Syed Adeeluddin, Hyderabad V. ITO,Ward 7(1), Hyderabad

ITA 196/HYD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2300 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 07-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Keywords: Unexplained investment; Source of fund
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 196/HYD/2014 ASSESSMENT YEAR: 2008-09 SYED ADEELUDDIN, HYDERABAD [PAN: AYFPS5911H] VS INCOME TAX OFFICER, WARD-7(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P.C. YADAV, AR FOR REVENUE : SMT. N. SWAPNA, DR DATE OF HEARING : 28-11-2017 DATE OF PRONOUNCEMENT : 30-11-2017 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-VI, HYDERABAD, DATED 28-10-2013, FOR THE AY. 2008-09. 2. THE ISSUE IN THIS APPEAL IS ABOUT AN AMOUNT OF RS. 20,00,000/- STATED TO HAVE BEEN RECEIVED BY ASSESSEE F ROM ONE MR. ABDUL RAUF. BRIEFLY STATED, ASSESSEE IS AN INDIVIDUA L ENGAGED IN THE BUSINESS OF PERFORMING ELECTRICAL CONTRACT WORKS, A PART FROM BEING PARTNER IN M/S. VISTA CONSTRUCTIONS AND M/S. NEW VISTA CONSTRUCTIONS. THERE WERE SURVEY PROCEEDINGS IN THE C ASE OF M/S. SIGMA CONSTRUCTIONS AND THE OTHER TWO CONCERNS I.E. M/ S. VISTA AND M/S. NEW VISTA CONSTRUCTIONS, ON 25-02-2010, DURI NG WHICH IT WAS NOTICED THAT THE FIRMS INVESTED HUGE AMOUNTS IN THE L ANDED PROPERTIES FOR BUSINESS OF CONSTRUCTING AND A DECLARA TION OF RS. 2.50 CRORES SHOWN TO HAVE BEEN MADE IN THE NAME OF FIRMS. HOWEVER, SUBSEQUENTLY, THE DECLARATIONS WERE SHOWN TO HAVE BEEN I.T.A. NO. 196/HYD/2014 :- 2 - : MADE IN THE NAMES OF PARTNERS OF THE FIRM. HOWEVER, I T WAS OBSERVED THAT NO SUCH INCOMES WERE ADMITTED WHILE FURN ISHING THE RETURN OF INCOME BY THE PARTNERS. DURING THE EXAMINATIO N OF THE SOURCES OF INVESTMENTS MADE BY ASSESSEE DURING THE YEA R, IT HAS BEEN OBSERVED BY THE AO THAT THE ASSESSEE HAD MADE ADDI TIONS TO CAPITAL TO THE TUNE OF RS.43,50,000/- IN M/S. VISTA CON STRUCTIONS AND M/S. NEW VISTA CONSTRUCTIONS, AS UNDER: 1. M/S. VISTA CONSTRUCTIONS - RS. 20,00,000 2. M/S. NEW VISTA CONSTRUCTIONS - RS. 23,50,000 TOTAL RS. 43,50,000 THE SOURCES OF INVESTMENTS FOR THESE INVESTMENTS HAVE BE EN SHOWN AS LOANS FROM THE FOLLOWING PERSONS: 1. SRI.ABDUL RAUF - RS. 20,00,000 2. SRI. M.A. QUDDUS - RS. 6,50,000 3. SRI. SYED KHAJA FAIZUDDIN - RS. 17,00,000 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSE E WAS REQUIRED TO FURNISH CASH FLOW-FUNDS FLOW STATEMENT, CAP ITAL ACCOUNT INDICATING CAPITAL ACCRETIONS YEAR AFTER YEAR, CONFIRM ATION LETTERS FROM THE PARTIES WHO HAVE EXTENDED LOANS ETC., TO THE AO . ASSESSEE WHILE FURNISHING THE OTHER INFORMATION CALLED FOR, STA TED TO HAVE FURNISHED ONLY COPIES OF TWO INSTRUMENTS OF 'EMIRATES INDIA INTERNATIONAL EXCHANGE' DATED 12-02-2008 ISSUED IN FA VOUR OF ASSESSEE FOR RS. 7,00,000/- AND RS. 10,00,000/- RES PECTIVELY WHEREIN THE PURPOSE OF ISSUE OF CHEQUES WAS RECORDED AS 'FOR FAMILY MAINTENANCE'. HOWEVER, IT WAS OBSERVED BY THE AO THAT AS SESSEE HAD REFLECTED THESE TRANSACTIONS AS LOAN FROM SRI SYED KHAJA FAIZUDDIN. IT WAS ALSO OBSERVED BY THE AO THAT, THE ASS ESSEE HAD NOT FURNISHED ANY OTHER DETAILS SUCH AS INCOME-TAX PA RTICULARS, SOURCES OF INCOMES AND ACTIVITIES OF THE LENDERS, WHI CH WOULD BE I.T.A. NO. 196/HYD/2014 :- 3 - : RELEVANT FOR ESTABLISHING THE CREDITWORTHINESS OF THE LE NDERS FOR ADVANCING SUCH HUGE LOANS TO ASSESSEE. IN THE ABSENCE OF ANY INFORMATION FORTHCOMING FROM ASSESSEE, EVEN AFTER AF FORDING SUFFICIENT OPPORTUNITIES, THE AO, TREATED THE LOANS ADVAN CED BY THE ABOVE THREE PERSONS TO THE TUNE OF RS. 43,50,000/- AS 'INCOME FROM OTHER SOURCES' AND BROUGHT TO TAX. 3. BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE AO HAD MADE AN ADDITION OF RS.43,50,000/- REPRESENTING THE UNACCOUNTED INVESTMENTS AND FOR HAVING FAILED TO EXPLAIN THE LOANS OBTAINED FROM SRI ABDUL RAUF (RS. 20,00,000/-), SRI M.A. QUD DUS (RS.6,50,000/-) AND SRI SYED KHAJA FAIZUDDIN (RS. 1 7,00,000/-). ASSESSEE DURING THE APPELLANT PROCEEDINGS HAD FURNISH ED COPIES OF CHEQUES ADVANCED BY SRI M.A KHUDDUS AND SRI SYED KH AJA FAIZUDDIN IN THE NAME OF ASSESSEE, IN ADDITION TO TH E CONFIRMATION LETTERS ISSUED BY THE ABOVE TWO PARTIES. AS THE ABOVE M ATERIAL FURNISHED AT THE STAGE OF APPELLATE PROCEEDINGS, CONST ITUTED ADDITION EVIDENCE, THE SAME WAS FORWARDED TO THE AO FOR VERIFICATION AND FURNISHING OF REMAND REPORT. AS FAR AS THE LOAN OF RS. 20,00,000/- FROM SRI ABDUL RAUF, ASSESSEE WAS S ILENT AND DID NOT FURNISH ANY INFORMATION. 4. LD.CIT(A) ON RECEIPT OF REMAND REPORT AND EXPLANATI ON OF ASSESSEE, HAS ACCEPTED THE CREDIT IN THE CASE OF SRI M. A. QUDDUS (RS.6,50,000/-) AND SRI SYED KHAJA FAIZUDDIN (RS. 1 7,00,000/-). HE, HOWEVER, HAS NOT ACCEPTED THE CREDIT FROM SRI ABDU L RAUF, STATING AS UNDER: 4.6. AS FAR AS THE LOAN OBTAINED FROM SRI. ABDUL R AUF IS CONCERNED, EXCEPT STATING THAT THE AMOUNT OF RS. 20,00,000/- I S RECEIVED FROM MR. ABDUL RAUF THROUGH BANKING CHANNELS, THAT TOO AT TH E TIME OF REJOINDER TO I.T.A. NO. 196/HYD/2014 :- 4 - : THE REMAND REPORT, THE APPELLANT COULD NOT PRODUCE ANY RELIABLE OR VERIFIABLE INFORMATION SUCH AS CONFIRMATION BY SRI. ABDUL RAUF, TO INDICATE THE 'IDENTITY OF CREDITOR', HIS SOURCES FOR EXTENDI NG THE SAME, THROUGH INCOME-TAX PARTICULARS ETC. UNDER THE CIRCUMSTANCES , I AM NOT INCLINED TO ACCEPT THE EXPLANATION OF THE APPELLANT THAT THE LO AN PURPORTED TO BE OBTAINED BY THE APPELLANT FROM SRI. ABDUL RAUF TO T HE EXTENT OF RS. 20,00,000/-. IT IS NOT ENOUGH TO INDICATE THAT THE LOANS ARE OBTAINED THROUGH BANKING CHANNELS. THE ONUS WAS CAST ON THE APPELLANT TO PROVE THE IDENTITY AND CREDITWORTHINESS OF CREDITOR FOR T HE PURPOSE OF PROVING THE CREDITS, SO AS TO EXPLAIN THE INVESTMENTS MADE DURI NG THE YEAR. HAVING FAILED TO EXPLAIN THE SOURCES, TO EXPLAIN THE INVES TMENTS OF AN AMOUNT OF RS. 20,00,000/-, STANDS TO BE TREATED AS UNEXPLAINE D INVESTMENT. HENCE, ADDITION OF RS. 20,00,000/-, REPRESENTING THE AMOUN TS SHOWN TO HAVE' BEEN OBTAINED AS LOAN FROM SRI. ABDUL RAUF, FOR MAK ING INVESTMENT AS CAPITAL IN FIRMS, STAND CONFIRMED. 5. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 2. THE AUTHORITIES BELOW ERRED IN ADDING & CONFIRM ING RS. 20,00,000/- TO THE TOTAL INCOME OF THE APPELLANT U/ S. 69 OF THE IT ACT AS UNEXPLAINED INVESTMENT. NONE OF THE INGREDIENTS OF THE PROVISION OF SECTION 69 ARE PRESENT IN THE APPELLANTS CASE AND UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION IS UNWARRAN TED, UNSUSTAINABLE UNDER LAW AND LIABLE TO BE DELETED. 3. THE AUTHORITIES BELOW ERRED IN REJECTING THE HAN D LOAN OF RS. 20 LAKHS OBTAINED FROM MR. ABDUL RAUF. THE AUTHORITIE S BELOW OVER LOOKED THE FACT THAT THE HAND LOAN WAS EFFECTED THROUGH CH EQUE BEARING NO. 000027 DT. 8.11.2007 DRAWN ON KOTAK MAHINDRA BANK, SOMAJIGUDA BR, HYD. THE APPELLANT HAS DULY DISCHARGED THE ONUS WH ICH THE LAW BURDEN HIM WITH AND THE ADDITION MADE IS ARBITRARY, PERVER SE AND ILLEGAL AND THE SAME BE DELETED. 6. LD. COUNSEL REFERRING TO THE PAPER BOOK FILED, SU BMITTED THAT THE PAGE NOS. 41 & 42 ARE COPIES OF PASS PORT OF SRI ABDUL RAUF AND PAGE NO. 43 IS A COPY OF CHEQUE ISSUED TO ONE MR . SYEED ANEESUDDIN FROM THE SAME BANK AND THESE ARE NOT FURNIS HED BEFORE AUTHORITIES AND SO BE ADMITTED AS ADDITIONAL E VIDENCE. A PRAYER TO THAT EXTENT WAS MADE. 7. LD.DR, HOWEVER, OBJECTED TO STATING THAT THESE TWO DOCUMENTS WOULD NOT ESTABLISH THE GENUINENESS OF THE CR EDIT AND I.T.A. NO. 196/HYD/2014 :- 5 - : ASSESSEE HAS NOT FURNISHED ANY CONFIRMATION EVEN FROM THE SAID PERSON. 8. I HAVE CONSIDERED THE RIVAL CONTENTIONS. IT IS A F ACT THAT ASSESSEE DID NOT FURNISH ANY CONFIRMATION FROM THE PE RSON, SO CLAIMED TO HAVE ADVANCED MONEY. NEITHER BEFORE THE R EVENUE AUTHORITIES NOR BEFORE THIS FORUM ANY CONFIRMATION FRO M THE SAID MR. ABDUL RAUF WAS PROVIDED. AS SEEN FROM THE RECOR D, THIS FORUM HAS POSTED THE CASE 19 TIMES FROM 27-05-2014 TO 28-11- 2017 (EXCLUDING THE NON-FUNCTIONING DATES OF BENCHES) AND COUNSEL SOUGHT ADJOURNMENT FOR FURNISHING INFORMATION OR FOR O THER REASONS. WITHOUT ANY CONFIRMATION FROM THE SAID PERSON OR EVEN THE EVIDENCE OF BANK TRANSACTIONS, THE COPY OF PASS POR T WITH COPY OF CHEQUE ISSUED BY THE SAID PERSON TO A THIRD PARTY DOES NOT ESTABLISH THE CREDIT OF MONEY RECEIVED BY ASSESSEE. T HERE IS NO LINK TO THE DOCUMENTS TO THAT CREDIT. THE CONTENTION THAT THE SAID PERSON ISSUED CHEQUES FROM THE SAME BANK TO ANOTHER DO ES NOT ESTABLISH THE FACT THAT ASSESSEE HAD RECEIVED MONEY FRO M THE SAME PERSON. IN VIEW OF THAT, IN THE ABSENCE OF ANY CONFIR MATION FROM THE SAID MR. ABDUL RAUF, ADDITIONAL DOCUMENTS FILED HA S NO RELEVANCE. IN THE ABSENCE OF ANY RELEVANT EVIDENCE, THERE IS NO MERIT IN ASSESSEES CONTENTIONS, SO THE GROUNDS ARE REJ ECTED. 9. IN THE RESULT, APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 30 TH NOVEMBER, 2017 TNMM I.T.A. NO. 196/HYD/2014 :- 6 - : COPY TO : 1. SYED ADEELUDDIN, C/O. M.M. FIRDOS, ADVOCATE, 11- 3-942, 1 ST FLOOR, NEW MALLEPALLY, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-7(1), HYDERABAD. 3. CIT (APPEALS)-VI, HYDERABAD. 4. CIT-VI, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.