What did the Tribunal hold?

The Tribunal confirmed the addition of Rs. 1.25 crores to the assessee's income. It held that the evidence submitted by the assessee was new evidence not considered by the AO and was filed after the assessment order was passed, without establishing a reasonable cause for the delay.

The assessee claimed that an advance payment of Rs. 2.5 crores for property purchase was entirely made by his co-partner, not by him. He submitted an affidavit and confirmation letters from the co-partner during the appellate proceedings.

What were the issues?

Whether the addition of unexplained advance payment is justified when the assessee submits new evidence during appeal. Whether the delay in submitting evidence without reasonable cause can lead to its admission.

Malisetty Sudheer, Nellore vs ITO | ITAT Hyderabad 2021

Income Tax Appellate Tribunal, HYDERABAD BENCHES “A” : HYDERABAD

Before: SHRI S.S.GODARA & SHRI LAXMI PRASAD SAHU

PER S.S.GODARA, J.M. :

This assessee’s appeal for AY.2011-12 arises from the CIT(A)-Tirupati’s order dated 25-02-2019 passed in case No.CIT(A), Tirupati/10079/2018-19, order u/s.250 of the Income Tax Act, 1961 [in short, ‘the Act’]. Heard both the parties. Case file perused.

The assessee has raised the following substantive grounds in the instant appeal:

“1) The order of the learned Commissioner of Income-tax (Appeals) is erroneous both on facts and in law. 2) The learned Commissioner of Income-tax (Appeals) erred in confirming the addition of Rs.1,25,00,000/-.

:- 2 -: 3) The learned Commissioner of Income Tax (Appeals) ought to have seen that the amount of Rs.2,50,00,000/- was entirely paid by the other partner Sri Vellampalli Chenchu Venkata Rama Rao who is separately assessed to tax. 4) The learned Commissioner of Income Tax (Appeals) ought to have considered the fact that Sri Vellampalli Chenchu Venkata Rama Rao filed an affidavit and also stated that he paid the amount. 5) The learned Commissioner of Income-tax (Appeals) failed to admit the evidences produced and to see the fact that the said Sri Vellampalli Chenchu Venkata Rama Rao is a partner of the appellant in acquiring the property and that the amount of Rs.2,50,00,000/- was entirely paid by him which is accepted by the said person. 6) The learned Commissioner of Income-tax (Appeals), therefore, erred in confirming the addition of Rs.1,25,00,000/-. 7) Any other ground or grounds that may be urged at the time of hearing”.

Learned counsel next took us to the CIT(A)’s detailed discussion affirming the Assessing Officer’s action making the impugned addition of Rs.1,25,00,000/- as under:

“Ground No.3: The appellant contended that he has filed a letter dated 6.12.2018 enclosing a copy of the confirmation letter dated 6.12.2018 from Sri V.G.V. Rama Rao, wherein, it was stated that the appellant has not paid the advance, but Sri V.G.V. Rama Rao paid the entire advance. It was also stated that the appellant was prevented from a reasonable cause for not submitting the information before the AO in person. During the appellate proceedings, the Ld.AR filed copy of the Affidavit of Sri V.G.V. Rama Rao, dated 7.1.2019, to the effect that he has given a confirmation letter on 6.12.2018, to the appellant, confirming the fact that the appellant has not contributed Rs.2.5 crores, but met by him only. The appellant also filed copy of the confirmation letter dated 6.12.2018 and copy of the letter of the appellant dated 6.12.2018 alleged to have been submitted before the AO along with copy of courier receipt. During the appellate proceedings, the Ld.AR was asked whether the above referred documents are filed under Rule 46A of the I.T. Rules, or not. In this connection the Ld. AR has not commented upon it, but :- 3 -: stated that these papers were filed for the disposal of the grounds. The papers are new evidences which were not considered by the AO. The confirmation letters are dated 6.12.2018 and the Affidavit is dated 7.12.2018. The assessment order was passed on 6.12.2018. In view of this, the affidavit filed is certainly a new document and though the confirmations were dated 6.12.2018, the same were not filed before the AO, before completion of assessment, hence, they are also new evidences. New evidences cannot be admitted unless the appellant establish that the reasonable cause which prevented the appellant from filing the information before the AO. In this case, the appellant completely failed in giving any evidence to establish a reasonable cause. Hence, these documents were not admitted. Moreover, the receipt of DTDC courier service, prove the fact that these documents were couriered on 7.12.2018, after the date of assessment order. Ld. AR of the appellant fairly conceded that these documents were submitted to the office subsequent to the date of completion of the order. As discussed in the brief facts, the appellant is known for taking adjournments and not complying to the notices. In case the other party for the purchase given a confirmation, nothing prevented the appellant in submitting the same during the assessment proceedings. It is not the information, which has to be collected from third parties or unrelated parties or from outsiders, but it is the confirmation from the person who is party to the agreement for purchase of the said lands. The intention in filing the details subsequent to passing an order appears to be to thwart the enquiry and investigation process. Hence, there is no merit in argument of the appellant and ground raised is dismissed and the addition made by the AO is confirmed”

Leaned authorised representative vehemently argued during the course of hearing that both the lower authorities have erred in law and on facts in making the impugned un- explained advance amount addition of Rs.1.25 lakhs in his hands. Smt.Sandhya took us to the assessee’s paper book running into seven pages inter alia comprising of his return, explanation, filed before the Assessing Officer affidavit dt.07- 01-2019 of Sri Vellampalli Chenchu Venkata Rama Rao confirmation dt.06-12-2018, assessee’s confirmations letter dt.06-12-2018 and status of the registered post dt.07-12-2018 sent on his behalf to the ITO, Ward-1, Nellore; respectively.

:- 4 -: Her case in light of all this voluminous evidence is that the assessee had not made any payment as it was the other person i.e., Sri Vellampalli Chenchu Venkata Rama Rao having incurred the entire expenditure of Rs.2.5 crores in favour of Sri Gorantla Radha Krishna towards sale agreement. Learned counsel therefore urged to reverse both the lower authorities’ action making the impugned addition.

Mr.Pandey has strongly supported the impugned addition made in the course of assessment and affirmed in the CIT(A)’s order.

We have heard the rival contentions against and in support of the impugned addition. The un-disputed fact that emerges herein is that both the learned lower authorities have assessed the assessee qua the sum in issue of Rs.1.25 lakhs going by agreement entered along with Sri Vellampalli Chenchu Venkata Rama Rao (co-vendee) and paid to Sri Gorantla Radha Krishna for purchase of immoveable property in the relevant previous year. The assessee’s stand has denied to have made any payment all along. He has also sought to shift the entire payments’ burden on the co-vendee as well. We find during the course of hearing that the corresponding agreement nowhere formed part of record as well which could suggest anything to this effect. Learned counsel has also not pleaded that the said agreement had further specified share of the immoveable property between assessee and the other co- vendee to the extent of less than half each. The only inference that could be drawn in absence of any such evidences or a clause having earmarked payment; vendee-wise, leads to the :- 5 -:

conclusion that both of them have incurred equal amount of expenditure of Rs.1,25,00,000/- each forming subject matter of the impugned addition.

6.1.

The assessee tried to further place reliance on the co- vendee’s affidavit dt.07-01-2019 i.e., much after the CIT(A)’s lower appellate order and that too, in absence of any such material evident from the agreement. We thus confirm both the lower authorities’ action making the impugned addition of Rs.1,25,00,000/- in assessee’s hands.

This assessee’s appeal is dismissed.

Order pronounced in the open court on 28th May, 2021 (LAXMI PRASAD SAHU) JUDICIAL MEMBER Hyderabad, Dated: 28-05-2021 TNMM

:- 6 -: Copy to : 1.Malisetty Sudheer, S/o.Sri Nagabhushanam, D.No. 19-44A, Balaji Nagar, Nellore. 2.The Income Tax Officer, Ward-1, Nellore. 3.CIT(Appeals)-Tirupati. 4.Pr.CIT-Tirupati. 5.D.R. ITAT, Hyderabad. 6.Guard File.

MALISETTY SUDHEER,NELLORE vs. INCOME TAX OFFICER, WARD-1, NELLORE

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