Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ SMC Bench, Hyderabad
Before: Smt. P. Madhavi Devi
ITA No 598 of 2015 Syed Aneesuddin Hyderabad.
IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ SMC Bench, Hyderabad Before Smt. P. Madhavi Devi, Judicial Member ITA No.598/Hyd/2015 Assessment Year: 2005-06 Shri Syed Aneesuddin, Vs. Income Tax Officer Hyderabad Ward 7(1) PAN:AAOPU6624Q Hyderabad (Appellant) (Respondent) Assessee by: Sri P.C. Yadav Revenue by: Sri D.J.P. Anand, DR Date of hearing: 27/11/2019 Date of pronouncement: 19/12/2019 ORDER This is assessee’s appeal for the A.Y 2005-06 against the order of the CIT (A)-3, Hyderabad, dated 13.02.2015.
Brief facts of the case are that the assessee, an individual, engaged in the business of performing civil contract works and consultancy services and also was a partner in M/s Sigma Constructions, M/s. Vista Constructions as well as in M/s. New Vista Constructions located in Mehdipatnam, filed his return of income on 1.8.2005 admitting a total income of Rs.1,18,200/-. There was a survey action u/s 133A of the I.T. Act in the case of M/s. Sigma Constructions on 25.02.2010, during the course of which, it was noticed that other two concerns M/s. Vista Constructions and M/s. New Vista Constructions are also functioning in the same premises and that some of the partners are common in all the three firms. Therefore, the cases of M/s. Vista Constructions and M/s. New Vista Constructions which
Page 1 of 8
ITA No 598 of 2015 Syed Aneesuddin Hyderabad.
came into existence by way of deeds of partnership executed on 29.09.2006 and 23.10.2007 respectively were also covered u/s 133A of the Act.
During the course of survey action, it was noticed that these firms mobilized huge funds for investment in purchase of properties and that during the survey and post survey proceedings, the firms admitted additional income of Rs.2.50 crores and subsequently the firms came up with different pleas that since two firms have not commenced their operations, the additional income is offered in the hands of its partners. Accordingly, in the hands of the assessee, the firms offered to declare additional income of Rs.25,00,000/- but in his return of income the assessee did not offer any additional income. The AO observed that the firms had acquired the property and the sources of such acquisitions were claimed to be capital mobilized by its partners, but none of the partners or firms filed the return of income till the date of survey. The AO observed that the partners including the assessee, made huge investments in the capital of the above named partnership firms and the sources for such investments are required to be explained. In view of the same, the AO issued notice u/s 148 of the Act the assessee to bring to tax the escaped income.
In response to the notice u/s 148 of the Act, the assessee submitted that the return already filed on 1.8.05 may be treated as a return filed in response to the said notice. The AO noticed that during the previous year relevant to the A.Y under consideration, the assessee has contributed to the capital in the firm M/s. Sigma Constructions to the tune of Rs.10.00 lakhs. The assessee was therefore, asked to explain the sources for such Page 2 of 8
ITA No 598 of 2015 Syed Aneesuddin Hyderabad.
investment. Further, the AO also observed that the credits in the Savings Bank A/c in SBI during the period 1.4.2004 to 31.3.2005. Assessee were explained to be the sources for the capital contribution. The AO noticed that the assessee has claimed to have taken hand loans from certain persons, but since he was not satisfied with the genuineness of the loan and the identity and creditworthiness of some of the parties, he made the addition of Rs.33,67,435. Aggrieved, the assessee preferred an appeal before the CIT (A), who allowed partial relief. Against the confirmation of the addition, the assessee is in second appeal before the Tribunal by raising the following grounds of appeal: “1. The impugned order is passed much against the weight of evidence and contrary to law and as such, the assessment is liable to be annulled. 2. The learned officer erred in re-opening the assessment by issuance of notice u/s 148 of the I. T Act, 1961. He failed to appreciate the fact that none of the ingredients of the provisions of section 147 of the I.TAct,1961 and there is no income which has escaped assessment and as such, the assessment is liable to be annulled. 3. The learned officer erred in making an addition of Rs 20,94,799./- as unexplained investment u/s 68 of the I. T Act, 1961, to the total income of the appellant. None of the ingredients of the provisions of section 68 of the I.TAct,1961 are presented and attracted the appellant's case and as such, the addition made on this count is unwarranted, unsustainable and liable to be deleted. 4. The findings which are adverse to the appellant arrived at by the Assessing Officer are perverse, whimsical and abuse of process of law and are liable to be expunged. 5. IN ANY EVENT, the authorities below erred in holding adding the hand loan of Rs.5,OO,OOO/- taken from Syed Khaja Faizuddin, on the frivolous reason no information in the confirmation about the identity and creditworthiness of the creditor. The authorities below over-looked the fact that the said Syed Khaja Faizuddin is a non-resident and one of the partner in M/s Vistas Constructions and M/s New Vistas Constructions, partnership firms which are assessable with the same Assessing Officer with whom the appellant assessed. Further, the lender sent the amount directly from UAE Page 3 of 8
ITA No 598 of 2015 Syed Aneesuddin Hyderabad.
through Emirates India International Exchange on 27.8.2004. Further, the said Syed Khaja Faizuddin has also been assessed to income tax with the same Assessing Officer, who completed the assessment under appeal. The appellant has duly discharged the, onus which the law burdened him with and the addition made is arbitrary, perverse and illegal and the same is liable to be deleted. 6. IN ANY EVENT the authorities below erred in holding that the hand loan of Rs.8,00,OOO/- raised from Moosa Kaleem Khan to be assessed to the appellant's income on the frivolous assumption that no details such as bank details or sources thereof not specify in the Confirmation although the confirmatory letter containing all the details including PAN No. given. The authorities below overlooked the fact that the hand loan was effected through banking channels and is very much evident from the Bank Pass Book. The appellant has duly discharged the onus which the law burdened him with the addition made by the A.O. is arbitrary, perverse and illegal and the same is liable to be deleted. 7. The authorities below erred in rejecting the explanation for the sources of RsA,49,799/-which the appellant has received as advance against sale consideration in respect of agrl. lands at Kohir, Medak. They failed to appreciate that the sale deed for the said agrl.lands were executed and registered during the asst.year 2007-08 and the gains arising therefrom has been offered during the sad asst.year 2007-08. The appellant has duly discharged the onus which the law burdened him with and the addition made by the Assessing Officer is arbitrary; perverse and illegal and the same is liable to be deleted. 8. IN ANY EVENT, the authorities below erred in rejecting the hand loan of Rs'.2,50,000/- taken from Mohd Abdul Kareem on the frivolous reason that no . confirmation of the creditor has been filed which is not correct. A confirmatory letter issued by his wife Mrs. Tahera Fatima confirming the fact of giving hand loans to the appellant on various dates from Andhra Bank, Mehdipatnam Br. Hyderabad, from SB NRE A/c No.03/00000069 filed but the authorities below overlooked the same and also the fact that the hand loan was effected through · banking channel. The appellant has duly discharged the onus which the law burdened him with and the addition made by the Assessing Officer is arbitrary, perverse and illegal and the same is liable to be deleted. 9. IN ANY EVENT the authorities below erred in holding that the hand loan of Rs.95,OOO/- taken from the appellant's' son Syed Adeeluddin on the frivolous
Page 4 of 8
ITA No 598 of 2015 Syed Aneesuddin Hyderabad.
assumption that he himself relied on raising loans from friends and relatives. The learned officer over-looked the fact that the lender Syed Adeeluddin, who is none other than the son of the appellant and assessed to income-tax under PAN NO.AYFPS9511 H with the same Assessing Officer who passed the assessment under appeal. Thus, the addition is unsustainable and liable to be deleted. 10. The charging of interest u/s 234B and 234C of the I.T.Act, 1961 is not in accordance with the provisions of Income-tax Act,1961. The interest so charged is not calculated in accordance with the provisions of the I.T.Act and as such, a direction may be issued to calculate the correct interest under the facts and circumstance of the appellant's case. On the above grounds and such other grounds which may be urged at the time of hearing of appeal, it is prayed that the appeal may be allowed”.
At the time of hearing, the learned Counsel for the assessee stated that the assessee does not wish to press Grounds 1,2,3,4, 7 & 9. They are accordingly rejected as not pressed.
Ground No.10 being charging of interest u/s 234B & 234C of the Act, we direct the AO to give consequential relief to the assessee, if any.
As regards Ground No.5 regarding the contention of hand loan of Rs.5.00 lakhs taken from Shri Syed Khaja Faizuddin, the learned Counsel for the assessee has drawn our attention to the confirmation letter filed by him before the AO at page 8 of the Paper Book wherein it is stated that he is the childhood friend of the assessee and also partner of Sigma Constructions and during the month of August, 2006, the assessee was in urgent need of money and therefore, the assessee was given a sum of Rs.5.00 lakhs from UAE through Emirates India International Exchange on 27.8.2004. In support of his
Page 5 of 8
ITA No 598 of 2015 Syed Aneesuddin Hyderabad.
contention, he has also filed Emirates India International Exchange voucher and has also drawn our attention to the Bank A/c of the assessee wherein this transaction is reflected. He submitted that Shri Syed Khaja Faizuddin is also a partner in M/s Vista Constructions and M/s. New Vista Constructions, the partnership firms in which the assessee is also a partner and they were also assessed to tax by the same AO. Therefore, according to him, the genuineness of the transaction and the creditworthiness of the creditor is proved. Further, he has also filed the Paper Book II containing pages 1 to 24 as additional evidence to demonstrate that the firm Vista Constructions is a registered firm and that both the assessee as well as Shri Syed Khaja Faizuddin are partners and the balance sheet of Vista Constructions proves creditworthiness of Shri Syed Khaja Faizuddin. He submitted that these details were filed before the CIT (A) but the CIT (A) failed to consider the same.
The learned DR however, objected to the additional evidence and relied upon the orders of the authorities below.
Having regard to the rival contentions and the material on record, I find that the creditor Sri Syed Khaja Faizuddin is a partner in M/s. Vista Constructions and a person known to the assessee and therefore, the identity of the said person is proved. As regards the genuineness of the transactions, the money has been transferred to the assessee through Banking channels and therefore, the genuineness of the transaction is proved. From the books of M/s. Vista Constructions I have seen that its capital a/c shows the balance of Rs.63.00 lakhs to the credit of Shri Syed Khaja Faizuddin. Therefore, he is proved to be a person of means.
Page 6 of 8
ITA No 598 of 2015 Syed Aneesuddin Hyderabad.
Therefore, the creditworthiness also is proved. Thus, the addition of Rs.5.00 lakhs made by the AO and sustained by the CIT (A) is deleted.
The second addition challenged by the assessee is Rs.8.00 lakhs which is allegedly received from Sri Moosa Khaleem Khan. I find that the assessee has pointed out that Shri Moosa Khaleem Khan has given the confirmation letter which is placed at page 10 of the paper book. This letter contains the PAN No. of the said person and also that Rs.5.00 lakhs has been transferred on 5.10.2004 vide cheque No.797948 and that Rs.3.00 lakhs transferred on 6.10.2004 vide cheque No.1533144. Xerox copy of the PAN Card has also been filed. The Bank A/c of the assessee also demonstrate that these amounts have been received by way of cheques. Therefore, the identity of the creditor is proved and the genuineness of the transactions is also proved.
As regards the creditworthiness, though the PAN No. of the creditor is given, the AO has not thought it fit to examine the said creditor.
The AO and the CIT (A) have recorded that the assessee has not filed any of the details, but I find that all the above details have been filed by the assessee, but the same have not been examined by the AO or the CIT (A). Therefore, I do not find any reason to set aside the same to the file of the AO for re- verification at this stage and in such circumstances, I am inclined to accept the creditworthiness of this person and the addition of Rs.8.00 lakhs is deleted.
Page 7 of 8
ITA No 598 of 2015 Syed Aneesuddin Hyderabad.
As regards the alleged hand loan of Rs.2.50 lakhs taken from Shri Mohd Abdul Kareem, I find that the assessee has filed the confirmation letter of the wife of Late Shri Mohd. Abdul Kareem confirming that the hand loan to the assessee was given on various dates from the creditors A/c maintained at Andhra Bank, Mehdipatnam Branch and the same are also reflected in the Bank A/c of the assessee. I find that the assessee has given the Bank A/c details and the details of the various cheques. The AO has accepted the credits to the tune of Rs.2.50 lakhs but has disallowed the balance of Rs.2.50 lakhs, though relevant details were given by the assessee. The creditor Mr. M.A. Kareem has since passed away and it is not possible at this stage to verify the creditworthiness of the said person. Since the transaction is through Banking Channels and through A/c Payee cheques, I do not find any reason to doubt the creditworthiness of this person.
In the result, assessee’s appeal is allowed. Order pronounced in the Open Court on 19th December, 2019.
Sd/- (P. MADHAVI DEVI) JUDICIAL MEMBER
Hyderabad, dated 19th December, 2019. Vinodan/sps Copy to: 1 Shri Syed Aneesuddin C/o M.M. Firdos, Advocate, 11-3-942, 1st Floor, New Mallepally, Hyderabad 2 ITO Ward 7(1) IT Towers, 2nd Floor, AC Guards, Hyderabad 3 CIT (A)-3 Hyderabad 4 Add CIT– Range-7 Hyderabad 5 The DR, ITAT Hyderabad 6 Guard File By Order Page 8 of 8