Appeal details
Counselvise Citation
[2022] 104 COUNSELVISE.COM (IT) 5228 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 month(s) 30 day(s)
Appellant
Respondent
Appeal Type
Miscellaneous Application
Pronouncement Date
08-02-2022
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB-A
Assessment Year
2016-2017
Appeal Filed On
09-12-2021
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH “A”, HYDERABAD (Through Virtual Hearing) BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER MA No.102/Hyd/2021 (In ITA No.161/Hyd/2021) Assessment Year: 2016-17 Income Tax Officer, Ward-1, Nellore. Vs. Talluri Srinivasulu, Nellore – 524 001. PAN: AAUPT 9827 G (Appellant) (Respondent) Assessee by: Shri M.V. Prasad Revenue by: Shri Rajendra Kumar, CIT-DR Date of hearing: 06/01/2022 Date of pronouncement: 09/02/2022 ORDER PER A. MOHAN ALANKAMONY, AM.: This Miscellaneous Application is filed by the Revenue seeking rectification of the order passed by the Tribunal in the assessee’s case in ITA No. 161/Hyd/2021, dated 12/08/2021 for the Assessment Year 2016-17. 2. In the MA the Revenue has stated the following shortcomings in the order of the Tribunal dated 12/08/2021. 1. The Pr. CIT has elaborately discussed in the order U/s. 263 that the enquiries made by the A.O. are grossly inadequate having regard to the specific issue for verification of which the case was selected for scrutiny. 2 The ITAT has set aside the 263 order and restored the order of the A.O. without considering the detailed discussion made by the Pr. CIT in 263 and without giving reasons for disregarding the same. 2. The Hon’ble ITAT restored the order of the A.O. without discussing the issues raised by the Pr. CIT in 263 order with regard to grossly inadequate enquiries in the course of the assessment proceedings in respect of the issue on which the case was specifically selected for scrutiny. 3. The Hon’ble ITAT set aside the order of the Pr. CIT by merely stating that the A.O. had made enquiries, without specifically dealing with the detailed reasons given in the 263 order for coming to the conclusion that the enquiries made by the A.O. were inadequate and without giving a speaking order as to how the enquiries made by the A.O. can be considered to be inadequate. 4. The Hon’ble ITAT has not considered or discussed the issues raised in the order U/s. 263 with regard to inadequate enquiries / examination / verification of the issue of correctness of the High amount of cash on hand by the A.O. for verification of which the case was selected for scrutiny. The issues raised in order U/s. 263 in respect of sources explained by the assessee for the said cash on hand are as under: Agricultural Income: a. The A.O. without even verifying the ownership of the land holding by the assessee and his family members had accepted the huge agricultural income, which was claimed to be one of the sources for the high cash on hand shown by the assessee as on 31/3/2016. Further, the assessee furnished copies of pattadar passbooks, land tax paid receipts, lease agreements entered into with family members and encumberance certificates only in response to the show cause notice issued u/s. 263 during the present proceedings. They were not furnished to the A.O. during the assessment proceedings. The said documents are running into 103 pages and the same require careful verification by the A.O. to ascertain the extent of owned/leased agricultural lands which were utilized for agricultural operations. b. At para 10 of the 263 order, it was clearly discussed that the claim of the assessee regarding production of documents in proof of the land holdings, land tax paid receipts, pattadar passbooks and leaser deeds before the ITI, who was deputed b the A.O. for enquiries, during the course of his visit to the agricultural lands, is factually incorrect. c. No inquiries were made by the A.O. with the purported buyer of eucalyptus trees Sri Hazaratiah for ascertaining the genuineness of the sale agreement and the creditworthiness of the said person for making 3 substantive payments to the assessee. No inquiries were made by the A.O. for obtaining and examining the bank account of the said person from which payments were stated to have been received to the tune of Rs. 10,00,000 and Rs. 8,00,000/- on 4/3/2016 and 19/03/2016 respectively. No inquiries were made as to why the sale was shown to have been made to Sri Hazaratiah at Rs. 3,200/-per ton in the said agreement, though it was stated by the assessee himself in Annexure- III to the letter dated 10/09/2018 furnished during the assessment proceedings that debarked eucalyptus was sold to a paper mill at the said rate. d. Though the proceeds from sale of eucalyptus trees were shown to have been received by cash to the extent of Rs. 10,00,000/- on 22/02/2016 and through bank on 4/3/2016 and 19/03/2016 to the tune of Rs. 10,00,000/- and Rs. 8,00,000/- respectively, some of the weight bridge receipts were found to have been issued on dates subsequent to the last date of receipt of sale consideration ie 19/03/2016. e. The weigh bridge receipts do not contain the name of either the assessee or the buyer Sri Hazaratiah and do not contain the signature of either these persons or the weigh bridge operator, though there is specific space earmarked in the said receipts for the signature of the party and the signature of the operator. The weigh bridge receipts therefore do not carry any evidentiary value in support of claim of sale of eucalyptus trees. Chit Bid Amounts: f. From the elaborate discussion made at para 19 of the 263 order based on the bank account extract and cash book entries, it is evident that the chit bid amounts were withdrawn by the assessee in cash from his bank account in October 2015 and February 2016, though substantial cash balance was already available with him on the relevant dates as per the cash book maintained by him and the said amounts were not shown to have been utilized till the end of the financial year. The conduct of the assessee to bid for chit amounts and hold the said amounts as cash on hand till the end of the financial year without utilizing the same for the purpose for which the amounts were bid, represents a conduct which is contrary to normal/prudent human behaviour. The reasons for the same were not all probed by the A.O. during the assessment proceedings for ascertaining the genuineness of the assessee’s claim. The assessee failed to furnish a satisfactory explanation during the revisions proceedings also. HDFC bank loan amounts: g. The assessee failed to furnish HDFC bank account statement (during assessment proceedings as well as revision proceedings) in which the loan sanction amount of Rs. 81.30 lakhs was claimed to have been 4 credited and subsequently transferred to APGB A/c., from which the funds were withdrawn and claimed as sources for cash on hand. h. The plot loan amount of Rs. 89,12,843/- (sanction by HDFC and credited in APGB account) was withdrawn in cash from the bank account by the assessee though there was no immediate transaction of investment in plot to be executed by him. The reason cited for such withdrawal of the same in cash and holding it as cash on hand till the end of the financial year was discredited by the Pr. CIT in the order U/s. 263 with detailed reasoning at paras 24 to 26 of the order. In particular, it was brought out clearly that the conduct of the assessee in obtaining a loan for purchase of a plot, withdrawing the same in cash immediately and making a claim of holding the same in cash for a long period, while incurring huge interest cost on the said loan amount is against the normal prudent human behaviour. Overall observation/findings in 263 order: i. The A.O. completely overlooked the fact that the return of income for the instant assessment year 2016-17 was filed belatedly by the assessee on 8/2/2017 showing huge cash balance of s. 1,60,89,213/- as on 31/3/2016 therein, which is after the completion of the period of demonetization on 31/12/2016 and that the assessee claimed during the course of the statement recorded U/s. 131 on 31/3/2017 by the A.O. that the cash deposits of Rs. 40,56,500/- made by him during the demonetization period in APGB A/CIT(A) were out of the said cash balance brought forward on 1/4/2016. In such a factual background, it was all the more incumbent on the part of the A.O. to have critically examined the claims of the assessee regarding the sources of the cash on hand and genuineness of the cash on hand by making relevant and detailed inquiries / verification. j. The Pr. CIT has clearly established in order U/s. 263 how the enquiries made by the A.O. with regard to the sources for cash deposits are grossly inadequate. However, the ITAT without discussing even a single issue as narrated above, has set aside the order of the Pr. CIT by observing in a blind manner that the A.O. completed the assessment after making enquiries. k. The Hon’ble ITAT has completely ignored Explanation 2 of section 263 of the Act in quashing the order U/s. 263 passed by the Pr. CIT. As per the provisions of clause (a) of Explanation 2 to section 263(1) inserted in the statute with effect from 01/06/2015 by the Finance Act, 2015, an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of revenue, if the order has been passed without making inquiries or verification which should have been made. The inadequacy of the enquiries made by the A.O. on the several fronts was clearly brought out in the order U/s. 263. On applying the said legal provisions to the facts of the case as mentioned 5 above, it is evident that the assessment order U/s. 143(3) dated 6/12/2018 is required to be treated as an order which is erroneous in so far as it is prejudicial to the interests of the Revenue on a deemed basis within the meaning of section 263 of the Act. However, the ITAT did not mention even a word regarding the applicability of the said legal provisions to the facts of the case.” 3. From the MA filed by the Revenue it is apparent that the Revenue is seeking for Review of the Order of the Tribunal and not rectification of mistake which is apparent on record in the order of the Tribunal. It is pertinent to mention that the Tribunal does not have powers for Review. On the earlier instance, the entire submissions of both the parties and the documents furnished by them were taken into consideration while passing the Order. Therefore, the MA filed by the Revenue is devoid of merits. 4. Further, the Revenue has stated in the MA that the Ld. Pr. CIT has passed revision order U/s. 263 of the Act for the AY 2016-17 and 2017-18 which are inter-connected with regard to source for cash deposit during demonetization period. However, the Tribunal has disposed off the appeal of the assessee for both the AYs 2016-17 and 2017-18 separately. 5. At the outset, we do not find any mistake which is apparent on record in the order of the Tribunal for disposing off both the appeals by passing separate order. 6 6. Accordingly, the Miscellaneous Application filed by the Revenue does not have any merit. 7. In the result, the MA filed by the Revenue is dismissed. Order pronounced in the open court on the 09 th February, 2022. Sd/- Sd/- (S.S. GODARA) (A. MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 09 th February, 2022 OKK Copy to:- 1) Appellant: Income Tax Officer, ward-1, Nellore. 2) Respondent: Sri Talluri Srinivasulu, D.No.60-7-13, Ground Floor, Siddhartha Nagar, 4 th Lane, Vijayawada. 3) The Principal Commissioner of Income Tax, 1 st Floor, Aayakar Bhavan, K.T Road, Tirupati - 517507 4) The DR, ITAT, Hyderabad 5) Guard File
