Sri Mohammed Sikandar, Warangal V. Income Tax Officer, Ward-1, Kothagudem

ITA 999/HYD/2014

• Counselvise Citation: 99922514 RSA 2014
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: G MANIKYA PRASAD
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources; Source of fund
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.999/HYD/2014 ASSESSMENT YEAR 2009-2010 MR. MOHAMMED SIKANDAR, KOTHAGUDEM PAN ABZPM3704D VS. THE INCOME TAX OFFICER, WARD-1, KOTHAGUDEM, KHAMMAM DISTRICT. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. G. MANIKYA PRASAD FOR REVENUE : MR. P. SOMASEKHAR REDDY DATE OF HEARING : 11.09.2014 DATE OF PRONOUNCEMENT : 24.10.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS IS AN ASSESSEES APPEAL AGAINST THE ORDER OF LD. CIT, VIJAYAWADA UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 SETTING ASIDE THE ASSESSMENT COMPLETED BY A.O. UNDER SECTION 143(3) DATED 30.05.2011. 2. BRIEFLY STATED, ASSESSEE IS AN INDIVIDUAL AND I S DERIVING INCOME FROM HOUSE PROPERTY AND OTHER SOURC ES. HE FILED RETURN OF INCOME ADMITTING INCOME OF RS.1,95, 770. IN THE SCRUTINY ASSESSMENT COMPLETED, A.O. EXAMINED VARIOU S ISSUES AND MADE ADDITIONS OF UNEXPLAINED INVESTMENT TO AN EXTENT OF RS.56,484 AND ALSO LOW WITHDRAWALS TO AN EXTENT OF RS.90,000. TOTAL INCOME WAS TOTALLY DETERMINED AT RS.3,42,254. LEARNED CIT, VIJAYAWADA NOTICED THAT ASSESSEE HAS RECEIVED AN AMOUNT OF RS. 12 LAKHS AND RS.52,000 AS CREDITS TOWARDS PU RCHASE OF IMMOVABLE PROPERTIES. AS PER THE CONFIRMATION LETTE RS AVAILABLE 2 ITA.NO.999/HYD/2014 MR. MOHAMMED SIKANDAR, KOTHAGUDEM, KHAMMAM DIST., ON RECORD, THE LEARNED CIT OBSERVED THAT AN AMOUNT OF RS. 5 LAKHS AND RS. 6 LAKHS RECEIVED FROM M/S. SAJID ASSO CIATES AND MR. MOHD. JAFAR RESPECTIVELY NEEDS VERIFICATION AND SINCE A.O. DID NOT EXAMINE THE CREDITS, HE WAS OF THE OPINION THAT THE ORDER PASSED BY A.O. WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. ACCORDINGLY, HE ISSUED NOTICE DATED 18.10.2012. 2.1. ASSESSEE IN REPLY SUBMITTED THAT THESE AMOUNT S WERE ADVANCED BY THE RESPECTIVE PERSONS FOR PURCHAS E OF PROPERTY JOINTLY WITH THE ASSESSEE AND THE A.O. HAS ENQUIRED IN THE COURSE OF ASSESSMENT PROCEEDINGS ABOUT THE SOUR CE OF FUNDS. ASSESSEE ALSO EXPLAINED THE SOURCE OF FUNDS WITH CONFIRMATIONS GIVEN AND OTHER INFORMATION TO JUSTIF Y THAT A.O. HAS ACCEPTED ON VERIFICATION AND LD. CIT CANNOT INV OKE JURISDICTION UNDER SECTION 263 ON THE BASIS OF THE CONFIRMATION LETTERS AVAILABLE ON RECORD. THE LD. CIT, HOWEVER, DID NOT AGREE WITH ASSESSEES CONTENTIONS AND CAME TO THE FOLLOWI NG OPINION THAT A.O. FAILED TO VERIFY THE CREDITWORTHINESS AND GENUINENESS OF THE CREDITORS AND ACCEPTED ASSESSEES CLAIM WITH OUT ANY EXAMINATION. HIS OBSERVATIONS IN PARA 7 ARE AS UNDE R : 7. THE ABOVE SUBMISSIONS ARE CONSIDERED CAREFULLY. THE A.R. HAS ARGUED THAT THE ADVANCES ARE ROUTED TH ROUGH THE BANK, BOTH THE CREDITORS ARE IDENTIFIABLE AND T HEIR CREDITWORTHINESS HAVE BEEN ESTABLISHED. AS SEEN FRO M THE BANK STATEMENTS, THE DEPOSITS WERE MADE AND WITHDRA WN ON THE SAME DAY WHICH CLEARLY INDICATED THAT THE CA PACITY OF CREDITORS AND GENUINENESS OF THE CREDITS WERE DOUBT FUL WHICH SHOULD HAVE PROMPTED THE A.O. TO CONDUCT A LI TTLE PROBING WHICH WAS REQUIRED IN THE PRESENT CASE TO E STABLISH AS TO WHETHER THE APPARENT WAS REAL OR NOT. THE TAX ING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WH ILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE EN TITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITALS MADE IN THOSE DOCUMENTS, AS HELD IN 3 ITA.NO.999/HYD/2014 MR. MOHAMMED SIKANDAR, KOTHAGUDEM, KHAMMAM DIST., THE CASE OF COMMISSIONER OF INCOME TAX, WEST BENGAL -II VS. DURGA PRASAD MORE, (082 ITR 0540 (1973) (SC). FURTH ER, IT IS HELD THAT A MERE IDENTIFICATION AND SHOWING OF THE MOVEMENT OF THE AMOUNT IN BANKING CHANNELS IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE CREDIT (264 ITR 435 DELHI (P 438). IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, IT IS CL EAR THAT THE A.O. HAS FAILED TO VERIFY CREDITWORTHINESS AND GENUINENESS OF THE CREDITORS AND ACCEPTED THE ASSES SEES CLAIM WITHOUT ANY EXAMINATION. 2.2. THUS, THE LD. CIT SET ASIDE THE ASSESSMENT OR DER WITH A DIRECTION TO THE A.O. TO RE-DO THE ASSESSMEN T AS INDICATED ABOVE IN ACCORDANCE WITH LAW AND ESTABLIS HED PROCEDURE ON SUCH ISSUE. 3. ASSESSEE IS AGGRIEVED AND FILED THE PRESENT APP EAL. LD. COUNSEL SUBMITTED THAT ASSESSEE HAS FILED NECES SARY CONFIRMATIONS BEFORE THE A.O. AND A.O. HAS EXAMINED THE SAME. IT WAS ALSO SUBMITTED THAT BOTH PERSONS WERE UNDER THE JURISDICTION OF THE SAME A.O. AND THE FUNDS ARE DRA WN FROM A FIRM FOR PURCHASE OF PROPERTY IN JOINT NAMES. HE AL SO PLACED ON RECORD THE PAPER BOOK JUSTIFYING THE SUBMISSIONS MA DE BEFORE THE LD. CIT. IT WAS THE SUBMISSION THAT HAVING EXAM INED BY A.O. LD. CIT LACKS JURISDICTION UNDER SECTION 263. 4. ON THE OTHER HAND, LEARNED D.R. SUBMITTED THAT THERE WAS CASH DEPOSITS IN THE BANK ACCOUNT AND THE SE WERE NOT EXAMINED BY A.O. AND THEREFORE, ORDER OF LD. CI T IS JUSTIFIED. 5. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE RECORD. THERE IS NO DOUBT WITH REFERENCE TO THE FAC T THAT A.O. ASKED FOR SOURCE OF FUNDS IN PURCHASE OF PROPERTIES AND AS THE A.O. ORDER ITSELF INDICATES THAT THIS ASPECT HAS BE EN EXAMINED. HIS ORDER IN PARA 3 IS AS UNDER : 4 ITA.NO.999/HYD/2014 MR. MOHAMMED SIKANDAR, KOTHAGUDEM, KHAMMAM DIST., 3. ADDITION OF UNEXPLAINED INVESTMENT : DURING THE YEAR 2008-09, RELEVANT TO THE A.Y.2009-10, THE ASSESSEE HAS JOINTLY PURCHASED TWO PROPERTIES WORTH OF RS.13 ,26,105 AND RS.1,01,640 WITH A SHARE OF 12% AND 1% RESPECTI VELY. THE ASSESSEES SHARE IN RESPECT OF INVESTMENT INCLU DING REGISTRATION CHARGES HAS BEEN QUANTIFIED AT RS.1,60 ,149. ON VERIFICATION OF THE BALANCE SHEET, IT WAS SEEN THAT THE ASSESSEE HAS SHOWN THE VALUE OF ASSETS AT RS.1,03,6 65 ONLY. WHEN ASKED FOR THE SOURCES FOR DIFFERENCE OF RS.56,484, THE A.R. COULD NOT SUBSTANTIATE THE SAME . IN VIEW OF THIS, THE DIFFERENCE IN INVESTMENT OF RS.56,484 IS ADDED TOWARDS THE UNEXPLAINED INVESTMENT. 6. AS CAN BE SEEN FROM THE ABOVE, ASSESSEE HAS JOINTLY PURCHASED TWO PROPERTIES WORTH RS.13,26,105 AND RS.1,01,640 AND HAVING A SHARE OF 12% AND 1% RESPEC TIVELY. THIS INDICATES THAT THE FUNDS ADVANCED BY M/S. SAJI D ASSOCIATES AND MR. MOHD. JAFAR TO THE ASSESSEE ARE FOR PURCHASE OF PROPERTY IN JOINT NAMES OUT OF WHICH, A SSESSEES SHARE IS ONLY PROPORTIONATE AS STATED ABOVE. IN FAC T, A.O. FOUND OUT THAT VALUE OF THE ASSETS SHOWN WAS AT RS.1,03,6 65. THERE IS NO SOURCE FOR AN AMOUNT OF RS.56,484 WHICH WAS T REATED AS UNEXPLAINED INVESTMENT. IN WHAT CIRCUMSTANCES, THE CREDITS RECEIVED FROM M/S. SAJID ASSOCIATES AND MR. MOHD. J AFER CAN BE CONSIDERED AS UNEXPLAINED CREDITS IN THE HANDS O F ASSESSEE WAS NOT FORTHCOMING FROM THE ORDER OF LD. CIT. IN F ACT, THE FUNDS HAVE COME TO ASSESSEE FOR A JOINT INVESTMENT IN A PROPERTY AND THIS FACT IS AVAILABLE ON RECORD. NOT ONLY THAT, IN THE COURSE OF ASSESSMENT, NECESSARY CONFIRMATIONS H AVE BEEN FILED BY THE SAID PARTIES IN ASSESSEES CASE WHICH WERE ACCEPTED AS GENUINE. THOSE PARTIES ARE ALSO ASSESSEES WITH T HE SAME AO. SINCE THE ENTIRE INFORMATION WAS AVAILABLE ON R ECORD, WE ARE UNABLE TO UNDERSTAND ON WHAT BASIS THE LD. CIT COULD COME TO THE CONCLUSION THAT A.O. HAS NOT VERIFIED. THE SO-CALLED 5 ITA.NO.999/HYD/2014 MR. MOHAMMED SIKANDAR, KOTHAGUDEM, KHAMMAM DIST., CASH DEPOSITS IN THE BANK ACCOUNT DOES NOT ESTABLIS H THAT THIS WAS UNACCOUNTED INCOME. AS EXPLAINED BEFORE THE LD. CIT AND AS PERUSED FROM RECORD, THOSE ARE WITHDRAWALS FROM THE FIRM AND DEPOSITED IN THEIR ACCOUNTS ONLY. BUT ASSESSEE HAS RECEIVED ONLY BY WAY OF CHEQUES FROM THE RESPECTIVE PERSONS. IF AT ALL THERE IS CASH DEPOSITS IN RESPECTIVE ASSESSE ES HANDS, THEY WILL BE UNACCOUNTED INCOME IN THEIR HANDS BUT NOT IN ASSESSEES HANDS. THIS BASIC FACT HAS NOT BEEN CONS IDERED BY THE LD. CIT. SINCE ASSESSEE RECEIVED THE AMOUNTS BY WAY OF ACCOUNT PAYEE CHEQUES AND AS A.O. EXAMINED THEM BY OBTAINING NOT ONLY NECESSARY CONFIRMATIONS BUT ALSO RELEVANT BANK ACCOUNTS, THE SAME DOCUMENTS BEING THE BASIS F OR THE LD. CITS OPINION, WE ARE NOT IN A POSITION TO UPHO LD THE ORDER OF LD. CIT. TAKING AN OPINION ON A PARTICULAR ISSUE BY A.O. CANNOT BE CONSIDERED AS NON-ENQUIRY BY THE HIGHER A UTHORITY BECAUSE HE HOLDS A DIFFERENT VIEW ON THE ISSUE. AS STATED ABOVE, THE FACTS DO INDICATE THAT THE OPINION OF LD . CIT IS NOT JUSTIFIABLE. IN VIEW OF THIS, WE HAVE NO HESITATION IN SETTING ASIDE THE ORDER OF LD. CIT AND RESTORE THE ASSESSME NT ORDER UNDER SECTION 143(3). ASSESSEES GROUNDS ARE ACCORD INGLY ALLOWED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.10.2014. SD/- SD/- (SAKTIJIT DEY) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 24 TH OCTOBER, 2014 VBP/- 6 ITA.NO.999/HYD/2014 MR. MOHAMMED SIKANDAR, KOTHAGUDEM, KHAMMAM DIST., COPY TO 1. MR. MOHAMMED SIKANDAR, KOTHAGUDEM, KHAMMAM DIST., C/O. G.S. MADHAVA RAO & CO. C.AS SUDHARMA BUILDINGS, M.G. ROAD, WARANGAL. 2. THE INCOME TAX OFFICER, WARD-1, KOTHAGUDEM, KHAMMAM DISTRICT. 3. CIT, VIJAYAWADA. 4. ADDL.CIT, KHAMMAM RANGE, KHAMMAM 5. D.R. ITAT A BENCH, HYDERABAD.