WHEN THE ASSESSEE HAS B EEN QUESTIONED ABOUT THE AGRICULTURAL HOLDING, IT HAS BEEN BROUGHT TO THE NOTICE THAT THE ASSESSEE AND HIS WIFE JOINTLY HELD AT SRIRANGAP URAM VILLAGE, NIDAMANOOR MANDAL, NALGONDA DT. AND, HENCE, THE INC OME ADMITTED OF RS. 1.00 LAKH SEEMS TO BE FAIR AND REASONABLE. F ROM THE RECORD, WE FIND THAT THE AO HAS PROPERLY VERIFIED THE CLAIM S OF THE ASSESSEE AND FIGURES FOUND DURING THE COURSE OF SURVEY WERE THE BASIS FOR THE ASSESSEE TO OFFER THE INCOME. THEREFORE, WE ARE OF THE OPINION THAT ONCE THE ASSESSEE OFFERED TO DISCLOSE THE INCOME OF RS. 15,20,690/- DURING THE YEAR UNDER CONSIDERATION, THE AO AFTER R ECONCILIATION ACCEPTED THE SAME AND COMPLETED THE ASSESSMENT AND, HENCE, THE ORDER OF THE AO IS NEITHER ERRONEOUS NOR PREJUDICIA L TO THE INTERESTS OF THE REVENUE. THEREFORE, WE HEREBY QUASH THE ORDE R OF THE CIT PASSED U/S 263 OF THE ACT AND RESTORE THAT OF THE A O. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2012. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGH AVAN) ACCOUNTANT MEMBER JUDICIAL MEMBE R HYDERABAD, DATED: 20 TH DECEMBER, 2012. KV ITA NO. 829/HYD/2012 DR. K. HARINATH 6 COPY TO:- 1) DR. K. HARINATH, C/O SRI S. RAMA RAO, ADVOCATE, FLA T NO. 102, H.NO. 3-6-643, SHRIYAS ELEGANCE, ST.NO. 9, HIMAYATNAGAR, HYDERABAD 500 029. 2) ITO, WARD - 1,NALGONDA 3) THE CIT-VI, HYDERABAD 4) THE ADDL. CIT, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.