Mohanlal Singh LR of late Sugan Devi, Hyderabad V. ACIT., Circle-7(1), Hyderabad

ITSSA 3/HYD/2014

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4487 (ITAT-HYDERABAD)
• Duration Of Justice: 6 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-10-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 19-10-2020
• Assessment Year: misc
• Appeal Filed On: 06-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained expenditure; Opportunity of being heard; Reasonable cause; Condonation of delay
• Section: 158BC; 158BD; 68; 54; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER (THROUGH VIRTUAL HEARING) ITA NO.3/HYD/2014 ASSESSMENT YEAR:1991 - 92 TO 2001 - 02 (BLOCK PERIOD) MOHANLAL SIGH, LR OF LATE SUGUNA DEVI, HYDERABAD. PAN: ADRPS 6065 P VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 7(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI S. RAMA RAO REVENUE BY: SHRI Y.V.S.T. SAI, CIT - DR DATE OF HEARING: 19/10/2020 DATE OF PRONOUNCEMENT: 19/10/2020 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A) - III, HYDERABAD IN APPEAL NO. 0108/CIT(A) - III/08 - 09, DATED 16/3/2009 PASSED U/S 144 R.W.S 158BD AND U/S. 250(6) OF THE ACT FOR THE AYS 1991 - 92 TO 2001 - 02. 2. THE ASSESSEE HAS RAISED FIVE GROUNDS IN HIS APPEAL WHICH ARE EXTRACTED HEREIN BELOW: 1. THE ORDER OF THE LD. CIT (A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2 2. THE LD. CIT (A) ERRED IN HOLDING THAT THE ORDER U/S. 158BD IS VALID EVEN WHEN NOTICE UNDER THE SAID SECTION IS ISSUED LONG AFTER THE ASSESSMENT ORDER IN THE CASE OF THE SEARCHED PERSON WAS ISSUED. 3. THE APPELLANT PRAYS THE HONBLE ITA T TO ALLOW THE APPEAL BY HOLDING THAT THE INITIATION OF PROCEEDINGS U/S. 158BD ARE NOT VALID. 4. IN THE ALTERNATE, THE APPELLANT PRAYS THE HONBLE ITAT TO KINDLY CONSIDER THE FOLLOWING GROUNDS RAISED BY THE APPELLANT IN THE APPEAL ORIGINALLY FILED AND DISP OSED OF VIDE ORDER IN IT (SS)A NO. 47/HYD/2009 DATED I) THE ORDER OF THE LD CIT (A) IS ERRONEOUS TO THE EXTENT IT IS PREJUDICIAL TO THE APPELLANT. II) THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE AO IN NOT ALLOWING DEDUCTION U/S. 54 OF THE ACT ON THE GROUND THAT THE CONSTRUCTED AREA WAS RECEIVED AFTER A PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER. THE LD. CIT (A) OUGHT TO HAVE CONSIDERED THE FACT THAT IT IS ONLY AN EXCHANGE OF THE PROPERTY. III) THE LD. CIT (A) OUGHT TO HAVE SEEN THAT THERE IS NO TRANSFER OF PROPERTY ON THE DATE OF DEVELOPMENT AGREEMENT AND THE PROPERTY WAS TRANSFERRED ONLY IN THE YEAR 1997 WHEN THE CONSTRUCTED AREA WAS TRANSFERRED TO THE APPELLANT HEREIN. IV) THE LD. CIT (A) IS NOT CORRECT IN HOLDING THAT THE 3 YEARS PERIOD HAS TO BE RECKONED FROM THE DATE OF DEVELOPMENT AGREEMENT. HE OUGHT TO HAVE HELD THAT THE PERIOD OF THREE YEARS HAS TO BE RECKONED FROM THE DATE OF HANDING OVER THE POSSESSION OF CONSIDERATION. V) THE LD. CIT (A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO OF RS. 1.0 LAKH ON ACCOUNT UNEXPLAINED EXPENDITURE. VI) THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATING THE AMOUNT OF RS. 4,00,000/ - AS REPRESENTING THE AMOUNT BORROWED ON THE PROMISSORY NOTES BY LATE SMT. SUGAN DEVI. VII) THE LD. CIT (A) OUGHT TO HAVE SEEN THAT THE PROVISIONS OF SECTION 68 HAVE NO APPLICATION TO THE FACTS OF THE APPELLANTS CASE HEREIN. VIII) THE LD. CIT (A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO AS UNEXPLAINED IN RESPECT OF PAYMENT MADE TO THE DEVELOPER WITHO UT CONSIDERING THE FACT THAT THE APPELLANT HAS SUBSTANTIAL SOURCES. IX) THE LD. CIT (A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO OF RS. 80,000/ - WHICH REPRESENTS THE AMOUNTS PAID FOR VACATING THE TENANTS AND IS A CAPITAL AMOUNT RECEIVED BY THE APPELLANT AND ACCORDINGLY OUGHT TO HAVE DELETED THE ADDITION OF RS. 80,000/ - . 3 X) THE ORDER U/S. 158BD PASSED ON 30/06/2006 IS NOT VALID AS THE NOTICE U/S. 158BD WAS ISSUED LONG AFTER THE ASSESSMENT IN THE CASE OF THE SEARCHED PARTY WAS COMPLETED. 5. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 3. AT THE OUTSET, LD. AR SUBMITTED BEFORE US THAT THERE IS A DELAY OF 15 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. IN THIS REGARD, LD. AR BROUGHT OUR ATTENTION TOWARDS THE AFFIDAVIT FILED BY T HE ASSESSEE S LEGAL REPRESENTATIVE SEEKING CONDONATION OF DELAY WHEREIN THE REASON FOR NOT FILING THE APPEAL WITHIN THE PRESCRIBED TIME LIMIT WAS EXPLAINED. FOR REFERENCE, THE RELEVANT PORTIONS FROM THE AFFIDAVIT IS EXTRACTED HEREIN BELOW: - .IN THIS REGARD, THE APPELLANT HUMBLY SUBMITS THAT DURING THE RELEVANT PERIOD THE APPELLANT LAID DOWN WITH ACUTE KNEE PAID AND WAS UNDERGOING TREATMENT FROM 7 TH JULY, 2014 AT GANDHI HOSPITAL ETC. HE WAS ALSO ADVISED NOT TO TRAVEL WITHOUT ESCORT. THEREFORE, HE COU LD NOT CONSULT HIS ADVOCATE FOR FILING THE APPEAL BEFORE THE HONBLE ITAT. COPIES OF THE MEDICAL RECORD INCLUDING THE CERTIFICATE ISSUED BY THE DOCTORS OF GANDHI HOSPITAL ARE SUBMITTED FOR KIND PERUSAL. HE WITH THE ASSISTANCE OF HIS RELATIVE COULD CONTAC T THE ADVOCATE ON 5/8/2014 WHEN THE APPEAL WAS GOT PREPARED AND THE SAME IS BEING FILED ON 6/8/2014 WITH A DELAY OF 15 DAYS. THE APPELLANT HUMBLY SUBMITS THAT THE DELAY IS FOR THE REASONS SUBMITTED ABOVE AND IS NOT INTENTIONAL. THE APPELLANT, THEREFORE, PRAYS THE HONBLE INCOME TAX APPELLATE TRIBUNAL TO KINDLY CONDONE THE DELAY AND PASS APPROPRIATE ORDERS IN THE MATTER. 4. AFTER HEARING THE SUBMISSIONS OF THE LD. AR AND ON PERUSAL OF THE AFFIDAVIT FILED BY THE ASSESSEE S LEGAL REPRESENTATIVE EXPLAINING THE REASONS FOR THE DELAY IN FILING THE APPEAL BEFORE THE TRIBUNAL WHICH IS 4 SUPPORTED BY THE MEDICAL CERTIFICATE ENCLOSED ALONG WITH THE CONDONATION PETITION, WE FIND THAT THE ASSESSEE S LEGAL REPRESENTATIVE HAD REASONABLE CAUSE FOR NOT FILING THE APPEAL BEFORE THE TRIBUNAL WITHIN THE STIPULATED TIME DUE TO THE ILL HEALTH SUFFERED BY HIM . HENCE, IN THE INTEREST OF JUSTICE, WE HEREBY CONDONE THE DELAY OF 1 5 DAYS IN THE FILING THE APPEAL BEFORE THE TRIBUNAL AND PROCEED TO DISPOSE OF F THE APPEAL ON MERITS. 5. AT THE OUTSET, THE LD. AR CONCEDED BEFORE US THAT THE GROUND NO. 3 WITH RESPECT TO THE INVALIDITY OF INITIATION OF THE PROCEEDINGS U/S. 158BD OF THE ACT , THE ASSESSEE HAS NO CASE BY VIRTUE OF THE RATIO LAID DOWN BY THE HONBLE S UPREME COURT IN THE CASE OF CIT VS. CALCUTTA KNITWEARS (2014) REPORTED IN 362 ITR 673 / 101 DTR 217 (SC). ACCORDINGLY THIS GROUND RAISED BY THE ASSESSEE DOES NOT SURVIVE. 6 . THE LD. AR THEREAFTER VEHEMENTLY ARGUED BEFORE US STATING THAT IN THE CASE OF THE ASSESSEE SEARCH WARRANT WAS ISSUED AND SEARCH WAS CONDUCTED U/S. 132 OF THE ACT THEREFORE THE ASSESSMENT OUGHT TO HAVE BEEN COMPLETED U/S. 158BC OF THE ACT , HOWEVER ASSESSMENT WAS COMPLETED U/S. 158BD OF THE ACT WHICH IS AB - INITIO ERRONEOUS AND THEREFO RE THE ASSESSMENT MADE U/S. 158BD CANNOT SURVIVE AND IT IS REQUIRED TO BE QUASHED. THE LD. DR ON THE OTHER HAND POINTED OUT CITING THE PANCHANAMA DATED 24/1/2001 THAT THE WARRANT WAS ISSUED 5 IN THE NAME OF SHRI MOHANLAL SINGH WHO WAS RESIDING AT THAT TIME IN THE PREMISES OF THE ASSESSEE AND THEREFORE, THE SEARCH WAS CONDUCTED ON MR. MOHANLAL SINGH AT THE PREMISES OF THE ASSESSEE AND HENCE IT CANNOT BE STATED THAT THE SEARCH WAS CONDUCTED ON THE ASSESSEE . THE LD. DR FURTHER SUBMITTED THAT SINCE INCRIMINATIN G MATERIALS RELATING TO THE ASSESSEE WAS REVEALED DURING THE COURSE OF SEARCH IN THE CASE OF SHRI MOHANLAL SINGH NOTICE WAS ISSUED TO THE ASSESSEE AND ASSESSMENT WAS COMPLETED U/S. 158BD OF THE ACT WHICH IS IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. HEN CE, IT WAS PLEADED THAT THE ASSESSMENT MADE IN THE HANDS OF THE ASSESSEE U/S. 158BD OF THE ACT IS IN ORDER. 7. AFTER HEARING BOTH SIDES AND PERUSING THE PANCHANAMA DATED 24/1/2001 POINTED OUT BY THE LD. DR, WE FIND MERIT IN HIS SUBMISSIONS. FROM THE FACTS OF THE CASE IT IS APPERANT THAT SHRI MOHANLAL SINGH WAS RESIDING IN THE PREMISES OF THE ASSESSEE. THEREFORE, WARRANT OF SEARCH WAS ISSUED IN THE NAME OF MR. MOHANLAL SINGH TO SEARCH THE PREMISES WHERE HE WAS RESIDING AT THAT POINT OF TIME I.E., THE PREMISES OF THE ASSESSEE. HENCE, IT IS A PPROPRIATE THAT THE SEARCH WAS CONDUCTED IN THE PREMISES WHERE MR. MOHANLAL SINGH WAS STAYING. THEREFORE, IT CANNOT BE CONSTRUED THAT THE SEARCH WAS CONDUCTED ON THE ASSESSEE JUST BECAUSE THE PREMISES SEARCHED BELONGS TO THE ASSESSEE. SINCE, INCRIMINATING MATERIALS RELATED TO THE ASSESSEE WAS FOUND DURING THE COURSE OF THE SEARCH IN THE CASE OF MR. MOHANLAL SINGH, THE LD. REVENUE 6 AUTHORITIES HAD RIGHTLY ISSUED NOTICE AND ASSES SED THE ASSESSEE U/S. 158BD OF THE ACT. THEREFORE, THIS GROUND RAISED BY THE ASSESSEE IS DEVOID OF MERITS AND ACCORDINGLY HELD AGAINST THE ASSESSEE. 8. THE LD. AR THEREAFTER ARGUED BEFORE US STATING THAT THE LD. CIT (A) HAD NOT ADJUDICATED ALL THE GROUNDS RAISED BY THE ASSESSEE AND THEREFORE HE PLEADED THAT THE MATTER MAY BE REMITTED BACK TO THE LD. CIT (A) FOR FRESH CONSIDERATION. THOUGH THE LD. DR VEHEMENTLY OPPOSED TO THE SUBMISSION OF THE LD. AR, COULD NOT SUCCESSFULLY CONTROVERT TO HIS CLAIM. 9. AFTER HEARING THE RIVAL SUBMISSIONS, WE ARE OF THE CONSIDERED VIEW THAT THE MATTER IS REQUIRED TO BE REMITTED BACK TO THE FILE OF THE LD. CIT (A) IN ORDER TO PROVIDE THE ASSESSEE WITH ONE MORE OPPORTUNITY OF BEING HEARD AND FOR THE LD.CIT(A) TO ADJUD ICATE ALL THE ISSUES RAISED IN THE APPEAL BY PASSING A SPEAKING ORDER. THEREFORE, IN THE INTEREST OF JUSTICE, WE HEREBY REMIT ALL THE OTHER GROUNDS RAISED BY THE ASSESSEE BEFORE US OTHER THAT WHAT IS DECIDED BY US HEREIN ABOVE, BACK TO THE FILE OF THE LD. CIT (A) FOR FRESH CONSIDERATION. IT IS ORDERED ACCORDINGLY. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREIN ABOVE. 7 PRONOUNCED IN THE OPEN COURT ON 19 TH OCTOBER, 2020. SD/ - SD/ - (P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 19 TH OCTOBER, 2020. OKK COPY TO: - 1. MOHANLAL SINGH LR OF LATE SUGUNA DEVI C/O. SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, H.NO. 3 - 6 - 643, ST. NO.9, HIMAYATNAGAR, HYDERABAD 500 029. 2. ACIT, CIRCLE - 7(1), INCOME TAX TOWERS, A.C. GUARDS, MASAB TANK, HYDERABAD. 3. THE CIT (A) - III, HYDERABAD. 4. THE CIT - VI, HYDERABAD. (II) THE ADDL. CIT, RANGE - 7, HYDERABAD. 5. THE DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. 6. GUARD FILE.