Sri T Hanumantha Rao, v. The ACIT, Central Circle, Vijayawada

ITA 46/VIZ/2010 | 2004-2005
Pronouncement Date: 17-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 4625314 RSA 2010
Assessee PAN ABIPH8533Q
Bench Visakhapatnam
Appeal Number ITA 46/VIZ/2010
Duration Of Justice 1 year(s) 1 month(s) 15 day(s)
Appellant Sri T Hanumantha Rao,
Respondent The ACIT, Central Circle, Vijayawada
Appeal Type Income Tax Appeal
Pronouncement Date 17-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 17-03-2011
Date Of Final Hearing 17-03-2011
Next Hearing Date 17-03-2011
Assessment Year 2004-2005
Appeal Filed On 01-02-2010
Judgment Text
ITA NOS.46 47 48 51 OF 10 T HANUMANTHA RAO YAKAMURU PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NOS.46 TO 48/VIZAG/2010 ASSESSMENT YEARS: 2004-05 TO 2006-07 RESPECTIVELY SRI T. HANUMANTHA RAO YAKAMURU KRISHNA DIST. VS. ACIT CENTRAL CIRCLE VIJAYAWADA (APPELLANT) PAN NO: ABIPH 8533Q (RESPONDENT) ITA NO.51/VIZAG/2010 ASSESSMENT YEAR: 2005-06 SRI N. LINGA MURTHY YAKAMURU VS. ACIT CENTRAL CIRCLE VIJAYAWADA (APPELLANT) PAN NO: ACIPN 7406R (RESPONDENT) APPELLANT BY: SHRI C. SUBRAHMANYAM CA RESPONDENT BY: SHRI TH.L. PETER CIT(DR) & SHRI D.S. SUNDER SINGH SR.DR ORDER PER BENCH: THESE APPEALS FILED AT THE INSTANCE OF THE ASSESSE ES ARE DIRECTED AGAINST THE ORDERS OF LEARNED CIT(A) VIJAYAWADA. WHILE THE APPEALS FILED BY SHRI T.HANUMANTHA RAO RELATE TO THE ASSESSMENT Y EARS 2004-05 TO 2006- 07 THE APPEAL OF SHRI N. LINGAMURTHY RELATES TO TH E ASSESSMENT YEAR 2005- 06. SINCE THEY WERE HEARD TOGETHER WE ARE DISPOSI NG THEM OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. WE SHALL FIRST TAKE UP THE APPEALS FILED BY SHR I T. HANUMANTHA RAO. IN ASSESSMENT YEAR 2004-05 THE ASSESSEE IS CONTESTING THE ADDITION OF RS.5 93 000/- BEING THE FACE VALUE OF PRONOTES SEI ZED DURING THE COURSE OF SEARCH AND ADDED AS UNEXPLAINED INVESTMENT AND ALSO THE ASSESSMENT OF ITA NOS.46 47 48 51 OF 10 T HANUMANTHA RAO YAKAMURU PAGE 2 OF 4 ACCRUED INTEREST ON THE PRONOTES. IN OTHER TWO YEAR S THE ASSESSEE IS CONTESTING THE ASSESSMENT OF ACCRUED INTEREST ON PR ONOTES. 3. THE FACTS RELATING TO THE CASE ARE STATED IN BRIEF. A SEARCH OPERATION WAS CARRIED IN THE RESIDENTIAL PREMISES OF THE ASSE SSEE AND DURING THE COURSE OF SEARCH INTER ALIA CERTAIN PRONOTES WERE SEIZED. REGARDING THE SOURCES FOR GIVING LOANS ON PRONOTES THE ASSESSEE EXPLAINED THAT HE RECEIVED A GIFT OF RS.3.00 LAKHS FRO HIS FATHER IN EARLIER YEARS AND FURTHER THERE WERE ACCUMULATED SAVINGS. THE SAID CLAIM WAS REJECTED FOR WANT OF EVIDENCE. CONSEQUENTLY THE ASSESSMENT WAS FRAMED U NDER SECTION 153A OF THE ACT IN THE HANDS OF THE ASSESSEE BY TREATING TH E FACE VALUE OF PRONOTES AS UNEXPLAINED INVESTMENT. THE ASSESSING OFFICER AL SO ESTIMATED ACCRUED INTEREST ON THE PRONOTES AND ASSESSED THE SAME IN T HE ASSESSMENT YEARS 2004-05 2005-06 AND 2006-07. THE ASSESSEES APPEA LS FILED BEFORE LEARNED CIT(A) WERE DISMISSED. HENCE THE ASSESSEE IS IN APPEAL BEFORE US IN ALL THE THREE YEARS. 4. THE FIRST ISSUE IN THE ASSESSMENT YEAR 2004 -05 RELATES TO THE ADDITION OF FACE VALUE OF PRONOTES AS UNEXPLAINED INVESTMENT . THE SAID ADDITION WAS MADE SINCE THE ASSESSEE COULD NOT EXPLAIN THE SOURC ES WITH PROPER EVIDENCES. BEFORE US ALSO THE ASSESSEE COULD NOT F URNISH ANY EVIDENCE IN SUPPORT OF HIS CLAIM THAT HE HAD ACCUMULATED SAVING S AND ALSO RECEIVED GIFTS FROM HIS FATHER IN EARLIER YEARS. HENCE WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING THE AD DITION RELATING TO THE UNEXPLAINED INVESTMENT. 5. THE NEXT ISSUE WHICH IS COMMON IN ALL THE TH REE YEARS RELATES TO THE ASSESSMENT OF ACCRUED INTEREST ON PRONOTES. DURING THE COURSE OF HEARING THE LEARNED A.R SUBMITTED THAT THE ASSESSEE IS NOT A REGULAR MONEY LENDER AND HENCE HE WAS OFFERING INTEREST INCOME ON RECEIP T BASIS WHEREVER THERE IS NO CERTAINTY OF RECEIPT OF INCOME. ACCORDINGLY HE PLEADED THAT THERE IS NO JUSTIFICATION IN ASSESSING THE INTEREST INCOME ON A CCRUAL BASIS. HOWEVER IT ITA NOS.46 47 48 51 OF 10 T HANUMANTHA RAO YAKAMURU PAGE 3 OF 4 WAS NOTICED THAT THE ASSESSEE HAD ACCOUNTED FOR INT EREST ON ACCRUAL BASIS IN RESPECT OF TWO PARTIES. HENCE THE SAID CLAIM WAS R EJECTED BY THE TAX AUTHORITIES. THE LEARNED A.R SUBMITTED THAT THE IN TEREST INCOME IN THE INSTANT CASE IS TO BE ASSESSED ON REAL INCOME PRI NCIPLE. HENCE THE ASSESSEE PREFERRED TO OFFER INTEREST INCOME ON RECE IPT BASIS WHENEVER HE IS NOT SURE OF DEFINITE RECOVERY OF PRINCIPAL AND INTE REST. TO A SPECIFIC QUERY RAISED BY THE BENCH THAT WHETHER THE ASSESSEE HAS O FFERED THE INTEREST INCOME ON RECEIPT BASIS IN SUBSEQUENT YEARS THE LE ARNED A.R STATED THAT THE MATTERS MAY BE SET ASIDE TO THE FILE OF ASSESSI NG OFFICER FOR VERIFICATION. THE LEARNED D.R ALSO AGREED WITH THE PLEA MADE BY T HE LEARNED A.R. ACCORDINGLY WE SET ASIDE THE ORDER OF LEARNED CIT( A) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO VERIFY WHETHER THE ASSESSEE HAS OFFERED INTEREST INCOME ON THE PRONOTES ON RECEIPT BASIS IN SUBSEQUENT YEARS AND IF HE IS SATI SFIED WITH THE SAID CLAIM OF THE ASSESSEE THEN THE ASSESSING OFFICER SHALL DELE TE THE INTEREST ASSESSED ON ACCRUAL BASIS. OTHERWISE THE INTEREST INCOME AS SESSED ON ACCRUAL BASIS SHALL STAND. WE ORDER ACCORDINGLY. 6. NOW WE SHALL TAKE UP THE APPEAL OF SHRI N.LING AMURTHY FILED FOR THE ASSESSMENT YEAR 2005-06. CONSEQUENT TO THE SEARCH OPERATION STATED IN PARAGRAPH 3 (SUPRA) THE ASSESSMENT IN THE HANDS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED UNDER SECTIO N 143(3) R.W.S. 153C OF THE ACT. THE ASSESSING OFFICER INTER ALIA MAD E AN ADDITION OF RS.3.00 LAKHS RELATING THE AMOUNT ADVANCED BY THE ASSESSEE WHICH WERE NOTED ON TWO PAPERS FOUND DURING THE COURSE OF SEARCH. DURI NG THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSEE AGREED TO THE S AID ADDITION. HOWEVER HE CONTESTED THE SAID ADDITION BEFORE LEAR NED CIT(A). HOWEVER THE FIRST APPELLATE AUTHORITY DISMISSED THE SAID GR OUND BY FOLLOWING THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE O F RAMESH CHANDRA & CO. VS. CIT (168 ITR 375) WHERE IN THE HON'BLE BOM BAY HIGH COURT HAS OBSERVED AS UNDER: WHERE AN ASSESSEE HAS MADE A STATEMENT OF FACTS H E CAN HAVE NO GRIEVANCE IF THE TAXING AUTHORITY TAXES HIM IN ITA NOS.46 47 48 51 OF 10 T HANUMANTHA RAO YAKAMURU PAGE 4 OF 4 ACCORDANCE WITH THAT STATEMENT. IF HE CAN HAVE NO G RIEVANCE HE CAN FILE NO APPEAL. THERE FORE IT IS IMPERATIV E IF THE ASSESSEES CASE IS THAT HIS STATEMENT HAS BEEN WRON GLY RECORDED OR THAT HE MADE IT UNDER A MISTAKEN BELIEF OF FACT OR LAW THAT HE SHOULD MAKE AN APPLICATION FOR RECTIFI CATION TO THE AUTHORITY WHICH PASSED THE ORDER BASED UPON THAT ST ATEMENT. UNTIL RECTIFICATION IS MADE AN APPEAL IS NOT COMPE TENT. BESIDES THE ABOVE THE LEARNED CIT(A) HAS DRAWN SUP PORT FROM VARIOUS OTHER CASE LAW WHEREIN SIMILAR VIEWS HAVE BEEN EXP RESSED. IN THIS CASE THERE IS NO DISPUTE THAT THE ASSESSEE HAD AGREED TO THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER. IN THAT CASE HIS A PPEAL IS NOT MAINTAINABLE IN VIEW OF THE DECISIONS CITED BY LEARNED CIT(A). HENCE WE FIND NO REASON TO INTERFERE WITH HIS DECISION ON THIS ISSUE. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IN ITA -51/VIZAG/2010 IS DISMISSED. THE APPEAL OF THE ASSESSEE IN ITA NO.46 /VIZAG/2010 IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE OT HER TWO APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 17-03-2011 SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE: 17-03- 2011 COPY TO 1 SRI T. HANUMANTHA RAO YAKAMURU VILLAGE KRISHNA DISTRICT-521 165. 2 SRI N. LINGA MURTHY YAKAMURU VILLAGE KRISHNA DI STRICT-521 165. 3 ACIT CENTRAL CIRCLE VIJAYAWADA 4 5. THE CIT VIJAYAWADA THE CIT(A) VIJAYAWADA 6 THE DR ITAT VISAKHAPATNAM. 7 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM