M/s Bonthala Venkata Rao, Kothavalasa V. The ITO, Ward-2, Vizianagaram

ITA 178/VIZ/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2851 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 04-03-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C V S MURTHY
• Assessee Lawyers: G S S GOPINATH
• Section: 69B; 69

Judgement Text

PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER SL. NO CASE NO. ASST. YEAR P.A.N.NO. APPELLANTS RESPONDENTS 1 ITA 321/VIZAG/2006 2005 - 06 AJGPB 9350 H BASAVA JANARDHAN RAO, SRIKAKULAM ITO, WARD - 1, SRIKAKULAM 2 ITA 177/VIZAG/2008 2005 - 06 AJOPM 9921 D MUKKU JANAKI RAMA RAO, PENDURTHI ITO WARD - 2, VIZIANAGARAM 3 ITA 178/VIZAG/2008 2005 - 06 AHJPB 7866 K BONTHALA VENKATA R AO, KOTHAVAALASA ITO WARD - 2, VIZIANAGARAM 4 ITA 179/VIZAG/2008 2005 - 06 AGXPK 4994 K KONKI SANYASI RAO, VIZIANAGARAM ITO WARD - 2 VIZIANAGARAM APPELLANT BY: SHRI C.V.S. MURTHY, CA RESPONDENT BY: SHRI G.S.S. GOPINATH, DR ORDER PER BENCH: THESE APPEALS FILED AT THE INSTANCE OF THE RESPECT IVE ASSESSEE ARE DIRECTED AGAINST THE ORDER PASSED BY THE LD CIT (A) -I/CIT(A)-II, VISAKHAPATNAM IN THE RESPECTIVE HANDS OF THE ASSESS EES AND THEY RELATE TO THE ASSESSMENT YEAR 2005-06. SINCE THE ISSUES AGITATED IN THESE APPEALS ARE COMMON IN NATURE, WE FIND IT CONVENIENT TO DISPOSE ALL THESE APPEALS BY THIS COMMON ORDER. 2. THE ONLY ISSUE AGITATED IN THIS APPEAL IS WHETHE R THE LD CIT (A) IS JUSTIFIED IN CONFIRMING THE ADDITION PERTAINING TO THE PURCHASE OF DEMAND DRAFTS THROUGH THE BANK ACCOUNT OF THE RESPECTIVE ASSESSEE S. 3. THE FACTS ARE STATED IN BRIEF. THE RESPECTIVE AS SESSING OFFICERS RECEIVED INFORMATION TO THE EFFECT THAT THESE ASSESSEES HAVE PURCHASED DEMAND DRAFTS, AS DETAILED BELOW, FROM CERTAIN BANKS IN THE NAME O F VARIOUS PERSONS. PAGE 2 OF 5 A. BASAVA JANARDHANA RAO - RS.42,25,000/ - B. MUKKU JANAKI RAO - RS.12,50,000/- C. BONTALA VENKATA RAO - RS.11,50,000/- D. KONKI SANYASI RAO - RS.12,70,000/-* (* D.D PURCHASED FOR RS.15.70 LAKHS; BUT ADDITION M ADE IS ONLY RS.12.70 LAKHS). IN THIS CONNECTION, THE AO CALLED FOR EXPLANATIONS F ROM THE ASSESSEE. THE CASE OF THESE ASSESSEES WAS THAT THE IMPUGNED DEMAND DRA FTS WERE PURCHASED BY THEM ON BEHALF OF SOME OTHER PERSONS AT THEIR SPECI FIC REQUEST BY UTILIZING THE MONEY PROVIDED BY THEM. THESE ASSESSEES FURTHER EX PLAINED THAT THESE DDS WERE USED BY THE RESPECTIVE PERSONS IN ORDER TO APP LY FOR EXCISE LICENSE FOR RUNNING WINE SHOPS. IN SUPPORT OF THESE SUBMISSIONS , ALL THESE ASSESSEES FILED CONFIRMATION LETTERS FROM THE RESPECTIVE PERSONS ON WHOSE BEHALF THE DDS WERE CLAIMED TO HAVE BEEN TAKEN. SUBSEQUENTLY ALL THE PERSONS, ON WHOSE BEHALF THE D.DS WERE CLAIMED TO HAVE BEEN PURCHASED , WERE ALSO PRODUCED BEFORE THE AO. THE AO RECORDED STATEMENT FROM ALL OF THEM AND IN THAT STATEMENT, ALL THE PERSONS CONFIRMED THE SUBMISSION S MADE BY THE ASSESSEE. HOWEVER, THE AO TOOK THE VIEW THAT THE RESPECTIVE P ERSONS ON WHOSE BEHALF THE DEMAND DRAFTS WERE PURCHASED DID NOT HAVE THE R EQUIRED CREDIT WORTHINESS AND ACCORDINGLY ADDED THE AMOUNT STATED ABOVE TO TH E TOTAL INCOME OF THE RESPECTIVE ASSESSEES. IN THE APPEAL PREFERRED BEFOR E THE LD CIT (A), THE FIRST APPELLATE AUTHORITY CONFIRMED THE IMPUGNED ADDITION S. AGGRIEVED BY THE ORDER OF LD CIT(A), THESE ASSESSEES ARE IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES. IT WAS BROUGHT T O OUR NOTICE THAT IDENTICAL ISSUE WAS CONSIDERED BY THE BENCH IN SOME OTHER APP EALS ALSO. WE NOTICE THAT IN THE CASE OF BALAGAM SRINIVAS IN ITA NO.518/VIZAG /2007, THIS BENCH, VIDE ITS ORDER DATED 13.11.2009 HAS DECIDED THE ISSUE AS UND ER: 4. WE HAVE HEARD THE PARTIES AND CAREFULLY PE RUSED THE RECORD. WE NOTICE THAT THE LD CIT (A) HAS CONSIDERED FOLLOWING CASE L AW IN SUPPORT OF HIS DECISION: A) R. THYAGARAJ VS. CIT (239 ITR 557( (MAD.)) IN THI S CASE, THE APPLICATION FORM PURCHASE OF D.D. WAS SIGNED BY THE ASSESSEE. THE COURT HELD THAT THE INFERENCE DRAWN BY THE AO TO TH E EFFECT THAT THE PAGE 3 OF 5 ASSESSEE HAS PAID NECESSARY CASH FOR OBTAINING THE DRAFT IS NOT JUSTIFIED. B) MOHAN B. SAMTANI VS. CIT (199 ITR 370)(CAL.) IN T HIS CASE, THE ASSESSEE CONSIGNED ANTIQUES AS A REPRESENTATIVE OF STATE TRADING CORPORATION OF SIKKIM. THE DISPATCH OF THE GOODS W ERE DONE ON THE ORAL INSTRUCTION OF CHOGYAL. CHOGYAL ALSO CLAIMED O WNERSHIP OF THE ANTIQUE AND HIS CLAIM WAS NOT DISPROVED. HENCE IT WAS HELD THAT THE VALUE OF ANTIQUE CANNOT BE ADDED TO THE ASSESSEES INCOME C) CIT VS. SMT. P.K. NOORJAHAN, (237 ITR 570)(SC) IN THIS CASE, THE ASSESSEE WAS FOUND TO BE NOT CAPABLE ENOUGH TO EARN THE INCOME DURING THE ASSESSMENT YEAR UNDER CONSIDERATION OR W AS IN A POSITION TO EARN IT FOR A DECADE OR MORE. THE HONBLE APEX COURT HELD THAT SECTION 69 CONFERS A DISCRETION TO THE ASSESSING OF FICER IN THE MATTER OF TREATING AN INVESTMENT AS INCOME OF THE ASSESSEE AND HENCE THE QUESTION WHETHER THE SOURCE OF INVESTMENT SHOULD BE TREATED AS INCOME OR NOT U/S 69 HAS TO BE CONSIDERED IN THE LI GHT OF FACTS OF EACH CASE. D) JAYADAYA PODDAR VS. BIBI RAGRA AND OTHERS, AIR (1974 SC 171.) _ IN CASES FALLING U/S 69A, 69B AND 69C, THE PHRASEOLOGY USED GOES TO SHOW THAT BEFORE ANY OF THESE SECTIONS CAN BE INVOK ED, THE CONDITION PRECEDENT AS TO THE EXISTENCE OF INVESTMENT, EXPEND ITURE, OMISSION TO STATE OR MAKING UNDERSTATEMENT OF VALUE ETC., MU ST BE CONCLUSIVELY ESTABLISHED BY EVIDENCE AND/OR MATERIA L ON RECORD. (E) PRAKASH NARIAN VS. CWT (20 CTR 147) (ALL.) THE BU RDEN OF SHOWING THAT A PARTICULAR TRANSACTION IS A BENAMI A ND THE OWNER IS NOT THE REAL OWNER RESTS ON THE PERSON ASSERTING IT TO BE SO AND THIS BURDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCI NG LEGAL EVIDENCE OF DEFINITE CHARACTER WHICH WOULD EITHER D IRECTLY PROVE THE FACT OF BENAMI OR ESTABLISH CIRCUMSTANCES UNERRINGL Y AND REASONABLY RAISING AN INFERENCE OF THE FACT. 4.1 WE NOTICE THAT THE ASSESSEE HAS FILE D CONFIRMATION LETTERS FROM ALL THE 18 PERSONS ON WHOSE BEHALF THE DDS WERE CLAIMED TO HAVE BEEN PURCHASED BY THE ASSESSEE. SUBSEQUENTLY THE ASSESSE E HAS ALSO PRODUCED 17 PERSONS AND THE AO HAS RECORDED STATEMENT FROM T HEM. IN THE SWORN STATEMENT ALSO ALL THE 17 PERSONS HAVE CONFIRMED TH E SUBMISSION OF THE ASSESSEE. THERE IS ALSO NO DISPUTE WITH REGARD TO T HE FACT THAT THE DDS WERE UITILISED BY THESE 18 PERSONS ONLY FOR THEIR O WN PURPOSE, I.E.FOR MAKING APPLICATION IN THEIR RESPECTIVE NAMES. WE WE RE ALSO INFORMED THAT THE REVENUE DID NOT CAUSE ANY INQUIRY WITH REGARD T O THE DEMAND DRAFTS IN THE INDIVIDUAL HANDS OF THE 18 PERSONS. IN THE F ACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT ONCE INDIVI DUAL PERSONS HAVE ADMITTED THAT THE DDS WERE PURCHASED ON THEIR BEHAL F AND THAT THEY HAVE PAGE 4 OF 5 ONLY USED THEM FOR THEIR OWN PURPOSE, THE ONUS PLAC ED UPON THE ASSESSEE GETS DISCHARGED. IN SUCH A SITUATION THE REVENUE MA Y EXAMINE THE FINANCIAL STATUS OF THE INDIVIDUAL PERSONS AND THE ADDITION, IF ANY, IS CALLED FOR IN THEIR RESPECTIVE HANDS. WE NOTICE THAT THE L D CIT (A) HAS ANALYSED THE ISSUE IN RIGHT PERSPECTIVE AND HAS RENDERED HIS DECISION ON A CONSPECTUS OF MATTER. HENCE WE DO NOT FIND ANY NECE SSITY TO INTERFERE IN HIS DECISION. 4.1 SIMILARLY IN THE CASE OF BUDDEPU VARA LAKSH MI IN ITA NO.15/VIZAG/2007, THIS BENCH, VIDE ITS ORDER DATED 13-11-2009, HAS DECIDED AN IDENTICAL ISSUE AS UNDER: 6. DURING THE COURSE OF HEARING, A SPECIFIC QUERY WAS RAISED TO THE LD. DR, I.E. WHETHER THE ASSESSING OFFICER HAS MADE ANY INVESTIG ATION IN THE INDIVIDUAL HANDS OF PERSONS ON WHOSE BEHALF THE DEMAND DRAFTS WERE PURC HASED BY THE ASSESSEE. LD. DR REPLIED IN NEGATIVE. LD DR ALSO CONFIRMED THAT ONLY THE PERSONS IN WHOSE BEHALF THE DEMAND DRAFTS WERE CLAIMED TO HAVE BEEN PURCHAS ED HAS APPLIED FOR OBTAINING LICENSE FOR RUNNING IMFL SHOPS. HENCE IT IS PROVED THAT THE DEMAND DRAFTS WERE USED BY THE RESPECTIVE PERSONS. FURTHER ALL THE PE RSONS HAVE APPEARED BEFORE THE AO AND CONFIRMED THAT THE ASSESSEE HAS ONLY FACILIT ATED THE PURCHASING OF DEMAND DRAFTS. ONCE THE INDIVIDUAL PERSONS HAVE ADMITTED THAT THE DEMAND DRAFTS WERE PURCHASED ON THEIR BEHALF AND THAT THEY ONLY HAVE U SED THE SAID DEMAND DRAFTS FOR THEIR OWN PURPOSE, IN OUR OPINION, THE ONUS PLACED UPON THE ASSESSEE GETS DISCHARGED AND THE REVENUE WAS REQUIRED TO EXAMINE THE FINANCIAL STATUS OF THE INDIVIDUAL PERSONS AND ADDITION, IF ANY, IS CALLED FOR IN THEIR RESPECTIVE HANDS. IN VIEW OF THE FORE GOING, WE REVERSE THE ORDER OF LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.12.00 LAKHS. 5. BOTH THE PARTIES AGREED THAT THE FACTS AND C IRCUMSTANCES PREVAILING IN THE CASES NOW CONSIDERED ARE IDENTICAL WITH THE CASES D ECIDED EARLIER. HENCE, CONSISTENT WITH THE VIEW TAKEN IN THE ABOVE CITED C ASES, WE DIRECT THE AO TO DELETE THE ADDITIONS MADE ON THIS ISSUE. 6. IN THE RESULT, THE APPEALS FILED BY THE ASSE SSEES ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 22.12.2009. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 22 ND DECEMBER, 2009. PAGE 5 OF 5 COPY TO 1 MR. BASAVA JANARDHANA RAO, S/O SRI MOHANA RAO, NE AR RAILWAY GATE, AMADALAVALSA, SRIKAKULAM DISTRICT. 2 THE ITO WARD-1, SRIKAKULAM 3 MR.MUKKU JANAKI RAMA RAO, S/O SRI M.A. RAMA RAO,O PP: NATARAJ TALKIES, PENDURTHI, VISAKHAPATNAM DISTRICT. 4 MR. BONTHALA VENKATA RAO, D.NO.5-28, NEAR RAILWAY STATION, KOTHAVALASA 5 MR. KONKI SANYASI RAO, S/O LATE SRI KANNAYYA, NEA R BUTCHANNA KONERU JUNCTION, VIZIANAGARAM 6. THE ITO WARD-2, VIZIANAGARAM 7 THE CIT(A)-I, VISAKHAPATNAM. 8 THE CIT, VISAKHAPATNAM 9 THE DR, ITAT, VISAKHAPATNAM 10. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM