Mohd. Mujibuddin, Yellandu, Hyderabad V. ITO, Ward-1, Kothagudem, Kothagudem

ITA 993/HYD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2543 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 08-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D PRASADA RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Principle of natural justice
• Section: 143(3); 148; 144; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B BENCH: HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ITA. NO.993/HYD/2016 ASSESSMENT YEAR:2004 - 2005 MOHD. MUJIBUDDIN, 1 - 5 - 36, NEAR BAJAN MANDIR, YELLANDU. PAN: AL K PM 4229 J VS. INCOME TAX OFFICER, WARD - 1, NEAR GANESH TEMPLE, KOTHAGUDEM. (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI S. RAMA RAO FOR REVENUE : SHRI D. PRASADA RAO, DR DATE OF HEARING : 13.02.2018 DATE OF PRONOUNCEMENT : 1 6 .02.2018 ORDER PER V. DURGA RAO, JM . THIS APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) - 7, HYDERABAD FOR THE ASSESSMENT YEAR 2004 - 05. IN THIS APPEAL, THE EFFECTIVE GROUND URGED BY THE ASSESSEE READS AS UNDER: - THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS. 17,92,769 / . THE LD. CIT(A) OUGHT TO HAVE SEEN THAT THE INCOME WAS ADMITTED ON ESTIMATE BASIS AND THAT NO SUCH ADDITION SHOULD HAVE BEEN MADE BY THE ASSESSING OFFICER. 2. BRIEFLY STATED F ACTS IN BRIEF ARE THAT THE ASSESSEE, WHO IS AN INDIVIDUAL, FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 89,640/ - . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT ISSUING A REFUND OF RS.13,370 /. SUBSEQUENTLY, A NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON THE GROUND THAT ASSESSEE HAD OFFERED INCOME 2 @ 5% U/S 44AF OF THE ACT ON THE PURCHASE CONSIDERATION OF RS. 17,92,769/ - WHICH IS AGAINST THE PROVISIONS OF SECTION 44AF ACCORDING TO W HICH THE ESTIMATION SHOULD BE MADE ON THE SALE CONSIDERATION. CONSEQUENT TO THE NOTICE U/S 148, THE CASE WAS CONVERTED INTO SCRUTINY AND CONSIDERING THE ASSESSEES NON - COMPLIANCE, A.O COMPLETED THE ASSESSMENT U/S 144 OF THE ACT BY MAKING AN ADDITION OF RS . 17,92,769/ - ON ACCOUNT OF NO EVIDENCE FOR THE INVESTMENT MADE IN THE SCRAP BUSINESS. CONSEQUENTLY, ASSESSEE FILED AN APPEAL U/S 264 OF THE ACT BEFORE THE CIT AND THE COMMISSIONER PASSED AN ORDER ON 29.03.2010 DIRECTING THE A.O. TO GRANT ONE MORE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. SUBSEQUENTLY, A.O. ISSUED NOTICE U/S 143(2) OF THE ACT AND CALLED FOR THE EXPLANATION FROM THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, ASSESSEE SUBMITTED THAT THE HE IS AN ILLITERATE, RESIDING IN A REMOTE RURAL AREA AND LEADING LIFE BY TAKING AGRICULTURAL LAND ON LEASE BASIS AND DEPEND S ON THE RAINY SEASON. ASSESSEE FURTHER SUBMITTED THAT HE IS NOT IN THE BUSINESS OF SCRAP BUT ONLY A COMMISSION AGENT WORKING UNDER ONE MR. SUDERSHAN, WHO IS AN EMPLOYEE OF M/S. SINGAR ENI COLLERIES COMPANY LTD. MR. SUDERSHAN USED THE ASSESSEES NAME TO PARTICIPATE IN IRON SCRAP AUCTION AND FOR THE PURPOSE OF OBTAINING TENDERS BUT THE DEMAND DRAFTS WERE OBTAINED BY MR. SUDERSHAN TO LIFT THE MATERIAL FROM HYDERABAD TRADERS. HOWEVER, ASS ESSEE IS NOT ABLE TO FILE ANY CORROBORATIVE EVIDENCE TO SUBSTANTIATE HIS CASE BEFORE THE A.O. THEREFORE, CONSIDERING THE LACK OF EVIDENCE, THE ENTIRE SCRAP PURCHASE CONSIDERATION OF RS.17,92,769/ - AND THE AMOUNT OF RS.89,638/ - WHICH IS OFFERED FOR TAXATIO N IN THE ORIGINAL RETURN OF INCOME WERE CONSIDERED BY THE ASSESSING OFFICER AND ASSESSED IN THE HANDS OF THE ASSESSEE AND DETERMINED THE TOTAL INCOME AT RS. 18,82,410/ - AND RAISED A DEMAND OF RS. 8,14,777/ - . 3 3. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. BEFORE THE LD. CIT(A), ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O., BUT HE COULD NOT PRODUCE ANY EVIDENCE IN SUPPORT OF HIS CONTENTIONS MADE BEFORE THE ASSESSING OFFICER. CONSIDERING THE LACK OF EVIDENCE IN SUPPORT OF THE ASSESSEES CLAIM, LD. CIT(A) CONFIRMED THE ORDER OF THE A.O AND DISMISSED THE APPEAL. 5. ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 6. BEFORE US, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS AN UNEDUCATED AGRICULTURIST , RESIDING IN REMOTE RURAL AREA NAMED YELLANDU. HE FURTHER SUBMITTED THAT ONE MR. SUDERSHAN, AN EMPLOYEE OF M/S. SINGARENI COLLERIES COMPANY LTD., APPROACHED THE ASSESSEE AND AGREED TO PAY 5% OF COMMISSION ON SALE OF SCRAP A ND SO FAR AS THE PURCHASE OF SCRAP IS CONCERNED, MR. SUDERSHAN OBTAINED DD S AND PARTICIPATED IN THE AUCTION. ASSESSEE, BEING AN UNEDUCATED PERSON, COULD NOT GET THE NECESSARY INFORMATION FROM M/S. SINGARENI COLLERIES COMPANY LTD., TO PROVE HIS INNOCENCE, THOUGH HE HAS WRITTEN A LETTER DATED 10.01.2017 TO M/S. SINGARENI COLLERIES COMPANY LTD AND SOUGHT INFORMATION THROUGH RTI . LD COUNSEL BROUGHT OUR ATTENTION TO THE AFFIDAVIT DATED 02.12.2009 FILED BY THE ASSESSEE BEFORE THE CIT, VIJAYAWADA AND READ OUT TH E CONTENTS, WHEREIN THE ASSESSEE NARRATED THE FACTS OF THE CASE TO PROVE THAT HE HAS NO KNOWLEDGE OR ANY SOURCE TO PARTICIPATE IN THE AUCTION AND THE PURCHASE CONSIDERATION DOES NOT BELONG TO THE ASSESSEE. EXPLAINING THE ABOVE FACTS, LD COUNSEL SUBMITTED THAT , IN FACT , SINCE THE PURCHASE CONSIDERATION DOES NOT BELONG TO THE ASSESSEE, WHO ACTED AS ONLY A COMMISSION AGENT, THE 4 ADDITION MADE BY THE A.O AND CONFIRMED BY THE LD. CIT(A) MAY BE DELETED. 7. ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED ON THE ORDERS PASSED BY THE AUTHORITIES BELOW. 8. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD AND GONE THROUGH THE ORDERS PASSED BY THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE AFFIDAVIT FILED BY THE ASSESSEE BEFORE THE CIT, V IJAYAWADA. ACCORDING TO THE SAID AFFIDAVIT ASSESSEE IS BASICALLY AN AGRICULTURIST AND ALSO A COMMISSION AGENT. HE FILED THE RETURN OF INCOME BY ADMITTING COMMISSION INCOME OF RS. 89,640/ - . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT AND ASSESSEE OFFER ED INCOME @5% ON PURCHASE CONSIDERATION U/S 44AF OF THE ACT. SUBSEQUENTLY, A NOTICE U/S 148 WAS ISSUED AND THE A.O CAME TO THE CONCLUSION THAT THE ESTIMATION MADE BY THE ASSESSEE IS NOT CORRECT SINCE THE ESTIMATION SHOULD BE MADE ON THE SALE CONSIDERATION INSTEAD OF PURCHASE CONSIDERATION AND ACCORDINGLY ISSUED A NOTICE TO THE ASSESSEE U/S 143(2) OF THE ACT TO EXPLAIN THE SOURCE FOR THE AMOUNT OF RS.17,92,769/. ASSESSEE DID NOT APPEAR BEFORE THE A.O. AND THEREFORE THE ENTIRE SALE CONSIDERATION OF RS. 17,9 2,769/ - WAS ADDED AS INCOME OF THE ASSESSEE. ASSESSEE CARRIED THE MATTER BEFORE THE CIT U/S 264 OF THE ACT AND FILED AN AFFIDAVIT BEFORE THE COMMISSIONER EXPLAINING THE FACTS AND CIRCUMSTANCES OF THE CASE. FOR THE SAKE OF CONVENIENCE AND READY REFERENCE, THE CONTENTS OF THE SAID AFFIDAVIT ARE EXTRACTED AS UNDER: - I MD. MUJEEBUDDIN S/O. GAYASUDDIN, AGED 50 YEARS, OCC: AGRIL., R/O. NEARBAJAN MANDIR, YELLANDU TOWN AND MANDAL, KHAMMAM DISTRICT DO HEREBY SOLEMNLY AFFIRM AND STATE ON OATH AS FOLLOWS: 1. THAT I AM THE DEPONENT HEREIN AND AS SUCH, I AM WELL ACQUAINTED WITH ALL THE FACTS OF THIS AFFIDAVIT. 5 2. I AM AN ILLITERATE RESIDING IN REMOTE RURAL AREA AND LEADING MY LIFE BY TAKING AGRICULTURAL LAND ON LEASE BASIS AND DEPENDING ON THE RAINY SEASON I WOULD BE MAINTAINING MYSELF. I AM STRUGGLING TO GET HAND TO MOUTH IN THESE INFLATIONARY PERIOD. I HAVE ACQUAINTANCE WI TH ONE MR. SUDERSHAN R/O YELLANDU WHO HAS BEEN A CONTRACTOR AND I WOULD BE TAKE PETTY WORKS FOR HIM AND OTHER CONTRACTORS WHO WOULD BE GIVING ME SOME COMMISSION WITH THAT I AM PULLING ON MY LIFE. I HAVE NO ANY MOVABLE OR IMMOVABLE PROPERTIES OF ANY NATURE AT ANY POINT OF TIME TILL DATE. 3. THE ABOVE SAID MR. SUDERSHAN BY USING MY NAME HAD GOT OBTAINED A PAN CARD IN THE YEAR 2004 - 05 THROUGH PAN CARD NO. ALKPM 422PJ. THE SAID INCOME TAX RETURN WAS SUBMITTED THROUGH UNTRAINED ACCOUNTANT DUE TO OUR IGNORANCE AND MISTAKE. THE SAID MR. SUDERSHAN ASSURED TO GIVE SOME COMMIS SION AND HE HAD PARTICIPATD IN THE AUCTION OF IRON SCRAP CONDUCTED BY THE S.C.CO., LTD., A GOVERNMENT COMPANY AND THE SCRAP MATERIAL SITUATED AT BELLAMPALLI OF ADILABAD DISTRICT FOR AN AMOUNT OF RS. 17,14,064/ - THE SAID INVESTMENT WAS MADE BY THE SAID PERS ON ONLY. THE SAID INVESTMENT DOES NOT BELONG TO ME. I WOULD ONLY GET A PALTRY COMMISSION FROM THE SAID PERSON. I HAVE TRIED TO APPROACH THE SAID PERSON REGULARLY BUT INVAIN AND IS WHEREABOUTS ARE ALSO COU8LD NOT BE DETECTED BY ME. THE SAID STOCKS WERE LIFTED BY THE SAID PERSON ONLY AND I HAD NO ANY ROLE IN THAT REGARD WHICH ITSELF IS PALPABLY CLEARED FROM THE RECORDS OF THE S.C.CO., LTD. 4. THE PROCEEDINGS ARE INITIATED AGAINST ME U/S 144 OF ITJ ACT WERE INITIATED AGAINST ME AND I HAD NO TIME TO APPROACH Y OUR KIND AUTHORITY OF SUBMITTING THE ABOVE FACTS. I BONAFIDELY HUMBLY SUBMIT THAT ABSOLUTELY I HAVE NO KNOWLEDGE OR ANY SOURCE TO PARTICIPATE IN THE AUCTION AND THE PURCHASE MONEY DOES NOT BELONG TO ME AND DUE TO MY INNOCENCE THE ABOVE SAID PERSONS HAVE G OT ME IN THE ABOVE SAID TRANSACTION BY ASSURING TO PAY PALTRY COMMISSION AUCTION AND SUBSEQUENTLY VANISHED THEREBY DECEIVED ME. 5. HENCE IT IS PRAYED THAT YOUR KIND AUTHORITY MAY BE PLEASED TO CONSIDER THE ABOVE FACTS AND EXONERATE ME .. 9. BEFORE THE CIT , L D COUNSEL APPEARED AND SUBMITTED THAT THE ASSESSEE IS AN ILLITERATE AND WORKING WITH MR. SUDERSHAN, WHO IS AN EMPLOYEE OF M/S. SINGARENI COLLERIES COMPANY LTD., AND WHO ACTUALLY PURCHASED THE SCRAP. WHEN THE COMMISSIONER ASKED THE ASSESSEE TO FILE CORROBO RATIVE EVIDENCE, NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE CIT. HOWEVER, BY FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE, CIT DIRECTED THE AO TO GRANT ONE MORE OPPORTUNITY TO THE ASSESSEE. EVEN BEFORE THE A.O. IN THE SECON D ROUND OF PROCEEDINGS , ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE CIT. HENCE, THE AO ADDED THE ENTIRE PURCHASE CONSIDERATION OF SCRAP 6 TO THE TOTAL INCOME DECLARED BY THE ASSESSEE AND COMPLETED THE ASSESSMENT U/S 143(3) READ WITH SECTION 264 OF T HE ACT. ON APPEAL, CIT (A) CONFIRMED THE ORDER PASSED BY THE AO ON THE GROUND THAT NO EVIDENCE WAS FILED BY THE ASSESSEE , NEITHER BEFORE THE AO NOR BEFORE THE FIRST APPELLATE AUTHORITY , TO SUPPORT HIS CASE. 10. WE HAVE GONE THROUGH THE ORIGINAL ASSESSMENT ORDER AND THE ORDER PASS E D BY THE CIT U/S 264 OF THE ACT AND ALSO THE CONSEQUENTIAL ORDER PASSED BY THE AO U/S 143(3) R.W.S 264 OF THE ACT. WE HAVE ALSO GONE THROUGH THE AFFIDAVIT FILED BY THE ASSESSEE BEFORE CIT ON 02.12.2009. THE CASE OF THE ASSESSEEE IS THAT HE IS AN ILLITERATE AND LEADING LIFE AS AN AGRICULTURIST BY TAKING LANDS ON LEASE . IT IS ALSO THE CASE OF THE ASSESSEE THAT ONE MR. SUDHERSHAN APPROACHED HIM AND STATED THAT HE WOULD PAY THE ASSESSEE 5% COMMISSION FOR ALLOWING HIM TO DO SCRAP BUSINESS IN THE NAME OF THE ASSESSEE. IN FACT, THE ACTUAL BUSINESS WAS RUN BY MR. SUDHERSHAN WITH HIS OWN INVESTMENT AND NOT THE ASSESSEE. IT WA S ALSO SUBMITTED IN THE SAID AFFIDAVIT FILED BEFORE THE CIT THAT MR. SUDHERSHAN USED THE ASSESSEES NAM E AND THE ASSESSEE HAS NO MEANS TO CARRY THE BUSINESS. WITH REGARD TO ANY CORROBORATIVE EVIDENCE IN SUPPORT OF THE ASSESSEES CONTENTIONS, LD COUNSEL SUBMITTED THAT ASSESSEE SENT A LETTER TO M/S. SINGARENI COLLERIES COMPANY LTD., THROUGH RTI TO DISCLOSE T HE DETAILS BUT COULD NOT GET RELEVANT INFORMATION WHICH CAN SUPPORT THE ASSESSEES CASE. KEEPING IN VIEW THE FINANCIAL POSITION OF THE ASSESSEE AS WELL AS OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THERE IS NO REASO N TO DISBELIEF THE AFFIDAVIT FILED BY THE ASSESSEE BEFORE THE CIT , IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE TO SUPPORT THE SAME. ASSESSEE ADMITTED HIS INABILITY TO FILE ANY EVIDENCE DUE TO CIRCUMSTANCES BEYOND HIS CONTROL. AS SUCH, ACCORDING TO ASSESSEE HE COULD NOT TRACE OUT MR. SUDHERSHAN AND WHEREABOUTS NOT KNOWN . 7 UNDER THESE CIRCUMSTANCES OF THE CASE, THE ONLY OPTION LEFT TO US IS TO ESTIMATE THE INCOME OF THE ASSSESSEE. ACCORDINGLY, IN OUR OPINION ESTIMATING THE INCOME OF THE ASSESSEE AT RS . 2 .50 LAKHS INSTEAD OF ADMITTED INCOME OF RS. 89,640/ - WOULD MEET BOTH THE ENDS OF JUSTICE. WE ORDER ACCORDINGLY. 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 6 T H FEBRUARY, 2018. S D / - S D / - (B. RAMAKOT AIAH) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 1 6 T H FEBRUARY, 2018. OKK, SR.PS COPY TO 1. SHRI S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, 3 - 6 - 643, STREET NO.9, HIMAYATNAGAR, HYDERABAD - 500 029. 2. INCOME TAX OFFICER, WARD - 1, NEAR GANESH TEMPLE, KOTHAGUDEM. 3. CIT (A) - 7, HYDERABAD. 4. PR. COMMISSIONER OF INCOME TAX - 7, HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE