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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
Before: Before Shri Rama Kanta Panda & Shri Laliet Kumar
IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad Before Before Shri Rama Kanta Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member
ITA Nos.509 to 511/Hyd/2017 Assessment Years: 2004-05, 2009-10 and 2010-11 Paladugu Prabhakar, Vs. The Deputy Commissioner Visakhapatnam. of Income Tax, Central Circle 2(2), Hyderabad. PAN : AGYPP0536C. (Appellant) (Respondent) Assessee by: Sri Pawan Kumar Chakrapani Revenue by: Sri K.P.R. R.Murthy. Date of hearing: 19.07.2022 Date of pronouncement: 20.07.2022
O R D E R Per Laliet Kumar, J.M. These are the three connected appeals filed by the assessee feeling aggrieved by the separate orders of ld. Commissioner of Income Tax (Appeals) – 12, Hyderabad, (hereinafter referred as “ld. CIT”) passed on 14.10.2016 for A.Ys. 2004-05, 2009-10 and 2010- 11, respectively.
ITA Nos.509 to 511/Hyd/2017
It was submitted by the ld.AR that the issue raised in all the appeals are common and therefore, the appeal in ITA No.509/Hyd/2017 will be taken as the lead case, in which the ld.DR has raised no objection.
2.1. The grounds raised by the assessee in ITA No.509/Hyd/2017 reads as under :
“1. The Learned Commissioner of Income Tax (Appeals)-12 [CIT (A)] has erred on facts and in law while passing the appellate order. 2. Learned CIT (A) is not justified in sustaining of addition of Rs. 18,50,000/- made in the assessment U/s 153C because no incriminating material was found during the search. The material relating to Rs. 18,50,000/ - was not found during the search. 3. Learned CIT (A) has erred in sustaining the addition of Rs. 18,50,000//- U/s 68 of the IT Act because assessee has no books of accounts, but only balance sheet drawn at the end of the year. 4. Learned CIT (A) has erred in ignoring the submission that the amount of Rs. 8,00,000/- out of Rs. 18,50,000/ - did not relate to the previous year but that it relates to an earlier year during which the assessee sold land to Shri J N Reddy through sale deed in the year 2002. 5. Learned CIT (A) is not justified in sustaining the addition of Rs. 15,15,875/ Additional Grounds of Appeal (6 & 7) 6. The Proceedings U/s 153C for the AY 2004-05 are not valid because AY 2004-05 falls beyond the six preceding assessment years. For the purpose of proviso to section 153C, the date of receiving the documents seized is the date of search. 7. The initiation of proceedings U/s 153C being invalid for the year, the assessment order U/s 143(3) r.w.s 153C is liable to be cancelled.
ITA Nos.509 to 511/Hyd/2017
The brief facts of the case are that Search and Seizure operation u/s.132 of the Income Tax Act, 1961 was conducted at the residential premises of Sri M. Janardhan Reddy, wherein an amount of Rs.25,00,000/- was received by the assessee as advance against the total consideration of Rs.1,38,00,000/- towards sale of plot No.16 at Puppalaguda. In view of this, a survey u/s 133A of the Act was conducted at the business premises of M/s. Harika Properties belonging to assessee on 17.02.2010. Assessee filed his return of income admitting income of Rs.2,88,166/- on 26.09.2011 in response to notice u/s 153C of the Act. Notice u/s 143(2) of the Act along with questionnaire was issued to assessee. Finally, assessment was completed u/s 143(3) r.w.s 153C for a total income of Rs.36,45,199/- raising a gross demand of Rs.24,05,964/- including the interest u/s 234A and 234B amounting to Rs.12,31,648/-. During the course of assessment, addition of Rs.18,50,000/- was made on the ground that confirmation letters were not received from the persons from whom assessee had received loans and also made addition of Rs.15,15,875/- u/s 69B of the Act as the AO observed that the assessee did not disclose the investment in the Balance Sheet in response to notice u/s 153C of the Act. Finally, Assessing Officer completed the assessment u/s 143(3) r.w.s. 153C of the Act vide order dt.30.12.2011. 4. Feeling aggrieved with the order of Assessing Officer, assessee carried the matter before ld.CIT(A), who partly allowed the appeal of the assessee.
ITA Nos.509 to 511/Hyd/2017
Feeling aggrieved with the order of ld.CIT(A), the assessee is now in appeal before us.
At the outset, the ld.AR had submitted that assessee had raised certain grounds before the ld.CIT(A) mentioned at Para 2.0 of the order of ld.CIT(A) which reads as under :
“1. The Joint Commissioner of Income Tax (OSD) (AO for short), Central Circle-4, Hyderabad has erred on facts and law. 2.(a) The assessment order is invalid in law as the assessment proceedings are invalid. (b) The assessment proceedings are invalid because the initiation of proceedings u/s.153C are of the Income Tax Act is not valid. (c) The initiation of proceedings u/s.153C is not legally valid because the satisfaction required u/s.153C before issuing of the notice there under has not been recorded or reached. (d) Satisfaction u/s.153C could not have been reached because "money bullion, jewellery or other valuable article or thing or books of account or documents, if any, seized did not belong to the assessee. 3(a) The learned AO is not justified in making the additions u/s 68 of the I.T. Act because the assessee has not maintained accounts. The provisions of section 68 are not therefore applicable. Without prejudice to the above ground (b) The learned AO is not justified in making additions on the mere ground that confirmation letters were not filed. Confirmation letters are not an indispensable legal requirement to prove the loans. (c) The learned AO has not granted adequate opportunity to prove the genuineness the loans from Sri J.N.Reddy, Sri K.Vijay Kumar and Sri Vamsi Krishna which were all bank transactions. The learned AO failed to notice that these loans were taken more than 8 years ago so that neither the copies of bank accounts could be obtained from the banks nor the persons could be contacted in the short time granted by the Assessing Officer. The assessee had no dealings with these persons at any time later than 2004-05. They are neither related to the assessee nor are their friends of the assessee. 4
ITA Nos.509 to 511/Hyd/2017
4.(a) The learned AO is not justified in making the additions u/s.69B of the I.T.Act because the assessee has not maintained day to day accounts. The provisions of section 69B are not therefore applicable. (b) The learned AO is not justified in making the addition of Rs.15,15,875/- towards the alleged unexplained investment in the house property without granting adequate opportunity. The learned AO should have granted adequate enough time because the transaction was too old.” 7. However, there is no adjudication by the ld.CIT(A) of the above said grounds. It was submitted that since the ld.CIT(A) had failed to decide the grounds with respect to recording of satisfaction by the Assessing Officer before initiating the proceedings u/s 153C and the existence of material belonging to the assessee, therefore, the order passed by the ld.CIT(A) is required to be set aside.
The ld.AR had drawn our attention to the decision of the Tribunal in the case of the assessee for A.Y. 2008-09 whereby the Tribunal has deleted the addition made in the hands of the assessee.
“Heard both the parties. Case files perused. 2. A combined perusal of both the instant case files suggested that the assessee's appeal ITA 677/Hyd/2017 has emanated from the JCIT (OSD), Central Circle 4, Hyderabad’s search assessment dt.30.12.2011 making various additions; as upheld in CIT(A)’s order under challenge whereas his other appeal ITA 675/Hyd/2015 seeks to reverse the CIT(Central) 263 revision direction holding the foregoing assessment as an erroneous one causing prejudice to interest of the revenue; respectively. It is in this factual backdrop that we first of all take assessee's latter appeal ITA 677/Hyd/2019 involving section 143(3) r.w.s. 153C assessment. 3. We next note with the able assistance of both the parties that this tribunal had directed the learned CIT-DR to produce the relevant satisfaction note u/s. 153C of the Act to the effect that the specified incriminating material, found or seized during the course of search dt.3.10.2009; had in fact belong to this assessee as per the statutory position. There is no such satisfaction note coming from the department side. 4. Learned CIT, DR vehemently contended during the course of hearing that such a satisfaction note is merely a procedural irregularity; if at all, which does not vitiate assessment framed u/s. 153C of the Act. He further sought to buttress the point that the 5
ITA Nos.509 to 511/Hyd/2017
legislature has nowhere prescribed any specific mode of the impugned satisfaction which sufficiently indicates that Assessing Officer could very very initiate proceedings after coming across the alleged seized material. 5. We find no merit in the Revenue’s foregoing arguments. Case laws Pepsi Foods Pvt. Ltd. Vs. ACIT 231 Taxman 58 (Del); Pepsico India Holdings Pvt. Ltd. Vs. ACIT 370 ITR 215 (Del) and PCIT Vs. N S Software (Firm) 403 ITR 259 (Del) along with similar other various judicial precedents have already settled the law that such a satisfaction note is indeed a mandatory condition on the Assessing Officer’s part so as to set section 153C proceedings in motion. He is supposed to record that the alleged incriminating and seized material in fact “belongs to” the assessee concerned as per the statutory position upto 1.6.2015. We thus accept the assessee's legal ground and quash the impugned assessment herein dt.30.12.2011 for this precise reason only. This appeal 677/Hyd/2017 stands accepted. 6. We now advert to the assessee's revision appeal ITA 675/Hyd/2015 filed against the CIT(A)’s 263 order. It transpires at the outset that the same is time barred by 561 days delay stated attributable to communication gap and other miscellaneous reasons. This is coupled with th4e fact that the impugned assessment has already been quashed in preceding paras. We thus condone the foregoing delay and hold that impugned revision directions have no legs to stand since the assessment itself stands quashed. We therefore accept the assessee's instant former appeal ITA 675/Hyd/2015 as well as a necessary corollary. 9. All other pleadings on merits are rendered infructuous.”
Per contra, the ld.DR for the assessee has submitted that the decision of the Tribunal passed in 2008-09 is not applicable to the present set of facts as the issue of non-adjudication of the grounds was not raised in the said appeal.
We have heard the rival contentions and perused the material available on record including the impugned order passed by the ld.CIT(A). Admittedly, in Para 2 of the ld.CIT(A)’s order, assessee has raised grounds challenging the initiation of proceedings u/s 153C and non-recording of satisfaction. Thereafter, the assessee had also filed additional grounds as per Para 4.2 of the order of ld.CIT(A). However, despite noting the grounds 6
ITA Nos.509 to 511/Hyd/2017
raised by the assessee, the ld.CIT(A) had dismissed these grounds summarily by observing that the additional grounds are not admissible however no finding on ground nos.1 to 4 mentioned at Para 2.0 was given in ld.CIT(A)’s order. We note that the decision relied upon by the assessee for A.Y. 2008-09 is not applicable to the present set of facts as non- adjudication of grounds by ld.CIT(A) was not the ground in the said appeals. In the light of the above, we are of the opinion that the order passed by ld.CIT(A) is required to be set aside as the specific grounds raised by the assessee had not been decided by him. In view of the above, the order passed by the ld.CIT(A) is set aside and the matter is remanded back to the file of the ld.CIT(A) with a direction to pass fresh order in all the three appeals on all the grounds. Needless to say, that while passing the order, the ld.CIT(A) shall keep in mind the binding precedents of the Hon’ble High Courts.
In the result, the appeal of assessee in ITA No.509/Hyd/2017 for A.Y. 2004-05 is allowed for statistical purposes.
Now coming to ITA Nos.510 and 511/Hyd/2017, we respectfully, following our decision for A.Y. 2004-05 decided above, allow the same i.e. ITA Nos.510 and 511/Hyd/2017. Accordingly, the appeals of the assessee in ITA Nos.510 and 511/Hyd/2017 for A.Y.s 2009-10 and 2010-11, respectively, are allowed for statistical purposes.
ITA Nos.509 to 511/Hyd/2017
In the result, all the three appeals of the assessee are allowed for statistical purposes. A copy of this common order be placed in respective case files.
Order pronounced in the Open Court on 20th July, 2022.
Sd/- Sd/- (RAMA KANTA PANDA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad, dated 20th July, 2022. TYNM/sps
Copy to: S.No Addresses 1 Paladugu Prabhakar, Flat No.A2-515, Visakhi Skyline Apartments, Yendada, Visakhapatnam – 530045, A.P. 2 The Dy. Commissioner of Income Tax, Central Circle 2(2), Hyderabad. 3 The Commissioner of Income Tax (Appeals) – 12, Hyderabad. 4 Pr. CIT (Central), Hyderabad. 5 DR, ITAT Hyderabad Benches 6 Guard File
By Order