V. Rama Rao, Hyderabad V. ITO, Ward-9(1), Hyderabad

ITA 1504/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59102 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 19-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE CHANDRA POOJARI, ACCOUNTANT MEMBER & SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1504/HYD/2011 ASSESSMENT YEAR 2005-06 SHRI. V. RAMA RAO, HYDERABAD (PAN ABVPV0876F) VS TH E ITO, WARD 9(1), HYDERABAD APPELLANT RESPONDENT APPELLANT BY : SHRI RAMA RAO RESPONDENT BY : SHRI T. DIWAKAR PRASAD DATE OF HEARING : 26.12.2011 DATE OF PRONOUNCEMENT : 6.1.2012 ORDER PER ASHA VIJAYARAGHAVAN, JM: THIS APPEAL PREFERRED BY THE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) VI, HYDERABAD DATED 25. 7.2011 AND PERTAINS TO THE ASSESSMENT YEAR 2005-06. 2. BRIEF FACTS OF THE CASE ARE THAT THE PENALTY W AS LEVIED ON THE FOLLOWING ADDITIONS:- A) UNEXPLAINED CREDITORS -RS.22,90,377/- B) UNEXPLAINED CASH CREDITS -RS.80,50,000/- 2.1. THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS.80,50,000/- TOWARDS UNEXPLAINED CASH CREDITS FRO M 47 PARTIES. THE ASSESSING OFFICER HAS ALSO FOUND THAT THE ASSESSEE HAD RECORDED EXPENSES OF RS.3,31,82,320/- UNDER LOR RY HIRE CHARGES PAID ACCOUNT AND THEN MADE A SINGLE ENTRY OF RS,22,90,377/- AT THE END OF THE ACCOUNT AS LORRY H IRE CHARGES ITA NO.1504/H/2011 SHRI V. RAMA RAO, HYDERABAD 2 PAYABLE. THIS LATTER AMOUNT WAS CORRESPONDINGLY, RE FLECTED IN THE BALANCE SHEET AS SUNDRY CREDITORS. NEITHER ANY B REAK UP OF THIS FIGURE WAS AVAILABLE IN THE BOOKS NOR WAS THE APPEL LANT ABLE TO FURNISH IT IN THE COURSE OF THE ASSESSMENT PROCEEDI NGS. ON THE OTHER HAND, HE ACCEPTED IN HIS STATEMENT DATED 26.1 2.2007 BEFORE THE ASSESSING OFFICER THAT HE COULD NOT FURN ISH THE PARTICULARS. THUS, NEITHER ANY NAMES AND ADDRESSES OF THE ALLEGED CREDITORS NOR ANY SUPPORTING VOUCHERS WERE PRODUCED. THE ASSESSING OFFICER, THEREFORE, ADDED THE SUNDRY CREDITORS OF RS.22,90,377/- TO THE INCOME OF THE ASSESSEE. WHIL E ARRIVING AT THIS DECISION, THE ASSESSING OFFICER ALSO TOOK NOTE OF THE FACT THAT THERE WERE SERIOUS DISCREPANCIES IN THE VOUCHERS FO R THE OTHER EXPENSES UNDER THIS HEAD. SOME VOUCHERS DID NOT BE AR THE SIGNATURE OF THE RECIPIENT, VEHICLE NUMBERED WERE R EPEATED IN SOME, AND SOMETIMES THE VEHICLE NUMBERS WERE SAME B UT THE RECIPIENT WERE DIFFERENT. 2.2. THE ADDITION MADE BY THE ASSESSING OFFICER WE RE CONSIDERED IN APPEAL BY THE CIT(A) WHO REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE INCOME AT RS.22,90,377/-. HE SIMULTANEOUSLY DELETED THE ADDITION OF RS.22,90,377 /- TOWARDS UNEXPLAINED CREDITORS BUT SUSTAINED AN ADDITION OF RS.62,49,455/- OUT OF THE SUM OF RS.80,50,000/- TOW ARDS CASH CREDITS. 3. ON APPEAL THE ITAT UPHELD THE ADDITION OF RS.22 ,90,377/- TOWARDS UNEXPLAINED CREDITORS AND RS..5.5 LAKHS TO WARDS CASH CREDITS. 4. IN HIS PENALTY ORDER DATED 30.03.2010, THE ASSE SSING OFFICER LEVIED PENALTY ON THE BASIS OF THE CIT(A)S ORDER, ON CONCEALED INCOME OF RS.85,39,832/-. ITA NO.1504/H/2011 SHRI V. RAMA RAO, HYDERABAD 3 5. ON APPEAL BEFORE THE CIT(A), THE CIT(A) CONFIRM ED THE PENALTY ON THE ISSUE OF UNEXPLAINED CREDITORS. WITH RESPECT TO THE PENALTY ON ACCOUNT OF UNEXPLAINED CASH CREDIT, THE CIT(A) HELD THAT THE ITAT HAS SUSTAINED THE ADDITION TO TH E EXTENT OF RS.5.5. ONLY AND DELETED THE BALANCE. AND THE CIT( A) EXTRACTED THE OBSERVATION OF THE ITAT IN THIS REGARD AS FOLLO WS:- HOWEVER, CREDIT IN RESPECT OF 3 PERSONS, NAMELY SH RI KOMMINENI VENKATESWARLU (RS.2 LAKHS) SMT KOMMINENT KOTAMMA (RS.1.5 LAKHS) AND SMT G.MANGAMMA (RS.2 LAK HS) ARE TO BE SUSTAINED SINCE THEY HAVE NOT APPEARED BE FORE THE LOWER AUTHORITIES TO EXPLAIN THE SOURCE OF CREDIT. THEIR IDENTITY NOT PROVED AND THE GENUINENESS TRANSACTION IS ALSO DOUBTFUL. 6. AGGRIEVED THE ASSESSEE HAS PREFERRED APPEAL BEF ORE US. THE LD. COUNSEL FOR THE ASSESSEE SHRI RAMA RAO HAS SUBM ITTED THAT AT PAGE 18, 20 AND 22 OF THE PAPER BOOK, LETTERS HA VE BEEN FILED TO THE INCOME TAX OFFICER WHEREIN MANGAMMA KOMMIENE NI VENKATESWARALU AND SMT KOTAMMA HAVE EXPLAINED THAT IT IS NOT POSSIBLE TO PRODUCE PHANI AS THE SAME HAS TO BE OBT AINED FROM MANDAL REVENUE OFFICE. THIS WOULD BE TIME CONSUMING , HOWEVER, I HAVE ALREADY SUBMITTED COPY OF PATTADAR PASS BOOK WHICH IS A GOOD EVIDENCE REGARDING POSSESSION OF LA ND. THREE PERSONS ALSO SUBMITTED THAT THEY OWN HOUSE IN THE V ILLAGE AND AGRICULTURAL LAND FROM WHICH AGRICULTURAL INCOME IS DERIVED. 7. THE LD. COUNSEL ALSO SUBMITTED THAT ALL THE THR EE PERSONS HAVE FILED CONFIRMATION LETTER WHICH ESTABLISH THEI R CREDIT WORTHINESS AND THAT THOUGH THE EXPLANATION OFFERED WAS NOT CONSIDERED SUFFICIENT FOR ACCEPTING THE CASH CREDIT S DURING ASSESSMENT, IT CANNOT BE SAID TO REPRESENT CONCEALE D INCOME. ITA NO.1504/H/2011 SHRI V. RAMA RAO, HYDERABAD 4 8. THE LD. COUNSEL ALSO RELIED ON THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS (322 ITR 158) (SC). 9. THE LD. DR SHRI T. DIWAKAR PRASAD RELIED ON T HE DECISION IN THE CASE OF R.B. MITTAL VSS. CIT (AP HC) (246 ITR 283). 10. WE HEARD BOTH THE PARTIES. WE FIND MERIT IN T HE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT CREDIT HAS BEEN ACCEPTED BY THE CREDITOR IT CANNOT BE SAID THAT THE AMOUNTS BELONG TO THE ASSESSEE HEREIN. THE ASSESSING OFFICER WHILE MAKIN G ADDITION UNDER SECTION 68 OF THE ACT, DID NOT PROVE THAT THE AMOUNT REPRESENTS THE INCOME OF THE ASSESSEE AND SUCH INCO ME WAS DIVERTED IN THE SHAPE OF CASH CREDIT FOR ESTABLISHI NG THAT THE SAME IS CONCEALED INCOME OF THE ASSESSEE. IT IS ONL Y A CASE OF THE DEPARTMENT NOT ACCEPTING THE EXPLANATION OF THE ASS ESSEE. IT CANNOT BE SAID THAT THE EXPLANATION OFFERED WAS NOT GENUINE. MERELY BECAUSE THE EXPLANATION OFFERED BY THE ASSES SEE HAS BEEN REJECTED, PENALTY CANNOT BE LEVIED. 13. WE HEARD BOTH THE PARTIES. AS RIGHTLY OBSERV ED BY THE CO- ORDINATE BENCH IN ITA NO.235/HYD/2009, CREDIT IN RE SPECT OF 3 PERSONS, NAMELY SHRI K. VENKATESWARULU (RS.2 LAKHS) , SMT. K. KOTTAMMA (RS.1 LAKH) AND SMT. G. MANGAMMA (RS.2 LAK HS) ARE TO BE SUSTAINED SINCE THEY HAVE NOT APPEARED BEFORE THE LOWER AUTHORITIES TO EXPLAIN THE SOURCE OF CREDIT. THEIR IDENTITY NOT PROVED AND THE GENUINENESS OF TRANSACTIONS ARE ALS O DOUBTFUL. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON: 6.1.201 2 SD/- SD/- (CHANDRA POOJARI) ( (ASHA VIJAYA RAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER ITA NO.1504/H/2011 SHRI V. RAMA RAO, HYDERABAD 5 DATED THE 6 TH JANUARY, 2012 COPY FORWARDED TO: 1. SHRI S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS RESIDENCY, ROAD NO.9, HIMAYATNAGAR, HYDERABAD. 2. THE ITO WARD 9(1), HYDERABAD 3. THE CIT(A) VI, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/