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2018 Supreme(AP) 381
IN THE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH
V. RAMASUBRAMANIAN, J. UMA DEVI, JJ.
Pendurthi Chandrasekhar - Appellant
Versus
The Deputy Commissioner of Income Tax - Respondent
ITTA No.703 of 2016
Decided on : 26-04-2018
Advocate Appeared:
For the Appellant : Mr. K. Vasantha Kumar
For the Respondent: Mrs. M. Kiranmayee
Headnote:
Taxation – Income Tax, 1961 – Section 260A – Assessment – Challenging an order of Income Tax Appellate Tribunal in I.T.A. relating to the Assessment Year 2005-2006 – Though appellant raised about 10 substantial questions of law at the time of filing of the appeal, he came up with a Memo subsequently seeking to reframe the questions of law – Accepting Memo filed, following substantial questions of law were framed as arising for consideration in this appeal – Whether on the facts and in the circumstances of the case, Income Tax Appellate Tribunal while confirming the addition of Rs.11,97,267 as unexplained credit under\Section 68 of the Act, is right in law in holding that there should be sufficient reasons for receiving gifts though it is from father-in-law and the gift is covered by the provisions of Section 56 of the Act – Whether on t facts and in circumstances of the case, Income Tax Appellate Tribunal is right in law in upholding the conclusion of the Assessing Officer and the learned Commissioner of Income Tax (Appeals) that undisclosed income has been brought in the form of gifts in spite of the fact that there was no income earning activity to the assessee – Held, without looking into these aspects, C.I.T. (Appeals) came to the conclusion that there was a relinquishment by the assessee and that too in favour of a Private Limited Company of which he was one of the Directors and that through such relinquishment, a business profit of Rs.1000/- per sq. yard arose Directors of the Company, which ultimately got three sale deeds registered in their favour; (2) the circumstances under which the sale consideration was enhanced during the period 2000 to 2005; and (3) whether any relinquishment was actually made by the individual, in favour of a Company floated by him – Assessee herein as well as one K. Srinivasa Rao were involved, it is not known as to how one person can make relinquishment – In any case, the books of accounts of those private limited Companies were not examined to find out the flow of consideration – Therefore, the addition of an imaginary amount as business profit to the income of the assessee is contrary to law – Hence questions of law 4 and 5 are answered in favour of appellant/assessee – Appeal is partly allowed.
V. RAMASUBRAMANIAN, J.
1. This is an appeal filed by the assessee under Section 260A of the Income Tax, 1961, challenging an order of the Income Tax Appellate Tribunal in I.T.A.No.2119/H/2011 relating to the Assessment Year 2005-2006.
2. Though the appellant raised about 10 substantial questions of law at the time of filing of the appeal, he came up with a Memo subsequently seeking to reframe the questions of law. Accepting the Memo filed, the following substantial questions of law were framed as arising for consideration in this appeal.
A. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal while confirming the addition of Rs.11,97,267 as unexplained credit under\Section 68 of the Act, is right in law in holding that there should be sufficient reasons for receiving gifts though it is from father-in-law and the gift is covered by the provisions of Section 56 of the Act.
B. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in upholding the conclusion of the Assessing Officer and the learned Commissioner of Income Tax (Appeals) that undisclosed income has been brought in the form of gifts in spite of the fact that there was no income earning activity to the assessee.
C. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in ignoring the reference made by the Assessing Officer to the Foreign Tax Division of the Central Board of Direct Taxes requesting to verify the genuineness of the amounts received from UK and confirming the addition though no adverse communication is received as per records.
D. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in holding that there is relinquishment of right over the property and the difference between the original consideration of Rs.4,000/- and final consideration of Rs.5000/- is profit to the assessee and confirming the addition of Rs.74,15,000/- though the sale deed is contrary to such conclusion.
E. Whether on the facts and in the circumstance of the case, the Income Tax Appellate Tribunal is right in law in holding that the assessee has not no specific reply has been given to query of why income should not be assessed consequent to the relinquishment though the assessee in the written submissions has categorically stated that neither any income accrued nor received through the execution of sale deed in favour of the .
3. Heard Mr. K. Vasanthakumar, learned counsel for the appellant and Smt. M. Kiranmayee, learned Senior Standing Counsel for the Revenue.
Facts leading to the present appeal:
4. A Search and seizure operation under Section 132 of the Income Tax Act, 1961 was carried out in the premises of M/s. Ambiance Properties Pvt. Ltd., and its sister concerns. The assessee is one of the Directors of M/s. Dakshin Shelters Pvt. Ltd. Therefore, his residential premises was also covered by the search and seizure.
5. Thereafter, notices under Section 153A were issued on 20.10.2008. In response to the notices, the assessee filed his return of income on 02.02.2009, admitting a total income of just Rs.20,024/-.
6. Notices under Section 143(2) and 142(1) were issued on 27.04.2009 and after giving an opportunity, the assessment was completed. Three issues became the focal points in the assessment. They were (1) a gift of Rs.11,97,267/- allegedly received from the father-in-law; (2) personal expenditure/withdrawals shown as NIL, despite the fact that the assessee had cash in hand of Rs.40,94,100/-; and (3) the purchase of a land measuring about 7415.19 sq. yards in Banjara Hills, Hyderabad, through sale deeds in the names of three different Companies, at a price of Rs.1000/- per sq. yard over and above that was originally fixed, leading to an inference that to the extent of the said difference, there were business profits.
7. Holding that the existence of the donor, his source of income,
