NALLA SUDHAKAR,HYDERABAD vs. ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3), HYDERABAD

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ITA 2235/HYD/2017Status: DisposedITAT Hyderabad08 April 2022AY 2014-1511 pages
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What did the Tribunal hold?

The Tribunal upheld the addition in the company's hands, finding that the individual's survey statement and the sale agreement provided sufficient evidence of the unexplained investment. However, it deleted the addition in the individual's hands, citing the principle of assessing income in the right person's hands.

What were the facts?

The appeals concerned an unexplained investment addition of Rs. 2.85 crores made by the Assessing Officer on substantive and protective bases in the hands of an individual and a company, respectively. The addition was based on a survey statement admitting cash payment and a seized sale agreement.

What were the issues?

Whether the addition for unexplained investment was justified based on survey admissions and seized documents, and whether the income was correctly assessed in the hands of the individual or the company.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 292C(1)

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Income Tax Appellate Tribunal, HYDERABAD ‘A’ BENCH, HYDERABAD.

Before: SHRI S.S. GODARA & SHRI L. P. SAHU

Heard together (2 matters)

ITA No.2235/Hyd/2017
ITA No.2236/Hyd/2017

Read from the judgment's own cause title. This page is filed under one of them.

1.

Shri Nalla Sudhakar, Hyderabad. PAN AFQPN 1577G 2. M/s.Ved Kiran Infra Projects Pvt. Ltd., Hyderabad. PAN AECV4030C …..Appellants. Vs. Asst. Commissioner of Income Tax, Central Circle 2(3), Hyderabad. …..Respondent. Appellants By : Shri K.C. Devdas, C.A. Respondent By : Shri Sunil Goutam, (D.R.) Date of Hearing : 07.04.2022. Date of Pronouncement : 08.04.2022.

O R D E R Per S.S. Godara, J.M. : These twin assessee's as many appeals for Assessment Year 2014-15 arise against the Commissioner of Income Tax (Appeals)-12, Hyderabad separate orders; both dt.2.11.2017 passed in case Nos.0267 and 265/2016-17 in Heard both sides. Case files perused.

3.

We notice at the outset with the able assistance of both the parties that these twin assessee's identical sole substantive grievance challenges correctness of the learned lower authorities’ action making unexplained investment addition of Rs.2.85 crores; on substantive cases in individual’s and protective basis in company’s hands herein; respectively. The CIT(A)’s detailed discussion affirming the Assessing Officer’s action to this effect in individual hands on substantive basis read as under :

4.

We have heard both the sides. There is hardly any issue about the total purchase consideration coming to 8 & 2236/Hyd/2017 Rs.22 Crores whereas the assessee's and the co-purchaser M/s. Vishwambhara Educational Society have 3/4th and 1/4th shares, respectively. The latter had already paid its consideration of Rs.5.5 Crores. The assessee company’s share comes to Rs.16.5 Crores. The Revenue’s case all along has been that it has failed to explain source of the impugned sum of Rs.2.85 Crores forming subject matter of addition(s) before us. It has placed a strong reliance on the survey statement of Mr. Nalla Sudhakar/Appellant herein admitting cash payment of Rs.2.85 Crores in issue which has been added on substantive and protective basis (supra).

5.

The assessees vehemently contended that the impugned additions are not based on any supportive evidences apart from the foregoing survey statement. And that the latter hardly carries any significance in light of the CBDT’s twin circulars dt.10.03.2003 and 18.12.2014.

All these arguments fail to convince us as it has come on record that the relevant sale agreement found in the course of search dt.20.11.2014 had indicated the purchase price

9 & 2236/Hyd/2017 as Rs.22 Crores out of which the assessee could neither account not explain source of Rs.2.85 Crores in the survey statement in issue. We deem it appropriate to observe here that the said seized document carries presumption of correctness u/s.292C(1) of the Act. And that the individual assessee has further supported the contents thereof in survey statement. We thus decline learned counsel’s arguments based on the CBDT’s twin circulars (supra). There is also no indication of any substantive retraction from the assessees' side before the departmental authorities as well. Their case that the vendor has supported its stands if no cash payment goes contrary to both the sale agreement as well as survey statement. The impugned addition is upheld in principle therefore.

6.

Next comes the equally important aspect of assessment of the impugned on-money addition. Case law ITO Vs. Ch. Atchaiah 218 ITR 239 (SC) holds that correct amount of income has to be assessed in the right person’s hands alone. We find in this legal backdrop that it is the 10 & 2236/Hyd/2017 company assessee only which had purchased the land in issue as recorded in its books maintained in the regular course of business. We therefore delete the impugned addition in ITA No.2236/Hyd/2017. Ordered accordingly.

7.

These twin assessee's former appeal is dismissed in above terms. A copy of this common order be placed in the respective case files.

Order pronounced in the open court on 8th April, 2022.

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