Madala Chandhana, Hyd, Hyderabad V. ITO, Ward-6(3), Hyderabad

ITA 1507/HYD/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0362 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 23-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 22-08-2011
• Court: TRIBUNAL
• Department Lawyers: B RAJARAM
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 1507/HYD/2011 ASSESSMENT YEAR: 2008-09 SMT MADALA CHANDANA, HYDERABAD [PAN: AKLPM2799M] VS INCOME TAX OFFICER , WARD-6(3), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : S HRI P. MURALI MOHAN RAO, A R FOR REVENUE : S HRI B. R A J A RAM , DR DATE OF HEARING : 23 - 0 6 - 201 5 DATE OF PRONOUNCEMENT : 26 - 0 6 - 2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-IV, HYDERABAD DATED 23-06-2011. ASSESSEE HAS RAISED THREE ISSUES IN THE APPEAL. 2. BRIEFLY STATED, ASSESSEE IS AN INDIVIDUAL AND H AS OFFERED INCOME OF RS. 1,84,690/- IN ADDITION TO AGRICULTURE INCOME OF RS. 3,41,461/-. ASSESSING OFFICER (AO) NOTICED THAT ASSESSEE IS NOT CLAIMED ANY EXPENDITURE OUT OF THE AGRICULTURE INCOME DECLARED. THEREFORE, HE CONSIDERED AN AMOUNT OF RS. 1,36,584/- AS UNEXPLAIN ED EXPENDITURE AND BROUGHT TO TAX WHEREAS INCOME FROM THE AGRICULTURE CORRESPONDINGLY REDUCED. IT WAS THE CONTENTION THAT AO IS NOT CORR ECT IN DISALLOWING EXPENDITURE AND BRINGING TO TAX. LD. DR SUPPORTED THE ORDERS. I.T.A. NO. 1507/HYD/2011 SMT. MADALA CHANDANA :- 2 -: 3. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PERU SING THE RECORD, WE NOTICED THAT ASSESSEE HAS NOT FURNISHED ANY EXPLANA TION WITH REFERENCE TO EARNING OF AGRICULTURE INCOME NOR THERE WAS ANY CLAIMS MADE ABOUT GROSS AGRICULTURE INCOME AND NET AGRICULTURE INCOME . AO SIMPLY CONSIDERED THE CHEQUE AMOUNT RECEIVED FROM SARITA S UGARS, CHEJERLA BRANCH AS THE GROSS AGRICULTURE INCOME AND ACCORDIN GLY ESTIMATED 40% OF THE SAME TO BE EXPENDITURE FOR EARNING THE AMOUN T. THERE IS NO REASON FOR THE AO TO ESTIMATE THE EXPENDITURE AND TREAT THE SAME AS UNEXPLAINED AND AT THE SAME TIME REDUCING THE AGRIC ULTURE INCOME BY THE SAME AMOUNT. IT SEEMS THAT PROPER OPPORTUNITY WAS NOT GIVEN TO ASSESSEE AND THE NATURE OF AGRICULTURE LANDS NOR TH E INCOME GENERATED WERE EXAMINED. IN VIEW OF THIS, WE ARE OF THE OPIN ION THAT THIS MATTER REQUIRES RE-EXAMINATION BY THE AO BY GIVING DUE OPP ORTUNITY TO ASSESSEE. ACCORDINGLY, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. AO IS DIRECTED TO RE-EXAMINE THE ISSUE AND DECIDE I T ON THE FACTS AND LAW. 4. NEXT ISSUE FOR CONSIDERATION RAISED IN GROUND NO . 2 IS WITH REFERENCE TO ADDITION OF RS. 18,25,000/- ON ACCOUNT OF UN-EXPLAINED CASH DEPOSITS. AO NOTICED THAT DURING THE PERIOD 15-11- 2007 TO 17-11-2007 AN AMOUNT OF RS. 25,00,000/- WAS DEPOSITED IN ASSES SEE'S BANK A/C IN ING VYSYA BANK, NELLORE BRANCH. WHEN ASKED ABOUT T HE SOURCES OF THE ABOVE DEPOSIT, ASSESSEE FURNISHED NAMES OF NINE PER SONS WITH RELEVANT CONFIRMATIONS INCLUDING SUPPORTING EVIDENCES LIKE C ERTIFICATE FROM MANDAL REVENUE OFFICE ETC. OUT OF THE NINE PERSONS , THREE PERSONS I.E., SHRI G. VENKATRATNAM, SHRI G. RAMANIAH AND SHRI KRI SHNA ARE ALSO INCOME TAX ASSESSEES. HOWEVER, AO INSTEAD OF VERIF YING THE CONFIRMATIONS MADE BY VARIOUS PEOPLE BY CONDUCTING EITHER FIELD ENQUIRIES OR SUMMONING THE PERSONS CONCERNED, TOOK UPON HIMSELF TO EXAMINE THE CREDITWORTHINESS OF THE PERSONS. HE NO TICED THAT IN THE CASE OF SHRI T. MOHAN RAO, WHO ADVANCED RS. 5 LAKHS, YEA RLY INCOME COULD BE DETERMINED AT RS. 2,75,000/- AND DISALLOWED THE BALANCE AMOUNT OF I.T.A. NO. 1507/HYD/2011 SMT. MADALA CHANDANA :- 3 -: RS. 2,25,000/-. LIKE-WISE, IN THE CASE OF SHRI T. SRINIVASULU WHO ALSO GAVE CONFIRMATION LETTER HAVING 18.05 ACRES OF AGRI CULTURE LAND, DETERMINED THE AGRICULTURE INCOME AT RS. 1,70,000/- . IN THIS CASE, AO DETERMINED THAT THERE IS NO PROPER CREDITWORTHINESS TO THE EXTENT OF RS. 3,30,000/-. IN THE CASE OF SHRI K. RAMANIAH, WHO A LSO GAVE AN AMOUNT OF RS. 5 LAKHS CONFIRMATION INDICATES THAT HE HAD A BOUT 22.66 ACRES OF LAND. AO DETERMINED THE AGRICULTURE INCOME AT RS. 2,30,000/- AND BALANCE OF RS. 2,70,000/- HAS HELD NOT CREDITWORTH Y. ACCORDINGLY, IN THE ABOVE THREE CASES, AO CONSIDERED PART OF THE AM OUNT DEPOSITED IN THEIR NAMES AS INCOME OF ASSESSEE. 5. WITH REFERENCE TO SHRI V.P. PANTULU FOR AN AMOUN T OF RS. 4 LAKHS AND SHRI G. VENKATRATNAM RS. 1,50,000/-, SHRI G. VE NKATESWARLU RS. 1,50,000/-, SHRI G. RAMANIAH RS. 1 LAKH, SHRI G. VE NKATESWARLU RS. 1 LAKH AND SHRI G. KRISHNA RS. 1 LAKH HE WAS OF THE O PINION THAT EVEN THOUGH THEY ARE HAVING AGRICULTURE LANDS, THE INCOM E THEREON IS NOT SUFFICIENT TO THE EXTENT OF CREDIT TO ASSESSEE. AC CORDINGLY, OUT OF THE AMOUNT OF RS. 25 LAKHS RECEIVED FROM THE ABOVE NINE PERSONS, AO ACCEPTED AN AMOUNT OF RS. 6,75,000/- AND TREATED TH E BALANCE AMOUNT OF RS. 18,25,000/- AS INCOME OF ASSESSEE U/S. 68. THE LD.CIT(A) CONFIRMED THE SAME. 6. IT WAS SUBMITTED THAT AO IS NOT CORRECT IN DISBE LIEVING THE PART OF THE CREDITS AND ALSO NOT ACCEPTING THAT CREDITS EVE N FROM THE INCOME TAX ASSESSEES. THERE IS NO DOUBT ABOUT THE IDENTITY OF THE CREDITORS AND ALSO GENUINENESS OF THE LOAN. IT WAS SUBMITTED THAT AO WAS NOT COMPETENT TO DISBELIEVE THE CREDITWORTHY OF CREDITORS AND TAX TH E AMOUNT AS INCOME OF ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE AMOUNT S WERE OBTAINED FROM THE RESPECTIVE FARMERS, WHO ARE RELATIVES OF ASSESS EE AND THEY INVESTED IN A COMMON PROPERTY. IT WAS FURTHER SUBMITTED THAT E VEN THE LD.CIT(A) DID NOT DOUBT THE IDENTITY OF THE PERSONS OR GENUIN ENESS OF THE I.T.A. NO. 1507/HYD/2011 SMT. MADALA CHANDANA :- 4 -: TRANSACTIONS, BUT ONLY CREDITWORTHINESS OF THE PERS ONS INVOLVED. LD. COUNSEL RELIED ON THE CO-ORDINATE BENCH DECISION IN THE CASE OF S. JAYACHANDRA REDDY, TIRUPATI IN ITA NO. 1765/HYD/201 3 DT. 20-02-2015 TO SUBMIT THAT ONCE ASSESSEE FURNISHED EVIDENCE AS SUPPORTED BY INCOME CERTIFICATE FROM MANDAL REVENUE OFFICER, AO CANNOT SUBSTITUTE HIS OPINION ON PRESUMPTIONS AND ASSUMPTIONS. LD. DR HO WEVER, RELIED ON THE ORDERS OF THE AUTHORITIES. 7. WE HAVE CONSIDERED THE ISSUE AND PERUSED THE DET AILS BASED ON RECORD. THERE IS NO DISPUTE WITH REFERENCE TO THE IDENTITY OF THE PERSONS OR THEIR OWNERSHIP OF AGRICULTURAL LAND. THE ONLY ISSUE IS WITH REFERENCE TO CREDITWORTHINESS OF THOSE PEOPLE IN ADVANCING TH E AMOUNTS. AO IN OUR VIEW EXCEEDED THE PROVISIONS OF THE ACT IN DETERMIN ING THE PROBABLE INCOME OF THE CREDITORS WHILE DETERMINING THE INCOM E OF ASSESSEE. IN CASE HE HAS ANY DOUBT ABOUT THE CREDITWORTHINESS OF THE PERSONS, HE SHOULD EXAMINE THE PERSONS CONCERNED OR MAKE SOME E NQUIRIES ABOUT THE TRANSACTION. NOTHING WAS DONE. ON THE BASIS O F THE CONFIRMATION LETTER AND EVIDENCE FURNISHED BY ASSESSEE, AO TOOK UPON HIMSELF ARRIVING AT THE INCOME OF THOSE PEOPLE TO COME TO A CONCLUSI ON THAT PART OF THE AMOUNT COULD NOT BE EXPLAINED. WE ARE UNABLE TO UN DERSTAND THE LOGIC OF THE AO IN DETERMINING THE INCOME OF THE THIRD PE RSON AND BRINGING THE LOANS OBTAINED BY ASSESSEE WITHOUT HOLDING THAT IN COME WAS EARNED BY ASSESSEE. PART ACCEPTANCE OF THE CONFIRMATION ITSEL F CANNOT BE UNDERTAKEN WITHOUT DUE EXAMINATION BY THE AO. THER EFORE, THE ACTION OF AO IN TREATING THE PART OF THE CREDITS RECEIVED BY ASSESSEE AS INCOME CANNOT BE JUSTIFIED. IN ADDITION, ASSESSEE ALSO FU RNISHED COPIES I.T. RETURNS WITH REFERENCE TO THREE PEOPLE I.E., SHRI G . VENKATRATNAM, SHRI G. RAMANIAH AND SHRI G. KRISHNA, WHO INCIDENTALLY A LSO HAVE OTHER INCOMES. THIS INDICATE THAT AO HAS NOT EXAMINED TH E ISSUES IN ITS CORRECT PROSPECTIVE AND ONLY ON THE BASIS OF CONFIR MATIONS FILED, CAME TO A CONCLUSION THAT THEY HAVE NO CREDITWORTHINESS. C ONSIDERING THE FACT I.T.A. NO. 1507/HYD/2011 SMT. MADALA CHANDANA :- 5 -: THAT FIRST THREE PERSONS HAVE AGRICULTURE INCOME A ND ALSO SUPPORTED BY THE CERTIFICATE FROM MRO AND AO ACCEPTED PART OF CR EDIT, WE HAVE NO HESITATION IN ACCEPTING THE CREDITWORTHINESS OF THE ABOVE THREE PERSONS I.E., T. MOHAN RAO, T. SRINIVASULU AND K RAMANIAH . WITH REFERENCE TO SHRI G. VENKATRATNAM, SHRI G. RAMANIAH AND SHRI G. KRISHNA, BEING NOT ONLY AGRICULTURISTS BUT ALSO HAVING OTHER SOURCES O F INCOME AND HAVING FILED RETURNS OF INCOME, THEIR CREDITWORTHINESS CAN NOT BE DOUBTED. ACCORDINGLY, CREDIT IN THE ABOVE THREE CASES ALSO C AN BE ACCEPTED AS GENUINE. THAT LEAVES US WITH OTHER THREE CREDITS IN THE CASE OF SHRI V.P. PANTULU, SHRI G. VENKATESWARLU AND SHRI G. VENKATES WARLU. IN THESE THREE CASES, THEIR CREDITWORTHINESS CANNOT BE REJEC TED WITHOUT ANY ENQUIRY WHETHER THEY HAVE OTHER SOURCES OR ACCUMULA TED INCOMES SO AS TO ADVANCE TO ASSESSEE. THEREFORE, IN THE ABOVE TH REE CASES, ENQUIRIES ARE TO BE CONDUCTED IN ORDER TO ESTABLISH THE CREDI TWORTHINESS OF THE ABOVE THREE CREDITS. FOR THIS PURPOSE, AO IS DIREC TED TO MAKE NECESSARY ENQUIRIES AND DETERMINE THE GENUINENESS OF THE CRED ITS. THE GROUNDS ARE PARTLY ALLOWED. 8. GROUND NO. 3 IS ON THE ADDITION OF INTEREST INCO ME OF RS. 11,339/- WHICH IS NOT PRESSED. THEREFORE, THIS GROUND IS TR EATED AS WITHDRAWN. 9. IN THE RESULT, APPEAL IS PARTLY ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH JUNE, 2015. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD, DATED 26 TH JUNE, 2015 TNMM I.T.A. NO. 1507/HYD/2011 SMT. MADALA CHANDANA :- 6 -: COPY TO : 1. SMT. MADALA CHANDANA, C/O. P. MURALI & CO., CHAR TERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD. 2. INCOME TAX OFFICER, WARD-6(3), HYDERABAD. 3. CIT(APPEALS)-IV, HYDERABAD. 4. CIT-III, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.