Mr.K.CH.Subba Rao, Hyderabad V. ACIT, Central Circle-3, Hyderabad

ITA 888/HYD/2013

• Counselvise Citation: 88822514 RSA 2013
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 28-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PALLAVI AGARWAL
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Source of fund
• Section: 143(3); 153A; 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NOS.885, 886, 887 & 888/HYD/2013 ASSESSMENT YEARS 2004-05, 2005-06, 2006-07 & 2008-09 MR. K.CH. SUBBA RAO, HYDERABAD. PAN AHLPK3647B VS. THE ACIT, CENTRAL CIRCLE-3, HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. P. MURALIMOHAN RAO FOR REVENUE : SMT. PALLAVI AGARWAL DATE OF HEARING : 16.08.2016 DATE OF PRONOUNCEMENT : 16.09.2016 ORDER PER B. RAMAKOTAIAH, A.M. THESE FOUR APPEALS ARE BY THE ASSESSEE AGAINST THE SEPARATE BUT SIMILAR ORDERS OF CIT, CENTRAL, HYDERAB AD DATED 25.03.2015 SETTING ASIDE THE ASSESSMENTS COMPLETED IN R ESPECTIVE ASSESSMENT YEARS UNDER SECTION 153A READ WITH SECTION 1 43(3) OF THE I.T. ACT, 1961 WHICH ARE ALL COMPLETED VIDE ORDER S DATED 28.12.2010. 2. BRIEFLY STATED, ASSESSEE HEREIN IS COVERED UNDER SECTION 132 OF THE I.T. ACT ON 29.12.2008. CONSEQUENT TO THAT, NOTICES UNDER SECTION 153A OF THE I.T. ACT WERE ISSUED ON 03.08.2008 FOR IMPUGNED ASSESSMENT YEARS AND AFTER D UE SCRUTINY AND WITH THE APPROVAL OF THE ADDL. CIT, CENTR AL RANGE-2, THE ASSESSMENTS HAVE BEEN COMPLETED IN THE IMPUGNED ASSESSMENT YEARS. ON NOTICING THAT CERTAIN SEIZED MATER IAL HAS 2 ITA.NO.885 TO 888/HYD/2013 MR. K.CH. SUBBA RAO, HYDERABAD. NOT BEEN EXAMINED BY THE ASSESSING OFFICER THE LD. C IT INITIATED PROCEEDINGS UNDER SECTION 263 OF THE I.T. ACT, 1961. THE SAID SEIZED MATERIAL ARE AS UNDER : FOR A.Y. 2004-05 : (I) PAGE NO. 4 TO 7 OF ANNEXURE A/KCSR/RES/02 IS AN AGREEMENT OF SALE DATED 13.11.2003 FOR PURCHASE OF PROPERTY BY YOU FOR A CONSIDERATION OF RS.25,00,000 /-, OUT OF WHICH AN AMOUNT OF RS.12,50,000/- WAS ALREAD Y PAID. (II) PAGE NO. 77 TO 79 OF ANNEXURE A/KCSR/RES/03 IS AN AGREEMENT OF SALE DATED 13.11.2003 FOR PURCHASE OF PROPERTY BY YOU FOR A CONSIDERATION OF RS.25,00,000 /-. FOR A.Y. 2005-06 : (I) PAGE NO. 83 TO 88 OF ANNEXURE A/KCSR/RES/03 IS AN AGREEMENT OF SALE DATED 08.07.2004 FOR PURCHASE OF PROPERTY FOR A CONSIDERATION OF RS.7,50,000/-, OUT OF WHICH AN AMOUNT OF RS.3,75,000/- WAS PAID IN CASH. FOR A.Y. 2006-07 : (I) PAGE NO. 66 TO 75 OF ANNEXURE A/KCSR/RES/02 IS AN AGREEMENT OF SALE DATED 16.03.2006 FOR PURCHASE OF PROPERTY FOR A CONSIDERATION OF RS.5,50,000/-. THE ENTIRE AMOUNT WAS PAID IN CASH. (II) PAGE NO.56 TO 65 OF ANNEXURE A/KCSR/RES/02 IS AN AGREEMENT OF SALE DATED 16.03.2006 FOR PURCHASE OF PROPERTY FOR A CONSIDERATION OF RS.5,50,000/-. THE ENTIRE AMOUNT WAS PAID IN CASH. (III) PAGE NO.68 TO 76 OF ANNEXURE A/KCSR/RES/03 IS A SALE DEED DATED 20.06.2005 ENTERED BY THE ASSESSEE FOR PURCHASE OF PROPERTY FOR A CONSIDERATION OF RS.45,000/-. 3 ITA.NO.885 TO 888/HYD/2013 MR. K.CH. SUBBA RAO, HYDERABAD. FOR A.Y. 2008-09 : (I) PAGE NO.101 TO 107 OF ANNEXURE A/KCSR/RES/02 IS AN AGREEMENT OF SALE DATED 18.06.2007 FOR PURCHASE OF PROPERTY BY YOU FOR A CONSIDERATION OF RS.4,50,000/ -. THE ENTIRE AMOUNT WAS PAID IN CASH. (II) PAGE NO.83 TO 88 OF ANNEXURE A/KCSR/RES/02 IS AN AGREEMENT OF SALE DATED 18.06.2007 FOR PURCHASE OF PROPERTY BY YOU FOR A CONSIDERATION OF RS.6,00,000/ -. THE ENTIRE AMOUNT WAS PAID IN CASH. (III) PAGE NO.93 TO 96 OF ANNEXURE A/KCSR/RES/03 IS A DEVELOPMENT AGREEMENT ENTERED BY M/S. DEEPTI HOMES, WHEREIN SRI K. SRIKANTH, YOUR SON, WAS A PARTNER FO R THE DEVELOPMENT OF THE PROPERTY AT MADHAPUR. (IV) PAGE NO.89 TO 92 OF ANNEXURE A/KCSR/RES/03 IS A DEVELOPMENT AGREEMENT ENTERED BY M/S. DEEPTI HOMES, WHEREIN SRI K. SRIKANTH, YOUR SON, WAS A PARTNER FO R THE DEVELOPMENT OF A PROPERTY AT MADHAPUR. (V) PAGE NO.19 TO 35 OF ANNEXURE A/KCSR/RES/03 IS A DEVELOPMENT AGREEMENT ENTERED BY M/S. DEEPTI HOMES, WHEREIN SRI K. SRIKANTH, YOUR SON, WAS A PARTNER FO R THE DEVELOPMENT OF A PROPERTY AT MADHAPUR. 2.1. THE ASSESSEE HAS OBJECTED TO THE PROCEEDINGS STAT ING THAT ASSESSMENTS HAVE BEEN COMPLETED UNDER SECTION 153A AFTER DUE SCRUTINY OF THE ENTIRE SEIZED MATERIAL, NOT ONLY O F THE ASSESSEE BUT ALSO OTHER GROUP CONCERNS IN WHICH ASSE SSEE IS INTERESTED AND SINCE THE ASSESSMENTS HAVE BEEN COMPLET ED WITH THE APPROVAL OF THE ADDL. CIT, THERE IS NO ERROR IN THE ORDER OF THE ASSESSING OFFICER. FURTHER, IT WAS SUBMITTED THAT THE IMPU GNED MATERIAL PERTAINS TO ASSESSEE HUF AND THESE INVESTMEN TS MADE BY THE HUF DOES NOT PERTAIN TO THE ASSESSEE IN INDIVIDU AL CAPACITY. ASSESSEE ALSO FURTHER OBJECTED TO THAT IN THE ASSESSMENT YEAR 2004-05, THE SO-CALLED SEIZED MATERIAL DOES NOT PERTAIN TO 4 ITA.NO.885 TO 888/HYD/2013 MR. K.CH. SUBBA RAO, HYDERABAD. THE YEAR UNDER CONSIDERATION. LD. CIT HOWEVER, DID NO T AGREE WITH THE ASSESSEE. HIS REASONING WHICH IS COMMON IN ALL T HE ASSESSMENT YEARS ARE AS UNDER : 5. I HAVE GONE THROUGH THE SUBMISSION. FIRST OF ALL THE SUBMISSION HAS BEEN RECEIVED FROM THE ASSESSEE IN THE CAPACITY OF HUF WHERE AS THE DOCUMENTS NO WHERE STA TES THAT AN AGREEMENT WAS ENTERED BY THE HUF. RATHER IT CLEARLY SHOWS THAT THE ASSESSEE AS INDIVIDUAL HAD ENTERED I NTO AGREEMENTS. FURTHER THE CASE OF HUF WAS NOT CENTRAL ISED WITH THE AO FOR ANY VERIFICATION WHATSOEVER. IN ANY CASE THE FACT REMAINS THAT THE ISSUE HAS NOT AT ALL BEEN DEA LT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THOUGH TH E SEIZED MATERIALS WERE AVAILABLE BEFORE THE AO AT THE TIME OF ASSESSMENT. FURTHER THE SUBMISSION HAS BEEN RECEIVE D FROM HUF WHEREAS THE SHOW-CAUSE NOTICE WAS ISSUED TO SRI K.CH. SUBBA RAO IN THE CAPACITY OF INDIVIDUAL. HENCE, THE REPLY GIVEN BY ASSESSEE CAN NOT BE ACCEPTED. 6. IT HAS BEEN JUDICIALLY HELD THAT AN ASSESSMENT MADE WITHOUT NECESSARY ENQUIRY CAN BE HELD TO BE ER RONEOUS AND CAN BE REVISED U/S.263 OF THE LT. ACT 1961. REF ERENCE IN THIS REGARD CAN BE MADE TO THE DECISION OF SPECIAL BENCH, ITAT, CHENNAI REPORTED IN 313 ITR (AT) 182, CHENNAI SB WHEREIN IT WAS OBSERVED THAT IT IS NOT NECESSARY FO R THE COMMISSIONER OF INCOME-TAX IN REVISION TO MAKE FURT HER ENQUIRIES BEFORE CANCELING THE ASSESSMENT ORDER OF THE A.O. THE COMMISSIONER OF INCOME-TAX CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES O F THE CASE, THE A.O. SHOULD HAVE MADE FURTHER ENQUIRIES B EFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HI S RETURN. IT IS INCUMBENT ON THE A.O. TO INVESTIGATE THE FACT S STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN EN QUIRY PRUDENT. THE WORD ERRONEOUS IN SEC.263 OF INCOME-TA X ACT, 1961 INCLUDES CASES WHERE THERE HAS BEEN FAILURE TO MAKE NECESSARY ENQUIRIES. CONSIDERING THE ABOVE, THE ORD ER PASSED BY ASSESSING OFFICER U/S.143(3) R.W.S.153A F OR THE A.Y.2004-05 ON 28.12.2010 IS PREJUDICIAL TO THE INT EREST OF REVENUE. 2.2. BY CONSIDERING THE ISSUE AS ABOVE, THE LD. CIT SET ASIDE THE IMPUGNED ASSESSMENT ORDERS WITH A DIRECTION TO RE-DO 5 ITA.NO.885 TO 888/HYD/2013 MR. K.CH. SUBBA RAO, HYDERABAD. THE ASSESSMENT AFTER CONDUCTING NECESSARY VERIFICATION /ENQUIRIES RELATING TO THE TRANSACTION OF ASSESSEE IN PURCHASE AND SALE OF LAND AS APPEARING IN THE SEIZED BOOKS OF ACCOUNT AND DOCUMENTS AND AFTER VERIFYING THE SOURCE OF INVESTMENT IN SUCH L ANDED PROPERTIES. HE, ACCORDINGLY, SET ASIDE THE ASSESSMENTS. 3. ASSESSEE HAS RAISED SIMILAR GROUNDS IN ALL THE APPEALS AND SINCE COMMON ISSUE IS INVOLVED IN ALL THE APPEAL S, WE HAVE HEARD THE APPEALS TOGETHER. ASSESSEE HAS ALSO RAISED A DDITIONAL GROUND STATING THAT PROCEEDINGS UNDER SECTION 143(3) REA D WITH SECTION 153A ITSELF ARE INVALID. THEREFORE, CONSEQUEN TLY, THE PROCEEDINGS WOULD ALSO BECOME INVALID. LEARNED COUN SEL FOR THE ASSESSEE REFERRING TO THE ORDERS AND PAPER BOOK PLAC ED ON RECORD SUBMITTED THAT ASSESSING OFFICER HAS COMPLETED THE CONSEQUENTIAL ASSESSMENTS AND THE DETAILS ARE AS UNDER : A.Y. SEIZED MATERIAL REFERENCE IN 263 ORDER ADDITION MADE IN 143(3) R.W.S. 263 REMARKS 2004-05 PAGE 4 TO 7 OF A/KCSR/RES/02 NO ADDITION MADE AS AMOUNT RELATES TO YEAR 1998-99. PAGE 77 TO 79 OF A/KCSR/RES/03 NO ADDITION MADE AS AMOUNT RELATES TO YEAR 1998-99 2005-06 PAGE 83 TO 88 OF A/KCSR/RES/03 RS.3,75,000 = TOTAL RS.3,75,000 2006-07 PAGE 66 TO 75 OF A/KCSR/RES/02 RS.1,10,000 1/5 TH SHARE ADDED IN THE HANDS OF ASSESSEE. PAGE 56 TO 65 OF A/KCSR/RES/02 NO ADDITION MADE IN 143(3) RWS 263 ORDER. PAGE 68 TO 76 OF A/KCSR/RES/03 RS.45,000 UNEXPLAINED INVESTMENT TOTAL RS.1,55,000 6 ITA.NO.885 TO 888/HYD/2013 MR. K.CH. SUBBA RAO, HYDERABAD. 2008-09 PAGE 101-107 OF A/KCSR/RES/02 RS.1,12,500 1/4 TH SHARE ADDED IN THE HANDS OF ASSESSEE. PAGE 83-88 OF A/KCSR/RES/02 RS.1,50,000 1/4 TH SHARE ADDED IN THE HANDS OF ASSESSEE. PAGE 93-96 OF A/KCSR/RES/03 = PAGE 89-92 OF A/KCSR/RES/03 = PAGE 19-35 OF A/KCSR/RES/03 = TOTAL RS.2,62,500 3.1. IT WAS HIS OBJECTION THAT THE ASSESSING OFFICER HI MSELF HAS GIVEN A FINDING THAT THE MATERIAL REFERRED TO BY TH E CIT IN A.Y. 2004-05 DOES NOT PERTAIN TO THE YEAR UNDER CONSID ERATION AND ACCORDINGLY, NO ADDITION WAS MADE. THEREFORE, TH E PROCEEDINGS INITIATED PER SE ARE BAD IN LAW. COMING TO THE A.Y. 2005-06 EVEN THOUGH ASSESSING OFFICER HAS MADE AN AM OUNT OF RS.3,75,000 AS ADDITION THERE IS NO SUCH SEIZED MATER IAL WHICH CAN DETERMINE THIS AMOUNT. WITH REFERENCE TO ASSESSMENT YEARS 2006-07 AND 2008-09, IT WAS SUBMITTED THAT ONLY FEW A DDITIONS HAVE MADE IN EACH YEAR WHICH IN FACT, PERTAIN TO THE H UF. IT WAS SUBMITTED THAT HUF HAS EQUALLY GOOD INCOME IN RESPECT O F THE ASSESSMENT YEARS AND THESE AMOUNTS WERE PERTAINING TO THE HUF WHICH ALSO HAS AGRICULTURAL INCOME. THE DETAILS OF TH E INCOME IN INDIVIDUAL AND HUF STATUS ARE SUBMITTED AS UNDER : INCOME STATEMENT FOR INDIVIDUAL AND HUF S.NO. A.Y. HUF INCOME INDIVIDUAL INCOME TOTAL INCOME 1 2004-05 11,75,848 6,67,177 18,43,025 2. 2005-06 12,06,394 11,92,060 23,98,454 3. 2006-07 19,94,904 22,75,905 42,70,809 4. 2007-08 3,41,368 29,57,420 32,98,788 5. 2008-09 29,60,395 44,55,013 74,15,408 TOTAL 76,78,909 1,15,47,575 1,92,26,484 7 ITA.NO.885 TO 888/HYD/2013 MR. K.CH. SUBBA RAO, HYDERABAD. 3.2. IT WAS THE SUBMISSION THAT IN ALL THREE ASSESSME NT YEARS THE TOTAL OF THE ADDITIONS MADE WAS ONLY AT RS.7,9 2,500 THAT TOO PERTAINING TO HUF STATUS IN INDIVIDUAL ASSESSM ENTS, WHEN ASSESSEE HAS DECLARED ALMOST RS.2 CRORES OF INC OME IN THE INTERVENING YEARS. APART FROM THE FACTUAL POSITION, LEAR NED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THE OBJECTIONS AS UNDER : 3. WE WOULD FURTHER LIKE TO SUBMIT THAT THE ENTIRE ASSESSMENTS WERE COMPLETED AFTER CAREFUL VERIFICATI ON OF ALL THE MATERIAL FOUND DURING THE COURSE AND FACT REMAI NS THAT THE ASSESSING OFFICER HAD MADE CERTAIN ADDITION TO THE INCOME OF THE APPELLANT BASED ON THE MATERIAL SEIZE D FOR THE A.Y. 2008-09. THE ASSESSING OFFICER HAD ARRIVED AT THE CONCLUSION THAT NO ADDITION IS WARRANTED IN RESPECT OF THE SEIZED MATERIAL REFERRED BY THE LEARNED CIT(CENTRAL ) AND THEREFORE NO ADDITIONS WERE MADE WHILE COMPLETING T HE ASSESSMENT U/S.143(3) RWS 153A OF THE ACT. 3.3. HEREIN, WE WOULD LIKE TO SUBMIT THAT THE AO I S NOT REQUIRED TO NARRATE THE ENTIRE ASSESSMENT PROCEEDIN GS IN ITS ASSESSMENT ORDER AND MERELY BECAUSE THE AO HAS NOT MENTIONED ABOUT THE VERIFICATION OF THE ABOVE MATER IAL IN THE ASSESSMENT ORDER, THE PROVISIONS OF SECTION 263 ARE NOT ATTRACTED. IN THIS REGARD, RELIANCE IS PLACED ON TH E DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF M/S SPECTR A SHARES AND SCRIPS P LTD VS CIT 36 TAXMANN.COM 348 (ANDHRA PRADESH). 4. WE WOULD ALSO LIKE TO SUBMIT THAT THE ASSESSMEN TS COMPLETED U/S.143(3) RWS 15A OF THE ACT ARE PASSED AFTER GETTING STATUTORY APPROVAL OF ADDL. CIT U/S 153D OF THE INCOME TAX ACT. FACT REMAINS THAT THE CIT (CENTRAL) WHILE PASSING THE ORDER U/S 263 OF THE ACT HAVE NOT REVIS ED THE APPROVAL AS GRANTED BY ADDL. CIT GIVEN U] S 153D OF THE ACT. IT IS AN ESTABLISHED POSITION OF LAW THAT ASSESSMEN T MADE U] S 153A OF THE ACT CANNOT BE REVISED WITHOUT REVISIN G THE DIRECTIONS OF ADDL. CIT U/S 153D OF THE ACT. IN THI S REGARD, RELIANCE IS PLACED ON THE ORDER OF HON'BLE HYDERABA D ITAT IN THE CASE OF M/S. TRINITY INFRA VENTURES LIMITED VS DCIT IN ITA NO. 584-589/H/2015. 8 ITA.NO.885 TO 888/HYD/2013 MR. K.CH. SUBBA RAO, HYDERABAD. 5. WE WOULD FURTHER LIKE TO SUBMIT THAT THE CIT (C ENTRAL) HAS ERRED IN NOT POINTING OUT ANY SPECIFIC ERROR IN THE ORDER OF ASSESSING OFFICER WHILE PASSING THE REVISION ORDER U/S. 263 OF THE ACT. IT IS SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 263 OF THE ACT, TWIN CONDITIONS HAS TO BE SATISFIED I.E., ORDER HAS TO BE PREJUDICIAL TO THE INTEREST OF REVENUE AN D ORDER HAS TO BE ERRONEOUS. IN THE CASE IN HAND, THE CIT (CENT RAL) HAS ERRED IN NOT POINTING OUT ANY ERROR IN ORDER OF AO AND HAS SET ASIDE THE MATTER TO THE FILE OF AO TO POINT OUT THE ERROR IN THE ASSESSMENT ORDER. IT IS ALSO A FACT THAT NO ADDITIO N WAS MADE BY AO FOR A Y 2004-05 IN ORDER PASSED U/S 143(3) RW S 263 OF THE ACT. 5.1. THE ACTION OF THE CIT(CENTRAL) IS NOT JUSTIFIE D AS HELD BY DELHI HIGH COURT IN THE CASE OF ITO VS DG HOUSING P ROJECTS LIMITED 20 TAXMANN.COM 587 WHEREIN IT HELD THAT IN THE CASES OF WRONG OPINION OR FINDING ON MERITS, THE CI T HAS TO COME TO THE CONCLUSION AND HIMSELF DECIDE THAT THE ORDER IS ERRONEOUS, BY CONDUCTING NECESSARY ENQUIRY, IF REQU IRED. THE CIT CANNOT SET ASIDE THE ORDER TO THE FILE OF AO TO POINT OUT THE MISTAKE. 4. LD. D.R. HOWEVER SUBMITTED THAT THE ASSESSING OFFIC ER HAS NOT EXAMINED THE SEIZED MATERIAL. THEREFORE, THE L D. CIT IS CORRECT IN EXERCISING JURISDICTION UNDER SECTION 263 O F THE I.T. ACT. HE SUPPORTED THE ORDERS OF THE LD. CIT. 5. WE HAVE EXAMINED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS ON RECORD. AS FAR AS THE CONTENTION THAT ASS ESSING OFFICER HAS EXAMINED ALL THE SEIZED MATERIAL AND ACC EPTED THE INVESTMENTS IN HUF, THE SAME CAN BE BORNE BY THE FACT THA T ASSESSING OFFICER IN A.Y. 2004-05 HAS EXAMINED THE D OCUMENTS AS NOTED IN PARA.4.1 OF THE ASSESSMENT ORDER AND ASSES SED LONG TERM CAPITAL GAINS ON DISPOSAL OF ASSESSEES FLAT AT R AJESHWARI TOWERS, PUNJAGUTTA, HYDERABAD, WHICH WAS NOT REFLECTE D IN THE REGULAR RETURN OF INCOME. 9 ITA.NO.885 TO 888/HYD/2013 MR. K.CH. SUBBA RAO, HYDERABAD. 5.1. IN A.Y. 2005-06 AND 2006-07, THE ASSESSING OFF ICER DID ASK FOR INFORMATION AND THE ENTIRE INFORMATION AND OTHER DOCUMENTS WERE EXAMINED, AS NOTED IN THE ORDER AND INC OME RETURNED WAS ACCEPTED. IN A.Y. 2008-09 THERE IS A SPE CIFIC MENTION OF EXAMINATION OF VARIOUS SEIZED MATERIAL FRO M PARA 4.1 ONWARDS AND INCOME FROM COAL BUSINESS AT RS.40 LAKHS AND UNEXPLAINED CASH CREDITS AT RS.104,73,034 WERE ASSESS ED IN THAT YEAR. THE ORDERS DO INDICATE THAT ASSESSING OFFICER HA S EXAMINED THE SEIZED MATERIAL AND HAS COMPLETED THE ASSESSMENT A FTER DUE VERIFICATION. THEREFORE, THE LD. CITS CONTENTION THAT TH E ASSESSING OFFICER HAS NOT EXAMINED CERTAIN SEIZED MAT ERIAL IS WITHOUT ANY BASIS. 5.2. COMING TO THE IMPUGNED SEIZED MATERIAL CONSID ERED BY THE LD. CIT IN THE PROCEEDINGS UNDER SECTION 263 TH E FINDING BY THE ASSESSING OFFICER IN CONSEQUENTIAL PROCEEDINGS WERE ALSO EXAMINED. AS FAR AS A.Y. 2004-05 IS CONCERNED, THERE IS NO ADDITION TO THE ORIGINAL ASSESSED INCOME, AS THE SAID M ATERIAL CONSIDERED BY THE LD.CIT DOES NOT PERTAIN TO THE IMPUGNE D A.Y. AND THIS FACT WAS NOTED BY THE ASSESSING OFFICER IN TH E CONSEQUENTIAL ORDER. THEREFORE, INITIATION OF PROCEEDI NGS FOR A.Y. 2004-05 ITSELF IS PER SE NOT CORRECT, AS THERE IS NO ERROR IN THE ORDER OF THE ASSESSING OFFICER. FURTHER AS SEEN FROM THE CONSEQUENTIAL ORDERS PLACED ON RECORD ALONG WITH THE EXPLANATION OF THE ASSESSEE DURING THE PROCEEDINGS BEFORE THE LD. CIT, IT WAS THE CONTENTION THAT ALL THE MATERIAL DO PERTAIN TO THE HUF STATUS. SURPRISINGLY, LD. ASSESSING OFFICER WITHOUT EXAMININ G THE CONTENTIONS, BROUGHT THE AMOUNTS TO TAX ON THE REASON THA T THERE IS NO MENTION OF THE HUF STATUS IN THE AGREEMENT OF SAL E. WE ARE UNABLE TO UNDERSTAND HOW AGREEMENT OF SALE WILL CONTAIN THE 10 ITA.NO.885 TO 888/HYD/2013 MR. K.CH. SUBBA RAO, HYDERABAD. STATUS OF THE PERSON. THESE ARE TO BE EXAMINED WITH REFE RENCE TO THE SOURCE OF FUNDS AND THE RETURNS OF THE ASSESSEE, W HICH WERE ALREADY FILED AND ASSESSED. FOR EXAMPLE, THE ADDITION MADE BY THE LD. ASSESSING OFFICER IN A.Y. 2005-06 IS AS UNDE R : 3. PAGES 83 TO 88 OF ANNEXURE A/KCSR/RES/03 IS A AGREEMENT OF SALE DEED EXECUTED ON 08-07-2004 BY SR I B. RAJASEKHAR RAO IN FAVOUR OF THE ASSESSEE SRI K. CH. SUBBA RAO AND SMT KOLLA MAMATA W/O. K. VIJAY KUMAR FOR A PLOT BEARING NO.492, IN SY. NO.78 ADMEASURING 600 SQ YAR DS FOR A CONSIDERATION OF RS.7,50,000/- OUT OF WHICH 50% O F SHARE RELATES TO THE ASSESSEE. IN THIS REGARD, THE ASSESS EE HAS CONTENDED THAT HE HAS PURCHASED THIS PROPERTY IN HI S HUF CAPACITY. THOUGH THE ASSESSEE HAS CONTENDED THAT HE HAS PURCHASED THE SAID PROPERTY IN HIS HUF CAPACITY, NO SUCH MENTION IS MADE IN THE AGREEMENT OF SALE. CONSIDERI NG THE FACT THAT THERE IS NO MENTION OF HUF IN THE AGREEME NT OF SALE, THE CONTENTION OF THE ASSESSEE THAT THE PROPERTY WA S PURCHASED IN THE HUF CAPACITY IS NOT ACCEPTABLE. HE NCE, THE INVESTMENT MADE TOWARDS THE PURCHASE OF SAID PROPER TY OF RS.3,75,000/- I.E., 50% OF INVESTMENT STANDS UNEXPL AINED IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, THE SAME IS TREATED AS UNEXPLAINED. 5.3. THIS INDICATES THAT THESE CONTENTIONS WERE NOT EXAMINED AT ALL BY THE ASSESSING OFFICER, EVEN THOUGH THE ASSESSMENTS WERE SPECIFICALLY SET ASIDE BY THE CIT TO E XAMINE THE ISSUES. BE THAT AS IT MAY, WE ARE OF THE OPINION THAT THE PROCEEDINGS INITIATED BY THE CIT ARE NOT CORRECT. FIR ST OF ALL, AS ALREADY STATED ABOVE (1) SEIZED MATERIAL WERE TAKEN INTO CONSIDERATION AT TH E TIME OF ORIGINAL ASSESSMENT. (2) THE CIT WITHOUT EXAMINING THE ASSESSEES CONTENTION THAT IT BELONGS TO HUF AND WITHOUT IDENTIFYING WHETHER T HE TRANSACTION PERTAIN TO INDIVIDUAL OR HUF, COULD NOT HAVE COME TO CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS ON THAT FACT. 11 ITA.NO.885 TO 888/HYD/2013 MR. K.CH. SUBBA RAO, HYDERABAD. (3) THESE ORDERS WERE ALSO APPROVED BY THE ADDL. CIT. THEREFORE, IT CANNOT BE STATED THAT LD. ASSESSING O FFICER HAS NOT EXAMINED THE DOCUMENTS. (4) MOREOVER, ASSESSEE HAS DECLARED SUBSTANTIAL INCOMES IN BOTH INDIVIDUAL AND HUF STATUS AND THERE ARE LONG T ERM CAPITAL GAINS/BUSINESS INCOME OFFERED IN HUF STATUS AS WELL. WITHOUT IDENTIFYING THE EXACT NATURE OF THE TRANSACTION, WHETHER IT IS OFFERED IN HUF OR INDIVI DUAL STATUS AND WITHOUT ANY FINDING ON THESE TRANSACTION S, THE AMOUNTS CANNOT BE CONSIDERED IN THE HANDS OF INDIVI DUAL- SIMPLY BECAUSE THE AGREEMENT OF SALE DOES NOT MENTI ON HUF STATUS. 5.4. FOR THESE REASONS ALSO, WE ARE UNABLE TO UPHOL D THE PROCEEDINGS INITIATED BY THE LD. CIT. ASSESSEE HAS RE LIED ON VARIOUS CASE LAW IN HIS ARGUMENTS. CONSIDERING THE PR INCIPLES THEREIN, WE HAVE NO HESITATION IN HOLDING THAT THE PROCE EDINGS INITIATED BY THE CIT ARE BAD IN LAW. THERE IS NO ERROR IN THE IMPUGNED ORDERS OF THE ASSESSING OFFICER, WHICH ARE NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF REVENUE, THE TWIN CONDITIONS WHICH SHOULD BE SATISFIED BEFORE INITIATING THE PROCEEDINGS U/S 263 OF THE IT ACT. WE HEREBY SET ASID E THE ORDERS OF CIT IN RESPECT OF IMPUGNED ASSESSMENT YEARS AND RE STORE THE ORIGINAL ASSESSMENT ORDERS OF THE ASSESSING OFFICER. 6. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.0 9.2016. SD/- SD/- (SMT. P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 16 TH SEPTEMBER, 2016 VBP/- 12 ITA.NO.885 TO 888/HYD/2013 MR. K.CH. SUBBA RAO, HYDERABAD. COPY TO 1. MR. K.CH. SUBBA RAO, HYDERABAD. C/O. MR. P. MURA LI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82. 2. ACIT, CENTRAL CIRCLE-3, HYDERABAD. 3. COMMISSIONER OF INCOME TAX (CENTRAL), 7 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 4. ADDL. CIT, C.R-2, HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE