Sri Maddi Vijaya Sekhar (HUF), Guntur v. The ACIT, Circle, Vijayawada

CO 12/VIZ/2009 | misc
Pronouncement Date: 09-03-2011 | Result: Dismissed

Appeal Details

RSA Number 1225323 RSA 2009
Assessee PAN ACUPM0115C
Bench Visakhapatnam
Appeal Number CO 12/VIZ/2009
Duration Of Justice 1 year(s) 11 month(s) 23 day(s)
Appellant Sri Maddi Vijaya Sekhar (HUF), Guntur
Respondent The ACIT, Circle, Vijayawada
Appeal Type Cross Objection
Pronouncement Date 09-03-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 09-03-2011
Date Of Final Hearing 13-12-2010
Next Hearing Date 13-12-2010
Assessment Year misc
Appeal Filed On 16-03-2009
Judgment Text
ITSSA 15 OF 08 ITSSA 7 OF 06 AND CO 12 OF 09 MADDI V IJAYA SEKHAR HUF GUNTUR PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER IT(SS)A NO.7/VIZAG/2006 BLOCK PERIOD 1.4.1996 TO 4.12.2002 MADDI VIJAYA SEKHAR GUNTUR (APPELLANT) PAN NO:ACUPM 0115 C VS. ACIT CENTRAL CIRCLE VIJAYAWADA (RESPONDENT) IT(SS)A NO.15/VIZAG/2008 BLOCK PERIOD 1.4.1996 TO 4.12.2002 ACIT CENTRAL CIRCLE VIJAYAWADA (APPELLANT) VS. MADDI VIJAYA SEKHAR GUNTUR (HUF) (RESPONDENT) PAN NO:ACUPM 0115 C C.O NO.12/VIZAG/2009 (ARISING OUT OF IT (SS) A NO.15/VIZAG/2008) BLOCK PERIOD 1.4.1996 TO 4.12.2002 MADDI VIJAYA SEKHAR (HUF) GUNTUR (APPELLANTT) PAN NO:AAHHM 5007 Q VS. ACIT CENTRAL CIRCLE VIJAYAWADA (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI CA RESPONDENT BY: SHRI T.H. LUCAS PETER CIT (DR) ORDER PER SHRI B. R. BASKARAN ACCOUNTANT MEMBER: ALL THESE APPEALS AND CROSS OBJECTIONS ARE DIRECTED AGAINST THE ORDERS OF LEARNED CIT(A)-I HYDERABAD AND THEY RELATE TO THE BLOCK PERIOD ENDING 4.12.2002. THE APPEAL NUMBERED AS IT(SS)7/VIZAG/200 6 RELATES TO THE INDIVIDUAL STATUS OF THE ASSESSEE. THE OTHER APPEAL AND CROSS OBJECTION RELATE TO THE HUF STATUS OF THE ASSESSEE. SINCE TH E ISSUES URGED IN THESE CASES ARE INTERLINKED THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF ITSSA 15 OF 08 ITSSA 7 OF 06 AND CO 12 OF 09 MADDI V IJAYA SEKHAR HUF GUNTUR PAGE 2 OF 8 BY THIS COMMON ORDER. THE CROSS OBJECTION FILED BY THE ASSESSEE IS BARRED BY LIMITATION BY 94 DAYS. THE ASSESSEE HAS MOVED A PETITION FOR CONDONING THE DELAY. HAVING REGARD TO THE SUBMISSIONS MADE I N THE PETITION WE CONDONE THE DELAY AND ADMIT THE CROSS OBJECTION FIL ED BY THE ASSESSEE. 2. THE ADDITIONS MADE BY THE ASSESSING OFFICER IN T HE STATUS OF HUF HAVING BEEN PARTLY DELETED BY THE LEARNED CIT (A) THE REVENUE IS IN APPEAL BEFORE US. IN THE CROSS OBJECTION FILED BY THE ASS ESSEE FURTHER RELIEF IS BEING SOUGHT. THE ASSESSING OFFICER HAD MADE A PROT ECTIVE ASSESSMENT IN THE HANDS OF THE INDIVIDUAL. SINCE THE SAID PROTECT IVE ASSESSMENT WAS CONFIRMED BY THE LEARNED CIT (A) THE ASSESSEE IS I N APPEAL BEFORE US. 3. THE FACTS RELATING TO THE CASES ARE STATED IN BR IEF. THE DEPARTMENT CARRIED OUT SEARCH AND SEIZURE OPERATION IN THE IND IVIDUAL STATUS OF THE ASSESSEE ON 4.12.2002. THE ASSESSEE WAS ENGAGED IN CHILLIES COMMISSION BUSINESS IN THE STATUS OF HUF. DURING THE COURSE OF SEARCH INCRIMINATING DOCUMENTS WERE SEIZED AND IT WAS FOUND THAT THE SAI D DOCUMENTS RELATED TO THE HUF STATUS OF THE ASSESSEE. ACCORDINGLY THE ASS ESSING OFFICER INITIATED PROCEEDINGS UNDER SECTION 158BD OF THE ACT IN THE H ANDS OF HUF. DURING THE COURSE OF SEARCH A SWORN STATEMENT WAS TAKEN F ROM THE ASSESSEE UNDER SECTION 132(4) OF THE ACT. IN THE SAID STATEM ENT ASSESSEE DECLARED UNDISCLOSED INCOME OF RS.20.00 LAKHS THE BREAK UP OF WHICH WAS GIVEN AS UNDER: A) CIRCULATION CAPITAL IN MONEY LENDING - RS.8 00 0 00 B) JEWELLERY - RS.4 00 000 C) NON ALLOWABLE NON LEGAL EXPENSES PAID - RS.4 00 000 OUTSIDE BOOKS D) PURCHASE OF SHARES/UNITS - RS. 50 000 E) CASH - RS. 36 170 F) UNACCOUNTED PERSONAL - RS.3 13 830 ---------------- TOTAL = RS.20 00 000 ======== ITSSA 15 OF 08 ITSSA 7 OF 06 AND CO 12 OF 09 MADDI V IJAYA SEKHAR HUF GUNTUR PAGE 3 OF 8 HOWEVER THE ASSESSEE FILED THE BLOCK RETURN DECLAR ING NIL INCOME. THE ASSESSEE CLAIMED THAT HE HAD VOLUNTARILY OFFERED AD DITIONAL INCOME OF RS.20.00 LAKHS IN HIS RETURN OF INCOME FILED IN THE HUF STATUS FOR THE ASSESSMENT YEAR 1998-99 WHICH WAS FILED PRIOR TO T HE DATE OF SEARCH. IT WAS CONTESTED THAT THE SAID ADDITIONAL INCOME OF RS .20.00 LAKHS WAS SUFFICIENT TO EXPLAIN THE UNACCOUNTED INVESTMENTS. THE ASSESSING OFFICER DID NOT ACCEPT THE SAID CONTENTIONS OF THE ASSESSEE AS HE FELT THAT THE ADMISSION GIVEN IN THE STATEMENT RECORDED UNDER SEC TION 132(4) HAS BINDING EFFECT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER WORKED OUT THE UNDISCLOSED INCOME RELATABLE TO THE SEIZED MATERIALS AT RS.9 13 156/-. SINCE THE ASSESSEE HAD DECLARED RS. 20.00 LAKHS IN HIS SWORN STATEMENT THE ASSESSING OFFICER ASSESSED THE BALAN CING FIGURE OF RS.10 86 844/- ALSO AS UNDISCLOSED INCOME IN ORDER TO ARRIVE AT THE FIGURE OF RS.20.00 LAKHS AS STATED IN THE STATEMENT. THE BRE AK UP DETAILS ARE FURNISHED BELOW: ASSESSMENT YEAR UNDISCLOSED INCOME/ INVESTMENT REMARKS 97-98 6 000 INVESTMENT IN SHARES 98-99 3 83 096 INVESTMENT IN SHARES UNACCOUNTED ADVANCE GIVE AND UNACCOUNTED ILLEGAL EXPENSES 99-00 2 29 780 UNDISCLOSED INVESTMENT OF GOLD SILVER SHARES 00-01 3 000 INVESTMENT IN NSC/SHARES 01-02 50 110 PURCHASE OF NSC/SHARES AND INVESTMENT IN MONEY LENDING BUSINESS 02-03 1 05 000 - DO - 03-04 1 36 170 UNDISCLOSED INVESTMENT IN MONEY L ENDING BUSINESS AND UNEXPLAINED CASH FOUND DURING SEARCH SUB TOTAL 9 13 156 1-4-96 TO 4-12-2002 10 86 844 UNDISCLOSED INCOME EARNED DURING THE PERIOD 1-4-96 TO 4-12- 2002 AS STATED U/S 132(4) AFTER SET OFF OF UNDISCLOSED INVESTMENTS. TOTAL 20 00 000 ITSSA 15 OF 08 ITSSA 7 OF 06 AND CO 12 OF 09 MADDI V IJAYA SEKHAR HUF GUNTUR PAGE 4 OF 8 ACCORDINGLY THE ASSESSING OFFICER DETERMINED THE U NDISCLOSED INCOME OF THE ASSESSEE AT RS.20.00 LAKHS IN THE HANDS OF THE HUF. THE SAME AMOUNT HAD BEEN ASSESSED IN THE HANDS OF THE INDIVIDUAL ALSO O N PROTECTIVE BASIS PRIOR TO THE FINALIZATION OF ASSESSMENT IN THE HANDS OF H UF. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT (A) AGAINST THE PROTECTIVE ASSESSMENT IN THE HANDS OF IN DIVIDUAL. SINCE THE ASSESSMENT IN THE HANDS OF THE HUF UNDER SECTION 15 8BD WAS PENDING TO BE COMPLETED BY THE TIME THE APPEAL RELATING TO IND IVIDUAL WAS HEARD BY THE LEARNED CIT (A) THE FIRST APPELLATE AUTHORITY CONF IRMED THE SAID PROTECTIVE ASSESSMENT. HENCE THE ASSESSEE IS IN APPEAL BEFORE US IN THE INDIVIDUAL STATUS. 5. IN THE APPEAL FILED BY THE ASSESSEE IN THE HUF ST ATUS THE LEARNED CIT (A) DELETED THE ADDITION OF RS.10 86 844/- SIN CE THE SAID ADDITION WAS NOT RELATABLE TO ANY MATERIAL FURNISHED DURING THE COURSE OF SEARCH. WITH REGARD TO THE CLAIM OF TELESCOPING OF THE ADDITIONA L INCOME OFFERED BY HIM IN ASSESSMENT YEAR 1998-99 IN THE RETURN FILED PRIOR TO THE DATE OF SEARCH THE LEARNED CIT (A) ALLOWED TELESCOPING BENEFIT ONLY TO THE INVESTMENTS MADE IN THE YEAR RELEVANT TO THE ASSESSMENT YEAR 1998-99 W HICH WORKED OUT TO RS.3 83 096/-. DURING THE COURSE OF SEARCH IT WAS NOTICED THAT THE ASSESSEE HAD EARNED UNDISCLOSED INCOME FROM CHILLIE S COMMISSION DURING THE YEARS RELEVANT TO THE ASSESSMENT YEARS 1997-98 AND 1998-99 @ RS.99 754/- AND RS.23 449/- RESPECTIVELY. THE ASSES SING OFFICER DID NOT MAKE ANY SPECIFIC ADDITION OF THESE TWO ITEMS. SINC E THE SAID COMMISSION WAS EARNED DURING THE BLOCK PERIOD THE ASSESSING O FFICER DIRECTED THE ASSESSING OFFICER TO TREAT THEM ALSO AS THE UNDISCL OSED INCOME OF THE ASSESSEE. DURING THE COURSE OF SEARCH DOCUMENTS E VIDENCING UNACCOUNTED PURCHASES RELATING TO THE YEARS RELEVANT TO THE ASS ESSMENT YEARS 1999-2000 TO 2003-04 WERE ALSO UNEARTHED. IN THE APPELLATE P ROCEEDINGS THE LEARNED ITSSA 15 OF 08 ITSSA 7 OF 06 AND CO 12 OF 09 MADDI V IJAYA SEKHAR HUF GUNTUR PAGE 5 OF 8 CIT (A) NOTICED THAT THE ASSESSEE HUF HAD STOPPED B USINESS DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR 1998-99 AND FR OM ASSESSMENT YEAR 1999-2000 ONWARDS THE ASSESSEES SON SHRI MADDI NA NDA KISHORE HAS CARRIED ON THE BUSINESS. IT WAS ALSO NOTICED THAT T HE UNACCOUNTED PURCHASES RELATING TO THE ASSESSMENT YEAR 1999-00 TO 2003-04 WAS OWNED UP BY SHRI MADDI NANDA KISHORE AND HE HAD ALSO DECLARED THE CO MMISSION INCOME THEREFROM IN HIS BLOCK RETURN. THE LEARNED CIT (A) ALSO NOTICED THAT NEITHER THE ASSESSING OFFICER NOR THE DDIT (INV) HAD GIVEN A SPECIFIC FINDING THAT THE ASSESSEE HUF DID CARRY ON BUSINESS IN THE ASSES SMENT YEARS 1999-2000 AND SUBSEQUENT YEARS. ACCORDINGLY THE LEARNED CIT (A) HELD THAT THE IMPUGNED UNACCOUNTED PURCHASES BELONG TO SHRI M. NA NDA KISHORE ONLY. AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) BOTH THE PARTIES ARE IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. FIRST WE TAKE UP THE ISSUE RELATING TO THE UNACCOUNTED PU RCHASES. WE NOTICE THAT THE LEARNED CIT (A) HAS GIVEN A SPECIFIC FINDI NG THAT THE SAME BELONG TO THE SON OF THE ASSESSEE SHRI M. NANDA KISHORE. FUR THER IT HAS BEEN NOTICED BY HIM THAT SHRI NANDA KISHORE HAD DECLARED THE COM MISSION THERE FROM IN HIS BLOCK RETURN. THE LEARNED CIT(A) HAS ALSO NOTI CED THAT NEITHER THE ASSESSING OFFICER OR NOR THE DDIT (INV) HAS DENIED T HE FACT THAT THE ASSESSEE HUF DID NOT CARRY ON THE BUSINESS FOR THE ASSESSMENT YEAR 1999- 2000 ONWARDS. DURING THE COURSE OF HEARING BEFORE US THE DEPARTMENT DID NOT BRING ANY MATERIAL TO CONTRADICT THE SAID OBSER VATIONS OF LEARNED CIT(A). HENCE WE ARE OF THE VIEW THAT THE LEARNED CIT (A) IS RIGHT IN HOLDING THAT THE SAID UNACCOUNTED PURCHASES DID NOT BELONG TO THE ASSESSEE. 6.1 THE NEXT ISSUE RELATES TO THE DELETION OF RS.10 86 844/-. THE ASSESSING OFFICER HIMSELF HAS NOTICED THAT THE UNDI SCLOSED INCOME REFERABLE ITSSA 15 OF 08 ITSSA 7 OF 06 AND CO 12 OF 09 MADDI V IJAYA SEKHAR HUF GUNTUR PAGE 6 OF 8 TO THE SEIZED MATERIAL ACTUALLY WORKS OUT TO RS.9 1 3 756/-. IN ORDER TO SUSTAIN THE FIGURE OF RS.20.00 LAKHS DECLARED BY TH E ASSESSEE THE ASSESSING OFFICER HAS CONSIDERED THE BALANCING FIGURE OF RS.1 0 86 844/- AS THE UNDISCLOSED INCOME OF THE ASSESSEE. AS PER SECTION 158BB OF THE ACT THE UNDISCLOSED INCOME OF THE BLOCK PERIOD SHALL BE COM PUTED ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFF ICER AND RELATABLE TO SUCH EVIDENCE. HENCE THERE CANNOT BE ANY DISPUTE THAT THE UNDISCLOSED INCOME HAS TO BE COMPUTED ONLY ON THE BASIS OF MATERIAL FO UND DURING THE COURSE OF SEARCH OR SUCH OTHER MATERIAL OR INFORMATION WHICH ARE RELATABLE TO SUCH EVIDENCE. WE HAVE ALREADY NOTICED THAT THE ASSESSI NG OFFICER HAS CONSIDERED THE AMOUNT OF RS.10 86 844/- AS THE UNDI SCLOSED INCOME OF THE ASSESSEE ONLY TO ARRIVE AT THE FIGURE OF RS.20.00 L AKHS. WE HAVE EXTRACTED THE BREAK UP DETAILS OF RS.20.00 LAKHS AS ORIGINALL Y GIVEN IN THE STATEMENT AND AS COMPUTED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THERE IS MUCH VARIANCE BETWEEN THE TW O BREAK UP DETAILS. IT COULD BE NOTICED THAT THE ASSESSING OFFICER HAS COM PUTED THE UNDISCLOSED INCOME TO THE EXTENT OF RS.9 13 156/- ON THE BASIS OF EVIDENCES FOUND DURING THE COURSE OF SEARCH. THERE CANNOT BE ANY D ISPUTE THAT THE BALANCING FIGURE OF RS.10 86 844/- COMPUTED BY THE ASSESSING OFFICER IS NOT RELATABLE TO ANY EVIDENCE FOUND DURING THE COURSE O F SEARCH. HENCE WE FIND THAT THE DECISION OF LEARNED CIT(A) IS IN ACCO RDANCE WITH THE PROVISIONS OF SEC. 158BB AS EXPLAINED ABOVE. ACCORDINGLY WE AFFIRM HIS DECISION ON THIS ISSUE. 6.2 WITH REGARD TO THE CLAIM OF TELESCOPING OF ADDI TIONAL INCOME OF RS.20.00 LAKHS WHICH HAD BEEN OFFERED BY THE ASSES SEE IN THE ASSESSMENT YEAR 1998-99 THE LEARNED CIT (A) HAS NOTICED THAT THE ASSESSEE WAS NOT ABLE TO SUPPORT THE CLAIM WITH ANY SUPPORTING EVIDE NCE LIKE BALANCE SHEET AND CAPITAL ACCOUNT IN ORDER TO PROVE THAT THE ASSE SSEE HAS MADE ITSSA 15 OF 08 ITSSA 7 OF 06 AND CO 12 OF 09 MADDI V IJAYA SEKHAR HUF GUNTUR PAGE 7 OF 8 INVESTMENTS IN THE SUBSEQUENT YEARS FROM OUT OF THE SAID ADDITIONAL INCOME. HOWEVER THE LEARNED CIT (A) HELD THAT THE INVESTME NTS MADE IN THE YEAR RELEVANT TO THE ASSESSMENT YEAR 1998-99 COULD LEGIT IMATELY BE CONSIDERED AS MADE OUT OF THE SAID ADDITIONAL INCOME OFFERED I N THAT YEAR. ACCORDINGLY THE UNDISCLOSED INCOME OF RS.3 83 096/- RELATABLE T O THE ASSESSMENT YEAR 1998-99 WAS DIRECTED TO BE DELETED BY ACCEPTING THE TELESCOPING BENEFIT SOUGHT FOR BY THE ASSESSEE. THE REVENUE IS AGGRIEVE D BY THE SAID DECISION OF THE LEARNED CIT (A). HOWEVER ON A CAREFUL READI NG OF THE ORDER OF THE LEARNED CIT (A) WE NOTICE THAT THE LEARNED CIT(A) HAS GIVEN THE TELESCOPING BENEFIT ONLY FOR THE UNDISCLOSED INCOME COMPUTED FOR THE ASSESSMENT YEAR 1998-99 SINCE THE ASSESSEE HAD DEC LARED THE ADDITIONAL INCOME IN THAT YEAR. ACCORDING TO THE ASSESSEE HE DID NOT ACCOUNT FOR THE ADDITIONAL IN ANY BOOKS OF ACCOUNT. IN THESE CIRCU MSTANCES IT IS REASONABLE TO PRESUME THAT THE SAID ADDITIONAL INCOME COULD BE USED TO EXPLAIN THE INVESTMENTS MADE IN THAT YEAR ITSELF. HENCE WE DO NOT FIND ANY INFIRMITY IN THE SAID DECISION OF THE LEARNED CIT (A) ON THIS IS SUE. 6.3 IN THE CROSS OBJECTION THE ASSESSEE IS OBJECTIN G TO THE DECISION OF THE LEARNED CIT (A) IN RESTRICTING THE TELESCOPING BENEFIT ONLY TO THE EXTENT OF RS.3 83 096/-. DURING THE COURSE OF HEARING TH E LEARNED A.R CONTENDED THAT THE TELESCOPING BENEFIT MAY BE EXTENDED TO THE INVESTMENTS MADE IN THE SUCCEEDING YEAR ALSO. IN THAT REGARD WE HAVE AL READY NOTICED THAT THE LEARNED CIT (A) HAS SPECIFICALLY OBSERVED THAT THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM OF TELESCOPING FOR THE INVES TMENTS MADE IN THE YEARS SUBSEQUENT TO THE ASSESSMENT YEAR 1998-99. BEFORE U S ALSO THE ASSESSEE COULD NOT FILE ANY EVIDENCE TO SUBSTANTIATE HIS CLA IM. ACCORDINGLY WE REJECT THE SAID CLAIM OF THE ASSESSEE. 6.4 OTHER GROUNDS RAISED BY THE ASSESSEE IN THE CROSS OBJECTION HAVE BEEN DULY CONSIDERED WHILE DISPOSING OF THE APPEAL OF THE REVENUE. ITSSA 15 OF 08 ITSSA 7 OF 06 AND CO 12 OF 09 MADDI V IJAYA SEKHAR HUF GUNTUR PAGE 8 OF 8 7. SINCE WE HAVE CONFIRMED THE ASSESSMENT IN THE HA NDS OF HUF STATUS OF THE ASSESSEE THE PROTECTIVE ASSESSMENT MADE IN THE HANDS OF THE INDIVIDUAL STATUS OF THE ASSESSEE STANDS CANCELLED. WE ORDER ACCORDINGLY. 8. IN THE RESULT THE APPEAL NUMBERED AS IT(SS)A 7/V IZAG/2006 IS ALLOWED. THE APPEAL OF THE REVENUE AND THE CROSS OB JECTION OF THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 9 TH MARCH 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE:09-03-2011 COPY TO 1 THE ACIT CENTRAL CIRCLE VIJAYAWADA 2 SRI MADDI VIJAYA SEKHAR (HUF) S/O SRI NARASIMHA R AO 12-25-87 KOTHAPET GUNTUR 3 SHRI G.V.N. HARI & CO. CHARTERED ACCOUNTANT D.NO. 30-14-11 DABBIRU MANSIONS DABAGARDENS VISAKHAPATNAM 500020 4 5 THE CIT CENTRAL HYDERABAD THE CIT(A)-I HYDERABAD 6 THE DR ITAT VISAKHAPATNAM. 7 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM