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TMI Blog2019 (7) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... ifaur Rahman, Accountant Member For the Assessee : Shri S. Rama Rao For the Revenue : Shri Dinesh Paduchuri ORDER PER S. RIFAUR RAHMAN, AM: This appeal filed by the assessee is directed against the order of CIT(A) 2, Hyderabad, dated, 30/08/2016 for AY 2007-08. 2. Brief facts of the case are, the assessee, filed its return of income for the AY 2007-08 on 02/12/2009 admitting loss of ₹ 2,46,730/-. Notice u/s 148 was issued based on the observations made by the ITAT, Hyderabad in its order No. ITA No. 79/Hyd/2012 dated 29/11/2013 in the case of Shri Krishna Reddy D.V., who is a partner in the firm M/s SVK Projects. Relying upon the decision of the ITAT, reasons were recorded for reopening the assessment u/s 147 of the Income-tax Ac, 1961 (in short the Act ) and notice u/s 148 of the Act dated 10/11/2014 was issued and served upon the assessee on 09/01/2015. 2.1 Brief facts on reopening of assessment are, there was a search and seizure operation conducted u/s. 132(1) of the Act, 1961 on 29-10-2007, in the case of Sri D. Nagarjuna Rao, partner in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the month of January, 2007. DVKR furnished the details of persons from whom the assessee firm received the funds, and some of them were examined on oath. All the persons (19 persons) have explained and confirmed that they have advanced the funds on various dates to M/s. SVK Projects. 2.3 The assessing officer while completing the assessment in the case of Shri D. V. Krishna Reddy, has made addition of ₹ 2,42,00,000/- u/s. 69 of the Income-tax Act, 1961, with following observation: 5. From the above discussion, it can be seen that all the aforementioned persons claimed to have made the advances in-cash and have failed to furnish documentary evidence in support of their accumulated savings. Further, the bank statements do not show the advancement of cash to the assessee on respective dates and the dates and amounts of withdrawal by above persons do not match with the cash advances claimed to have been made to the assessee. Thus, the details of the said withdrawals are far apart and well ahead of the said cash advances to the assessee. Even in cases where the source of finance is stated to be amounts received from overseas, there is no reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the date of search. Even Shri D. Nagarjuna Rao in his statement admitted that Assessee Shri D. V. Krishna Reddy, promoter of M/s. SCK SSC is also representing M/s. SVK Projects. Assessee also admitted on behalf of M/s. SVK Projects that he has contributed the fund to a large extent in M/s. SVK SSC and he gave details of various persons from whom the funds received by way of cheques and cash and the same were invested in M/s SVK Projects. It is also a fact that ADIT made enquiries with reference to various people, who have admitted the source of funds as well as confirmed that they have invested in M/s. SVK Projects. In spite of explanations and evidence furnished that the amounts were received by M/s. SVK Projects and these funds were withdrawn by the partners and invested in M/s, SVK SSC, the AO considered the amounts in the hands of Assessee on a thin reason that Assessee Shri D. V. Krishna Reddy admitted to have contributed on behalf of the partners. It is obvious that Assessee Shri D. V. Krishna Reddy is acting as a partner in M/s. SVK SSC and its sources of funds are from M/s. SVK Projects. There is not dispute on these facts. The A.O, at best, could have examined the sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ojects, we are of the considered opinion that the amount cannot be added in the hands of Assessee. In view of this, we have no hesitation in deleting the amount in the hands of Assessee. If there is any incriminating material or doubt about sources, revenue is free to enquire in the 'hands of M/s. SVK, if required, but this is only an observation but not a direction. With these observations, addition made in the hands of Assessee stands deleted. 2.6 In view of the order of ITAT, the AO issued Notices u/s. 143(2) and 142(1) of the Income-tax Act, 1961 dated 16-02-15. 2.7 In response to the notice u/s 148, assessee has filed letter dated 09/02/2015. In its letter, the assessee has contended that according to the provisions of Sec. 147 of the I.T. Act, notice u/s. 148 can be issued within six years from the end of the assessment year. The notice is issued for the assessment year 2007-08. The due date for initiating the proceedings u/s. 147 by issue of notice u/s. 148 expired by 31-03-2014. The notice u/s. 148 is not within time. The provisions of Sec. 150 have no application as the Hon'ble Tribunal made it very clear that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued to the assessee on 16/02/2015. The notices were returned by the postal department with remark as left . As the assessee has not furnished the present address, the same notices were served by affixture, at the last known address. As there is no response to the notices u/s 143(2) and 142(1), one more and final opportunity was also provided to the assessee vide this office notice dt.17/06/2015, u/s 142(1), where in it is informed that the assessment will be completed u/s 144 in case of non-compliance to this notice. In spite of sufficient number of opportunities, the assessee did not responded at all. 2.12. Under the above facts circumstances of the case, the AO completed the assessment u/s 144 of the IT Act as follows: The assessee has failed to provide any evidences regarding the existence, identity, address, PAN and creditworthiness of the investors who have invested ₹ 3,00,50,000/- and failed to furnish the documentary evidence in support of their accumulated savings. Therefore, the amount of ₹ 3,00,50,000/- received in cash from the investors is unexplained credit u/s. 68 of the Income-tax Act, 1961 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the addition of ₹ 3,00,50,000/- without considering the detailed explanations submitted before him. 5) The learned CIT(A) ought to have considered the fact that the investment made is from out of the advances received from various persons and necessary evidences were furnished before the Assessing Officer and the learned CIT(A). 6) Any other ground or grounds that may be urged at the time of hearing. 6. Before us, ld. AR brought to our notice the facts relating to the assessment of Mr. D.V. Krishna Reddy and status of appellate proceedings in the above case. He submitted that Hon ble ITAT has deleted the addition made in the hands of Mr. D.V. Krishna Reddy and made observation that revenue is free to enquire in the hands of the assessee if required. It made it clear that it is only observation and not direction. 6.1 Subsequently, AO initiated the proceedings u/s 147 after expiry of 6 years. AO initiated the proceedings by heavily relying on provisions of section 150, whereas Hon ble ITAT has only given their observation, not direction, the provisions of section 150 has no application. He further sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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