Dy.CIT, Circle-1, Khammam V. Shri Tummalapalli Venkateswara Rao, Khammam Dist.

ITA 101/HYD/2013

• Counselvise Citation: 10122514 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 31-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: CHANDRAMOULESWARA RAO
• Keywords: Unexplained cash credit; Peak credit; Additional evidence
• Section: 68; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 101/HYD/2013 ASSESSMENT YEAR 2005-06 THE DEPUTY CIT CIRCLE-1 KHAMMAM VS. SHRI TUMMALAPALLI VENKATESWARA RAO KHAMMAM PAN: AANPT6525C APPELLANT RESPONDENT APPELLANT BY: SRI RAMAKRISHNA BANDI RESPONDENT BY: SRI CHANDRAMOULESWARA RAO DATE OF HEARING: 01 .1 2 .2014 DATE OF PRONOUNCEMENT: 02. 12.2014 O R D E R PER ASHA VIJAYARAGHAVAN, JM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A), VIJAYAWADA DATED 2.11.2012 FOR ASSESSMENT YEAR 2005-06. 2. FACTS OF THE CASE ARE THAT THE ASSESSEE, SRI TUMMALAPALLI VENKATESWARA RAO IS PROPRIETOR OF M/S. SRI SAI RAM TRANSPORT AND M/S. SRI SAI RAM AUTO FILLING STATION. HE FILED HIS RETURN OF INCOME FOR A.Y. 200 5-06 ADMITTING TOTAL INCOME OF RS. 9,15,000 AND AGRICULT URAL INCOME OF RS. 2,00,000 AND ASSESSMENT U/S. 143(3) O F INCOME-TAX ACT, 1961 WAS COMPLETED ON 20/12/2007 BY DETERMINING THE TOTAL INCOME AT RS. 19,88,650 AND AGRICULTURAL INCOME AT RS. 2,00,000. BASING ON THE ITA NO. 101/HYD/2013 SRI TUMMALAPALLI VENKATESWARA RAO ============================ 2 INFORMATION RECEIVED FROM CIT (CIB) THAT THE ASSESS EE MADE CASH DEPOSITS TO THE TUNE OF RS. 47,58,000 IN ING VYSYA BANK LTD., AS ON 31/03/2005, THE CASE WAS REO PENED AND ASSESSMENT U/S. 143(3) R.W.S. 148 WAS COMPLETED ON 29/12/2009 WHEREIN AN ADDITION OF RS. 77,08,083 WAS MADE TREATING THE CASH DEPOSITS MADE IN ING VYSYA BANK A S UNEXPLAINED CASH CREDITS U/S. 68 OF THE INCOME TAX ACT, 1961. 3. BEFORE THE CIT(A), THE ASSESSEE FILED WRITTEN SUBMISSIONS AND ALSO ADDITIONAL EVIDENCE. THE ASSE SSEE CONTENDED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ACCOUNT COPY OF ING VYSYA BANK WAS CALLED FOR AND THE SAME WAS SUBMITTED BY HIM. WITH REGARD TO THE SOURCES FOR CASH DEPOSITS IN ING VYSYA BANK AND ALSO DETAILS OF TRANSACTION MADE THROUGH ING VYSYA BANK, THE ASSESSEE HAS CONTENDED BEFORE THE ASSESSING OFF ICER THAT HE BEING THE TRANSPORT CONTRACTOR, TO RETAIN H IS REGULAR TRANSPORT CUSTOMERS, HE HAS ALLOWED HIS CUSTOMERS T O CARRY ON BITUMEN PURCHASE THROUGH HIS ON LINE ING V YSYA BANK ACCOUNT. HE STATED THAT THE CASH IS DEPOSITED BY CUSTOMERS IN ING VYSYA BANK ACCOUNT AND THOSE FUNDS WERE UTILIZED FOR PURCHASE OF BITUMEN FOR HIS CUSTO MERS. THIS FACILITY WAS PROVIDED BY THE ASSESSEE TO MEET EMERGENCY REQUIREMENT OF HIS REGULAR TRANSPORT CUSTOMERS. THIS ADD ON FREE SERVICE, TO HIS REGULAR TRANSPORT SERVICE ACTIVITY, ACTS AS INCENTIVE TO HI S CUSTOMERS AND HELPS TO RETAIN THEM. THE ASSESSEE SUBMITTED THAT ING VYSYA BANK IS MAINTAINED EXCLUSI VELY FOR THE PURPOSE OF CUSTOMERS, AS THE TOTAL TRANSACT ION DO NOT RELATE TO THE ASSESSEE, THE ACCOUNT DID NOT FIG URE IN THE ASSESSEE'S BOOKS OF ACCOUNTS AND IN SUPPORT OF HIS CLAIM THE ASSESSEE SUBMITTED THE AVAILABLE BITUMEN INVOIC ES AND ITA NO. 101/HYD/2013 SRI TUMMALAPALLI VENKATESWARA RAO ============================ 3 ALSO COPIES OF THE BANK DEMAND DRAFT APPLICATIONS F OR PURCHASE OF DEMAND DRAFTS IN FAVOUR OF IOC/HPCL. 4. THE ASSESSEE POINTED OUT THAT THE ASSESSING OFFICER BY MERELY STATING THAT 'THE ASSESSEE DID NOT SUBSTA NTIATE HIS ARGUMENT' HAS ADDED THE TOTAL DEPOSITS IN ING V YSYA BANK ACCOUNT TO HIS INCOME. HE FURTHER CONTENDED TH AT THE ASSESSING OFFICER EVEN ADDED THE RETURNED/DISHONOUR ED CHEQUE DEPOSITS ALSO. THE ASSESSEE STATED THAT DUE TO THE CHANGE IN JURISDICTION IN THE ELEVENTH HOUR, THE NE W INCUMBENT HAVING JURISDICTION HAS GOT VERY SHORT TI ME AND COULD NOT PROVIDE THE REQUIRED TIME TO THE ASSESSEE TO SUBMIT THE NECESSARY PAPERS IN SUPPORT OF HIS CLAIM . HE FURTHER SUBMITTED THAT ALL THE DEPOSITS IN THE ACCO UNT ARE CONFIRMED BY THE CUSTOMERS IN THEIR RESPECTIVE AFFI DAVITS. HE REQUESTED TO DELETE THE ADDITION AS THE TOTAL DE POSITS ARE MADE BY CUSTOMERS FOR PROCURING BITUMEN ON THEI R BEHALF AND AS THE DEPOSITED MONEY DOES NOT BELONG T O THE ASSESSEE. 5. THE ASSESSEE CONTENDED THAT EVEN IF IT IS PRESUMED THAT THE ASSESSEE HAS MADE TRADING BUSINESS FROM OU T OF THE CASH DEPOSITS BY CUSTOMERS, ONLY A REASONABLE ESTIMATE HAS TO' BE MADE FROM OUT OF THE TURNOVER O F BANK ACCOUNT AND THE TOTAL ADDITION OF DEPOSITS MADE BY ASSESSING OFFICER IS UNJUST AND UNWARRANTED. THE ASSESSEE FURTHER CONTENDED THAT EVEN THE PEAK CREDI T IS CONSIDERED IN THE BANK ACCOUNT, THE PEAK CREDIT IS ONLY RS. 5,05,127 AND PLEADED THAT THE ADDITION OF TOTAL DEP OSITS IS UNJUST. ITA NO. 101/HYD/2013 SRI TUMMALAPALLI VENKATESWARA RAO ============================ 4 6. THE CIT(A) HELD AS FOLLOWS: 'IN THE COURSE OF APPELLATE PROCEEDINGS, A REMAND REPORT WAS CALLED FOR AND A COPY OF THE SAME WAS GIVEN TO THE ASSESSEE FOR HIS REJOINDER WHICH WAS FILED ON THE DATE OF FINALISATION OF APPELLATE PROCEEDINGS AND MAJOR DISCUSSION TOOK PLACE ON THAT DATE. IT TRANSPIRES FROM THE REJOINDER TO THE REMAND REPORT THAT THE DEPOSITS COULD BE CATEGORISED INTO THREE CATEGORIES VIZ., DEPOSITS MADE BY THE PARTIES AND FOR WHICH THEY HAVE GOT SUPPLY OF MATERIAL AMOUNTING TO RS. 55,83,000 IN THE FIRST PLACE. IN THE SECOND PLACE DEPOSITS MADE BY THE PARTIES AND FOR WHICH THEY HAVE GOT THE MONEY BACK AMOUNTING TO RS. 11,25,000 AND IN THE THIRD CATEGORY CHEQUES DEPOSITED BY THE PARTIES AND WHICH ARE DISHONOURED BY THE BANK AMOUNTED TO RS. 10,00,000. THUS, INSOFAR AS THE CHEQUES WERE DISHONOURED, NO ELEMENT OF INCOME COULD BE ATTRIBUTED . IN THE FIRST AND SECOND CATEGORY OF DEPOSITS, IT COULD BE SAID THAT THE DEPOSITS WERE IN THE COURSE OF TRANSACTIONS AND COULD BE HELD THAT SOME BUSINESS ADVANTAGE ACCRUED AS SUCH MONIES WERE THERE WITH THE ASSESSEE FOR SOME CONSIDERABLE TIME. HENCE THE CONTENTIONS OF THE AR THAT IN THE FIRST CATEGORY MATERIALS WERE SUPPLIED AND IN THE SECOND CATEGORY THE PARTIES GOT BACK THE MONIES DEPOSITED AND AS SUCH NO BUSINESS ADVANTAGE ACCRUED IS NOT TENABLE. IT IS AN UNDISPUTED FACT THAT CASH DEPOSITS WERE AVAILABLE TO THE ASSESSEE FOR CONSIDERABLE PERIOD WHOSE TURNOVER IS THE TOTAL OF FIRST AND SECOND ITEMS AMOUNTING TO RS. 67,08,000 ON WHICH A REASONABLE RETURN COULD BE AROUND 6% AND AS SUCH THE AO IS DIRECTED TO CURB OUT THE INCOME, AS SPELT OUT ABOVE WHILE GIVING EFFECT TO HIS ORDER.' 7. WE HEARD BOTH PARTIES. THE ADDITIONAL EVIDENCE ALONG WITH WRITTEN SUBMISSIONS WAS FORWARDED TO THE ASSESSING OFFICER FOR HIS COMMENTS, WHICH WERE RECE IVED ON 09/06/2011. ITA NO. 101/HYD/2013 SRI TUMMALAPALLI VENKATESWARA RAO ============================ 5 8. WE FIND THAT THE ASSESSING OFFICER HAS VERIFIED ALL THE DEPOSITS AMOUNTING TO RS. 77,08,000 MADE DURING THE YEAR IN THE ACCOUNT DULY CALLING FOR THE REQUIRED INFORM ATION AND EXPLANATIONS. THE LEARNED ASSESSING OFFICER HAS CLA SSIFIED TOTAL DEPOSITS INTO THREE CATEGORIES. 1. DEPOSITS MADE BY THE PARTIES AND FOR WHICH THEY HAVE GOT SUPPLY OF MATERIAL RS. 55,83,000 2. DEPOSITS MADE BY THE PARTIES AND FOR WHICH THEY HAVE GOT THE MONEY BACK RS. 11,25,000 3. CHEQUES DEPOSITED BY THE PARTIES AND WHICH ARE DISHONOURED BY THE BANK RS. 10,00,000 9. THE LEARNED AO HAS STATED AS FOLLOWS: 'THE ASSESSEE HAS SUBMITTED CONFIRMATION LETTERS, AFFIDAVITS AND ACCOUNT COPIES FROM THE PARTIES WHO HAVE DEPOSITED AMOUNTS AND HAVE SUPPLIED MATERIAL. THE ASSESSING OFFICER HAS VERIFIED THE INFORMATION SUBMITTED AND FOUND THEM TO BE IN ORDER AND HENCE HE DID NOT MAKE ANY NEGATIVE COMMENTS ON THE SAME. THE ONLY COMMENT HE HAS MADE THAT THE ASSESSEE COULD NOT PRODUCE ACCOUNT COPIES FROM THE PARTIES WHOSE TRANSACTIONS ARE AMOUNTING TO RS. 7,03,000. THE ACCOUNT COPIES REQUIRED RELATE TO THE FINANCIAL YEAR 2004005, DUE TO LONG PAUCITY OF TIME SOME OF THE PARTIES DID NOT KEEP THE BOOKS OF ACCOUNTS AND HENCE COULD NOT BE GIVEN. BUT CONFIRMATION AND AFFIDAVITS VOUCHSAFING THE TRANSACTIONS WERE GIVEN BY THEM. FURTHER THE ASSESSING OFFICER HAS WRITTEN LETTERS TO INDIAN OIL CORPORATION, CHENNAI, REQUIRING THEM TO CONFIRM THE GENUINENESS OF THE TRANSACTIONS. THE IOC CHENNAI CONFIRMED THE GENUINENESS OF THE TRANSACTIONS. HENCE THE ASSESSING OFFICER DID NOT MAKE ANY NEGATIVE OBSERVATION ON THE GENUINENESS OF TRANSACTIONS AMOUNTING TO RS. 55,83,000. THE ASSESSEE SUBMITTED REGARDING ITA NO. 101/HYD/2013 SRI TUMMALAPALLI VENKATESWARA RAO ============================ 6 DEPOSITS MADE BY TWO PERSONS SRI P. YADAGIRI AND SRI B. RANGA RAO AMOUNTING TO RS. 11,25,000, PARTIES HAS GIVEN AFFIDAVIT AND CONFIRMATION LETTER THAT THEY HAVE DEPOSITED THE AMOUNT AND THE SAME WAS RETURNED TO THEM AS THE MATERIAL COULD NOT BE SUPPLIED DUE TO NON AVAILABILITY OF TRUCKS. THE ASSESSING OFFICER MADE A COMMENT THAT THE ASSESSEE COULD NOT SUBSTANTIATE CLAIM OF RETURNING OF MONEY TO THE PERSONS. THE ASSESSEE SUBMITTED THAT THE PERSONS WHO HAVE GIVEN AMOUNT THEMSELVES HAVE DEPOSED THAT THEY HAVE GOT BACK THE MONEY AND THE ASSESSEE SUBMITTED THAT THERE CAN BE NO MORE AUTHENTICATIONS OTHER THAN THE DEPOSITIONS FROM THE PERSONS WHO HAVE GOT BACK THE MONEY. HENCE EXPECTATION OF FURTHER SUBSTANTIATIONS IS UNJUST AND UNWARRANTED. THE ASSESSEE SUBMITTED THAT REGARDING THE AMOUNTS RELATING TO CHEQUES RETURNED AMOUNTING TO RS. 10,00,000, THE ASSESSING OFFICER HIMSELF CATEGORICALLY ACCEPTED THE RELIEF HAS TO BE GIVEN AS THE AMOUNTS ARE NOT REALIZED IN THE ACCOUNT OF THE ASSESSEE.' 10. WE CONFIRM ORDER OF THE CIT(A) FOR THE REASON THAT CASH DEPOSITS WERE AVAILABLE TO THE ASSESSEE FOR CONSIDERABLE PERIOD WHOSE TURNOVER IS THE TOTAL OF FIRST AND SECOND ITEMS AMOUNTING TO RS. 67,08,000 ON WHICH A REASONABLE RETURN COULD BE AROUND 6%. WE DO NOT FI ND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND THE SAME I S CONFIRMED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 2 ND DECEMBER, 2014. SD/ - (P.M. JAGTAP) ACCOUNTANT MEMBER SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD, DATED 2 ND DECEMBER, 2014 TPRAO ITA NO. 101/HYD/2013 SRI TUMMALAPALLI VENKATESWARA RAO ============================ 7 COPY FORWARDED TO: 1. THE DEPUTY CIT, CIRCLE-1, AAYAKAR BHAVAN, BEIND KINNERSANI THEATRE, RAJIV GUNJ, KHAMMAM. 2. SHRI TUMMALAPALLI VENKATESWARA RAO, PROP.: SRI S AI RAM TRANSPORT, RAM & SAI AUTO FILLING STATION, 4-2-93/1 , ROTARY NAGAR, OPP. MAMATA MEDICAL COLLEGE, KHAMMAM. 3. THE CIT(A), VIJAYAWADA. 4. THE CIT, VIJAYAWADA. 5. THE DR 'A' BENCH, ITAT, HYDERABAD