ACIT, Bangalore v. Sri Dinesh Reddy, Bangalore

ITA 45/BANG/2010 | 2005-2006
Pronouncement Date: 20-05-2010 | Result: Dismissed

Appeal Details

RSA Number 4521114 RSA 2010
Assessee PAN AABHB4020J
Bench Bangalore
Appeal Number ITA 45/BANG/2010
Duration Of Justice 4 month(s) 1 day(s)
Appellant ACIT, Bangalore
Respondent Sri Dinesh Reddy, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 20-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 20-05-2010
Assessment Year 2005-2006
Appeal Filed On 18-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO.45(BNG)/10 (ASSESSMENT YEAR : 2005-06) ASST. COMMISSIONER OF INCOME TAX CIRCLE 11(5) BANGALORE. VS. SHRI DINESH REDDY NO.119 TIERRA 3 RD MAIN DEFENCE COLONY HAL 2 ND STAGE INDIRANAGAR BANGALORE-38 APPELLANT. RESPONDENT. C.O. NO.22(BNG)/10 (ASSESSMENT YEAR : 2005-06) (BY ASSESSEE) REVENUE BY : SMT. JACINTA ZIMIK VASHAI. ASSESSEE BY : SHRI SACHIN KUMAR. O R D E R PER SMT. P. MADHAVI DEVI J.M. : THE REVENUE HAS FILED THIS APPEAL FOR THE ASSESSME NT YEAR 2005-06 RAISING THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED CIT(A) IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE IS OPPOSED TO LAW AND CIRC UMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.45 64 737 OUT OF THE TOTAL ADDITION OF S.53 64 7 37 MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME TA X ACT 1961 WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES STATED IN THE RELEVANT ASSESSMENT ORDER. 3. THE LEARNED CIT(A) HAS ERRED IN ARRIVING AT HIS FIN DINGS BY CONSIDERING THE FRESH EVIDENCE/DOCUMENTS FILED BEFO RE HIM WHICH WERE NOT FILED BEFORE THE ASSESSING OFFICER IN COURSE OF THE ASSESSMENT PROCEEDINGS IN CONTRAVENTION OF RULE 46A OF THE I. T. RULES. 4. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD TO ALTER TO AME ND OR TO DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. ITA NO.45(BNG)/10 & C.O.22(BNG)/10 - 2 - 02. GROUND NUMBERS 1 4 & 5 ARE GENERAL IN NATURE. AS REGARDS GROUND NUMBERS 2 & 3 THE FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL . HE FILED HIS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR DECLARING INCOME OF RS .1 88 660. DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF DEPOSITS EXCEEDING RS. 1 LAKH. THE ASSESSEE FURNISHED THE DETAILS VIDE LETTER DT.28.12.2007 AND IT WAS NOTICE D FROM SUCH DETAILS THAT AN AMOUNT OF RS.53 64 737 HAS BEEN RECEIVED FROM VARIOUS PART IES ON ACCOUNT OF ADVANCES OF SALE OF HUF LANDS AT SURVEY NOS.97 & 98. THE ASSESSEE W AS ASKED TO SUBSTANTIATE THE SALE WITH NECESSARY EVIDENCES. VIDE LETTER DT.28.12.200 7 THE ASSESSEE FURNISHED DETAILS OF THE LAND HOLDINGS SOLD TO VARIOUS PEOPLE AND THE AM OUNT RECEIVED FROM THE BUYERS WHICH ARE DEPOSITED IN THE BANK OF INDIA. IT WAS ALSO SU BMITTED THAT LATER ON THESE SALES WERE CANCELLED AS THE LANDS WERE IN DISPUTE AND THE AMOUNT WAS PAID BACK. THE RELEVANT DETAILS WERE FURNISHED BEFORE THE A.O. HO WEVER THE A.O. HELD THAT THE ASSESSEE HAS NOT FILED SATISFACTORY EVIDENCES TO PR OVE THE GENUINENESS OF THE SALE AND SUBSEQUENT PURCHASES BY THE ASSESSEE OF THE SAME PL OT AS THE SALE WAS MADE THROUGH TRANSFER OF GENERAL POWER OF ATTORNEY (GPA) TRANSAC TION. HE HELD THAT THE GPA TRANSACTION DO NOT APPEAR TO BE GENUINE. IN VIEW O F THE SAME HE ADDED THE ENTIRE AMOUNT AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) REITERAT ING THE SUBMISSIONS MADE BEFORE THE A.O. THE CIT(A) OBSERVED THAT THE ASSESSEE IS CHALLENGING THE ADDITION ON TWO GROUNDS ONE QUESTIONING THE JURISDICTION OF THE A .O. IN CONSIDERING THE CREDITS IN THE HANDS OF THE ASSESSEE AND THE OTHER PLEADING THAT E VEN ON MERITS THE ADDITION IS NOT ITA NO.45(BNG)/10 & C.O.22(BNG)/10 - 3 - WARRANTED. REGARDING THE ISSUE OF JURISDICTION THE ASSESSEE HAD FILED WRITTEN SUBMISSION STATING THAT ALL THE DETAILS HAVE BEEN F URNISHED BEFORE THE A.O. IN THE FORM OF A PAPER BOOK AND IT IS EVIDENT FROM THE REGISTER ED SALE DEEDS THAT THE SELLER IS A HUF AND NOT THE ASSESSEE-INDIVIDUAL. IT WAS ALSO S UBMITTED THAT THE PERMANENT ACCOUNTANT NUMBER MENTIONED IN THE SALE DEED CLEARL Y SHOWS THAT THE VENDOR IS A HUF AND NOT THE ASSESSEE IN HIS INDIVIDUAL CAPACITY AND IF AT ALL THESE CREDITS ARE TAXABLE THEY ARE TAXABLE ONLY IN THE HANDS OF THE HUF UNDER THE HEAD CAPITAL GAIN AND CANNOT BE TAXED IN THE HANDS OF THE ASSESSEE IRRESPECTIVE OF THE FACT THAT THE SALE CONSIDERATION IS CREDITED IN THE BANK ACCOUNT OF TH E ASSESSEE WHO IS NONE OTHER THAN ITS KARTA. AFTER CONSIDERING THE WRITTEN SUBMISS IONS OF THE ASSESSEE THE CIT(A) CAME TO THE CONCLUSION THAT THE A.O. HIMSELF IN THE PAGE 2 OF ASSESSMENT ORDER STATES THAT THE AMOUNT WAS RECEIVED FROM VARIOUS PARTIES T O WHOM THE HUF SOLD LAND IN THE YEARS 1997 & 1998 AND THE SAME HAS BEEN EFFECTED BY REGISTERED DEEDS THOUGH THE SUBSEQUENT CANCELLATIONS ARE BY UNREGISTERED DOCUME NTS. HE FURTHER HELD THAT THE DETAILS OF THE PERSONS FROM WHOM THE AMOUNTS HAVE B EEN RECEIVED HAVE BEEN FURNISHED BEFORE THE A.O. EXCEPT IN RESPECT OF A SUM OF RS.8 LAKHS. HE FURTHER OBSERVED THAT THE PERMANENT ACCOUNT NUMBER MENTIONED IS THAT OF H UF AND NOT THAT OF THE ASSESSEE AND MERELY BECAUSE THE AMOUNT HAD BEEN CREDITED INT O THE BANK ACCOUNT OF THE INDIVIDUAL ASSESSEE WHO IS NONE OTHER THAN THE KA RTA OF THE HUF IT CANNOT BE SAID THAT IT IS THE INCOME OF THE ASSESSEE. HE ALSO OBS ERVED THAT THE HUF HAS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEARS 2005-06 & 2006-07 MUCH PRIOR TO THE INITIATION OF ENQUIRY BY THE ASSESSING OFFICER. ITA NO.45(BNG)/10 & C.O.22(BNG)/10 - 4 - 03. AS REGARDS THE ARGUMENT OF THE ASSESSEE THAT EV EN ON MERITS THE ADDITION IS NOT WARRANTED THE ASSESSEE SUBMITTED THAT THE DETA ILS OF SALE EFFECTED BY MR. DINESH REDDY HUF BEARING THE PERMANENT ACCOUNT NUMBER AAB HB4020J DURING THE F.Y. 2004-05 RELEVANT TO A.Y. THE ASSESSEE ALSO FILED TH E SALE DEED AT PAGE NUMBERS 11 TO 60 OF THE PAPER BOOK. IT WAS ALSO SUBMITTED THAT S UBSEQUENT TO THE SALE THE PURCHASERS BECAME AWARE OF THE LITIGATION ATTACHED TO THE PROPERTY. ONE SMT. NEELAMMA HAD FILED A SUIT (O.S. NO.1323 OF 2004) BE FORE THE HONBLE COURT OF CIVIL JUDGE BANGALORE CLAIMING 1/8 TH SHARE OF THE SAID PROPERTY. THE DETAILS OF THE OS SUIT FILED BY THE PLAINTIFF ARE ALSO EXPLAINED AND THE RELEVANT DOCUMENTS WERE PLACED AT PAGE NUMBERS 118 TO 136 OF THE PAPER BOOK. THE ASS ESSEE SUBMITTED THAT IN VIEW OF THIS DISPUTE REGARDING THE LAND LITIGATION THE ASS ESSEE WAS CONSTRAINED TO MAKE AN AMICABLE SETTLEMENT WITH THE PURCHASERS. CANCELLAT ION/REPURCHASE OF THE PROPERTY WERE AN EXPENSIVE AFFAIR FOR THE ASSESSEE DUE TO ST AMP DUTY COMPONENT IN THE TRANSACTION. TO TIDE OVER THE CRISIS THE ASSESSEE OBTAINED GPA FROM THE ABOVE BUYERS TO REGAIN THE CONTROL OVER THE PROPERTY. FURTHER HE REPAID THEM THE CONSIDERATION AND THE PURCHASERS HAVE EXECUTED AFFIDAVITS TO THAT EFF ECT AND FINAL SETTLEMENT AGREEMENTS WERE ALSO EXECUTED. THE ASSESSEE ALSO FI LED COPIES OF AFFIDAVITS IN THE PAPER BOOK. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE THE CIT(A) HELD THAT THE ASSESSEE HAS DULY EXPLAINED MOST OF THE CR EDITS IN THE BANK ACCOUNT AND THE EXPLANATION OFFERED BY THE ASSESSEE IS SUPPORTED BY THE DOCUMENTARY EVIDENCE LIKE THE SALE DEED GPA AN AGREEMENT OF CONFIRMATION HAVIN G WRITTEN BY BUYERS ETC. HE ALSO HELD THAT THE LITIGATION WAS PENDING WITH REGARDS T O THE LAND SOLD BY THE HUF. HE ITA NO.45(BNG)/10 & C.O.22(BNG)/10 - 5 - THEREFORE DELETED THE ADDITION MADE TO THE EXTENT O F RS.45 64 737. HOWEVER AS REGARDS THE BALANCE ADDITION OF RS.8 LAKHS THE CIT (A) HELD THAT IT IS AN ADVANCE PAID BY ONE SRI VENKAT MARULLAH TO MR. DINESH REDDY AND THEREFORE BUT FOR THIS FACT THERE IS NO EVIDENCE TO PROVE PRIMA FACIE THAT IT REPRESE NTS THE SALE PROCEEDS OF THE LAND. HE THEREFORE CONFIRMED THE ADDITION TO THAT EXTENT. 04. AGGRIEVED BY THE RELIEF GIVEN BY THE CIT(A) TH E REVENUE IS IN APPEAL BEFORE US AND AGGRIEVED BY THE CONFIRMATION OF THE ADDITION T O THE EXTENT OF RS.8 LAKHS THE ASSESSEE IS IN CROSS OBJECTION BEFORE US. 05. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE DOES NOT WISH TO PRESS GROUND NUMBERS 2 & 3 IN THE CROSS OBJECTION RELATING TO THE ADDITION OF RS.8 LAKHS. THEY ARE ACCORDINGLY REJECTED AND ADDITION OF RS.8 LAKHS IS CONFIRMED. AS REGARDS GROUND NO. 1 OF THE CROSS OBJECTION AND GROUND NO.3 OF THE REVENUES APPEAL RELATING TO THE CONSIDERATION OF F RESH EVIDENCE DOCUMENTS FILED BEFORE THE CIT(A) IN CONTRAVENTION OF RULE 46A OF T HE INCOME TAX RULES WE FIND THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS BEFORE T HE A.O. AS CERTIFIED BY HIM IN THE PAPER BOOK FILED BEFORE US AND AFFIDAVIT WHICH IS A T PAGE 148 OF THE PAPER BOOK. IN SUCH A CASE IT CANNOT BE SAID THAT CONTRAVENTION O F RULE 46A IN ANY WAY. THEREFORE THIS GROUND OF APPEAL OF REVENUE IS REJECTED AND TH E GROUND NO.1 OF CROSS OBJECTION IN SUPPORT OF THE ORDER OF CIT(A) IS ALSO DISMISSED.. 06. AS REGARDS THE MERITS OF THE ADDITION DELETED B Y THE CIT(A) WE FIND THAT AS REGARDS THE LAND SOLD IT BELONGS TO THE HUF OF THE ASSESSEE AND THOUGH THERE HAVE BEEN CREDITS IN THE ASSESSEES BANK ACCOUNT THEY B ELONGS TO THE HUF OF THE ASSESSEE ITA NO.45(BNG)/10 & C.O.22(BNG)/10 - 6 - AND NOT THE ASSESSEE-INDIVIDUAL. THE HUF AND THE I NDIVIDUAL ARE TWO DIFFERENT PERSONS FOR THE PURPOSE OF LIABILITY OF TAX UNDER THE INCOM E TAX ACT AND THEREFORE THE CREDITS ARE TAXABLE IN THE HANDS OF THE HUF ONLY. WE THERE FORE UPHOLD THE FINDING OF THE CIT(A) ON THIS ISSUE. EVEN IF THE CREDITS ARE TO B E CONSIDERED IN THE HANDS OF THE ASSESSEE WE FIND THAT UNDISPUTEDLY LAND HAS BEEN SOLD BY THE ASSESSEE FOR A CONSIDERATION AND THERE ARE REGISTERED SALE DEEDS T O THIS EFFECT. IN SUCH A CASE WHEN THE ASSESSEE HAS GIVEN THE EXPLANATION ABOUT THE SO URCE OF DEPOSIT IN THE BANK ACCOUNT IT CANNOT BE SAID THAT THEY ARE UNEXPLAINED CASH CR EDITS. SECTION 68 OF THE INCOME TAX ACT 1961 PROVIDES AS UNDER : W HETHER ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR THE ASSE SSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE T HEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT SATISFACTORY IN THE OPINION OF THE (ASSESSING) OFFICER SO CREDITED MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR. IN THE CASE BEFORE US THE ASSESSEE HAS OFFERED TH E EXPLANATION ABOUT THE NATURE AND SOURCE OF THE SUMS CREDITED IN THE BOOKS OF THE ASS ESSEE AND ALSO FILED THE DOCUMENTARY EVIDENCE IN SUPPORT OF THE SAME. THOU GH ALL THE DOCUMENTS WERE FILED BEFORE THE A.O. THE ASSESSING OFFICER HAS NOT MADE ANY VERIFICATION OF THE SAME. HOWEVER WE FIND THAT THE DOCUMENTS ARE REGISTERED DOCUMENTS AND THEIR VERACITY HAS NOT BEEN DISPUTED BY THE A.O. EVEN OTHERWISE THE POWERS OF THE CIT(A)ARE CO- TERMINOUS WITH POWERS OF THE A.O. WE ARE OF THE OP INION THAT THE CIT(A) HAS PROPERLY APPRECIATED THE EVIDENCE IN GIVING RELIEF TO THE AS SESSEE. AS REGARDS THE ASSESSEES ITA NO.45(BNG)/10 & C.O.22(BNG)/10 - 7 - CONTENTION THAT THE ASSESSEE HAD REPAID THE AMOUNT TO SOME OF THE CUSTOMERS ON EXECUTION OF GPA THIS FACT NEEDS VERIFICATION BY T HE A.O. AND THE ASSESSEE ALSO NEED TO FILE EVIDENCE SHOWING THE PAYMENT TO THE SAID PA RTY. HOWEVER AS WE HAVE ALREADY UPHELD THE FINDING OF THE CIT(A) THAT THESE CREDITS HAVE TO BE CONSIDERED IN THE HANDS OF THE HUF AND NOT THE ASSESSEE WE DO NOT THINK IT NECESSARY TO REMIT THE ISSUE TO THE FILE OF THE A.O. FOR VERIFICATION. IN THE RESULT THE REVENUES APPEAL IS DISMISSED AND THE C.O. IS ALSO DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF MAY 2010. SD/- SD/- (A. MOHAN ALANKAMONY) (P. MADHAVI DEVI ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DT.20-05-2010. COPY TO : 1. THE ASSESSEE. 2. THE ASSESSING OFFICER. 3. CIT(APPEALS) 4. CIT 5. DEPARTMENTAL REPRESENTATIVE ITAT BANGALORE. 6. GUARD FILE ITAT BANGALORE. 7. GUARD FILE ITAT NEW DELHI. * GPR BY OR DER ASSISTANT R EGISTRAR