Smt. V. Bangaramma, Hyderabad V. ITO,Ward 13(3), Hyderabad

ITA 1161/HYD/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5880 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 19-10-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 09-06-2014
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: A V RAGHURAM
• Keywords: Peak credit
• Section: 143(3)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1161/HYD/2014 ASSESSMENT YEAR: 2007-08 SMT. V.BANGARAMMA, HYDERABAD PAN ACZPV 9376M VS. THE INCOME TAX OFFICER, WARD 13(3), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.V. RAGHU RAM REVENUE BY : SHRI K.J. RAO DATE OF HEARING : 23-11-2016 DATE OF PRONOUNCEMENT : 30-12-2016 ORDER PER P. MADHAVI DEVI, J.M.: IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(A)-V, HYDERABAD, DATED 13-01-2014 UPHOLDING THE DISALLOWANCES AND CONSEQUENTIAL ADDITIONS TO THE EXTENT OF RS. 54,90,000/- AS UNEXPLAINED DEPOSITS. THE ASSESSEE AL SO RAISED AN ALTERNATIVE GROUND THAT, THE PEAK CREDIT SHOULD BE CONSID ERED FOR THE PURPOSE OF ADDITION. 2. FOR THE SAKE OF CLARITY, THE GROUNDS OF APPEAL AS RAISED BY THE ASSESSEE ARE REPRODUCED HERE UNDER: 1. THE ORDER OF THE LEARNED CIT(AL IS NOT ONLY ERR ONEOUS BOTH ON LAW AND N FACTS IS VOID ABINTIO HAVING BEEN PASSED AFTER LAPSE OF SUBSTANTIAL TIME AFTER HEARING AND SERVED BY ANTEDA TING THE ORDER. 2. THE LEARNED CIT(AL ERRED IN HOLDING THAT THE DEP OSITS AMOUNTING TO 54,90,000 AS UNEXPLAINED WITHOUT CONSIDERING THE DETAILED 2 ITA NO. 1161/HYD/2014 SMT. V. BANGARAMMA, HYD. SUBMISSIONS THAT ARE MADE AGAINST THE REPORT OF THE ADDL CIT, BANGALORE AND THEREBY ERRED IN CONFIRMING THE ADDIT ION. 3. THE LEARNED CIT(AL FAILED TO APPRECIATE THAT THE MATERIAL COLLECTED BY THE DEPARTMENT AT BANGALORE CLEARLY DEMONSTRATE THAT THE ASSESSEE HAS GOT NOTHING TO DO WITH THE BANK ACCOUN T AT BANGALORE AND THAT THE SAME WAS OPERATED BY THE COMPANY VSL M INING AND THEREBY ERRED IN HOLDING THAT THE DEPOSITS MADE IN SUCH BANK ACCOUNT TO BE BELONGING TO ASSESSEE AND UNEXPLAINED . 4. ALTERNATELY THE LEARNED CIT(AL OUGHT TO HAVE APP RECIATED THAT THE WITHDRAWALS OF THE AMOUNT OF RS.ONE CRORE ALLEGED T O HAVE BEEN ADVANCED AS LOAN AND RECEIVED BACK BY VSL MINING WA S AVAILABLE FORMAKING DEPOSITS AND OUGHT TO HAVE DELETED THE AD DITION. 5. THE LEARNED CIT(AL FAILED TO APPRECIATE THAT THE FACTS OF THE ASSESSEE CASE IS SIMILAR TO THAT OF SMT P.K.NOORJEH AN REPORTED IN 237 LTR 570 AND THEREFORE OUGHT TO HAVE DELETED THE ADDITION. 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 3. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS NOT INTERESTED TO PURSUE GROUND OF APPEAL NO.1 AND THIS GROUND IS THEREFORE REJECTED AS NOT PRESSED. 4. AS FAR AS GROUND NO. 2 AND 3 ARE CONCERNED, BRIE F FACTS ARE THAT THE ASSESSEE, A RETIRED EMPLOYEE OF BSNL, HAS FILE D HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 23-07-20 07, ADMITTING TOTAL INCOME OF RS.1,28,170/-. DURING THE AS SESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE A.O. OBSERVED TH AT THERE WERE HUGE AMOUNTS DEPOSITED INTO THE ASSESSEES BANK A CCOUNT IN INDIAN BANK, RAJAMAHAL VILAS EXTN, BANGLORE. HE OBSE RVED THAT OUT OF THE TOTAL OF THESE DEPOSITS, DEPOSITS TO THE EXTENT OF RS. 54,90,000/-, WERE BY WAY OF CASH. THE ASSESSEE WAS THEREFORE, ASKED TO EXPLAIN THE SOURCES FOR THESE DEPOSITS. THE ASSESSEE CLARIFIED THAT THESE DEPOSITS WERE MADE BY M/S VSL MIN ING CO. PVT. LTD., WHO HELPED HER IN GETTING THE COMPENSATION FRO M M/S. MINAS-E-MINERALS DE-GOA PVT. LTD,. IN THE SWORN STATEME NT 3 ITA NO. 1161/HYD/2014 SMT. V. BANGARAMMA, HYD. RECORDED DURING THE SCRUTINY PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE MONEY DOES NOT BELONG TO HER BUT IT BELONGS TO M /S VSL MINING CO. PVT. LTD., WHO HELPED HER TO OPEN THE ACCOUN T, AND THAT THE MONEY WAS ALSO WITHDRAWN BY THEM ONLY BY USIN G THE CHEQUES SIGNED BY THE ASSESSEE AND GIVEN TO THEM. TH E A.O. HOWEVER, WAS NOT CONVINCED WITH THE ASSESSEES CONTENTIO NS AND BROUGHT THE ENTIRE CASH DEPOSITS AMOUNTING TO RS. 54,9 0,000/- TO TAX AS UNEXPLAINED INCOME OF THE ASSESSEE UNDER THE HE AD INCOME FROM OTHER SOURCES. ON APPEAL, THE CIT(A) CONFIRMED THE ORDER OF THE A.O AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 5. THE LD COUNSEL FOR THE ASSESSEE, WHILE REITERATING THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AUTHORITIE S BELOW, HAS BRIEFLY EXPLAINED THE FACTS OF THE CASE LEADING TO THE ABOVE ADDITION AS UNDER:- (1). THE MINING LEASE OPERATIONAL FROM 10-06-1954, W AS RENEWED BY THE GOVT. OF KARNATAKA IN FAVOUR OF ONE SHRI K.C.TH IMMA REDDY, FOR A PERIOD OF 10 YEARS BY LETTER DATED 20.0 3.1991 SUBJECT TO OBTAINING CLEARANCE UNDER FOREST CONSERVATION ACT, 19 80. (II). ON 29-11-1991, SHRI K.C. THIMMA REDDY, TRANSFE RRED THE MINING LEASE IN FAVOUR OF M/S. SRI SANTHIPRIYA MINER ALS PVT. LTD (SSMPL), WHICH WAS OWNED BY THE ASSESSEE ALONG WITH HER HUSBAND AND TWO OTHER INDIVIDUALS. THE AREA OF MINI NG WAS ON AN EXTENT OF 80.94 HECTORS AS MENTIONED IN THE AGREEMENT. (III). THE LEASE EXTENDED ON 10-06-1984 FOR A PERI OD OF 10 YEARS WAS EXPIRING ON 10-06-1994 AND SSMPL, VIDE LETTER DA TED 17-05- 1993 APPLIED FOR RENEWAL OF LEASE. SSMPL ALSO MOVED A WRIT PETITION BEFORE THE HONBLE HIGH COURT OF KARNATAKA, AGA INST THE NOTICE OF THE DY. CONSERVATOR OF FOREST DEPARTMENT, BELL ARY, TO 4 ITA NO. 1161/HYD/2014 SMT. V. BANGARAMMA, HYD. STOP WORKING ON MINES FOR ALLEGED NON-COMPLIANCE OF FOREST ACT OF 1980. (IV). ON 06-09-1994, AN MOU WAS ENTERED INTO BY SRI V. NARASARAJU (ASSESSEES HUSBAND) AND THE ASSESSEE HE REIN REPRESENTING SSMPL WITH M/S. MINAS-E-MINERALS DE-GOA PVT. LTD., ACCORDING TO WHICH THE SHARES OF SSMPL WERE AGR EED TO BE TRANSFERRED AT RS. 225 PER SHARE AND THE TOTAL PRICE WAS AGREED AT RS. 90,30,000 AND RS. 20,00,000 WAS PAID AS ADVANCE AND BALANCE WAS TO BE PAID SUBJECT TO FULFILMENT OF CERTAIN CONDITIONS SUCH AS GETTING THE CLEARANCE UNDER THE FOREST CONSERVATI ON ACT ETC. THE ASSESSEE AND HER HUSBAND WERE TO CONTINUE IN SSMPL TILL ALL THE TERMS OF THE MOU WERE EXECUTED. (V). SINCE THE TERMS AND CONDITIONS COULD NOT BE FULF ILLED, THE MOU WAS NOT EXECUTED AND A SUIT IN OS NO. 51/2005 WAS FILED BY M/S MINES-E-MINERALS DE-GOA PVT. LTD., AGAINST THE ASSE SSEE AND ONE OTHER PERSON (SRI SYERI SAMIULLA) IN THE CAPACITY OF THE GPA HOLDER OF THE ASSESSEE FOR INJUNCTION AGAINST THE ASSES SEE, AS THE ASSESSEE WAS SEEKING DUES FROM M/S MINAS-E-MINERALS DE-GOA PVT. LTD. ON 20-08-2008, THE HONBLE CIVIL JUDGE PASS ED AN ORDER DECLINING TO GRANT INJUNCTION AGAINST THE ASSESSEE. 6. THE CASE OF THE ASSESSEE IS THAT (SRI SYERI SAMIULL A) BACKED BY M/S. VSL MINING CO. PVT. LTD. HAS APPROACHED THE AS SESSEE WITH A PROPOSAL THAT HE WOULD HELP HER OUT IN RECOVERI NG HER DUES FROM M/S MINAS-E-MINERALS DE-GOA PVT. LTD., AND IN ITS OWN INTEREST IN THE MATTER. AS THE ASSESSEE WAS HELPLESS AFT ER THE DEMISE OF HER HUSBAND, SHE TOOK THE HELP OF M/S VSL M INING CO. PVT., LTD., AND SRI SYERI SAMIULLA TO FIGHT AGAINST THE M /S MINAS- E-MINERALS DE-GOA PVT. LTD., AND IN THAT PROCESS, M/S VSL 5 ITA NO. 1161/HYD/2014 SMT. V. BANGARAMMA, HYD. MINING CO. PVT. LTD. INSISTED THAT THE ASSESSEE SHOULD OP EN A BANK ACCOUNT FOR EASY FACILITATION AND ADMITTEDLY HAS ALSO INTRODUCED THE ASSESSEE TO INDIAN BANK, BANGLORE, FOR OPENING THE BANK ACCOUNT IN BANGLORE. IT IS STATED THAT THE SAID CO MPANY HAS TAKEN SIGNED BLANK CHEQUES FROM THE ASSESSEE AND ROUTE D ITS UNACCOUNTED MONEY THROUGH THE ASSESSEES ACCOUNT WHICH IS THE SOURCE FOR THE DEPOSIT OF RS. 54,90,000/- IN CASH. I T IS SUBMITTED THAT THE ASSESSEE WAS NOT AWARE OF THE SAID TRANSACTIONS UNTIL IT WAS POINTED OUT BY THE A.O. TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. IT IS SUBMITTED THAT IN THE YEAR 2 006, THE SUIT WAS SETTLED AND THE ASSESSEE RECEIVED THE CONSID ERATION OF ABOUT RS. 45,00,000/-, WHICH WAS OFFERED TO TAX AS CAP ITAL GAINS IN THE REVISED COMPUTATION FILED IN THE COURSE OF ASSES SMENT PROCEEDINGS. 7. THUS, ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE , THE CASH DEPOSITS WERE MADE BY M/S VSL MINING CO. PVT. LTD. AND WERE ALSO WITHDRAWN BY M/S VSL MINING CO. PVT. LTD. AND IS NOT THE INCOME OF THE ASSESSEE AND CANNOT BE BROUGHT TO TAX IN HER HANDS. 8. THE LD. COUNSEL FOR ASSESSEE HAS SUBMITTED THAT THE FACT THAT THERE ARE DEALINGS BETWEEN THE ASSESSEE AND M/S VS L MINING CO. PVT. LTD. AND ALSO THAT M/S VSL MINING CO. PVT. LTD. HAS INTRODUCED THE ASSESSEE FOR OPENING THE BANK ACCOUNT AT BANGALORE, ARE ADMITTED BY THE FINANCIAL MANAGER OF M/ S VSL MINING CO. PVT. LTD.,. HE HAS DRAWN OUR ATTENTION TO PA GE 142 OF THE PAPER BOOK, WHEREIN THE SAID STATEMENT IS RECORDED BY THE REVENUE AUTHORITY HE HAS ALSO DRAWN OUR ATTENTION TO PA GE 120 OF THE PAPER BOOK WHICH IS THE REPORT OF THE COMMISSIONER OF INCOME TAX, BANGLORE, WHO HAS SUMMARISED THE STATEMENT OF THE FINANCE 6 ITA NO. 1161/HYD/2014 SMT. V. BANGARAMMA, HYD. MANAGER OF M/S VSL MINING CO. PVT. LTD., TO THE ABOVE E FFECT. HE HAS ALSO DRAWN OUR ATTENTION TO PAGE 149 OF THE PAPER BOOK WHICH IS THE COPY OF THE DEPOSIT VOUCHER, ON THE REVERSE SIDE OF WHICH IS THE NAME OF THE DEPOSITOR MR. SRINIVASA RAO, WHO IS A LLEGEDLY THE EMPLOYEE OF M/S VSL MINING CO. PVT. LTD., AND HAS DRA WN OUR ATTENTION TO THE TELEPHONE NUMBER OF THE SAID PERSON WRI TTEN ON THE SAID REVERSE SIDE OF THE PAYING SLIP. THUS, ACCO RDING TO HIM, THE ASSESSEE HAS PROVED BEFORE THE A.O. AND THE CIT(A ), THAT THE CASH DEPOSITS AND SUBSEQUENT WITHDRAWALS WERE BY M/S V SL MINING CO. PVT. LTD., ONLY AND THE ASSESSEE HAS NOTHI NG TO DO WITH THE SAID AMOUNT. ACCORDING TO THE LD. COUNSEL FOR ASSE SSEE, AUTHORITIES BELOW HAVE FAILED TO CARRYOUT NECESSARY VE RIFICATION AND HAVE SIMPLY MADE THE ADDITION IN THE HANDS OF THE ASSESSEE WITHOUT ANY CLINCHING EVIDENCE AGAINST THE ASSESSEE. 9. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE FACT THAT THERE WERE CASH DEPOSITS INTO THE BANK ACCOUNT OF THE ASSESSEE AT INDIA N BANK ITSELF PROVES THAT THE INCOME BELONGS TO THE ASSESSEE AN D PARTICULARLY AS THE SUBSEQUENT WITHDRAWALS ARE BY WAY OF CHEQUES SIGNED BY THE ASSESSEE. THUS, ACCORDING TO HER, THE ORDERS OF THE AUTHORITIES BELOW NEED TO BE CONFIRMED. 10. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATER IAL ON RECORD, WE FIND THAT UNDISPUTEDLY THERE WERE HUGE CASH DEPOSITS INTO THE BANK ACCOUNT OF THE ASSESSEE IN INDIAN BANK A T BANGALORE. IT IS ALSO NOT DISPUTED THAT THE ASSESSEE HAD BEEN INTRODUCED TO INDIAN BANK BY M/S VSL MINING CO. PVT. L TD. THEREFORE, THERE IS NECESSARILY SOME SORT OF A CONTRAC T OR AN AGREEMENT BETWEEN ASSESSEE AND M/S VSL MINING CO. PV T. LTD.,. THIS FACT IS FURTHER PROVED BY THE FACT THAT M/S VSL MIN ING CO. 7 ITA NO. 1161/HYD/2014 SMT. V. BANGARAMMA, HYD. PVT. LTD. HAS PAID A SUM OF RS. ONE CRORE TO THE ASSESS EE FOR TAKING OVER THE MINING RIGHTS AND SUBSEQUENTLY, THE ASSESSEE HAS ALSO RETURNED THE SAID SUM TO M/S VSL MINING CO. PVT. LTD. B Y CHEQUES. THESE ABOVE DEPOSITS AND THE RETURN OF THE AD VANCES HAS BEEN DONE THROUGH THE BANK ACCOUNT AT INDIAN BANK, BANGLORE. THE SUIT FILED BY M/S MINAS-E-MINERALS DE -GOA PVT. LTD. IS ALSO AGAINST THE ASSESSEE AND SRI SYERI SAMIUL LAAS, A GPA HOLDER OF THE ASSESSEE. THEREFORE, THERE IS EVERY P OSSIBILITY THAT THE ASSESSEE HAS TAKEN THE ASSISTANCE OF M/S VSL MINING CO. PVT. LTD. TO GET HER DUES FROM M/S MINAS-E-MINERALS DE-GOA PVT. LTD. THIS BEING THE POSITION, THE ASSESSEES CONTENTION THAT, ASSESSEES BANK ACCOUNT HAS BEEN USED BY THE M/S VSL MINING CO. PVT. LTD.,, TO ROUTE ITS MONEY CANNOT BE RULED OUT. THE ASSESS EE HAS DRAWN OUR ATTENTION TO PAGE NO. 149 OF THE PAPER BOOK WH ICH IS THE COPY OF THE PAY-IN-SLIP AND ON THE REVERSE SIDE OF THE PAY-IN- SLIP, THERE IS A NAME OF A PERSON MR. SRINIVASA RAO ALONG WITH TWO PHONE NUMBERS, ONE OF WHICH IS A LANDLINE NUMBER WH ILE THE OTHER ONE IS A MOBILE NUMBER. WHEN THE CONTENTIONS OF THE ASSESSEE, ALL ALONG HAVE BEEN, THAT THE SAID MONEY DOE S NOT BELONG TO HER BUT BELONGS TO M/S VSL MINING CO. PVT. LTD.,, IT IS NOT UNDERSTANDABLE, AS TO WHY THE AUTHORITIES BELOW HAVE NO T ENQUIRED WITH M/S VSL MINING CO. PVT. LTD.,, WITH REGAR D TO THESE DEPOSITS AND THE SUBSEQUENT WITHDRAWALS. THE AUTHORITI ES BELOW COULD HAVE ALSO CALLED FOR INFORMATION FROM THE BANK AS TO THE IDENTITY OF THE PERSON FOR DEPOSITING SUCH HUGE CASH I NTO THE BANK ACCOUNT AND COULD HAVE VERIFIED THE SAME WITH THE CONT ENTIONS OF THE ASSESSEE. WE FIND THAT THE A.O AND CIT(A) HAVE SUM MARILY DISMISSED THE ASSESSEES CONTENTIONS AND HAVE MADE THE ADDITIONS WITHOUT DUE DELIGENCE AND THE ENTIRE CASH DEPOSITS HAVE BEEN TAKEN INTO CONSIDERATION AS UNEXPLAINED INCOME OF THE A SSESSEE. 8 ITA NO. 1161/HYD/2014 SMT. V. BANGARAMMA, HYD. EVEN IF THE ENTIRE DEPOSITS ARE TO BE CONSIDERED AS THE INCOME OF THE ASSESSEE, THEN THE PEAK CREDIT SHOULD HAVE BEEN TAKE N FOR MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE. HOW EVER, SINCE, THE A.O. AND CIT(A) HAVE FAILED TO VERIFY THE V ERACITY AND ACCEPTABILITY OF THE ASSESSEES CONTENTIONS AND HAVE PR OCEEDED TO MAKE THE ADDITION WITHOUT PROPER ENQUIRY, WE ARE OF THE OPINION THAT THIS ISSUE NEEDS TO BE REMITTED TO THE FILE OF THE A. O. HOWEVER, DUE TO LAPSE OF TIME I.E. AFTER NEARLY TEN YEARS, WE ARE NOT SURE AS TO WHETHER THE BANK WOULD BE MAINTAINING THE RELEVANT DOCUMENTS TO ESTABLISH THE IDENTITY OF THE DEPOSITORS OF THE DEPOSITS MADE INTO ASSESSEES BANK ACCOUNT. THEREFORE, THE REMAND WOULD RESULT IN A FUTILE EXERCISE. IN VIEW O F THE SAME, WE ARE INCLINED TO GIVE BENEFIT OF DOUBT TO THE ASSESSEE AND TREAT ONLY THE PEAK CREDIT AS THE UNEXPLAINED INCOME OF THE ASSESSEE. THEREFORE, WE REMAND THE ISSUE TO THE FILE OF THE A.O. FOR COMPUTING ONLY THE PEAK CREDIT. 11. IN THE RESULT, THE ASSESSEE APPEAL IS TREATED AS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2016. SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 30 TH DECEMBER, 2016 1) SMT V. BANGARAMMA, C/O. K.V. SANATH KUMAR & A.V. RAGHURAM, ADVOCATES, 610, 6 TH FLOOR, BHUKAN ESTATE, BASHEERBAGH, HYD-1 2) ITO, WARD - 13(3), HYDERABAD. 3) CIT -5, HYDERABAD 4) THE ACIT 13, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., H YDERABAD. 6) GUARD FILE