THE AICIT, Visakhapatnam V. Arikatla Ramanaiah, Hyderabad

MA 24/VIZ/2016

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6357 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 26-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y SESHA SRINIVAS
• Keywords: Unexplained investment; Search and seizure
• Section: 143(3); 153A; 147; 148; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER M.P. NO.21/VIZAG/2016 (ARISING OUT OF I.T.A.NO.400/VIZAG/2014) ( / ASSESSMENT YEAR : 2008 - 09 ) ACIT CENTRAL CIRCLE - 1 VISAKHAPATNAM VS. G. KOTESWARA RAO HYDERABAD [ PAN: AGDPG 1141R ] ( / APPELLANT) ( / RESPONDENT ) M.P. NO.22/VIZAG/2016 (ARISING OUT OF I.T.A.NO.401/VIZAG/2014) ( / ASSESSMENT YEAR : 2008 - 09 ) ACIT CENTRAL CIRCLE - 1 VISAKHAPATNAM VS. B. HARIPRASADA RAO HYDERABAD [ PAN: AAQPB8958C ] ( / APPELLANT) ( / RESPONDENT ) M.P. NO.2 3 /VIZAG/2016 (ARISING OUT OF I.T.A.NO.402/VIZAG/2014) ( / ASSESSMENT YEAR : 2008 - 09 ) ACIT CENTRAL CIRCLE - 1 VISAKHAPATNAM VS. N. VINOD KUMAR VISAKHAPATNAM [ PAN: AEYPN 2111F ] ( / APPELLANT) ( / RESPONDENT ) 2 M.P.NOS.21 - 26/VIZ/2016 SHRI G.KOTESWARA RAO & OTHERS, HYDERABAD M.P. NO.24/VIZAG/2016 (ARISING OUT OF I.T.A.NO.403/VIZAG/2014) ( / ASSESSMENT YEAR : 2008 - 09 ) ACIT CENTRAL CIRCLE - 1 VISAKHAPATNAM VS. ARIKATLA RAMANAIH CHIRUKUDUPADU [ PAN: APVA9224N ] ( / APPELLANT) ( / RESPONDENT ) M.P. NO.2 5 /VIZAG/2016 (ARISING OUT OF I.T.A.NO.404/VIZAG/2014) ( / ASSESSMENT YEAR : 2008 - 09 ) ACIT CENTRAL CIRCLE - 1 VISAKHAPATNAM VS. GOTTIPATI ANJANEYULU BOLLIPALLI [ PAN: AGVPG6128J ] ( / APPELLANT) ( / RESPONDENT ) M.P. NO.26/VIZAG/2016 (ARISING OUT OF I.T.A.NO.405/VIZAG/2014) ( / ASSESSMENT YEAR : 2008 - 09 ) ACIT CENTRAL CIRCLE - 1 VISAKHAPATNAM VS. CHERUKURI RAMBABU GUNTUR [ PAN: AKWPC8696G ] ( / APPELLANT) ( / RESPONDENT ) / APPELLANT BY : SHRI Y. SESHA SRINIVAS, DR / RESPONDENT BY : SHRI SAMUEL NAGADESI, AR / DATE OF H EARING : 09.02.2018 / DATE OF PRONOUNCEMENT : 21.02.2018 3 M.P.NOS.21 - 26/VIZ/2016 SHRI G.KOTESWARA RAO & OTHERS, HYDERABAD / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : TH E S E MISCELLANEOUS PETITIONS ARE FILED BY THE REVENUE AGAINST THE ORDER OF THE ITAT NO.400 - 405/VIZ/2014 DATED 29 . 1 0 .201 5 FOR THE ASSESSMENT YEAR 20 08 - 09 . SINCE THE FACTS ARE IDENTICAL AND ISSUE INVOLVED IS COMMON IN THESE PETITIONS, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT U/S 143 R.W.S. 147 IN THESE CASES . . THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) BUT NOT SUCCEEDED HENCE THE ASSESSEE FILED APPEALS BEFORE THIS TRIBUNAL CHALLENGING THE ORDER OF THE LD. CIT(A) VIDE ORDER IN ITA 400 - 407/VIZ/2014 FOR THE ASSESSMENT YEAR 2008 - 09 AND 2009 - 10. THE ITAT, VISAKHAPATNAM PASSED COMMON ORDER IN ALL THE APPEALS BY AN ORDER DATED 29.10.2015. 3. BRIEF FACTS EXTRACTED FROM THE ORDER OF THE ITAT IN ITA 40 0 /VIZ/2014 ARE THAT DURING THE SEARCH OPERATION U/S 132 CONDUCTED IN THE PREMISES OF N.SURYANARAYANA RED DY AND THE OFFICE PREMISES OF M/S SAI LAKSHMI TOWNSHIP PVT. LTD. AND SURVEY IN ITS BRANCH OFFICES ON 22.08.2008 CERTAIN 4 M.P.NOS.21 - 26/VIZ/2016 SHRI G.KOTESWARA RAO & OTHERS, HYDERABAD INCRIMINATING MATERIAL WAS FOUND AND SEIZED. IT WAS NOTICED THAT TH E ASSESSEE AND OTHERS HAVE INVESTED AN AMOU NT OF RS.230 LAKHS FOR PUR CHAS E OF LANDS SITUATED AT SINGAVARAM VILLAGE, DENKADA MANDAL, VIZIANAGARAM DIST. A DMEASURING 14.81 ACRES AND GIVEN TO M/S SAI LAKSHMI TOWNSHIP PVT. LTD. FOR DEVELOPMENT AND MARKETING. DURING THE COURSE OF SEARCH PROCEEDINGS, THE ASSESSEE WAS SUMMONED BY THE DY.DI T (INV.) , VISAKHAPATNAM AND RECORDED THE STATEMENT. DURING THE COURSE OF INVESTIGATION PROCEEDINGS, TO A SPECIFIC QUESTION OF DDIT, THE ASSESSEE HAD AGREED THAT HE ALONG WITH OTHER ASSOCIATES HAVE INVESTED AN AMOUNT OF RS. 230 LAKHS FOR PURCHASE OF LANDS SITUATED AT DENKADA MANDAL, VIZIANAGARAM DISTRICT ADMEASURING 14.81 ACRES OF LAND AND FURNISHED THE SOURCE S FOR THE INVESTMENT TO THE EXTENT OF RS.208 LAKHS AND THE BALANCE AMOUNT WAS ADMITTED AS UNEXPLAINED INVESTMENT. ON T HE BASIS SEIZED MATERIAL AND THE STATEMENT RECORDED FROM SHRI N.SURYANARAYANA REDDY / M/S SAI LAKSHMI TOWNSHIP PVT. LTD. , THE AO REOPENED THE ASSESSMENT U/S 148 AND COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 147 OF IT ACT. AGGRIEVED BY THE ORDER OF THE AO , THE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL. AFTER HEARING BOTH THE SIDES OF THE ARGUMENT S THIS TRIBUNAL HELD THAT THE ASSESSMENT MADE U/S 143(3) R.W.S. 147 IS BAD IN LAW AND ACCORDINGLY QUASHED THE ASSESSMENT. ACCORDING TO THE H ONBLE ITAT , THE 5 M.P.NOS.21 - 26/VIZ/2016 SHRI G.KOTESWARA RAO & OTHERS, HYDERABAD AO SHOULD HAVE TAKEN ACTION U/S 153A /153C OF IT ACT. FOR READY REFERENCE, WE EXTRACT THE RELEVANT PARAGRAPH OF THE ORDER OF THE ITAT IN PARA NO. 17 WHICH READS AS UNDER : 17. CONSIDERI NG THE FACTS AND CIRCUMSTANCES O F THE CASE AND ALSO APPLYING THE RATIOS OF THE ABOVE MENTIONED DECISIONS, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER, HAS NO JURISDICTION TO ISSUE NOTICE U/S 148 OF THE ACT TO REOPEN THE ASSESSMENTS IN RESPECT OF THOSE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THE PERIOD UNDER CONSIDERATION FALLS WITHIN THE EXCLUSIVE DOMAIN OF SECTION 153A. IN THE INSTANT CASE, SINCE THE ASSESSMENT IS MADE CONSEQUENT TO SEARCH IN ANOT HER CASE, THE ASSESSING OFFICER IS BOUND TO ISSUE NOTICE U/S 153C AND THEREAFTER PROCEED TO ASSESS OR REASSESS TOTAL INCOME UNDER SECTION 153A OF THE ACT. THE ASSESSING OFFICER, INSTEAD OF COMPLYING WITH THE PROVISIONS OF SECTION 153C, PROCEEDED WITH THE REASSESSMENT UNDER SECTION 147/148 WHICH IS NOT APPLICABLE TO SEARCH CASES. THEREFORE, THE IMPUGNED ASSESSMENT ORDER PASSED U/S 143(3), R.W.S.147 OF THE INCOME TAX ACT, 1961 IS ILLEGAL, ARBITRARY AND WITHOUT ANY JURISDICTION. HENCE THE ASSESSMENT ORDER D ATED 31.12.2010 PASSED U/S 143(3) R.W.S. 147 IS QUASHED. WHILE QUASHING THE ORDER PASSED U/S 143(3) R.W.S. 147, THE HONBLE ITAT , RELIED ON THE DECISIONS OF SPECIAL BENCH IN THE CASE OF A LL CARGO GLOBAL LOGISTICS LTD AND OTHERS VS. DCIT (201 2 ) 137 ITD 2 87( MUM ) AND THE DECISION OF STATE BANK OF INDIA VS. DEPUTY COMMISSIONER OF INCOME TAX (2013) 22 ITR 609. 4. AGGRIEVED BY THE ORDER OF THIS TRIBUNAL, THE REVENUE FILED MISCELLANEOUS PETITION STATING THAT NO MATERIAL RELATED TO THE ASSESSEE WAS FOUND AND SEIZED FROM THE BUSINESS PREMISES OF N SURYANARAYANA REDDY AND OFFICE PREMISES OF M/S SAI LAKSHMI TOWNSHIP PVT. LTD. SO AS TO INVOKE 6 M.P.NOS.21 - 26/VIZ/2016 SHRI G.KOTESWARA RAO & OTHERS, HYDERABAD THE PROVISIONS OF 153C OF IT ACT. THEREFORE, REQUESTED TO RECALL THE ORDER AFTER RECTIFYING THE MISTAKE IN THE ORDER PASSED BY THE TRIBUNAL. DURING THE APPEAL HEARING, LD.DR ARGUED THAT IN THIS CASE THERE WAS NO MATERIAL WAS FOUND AND SEIZED FROM THE PREMISES OF SEARCHED PER SON. THE AO HAS REOPENED THE ASSESSMENT MERELY ON THE BASIS OF THE STATEMENT RECORDED FROM M/S SAI LAKSHMI TOWNSHIP PVT. LTD. OR IN THE CASE OF MR.N.SURYANARAYANA REDDY. THEREFORE, THE LD.DR ARGUED THAT THERE WAS FACTUAL MISTAKE CREPT IN THE ORDER OF THE TRIBUNAL AND T HEREFORE , REQUESTED TO RECTIFY THE MISTAKE AFTER RECALLING THE ORDER. 5. ON THE OTHER HAND, LD.AR ARGUED THAT THE ASSESSMENT WAS REOPENED CONSEQUENT TO SEARCH AND SEIZURE OPERATIONS CONDUCTED U/S 132 OF IT ACT IN THE PREMISES OF SRI N.SUR YANARAYANA REDDY AND IN THE OFFICE OF M/S SAI LAKSHMI TOWNSHIP LTD., VISAKHAPATNAM. THE MATERIAL WITH REGARD TO THE INVESTMENTS MADE ON PURCHASE OF LAND AT SINGAVARAM WAS FOUND DURING THE COURSE OF SEARCH CONDUCTED IN THE PREMISES OF SAI LAKSHMI TOWNSHIP PVT. LTD. WHICH IS EVIDENT FROM THE FIRST PARAGRAPH OF THE ASSESSMENT ORDER. THE LD. AR FURTHER ARGUED THAT PARA N O.3 OF THE ASSESSMENT ORDER ESTABLISHES THAT THE MATERIAL WITH REGARD TO THE PURCHASE OF LANDS WAS MADE AVAILABLE TO THE INCOME TAX DEPARTMENT DURING THE COURSE OF SEARCH PROCEEDINGS 7 M.P.NOS.21 - 26/VIZ/2016 SHRI G.KOTESWARA RAO & OTHERS, HYDERABAD FROM THE STATEMENT OF SRI N.SURYANARAYANA REDDY. FURTHER IN PARAGRAPH NO.3, OF THE ASSESSMENT ORDER IT WAS CLEARLY WRITTEN THAT EACH ACRE WAS AGREED TO BE PURCHASED @ RS.27.50 LAKHS TO RS.29 LAKHS F ROM THE SEIZED M ATERIAL AND FROM THE STATEMENT GIVEN BY SHRI N SURYANARAYANA REDDY . FURTHER IN PARAGRAPH NO.4, IN THE SHOW CAUSE NOTICE IT WAS MENTIONED THAT THE ASSESSEE HAS MADE INVESTMENTS AS PER THE REPORT SUBMITTED BY THE DDIT (INV) A S PER THE SEIZED MATERIAL MARKE D AS ANNEXURE - A/SLT/39 (PAGES 1 TO 55). THEREFORE, LD.AR ARGUED THAT THE ENTIRE ASSESSMENT WAS MADE ON THE BASIS OF THE SEIZED MATERIAL FOUND AND SEIZED AT THE TIME OF SEARCH IN THE PREMISES OF N.SURYANARAYA NA REDDY AND M/S SAI LAKSHMI TOWNSHIP PVT. LTD. , H ENCE THE ASSESSMENTS REQUIRED TO BE MADE U/S 153C BUT NOT UNDER 147 OF THE ACT AND ARGUED THAT THE HONBLE ITAT HAS RIGHTLY QUASHED THE ORDER AND THERE IS NO MISTAKE WHICH NEEDS RECTIFICATION, HENCE REQUESTED TO DISMISS THE MISCELLANEOUS APPEALS FILED BY T HE REVENUE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THESE CASES, ASSESSMENTS WERE COMPLETED U/S 143(3) R.W.S. 147 OF THE I . T . ACT. THE INITIATION OF PROCEEDINGS FOR REASSESSMENT U/S 147 WAS CONSEQUENT TO THE SEARCH OPERATIONS CONDUCTED U/S 132 IN CASE OF SHRI N.SURYANARAYANA REDDY AND IN THE OFFICE PREMISES OF SAI LAKSHMI TOWNSHIP 8 M.P.NOS.21 - 26/VIZ/2016 SHRI G.KOTESWARA RAO & OTHERS, HYDERABAD PVT. LTD., VISAKHAPATNAM WHICH IS EVIDENT FROM THE ASSESSMENT ORDER. AS PER THE INFORMATION COLLECTED DURING THE COURSE OF SEARCH OPERATIONS, THE AO CAME TO AN OPINION THAT THE ASSESSEE HAD PURCHASED LANDS AT SINGAVARAM VILLAGE FOR THE PURPOSE OF LAYING OUT VENTURES. IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT G. KOTESWARA RAO AND OTHERS HAVE INVESTED IN 14.81 A CRES IN SING AVARAM VILLAGE, DENKADA MANDAL, T HE LANDS WERE ACQUIRED BY THE ASSESSEE IN SURVEY NO. 143, 141, 176, 145 OF SINGAVARAM VILLAGE ON 06.12. 2007, 05.01.2008 AND 21.02.2008 AND VENTURE WAS TAKEN UP BY M/S SAI LAKSHMI TOWNSHIP PVT. LTD., VISAKHAPATN AM IN PARA NO.3 OF THE ASSESSMENT ORDER WHICH READS AS UNDER : 3. D UR ING THE COURSE OF SEARCH PROCEEDINGS, THE MAIN PERSON OF THE TEAM WHO HAVE INVESTED IN THE ABOVE LANDS NAMELY, SHRR GALA RAMAKRISHNIAH HAS SUBMITTED VIDE HIS STATEMENT DATED 26 - 9 - 2008 THA T 'M/S. SAL LAKSH M I TOWNSHIP PVT. LTD. HAS MADE AN INVESTMENT IN SINGAVA RAM VIILAGE BY PAYING ADVANCES TO FARMERS FOR ACQUIRING LANDS. FROM THE SEIZED MATERIAL AND ALSO FROM THE STATEMENT GIVEN BY N.SURYANARAYANA REDDY, IT WAS NOTICED THAT EACH ACRE WAS A GREED TO BE PURCHAS ED @27.50 LAKHS TO RS.29 LAKHS. HOWEVER, SRI G.RA M AKRISHNAIAH HAS STATED THAT THEY HAVE CONTRIBUTED ONLY RS.15 LAKH PER ACRE AND THE REMAINING AMOUNT WHAT - EVER IS THE ACTUAL AMOUNT IS CONTRIBUT E D BY SRI N.SURYANARAYANA REDDY. 6.1. THE AO ISSUED SHOW CAUSE NOTICE AS RECORDED IN PARA NO.4 OF THE ASSESSMENT ORDER WHICH READS AS UNDER : 4. IN THE LIGHT OF THE ABOVE A COMMON SHOW CAUSE LETTER DATED 25.11.20 10 WAS ISSUED TO ASSESSEE FOR THE A Y 2008 - 0 9 AND THE GIST OF SHOW - CAUSE LETT ER IS AS UNDER : AS SEEN FROM THE ABOVE TABLE, YOU HAVE MADE AN INVESTMENT O F RS.25 IA KH S IN LANDS PERTAINING TO HIGHWAY GALAXY VENTURE DURING THE F. YS.2007 - 08 AND 2008 - 09 RELEVANT TO THE A.YS.2008 - 09 AND 2009 - 10. 9 M.P.NOS.21 - 26/VIZ/2016 SHRI G.KOTESWARA RAO & OTHERS, HYDERABAD THE DDIT(LNV), UNIT - 111(2), VISAKHAPATNAM IN HIS REPORT STATED THAT AS PER THE SEIZED MATERIAL MARKED AS ANNCXURE ' - A/ SLT / 39 (PAGES 1 TO 55); EACH ACRE WAS AGREED TO BE PURCHASED AT R S. 27.50 LAKHS TO R S. 29 LAKHS. THIS FIGURE WAS ALSO CONFIRMED BY SHRI N.S URYANARAYANA REDDY, MANAGING DIRECTOR OF M / S.SAI LAKSHMI TOWNSHIP PV T. LTD., VID E HIS STATEMENT RECORDED U/S.132(4) OF THE I .T.ACT, 1961, ON 9.9.2008. YOU ARE, THEREFORE, REQUESTED TO EXPLAIN AS TO WHY THE SAME FIGURE OF RS.29 LAKHS PER ACRE SHOULD NOT BE T AKEN INTO CONSIDERATION AND THE TOTAL INVESTMENT SHOULD NOT BE TAKEN AT R S. 4,29,49,000/ - AS AGAINST ADMITTED FIGURE OF RS.2.30 CRO R ES. FROM THE PLAIN READING OF THE ASSESSMENT ORDER IT IS ESTABLISHED THAT THE INCOME TAX DEPARTMENT HAS NOTICE D THE PURCHASE OF LANDS BY THE ASSESSEE AND SIX OTHERS IN SINGAVARAM VILLAGE CONSEQUENT TO SEARCH OPERATIONS CONDUCTED IN THE CASE OF N.SURYANARAYA REDDY AND THE OFFICE PREMISES OF SAI LAKSHMI TOWNSHIP PVT. LTD., VISAKHAPATNAM AND THE DEPARTMENT HAS SEIZE D THE INCRIMINATING MATERIAL EVIDENCING THE PURCHASE OF LANDS . FURTHER, AS PER THE REPORT OF THE DDIT(INV), UNIT III( 2), VISAKHAPATNAM, IT WAS ESTABLISHED THAT THE INCRIMINATING MATERIAL WAS FOUND AND SEIZED MARKED AS ANNEXURE - A/SLT/39 (PAGES 1 TO 55). T HEREFORE, FROM THE ABOVE IT IS CLEAR THAT THE INITIATION OF PROCEEDINGS U/S 147 WAS DUE TO THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND THE MATERIAL INDICATING THE EXCESS PAYMENT OR PURCHASE OF LANDS WAS FOUND AND SEIZED DURING THE COUR SE OF SEARCH. THEREFORE, THIS TRIBUNAL RIGHTLY HELD THAT THE ASSESSMENTS SHOULD HAVE BEEN MADE U/S 153C BUT NOT U/S 147 OF THE ACT. ON PERUSAL OF THE ENTIRE MATERIAL AND ORDERS OF THIS TRIBUNAL IT IS EVIDENT THAT THIS TRIBUNAL HAS CONSIDERED THE ENTIRE MA TERIAL 10 M.P.NOS.21 - 26/VIZ/2016 SHRI G.KOTESWARA RAO & OTHERS, HYDERABAD AND THE ARGUMENTS PLACED BY THE LD.AR AND DR AND HAS TAKEN A CONSCIOUS DECISION TO HOLD THAT THE ASSESSMENT MADE U/S 147 R.W.S. 143 IS BAD IN LAW. HENCE, T HERE IS NO MISTAKE APPARENT FROM RECORD WH ICH REQUIRES RECTIFICATION U/S 2 54. 7. IN THE RES ULT, MISCELLANEOUS PETITIONS FILED BY THE REVENUE ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 21 ST FEB 20 1 8 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 21 .02.2018 L.RAMA, SPS 11 M.P.NOS.21 - 26/VIZ/2016 SHRI G.KOTESWARA RAO & OTHERS, HYDERABAD / COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT - ACIT CENTRAL CIRCLE - 1, VISAKHAPATNAM 2 . / THE RESPONDENT SHRI SAMUEL NAGADESI, CA, 408, SRI RAMAKRISHNA TOWERS, BESIDES IMAGE HOSPITALS, AMEERPET, HYDERABAD - 500 073 3 . THE COMMISSIONER OF INCOME TAX (CENTRAL), HYDERABAD 4.THE COMMISSIONER OF INCOME TAX(APPEALS) - 1, HYDERABAD 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM