Sri. Gaddipati Srinivasa Rao, Hyderabad V. Dy. CIT, Circle 16(1), Hyderabad

ITA 181/HYD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74681 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 03-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 181/HYD/2012 ASSESSMENT YEAR 2008-09 SRI GADDIPATI SRINIVASA RAO HYDERABAD PAN: AEEPG6166M VS. THE DEPUTY CIT CIRCLE-16(1) HYDERABAD [APPELLANT] [RESPONDENT] APPELLANT BY: SRI A.V. RAGHU RAM RESPONDENT BY: SRI B. YADAGIRI DATE OF HEARING: 19.02.2014 DATE OF PRONOUNCEMENT: 12.03.2014 ORDER PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-V, HYDERABAD DATED 23.11.2011 F OR ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE'S GRIEVANCE IN THIS APPEAL IS WITH REG ARD TO SUSTAINING ADDITION BY THE CIT(A) U/S. 68 OF INCOME- TAX ACT, 1961 WITH REGARD TO THE FOLLOWING CASH CREDITS DEPO SITED IN ASSESSEE'S SB A/C. WITH CENTURY BANK OF PUNJAB LTD., SD ROAD, SECUNDERABAD: 27.02.2008 BY CASH RS. 10,25,000 22.03.2008 BY CASH RS. 9,00,000 24.03.2008 BY CASH RS. 9,00,000 25.03.2008 BY CASH RS. 9,00,000 ITA NO. 181/HYD/2012 SRI GADDIPATI SRINIVASA RAO ======================= 2 ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION ON ALL COUNTS. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 3. REGARDING THE FIRST CASH CREDIT OF RS. 10.25 LAKHS, THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAS RECEIVED RS. 10.25 LAKHS FROM HIS BROTHER-IN-LAW. ACCORDING TO THE AR THE ASSESSEE OWNS 14.79 ACRES OF LAND IN MADAKA VILLAGE . HIS WIFE, SMT. G. SRI LAKSHMI OWNS 1 ACRE AND HIS FATHE R OWNS 3 ACRES OF LAND IN THE SAME VILLAGE. THE SAID LAND W AS GIVEN ON LEASE TO ONE MR. AKKINENI PARDHASARADHI VENKATESWAR A RAO (FOR SHORT MR. AKKINENI), WHO IS ASSESSEE'S BROTHER -IN-LAW. SINCE MR. AKKINENI IS A CLOSE RELATIVE OF THE ASSES SEE, THE ASSESSEE HAS NOT TAKEN ANY LEASE RENT FROM HIS BROT HER-IN-LAW FOR THE PAST SEVERAL YEARS. SINCE THE ASSESSEE WAS IN NEED OF CERTAIN FUNDS, HE HAD REQUESTED HIS BROTHER-IN-LAW TO GIVE LEASE RENTALS OF THE ABOVE SAID LANDS. ACCORDINGLY , THE ASSESSEE RECEIVED RS. 12 LAKHS FROM HIM. OUT OF TH IS, THE ASSESSEE DEPOSITED RS. 10.25 LAKHS INTO HIS BANK A/C . ACCORDING TO THE ASSESSEE'S AR, SINCE MR. AKKINENI CONFIRMED GIVING OF RS. 12 LAKHS TO THE ASSESSEE TOWARDS LEAS E RENT IN HIS STATEMENT RECORDED BY THE INSPECTOR. THIS AMOU NT OF RS. 10.25 LAKHS CANNOT BE DOUBTED SO AS TO MAKE ADDITIO N U/S. 68 OF THE ACT. ITA NO. 181/HYD/2012 SRI GADDIPATI SRINIVASA RAO ======================= 3 4. ON THE OTHER HAND, THE LEARNED DR SUBMITTED WITH REGARD TO DEPOSIT OF RS. 10,25,000 THAT THERE IS AB SOLUTELY NO EVIDENCE WITH REGARD TO THE AFOREMENTIONED STORY. IT IS STATED THAT MR. AKKINENI IS THE BROTHER-IN-LAW OF THE ASSE SSEE AND HAD TAKEN HIS LANDS ON LEASE FOR MANY YEARS WITHOUT ANY RENT. THERE IS NO EVIDENCE OF THIS TRANSACTION. SECONDLY , AS HAS BEEN GIVEN IN THE ORDER OF THE AO, THERE WAS A CLEA R CUT DIFFERENCE IN THE LAND HOLDINGS. THE ASSESSEE OWNS ONLY 14.79 ACRES OF LAND. IT IS NOT CLEAR AS TO HOW MR. AKKINENI WAS SUPPOSED TO HAVE GIVEN LEASE OF 20 ACRES OF LAND. SECONDLY, MR. AKKINENI COULD NOT EVEN EXPLAIN THE DETAILS OF CULTIVATION AND COULD NOT PRODUCE EVEN THE PATTADAR PASSBOOKS A S PROOF. THE TRANSACTIONS ARE NEITHER ROUTED THROUGH THE BAN K ACCOUNT OF MR. AKKINENI OR ANY OTHER BANK ACCOUNT. ONLY CA SH HAS BEEN DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. THEREFORE, NOT ONLY IS THERE NO EVIDENCE REGARDING THE AFOREMENTIONED STORY, BUT THERE ARE ALSO GLOWING LO OPHOLES IN IT. DURING PHYSICAL VERIFICATION, NO EVIDENCE WAS FOUND REGARDING THE ABOVE TRANSACTION. IN ANY CASE, EVEN ON HUMAN PROBABILITY, IT IS IMPOSSIBLE THAT SOMEONE WOULD GI VE HIS ENTIRE LANDHOLDING AND FORGET ABOUT RECEIVING ANY R ENT. AS PER THE ASSESSEE, MR. AKKINENI OWED HIM RS. 12,00,0 00. AT AN AVERAGE OF RS. 10,000 PER ANNUM FOR 14 YEARS, IT WO ULD IMPLY THAT NOT A PENNY HAD BEEN PAID FOR THE PAST 9 YEARS . GIVEN ITA NO. 181/HYD/2012 SRI GADDIPATI SRINIVASA RAO ======================= 4 THE ABOVE FACTS, THE ENTIRE TRANSACTION IS CLEARLY NOT PROVEN AND IS NOT GENUINE. 5. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. IN T HIS CASE, THE ASSESSEE PLACED CONFIRMATION LETTER FROM MR. AKKINENI TO STATE THAT HE HAS GIVEN RS. 12 LAKHS TO THE ASSESSEE TOWARDS LEASE RENT OF THE AGRICULTURAL PRO PERTY. THE ASSESSEE ALSO FILED DETAILS OF LANDHOLDING CERTIFIC ATE BY THE VILLAGE REVENUE OFFICER, MADAKA VILLAGE, PEDANA MAN DALAM AND ALSO FILED COPY OF PATTADAR PASSBOOK. SIMILAR DOCUMENT HAS BEEN FILED WITH REGARD TO LAND HOLDING OF ASSES SEE'S FATHER. HOWEVER, THE DEPARTMENT IS NOT READY TO AC CEPT THE TRANSACTION AS GENUINE SINCE THE AMOUNT GIVEN BY MR . AKKINENI BY CASH. IT IS AN ADMITTED FACT THAT THE PERSON WHO HAS GIVEN THE MONEY TO THE ASSESSEE IS AN AGRICULTU RIST AND A CLOSE RELATIVE OF THE ASSESSEE WHO HAS CONFIRMED TH E PAYMENT. IN SUCH CIRCUMSTANCES, IT IS NOT PROPER T O DOUBT THE GENUINENESS OF THE TRANSACTION. IN OUR OPINION, ID ENTITY OF THE PARTY IS ALSO PROVED AND CONSIDERING THE FACTS OF THE PRESENT CASE, WE ARE OF THE OPINION THAT THE INGRED IENTS OF SECTION 68, I.E., IDENTITY OF THE PARTY, CAPACITY O F THE PERSON TO LEND THE MONEY AND GENUINENESS OF THE TRANSACTIO N ARE FULFILLED. THE ADDITION IS UNWARRANTED ON THIS COU NT. ITA NO. 181/HYD/2012 SRI GADDIPATI SRINIVASA RAO ======================= 5 ACCORDINGLY, THE ADDITION MADE BY THE AO AND CONFIR MED BY THE CIT(A) IS DELETED. THE GROUND ON THIS ISSUE I S ALLOWED. 6. THE NEXT ADDITION IS WITH REGARD TO ADDITION OF RS. 9 LAKHS EACH FROM TWO PARTIES. 7. THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAS RECEIVED AN ADVANCE OF RS. 15 LAKHS FROM SRI VEERAM ACHINENI BHAVANI PRASAD (FOR SHORT MR. PRASAD). MR. PRASAD IS AN AGRICULTURIST HAVING 10 ACRES OF AGRICULTURAL WET L AND AND HE IS CULTIVATING CASH CROPS LIKE PADDY, PULSES, SUGAR CANE, ETC., AND IS DERIVING SUBSTANTIAL INCOME FROM AGRICULTURE . HE DREW OUR ATTENTION TO THE CONFIRMATION LETTER DATED 6.11 .2010 GIVEN BY MR. PRASAD. ACCORDING TO HIM, OUT OF THIS, THE ASSESSEE DEPOSITED RS. 9 LAKHS ON 22.3.2008 AND RS. LAKHS ON 24.3.2008. RS. 3 LAKHS WAS MET OUT OF EARLIER WITH DRAWALS. THEREFORE, THERE CANNOT BE ANY ADDITION ON THIS COU NT. 8. ON THE OTHER HAND, THE LEARNED DR SUBMITTED WITH RESPECT TO THE TWO AMOUNTS OF RS. 9,00,000/- EACH, T HE ASSESSEE STATED THAT HE HAD RECEIVED ADVANCE OF RS. 15,00,000/- FROM MR. PRASAD FOR SALE OF HIS AGRICULT URAL LAND AND THE BALANCE OF RS. 15,00,000/- WAS LYING WITH HI M AS CASH. THE DR SUBMITTED THAT THERE IS ABSOLUTELY NO EVIDENCE OF THE ABOVE TRANSACTION. THE SAID PERSON WHO WAS S UPPOSED ITA NO. 181/HYD/2012 SRI GADDIPATI SRINIVASA RAO ======================= 6 TO HAVE PURCHASED LAND DOES NOT HAVE THE CREDITWORT HINESS OR THE SOURCES. HIS BANK ACCOUNT SHOWS VERY MEAGRE DEP OSIT. SECONDLY, NO REGISTRATION HAS BEEN GOT DONE AND THE LAND WAS TRANSFERRED TO THAT PERSON EVEN AFTER MANY YEARS OF THE SO CALLED TRANSACTION. THE RELEVANT PORTION OF THE ASS ESSING OFFICER'S ORDER IS REPRODUCED BELOW: '4.1.3. FROM THE ABOVE STATEMENT, IT SHOWS THAT SRI VEERAMACHINENI BHAVANI PRASAD IS AN AGRICULTURIST A ND IS HAVING INCOME OF APPROXIMATELY RS. 1,20,0001- PER A NNUM FROM LANDS. THE PAYMENT OF RS.15 LAKHS SAID TO HAVE BEEN PAID IN CASH CANNOT BE ACCEPTED FOR THE REASON THAT THE SAID PERSON HAS NOT PROPERLY EXPLAINED WHERE AND IN WHAT FORM T HIS MONEY WAS KEPT BEFORE ADVANCING TO THE ASSESSEE FOR PURCH ASE OF LAND. SECONDLY, EVEN AS ON DATE, AFTER A LAPSE OF MORE TH AN TWO AND HALF YEARS, THE REGISTRATION HAS NOT TAKEN PLACE TH E BANK ACCOUNT OF THE SAID PERSON SHOWS MEAGRE DEPOSITS AN D IT GOES TO SHOW THAT THERE IS NO CREDITWORTHINESS FOR THE S AID PERSON. THE STATEMENT OF THE SAID PERSON CANNOT BE TREATED AS SUFFICIENT EVIDENCE SINCE, THERE IS NO CAPACITY TO PAY SUCH HU GE AMOUNTS AND INVEST IN PURCHASE OF LAND THEREFORE, IT HAS TO BE TREATED AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSE E AND THE SAME IS BROUGHT TO TAX.' 9. THE LEARNED DR SUBMITTED THAT FROM THE ABOVE FACTS, IT IS CLEAR THAT THESE TWO AMOUNTS TOTALLING TO RS. 18 ,00,000/- ARE NOT EXPLAINED AND THE TRANSACTIONS ARE NOT GENU INE. LASTLY, WITH RESPECT TO RS. 9,00,000/- RECEIVED FROM PARENTS, THERE IS ABSOLUTELY NO EVIDENCE THAT ANY MONEY WAS GIVEN TO HIM. HE DREW OUR ATTENTION TO THE FOLLOWING OBSERVA TIONS IN THE ASSESSMENT ORDER: '6.1. FURTHER, IT HAS BEEN EXPLAINED THAT DURING T HE FIRST WEEK OF MARCH, 2008, HIS FATHER LATE G. SUBBA RAO (WHO E XPIRED ON 06.03.2008) HAD WITHDRAWN AN AMOUNT OF RS. 5,50,000 /- FROM ITA NO. 181/HYD/2012 SRI GADDIPATI SRINIVASA RAO ======================= 7 BANK. AFTER HIS DEATH, SMT G. KASTURI, MOTHER OF TH E ASSESSEE HAS GIVEN THE SAID AMOUNT OF RS. 5,50,000 ALONG WIT H ANOTHER SUM OF RS. 3,50,000 IN CASH WHICH WAS DEPOSITED BY THE ASSESSEE INTO HIS BANK A/C IN THE LAST WEEK OF MARC H, 2008. 6.2. THIS EXPLANATION CANNOT BE ACCEPTED FOR THE SI MPLE REASON THAT EXCEPT FOR THE DEATH CERTIFICATE OF HIS FATHER , THERE IS HARDLY ANY EVIDENCE FOR THE EXPLANATION. THE BANK A/C COPY FURNISHED WHICH IS IN THE NAME OF HIS FATHER AND MOTHER, JOIN TLY, SHOWS A WITHDRAWAL OF RS. 3 LAKHS ON 03.03.2008 WHICH WAS P AID TO 'AP SARA', IT IS CLEAR FROM THIS THAT THE WITHDRAWAL IS MADE BY SRI AKKINENI PARDHASARADHI AND THAT THE FAMILY HAD CERT AIN TRANSACTIONS BETWEEN THEM. THE SAID PERSON SRI AKKI NENI PARDHASARADHI HAS BEEN USED AS A CONVENIENT CONDUIT FOR EXPLAINING THE DEPOSITS INTO THE BANK A/C IN CASH. OTHERWISE, THERE IS NO PROPER EXPLANATION WHICH WARRANTS ACCEP TANCE THAT THE ASSESSEE HAS PROPERLY DISCLOSED HIS INCOME/SOUR CES FOR DEPOSITS IN CASH.' 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE ALSO, THERE IS VA LID CONFIRMATION LETTER FROM MR. PRASAD WHICH IS PLACED ON RECORD AT PAGE NO. 13 OF THE PAPER BOOK FILED BY THE ASSES SEE. THE DEPARTMENT IS DOUBTING THE TRANSACTION ON THE REASO N THAT MR. PRASAD IS HAVING MEAGRE INCOME OF RS. 1.20 LAKH S PER ANNUM AND THE TRANSACTION WAS NOT MATERIALISED EVEN AFTER 2.5 YEARS. IN OUR OPINION, WHEN THE ASSESSEE PLACE D CONFIRMATION LETTER BEFORE THE LOWER AUTHORITIES TH EY COULD HAVE VERY WELL EXAMINED THE PARTIES AND WITHOUT BRI NGING ANY CONTRARY MATERIAL TO THE MATERIAL SUPPLIED BY THE A SSESSEE, THE DEPARTMENT IS NOT JUSTIFIED IN MAKING THE ADDIT ION. IN OUR OPINION, THE EVIDENCE PLACED ON RECORD WEIGHS IN FA VOUR OF THE ASSESSEE. ACCORDINGLY, THE TRANSACTION IS TO B E CONSIDERED ITA NO. 181/HYD/2012 SRI GADDIPATI SRINIVASA RAO ======================= 8 AS GENUINE UNLESS PROVED CONTRARY. ACCORDINGLY, BO TH THE ADDITIONS ARE DELETED. 11. NOW COMING TO THE LAST ADDITION OF RS. 9 LAKHS RECE IVED FROM ASSESSEE'S PARENTS. 12. THE LEARNED AR SUBMITTED THAT HIS FATHER SRI G. SUB BA RAO HAD EXPIRED ON 6.3.2008 IN HIS VILLAGE CHALLAPL LI, KRISHNA DISTRICT. HE WITHDREW RS. 5,50,000 FROM HIS BANK A /C AND KEPT AT HIS RESIDENCE. IN ADDITION TO THIS, HIS MO THER KEPT IN HER RESIDENCE RS. 3,50,000. THIS TOTAL AMOUNT OF R S. 9 LAKHS WAS DEPOSITED ON 25.3.2008 AS RECEIVED FROM HIS PAR ENTS. 13. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT TH E ABOVE CASH DEPOSIT IS NOT PROPERLY EXPLAINED AND TH E ADDITION HAS TO BE SUSTAINED. 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE FILED A BANK STAT EMENT OF HIS FATHER LATE SRI G. SUBBA RAO AND ALSO SMT. G. K ASTURI, HIS MOTHER, FOR THE PERIOD 12.1.2007 TO 1.6.2008 WITH I NDIAN BANK, MACHILIPATNAM ROAD, CHALLAPALLI. ACCORDING T O THE AR THE ACCOUNT SHOWS WITHDRAWALS AS FOLLOWS: 1.3.2008 RS. 1,50,000 1.3.2008 RS. 1,00,000 3.3.2008 RS. 3,00,000 ITA NO. 181/HYD/2012 SRI GADDIPATI SRINIVASA RAO ======================= 9 15. HOWEVER, WE FIND THAT THESE ARE NOT CASH WITHDRAWAL ENTRIES RATHER THEY REPRESENT TRANSFER ENTRIES IN T HE BANK A/C. BEING SO, TO THAT EXTENT OF RS. 5,50,000 ASSESSEE'S PLEA CANNOT BE ACCEPTED. THE BALANCE OF RS. 3,50,000 WAS SAID TO HAVE BEEN RECEIVED FROM ASSESSEE'S MOTHER WHO IS A SENIO R LADY. SINCE LONG SHE HAS SAVED THE MONEY AND GIVEN TO HER SON ON ACCOUNT OF NATURAL LOVE AND AFFECTION WHICH CANNOT BE DOUBTED. IN OUR OPINION, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION CANNOT BE S USTAINED. ACCORDINGLY, THE GROUND TAKEN BY THE ASSESSEE ON TH IS COUNT IS PARTLY ALLOWED. 16. IN THE RESULT, ASSESSEE'S APPEAL IN ITA NO. 181/HYD/ 2012 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH MARCH, 2014. SD/- (SAKTIJIT DEY) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 12 TH MARCH, 2014 TPRAO COPY FORWARDED TO: 1. SRI GADDIPATI SRINIVASA RAO, C/O. SRI A.V. RAGHU RAM, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD-1. 2. THE DEPUTY CIT, CIRCLE-16(1), AAYAKAR BHAVAN, BASHERBAGH, HYDERABAD-500 001. 3. THE CIT(A)-V, HYDERABAD. 4. THE CIT-IV, HYDERABAD 5. THE DR BENCH 'A', ITAT, HYDERABAD