CM Gopal , Hyderabad V. Dy. Commissioner of Income Tax , Central Circle-(2), Hyderabad

ITA 832/Hyd/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5503 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 22-06-2021
• Assessment Year: 2008-2009
• Appeal Filed On: 21-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P CHANDRA SEKHAR
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Capital asset
• Section: 143(3); 153A; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH : HYDERABAD (THROUGH VIRTUAL HEARING) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO.235/HYD/2019 (ASSESSMENT YEAR: 2007-08) SHRI CH. CHANDRASEKHAR NAIDU, C/O P.. MURALI & CO, CHARTERED ACCOUNTANTS, 6-3-655/2/3, SOMAJIGUDA, HYDERABAD 500082. PAN NO.ADBPC2996B. ..APPELLANT. VS. THE DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2, HYDERABAD. .. RESPONDENT. ITA NO.832/HYD/2019 (ASSESSMENT YEAR: 2008-09) SHRI C.M. GOPAL, HYDERABAD, CHARTERED ACCOUNTANTS, 6-3-655/2/3, SOMAJIGUDA, HYDERABAD 500082. PAN NO.ABVPV2460L. APPELLANT. VS. THE DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2, HYDERABAD. .. RESPONDENT. 2 ITA NOS.832, 833 & 835/HYD/2019 & ITA NO.235/HYD/2019 ITA NO.833/HYD/2019 (ASSESSMENT YEAR: 2008-09) SHRI CH. CHANDRASEKAR NAIDU, C/O. P.. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, SOMAJIGUDA, HYDERABAD 500082. PAN NO.ADBPC2996B. APPELLANT. VS. THE DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2, HYDERABAD. .. RESPONDENT. ITA NO.835/HYD/2019 (ASSESSMENT YEAR: 2008-09) SHRI CH. GOVARDHAN NAIDU, C/O. P.. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, SOMAJIGUDA, HYDERABAD 500082. PAN NO.ADDPC6489M. APPELLANT. VS. THE DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2, HYDERABAD. .. RESPONDENT. APPELLANT BY : SHRI P. MURALI MOHAN RAO, AR. RESPONDENT BY : SHRI P. CHANDRA SEKHAR, DR. DATE OF HEARING : 22.06.2021 DATE OF PRONOUNCEMENT : 13.09.2021 3 ITA NOS.832, 833 & 835/HYD/2019 & ITA NO.235/HYD/2019 O R D E R PER S.S. GODARA, J.M. : THE INSTANT BATCH OF FOUR CASES PERTAINS TO THREE A SSESSEES SHRI CH. CHANDRASEKAR NAIDU, SHRI CM. GOPAL, AND CH . GOVERDHAN NAIDU. THE FIRST ASSESSEE HEREIN HAS FIL ED HIS TWIN APPEALS ITA NOS.235 AND 833/HYD/2019 FOR AYS. 200 7-08 AND 2008-09 AGAINST THE CIT(A)-11, HYDERABADS SEPARAT E ORDERS; DATED 30.11.2018 AND 29.03.2019 IN CASE NOS.220/201 3-14/DCIT CC-1(2)/CIT(A)-11, HYD AND 0221/2013-14/DCIT CC-2/C IT(A)- 11/2018-19/HYD; RESPECTIVELY. 2. THE LATTER TWO ASSESSEES APPEALS ON ITA NOS.832 AND 835/HYD/2019 ARE DIRECTED AGAINST THE CIT(A)-11, HY DERABADS SEPARATE ORDERS; BOTH DATED 29.03.2019, IN CASE NOS .0214/2013- 14/DCIT CC-2/CIT(A)-11/2018-19/HYD AND 0208/2013-14 /DCIT CC-2CIT(A)-11/2018-19/HYD; RESPECTIVELY. RELEVANT PROCEEDINGS IN ALL THE INSTANT FOUR CASES ARE U/S 143(3) R.W.S. 153A OF THE INCOME TAX ACT,1961 [IN S HORT, THE ACT]. HEARD ALL THE ASSESSEES APPEALS AS WELL AS THE DEP ARTMENT. CASE FILES PERUSED. 4 ITA NOS.832, 833 & 835/HYD/2019 & ITA NO.235/HYD/2019 3. WE COME TO THE FIRST ASSESSEES APPEAL ITA NO.2 35/HYD/2019 RAISING HIS SOLE SUBSTANTIVE GRIEVANCE THAT BOTH TH E LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN MAKIN G UN-EXPLAINED INVESTMENT ADDITION OF RS.1,00,000/- DURING THE COU RSE OF ASSESSMENT AS UPHELD IN THE CIT(A)S ORDER. THERE IS NO DISPUTE WITH IMPUGNED ADDITION PERTAINS TO A PROMISSORY NO TE FOUND AND SEIZED DURING THE COURSE OF SEARCH DATED 25.11.2010 . THE ASSESSEE HAD ATTRIBUTED SOURCE THEREOF TO BORROWERS FROM HIS EPONYMOUS HUF WHICH COULD NOT BE PROVED SINCE THE LATTER HAD NOT FILED ANY INCOME TAX RETURN PERTAINING TO A.Y. 2007-08. 4. MR. P. MURALI MOHAN RAO, VEHEMENTLY CONTENDED D URING THE COURSE OF HEARING THAT BOTH THE LOWER AUTHORITIES H AVE ERRED IN LAW AND ON FACTS IN MAKING THE IMPUGNED ADDITION. HE TOOK US TO THE HUFS BALANCE SHEET AND OTHER RELEVANT DOCUMENTS F ORMING PART OF THE CASE FILE. HE SUBMITS THAT JUST BECAUSE THE SAID HUF HAD NOT DERIVED ANY TAXABLE INCOME BEYOND THE EXEMPTION LIMIT WOULD NOT FORM THE SOLE SUBSTANTIVE REASON TO DENY THE ASSESSEES EXPLANATION HEREIN. 5 ITA NOS.832, 833 & 835/HYD/2019 & ITA NO.235/HYD/2019 5. WE FIND NO MERIT IN ASSESSEES INSTANT ARGUMENTS SINCE HE HAS FAILED TO PROVE THE IMPUGNED SUM OF RS.1,00,00 0/- AS BORROWALS COMING FROM HUF WITH THE RELEVANT MODE OF PAYMENT AS WELL. WE REJECT THE ASSESSEES INSTANT SOLE SUBSTANT IVE GRIEVANCE. HIS FIRST AND FOREMOST APPEAL NO.235/HYD/2019 FAILS THEREFORE. 6. NEXT COMES THE SOLE IDENTICAL ISSUE OF UNDISCLOS ED INVESTMENT ADDITION OF RS.47,00,100/- 2 ND AND 3 RD APPEALS ITA NOS.833 AND 832/HYD/2019 @ 12.5% SHARE IN THEIR HANDS AS AGAINS T RS.94,00,201/- INVOLVING THE LAST ASSESSEE SHRI CH. GOVERDHAN NAIDU; RESPECTIVELY. 7. THERE IS NO QUARREL BETWEEN THE PARTIES THAT THE DEPARTMENT HAD FOUND / SEIZED THE ASSESSEES FOUR PURCHASE DE EDS DOCUMENTS NOS.92, 93, 144 AND 145/2008 INDICATING ACTUAL CONS IDERATION AS RS.1,49,00,000/- HAVING SRO VALUE OF RS.2,73,77,000 /- FOLLOWED BY THE ALLEGED UNDISCLOSED INVESTMENT SUM OF RS.3.5 CRORES (INCLUDING THE FOREGOING HEADS); RESPECTIVELY. 8. THE DEPARTMENT HAS FILED A VERY DETAILED NOTE DA TED 28.07.2021 THROUGH LEARNED CIT-DR THAT THE LOWER AU THORITIES HAVE GONE BY THE ASSESSEES ADMISSION MADE DURING T HE COURSE OF 6 ITA NOS.832, 833 & 835/HYD/2019 & ITA NO.235/HYD/2019 SEARCH THAT THEY HAD ACTUALLY PAID A TOTAL SUM OF R S.3.5 CRORES INVOLVING THE RESPECTIVE SHARES OF 12.5% EACH AND 2 5% (SUPRA) AS WELL AS 50% STAKE OF THEIR ELDEST BROTHER SHRI C. S ATYANARAYANA. AND THEIR UNIFORM STAND BEFORE US IS THAT IT WAS T HE FORGOING HUF ONLY WHICH HAD MADE THE IMPUGNED INVESTMENT AND THE IR INDIVIDUALS / MEMBERS THEREOF. 9. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO TH E FORGOING RIVAL STANDS AGAINST THE IMPUGNED AND UNDISCLOSED INVESTMENT ADDITION MADE IN THESE THREE ASSESSEES HANDS. WE FIND NO REASON TO SUSTAIN THE SAME. THIS IS BECAUSE OF THE FAC T THAT IT IS NOT THESE THREE MEMBERS / INDIVIDUALS OF THE HUF BUT TH E LATTER PERSON HIMSELF WHO HAD DISCLOSED THE RELEVANT IN VESTMENT IN ITS BALANCE SHEET AS ON 31.03.2008 (PG.NO.130) INVOLVIN G POSINA COMPLEX HAVING VALUE OF RS.43,75,352/- WAY BACK ON 31.03.2008. THIS CLINCHING FACT HAS GONE UNREBUTTED FROM REVE NUE SIDE. IT HAS SOUGHT TO REEMPHASIZE THAT THE IMPUGNED ADDITIO N IS BASED ON THE ASSESSEES SEC.132(4) STATEMENTS WHICH HAD NOT BEEN RETRACTED. IT ALSO QUOTES CASE LAW BANNALAL JAT CO NSTRUCTIONS PVT. LTD VS. ACIT (2019) 106 TAXMANN.COM 128 (SC), PCIT VS. ROSHAN 7 ITA NOS.832, 833 & 835/HYD/2019 & ITA NO.235/HYD/2019 LAL (2013) 30 TAXMANN.COM 367 (ALLAHABAD), KERMEX M ICRO SYSTEMS (INDIA) LTD VS DCIT (2014) 47 TAXMANN.COM 375 (ANDHRA PRADESH HIGH COURT). LEARNED CIT-DR COULD NOT PI NPOINT EVEN A SINGLE INSTANCE IN ALL THE FOREGOING JUDICIAL PRECED ENTS AS TO WHETHER THE ADDITIONS THEREIN WERE BASED ON MERE SE ARCH STATEMENTS OR NOT ? WE MAKE IT CLEAR THAT THE CBDT HAS ITSELF ISSUED THE TWIN CIRCULARS DT.10.03.2013 AND 18.12 .2014 THAT SEARCH STATEMENTS INVOLVING ADMISSIONS AND CONFESS IONS DO NOT CARRY ANY SIGNIFICANCE IN ABSENCE OF EVIDENCE COLL ECTED. WE MAKE IT CLEAR THAT THE REVENUE HAS NOT INDICATED EVEN A SINGLE MATERIAL WHICH COULD SUGGEST THESE ASSESSEES TO HAVE MADE AC TUAL PAYMENTS OVER AND ABOVE RS.1.49 CRORE. WE THUS HOL D THAT IN THIS FACTUAL BACKDROP BOTH THE LEARNED LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN ASSESSING THE ALLEGED IMPUGNED / UNDISCLOSED INVESTMENTS IN THESE THREE INDIVIDUALS HANDS WHERE IN THE CORRESPONDING CAPITAL ASSET HAD BEEN PURCHASED A ND DECLARED BY THE FOREGOING HUF ONLY. THESE ADDITIONS I.E., 47,00,100/- EACH IN ITA NOS.833 AND 832/HYD/2019 AND RS.94,00,201/- IN ITA 8 ITA NOS.832, 833 & 835/HYD/2019 & ITA NO.235/HYD/2019 NO.835/HYD/2019 ARE DIRECTED TO BE DELETED. THESE LATTER THREE APPEALS SUCCEED THEREFORE. NO OTHER GROUND HAS BEEN PRESSED BEFORE US. 10. TO SUM UP, THE FIRST AND FOREMOST APPEAL ITA NO.235/HYD/2019 IS DISMISSED AND THE REMAINING THRE E APPEALS IN ITA NO.832, 833 AND 835/HYD/2019 ARE ALLOWED IN ABOVE TERMS. A COPY OF THIS COMMON ORDER BE PLACED IN RESPECTIVE CASE FILES. ORDER PRONOUNCED ON 13 TH DAY OF SEPTEMBER, 2021. SD/- S SD/- SD/- SD/- (L.P. SAHU) ( S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER HYDERABAD, DT.13.09.2021. *TYNM COPY FORWARDED TO: 1 . SHRI CH. CHANDRASEKHAR NAIDU, C/O P.. MURALI & CO, CHARTERED ACCOUNTANTS, 6-3-655/2/3, SOMAJIGUDA, HYDERABAD 500082. 2 . SHRI C.M. GOPAL, HYDERABAD, CHARTERED ACCOUNTANTS, 6-3-655/2/3, SOMAJIGUDA, HYDERABAD 500082. 9 ITA NOS.832, 833 & 835/HYD/2019 & ITA NO.235/HYD/2019 3 . CH GOVARDHAN NAIDU, C/O. P.. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, SOMAJIGUDA, HYDERABAD 500082. 4 . CIT (APPEALS) 11, HYDERABAD 5 . PR.CIT (CENTRAL), HYDERABAD 6. DR. ITAT, HYDERABAD. 7. GUARD FILE . // BY BY ORDER