Itta/40/2012 Of The Commissioner Of Income Tax -Vi v. Sri V.bhupal Reddy

THE HON’BLE THE CHIEF JUSTICE SHRI MADAN B.LOKURANDTHE HON’BLE SHRI JUSTICE SANJAY KUMAR W.A.M.P. No. 3018 of 2011andWRIT APPEAL (SR) NO.189093 OF 2011 DATED 26thMARCH, 2012 BetweenPasumarthi Ranganayakulu …Appellant and The Government of A.P., Rep. by itsPrincipal Secretary, Department ofHigher Education, Secretariat,Hyderabad and others. ...Respondents THE HON’BLE THE CHIEF JUSTICE SHRI MADAN B.LOKURANDTHE HON’BLE SHRI JUSTICE SANJAY KUMAR I.T.T.A. No.40 OF 2012 JUDGMENT:(per the Hon’ble the Chief Justice Shri Madan B. Lokur) 1. The Revenue is aggrieved by the deletion of some additionsmade by the Assessing Officer in the order of the Income Tax AppellateTribunal, Hyderabad dated 7.3.2008 in I.T. (SS) A. No.05/Hyd/2004, relevant for the block period 1989-90 to 1990-2000. 2. The assessee is an individual and is a Managing Partner of afirm called M/s. Rukmini 70 MM theatre at Patancheru, Medak District. 3. As a result of search operations conducted on 19.3.1999 at theresidential premises of the assessee and his brothers, certain books ofaccounts were seized along with loose sheets. Thereafter, a notice wasissued to the assessee under Section 158 BC of the Income Tax Act,1961(hereinafter referred to as “the Act”). The assessee filed his return of incomeadmitting nil undisclosed income. 4. The Assessing Officer assessed the undisclosed income of theassessee at about Rs.48.00 lakhs. The Assessing Officer asked theassessee to explain the investments made in the construction of the theatre. 5. We are concerned for the time being, with an amount ofRs.2.00 lakhs said to have been paid by Jagadish to take thetheatre on lease. It appears that at the time of search and seizure operations, the assessee had stated that the aforesaid amount of Rs.2.00 lakhs wastaken from Jagadish for leasing out the theatre to him, but subsequently, theassessee said that the amount was received from one Hanumantha Rao,who had also filed an affidavit to this effect. Neither the Assessing Officer northe Commissioner of Income Tax (Appeals) accepted the version given bythe assessee. 6. In a further appeal filed by the assessee, the Tribunal took theview that merely because Jagadish and Hanumantha Rao were not producedby the assessee before the Assessing Officer, is no ground to reject theexplanation given by the assessee. The Assessing Officer could have issuedsummons to Jagadish or Hanumantha Rao under Section 131 of the Act andrecorded their statements. In view of the fact that the Assessing Officerhimself did not take any trouble to confirm the statement of Hanumantha Rao,which was given on affidavit, the burden cannot be passed on to theassessee. The Tribunal also held that since the unexplained investment issaid to have been made by Jagadish or Huanumantha Rao, the additioncould not have been made in the hands of the assessee. 7. We are in agreement with the view expressed by the Tribunaland see no reason to hold a different opinion. 8. The next item of deletion was an amount of 3.00 lakhs, whichwas said to have been received by the assessee as his share in respect of afamily property surrendered in favour of his brothers. The Assessing Officerwas of the view that this amount was not explained by the assessee and theview of the Assessing Officer was accepted by the Commissioner of IncomeTax (Appeals). 9. The Tribunal, however, took a different view and held thatduring the search operations, the statement of the assessee was recordedand a partition deed was also made available subsequently, which clearlystates that the amount of Rs.3.00 lakhs was the share of the assessee in the 7. We are in agreement with the view expressed by the Tribunaland see no reason to hold a different opinion. 8. The next item of deletion was an amount of 3.00 lakhs, whichwas said to have been received by the assessee as his share in respect of afamily property surrendered in favour of his brothers. The Assessing Officerwas of the view that this amount was not explained by the assessee and theview of the Assessing Officer was accepted by the Commissioner of IncomeTax (Appeals). 9. The Tribunal, however, took a different view and held thatduring the search operations, the statement of the assessee was recordedand a partition deed was also made available subsequently, which clearlystates that the amount of Rs.3.00 lakhs was the share of the assessee in the family partition. There was no evidence produced by the Revenue to showthat this investment made by the assessee was not as a result of a familypartition. We are of the view that since the assessee had produced somematerial before the Assessing Officer, the onus was then on him to bring forthsome material to contradict what was stated by the assessee and whichstatement was supported by documentary evidence. 10. The third deletion that we are concerned with, is an amount ofRs.5.00 lakhs which is said to have been invested in the theatre by Mrs. Saritha Reddy, daughter of the assessee. In this regard also, theTribunal took the view that if at all there was an un-explained investment, thatwas made by the assessee’s daughter and therefore, the addition cannot bemade in the hands of the assessee. On merits also, the Tribunal took a viewin favour of the assessee. But, it is unnecessary for us to go into this aspectof the matter. 11. In view of what has been stated above, it has to be held that thetheatre was constructed by the firm of which the assessee was only themanaging partner and the investments were not made by the assessee in hispersonal capacity, but by the firm towards construction of the theatre. 12. Under the circumstances, we find that essentially questions offact have been raised by the Revenue. In any event, no substantial questionof law arises in this appeal. The appeal is accordingly dismissed. _____________________ MADAN B.LOKUR, CJ. 28[th] MARCH, 2012. ____________________ SANJAY KUMAR, J. pnb