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TMI Blog2015 (12) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... t the order of the Commissioner of Income-tax(Appeals) 12, Hyderabad dated 29.1.2015 for the assessment year 2006-07, relates to an addition of Rs. 76,545 as income from other sources as against agricultural income declared by the assessee. 4. Briefly, facts are that assessee, an individual, is engaged in the profession as film artist. For the year under consideration, the assessee filed his return of income on 27.7.2006 declaring loss of Rs. 2,84,045, besides agricultural income of Rs. 1,39,945. A search and seizure operation was conducted in case of the assessee under S.132 of the Act on 4.3.2008. Pursuant to the said operation, assessment was completed under S.143(3) vide order dated 31.12.2009, determining the loss at Rs. 1,29,863. Subsequently, again a search and seizure operation under S.132 of the Act was conducted in the case of the assessee on 8.12.2011. Consequent to the said search and seizure operation, as aforesaid, the Assessing Officer issued notice under S.153A of the Act, calling upon the assessee to furnish his return of income. In response to the said notice, the assessee filed his return of income on 31.10.2013 declaring loss of Rs. 1,29,795 besides agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to note that in the assessment order, the Assessing Officer has not referred to any incriminating material found, while disbelieving a part of the agricultural income and treating it as income from other sources. Consequently, it is well settled that if a particular income is subject matter of assessment in an earlier assessment proceedings and stands concluded, it cannot be reopened unless there are incriminating material found as a result of search to show undisclosed income. In this context, we refer to the decision of the Special Bench of the Tribunal in the case of All Cargo Global Logistics Ltd. V/s. DCIT (supra). Admittedly, in the present case, as far as agricultural income is concerned, it has been considered in the original assessment proceedings. Therefore, in the absence of any incriminating material found during the second search and seizure operation conducted on 8.12.2011, to show that agricultural income was inflated, the Assessing Officer cannot consider this issue again in the impugned re-assessment proceedings. Accordingly, we delete the addition of Rs. 76,545 made by the Assessing Officer treating part of the agricultural income declared as income from other s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2008-09, agricultural income of Rs. 63,400 only was accepted, called upon the assessee to explain as to why the excessive agricultural income shown should not be treated as income from other sources. Though the assessee explained objecting to the disallowance of part of agricultural income, the Assessing Officer observing that the assessee has failed to produce evidence to show the variety of crops, details of agricultural activity carried on, etc. restricted the agricultural income to Rs. 63,400 and treated the balance amount of agricultural income of Rs. 1,44,360 as income from other sources. 15. Assessee challenged this disallowance of part of agricultural income before the CIT(A), who, however, sustained the disallowance made by the Assessing Officer. Hence, assessee is in second appeal before us on this issue. 16. We have considered the submissions of the parties and perused the material on record. As could be seen, though the extent of agricultural land holding of the assessee, i.e. 3.95 acres remained the same all through, the income declared by the assessee varied from year to year. It is, however relevant to note, the fact that the assessee has earned agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded sale consideration to all the owners who have entered into agreement with EHTPL. Also relying upon the assessment of EHTPL , he observed that the department in exercise of power under S.133(6) of the Act has gathered substantial information from some of the plot owners of EHTPL, who have accepted paying additional amounts ranging from Rs. 5,000 to Rs. 17000 per sq. yard over and above the agreed price of Rs. 5,000 per sq. yard recorded in the sale deed. In this context, the Assessing Officer referred to the information obtained from some of the plot owners wherein they accepted of having paid consideration over and above the amounts recorded in the registered sale deeds. He further observed that in the appellate proceedings in the case of EHTPL, additional evidence brought in the form of charge-sheets and supplemental charge sheets filed by the CBI, also revealed that buyers of plots have paid on money in addition to the recorded sale consideration. Thus, on the basis of the statement of Shri Tummala Ranga Rao and the information gathered from certain buyers of plots, the Assessing Officer observed that assessee's version that he has not paid any on money towards purchase of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Assessing Officer relating to the alleged payment of onmoney, nor the statement recorded from Shri T.Ranga Rao were supplied to the assessee. He submitted that even though during the course of assessment proceedings, the assessee has specifically asked for cross-eamination of Shri T.Ranga Rao, the Assessing Officer without allowing the assessee to cross examine, has made the addition solely relying upon the statement of Shri T.Ranga Rao. In this context, he referred to the letter dated 13. March, 2014 filed before the Assessing Officer. Thus, he submitted that addition made by the Assessing Officer relying upon information/material gathered without supplying the same to the assessee is in violation of rules of natural justice, and hence, the assessment made has to be struck down. In this context, he relied upon the decision of the Hon'ble Supreme Court in the case of Andaman Timber Industries V.s. CCE (Appeal No.4228 of 2006). 21. The Learned Departmental Representative, on the other hand, submitted that the information gathered by the Assessing Officer clearly revealed that on-money was paid by the assessee for purchasing the Villa. However, the Learned Departmental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er nor even subsequently no material has been brought on record to show what exactly is the information/evidence, which indicated that assessee has paid the on money of Rs. 1,99,20,000. Further, the investigation results of CBI as well as statement of Shri T.Ranga Rao which have been followed by way of charge sheets and supplementary charge sheets, though heavily relied upon by the Assessing Officer, but admittedly they were not supplied to the assessee. Even the Learned Departmental Representative accepts the aforesaid factual position. Though in the course of assessment proceedings there is no fetter on the Assessing Officer to conduct any enquiry or investigation as found necessary for ascertaining the real nature of transaction or income, at the same time, it is salutary principle of law that any adverse material gathered by him, which he proposes to utilise against the assessee, must be confronted to the assessee for allowing him an effective opportunity of rebuttal. This is in keeping with the principle of natural justice that no person should be condemned without giving a fair opportunity of hearing. In the present case, though the basis for addition is the statement recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey. Further, through a process of investigation, CBI has found irregularities in the activities of EHTPL and submitted charge sheet(s). As the statement of Srhi T.Ranga Rao, the entire charge sheet(s) filed by CBI and information gathered by the department through enquiry have not been brought on record before us either by assessee or department, we are unable to examine the extent of assessee's involvement, if at all, in the irregularities alleged by CBI or whether the assessee has also been implicated by the investigation agency or any other person. Therefore, in our view, issue relating to payment of on-money requires to be examined afresh by Assessing Officer after confronting evidence/material sought to be relied upon to the assessee and seeking his response on them. The Assessing Officer must also disclose to the assessee the material/information on the basis of which he has quantified the on-money payment of Rs. 1,99,20,000. If the Assessing Officer is able to establish on the basis of evidence gathered that the assessee has paid onmoney to the extent quantified by him, then he can make the addition under S.69B. On the flip side, if there is no evidence available on record t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving that such amount is towards personal user. The CIT(A) also confirmed the said disallowance made by the Assessing Officer. 30. Having considered the submissions of the parties and perused the material on record, we are of the view that the nature of expenditure claimed demonstrate that there would be some amount of personal element in the same, and hence, certain disallowance is warranted. We find that the disallowance worked out at 20% made by the Assessing Officer is reasonable, and the CIT(A) was therefore, justified in sustaining the same. We accordingly uphold the orders of the Revenue authorities on this issue, and reject this ground. 31. In the result, this appeal of the assessee is treated as partly allowed. ITA No.56/Hyd/2015 : Assessment year 2010-11 ITA No.57/Hyd/2015 : Assessment year 2011-12 ITA No.58/Hyd/2015 : Assessment year 2012-13 32. In these three appeals directed against similar but separate orders of the learned Commissioner of Income-tax(Appeals)-12, Hyderabad, dated 28.11.2014 for the assessment years 2010-11 and 2011-12 and dated 12.12.2014, the first common effective ground relates to the additions made treating part of agricultural income dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted in the case of Shri Jetti Venakta Phanindra Reddy, producer of the Film 'Businessman' certain incriminating material in the form of loose sheets were found and seized. As per the seized material, over and above the payments received in cheque towards remuneration for acting in the film 'Businessman', assessee had been paid cash of Rs. 2 crores. Whereas it was noticed by the Assessing Officer, assessee had only shown remunrati0on of Rs. 4.87 crores, received in cheque from the movie 'Businessman' without disclosing the amount of Rs. 2 crore in cash as revealed from seized material. The Assessing Officer, therefore, issued summons to both assessee and the producer Shri j.V.Phanindra Reddy. As observed by Assessing Officer, both assessee and Shri Reddy flatly denied of any payment having been made in cash over and above the cheque payments. Assessing Officer, however, disbelieved the statements of assessee and Shri Reddy. He observed that when the cheque payments recorded in the seized material was accepted as correct, cash payments recorded cannot be denied. He further observed, in view of the specific provision of S.292C presumption could be, the contents of seized materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have also examined the decisions cited at the Bar. Undisputedly, the basis for the addition of Rs. 2 crores as undisclosed income is a loose sheet seized not from the assessee, but from a third party, who happens to be producer of a movie in which assessee has acted. On a perusal of the said seized document, a copy of which is at page 3 of the paper-book, we find it contains cash payments made to some persons, one amongst them being the assessee. Admittedly, apart from this document, no other evidence/material was found or has been brought on record to demonstrate that cash payment of Rs. 2 crore was actually made to assessee. More importantly, even though a search operation was also carried out in the case of assessee, no incriminating material was found. It is also a fact on record that pursuant to summons issued, both the assessee as well as the producer of the movie appeared before the Assessing Officer and denied of having made any cash transaction as recorded in the seized document. In fact, a confirmation letter obtained from the producer stating therein that entire remunerations are paid in cheques was also submitted before the Assessing Officer. Further, remuneration rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n : Assessment year 2009-10 ITA No.393/Hyd/2015 & CO No.27/Hyd/2015 therein : Assessment year 2010-11 ITA No.394/Hyd/2015 & CO No.28/Hyd/2015 therein : Assessment year 2011-12 ITA No.395/Hyd/2015 & CO No.29/Hyd/2015 therein : Assessment year 2012-13 42. Common issue involved in all these appeals of the department relates to levy of interest under S.234A and 234B of the Income Tax Act, 1961. Assessee has also filed cross objections in these appeals raising some technical issues. 43. Having considered the rival submission of the parties and perused the material on record, in the light of the relevant statutory provisions as well as judicial precedents cited, we are of the view that in so far as the appeals for the assessment years 2009-10 to 2011-12 are concerned, the orders of the learned first appellate authority on the issue is in accordance with statutory provisions hence, they call for no interference. Accordingly, we uphold the decision of the learned CIT(A) for those years and dismiss the appeals of the Revenue. 44. As for the appeal for assessment year 2012-13, viz. ITA 395/Hyd/2015, it is a regular assessment under S.143(3) of the Act. Therefore, in our view, inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew is totally misplaced. Therefore, we do not find any infirmity in the order of the learned CIT(A) in directing the Assessing Officer to give credit to the TDS of Rs. 5 lakhs. This ground of the Revenue is also rejected. 49. In the light of the above discussion, appeals of the Revenue for assessment years 2009-10 to 2011-12 are dismissed and for assessment year 2012-13 is treated as partly allowed. 50. As far as assessee's cross objections are concerned, in view of our decision in department's appeals, they have become infructuous, hence dismissed. 51. To sum up:- (a) Out of assessee's appeals, a. Appeal for assessment year 2006-07, being ITA No.256/Hyd/2015, is allowed and appeal for assessment year 2007-08, being ITA No.286/Hyd/2015, is dismissed. b. Appeals for assessment years 2009-10 to 2012-13, being ITA Nos.55 to 58/Hyd/2015, are partly allowed; (b) Out of Revenue's appeals (i) Appeals for assessment year 2009-10 to 2011-12, being ITA Nos.392 to 394/Hyd/2015, are dismissed; (ii) Appeal for assessment year 2012-13, being ITA No.395/Hyd/2015, is treated as partly allowed. (c) Cross Objections of the assessee, being CO Nos.26 to 29/Hyd/2015, being infructuous ..... 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