THE ITO, Vijayawada V. Nelakuditi Hari Krishna, Nandigama

ITA 118/VIZ/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6478 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 14-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C DAS
• Keywords: Unexplained cash credit; Source of fund; Additional evidence; Assessment record; Right to appeal
• Section: 133(6); 131; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI D MANMOHAN , VICE PRESIDENT & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER . / I . T .A.NO. 118 /VIZ/ 201 6 ( / ASSESSMENT YEAR: 20 12 - 13 ) INCOME TAX OFFICER WARD - 1 ( 3 ) 2 ND FLOOR, CENTRAL REVENUE BUILDINGS M.G.ROAD VIJAYAWADA ANDHRA PRADESH VS. SRI NELAKUDITI HARI KRISHNA D.NO.6 - 61, RYTHUPET NANDIGAMA KRISHNA DISTRICT ANDHRA PRADESH [ PAN : A HWPN2386B ] ( / APPELLANT) ( / RESPONDENT) CROSS OBJECTION NO. 29/VIZ/2016 ARISING OUT OF I.T.A.NO. 118 /VIZ/201 6 ( / ASSESSMENT YEAR:20 12 - 13 ) SRI NELAKUDITI HARI KRISHNA D.NO.6 - 61, RYTHUPET NANDIGAMA KRISHNA DISTRICT ANDHRA PRADESH [ PAN : A HWPN2386B ] INCOME TAX OFFICER WARD - 1( 3 ) 2 ND FLOOR, CENTRAL REVENUE BUILDINGS M.G.ROAD VIJAYAWADA ANDHRA PRADESH ( / APPELLANT) ( / RESPONDENT) / REVENUE BY : SHRI K.C.DAS, DR / ASSESSEE BY : SHRI C.SUBRAHMANYAM, AR / DATE OF HEARING : 06 . 12 .2017 / DATE OF PRONOUNCEMENT : 08 .1 2 .2017 2 ITA NO .118/VIZ/2016 AND CO NO.29/VIZ/2016 SRI NELAKUDITI HARI KRISHNA, NANDIGAMA / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) [CIT(A)], VIJAYAWADA VIDE ITA NO. 469 / CIT(A) /VJA/2014 - 15 DATED 29 . 12 .201 5 FOR THE ASSESSMENT YEAR 20 12 - 13 . 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ADDITION MADE BY THE ASSESSING OFFICER ( AO ) ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS OF RS.30,00,000/ - AND AGRICULTURAL INCOME OF RS.6,74,667/ - . THE ASSESSEE IS A PARTNER IN FOUR PARTNERSHIP FIRMS AND RECEIVING SHARE INCOMES BESIDES AGRICULTURAL INCOME AND FILED THE RETURN OF INCOME FOR THE ASSESSM ENT YEAR 2012 - 13 DECLARING TOTAL INCOME OF RS.2,91,440/ - BESIDES AGRICULTURAL INCOME OF RS.10,12,000/ - . THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSING OFFICER (AO) HAS ISSUED NOTICE U/S 143(2) AND FOUND THAT THE ASSESSEE IS HOLDING THE AGRICULTURAL LAND TO THE EXTENT OF 12.18 ACRES AND 8.79 ACRES JOINTLY WITH SHRI N.TIRUPATHAIAH AND SRI N.KASIVISWESWARA RAO. THE ASSESSEE ALSO FURNISHED PATTADAR PASS BOOKS WHICH ARE IN THE NAME OF SRI NELAKUDITI NAGESWARA RAO. SINCE THE DETAILS RECORDED IN THE PATTA DAR 3 ITA NO .118/VIZ/2016 AND CO NO.29/VIZ/2016 SRI NELAKUDITI HARI KRISHNA, NANDIGAMA PASS BOOKS ARE NOT TALLIED WITH REGARD TO THE NAME AND MINOR DISCREPANCIES , THE AO HAD ISSUED THE NOTICE S U/S 133(6) CALLING FOR INFORMATION FROM THE MANDAL TEHSILDAR, BUT THE AO HAS NOT RECEIVED ANY RESPONSE FROM THE MANDAL TEHSILDAR. 2.1. FURTHER, THE AO FOUND CASH DEPOSITS OF RS.20,00,000/ - ON 05.05.2011 FROM THE BANK ACCOUNT STATEMENT OF INDIAN BANK, NANDIGAMA BRANCH WHICH WAS TRANSFERRED TO M/S WHITEGOLD INDUSTRIES INDIA PVT. LTD FOR PURCHASE OF SHARES IN THE SAID COMPANY. THE AO FURTHER NOTIC ED TH E C ASH DEPOSIT OF RS.10,00,000/ - ON 11.05.2011 WHICH WAS ALSO TRANSFERRED FOR PURCHASE OF SHARES IN M/S WHITEGOLD INDUSTRIES INDIA PVT. LTD. IN AGGREGATE, THE CASH DEPOSITS WERE AMOUNTING TO RS.30,00,000/ - IN THE BANK ACCOUNT WHICH WERE TRANSFERRED TO M/S WHITEGOLD INDUSTRIES INDIA PVT. LTD. THE ASS ESSEE EXPLAINED THAT HE HAD SOLD SOME SHARES OF M/S ENERGY L EADERS BATTERIES INDIA PVT. LTD BUT NOT FURNISH ED THE DETAILS. T HE AO ISSUED LETTERS U/S 133(6) CALLING FOR INFORMATION FROM THE BRANCH MANAGER, INDIAN BANK, NANDIGAMA, KRISHNA DIST., M/S WHITEGOLD INDUSTRIES INDIA PVT. LTD. AND M/S ENERGY LEADERS BATTERIES INDIA PVT. LTD. WITH REGARD TO THE DEPOSITS MADE INVESTMENT M ADE AND SHARES SOLD BY THE ASSESSEE. HOWEVER, THE AO HAS NOT RECEIVED ANY REPLY FROM THE ABOVE PERSONS. THE AO ALSO ISSUED LETTERS 4 ITA NO .118/VIZ/2016 AND CO NO.29/VIZ/2016 SRI NELAKUDITI HARI KRISHNA, NANDIGAMA TO THE FIRMS IN WHICH THE ASSESSEE IS A PARTNER, CALLING FOR INFORMATION WITH REGARD TO THE SHARE INCOME, REMUNERATION PA ID, INTEREST PAID ETC . AND NO REPLY WAS RECEIVED FROM THE ABOVE FIRMS. THEREFORE, THE AO ISSUED SUMMONS U/S 131 ON 11.03.2015 DIRECTING THE ASSESSEE TO APPEAR BE FORE THE AO ON 12.03.2013 AND RECORD THE STATEMENT ON OATH . IN THE COURSE OF RECORDING THE ST ATEMENT THE ASSESSE E COULD NOT EXPLAIN THE SOURCES FOR CASH DEPOSITS OF RS.30,00,000/ - AND AGREE D FOR THE ADDITION OF RS.30,00,000/ - U/S 68 OF THE I.T.ACT. SIMILARLY, THE AO CONFRONTED WITH ASSESSE E WITH REGARD TO REGARD TO AGRICULTURAL INCOME AND THE AS SESSEE HAD AGREE D FOR THE DISALLOWING RS.6,74,667/ - FROM AGRICULTURAL INCOME AND ASSESSE E THE SAME AS INCOME FROM OTHER SOURCE. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND EXPLAINED THE SOURCES OF CASH DEPOSITS S TATING THAT THE CASH DEPOSITS WERE SOURCED FROM WITHDRAW AL OF CAPITAL ACCOU NTS OF THE FIRMS IN WHICH HE IS A PARTNER, AGRICULTUR AL INCOME AND THE WITHDRAWAL MADE FROM THE SA VINGS BANK ACCOUNT OF INDIAN BANK . FURTHER, THE LD.AR SUBMITTED BEFORE THE CIT(A ) THAT THE ASSESSEE HOLDS 17 .8 ACRES OF AGRICULTURAL LAND AT THOTARAVULAPADU, PATEMPADU AND CHINTALAPADU VILLAGES IN VIJAYAW ADA REVENU E DIVISION. KRISHNA DISTRICT AND RECEIVES NET AGRICULTURAL INCOME OF 5 ITA NO .118/VIZ/2016 AND CO NO.29/VIZ/2016 SRI NELAKUDITI HARI KRISHNA, NANDIGAMA RS.10,00,000/ - APPROXIMATELY PER ANNUM AND FOR THE ASSESSMENT YEAR 2011 - 12, THE ASSESSEE CLAIMED TO HAVE RECEIVED NET AGRICULTURAL INCOME OF RS.10.12 LAKHS. THE COPIES OF THE COLD STORAGE BONDS AND THE AGREEMENT OF THE PLEDGE WITH THE INDIAN BANK, NANDIGAMA BRANCH WAS FURNISHED BEFORE THE LD.C IT(A). FURTHER, THE LD.AR SUBMITTED THAT THE LANDS WERE REGISTERED IN THE NAME OF NELAKUDITI NAGESWARA RAO WHO IS THE FATHER OF THE ASSESSEE AND AFTER THE DEMISE OF HIS FATHER, THE LANDS WERE INHERITED BY THE ASSESSEE. THEREFORE, THERE WAS NO ERROR IN T HE PATTADAR PASSBOOK. SINCE THE ASSESSEE HAD FILED ADDITIONAL EVIDENCES, THE CIT(A) FORWARDED THE ADDITIONAL EVIDENCES ALONG WITH WRITTEN SUBMISSIONS TO THE AO TO SUBMIT THE REMAND REPORT. THE AO WITHOUT MAKING FRESH ENQUIRIES SUBMITTED THE REMAND REPORT TO THE CIT(A) , BASING ON THE INFORMATION AVAILABLE IN THE ASSESSMENT RECORD AND REQUESTED THE LD.CIT(A) NOT TO CONSIDER THE ADDITIONAL EVIDENCES AND TO UPHOLD THE ADDITION MADE BY THE AO. THE CIT(A) HAS CONSIDERED THE REMAND REPORT AND THE ARGUMENTS OF T HE AO AND DID NOT AGREE WITH THE AO THAT THE ADDITIONS WERE MADE ON AGREED BASIS AND ADMITTED ADDITIONAL EVIDENCES AND ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE ADDITION OF RS.30,00,000/ - AND RS.6,74,667/ - RELATING TO AGRICULTURAL INCOME. THE LD. CIT(A) ALSO DIRECTED THE AO TO COMPUTE THE CAPITAL GAINS FOR SALE OF SHARES AFTER RE VERIFICATION. 6 ITA NO .118/VIZ/2016 AND CO NO.29/VIZ/2016 SRI NELAKUDITI HARI KRISHNA, NANDIGAMA 4. AGGRIEVED BY THE ORDER OF THE LD.CIT(A) THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, LD. DR ARGUED THAT THE AO HAS CALLED FOR THE INFORMATION SINCE NO DETAILS WERE FORTHCOMING THE AO COMPELLED TO ISSUE SUMMONS AND RECORD THE STATEMENT. DURING THE PROCEEDINGS OF RECORDING THE STATEMENT, THE ASSESSEE HAD AGREED TO MAKE THE ADDITION OF RS. 30,00,000/ - U/S 68 RELATING TO THE BAN K DEPOSITS MADE IN THE SB ACCOUNT OF INDIAN BANK, NANDIGAMA BRANCH. FURTHER, THE ASSESSEE HAD AGREED FOR THE DISALLOWANCE OF AGRICULTURAL INCOME OF RS. 6,74,667/ - OUT OF THE DECLARED AGRICULTURAL INCOME OF RS.10,12,000/ - FOR TAXATION PURPOSE UNDER THE HEA D INCOME FROM OTHER SOURCES. SINCE THE ASSESSEE HAD AGREED FOR HIS FAILURE TO SUBMIT THE NECESSARY D ETAILS AND EXPLAIN THE SOURCES, THE AO HAS RI GHTLY MADE THE ADDITION WHICH REQUIRED TO BE UPHELD. LD.DR FURTHER ARGUED THAT THE ADDITION IS BASED ON AG REED BASIS, THEREFORE, THE ASSESSEE SHOULD NOT HAVE FILED APPEAL BEFORE THE CIT(A) AND REQUESTED TO UPHOLD THE ORDER OF THE AO . 5. ON THE OTHER HAND LD.AR ARGUED THAT THE ASSESSEE IS AN INDIVIDUAL AND AFTER THE DEMISE OF HIS FATHER SRI N.NAGESWARA RAO, HE HAS INHERITED THE AGRICULTURAL LAND S OWNED BY HIS FATHER AND HE WAS RECEIVING SHARE INCOME FROM FOUR FIRMS. AFTER DEMISE OF HIS FATHER THE ASSESSEE HAS ENTERED INTO 7 ITA NO .118/VIZ/2016 AND CO NO.29/VIZ/2016 SRI NELAKUDITI HARI KRISHNA, NANDIGAMA THE BUSINESS AND NOT AWARE OF THE COMPLETE FACTS OF THE CASE AND COMPLICATION OF INCOME T AX . THE LANDS IN QUESTION WERE REGISTERED IN THE NAME OF HIS DECEASED FATHER, THEREFORE, THERE WAS A MISTAKE WITH REGARD TO THE NAME IN THE PATTADAR PASS BOOK. APART FROM HIS OWN AGRI CULTURAL LANDS, THE ASSESSEE ALSO OWNING AGRICU LTURAL LANDS JOINTLY WI TH SRI N.TIRUPATHAIAH AND SRI N.KASIVISWESWARA RAO . I N AGGREG ATE , T HE ASSESSEE HOLDS 17 .18 ACRES OF AGRICULTURAL LAND IN THOTARAVULAPADU, PATEMPADU AND CHINTALAPADU OF KRISHNA DIST. THE AGRICULTURAL INCOME WOULD BE AROUND RS.10 LAKHS PER ANNUM AND IN THE ASSESSMENT YEAR IN QUESTION, THE ASSESSEE HAD RECEIVED AGRICULTURAL INCOME OF RS.10.12 LAKHS. LD.AR FURTHER SUBMITTED THE COPIES OF THE COLD STORAGE, AGREEMENT OF PLEDGE WITH THE INDIAN BANK, NANDIGAMA BRANCH WAS FURNISHED BEFORE THE LD.CIT(A) SUPPOR TING THE AGRICULTURAL INCOME. WITH REGARD TO THE CASH DEPOSITS, THE LD.AR SUBMITTED THAT THE CASH DEPOSITS OF RS.30,00,000/ - WAS SOURCE D FROM THE WITHDRAWAL OF THE CAPITAL ACCOUNT S IN FIRMS IN WHICH HE IS A PARTNER , AGRICULTURAL INCOME AND EARLIER WITHDRA WALS MADE FROM THE SAME BANK ACCOUNT. THE LD.AR FURTHER SUBMITTED THAT THE ASSESSEE WAS ISSUED SUMMONS DATED 11.03.2015 AND DIRECTED HIM TO APPEAR ON 12.03.2015 WITHOUT GIVING THE TIME FOR COLLECTING THE DETAILS TO EXPLAIN THE SOURCES. THE ASSESSEE CANNO T BE MADE RESPONSIBLE FOR NON RESPONSE FROM MANDAL TEHSILD AR, BRANCH MANAGER, 8 ITA NO .118/VIZ/2016 AND CO NO.29/VIZ/2016 SRI NELAKUDITI HARI KRISHNA, NANDIGAMA INDIAN BANK AND WHITEGOLD INDUSTRIES INDIA PVT. LTD . AND ENERGY LEADERS BATTERIES INDIA PVT. LTD. THE STATEMENT RECORDED FROM THE ASSESSEE WITHOUT GIVING OPPORTUNITY SHOULD NOT B E TAKEN CO GNIZANCE AND LAW DOES NOT PROHIBIT THE ASSESSEE FROM HIS RIGHT TO APPEAL BEFORE THE APPELLATE AUTHORITIES. THOUGH THE CIT(A) HAS CALLED FOR THE REMAND REPORT, THE AO CHOSE NOT TO MAKE FRESH ENQUIRIES AND HENCE, THE LD.CIT(A) HAS RIGHTLY DELETED THE ADDITIONS AND ACCORDINGLY ARGUED THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD.CIT(A) AND THE SAME REQUIRED TO BE UPHELD. 6. ON THE OTHER HAND, LD.DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AO. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AN D PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, THE ASSESSE E HAD MADE CASH DEPOSITS OF RS.2 0,00,000/ - IN THE SAVINGS BANK ACCOUNT ON 05.05.2011 AND RS.20,00,000/ - ON 11.05.2011 WHICH WAS BROUGHT TO TAX BY THE AO. SIMILARLY, THE ASSESSEE DECLARED A GRICULTURAL INCOME OF RS.10,12,000/ - DUE TO MIS TAKES IN THE PATTADAR PASSBOOKS, T HE AO DISBELIEVED THE LAND HOLDINGS AND DISALLOWED RS.6, 74,667/ - OUT OF AGRICULTURAL INCOME OF RS.10,12,000/ - AND BROUGHT TO TAX UNDER THE HEAD OTHER SOURCES . BOTH THE ADDITIONS WERE AGREED BY THE ASSESSEE DURING THE STATEMENT RECORDED U/S 9 ITA NO .118/VIZ/2016 AND CO NO.29/VIZ/2016 SRI NELAKUDITI HARI KRISHNA, NANDIGAMA 131 ON 12.03.2015. HOWEVER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) AND FURNISHED THE EVIDENCES REGARDING THE SOURCES FOR THE DEPOSITS MADE IN THE BANK ACCOUNT AND IT WAS EXPLAINED BY THE ASSESSEE THAT THE SOURCES WERE FROM AG RICULTURAL INCOME, WITHDRAWAL FROM THE CAPITAL ACCOUNT OF THE FIRMS IN WHICH THE ASSESSEE IS A PARTNER AND THE EARLIER WITHDRAWALS MADE FROM THE SAVINGS BANK ACCOUNT. THE ASSESSEE ALSO FURNISHED E VIDENCES WITH REGARD TO THE AGRICULTURAL PRODUCE AND COPIES OF THE COLD STORAGE BOND AND THE AGREEMENT OF PLEDGE WITH THE INDIAN BANK, NANDIGAMA BRANCH. THE ASSESSEE EXPLAINED AND SUBMITTED THE EVIDENCES WITH REGARD TO T HE AGRICULTURAL LAND HOLDINGS OF 17 .88 ACR E S LOCATED IN THOTARAVULAPADU, PATEMPADU AND CHINTALAPADU OF KRISHNA DIST., ANDHRA PRADESH. THE ASSESSEE ALSO EXPLAINED THE CROPS GROWN, YIELD, PRICE, AVERAGE AGRICULTURAL INCOME AND THE NET AGRICULTURAL INCOME RECEIVED DURING THE ASSESSMENT YEAR U NDER CONSIDERATION. ALL THE EVIDENCES FU RNISHED BEFORE THE LD.CIT(A) WERE FORWARDED TO THE AO, BUT THE AO WAS NOT INCLINED TO MAKE VERIFICATION AND INVESTIGATION WITH REGARD TO SOURCES OF INCOME FOR CASH DEPOSITS AND AGRICULTURAL INCOME , I NSTEAD OPPOSED FOR ADMISSION OF ADDITIONAL EVIDENCES BY THE CIT(A) UNDER RULE 46A. THE CIT(A) AFTER CONSIDERING THE OBJECTIONS ADMITTED THE ADDITIONAL EVIDENCES AND DECIDED THE APPEAL ON THE BASIS OF THE ADDITIONAL EVIDENCES PRODUCED BY THE ASSESSEE DURIN G THE APPEAL 10 ITA NO .118/VIZ/2016 AND CO NO.29/VIZ/2016 SRI NELAKUDITI HARI KRISHNA, NANDIGAMA HE ARING. HAVING DE CLINED TO MAKE VERIFICATIONS AT THE REMAND STAGE, THE AO CANNOT AGITATE AGAINST THE ORDER OF THE LD.CIT(A). THE LD.CIT(A) IS VESTED WITH THE POWERS TO MAKE ENQUIRIES BEFORE DISPOSING THE APPEAL . IT IS THE OBLIGATION ON THE PART OF THE AO WHEN THE CASE WAS REMANDED TO MAKE VERIFICATIONS AND TO COLLECT THE EVIDENCES AND FIND THE FACT AND TO ASSESS THE TRUE AND CORRECT INCOME. THE AO HAS ISSUED THE NOTICES U/S 136 TO MANDAL TEHSILDAR, INDIAN BANK MANAGER AND THE COMPANIES IN WHICH THE ASSES SEE HAD MADE APPLICATION FOR SHARES AND THE COMPANYS SHARES WHICH THE ASSESSEE HAS SOLD. SINCE THERE WAS NO REPLY FROM THE WITNESSES, THE AO CONCLUDED THAT THERE WAS NO COMPLIANCE AND ACCORDINGLY ISSUED SUMMONS ON 11.03.2015 DIRECTING THE ASSESSEE TO APP EAL ON 12.03.2015 WITHOUT GIVING SUFFICIENT TIME AND PROPER OPPORTUNITY TO COLLECT THE DETAILS AND TO FURNISH THE INFORMATION. IN SUCH CIRCUMSTANCES, IT IS THE OBLIGATION ON THE PART OF THE AO TO MAKE PROPER VERIFICATIONS AT LEAST AT REMAND STAGE AND SUBM IT PROPER REMAND REPORT WITH COMPLETE DETAILS AND CORRECT INFORMATION. BEING FAILED TO UTILIZE THE OPPORTUNITY GIVEN BY THE LD.CIT(A), THE AO CANNOT MAKE OUT A CASE FOR LEGAL BATTLE. IN THIS CASE, THE CIT(A) VERIFIED THE LAND HOLDINGS AND VERIFIED THE CON FIRMATION LETTER ISSUED BY THE INDIAN BANK, NANDIGAMA ON 12.01.2015 AND GIVEN A FINDING THAT LANDS IN SURVEY NO.17/1, 19/C & 19/2A IN CHINTALAPADU VILLAGE STOOD IN THE NAME OF 11 ITA NO .118/VIZ/2016 AND CO NO.29/VIZ/2016 SRI NELAKUDITI HARI KRISHNA, NANDIGAMA THE ASSESSEES FATHER. THE CIT(A) HAS GIVEN A FINDING THAT THE ASSESSEE HAS EST ABLISHED THE LAND HOLDINGS AND RECEIPT OF AGRICULTURAL INCOME ON SALE OF CHILLIES, COTTON ETC. DURING THE RELEVANT PERIOD. AFTER VERIFICATION OF THE CORRECTNESS OF LAND HOLDINGS AND THE AGRICULTURAL INCOME, THE CIT (A) HAS ACCEPTED THE ASSESSEES CONTENTI ON WITH REGARD OT THE AGRICULTURAL INCOME AND DELETED THE ADDITION MADE BY THE AO. SINCE THE CIT(A) DELETED THE ADDITION AFTER DUE VERIFICATION OF THE DETAILS FILED BY THE ASSESSEE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND THE SAME IS U PHELD. 7.1. WITH REGARD TO THE ADDITION OF RS.30,00,000/ - TOWARDS UNEXPLAINED DEPOSITS U/S 68 OF THE I.T.ACT, THE ASSESSEE STATED DURING THE COURSE OF STATEMENT DATED 12.03.2015 THAT HE COULD NOT EXPLAIN THE SOURCES OF THE ABOVE CASH DEPOSITS AS HE HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS. SUBSEQUENTLY, THE ASSESSEE HAS CONSTRUCTED THE CASH BOOK AND EXPLA INED THE SOURCES AND EXPLAINED THAT THE SOURCES FOR CAS H DEPOSITS WERE SOURCES FROM ACCOUNTED SOURCES. THE LD. CIT(A) FORWARDED THE CONSTRUCTED CASH B OOK OF THE ASSESSEE FROM 01.04.2008 TO 31.03.2012 TO CAUSE ENQUIRIES AND GIVE FINDINGS. THE AO DISMISSE D THE CLAIM OF THE ASSESSEE WITHOUT CAUSING ANY ENQUIRIES REGARDING THE GENUINENESS. THE LD. CIT(A) AFTER CONSIDERING THE REMAND REPORT AND THE RELEVA NT EVIDENCES DID NOT ACCEPT THE 12 ITA NO .118/VIZ/2016 AND CO NO.29/VIZ/2016 SRI NELAKUDITI HARI KRISHNA, NANDIGAMA CONTENTION OF THE AO AND ACCEPTED THE SOURCES FOR THE CASH DEPOSITS AND DELETED THE ADDITION MADE BY THE AO. FOR READY REFERENCE, WE EXTRACT RELEVANT PARAGRAPHS OF THE ORDER OF THE LD.CIT(A) WHICH READS AS UNDER : 5.3. I HAVE PERUSED ALL RELEVANT SUBMISSIONS OF APPELLANT. 5.3.1. ASSESSING OFFICER MADE ADDITION OF RS.30 LAKHS TOWARDS UNEXPLAINED CASH DEPOSITS U/S 68 OF THE ACT ON THE BASIS OF APPELLANTS REPLY TO QUESTION NO.13 OF STATEMENT DATED 12.03.2015 WHEREIN APPELLANT REPLIED THAT HE COULD NOT EXPLAIN THE SOURCES FOR THE ABOVE CASH DEPOSITS AS HE HAD NOT MAINTAINED ANY BOOKS OF ACCOUNT. HOWEVER, APPELLANTS AUTHORIZED REPRESENTATIVE SUBMITTED A CONSTRUCTED CASH BOOK' OF APPELLANT FROM 01.04.2008 TO 31.03.20 12 ON THE BASIS OF BANK STATEMENTS OF APPELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS AND CLAIMED THAT APPELLANT HAD SUFFICIENT SOURCES FOR CASH DEPOSITS. 5.3.2. APPELLANT'S AUTHORIZED REPRESENTATIVE EXPLAINED THE SOURCES FOR CASH DEPOSIT OF RS.30 LAK HS IN BANK ACCOUNT AS FOLLOWS : WITHDRAWAL FROM THE CURRENT A/C IN THE FIR M, M/S SRI SAL BHARGAVA COLD STORAGE IN WHICH HE IS ADMITTED AS A PARTNER AFTER DEMISE OF HIS FATHER. IN THE BALANCE SHEET OF ABOVE FIRM F OR THE YEAR ENDING 31.3.2012, THIS AMOUNT IS SHOWN AS ASSET RECEIVABLE FROM APPELLANT 02.4.11 - 1,50,000 04.4.11 - 2,50,000 30.4.11 - 4,00,000 04.5.11 - 4,00,000 RS.12,00,000 AGRICULTURAL INCOME (22.3.2011) APPELLANT ADMITTED RS.9,85,600/ - AND RS.10,12,000/ - AS AGRICULTURAL INCOME IN THE RETURN OF INCOME FOR ASST.YEAR 2011 - 12 AND 2012 - 13 RESPECTIVELY. RS.9,30,000/ - 3) AGRICULTURAL LOAN SANCTIONED BY BANK AGAINST RS.11,00,000/ - 13 ITA NO .118/VIZ/2016 AND CO NO.29/VIZ/2016 SRI NELAKUDITI HARI KRISHNA, NANDIGAMA THE SECURITY OF STOCK OF AGRICULTURAL PRODUCE. APPELLANT HAD AGRICULTURAL LOAN ACCOUNT WITH INDIAN BANK, NANDIGAMA AND DETAILS ARE AS FOLLOWS : AGRI SHORT TERM LOANS DETAILS A/C NO.884064740 A/C NO.900123009 A/C NO.6013386178 LIMIT RS. 5 LAKHS RS.6 LAKHS RS.8,85,000/ - DRAWING POWER RS.7.5 LAKHS RS.9,04,000/ - - 5 .3 .3 . APPELLANT'S AUTHORIZED REPRESENTATIVE SUBMITTED COPIES OF FORM NO.2 AND FORM NO.20 B OF THE COMPANIES ACT, 1956 TO EVIDENCE THE FOLLOWING: 1. PU RCHASE OF SHA RES OF ELB I LIMITED ( NOT A LISTED COMPANY) (A) FORM NO.2 (RETURN OF ALLOTMENT) LIST OF ALLOTTEES OF E Q UITY SHARES OF ENER G Y LEA DER BATTERIES INDIA LIMITED' AS ON 30.09.2008 2 LAKH SHARES OF RS.10/ - EACH OF THE ABOVE COMPANY HAD BEEN ALLOTTED TO THE APPELLANT AS SHAREHOLDER(FOLIO NO.18. CERTIFICATE NO.36. DISTINCTIVE NOS. 13113831 - 13313830) . PURCHASE OF THESE SHARES IS EVIDENCED BY DEBIT ENTRY FOR PAYMENT OF RS.20 LAKHS BY CHEQUE NO.195879 DATED 26.09.2008 IN THE JOINT BANK ACCOUNT OF APPELLANT AND HIS MOTHER WITH INDIAN BANK, NANDIGAMA (A/C NO.501443319). (B) FORM NO.20 B (ANNUAL RETURN OF THE COMPANY): APPELLANT HAD TRANSFERRED ALL HIS 2 LAKH SHARES TO MR.PATURI SRINIVASA RAO ON 04.10.2011. THIS IS EVIDENCED BY SCHEDULE V OF ANNUAL RETURN. TRANSFER CONSIDERATION OF T HES E S HA RES IS SAID TO BE RS . 27 LAKHS. THIS CLAIM REQUIR ESVERIFICATION AT ASSESSING OFFICERS END. AS THE TRANSFER OF SHARES TOOK PLACE ON 04.10.2011 (I.E) DURING ASST.YEAR 2012 - 13, THE LONG TERM CAPITAL GAIN ON ACCOUNT OF SHARE TRANSFER SHOULD BE ASSESSED TO TAX IN ASST. YEAR 2012 - 13. APPELLANTS AUTHORIZED R EPRESENTATIVE SUBMITTED THAT APPELLANT DID NOT ADMIT LTCG IN ASST. YEAR 2012 - 13. HE HAD COMPUTED THE LTCG AT RS.2,405/ - . ASSESSING OFFICER IS DIRECTED TO VERIFY THE COMPUTATION AND LEVY DUE LTCG TAX FOR THIS ASST. YEAR. 2. PURCHASE OF SHARES OF MIS WHITEGOLD INDUSTRIES (INDIA) LIMITED (A) FORM NO.2 (RETURN OF ALLOTMENT): 14 ITA NO .118/VIZ/2016 AND CO NO.29/VIZ/2016 SRI NELAKUDITI HARI KRISHNA, NANDIGAMA APPELLANT HAD BEEN ALLOTTED 3,18,000/ - SHARES OF RS.10/ - EACH ON 30.12.2011. THUS APPELLANT'S CLAIM OF INVESTMENT IN SHARES IS DULY EVIDENCED BY RELEVANT DETAILS AND BANK ACCOUNT E NTRIES. APPELLANT COULD NOT EXPLAIN THE DETAILS BEFORE THE ASSESSING OFFICER AT THE TIME OF RECORDING OF STATEMENT ON 12.03.2015. APPELLANT DERIVED SHARE INCOME FROM THE FOUR FIRMS IN WHICH HE IS A PARTNER, WHICH IS EXEMPT U/S 10(2A) OF THE ACT. HE ALSO R ECEIVED INTEREST ON HIS CAPITAL ACCOUNTS WITH THOSE FIRMS BESIDES AGRICULTURAL INCOME. APPELLANT DID NOT HAVE ANY INDEPENDENT BUSINESS ACTIVITY AT THE RELEVANT ASST. YEAR. HENCE THERE WAS NO NECESSITY TO MAINTAIN ANY BOOKS OF ACCOUNT. IN THE ABSENCE OF BOO KS OF ACCOUNT, THE AFFAIRS OF THE APPELLANT HAD TO BE RECONSTRUCTED ON THE BASIS OF BANK STATEMENTS ONLY. ASSESSING OFFICER DID NOT OBSERVE ANY DISCREPANCY IN THE 'RECONSTRUCTED ACCOUNT' DURING THE REMAND PROCEEDINGS. AS THE SOURCES OF CASH DEPOSITS OF RS. 30 IAKHS ARE EXPLAINED ON THE BASIS OF 'CONSTRUCTED ACCOUNTS', ADDITION OF RS.30 LAKHS AS UNEXPLAINED CASH CREDIT U / S 68 IS NOT WARRANTED. IN THE CASE OF MAHAVIR PRASAD MUN N A LAL VS. CIT (1947) 15 ITR 393 (ALL) AND CIT VS SOPHIA FINANCE LTD. (1994) 205 ITR 98 (DEL.FB) HELD THE FOLLOWING: 'IT IS INCUMBENT UPON THE ASSESSING OFFICER TO MAKE PROPER ENQUIRIES REGARDING THE TRUTH AND GENUINENESS OF THE DEPOSIT OR LOAN. THUS, IT IS ONLY WHEN THE EXPLANATION OFFERED BY THE ASSESSEE IS FALSE OR UNBELIEVABLE OR THAT THE ASSESSEE GIVES EVASIVE REPLIES TO THE QUERIES REGARDING THE SOURCES OF CREDIT ENTRY, THE ASSESSING OFFICER WOULD BE JUSTIFIED TO PRESUME THE WHOLE RECEIPT TO BE REVENUE RECEIPT' IN THE CASE OF DEVAMANI ATHA VS CIT (1978) 112 ITR 837 (ON) AND NANDIRII SYNTEX LTD. VS CIT (1991) 39 TTJ (BOM.TRIB.) 410, IT WAS HELD THAT WHERE ASSESSEE HAD PRODUCED EVIDENCE REGARDING CASH CREDIT, ADDITION BY THE ASSESSING OFFICER WITHOUT ANY ENQUIRY WAS NOT JUSTIFIED. 5.3.4 . COPY OF THE 'CONSTRUCTED CASH BOOK OF APPELLANT' ALONG WITH OTHERDETAILS WERE FORWARDED TO THE ASSESSING OFFICER UNDER RULE 46A OF THE RULES DURINGREMAND PROCEED INGS FOR NE CESSARY VERIFICATION AT ASSESSING OFFICERS END . FROM THE REMAND REPORT OF ASSESSING OFFICER , IT APPEARS THAT ASSESSING OFFICER DISMISSED THE CLAIM OF APPELLANT WITHOUT CAUSING ANY ENQUIRY AS REGARDS THE GENUINENESS OF APPELLANTS CLAIM AND HELD THAT SUCH CLAIM IS NOT ACCEPTABLE AT THIS STAGE AS THIS IS AGREED ASSESSMENT. 5.4. I DO NOT AGREE WITH ASSESSING OFFICERS CLAIM THAT APPELLANT VOLU NTARILY ACCEPTED FOR THE ABOVE ADDITION AND ALSO PROMISED NOT TO PREFER APPEAL ON THE ABOVE ADDITIONS. 15 ITA NO .118/VIZ/2016 AND CO NO.29/VIZ/2016 SRI NELAKUDITI HARI KRISHNA, NANDIGAMA 7. 2 . T HE AO DID NOT CAUSE NECESSARY VERIFICATION, EVEN DURING THE REMAND PROCEEDINGS AND THE CIT(A) HAS DELETED THE ADDITION AFTER VERIFICATION OF THE ADDITIONAL EVIDENCES FURNISHED BY TH E ASSESSEE DURING THE APPEAL PROCEEDINGS. DURING THE APPEAL HEARING ALSO, THE LD.DR DID NOT PLACE ANY EVIDENCE TO CONTROVERT THE SOURCES EXPLAINED BY THE ASSESSEE BEFORE THE LD.CIT(A). IT IS SETTLED POSITION OF LAW THAT THE CIT(A) IS VESTED WITH THE POWERS OF MAKING INDEPENDENT VERIFICATION AT APPEAL STAGE AND THE LD.CIT(A) HAS DONE THE SAME . THEREFORE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A), ACCORDINGLY WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 8. T HE ASSESSEE FILED CROSS OBJECT IONS SUPPORTING THE ORDER OF THE LD.CIT(A) AND AGITATED FOR INSUFFICIENT OPPORTUNITY GIVEN TO THE ASSESSEE WITHOUT GIVING ADEQUATE TIME TO SUBMIT THE EXPLANATIONS. SINCE WE HAVE UPHELD THE ORDER OF THE LD. CIT(A), THE CROSS OBJECTIONS FILED BY THE ASSESSEE STANDS ALLOWED . 9. IN THE RESULT APPEAL FILED BY THE REVEN UE IS DISMISSED AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE ALLOWED. 16 ITA NO .118/VIZ/2016 AND CO NO.29/VIZ/2016 SRI NELAKUDITI HARI KRISHNA, NANDIGAMA THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 8 TH DEC 20 17 . SD/ - SD/ - ( . ) ( . . ) ( D. MANMOHAN ) ( D.S. SUNDER SINGH ) / VICE PRESIDENT / ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 08 .12.2017 L. RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT - INCOME TAX OFFICER , WARD - 2 ( 3 ), 1 ST FLOOR, RAJKAMAL COMPLEX, LAKSHMIPURAM, GUNTUR, ANDHRA PRADESH 2 . / THE RESPONDENT SRI GARUGU LAKSHMANA SRINIVASA PRABHAKARA REDDY, 2 - 188, RAMALAYAM STREET, KOTHURU, TADOPALLI, GUNTUR DIST, ANDHRA PRADESH 3 . THE PR. COMMISSIONER OF INCOME TAX , GUNTUR 4.THE COMMISSIONER OF INCOME TAX(APPEALS) - 1, GUNTUR 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM