P Jayashree, Hyderabad v. The DCIT, Hyderabad

ITA 956/HYD/2010 | 2003-2004
Pronouncement Date: 28-01-2011 | Result: Allowed

Appeal Details

RSA Number 95622514 RSA 2010
Assessee PAN AGHPP5652N
Bench Hyderabad
Appeal Number ITA 956/HYD/2010
Duration Of Justice 7 month(s) 2 day(s)
Appellant P Jayashree, Hyderabad
Respondent The DCIT, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 28-01-2011
Assessment Year 2003-2004
Appeal Filed On 25-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B' HYDERABAD BEFORE SHRI N.R.S. GANESAN JUDICIAL MEMBER AND SHRI AKBER BASHA ACCOUNTANT MEMBER I.T.A. NO. 956/HYD/2010 (ASSESSMENT YEAR 2003-04) MRS. P. JAYASHREE HYDERABAD PAN: AGHPP5652N VS. THE DCIT CIRCLE 5(1) HYDERABAD APPELLANT RESPONDENT I.T.A. NO. 957/HYD/2010 (ASSESSMENT YEAR 2003-04) MR. P. ANANDARAO HYDERABAD PAN: AEJPP6639R VS. THE DCIT CIRCLE 5(1) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SHRI A.V. RAGHURAM RESPONDENT BY: SHRI AMLAN TRIPATHY O R D E R PER NRS GANESAN JM: BOTH THE ABOVE APPEALS OF TWO INDEPENDENT ASSESSEE S ARE DIRECTED AGAINST THE TWO INDEPENDENT ORDERS OF THE CIT(A)-V HYDERABAD DATED 21.5.2010 AND PERTAIN TO ASSESSMENT YEAR 2003-04. SINCE COMMON ISSUE ARISES FOR CONSIDERATI ON IN BOTH THE APPEALS WE HEARD THE SAME TOGETHER AND DISPOSIN G OF THE SAME BY THIS COMMON ORDER. 2. THE ONLY ISSUE ARISING FOR CONSIDERATION IN BOTH THE APPEALS IS THE ADDITION U/S. 69 OF THE INCOME-TAX A CT 1961 AS UNEXPLAINED INVESTMENT. 3. SHRI A.V. RAGHURAM THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT BOTH THE ASSESSEES ARE RELA TED AS I.T.A. NOS. 956&957/HYD/2010 MRS. P. JAYASHREE & ANR. ======================== 2 HUSBAND AND WIFE. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION BOTH THE ASSESSEES RECEIVED ADVANCES FOR SUPPLY OF CASURINA BALLIES AND THE SAME WERE DEPOSITED IN THE BANK. AFTER THE FIELD VISIT THE PURCHASER DID NOT LIKE T HE CASURINA BALLIES. THEREFORE THE AGREEMENT WAS CANCELLED. ACCORDINGLY THE ADVANCES RECEIVED BY THE ASSESSEE WERE RETURNED TO THE RESPECTIVE PARTIES. WHAT WAS RECEIVED BY THE ASSES SEE IS AN ADVANCE IN THE COURSE OF TRADING ACTIVITY AND THE S AME WAS ALSO REPAID. ACCORDING TO THE LEARNED COUNSEL FOR THE A SSESSEE THE SAID AMOUNT CANNOT BE TREATED AS INCOME OF THE ASSE SSEE. REFERRING TO PAPER BOOK FILED BY THE ASSESSEE MORE PARTICULARLY PAGE NOS. 9 TO 20 THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THESE ARE ALL COPIES OF THE AGREEMEN T AND RECEIPT FOR REPAYMENT OF THE ADVANCES RECEIVED. SINCE THE AMOUNTS WERE REPAID ACCORDING TO THE LEARNED COUNSEL FOR T HE ASSESSEE THE SAME CANNOT BE TREATED AS INCOME OF THE ASSESSE E. 4. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUB MITTED THAT THE ASSESSEE HAS NO OTHER SOURCE OF INCOME EXC EPT INCOME FROM BUSINESS. THEREFORE THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING THE ADDITION U/S. 69 OF THE ACT WITH REGA RD TO INVESTMENTS MADE IN THE BANK DEPOSITS. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED HIS RELIANCE ON THE JUDGEME NT OF THE APEX COURT IN CIT VS. P.K. NOORJAHAN (1999) 237 ITR 570 AND SUBMITTED THAT WHEN THE ASSESSEE HAS NO OTHER SOURC E OF INCOME THERE CANNOT BE ANY ADDITION U/S. 69 OF THE ACT. THE I.T.A. NOS. 956&957/HYD/2010 MRS. P. JAYASHREE & ANR. ======================== 3 LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO PLACED HI S RELIANCE ON THE JUDGEMENT OF THE ALLAHABAD HIGH COURT IN S.B . KOCHHAR VS. ITO (1984) 145 ITR 255 AND SUBMITTED THAT WHEN THE TRIBUNAL SET ASIDE THE MATTER FOR MAKING FRESH ASSE SSMENT THE POWER OF ASSESSING OFFICER IS CONFINED TO THE SUBJE CT MATTER OF THE APPEAL BEFORE THE TRIBUNAL. THE ASSESSING OFFI CER CANNOT TAKE UP THE QUESTION WHICH WAS NOT THE SUBJECT MATE R BEFORE THIS TRIBUNAL EVEN THOUGH THERE WAS NO SPECIFIC DIRECTIO N. IN THIS CASE ACCORDING TO THE LEARNED COUNSEL FOR THE ASSE SSEE THE GENUINENESS OF THE AGREEMENT ENTERED BETWEEN THE AS SESSEE AND THE PURCHASER OF CASURINA BALLIES WAS NOT SUBJE CT MATTER BEFORE THE TRIBUNAL. THEREFORE THE ASSESSING OFFI CER CANNOT EXAMINE THE GENUINENESS OF THE AGREEMENT WHILE MAKI NG RE- ASSESSMENT IN PURSUANCE OF THE TRIBUNAL ORDER. THE REFORE THE ASSESSING OFFICER HAS EXCEEDED THE JURISDICTION WHI LE MAKING RE- ASSESSMENT. 5. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO PL ACED HIS RELIANCE ON THE JUDGEMENT OF THE APEX COURT IN CIT VS. BHARAT ENGINEERING & CONSTRUCTION CO. (1972) 83 ITR 187 AN D SUBMITTED THAT CASH CREDIT MADE IN THE FIRST YEAR O F THE BUSINESS CANNOT BE TREATED AS INCOME OF THE ASSESSEE. SINCE THIS IS THE FIRST ASSESSMENT YEAR THE INVESTMENT MADE BY THE AS SESSEE HAS TO BE TREATED AS CAPITAL RECEIPT. THEREFORE IT CA NNOT BE TREATED AS INCOME OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO PLACED HIS RELIANCE ON THE DECISI ON OF PUNE I.T.A. NOS. 956&957/HYD/2010 MRS. P. JAYASHREE & ANR. ======================== 4 BENCH OF THIS TRIBUNAL IN BHAGWANDAS ASSOCIATES VS. ITO (2009) 111 ITD 1 AND SUBMITTED THAT THE ASSESSING OFFICER HAS A LIMITED ROLE WHILE GIVING EFFECT TO AN APPELLATE ORDER. TH EREFORE THE ASSESSING OFFICER HAS EXCEEDED HIS JURISDICTION IN EXAMINING THE GENUINENESS OF THE AGREEMENT AND THE TRANSACTION. 6. ON THE CONTRARY SHRI AMLAN TRIPATHY THE LEARNE D DR SUBMITTED THAT THE ASSESSING OFFICER RECEIVED INTI MATION REGARDING DEPOSIT OF FUNDS IN THE STATE BANK OF IND IA NAMPALLY BRANCH FROM CIB WING OF THE DEPARTMENT. ACCORDING LY THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF INVESTM ENT MADE IN THE BANK DEPOSITS. THE ASSESSEE EXPLAINED TO TH E ASSESSING OFFICER THAT THEY ARE DOING BUSINESS IN CASURINA BA LLIES AND THEY HAVE OCC ACCOUNT WITH CREDIT LIMIT OF RS.25 LAKHS. THE PARTNERSHIP FIRM IN WHICH THE ASSESSEE WAS A PARTNE R HAD A CREDIT BALANCE OF RS.24.75 LAKHS TOWARDS PURCHASE O F CASURINA GARDEN FROM VARIOUS PARTIES AND THE SAID BALANCE MI GHT HAVE BEEN WITHDRAWN FOR THE PURPOSE OF MAKING INVESTMENT . IT WAS FURTHER EXPLAINED BY THE ASSESSEE THAT THE ASSESSEE HAS RECEIVED ADVANCES FROM PURCHASERS OF CASURINA BALLI ES. HOWEVER THE ASSESSEE COULD NOT FILE ANY MATERIAL B EFORE THE ASSESSING OFFICER TO SHOW THAT THE ASSESSEE HAD REC EIVED ADVANCES AS CLAIMED. THEREFORE THE ASSESSING OFFI CER MADE ADDITION U/S. 69 OF THE ACT WHICH WAS ALSO CONFIRME D BY THE CIT(A). DURING THE FIRST ROUND OF LITIGATION BEFOR E THIS TRIBUNAL IN AN EARLIER OCCASION THE ASSESSEE FILED THE COPIES O F THE I.T.A. NOS. 956&957/HYD/2010 MRS. P. JAYASHREE & ANR. ======================== 5 AGREEMENT CONFIRMATION LETTERS AND RECEIPT FOR REP AYMENT OF ADVANCES BEFORE THIS TRIBUNAL. ACCORDINGLY THIS T RIBUNAL BY AN ORDER DATED 13.4.2007 IN I.T.A. NO. 1131/HYD/2006 R EMANDED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICE R TO RE-EXAMINE THE MATTER AFTER CONSIDERING THE AGREEMENT AND OTHE R MATERIALS FILED BY THE ASSESSEE. IN OBEDIENCE TO THE DIRECT ION OF THIS TRIBUNAL THE ASSESSING OFFICER EXAMINED THE AGREEME NT AND OTHER MATERIALS AVAILABLE ON RECORD. THEREFORE AC CORDING TO THE LEARNED DR IT MAY NOT BE RIGHT TO SAY THAT THE ASSE SSING OFFICER EXCEEDED HIS JURISDICTION WHILE MAKING THE RE-ASSES SMENT. ACCORDING TO THE LEARNED DR THE ASSESSING OFFICER E XAMINED THE GENUINENESS OF THE AGREEMENT AND THE TRANSACTION ON LY ON THE BASIS OF THE DIRECTION OF THIS TRIBUNAL. ON EXAMIN ATION THE ASSESSING OFFICER FOUND THAT NO SUCH PERSONS IN FAC T EXIST. THE ATTEMPT MADE BY THE ASSESSING OFFICER TO EXAMINE TH E PERSONS SAID TO HAVE GIVEN ADVANCES WAS ALSO FAILED SINCE N O SUCH PERSONS IN FACT EXIST. THEREFORE ACCORDING TO T HE LEARNED DR THE ASSESSEE COULD NOT PROVE THE EXISTENCE OF THE P ERSONS SAID TO HAVE GIVEN THE ADVANCES. THE ASSESSING OFFICER THEREFORE CONCLUDED THAT THE TRANSACTION IS NOT GENUINE. 7. REFERRING TO THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THIS IS THE FIRST YEAR OF ASSESSMENT ACCORDING TO THE LEARNED DR THE ASSESSEES WERE IN THE BUSINESS EARLIER BUT THEY FILED THE RETURN OF INCOME FOR THE FIRST TIME. IN THE CASE BEFORE THE APEX COURT IN BHARAT ENGINEERING & CONST RUCTION CO. I.T.A. NOS. 956&957/HYD/2010 MRS. P. JAYASHREE & ANR. ======================== 6 (SUPRA) THE BUSINESS ITSELF WAS STARTED IN THE ASSE SSMENT YEAR UNDER CONSIDERATION. THEREFORE THIS JUDGEMENT OF THE APEX COURT MAY NOT BE OF ANY ASSISTANCE TO THE ASSESSEE. THE LEARNED DR PLACED HIS RELIANCE ON THE JUDGEMENT OF THE APEX COURT IN CIT VS. CHINNATHAMBAN (2007) 292 ITR 682 A ND THE JUDGEMENT OF THE ALLAHABAD BENCH OF THIS TRIBUNAL I N ISHRAWATI DEVI VS. ITO (2008) 298 ITR (AT) 313 (ALL). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THIS IS THE SECOND ROUND OF LITIGATION BEFORE THIS TRIBUNAL IN RESPECT OF THE ADDITION MADE BY THE ASSESSING OFFICER U/S. 69 OF T HE ACT. IN THE FIRST ROUND OF LITIGATION THE ASSESSEE SPECIFICALLY CLAIMED BEFORE THIS TRIBUNAL THAT THE AMOUNTS RECEIVED AS ADVANCES FOR SALE OF CASURINA BALLIES WERE DEPOSITED IN THE BANK. THE A SSESSEE HAS ALSO FILED THE COPIES OF THE AGREEMENT RECEIPT CO NFIRMATION LETTER ETC. BEFORE THIS TRIBUNAL. THIS TRIBUNAL FOUND THAT THE ASSESSING OFFICER HAD NO OCCASION TO EXAMINE ALL TH OSE MATERIALS. THEREFORE THE MATTER WAS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER TO RECONSIDER THE SAME AFT ER EXAMINING THE AGREEMENT AND OTHER MATERIALS FILED BY THE ASSE SSEE. IN FACT THIS TRIBUNAL HAS OBSERVED AS FOLLOWS IN THE ORDER DATED 13.4.2007 IN I.T.A. NOS. 1130 & 1131/HYD/2006. ' WE HAVE FOUND THAT THE FACTS REGARDING RECEIPTS FILED BY THE ASSESSEE ON REPAYMENT OF ADVANCES ARE REQUIRED TO BE RECORDED AFTER NECESSARY EXAMINATIONS. THE LOWER AUTHORITIES COULD NOT EXAMINE THIS FACT AS THEY INDULGED I.T.A. NOS. 956&957/HYD/2010 MRS. P. JAYASHREE & ANR. ======================== 7 REGARDING THE FACT WHETHER THE ASSESSEE FILED THOSE RECEIPTS OR NOT. HOWEVER CONSIDERING THE CONTENTS OF THE AFFIDAVIT THE RECEIPTS FLED SHOULD BE ON RECORD. EVEN THESE ARE NOT ON RECORD. THE SAME ARE REQUIRED TO BE PUT ON RECORD AND NECESSARY EXAMINATIONS OF THESE RECEIPTS ARE NECESSARY. FURTHER IT HAS ALSO BEEN NOTICED FROM THE FINDING THE AO THAT HE HAS NOT EXAMINED THE RELEVANT AGREEMENTS AND HAS NOT APPRECIATED THE FACTS OF THE CASE. HE SIMPLY FOLLOWED THE DIRECTIO N OF THE ADDL. CIT RANGE-5 HYDERABAD. WE FIND THAT COMPLETE FACTS OF THE CASE AFTER NECESSARY EXAMINATION OF AGREEMENTS AND OTHER DOCUMENTS ARE NOT ON RECORD. IN THE ABSENCE OF COMPLETE FACTS THE MATTER CANNOT BE DECIDED AT THIS STAGE. SINCE THE RELEVANT MATERIAL ETC. ARE NOT READILY AVAILABLE AT THIS STAGE WE FIND IT PROPER AND JUST TO SEND BACK THIS MATTER TO THE FILE OF THE AO WITH DIRECTION TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING OPPORTUNITY OF HEARING TO THE ASSESSEE.' 9. FROM THE ABOVE ORDER OF THIS TRIBUNAL IT IS OBVI OUS THAT THE ASSESSEE MADE A SPECIFIC CLAIM THAT THE AMOUNTS REC EIVED AS ADVANCED WERE DEPOSITED WITH THE BANK. THEREFORE THIS TRIBUNAL DIRECTED THE ASSESSING OFFICER TO EXAMINE THE AGREEMENT AND OTHER MATERIALS FILED BY THE ASSESSEE . IN VIEW OF THE ORDER OF THIS TRIBUNAL IT IS OBVIOUS THAT THE A SSESSING OFFICER WAS DIRECTED TO EXAMINE THE GENUINENESS OF THE AGRE EMENT AND THE TRANSACTION. THEREFORE THE ASSESSEE AT THIS S TAGE CANNOT SAY THAT THE ASSESSING OFFICER EXCEEDED HIS JURISDI CTION. IN OUR OPINION THE ASSESSING OFFICER EXAMINED THE AGREEME NT IN COMPLIANCE TO THE DIRECTION OF THE TRIBUNAL. 10. NOW COMING TO THE MERIT OF THE CASE. THE ASSES SING OFFICER ISSUED SUMMONS TO THE PERSONS WHO WERE SAID TO HAVE ADVANCED THE MONEY. THE SAID SUMMONS WERE RETURNED BY THE I.T.A. NOS. 956&957/HYD/2010 MRS. P. JAYASHREE & ANR. ======================== 8 POSTAL AUTHORITIES UNSERVED. THEREFORE THE ASSESS ING OFFICER HAS MADE AN ATTEMPT TO EXAMINE THOSE PERSONS THROUG H DEPARTMENTAL OFFICERS. THE DEPARTMENTAL OFFICERS W HO WERE DEPUTED FOR EXAMINATION FOUND THAT NO SUCH PERSON IN FACT EXISTS. THE ASSESSEE ALSO COULD NOT PRODUCE THOSE PERSONS BEFORE THE ASSESSING OFFICER. SINCE THE PERSONS SA ID TO HAVE GIVEN THE ADVANCES WERE NOT IN FACT EXIST THE ASSE SSING OFFICER CONCLUDED THAT THE AGREEMENT AND THE TRANSACTION AR E NOT GENUINE. NO MATERIAL IS PRODUCED BEFORE THIS TRIBU NAL TO SHOW THAT THE ABOVE SUCH PERSONS WERE IN FACT EXIST. NO MATERIAL IS AVAILABLE ON RECORD TO CONTRADICT THE FINDINGS RECO RDED BY THE LOWER AUTHORITIES ABOUT THE EXISTENCE OF THE PERSON S WHO SAID TO HAVE GIVEN THE ADVANCES. WHEN THE EXISTENCE OF THE PERSONS SAID TO HAVE GIVEN THE ADVANCES IS DOUBTFUL AND NO T PROVED IN OUR OPINION THE AGREEMENT AS WELL AS THE TRANSACTI ON CANNOT BE TREATED GENUINE. THEREFORE WE DO NOT FIND ANY INF IRMITY IN THE ORDERS OF THE LOWER AUTHORITIES IN CONCLUDING THAT THE AGREEMENT AND TRANSACTION ARE NOT GENUINE. 11. THE NEXT CONTENTION OF THE ASSESSEE IS THAT THI S IS THE FIRST YEAR OF ASSESSMENT THEREFORE THE RECEIPT HAS TO B E TREATED AS CAPITAL RECEIPT. IT IS AN ADMITTED FACT THAT THE A SSESSEES ARE CARRYING ON THE BUSINESS SINCE LONG AND IN FACT THE Y HAVE BANK ACCOUNTS WITH CREDIT FACILITY OF RS.25 LAKHS. NO B ANK WILL SANCTION CREDIT LIMIT OF RS.25 LAKHS IMMEDIATELY AF TER STARTING OF THE BUSINESS. THE ASSESSEE HAS FILED THE RETURN OF INCOME FOR I.T.A. NOS. 956&957/HYD/2010 MRS. P. JAYASHREE & ANR. ======================== 9 ASSESSMENT YEAR UNDER CONSIDERATION SINCE THE DEPAR TMENT HAS RECEIVED INTIMATION FROM CIB WING WITH REGARD TO DE POSIT OF MONEY IN THE BANK AND THE ASSESSEE IS CARRYING ON T HE BUSINESS WITHOUT FILING OF THE RETURN OF INCOME. THEREFORE THE JUDGEMENT OF THE APEX COURT IN BHARAT ENGINEERING & CONSTRUCT ION CO. (SUPRA) MAY NOT BE OF ANY ASSISTANCE TO THE ASSESSE E. WHEN THE GENUINENESS OF THE TRANSACTION AS WELL AS THE A GREEMENT WAS FOUND TO BE DOUBTFUL AND THE PERSONS SAID TO HA VE ADVANCED THE MONEY WERE NOT IN EXISTENCE IN OUR OP INION THE LOWER AUTHORITIES HAVE RIGHTLY MADE THE ADDITION. SINCE THE ASSESSEE WAS IN THE BUSINESS IN EARLIER YEAR THE J UDGEMENT OF THE APEX COURT IN THE CASE OF P.K. NOOJAHAN (SUPRA) MAY NOT BE OF ANY ASSISTANCE TO THE ASSESSEE. 12. WE HAVE ALSO CAREFULLY GONE THROUGH THE DECISIO N OF THE PUNE BENCH OF THIS TRIBUNAL IN BHAGWANDAS ASSOCIATE S (SUPRA) AND JUDGEMENT OF THE ALLAHABAD HIGH COURT IN S.B. K OCHHAR (SUPRA). IN VIEW OF THE DISCUSSION MADE EARLIER AN D THE FACTUAL SITUATION THAT THE PERSONS SAID TO HAVE ADVANCED TH E MONEY ARE NOT FOUND TO BE IN EXISTENCE IN OUR OPINION THIS JUDGEMENT AND THE DECISION OF THE TRIBUNAL ARE ALSO NOT APPLICABL E TO THE FACTS OF THIS CASE. 13. IN VIEW OF THE ABOVE WE DO NOT FIND ANY INFIRM ITY IN THE ORDERS OF THE LOWER AUTHORITIES. ACCORDINGLY THE S AME ARE CONFIRMED. I.T.A. NOS. 956&957/HYD/2010 MRS. P. JAYASHREE & ANR. ======================== 10 14. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE S STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH JANUARY 2011. SD/- (AKBER BASHA) ACCOUNTANT MEMBER SD/- (N.R.S. GANESAN) JUDICIAL MEMBER HYDERABAD DATED 28TH JANUARY 2011 TPRAO COPY FORWARDED TO: 1. MRS. P. JAYASHREE C/O. SHRI A.V. RAGHURAM ADVO CATE 610 6TH FLOOR BABHUKHAN ESTATE BASHEERBAGH HYDERABAD-1. 2. MR. P. ANANDARAO C/O. SHRI A.V. RAGHURAM ADVOC ATE 610 6TH FLOOR BABHUKHAN ESTATE BASHEERBAGH HYDERABAD-1. 3. THE DCIT CIRCLE 5(1) AAYAKAR BHAVAN HYDERABAD . 4. THE CIT(A)-V HYDERABAD 5 THE CIT-IV HYDERABAD 6. THE DR B BENCH ITAT HYDERABAD