P. SUDHAKAR REDDY,HYDERABAD vs. ACIT CENTRAL CIRCLE-5, HYDERABAD

Although a number of grounds have been raised by the assessee, however, the learned Counsel for the assessee did not press grounds challenging the validity of the assessment passed u/s 144 r.w.s. 153A of the I. T. Act, 1961 and confined his argument to the order of the learned CIT (A) in confirming the addition of Rs.52.97 lakhs on account of investment in SAARC Net Ltd.

Facts of the case, in brief, are that the assessee is an individual. A search and seizure actin u/s 132 of the I. T. Act was conducted in the case of Sujana Group of Industries during the financial year 2004-05. The case of the assessee was also covered. The Assessing Officer issued notice u/s 153A calling for the return of income for the A.Ys 1999-2000 to 2004-05. However, no return was filed in response to the same. Subsequently, the Assessing Officer issued a questionnaire u/s 142(1) of the Act. Thereafter, a show-cause notice was also issued due to non-filing of the reply by the assessee. Finally, the assessee filed return of income for the A.Ys 1999-2000 to 2004-05 on 27.11.2006. For the impugned A.Y the assessee filed the return declaring total income of Rs.2,00,030/-. The case was converted into scrutiny by issuance of notice u/s 142(1) of the I.T. Act.

The Assessing Officer had issued a detailed questionnaire to the assessee on 28.09.2006 based on the finding of the seized material found during the course of search. Since no satisfactory reply was received from the assessee, the Assessing Officer made addition of Rs.2,07,62,000/- as unexplained investment.

Before the learned CIT (A), the assessee apart from challenging the addition on merit also challenged the validity of the assessment u/s 143(3)/153A of the Act. So far as the grounds challenging the validity of the proceedings u/s 153A is concerned, the learned CIT (A) dismissed the same. Although the assessee has raised ground challenging the order of the learned CIT (A) on this issue, however, the learned Counsel for the assessee did not press these grounds for which we dismiss the grounds raised on this issue as not pressed.

So far as the disallowance of Rs.2,07,62,000/- is concerned, the assessee filed elaborate submissions based on which the learned CIT (A) called for a remand report from the Assessing Officer. After considering the remand report from the Assessing Officer , the learned CIT (A) deleted the addition of Rs.89.65 lakhs being deposit with Micro Biomed Products Ltd. Similarly, he also deleted the addition of Rs.40.00 lakhs with G.B Trading Pvt. Ltd and Rs.25.00 lakhs on a/c of deposits with Bhagyanagar Investment & Trading Pvt. Ltd.

So far as the issues involved in the present appeal is concerned i.e., the addition of Rs.52.97 lakhs on a/c of investment in SAARC Net Ltd is concerned, the learned CIT (A) upheld the action of the Assessing Officer by observing as under: “Thirdly, the Assessing Officer has made an addition of Rs.52.97 lakhs on account of investment in SAARC Net Ltd. The AR has denied that appellant has investment in the said company and furnished a copy of share holding pattern and name of shareholders of SAARC Net Ltd downloaded from the internet portal of Bombay Stock Exchange (BSE) to prove that the assessee’s name does not appear as a shareholder. On perusal of the document of SAARC Net Ltd from the BSE it is seen that the data is only from 1.1.2003 to 31.3.2003 i.e., it pertains to the last quarter of the financial year. The appellant has not given the statement of investors for the entire year. Therefore, the appellant’s argument that the name does not figure in the list of shareholders during the year is not correct. Besides, the statement of assets and liabilities of the appellant found during search and signed by the appellant himself clearly mentions that he has investment of 35,500 shares in SAARC Net Ltd (market price 134.10 share). This shows that appellant has invested Rs.52.97 lakhs in 39,500 shares in SAARC Net Ltd. Therefore, the addition of Rs.52.97 lakhs is confirmed. Accordingly, the grounds of appeal pertaining to the issue of SAARC Net Ltd are dismissed”.

Aggrieved with such order of the learned CIT (A) the assessee is in appeal before the Tribunal.

The learned DR, on the other hand, strongly supported the order of the learned CIT (A) on this issue.

We have heard the rival arguments made by both the sides, perused the orders of the AO and learned CIT (A) and the paper book filed on behalf of the assessee. We find the learned CIT (A) sustained the addition of Rs.52.97 lakhs being investment in SAARC Net Ltd on the ground that the assessee could not substantiate with evidence to his satisfaction that the name of the assessee does not figure in the list of shareholders and the list of shareholders that was filed before him was only from 1.1.2003 to 31.3.2003 i.e., it pertains to the last quarter of the financial year 2002-03. It is the submission of the learned Counsel for the assessee that the name of the assessee also does not figure in the shareholding pattern as on 30.06.2002 copy of which is obtained from the BSE and has been filed as an additional evidence. Since the assessee has filed the additional evidence now before the Tribunal evidencing that the name of the assessee does not appear in the shareholders list as on 30.06.2002 and since this additional evidence was not available at the level of the Assessing Officer or the learned CIT (A), therefore, considering the totality of the facts of the case and considering the fact that the additional evidence goes to the root of the matter, we admit the additional evidence and deem it fit and proper to restore the issue of Rs.52.97 lakhs to the file of the Assessing Officer with a direction to adjudicate the issue afresh in the light of the additional evidence filed before the Tribunal. Needless to say, the Assessing Officer shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. We hold and direct accordingly. The ground raised by the assessee is allowed for statistical purposes.

In the result, appeal filed by the assessee is partly allowed for statistical purposes.