JCIT Vs Shri Narayana Reddy Vakati (ITAT Hyderabad)
Conclusion: Additions made on the basis of statement of assessee u/s 132(4) in the hands of assessee ignoring the fact that the seized material belongs to company was not justified as the same were not attributable to the Managing Director for undisclosed and unaccounted income of the Company.
Held: Assessee was the Managing Director of M/s VNR Infrastructure Ltd, having income from salary from the company and other sources. Search and seizure operations were conducted in the case of M/s VNR Infrastructures Ltd and also in the case of its Managing Directors and other Director. During the course of search certain incriminating material pertaining to the company was found at the premises of M/s. VNR Infrastructures Ltd, statement of the Managing Director and the other director and also the statements of other persons were recorded u/s 132(4) of the IT Act. During the course of statement the Managing Director Narayan Reddy. V and other Director Praveen Kumar.G had made disclosures u/s 132(4) amounting to Rs.74,27,47,257/- and Rs.3,00,00,000 Crores respectively, in the hands of company a further amount of Rs.23,80,37,378/- was made, the aggregate disclosure made was at Rs.101 Crores. Assessee admitted an aggregate amount of Rs.74,27,45,257 in his hands during the course of statement u/s 132(4). However, the seized material on which additions were obtained, belonged to the company However, AO had not taken any pain to verify whether the seized material stated in the letter submitted on 14.03.2016 to confirm whether it belonged to the company or to assessee V.Narayan Reddy. The additions were made only on the basis of statement of assessee u/s 132(4) in the hands of assessee ignoring the fact that the seized material belongs to company. It was held that no additions could be made in the assessee/individual’s hands since corresponding undisclosed and unaccounted income pertained to its company M/s. VNR Infrastructure Limited carrying out the business in its own name. ITAT clarified that Revenue had not even indicated the fact above the company’s assessment qua the very incomes.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
These Revenue’s five appeals for Assessment Years 2010-11 to 2014-15 arise from the Commissioner of Income Tax (Appeals)-11, Hyderabad common order dt.27.02.2018 passed in case Nos.130 to 134/2016-17/DCIT-TC-1(3), Hyd/17-18 involving proceedings under Section 143(3) r.w.s. 153A in former four and u/s. 143(3) of the Income Tax Act, 1961 (‘the Act’) in last assessment year; respectively.
Heard the learned department representative. Case files perused.
2. It transpires during the course of hearing that the Revenue’s identical substantive grievance(s) in all these five assessment years plead that the CIT(A) has erred in law and on facts in reversing the Assessing Officer’s action adding unexplained expenditure of 2,55,20,578; Rs.2,22,10,994; Rs.43,94,74,187; Rs.6,53,44,000 and Rs.7,09,61,473 (assessment year-wise) and unexplained income addition of Rs.1 Crore in A.Y. 2013-14 and Rs.2.10 Crore and Rs.4,99,61,473 in A.Y. 2014-15; respectively alleged based on the assessee’s statement recorded during the course of search.
3. The learned department representatives took us to paras 2 to 5 of the CIT(A)’s common lower appellate discussion to the above effect as under :
“ 2. The facts of the case are as under. The appellant, an individual, is MD of M/s. VNR Infrastructures Ltd., derives income from salary. Search in this case was conducted on 23.10.2013. Last authorization for S& S was executed on 19/11/2013. The factual information with regard to date of filing of original return of income, details of income returned in the, etc. are tabulated below for ready reference :-
3. The Assessing Officer made most of the additions as mentioned in column 10 of the table above in the hands of the assessee on substantive basis and in the hands of M/s. VNR Infrastructure Limited on protective
4. Aggrieved over such assessments, the assessee preferred appeals against all these assessment years, viz., AYs 2008-09, 2010-11 to 2014-15 raising the grounds, assessment year-wise, as under :
