M/s Beerelli Damodar, Hyderabad V. ITO, Kothagudem

ITA 1648/HYD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3412 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-03-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 10-11-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H PHAN RAJU
• Assessee Lawyers: S RAMA RAO
• Keywords: Business income; Corroborative evidences; Capital receipt; Revised return

Judgement Text

IN THE INCOME TX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMEBR ITA NO.1648/HYD/08 : ASST T. YEAR 2005-06 M/S. BEERELLI DAMODAR, KOTHAGUDEM. ( PAN AAHFB 0911 C) V/S. INCOME-TAX OFFICER, WARD-1, HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.RAMA RAO RESPONDENT BY : SHRI H.PHAN RAJU O R D E R PER G.C.GUPTA, VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2005- 06 IS DIRECTED AGAINST THE ORDER OF THE CIT(A). 2. GROUNDS OF APPEAL OF THE ASSESSEE ARE AS UNDER- '1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E-TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED COM MISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION FO THE ASSESSING OFFICER IN M AKING ADDITION OF THE FOLLOWING AMOUNTS INVESTED BY THE PARTNERS M ENTIOND AGAINST EACH- A) SHRI K.SRI HARI RS. 1,05,000 B)SHR8 B.SRINIVASA RAO RS.1,20, 000 C)SHRI BAVANPALLI SRINIVASA RAO RS.1,16,000 D)SHRI T.VENKANNA RS.1, 46,000 E)SHRI B.HARI PRASAD RS.1,94,000 F)SHRI M.KISHORE KUMAR RS.1,85,000 ITA NO.16487/HYD/09 SHRI BEERELLI DAMODAR, KOTHAGUDEM. 2 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) O UGHT TO HAVE SEEN THAT THE APPELLANT DISCHARGED THE ONUS BY PROV IDING DETAILED ADDRESSES, CONFIRMATION LETTERS HAVING INVESTED THE AMOUNTS AND PROVED THE GENUINENESS OF THE INVESTMENT AND, THERE FORE, OUGHT TO HAVE DELETED THE ADDITION MADE BY THE ASSESSING OFF ICER.' 3. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSMENT YEAR UNDER CONSIDERATION, VIZ. 2005-06 WAS THE FIRST YEAR OF BUSINESS OF THE ASSESSEE AND THE CAPITAL WAS INTRODUCED BY THE PARTNERS IN THE BEGINNING OF THE RELEVANT ACCOUNTING P ERIOD. IN THE CIRCUMSTANCES, HE SUBMITTED THAT THE RATIO OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. BHARAT ENG INEERING AND CONSTRUCTION COMPANY (83 ITR 187)(SC) APPLIES TO THE CA SE OF THE ASSESSEE. HE SUBMITTED THAT IN THIS CASE, HON'BLE SUPREME CO URT HAS HELD THAT A CONSTRUCTION COMPANY TAKES TIME TO EARN PR OFIT AND IT COULD NOT HAVE EARNED A HUGE PROFIT WITHIN A FEW DAYS OF CO MMENCEMENT OF ITS BUSINESS, AND THEREFORE, IT WAS REASONABLE TO ASSUME THAT THE CASH CREDIT ENTRIES REPRESENT CAPITAL RECEIPTS THOUGH FOR ONE REASON OR THE OTHER, ASSESSEE HAS NOT COME OUT WITH THE TRUE STORY AS R EGARDS THE SOURCE OF THE RECEIPT. THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE ASSESSING OFFICER HAS ACCEPTED THE GENUI NENESS OF THE PARTNERSHIP FIRM AND THEREFORE, THERE IS NO REASON TO DOUBT THE CREDIT ENTRIES IN THE PARTNERS' ACCOUNTS. HE SUBMITTED THAT THE PARTNERS HAVE FILED CONFIRMATION LETTERS IN RESPECT OF THE GEN UINENESS OF THE CREDIT ENTRY BEFORE THE ASSESSING OFFICER. HE SUBMITTED TH AT THE ASSESSEE FIRM HAS ORIGINALLY FILED RETURN OF INCOME DECLA RING INCOME OF RS.1,10,000 AND LATER ON FILED REVISED RETURN SHOWING INCOME OF RS.5,15,800, AND THEREFORE, CREDIT FOR THE ADDITIONAL INCOME OFFERED FOR ASSESSMENT SHOULD HAVE BEEN GIVEN BY THE ASSESSING OFFICER. ITA NO.16487/HYD/09 SHRI BEERELLI DAMODAR, KOTHAGUDEM. 3 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND, HAS OPPOSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR TH E ASSESSEE. HE SUBMITTED THAT THE DECISION OF THE HON'BLE SUPREME CO URT IN THE CASE OF BAHRAT ENGG. AND CONSTRUCTION COMPANY (SUPRA) HAS BEEN DISTINGUISHED BY THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT V/S. ASHOK TIMBER INDUSTRIES (125 ITR 336)(CAL), WHICH W AS FOLLOWED BY THE HON'BLE MADHYA PRADESH HIGH COURT IN BANSIDHA R AGARWAL PANNA V/S. CIT(148 ITR 523). HE RELIED ON THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL DATED 14.9.2007 IN TH E CASE OF M/S. DURGA WINES V/S. ITO (ITA NO.25/HYD/02 FOR ASSESSMENT YEA R 1998- 99) LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT NONE OF THE PARTNERS WAS ASSESSED TO INCOME TAX AND THEY HAVE DEPOSIT ED AMOUNTS IN CASH AND THEY HAVE NO CREDIT WORTHINESS AND T WO OF THEM WERE DERIVERS BY PROFESSION. HE RELIED ON THE ORDERS O F THE ASSESSING OFFICER AND THE CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE HAVE PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A ) AND ALSO THE COPIES OF CONFIRMATION LETTERS FILED BY THE PARTNER S OF THE ASSESSEE FIRM BEFORE THE ASSESSING OFFICER. AS FOR THE LEGAL OBJE CTION OF THE ASSESSEE THAT IN VIEW OF THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF BHARAT ENGINEERING AND CONSTRUCTION COMPANY (SUP RA), NO ADDITION IS CALLED FOR, AS THE CREDIT ENTRIES IN THE ACCOU NTS OF THE PARTNERS WERE INTRODUCED IN THE VERY FIRST YEAR OF BUSI NESS, WE FIND THAT THIS DECISION OF THE HON'BLE APES COURT HAS BEEN DI STINGUISHED BY THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF ASHOK TIMB ER INDUSTRIES (SUPRA) WHEREIN IT WAS HELD THAT THIS CASE OF BHARA T ENGINEERING AND CONSTRUCTION COMPANY (SUPRA) BEFORE THE HON'BLE A PEX COURT PERTAINS TO THE PERIOD COVERED BY THE 1922 ACT, AND UN DER S.68 OF THE ITA NO.16487/HYD/09 SHRI BEERELLI DAMODAR, KOTHAGUDEM. 4 INCOME-TAX ACT, 1961, EVEN IN A CASE, WHERE AN AMOUNT I S CREDITED IN THE VERY FIRST DAY OF THE ACCOUNTING YEAR AND THE EXPL ANATION OFFERED BY THE ASSESSEE IS NOT ACCEPTED, SUCH AMOUNT MAY BE ASSESSED AS INCOME OF THE ASSESSEE OF THE ACCOUNTING YEAR FOR WHICH THE BOOKS ARE MAINTAINED. THIS DECISION OF THE HON'BLE CALCUTTA HIGH C OURT IN ASHOK TIMBER INDUSTRIES (SUPRA) WAS FOLLOWED BY THE MADHYA PRADESH HIGH COURT IN THE CASE OF BANSHIDER AGARWAL PANNA (SUPRA). ADMITTEDLY, CASE OF THE ASSESSEE IS COVERED BY THE 1961 ACT AND ACCORDIN GLY, PROVISIONS OF S.68 OF THE INCOME-TAX ACT, 1961 ARE CLEAR LY APPLICABLE TO THE CASE OF THE ASSESSEE. IN THIS VIEW OF THE MATTER, WE ARE UNABLE TO ACCEPT THE LEGAL PLEA RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE. ACCORDINGLY, WE REJECT THE SAME. 6. AS FOR THE PLEA URGED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT ASSESSEE IS ENTITLED TO SOME CREDIT FOR THE ADDI TIONAL INCOME OFFERED BY IT FOR ASSESSMENT THROUGH THE REVISED I NCOME FILED WITH THE DEPARTMENT, WE FIND THAT THIS PLEA OF THE ASSESSEE IS DEVOID OF MERIT. ASSESSEE HAS APPLIED FLAT RATE OF NET PROFIT TO ITS GROSS RECEIPTS FOR COMPUTING ITS BUSINESS INCOME DURING THE REL EVANT YEAR, WHILE CREDIT ENTRIES IN THE ACCOUNTS OF THE PARTNERS ARE MADE IN THE VERY BEGINNING OF THE RELEVANT ACCOUNTING PERIOD. IN THE CIRCUMSTANCES OF THE CASE, THEREFORE, THERE IS NO NEXUS BETW EEN THE CREDIT ENTRIES IN THE ACCOUNTS OF THE PARTNERS MADE IN TH E BEGINNING OF THE YEAR, AND THE BUSINESS INCOME ULTIMATELY DETERMINED IN THE HANDS OF THE ASSESSEE AT THE END OF THE YEAR. WE ACCORDINGLY R EJECT THIS CONTENTION OF THE ASSESSEE IN THIS BEHALF. 7. THIS LEADS US TO THE ISSUE TO THE MERITS OF THE ADDIT IONS SUSTAINED BY THE CIT(A) ON ACCOUNT OF CREDIT ENTRIES IN T HE PARTNERS' ITA NO.16487/HYD/09 SHRI BEERELLI DAMODAR, KOTHAGUDEM. 5 ACCOUNTS. AS FOR THE FIRST ADDITION OF RS.1,05,000 SUSTAIN ED BY THE CIT(A), WE FIND THAT K.SRI HARI INTRODUCED A SUM OF R S.2,46,000 IN THE ACCOUNTS OF THE FIRM, AND AFTER CONSIDERING THE EXPLANAT ION OF SRI HARI, AN ADDITION OF RS.1,05000 WAS CONFIRMED BY THE CIT(A). LEARNED COUNSEL FOR THE ASSESSEE HAS REITERATED THE CONTENTS OF THE CONFIRMATION LETTER FILED BY SRI HARI BEFORE THE ASSESSIN G OFFICER, AND PRAYED FOR THE DELETION OF THE ENTIRE ADDITION SUSTAI NED BY THE CIT(A). LEARNED DEPARTMENTAL REPRESENTATIVE HAS OPPOSED THE C ONTENTIONS OF THE ASSESSEE ON THIS COUNT, AND SUBMITTED THAT SRI HARI WA S A PETTY EMPLOYEE IN A PRIVATE CONCERN AND NOT AN INCOME-TAX AS SESSEE WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT SR I HARI HAS CONFIRMED THAT HE WAS WORKING AS A PRIVATE SURVEYOR MEA SURING HOUSE SITES AND AGRICULTURAL LAND FOR THE LAST SEVEN YEARS. HE CLAIMED TO HAVE LENT TO FRIENDS AND RELATIVES FROM OUT OF THE SA VINGS FROM PROFESSIONAL INCOME. HE HAS RECOVERED THOSE LOANS AND HAS I NVESTED THE SAME WITH THE ASSESSEE FIRM, ALONGWITH AN AMOUNT OF RS.,55,000 ON 3.4.2004, WHICH WAS BORROWED FROM HIS FRIENDS. WE FI ND THAT THE CIT(A) HAS GIVEN DUE CONSIDERATION AND CREDIT FOR THE SAVINGS FROM PROFESSIONAL INCOME OF SRI HARI, BUT HAS NOT GIVEN CREDIT FOR THE AMOUNT OF RS.55,000 CLAIMED TO HAVE BEEN BORROWED BY HIM FROM HIS FRIENDS. IN THE ABSENCE OF ANY ADVERSE FINDING WITH R EGARD TO THE BORROWING CLAIMED TO HAVE BEEN MADE BY SRI HARI, WE H OLD THAT THIS AMOUNT OF RS.55,000 CLAIMED TO HAVE BEEN BORROWED FRO M FRIENDS, HAS TO BE ALLOWED, AND ACCORDINGLY, ADDITION ON ACCOUNT OF CREDIT ENTRY IN THE ACCOUNT OF K.SRI HARI IS RESTRICTED TO RS.50,000 AS AG AINST RS.1,05,000 CONFIRMED BY THE CIT(A). WE DO SO ACCORDING LY. 8. AS FOR THE NEXT ITEM OF ADDITION OF RS.1,20,000 SUSTAINED BY THE CIT(A) IN RESPECT OF THE CAPITAL INTRODUCED BY B .SRINIVASA RAO, ITA NO.16487/HYD/09 SHRI BEERELLI DAMODAR, KOTHAGUDEM. 6 LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SRINIVASA RAO WAS AN EMPLOYEE IN A PRIVATE CONCERN AND WAS ALSO HAVING AGRICU LTURAL INCOME. HE SUBMITTED THAT NO ADDITION IS CALLED FOR IN RESPECT OF CREDIT ENTRY IN THE ACCOUNT OF THIS PARTNER. LEARNED DEPARTME NTAL REPRESENTATIVE OPPOSED THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE AND SUBMITTED THAT THE ASSESSEE COULD NOT PROVE THE CREDITWORTHINESS OF SRINIVASA RAO WITH ANY DOCUMENTARY E VIDENCE. HE SUBMITTED THAT SRINIVASA RAO IS NOT EVEN AN INCOME-TAX ASSESSEE, AND AS SUCH THE ADDITION SUSTAINED BY THE CIT(A) IN RESPECT OF CREDIT IN THE ACCOUNT OF SRINIVASA RAO SHOULD BE UPHELD. ON CAREFUL CO NSIDERATION OF THE RIVAL SUBMISSIONS, WE FIND THAT SRINIVASA RAO WAS DOI NG PRIVATE JOB WORKS AND WAS ALSO DOING AGRICULTURE AT HIS NATIVE PLACE TAKING LAND ON LEASE. WE FIND THAT NO CREDIT FOR THE AGRICULTURAL IN COME OF SRINIVASA RAO WAS GIVEN BY THE REVENUE AUTHORITIES, THOUGH THE CONTENTION OF THE ASSESSEE IN THIS BEHALF IS NOT DISPUTED. IN THESE FA CTS OF THE CASE, WE FIND IT REASONABLE TO RESTRICT THE ADDITION IN RESPE CT OF CREDIT ENTRY IN THE ACCOUNT OF B.SRINIVASA RAO TO RS.60,000, BY ALLO WING CREDIT FOR THE AGRICULTURAL INCOME OF THIS PARTNER FOR PAST YEARS, AS AGAINST ADDITION OF RS.1,20,000 SUSTAINED BY THE CIT(A) IN TH IS BEHALF. WE ORDER ACCORDINGLY. 9. AS FOR THE NEXT ITEM OF ADDITION OF RS.1,16,000 SUSTAINED BY THE CIT(A) IN RESPECT OF THE CREDIT ENTRY IN THE ACCO UNT OF ANOTHER PARTNER, BAVANPALLI SRINIVASA RAO, THE LEARNED COUNSE L FOR THE ASSESSEE SUBMITTED THAT THIS PARTNER WAS DERIVING INCOME BY SUPPLYING LABOUR TO VARIOUS CONTRACTORS AND HAS ALSO INVESTED AN AMO UNT OF RS.70,000 WHICH WAS BORROWED FROM OTHERS. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS OPPOSED THE SUBMISSIONS O F THE ASSESSEE AND SUBMITTED THAT THE EXPLANATION OF THE ASSESSEE HAS NO ITA NO.16487/HYD/09 SHRI BEERELLI DAMODAR, KOTHAGUDEM. 7 SUPPORTING EVIDENCE AND THIS PARTNER IS NOT EVEN AN IN COME-TAX ASSESSEE, AND AS SUCH HIS CREDIT-WORTHINESS IS NOT AT ALL PROVE D WITH ANY DOCUMENTARY EVIDENCE. ON CAREFUL CONSIDERATION OF T HE RIVAL SUBMISSIONS WITH REGARD TO THE CAPITAL INTRODUCED BY THIS PARTNER, WE FIND THAT THIS PARTNER IS CLAIMED TO HAVE BEEN WORKING AS WORKS SUPERVISOR FOR THE LAST TEN YEARS, BESIDES DERIVING INCOME FROM SUPPLYING LABOUR TO VARIOUS CONTRACTORS. HE HAS CLAIMED TO HAVE INVESTED RS.70,000 ON 3.4.2004, WHICH WAS BORROWED FROM OTHERS, FOR WHICH NO CREDIT WAS GIVEN BY THE REVENUE AUTHORITIES. WE FIND THAT THERE IS NO ADVERSE FINDING GIVEN BY THE LOWER AUTHO RITIES WITH REGARD TO THE BORROWAL OF RS.70,000 CLAIMED BY THIS PARTNER. IN THE CIRCUMSTANCES, WE HOLD THAT CREDIT FOR THE AMOUNT OF RS.70 ,000 CLAIMED TO HAVE BEEN BORROWED SHOULD BE GIVEN, AND ACCO RDINGLY, THE ADDITION IN RESPECT OF CREDIT ENTRY IN THE ACCOUNT OF TH IS PARTNER IS RESTRICTED TO RS.46,000 AS AGAINST RS.1,16,000 SUSTAINED BY THE CIT(A). WE ORDER ACCORDINGLY. 10. NEXT ITEM OF ADDITION IN DISPUTE RELATES TO RS.1, 46,000 SUSTAINED BY THE CIT(A), OUT OF THE CREDIT ENTRY IN TH E ACCOUNT OF PARTNER, T.VENKANNA. THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THIS PARTNER WAS WORKING AS A DRIVER AND HAS SAVING S ACCUMULATED FOR THE LAST NINE YEARS. HE SUBMITTED THAT VENKANNA WA S ALSO AN AGRICULTURIST AND WAS DOING CULTIVATION ON LAND TAKEN ON LEASE AT HIS NATIVE PLACE. HE SUBMITTED THAT NO CREDIT WAS GIVEN BY THE LOWER AUTHORITIES EITHER FOR THE AGRICULTURAL INCOME DERIVED BY VENKANNA FOR THE PAST SEVERAL YEARS, OR FOR THE AMOUNT OF RS.72,000 WHICH WAS INVESTED BY BORROWING FROM FRIENDS. THE LEARNED DEPA RTMENTAL REPRESENTATIVE HAS OPPOSED THE SUBMISSIONS OF THE ASSESSEE AND SUBMITTED THAT THE EXPLANATION OF THE ASSESSEE HAS NO SUPP ORTING ITA NO.16487/HYD/09 SHRI BEERELLI DAMODAR, KOTHAGUDEM. 8 EVIDENCE AND THIS PARTNER IS NOT EVEN AN INCOME-TAX ASSESSE E, AND AS SUCH HIS CREDIT-WORTHINESS IS NOT AT ALL PROVED WITH ANY D OCUMENTARY EVIDENCE. ON CAREFUL CONSIDERATION OF THE RIVAL SUBMI SSIONS WITH REGARD TO THE CAPITAL INTRODUCED BY THIS PARTNER, WE F IND THAT THIS PARTNER, VENKANNA, HAS CONFIRMED THAT HE WAS AN AGRICUL TURIST, DERIVING AGRICULTURAL INCOME FOR THE LAST SEVERAL YEARS FROM THE LAND TAKEN BY HIM ON LEASE AT HIS NATIVE PLACE. WE FIND TH AT NO CREDIT FOR HIS SAVINGS OUT OF AGRICULTURAL INCOME WAS ALLOWED BY THE LOWER AUTHORITIES, THOUGH NO ADVERSE FINDING HAS BEEN GIVEN BY THEM AGAINST THE AGRICULTURAL INCOME CLAIMED BY THIS PARTNER. WE F IND THAT THIS PARTNER HAS ALSO CLAIMED TO HAVE INVESTED RS,.72,000, AF TER BORROWING THE SAID AMOUNT FROM HIS FRIENDS. CREDIT FOR THIS AMO UNT WAS ALSO NOT ALLOWED BY THE ASSESSING OFFICER, THOUGH THE CLAIM OF TH E ASSESSEE WITH REGARD TO THE BORROWAL WAS NOT DISPUTED. IN THESE FACTS, WE HOLD THAT IT SHALL BE REASONABLE TO RESTRICT THE ADDITION IN RESPECT OF THE CREDIT ENTRY IN THE NAME OF THIS PARTNER TO RS.40,000 AS AGAINST RS.1,46,000 SUSTAINED BY THE CIT(A). WE ORDER ACCORDING LY. 11. AS FOR THE NEXT ITEM OF ADDITION OF RS.1,94,000 SUSTAINED BY THE CIT(A) IN RESPECT OF THE CREDIT ENTRY IN THE ACCO UNT OF THE PARTNER, B.HARI PRASAD, THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THIS PARTNER WAS OWING 1.3 CENTS OF AGRICULTURAL LA ND AND HAS ALSO TAKEN SOME AGRICULTURAL LAND ON LEASE AT HIS NATIVE PLA CE, BUT NO CREDIT WAS GIVEN BY THE LOWER AUTHORITIES WITH REGARD TO AGR ICULTURAL INCOME DERIVED BY THE ASSESSEE FROM THE LAND TAKEN ON LEASE. T HE LEARNED DEPARTMENTAL REPRESENTATIVE HAS OPPOSED THE SUBMISSIONS O F THE ASSESSEE AND SUBMITTED THAT THE CONFIRMATION LETTER OF SH RI HARI PRASAD IS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE AND HE IS NOT EVEN AN INCOME-TAX ASSESSEE, AND AS SUCH HIS CREDIT-WORTHINESS IS NOT A T ALL ITA NO.16487/HYD/09 SHRI BEERELLI DAMODAR, KOTHAGUDEM. 9 PROVED. ON CAREFUL CONSIDERATION OF THE RIVAL SUBMISSIO NS WITH REGARD TO THE CAPITAL INTRODUCED BY THIS PARTNER, WE FIND THA T THE LOWER AUTHORITIES HAVE NOT ALLOWED ANY CREDIT FOR THE SAVIN GS OF THIS PARTNER FROM OUT OF AGRICULTURAL INCOME FROM THE LANDS TAKEN O N LEASE BY HIM FROM OTHERS AT HIS NATIVE PLACE. IN THE ABSENCE OF ANY ADVERSE FINDING GIVEN BY THE LOWER AUTHORITIES DOUBTING THE VERSION OF THE PARTNER AS TO CULTIVATION DONE BY HIM ON THE LANDS TAKEN ON LEASE FROM OTHERS AT HIS NATIVE PLACE, WE HOLD THAT IT SHALL BE REASONABLE TO RESTRICT THE ADDITION WITH REGARD TO THE CREDIT ENTRY IN THE NAME OF THIS PARTNER TO RS.75,000 AS AGAINST RS.1,94,000 SUSTAINED BY THE CIT(A ). WE ORDER ACCORDINGLY. 12. NEXT ITEM OF ADDITION IN DISPUTE RELATES TO RS.1, 85,000 SUSTAINED BY THE CIT(A), IN RESPECT OF THE CREDIT ENTRY IN THE ACCOUNT OF PARTNER, M.KISHORE KUMAR. THE LEARNED COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THIS PARTNER WAS WORKING AS A DRIVER AND HAS TAKEN ON LEASE AGRICULTURAL LAND AT HIS NATIVE PLACE AND CULTIVAT ED THE SAME. HE SUBMITTED THAT NO CREDIT WAS ALLOWED BY THE ASSESSING OFFI CER WITH REGARDED TO THE AGRICULTURAL INCOME OF THE ASSESSEE. HE SUBMITTED THAT AN AMOUNT OF RS.98,000 INVESTED ON 4.4.2004 WAS B ORROWED BY THE ASSESSEE FROM OTHERS, AND THIS FACT HAS BEEN AFFIRMED B Y THE PARTNER KISHORE KUMAR IN HIS CONFIRMATION LETTER. HE THEREFORE, SUBMITTED THAT THE ADDITION SUSTAINED BY THE CIT(A) I N RESPECT OF CREDIT ENTRY IN THE ACCOUNT OF THIS PARTNER IS NOT JUSTIFIED. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, OPPOSE D THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE AND SUBMI TTED THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPPORT OF THE CONFIRMATION LETTER FILED BY KISHORE KUMAR AND THE SAI D PARTNER IS NOT EVEN ASSESSED TO INCOME-TAX AND IN THE CIRCUMSTANCES, THE ITA NO.16487/HYD/09 SHRI BEERELLI DAMODAR, KOTHAGUDEM. 10 CREDITWORTHINESS OF KISHORE KUMAR HAS NOT BEEN PROVED BY THE ASSESSEE. ON CAREFUL CONSIDERATION OF THE RIVAL SUBMISSIONS W ITH REGARD TO THE CAPITAL INTRODUCED BY THIS PARTNER, WE FIND THAT THE TOTAL CREDIT FOUND IN THE ACCOUNT OF THIS PARTNER, KISHORE KUM AR, WAS RS.2,48,000. WE FIND THAT NO CREDIT FOR THE SAVINGS O UT OF AGRICULTURAL INCOME OF KISHORE KUMAR WAS ALLOWED BY THE LOWER AUTHO RITIES, THOUGH NO ADVERSE FINDING HAS BEEN GIVEN BY THEM AGAINST THE AGRICULTURAL INCOME CLAIMED BY THIS PARTNER. WE ALSO FIND THAT TH IS PARTNER HAS ALSO CLAIMED TO HAVE INVESTED RS,.98,000, AFTER BORROWI NG THE SAID AMOUNT FROM HIS FRIENDS. CREDIT FOR THIS AMOUNT WAS ALSO NOT ALLOWED BY THE ASSESSING OFFICER, THOUGH THE CLAIM OF THE ASSESSEE WITH REGARD TO THE BORROWAL WAS NOT DISPUTED. CONSIDERING TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT IT SHALL BE REASONAB LE TO RESTRICT THE ADDITION IN RESPECT OF THE CREDIT ENTRY IN THE NAME OF THIS PARTNER TO RS.40,000 AS AGAINST RS.1,85,000 SUSTAINED BY THE CIT(A). WE DIRECT ACCORDINGLY. 13. IN THE RESULT, ASSESSEE'S APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9/4/2010 SD/- SD/- (CHANDRA POOJARI) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 9TH APRIL, 2010 COPY FORWARDED TO: 1. M/S. BEERELLI DAMODAR, (KOTHAGUDEM), C/O. SHRI S. RAMA RAO, ADVOCATE, FLAT NO.103, INDIRA DEVI NILAYAM, ST. NO. 7, HIMAYATNAGAR, HYDERABAD. . 2. INCOME-TAX OFFICER, WARD=1. KOTHAGUDEM. 3. COMMISSIONER OF INCOME-TAX(APPEALS), VIJAYAWADA. ITA NO.16487/HYD/09 SHRI BEERELLI DAMODAR, KOTHAGUDEM. 11 4. COMMISSIONER OF INCOME-TAX, VIJAYAWADA. 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.