M. Prabhakar Rao, Nirmal, Hyderabad V. ITO, Ward-1, Nirmal, Nirmal

ITA 1076/HYD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2461 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-02-2018
• Assessment Year: 2005-2006
• Appeal Filed On: 09-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Keywords: Unexplained cash credit; Additional evidence; Corroborative evidences
• Section: 131; 68; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH SMC-B, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 1076/HYD/2016 ASSESSMENT YEAR: 2005-06 M. PRABHAKAR RAO, NIRMAL. PAN ABZPM 3551C VS. INCOME-TAX OFFICER, WARD 1, NIRMAL. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MOHD. AFZAL REVENUE BY : SMT. N. SWAPNA DATE OF HEARING 06/02/2018 DATE OF PRONOUNCEMENT 28/02/2018 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY CIT(A) 5, HYDERABAD AND IT PERTAINS TO AY 2005-06. 2. FOLLOWING GROUNDS WERE URGED BEFORE TRIBUNAL. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-5, IS AGAINST THE LAW, WEIGHT OF EVIDENCE AND PROBABILITIES OF CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN CONFIRMING THE ADDITION OFRS.10,26,852/-, MADE U/S 69 OF THE I T ACT. 3. THE LEARNED COMMISSIONER OF INCOME TAX OUGHT TO HAVE APPRECIATED A SYNDICATE WAS FORMED BY THE ASSESSEE AND OTHER 9 MEMBERS TO OBTAIN THE LICENSE FOR SALE OF IMFL AN D EACH MEMBER CONTRIBUTED RS. 1 LAKH AS HIS SHARE OF CONTR IBUTION, THEREFORE, ERRED IN CONFIRMING THE ADDITION IN THE HANDS OF ASSESSEE, EVEN AFTER THE CONFIRMATION FROM THE RESP ECTIVE PERSONS. 4. THE LEARNED COMMISSIONER OF INCOME TAX OUGHT TO HAVE APPRECIATED THAT THE PERSONS WHO HAVE CONTRIBUTED R S. 1 LAKH 2 ITA NO. 1076 /HYD/2016 M. PRABHAKAR RAO, NIRMAL APPEARED BEFORE THE ASSESSING OFFICER AND CONFIRMED THE TRANSACTION, THEREFORE, ERRED IN CONFIRMING THE ADD ITION. 5. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN ASSUMING THAT THE GENUINENESS OF THE TRANSACTION ARE NOT EST ABLISHED AND THEREFORE, FURTHER ERRED IN CONFIRMING THE ADDITION OF RS.10,26,852/-. 6. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR M ODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIM E OF HEARING OF THE APPEAL, IF IT IS CONSIDERED NECESSARY. 3. FACTS NECESSARY FOR THE DISPOSAL OF THE APPEAL A RE STATED IN BRIEF. ASSESSEE, SHRI M. PRABHAKAR RAO, IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF IMFL. FOR THE AY UNDER CONS IDERATION, HE DECLARED TOTAL INCOME OF RS. 1,24,980/-. SAVINGS BA NK ACCOUNT OF THE ASSESSEE AT SBH SHOWS CASH DEPOSITS OF RS. 19,38,98 0/-, BUT, NO DETAILS REGARDING BANK ACCOUNT WERE FOUND. THEREFOR E, TO BRING TO TAX THE UNEXPLAINED CASH DEPOSITS, NOTICE WAS ISSUED U/ S 148 OF THE ACT, IN RESPONSE TO WHICH, ASSESSEES REPRESENTATIVE APP EARED FROM TIME TO TIME AND SUBMITTED A COPY OF THE BANK STATEMENT. 3.1 ACCORDING TO THE ASSESSEE, DURING THE PERIOD RE LEVANT TO AY UNDER CONSIDERATION, HE INTENDED TO BID FOR EXCISE LICENSE FOR A SPECIFIED AREA IN THE ADILABAD DISTRICT AND FOR THA T PURPOSE HE ALONG WITH 11 OTHER MEMBERS FORMED A SYNDICATE, WHICH IS A COMMON PRACTICE FOLLOWED IN THIS LINE OF TRADE, TO MEET TH E INITIAL DEPOSIT TO BE MADE WITH THE EXCISE DEPARTMENT. THE BID WAS SUBSEQ UENTLY CANCELLED BY THE GOVT. OF AP AND THE AMOUNT WAS RET URNED TO THE ASSESSEE, WHICH IN TURN, WAS RETURNED TO THE MEMBER S OF THE SYNDICATE IN THE MONTH OF APRIL, 2005. IT WAS ALSO SUBMITTED THAT ASSESSEE CONTRIBUTED RS. 3 LAKHS FOR FRESH LICENSE DURING THE YEAR AND SOURCES WERE EXPLAINED AS FROM CURRENT YEAR BUSINES S SALES FROM WINE SHOP AND IN RESPECT OF BALANCE OF RS. 10,26,85 2/-, REFERABLE TO THE CASH DEPOSITS IN HIS ACCOUNT, FOR MAKING DDS IN FAVOUR OF EXCISE DEPARTMENT, ASSESSEE SUBMITTED THAT THE AMOUNT WAS RECEIVED FROM 12 MEMBERS . LD. AR WAS CALLED UPON TO PRODUCE THOS E 12 MEMBERS 3 ITA NO. 1076 /HYD/2016 M. PRABHAKAR RAO, NIRMAL FOR CROSS-EXAMINATION. AR STATED THAT THE WHEREABOU TS OF THOSE PERSONS ARE DIFFICULT TO TRACE OUT AND IT WAS FURTH ER STATED THAT INDIVIDUAL CONTRIBUTION WAS RS. 1 LAKH EACH AND, TH EREFORE, REQUESTED TO COMPLETE THE ASSESSMENT ON AVAILABLE EVIDENCE. AO SUMMONED THOSE PERSONS AT THE ADDRESSES MENTIONED IN THE CHA LLANS PAID TO EXCISE DEPARTMENT, BUT, THE SUMMONS ISSUED WERE RET URNED WITH THE REMARK INCORRECT ADDRESS FROM POSTAL AUTHORITIES. UNDER THESE CIRCUMSTANCES, AO ADDED THE IMPUGNED AMOUNT AS UNEX PLAINED CASH CREDIT AND ASSESSMENT WAS COMPLETED ACCORDINGLY. 3.2 IT MAY BE NOTICED THAT THOUGH THE AMOUNT WAS AD DED AS UNEXPLAINED CASH CREDIT, AO HAS WRONGLY MENTIONED S ECTION 69 AS AGAINST SECTION 68, BECAUSE THE AMOUNT WAS UTILIZED FOR BIDDING OF NEW LIQUOR SHOP. 4. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THAT THE AO HAS NOT SOUGHT ANY FURTHER DETAILS FROM THE ASSESSE E AND ISSUED NOTICE U/S 131 TO SOME OF THE MEMBERS OF THE SAID S YNDICATE, WHICH WERE RETURNED ON ACCOUNT OF NON-AVAILABILITY OF PER SONS AT THE MENTIONED ADDRESS ON ACCOUNT OF BUSINESS COMPULSION . IT WAS ALSO SUBMITTED THAT THE ASSESSEE COULD NOT PRODUCE THE P ERSONS WITHIN A SHORT SPAN OF TIME, WHICH WAS GIVEN BY THE AO. IT W AS FURTHER ADDED THAT A REQUEST WAS MADE FOR GRANT OF TIME TO PRODUC E PERSONS, WHICH WAS NOT CONSIDERED BY THE AO. IT WAS REITERATED THA T THE AMOUNT WAS PULLED BY THE ASSESSEE FROM THE MEMBERS WITH AN INT ENTION TO OBTAIN LICENSE FROM EXCISE DEPARTMENT AND ASSESSEE IS READ Y TO FURNISH PERSONS BEFORE THE AUTHORITIES AT THIS STAGE. 5. FORM NO. 35 FILED BEFORE THE CIT(A) SHOWS THAT T HE ORDER OF THE AO WAS SERVED ON 13/01/2008 WHEREAS THE ASSESSMENT ORDER WAS PASSED ON 31/12/2008 AND THE APPEAL INSTITUTED ON 1 1/02/2009, THEREBY, BARRED BY LIMITATION AND NEITHER ASSESSEE CHOSE TO CORRECT FORM 35 NOR ANY DEFECT APPEARS TO HAVE BEEN POINTED OUT BY THE OFFICE 4 ITA NO. 1076 /HYD/2016 M. PRABHAKAR RAO, NIRMAL OF THE CIT(A). SINCE, CIT(A) PROCEEDED TO DISPOSE OF THE APPEAL ON MERITS, IT IS NOT NECESSARY FOR ME TO GO INTO THE A SPECT OF THE CORRECTNESS OF THE DATES MENTIONED IN FORM 35. 6. IT WAS CONTENDED BEFORE THE CIT(A) THAT 12 MEMBE RS HAVE FORMED A SYNDICATE AND PAID RS. 60,000/- THROUGH AS SESSEES SB ACCOUNT ( RS. 5,000/- EACH). IT WAS SUBMITTED THAT CASH DEPOSITS IN ASSESSEES ACCOUNT FOR MAKING DDS IN FAVOUR OF THE EXCISE DEPARTMENT WAS OBTAINED FROM 12 MEMBERS ONLY, BUT, THE AO COMPLETED THE ASSESSMENT IN A HURRY AND REQUESTED C IT(A) TO ACCORD ONE MORE OPPORTUNITY TO ASSESSEE TO PROVE THE SOURC E OF THE AMOUNT ADDED. THE CASE OF THE ASSESSEE WAS THAT THE AMOUNT BELONGS TO 10 OTHER PERSONS; CONFIRMATION LETTERS WERE FILED IN 2016 - LONG AFTER THE DATE OF FILING OF APPEAL BEFORE THE CIT(A). NONE OF THE CONFIRMATION LETTERS FILED BEFORE THE CIT(A) CONTAINED THE DATE OF OBTAINING CONFIRMATION LETTERS AND THEY ARE STEREO TYPED HAVI NG SAME LANGUAGE AND SAME MISTAKES, SUCH AS, CONFORMATION LETTER. LD. COUNSEL FOR THE ASSESSEE ADMITTED THAT CONFIRMATION LETTERS WER E NOT FILED AT THE TIME OF FILING OF THE APPEAL OR IMMEDIATELY THEREAF TER, BUT, HE ADDED THAT THE APPEAL WAS NOT POSTED FOR HEARING FOR A LO NG TIME AND THUS, HE HAD NO OCCASION TO FURNISH CONFIRMATION LETTERS. 6.1 A REQUEST WAS MADE BEFORE THE CIT(A) TO ADMIT C ONFIRMATION LETTERS UNDER RULE 46A OF THE IT ACT, AS ADDITIONAL EVIDENCE. THERE ARE 9 CONFIRMATION LETTERS, FROM PAGES 18 TO 26 OF THE PAPER BOOK, WHERE ALL OF THEM HAVE STATED THAT THEY ARE DOING AGRICUL TURE AND DURING THE MONTH OF FEBRUARY, 2005 THEY HAVE CONTRIBUTED AN AM OUNT OF RS. 1 LAKH TO SHRI M. PRABHAKAR RAO FOR THE PURPOSE OF MA KING AN APPLICATION FOR ALLOTMENT OF RETAIL SHOP FOR THE SA LE OF IMFL AT ADILABAD BY FORMING A SYNDICATE/GROUP. IT WAS ALSO STATED TH AT THE AMOUNT WAS OUT OF THEIR PERSONAL SAVINGS OR FROM THEIR FAMILY MEMBERS. 5 ITA NO. 1076 /HYD/2016 M. PRABHAKAR RAO, NIRMAL 6.2 IN PARA 6.2 OF HIS ORDER, CIT(A) OBSERVED THAT THOUGH 9 PERSONS HAVE FILED CONFIRMATION LETTERS AT THIS STAGE, IT A MOUNTS TO ADDITIONAL EVIDENCE AND THERE ARE NO REASONS FOR NON-PRODUCTIO N OF SUCH EVIDENCE BEFORE THE AO BUT, AT THE SAME TIME, REDIR ECTED THE AO TO VERIFY THE GENUINENESS OF THE TRANSACTION AS CLAIME D BY THE APPELLANT AND TO SUBMIT THE REPORT. COPIES OF THE CONFIRMATIO N LETTERS WERE ALSO FORWARDED TO AO FOR EXAMINATION. ACCORDINGLY, AO PR OCEEDED TO EXAMINE THE GENUINENESS/ AVAILABILITY OF THE MEMBER S. OUT OF 9 MEMBERS, WHOSE CONFIRMATION LETTERS WERE FILED, COM PLETE ADDRESS WAS PROVIDED ONLY WITH RESPECT TO 5 MEMBERS AND THE AO HAS RECORDED STATEMENTS FROM ALL OF THEM. FOR EXAMPLE, SHRI KETHADI NARESH REDDY STATED THAT HE WAS WORKING AS A DRIVER AND HIS FAMILY CONSISTS OF HIMSELF, HIS WIFE AND TWO CHILDREN AND HIS ANNUAL INCOME AROUND RS. 60,000/-. HE MERELY STATED THAT HE HAS C ONTRIBUTED AN AMOUNT OF RS. 1 LAKH TO SHRI M. PRABHAKAR RAO. HE A LSO STATED THAT HE SOLD A HOUSE AT THAT TIME AND THE AMOUNT WAS GIVEN OUT OF PERSONAL SAVINGS OF HIMSELF AND THE AMOUNT RECEIVED THROUGH SELLING THE HOUSE. HE HAS ADMITTED THAT HE HAS NO BANK ACCOUNT AND THE AMOUNT WAS GIVEN IN CASH. HE CLAIMED TO HAVE NOT KEPT THE RECE IPT WITH HIM AFTER CASH WAS RETURNED BY SHRI M. PRABHAKAR RAO. SHRI M. SUBHASH REDDY HAS ALSO GIVEN SIMILAR STATEMENT WHEREIN HE WAS STA TED THAT HE WAS DOING AGRICULTURE BUT HE HAS NOT SPECIFIED THE EXTE NT OF LAND AND HE ADMITTED THAT HIS INCOME IS AROUND RS. 1 LAKH AND O UT OF PERSONAL SAVINGS HE HAS GIVEN RS. 1 LAKH TO SHRI M. PRABHAKA R RAO. IN FACT, LD. CIT(A) HAS SUMMARISED THE CONTENTS OF THE STATEMENT S OF ALL THE PARTIES IN PARA 6.5 OF HIS ORDER. 7. VIDE REMAND REPORT DATED 11/02/2016, AO SUBMITTE D TO CIT(A) THAT OUT OF 9 CREDITORS, ASSESSEE WAS ABLE TO FURNI SH ONLY 5 ADDRESSES AND ONLY 5 CREDITORS HAVE BEEN SUMMONED ON OATH AND THEIR SWORN STATEMENTS WERE RECORDED. IT WAS ALSO STATED THAT N ONE OF THE CONFIRMATIONS SPEAK OF OF THE DATE OF TRANSFER OF M ONEY AND INVARIABLY ALL THE CONTRIBUTIONS WERE SHOWN TO HAVE BEEN MADE IN CASH. THUS, 6 ITA NO. 1076 /HYD/2016 M. PRABHAKAR RAO, NIRMAL THE SOURCES OF THE CASH DEPOSITS ARE DOUBTFUL/ FICT ITIOUS/NOT GENUINE. IT WAS FURTHER STATED THAT EVEN IF THE SO-CALLED MEMBE RS HAVE GIVEN CASH TO THE ASSESSEE, IT IS IN VIOLATION OF PROVISIONS O F SECTION 269-SS OF THE ACT AND IN FACT ASSESSEE DID NOT FURNISH ANY DE TAILS BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 8. IN THE LIGHT OF THE REMAND REPORT OBTAINED FROM THE AO, ASSESSEE WAS CALLED UPON TO MAKE HIS SUBMISSIONS, A R OF THE ASSESSEE RAISED A LEGAL ISSUE BEFORE THE CIT(A) STA TING THAT THE ADDITION CANNOT BE MADE U/S 68 OF THE ACT IF THE TR ANSACTIONS WERE NOT PROVED TO BE BOGUS AND THE PARTIES HAVE ACCEPTED TH E PAYMENTS TO ASSESSEE. IN THIS REGARD, RELIANCE WAS PLACED UPON A DECISION IN THE CASE OF CIT VS. P. MOHANAKALA & ORS., 291 ITR 278 W HEREIN THE COURT OBSERVED THAT IF AN EXPLANATION IS TENDERED BY THE ASSESSEE, AO HAS TO PROPERLY APPRECIATE THE MATERIAL ON THE BASIS OF ATTENDING CIRCUMSTANCES AVAILABLE ON RECORD AND HE IS REQUIRE D TO FORM AN OPINION OBJECTIVELY. 8.1 REFERRING TO THE SECTION 68 OF THE ACT, THE CIT (A) OBSERVED THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS/IN THE BANK ACCOUNT, INITIAL BURDEN IS UPON ASSESSEE TO PROVE THREE INGR EDIENTS, VIZ., IDENTITY, GENUINENESS AND THE CREDITWORTHINESS OF T HE PARTIES/CREDITORS. HE FURTHER OBSERVED THAT THESE R EQUIREMENTS HAVE TO BE TESTED NOT SUPERFICIALLY, BUT, IN DEPTH HAVING R EGARD TO THE HUMAN PROBABILITIES AND NORMAL COURSE OF HUMAN CONDUCT. I N THAT BACKDROP, HE OBSERVED THAT ALL THE TRANSACTIONS WERE IN CASH AND GENUINENESS OF THE TRANSACTIONS WERE NOT ESTABLISHED. ACCORDINGLY, HE CONFIRMED THE ADDITION MADE BY THE AO. 9. FURTHER AGGRIEVED, THE ASSESSEE IS IN APPEAL BEF ORE THE TRIBUNAL. 7 ITA NO. 1076 /HYD/2016 M. PRABHAKAR RAO, NIRMAL 10. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AO AS WELL AS CIT(A) HAVE WRONGLY MENTIONED THE PROVISIONS OF SEC TION 69 OF THE ACT WHEREAS THE CORRECT PROVISION IS 68 OF THE IT ACT. IT WAS FURTHER SUBMITTED THAT ASSESSEE OBTAINED CONFIRMATION LETTE RS FROM ALL THE PARTIES AND FILED. DUE TO PAUCITY OF TIME, THE PART IES COULD NOT BE PRODUCED. HOWEVER, 5 OUT OF 9 CREDITORS HAVE APPEAR ED BEFORE THE AO AND STATED THAT THEY HAVE CONTRIBUTED SUM OF RS. 1 LAKH AND THEY HAVE ALSO MENTIONED THE SOURCE OF THE AVAILABILITY OF CA SH. BY PLACING RELIANCE UPON THE DECISION OF THE HONBLE HIGH COUR T OF CHHATTISGARH IN THE CASE OF CIT VS. ABDUL AZIZ, [2012] 20 TAXMAN N.COM 137, LD. COUNSEL SUBMITTED THAT WHERE AN AO HAS NOT MADE ANY INDEPENDENT ENQUIRY TO DISPROVE CREDITWORTHINESS OF CREDITORS, AS ESTABLISHED BY AFFIDAVITS AND STATEMENTS OF CREDITORS, ADDITION CA NNOT BE MADE BASED ON SURMISES AND CONJECTURES. IT WAS STRONGLY CONTEN DED THAT ALL THE CREDITORS HAVING ADMITTED PARTICIPATING IN THE TEND ER ALONG WITH SHRI M. PRABHAKAR RAO BY FORMING A SYNDICATE, ADDITION C OULD NOT HAVE BEEN MADE IN THE HANDS OF ASSESSEE. LD. COUNSEL SUB MITS THAT THE CIT(A) HAVING CALLED FOR THE REMAND REPORT, HE WAS NOT JUSTIFIED IN MAKING A STATEMENT THAT THIS IS NOT A FIT CASE FOR ADMITTING ADDITIONAL EVIDENCE. IN FACT, PARTIES HAVE BEEN EXAMINED AND T HEY HAVE ADMITTED HAVING FORMED A SYNDICATE AND HAVING ALSO EXPLAINED THE SOURCE OF AVAILABILITY OF CASH. THUS NO ADDITION IS MAINTAINA BLE IN THE HANDS OF ASSESSEE. 11. LD. DR, ON THE OTHER HAND, SUBMITTED THAT ASSES SEE HAVING DEPOSITED CASH IN THE BANK ACCOUNT AND ADMITTED TO HAVE OBTAINED FROM OTHER MEMBERS OF THE SO-CALLED SYNDICATE, DUTY IS CAST UPON ASSESSEE TO PROVE THE GENUINENESS AND IDENTITY OF T HE PARTIES AND ALSO CREDITWORTHINESS AND EVEN OF ONE OF THE INGRED IENTS IS NOT SATISFIED, ADDITION MADE BY THE AO CANNOT BE QUESTI ONED SINCE SECTION 68 PLACES HEAVY BURDEN ON THE ASSESSEE TO R EBUT ALL THE THREE PRESUMPTIONS. SHE FURTHER SUBMITTED THAT SECTION WA S WRONGLY MENTIONED BY THE AO, BUT, THE FACT REMAINS THAT CIT (A) CORRECTLY 8 ITA NO. 1076 /HYD/2016 M. PRABHAKAR RAO, NIRMAL MENTIONED PROVISIONS OF SECTION 68 OF THE ACT WHILE CONFIRMING THE ADDITION AND THEREFORE, HIS ORDER DOES NOT CALL FOR ANY INTERFERENCE. SHE ALSO REFERRED TO THE STATEMENTS GIVEN BY ONLY 5 MEMBERS, WHICH ARE STEREOTYPED AND NONE OF THEM HAVE ANY BANK ACCO UNT AND THEREFORE NOT MEN OF MEANS TO GIVE SUCH HUGE SUM TO THE ASSESSEE DURING THE PY RELEVANT TO AY 2005-06. SHE, THUS, ST RONGLY RELIED UPON THE ORDER PASSED BY THE CIT(A). 12. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT AO AS WELL AS LD. CIT(A) EXAMINED THE GENUINENESS OF THE CASH CREDITS, THOUG H, AO WRONGLY MENTIONED SECTION 69 OF THE ACT, WHICH WAS CORRECTE D BY THE LD. CIT(A). SECTION 68 IN TURN MANDATES THE ASSESSEE TO DISCHARGE THE INITIAL BURDEN OF PROVING IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CREDITORS. IN THE INSTANT CASE, ASSESSEE DID NO T FURNISH ANY DETAILS BEFORE THE AO, THOUGH, THE CASE WAS POSTED FOR HEAR ING FROM TIME TO TIME FROM JANUARY07 TO DECEMBER08 AND THERE WAS N OTHING ON RECORD TO SUGGEST THAT 12 MEMBERS HAVE FORMED A SYN DICATE AND THEY HAVE, IN TURN, DEPOSITED RS. 1 LAKH EACH IN THE BAN K ACCOUNT OF THE ASSESSEE. THOUGH, ASSESSEE PREFERRED AN APPEAL BEFO RE THE LD. CIT(A), NO CONFIRMATION LETTERS WERE FILED ALONG WI TH APPEAL. IT WAS MERELY STATED THAT THE ASSESSEE IS READY TO FURNISH PERSONS BEFORE THE AUTHORITIES. CONFIRMATION LETTERS, ARE STEREOTYPED CONTAINING THE SAME LANGUAGE/SAME MISTAKES AND NOWHERE THE DATE OF PAYM ENT OF THE SUM AND PROPER SOURCE WAS MENTIONED. THOUGH, LD. CIT(A) STATED THAT AFTER A LONG GAP OF TIME ADDITIONAL EVIDENCE SHOULD NOT BE ADMITTED, BUT, THE FACT REMAINS THAT HE HAS CALLED FOR REMAND REPORT AND HENCE, IT IS NOT NECESSARY AT THIS STAGE TO GO INTO THE CO RRECTNESS OF ADMISSION OF ADDITIONAL EVIDENCE. EVEN AFTER OPPORT UNITY BEING GIVEN TO THE ASSESSEE, BY CALLING FOR THE REMAND REPORT F ROM THE AO, ASSESSEE COULD NOT AVAIL THE SAID OPPORTUNITY AND H E COULD PRODUCE ONLY 5 PERSONS FOR EXAMINATION. 9 ITA NO. 1076 /HYD/2016 M. PRABHAKAR RAO, NIRMAL 12.1 IN THIS BACKDROP I HAVE CAREFULLY EXAMINED THE CONFIRMATION LETTERS. SHRI A. SHRI M. SUBHASH REDDY ADMITTED THA T HE HAS EARNED ANNUAL INCOME OF AROUND RS. 1 LAKH AND HE HAS NOT D ECLARED THE EXTENT OF AGRICULTURAL LAND BEING HELD BY HIM, BUT, THE FACT REMAINS THAT HE DOES NOT HAVE SUFFICIENT MEANS TO PAY A SUM OF RS. 1 LAKH SINCE HIS INCOME IS HARDLY SUFFICIENT TO MEET THE FAMILY EXPENDITURE. SHRI THIPRISH SURESH WAS EARNING INCOME AS A DRIVE R AND IN ORDER TO MAINTAIN FAMILY CONSISTING WIFE AND TWO CHILDREN H IS INCOME IS BARELY SUFFICIENT. THOUGH HE STATED TO HAVE SOLD AGRICULTU RAL LAND, NO PROOF WHATSOEVER WAS FURNISHED IN THAT REGARD. SECTION 68 OF THE I.T. ACT, WAS SUBJECT MATTER OF CONSIDERATION BEFORE THE APPE LLATE COURTS ON NUMBER OF OCCASIONS WHEREIN THE COURTS HAVE OBSERVE D THAT INITIAL ONUS IS UPON THE ASSESSEE TO PROVE NOT ONLY IDENTIT Y AND GENUINENESS OF THE CREDIT, BUT, ALSO CREDITWORTHINESS OF THE CR EDITORS AND SUCH CREDITWORTHINESS HAS TO BE EXAMINED HAVING REGARD T O THE HUMAN PROBABILITIES AND NORMAL COURSE OF HUMAN CONDUCT. 12.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, N ONE OF THEM ADMITTED TO HAVE CONTRIBUTED THE SUMS AND EVEN TILL DATE IT COULD NOT BE SHOWN AS TO WHETHER THEY HAVE MAINTAINED ANY BAN K ACCOUNT WHICH PROVES THAT THE CREDITWORTHINESS OF THE PARTI ES IS DOUBTFUL. SHRI KETHADI NARESH REDDY IS ALSO A DRIVER AND EARNING O NLY INCOME OF RS. 60,000/- AND LIVING WITH HIS WIFE AND TWO CHILDREN. HE HAS NOT FURNISHED ANY SUPPORTING EVIDENCE TO SHOW THAT HE H AS GIVEN RS. 1 LAKH TO ASSESSEE. 12.3 AT BEST THE SOURCE OF SHRI PODDUTURI MANIK RED DY CAN BE ACCEPTED, HAVING REGARD TO THE FACT THAT HE HAS 8 A CRES OF LAND AND IS ALSO WORKING AS COMMISSION AGENT IN BEEDI COMPANY. HE HAS ALSO DECLARED ANNUAL INCOME OF RS. 1.20 LAKHS. BY APPLYI NG THE PRINCIPLES OF PREPONDERANCE OF PROBABILITIES, I AM OF THE VIEW THAT THE AMOUNT STATED TO HAVE GIVEN BY SHRI PODDUTURI MANK REDDY C AN BE ACCEPTED. SIMILARLY, SHRI GANGADHAR WAS STATED TO BE AN AGRIC ULTURIST AND HE 10 ITA NO. 1076 /HYD/2016 M. PRABHAKAR RAO, NIRMAL WAS WORKING AS ACCOUNTANT IN WINE SHOP AND CLAIMED TO HAVE OWNED 2 ACRES OF AGRICULTURAL LAND. HE HAS FILED INCOME T AX RETURNS FOR THE LAST TWO YEARS AND HENCE, THE AMOUNT OF RS. 1 LAKH GIVEN BY HIM TO THE ASSESSEE CAN BE ACCEPTED. UNDER THESE CIRCUMSTA NCES, THE AMOUNTS GIVEN BY THE SAID CREDITORS DESERVE TO BE A CCEPTED AS GENUINE AND WE HEREBY DIRECT THE AO ACCORDINGLY. I N OTHER WORDS, ADDITION OF RS. 2 LAKHS OUT OF THE ADDITION OF RS. 10,26,852/- SUSTAINED BY THE LD. CIT(A), IS HEREBY DELETED. 13. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2018. SD/- (D. MANMOHAN) VICE PRESIDENT HYDERABAD, DATED: 28 TH FEBRUARY, 2018 KV COPY TO:- 1) SHRI M. PRABHAKAR RAO, C/O MOHD. AFZAL, ADVOCAT E, 11-5-465, SHERSONS RESIDENCY, FLAT NO. 402, CRIMIN AL COURT ROAD, RED HILLS, HYDERABAD 500 004. 2) ITO, WARD 1, NIRMAL, ADILABAD DISTRICT. 3) CIT(A) 5, HYDERABAD. 4) PR. CIT 5, HYD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE 11 ITA NO. 1076 /HYD/2016 M. PRABHAKAR RAO, NIRMAL