Sri M Veeranna, Hyderabad V. ITO, Ward - 9(1), Hyderabad

ITA 1365/HYD/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7636 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 30-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A V RAGHURAM
• Keywords: Additional evidence; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICAL MEMBER ITA.NO.1365/HYD/2014 ASSESSMENT YEAR 2009-2010 MR. M. VEERANNA HYDERABAD PAN AFCPV-6002-J VS. INCOME TAX OFFICER WARD 9 (1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. A.V. RAGHURAM FOR REVENUE : MR. SOLGY JOSE T KOTTARAM DATE OF HEARING : 27.08.2014 DATE OF PRONOUNCEMENT : 03.09.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-V, HYDERABAD DATED 24.03.2014 FOR THE A.Y. 2009- 2010 ON THE ISSUE OF CONFIRMATION OF DEPOSITS MADE INTO THE BANK ACCOUNT TO AN EXTENT OF RS.92,09,700/-. 2. BRIEFLY STATED, ASSESSEE IS AN INDIVIDUAL AND A .O. HAS RECEIVED INFORMATION THROUGH THE AIR THAT SUBSTANTI AL CASH DEPOSITS WERE MADE IN THE SB ACCOUNTS OF THE ASSESS EE IN ICICI BANK, HDFC BANK AND DEVELOPMENT CREDIT BANK. IN THE COURSE OF SCRUTINY PROCEEDINGS, A.O. ASKED THE ASSESSEE TO EX PLAIN THE SOURCE FOR CASH DEPOSITS IN THE BANK ACCOUNT. ASSES SEE EXPLAINED THAT A PARTNERSHIP FIRM WAS CONSTITUTED ON 13.05.20 08 WITH 20 PARTNERS UNDER THE NAME AND STYLE OF M/S. VIJETHA FINANCE AND PART OF THE DEPOSITS PERTAIN TO THE FIRM. HE SUBMI TTED THAT BUSINESS COULD NOT BE CARRIED ON DUE TO DISPUTES AM ONG THE 2 ITA.NO.1365/HYD/2014 MR. M. VEERANNA, HYDERABAD. PARTNERS AND BUSINESS WAS CLOSED BUT DUE TO OPERATI ONAL REASONS ASSESSEES PERSONAL BANK ACCOUNTS WERE UTILIZED FOR DOING ASSESSEES BUSINESS. SINCE ASSESSEE COULD NOT SUBST ANTIATE THE CONTENTIONS MADE, A.O. TREATED THE ENTIRE CASH DEPO SITS OF RS.92,09,700/- AS INCOME FROM UNEXPLAINED SOURCE AN D BROUGHT THE SAME TO TAX. 3. BEFORE THE LD. CIT(A) ASSESSEE FILED WRITTEN SUBMISSIONS ALONG WITH ADDITIONAL EVIDENCE WHICH WA S REFERRED TO THE A.O. UNDER RULE 46A. IT WAS THE SUBMISSION OF T HE ASSESSEE THAT THE FUNDS BELONG TO M/S. VIJETHA FINANCE, THER E ARE PARTNERS AND ALL TRANSACTIONS PERTAIN TO THE FIRM AND SOURCE OF THE FUNDS ARE ALSO CONTRIBUTIONS BY VARIOUS PARTNERS. LD. CIT (A) EXAMINED AND CALLED FOR REMAND FROM THE A.O. WHO GAVE A REMA ND REPORT INDICATING THAT OUT OF 8 PARTNERS WHO HAVE FILED VO LUNTARY CONFIRMATIONS ONLY ONE PERSON CONFIRMED BEING PARTN ER AND INVESTED RS. 3,00,000 WHEREAS, OTHER 7 PARTNERS EVE N THOUGH CONFIRMED AS PARTNER DID NOT MAKE ANY INVESTMENTS. WITH REFERENCE TEN PARTNERS WHO HAVE FILED REPLIES IN RE SPONSE TO SUMMONS THEY HAVE CONFIRMED BEING PARTNERS AND INVE STED RS.5,00,000 EACH BUT NO SUPPORTING EVIDENCE HAS BEE N FILED ALONG WITH THE CONFIRMATION LETTERS. WITH REFERENCE TO BA LANCE 8 PERSONS THERE WAS NO REPLY FROM ANY ONE OF THEM. ACCORDINGL Y, HE REQUESTED THE LD. CIT(A) TO CONSIDER THE ISSUE ON M ERITS. A.O. ALSO CONFIRMED THAT THE FIRM HAS OPENED BANK ACCOUNT IN THE MONTH OF OCTOBER, 2008 ITSELF. HOWEVER, DUE TO OPERATIONAL R EASONS SAID ACCOUNT WAS NOT OPERATED. SINCE ASSESSEE HAS FAILED TO EXPLAIN OPERATIONAL REASONS WHICH LEAD TO SUCH ACTIVITY OF DEPOSITING CASH OF FIRM IN HIS OWN ACCOUNTS, A.O. DID NOT ACCEPT TH E EXPLANATION AND CONCLUDED THAT ASSESSEE NEITHER FILED CORRECT A ND FULL 3 ITA.NO.1365/HYD/2014 MR. M. VEERANNA, HYDERABAD. INFORMATION FOR EXAMINATION BEFORE THE A.O. NOR FIL ED BEFORE THE APPELLATE AUTHORITY. 4. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND REMAND REPORT, AGREED WITH THE FINDING S OF THE A.O. GIVEN IN THE LAST PARA OF HIS REMAND REPORT. IN VIE W OF THE OBSERVATIONS, HE HELD THAT A.O. WAS JUSTIFIED IN TR EATING THE CASH DEPOSITS AS UNEXPLAINED INCOME OF THE ASSESSEE. ASS ESSEE IS AGGRIEVED AND RAISED GROUNDS ACCORDINGLY INCLUDING THE ISSUE OF NOT GIVING PROPER OPPORTUNITY AND VIOLATION OF NATU RAL JUSTICE. 5. LD. COUNSEL REFERRING TO THE PAPER BOOK FILED B EFORE THE LD. CIT(A) SUBMITTED THAT THE FIRM M/S. VIJETHA FIN ANCE WAS A REGISTERED FIRM AND CERTIFICATE OF REGISTRATION WAS FILED AT PAGE 42 OF THE PAPER BOOK AND DUE TO INFORMAL WAY OF DOING BUS INESS, THE FIRMS BANK ACCOUNT WAS NOT OPERATED FULLY AND MOST OF THE FIRM FUNDS ARE OPERATED THROUGH THE BANK ACCOUNTS OF THE ASSESSEE. HE REFERRED TO THE STATEMENTS OF BANK AND ALSO ACCOUNT S MAINTAINED IN THIS REGARD AND MONTHLY STATEMENTS INCLUDING PAY MENTS AND RECEIPTS FILED BEFORE THE LD. CIT(A) TO SUBMIT THAT ALL TRANSACTIONS PERTAIN TO THE FIRM AND ALL THE 26 PEOPLE OTHER THA N ASSESSEE WERE SIGNATORIES EVERY MONTH TO THE RECEIPTS AND PAYMENT S. REFERRING TO THE REMAND REPORT IT WAS SUBMITTED THAT 10 PERSONS HAVE CONFIRMED INVESTING ABOUT RS. 5,00,000 AND EVEN FRO M THE REPORT OF THE A.O. ONE PERSON OUT OF FIRST 8 LISTED IN TAB LE-1 CONFIRMED INVESTMENT IN RS. 3,00,000. IN SPITE OF THAT, NO CR EDIT WAS GIVEN TO ANY OF THE ABOVE AMOUNTS AND ENTIRE MONEY WAS BROUG HT TO TAX IN THE HANDS OF THE ASSESSEE. FURTHER, THE ISSUE OF PE AK CREDIT WAS ALSO NOT CONSIDERED EVEN THOUGH RAISED BEFORE THE L D. CIT(A), IF THOSE STATEMENTS OF THE PARTNERS WERE NOT ACCEPTED. IT WAS SUBMITTED THAT MATTER CAN BE REMITTED TO THE A.O. F OR EXAMINATION OF COMPLETE DETAILS. 4 ITA.NO.1365/HYD/2014 MR. M. VEERANNA, HYDERABAD. 6. LEARNED D.R. HOWEVER, RELIED ON THE ORDERS OF T HE A.O. AND LD. CIT(A) AND SUBMITTED THAT ASSESSEE HAS CREA TED A PARTNERSHIP FIRM WITH ONLY 20 PEOPLE BUT THE DOCUME NTS PLACED ON RECORD INDICATE THAT THERE ARE 27 PERSONS. SINCE RE TURNS OF THE FIRM ARE NOT FILED, THEY CANNOT BE ACCEPTED AS SUCH AND THE SOURCE OF INVESTMENT IN THE BANK ACCOUNTS COULD NOT BE ACCEPT ED. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE DOCUMENTS PLACED ON RECORD. AS SEEN FROM THE RE TURNS FILED, ASSESSEE IS HAVING INDIVIDUAL BUSINESS ALSO AS PROP RIETOR OF PRAJAPATI JOURNAL. ASSESSEE ALSO HAS PARTNERSHIP FI RM IN THE NAME OF M/S. VIJETHA FINANCE WHOSE STATEMENT OF ACCOUNTS AND DOCUMENTS OF TRANSACTIONS WERE FILED BEFORE THE LD. CIT(A) WHICH WERE SIGNED BY ALL THE SO-CALLED PARTNERS. ASSESSEE ALSO PLACED ENTIRE STATEMENT OF ACCOUNTS OF BANKS IN WHICH THER E ARE CASH DEPOSITS AND CASH WITHDRAWALS REGULARLY TO SUPPORT THE CONTENTION THAT THESE ARE BUSINESS TRANSACTIONS. HOWEVER, IT I S NOT KNOWN FOR WHAT PURPOSE THE DEPOSITS ARE MADE AND WITHDRAWN RE GULARLY AND WHETHER ANY OF THE INTEREST RECEIVED IN THE NAME OF THE FINANCE BUSINESS OF THE FIRM WERE ALSO CREDITED INTO THE BA NK ACCOUNTS. IT IS ALSO REQUIRED TO BE VERIFIED, IF PARTNERS HAVE I NVESTED FUNDS, THE DATES OF INVESTMENT OF FUNDS AND THEIR RESPECTIVE D EPOSITS IN THE BANK ACCOUNTS. AS SEEN FROM THE DOCUMENTS, NO SUCH DETAILS WERE FURNISHED EXCEPT THAT EACH OF THE PARTNER HAS TO DE POSIT RS.5,00,000 INTO THE BUSINESS. A.O. ORDER ALSO DOES NOT INDICATE THAT DATES OF DEPOSITS AND HOW THE AMOUNTS ARE ARRI VED AT. THE BRIEF ORDER OF THE A.O. ONLY QUANTIFIED THE AMOUNT OF DEPOSITS IN THE FIRST PAGE ITSELF, WITHOUT GIVING THE DATES OF DEPOSITS. WITHDRAWAL FROM ONE BANK AND DEPOSIT IN ANOTHER AL SO REQUIRE EXAMINATION, SINCE IT IS THE CONTENTION EVEN BEFORE THE A.O. MOREOVER THE CONTENTION THAT THE TRANSACTIONS PERTA IN TO FIRM CAN 5 ITA.NO.1365/HYD/2014 MR. M. VEERANNA, HYDERABAD. NOT BE REJECTED OUTRIGHT AS FIRM WAS REGISTERED EVE N A.O. ACCEPTS IN THE REMAND REPORT THAT THERE WAS A BANK ACCOUNT IN THE NAME OF THE FIRM BUT TRANSACTIONS ARE LESS. UNLESS THE D EPOSITS IN BANK ACCOUNT OF THE FIRM AND ALSO THE DEPOSITS IN THE IN DIVIDUAL ACCOUNT OF THE ASSESSEE ARE CO-RELATED AND ANALYSED, IT IS VERY DIFFICULT TO ACCEPT OR REJECT THE CONTENTION OF THE ASSESSEE. IN VIEW OF THIS, WE ARE OF THE OPINION THAT THESE ARE REQUIRE FRESH EXA MINATION BY THE A.O. AND ACCORDINGLY, THE ORDER OF A.O. AND LD. CIT (A) ON THE ISSUE REQUIRE TO BE SET ASIDE. EVEN, WE ARE SURPRISED THA T LD. CIT(A) IN SPITE OF HAVING A REMAND REPORT FROM THE A.O. ACCEP TING THE DEPOSITS FROM SOME OF THE PARTNERS, DID NOT GIVE CR EDIT TO ANY OF THE CONFIRMATIONS FILED AND SIMPLY WENT BY THE REPO RT OF THE A.O. THAT ASSESSEE DID NOT EXPLAIN WHY PARTNERSHIP FIRM ACCOUNT WAS NOT UTILIZED DUE TO OPERATIONAL REASONS. WE ARE OF THE OPINION THAT THIS REQUIRES FRESH EXAMINATION AND ACCORDINGLY, TH E IMPUGNED ORDERS OF THE AUTHORITIES ARE SET ASIDE AND ISSUE O F CASH DEPOSITS IN THE BANK ACCOUNT ARE RESTORED TO THE FILE OF THE A. O. A.O. SHOULD EXAMINE ALL THE BANK ACCOUNTS AND THE ACCOUNTS OF T HE ASSESSEE IN ITS PROPRIETARY CONCERN AND ALSO THE PARTNERSHIP FI RM SO AS TO ANALYSE DEPOSITS AND DECIDE ACCORDINGLY. WITH THESE DIRECTIONS, ASSESSEES GROUNDS ARE CONSIDERED AS ALLOWED FOR ST ATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 03.09.2014. SD/- SD/- (SAKTIJIT DEY) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 03 RD SEPTEMBER, 2014 VBP/- 6 ITA.NO.1365/HYD/2014 MR. M. VEERANNA, HYDERABAD. COPY TO 1. MR. M. VEERANNA, HYDERABAD, C/O. MR. A.V. RAGHU RAM, & P. VINOD, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD 500 001. 2. INCOME TAX OFFICER, WARD 9(1), 2 ND FLOOR, I.T. TOWERS, A.C. GUARDS, HYDERABAD 500 004. 3. CIT(A)-V, HYDERABAD 4. CIT-VI, HYDERABAD 5. D.R. B BENCH, ITAT, HYDERABAD.