Sri Padala Srinivasa Reddy V. The Deputy Commissioner of Income Tax, Circle-I, Rajahmundry

ITTA/488/2010

AI Insights

The case involves Sri Padala Srinivasa Reddy, the appellant, who contested the inclusion of certain promissory notes in his income for the assessment year 1998-1999, following a search and seizure operation linked to another assessee, Padala Satyananarayana Reddy. The Income Tax Department included the interest from these notes in the appellant's income, leading to an increased tax assessment. The appellant's appeals at various levels, including the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, were unsuccessful. The High Court dismissed the final appeal, finding no substantial question of law and upholding the lower authorities' decisions.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 805343 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 20-09-2010
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Keywords: Block assessment; Income Tax; Interest income; Promissory notes; Search and seizure
• Section: 143(2); 254(2)

Judgement Text

"THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI RAMESH RANGANATHAN ITTA No.488 OF 2010 20.09.2010 Between: Sri Padala Srinivasa Reddy …Appellant AND The Deputy Commissioner of Income Tax, Circle-I, Rajahmundry . …Respondent THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI RAMESH RANGANATHAN ITTA No.488 OF 2010 COMMON ORDER: (per Hon’ble Sri Justice V.V.S.Rao) This appeal is against the order of the Income Tax Appellate Tribunal, Visakhapatnam Bench, Visakhapatnam in I.T.A.No.505/Vizag/2003, dated 16.09.2009. The petitioner is an individual assessee. For the assessment year 1998-1999, he filed Return on 30.03.1999 admitting income of Rs.46,410/-. It is a case of search and seizure on 23.12.1997 in connection with another assessee, namely, Padala Satyananarayana Reddy group. The case was taken up for scrutiny. Pursuant to a notice under Section 143(2) of the Income Tax Act, 1961, the assessee appealed before the respondent. It was noticed that during search and seizure operations inter alia certain promissory notes in the name of the assessee were found and amounts realized thereon were included in his income. Therefore, the assessee was requested to furnish the total amount of interest due as per the amounts included in the block assessment without deducting the amounts claimed as realized. Interest amount of Rs.1,86,844/- thereon was worked out and was included in the income and, accordingly, the tax was assessed at Rs.52,762/-. The assessee appealed before the Commissioner of Income Tax (Appeals) (CIT (A)). By order dated 16.09.2009, CIT (A) partly allowed the appeal observing that the interest amount on the pro-notes dated 15.04.1995 and 10.10.1996, which were in the names of other persons, amounting to Rs.32,353/- are to be deleted from the addition made by assessing officer. The assessee then appealed further to the Tribunal unsuccessfully. The Tribunal dismissed the appeal rejecting the plea that the pro-notes did not belong to the assessee. The appellant filed an application being M.A.No.59/Vizag/2009 to recall the order dated 16.09.2009 passed by learned Tribunal on the ground that the additional grounds raised by the assessee were not considered, and the additional evidence filed was not taken into consideration. The said application was rejected on 23.09.2009. Counsel for appellant submits that the learned Tribunal erred in not considering the additional grounds filed under Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963 (hereafter called, the Rules), which were filed along with an application under Rule 29 thereof for production of additional evidence before the Tribunal. The submission made by the counsel for petitioner cannot be countenanced. The learned Tribunal dismissed the appeal on 16.09.2009. During pendency of the said appeal, which relates to the assessment year 1998-1999, the appellant did not file any application under Rule 29 of the Rules or any additional grounds under Rule 11 of the Rules. A perusal of a copy of the documents, annexed to Memorandum of Appeal, would show that Revenue took up block assessment for the period 1987-1988 to 1997-1998. The same was subject matter of another appeal being I.T (SS) No.44/Vizag/2002. The same was partly allowed on 10.01.2008 sustaining ground No.1 therein, which is to the effect that “in the facts and circumstances of the case, the order of the assessing officer under Section 143(3) read with Sections 158BC and 158BD is erroneous and is not in accordance with law in the absence of satisfaction on the part of the assessing officer that the income belonged to the assessee Srinivasa Reddy, and that the same belonged to one P.Satyanrayana Reddy”. By that time, the appeal in respect of assessment year 1998-1999 was also pending. The appellant then filed two applications on 22.05.2008 purportedly under Rules 11 and 29 of the Rules separately. In the first application, he raised additional grounds that the pro-notes, and other documents in the search operations on 23.12.1997, did not relate to appellant and they belonged to Satyanarayana Reddy. In the other petition he sought to file as many as nineteen (19) documents all of which are post litem motam. By that time, the assessing officer had not disposed of the matter. Nothing prevented the appellant to file those documents. The appeal was pending before CIT (A) during which no such ground was urged. Therefore, the plea of the appellant that relevant material was eschewed by the assessing authorities cannot be accepted. The additional evidence includes the affidavit of the appellant and correspondence with the chartered accountant, which prima facie came into existence after the appeal was disposed of by the CIT. Therefore, much significance cannot be attached. Further more, when the appellant filed the application under Section 254(2) of the Act, the learned Tribunal itself held that all the grounds raised by the appellant and the additional evidence filed by appellant were already considered though there was no specific order on those applications. We have perused all the orders passed by the learned Tribunal and we are convinced that the case does not involve any substantial question of law. The appeal is therefore dismissed in limine. __________________ (V.V.S.RAO, J) ____________________________ (RAMESH RANGANATHAN) 20.09.2010. Pln "