ITO, Ward-14(1), Hyd, Hyderabad V. Ashok Rao Thungathurthi, Hyd, Hyderabad

ITA 938/HYD/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2278 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-10-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 10-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: T CHAITANYA KUMAR
• Keywords: Unexplained investment; Tax effect
• Section: 143(3); 234B; 2

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN , ACCOUNTANT MEMBER ITA NO. 838 /HYD/2015 ASSESSMENT YEAR: 2011 - 12 SRI ASHOK RAO TUNGATHURTHI, HYDERABAD. PAN ABAPT0435H VS. INCOME TAX OFFICER, WARD 6 ( 3 ), HYDERABAD. (APPELLANT) (RESPONDENT) ITA NO . 938 /HYD/2015 ASSESSMENT YEAR: 2011 - 12 INCOME TAX OFFICER, WARD 14 ( 1 ), HYDERABAD. VS. SRI ASHOK RAO TUNGATHURTHI, HYDERABAD. PAN ABAPT0435H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T. CHAITANYA KUMAR REVENUE BY : SHRI NILANJAN DEY DATE OF HEARING : 31 - 10 - 201 8 DATE OF PRONOUNCEMENT : 14 - 11 - 2018 ORDER PER P. MADHAVI DEVI, J.M.: 1. BOTH ARE CROSS APPEALS FOR THE A.Y 2011 - 12, FILED BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE ORDER OF THE CIT(A) - 4 , HYDERABAD DATED 26 .0 3 .2015. 2 ITA NO S . 838 & 938 /H YD/201 5 SHRI ASHOK RAO. T, HYD. ITA NO. 930/HYD/2015 2. TH IS IS REVENUES APPEAL AGAINST THE ORDER OF THE CIT(A) - 4, HYDERABAD DATED 2 6 .03.2015. AT THE TIME OF HEARING , THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TAX EFFECT INVOLVED IN THE REVENUE APPEAL IS LESS THAN 20 LAKHS , THEREFORE IT IS LIABLE TO BE DISMISSED IN VIEW OF THE CBDT CIRCULAR NO. 03/2018 DATE D 03.07.2018. THE LD. DR WAS ALSO HEARD AND HE AGREED WITH THE CONTENTIONS OF THE ASSESSEE. O N GOING THROUGH THE GROUNDS RAISED BY THE REVENUE , WE FIND THAT THE TAX EFFECT INVOLVED IN THIS APPEAL IS LESS THAN 20 LAKHS . T HEREFORE, THE REVENUES APPEAL IS DISMISSED ON ACCOUNT OF LOW TAX EFFECT. ITA NO. 838/ HYD/ 2015 3. THIS IS ASSESSEES APPEAL AGAINST THE CIT( A ) - 4, HYDERABAD DATED 26.03.2015 . T HE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE A.O AN AMOUNT OF RS. 48,20,000/ - WITHOUT CONSIDERING THE APPELLANT SUBMISSIONS. 3. THE LD. CIT(A) ERRED IN CONFIRMING AN AMOUNT OF RS. 48,20,000/ - TREATING AS UNEXPLAINED INVESTMENT. 4. THE LD. CIT(A) ER RED IN CONFIRMING THE ACTION OF THE A.O WITHOUT CONSIDERING THE APPELLANT SUBMISSIONS THAT THIS AMOUNT REPRESENTS PROFESSIONAL RECEIPTS AND LOAN TAKEN FROM GE CAPITAL. 5. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE A.O IN LEVYING INTEREST U/S 234B OF RS. 9,90,891/ - 234C OF RS. 4,407/ - OF THE IT ACT. 3 ITA NO S . 838 & 938 /H YD/201 5 SHRI ASHOK RAO. T, HYD. 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING . 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE , AN INDIVIDUAL AND MEDICAL PRACTITIONER AND RUNNING A NURSING HOME IN THE NAME OF PAV ITRA NURSING HOME FILED HIS R E TURN OF INCOME ELECTRONICALLY ON 23.11.2011 FOR THE A.Y 2011 - 12 ADMITTING AN INCOME OF RS. 9,09,967/ - . DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE IT ACT , THE A.O OBSERVED THAT THE GROSS RECEI P TS ADMITTED BY THE ASSES SEE FROM THE NURSING HOME IS RS. 21,56,580/ - AND SINCE IT EXCEEDED THE LIMITATION AS PRESCRIBED U/S 44AA ( 3 ) , HE OBSERVED THAT THE ASSESSEE HAS TO MAINTAIN THE BOOKS OF ACCOUNT AND SUCH BOOKS HAVE TO BE AUDITED. THE A SSESSE E W AS THEREFORE ASKED TO SUBMIT TH E AUDIT REPORT ALONG WITH THE BOOKS OF ACCOUNT , VOUCHERS AND BILLS ETC. 4.1 THE ASSESSEE SUBMITTED THE SAME AND ON VERIFICATION , THE A.O FOUND THAT THEY ARE NOT MAINTAINED PROPERL Y AND THE CORRECT INCOME OF THE ASSESSEE COULD NOT BE COMP UTED ON THE BASIS OF S UCH BOOKS OF ACCOUNT. THE A.O ALSO FOUND THAT THE ASSESSEE HAD MADE DEPOSITS INTO HDFC BANK ACCOUNT WHICH WAS NOT DISCLOSED TO THE DEPARTMENT . T HE ASSESSEE WAS THEREFORE ASKED TO SUBMIT HIS EXPLANATION. THE ASSESSEE SUBMITTED HIS EX PLANATION ALONG WITH A COPY OF THE INTEREST STATEMENT DATED 11.12.2011 ISSUED BY GE CAPITAL AND EXPLAINED THAT ALL HIS INCOME FROM MEDICAL PROFESSION ARE BEING DEPOSITED IN TO HIS SAVINGS BANK ACCOUNT ONCE IN A WEEK OR FORTNIGHT AND HE HAS AVAILED A MORT G AG E LOAN OF RS. 55,00,000/ - FROM GE CAPITAL, NBFC IN THE YEAR 2007 - 08 AND LATER ON UTILIZED THE SAME TO 4 ITA NO S . 838 & 938 /H YD/201 5 SHRI ASHOK RAO. T, HYD. PURCHASE A RESIDENTIAL F L A T AT MADHAPUR, SERILINGAMPALLI MANDAL , RR DISTRICT , FOR A SUM OF RS. 80,00,000/ - AND FOR THIS PURPOSE , HE HAS ENTERED INTO AN AGREEMENT OF SALE AND HAD PAID SOME AMOUNT TO THE VENDOR AS AN ADVANCE. HE SUBMITTED THAT DUE TO SOME DIFFERENCE IN PRICE NEGOTIATION S AND UNDUE DELAY IN MEETING THE TIME SCHEDULE BY THE BUILDER , THE SALE AGREEMENT WAS CANCELLED IN 20 10 AND HE HAS RECEIVED THE AMOUNT BACK FROM THE VENDOR IN 2010 AND SUCH AMOUNTS ONLY WERE DEPOSITED INTO HIS SB ACCOUNT OF HDFC AND THERE AFTER HE HAD REPAID HIS LOAN TO GE CAPITAL. 4.2 THE A.O DID NOT ACCEPT THE C ONTENTION OF THE ASSESSEE AND HELD THAT EXPLANATION OF THE ASSESSEE IS SELF SERVING AND WITHOUT ANY BASIS. HE OBSERVED THAT THE GROSS RECEIPTS DISCLOSED BY THE ASSESSEE FOR THE ENTIRE PREVIOUS YEAR I.E 01.04 .2010 TO 31.03.2011 W AS RS. 21,56,580/ - , WHEREAS THE CASH DEPOSIT ON 12.04.2010 ITSELF WAS RS. 26,20,000/ - . T HEREFORE, HE HELD THAT THE ASSESSEES EXPLANATION THAT THE DEPOSITS AND THE RECEIPTS OF NURSING HOME ARE DEPOSITED INTO HIS BANK ACCOUNTS IS NOT ACCEPTABLE. FURTHER, HE ALSO OBSERVED THAT THE AS SES S EES CONTENTION THAT THE CASH DEPOSITS OF RS. 49,20,000/ - IN HDFC BANK ARE NOTHING BUT ADVANCES RETURNED BY BUILDER ALSO IS WITHOUT ANY BASIS BECAUSE THE IDENTITY OF SELLER AND THE GENUINENESS OF THE TRANSACTION HAS NOT BEEN PROVED BY THE ASSESSEE. HE ALSO OBSERVED THAT THE ASSESSEE HAS NOT SHOWN THE LOAN TAKEN FROM THE GE CAPITAL OR THE ADVANCE GIVEN TO THE VENTURE AS A LIABIL I TY IN HIS BALANCE SHEET FOR THE RELEVANT ASSESSMENT OR EVEN IN THE PREVIOUS ASSESSMENT YEAR S . THEREFORE, HE TREATED THE CASH DEPOSITS REFLECTED IN HDFC BANK ACCOUNT 5 ITA NO S . 838 & 938 /H YD/201 5 SHRI ASHOK RAO. T, HYD. TO THE TU NE OF RS. 4 9 ,20,000/ - DURING THE YEAR , AS UNEXPLAINED INVESTMENT AND BROUGHT IT TO TAX. 5. AGGRIEVED T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) , CHALLENGING THE ADDITION OF RS. 48,20,000 (INSTEAD OF RS. 49,20,000/ - MADE BY THE A.O) AMONGST OTHER ADDITION S AND THE CIT(A) CONFIRMED THE ADDITION OF RS. 48,20,000/ - AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND HAS DRAWN OUR ATTENTION TO THE COP IES OF THE BANK ACCOUNT S WITH SYNDICATE BANK AND GE CAPITAL FILED BEFORE US AT PAGES 18 TO 24 OF THE PAPER B OOK, SYNDICATE BANK ACCOUNT FOR THE PERIOD OF 01.04.2008 TO 31.03.2009 REFLECT THE EMIS PAID BY THE ASSESSEE TO GE CAPITAL AT RS. 70,498/ - PER MONTH. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS CLEARLY PROVES THAT THE ASSESSEE HAS TAKEN THE LOAN FROM GE CAPITAL WHICH WAS RE PAID BY HIM BY WAY OF EMIS . H E ALSO DREW OUR ATTENTION TO TWO PAYMENTS OF RS. 10 ,00,000/ - EACH MADE TO SHRI SRINIVAS CONSTRUCTIONS , WHICH WERE THE ADVANCES PAID FOR PURCHASE OF THE FLAT. HE SUBMITTED THAT THESE AMOUNTS WERE R ETURNED BACK TO HIM ON CANCELLATION OF THE AGREEMENT OF SALE, WHICH WERE UTILIZED FOR DEPOSITS IN HDFC BANK ACCOUNT. THEREFORE , ACCORDING TO HIM , THE TRANSACTION OF AGREEMENT FOR PURCHASE FOR A FLAT IN 2007 FOR A SALE CONSIDERATION , WHICH WAS THEREAFTER CANCELLED IN 2010 IS PROVED AND THEREFORE THE SOURCES FOR THE THE AMOUNTS DEPOSITED INTO HDFC BANK 6 ITA NO S . 838 & 938 /H YD/201 5 SHRI ASHOK RAO. T, HYD. ACCOUNT , HAVE BEEN PROVED AND CANNOT BE TREATED AS UNEXPLAINED INVESTMENT. 7. THE LD. DR , HOWEVER SUPPORTED T HE ORDERS OF THE AUTHORITIES BELOW. 8. HAVING GONE THROUGH THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE HAS AVAILED A MORTGAGE LOAN FROM GE CAPITAL , AND HAS RE PAID THE SAME. WE ALSO FIND THAT THE ASSESSEE HAS PAID RS. 10,00,000/ - ON 14.08 .2008 AND ANOTHER RS. 10,00,000/ - ON 27.09.2008 TO THE DEVELOPER SRI SRINIVAS CONSTRUCTIONS VIDE CHEQUES. THE PURPOSE OF SUCH PAYMENT HAS NOT BEEN EXAMINED BY THE A.O. THE ASSESSEES CONTENTION , THAT THE SAID SALE TRANSACTION HAS BEEN CANCELLED AND THAT HE HA D RECEIVED THE CONSIDERATION PAID SO FAR HAS BEEN DEPOSIT ED IN THE HDFC BANK ACCOUNT IS NOT SUPPORTED BY A NY DOCUMENTARY EVIDENCE , BUT ONLY BY THE ORAL SUBMISSIONS OF THE ASSESSEE. HO W EVER , IF THE TRANSACTION HAS NOT GONE AHEAD , THE PROBABILITY OF TH E ASSESSEE RECEIVING THE CONSIDERATION CANNOT BE RULED OUT AND IN SU C H CIRCUMSTANCES THE SOURCES FOR DEPOSITS INTO HDFC BANK ACCOUNT ALSO CANNOT BE DOUBTED. THEREFORE , WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE FILE OF THE A.O WITH A DIRECTION TO VERIFY THE PURPOSE OF PAYMENT OF 20 LAKHS BY CHEQUES TO SRI SRINIVAS CONSTRUCTIONS AND IF IT IS CONFIRMED THAT THE PAYMENT WAS TOWARDS OF PURCHASE OF THE FLAT AND THAT IT HAS BEEN CANCELLED IN 20 10, T HEN THE SOURCES FOR THE DEPOSITS INTO HDFC BANK ACCOUNT HAVE TO BE ACCEPTED. WITH THESE DIRECTIONS , THE ISSUE IS SET ASIDE TO THE FILE OF THE A.O , FOR LIMITED PURPOSE OF VERIFICATION . A CCORDINGLY , THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR 7 ITA NO S . 838 & 938 /H YD/201 5 SHRI ASHOK RAO. T, HYD. STATISTI CAL PURPOSES. NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE GIVEN A FAIR OPPORTUNITY OF HEARING. 9. IN THE R ESULT , THE REVENUE S APPEAL IS DISMISSED ON ACCOUNT OF LOW TAX EFFECT AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. P RONOUNCED IN THE OPEN COURT ON 14 TH NOVEMBER , 2018 . SD/ - SD/ - ( S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABA D, DATED: 14 TH NOVEMBER , 2018 . KRK 1) SHRI ASHOK RAO T C/O SHRI T. CHAITANYAKUMAR, ADVOCATE FLAT NO. 409, METRO RESIDENCY, RAJBHAVAN ROAD, SOMAJIGUDA, HYDERABAD. 2) ITO, WARD 6 ( 3 ), HYDERABAD . 3) ITO, WARD 14 ( 1 ), HYDERABAD. 4 ) CIT - 4 , HYDERABAD 5 ) A CIT , RANGE - 4 , HYDERABAD 6 ) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 7 ) GUARD FILE