Income Tax Officer, Ward -2(2), Tirupathi V. Sri. M. Tirumala Prasad Babu, Chttoor District

ITA 1618/HYD/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7748 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 25-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: S RAMA RAO
• Keywords: Peak credit; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1618/HYD/2012 ASSESSMENT YEAR: 2009-10 INCOME-TAX OFFICER, WARD 2(2), TIRUPATHI SRI M. TIRUMALA PRASAD BABU, CHITTOOR DT. PAN AIDPM2664B (APPELLANT) (RESPONDENT) REVENUE BY SHRI RAJAT MITRA ASSESSEE BY SHRI S. RAMA RAO DATE OF HEARING 04-12-2014 DATE OF PRONOUNCEMENT 10-12-2014 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL OF THE DEPARTMENT IS DIRECTED AGAINST ORDER DATED 29/08/2012 OF LD. CIT(A), GUNTUR FOR THE ASSESSMENT YEAR 2009-10. 2. AS CAN BE SEEN FROM THE GROUNDS OF APPEAL, DEPAR TMENT IS AGGRIEVED WITH THE DECISION OF LD. CIT(A) IN DELETI NG THE ADDITION OF RS. 31,13,502 MADE BY AO ON ACCOUNT OF UNEXPLAINED DEPOSITS IN THE BANK ACCOUNTS. 3. BRIEFLY THE FACTS ARE, ASSESSEE IS AN INDIVIDUAL . FOR THE AY UNDER DISPUTE, ASSESSEE FILED HIS RETURN OF INCOME ON 09/06/2009 DECLARING TOTAL INCOME OF RS. 1,99,040. IN COURSE O F ASSESSMENT PROCEEDING, ON THE BASIS AIR INFORMATION, AO FOUND THAT ASSESSEE HAS MADE CASH DEPOSITS TO THE TUNE OF RS. 3.36 CROR ES IN SB A/C OF ICICI BANK LTD., TIRUPATI AND RS. 19.64 LAKHS IN HD FC BANK. AO, 2 ITA NO. 1618/HYD/2012 SRI M. TIRUMALA PRASAD BABU THEREFORE, CALLED UPON ASSESSEE TO EXPLAIN THE SOUR CE OF SUCH DEPOSITS. THOUGH ASSESSEE VIDE LETTER DATED 26/12/2 011 FURNISHED CERTAIN INFORMATION/EXPLANATION WITH REGARD TO DEP OSITS MADE IN THE BANK ACCOUNT, BUT, AO WAS NOT CONVINCED WITH THE SA ME. HE OBSERVED THAT ASSESSEE COULD NOT PRODUCE ANY SUBSTA NTIAL PROOF TO EXPLAIN THE SOURCE OF DEPOSITS. ACCORDINGLY, AFTER VERIFYING THE TRANSACTIONS IN THE BANK ACCOUNTS, HE FOUND THAT TH E PEAK CREDIT APPEARING IN THE SB A/C AFTER CONSIDERING DEPOSITS AND WITHDRAWALS IS RS. 31,13,502, WHICH WAS TREATED AS UNEXPLAINED INC OME OF ASSESSEE AND ACCORDINGLY ADDITION WAS MADE WHILE COMPLETING THE ASSESSMENT. BEING AGGRIEVED OF THE ADDITION SO MADE, ASSESSEE P REFERRED APPEAL BEFORE LD. CIT(A). 4. AS IT APPEARS FROM THE ORDER OF LD. CIT(A), IN C OURSE OF HEARING, ASSESSEE MADE ELABORATE SUBMISSIONS FROM TIME TO TI ME STATING THEREIN THAT ASSESSEES FRIEND ONE MR. K. LOKADRI W ORKING AS PRO OF M/S RELIANCE INDUSTRIES, TIRUPATHI IS A BUSINESSMAN -CUM-CONTRACTOR. IT WAS SUBMITTED THAT MR. K. LOKADRI DELEGATED SOME OF HIS BUSINESS ACTIVITIES TO ASSESSEE AND LATER ON ENTERED INTO A MEMORANDUM OF UNDERSTANDING AUTHORIZING ASSESSEE TO CARRY OUT FIN ANCIAL TRANSACTIONS OF MR. K. LOKADRI, THROUGH ASSESSEES BANK ACCOUNT. IT WAS SUBMITTED THAT MR. K. LOKADRI REQUESTED HIS CLI ENTS/BUSINESS PERSONS FROM VARIOUS PLACES TO DEPOSIT MONIES IN TH E ICICI BANK ACCOUNT OF ASSESSEE AND USED TO INSTRUCT ASSESSEE T O DRAW THE FUNDS ON THE SAME DAY AND DISBURSE IT TOWARDS BUSINESS TR ANSATIONS OF MR. K. LOKADRI. AS PER THE CONDITIONS LAID DOWN IN MOU ASSESSEE CARRIED OUT FINANCIAL TRQANSACTIONS OF MR. K. LOKADRI TILL MARCH, 2011. THUS, IT WAS SUBMITTED THAT MONEY DEPOSITED IN ASSESSEES BA NK ACCOUNT IS NOT HIS OWN EARNINGS, BUT, RELATE TO MR. K. LOKADRI AND ASSESSEE ONLY GOT SOME COMMISSION FROM MR. K. LOKADRI FOR RENDERI NG SERVICES. IT WAS SUBMITTED, AS THE TRANSACTIONS IN ASSESSEES B ANK ACCOUNT RELATE TO BUSINESS OF MR. K. LOKADRI AND MR. K. LOKADRI HA S ACCOUNTED ALL THE DEPOSITS AND WITHDRAWALS IN HIS BOOKS OF ACCOUNT, B UT, SINCE MR. K. 3 ITA NO. 1618/HYD/2012 SRI M. TIRUMALA PRASAD BABU LOKADRI WENT UNDERGROUND AND COULD NOT BE FOUND, AS SESSEE IN SPITE OF HIS BEST EFFORTS COULD NOT OBTAIN RELEVANT EXTRA CT FROM BOOKS OF ACCOUNT MR. K. LOKADRI AND SUBMIT THE SAME BEFORE A O. HOWEVER, ASSESSEE COULD OBTAIN A DECLARATION FROM MR. K. LOK ADRIS SISTER SMT. BHARATHI IN SUPPORT TO PROVE THE FACT THAT ASSESSEE WAS ONLY CARRYING OUT THE DUTIES AS PER THE DIRECTIONS OF MOU WITH MR . K. LOKADRI. IT WAS SUBMITTED THAT ASSESSEE ALSO CANNOT IDENTIFY THE PE RSONS BY WHOM DEPOSITS WERE MADE IN HIS ACCOUNT AND ALSO THE PERS ONS TO WHOM CASH WAS PAID, SINCE THE ENTIRE DEPOSITS AND WITHDR AWALS RELATED TO BUSINESS TRANSACTIONS OF MR. K. LOKADRI. IN SUM AND SUBSTANCE, ASSESSEES SUBMISSIONS BEFORE LD. CIT(A) WERE AS UN DER: I. THAT HE HAS NOT DONE ANY SPECIFIC BUSINESS IN TH E PAST OR IN THE PRESENT; II. THAT HE HAS NOT MADE ANY MAJOR INVESTMENTS IN A NY PROJECTS; III. THAT HE HAS NOT TAKEN ANY MAJOR LOANS FROM ANY OF THE BANKS FOR ANY PURPOSE SINCE A BUSINESSMAN USUALLY AVAIL B ANK LOANS FOR HIS BUSINESSES; IV. THAT HE HAS NOT MADE ANY FIXED DEPOSITS IN ANY OF THE BANKS OR IN THE FINANCIAL INSTITUTIONS; V. THAT HE HAS NOT GIVEN ANY MAJOR LOANS TO ANYBODY EITHER IN THE PAST OR IN THE PRESENT; VI. THAT HE HAS NOT ACQUIRED ANY MAJOR ASSETS EXCEP T A SMALL HOUSE; VII. THAT HE WAS ONLY 31 YEARS OLD DURING THE FY 20 08-09 RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND IT IS NOT POSSIBLE TO EARN SUCH HUGE SUMS AND DEPOSIT IN HIS ACCOUNT; VIII. THAT IT IS A FACT THAT THE DEPOSITS WERE MADE BY PERSONS FROM VARIOUS PLACES AND THE WITHDRAWALS WERE MADE O N THE SAME DAY AND DISBURSED; [IF THE MONEY OWNED BY THE APPELLANT HE NEED NOT WITHDRAWN ON THE SAME DAY ITSELF] IX. THAT HE IS REGULAR IN FILING HIS INCOME-TAX RET URNS FROM THE AY 2001-02 ONWARDS AND PAYING TAXES; TO SUBSTANTIATE HIS SUBMISSIONS, ASSESSEE ALSO SUBM ITTED THE FOLLOWING DOCUMENTARY EVIDENCES:- 1. THE MEMORANDUM OF UNDERSTANDING BETWEEN THE APPE LLANT AND MR. K. LOKADRI. 2. THE NEWS PAPER CLIPPING ABOUT MR. K. LOKADRI DIS APPEARANCE AND NEWS ABOUT HIS LOOTING THE PUBLIC; 3. THE COPY OF THE FIR FILED WITH POLICE BY THE MOT HER OF MR. K. LOKADRI ABOUT HIS DISAPPEARANCE WAS; 4 ITA NO. 1618/HYD/2012 SRI M. TIRUMALA PRASAD BABU 4. COPY OF PHOTOGRAPH OF APPELLANT ALONG WITH MR. K . LOKADRI TAKEN WHILE THE APPELLANT WAS WORKING WITH HIM; 5. THE STATEMENT GIVEN BY SMT. BHARATHI, THE ONLY S ISTER OF MR. K. LOKADRI ABOUT THE ACTIVITIES OF THE APPELLANT WH ILE HE WAS WITH MR. K. LOKADRI. 6. THE STATEMENT GIVEN BY SRI KOLA ANAND, CHAIRMAN OF SRI KALAHASTEESWARASWAMY TEMPLE, SRIKALAHASTI; 5. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AS WELL AS THE EVIDENCES PRODUCED BEFORE HIM, DELETED THE ADDITION MADE BY AO BY HOLDING AS UNDER: 4.4 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT, GONE THROUGH THE ORDER OF THE AO AND PER USED ALL OTHER MATERIAL AVAILABLE ON RECORD. IT IS A FACT TH AT THE APPELLANT IS A FRIEND OF ONE MR. K. LOKADRI, A REAL ESTATE CO NTRACTOR-CUM- PRO OF M/S RELIANCE INDUSTRIES FOR THE PURPOSES OF GETTING DARSHAN OF LORD SRI VENKATESWARASWAMY AT TIRUMALA H ILLS TO THE VIPS SPONSORED BY THE SAID CONCERN. THE SAID MR. K. LOKADRI HAS ENTERED INTO AN AGREEMENT WITH THE APPELLANT TO ASSIST HIM IN DARSHAN OF THE PILIGRMS TO TIRUPATHI AND ALSO TO DEPOSIT AMOUNTS IN APPELLANTS BANK ACCOUNT FROM THE PERSON S DIRECTED BY MR. K. LOKADRI AND WITHDRAW THE SAME EITHER ON T HE SAME DAY OR A DAY OR TWO LATER AND HANDOVER THE SAME AS DIRECTED BY MR. K. LOKADRI, FOR WHICH THE APPELLANT GETS SOME C OMMISSION. AS PER THE AIR INFORMATION, THIS CASE WAS SELECTED FOR SCRUTINY AND WHEN THIS POINT HAS COME FOR QUERY, THE APPELLA NT DID NOT RESPOND TO AO AS BY THAT TIME MR. K. LOKADRI HAS GO NE UNDERGROUND. THE FACT THAT MR. K. LOKADRI HAS GONE UNDERGROUND WAS PROMPTLY REPORTED IN LOCAL PRESS, T HE CLIPPINGS (COPIES) OF WHICH WERE SUBMITTED DURING THE COURSE OF THE PROCEEDINGS HAVE BEEN PERUSED AND PLACED ON RECORD. IT IS ALSO A FACT THAT THE FAMILY MEMBERS OF MR. K. LOKADRI HA VE COMPLAINED TO POLICE TO INFORM THEM THAT MR. K. LOK ADRI WAS NOT SEEN AND REQUESTED THE POLICE AUTHORITIES TO FIND O UT THE WHEREABOUTS OF MR. K. LOKADRI AND BRING BACK HIM AN D HANDOVER HIM TO THEM, INDICATING THE FACT THAT MR. K. LOKADR I HAS GONE UNDERGROUND. A PERUSAL OF THE IMPUGNED BANK ACCOUN T REVEALED CASH TRANSACTIONS, WHICH WERE WITHDRAWN IN A DAY OR TWO SUBSEQUENT TO THE DATE OF DEPOSIT. SINCE, THE TRANS ACTIONS WERE EXPLAINED BY THE APPELLANT, THERE IS NO QUESTION OF SUCH AMOUNTS BEING SUBJECTED TO TAX IN A HAPHAZARD MANNE R. HERE IT IS IMPORTANT TO NOTE THAT THE FACT THAT CREDITS WER E THERE WAS NOT DENIED, BUT THE AO WAS SILENT ON THE CORRESPONDING DEBITS, WHICH IS NOT PROPER ON HIS PART AND TO THAT EXTENT, THE AO WAS NOT FAIR TO THE APPELLANT. IN THE CIRCUMSTANCES, TH E ADDITION SO MADE BY THE AO CANNOT BE SUSTAINED AND IT HAS TO BE DELETED. 5 ITA NO. 1618/HYD/2012 SRI M. TIRUMALA PRASAD BABU IN VIEW OF THE ABOVE, THE AO IS DIRECTED TO DELETE THE ADDITION MADE BY HIM WHILE FINALIZING THE ASSESSMENT PROCEED INGS. 6. THE LD. DR SUBMITTED BEFORE US THAT LD. CIT(A) W AS NOT JUSTIFIED IN ALLOWING ASSESSEES CLAIM AFTER CONSIDERING THE SUBMISSIONS AND EVIDENCES WHICH ASSESSEE NEVER BROUGHT TO THE NOTIC E OF AO. THEREFORE, WITHOUT AFFORDING OPPORTUNITY TO AO, LD. CIT(A) SHOULD NOT HAVE DELETED THE ADDITION. FURTHER, IT WAS SUBMITTE D BY LD. DR THAT WHEN ASSESSEE FAILED TO PRODUCE ANY SUBSTANTIVE EVI DENCE TO SHOW THAT THE TRANSACTIONS IN THE BANK ACCOUNT RELATED T O BUSINESS OF MR. K. LOKADRI, LD. CIT(A) WAS NOT CORRECT IN ACCEPTING AS SESSEES CLAIM WITHOUT ANY SUPPORTING EVIDENCE. LD. DR, THEREFORE, SUBMITTED THAT ORDER OF LD. CIT(A) HAS TO BE SET ASIDE. 7. THE LD. AR ON THE OTHER HAND SUPPORTING THE ORDE R OF LD. CIT(A) SUBMITTED THAT SINCE ON THE BASIS OF FACTS AND MATE RIALS BROUGHT ON RECORD, LD. CIT(A) HAS COME TO A CONCLUSION, THE S AME CANNOT BE INTERFERED WITH. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. AS CAN BE SEEN FROM THE ASSESSMENT ORDER, AO HAS MA DE AN OBSERVATION THAT THOUGH ASSESSEE FILED EXPLANATION RELATING TO THE DEPOSITS MADE IN THE BANK ACCOUNT, BUT, HE HAS FAIL ED TO SUBSTANTIATE THEM WITH SUPPORTING EVIDENCE. HOWEVER, ON A PERUSA L OF THE ORDER PASSED BY LD. CIT(A), IT APPEARS THAT LD. CIT(A) HA S ACCEPTED ASSESSEES CLAIM MERELY ON ITS FACE VALUE WITHOUT P ROPERLY MAKING ANY ENQUIRY TO FIND OUT WHETHER ASSESSEES CLAIM IS CORRECT. FURTHER, LD. CIT(A) IS UNDER MISCONCEPTION THAT AO HAS ONLY CONSIDERED THE DEPOSITS WITHOUT TAKING INTO ACCOUNT THE WITHDRAWAL S. AS CAN BE SEEN FROM THE ASSESSMENT ORDER, AO HAS CONSIDERED BOTH T HE DEPOSITS AND WITHDRAWALS AND WORKED OUT THE PEAK CREDIT OF RS. 3 1,13,502 FOR THE PURPOSE OF ADDITION. IN THESE CIRCUMSTANCES, LD. CI T(A)S FINDING IS NOT 6 ITA NO. 1618/HYD/2012 SRI M. TIRUMALA PRASAD BABU SUSTAINABLE. HOWEVER, FACT REMAINS THAT AO HAS ALSO NOT PROPERLY APPRECIATED THE FACTS AND COULD NOT MAKE EFFECTIVE ENQUIRY DUE TO CONSTRAINT OF TIME AS ASSESSMENT WAS GETTING TIME B ARRED. IN THE AFORESAID VIEW OF THE MATTER, WE ARE OF THE OPINION , THE ENTIRE ISSUE RELATING TO DEPOSITS INTO ASSESSEES BANK ACCOUNT R EQUIRES EXAMINATION AFRESH IN VIEW OF THE CLAIM MADE BY ASS ESSEE BEFORE THE FIRST APPELLATE AUTHORITY. AO MUST CONDUCT NECESSAR Y ENQUIRY NOT ONLY WITH ASSESSEE AND OTHER PERSONS CONCERNED, BUT, IF NECESSARY SHALL ALSO MAKE ENQUIRY WITH THE CONCERNED BANK TO ASCERT AIN ORIGIN OF THE DEPOSITS MADE INTO BANK ACCOUNT AND THE PURPOSE FOR WHICH WITHDRAWALS MADE WERE UTILIZED. ASSESSEE MUST ALSO BE AFFORDED REASONABLE OPPORTUNITY TO ADDUCE NECESSARY EVIDENCE IN SUPPORT OF HIS CLAIM THAT DEPOSITS AND WITHDRAWALS MADE IN THE BANK ACTUALLY RELATE TO THE BUSINESS OF MR. K. LOKADRI. AFTER CO NSIDERING THE FACTS AND MATERIALS ON RECORD, AO SHOULD DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 9. IN THE RESULT, DEPARTMENTS APPEAL IS ALLOWED FO R STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 10/12/2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD, DATED: 10 TH DECEMBER, 2014 KV 7 ITA NO. 1618/HYD/2012 SRI M. TIRUMALA PRASAD BABU COPY TO:- 1) ITO, WARD 2(2), D.NO. 6-1-75E, RAJASWAB BHAVA N, VARADARAJA NAGAR, TIRUPATHI 517 507 2) SRI M. TIRUMALA PRASAD BABU, D.NO. 20-3-7, SIVAJ YOTHI NAGAR, KT ROAD, TIRUPATI 517 507. 3) CIT(A), GUNTUR 4) CIT, TIRUPATHI 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.