THE DCIT, Vijayawada V. Mandava Gandhara Rao,

ITA 12/VIZ/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6600 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 13-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C DAS
• Section: 133(6); 68

Judgement Text

ITA NO.12/VIZAG/2016 DR. MANDAVA GANGADHARA RAO, NUZVID 1 , , 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.12/VIZAG/2016 ( / ASSESSMENT YEAR: 2011-12) DCIT, CIRCLE - 3(1), VIJAYAWADA DR. MANDAVA GANGADHARA RAO NUZVID [ PAN NO. ACEPM0727A ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI K.C. DAS, DR / RESPONDENT BY : SHRI D.L. NARASIMHA RAO, AR / DATE OF HEARING : 16.10.2017 / DATE OF PRONOUNCEMENT : 18.10.2017 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) {CIT(A)}, VIJA YAWADA VIDE ITA NO.44/CIT(A)/VJA/2014-15 DATED 30.10.2015 FOR THE A SSESSMENT YEAR 2011-12. ITA NO.12/VIZAG/2016 DR. MANDAVA GANGADHARA RAO, NUZVID 2 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE CA SH CREDITS AND ADDITION MADE U/S 68 OF THE INCOME TAX ACT, 1961 (H EREINAFTER CALLED AS 'THE ACT' THE ASSESSEE IS A DOCTOR BY PROFESSION AN D ALSO ENGAGED IN THE ACTIVITY OF GENERATING WIND ENERGY AND SOLD THE POWE R TO TAMILNADU GENERATION AND DISTRIBUTION CORPORATION LIMITED (TN GC). DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2011- 12, THE ASSESSEE HAD RECEIVED UNSECURED LOANS OF ` 1,85,13,884/-, OUT OF WHICH THE FOLLOWING LOANS WERE TREATED AS NOT GENUINE AND ADD ED BACK TO THE INCOME: 3. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. RECO RDED THE STATEMENT FROM MR. P.V. PRASADA RAO AND HE HAS CO NFIRMED THAT HIS FATHER (LATE) SRI PARANDHAMAIAH HAD GIVEN A LOAN OF ` 45 LAKHS THROUGH BANK CHEQUE TO THE ASSESSEE. THE SOURCE WAS EXPLAI NED AS AGRICULTURAL INCOME. ANOTHER STATEMENT WAS RECORDED FROM MR. P. V. PRASADA RAO, WHO HAS CONFIRMED THAT HE HAD GIVEN A LOAN OF ` 40 LAKHS THROUGH RTGS TO THE ASSESSEE. THE SOURCE WAS EXPLAINED AS AGRIC ULTURAL INCOME, CHIT AMOUNT, GOLD LOAN, MATURITY OF FIXED DEPOSIT, ETC. A STATEMENT WAS RECORDED FROM SMT. M. SIVANI ALSO AND SHE HAD CONFI RMED TO HAVE GIVEN SL.NO. DISALLOWANCE OF UNPROVED CASH CREDITS STANDING IN THE NAMES OF AMOUNT IN ( ` ) 1 (LATE) SRI M.PARANDHAMAIAH 45,00,000 2 SRI P.V. PRASAD 40,00,000 3 SMT. M. SIVANI 20,00,000 TOTAL 1,05,00,000 ITA NO.12/VIZAG/2016 DR. MANDAVA GANGADHARA RAO, NUZVID 3 THE LOAN OF 20 LAKHS TO THE ASSESSEE AND THE SOURCE WAS EXPLAINED AS AGRICULTURAL INCOME. HOWEVER, THE ASSESSING OFFICE R DID NOT BELIEVE CREDIT WORTHINESS AND SOURCES EXPLAINED BY THE CRED ITORS, SINCE THEY ARE HAVING ONLY AGRICULTURAL INCOME AND THEY ARE NOT AS SESSED TO TAX. FURTHER, THE CREDITORS HAVE NOT TAKEN ANY PROMISSOR Y NOTES FOR GIVING THE LOANS. ACCORDINGLY, THE A.O. TREATED THE ENTIR E CASH CREDITS OF ` 1.05 CRORES AS UNEXPLAINED IN THE HANDS OF THE ASSESSEE AND ACCORDINGLY MADE THE ADDITION. AGGRIEVED BY THE ORDER OF THE A.O., THE A SSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) CALLED FOR THE REMAND REPORT. IN THE REMAND REPORT, THE A.O. ACCEPTED THE SOURCE AND STATED THAT NO ADDITION REQUIRED TO BE MADE IN THE HANDS OF THE AS SESSEE. HOWEVER, THE JOINT COMMISSIONER OF INCOME TAX WHILE FORWARDI NG THE REMAND REPORT RECOMMENDED FOR SUSTAINING THE ADDITIONS SIN CE THE ASSESSEE DID NOT PRODUCE PROMISSORY NOTE, SOURCES WERE NOT EXPLA INED WITH RESPECT TO THE AGRICULTURAL RECEIPTS AND NO PROOF REGARDING THE SAVINGS OF THE CREDITS. THE LD. CIT(A) AFTER EXAMINING THE REMAND REPORT DELETED THE ADDITION HOLDING THAT THE ASSESSEE HAS DISCHARGED T HE ONUS BY ESTABLISHING THE IDENTITY, CREDITWORTHINESS AND GEN UINENESS. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEA L BEFORE US. ITA NO.12/VIZAG/2016 DR. MANDAVA GANGADHARA RAO, NUZVID 4 4. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR, THE ASSESSEE HAS RECEIVED THE LOANS FROM THE FOLLOWING PERSONS: 5. ALL THE 3 PERSONS HAVE CONFIRMED HAVING GIVEN TH E LOANS. ON BEHALF OF LATE MR. P. PARANDHAMAIAH HIS SON MR.P.V. PRASAD WHO IS THE LEGAL HEIR HAS CONFIRMED THAT HIS FATHER HAD GIVEN THE LOANS THROUGH BANKING TRANSACTIONS. ALL OF THEM ARE HAVING AGRIC ULTURAL INCOME AND AGRICULTURAL LAND HOLDINGS AND THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THEY ARE HAVING AGRICULTURAL LAND. WHILE DELET ING THE ADDITION, THE LD. CIT(A) DELETED THE ADDITION WITH THE FOLLOWING OBSERVATIONS: 6. I HAVE PERUSED THE ASSESSMENT ORDER, SUBMISSIONS OF THE APPELLANT AND REMAND REPORT OF ASSESSING OFFICER, RELEVANT INCOME TAX RECORDS FOR ASST. YEAR 2011-12 WERE ALSO CALLED FOR AND PERUSED . 6.1 AS PER VARIOUS JUDICIAL PRONOUNCEMENTS, THE ASSESSE E IS REQUIRED TO ESTABLISH FOR THE PURPOSE OF GENUINENESS OF CREDITS U/S 68 OF THE ACT, THE FOLLOWING: SL.NO. DISALLOWANCE OF UNPROVED CASH CREDITS STANDING IN THE NAMES OF AMOUNT IN ( ` ) 1 (LATE) SRI M. PARANDHAMAIAH 45,00,000 2 SRI P.V. PRASAD 40,00,000 3 SMT. M. SIVANI 20,00,000 TOTAL 1,05,00,000 ITA NO.12/VIZAG/2016 DR. MANDAVA GANGADHARA RAO, NUZVID 5 (A) PROOF OF IDENTITY OF CREDITORS (B) CAPACITY OF CREDITOR TO ADVANCE MONEY AND (C) GENUINENESS OF THE TRANSACTION 6.2 IN APPELLANT'S CASE, APPELLANT OFFERED EXPLANATI ON ABOUT THE NATURE AND SOURCE OF CREDIT VIDE THE LETTER OF AUTHORIZED REPR ESENTATIVE DATED 08.02.2014 SUBMITTED DURING THE COURSE OF ASSESSMEN T PROCEEDINGS. 6.3 ADDITIONS U/S 68 OF THE ACT WERE MADE IN RESPECT OF THREE CREDITS MENTIONED IN PARA 2.1 SUPRA. OF THE THREE CREDITORS , SRI P.PARANDHAMAIAH DIED ON 02.03.2011. OTHER TWO CREDI TORS VIZ., SRI P.V.PRASADA RAO, S/O LATE SRI P.PARANDHAMAIAH AND S MT. M. SIVANI WERE SUMMONED BY ASSESSING OFFICER. THEY APPEARED BEFORE ASSESSING OFFICER AND A SWORN STATEMENT WAS RECORDED FROM THEM ON 14.03.201 4 & 21 .03.2014 RESPECTIVELY. THUS, PROOF OF IDENTITY OF CREDITORS WAS ESTABLISHED. THEY CATEGORICALLY CONFIRMED THE IMPUGNED LOAN TRANSACTI ONS. 6.4 REGARDING THEIR CAPACITY TO ADVANCE MONEY, THEY SUB MITTED THAT THEY HAD SUBSTANTIAL AGRICULTURAL INCOME OUT OF VAST WET LANDS AND DRY LANDS OWNED BY THEM. EXTENT OF LAND OWNED BY SRI (LATE) P .PARANDHAMAIAH (EXTENT OF AC.6.42 CENTS IN R.S.NO.67) WAS ALSO CON FIRMED BY TAHSILDAR, GANNAVARAM VIDE HIS LETTER RC.B.2/2014 DATED 28.02. 2014 RECEIVED IN RESPONSE TO ASSESSING OFFICER'S LETTER DATED 14.02. 2014. CERTIFICATES ISSUED BY DIFFERENT TAHSILDARS VIZ., NUZVID, MUSUNURU AND VRO, AGIRIPALLI (AVAILABLE IN ITMR) CONFIRM THE VAST LAND HOLDINGS OF THE CREDITORS. IN THE REMAND REPORT, THE ASSESSING OFFICER SUBMI TTED THAT INCOME TAX INSPECTOR WAS DEPUTED TO CAUSE INDEPENDE NT ENQUIRIES TO VERIFY THE LAND HOLDINGS OF CREDITORS AND THE CROPS GROWN IN THAT LAND. AS PER ITIS REPORT, THE LANDHOLDING IN THE NAME OF SR I (LATE) PARANDHAMAIAH & HIS SON, SRI P.V. PRASADA RAO AS CERTIFIED BY REV ENUE AUTHORITIES IS AC.50.46 CENTS. PADDY, CORN, MANGO, COTTON, ETC. AR E GROWN IN THEIR LANDS. SMT. M.SIVANI, ANOTHER CREDITOR HELD ABOUT 31 ACRES INCLUDING 11.74 ACRES IN S.NO.133 AND 1.26 ACRES IN S.NO.134. HENCE, THER E IS EVIDENCE FOR SUBSTANTIAL AGRICULTURAL INCOME SOURCE IN VIEW OF T HEIR LANDHOLDINGS AND THE CROPS GROWN THERE. HENCE, IN MY VIEW, THE SECON D CONDITION OF CAPACITY OF CREDITORS IS ALSO PROVED. 6.5 AS REGARDS THE GENUINENESS OF TRANSACTION, ALL THOSE LOANS(CREDITS) WERE ROUTED THROUGH BANKING CHANNEL (I.E.) APPELLANT RECEIVED THE CREDITS EITHER THROUGH CHEQUES OR FUND S WERE TRANSFERRED BY RIGS FROM THE CREDITORS BANK ACCOUNT TO APPELLANT'S BANK ACCOUNT. HENCE, GENUINENESS OF TRANSACTION IS ALSO ESTABLISHED. 6.6 ASSESSING OFFICER OBTAINED ALL RELEVANT BANK A CCOUNT COPIES IN ITA NO.12/VIZAG/2016 DR. MANDAVA GANGADHARA RAO, NUZVID 6 THIS REGARD BY ISSUING LETTERS U/S 133(6) OF THE AC T TO VARIOUS BANK AUTHORITIES. THE INCOME TAX INSPECTOR CAUSED ENQUIR IES DURING REMAND STAGE AND OBTAINED DETAILS OF CONFIRMATION REGARDIN G THE INVESTMENTS MADE IN VARIOUS CHIT FUNDS BY CREDITORS. THUS, THE CREDITORS BANK ACCOUNTS HAD ADEQUATE CASH BALANCE ON THE DATE OF TRANSFER O F FUNDS TO APPELLANT'S ACCOUNT. 6.7 ASSESSING OFFICER IN HIS REMAND REPORT ALSO CO NFIRMED THAT IMPUGNED ADDITION OFRS.1,05,00,000/-MAY NOT APPEAR TO BE JUSTIFIABLE. I AGREE WITH THE CONCLUSION DRAWN IN THE REMAND REPOR T THAT THE APPELLANT ESTABLISHED (1) IDENTITY OF CREDITORS (2) THE ABILI TY OF THE CREDITORS TO ADVANCE MONEYS AND (3) PRIMA FACIE THAT THE LOAN IS A GENUINE ONE. 6.8 THE JOINT COMMISSIONER OF INCOME-TAX, RANGE-3, VIJAYAWADA IN HIS ENDORSEMENT OF REMAND REPORT SUBMITTED THAT ADD ITIONS MADE IN THE ASSESSMENT ORDER MAY BE SUSTAINED FOR THE FOLLOWING REASONS: 1) CREDITWORTHINESS & GENUINENESS ARE NOT PROVED SI NCE NO EVIDENCE LIKE PROMISSORY NOTE OR OTHERWISE WAS FURNISHED. 2) THE SOURCES WERE NOT EXPLAINED WITH REFERENCE TO AGRICULTURAL RECEIPTS. 3) NO PROOF REGARDING THE SAVINGS OF THE CREDITORS GIVEN. ETC. 6.9 AFTER PERUSAL OF AVAILABLE MATERIALS IN INCOME TAX RECORDS AND THE DETAILED REMAND REPORT OF ASSESSING OFFICER, I FAIL TO PERSUADE MYSELF TO AGREE WITH THE AFOREMENTIONED SUBMISSION OF JCIT . 6.10 IN MY VIEW, APPELLANT OFFERED EXPLANATION AND DISCHARGED HIS ONUS BY ESTABLISHING THE AFORESAID THREE PRE-CONDIT IONS. APPELLANT IS NOT BOUND TO PROVE SOURCE OF THE SOURCE (I.E.) APPELLAN T'S BURDEN IS CONFINED TO PROVE THE CREDITWORTHINESS OF CREDITOR WITH REFE RENCE TO TRANSACTION BETWEEN APPELLANT AND CREDITOR. THE REMAND REPORT O F ASSESSING OFFICER ALSO CONFIRMS THAT IMPUGNED ADDITION OF RS.1 05,00, 000/- MAY NOT APPEAR TO BE JUSTIFIABLE. 6. THE A.O. HAS DEPUTED THE INSPECTOR AND CAUSED TH E ENQUIRIES AND CONCLUDED THAT THE CREDITORS ARE HAVI NG SUFFICIENT SOURCE AND THERE IS NO JUSTIFICATION FOR MAKING THE ADDITION. THERE IS NO DISPUTE WITH REGARD TO THE IDENTITY OF THE CREDITORS AND GENUINENESS OF THE LOANS. ONLY SUSPICION RAISE D BY THE JOINT COMMISSIONER OF INCOME TAX WAS NO EVIDENCE LIKE PRO MISSORY ITA NO.12/VIZAG/2016 DR. MANDAVA GANGADHARA RAO, NUZVID 7 NOTE, AGRICULTURAL RECEIPTS AND NO SOURCE FOR ACCUM ULATION OF SAVINGS. IN THE CASE OF LATE SHRI P. PARANDHAMAIAH , IT WAS EXPLAINED BY THE CREDITOR THAT THE SOURCE WAS FROM THE REALIZATION OF THE CHIT FUND AND AGRICULTURAL INCOM E, WHICH WAS ACCEPTED BY THE ASSESSING OFFICER. IN THE CASE OF P.V. PRASADA RAO, THE SOURCE WAS CHIT FUND, FIXED DEPOSITS, ETC. SIMILARLY, SMT. SIVANI HAS ALSO EXPLAINED THE SOURCES. THEREF ORE, HAVING EXPLAINED THE SOURCE ESTABLISHED THE IDENTITY AND G ENUINENESS, THERE IS NO CASE FOR MAKING ADDITION IN THE HANDS O F THE ASSESSEE. ACCORDINGLY, WE DO NOT FIND ANY INFIRMIT Y IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS UPHELD. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18 TH OCT17. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 18.10.2017 VG/SPS ITA NO.12/VIZAG/2016 DR. MANDAVA GANGADHARA RAO, NUZVID 8 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE DCIT, CIRCLE-3(1), VIJAYAWAD A 2. / THE RESPONDENT DR. MANDAVA GANGADHARA RAO, D.N O.2/14, S. VANI NURSING HOME, NEAR PETROL BUNK, NUZVID, KRISHNA DIS TRICT. 3. + / THE PRINCIPAL CIT, VIJAYAWADA 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM