Income Tax Officer, Ward-7(1), Hyderabad V. Shri Syed Aneesuddin, Hyderabad

ITA 1804/HYD/2013

• Counselvise Citation: 180422514 RSA 2013
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 26-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Keywords: Unexplained cash credit; Unexplained investment; Additional evidence
• Section: 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE S/SHRI B. RAMAKOTAIAH, A.M. & SAKTIJIT DEY, J.M. ITA.NO.1804/HYD/2013 ASSESSMENT YEAR 2008-2009 ITO, WARD 7(1) HYDERABAD. VS. SRI SYED ANEESUDDIN, HYDERABAD. PAN-AAOPU-6624Q (APPELLANT) (RESPONDENT) FOR REVENUE : MR. B. YADAGIRI FOR ASSESSEE : -NONE- DATE OF HEARING : 22.04.2014 DATE OF PRONOUNCEMENT : 07.05.2014 ORDER PER SAKTIJIT DEY, J.M. THIS APPEAL BY THE DEPARTMENT IS FILED AGAINST TH E ORDER OF THE CIT(A)-VI, HYDERABAD DATED 18.09.2013 FOR THE A.Y. 2008-09. WHEN THE MATTER WAS CALLED NONE APPEA RED FOR THE ASSESSEE. CONSIDERING THE NATURE OF DISPUTE, WE PROCEED TO DECIDE THE APPEAL EXPARTE QUA THE ASSESSEE AFTER HE ARING THE LEARNED D.R. THE ONLY EFFECTIVE GROUND OF THE DEPAR TMENT READS AS UNDER : 2. THE CIT(A) ERRED IN DELETING THE ADDITION OF RS . 12 LAKHS MADE TOWARDS UNEXPLAINED CREDITS WHEN THE CREDITWORTHINESS OF THE CREDITORS IS NOT PROVED. 2. BRIEFLY THE FACTS ARE, THE ASSESSEE AN INDIVIDU AL IS ENGAGED IN THE BUSINESS OF EXECUTING CIVIL CONTRACT WORK AND CONSULTANCY SERVICES. THE ASSESSEE IS ALSO PARTNER IN THREE PARTNERSHIP FIRMS NAMELY, M/S. SIGMA CONSTRUCTIONS, M/S. VISTA CONSTRUCTIONS AND M/S. NEW VISTA CONSTRUCTION S. SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED IN THE BUSINESS 2 ITA.NO.1804/HYD/2013 SRI SYED ANEESUDDIN, HYDERABAD PREMISES OF M/S. SIGMA CONSTRUCTIONS ON 25.02.2010. IT IS NOTED BY THE A.O., THE INFORMATION FOUND DURING SUR VEY REVEALED HUGE INVESTMENTS MADE BY THESE FIRMS IN PU RCHASE OF PROPERTIES. IT IS STATED, DURING SURVEY AND POST SU RVEY PROCEEDINGS THESE FIRMS ADMITTED ADDITIONAL AGRICUL TURAL INCOME OF RS.2.50 CRORES BUT SUBSEQUENTLY THEY CAME UP WITH A PLEA THAT AS THE FIRMS HAVE NOT COMMENCED THEIR B USINESS, THE ADDITIONAL INCOME IS TO BE OFFERED AT THE HANDS OF THE PARTNERS. ACCORDINGLY, AGRICULTURAL INCOME OF RS.25 ,00,000/- WAS OFFERED AT THE HANDS OF THE PRESENT ASSESSEE. H OWEVER, SINCE AGRICULTURAL INCOME PROMISED TO BE OFFERED WA S NOT ULTIMATELY OFFERED EITHER BY THE FIRMS OR BY THE PA RTNERS, THE A.O. REOPENED THE ASSESSMENT BY ISSUING NOTICE UNDE R SECTION 148 OF THE ACT. IN COURSE OF THE ASSESSMENT PROCEED INGS, THE A.O. NOTICED THAT THE ASSESSEE HAS INVESTED TOWARDS HIS CAPITAL IN DIFFERENT FIRMS AS UNDER : M/S. SIGMA CONSTRUCTIONS RS. 3,50,000/- M/S. VISTA CONSTRUCTIONS RS.24,00,000/- M/S. NEW VISTA CONSTRUCTIONS RS.60,50,000/- TOTAL RS.88,00,000/- 3. WHEN THE A.O. CALLED UPON THE ASSESSEE TO EXPLA IN THE SOURCE OF SUCH INVESTMENT, THE ASSESSEE EXPLAIN ED THAT INVESTMENT WAS MADE BY HIM ON AVAILING LOANS FROM F EW PERSONS AS UNDER : SRI MOHD. IRFANUDDIN RS.50,50,000/- SRI KHAJA FAIZUDDIN RS. 2,00,000/- DR. GOPAL RAO RS.10,00,000/- 3 ITA.NO.1804/HYD/2013 SRI SYED ANEESUDDIN, HYDERABAD 4. THE ASSESSEE EXPLAINED THAT REMAINING INVESTMEN T OF RS.25,50,000/- WAS OUT OF HIS OWN SOURCES. FURTH ER, THE ASSESSEE ALSO FURNISHED CASH FLOW STATEMENT OF CRED ITORS ALONG WITH CONFIRMATIONS IN RESPECT OF TWO CREDITORS I.E. , MOHD. IRFANUDDIN AND KHAJA FAIZUDDIN. HOWEVER, A.O. ACCEP TED ONLY THE LOAN OF RS.50,50,000/- AVAILED FROM MOHD. IRFAN UDDIN. SO FAR AS INVESTMENT OF BALANCE AMOUNT OF RS.37,50,000 /- (RS.12,00,000 LOAN + RS.25,50,000/- OWN INVESTMENT) IS CONCERNED, THE A.O. DISBELIEVING THE EXPLANATION OF THE ASSESSEE TREATED IT AS UNEXPLAINED INVESTMENT AND A DDED IT TO THE INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A). AS THE DEPARTMENT I N THE PRESENT APPEAL HAS ONLY CHALLENGED THE DELETION OF RS. 12 LAKHS REPRESENTING LOAN FROM TWO PERSONS, IT IS NECESSARY TO DEAL WITH THE FACTS RELATING TO THIS ISSUE ALONE. IN COURSE O F HEARING OF APPEAL BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED THAT LOAN OF RS.10,00,000/- WAS ACTUALLY AVAILED FROM MR. M.A . KHUDDUS AND NOT DR. GOPAL RAO AS INDICATED DURING THE ASSES SMENT PROCEEDINGS. TO SUBSTANTIATE HIS CLAIM ASSESSEE ALS O SUBMITTED CONFIRMATION OF THE CREDITOR AS ADDITIONAL EVIDENCE . ON THE BASIS OF SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A ) CALLED FOR A REMAND REPORT FROM THE A.O. AFTER CONSIDERING THE S UBMISSIONS OF THE ASSESSEE, COMMENTS OF THE A.O. IN THE REMAND REPORT AND OTHER MATERIALS ON RECORD, THE CIT(A) HELD THAT LAON OF RS. 12 LAKHS AVAILED FROM MR. KHUDDUS AND MR. FAIZUDDIN STAND EXPLAINED AND ACCORDINGLY, DELETED THE ADDITION MAD E BY A.O. OF THE SAID AMOUNT. THE FINDING OF THE CIT(A) IN TH IS REGARD IS REPRODUCED HEREUNDER : 4 ITA.NO.1804/HYD/2013 SRI SYED ANEESUDDIN, HYDERABAD 4.7. AS REGARDS TO THE LOAN OF RS.10,00,000 FROM M R. MOHD. ABDUL KHUDDUS IS CONCERNED, THE SAME WAS CONFIRMED BY MR. KHUDDUS, THOUGH ORIGINALLY THE LOA N WAS WRONGLY SHOWN IN THE NAME OF DR. GOPAL RAO. THIS WA S EXPLAINED BY THE APPELLANT AND NOT DISPUTED BY THE A.O. THE CONFIRMATION BY MR. KHUDDUS INDICATES THAT THE LOANS ARE OBTAINED THROUGH BANKING CHANNEL WITH THE CHEQU E NUMBER AND BANK ACCOUNT DETAILS FURNISHED. IT IS AL SO SUBMITTED THAT MR. KHUDDUS IS ASSESSED TO TAX IN WA RD 12(2), HYDERABAD. SINCE, THE IDENTIFY OF THE CREDIT OR IS ESTABLISHED AND THE APPARENT SOURCES ARE INDICATED, IT IS NOT THE CASE OF THE A.O. TO QUESTION THE TRANSACTIO N. HAVING SUBMITTED THE BASIC REQUIRED DETAILS, IT WAS FOR THE A.O. TO EXAMINE THE DETAILS AND TO PROCEED AGAINST THE CREDITOR. THE ANGLE OF HUMAN PROBABILITY SHOULD BE GIVEN ITS DUE RECOGNITION, IN ARRIVING AT THE CONCLUSION ON THE GENUINENESS OF TRANSACTION AND THE CREDITWORTHINESS OF THE CREDITORS. SAME IS THE CASE WITH THE CREDIT OF RS.2,00,000 FROM MR. FAIZUDDIN, WHO HAS FURNISHED T HE CONFIRMATION FOR THE LOAN. UNDER THE CIRCUMSTANCES, IT CAN BE HELD THAT THE CREDITS FROM MR. KHUDDUS TO THE EX TENT OF RS.10,00,000 AND RS.2,00,000 FROM MR. FAIZUDDIN STA ND EXPLAINED, AND PROVISIONS OF SEC.68 ARE NOT ATTRACT ED TO TREAT THEM AS UNEXPLAINED CREDITS, IN THE INSTANT C ASE. HENCE, THE ADDITION TO THE EXTENT OF RS.12,00,000 A S UNEXPLAINED CREDITS STAND DELETED. 5. WE HAVE HEARD THE LD. D.R. AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. IT IS A FACT ON RECORD THAT THE ASSESSEE HAS NOT ONLY PRODUCED CONFIRMATION LETTER OF THE CREDITOR MR. MOHD. ABDUL KHUDDUS CONFIRMING LOAN OF RS. 10 LAKHS BUT THE LOAN TRANSACTION WAS THROUGH BANKING CHANNEL. ASSESSEE HAS ALSO FURNISHED INCOME TAX ASSESSMENT PARTICULARS OF THE SAID CREDITOR. SIMILARLY, IN RES PECT OF LOAN OF RS.2,00,000/- FROM MR. FAIZUDDIN ALSO ASSESSEE HAS FURNISHED CONFIRMATION FROM THE CREDITOR. THEREFORE, THE ASSE SSEE HAVING DISCHARGED THE INITIAL BURDEN CAST UPON HIM TO PROV E THE GENUINENESS OF LOAN TRANSACTION BY IDENTIFYING THE CREDITORS, FURNISHING EVIDENCE WITH RESPECT TO THEIR CREDITWOR THINESS, THE BURDEN SHIFTS TO THE A.O. TO PROVE THAT LOAN IS NOT GENUINE, 5 ITA.NO.1804/HYD/2013 SRI SYED ANEESUDDIN, HYDERABAD EITHER BECAUSE CREDITORS ARE NOT IDENTIFIABLE OR TH EY DO NOT HAVE CREDITWORTHINESS. FROM THE ASSESSMENT ORDER IT IS C LEAR THAT THE A.O. HAS NOT DONE ANY SUCH EXERCISE TO ESTABLIS H ON RECORD THAT THE CREDITS ARE UNEXPLAINED. IN THIS VIEW OF T HE MATTER, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDIN G OF THE LD. CIT(A). THE GROUND RAISED BY THE REVENUE IS DISMISS ED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.05.2 014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACOUNTANT MEMBER JUDICIALMEMB ER HYDERABAD, DATE 07 TH MAY, 2014 VBP/- COPY TO : 1. ITO, WARD 7(1), 2 ND FLOOR, B BLOCK, I.T. TOWERS, A.C. GUARDS, HYDERABAD. 2. SRI SYED ANEESUDDIN, 12-2-830/34, MEHDIPATNAM, HYDERABAD. 3. CIT(A)-VI, HYDERABAD 4. CIT-VI, HYDERABAD 5. D.R. ITAT, B BENCH, HYDERABAD.