Shri T. Prabhakar Rao, Hyderabad V. DCIT Central Cercle-7, Hyderabad

ITA 13/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59100 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 06-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained expenditure; Source of fund
• Section: 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, A.M. & SMT. ASHA VIJAYARAGHAVAN, J.M. ITA NO.13/HYD/2010 ASSESSMENT YEAR 2007-08 SHRI T. PRABHAKAR RAO, HYDERABAD (PAN ACJPT3984 D) VS THE DY. CIT, CIRCL E 7, HYDERABAD APPELLANT RESPONDENT APPELLANT BY : SHRI S. RAMA RAO RESPONDENT BY : SHRI T. DIWAKAR PRASAD DATE OF HEARING : 14.12.2011 DATE OF PRONOUNCEMENT : 6.1.2012 ORDER PER ASHA VIJAYARAGHAVAN, JM: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER PASSED BY THE CIT(A) I, HYDERABAD DATED 16.11.2009 AND IT PERTAINS TO THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS: THE APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMING THE ADDITION OF RS. 5,80,200/-, BEING THE CASH FOUND IN THE RESIDENCE O F THE ASSESSEE IN THE COURSE OF SEARCH OPERATIONS. 3. BRIEF FACTS OF THE CASE ARE THAT SHRI T. PRABHA R RAO IS THE DGM (PURCHASE AND COORDINATION) IN M/S MY HOME INDUSTRI ES LTD., SEARCH & SEIZURE OPERATIONS U/S 132 WAS CARRIED OUT IN THE R ESIDENCE OF THE ASSESSEE. IN THE COURSE OF SEARCH PROCEEDINGS, A CASH OF RS. 6,40,200/- WAS FOUND IN THE RESIDENCE OF SHRI. T. PRABHAR RAO, SHRI.T. PRA BHAR RAO WAS NOT PRESENT IN HIS RESIDENCE AT THE TIME OF SEARCH. HIS WIFE S MT. T. SHARMISHTA WHO WAS ITA NO.13/HYD/2010 SHRI T. PRABHAKAR RAO, HYD. 2 PRESENT AT THE TIME OF SEARCH, WHEN SHE WAS ASKED T O EXPLAIN THE SOURCE OF THE CASH FOUND IN THE RESIDENCE, SHE HAS STATED THA T OUT OF THE CASH FOUND OF RS 6,40,200/- AN AMOUNT OF RS 30,000/- BELONGS TO M R. SRINIVAS WHO IS AN ASSISTANT TO HER HUSBAND SHRI T. PRABHAKAR RAO AND RS. 20,000/- BELONGS TO HER WIDOW CO SISTER WHO STAYS WITH THEM. RS 10, 000/- BELONGS TO SHRI. YASHPAL RAO, HER BROTHER. BALANCE RS 5,80,200/- IS RELATED TO HAVE BEEN RECEIVED BY THEM AS CHIT MATURITY AMOUNTS. THESE C HITS HAVE BEEN PAID BY THEM FROM THEIR KNOWN SOURCES OF INCOME I.E., SALAR Y FROM MY HOME CEMENT INDUSTRIES, RENTAL INCOME ETC., SHE HAS DEPOSED IN HER STATEMENT THAT THE CHIT WAS WITH A PETTY BUSINESS MAN WHO DOES NOT MAI NTAIN ANY PASS BOOK ETC. 4. SUBSEQUENTLY SRI. T.PRABHAKAR RAO IN HIS SWORN DEPOSITION DATED 30.3.2007, HAS STATED THAT RS 5,80,200/- OUT OF THE CASH FOUND IN HIS RESIDENCE BELONGS TO THE TRANSPORTATION DEPARTMENT OF M/S MY HOME CONSTRUCTIONS P. LTD., AND THAT THE ABOVE CASH WAS GIVEN TO HIM FOR HANDING OVER TO THE IN CHARGE OF THE TRANSPORTATION DIVISIO N IN KODAD, WHEN THE FACT IS HIS WIFE SMT. T. SHARMISHTA IN HER SWORN DEPOSIT ION HAS STATED THAT AN AMOUNT OF RS 5,80,200/- HAS BEEN RECEIVED ON MATUR ITY OF CHITS. SRI PRABHAKAR IN HIS STATEMENT HAS STATED THAT THEY WER E EXPECTING CHIT AMOUNTS AND HIS WIFE MISTOOK THE CASH FROM M/S MY H OME CONSTRUCTIONS P. LTD., AS THE CASH FROM THE MATURITY OF CHITS, AS SH E WAS UNDER THE IMPRESSION THAT THE CHIT WAS ALREADY RECEIVED. 5. AO FELT THAT THERE IS NO EVIDENCE WHAT SO EVER TO PROVE THAT THE CASH AVAILABLE IN HIS RESIDENCE FORMS PART OF THE CASH BALANCEAS PER THE BOOKS OF ACCOUNTS OF M/S MY HOME CONSTRUCTIONS P. LTD., A S ON THE DAY OF SEARCH. FURTHER, THERE IS NO ENTRY IN THE BOOKS OF ACCOUNTS OF THE COMPANY TO SUBSTANTIATE THE FACT THAT THE CASH BELONG TO M/S M Y HOME CONSTRUCTIONS P. LTD., FURTHER IT IS FOUND THAT THE ASSESSEES WIFE HAS CLEARLY STATED IN HER SWORN STATEMENT THAT THE CASH FOUND IS FROM BIDDING OF CHITS, WHEREAS THE ASSESSEE HAS STATED THAT THE CASH PERTAIN TO THE CO MPANY M/S. MY HOME ITA NO.13/HYD/2010 SHRI T. PRABHAKAR RAO, HYD. 3 CONSTRUCTIONS P. LTD. THERE WAS CONTRADICTION IN TH E STATEMENTS OF THE ASSESSEE. FURTHER THERE WAS NO ENTRY IN THE BOOKS O F ACCOUNTS OF THE COMPANY AS ON THE DAY OF SEARCH, TO SUBSTANTIATE TH E ABOVE FACT. THE ASSESSEE HAS NOT FURNISHED ANY COGENT EVIDENCE TO S UBSTANTIATE THE SOURCES FOR THE CASH AVAILABLE IN HIS RESIDENCE. IN THE LI GHT OF THE ABOVE, OUT OF THE CASH FOUND OF RS 6,40,200/- AN AMOUNT OF RS 60,000/ - IS TREATED AS PROPERTY EXPLAINED AND FOR THE BALANCE AMOUNT OF RS 5,80,200/- THE AO TREATED THE ASSESSEE AS THE OWNER OF MONEY AND THE EXPLANATION OFFERED BY HIM IS NOT SATISFACTORY AND THE SAME WAS TREATED UN EXPLAINED MONEY AND DEEMED AS THE INCOME OF THE ASSESSEE U/S 69A OF THE ACT. 6. ON APPEAL THE CIT(A) CONFIRMED THE ADDITION OF RS. 5,80,200/- BEING CASH FOUND AT THE TIME OF SEARCH, OBSERVING AS UNDE R: I HAVE GONE THROUGH THE FACT OF THE CASE AND SUBMI SSIONS MADE BY THE APPELLANT. AS REGARDS THE CASH OF RS 5,80,200/- IT IS THE CONTENTION OF THE APPELLANT THAT THE SAID CASH BELONGS TO THE COMPANY MY HOME CONSTRUCTIONS LTD AND HE WAS GIVEN THE SAME FOR HAN DING OVER TO THE TRANSPORTATION DEPARTMENT AT KODAD, FROM THE STATEM ENTS RECORDED AT THE TIME OF SEARCH FROM DIFFERENT PERSONS I AM OF THE V IEW THAT THE APPELLANTS EXPLANATION IS NOTHING BUT AN AFTER THOUGHT TO EXP LAIN THE CASH, FIRST OF ALL THE APPELLANT WAS EMPLOYED WITH MY HOME INDUSTRIES LTD AND NOT MY HOME CONSTRUCTIONS LTD., WHY SHOULD THE CASH OF MY HOME CONSTRUCTION COME TO THE APPELLANT WHEN HE WAS NOT AN EMPLOYEE T HEREOF ? SECONDLY DURING THE SEARCH AT THE PREMISES OF MY HOME CONSTR UCTION LTD., THE STATEMENT OF SHRI G. HARIKUMAR FINANCE MANAGER WAS RECORDED. HE HAD NOT STATED THAT ANY CASH WAS HANDED OVER TO THE AP PELLANT FOR CARRYING TO TRANSPORT DEPARTMENT AT KODAD. FURTHER THERE WAS NO SUCH ENTRY IN THE BOOKS OF MY HOME CONSTRUCTION IN THIS REGARD. CONS IDERING THIS IT APPEARS THAT THE APPELLANT TRIES TO TAKE ADVANTAGE OF THE C ASH DEFICIT AT MY HOME CONSTRUCTION TO EXPLAIN THE CASH AVAILABLE WITH HIM . ON THE OTHER HAND THE STATEMENT GIVEN BY THE APPELLANTS WIFE AT THE TIM E OF SEARCH SOUNDS MORE ITA NO.13/HYD/2010 SHRI T. PRABHAKAR RAO, HYD. 4 CONVINCING . HER STATEMENT WAS SPONTANEOUS. FURTHER SHE HAS EXPLAINED THE TOTAL CASH AVAILABLE IN THE RESIDENCE. EVEN THE APPELLANT DOES NOT DISPUTE HER EXPLANATION OF CASH OF RS 60,000/- BELO NGING TO THREE OTHER PERSONS. THEREFORE IN MY VIEW THE STATEMENT OF THE APPELLANTS WIFE SUGGESTS THE CORRECT SOURCE OF THE CASH AVAILABLE. I MAY ALSO ADD THAT THE COMPANY HAS NOT COME FORWARD TO OWN UP THE CASH FOU ND IN THE APPELLANTS PREMISES. IT IS NOT OUT OF PLACE TO MEN TION THAT THE CHAIRMAN OF THE MY HOME GROUP HAD OWNED UP THE CASH AVAILABLE I N THE PREMISES OF THE DIRECTOR (TECH) SHRI R.K. ROYCHOUDHURY STATING THAT THE SAID AMOUNT BELONGED TO MY HOME POWER LTD. NO SUCH STATEMENT WA S FORTHCOMING IN APPELLANTS CASE NOR ANY EVIDENCE IN THIS REGARD HA S BEEN PRODUCED EITHER DURING THE ASSESSMENT OR APPELLATE PROCEEDINGS. TH US CONSIDERING THE TOTALITY OF THE FACT AND CIRCUMSTANCES OF THE CASE I AM OF THE VIEW THAT THE ASSESSING OFFICER HAS RIGHTLY ADDED THE AMOUNT TO A PPELLANTS INCOME. THE ADDITION OF RS 5,80,200/- MADE BY THE AO IS SUSTAIN ED. THIS EFFECTIVE GROUND OF APPEAL FAILS. 7. AGGRIEVED THE ASSESSEE IS ON APPEAL BEFORE US. IN SO FAR AS THE SAID AMOUNT OF RS 5,80,200/- IS CONCERNED THE ASSESSEE R EITERATED THAT IT BELONGS TO M/S MY HOME CONSTRUCTIONS P. LTD., AND THAT THE SAID AMOUNT WAS GIVEN TO HIM FOR BEING HANDED OVER TO THE PERSON IN CHARG E OF THE TRANSPORTATION DEPARTMENT AT KODAD. IT IS ALSO EXPLAINED THAT CAS H WAS AVAILABLE WITH M/S MY HOME CONSTRUCTIONS P. LTD IN ITS BOOKS OF ACCOUN T AND ON THE DATE OF SEARCH THERE WAS PHYSICAL DEFICIT CASH AT THE PREMI SES. THEREFORE THE ASSESSEE SUBMITTED THAT THE AMOUNT OF RS 5,80,200/- CAN NOT BE ADDED. 8. DURING THE COURSE OF SEARCH CASH OF RS. 5,80,20 0/- WAS FOUND AT THE RESIDENTIAL PREMISES OF THE ASSESSEE. THE WIFE OF T HE ASSESSEE CLAIMED IT AS PROCEEDS FROM MATURITY OF CHITS. BUT THE ASSESSEE C LAIMED IT TO BE THAT OF M/S HOME CONSTRUCTIONS P LTD. THE ASSESSEE ALSO SU BMITTED THAT THERE WAS SHORTAGE OF ACTUAL CASH FOUND WITH THAT COMPANY AGA INST THE CASH BALANCE AS PER BOOKS. THIS IS REFLECTED IN THE ORDER OF ITA T IN THE CASE OF M/S HOME ITA NO.13/HYD/2010 SHRI T. PRABHAKAR RAO, HYD. 5 CONSTRUCTIONS LTD IN ITA NO 78/HYD/2011 DT 20.10.20 11 FOR AY 2007-08. IN THAT ORDER THE TRIBUNAL HAS HELD AS UNDER: 2. THE REVENUES GROUND IS THAT THE CIT(A) ERRED IN HOLDING THAT CASH DEFICIT WAS DUE TO THE REASON THAT MONEY WAS SENT TO WORK SPOT. 3. BRIEF FACTS OF THE ISSUE ARE THAT THERE WAS A SE ARCH AND SEIZURE ACTION U/S 132 OF THE IT ACT. 1916 IN THE CASE OF ASSESSE ES GROUP OF CASES ON 7.2.2007. DURING THE COURSE OF SEARCH IT WAS OBSER VED THAT CASH BALANCE AS PER BOOKS OF ACCOUNT WAS AT RS. 67,38,69 1 BUT THE ACTUAL PHYSICAL CASH BALANCE WAS AT RS 12,23,210 AND THERE WAS A SHORTAGE OF RS 55,15,481. SINCE THERE WAS A DEFICIT CASH BA LANCE THE SAME WAS ADDED AS INCOME OF THE ASSESSEE. ON APPEAL THE CIT( A) DELETED THE ADDITION ON THE GROUND THAT THE ASSESSEE NOT ACCOUN TED THE CASH SENT TO WORK SPOT AND IT CANNOT BE CONSIDERED AS UNEXPLAINE D CASH. ACCORDINGLY THE CIT(A) DELETED THE SAME. AGAINST TH IS REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IN THIS CASE ADDITION WAS MADE ON ACCOUN T OF DEFICIT IN PHYSICAL CASH BALANCE AS COMPARED TO CASH BALANCE A S PER BOOKS OF ACCOUNT. IN OUR OPINION THIS DEFICIT OF CASH BALANC E CANNOT BE CONSIDERED AS UNEXPLAINED EXPENDITURE IN THE HANDS OF THE ASSE SSEE. EVEN IF IT IS UNEXPLAINED IT MAY BE THE REASON THAT CASH SENT TO WORK SPOT WAS NOT ACCOUNTED FOR AND IT CANNOT BE CONSIDERED IN ANY WA Y AS UNEXPLAINED EXPENDITURE OR INVESTMENT U/S 69 OF THE ACT. THE A SSESSING OFFICER HAS NOT MADE OUT ANY CASE UNDER THE PROVISIONS OF SECTI ON 69 OF THE ACT. ACCORDINGLY THE DELETION OF THE ADDITION BY THE CIT (A) IS JUSTIFIED. WE CONFIRM THE ORDER OF THE CIT(A) 5. IN THE RESULT THE APPEAL OF THE R EVENUE IS DISMISSED. ITA NO.13/HYD/2010 SHRI T. PRABHAKAR RAO, HYD. 6 9. THUS IT WAS FOUND THAT THERE WAS A SHORTAGE OF ACTUAL CASH AGAINST THE CASH AS PER THE BOOKS. THEREFORE THE EXPLANATION OF THE ASSESSEE IS PLAUSIBLE. THE AO SHOULD HAVE CROSS VERIFIED THE EX PLANATION OF THE ASSESSEE AGAINST THE EXPLANATION GIVEN BY THAT COMPANY FOR T HE PHYSICAL DEFICIT IN CASH AND WHETHER ACCORDING TO THE COMPANY THE PHYSI CAL DEFICIT OF CASH WOULD INCLUDE THE CASE FOUND WITH THE ASSESSEE. THI S HAS NOT BEEN DONE. WE HAVE THEREFORE NO OTHER OPTION BUT TO REMIT THE MAT TER BACK TO THE FILES OF THE AO FOR RE-EXAMINING THE ISSUE AFRESH AFTER GIVING T HE ASSESSEE REASONABLE OPPORTUNITY TO EXPLAIN THEIR CASE. THE AO CAN ALSO VERIFY WITH THE ASSESSMENT OF M/S HOME CONSTRUCTIONS P LTD TO SEE W HETHER THE PHYSICAL DEFICIT OF CASH IN THEIR ACCOUNTS COULD EXPLAIN THE CASH FOUND IN THE PREMISES OF THE ASSESSEE. HENCE, WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT IN THE LIGHT OF THE DIRECTION GIVEN BY US. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 6.1.2012 SD/- SD/- (CHANDRA POOJARI) ( (ASHA VIJAYA RAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 6 TH JANUARY, 2012 COPY FORWARDED TO: 1. SHRI S. RAMA RAO, ADVOCATE, 102, SHRIYAS ELEGANCE, DOOR NO.3-6-643, ST. NO.9, HIMAYATNAGAR, HYDERABAD 2. THE DCIT, CIRCLE 7, HYDERABAD 3. THE CIT(A)- I, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/