Prabhakar Reddy Ingala, Hyd, Hyderabad V. ITO, Ward-6(3), Hyd, Hyderabad

ITA 953/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6179 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 23-06-2016
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Unexplained investment
• Section: 143(3); 142(1); 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 953/HYD/2016 ASSESSMENT YEAR: 2005-06 SRI PRABHAKAR REDDY INGALA, HYDERABAD [PAN: AABPI9886M] VS THE INCOME TAX OFFICER, WARD-6(3), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.A. SAI PRASAD, AR FOR REVENUE : SMT SUMAN MALIK, DR DATE OF HEARING : 31-01-2017 DATE OF PRONOUNCEMENT : 08-02-2017 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-9, HYDERABAD, DATED 04-03-2016. 2. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) IS NOT JUSTIFIED IN NOT PROPERLY APPRECIATING THE APPELLANTS CONTENTIO N ABOUT THE VALIDITY OF THE NOTICE U/S. 148. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 4,80,000/- WITHOUT P ROPER AND REASONABLE EVIDENCE. GROUND NO. 3 IS GENERAL IN NATURE. 3. FACTS LEADING TO THE PRESENT APPEAL ARE THAT THE ASS ESSING OFFICER (AO) HAS SERVED A NOTICE U/S. 148 INCOME TAX ACT [ACT] BY I.T.A. NO. 953/HYD/2016 SRI PRABHAKAR REDDY INGALA :- 2 - : AFFIXTURE AND COMPLETED PROCEEDINGS OF ASSESSMENT, W HEREIN AN AMOUNT OF RS. 4,80,000/- HAS BEEN BROUGHT TO TAX STATIN G AS UNDER: UNEXPLAINED INVESTMENT: AS PER THE INFORMATION, STATED ABOVE, IT WAS NOTICE D THAT THE ASSESSEE HAD PURCHASED 2 PLOTS ADMEASURING 300 AND 301 SQ.YA RDS AND PAID RS. 2,10,000/- (RS.1,20,000/- BY CASH AND RS. 90,000/- BY CHEQUE) AND RS. 2,10,000/- (RS. 1,20,000/- BY CASH AND RS. 90,000/- BY CHEQUE) RESPECTIVELY FROM MANASA ESTATES. THE ASSESSEE VID E NOTICES U/S. 142(1), DT. WAS REQUESTED FOR FURNISH THE INFORMATION IN RE SPECT OF THE FOLLOWING: 1. ALL LANDS/PROPERTIES HELD BY HIM 2. DETAILS OF THE LANDS/PROPERTIES PURCHASED FROM M/S. MANASA ESTATES ALONG WITH COPIES OF SALE DEEDS, 3. DETAILS/DOCUMENTARY EVIDENCES REGARDING, EXTENT, CO ST OF PLOT TOTAL PAYMENTS, DATE/YEAR OF PAYMENT, MODE OF PAYMENT ETC ., IN RESPONSE, THE ASSESSEE FURNISHED THE DETAILS OF PROPERTIES PURCHASED DURING THE YEAR AND ALSO RECEIPTS AND PAY MENTS ACCOUNT EXPLAINING THE SOURCES FOR INVESTMENT. ON VERIFICA TION OF THE DETAILS, IT IS SEEN THAT THE ASSESSEE HAS PURCHASED THREE PLOTS OF 600 SQ. YDS., 300 SQ. YDS AND 300 SQ. YDS FROM MANASA ESTATES. T HE ASSESSEE HAS EXPLAINED SOURCES TO THE EXTENT OF THE CHEQUES PAID FOR PURCHASE OF THE PLOTS. AS PER THE INFORMATION AVAILABLE THE ASSESS EE HAS PAID CASH OF RS. 400 PER SQ.YDS. TO MANASA ESTATES. THE ASSESSE E PURCHASED 1200 SQ. YDS AND HAS PAID CASH OF RS. 4,80,000/-. AS TH E ASSESSEE FAILED TO EXPLAIN THE SOURCES FOR CASH PAID FOR PURCHASE OF P LOTS, THE INVESTMENT OF RS. 4,80,000/- IS TREATED AS UNEXPLAINED INVESTM ENT. UNDER THESE CIRCUMSTANCES, THE INVESTMENT OF RS. 4 ,80,000/- IN THE PLOT PURCHASED BY THE ASSESSEE IS TREATED AS UNEXPL AINED AND THE SAME IS BROUGHT TO TAX. IN VIEW OF THE ABOVE, AN AMOUNT OF RS. 4,80,000/- IS ADDED TO THE INCOME RETURNED. 4. BEFORE THE LD.CIT(A), ASSESSEE QUESTIONED THE SERVI CE OF NOTICE AS WELL AS ADDITION ON MERITS STATING AS UNDER: THE APPELLANT HAS BEEN FILING REGULARLY HIS RETURN S OF INCOME. THE ADDRESS MENTIONED IN THE VARIOUS ASSESSMENT YEARS A RE FURNISHED BELOW: I.T.A. NO. 953/HYD/2016 SRI PRABHAKAR REDDY INGALA :- 3 - : ASST. YEAR DATE OF FILING OF THE RETURN OF INCOME ADDRESS MENTIONED THEREIN 2005-06 21-12-2005 8-2-686/8/2, ROAD NO.12, BANJARA HILLS 2006-07 30-11-2006 8-2-686/8/2, ROAD NO.12, BANJARA HILLS 2007-08 27-03-2008 8-2-686/8/2, ROAD NO.12, BANJARA HILLS 2008-09 14-08-2008 8-2-686/8/2, ROAD NO.12, BANJARA HILLS 2009-10 24-09-2009 8-2-686/8/2, ROAD NO.12, BANJARA HILLS 2010-11 08-02-2011 8-2-686/8/2, ROAD NO.12, BANJARA HILLS 2011-12 11-01-2012 PLOT NO.48, KAVURI HILLS, I-PHAS E, JUBILEE HILLS, HYDERABAD 2012-13 06-12-2012 PLOT NO.48, KAVURI HILLS, I-PHAS E, JUBILEE HILLS, HYDERABAD 2. AS MENTIONED IN THE STATEMENT OF FACTS, THE ASSE SSEE RECEIVED A NOTICE U/S. 142(1) DATED 6-9-2012, REQUIRING, INTER ALIA, COMPLIANCE WITH THE NOTICE U/S 148 DATED 22-3-2012. THE ADDRESS GIVEN O N THIS NOTICE U/S. 142(1) IS AS UNDER: 'I.PRABHAKAR REDDY, S/O I.BAPU REDDY, HOUSE NO.315, PLOT NO.195/A, ROAD NO.13, WILITE HOUSE, JUBILEE HILLS; HYDERABAD-033' 3. DURING THE COURSE OF HEARING IN RESPONSE TO THE NOTICE U/S 142(1), IT WAS UNDERSTOOD THAT A NOTICE U/S.148 DATED 22-3-201 2 WAS SERVED BY AFFIXTURE AT THE ABOVE ADDRESS. WHILE THE NOTICE U/ S 142(1) COULD BE SERVED IN NORMAL COURSE, THOUGH WRONGLY ADDRESSED, THE NOT ICE U/S 148 WAS STATED TO HAVE SERVED BY AFFIXTURE. 4.1 IT IS SUBMITTED THAT THE SERVICE BY AFFIXTURE H AS TO BE RESORTED ONLY WHEN THE NOTICE COULD NOT BE SERVED IN NORMAL COURS E, COULD NOT BE TRACED AND SHOULD BE AT THE LAST KNOWN ADDRESS OF THE APPE LLANT. AS CAN BE SEEN FROM TABLE OF THE DETAILS OF FILING OF THE RETURNS OF INCOME, THE LAST KNOWN ADDRESS AS ON THE DATE OF ISSUE OF NOTICE U/S 148, I.E., 22-3-2012, WAS PLOT NO.48, KAVURI HILLS, 1- PHASE, JUBILEE HILLS, HYDERABAD. EVEN ACCORDING TO THE RETURN FOR IMMEDIATELY EARLIER' YE AR I.E., AY 2010-11, THE ADDRESS WAS 8-2-686/8/2, ROAD NO.12, BANJARA HILLS. IT IS, THUS, CLEAR THAT THE NOTICE WAS NOT AFFIXED AT THE LAST KNOWN A DDRESS. THE SERVICE OF NOTICE U/S 148 IS, THEREFORE, NOT A VALID ONE AND T HE CONSEQUENT ASSESSMENT U/S 143(3) R.W.S.147 IS ALSO NOT A VALID ASSESSMENT, EVEN THOUGH THE APPELLANT COOPERATED IN COMPLETION OF TH E ASSESSMENT AFTER RECEIVING THE NOTICE U/S 142(1) DATED 6-09-2012. I.T.A. NO. 953/HYD/2016 SRI PRABHAKAR REDDY INGALA :- 4 - : 4.2 IN THIS CONNECTION, KIND ATTENTION OF THE COMMI SSIONER OF INCOMETAX (APPEALS) IS INVITED TO THE ABOVE FOLLOWING DECISIO NS OF VARIOUS JUDICIAL AUTHORITIES. I. ITAT DELHI IN THE CASE OF CHANDRA AGENCIES VS.ITO - 89 ITD 1 II. COMMISSIONER OF INCOME-TAX VS. NAVEEN CHANDER (323 ITR 49) (COPY OF THE ABOVE ORDER IS ENCLOSED) 4.3 IT IS, THEREFORE, PRAYED THAT THE HON'BLE COMMI SSIONER OF INCOMETAX (APPEALS) BE PLEASED TO CANCEL THE ASSESSMENT, IN T HE ABOVE CIRCUMSTANCES OF THE CASE. 5.1 WITHOUT PREJUDICE TO THE ABOVE CONTENTION, IT I S SUBMITTED THAT THE LEARNED ASSESSING OFFICER MADE AN ADDITION OF RS.4, 80,000 WITH THE FOLLOWING OBSERVATION: 'AS PER THE INFORMATION AVAILABLE THE ASSESSEE HAS PAID CASH OF RS.400 PER SQ.YARDS. TO MANASA ESTATES. THE ASSESSEE HAS PURCH ASED 1200 SQ.YDS AND HAS PAID CASH OF RS.4,80,000/-. AS THE ASSESSEE FAILED TO EXPLAIN THE SOURCES FOR CASH PAID FOR PURCHASE OF PLOTS, THE INVESTMENT OF RS.4, 80,000/- IS TREATED AS UNEXPLAINED INVESTMENT.' 5.2 FIRSTLY, THE LEARNED ASSESSING OFFICER DID NOT DISCLOSE, EVEN IN THE ASSESSMENT ORDER, THE NATURE OF INFORMATION AND FRO M WHERE SUCH INFORMATION WAS FOUND. THE ONLY INFERENCE THAT COUL D BE GATHERED IS FROM THE OPENING SENTENCE OF THE ASSESSMENT ORDER THAT: CONSEQUENT TO THE SURVEY U/S 133A CONDUCTED IN THE CASE OF M/S MANASA ESTATES, HYDERABAD .... ', 5.3 THE APPELLANT FILED BEFORE THE LEARNED ASSESSIN G OFFICER COPIES OF THE THREE SALE DEEDS REFLECTING THE PURCHASE OF THREE P LOTS - ALL DATED 27 TH AUGUST 2004. COPIES OF THESE DEEDS ARE ENCLOSED. TH E VENDOR AND GPA HOLDER ARE THE PARTNERS OF MANASA ESTATES. THE DETA ILS OF THE AREA OF THE PLOTS, CONSIDERATION, MARKET VALUE ETC., MENTIONED IN THE SALE DEEDS ARE AS UNDER: DOCUMENT NO. AND DATE PLOT NO. AREA CONSIDERATION (RS) MARKET VALUE (RS) 6965 DT.27-8-2004 307 600 SQ.YDS 1,80,000 2,64,000 @ 440 PER SQ.YARD 6972 DT.27-8-2004 434 300 SQ.YDS 90,000 1,32,000 @ 440 PER SQ. YARD 6973 DT.27-8-2004 527 300 SQ.YDS 90,000 1,32,000 @ 440 PER SQ. YARD I.T.A. NO. 953/HYD/2016 SRI PRABHAKAR REDDY INGALA :- 5 - : 5.4 KIND ATTENTION OF THE HON'BLE COMMISSIONER OF I NCOMETAX(APPEALS) IS INVITED TO THE THIRD PARA AT PAGE 3 OF THE SALE DEE D, WHICH IS REPRODUCED BELOW FOR CONVENIENCE: (ALL THE SALE DEEDS CONTAIN THE SAME MATTER, MENTIONED ABOVE, EXCEPT THE QUANTUM OF CONSIDERATIO N.) 'THAT IN PURSUANCE OF THE AFORESAID OFFER AND ACCEP TANCE THE VENDEE HAS ALREADY PAID THE ENTIRE SALE CONSIDERATION OF RS.90,000/-(R UPEES NINTY THOUSAND ONLY) RECEIVED THROUGH M/S JANMABHOOMI ESTATES, AND THUS THE VENDO R HEREBY ADMITS AND ACKNOWLEDGES THE RECEIPT OF THE ENTIRE SALE AMOUNT HAVING RECEIVED FROM THE VENDEE.. ' 5.5 THE LEARNED ASSESSING OFFICER DID NOT NOTICE TH E FACT MENTIONED IN THE SALE DEED THAT THE CONSIDERATION WAS RECEIVED T HROUGH M/S JANMABHOOMI ESTATES. 5.6 IT IS SUBMITTED THAT THE LEARNED ASSESSING OFFI CER DID NOT ESTABLISH BY ANY REASONABLE EVIDENCE THAT THE APPELLANT PAID IN CASH AT THE RATE OF RS.400 PER SQ.YARD TO THE VENDOR IN ADDITION TO THE CONSIDERATION MENTIONED IN THE SALE DEEDS, EXCEPT STATING THAT: ' AS PER THE INFORMATION. AVAILABLE THE ASSESSEE HAS PAID CASH OF RS.400 PER SQ.YDS.TO MANSA ESTATES'. THE ASSESSING OFFICER DID NOT EVEN DISCLO SE THE NATURE OF INFORMATION AVAILABLE WITH HIM. 5.7 IN THESE CIRCUMSTANCES, IT IS SUBMITTED THAT, E VEN ON MERITS, THERE IS NO CASE FOR ADDITION OF RS.4,80,000/-. 5. LD.CIT(A) HAS REJECTED THE CONTENTIONS STATING THAT IT I S THE NORMAL PRACTICE THAT WHEN A NOTICE CANNOT BE SERVED THROU GH POSTAL AUTHORITIES, IT IS GENERALLY SERVED BY AFFIXTURE . IT WAS FURTHER NOTICED THAT AO HAS SERVED THROUGH THE LAST KNOWN ADDRES S AND ASSESSEE HAS PARTICIPATED IN THE PROCEEDINGS BY FILING A LETTER DT. 07-11-2012. ON MERITS, THE LD.CIT(A) HAS CONFIRMED THE ADDITION ON THE BASIS THAT FROM THE COMMUNICATION RECEIVED FROM ADDL. CIT, RANGE-6, THE ASSESSEE HAD PAID CONSIDERATION IN CASH OVER AND ABOVE THE CONSIDERATION MENTIONED IN THE SALE DEED. I.T.A. NO. 953/HYD/2016 SRI PRABHAKAR REDDY INGALA :- 6 - : 6. LD. COUNSEL REITERATED THE SUBMISSIONS WHERE AS TH E LD.DR RELIED ON THE ORDERS. 7. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE DOCUMENTS PLACED ON RECORD IN THE PAPER BOOK. THE AD DRESS ON WHICH THE NOTICE WAS AFFIXED WAS NOT THE ADDRESS OF A SSESSEE, NEITHER IN THE PAST NOR LATER. AS SEEN FROM THE WRITTEN SUBMISSIONS AND THE COPIES PLACED ON RECORD OF RETURNS FILED, THE ADDRESS OF ASSESSEE WAS 8-2-686/8/2, ROAD NO. 12, BANJARA HILL S, HYDERABAD. THE SAME ADDRESS WAS ALSO STATED IN THE SALE DEEDS PL ACED ON RECORD. FROM WHERE THE AO GOT THE ADDRESS OF 195/A, ROAD NO. 13, WHITE HOUSE, JUBILEE HILLS, HYDERABAD WAS NOT KNOWN. HOW IT WAS THE LAST KNOWN ADDRESS WAS NOT ANSWERED BY THE LD.CIT(A ), WHO EXAMINED THE RECORD AS STATED IN PARA 8.2, WHILE CONFI RMING ON MERITS. SINCE THE PROCEDURE FOLLOWED FOR AFFIXTURE OF NOTICE IS NOT PROPER, FOLLOWING THE PRINCIPLES LAID DOWN BY THE CO -ORDINATE BENCH IN THE CASE OF CHANDRA AGENCIES VS. ITO [89 I TD 1] (DEL) AND THE HON'BLE PANJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. NAVEEN CHANDER [323 ITR 49], ASSESSMENT COMPLETED IN PURSUANCE OF AN INVALID NOTE IS NOT VALID. 7.1. EVEN ON MERITS, IT IS NOT CLEAR HOW THE INFORMATION WAS RECEIVED, THE BASIS OF THE SAME AS ASSESSEE WAS NOT GI VEN ANY OPPORTUNITY. NEITHER THE SO CALLED STATEMENT WAS FURNIS HED NOR THE CROSS-EXAMINATION OF THE PERSON WAS PROVIDED. EVEN TH E LD.CIT(A) DID NOT EXAMINE HOW THE SAID MANASA ESTATES CAME INTO PICTURE WHEN THE DOCUMENT INDICATES THAT THE MONIES WERE RECEIVED THROUGH JANMABHOOMI ESTATES. SINCE THE VERY BASIS FO R ADDITION IS NOT RELIABLE, THE ADDITION PER SE CANNOT BE SUSTAINED. I.T.A. NO. 953/HYD/2016 SRI PRABHAKAR REDDY INGALA :- 7 - : 7.2. THUS ON BOTH GROUNDS, THE ORDER OF THE AO CANNO T BE SUSTAINED. THE GROUNDS ARE ACCORDINGLY ALLOWED. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH FEBRUARY, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 8 TH FEBRUARY, 2017 TNMM COPY TO : 1. SRI PRABHAKAR REDDY INGALA, HYDERABAD. C/O. CH. PARTHASARATHY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST.NO.1, ASHOKNAGAR, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-6(3), HYDERABAD. 3. COMMISSIONER OF INCOME TAX(APPEALS)-9, HYDERABAD . 4. THE PR. COMMISSIONER OF INCOME TAX-6, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.