ITO, Ward - 1, Gudur v. Sannareddy Nanda Gopal Reddy, Nellore

ITA 2/HYD/2011 | 2004-2005
Pronouncement Date: 30-11-2011 | Result: Dismissed

Appeal Details

RSA Number 222514 RSA 2011
Assessee PAN AIQPS0061B
Bench Hyderabad
Appeal Number ITA 2/HYD/2011
Duration Of Justice 10 month(s) 27 day(s)
Appellant ITO, Ward - 1, Gudur
Respondent Sannareddy Nanda Gopal Reddy, Nellore
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 30-11-2011
Assessment Year 2004-2005
Appeal Filed On 03-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH HYDERABAD BEFORE SHRI H.S. SIDHU JUDICIAL MEMBER AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.1/HYD/2011 ASSESSMENT YEAR 2003-04 THE ITO WARD 1 NELLORE DISTRICT VS SHRI SANNAREDDY NAN DA GOPAL REDDY NELLORE DISTRICT ( PAN AIQPS0061B) APPELLANT RESPONDENT APPELLANT BY : SHRI N.H. NAYAK RESPONDENT BY : SHRI R.V. SESHAIAH NAIDU DATE OF HEARING : 29.11.2011 DATE OF PRONOUNCEMENT : ORDER PER BENCH: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER PASSED BY THE CIT(A) GUNTUR DATED 2.9.20 10 AND IT PERTAINS TO THE ASSESSMENT YEAR 2003-04. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS: 1. THE CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) AS NO COGENT MATERIAL HAS BROUGHT ON RECO RD BY THE ASSESSING OFFICER THOUGH THE ASSESSING OFFICER HAS DUTY ESTABLISHED THE CONCEALMENT IN THE ASSESSMENT ORDER AND AFTER ESTABLISHING THE SAME ONLY THE PENALTY PROCEEDINGS U/S 271(1)(C) ARE INITIATED. 2. THE CIT(A) OUGHT NOT TO HAVE DELETED THE PENALTY LEVIED U/S 271(1)(C) WITH A GROUND THAT THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE TWO SEPARAT E PROCEEDINGS AND THE EVIDENCE COLLECTED IN THE ASSES SMENT PROCEEDINGS MAY NOT BE SUFFICIENT THOUGH THE ASSES SING OFFICER HAS GIVEN ADEQUATE OPPORTUNITY TO THE ASSES SEE ITA NO.1 OF 2011 SHRI SANNA REDDY & NANDA GOPAL REDDY NELLORE 2 BEFORE LEVYING PENALTY TO PROVE AND ESTABLISH THE GENUINENESS OF CREDITS AND THE ASSESSEE FAILED TO A VAIL THE OPPORTUNITY AND NOT BROUGHT ANY NEW EVIDENCES TO PR OVE THE GENUINENESS OF THE CREDITS. 3. THE CIT(A) GUNTUR HAS ERRED IN DELETING THE PEN ALTY LEVIED U/S 271(1)(C) THOUGH THE ASSESSING OFFICER H AS CLEARLY ESTABLISHED THE CONCEALMENT BY GIVING AN AD EQUATE OPPORTUNITY BEFORE FINALISATION OF PENALTY PROCEEDI NGS. 4. THE CIT(A) GUNTUR HAS ERRED IN DELETING THE PEN ALTY LEVIED U/S 271(1)(C) THOUGH CIT(A) GUNTUR HAS CONFI RMED THE ADDITION MADE BY ASSESSING OFFICER U/S 68 OF RS.52 35 000/-. 5. THE CIT(A) GUNTUR HAS ERRED IN DELETING THE PEN ALTY LEVIED U/S 271(1)(C) THOUGH THE TRIBUNAL HAS ALSO CONFIRMED THE ORDER OF THE CIT(A) GUNTUR FOR THE AD DITION MADE BY THE ASSESSING OFFICER U/S 68. 3. BRIEF FACTS OF THE CASE RELATING TO THE ISSUE IN DISPUTE FOR THE YEAR UNDER CONSIDERATION IS THAT THE ASSESSEE I S A BUILDER ENGAGED IN CONSTRUCTION AND SALE OF FLATS. THE ASS ESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-04 ON 1.11.2005 ADMITTING A TOTAL INCOME OF RS.60 572/-. A NOTICE U/S 148 OF THE INCOME TAX ACT 1961 WAS ISSUED TO T HE ASSESSEE ON 4.1.2007 REQUIRING THE ASSESSEE TO FILE HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-04. IN RESPONS E TO THE SAME THE ASSESSEE FILED A LETTER DATED 29.1.2007 RE QUESTING TO TREAT THE RETURN OF INCOME FILED BY HIM ON 1.11.200 5 AS THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE IS SUED U/S 148 OF THE ACT. THE ASSESSING OFFICER ISSUED A NOTICE U/S 143(2) ON 2.2.2007. IN RESPONSE TO THE NOTICE THE LEARNED A UTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED. THE ASSES SING OFFICER CONSIDERED THE RETURN FILED BY THE ASSESSEE IN WHIC H THE ITA NO.1 OF 2011 SHRI SANNA REDDY & NANDA GOPAL REDDY NELLORE 3 ASSESSEE HAS SHOWN TO HAVE RECEIVED ADVANCES FROM M EMBERS I.E. BUYERS OF THE FLATS TO THE TUNE OF RS.93 60 00 0/- IN RESPECT OF THE CONSTRUCTION OF AN APARTMENT PROJECT STARTED BY THE ASSESSEE. ON VERIFICATION OF THE BOOKS OF ACCOUNTS IT WAS SEEN THAT BY ALMOST THE ENTIRE AMOUNT OF ADVANCES FROM T HE SECOND GROUP OF PERSONS ARE RECEIVED EITHER THROUGH CHEQUE S OR DEMAND DRAFTS WHEREAS ALL THE ADVANCES IN THE FIRST GROUP (EXCEPT IN THE CASE OF MR. RAVINDRA B. SANNAREDDY) ARE BY WAY CASH. IT WAS ALSO SEEN THAT THE PERSONS OF THE SEC OND GROUP ULTIMATELY PURCHASED THE FLATS AND GOT THE FLATS RE GISTERED IN THEIR NAMES WHILE ALL THE ADVANCES RECEIVED FROM TH E FIRST GROUP OF PEOPLE EXCEPT (SHRI RAVINDRA B. SANNAREDDY) WERE SAID TO HAVE BEEN RETURNED BACK IN THE SUBSEQUENT YEARS. I T WAS TREATED BY THE ASSESSEE THAT THESE PERSONS ARE HIS FRIENDS AND RELATIVES BELONGING TO HIS NATIVE PLACE AND NEIGHBO URING VILLAGES. THE ASSESSING OFFICER EXAMINED THE GENUI NENESS OF THESE ADVANCES IN THE SCRUTINY ASSESSMENT AND FINAL LY THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143( 3) DETERMINING THE TOTAL INCOME AT RS.5 29 570/- ON AC COUNT OF CASH CREDITS APPEARING IN THE BOOKS OF ACCOUNT OF T HE ASSESSEE AND TREATED THE SAME AS UNDISCLOSED INCOME OF THE A SSESSEE U/S 68 OF THE ACT. 4. AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE T HE CIT(A) CHALLENGING THE ADDITION MADE TOWARDS CASH CREDITS OF RS.52 35 000/- VIDE ORDER DATED 11.11.2008 CONFIRMI NG THE ASSESSMENT ORDER. THE ASSESSEE FILED AN APPEAL BEF ORE THE TRIBUNAL AGAINST THE ORDER DATED 11.11.2008 AND THE TRIBUNAL HYDERABAD VIDE ITS ORDER DATED 9.10.2009 UPHELD THE ORDER OF THE CIT(A) CONFIRMING THE ADDITION OF RS.52 35 5000 /- MADE TOWARDS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 O F THE ACT. ITA NO.1 OF 2011 SHRI SANNA REDDY & NANDA GOPAL REDDY NELLORE 4 5. THE ASSESSING OFFICER IS OF THE OPINION THAT TH E ASSESSEE HAS CONCEALED PARTICULARS OF INCOME AND HE INITIATE D THE PENALTY PROCEEDINGS U/S 271(1)(C) BY ISSUING A NOTI CE TO THE ASSESSEE ON 9.1.2010 REQUIRING THE ASSESSEE TO SHOW CAUSE WHY PENALTY PROCEEDINGS U/S 271(1)(C) SHOULD NOT BE IMP OSED ON THE ASSESSEE FOR CONCEALMENT OF INCOME. IN RESPONSE TO THE SAME THE ASSESSEE FILED A LETTER ON 8.2.2010 STATING THA T HE HAS FILED RETURN OF INCOME VOLUNTARILY ADMITTING HIS INCOME I N RESPECT OF CONSTRUCTION OF PLOTS STARTED AT BANGALORE. HE ALS O STATED THAT HE HAS RECEIVED ADVANCE AMOUNTS FROM FRIENDS AND RE LATIVE RESIDING IN HIS VILLAGE AND SURROUNDING PLACES AND THE AMOUNT INVESTED WERE TO BE CONSIDERED AS CAPITAL EXPENDITU RE. HE FURTHER STATED IN REPLY IF THERE IS ANY DIFFERENC E OF OPINION THE COST OF PLOT OUGHT TO HAVE BEEN ESTIMATED BUT NOT T HE TOTAL AMOUNT OF ADVANCES RECEIVED AS INCOME. ASSESSING T HE SAID AMOUNT U/S 68 OF THE ACT IS NOT JUSTIFIED. THE ASS ESSEE STATED THAT HE HAS DISCHARGED HIS ONUS BY PRODUCING THE ID ENTITY OF CREDITORS THEIR CREDIT WORTHINESS AND GENUINENESS OF TRANSACTIONS. THE ASSESSEE HAS FURTHER STATED THAT THE PROPOSED PENAL ACTION IS NOT JUSTIFIED AND REQUESTE D FOR DROPPING THE PENAL PROCEEDINGS. AFTER CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE IN REPLY TO THE L ETTER DATED 8.2.2010 THE ASSESSING OFFICER UPHELD THAT THOUGH THE ASSESSEE COULD PROVE THE IDENTITY OF CREDITORS THE GENUINENESS OF TRANSACTION COULD NOT BE PROVED BY HIM AND ALSO UPHELD THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF ADV ANCES AND THE FINDINGS OF THE ASSESSING OFFICER HAS ALSO BEEN APPRECIATED BY THE CIT(A). IN THESE CIRCUMSTANCES THE ASSESS ING OFFICER HAS LEVIED THE PENALTY OF RS.16.22 LAKHS ON THE CON CEALED INCOME OF RS.52 35 000/- @ 100% OF TAX OUGHT TO HAVE BEEN ITA NO.1 OF 2011 SHRI SANNA REDDY & NANDA GOPAL REDDY NELLORE 5 EVADED U/S 271(1)(C ) OF THE ACT CONCEALING THE PAR TICULARS OF INCOME VIDE ORDER DATED 25.3.2010. 6. AGGRIEVED BY THE ORDER DATED 25.10.2010 THE AS SESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO VIDE THE IMP UGNED ORDER DATED 2.9.2010 PARTLY ALLOWED THE APPEAL OF THE ASS ESSEE AND DIRECTED THE ASSESSING OFFICER TO DELETE THE PENALT Y IN DISPUTE EXCEPT THE AMOUNT RELATABLE TO RS.3 LAKHS OF THE CR EDITOR SHRI P. AVDISESHA REDDY WHO HAS DENIED THE SAME ON WHICH NO POSITIVE MATERIAL WAS BROUGHT ON RECORD BY THE ASSE SSEE. 7. AGGRIEVED BY THE IMPUGNED ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 8. AT THE TIME OF HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER PASSED BY THE AS SESSING OFFICER AND STATED THAT THE CIT(A) HAS WRONGLY DELE TED THE ADDITION MADE BY THE ASSESSING OFFICER IN SPITE OF THE FACT THAT THE CIT(A) GUNTUR HAS CONFIRMED THE ADDITION OF RS.52 35 000/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT. 9. ON THE CONTRARY THE LEARNED COUNSEL FOR THE AS SESSEE RELIED ON THE ORDER OF THE CIT(A) AND STATED THAT T HE CIT(A) HAS RIGHTLY DELETED THE PENALTY IN DISPUTE AFTER APPREC IATING VARIOUS DECISIONS RENDERED BY THE HONBLE SUPREME COURT HI GH COURTS AND THE TRIBUNAL. HE REQUESTED THE APPEAL FILED BY THE REVENUE MAY BE DISMISSED. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE ARE OF THE VIEW THAT IT IS AN ADMITTED FACT THAT THE ASSESSEE IS A BUILDER AND HA D FILED BELATED RETURN OF INCOME FOR THE ASSESSMENT YEAR 20 03-04 DECLARING AN INCOME OF RS.60 572/-. WHICH WAS LODGE D. THEREAFTER A NOTICE U/S 148 OF THE ACT WAS ISSUED ON THE BASIS ITA NO.1 OF 2011 SHRI SANNA REDDY & NANDA GOPAL REDDY NELLORE 6 OF REASONS TO BE BELIEVED THAT THE CASH CREDITS SHO WN BY THE ASSESSEE WERE NOT GENUINE. THE ASSESSING OFFICER C OMPLETED THE ASSESSMENT AFTER MAKING DETAILED ENQUIRY AND MADE T HE ADDITION OF RS.52 35 000/- U/S 68 OF THE INCOME TAX ACT WHICH HAS BEEN CONFIRMED BY THE CIT(A) ON 11.11.2008 ON T HE APPEAL FILED BY THE ASSESSEE AND ALSO CONFIRMED BY THE TRI BUNAL ON 9.8.2009 UPHOLDING THE ORDER OF THE CIT(A) ON THE A PPEAL FILED BY THE ASSESSEE. THE ASSESSING OFFICER INITIATED T HE PENALTY PROCEEDINGS AND LEVIED PENALTY OF RS.16.22 LAKHS ON 25.3.2010 U/S 271(1)(C) WHICH WAS CANCELLED BY THE CIT(A) BY PASSING THE IMPUGNED ORDER BY UPHOLDING THAT THE ASSESSMENT PRO CEEDINGS AND THE PENALTY PROCEEDINGS ARE TWO SEPARATE PROCEE DINGS AND THE EVIDENCES COLLECTED IN ASSESSMENT PROCEEDINGS M AY NOT BE SUFFICIENT IN MANY INSTANCES IT IS CONCLUSIVE. THE CIT(A) HAS ALSO UPHELD THAT IN ALL THE CASES CREDITS ARE BEI NG RETURNED BY THE ASSESSEE ALTHOUGH EXCEPT IN THE CASE OF SHRI P . AUDISESHA REDDY HAS CONFIRMATION THAT THEY HAVE LENT THE AMO UNT TO THE ASSESSEE. WHEREAS IN THE CASE OF SHRI P. AUDISESHA REDDY HE HAS DENIED TO HAVE GIVEN ANY AMOUNT TO THE ASSESSEE . THE CIT(A) CONCLUDED THAT NO AMOUNT WAS LENT BY SHRI P. AUDISESHA REDDY. THIS WAS NOT CHALLENGED BY THE ASSESSEE. T HESE FINDINGS OF THE ASSESSING OFFICER WHICH WAS MADE US E BY BOTH THE CIT(A) AND THE TRIBUNAL WHILE CONFIRMING SUCH A DDITION. THE CIT(A) HAS RIGHTLY APPRECIATED THE EVIDENCE PR ODUCED BY THE ASSESSEE AND HELD THAT NO COGENT MATERIAL HAS B EEN BROUGHT ON RECORD BY THE ASSESSING OFFICER AND THE EXPLANATION OF THE CREDITORS WAS NOT ACCEPTED BY HIM WHICH DOES NOT AUTOMATICALLY PROVE THAT THE PARTICULARS FURNISHED BY THE ASSESSEE WERE INACCURATE EXCEPT IN THE CASE OF SHRI P. AUDISESHA REDDY. THE CIT(A)-GUNTUR HAS DIRECTED TH E ASSESSING OFFICER TO DELETE THE PENALTY IN DISPUTE EXCEPT THE ITA NO.1 OF 2011 SHRI SANNA REDDY & NANDA GOPAL REDDY NELLORE 7 AMOUNT RELATABLE TO RS.3 LAKHS OF THE CREDITOR SHRI P. AUDISESHA REDDY WHO HAVE DENIED THE SAME ON WHICH N O POSITIVE MATERIALS WERE BROUGHT ON RECORD BY THE AS SESSING OFFICER. 11. KEEPING IN VIEW OF THESE FACTS AND CIRCUMSTANC ES OF THE PRESENT CASE AND THE MATERIAL EVIDENCES APPRECIATED BY THE CIT(A) ON THE ISSUE IN DISPUTE WE ARE OF THE CON SIDERED OPINION THAT NO INFERENCE IS CALLED ON THE ORDER PA SSED BY THE CIT(A). THEREFORE WE UPHOLD THE SAME BY DISMISSING THE APPEAL OF THE REVENUE. 12. IN THE RESULT THE APPEAL OF THE REVENUE STAND S DISMISSED. ORDER PRONOUNCED IN THE COURT ON: 30.11.2011 SD/- SD/- (CHANDRA POOJARI) ( H.S. SIDHU ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 30 TH NOVEMBER 2011 COPY FORWARDED TO: 1. INCOME TAX OFFICER WARD-1 NARASINGARAOPET GUDUR NELLORE DISTRICT 2. SHRI SANNAREDDY NANDA GOPAL REDDY KATTUVAPALLE(V) MANUBOLE(M) NELLORE DISTRICT 3. THE CIT(A) GUNTUR & HYDERABAD 4. THE CIT HYDERABAD 5. THE DR ITAT HYDERABAD NP/