NVM Seetharamanjaneya Constructions, Hyderabad V. ACIT, Circle-8(1), Hyderabad

ITA 1942/HYD/2011

• Counselvise Citation: 194222514 RSA 2011
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 21-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained cash credit; Salary income; Reasonable cause; Onus to prove
• Section: 234B; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NOS. 1942 & 2060/HYD/2011 ASSESSMENT YEARS : 2004-05 & 2005-06 NVM SEETHARAMANJANEYA CONSTRUCTIONS, HYDERABAD. PAN: ABPPD 7429Q ASST. COMMISSIONER OF INCOME-TAX, CIRCLE - 8(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI S. RAMA RAO REVENUE BY SHRI P. SOMASEKHAR REDDY DATE OF HEARING : 04-11-2013 DATE OF PRONOUNCEMENT : 01-01-2014 O R D E R PER BENCH: THESE APPEALS BY ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF CIT(A)-III, HYDERABAD. SINCE IDENTICAL ISSUES AR E INVOLVED, THESE APPEALS WERE CLUBBED AND HEARD TOGETHER AND, THEREF ORE, WE DISPOSE OF THESE APPEALS BY WAY OF THIS CONSOLIDATE D ORDER. 2. THERE WAS A DELAY OF THREE DAYS IN FILING THESE APPEALS AND TO THIS EFFECT ASSESSEE FILED A PETITION REQUESTING FO R CONDONATION OF DELAY. ASSESSEE ALSO FILED AN AFFIDAVIT AFFIRMING T HE REASONS FOR THE DELAY MENTIONED IN THE PETITION FOR CONDONATION OF DELAY. AFTER HEARING THE PARTIES AND PERUSING THE RECORD, WE FIN D THAT ASSESSEE WAS PREVENTED BY REASONABLE CAUSE FOR FILING THESE APPEALS WITHIN 2 ITA NOS. 1942 & 2060/HYD/2011 NVM SEETHARAMANJANEYA CONSTRUCTIONS THE STIPULATED TIME, AND, THEREFORE, WE CONDONE THE DELAY AND ADMIT THE APPEALS FOR ADJUDICATION. ITA NO. 1942/HYD/2011 FOR AY 2004-05. 3. GROUND NO. 1 & 11 ARE GENERAL IN NATURE. GROUND NOS. 2 TO 9 ARE PERTAINING TO CASH CREDITS. GROUND NO. 10 IS PERTAINING TO CHARGING OF INTEREST U/S 234A & 234B OF THE ACT, WH ICH IS CONSEQUENTIAL IN NATURE. 4. AS REGARDS GROUND NOS. 2 TO 9 PERTAINING TO CASH CREDITS, THE AO MADE TOWARDS UNEXPLAINED CREDITS MADE U/S 68 OF THE ACT IN RESPECT OF UNSECURED LOANS, EVEN THOUGH, ASSESSEE F ILED CONFIRMATION LETTERS FROM THE SAID PERSONS, ON THE GROUND THAT THEY HAVE NOT PROVED THEIR CREDITWORTHINESS BY FILING SU FFICIENT DOCUMENTARY EVIDENCE. 5. ON APPEAL, BEFORE THE CIT(A) IT WAS SUBMITTED TH AT ASSESSEE HAD PROVIDED EACH CREDITORS ADDRESS AND HIS SOURCE OF INCOME FOR ADVANCING SUCH AMOUNTS TO HIM, THEREFORE HE HAD DIS CHARGED THE ONUS TO PROVE THE CREDIT IN EACH CASE. AFTER CONSID ERING THE SUBMISSIONS, THE CIT(A) CONFIRMED THE ADDITIONS MAD E BY THE AO U/S 68 OF THE ACT. 6. BEFORE US THE LEARNED COUNSEL REFERRING TO THE S UBMISSIONS MADE BY THE LOAN CREDITORS IN THEIR CONFIRMATION LE TTERS, SUBMITTED AS UNDER: 1. SRI M. VEERRAJU (RS. 1,88,000/-): IN HIS CONFIRM ATION LETTER SRI VEERRAJU STATED THAT HE ADVANCED RS. 49,000/-, RS. 45,000/-, RS. 45,000/- ON 0103-2004 AND RS. 49,000/ - ON 05- 03-2004 THROUGH DEMAND DRAFTS. HE ALSO FURNISHED TH E DEMAND DRAFT NUMBERS. THE SOURCES WERE EXPLAINED AS 3 ITA NOS. 1942 & 2060/HYD/2011 NVM SEETHARAMANJANEYA CONSTRUCTIONS AGRICULTURAL INCOME. IT IS FURTHER STATED THAT HE O WNS FIVE ACRES OF AGRICULTURAL LAND SITUATED AT SIVA NAGAR C AMP, BAGALWADA VILLAE, MANVI TALUG, RAICHUR DISTRICT, KA RANATAKA. HE ALSO STATED THAT HE IS CULTIVATING ANOTHER EIGHT ACRES OF AGRICULTURAL LAND ON LEASE AND HIS NET AGRICULTURAL INCOME PER ANNUM FROM THE ABOVE SOURCE WOULD BE RS. 1,00,000/- AND FROM OUT OF THE AGRICULTURAL SAVINGS HE ADVANCED TH E MONIES TO THE ASSESSEE THROUGH DEMAND DRAFTS. 2. G. RAMA RAO (RS.2,00,000): CONFIRMATION LETTER WAS FILED BY SRI G. VENKAT RAO, S/O G. RAMA RAO ON BEHALF OF G. RAMA RAO AS THE LATTER DIED IN AN ACCIDENT. HE IS THE LE GAL REPRESENTATIVE OF THE DECEASED. HE STATED THAT THEY OWN FOUR ACRES OF AGRICULTURAL LANDS IN TAPESWARAM VILLAGE I N EAST GODAVARI DISTRICT AND THEIR ANNUAL INCOME FROM THE AGRICULTURAL SOURCE OUT OF THE AGRICULTURAL SAVINGS , HIS FATHER LATE RAMA RAO RECEIVED AN AMOUNT OF RS. 1,90,000/- AND RS. 10,000/- THROUGH CHEQUE NO. 180595 ON 28-01-2006. 3. SRI M. GOPAL RAO (RS. 1,36,408/): IN HIS CONFIR MATION SRI GOPAL RAO STATED HE IS A RETIRED MANAGER IN BATA SH OE COMPANY AT CHANDANAGAR, HYDERABAD AND OUT OF HIS TE RMINAL BENEFITS AND SAVINGS HE ADVANCED AN AMOUNT OF RS. 4 9,000/- ON 01-032004 THROUGH DEMAND DRAFT NO. 826853, RS. 4 9,000/- ON 05-03-2004 THROUGH DEMAND DRAFT NO. 356698 AND R S. 38,408/- ON 05-03-2004 THROUGH DEMAND DRAFT NO. 356 685. HE ALSO FURNISHED HIS PAN ABMPM 7889 A. 4. SRI M. SADASIVUDU (RS. 1,42,000/-): IN HIS CONFI RMATION LETTER SRI SADASIVUDU STATED THAT HE ADVANCED RS. 4 7,000/-, RS. 47,000/- ON 05-03-2004 THROUGH DEMAND DRAFT NOS . 356694 AND 356688 AND ANOTHER SUM OF RS. 48,000/- O N 05- 03-2004 THROUGH DEMAND DRAFT NO. 550145. THE SOURCE S WERE 4 ITA NOS. 1942 & 2060/HYD/2011 NVM SEETHARAMANJANEYA CONSTRUCTIONS EXPLAINED AS AGRICULTURAL INCOME. IT IS FURTHER STA TED THAT HE OWNS 20 ACRES OF AGRICULTURAL LAND SITUATED AT SIVA NAGAR CAMP, BAGALWADA VILLAGE, MANVI TALUQ, RAICHUR DISTR ICT, KARNATAKA. HE FURTHER STATED THAT HIS NET AGRICULTU RAL INCOME PER ANNUM FROM THE ABOVE SOURCE WOULD BE RS. 3,00,0 00/- AND FROM OUT OF THE AGRICULTURAL SAVINGS HE ADVANCE D THE MONIES TO ASSESSEE THROUGH DEMAND DRAFTS. 5. SMT. M. SATYAVATHI (RS. 2,94,000/-): IN HER CONF IRMATION LETTER M. SATYAVATHI STATED THAT SHE OWNS 7 AND A CRES OF AGRICULTURAL LAND AT BOMMURU VILLAGE IN RAJAHMUNDRY WHICH SHE GAVE ON LEASE. HE ANNUAL INCOME FROM THE ABOVE SOURCE IS RS. 90,000/- AND FROM OUT OF THE SAVINGS, SHE AD VANCED AN AMOUNT OF RS. 2,94,000/- TO ASSESSEE THROUGH DEMAND DRAFT. 6. SRI M. VENKATARATNAM (RS. 2,00,000/-): A CONFIRM ATION LETTER WAS FILED BY M. SATYAVATHI ON BEHALF OF M. VENKATARATNAM WHEREIN SHE STATED THAT AN AMOUNT OF RS. 2,00,000/- WAS ADVANCED BY M. VENKATARATNAM TO ASSE SSEE THROUGH DEMAND DRAFTS IN THE FY 2003-04. 7. SRI M. VENKAT RAO (RS. 1,93,000/-): CONFIRMATION LETTER WAS FILED BY SRI G. VENKAT RAO, HE STATED THAT HE OWNS TWO ACRES OF AGRICULTURAL LANDS IN TAPESWARAM VILLAGE IN EAST GODAVARI DISTRICT AND IN ADDITION TO THAT HE IS CULTIVATING AGRICULTURAL LANDS OF 8 ACRES ON LEASE AT TAPESWARAM VILLAGE. HE FURTHER STATED THAT HIS ANNUAL INCOME FROM THE AGRICULTURAL SOURCE WOULD BE ABOUT RS. 1,50,000/- AND FROM OUT OF THE A GRICULTURAL SAVINGS, HE ADVANCED RS. 49,000/-, RS. 47,000/- AND RS. 48,000/- ON 05-03-2004 THROUGH DEMAND DRAFT NOS. 35 6695, 356690 AND 550143 AND ANOTHER SUM OF RS. 49,000/- O N 05- 03-2004 THROUGH DEMAND DRAFT NO. 356701. 5 ITA NOS. 1942 & 2060/HYD/2011 NVM SEETHARAMANJANEYA CONSTRUCTIONS 7. THE LEARNED DR, HOWEVER, SUPPORTED THE ORDERS OF AO AND CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORD. WE FIND THAT ASSESSEE HAS DEMONSTRATED BEFORE THE LOWE R AUTHORITIES AND EVEN BEFORE US THE IDENTITY AND CREDITWORTHINES S OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS AS TH E TRANSACTIONS DONE THROUGH BANKING CHANNEL. MOREOVER, ASSESSEE RE PAID THE LOANS TAKEN BY HIM FROM THE SAID CREDITORS. THERE I S ALSO NO INCRIMINATING MATERIAL IN THE SEARCH PROCEEDINGS AN D ALL THE CREDITS WERE OLD AND REPAID BY THE TIME OF SEARCH. THEREFOR E, THE ADDITIONS MADE BY THE AO AND CONFIRMED BY THE CIT(A) ON THIS ISSUE IS NOT PROPER AND THE SAME ARE HEREBY DELETED. GROUND NOS. 2 TO 9 ARE ALLOWED. 9. IN THE RESULT, APPEAL OF ASSESSEE IN ITA NO. 194 2/HYD/2011 IS ALLOWED. ITA NO. 2060/HYD/2011 FOR AY 2005-06 10. THIS APPEAL IS DIRECTED AGAINST THE ORDER OF CI T(A)-III, DATED 19-09-2011. GROUND NO. 1 & 11 ARE GENERAL IN NATURE . GROUND NOS. 2 TO 9 ARE PERTAINING TO CASH CREDITS. GROUND NO. 10 IS PERTAINING TO CHARGING OF INTEREST U/S 234A, 234B & 234C OF TH E ACT, WHICH IS CONSEQUENTIAL IN NATURE. 11. AS REGARDS GROUND NOS. 2 TO 9 PERTAINING TO CAS H CREDITS, THE AO MADE ADDITIONS TOWARDS UNEXPLAINED CREDITS MADE U/S 68 OF THE ACT IN RESPECT OF UNSECURED LOANS, EVEN THOUGH, AS SESSEE FILED CONFIRMATION LETTERS FROM THE SAID PERSONS, ON THE GROUND THAT THEY 6 ITA NOS. 1942 & 2060/HYD/2011 NVM SEETHARAMANJANEYA CONSTRUCTIONS HAVE NOT PROVED THEIR CREDITWORTHINESS BY FILING SU FFICIENT DOCUMENTARY EVIDENCE. 12. ON APPEAL, BEFORE THE CIT(A) IT WAS SUBMITTED T HAT ASSESSEE HAD PROVIDED EACH CREDITORS ADDRESS AND HIS SOURCE OF INCOME FOR ADVANCING SUCH AMOUNTS TO HIM, THEREFORE HE HAD DIS CHARGED THE ONUS TO PROVE THE CREDIT IN EACH CASE. AFTER CONSID ERING THE SUBMISSIONS, THE CIT(A) CONFIRMED THE ADDITIONS MAD E BY THE AO U/S 68 OF THE ACT. 13. BEFORE US THE LEARNED COUNSEL REFERRING TO THE SUBMISSIONS MADE BY THE LOAN CREDITORS IN THEIR CONFIRMATION LE TTERS, SUBMITTED AS UNDER: 1. SRI M. VEERRAJU (RS. 49,000/-): IN HIS CONFIRMAT ION LETTER SRI VEERRAJU STATED THAT HE ADVANCED RS. 49,000/-, ON 2 4-09- 3004 THROUGH DEMAND DRAFT NO. 804131. THE SOURCES W ERE EXPLAINED AS AGRICULTURAL INCOME. IT IS FURTHER STA TED THAT HE OWNS FIVE ACRES OF AGRICULTURAL LAND SITUATED AT SI VA NAGAR CAMP, BAGALWADA VILLAGE, MANVI TALUQ, RAICHUR DISTR ICT, KARNATAKA. HE ALSO STATED THAT HE IS CULTIVATING AN OTHER EIGHT ACRES OF AGRICULTURAL LAND ON LEASE AND HIS NET AGR ICULTURAL INCOME PER ANNUM FROM THE ABOVE SOURCE WOULD BE RS. 1,00,000/- AND FROM OUT OF THE AGRICULTURAL SAVINGS HE ADVANCED THE MONIES TO ASSESSEE THROUGH DEMAND DRAF TS. 2. SRI M. GOPAL RAO (RS. 98,000/-): SRI GOPAL RAO I N HIS CONFIRMATION LETTER STATED THAT HE IS A RETIRED MAN AGER IN BATA SHOE COMPANY AT CHANDANAGAR, HYDERABAD AND OUT OF H IS TERMINAL BENEFITS AND SAVINGS HE ADVANCED AN AMOUNT OF RS. 98,000/-. 7 ITA NOS. 1942 & 2060/HYD/2011 NVM SEETHARAMANJANEYA CONSTRUCTIONS 3. SRI M. SADASIVUDU (RS. 49,000/-): IN HIS CONFIRM ATION LETTER SRI SADASIVUDU STATED THAT HE ADVANCED RS. 49,000/- ON 24- 092004 THROUGH DEMAND DRAFT NO. 804137. THE SOURCES WERE EXPLAINED AS AGRICULTURAL INCOME. IT IS FURTHER STA TED THAT HE OWNS 20 ACRES OF AGRICULTURAL LAND SITUATED AT SIVA NAGAR CAMP, BAGALWADA VILLAGE, MANVI TALUQ, RAICHUR DISTR ICT, KARNATAKA. HE FURTHER STATED THAT HIS NET AGRICULTU RAL INCOME PER ANNUM FROM THE ABOVE SOURCE WOULD BE RS. 3,00,0 00/- AND FROM OUT OF THE AGRICULTURAL SAVINGS HE ADVANCE D THE MONIES TO ASSESSEE THROUGH DEMAND DRAFTS. 4. SRI M. VENKAT RAO (RS. 49,000/-): CONFIRMATION L ETTER WAS FILED BY SRI G. VENKAT RAO, HE STATED THAT HE OWNS TWO AGRICULTURAL LANDS IN TAPESWARAM VILLAGE IN EAST GO DAVARI DISTRICT AND IN ADDITION TO THAT HE IS CULTIVATING AGRICULTURAL LANDS OF 8 ACRES ON LEASE AT TAPESWARAM VILLAGE. HE FURTHER STATED THAT HIS ANNUAL INCOME FROM THE AGRICULTURAL SOURCE WOULD BE ABOUT RS. 1,50,000/- AND FROM OUT OF THE A GRICULTURAL SAVINGS, HE ADVANCED RS. 49,000/-, ON 24-09-2004 TH ROUGH DEMAND DRAFT NO. 804136. 5. SRI G. SASHIBHUSHAN (RS. 1,96,000/-): CONFIRMATI ON LETTER WAS FILED BY SRI G. SASHIBHUSHAN, HE STATED THAT HE ADVANCED RS. 1,96,000/- TO ASSESSEE FROM OUT OF HIS RETIREME NT BENEFITS THROUGH DEMAND DRAFT. HE FURTHER STATED THAT HE IS A RETIRED PROJECT ENGINEER FROM PRIVATE SERVICE AND THE AMOUN T OF ADVANCE REPRESENTS HIS SALARY INCOME, SAVINGS AND T ERMINAL BENEFITS RECEIVED ON RETIREMENT. 6. SRI G. SURYAKANTHAM (RS. 49,000/-): CONFIRMATION LETTER WAS FILED BY SMT. G. SURYAKANTHAM. SHE STATED THAT SHE ADVANCED RS. 49,000/- ON 24-09-2004 THROUGH DEMAND DRAFT 8 ITA NOS. 1942 & 2060/HYD/2011 NVM SEETHARAMANJANEYA CONSTRUCTIONS NO. 804130. SHE IS AN AGRICULTURIST OWING 2 ACRES O F AGRICULTURAL LAND AT TAPESWARAM VILLAGE IN EAST GOD AVARI DISTRICT AND HER INCOME FROM THE ABOVE SOURCE PER A NNUM WOULD BE ABOUT RS. 30,000/- AND FROM OUT OF THE AGR ICULTURAL SAVINGS SHE ADVANCED THE MONEY TO ASSESSEE. 7. SMT. M. HEMALATHA (RS. 4,67,000/-): CONFIRMATION LETTER WAS FILED BY SMT. M. HEMALATHA. SHE STATED THAT SHE ADVANCED RS. 1,24,000/- ON 11-12-2004 THROUGH DD NO . 383972, RS. 84,000/- VIDE DD NO. 021781 ON 12-02-20 05, RS. 84,000/- VIDE DD NO. 021780 ON 12-02-2005, RS. 90,0 00/- THROUGH DD NO. 021804 DATED 22-02-2005 AND RS. 85,0 00/- THROUGH DD NO. 021805 ON 22-02-2005 FROM OUT OF HER INCOME FROM HOME FOOD BUSINESS AND ALSO INCOME FROM AGRICULTURE FROM 1 ACRES OF LEMON GARDEN. SHE FURTH ER STATED THAT SHE RECEIVED BACK THE AMOUNT ADVANCED THROUGH CHEQUE NO. 0037076 DATED 05-08-2005. 8. SRI PBR CHOWDARY (RS. 3,15,000/-): CONFIRMATION LETTER WAS FILED BY THE CREDITOR. THE AMOUNT WAS ADVANCED ON DIFFERENT DAYS THROUGH DDS. THE PARTICULARS OF THE DD NOS. & DATE ARE ALSO FURNISHED IN THE LETTER OF CONFIRMATI ON. THE SOURCE FOR THE ADVANCE ARE STATED TO BE THAT HE IS RUNNING A TYPEWRITING INSTITUTION BY NAME SRI VIJAYALAKSHMI TYPE INSTITUTE AT NALAMVARI VEEDHI IN EAST GODAVARI DIS TRICT. IT IS FURTHER STATED THAT HIS WIFE IS HAVING 1 ACRE COCON UT GARDEN AT YEDIDA VILLAGE IN EAST GODAVARI DISTRICT. 14. THE LEARNED DR, HOWEVER, SUPPORTED THE ORDERS O F AO AND CIT(A). 9 ITA NOS. 1942 & 2060/HYD/2011 NVM SEETHARAMANJANEYA CONSTRUCTIONS 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE FIND THAT ASSESSEE HAS DEMONSTRATED BEFORE THE LOWE R AUTHORITIES AND EVEN BEFORE US THE IDENTITY AND CREDITWORTHINES S OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS AS TH E TRANSACTIONS DONE THROUGH BANKING CHANNEL. MOREOVER, ASSESSEE RE PAID THE LOANS TAKEN BY HIM FROM THE SAID CREDITORS. THERE I S ALSO NO INCRIMINATING MATERIAL IN THE SEARCH PROCEEDINGS AN D ALL THE CREDITS WERE OLD AND REPAID BY THE TIME OF SEARCH. THEREFOR E, THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) ON THIS ISSUE IS NOT PROPER AND THE SAME ARE HEREBY DELETED. GROUND NOS . 2 TO 9 ARE ALLOWED. 16. IN THE RESULT, APPEAL OF ASSESSEE IN ITA NO. 20 60/HYD/2011 IS ALLOWED. 17. TO SUM UP, BOTH THE APPEALS IN ITA NOS. 1942 & 2060/HYD/2011 ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 1 ST JANUARY, 2014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B. R AMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT M EMBER HYDERABAD, DATED: 1 ST JANUARY, 2014. KV COPY TO:- 1) SHRI NVM SEETHARAMANJANEYA CONSTRUCTIONS, SHRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIY AS RESIDENCY, ROAD NO. 9, HIMAYATNAGAR, HYDERABAD. 2) ACIT, CIRCLE - 8(1), HYDERABAD. 3) CIT(A)-III, HYDERABAD. 4) CIT-II, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.