M/s Kedarisetti Satyanarayana, Tadepallegudem V. THE ITO, Tadepallegudem

ITA 154/VIZ/2015

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9667 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 05-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SATYANADHAM
• Assessee Lawyers: A ARUNA
• Section: 68

Judgement Text

ITA NO. 154/VIZAG/2015 M/S. KEDARI SETTI SATYANARAYANA, TADEPALLIGUDEM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER . / I . T .A.NO. 154 /VIZAG/ 2015 ( / ASSESSMENT YEAR: 2011 - 12 ) M/S. KEDARISETTI SATYANARAYANA, TADEPALLIGUDEM VS. ITO, WARD - (1), TADEPALLIGUDEM [PAN: BLWPK1798M ] ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SMT. A. ARUNA, AR / RESPONDENT BY : SHRI T. SATYANADHAM, DR / DATE OF HEARING : 07.11.2016 / DATE OF PRONOUNCEMENT : 19.12.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE CIT(A), RAJAHMUNDRY DATED 24.3.2015 FOR THE ASSESSMENT YEAR 2011 - 12. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IN RESPECT OF ADDITION MADE BY THE A.O. U/S 68 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS ITA NO. 154/VIZAG/2015 M/S. KEDARI SETTI SATYANARAYANA, TADEPALLIGUDEM 2 'THE ACT') OF ` 25,39,500/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. HAS NOTED THAT ASSESSEE HAS SHOWN UNSECURED LOANS TO THE TUNE OF ` 28 LAKHS AND THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE SAME . THE ASSESSEE HAS FURNISHED CONFIRMATION LETTERS WITH COPY OF THE I.D. PROOF IN RESPECT OF 132 LENDERS . THE A.O. HAS DEPUTED THE INSPECTOR FOR VERIFICATION OF GENUINENESS OF THE LENDERS AND THE INSPECTOR AFTER VERIFICATION, REPORTED THAT OUT OF 132 LEND ERS , 14 LENDERS COULD BE CONTACTED WITH THE ASSISTAN CE OF THE ASSESSEE WHO HAS CONFIRMED ABOUT LENDING OF MONEY TO THE ASSESSEE AND THAT REMAINING 118 LENDERS COULD NOT BE CONTACTED AND THE ASSESSEE COULD NOT ASSIST IN LOCATING THEM, THEREFORE, CREDITORS I N RESPECT OF 14 LENDERS AMOUNTING TO ` 2 , 60 , 500/ - WAS ACCEPTED AND REMAINING BALANCE OF ` 25,39,500/ - IS ADDED TO THE INCOME OF THE ASSESSEE U/S 68 OF THE ACT. BEFORE THE CIT(A), IT WAS SUBMITTED BY THE ASSESSEE THAT THE A.O. , WITHOUT MAKING ANY ENQUIRY S IMPLY ADDED THE AMOUNT U/S 68 OF THE ACT. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE CONFIRMED THE ADDITION MADE BY THE A.O. TO THE EXTENT OF ` 25,39,500/ - . THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: ITA NO. 154/VIZAG/2015 M/S. KEDARI SETTI SATYANARAYANA, TADEPALLIGUDEM 3 I HAVE CONSIDERE D THE DETAILS AND SUBMISSIONS MADE. AT THE OUTSET, CREDITS IN RESPECT OF 14 PERSONS WERE ACCEPTED AS GENUINE, AND WHICH AMOUNTED TO ` 2,60,500/ - , WHEREAS THE AO HAD WRONGLY TAKEN AS ` 1,87,000/ - . WITH REGARD TO BALANCE CREDITS AMOUNTING TO ` 25,39,500/ - ( ` 28,00,000 - ` 2,60,500/ - _ IT IS NOTED THAT THE ASSESSEE HAD ADMITTED THAT NO CONFIRMATION LETTERS COULD BE FILED IN RESPECT OF CREDITS IN RESPECT OF 39 PERSONS AMOUNTING TO ` 7,35,000/ - . AS A RESULT, THE ADDITION TO THE TUNE OF ` 7,35,000/ - IS CONFIRME D. 5.3.1 WITH REGARD TO THE BALANCE AMOUNT I.E. ` 18,04,500/ - , IT IS NOTED THAT THE ASSESSEE HAD NOT FILED ANY IDENTITY PROOF ALONG WITH CONFIRMATION LETTERS IN RESPECT OF 13 CREDITORS AMOUNTING TO ` 2,42,000/ - (SL.NO.136 TO 148). THUS, ADDITION MADE IN REGARD TO THESE CREDITS TO THE TUNE OF ` 2,42,000/ - IS CONFIRMED AS THE ASSESSEE FAILED TO PROVE THE IDENTITY OF THE CREDITORS. 5.3.2 WITH REGARD TO THE BALANCE CREDITS OF ` 15,62,500/ - ( ` 18,04,500 - ` 2,42,000), THE CONFIRMATION LETTERS FILED WERE CAR EFULLY PERUSED, AND IT IS NOTED THAT ALL THESE PERSONS WERE MOSTLY COOLIES AND DAILY WAGE WORKERS; SOME WERE FARMERS, TAILORS AND DRIVERS. THEIR ANNUAL INCOME VARIED FROM ` 12,000/ - TO ` 20,000/ - AS PER INFORMATION AVAILABLE IN THEIR ID CARDS AND APPARENT LY THEY DO NOT HAVE CREDITWORTHINESS TO LEND THE IMPUGNED AMOUNTS TO THE ASSESSEE. THE VERY FACT THAT ALL CREDITS OBTAINED WERE FROM LARGE GROUP OF PERSONS WITH MEAGER INCOME FOR AMOUNTS LESS THAN ` 20,000/ - IN CASH ALSO RAISED DOUBT ON THE GENUINENESS OF THE TRANSACTIONS ARE IN DOUBT, I CONSIDER THAT THE AO WAS JUSTIFIED IN DISBELIEVING THESE CREDITS AND ADDING THEM TO THE TOTAL INCOME. AS A RESULT, ADDITION TO THE TUNE OF ` 25,39,500/ - IS CONFIRMED. 3 . ON BEING AGGRIEVED, ASSESSEE CARRIED MATTER IN APP EAL BEFORE THE TRIBUNAL. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ALL THE DETAILS IN RESPECT OF CREDITORS INCLUDING CONFIRMATION LETTERS ARE FILED BEFORE THE CIT(A) AND THE LD. CIT(A) DOUBTED THE TRANSACTION AND CONFIRMED THE ITA NO. 154/VIZAG/2015 M/S. KEDARI SETTI SATYANARAYANA, TADEPALLIGUDEM 4 ADDITION , T HER EFORE, THE ORDER PASSED BY THE CIT(A) MAY BE RECALLED AND APPEAL OF THE ASSESSEE MAY BE ALLOWED. 5 . ON THE OTHER HAND, THE LD. D.R. SUPPORTED THE ORDER PASSED BY THE AUTHORITIES BELOW. 6 . I HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIALS AVAILABLE ON RE CORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE HAS SHOWN UNSECURED LOANS TO THE TUNE OF ` 28 LAKHS. THE A.O. HAS ASKED THE ASSESSEE TO SUBSTANTIATE HIS CASE. THE ASSESSEE HAS PRODUCED CONFIRMATION LETTERS WITH ID PROOFS IN RESPEC T OF 132 CREDITORS. THE A.O. HAS DEPUTED INSPECTOR FOR VERIFICATION TO VERIFY THE GENUINENESS OF THE CREDITORS. THE A.O. HAS VERIFIED ONLY 14 LENDERS AND OTHER S ARE NOT AVAILABLE, THEREFORE, HE COULD NOT VERIFY THE SAME. ACCORDINGLY, THE A.O. ACCEPTED T HE BORROWALS FROM 14 CREDITORS AMOUNTING TO ` 2,60,500/ - . HE HAS DISBELIEVED T HE REMAINING BALANCE OF ` 25,39,500/ - AND ACCORDINGLY MADE THE ADDITION U/S 68 OF THE ACT. ON APPEAL, THE LD. CIT(A) IS OF THE VIEW THAT THE CREDITORS INCOME PER YEAR IS ` 12, 000/ - TO ` 20,000/ - AND T HEY HAVE NO CREDITWORTHINESS . TH E ASSESSEE HAS BORROWED MONEY FROM LARGE GROUP OF PERSONS AND THEREFORE HE HAS ITA NO. 154/VIZAG/2015 M/S. KEDARI SETTI SATYANARAYANA, TADEPALLIGUDEM 5 DOUBTED THE GENUINENESS OF THE TRANSACTION. I FIND THAT WHEN ASSESSEE HAS FILED THE CONFIRMATION LETTERS FROM THE CRED ITORS, THE CIT(A) OUGHT TO HAVE EXAMINED EACH AND EVERY CASE AND DECIDED ACCORDING TO LAW. THE LD. CIT(A) , ONLY ON THE BASIS OF DOUBT, HE IS OF THE OPINION THAT THE TRANSACTION IS NOT A GENUINE TRANSACTION . IN MY OPINION, ON THE BASIS OF DOUBT, NO ADDITI ON CAN BE MADE. THUS, THE ORDER PASSED BY CIT(A) IS SET ASIDE AND I REMIT THE MATTER BACK TO THE CIT(A) TO RECONSIDER THE ISSUE AFRESH IN ACCORDANCE WITH LAW , AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD . 7 . THIS APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 19 TH DEC. 2016 SD/ - ( . ) (V. DURGA RAO) /JUDICIAL MEMBER /VISAKHAPATNAM: /DATED : VG/SPS / COPY OF THE ORDER FORWARDED TO : - 1. / THE APPELLANT M/S. KEDARISETTI SATYANARAYANA, D.NO.1 - 15 - 12/2, KADAKATLA, TADEPALLIGUDEM 2. / THE RESPONDENT THE ITO, WARD - 1, TADEPALLIGUDEM ITA NO. 154/VIZAG/2015 M/S. KEDARI SETTI SATYANARAYANA, TADEPALLIGUDEM 6 3. / THE CIT, RAJAHMUNDRY 4 . ( ) / THE CIT(A) , RAJAHMUNDRY 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // (SR.PRIVATE SECRETARY) , / ITAT, VISAKHAPATNAM