G.Adinaryana Naidu, Tirupathi V. ITO, Tirupathi

ITA 1408/HYD/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66471 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 18-06-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 02-09-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y V S J SAI
• Assessee Lawyers: S RAMA RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1408/HYD/2008 ASSESSMENT YEAR : 2005-06 G. ADINARAYANA NAIDU, APPELLANT TIRUPATI. (PAN AFBPG 0062 L) VS. INCOME-TAX OFFICER, RESPONDENT WARD 2(2), TIRUPATI APPELLANT BY : SHRI S. RAMA RAO RESPONDENT BY : SHRI YVSJ SAI DATE OF HEARING : 11/10/2012 DATE OF PRONOUNCEMENT : 09/11/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF CIT(A), TIRUPATI, DATED 13/06/2008 FOR THE ASSES SMENT YEAR 2005-06. 2. THERE WAS A DELAY OF ONE DAY IN FILING THE APPEA L BEFORE US AND THE SAME IS CONDONED BY US AFTER HEARING THE PARTIE S AND ADMITTED THE APPEAL FOR ADJUDICATION. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE HAD FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERA TION ON 2 ITA NO. 1408/HYD/2008 G. ADINARAAYNA NAIDU 31/10/2007. THE ASSESSEE DERIVES INCOME FROM MONEY LENDING AND FOR THE YEAR THE ASSESSEE HAD RETURNED A TOTAL INCO ME OF RS. 89,040/- IN ADDITION TO RS. 43,000/- OF AGRICULTURA L INCOME. THE RETURN WAS TAKEN UP FOR SCRUTINY AND DURING THE COU RSE OF ASSESSMENT AN AMOUNT OF RS. 9,13,000/-, WHICH WAS D EPOSITED IN THE ASSESSEES BANK ACCOUNT WAS TREATED AS UNEXPLAI NED INCOME AND THE TOTAL INCOME WAS DETERMINED AT RS. 10,02,040/-. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). 5. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT T HE ASSESSEE IS AN AGRICULTURIST AND ALSO DERIVES INTEREST ON LOANS GIVEN TO HIS FRIENDS AND RELATIVES. THE ASSESSEE ADMITTED INTERE ST RECEIVED ON LOANS GIVEN OF RS. 96,000/- AND LOSS OF RS. 6,962/- FROM HOUSE PROPERTY FOR THE YEAR UNDER CONSIDERATION. HE FURTH ER SUBMITTED THAT HIS BROTHERS DAUGHTER SMT. A. SWARNAKUMARI, WORKIN G AS HOUSE KEEPER IN KUWAIT ALONG WITH HER HUSBAND WHO WAS A D RIVER SENT MONIES TO HER PARENTS FROM TIME TO TIME. DURING THE YEAR UNDER CONSIDERATION, SHE APPROACHED THE ASSESSEE TO PURCH ASE AGRICULTURAL LAND IN AND AROUND TIRUPATI FOR HER AND ASKED HER P ARENTS TO HANDOVER RS. 6,50,000/- FOR PURCHASE OF LAND AND HA D SENT ON 06/09/2004 RS. 3,50,000/- AND ON 07/09/2004 RS. 3,0 0,000/-, WHICH THE ASSESSEE DEPOSITED THE SAME INTO HIS CANA RA BANK ACCOUNT ON THE SAME DATES. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD WITHDRAWN RS. 2.00 LAKHS ON 27/09/2004 & RS. 3.5 LAKHS ON 29/09/2004 TO PAY ADVANCE WITH RESPECT TO AGREEMENT FOR SALE FOR THE LAND TO BE PURCHASED IN THE NAME OF SM T. A. SWARNAKUMARI, BUT LATER ON HE CAME TO KNOW THAT SOM E LEGAL 3 ITA NO. 1408/HYD/2008 G. ADINARAAYNA NAIDU PROBLEMS PERTAINING TO THE PROPERTY WHICH DISABLED THE SELLER FROM REGISTRATION OF THE LAND. THEREFORE, IT WAS EXPLAIN ED THAT THE ASSESSEE HAD TO BACK RS. 4.00 LAKHS AND RS. 1.50 L AKHS OUT OF RS. 5.50 LAKHS ADVANCED TOWARDS LAND AND THE SAME WAS DEPOSITED INTO CANARA BANK ACCOUNT ON 05/10/2004 & 04/11/2004 RESP ECTIVELY. THE ASSESSEE CONTENDED THAT THE AO HAD NOT ACCEPTED THE EXPLANATION GIVEN BY THE ASSESSEE THOUGH CONFIRMATION LETTER FR OM SMT. A. SWARNAKUMARI AT KUWAIT, WAS ALREADY FILED BEFORE TH E AO. 6. THE ASSESSEE FURTHER SUBMITTED THAT HE HAD GIVEN MONIES TO S. GHOUSE BASHA THROUGH CHEQUES OF RS. 3,83,000/- ON C ANARA BANK ACCOUNT ON DIFFERENT DATES AS SHRI GHOUSE BASHA INT ENDED TO SEEK A JOB IN KUWAIT. OUT OF RS. 3,83,000/-, HE HAD PAID B ACK RS. 1.30 LAKH ON 18/11/2004 AND THE SAME WAS DEPOSITED AND RS. 83 ,000/- WAS ALSO RETURNED BY HIM ON 08/01/2005 OF RS. 70,500/- AND RS. 12,500/- ON 05/02/2005, WHICH WERE DEPOSITED INTO A CCOUNT OF THE ASSESSEE. CONFIRMATION LETTER FROM S. GHOUSE BASHA WAS FILED BY THE ASSESSEE AND THE LETTER WAS NOT ACCEPTED BY THE AO AS HE WAS NOT CONVINCED. THE ASSESSEE PRAYED THAT THE ADDITION M ADE OF RS. 10,02,040/- TO BE DELETED IN ITS ENTIRETY BEFORE TH E CIT(A). 7. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) HELD THAT AS REGARDS THE SOURCE OF DEPOSIT OF RS. 6 ,50,000/-, THE APPELLANT HAS ONLY PRODUCED AN ACCOMMODATION LETTER GIVEN BY HIS BROTHERS DAUGHTER STATING THAT I HAVE SENT RS. 8 LAKHS TO MY PARENTS TO ACQUIRE AGRICULTURAL LAND NEAR TIRUPATI . BUT THE APPELLANT HAS NOT GIVEN ANY EVIDENCE OF THE MODE OF DISPATCH AND RECEIPT OF THE MONEY FROM KUWAIT TO TIRUPATI. HENCE, THE CIT(A ) AGREED WITH THE AOS FINDING THAT IT IS ONLY AN ACCOMMODATION LETTER WITHOUT 4 ITA NO. 1408/HYD/2008 G. ADINARAAYNA NAIDU ANY CORROBORATIVE EVIDENCE AND HELD THAT THE SAME C ANNOT BE ACCEPTED. AND, THEREFORE, UPHELD THE ACTION OF THE AO. 8. AS REGARDS THE DEPOSIT OF RS. 2,63,000/- MADE ON DIFFERENT DATES, THE CIT(A) OBSERVED THAT AN AMOUNT OF RS. 3 LAKHS WAS GIVEN TO MR. S. GHOUSE BASHA ON 08/10/2004 AND HE RETURNE D THIS AMOUNT AS AND WHEN THE FUNDS WERE AVAILABLE WITH HIM, BUT THERE IS NO EVIDENCE PRODUCED BEFORE HIM SUBSTANTIATING THIS ST ATEMENT. HENCE, HE HELD THAT IN THE ABSENCE OF ANY EVIDENCE, THE DE POSITS HAVE BEEN RIGHTLY TREATED AS THE APPELLANTS INCOME FROM UNE XPLAINED SOURCES BY THE AO. 9. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT(A) IS BAD IN LAW AN D AGAINST THE FACTS OF THE CASE. 2. THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT THE APPELLANT HAS PRODUCED THE CONFIRMATION LETTER FROM HIS NIECE, CO NFIRMING THE DETAILS OF THE AMOUNTS SENT BY HER FROM TIME TO TIME FOR PU RCHASE OF AGRICULTURAL LAND. 3. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THE A PPELLANT HAS EXPLAINED IN DETAIL AS REGARDS THE DEPOSIT OF THE M ONEY AND THERE IS NO GROUND FOR TREATING THE AMOUNT DEPOSITED IN THE BAN K ACCOUNT AS INCOME FROM UNEXPLAINED SOURCE. 4. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THE A PPELLANT HAS DISCHARGED HIS DUTY OF EXPLAINING THE SOURCE FO R THE DEPOSITS MADE AND TREATING THE AMOUNT AS INCOME FRO M UNEXPLAINED SOURCE IS NOT BASED ON ANY EVIDENCE. 5. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THE D EPOSIT OF RS. 2,63,000/- WAS OUT OF THE FUNDS RETURNED BY MR. S. BHASHA FROM TIME TO TIME OUT OF THE EARLIER AMOUNTS ADVANC ED TO HIM. 6. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THE A PPELLANT DERIVES INTEREST INCOME FROM LOANS AND ADVANCES, AN D SOME PART OF THE CAPITAL IS ALWAYS IN ROTATION. THE LEAR NED CIT(A) 5 ITA NO. 1408/HYD/2008 G. ADINARAAYNA NAIDU OUGHT TO HAVE CONSIDERED THAT THE MONEYS ADVANCED A ND RETURN BACK HAVE BEEN DEPOSITED INTO BANK FROM TIME TO TIM E. 7. THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THE EVIDENCES FILED DURING THE COURSE OF ASSESSMENT AND TIME TO T IME. 8. THESE AND FOR ANY OF THE GROUND THAT MAY BE RAIS ED AT THE TIME OF HEARING THE APPELLANT PRAYS THAT THE ORDER OF THE LEARNED CIT(A) BE SET ASIDE AND THE ADDITION OF RS. 9,13,000/- BE DELETED IN THE INTERESTS OF JUSTICE. 10. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 11. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SHRI S. RAMA RAO SUBMITTED THAT SMT. A. SWARNAKUMARI, WAS WORKIN G AS HOUSE KEEPER IN KUWAIT ALONG WITH HER HUSBAND, WHO A DRIV ER. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT DUR ING THE AY 2005- 06, SHE HAD APPROACHED HER UNCLE, THE ASSESSEE, TO PURCHASE AGRICULTURAL LAND IN AND ROUND TIRUPATI FOR HER AND ASKED HER PARENTS TO HANDOVER RS. 6,50,000/- FOR PURCHASE OF LAND I.E . RS. 3,50,000/- ON 06/09/2004 AND RS. 3,00,000/- ON 07/09/2004 AND THE ASSESSEE DEPOSITED THE SAME INTO HIS CANARA BANK ACCOUNT ON THE SAME DATES. THE LEARNED COUNSEL EXPLAINED THAT THE ASSE SSEE WITHDRAWN RS. 2.00 LAKHS ON 27/09/2004 & RS. 3.5 LAKHS ON 29/ 09/04 TO PAY ADVANCE FOR THE LAND TO BE PURCHASED IN THE NAME OF SMT. A. SWARNAKUMARI, BUT LATER DUE TO SOME LEGAL PROBLEMS THE REGISTRATION DID NOT GO THROUGH. HENCE, THE ASSESSEE TOOK BACK T HE ADVANCES WITH REFERENCE TO PURCHASE OF LAND RS. 4.00 LAKHS & RS. 1.50 LAKHS OUT OF RS. 5.50 LAKHS AND DEPOSITED INTO CANARA BAN K ACCOUNT ON 05/10/2004 & 04/11/2004 RESPECTIVELY. IT IS CONTEND ED THAT THE ITO, WARD 2(2), TIRUPATI HAS NOT ACCEPTED THE EXP LANATION GIVEN BY THE ASSESSEE THOUGH CONFIRMATION LETTER FROM SMT . A. SWARNAKUMARI AT KUWAIT, WAS ALREADY FILED BEFORE TH E ITO. 6 ITA NO. 1408/HYD/2008 G. ADINARAAYNA NAIDU 12. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SU BMITTED THAT HE HAS GIVEN MONIES TO SHRI S. GHOUSE BASHA THROUGH CH EQUES OF RS. 3,83,000/- ON CANARA BANK ACCOUNT ON DIFFERENT DATE S AS HE INTEND TO SEEK A JOB IN KUWAIT AND OUT OF RS. 3,83,000/- H E HAS PAID BACK RS. 1.30 LAKHS ON 18/11/2004 AND THE SAME WAS DEPOS ITED AND RS. 83,000/- WAS ALSO RETURNED BY HIM ON 08/01/2005 OF RS. 70,500/- AND RS. 12,500/- ON 05/02/2005 WERE DEPOSITED IN AC COUNT. THE LEARNED COUNSEL CONTENDED THAT CONFIRMATION LETTER FROM S. GHOUSE BASHA FILED BY THE ASSESSEE WAS NOT ACCEPTED BY THE AO STATING THAT IT IS NOT CONVINCING. 13. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SU BMITTED THAT SHRI S. GHOUSE BASHA WAS IN EMPLOYMENT AT KUWAIT AN D THAT HE HAD TAKEN LOANS OF RS. 3,00,000/- ON 08/10/2004, RS. 75 ,000/- ON 20/10/2004 AND RS. 8,000/- ON 28/10/2004 FROM THE A SSESSEE THROUGH CHEQUES DRAWN FROM CANARA BANK AND ALSO TAK EN ANOTHER AMOUNT OF RS. 83,000/-. IT WAS POINTED OUT BY THE L EARNED COUNWEL FOR THE ASSESSEE THAT THE AMOUNT OF RS. 1,70,000/- WAS SPENT FOR THE PURPOSE OF GETTING EMPLOYMENT IN KUWAIT, VISA A ND TOWARDS FLIGHT CHARGES. IT IS SUBMITTED THAT PRIOR TO EMPLO YMENT AT KUWAIT, SHRI GHOUSE BASHA LIVED IN THE SAME VILLAGE WHERE T HE ASSESSEE ALSO RESIDED. IT IS SUBSTANTIATED THAT THE ASSESSEE GAVE THE AMOUNT AS STATED ABOVE TO GHOUSE BASHA PURELY ON COMPASSIONAT E GROUND AS HE HAD INCOME FROM AGRICULTURE, WHICH WAS THE ONLY SOURCE OF HIS INCOME. IT WAS SUBMITTED THAT SHRI S. GHOUSE BASHA REPAID THE BALANCE AMOUNT OF RS. 2,13,000/- IN INSTALMENTS, I. E., RS. 1,30,000/- ON 18/10/2004, RS. 70,500/- ON 08/01/200 5 AND RS. 12,500/- ON 05/02/2005. 7 ITA NO. 1408/HYD/2008 G. ADINARAAYNA NAIDU 14. THE LEARNED DR SHRI Y.V.S.J SAI, ON THE OTHER H AND, SUBMITTED THAT IDENTITY OF THE PARTIES HAS ONLY BEEN ESTABLIS HED AND NOT THE GENUINENESS OF THE TRANSACTIONS. 15. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES , PERUSED THE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND FROM THE PAPER BOOK FILED BY THE LEARNED COUNS EL FOR THE ASSESSEE THAT THE SMT. A. SWARNAKUMARI IS WORKING A T KUWAIT. SMT. A. SWARNAKUMARI HAS STATED THAT SHE HAD ASKED THE A SSESSEE TO IDENTIFY THE PROPERTY FOR HER NEAR TIRUPATI AND HAD SENT MONIES TO HER PARENTS FOR THE SAME. WE FIND THAT THE PROPERTY HAS BEEN REGISTERED IN HER NAME AS DOCUMENTS NO. 6360 OF 200 7. COPY OF THE PLAN OF THE PLOT HAS BEEN ENCLOSED AT PAGE 12 OF TH E PAPER BOOK. COPY OF THE SALE DEED DATED 30/07/2007 FOR PURCHASE OF PROPERTY BY SMT. A. SWARNAKUMARI HAS BEEN FILED AT PAGES 6 TO 1 4 OF THE PAPER BOOK, WHERE THE MARKET VALUE OF THE PROPERTY HAS BE EN MENTIONED AS RS. 6,06,000/-. COPY OF THE LETTER FROM SMT. A. SWARNAKUMARI HAS BEEN FILED AT PAGE 4 OF THE PAPER BOOK STATING THAT SHE HAS REPAID THE LOANS TAKEN FROM THE ASSESSEE. 16. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THA T SOME MORE ENQUIRIES HAVE TO BE CARRIED OUT BY THE AO IN ORDER TO CORROBORATE THE STATEMENT OF THE ASSESSEE. THE AO SHALL ENQUIRE FROM SMT. A. SWARNAKUMARI AS TO THE DETAILS OF SALARY SHE WAS DR AWING AT KUWAIT AND ENQUIRE THE PARENTS OF SMT. A. SWARNAKUMARI WIT H RESPECT TO PURCHASE OF PROPERTY. SIMILARLY, THE AO SHALL MAKE DETAILED ENQUIRY WITH RESPECT TO SHRI GHOUSE BASHA AND VERIFY WHETHE R HE HAS LEFT FOR KUWAIT AND IF HE HAS NOT GONE TO KUWAIT, ISSUE SUMM ONS TO HIM AND 8 ITA NO. 1408/HYD/2008 G. ADINARAAYNA NAIDU PASS ORDERS IN ACCORDANCE WITH LAW. HENCE, WE RESTO RE THE ISSUE TO THE FILE OF THE AO TO DECIDE THE SAME AFTER PROVIDI NG REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE TO ESTABLISH THE SOURCE OF THE BANK DEPOSITS MADE BY THE ASSESSEE TO THE SATISFACT ION OF THE AO. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 9 TH NOVEMBER, 2012. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAY ARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 9 TH NOVEMBER, 2012 KV COPY TO:- 1) G. ADINARAYANA NAIDU, NO. 906, II FLOOR, SAI RESIDE NCY, BAIRAGIPATTEDA, TIRUPATI, 2) ITO, WARD 2(2), TIRPATHI 3) THE CIT (A), TIRUPATI 4) THE CIT, TIRUPATI CHARGE, TIRUPATI 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., H YDERABAD. S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER