K Satyanarayana Reddy, Hyderabad V. ITO, Ward-1, Karimnagar

ITA 1336/HYD/2014

• Counselvise Citation: 133622514 RSA 2014
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 22-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained investment; Source of fund; Additional evidence; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1336/HYD/2014 ASSESSMENT YEAR: 2007-08 K. SATYANARAYANA REDDY, KARIMNAGAR. PAN AIFPR 8377L VS. INCOME-TAX OFFICER, WARD 1, KARIMNAGAR. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.V. RAGHURAM REVENUE BY : SHRI RAJAT MITRA DATE OF HEARING 18-03-2015 DATE OF PRONOUNCEMENT 01-04-2015 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST OR DER DATED 16/06/2014 PASSED BY LD. CIT(A)-III, HYDERABAD FOR A.Y. 2007-08. 2. THE SOLE GRIEVANCE OF ASSESSEE IS WITH REGARD TO ADDITION OF AN AMOUNT OF RS. 14,73,000 MADE BY AO AND CONFIRMED BY LD. CIT(A). 3. BRIEFLY THE FACTS ARE, ASSESSEE AN INDIVIDUAL DE RIVES INCOME FROM COMMISSION/BROKERAGE. FOR THE AY UNDER CONSIDE RATION, ASSESSEE FILED HIS RETURN OF INCOME ON 23/03/09 DEC LARING TOTAL INCOME OF RS. 1,04,484. IN COURSE OF ASSESSMENT PROCEEDING , AO WHILE VERIFYING COPY OF THE SAVINGS BANK ACCOUNT MAINTAI NED BY ASSESSEE WITH CORPORATION BANK, KARIMNAGAR BRANCH FOUND THAT NUMBER OF CASH DEPOSITS AMOUNTING TO RS. 14,73,000 HAVE BEEN MADE INTO THE SAID BANK ACCOUNT STARTING FROM 08/04/2006 TO 06/02/2007 . AS STATED BY 2 ITA NO. 1336/HYD/2014 K. SATYANARAYANA REDDY AO, THOUGH, ASSESSEE WAS SPECIFICALLY ASKED TO EXPL AIN THE SOURCE OF SUCH CASH DEPOSITS INTO THE BANK ACCOUNT, BUT, ASSE SSEE IN SPITE OF OPPORTUNITY OF BEING GIVEN TO HIM FAILED TO EXPLAIN THE SOURCE OR FURNISH ANY OTHER INFORMATION. AO INFERRING THAT AS SESSEE HAS NO EXPLANATION TO OFFER FOR THE SOURCE OF CASH DEPOSIT S INTO THE BANK ACCOUNT, TREATED THE ENTIRE DEPOSIT OF RS. 14,73,00 0 AS UNEXPLAINED INVESTMENT AND ADDED IT TO THE INCOME FOR THE IMPUG NED AY. BEING AGGRIEVED OF SUCH ADDITION MADE BY AO, ASSESSEE PRE FERRED APPEAL BEFORE THE LD. CIT(A). 4. IN COURSE OF HEARING OF APPEAL BEFORE LD. CIT(A) , ASSESSEE EXPLAINING THE SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNT SUBMITTED THAT SOME CUSTOMERS HAVE PAID ADVANCES TO HIM FOR P URCHASING SITES/PLOTS WHICH WERE RECEIVED IN CASH AND DEPOSIT ED IN THE BANK ACCOUNT. IN SUPPORT OF SUCH CONTENTION, ASSESSEE FU RNISHED SWORN AFFIDAVITS FROM SEVENTEEN PERSONS FROM WHOM ASSESSE E CLAIMED TO HAVE RECEIVED ADVANCES IN CASH. LD. CIT(A) AFTER CO NSIDERING THE SUBMISSIONS OF ASSESSEE AND ADDITIONAL EVIDENCES FI LED IN THE FORM OF AFFIDAVITS CALLED FOR A REMAND REPORT FROM AO. AO A FTER GOING THROUGH THE AFFIDAVITS SUBMITTED BY ASSESSEE, OBSERVED THAT ALL THE AFFIDAVITS WERE PREPARED ON 21/01/2010 AND THE CONTENTS OF THE AFFIDAVITS ARE IDENTICAL. HE FURTHER OBSERVED THAT THE AFFIDAVITS ARE NOTHING BUT AN AFTER THOUGHT OF ASSESSEE TO EXPLAIN THE SOURCE OF CASH DEPOSITS. AO OBSERVED, THE GENUINENESS OF THE PERSONS AND THEIR CREDITWORTHINESS ALSO ARE NOT ESTABLISHED. HE ALSO OPINED THAT IF TH E PERSONS CONCERNED HAVE REALLY GIVEN ADVANCES TO ASSESSEE IN 2006, THE N, NO MATERIAL HAS BEEN PRODUCED TO SHOW THAT ADVANCES WERE EITHE R UTILIZED BY ASSESSEE IN ARRANGING PLOTS FOR THEM OR THE ADVANCE S WERE REFUNDED BACK TO THE CONCERNED PERSONS. HE ALSO OPINED, ASS ESSEE COULD HAVE SUBSTANTIATED ITS CLAIM THAT IT HAS RECEIVED ADVANC E TOWARDS REAL ESTATE TRANSACTIONS BY FURNISHING REGISTERED SALE D EEDS TO SHOW THAT HE HAS ARRANGED PURCHASE OF HOUSING PLOTS FOR THE P ERSONS FROM WHOM HE CLAIMED TO HAVE RECEIVED ADVANCES. THUS, AO OBSE RVED THAT THE 3 ITA NO. 1336/HYD/2014 K. SATYANARAYANA REDDY CLAIM OF ASSESSEE THAT THE DEPOSITS IN THE BANK ACC OUNT REPRESENT ADVANCES RECEIVED FROM PROSPECTIVE BUYERS OF PLOT I S NOT BELIEVABLE. ON THE BASIS OF THE REPORT SUBMITTED BY AO, LD. CIT (A) OBSERVED THAT ASSESSEE COULD NOT EXPLAIN HOW HE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING EVIDENCES BEFORE AO, HENCE, THE ADDI TIONAL EVIDENCES ARE NOT ACCEPTABLE. LD. CIT(A) FURTHER OBSERVED, AS SESSEES CLAIM THAT HE RECEIVED ADVANCES FROM PROSPECTIVE BUYERS T OWARDS PURCHASE OF LAND IS ALSO NOT BELIEVABLE AS AFFIDAVITS SUBMIT TED BY ASSESSEE REVEALED THAT NONE OF THE PERSONS ARE HAVING PERMAN ENT ACCOUNT NO. NOR THEIR SOURCES OF INCOME ARE AVAILABLE. HE ALSO OBSERVED, FROM THE AFFIDAVITS IT IS NOT FORTHCOMING THE EXACT LOCATION OR IDENTITY OF THE PLOT OF LAND GOING TO BE PURCHASED BY THOSE PERSONS AGAI NST WHICH THE ADVANCE WAS GIVEN. LD. CIT(A) CONCLUDED THAT THREE LIMBS OF SECTION 68, I.E. IDENTITY OF THE PERSON, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS ARE NOT PROVED. ACCORDINGLY HE CON FIRMED THE ADDITION. 5. LD. AR SUBMITTED BEFORE US, WHEN ASSESSEE HAS FU RNISHED EVIDENCE INFORM OF AFFIDAVITS OF PERSONS, WHO ADVAN CED MONEY IN CASH TO ASSESSEE TOWARDS PURCHASE OF PLOT NEITHER AO NOR LD. CIT(A) WAS JUSTIFIED IN BRUSHING ASIDE THOSE EVIDENCES WITHOUT EXAMINING WHETHER THE CONTENTS OF THE AFFIDAVITS ARE TRUE OR FALSE. L D. AR SUBMITTED, WITHOUT EXAMINING THE CORRECTNESS OF ASSESSEES CLA IM, THE DEPARTMENTAL AUTHORITIES WERE NOT CORRECT IN TREATI NG THE CASH DEPOSITS AS UNEXPLAINED INVESTMENT FROM ASSESSEE. 6. LD. DR, ON THE OTHER HAND, STRONGLY RELYING UPON THE OBSERVATIONS MADE BY AO AND LD. CIT(A) SUBMITTED, A SSESSEE HAVING FAILED TO PROVE SOURCE OF CASH DEPOSITS INTO THE BA NK ACCOUNT WITH SUPPORTING EVIDENCE, ADDITION MADE IS JUSTIFIED. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OT HER MATERIAL ON RECORD. UNDISPUTEDLY, DURING THE PREVIOUS YEAR RELE VANT TO AY UNDER 4 ITA NO. 1336/HYD/2014 K. SATYANARAYANA REDDY CONSIDERATION ASSESSEE HAS MADE CASH DEPOSITS OF RS . 14,73,000 IN HIS BANK ACCOUNT. AS IT APPEARS, IN COURSE OF ASSES SMENT PROCEEDING ASSESSEE, FOR WHATEVER MAY BE THE REASON, HAS NOT E XPLAINED THE SOURCE OF SUCH CASH DEPOSITS AS A RESULT OF WHICH, AO HAS TREATED THE ENTIRE CASH DEPOSITS OF RS. 14,73,000 AS UNEXPLAINE D INVESTMENT OF ASSESSEE. HOWEVER, IN COURSE OF HEARING OF APPEAL B EFORE LD. CIT(A) ASSESSEE HAS NOT ONLY SUBMITTED AN EXPLANATION TO T HE EFFECT THAT CASH DEPOSITS REPRESENT ADVANCES RECEIVED IN CASH F ROM PROSPECTIVE BUYERS OF PLOT BUT IN SUPPORT OF SUCH CONTENTION HA S ALSO FURNISHED AFFIDAVITS OF SEVENTEEN PERSONS AS ADDITIONAL EVIDE NCE. IT IS ALSO A FACT ON RECORD THAT LD. CIT(A) HAS CALLED FOR A RE MAND REPORT FROM AO ON THE EVIDENCES SUBMITTED BEFORE HIM. THEREFORE, O NCE LD. CIT(A) HAS ACCEPTED THE ADDITIONAL EVIDENCE AND CALLED FOR A REMAND REPORT, IN OUR VIEW, HE WAS NOT JUSTIFIED IN OBSERVING THAT ADDITIONAL EVIDENCES ARE NOT ACCEPTABLE. FURTHER, WHEN ASSESSEE IN SUPPO RT OF HIS CLAIM THAT THE CASH DEPOSITS IN THE BANK ACCOUNT REPRESEN T ADVANCES RECEIVED FROM SEVENTEEN PERSONS TOWARDS PURCHASE OF PLOT HAS FURNISHED SWORN AFFIDAVITS CONTAINING THEIR NAME, A DDRESS ETC., THE EXPLANATION FURNISHED BY ASSESSEE ALONG WITH EVIDEN CES IN FORM OF AFFIDAVIT WERE CAPABLE OF BEING EXAMINED BY DEPARTM ENTAL AUTHORITIES THROUGH A PROCESS OF ENQUIRY AND INVESTIGATION. WHE N THE AUTHENTICITY OF AFFIDAVITS WERE SENT FOR VERIFICATION OF AO, IF HE HAD ANY DOUBT, HE COULD HAVE EITHER SUMMONED THE PERSONS CONCERNED O R COULD HAVE CALLED UPON ASSESSEE TO PRODUCE THOSE PERSONS FOR E XAMINATION. WITHOUT DOING SO OR MAKING ANY ENQUIRY TO PROVE THE AVERMENTS MADE IN THE AFFIDAVITS TO BE FALSE NEITHER AO NOR LD. CI T(A) WERE JUSTIFIED IN CONCLUDING THAT AFFIDAVITS ARE MERELY AN AFTER THOU GHT AND THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CREDITORS A RE NOT PROVED. IN OUR VIEW WITHOUT EXAMINING THE VERACITY OF THE AVER MENTS MADE IN THE AFFIDAVITS THE DEPARTMENTAL AUTHORITIES WERE NOT CO RRECT IN COMING TO A CONCLUSION ON PRESUMPTIONS AND SURMISES. IN THE AFO RESAID FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE MATTER R EQUIRES EXAMINATION BY AO AGAIN. ACCORDINGLY, WE SET ASIDE THE IMPUGNED 5 ITA NO. 1336/HYD/2014 K. SATYANARAYANA REDDY ORDER OF LD. CIT(A) AND REMIT THE MATTER BACK TO TH E FILE OF AO TO EXAMINE THE SOURCE OF CASH DEPOSITS INTO THE BANK A CCOUNT BY MAKING NECESSARY ENQUIRY IN SO FAR AS ASSESSEES CLAIM OF HAVING RECEIVED ADVANCES FROM SEVENTEEN PERSONS FROM WHOM AFFIDAVIT S HAVE BEEN SUBMITTED BY ASSESSEE. AO, IF SO REQUIRED, MAY IS SUE SUMMONS TO THE CONCERNED PERSONS OR CALL UPON ASSESSEE TO PROD UCE THEM FOR THE PURPOSE OF EXAMINATION TO FIND THE AUTHENTICITY OF ASSESSEES CLAIM. ONLY AFTER MAKING PROPER ENQUIRY AND INVESTIGATION WITH REGARD TO ASSESSEES CLAIM, AO MUST TAKE A DECISION ON THE IS SUE. NEEDLESS TO SAY, ASSESSEE MUST BE AFFORDED A REASONABLE OPPORTU NITY OF BEING HEARD IN THE MATTER. 8. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 1 ST APRIL, 2015. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED:1 ST APRIL, 2015 KV COPY TO:- 1) SHRI K. SATYANARAYANA REDDY, C/O K. VASANTKUMAR, A.V. RAGHURAM, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD 500 001. 2)ITO, WARD 1, O/O ADDL. CIT, AAYAKAR BHAVAN, KAR IMNAGAR-505001 3) CIT(A)-III, HYDERABAD 4) CIT-II, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6 ITA NO. 1336/HYD/2014 K. SATYANARAYANA REDDY