ACIT, Rajahmundry v. Kadiyala Krishna Mohan, Rajahmundry

ITA 14/VIZ/2009 | 2002-2003
Pronouncement Date: 23-03-2010 | Result: Allowed

Appeal Details

RSA Number 1425314 RSA 2009
Assessee PAN ANTPK1733E
Bench Visakhapatnam
Appeal Number ITA 14/VIZ/2009
Duration Of Justice 1 year(s) 2 month(s) 15 day(s)
Appellant ACIT, Rajahmundry
Respondent Kadiyala Krishna Mohan, Rajahmundry
Appeal Type Income Tax Appeal
Pronouncement Date 23-03-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 23-03-2010
Assessment Year 2002-2003
Appeal Filed On 07-01-2009
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH: VISAKHAPATNAM BEFORE: SRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SRI B.R. BASKARAN ACCOUNTANT MEMBER I.T.A. NO.13 TO 15/VIZAG/2009 ASSESSMENT YEAR :2001-02 2002-03 & 2003-04 ACIT CENTRAL CIRCLE RAJAHMUNDRY VS. SRI KADIYALA KRISHNA MOHAN RAJAHMUNDRY (APPELLANT) (RESPONDENT) PAN NO.ANTPK 1733 E APPELLANT BY : SHRI SUBRATA SARKAR CIT (DR) RESPONDENT BY : SHRI G.V.N. HARI CA O R D E R PER B..R. BASKARAN ACCOUNTANT MEMBER : THESE THREE APPEALS FILED AT THE INSTANCE OF THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDER DATED 30-10-2008 PASSED BY LD CIT(A)-I HYDERABAD AND THEY RELATE TO THE ASSESSMENT YEARS 2001-02 TO 2003-04. 2. THE ADDITION OF UNDISCLOSED INCOME FROM SAL E OF HOUSING PLOTS MADE BY THE ASSESSING OFFICER HAVING BEEN DELETED BY LD CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 3. THE FACTS RELATING TO THE ISSUE ARE STATED I N BRIEF. THE DEPARTMENT CARRIED OUT SEARCH AND SEIZURE OPERATIONS IN THE HANDS OF T HE ASSESSEE IN AUGUST 2005. DURING THE COURSE OF SEARCH THE DEPARTMENT STUMBLE D UPON A PARTNERSHIP DEED IN THE NAME OF AMBICA HOUSING CORPORATION AGREEMENT S ENTERED WITH FARMERS FOR PURCHASE OF LAND DOCUMENTS SHOWING DETAILS OF LAY OUT AREA AND THE AMOUNT PAID TO THE FARMERS AMOUNT SPENT ON DEVELOPMENT OF LAND INTO HOUSING PLOTS AND THE APPROXIMATE PROFIT ON THE VENTURE. THE ASSESSEE IN ITIALLY CLAIMED THAT HE HAS WITHDRAWN FROM THE PARTNERSHIP. HOWEVER IN A LETT ER FILED DURING THE ASSESSMENT 2 PROCEEDINGS HE CONTRADICTED HIS STATEMENT BY MAKIN G SOME MORE SUBMISSIONS. IN ONE OF THE SEIZED DOCUMENTS THE PROFIT FROM THE VENTURE WAS WORKED OUT AT RS.32.53 LAKHS. IN VIEW OF THE CONTRADICTORY STATE MENTS OF THE ASSESSEE THE AO TOOK THE VIEW THAT THE ASSESSEE IS THE PROPRIETOR O F THE REAL ESTATE VENTURE. BASED ON THE DOCUMENT REFERRED ABOVE THE AO HELD T HAT THE ASSESSEE MADE A PROFIT OF RS.32.00 LAKHS FROM THE SAID VENTURE AND TREATED THE SAME AS THE UNDISCLOSED INCOME OF THE ASSESSEE. SINCE THE REAL ESTATE VENTURE WAS CARRIED OVER A PERIOD OF THREE YEARS THE AO SPREAD THE SAI D INCOME OF RS.32.00 LAKHS IN THREE YEARS FALLING IN THE ASSESSMENT YEARS 2001-02 TO 2003-04. 4. AGGRIEVED THE ASSESSEE CARRIED THE MATTER I N APPEAL BEFORE LD CIT(A). THE FIRST APPELLATE AUTHORITY GAVE COGNIZANCE TO THE PA RTNERSHIP DEED SEIZED DURING THE COURSE OF SEARCH. DURING THE POST SEARCH ENQUI RIES THE AO HAD FOUND OUT THAT TWO BANK ACCOUNTS WERE OPENED IN THE NAME OF M /S AMBICA HOUSING CORPORATION AND A LOAN OF RS.15.00 LAKHS WAS ALSO S ANCTIONED BY THE BANK. THE ABOVE SAID LOAN WAS CLOSED LATER BY USING DEPOSITS STANDING IN THE NAME OF ANOTHER PARTNER NAMED SRI GANNI KRISHNA. IN VIEW O F THE ABOVE THE LD CIT(A) HELD THAT THE INCOME FROM REAL ESTATE VENTURE IS AS SESSABLE IN THE HANDS OF PARTNERSHIP FIRM ONLY AND ACCORDINGLY DELETED THE A DDITION MADE IN THE HANDS OF THE ASSESSEE. THE LD CIT(A) ALSO DIRECTED THE AO T O TAKE NECESSARY STEPS TO ASSESS THE INCOME IN THE HANDS OF THE FIRM. AGGRIE VED BY THE ORDER OF LD CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE PARTIES AND CAREFULLY PERU SED THE RECORD. THOUGH A PARTNERSHIP DEED WAS ENTERED INTO BY THE ASSESSEE H EREIN AND OTHER PERSONS IT WAS SUBMITTED THAT THE PARTNERSHIP FIRM DID NOT FIL E ITS RETURN OF INCOME TILL THE DATE OF SEARCH IN 2005. THE AO HAS ALSO NOTICED THAT BY MAY 2001 ABOUT 50% OF THE PLOT HAD BEEN SOLD OUT. IT WAS ALSO INFORMED THAT THE PARTNERSHIP FIRM DID NOT APPLY FOR THE PERMANENT ACCOUNT NUMBER ALSO. HENCE IT IS NOT CLEAR WHETHER THE PARTNERSHIP DEED WAS REALLY ACTED UPON OR NOT AND W HETHER THE PARTNERSHIP IS GENUINE ONE OR NOT. THOUGH THE AO STATES THAT ONE BANK ACCOUNT AND ONE LOAN ACCOUNT WERE OPENED IN THE NAME OF THE CONCERN M/S AMBICA HOUSING CORPORATION YET THE NATURE AND OWNERSHIP OF THE S AID BANK ACCOUNTS COULD BE 3 DETERMINED ONLY ON VERIFICATION OF RELEVANT BOOKS O F ACCOUNT. THE ASSESSEE DID NOT PRODUCE ANY BOOKS OF ACCOUNT ALSO. HENCE IN O UR OPINION A PARTNERSHIP DEED FOUND DURING THE COURSE OF SEARCH CANNOT BE TH E BASIS FOR GRANTING RELIEF UNLESS THERE ARE OTHER CORROBORATIVE MATERIALS TO S HOW THAT THE SAID PARTNERSHIP FIRM WAS GENUINE ONE. IN THE FACTS AND CIRCUMSTANC ES OF THE CASE ON HAND SUCH CORROBORATIVE MATERIALS ARE ESSENTIAL BECAUSE THE F IRM HAS NOT ONLY FAILED TO FILE THE RETURN OF INCOME BUT ALSO FAILED TO APPLY THE P ERMANENT ACCOUNT NUMBER. THE REASONS FOR SUCH FAILURE WERE NOT PROPERLY EXPL AINED BY THE ASSESSEE. THUS IN OUR OPINION THE ASSESSEE HAS FAILED TO ESTABLIS H THE GENUINENESS OF THE FIRM. HENCE WITHOUT ASCERTAINING THE GENUINENESS OF THE FIRM THE RELIEF GRANTED TO THE ASSESSEE AND ALSO THE DIRECTION GIVEN TO THE AO TO ASSESS THE INCOME FROM THE REAL ESTATE VENTURE IN THE HANDS OF THE FIRM DOES N OT APPEAR TO BE PROPER. 6. AT THE SAME TIME THE AO HAS ALSO COME TO TH E CONCLUSION TO THE EFFECT THAT THE CONCERN M/S AMBICA HOUSING CORPORATION IS THE P ROPRIETARY CONCERN OF THE ASSESSEE SIMPLY BECAUSE THE ASSESSEE HAS CONTRADIC TED HIS EARLIER STATEMENT. THE AO HAS FAILED TO ESTABLISH THAT THE PARTNERSHIP DEED WAS NOT ACTED UPON. IN OUR OPINION THE AO SHOULD HAVE MADE NECESSARY ENQU IRIES WITH OTHER PERSONS WHO WERE SHOWN AS PARTNERS IN THE PARTNERSHIP DEED TO PROVE HIS STAND. FROM THE ASSESSMENT ORDER WE NOTICE THAT THE LAND FOR T HE VENTURE WAS ACQUIRED IN THE INDIVIDUAL NAME OF THE PERSONS. THE AO HAS COME TO HIS CONCLUSION WITHOUT MAKING ANY VERIFICATION IN THAT REGARD. IF THE LAN DS WERE PURCHASED IN THE NAME OF OTHER PERSONS THEN THERE MUST BE SOME OTHER REASON TO BRING THE PROFIT REALIZED ON SALE OF THOSE LANDS IN THE HANDS OF THE ASSESSEE . THE AO HAS NOT ANALYSED THE ISSUE IN THAT ANGLE. THUS IN OUR OPINION THE TAX IMPLICATIONS INVOLVED IN THE REAL ESTATE VENTURE AT VARIOUS STAGES THE GENUINEN ESS OF PARTNERSHIP FIRM ETC. NEEDS TO BE REEXAMINED IN ACCORDANCE WITH LAW. HE NCE WE SET ASIDE THE ORDER 4 OF LD CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO CONSIDER THE ISSUE AFRESH BY MAKING NECESSARY INVES TIGATIONS ENQUIRES ETC. AND DECIDE THE ISSUE IN ACCORDANCE WITH THE LAW. 7. IN THE RESULT ALL THE THREE APPEALS OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 23-03-2010. SD/- SD/- (SUNIL KUMAR YADAV) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE : 23 RD MARCH 2010. A COPY OF THIS ORDER IS FORWARDED TO : 01 THE ACIT CENTRAL CIRCLE RAJAHMUNDRY 02 SRI KADIYALA KRISHNA MOHAN D.NO. 13-11 HUKUMPE T PIDIMGOYYA PANCHAYAT RAJAHMUNDRY 03 THE CIT (A)-I HYDERABAD 04 THE CIT CENTRAL HYDERABAD 05 THE DR ITAT VISAKHAPAATNAM 06 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY ITAT VISAKHAPATNAM BENCH