Itta/24/2004 Of B.mallalla v. The Income Tax Officer

THE HON’BLE SRI JUSTICE L. NARASIMHA REDDYAND THE HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A.Nos.310 of 2003, 14, 20 & 24 of 2004 COMMON JUDGMENT: (Per the Hon’ble Sri Justice L. NarasimhaReddy) These appeals are preferred under Section 260-A of the IncomeTax Act, 1961 (for short ‘the Act’) against the common order dated 27-02-2002 passed by the Hyderabad Bench of the Income Tax AppellateTribunal (for short ‘the Tribunal’), in I.T.A.Nos.1250/H/1996 and batch. The appellant is common, but the appeals are referable to theassessment years 1988-89 to 1992-93. The husband of the appellant is a partner of M/s MallikarjunaTraders, which carried on business as Commission Agent in themarket yard, Kadapa. A survey was conducted in the premises of theMallikarjuna Traders on 04-09-1992. Promissory notes worthRs.18.78 lakhs written in favour of the appellant were found. Threedays thereafter, the appellant and her two co-sisters, by nameSmt.Ammani, W/o. B. Naga Malla Reddy, and Smt. B. Ammani, W/o. B.C. Subba Reddy, filed returns for various assessment years. The appellant pleaded that she was carrying on money lendingbusiness with her own funds, borrowed from her co-sisters and sheclaimed deduction for the interest, said to have been paid on theamounts borrowed by her. During the course of enquiry, the Assessing Officer found that none of the co-sisters of the appellantfiled any balance sheets with their returns, and disbelieved the versionof the assessee. The appellant filed a batch of appeals before theCommissioner (Appeals). At that stage, additional evidence in theform of confirmatory letters, from the persons, who have said to havereceived loans from the co-sisters, were filed. That was an attempt toindicate that the co-sisters were possessed of funds and they lent thesame to the appellant. The Commissioner allowed the appeals. Thereupon, the department filed appeals before the Tribunal. Throughthe common order dated 27-02-2002, the Tribunal has set aside theorder passed by the Commissioner (Appeals). Heard Sri A.V. Krishna Kaundinya, learned counsel for theappellant and Sri S.R. Ashok, learned Senior Counsel for therespondent. The appellant filed returns for six years, only after the searchwas conducted in the premises of the firm, in which, her husband is apartner. It appears that till then, she did not file returns at all. Once thereturns were filed, the Assessing Officer examined the various details,furnished therein. The appellant pleaded that she borrowed aboutRs.7 lakhs from both her co-sisters, over the period of six years. Though the affidavits of the co-sisters were also filed, no other supporting material was forthcoming. As a matter of fact,those two women have filed returns for different years. On examination, it was found that the returns were not supported byany books of account, or balance sheet. The Assessing Officer treatedthe amount as undisclosed income, and levied tax. In the appeals, fresh evidence was adduced. The recorddiscloses that the procedure prescribed under Rule 46-A of the IncomeTax Rules was not followed. Fresh evidence was in the form of lettersof confirmation from the persons, who are said to have borrowedamount from the co-sisters. They were filed about 40 months after thedate of filing of returns. Rule 46-A of the said Rules stipulates thecircumstances under which additional evidence can be received at thestage of appeal. It cannot be received as a matter of course. TheTribunal found that the Commissioner did not take note of thecircumstances under which, the additional evidence can be received,and the additional evidence ought not to have been taken into account,before us also. In the appeals, fresh evidence was adduced. The recorddiscloses that the procedure prescribed under Rule 46-A of the IncomeTax Rules was not followed. Fresh evidence was in the form of lettersof confirmation from the persons, who are said to have borrowedamount from the co-sisters. They were filed about 40 months after thedate of filing of returns. Rule 46-A of the said Rules stipulates thecircumstances under which additional evidence can be received at thestage of appeal. It cannot be received as a matter of course. TheTribunal found that the Commissioner did not take note of thecircumstances under which, the additional evidence can be received,and the additional evidence ought not to have been taken into account,before us also. Learned counsel for the appellant is not able to substantiate asto how the appellant has proved her case. The raid has taken placeo n 04-09-1992. Her plea could have been accepted only withreference to any document, that existed prior to that date. Filing ofaffidavits three days after the raid can certainly be treated as an effortto justify an otherwise objectionable act. Added to that, the personswho are said to have borrowed the amount also failed to prove thatthey had amounts at their disposal and were lent to their co-sister, i.e.the appellant. At any rate, no substantial question of law arises forconsideration in these appeals. They are accordingly dismissed. The miscellaneous petitions filed in these appeals shall alsostand disposed of. There shall be no order as to costs. __________________________ L. NARASIMHA REDDY, J. __________________________ CHALLA KODANDA RAM,J. Dt.18-11-2014 KONote:LR Copy to be marked. B/O KO