ITO, Ward-1, Khammam V. Sri Bojedia Rama Krishna, Khammam Dist

ITA 1030/HYD/2013

• Counselvise Citation: 103022514 RSA 2013
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 27-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M V ANIL KUMAR
• Keywords: Unexplained investment; Gift
• Section: 43B

Judgement Text

1 ITA.NO.1030/HYD/2013 MR. BOJEDLA RAMA KRISHNA, MADHIRA, KHAMMAM DT. IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.1030/HYD/2013 ASSESSMENT YEAR 2009-2010 ITO, WARD-1, KHAMMAM VS. SRI BOJEDLA RAMA KRISHNA MADHIRA, KHAMMAM DIST. PAN AKYPB 8327R (APPELLANT) (RESPONDENT) FOR REVENUE : MR. JEEVAN LAL LAVIDIYA FOR ASSESSEE : MR. MV ANIL KUMAR DATE OF HEARING : 19.02.2014 DATE OF PRONOUNCEMENT : 21.02.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS IS A REVENUE APPEAL AGAINST THE ORDER OF LEARNED CIT(A), VIJAYAWADA DATED 05.04.2013. REVENU E HAS RAISED FOLLOWING GROUNDS : 1. THE ID. CIT(A) ERRED BOTH IN LAW AND ON FACTS OF T HE CASE. 2. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CASE T HE ID. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS.7,89,800/- BY HOLDING THAT IF AT ALL ANY ADDITIO N IS CONTEMPLATED THAT COULD BE IN THE RELEVANT YEAR, BU T NOT IN THE YEAR UNDER CONSIDERATION IGNORING THE FACT T HAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR FIRST T IME FOR THE ASSESSMENT YEAR 2009-10 AND NO EVIDENCE WAS PRODUCED BY THE ASSESSEE FOR THE BROUGHT FORWARD CAPITAL BALANCE. 3. THE ID. CIT(A) FAILED TO CONSIDER THE FACT THAT THE ASSESS HAS PURCHASED AC.2.18 CENTS OF AGRICULTURAL LAND ON 23- 05-2005 ONLY AND NO ACCUMULATED BALANCES OUT OF AGRICULTURAL INCOME OVER LAST 10 YEARS WOULD NOT BE 2 ITA.NO.1030/HYD/2013 MR. BOJEDLA RAMA KRISHNA, MADHIRA, KHAMMAM DT. AVAILABLE TO THE ASSESSEE. 4. THE ID. CIT(A) OUGHT TO HAVE SUSTAINED THE ADDITION TOWARDS OPENING CAPITAL BALANCE AS THE ASSESSEE HAS NOT PRODUCED ANY INFORMATION REGARDING THE OTHER INCOMES OUT OF WHICH THE BALANCE AMOUNT HAS BEEN ACCUMULATED FOR BRINGING INTO THE BUSINESS AS OPENI NG BALANCE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION . 5. RELIANCE IS PLACED ON THE DECISION OF THE MADRAS HI GH COURT IN THE CASE OF C. PACKIRISAMY VS ACIT (MAD) 3 15 ITR 293 WHEREIN REJECTION OF OPENING CAPITAL ON THE GROUND THAT ASSESSEE FAILED TO PROVE SOURCE AND HOW IT GOT ACCUMULATED OVER THE YEARS IS HELD AS JUSTIFIED . 6. THE ID. CIT(A) ERRED IN DELETING THE ADDITION TOWAR DS GIFTS AMOUNTING TO RS.1,35,000/- BY ACCEPTING THE CONFIRMATION LETTERS WITHOUT THERE BEING THE PROOF FOR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. 7. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CASE T HE ID. CIT(A) IS CORRECT IN HOLDING THAT THE ONUS IS DISCHARGED BY THE ASSESSEE AS THE CONFIRMATION LETT ERS ARE NOT HAVING FULL DETAILS CONFIRMING THE GENUINEN ESS OF TRANSACTION. 8. THE ID. CIT(A) ERRED IN DELETING THE ADDITION OF RS.70,100/- TOWARDS DISALLOWANCE U/S.43B AS THE ASSESSEE HAD NOT FURNISHED THE SAME BEFORE THE A.O. AND THE CIT(A) HAS NOT GIVEN AN OPPORTUNITY AS PER RULE 46A OF I.T. RULES. 9. THE ID. CIT(A) ERRED IN RESTRICTING THE DISALLOWANC E TO 5% WITHOUT ANY BASIS INSTEAD OF 10% MADE BY THE AO. 10.THE ID. CIT(A) ERRED IN DELETING THE ADDITION OF RS.35,000/- TOWARDS AGRICULTURAL INCOME AS THE ASSESSEE HAS FAILED TO PRODUCE THE EVIDENCE FOR THE AGRICULTURAL INCOME. 11.ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 3 ITA.NO.1030/HYD/2013 MR. BOJEDLA RAMA KRISHNA, MADHIRA, KHAMMAM DT. 2. BRIEFLY STATED, ASSESSEE IS A DEALER IN SALE O F IMFL AND FILED HIS RETURN OF INCOME FOR THE FIRST TIME O N 03.09.2009 ADMITTING TOTAL INCOME OF RS.2,82,450/- AND AGRICUL TURAL INCOME OF RS.60,000/-. IN THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE HAS NOT COMPLIED WITH MANY NOT ICES, NOT PRODUCED THE BOOKS OF ACCOUNT AND VOUCHERS CLAIMING EXPENDITURE. IN THE ABSENCE OF PROPER CONFIRMATION OR EXPLANATION FOR SOURCES, THE A.O. ADDED THE FOLLOWI NG AMOUNTS: 1. INTRODUCTION OF CAPITAL SHOWN AS BALANCE B/D IN THE CAPITAL ACCOUNT IN THE ABSENCE OF CORROBORATIVE EVIDENCE TREATING IT AS UNEXPLAINED INVESTMENT IN THE BUSINESS. RS.7,89,800/- 2. GIFTS FROM PARENTS & SISTER SHOWN IN THE CAPITAL ACCOUNT IN THE ABSENCE OF CONCLUSIVE PROOF AND CREDITWORTHINESS. RS.1,35,000/- 3. OUTSTANDING EXPENSES U/S.43B IN THE ABSENCE OF DETAILS. RS.70,100/- 4. UNSECURED LOANS IN THE ABSENCE OF EVIDENCE/CONFIRMATION FROM THE CONCERNED LOAN CREDITORS RS.96,000/- 5. DISALLOWANCE OF EXPENSES @ 10% ON RS.5,73,326/- ON ESTIMATE BASIS AS THESE EXPENSES ARE NOT SUSCEPTIBLE FOR VERIFICATION RS.57,332/- TOTAL INCOME ASSESSED RS.14,90,684/- 6. AGRICULTURAL INCOME TREATED AS INCOME RS.35,000/- 3. LD. CIT(A) HAS DELETED ALL THE ITEMS FROM SL.NO . 1, 2, 3 AND 5. HE CONFIRMED THE DISALLOWANCE AT ITEM NO. 4 AS NOT PRESSED AND REDUCED DISALLOWANCE AT 10% TO 5%. HE ALSO DELE TED THE ADDITION OF AGRICULTURAL INCOME AS OTHER INCOME. HIS ORDER O N THESE ISSUES ARE AS UNDER : 4 ITA.NO.1030/HYD/2013 MR. BOJEDLA RAMA KRISHNA, MADHIRA, KHAMMAM DT. 5. I HAVE SEEN THE SUBMISSIONS MADE BY THE APPELLA NT, GONE THROUGH THE ASSESSMENT ORDER BESIDES ALL OTHER INFORMATION AVAILABLE ON RECORD INCLUDING THE CASE LAWS RELIED UPON. THE 6 ADDITIONS MADE BY THE AO ARE CON TESTED, WHICH ARE RESOLVED AS UNDER: 5A. THE FIRST ISSUE IS OPENING CAPITAL BALANCE OF RS.7,89,800. IT IS SUBMITTED THAT OPENING BALANCE I S ACCUMULATION OVER THE YEARS AND THE SAME CANNOT BE CONSIDERED FOR ADDITION IN THE YEAR UNDER CONSIDERA TION. IF AT ALL ANY ADDITION IS CONTEMPLATED, THAT COULD BE IN THE RELEVANT YEAR, BUT NOT IN THE YEAR UNDER CONSIDERAT ION SOUNDS SENSE. SINCE, NO COGENT REASONS WERE GIVEN T HE ADDITION CANNOT BE SUSTAINED AND ACCORDINGLY, THE A O IS DIRECTED TO DELETE THE SAME. 5B. THE SECOND ISSUE IS GIFT FROM PARENTS & SISTER AT RS.1,35,000. IT IS THE CASE OF THE APPELLANT THAT E VEN AFTER THE SUBMISSION OF THE CONFIRMATION LETTERS THE AO M ADE THE ADDITION, WHICH IS OBJECTED TO. FOR CLAIM OF GIFTS, THE ONUS LIES ON THE APPELLANT AND WHEN THE APPELLANT FILES INFOR MATION INCLUDING CONFIRMATION LETTERS, THEN THE ONUS IS DI SCHARGED BY THE APPELLANT AND THE BALL IS THROWN ON THE REVE NUE, WHICH IS EXPECTED TO PROVE IT WRONG WITH COGENT MAT ERIAL, WHICH IS NOT THE CASE HERE. SINCE, THE ADDITION WAS MADE FOR NO VALID REASONS, THE SAME CANNOT BE SUSTAINED AND IT HAS TO BE DELETED AND THE AO IS DIRECTED ACCORDINGLY. 5C. THE THIRD ISSUE IS OUTSTANDING EXPENSES OF RS.70,100. THE APPELLANT'S SUBMISSION THAT OUTSTAND ING EXPENSES REPRESENTING SALARIES OF RS.50,320/- , AUDIT FEE OF RS.5000/- , RENT OF RS.9,100/- AND INTEREST OF RS.5680/- IN ALL AMOUNTING TO RS. 70,100, IN WHICH NONE COMES UN DER THE PROVISIONS OF SEC.43B. HENCE THE ADDITION OF RS.70, 100/- MADE U/S 43B IS UNWARRANTED. ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE SAME. 5D. THE FOURTH ISSUE IS UNSECURED LOANS OF RS. 96, 000. IT IS SUBMITTED BY THE APPELLANT THAT BY THE TIME T HE CONFIRMATION LETTER FROM THE UNSECURED LOAN CREDITO R IS OBTAINED AND SUBMITTED, THE LEARNED ASSESSING OFFIC ER CONCLUDED THE ASSESSMENT PROCEEDINGS BY MAKING ADDI TION OF RS.96,000. BUT HOWEVER, DURING THE APPELLATE PRO CEEDINGS THE AR HAS NOT PRESSED THE SAME AND ACCORDINGLY THE SAME IS CONFIRMED. 5 ITA.NO.1030/HYD/2013 MR. BOJEDLA RAMA KRISHNA, MADHIRA, KHAMMAM DT. 5E. THE FIFTH ISSUE IS DISALLOWANCE OF EXPENSES ESTIMATED @ 10% AMOUNTING TO RS.57,332. THESE EXPENSES PERTAIN TO HEADS LIKE SALARIES, BREAKAGE, MISCELLAN EOUS, FREIGHT CHARGES AND HAMALIES ETC. A LOOK AT ASSESSM ENT ORDER REVEALS THAT THIS ADDITION WAS OBVIOUSLY FOR THE REASON THAT SOME SELF MADE VOUCHERS WERE THERE. NO DOUBT, SELF MADE VOUCHERS FOR SOME EXPENSES ARE INEVITABLE, BUT THE AUTHENTICITY LACKS, HENCE SUSCEPTIBLE FOR MANIPULAT ION. IN ANY CASE IN SUCH A BACKGROUND, I AM OF THE VIEW THA T ENDS OF JUSTICE ARE MET, IF THE DISALLOWANCE IS RESTRICT ED TO 5% AND THE AO IS DIRECTED ACCORDINGLY. 5F. THE SIXTH ISSUE IS AGRICULTURAL INCOME RETURNE D WAS NOT ACCEPTED, BUT ONLY A PART WAS ACCEPTED AND THE REMAINING AMOUNT OF RS. 35,000 WAS TREATED AS INCOM E FROM OTHER SOURCES WITHOUT BRINGING ANY MATERIAL ON RECO RD. IT IS ALSO EXPLAINED BY THE APPELLANT THAT AGRICULTURAL I NCOME IS A YEARLY PHENOMENA, WHICH WAS NOT INTERFERED IN THE P AST. SINCE NO MATERIAL OR REASONS AS TO WHY SUCH A STAND IS TAKEN IS NOT EXPLAINED BY THE AO, THE ACTION OF THE AO CANNOT BE SUSTAINED AND ACCORDINGLY THE AO IS DIRECTED NOT TO MAKE SUCH AN ADDITION AND THAT THE AGRICULTURAL INCOME A S RETURNED. 4. LEARNED D.R. OBJECTED TO DELETING VARIOUS ADDIT IONS BY CIT(A) WITHOUT EVIDENCE OR GIVING OPPORTUNITY TO TH E A.O. HE REFERRED TO THE VARIOUS GROUNDS RAISED BY THE REVENUE. HE AL SO PLACED ON RECORD COPIES OF CONFIRMATION FILED WITH REFERENCE TO GIFTS. 5. LD. COUNSEL PLACED ON RECORD THE BALANCE SHEET AND PROFIT & LOSS ACCOUNT AND SUPPORTS THE ORDER OF CIT (A). 6. HAVING CONSIDERED THE RIVAL CONTENTIONS, PERUSI NG THE ORDER OF LEARNED CIT(A) AND DOCUMENTS ON RECORD, WE ARE OF THE OPINION THAT THE MATTERS RAISED BEFORE US REQUIRE R E-EXAMINATION BY A.O. AS SEEN FROM THE BALANCE SHEET PLACED ON RECOR D, THERE ARE NO IMMOVABLE PROPERTIES, EVEN THE SO-CALLED AGRICULTUR AL LAND PURCHASED IN 2005. AS STATED BY A.O. NO BOOKS OF AC COUNTS OR VOUCHERS ARE FURNISHED. THE CONFIRMATION OF GIFT LE TTERS SIGNED AND FILED ALSO ARE DEVOID OF ANY INFORMATION ABOUT DATE OF GIFT, MODE OF GIFT AND AMOUNT ADVANCED BY EACH PERSON. OPENING CA PITAL CLAIMED ALSO REQUIRE CONFIRMATION ABOUT SOURCES. WE ARE OF THE OPINION THAT 6 ITA.NO.1030/HYD/2013 MR. BOJEDLA RAMA KRISHNA, MADHIRA, KHAMMAM DT. CIT(A) WITHOUT EXAMINING THIS ISSUE, DELETED THEM W ITHOUT PROPER REASONS. WHETHER ASSESSEE HAS ANY OTHER BALANCE SHE ET REFLECTING ASSETS IS ALSO NOT ON RECORD. RULE 46A VIOLATION IS ALSO THERE. FOR THESE REASONS, WE SET ASIDE THE ORDER OF THE A.O. A ND CIT(A) ON THESE ISSUES AND RESTORE IT TO THE FILE OF A.O. TO EXAMIN E COMPLETE ASSESSMENT AFRESH, AFTER GIVING DUE OPPORTUNITY TO ASSESSEE. GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBRUARY, 2014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACOUNTANT MEM BER HYDERABAD, DATE 21 ST FEBRUARY, 2014 VBP/- COPY TO : 1. INCOME TAX OFFICER, WARD-1, KHAMMAM 2. SRI BOJEDLA RAMA KRISHNA, PROP. SRI SAI DURGA WI NES, H.NO.12-416/4, SHOP NO.4, MADHIRA, KHAMMAM DIST RICT. 3. CIT(A), VIJAYAWADA. 4. CIT, VIJAYAWADA. 5. D.R. ITAT, B BENCH, HYDERABAD.