Income Tax Appellate Tribunal - Hyderabad
K Raghava Reddy, Hyderabad vs Assessee on 21 October, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH 'B'(SMC), HYDERABAD
BEFORE THE HON'BLE VICE PRESIDENT, SHRI D.MANMOHAN
ITA No.1898/Hyd/2014 : Asst. Year 2004-05
ITA No.1899/Hyd/2014 : Asst. Year 2005-06
ITA No.1900/Hyd/2014 : Asst. Year 2006-07
ITA No.1901/Hyd/2014 : Asst. Year 2007-08
Shri K.Raghava Reddy, V/s. Asst. Director of Income-tax
Hyderabad (Investigation), Unit 1(2),
Hyderabad
( PAN - AEMPL 0325 E)
(Appellant) (Respondent)
Appellant by : Shri M.V.Joshi
Respondent by : Shri Moharana
Date of Hearing 28.8.2015
Date of Pronouncement 21.10.2015
ORDER
These appeals by the assessee are directed against similar but separate orders passed by the Commissioner of Income-tax(Appeals) VI, Hyderabad and they pertain to assessment years 2004-05 to 2007-08. Since the only issue involved in the first three years and the major issue involved in the assessment year 2007-08, being identical, I proceed to dispose of these appeals by a combined order for the sake of convenience.
2. These appeals were originally fixed for hearing on 7.4.2015 and at the request of the assessee, they were adjourned to 4.8.2015, and thereafter posted for hearing on 28.8.2015. On behalf of the assessee's counsel, Shri M.V.Joshi, Chartered Accountant appeared and sought adjournment on the ground that learned counsel is out of India. In order to go abroad, one has to seek Visa and follow other formalities, which are being ordinarily done at least three weeks in advance, and thus, the counsel is well aware that he would be out of India, in which event, it is his duty to file an 2 ITA No.1898/Hyd/2014 & 3 ors Shri K.Raghava Reddy, Hyderabad application seeking adjournment, explaining the urgency of going abroad, as otherwise, adjournment is not a matter of right. In fact, had the assessee sought adjournment well in advance, some other cases would have been accommodated on that date. The practice of assuming that the cases would be automatically adjourned, and seeking adjournment on the day when the cases are listed for hearing, cannot be encouraged. Under these circumstances, I refused to grant adjournment and requested, Shri Joshi, Chartered Accountant (whose name is mentioned in the Power of Attorney, but he has not appended his signature) to argue the matter, but he merely pleaded that he is not aware of the facts and he has taken it for granted that adjournment would be automatic. The bench having refused to grant adjournment, requested the Learned Departmental Representative to briefly explain the facts. He merely read out the order of the CIT(A) as well as the grounds of appeal and submitted that the matter was merely set aside and thus no prejudice is caused to the assessee.
3. Parties are directed to file written submissions. Learned CIT-DR, Shri Moharana has not filed written submissions, but after long lapse of time, another CIT-DR sought to file written submissions, which are not taken on record, since she has not represented the matter.
4. Similarly, the learned counsel for the assessee filed the written submissions, wherein it is merely contended that in the light of the Special Bench(Mumbai) decision of the Tribunal in All Cargo Global Logistics Ltd. (137 ITD 287), when there is no incriminating material found during the course of search, no assessment can be made under S.143(3) read with S.153A of the Act. In his opinion, the matter having been set aside purely on the ground that the Assessing Officer made the additions on the basis of assumptions, it implies that there is no incriminating matterial found at the time of search.
3 ITA No.1898/Hyd/2014 & 3 orsShri K.Raghava Reddy, Hyderabad
5. I have carefully considered the submissions of both the parties. The facts considered for the assessment year 2004-05 are as under-
5.1 The assessee is a Director of M/s. Midwest Granites Pvt. Ltd. (MGPL). Search and seizure action has taken place in the business premises of M/s. Midwest Granites Pvt. Ltd. as well as the residential premises of the assessee. Consequent thereto, notice was issued under S.153A. It may be noticed hat the assessee purchased land situated at Survey No.15/2/E1, K.Samudram, Urpanapalli, Narsampet, Warangal for a consideration of Rs.50,000 and including stamp duty and registration charges, the total sum spent worked out to Rs.57,750, which was not reflected in the payment side of the Receipts and Payments Account furnished by the assessee. According to the Assessing Officer, the amount was routed through the unaccounted income of the assessee, and therefore, it was added as unexplained investment.
5.2. On the other hand, the case of the assessee before the CIT(A) is that during the course of assessment proceedings, the Assessing Officer has neither raised any proposal to make the addition, nor called for any explanation in this regard. It was also contended that it was reflected in the books of account of the assessee and all the above mentioned expenditure has been met by the company, i.e. M/s. Midwest Granites Pvt. Ltd. of which the assessee is a Director In the light of the new argument urged before the CIT(A), the matter was set aside to the file of the Assessing Officer with a direction to verify the fact and if the claim of the assessee is found to be true, no addition can be made, as observed by the learned CIT(A).
6 Similarly, for the assessment year 2005-06, the Assessing Officer noticed investment of Rs.89,300 towards purchase of land situated in K.Samudram, Urpanapalli, Narsampet, Warangal, which has to be treated as 4 ITA No.1898/Hyd/2014 & 3 ors Shri K.Raghava Reddy, Hyderabad unexplained investment, whereas the learned CIT(A), having noticed that the Assessing Officer has not given an opportunity of being heard to the assessee, set aside the matter to the file of the Assessing Officer for verification of the specific contention of the assessee that the payment was made through the books of the company, and if it is found to be true, no addition can be made.
7. Similarly, for the assessment year 2006-07, the assessee purchased lands in Thigalavenu, Gadur Parishad, Warangal for a consideration of Rs.2,47,630 and Rs.1,33,900 respectively, whereas in the Receipts and Payments Account, an amount of Rs.2,47,630 and Rs,44,425 only were reflected and the balance of Rs.89,475 was not reflected, and the same was added as unexplained investment. Before the learned CIT(A), learned counsel submitted that the payments were made by the company, i.e. M/s. Midwest Granites Pvt. Ltd. on behalf of the assessee, who is its Director. For verification of the said contention of the assessee, the matter was set aside to the file of the Assessing Officer.
8. In the appeal for assessment year 2007-08, the following two grounds were raised-
"1. ....
2. The Ld. CIT(A)-IV, having held that there is no basis for making the addition of Rs.2,72,160/- and that the addition made only on the basis of assumption in a search related assessment does not survive, has erred in directing the Assessing Officer for verification of specific payment through the books of the company.
3. The Ld. CIT(A) -IV, having held that the amount of Rs.2,116/- has already been taxed, erred in directing the Assessing Officer to verify further in this regard. .
4. ...."5 ITA No.1898/Hyd/2014 & 3 ors
Shri K.Raghava Reddy, Hyderabad 8.1 Facts concerning the first issue are identical to the facts of the earlier years, i.e. assessee purchased land situated at Urgpanapalli, Thigalveni and K.Samudram Village for a consideration of Rs.2,72,160 (including registration charges etc.), which were not reflected in the Receipts and Payments Account, and hence the Assessing Officer presumed that these investments were made from unexplained sources. Here also, the assessee contended before the CIT(A) that the said amounts were paid by the company, M/s. Midwest Granites Pvt. Ltd., on behalf of the assessee. Hence, for verification of these facts and redeciding the matter accordingly, the matter was set aside to the file of the Assessing Officer.
8.2. As regards the second aspect, interest amount of Rs.2,116 was added because the information brought on record indicates that the assessee received interest income of Rs.43,756 as per the Receipts and Payments Account, whereas the income offered to tax was only Rs.41,630. Here also, the case of the assessee was that the Assessing Officer has not given an opportunity of being heard. Before the CIT(A), it was contended that this amount was offered to tax in the earlier year, and it has already been taxed. Since this argument was not considered by the Assessing Officer, the matter was restored to the file of the Assessing Officer for verification.
9. Contention of the assessee in all these cases is that he learned CIT(A) having accepted that the additions have been made on assumptions, assessments would not survive and hence, there is no need for setting aside of these matters to the file of the Assessing Officer.
10. I have carefully perused the record. Case of the Assessing Officer is that during the course of search proceeding, certain incriminating matterial was found, which indicated that the assessee has made certain investments in the purchase of land, but the source of payments was not 6 ITA No.1898/Hyd/2014 & 3 ors Shri K.Raghava Reddy, Hyderabad reflected in the books. No material was placed before the Tribunal to indicate that incriminating material was not found during the course of search, except merely advancing the argument that no addition can be made in the absence of incriminating material. Having regard to the circumstances of the case, the learned CIT(A) in fact allowed all the claims of the assessee, subject to verification of facts brought to the notice of CIT(A) for the first time. Thus, order of the CIT(A) is in accordance with law.
11. Needless to observe, if the company, M/s. Midwest Granites Pvt. Ltd., has made the investments on behalf of the assessee, no addition can be made in the hands of the assessee, and similarly, if the interest received is already taxed in the earlier years, the same cannot be taxed in the assessment year 2007-08. With these observations, the appeals filed by the assessee are dismissed.
12. In the result, appeals field by the assessee are dismissed.
Pronounced in the court on 21st October, 2015 Sd/-
(D.Manmohan) Vice President Dt/- 21st October, 2015 Copy forwarded to:
1. Shri K.Raghava Reddy, C/o. M/s.P.Murali & Co., Chartered Accountants, 6-3-6755/2/3, 1st Floor, Somajiguda, Hyderabad-82
2. Asstt. Director of Income-tax(Inv) Hyderabad
3. Commissioner of Income-tax(Appeals) VI, Hyderabad
4. Director of Income-tax(Inv) Hyderabad
5. Departmental Representative, ITAT, Hyderabad.
B.V.S 7 ITA No.1898/Hyd/2014 & 3 ors Shri K.Raghava Reddy, Hyderabad