Dharmichand Sirvi, Hyderabad V. The Income Tax Officer, Ward-1, Vikarabad

ITA 1837/HYD/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6124 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 31-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained investment; Source of fund
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1837/HYD/2012 ASSESSMENT YEAR: 2008-09 DHARMICHAND SIRVI, SHANKER PALLY, R.R. DISTRICT [PAN: ADRPS6066Q] VS THE INCOME TAX OFFICER, WARD-1, VIKARABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO, AR FOR REVENUE : SMT. U. MINICHANDRAN, DR DATE OF HEARING : 01-09-2016 DATE OF PRONOUNCEMENT : 21-10-2016 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-III, HYDERABAD DATED 02-11-2012. ASSESSEE IS AGGRIEVED ON THE CONFIRMATIO N OF VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER (AO). 2. BRIEFLY STATED, ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF JEWELLERY AND MONEY LENDING [GIRVI]. A SURVEY O PERATION U/S. 133A OF THE INCOME TAX ACT [ACT] WAS CONDUCTED AT THE BU SINESS PREMISES OF ASSESSEE ON 11-10-2007. ASSESSEE MADE DISCLOSURE TO THE TUNE OF RS. 30,03,071/-. ASSESSEE EXPLAINED THAT A N AMOUNT OF RS. 7,30,000/- WAS DISCLOSED FOR AY. 2007-08 AND RS . 11,50,250/- I.T.A. NO. 1837/HYD/2012 DHARMICHAND SIRVI :- 2 -: FOR AY. 2008-09. THE BALANCE AMOUNT OF RS. 11,22,82 1/- WAS NOT DISCLOSED AS ASSESSEE WAS ABLE TO EXPLAIN THE STOCK A VAILABILITY IN THE BUSINESS PREMISES. AO IN THE COURSE OF ASSESSME NT, ENQUIRED ABOUT THE PURCHASE OF STOCK. ASSESSEE FURNISHED CREDI T PURCHASE BILLS FROM M/S. SHREE SUBHAM JEWELLERS, SECUNDERABA D, M/S. NAKODA SILVER PALACE, HYDERABAD AND M/S. SHAGUN JEW ELLERS, DELHI. AO ACCEPTED THE CREDIT BILLS FROM THE LOCAL PUR CHASES BUT DOUBTED THE PURCHASE FROM M/S. SHAGUN JEWELLERS, DELH I. ASSESSEE EXPLAINED THAT IT IS A GENERAL TRADE PRACTICE THAT PARTIES WILL COME AND DELIVER AT THE BUSINESS PREMISES AND AM OUNTS ARE ISSUED BY CHEQUE OR DD IN THE NAME OF THOSE PARTIES. AO ENQUIRED FROM THE STATE BANK AND FOUND THAT THE DD TAKEN WAS PAID AT CHENNAI. SINCE M/S. SHAGUN JEWELLERS, DELHI HAS NOT RECEIVED THE DD AND ON ENQUIRY ALSO GOT A CONFIRMATION THAT THEY DO N OT HAVE ANY TRANSACTION WITH ASSESSEE, AO DISBELIEVED THE PURC HASE OF JEWELLERY TO AN EXTENT OF RS.8,06,161/-. IN ADDITION TO THE ABOVE, AO ALSO ENQUIRED ABOUT THE STOCK AVAILABILITY ON THE DA TE OF SURVEY. IN THE EXPLANATION GIVEN, ASSESSEE HAS CLAIMED CERTAIN CONTRIBUTIONS FROM THE FAMILY MEMBERS TO AN EXTENT OF RS . 12,23,000/- WHICH AO HAS NOT ACCEPTED AND ADDED AS U NEXPLAINED INCOME. 2.1. IN ADDITION TO THE ABOVE TWO ITEMS, AO ALSO ENQUI RED INVESTMENT IN THE HOUSE TO AN EXTENT OF RS. 12 LAKHS OU T OF WHICH ASSESSEE EXPLAINED LOAN FROM SBH, FROM FATHER-IN-LAW AND ONE MR. SOHAN OUT OF BUSINESS FUNDS. AO DISBELIEVED LOAN FR OM FATHER-IN- LAW AND SOHAN AND BROUGHT TO TAX AN AMOUNT OF RS. 3,80 ,000/- AS UNEXPLAINED INVESTMENT IN THE HOUSE. THUS, AS AGAIN ST RS. I.T.A. NO. 1837/HYD/2012 DHARMICHAND SIRVI :- 3 -: 14,37,241/- RETURNED INCOME, ASSESSMENT WAS COMPLETED AT RS. 38,16,402/-. 3. BEFORE THE LD.CIT(A), ASSESSEE MADE VARIOUS SUBMI SSIONS AND FILED CONFIRMATION LETTERS GIVEN TO AO, BUT WITHOUT MUCH SUCCESS. LD.CIT(A) CONFIRMED ALL THE ADDITIONS MADE BY THE AO. ASSESSEE IS ACCORDINGLY AGGRIEVED AND RAISED THE GROUNDS AS UNDE R: 2. THE LEARNED CIT(A) ERRED BY UPHOLDING THE ADDIT ION OF RS. 8,06,161/- ON THE GROUNDS OF NOT BELIEVING THE CRED IT PURCHASES EVEN THOUGH PURCHASES ARE GENUINE AND CONSEQUENTLY UNEXPLAINED INVESTMENTS IN GOLD AND SILVER STOCK. 3. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION MADE BY ASSESSING OFFICER OF RS. 12,23,000 /- BEING THE AMOUNT OF LOANS RECEIVED FROM 1) OMPRAKASH SIRVI RS. 3,50,000/- 2) KANARAM SIRVI RS. 3,75,000/- AND 3) MAHESH BANK RS. 4,98,000/- EV EN THOUGH THE LOANS ARE GENUINE AND THE CREDITORS HAVE CREDITWORT HINESS AND SUFFICIENT SOURCES AND HAVING FILED THE CONFIRMATIO NS AND OTHER PROOFS AND AS SUCH THERE IS UNEXPLAINED INVESTMENT IN GIRVI ITEMS. 4. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ADDITI ON MADE BY THE ASSESSING OFFICER OF RS. 3,50,000/- BEING TH E AMOUNT RECEIVED AS LOAN FROM FATHER IN LAW RS. 1,50,000/- AND LOAN FROM SRI SOHAN RS. 2,00,000/- DISBELIEVING THE CONFIRMATIONS GIVEN BY THESE CREDITORS AND OTHER ASPECTS AND AS SUCH THERE IS UN EXPLAINED INVESTMENT IN CONSTRUCTION OF HOUSE PROPERTY. 5. THE LEARNED CIT(A) ERRED BY NOT PROPERLY APPRECI ATING EVIDENCES, CONFIRMATIONS, DOCUMENTS FILED BEFORE AS SESSING OFFICER IN A PROPER PERSPECTIVE. GROUND NOS. 1, 6 & 7 ARE GENERAL IN NATURE. 4. LD. COUNSEL REFERRING TO THE PAPER BOOK FILED AND EXPLANATIONS GIVEN IN THE COURSE OF ASSESSMENT PROCEED INGS AS WELL AS BEFPRE LD.CIT(A), SUBMITTED THAT SHRI DHARMICHAND SI RVI, ASSESSEE IS RUNNING JEWELLERY SHOP IN WHICH HIS BRO THER SHRI KANARAM SIRVI AND OTHER FAMILY MEMBERS ARE ALSO ASSO CIATED AS IT I.T.A. NO. 1837/HYD/2012 DHARMICHAND SIRVI :- 4 -: IS THE FAMILY BUSINESS AND IS BEING RUN IN A SMALL P LACE LIKE SHANKER PALLY IN RANGA REDDY DISTRICT. SINCE ASSES SEE IS IN THE JOINT FAMILY, THE FUNDS ARE ALSO MIXED UP AND SINCE D HARMICHAND SIRVI IS ALSO INCAPACITATED DUE TO HEALTH REASONS, HIS BROTHER, SHRI KANARAM SIRVI WAS AUTHORIZED TO TRANSACT BANK AND OTHER ACTIVITIES. HE ALSO FILED CONFIRMATION LETTERS FROM OTH ER LOAN CREDITORS WHICH WERE FURNISHED BEFORE THE AO. PAPER BOOK ALSO CONTAIN INCOME TAX RETURNS OF OTHER FAMILY MEMBERS TO S UBMIT THAT ALL THE PERSONS FROM WHOM ASSESSEE HAS BORROWED F UNDS HAS CREDITWORTHINESS WHICH WAS DOUBTED BY THE AO. LD. CO UNSEL ALSO REFERRED TO THE ENQUIRY AS PER THE SBH, DD PURCHASED I N THE NAME OF M/S. SHAGUN JEWELLERS, DELHI WAS IN FACT CLEARED, AS CAN BE SEEN FROM THE CERTIFICATE OF BANK, IF NOT IN DELHI BUT IN CH ENNAI. IT WAS HIS CONTENTION THAT ASSESSEE HAS CREDIT PURCHASES TO THE TUNE OF RS. 8,06,161/- AND ALSO LOANS FROM VARIOUS PERSONS INCLUDING FROM MAHESH BANK TO PROVE THE CREDITWORTHINESS. IT WAS HIS SUBMISSION THAT ASSESSEE HAS FURNISHED NECESSARY EVIDENCES IN SU PPORT OF THE CONTENTIONS. 5. LD. DR HOWEVER, SUBMITTED THAT ASSESSEE HAS FURNISH ED A BILL IN THE NAME OF M/S. SHAGUN JEWELLERS, DELHI, WHEREA S AMOUNT WAS PAID IN CHENNAI. SO, THE SAME WAS DISBELIEVED BY TH E AO. IN ADDITION THE CREDITWORTHINESS OF VARIOUS CREDITORS ARE NOT PROVED. HE SUPPORTED THE ORDERS OF AO AND CIT(A). 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE DOCUMENTS PLACED ON RECORD INCLUDING STATEMENTS OF ASSE SSEE IN THE COURSE OF SURVEY. AS SEEN FROM THE DOCUMENTS ON RECORD, IN ORDER TO SUPPORT THE STOCK AVAILABLE ON THE DATE OF SUR VEY, ASSESSEE HAS FURNISHED THREE CREDIT BILLS. OUT OF WHICH, TWO A RE ACCEPTED BY I.T.A. NO. 1837/HYD/2012 DHARMICHAND SIRVI :- 5 -: THE AO AFTER ENQUIRY. WITH REFERENCE TO THE BILL FROM M/S. SHAGUN JEWELLERS, DELHI, EVEN THOUGH THE BILL WAS PRODUCED AND EVIDENCE IN SUPPORT OF THE PAYMENT WAS ALSO FURNISHED, AO DISB ELIEVED THE SAME AS THE SAID DDS WERE PAYABLE AT CHENNAI. EXCEPT THIS DISCREPANCY, AO DID NOT MAKE ANY ENQUIRY WHETHER M/S. SHAGUN JEWELLERS, DELHI HAS ANY BRANCH OR UNIT IN CHENNAI OR THEY HAVE ENDORSED THESE DDS TO SOME OTHER PARTY. THE CONFIRMA TION FROM SBH ONLY INDICATES THAT THESE DDS WERE PAYABLE AT SERVI CE BRANCH, CHENNAI. THIS EVEN THOUGH DOES NOT PROVE THAT THE DD S ARE ENCASHED BY ASSESSEE BUT CERTAINLY DOES NOT SUPPORT THAT THE PAYMENTS ARE BOGUS. IN THE ABSENCE OF CONTRARY EVIDE NCE, IT IS TO BE ACCEPTED THAT ASSESSEE HAS ISSUED CHEQUES ON HIS B ANK ACCOUNT, FROM WHICH DDS WERE PURCHASED AND THOSE DDS WERE ENCASHED. THEREFORE, SIMPLY BECAUSE DDS WERE ENCAS HED IN CHENNAI AND NOT IN DELHI, AO CANNOT PRESUME THAT M/S. S HAGUN JEWELLERS, DELHI IS A BOGUS FIRM. THE REASONS ATTRI BUTED FOR DISBELIEVING THE CREDIT PURCHASE ARE NOT VALID. THERE FORE, WE ARE OF THE OPINION THAT ASSESSEE HAS DISCHARGED HIS DUTY IN E XPLAINING THE CREDIT PURCHASES AND ALSO PAYMENTS THEREON. IN VIEW O F THAT, WE ARE OF THE OPINION THAT THE DISALLOWANCE OF RS. 8,06,16 1/-TOWARDS CREDIT PURCHASES IS NOT SUSTAINABLE. ACCORDINGLY, THE GROUNDS OF ASSESSEE ON THIS ISSUE ARE ALLOWED. 7. COMING TO THE CREDITS GIVEN BY SHRI OMPRAKASH SIRV I, SHRI KANARAM SIRVI AND LOAN FROM MAHESH BANK, THERE IS NO DISPUTE WITH THE FACT THAT SHRI OMPRAKASH SIRVI AND KARANAM SI RVI ARE ASSESSEES ON RECORD. THEY HAVE THEIR OWN SOURCES OF INCOME AND HAVE BEEN FILING RETURNS. NOT ONLY THAT THEY HAVE CONFI RMED THE ADVANCING OF MONEYS. THEY ARE ALSO HAVING PERMANEN T ACCOUNT I.T.A. NO. 1837/HYD/2012 DHARMICHAND SIRVI :- 6 -: NUMBERS (PAN) AND ASSESSEES ON RECORD. BEING THE FA MILY MEMBERS, THEY MUST HAVE UTILIZED FUNDS IN THE BUSINESS . THEREFORE, THE CREDITWORTHINESS OF THESE TWO PEOPLE C ANNOT BE DOUBTED. IN ADDITION, AO ALSO DOUBTED THE LOAN FROM M AHESH BANK TO AN EXTENT OF RS. 4,98,000/-. ADMITTEDLY, THE LOAN I S IN THE NAME OF SHRI KANARAM SIRVI. WHETHER THAT LOAN WAS FOR THE PU RPOSE OF SHRI KANARAM SIRVI OR FOR THE BUSINESS PURPOSE OF AS SESSEE COULD HAVE BEEN VERIFIED BY EXAMINING THE REPAYMENT OF THE L OAN. HOWEVER, AO SIMPLY DISBELIEVED ASSESSEES CONTENTION THAT THE LOAN WAS TAKEN BY PLEDGING JEWELLERY ITEMS OF THE FAMILY M EMBERS IN THE NAME OF SHRI KANARAM SIRVI. AS HE WAS NOT IN A POSIT ION TO GO TO THE BANK DUE TO HEALTH REASONS. SINCE ALL THE FAMILY M EMBERS ARE IN THE SAME PLACE AND HAVE BEEN WORKING IN THE JEWELL ERY AND THE GIRVI BUSINESS (ALL OF THEM SHOWN THE SIMILAR SORT OF INCOMES IN THEIR RETURNS), IT CAN BE PRESUMED THE LOAN FUNDS OBTA INED FROM MAHESH BANK COULD HAVE BEEN UTILIZED BY ASSESSEE. I T IS ALSO SEEN THAT AO HAS QUANTIFIED THE EXCESS STOCK OR UNDISCLOSED INCOME IN THE COURSE OF SURVEY. THEREFORE, THE EXPLANATION GIVE N BY ASSESSEE TO EXPLAIN THE STOCK ON THE DATE OF SURVEY COULD HAVE BEEN VERIFIED BY THE AO ON THE DATE OF SURVEY. THEREFORE, DOUBTIN G THE EXPLANATION OF ASSESSEE OF CONTRIBUTIONS FROM THE FAM ILY MEMBERS IS NOT CORRECT. CONSIDERING THE CONFIRMATIONS FILED O N RECORD AND THE FACT THAT THE LOAN WAS OBTAINED FROM MAHESH BANK, EVE N THOUGH IN THE NAME OF SHRI KANARAM SIRVI, THE CREDIT CA N BE GIVEN TO ASSESSEES PURCHASE OF STOCK. ACCORDINGLY, WE ARE OF THE OPINION THAT RS. 12,23,000/- ADDED BY AO IS NOT WARRANTED. THE GROUND TO THAT EXTENT IS ALLOWED. I.T.A. NO. 1837/HYD/2012 DHARMICHAND SIRVI :- 7 -: 8. THE LAST ISSUE CONTESTED BY ASSESSEE IS DOUBTING THE INVESTMENT IN THE HOUSE FOR WHICH ASSESSEE EXPLAINED TH AT HE HAS OBTAINED RS. 3,50,000/- FROM HIS FATHER-IN-LAW, MR. R ATANLAL PANWAR AND MR. SOHAN FROM RAJASTAN. ASSESSEE ALSO CLAIMED CREDIT FROM THE LOAN FUNDS AND BUSINESS FUNDS TO AN EXTENT OF RS. 8,50,000/- WHICH WAS GIVEN BY THE AO. AO HOWEVER, DOUBTED THE LOANS FROM FATHER-IN-LAW AND MR. SOHAN, WHO HAS GIVE N RS. 1,50,000/- AND RS. 2 LAKHS RESPECTIVELY. AO DISBELI EVED THE CONFIRMATION LETTERS AS THEY ARE NOT REGULARLY ASSESSE D TO INCOME TAX AND ALSO NOT HAVING ENOUGH SOURCES TO ADVANCE THE L OANS. BEFORE THE LD.CIT(A) ALSO ASSESSEE CONTESTED THE SAME. LD.CIT(A) DID NOT AGREE WITH ASSESSEES CONTENTIONS BY STATING AS UNDER: BY MERELY STATING THAT THEY HAVE CAPACITY TO LEND, THE CREDITWORTHINESS DOES NOT GET ESTABLISHED. THE APPE LLANT HAS NOT PRODUCED EVEN THE BASIC EVIDENCE TO PROVE THE CASE. THERE AR E NO BANK TRANSACTIONS, NO DETAILS OF ANY INCOME TAX ASSESSMENTS AND ABSOLU TELY NOTHING IS KNOWN ABOUT THE TRANSACTIONS. 8.1. BEFORE US, EXCEPT FILING TWO CONFIRMATION LETTERS IN THE PAPER BOOK AT PG. 3 & 4, NOTHING FURTHER WAS ADVANCED IN SUP PORT OF THE CONTENTIONS. AS SEEN FROM THE CONFIRMATION LETTER, THERE IS ONLY THUMB IMPRESSION ON THE CONFIRMATION LETTER FILED ON BE HALF OF SHRI RATANLAL PANWAR. THERE IS NO IDENTITY WITH REFERENCE TO THUMB IMPRESSION AS WELL. NO ENCLOSURES IN THE FORM OF I DENTITY CARD, VOTER CARD OR DOCUMENTS IN SUPPORT OF AGRICULTURAL LAN DS WAS FILED. SIMILARLY IN THE CASE OF SOHAN ALSO, SOME CONFIRMATIO N LETTER WAS FILED BUT HERE ALSO NO ENCLOSURES WERE FILED AT LEAS T TO IDENTIFY THE PERSON WHO HAS ISSUED THE CONFIRMATION LETTER. THE RE VENUE CONTENTION THAT NO PROOF WAS FURNISHED EITHER FOR RECEI PT OF THE AMOUNTS OR FOR ESTABLISHING THE CREDITWORTHINESS HAS TO BE ACCEPTED. SINCE, NO FURTHER EVIDENCE WAS FURNISHED BEFORE US, WE I.T.A. NO. 1837/HYD/2012 DHARMICHAND SIRVI :- 8 -: ARE ALSO NOT IN A POSITION TO APPRECIATE THE ASSESSEE S CONTENTION. IN VIEW OF THAT, ADDITION OF RS. 3,50,000/- MADE AS U NEXPLAINED INVESTMENT IN THE HOUSE STANDS CONFIRMED. GROUND TO THAT EXTENT IS REJECTED. 9. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER, 2016 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 21 ST OCTOBER, 2016 TNMM COPY TO : 1.SHRI DHARMICHAND SIRVI, SHANKER PALLY, R.R. DISTR ICT. C/O. R. JASRAJ & CO., ADVOCATES, 15-1-91/4/A/1, 2 ND FLOOR, PAPALAL PLAZA, OLD FEELKHANA, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-1, VIKARABAD. 3. CIT(APPEALS)-III, HYDERABAD. 4. CIT-II, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.