THUNUGUNTLA JAGANMOHAN RAO, GUNTUR,GUNTUR vs DCIT, CENTRAL CIRCLE-2(1), HYDERABAD, HYDERABAD

Income Tax Appellate Tribunal, HYDERABAD BENCH “A”, HYDERABAD

Before: SHRI A. MOHAN ALANKAMONY & SHRI S.S. GODARA

Hearing: 14/02/2022Pronounced: 22/02/2022

PER A. MOHAN ALANKAMONY, AM.:

Both these appeals are filed by the assessee for the AY 2011-12. ITA No.98/Hyd/2016 is filed against the order of the Ld. Principal Commissioner of Income Tax (Central), Hyderabad in Order No. CIT(C)/263/11/14-15, dated 10/03/2015 U/s. 263 of the Act. ITA No.513/Hyd/2017 is filed against the order of the Ld. CIT (A)-12, Hyderabad in appeal No.0168/2015-16, dated 24/10/2016 passed U/s. 143(3) r.w.s 263 of the Act.

I. ITA No.98/Hyd/2016 2. On the earlier instance, the Tribunal vide its order dated 25/10/2019 had denied condoning the delay in filing the appeal by the assessee before the Tribunal. However, on appeal, the Hon’ble High Court of Telangana vide ITTA No.20 of 2020, dated 13/08/2020 condoned the delay in filing the appeal before the Tribunal and direct the Tribunal to hear and decide the appeal on merits in accordance with law. Respectfully following the directions of the Hon’ble High Court, we hereby proceed to adjudicate the appeal on merits with respect to the Order passed by the Ld. PCIT U/s. 263 of the Act. 3. The assessee has raised five grounds in its appeal however, the crux of the issue is that:

“The Ld. Pr. CIT has erred in invoking his powers U/s. 263 of the Act and instructing the ld. AO to re-do the assessment with specific direction with respect to the Gold & Silver Jewellery seized from the premises of the assessee towards which no additions were made by the Ld. AO.”

On examining the facts of the case, it is evident that certain Gold & Silver Jewellery were seized in the premises of the assessee and the Ld. AO while passing his order had neither made any enquiry regarding the source of the seized jewellery from the assessee nor discussed on the issue in the assessment order. Hon’ble Apex Court’s landmark

decision in the case of Malabar Industries reported in (2000) 243 ITR 83 (SC) holds that such a failure on Assessing Officer’s part indeed renders an assessment both erroneous as well as causing prejudice to the interest of the Revenue. Therefore, the Ld. Pr. CIT was right in his rem to direct the Ld. AO to re-do the assessment afresh on the issue by affording proper opportunity to the assessee of being heard. Therefore, the appeal of the assessee is devoid of merits.

II. ITA No.513/Hyd/2017

The Hon’ble High Court of Telangana in ITTA No. 22 of 2020 vide order dated 24/09/2020 remanded the order of the Tribunal in ITA No.513/Hyd/2017 dated 25/10/2019 for consideration along with the order of the Tribunal in ITA No.98/Hyd/2016 dated 25/10/2019 as the order of the Tribunal in ITA No.513/Hyd/2017 & 98/Hyd/2017 dated 25/10/2019 was a consolidated order. Accordingly, the appeal of the assessee in ITA No. 513/Hyd/2017 is also heard and disposed off herein below.

The assessee has raised four grounds in its appeal, and they are extracted herein below for reference: “1. The order of the Ld. CIT(A) is erroneous both on facts and in law. 2. The Ld. CIT(A) erred in confirming the addition of Rs. 1,04,66,134/- made by the Assessing Officer on the ground that the gold jewellery and the silver articles were not properly explained.

The Ld. CIT(A) erred in confirming the charging of interest U/s. 234A of Rs. 7,51,672/- U/s. 234B of Rs. 10,02,216/- and U/s. 234C of Rs. 36,645/-. 4. Any other ground or ground that may be urged at the time of hearing.” 7. On merits, on the earlier instance the Tribunal has given a finding in para 12 of the order in which one of the Member was a party to the order. The same is extracted herein below for reference:

“11. Before us, ld. Counsel for the assessee submitted that assessee’s son and his daughter-in-law both are working in USA. Some of the gold seized by the department during the course of search brought by his son and his daughter-in-law and some of the gold was given to his daughter-in-law by her parents as gift. Further, he submitted that the addition made to the extent of Rs. 1,04,66,134/- is not correct and excessive. 12. The ld. DR, on the other hand, supported the orders of revenue authorities. 13. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. There was a search operation carried out in the case of the assessee, in which, gold and silver articles valued at Rs. 1,19,50,059/- and Rs. 11,56,543/- respectively were found and out of this, gold valued at Rs. 93,09,531/- and silver valued at Rs. 11,56,543/- were seized. The AO gave credit for gold worth Rs. 26,40,468/- (weight of gold 1333.57) treating the same as inherited from assessee’s parents and the remaining gold jewellery weighing 4522.07 grams worth Rs. 93,05,591/- and silver articles weighing 33.234 kgs worth Rs. 11,56,543/-, totalling Rs. 1,04,66,134/- was considered as unexplained investment u/s 69 of the Act in the hands of the assessee. We find that it is a fact that assessee’s son and his daughter-in-law both are working in USA and there is every possibility that out of their earnings, they must have brought some gold jewellery. Therefore, we are of the view that some more credit should be given to the assessee and accordingly, we direct the AO to give credit of gold worth Rs. 24,00,000/- to the assessee and recalculate the addition (Rs. 1,04,66,134 – Rs. 24,00,000) accordingly. Thus, ground No. 2 is partly allowed. 13.1 Ground Nos. 1 & 4 are general in nature, hence, need no adjudication.

13.2 Ground No. 3 is regarding charging of interest u/s 234A, 234B and 234C. Charging interest under these sections consequential in nature, therefore, the AO is directed accordingly.”

Since the issue has been considered by the Tribunal on the earlier 8. instance and passed a speaking order on merits and since, neither any fresh facts nor arguments were advanced before the Tribunal on merits at the time of hearing the appeal in order to alter the earlier findings, we do not find it necessary to interfere with the earlier order passed by the Tribunal passed on merits. For the above stated reasons, we hereby direct the Ld. AO to grant relief to the assessee for Rs. 24 lakhs against the addition made towards gold and silver jewellery for Rs. 1,04,66,135/- and thereby sustaining the addition for Rs. 80,66,134/- (Rs. 1,04,66,135 – Rs. 24,00,000). Accordingly, this appeal of the assessee is partly allowed.

Conclusively, assessee’s appeal in ITA No. 98/Hyd/2016 is dismissed and the other appeal of the assessee in ITA No. 513/Hyd/2017 is partly allowed.

Pronounced in the open Court on the 22nd February, 2022.

Sd/- Sd/- (S.S. GODARA) (A. MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 22nd February, 2022. OKK

Copy to:- 1) Appellant: Thunuguntla Jagan Mohan Rao, C/o Sri S. Rama Rao, Advocate, Flat No. 102, Shriya’s Elegance, 3-6-643, Street No. 9, Himayat Nagar, Hyderabad – 500 029. 2) Respondent: DCIT, Central Circle – 2(1), Posnett Bhavan, Hyderabad. 3) CIT(A) -12, Hyderabad. 4) Pr. CIT (Central), Hyderabad 5) 6) Guard File

THUNUGUNTLA JAGANMOHAN RAO, GUNTUR,GUNTUR vs. DCIT, CENTRAL CIRCLE-2(1), HYDERABAD, HYDERABAD