Guru Deepika, Gajuwaka V. The ITO, Visakhapatnam

ITA 118/VIZ/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3846 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 07-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D J P ANAND
• Keywords: Unexplained cash credit; Gift; Set aside
• Section: 80C; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 11 8 /VIZ/ 201 7 ( / ASSESSMENT YEAR: 20 1 3 - 1 4 ) GURU DEEPIKA D.NO.2 - 55 AGANAMPUDI GAJUWAKA VISAKHAPATNAM [PAN : AJRPG0761G ] VS. INCOME TAX OFFICER WARD - 5(3) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI , AR / RESPONDENT BY : SHRI DJP ANAND , DR / DATE OF HEARING : 02 . 04. 201 8 / DATE OF PRONOUNCEMENT : 06 . 0 4 .201 8 / 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)] - 2, VISAKHAPATNAM VIDE 2 ITA NO . 11 8 /VIZ/201 7 GURU DEEPIKA , VISAKHAPATNAM ITA NO. 434 /201 5 - 1 6/CIT(A) - 2/W - 5(3)/VSP/2016 - 17 DATED 01 . 12 .201 6 FOR THE ASSESSMENT YEAR 201 3 - 1 4 . 2. GROUND NO.1 AND 7 ARE GENERAL IN NATURE WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 3. GROUND NO.2 IS RELATED TO THE ADDITION S MADE RELATING TO UNSECURED LOANS ACCEPTED FROM SMT. S.V.PADMAJA, RS.50,000/ - AND RS.3,00,000/ - FROM SRI G O PISETTY SATYA RAO . DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS ACCEPTED ADVANCE OF RS. 50,000/ - FROM SMT. S.V.PADMAJA. SINCE THE ASSESSEE HAS NOT FURNISHED THE SOURCES AND PARTICULARS OF THE INCOME OF SMT. S.V.PADMAJA, THE ASSESSING OFFICER (AO) MADE THE ADDITION OF RS.50,000/ - U/S 68 OF THE I.T.ACT. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT (A ) AND THE LD.CIT(A) CONFIRMED THE ADDITION BECAUSE THE ASSESSEE FAILED TO FURNISH ANY INFORMATION WITH REGARD TO THE CREDIT WORTHINESS OF THE CREDITOR. HENCE, THE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL. 3.1. DURING THE APPEAL HEARING, THE LD.AR ARGUED THAT THE ASSESSE E HAS RECEIVED ADVANCE OF RS.50,000/ - FROM SMT.S.V.PADMAJA. BY TAKING OUR 3 ITA NO . 11 8 /VIZ/201 7 GURU DEEPIKA , VISAKHAPATNAM ATTENTION TO PAPER BOOK PAGE NO.17 TO 20, THE LD.AR SUBMITTED THAT THE CREDITOR HAS GIVEN THE CONFIRMATION LETTER DATED 1.2.2016 TO THE AO. THE LD.AR FURTHER SUBMITTED THAT SHE IS ASSESSED TO INCOME TAX WITH PAN BBBPP9204N AND SUBMITTED THE BANK ACCOUNT COPY OF THE CREDITOR WITH ANDHRA BANK ACCOUNT NO.174010100013375 . A S PER THE BANK ACCOUNT COPY, THE CREDITOR HAD RECEIVED A SUM OF RS.85,000/ - THROUGH CHEQUE ON 19.10.2012 AND OUT OF THE SAID SUM SHE HAS GIVEN ADVANCE OF RS.50,000/ - . BOTH THE CREDIT IN HIS ACCOUNT AND THE PAYMENT MADE TO THE ASSESSEE WERE DIRECT BANKING TRANSACTIONS. SINCE THE ASSESSEE HAS FURNISHED THE CONFIRMATION LETTER AND EVIDENCE FOR THE SOURCE AND ALSO THE ADVANCE WAS GIVEN THROUGH BANKING CHANNELS, WE DO NOT SEE ANY REASON TO SUSPECT THE TRANSACTION, THEREFORE, THE ADDITION MADE BY THE AO IS DELETED AND THE APPEAL OF THE ASSESSEE ON THIS GROUND IS ALLOWED. 4. THE ASSESSEE HAS RE CEIVED ADVANCE OF RS.3,00,000/ - FROM SRI GOPISETTY SATYARAO WHICH WAS ADDED BY THE AO U/S 68 OF THE I.T.ACT. THE AO MADE THE ADDITION STATING THAT THE IDENTITY AND THE CREDIT WORTHINESS OF THE CREDITOR WAS NOT PROVED BY THE ASSESSEE. LD.CIT(A) CONFIRMED T HE ADDITION MADE BY THE AO FOR THE SAME REASONS. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 4 ITA NO . 11 8 /VIZ/201 7 GURU DEEPIKA , VISAKHAPATNAM 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE HAS RECEIVED A SUM OF RS.3,00,000 / - THROUGH BANKING CHANNEL THROUGH ACCOUNT PAYEE CHEQUE. THE ASSESSEE HAS FURNISHED CONFIRMATION LETTER TO THE AO FURNISHING THE INCOME TAX ASSESSMENT DETAILS OF THE CREDITOR AND THE CHEQUE NUMBER ETC. THE ASSESSEE HAS TAKEN US TO PAGE NO.21 TO 24 OF THE PAPER BOOK, WHEREIN THE ASSESSEE HAS ENCLO SED THE CONFIRMATION LETTER, COPY OF AADHAR CARD, PAN, BANK ACCOUNT COPY OF THE CREDITOR. SR I GOPISETTY SATYARAO HAS SB ACCOUNT WITH ANDHRA BANK, AGANAMPUDI BRANCH WITH A/C NO.174010100004483. AS PER THE ACCOUNT C OPY FURNISHED BY THE ASSESSEE, THE CREDITOR HAD RECEIVED A SUM OF RS.7,75,000/ - THROUGH CLEARING ON 25.08.2012 AND THE CREDITOR HAS GIVEN ADVANCE TO THE ASSESSEE ON 30.08.2012 FOR AN AMOUNT OF RS.3,00,000/ - . BOTH THE RECEIPT IN CREDITORS ACCOUNT AND PAYME NT MADE TO THE ASSESSEE WAS THROUGH BANKING CHANNELS. SINCE THE CREDITOR IS ASSESSED TO INCOME TAX AND FURNISHED THE PAN AND THE TRANSACTION WAS THROUGH BANKING CHANNEL, WE DO NOT SEE ANY REASON TO SUSPECT THE TRANSACTION. BY FURNISHING THE PAN AND CONFI RMATION LETTER, THE ASSESSEE HAS ESTABLISHED THE IDENTITY OF THE CREDITOR AND FROM THE BANK ACCOUNT, THE ASSESSEE HAS ESTABLISHED THE CREDIT WORTHINESS. THEREFORE, WE DO NOT SEE ANY REASON TO SUSPECT THE TRANSACTION, 5 ITA NO . 11 8 /VIZ/201 7 GURU DEEPIKA , VISAKHAPATNAM HENCE, WE DELETE THE ADDITION MADE BY T HE AO AND ALLOW THE APPEAL OF THE ASSESSEE ON THIS GROUND. 6. GROUND NO.3 IS RELATED TO SUSTAINING THE ADDITION OF RS.75,000/ - IN RESPECT OF SRI GURU JAYADEV AND RS.11,00,000/ - IN RESPECT OF SMT. GURU KALYANI. DURING THE ASSESSMENT YEAR, THE ASSESSEE HAD RECEIVED GIFT OF RS.75,000/ - FROM SRI GURU JAYADEV AND RS.11,00,000/ - FROM SMT.GURU KALYANI. THE ASSESSEE HAS PRODUCED COPIES OF INCOME TAX RETURNS FOR THE ASSESSMENT YEAR 2012 - 13 AND 2013 - 14. BOTH OF THEM ARE ASSESSED TO TAX. THE AO DISALLOWED THE GIF TS RECEIVED FROM SRI GURU JAYADEV AND SMT. GURU KALYANI SINCE BOTH ARE RELATIVES TO THE ASSESSEE AND THE AMOUNTS HAVE BEEN ADVANCED FROM FAMILY MEMBERS AND THE ASSESSEE FAILED TO FURNISH BANK ACCOUNT DETAILS OF THE DONORS. T HE AO CONCLUDED THAT THE ASSESS EE HAS NOT ESTABLISHED IDENTITY AND CREDIT WORTHINESS OF THE DONOR AND HENCE TREATED THE GIFTS RECEIVED BY THE ASSESSEE AS UNEXPLAINED CASH CREDIT AND ACCORDINGLY BROUGHT TO TAX. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT (A) AND THE LD.CIT(A) CONFIRMED THE ADDITION AS UNDER : 11. 1 IN REGARD TO GIFT OF RS.11 LAKH, THE ASSESSEE FILED CONFIRMATION LETTER FROM THE ALLEGED DONOR GURU KALYANI STATING THAT OUT OF CASH BALANCE AND BANK BALANCE AS ON 31.03.2012 AMOUNTING TO RS.16,53,972/ - , AND INCOME FROM 01.04.2012 TO 30.06.2012 OF RS.3,00 ,000/ - THE GIFT OF RS.2 LAKH WAS GIVEN ON 6 ITA NO . 11 8 /VIZ/201 7 GURU DEEPIKA , VISAKHAPATNAM 04.042012 AND RS.9 LAKH ON 26.06.2012 TO THE ASSESSEE. AN AFFIDAVIT WAS ALSO FILED STATING THAT THE RETURN OF INCOME FOR A.Y.2013 - 14 WAS FI L ED ON 29.10.2015 AND GIFT OF RS.11 LAKH S DULY DEBITED TO HER CAPITAL ACCO UNT. A COPY OF RETURN OF INCOME FOR AY.2012 - 13 FI L ED ON 29.09.2012 ALONG WITH FINANCIAL STATEMENT AS ON 31.03.2012 AND 31.03.2013 WERE ALSO FILED. IT WAS ALSO STATED THAT THE SAID DONOR WAS ALLOTTED LIQUOR LICENCE FOR THE PERIOD 01.07.2010 TO 20.06.2012. IT IS SEEN THAT INCOME OF RS.4,91,070/ - WAS DECLARED FOR A.Y.2012 - 13 AND RS.3,03,210/ - WAS DECLARED FOR A.Y.2013 - 14. AT THE OUTSET, IT IS RELEVANT TO NOTE THAT AS PER THE CONFIRMATION LETTER OF THE ALLEGED DONOR, THE AMOUNT OF RS.11,00,000/ - WAS GIVEN FOR THE LIQUOR BUSINESS OF THE ASSESSEE, AND THUS THE ESSENTIAL INGREDIENT OF GIFT WAS NOT PROVED. IT WAS STATED THAT THE ALLEGED GIFT WAS GIVEN OUT OF OPENING CASH AND BANK BALANCE OF RS.19,53,972/ - AS ON 31.03.2012, AND INCOME EARNED OF R S. 3 LAKH DURING 01.0 4.2012 TO 30.06.2012. THE PERUSAL OF THE BALANCE SHEET OF THE ALLEGED DONOR AS ON 31.03.2012 SHOW BANK BALANCE WITH VARIOUS BANKS AT RS.13,81,927/ - AND THE CASH BALANCE WAS RS.2,72,045/ - . THE ASSESSEE HAS NOT FURNISHED THE BANK ACCOUNT STATEMENT OR ANY OT HER INFORMATION TO SHOW THAT THE ALLEGED GIFT WAS GIVEN OUT OF SUCH AVAILABLE BALANCE. NO EXPLANATION WAS GIVEN FOR NON - FURNISHING THE BANK STATEMENT. THE AO HAD ISSUED SHOW CAUSE NOTICE INFORMING HIS PROPOSAL TO MAKE IMPUGNED ADDITION TAKING ADVERSE VIEW FOR NON - FURNISHING THE BANK STATEMENT. EVEN DURING THE APPELLATE PROCEEDINGS, THE BANK STATEMENTS WERE NOT PRODUCED AND NO VALID EXPLANATION WAS GIVEN FOR NON - FURNISHING THE SAME. THE INCOME ADMITTED FOR THE ENTIRE YEAR RELATING TO A.Y.2013 - 14 WAS RS.3,03, 210/ - ; AND NO EXPLANATION WAS GIVEN AS TO THE BASIS THAT THERE WAS INCOME OF RS.3 LAKH DURING 01.04.2012 TO 30.06.2012. BESIDES, IT IS ALSO SEEN THAT THE CLOSING CASH AND BANK BALANCE AS ON 31.03.2013 WAS AT RS.13,79,657/ - , AND THUS THE CLAIM THAT THE GIFT WAS GIVEN OUT OF AVAILABLE OPENING CASH AND BANK BALANCE APPEARS TO BE FARFETCHED. IT WAS ALSO NOT EXPLAINED WHY THE IMPUGNED TRANSACTION WAS IN CASH, WHEN BOTH PARTIES HAVE BANK ACCOUNTS. THUS THE GENUINENESS OF THE TRANSACTION OF GIFT AND THE CREDITWORT HINESS OF THE ALLEGED DONOR TO MAKE THE ALLEGED GIFT ARE VERY MUCH IN DOUBT, AND THE ASSESSEE FAILED TO PROVE THE SAME. BESIDES, AS ALREADY DISCUSSED THE IMPUGNED TRANSACTION IS NOT GIFT AND THE TRANSACTION IS IN THE NATURE OF CASH CREDIT ONLY. IN VIEW OF THE ABOVE, THE IMPUGNED ADDITION IN REGARD TO THE ALLEGED GIFT IS UPHELD. 11.2 IN REGARD TO THE GIFT FROM MR. GURU JAYADEV, IT WAS STATED IN THE CONFIRMATION LETTER, THAT OUT OF CASH AND BANK BALANCE OF RS.16,84,502/ - THE ALLEGED GIFT OF RS.75,000/ - WAS MADE ON 05.06.2012 IN CASH. AN AFFIDAVIT TO THIS EFFECT WAS ALSO FILED. COPY OF RETURN OF INCOME FOR A.Y.2012 - 13 FILED ON 08.08.2013 AND A.Y.2013 - 14 ON 29.10.2015 WERE ALSO FILED ALONG WITH FINANCIAL STATEMENTS. THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO SHOW THAT THE ALLEGED GIFT WAS GIVEN OUT OF SUCH BANK BALANCE. IT IS FURT HER NOTED THAT THE CLOSING CASH AND BANKBALANCE AS ON 31.03.2013 WAS AT RS.19,12,725/ - WHEREAS THE INCOME ADMITTED FOR THE SAID YEAR WAS ONLY RS.2,93,460/ - . BESIDES, NO EXPLANATION GIVEN AS TO WHY IMPUGNED TRANSACTION WAS IN CASH, WHEN BOTH PARTIES HAVE BA NK ACCOUNTS AND WHEN THE ALLEGED GIFT WAS OUT OF SUCH BANK 7 ITA NO . 11 8 /VIZ/201 7 GURU DEEPIKA , VISAKHAPATNAM BALANCE SHOWN IN THE BALANCE SHEET AS ON 31.03.2012 . THEREFORE, I FIND THAT THE GENUINENESS OF THE GIFT TRANSACTION IS IN DOUBT. HENCE THE IMPUGNED ADDITION IN REGARD TO THIS CREDIT IS UPHELD. 6 .1. DURING THE APPEAL HEARING, THE LD.AR ARGUED THAT BOTH SRI GURU JAYADEV AND SMT. GURU KAL YANI ARE ASSESSED TO INCOME TAX. THEY ARE HAVING SUFFICIENT CASH AND BANK BALANCES AS PER THE RETURNS OF INCOME FILED BY THEM. THE ASSESSEE HAS FILED CONFIRMATION LETTERS IN PAPER BOOK AND ALSO COPIES OF AFFIDAVITS FILED BY THEM ALONG WITH BANK ACCOUNT COPIES. THE ASSESSEE ARGUED THAT SMT. GURU KALYANI IS HAVING CAPITAL ACCOUNT BALANCE OF RS. 32.49 LAKHS AS ON 31.03.2012, CASH AND BANK BALANCE OF RS.16.53 LAKHS. S HE IS REGULARLY ASSESSED TO TAX. THEREFORE, THE IDENTITY, CAPACITY AND CREDIT WORTHINESS OF SMT. GURU KALYANI HAS BEEN ESTABLISHED. 6.2. SIMILARLY IN THE CASE OF SRI GURU JAYADEV, THE ASSESSEE FILED CONFIRMATION LETTER, COPIES OF INCOME TAX RETURNS AND THE BALANCE SHEET. AS PER THE BALANCE SHEET, HIS OUTSTANDING CAPITAL WAS RS.26.14 LAKHS AND THE CASH AND BANK BALANCE WAS RS.16.84 LAKHS. T HE LD.AR ARGUED THAT THE ASSESSEE HAS FURNISHED THE CONFIRMATION LETTERS AS WELL AS NOTARIZED AFFIDAVITS. THERE WAS SUFFICIENT CASH AND BANK BALANCE AS PER THE BALANCE SHEET AVAILABLE. THEREFORE SUBMITTED THAT THERE IS NO REASON TO DISBELIEVE THE CAPACITY AND GENUINENESS OF THE TRANSACTIONS, HENCE REQUESTED TO SET 8 ITA NO . 11 8 /VIZ/201 7 GURU DEEPIKA , VISAKHAPATNAM ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND ALLOW THE APPEAL OF THE ASSESSEE. PER CONTRA THE LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 6. 3 . WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL PLACED ON RECORD. IN THIS CASE SRI GURU J AYADEV AND SMT. GURU KALYANI HAVE GIVEN GIFT S OF RS.75,000/ - AND RS.11,00,000/ - RESPECTIVELY TO THE ASSESSEE. BOTH OF THEM HAVE FILED CONFIRMATION LETTERS AS WELL AS NOTARIZED AFFIDAVITS HAVING GIVEN THE GIFTS TO THE ASSESSEE. AS PER THE INFORMATION FILED IN THE PAPER BOOK, BOTH OF THEM ARE ASSESS ED TO TAX. THEY ARE HAVING SUFFICIENT CASH AND BANK BALANCES AND OUTSTANDING CAPITAL ACCOUNT BALANCE AS PER THE BALANCE SHEETS FILED. IN THIS CASE, BY FILING CONFIRMATION LETTERS, FURNISHING PAN, THE ASSESSEE HAS PROVIDED THE IDENTITY OF THE DONOR AND BY FILING INCOME TAX RETURNS AND FURNISHING THE CAPITAL ACCOUNTS AND BALANCE SHEETS, THE ASSESSEE HAS PROVED THE CREDIT WORTHINESS OF THE CREDITORS. THEREFORE, THERE IS NO REASON TO SUSPECT THE GIFTS RECEIVED BY THE ASSESSEE FROM SHRI GURU J AYADEV AND SMT. GURU KALYANI AND ACCORDINGLY WE DELETE THE ADDITION MADE BY THE AO AND SET ASIDE THE ORDERS OF THE LD. CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 9 ITA NO . 11 8 /VIZ/201 7 GURU DEEPIKA , VISAKHAPATNAM 7. GROUND NO.4 IS RELATED TO NOT MAKING ANY REFERENCE TO THE RELIEF GRANTED TO THE ASSESSEE . THIS GROUND IS NOT PRESSED BY THE LD.AR DURIN G THE APPEAL HEARING, HENCE, THIS GROUND IS DISMISSED AS NOT PRESSED. 8. GROUND NOS. 5 I S NOT ARGUED BY THE LD.AR, HENCE GROUND NO. 5 IS DISMISSED AS NOT PRESSED. 9. GROUND NO. 6 IS RELATED TO THE ASSES SEES CLAIM F OR DEDUCTION U/S 80C FOR AN AMOUNT OF RS.32,820/ - . THE AO DISALLOWED THE CLAIM MADE BY THE ASSESSEE SINCE THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE FOR PAYMENT BY CLAIMING SUCH DEDUCTION. THE LD.CIT(A) CONFIRMED THE ADDITION MADE BY THE AO SINCE NO SPECIFIC EVIDENCE WAS FILED BY THE ASSESSEE TO JUSTIFY THE DEDUCTION. DURING THE APPEAL HEARING, THE LD.AR DID NOT FURNISH ANY EVIDENCE NOR MADE ANY ARGUMENT. THEREFORE THE APPEAL OF THE ASSESSEE ON THIS GROUND IS DISMISSED. 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . 10 ITA NO . 11 8 /VIZ/201 7 GURU DEEPIKA , VISAKHAPATNAM THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 6 TH APR , 20 1 8 . S D / - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 06 .0 4 .2018 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT - GURU DEEPIKA, D.NO.2 - 55, AGANAMPUDI, GAJUWAKA, VISAKHAPATNAM 2 . / THE RESPONDENT - THE INCOME TAX OFFICER, WARD - 5(3), VISAKHAPATNAM 3 . THE COMMISSIONER OF INCOME TAX - 2 , VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME - TAX(APPEALS) - 2, VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6. / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM