Sri A Venkatesham, Hyderabad V. Income Tax Officer, Ward-1, Nalgonda

ITA 1712/HYD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2590 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 15-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 11-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained investment; Business income; Source of fund; Additional evidence; Reasonable cause
• Section: 143(3); 69

Judgement Text

ITA NO 1712 OF 2013 A VENKATESHAM NALGONDA PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.1712/HYD/2013 (ASSESSMENT YEAR: 2009-10) SRI A. VENKATESHAM NALGONDA PAN: ACEPA 1978 R VS INCOME TAX OFFICER WARD-1 NALGONDA FOR ASSESSEE : SHRI A.V. RAGHURAM FOR REVENUE : SMT. U. MINI CHANDRAN, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2009-10. IN TH IS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUN DS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, HYDERABAD, DISMISSING THE APPEAL OF THE APPELLANT IS ERRONEOUS, ILLEGAL AND UNSUSTAINABLE IN LAW. 2. THE CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.44,50,000 MADE BY THE AO AS UNEXPLAINED DEPOSITS IN BANK ACCOUNT IN SPITE OF THE FACT THAT THE SAME WERE STATED TO BE FROM KNOWN SOURCES. 3. THE CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.6,50,000 MADE BY THE AO AS UNEXPLAINED DEPOSITS IN THE DCB BANK. DATE OF HEARING : 15.02.2017 DATE OF PRONOUNCEMENT : 28.04.2017 ITA NO 1712 OF 2013 A VENKATESHAM NALGONDA PAGE 2 OF 8 4. THE CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.7,00,000 AS UNEXPLAINED INVESTMENT IN THE INDIAN BANK, NALGONDA AS UNEXPLAINED DEPOSITS. 5. THE CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.2,00,000 RECEIVED BY THE APPELLANT FROM HIS FATHER. THE CIT(A) FAILED TO APPRECIATE THAT THE AO HAS NOT CALLED FOR ANY EXPLANATION IN RESPECT OF THE ABOVE AMOUNT AND AT ANY RATE WAS UNJUSTIFIED IN EXPECTING EVIDENCE WITH RESPECT TO A TRANSACTION WITH FATHER. 6. THE CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.3,10,000 WITH RESPECT TO LOW WITHDRAWALS. 7. THE CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.9,00,000 BEING THE AMOUNT RECEIVED BY THE APPELLANT FROM HIS WIFE. THE CIT(A) FAILED TO APPRECIATE THAT THE WIFE OF THE APPELLANT IS A REGULAR INCOME TAX ASSESSEE AND THE AMOUNT GIVEN WAS FROM KNOWN SOURCES OF INCOME. 8. THE CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS4,65,000 BEING THE AGRICULTURAL INCOME TREATED AS OTHER INCOME. THE CIT(A) FAILED TO APPRECIATE THAT THE AO HAS NOT LOOKED INTO THE EVIDENCE FILED BY THE APPELLANT ON RECORD. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE RELE VANT A.Y 2009-10 ON 9.12.2009 ADMITTING TOTAL INCOME OF RS.4,69,820 AND AGRICULTURAL INCOME OF RS.9,50,000. THE RETURN OF I NCOME WAS INITIALLY PROCESSED U/S 143(1) OF THE ACT, BUT SINC E IT HAS BEEN SELECTED FOR SCRUTINY THROUGH CASS, THE PROCEEDINGS WERE INITIATED U/S 143(3) OF THE ACT. THE AO OBSERVED THAT THE ASS ESSEE HAS ACCOUNTS IN ICICI BANK LTD, HYDERABAD AND INDIAN BA NK ITA NO 1712 OF 2013 A VENKATESHAM NALGONDA PAGE 3 OF 8 NALGONDA, DEVELOPMENT CREDIT BANK LTD, HYDERABAD AN D FROM THE BANK A/C STATEMENTS, IT WAS NOTICED THAT THE ASSESS EE HAS MADE HUGE CASH AND OTHER DEPOSITS AND ALSO WITHDRAWALS D URING THE FINANCIAL YEAR 2008-09 RELEVANT TO THE A.Y 2009-10. THE ASSESSEE WAS THEREFORE, ASKED TO FURNISH THE SOURCES OF EACH OF THE DEPOSITS MADE AND EXPLAIN THE WITHDRAWALS FROM THE ABOVE ACC OUNTS IN WRITING ALONG WITH DOCUMENTARY EVIDENCE. THE ASSESS EE FURNISHED CERTAIN DETAILS VIDE LETTERS DATED 23.12.2011, 28.1 2.2011 AND 29.12.2011. 3. THE ASSESSEE ALSO FILED A CASH FLOW STATEMENT SH OWING THE CASH DEPOSITS AS WELL AS CASH WITHDRAWALS FROM VARIOUS BANK ACCOUNTS. THE ASSESSEE EXPLAINED THE SOURCES OF VAR IOUS DEPOSITS AS THE AMOUNTS GIVEN BY VARIOUS FARMERS OF HIS VILL AGE WHO GAVE THEIR SALE PROCEEDS FOR SAFE CUSTODY WITH HIM. HOWE VER, THE AO WAS NOT CONVINCED WITH THE ASSESSEES CONTENTION. H E OBSERVED THAT THE ASSESSEE HAS FURNISHED A LIST OF 11 AGRICU LTURISTS MENTIONING THE AMOUNTS AND HAS ALSO FURNISHED COPIE S OF THE PATTADAR PASS BOOKS IN RESPECT OF THESE 9 AGRICULTU RISTS BUT HAS NOT FURNISHED ANY DOCUMENTARY DIRECT EVIDENCE IN SU PPORT OF HIS ARGUMENTS. HE ALSO OBSERVED THAT THE ASSESSEE HAS N OT FURNISHED ANY CONFIRMATION LETTERS FROM 11 AGRICULTURISTS FRO M WHOM HE IS STATED TO HAVE RECEIVED THE SALE AMOUNT OF AGRICULT URAL PRODUCE. THE AO WAS NOT CONVINCED WITH THE ASSESSEES CONTEN TION THAT THESE 11 AGRICULTURISTS HAD GIVEN THEIR SALE PROCEE DS TO THE ASSESSEE FOR DEPOSITING WHICH WAS SUBSEQUENTLY BEEN WITHDRAWN BY WAY OF CASH WITHDRAWALS. HE THUS MADE AN ADDITIO N OF RS.44,50,000 AS UNEXPLAINED INVESTMENT U/S 69 OF TH E I.T. ACT AND BROUGHT IT TO TAX UNDER THE HEAD INCOME FROM O THER SOURCES. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO ITA NO 1712 OF 2013 A VENKATESHAM NALGONDA PAGE 4 OF 8 CONFIRMED THE ORDER OF THE AO HOLDING THAT THE ASSE SSEE HAS FAILED TO SUBSTANTIATE THE ASSESSEES CLAIM THAT THE DEPOS ITS WERE GIVEN TO HIM BY THE AGRICULTURISTS. HE REFUSED TO ACCEPT THE ASSESSEES CONTENTION IN THE ABSENCE OF ANY CONFIRMATION LETTE RS FROM ANY OF THE PARTIES. AGGRIEVED BY THE ORDER OF THE CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI A.V. RAGHURAM REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE WAS IN CHIT F UND BUSINESS AND WAS ARRESTED BY THE POLICE IN VIEW OF THE COMPL AINTS RECEIVED FROM VARIOUS SUBSCRIBERS TO CHITS AND THEREFORE, TH E ASSESSEE WAS PREVENTED BY REASONABLE CAUSE IN PROVIDING CONFIRMA TION LETTERS FROM THE PARTIES BEFORE THE CIT (A). HE SUBMITTED T HAT THE ASSESSEE IS NOW SUBMITTING THE CONFIRMATION LETTERS FROM ALL THE PARTIES AND PRAYED THAT THE SAME MAY BE ADMITTED AS ADDITIONAL EVIDENCE AND CONSIDER THE SAME FOR ADJUDICATION OF THE ISSUE. 5. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND ALSO SUBMITTED THAT THE CONFIRMATION LETTERS NOW FILED BY THE ASSESSEE ARE ALL SIMILARLY WORDED AND THEREFORE, CANNOT BE RELIED UPON. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS MADE THE D EPOSITS IN THE BEGINNING OF THE SEPTEMBER, 2008 AND HAS WITHDRAWN THE SAME AMOUNT IN THE LAST WEEK OF SEPTEMBER, 2008. IT IS T HE CONTENTION OF THE ASSESSEE THAT THE SOME AGRICULTURISTS WHO AR E ALSO RELATIVES OF THE ASSESSEE HAD BROUGHT THEIR AGRICULTURAL PROD UCE TO THE FRUIT MARKET IN KOTHAPET AND THE SALE PROCEEDS WERE DEPOS ITED IN THE ITA NO 1712 OF 2013 A VENKATESHAM NALGONDA PAGE 5 OF 8 ASSESSEES BANK A/C WHICH THE ASSESSEE RETURNED AFT ER SOME TIME. THE ASSESSEE HAS FILED THE COPIES OF THE PATTADAR P ASS BOOKS OF HIS PARTIES DURING THE ASSESSMENT PROCEEDINGS ITSELF, B UT HAD NOT FILED THE CONFIRMATION LETTERS DUE TO WHICH BOTH THE AO A S WELL AS THE CIT (A) WERE NOT INCLINED TO ACCEPT THE ASSESSEES CONTENTION. WE HAVE ALSO GONE THROUGH THE NEWS PAPER REPORT DATED 28.8.2012 IN WHICH THE NEWS OF THE ASSESSEES ARREST IS PUBLISHE D. THE ARREST OF THE ASSESSEE IS ALSO DURING THE SAME PERIOD DURING WHICH THE APPELLATE PROCEEDINGS WERE TAKEN UP BY THE CIT (A). THEREFORE, WE ARE CONVINCED THAT THE ASSESSEE WAS PREVENTED BY RE ASONABLE CAUSE IN PRODUCING THE RELEVANT MATERIAL BEFORE THE CIT (A). IN VIEW OF THE SAME, WE ARE INCLINED TO ADMIT THE ADDI TIONAL EVIDENCE FILED BY THE ASSESSEE AND REMAND THE SAME TO THE FI LE OF THE AO FOR VERIFICATION AND CONSIDERATION IN ACCORDANCE WITH T HE LAW AFTER GIVING THE ASSESSEE A FAIR OPPORTUNITY OF HEARING. THUS GROUND OF APPEAL NO.2 IS TREATED AS ALLOWED FOR STATISTICAL P URPOSES. 7. AS REGARDS GROUND NO.3, IT IS SEEN THAT IN THE C ASH FLOW STATEMENT, THE ASSESSEE HAD SHOWN A SUM OF RS. 6,50,000 WHICH WAS WITHDRAWN FROM THE DEVELOPMENT CREDIT BAN K, GADDINARAM, HYDERABAD A/C NO.07611110006798 AS SOUR CE OF THE CASH DEPOSIT ON 24.06.2008. THE AO PERUSED THE BANK STATEMENT OF THE DCB AND FOUND THAT THERE IS A DEPO SIT OF RS.6,50,000 ON THE SAME DAY I.E. 24.06.2008 WHICH W AS SUBSEQUENTLY WITHDRAWN AND THAT BEFORE THE SAID DEP OSIT, THE CREDIT BALANCE IN THE A/C IS ONLY RS.4,384. SINCE T HE ASSESSEE WAS NOT ABLE TO EXPLAIN THE CREDIT OF RS.6.50 LAKHS ON 24.06.2008, THE AO HAD TREATED IT AS UNEXPLAINED INVESTMENT UNDER T HE PROVISIONS OF SECTION 69 OF THE ACT AND ADDED IT TO THE INCOME RETURNED UNDER THE HEAD INCOME FROM OTHER SOURCES. THE CIT (A) C ONFIRMED THE ITA NO 1712 OF 2013 A VENKATESHAM NALGONDA PAGE 6 OF 8 ORDER OF THE AO AS THE ASSESSEE DID NOT SUBMIT ANY SPECIFIC SOURCE FOR THIS DEPOSIT. SIMILARLY WITH REGARD TO THE SOUR CES OF DEPOSITS IN THE CASH FLOW STATEMENT, THE ASSESSEE HAD SHOWN ONL Y RS.4,10,000 AS DEPOSIT IN THE SAID BANK ON 22.9.200 8 AS OUT OF THE FLOW OF CASH IN THE CASH FLOW STATEMENT, BUT TH E ASSESSEE HAS NOT SHOWN THE SOURCE OF CASH DEPOSITED OF RS.5.00 L AKHS ON 30.06.2008 AND RS.2.00 LAKHS ON 26.08.2008 AS OUTFL OW IN THE CASH FLOW STATEMENT. AO, THEREFORE, TREATED THE SUM OF RS.7.00 LAKHS AS UNEXPLAINED INVESTMENT AND BROUGHT IT TO T AX U/S 69 OF THE ACT WHICH WAS CONFIRMED BY THE CIT (A) AND THE ASSESSEE IS IN APPEAL BEFORE US BY RAISING GROUNDS OF APPEAL NOS 3 & 4. EVEN BEFORE US ALSO, THE LEARNED COUNSEL FOR THE ASSESSE E REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW, BUT HAS NOT BEEN ABLE TO SUBSTANTIATE HIS CONTENTION WITH ANY EVIDEN CE. AS THE AO AND THE CIT (A) HAVE VERIFIED THE CASH FLOW STATEME NT AND FOUND THAT THE SOURCES FOR THE CASH DEPOSITS SHOWN AS CAS H WITHDRAWAL ARE NOT CORRECT, WE DO NOT SEE ANY REASON TO INTERF ERE WITH THEIR ORDERS. ACCORDINGLY, GROUNDS OF APPEAL NOS. 3 & 4 A RE REJECTED. 8. AS REGARDS GROUND NO.5 I.E. IT IS THE CONTENTION OF THE ASSESSEE THAT A SUM OF RS.4.00 LAKHS WAS RECEIVED F ROM HIS FATHER WHO IS THE OWNER OF VAST AGRICULTURAL LAND. AO HAD TREATED IT AS INCOME FROM OTHER SOURCES AND THE CIT (A) HAS ALSO CONFIRMED THE SAID ADDITION. HOWEVER, WE ARE INCLINED TO ACCEPT T HE ASSESSEES CONTENTION AS THE TRANSACTION IS BETWEEN A FATHER A ND SON AND FATHER IS A PERSON WITH RESOURCES AND THE PROBABILI TY OF THE PAYMENT CANNOT BE DOUBTED. THE FACT THAT THE ASSESS EES FATHER HAS SUFFICIENT SOURCE TO GIVE A LOAN TO HIS SON IS SUFFICIENT TO DELETE THE ADDITION. THIS GROUND OF APPEAL IS ACCORDINGLY ALLOWED. ITA NO 1712 OF 2013 A VENKATESHAM NALGONDA PAGE 7 OF 8 9. AS REGARDS GROUND NO.6 REGARDING LOW WITHDRAWALS AND THE ADDITION MADE ON ACCOUNT OF LOW WITHDRAWALS , WE FIND THAT THE ASSESSEE IS STATED TO HAVE WITHDRAWN ONLY A SUM OF RS.2,90,000 FOR THE RELEVANT A.Y, FOR HIS PERSONAL N EEDS THOUGH HE WAS THE OWNER OF A SCORPIO CAR AND MAINTAINED THE S AME. THE AO HAS ESTIMATED THE PERSONAL EXPENSES OF THE ASSESSEE AT RS.50,000 P.M. AS REASONABLE EXPENDITURE AND HAS ACCORDINGLY MADE AN ADDITION OF RS.3,10,000 ON ACCOUNT OF LOW WITHDRAWA LS AND THE CIT (A) HAS CONFIRMED THE SAME. AS THE ASSESSEE HAS NOT FURNISHED ANY PROOF OR EVIDENCE BEFORE US TO DEMONS TRATE THAT THE SUM OF RS.2,90,000 IS SUFFICIENT FOR HIS STANDARD O F LIVING, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW. THIS GROUND OF APPEAL IS ACCORDINGLY REJECTE D. 10. AS REGARDS GROUND NO.7 AGAINST THE ADDITION OF RS.9.00 LAKHS ALLEGEDLY RECEIVED BY THE ASSESSEE FR OM HIS WIFE, THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEES WIFE IS A REGULAR INCOME TAX ASSESSEE AND THE AMOUNT GIVEN WAS FROM H ER KNOWN SOURCES OF INCOME. THE ASSESSEE HAS FILED A COPY OF THE RETURN OF HER INCOME AT PAGE NOS. 69 TO 91 OF THE PAPER BOOK WHEREIN THE ASSESSEES WIFE HAS RETURNED BUSINESS INCOME OF RS. 1,94,714 AND AGRICULTURAL INCOME OF RS.7,25,000 I.E. NEARLY RS.9 ,15,000 FROM WHICH THE ASSESSEE HAS EXPLAINED THAT RS.9.00 LAKHS WAS RECEIVED FROM HIS WIFE. THOUGH THE ASSESSEES WIFE IS SHOWN TO HAVE SUFFICIENT INCOME, BUT IT CANNOT BE ACCEPTED THAT T HE ENTIRE INCOME HAS BEEN GIVEN TO THE HUSBAND WHICH IS SHOWN AS SOURCE OF CASH DEPOSITS. THEREFORE, WE ACCEPT ONLY A SUM O F RS.8.00 LAKHS AS A LOAN FROM HER AND THE BALANCE ADDITION IS CONF IRMED. ITA NO 1712 OF 2013 A VENKATESHAM NALGONDA PAGE 8 OF 8 11. AS REGARDS GROUND NO.8 AGAINST THE ADDITION OF RS.2,83,000, THE ASSESSEE HAD CLAIMED IT TO BE AGRI CULTURAL INCOME AND HAS ALSO FILED CERTAIN BILLS REFLECTING THE SALE OF AGRICULTURAL PRODUCE. FURTHER, WE FIND THAT NONE OF THE AUTHORITIES BELOW HAVE VERIFIED THE ASSESSEES CONTENTION ON TH IS ISSUE. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO REMA ND THE ISSUE TO THE FILE OF THE AO WITH DIRECTION TO LOOK INTO THE ASSESSEES LAND HOLDINGS, THE NATURE OF THE CROPS GROWN AND WHETHER THEY COINCIDE WITH THE SALE BILLS FILED BY THE ASSESSEE AND RECON SIDER THE ISSUE IN ACCORDANCE WITH THE LAW. 12. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH APRIL, 2017. SD/- SD/- (INTURI RAMA RAO) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 28 TH APRIL, 2017. VINODAN/SPS COPY TO: 1 K. VASANTKUMAR, A.V. RAGHU RAM, ADVOCATES, 610 BA BUKHAN ESTATE, BASHEERBAGH, HYDERABAD 500001 2 INCOME TAX OFFICER WARD-1 NALGONDA 3 CIT (A)-V HYDERABAD 4 CIT IV HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER