Randi Sanyasi Naidu, Vizianagaram V. The Income Tax Officer, Ward-2, , Vizianagaram

ITA 125/VIZ/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 4997 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 05-07-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Corroborative evidences
• Section: 145; 144; 142(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI DUVVURU R L REDDY, HON’BLE JUDICIAL MEMBER & SHRI S. BALAKRISHNAN, HON'BLE ACCOUNTANT MEMBER I.T.A. No.125/VIZ/2021 (Asst. Year :2011-12) Randi Sanyasi Naidu, Madanapuram, Vizianagaram District. PAN: AVXPR 2418 M Vs. Income Tax Officer, Ward-2, Vizianagaram. (Appellant) (Respondent) Assessee by: Sri G.V.N. Hari Revenue by: Sri SPG Mudaliar, Sr. AR Date of hearing: 08/03/2022 Date of pronouncement: 07/04/2022 O R D E R PER S. BALAKRISHNAN, ACCOUNTANT MEMBER This appeal filed by the assessee against the order of the Ld. CIT (A)-1, Visakhapatnam in ITA No. 296/2014-15/CIT(A)-1/VSP/2020-21, dated 26/08/2020 passed u/s. 144 r.w.s 250(6) of the Act for the AY 2011-12. 2. The assessee has raised three grounds in his appeal and they are extracted herein below for reference: “1. The order of the Ld. CIT(A) is contrary to the facts and also the law applicable to the facts of the case. 2 2. The Ld. CIT(A) is not justified in partly sustaining the addition to the extent of Rs. 18,30,599/- out of the total addition of Rs. 40,30,599/- made by the Assessing Officer towards alleged unexplained investment in liquor business. 3. Any other ground or grounds that may be urged at the time of hearing.” 3. Brief facts of the case are that the asessee is an individual carrying on the business of purchase and sale of Indian Made Foreign Liquor in Vizianagaram District. The assessee has filed his return of income declaring total income of Rs. 5,84,379/- and agricultural income of Rs. 65,000/- on 30/09/2011. Subsequently, the return was selected for scrutiny with the approval of the Chief Commissioner of Income Tax, Visakhapatnam vide order No. 64/CCIT/Vsp/Tech/2012-13, dated 22/08/2012. Notices U/s. 143(2) and 142(1) dated 6/09/2012 & 11/07/2013 respectively were serviced on the assessee. In response to the notices, the assessee failed to appear before the Ld. AO and therefore, the Ld. AO issued show cause notice dated 10/02/2014. However, the assessee failed either to reply or to appear in person for the show cause issued by the Ld. AO. Considering the assessee’s non-compliance, the Ld. AO concluded the assessment proceedings U/s. 144 of the Act and rejected the books of account invoking the provisions of section 145 of the Act. In the assessment, the Ld. AO estimated the profit of the 3 assessee @ 5% on the sale of IMFL and also added the capital balance of Rs 40,30,599/-, as on 31.03.2011 net of profit admitted. The difference in profit estimated by the Ld. AO is Rs. 65,773/- and thereby the additions aggregating to Rs 40,96,372/- was added to the income of the assessee. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A)-1, Visakhapatnam. 4. Before the Ld.CIT (A), the assessee filed additional evidences viz., investment agreement in support of joint investment and the confirmation letters of associates along with supporting evidences for the capital introduced by the assessee. The Ld. CIT (A) remanded the additional evidence to the Ld. AO on 23/11/2005 for verification and remand report. The Ld. CIT (A) also noted that no remand report was received from the Ld. AO. Therefore, the Ld. CIT (A) based on the submissions made by the assessee estimated that the assessee has invested Rs. 2 lakhs as reasonable capital based on the sources of funds produced by the assessee. The Ld. CIT (A) also verified the confirmation letters and Pattadar Pass Books of the associates and concluded that the investments shall be Rs. 20 lakhs from the associates, which is a reasonable estimate. Accordingly, the Ld. CIT (A) sustained the addition to the extent of Rs. 18,30,599/- (Rs 40,30,599 – Rs 22,00,000/-) out of 4 the total addition of Rs. 40,30,599/- made by the Ld. AO. Aggrieved by the order of the Ld. CIT (A), the asessee is in appeal before us. 5. At the outset, the Ld. AR submitted that the details of investments by the associates of the assessee are given at para 6.5 of the Ld. CIT (A)’s order and it is entirely out of agricultural income and own savings of various individuals who have signed investment agreement. Before us, the Ld. AR pleaded that the amount of Rs. 18,30,599/- confirmed by the Ld. CIT (A) may be deleted. 6. Per contra, the Ld. DR had strongly relied on the order of the Ld. CIT (A) and argued in support of the same. 7. We have heard both the sides and verified the records produced before us as well as the orders of the authorities below. The Ld. CIT (A) in para 6.6 of his order has found that the identity of the associates and the genuineness of the transaction is established in the form of investment agreement. However the creditworthiness of the associates was not satisfactorily established to Ld.CIT(A). Therefore, we find that the Ld. CIT (A) has reasonably estimated the quantum of investment made by various individuals based on their land holdings and the annual income earned by them at Rs. 20,00,000/-. In view of the above, we agree with the findings of the Ld. CIT(A) and in our considered opinion 5 there is no infirmity in the order of the Ld. CIT (A). Accordingly, the grounds raised by the assessee are dismissed. 7. In the result, appeal of the assessee is dismissed. Pronounced in the open Court on the 07 th April, 2022. Sd/- Sd/- (DUVVURU R L REDDY) (S. BALAKRISHNAN) Judicial Member Accountant Member Dated: 07 th April, 2022. OKK Copy to: 1. The Assessee:Randi S any asi N aidu, Prop. Sri N aidu Wines, K. T amar ap alli Village, M ad an apur am, Vizian agar am Dist. 2. The Revenue: Income T ax Off icer, W ard-2, Siddh ar th N agar, Viz ian agar am. 3. Pr. C IT-1, Vis akhap atn am. 4. The C IT (A)-1, Visakh ap atn am. 5. The D.R., IT AT, Visakh ap atn am. 6. Gu ard f ile. By order Sr. Private Secretary, ITAT, Visakhapatnam.