Velegati Raji Reddy, Hyderabad V. Income Tax Officer, Ward-4(3), Hyderabad

ITA 209/Hyd/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1272 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 21-08-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 30-01-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: B SHANTHI KUMAR
• Keywords: Unexplained cash credit; Gift; Business income
• Section: 201; 147; 148

Judgement Text

IN THE INCOME TAX A PPELLATE TRIBUNAL HYDERABAD BENCH B ', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN , ACCOUNTANT MEMBER ITA NO. 209 / HYD/201 8 ASSESSMENT YEAR: 20 09 - 10 VELEGATI RAJI REDDY, HYDERABAD. PAN A HSPV 9156 B VS. INCOME - TAX OFFICER, WARD 4 ( 3 ), HYDERABAD. A PPELLANT RESPONDENT ASSESSEE BY: S H RI B. SHANTHI KUMAR REVENUE BY: S HRI MOHAN KUMAR DATE OF HEARING: 21 / 0 8 / 201 9 DATE OF PRONOUNCEMENT: 05 / 0 9 /201 9 O R D E R PER SHRI S. RIFAUR RAHMAN , A. M. T H IS IS AN APPEAL OF THE ASSESSEE FOR THE AY 20 09 - 10 AGAINST THE ORDER OF CIT(A) 1 , HYDERABAD , DATED, 13/12/2016. 2. BRIE F FACTS OF THE CASE ARE THAT THE ASSESSEE , AN INDIVIDUAL, DECLARED HIS TOTAL INCOME OF RS. 1,45,250/ - AND AGRICULTURAL INCOME OF RS. 1,25,250/ - . THE CASE WAS REOPENED U/S 147 AND NOTICE U/S 148 WAS ISSUED ON 29/11/2013. THE ASSESSMENT WAS COMPLETED U/S 14 3(3) RWS 148 ON 31/03/2015 DETERMINING THE TOTAL INCOME AT RS. 30,06,685/ - . WHILE DOING SO, THE AO MADE THE ADDITION OF RS. 27,56,575/ - TOWARDS UNEXPLAINED CASH CREDITS. BACK GROUND OF THE CASE: 2.1 A SCRUTINY ASSESSMENT U/S.143(3) R.W.S 144 WAS COMPLETED IN THE CASE OF WIFE OF THE ASSESSEE SMT. VELEGATI RAMA DEVI FOR A.Y. 09 - 10 AGAINST WHICH AN APPEAL BEFORE THE I.T.A. NO. 209 /HYD/1 8 VELEGATI RAJI REDDY, HYD. 2 CIT(A) - VI WAS FILED CONTENDING THAT THE ENTIRE CASH/CHEQUE DEPOSITS OF RS.77,33,446/ - IN THE BANK A/C MAINTAINED WITH ICICI BANK, HANUMAKONDA BELONGS TO THE ASSESSEE SRI V. RAJI REDDY AND AS THERE WAS NO PROPER EXPLANATION REGARDING THE SOURCES OF THE CASH DEPOSITS, RESULTED IN THE ADDITION OF RS.77,33,446/ - TO THE INCOME RETURNED @ RS.2,37,44 6/ - . THE SAME WAS ALLOWED BY THE CIT(A) - VI IN THE CASE OF SMT. VELIGETI RAMA REDDY WITH A FINDING THAT 'TO DRAW THE CORRECT CONCLUSION AND INITIATE THE APPROPRIATE PROCEEDINGS AGAINST THE REAL OWNERS OF THE CREDITS IN THE BANK ACCOUNT, INCLUDING APPELLAN T SMT. RAMA VELIGETI. ENQUIR I ES ARE TO BE CARRIED ON SRI RAJI REDDY VELIGETI WHO FILED AN AFFIDAVIT DURING APPELLATE PROCEEDINGS/DECLARING THE TRANSACTIONS IN THE SAVINGS BANK A R E MAINTAINED WITH ICICI BANK/HANAMKONDA BRANCH BELONGS TO HIS BUSINESS TRANSACTIONS WITH A STOCK OF RS.23 , 37 , 336/ - WITH CORRESPONDING SALES OF RS.21 , 64,5771 - AND THE PROFIT AFFIRMED DOES NOT COMMENSURATE WITH THE BUSINESS TRANSACTIONS TO THE EXTENT OF RS.77,33 , 902 / - FOR A. Y. 2009 - 10'. 2.2 AS THE VERACITY OF TH E CASH DEPOSITS MAINTAINED JOINTLY WITH HIS WIFE STANDS UNVERIFIED IN THE HANDS OF SRI VELIGETI RAJI REDDY, THE CASE WAS REOPENED FOR A.Y. 2009 - 10 AND NOTICE U/S 148 WAS ISSUED ON 29.11.2013 TO THE ASSESSEE. 2.3 DURING THE COURSE OF RE - ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER NOTICED FROM THE BANK STATEMENTS OF THE ASSESSEE WITH IC ICI BANK THAT THERE WERE CASH DEPOSITS : RS.52,95,000 CHEQUE TRANSFERS/DEPOSITS : RS.24,31.577 TOTAL : RS.77,33,577 2.4 ASSESSEE VIDE LETTER DT . 30 . 12.2014 HAD EX PLAINED THE SOURCES OF CASH DEPOSITS AS BELOW: I.T.A. NO. 209 /HYD/1 8 VELEGATI RAJI REDDY, HYD. 3 P, JITENDER RAO, LAND ADVANCE AMOUNT RECEIVED 6,40,000 CH. OMPRAKASH HAND LOAN(LATER GIVEN BACK) 30,000 GIFT RECEIVED BY SRNT. V, RAMA FROM HIS BROTHER 2,95,000 RAMESH RAO SALE A MOUNT ON 19.05.08 1,90,000 RANGANAYANNA GRANITES SALE AMOUNT ON 20.11.08 2,70,000 PAP REDDY SALE AMOUNT 94,577 PRASAD SALE AMOUNT 10,000 ADVANCES TAKEN BACK FROM G. SRINIVAS REDDY 1,54,000 INTERNAL BANK TRANSFER FROM MY ANOTHER BANK 6,75,000 A/C. NO. 020610025212880 CASH SALES OUT OF TOTAL SALES OF RS.21,64,577 16,00,000 AGRICULTURAL INCOME 1,25,250 COMMISSION & BROKERAGE INCOME 23,500 CASH WITHDRAWALS THROUGH SELF CHEQUES 35,46,575 TOTAL 77,33,902 2.5 THE ASSESSING OFFICER VERIFIED THE ABOVE ST ATEMENT WITH THE RETURN OF INCOME AND BANK STATEMENTS AND ACCEPTED THE BELOW SOURCES OF CASH DEPOSITS: SALES AS ADMITTED IN THE ROI 21,64,577 AGRICULTURAL INCOME AS PER PATTADAR PASS BOOKS 1,25,250 OPENING BALA NCE OF CASH AS PER CASH BOOK 3,89,506 COMMISSION INCOME 23,500 GIFTS TO SPOUSE 2,95,000 AMOUNT RECEIVED FROM JITENDER RAO AS PER CONFIRMATION 6,40,000 INTERNAL BANK TRANSFERS 6 ,7 5,000 INTERNAL BANK TRANSFERS 80,000 ADVANCE RECEIVED FROM G, SR INIVAS REDDY 1,54,000 CH. OMPRAKASH HAND LOAN AS PER LEDGER 30,000 TOTAL 49,77,327 2.6 ASSESSING OFFICER VERIFIED A LETTER FURNISHED BY SRI G. SRINIVAS REDDY CONFIRMING THAT HE HAS GIVEN AN AMOUNT OF RS,27,00,000/ - TO THE ASSESSEE FOR PURCHASE OF METAL FOR HIS HOUSE CONSTRUCTION DURING F,Y, 2008 - 09, BUT LATER ON THE DEAL WAS CANCELLED. AS TH E ASSESSEE COULD NOT FURNISH ANY DETAILS LIKE PAN, BANK STATEMENT, MODE OF PAYMENT ETC, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE AND ADDED THE SOURCES OF BALANCE DEPOSITS OF R S. 27,56,575/ - AS UNEXPLAINED CASH CREDITS TO THE INCOME OF THE AS SESSEE. I.T.A. NO. 209 /HYD/1 8 VELEGATI RAJI REDDY, HYD. 4 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHO CONFIRMED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER: AS SEEN FROM THE ANALYSIS OF WITHDRAWALS AND DEPOSITS, DEPOSITS WERE MORE THAN WITHDRAWALS AND D O NOT MATCH WITH THE WITHDRAWALS. FOR EXAMPLE, ON 22ND SEPTEMBER, THERE IS A CASH DEPOSIT OF RS.5 LAKHS. THIS AMOUNT WAS NOT THERE WITH THE APPLICANT. ON 23RD JULY, CASH DEPOSIT OF RS.49, 000/ - DOES NOT EXIST WITH THE APPLICANT. THE PAYMENT MADE THROUGH SEL F CHEQUE HAVE BEEN TAKEN AS BY THE APPLICANT AS WITHDRAWAL. FOR EXAMPLE, ON 20TH MAY, THE APPLICANT ISSUED SELF CHEQUE OF RS.20, 000/ - . AS PER ANALYSIS, THIS AMOUNT THAT HAS BEEN PAID, HAS BEEN TAKEN AS WITHDRAWALS. THE ENTRIES FROM THE BANK A R E GIVEN ARE V ERY CLEAR THAT THESE ARE CHEQUE WITHDRAWALS BUT NOT SELF - WITHDRAWALS. THAT IS TO SAY, CASH WITHDRAWALS BY THE APPLICANT ARE PAYMENTS NOT RETAINED IN THE HANDS OF THE APPLICANT. HENCE, THE APPLICANT'S SUBMISSIONS ARE INCORRECT. IN THIS SCENARIO, I DISALLOW THE CLAIM OF THE APPLICANT. I UPHOLD ADDITION MADE BY THE ASSESSING OFFICER. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUND OF APPEAL: : THE CIT(A) ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE ADD ITION OF RS. 27,56,575/ - . 5. LD. AR SUBMITTED THAT THE ASSESSEE IS RUNNING GRANITE BUSINESS AND THE PROCEEDS FROM BUSINESS WAS DEPOSITED. FURTHER, HE SUBMITTED THAT ASSESSEES WIFE WAS ALSO MADE CERTAIN CASH DEPOSITS. 6. LD. DR SUBMITTED THAT ASSESSEE WAS KEEP CHANGING THE EXPLANATION OFFERED TO AO AND CIT(A). OPENING CASH BALANCE OF RS. 16 LAKHS WAS ALREADY GIVEN BY AO. HE SUBMITTED THAT THE CASH WITHDRAWALS ARE MORE THAN CASH DEPOSITS, HENCE, THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED. I.T.A. NO. 209 /HYD/1 8 VELEGATI RAJI REDDY, HYD. 5 7. CO NSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD . WE NOTICE THAT ASSESSEE MADE DEPOSITS IN THE JOINT ACCOUNT MAINTAINED ALONG WITH HIS WIFE. ASSESSEE SUBMITTED STATEMENT SHOWING DETAILS OF DEPOSITS MADE BEFORE THE AO. AO ALLOWED CERTAIN DE POSITS AND CASH DEPOSITS RELATING TO THE BUSINESS AS DECLARED IN THE RETURN OF INCOME. THE REST OF THE DEPOSITS TO THE EXTENT OF RS. 27,56,573/ - WAS ADDED AS UNEXPLAINED INCOME. BEFORE THE CIT(A), ASSESSEE FILED DETAILED CASH STATEMENT WITH CASH DEPOSITS, WITHDRAWALS AND DAILY OUTSTANDING, AND SUBMITTED THAT THE CASH WITHDRAWALS WERE LATER DEPOSITED. AFTER CONSIDERING THE ASSESSEES SUBMISSION, LD. CIT(A) SUSTAINED THE ADDITION. BEFORE US ALSO, ASSESSEE MADE SIMILAR SUBMISSIONS. ON CAREFUL PERUSAL OF THE ST ATEMENTS, ASSESSEE HAS MADE DEPOSITS TO THE EXTENT OF RS. 97.33 LAKHS AND AO ACCEPTED THE DEPOSITS TO THE EXTENT OF RS. 49.77 LAKHS. THE BALANCE DEPOSITS, ASSESSEE COULD NOT EXPLAIN PROPERLY BEFORE TAX AUTHORITIES. BEFORE US, LD. AR SUBMITTED THAT THE DEPO SITS ARE OUT OF BUSINESS AND EXCESS CASH WITHDRAWALS WERE REDEPOSITED. ON CAREFUL PERUSAL, WE NOTICED THAT ASSESSEE MADE SEVERAL WITHDRAWALS IN THE DENOMINATION OF RS. 6 LAKHS ON 29/4, RS. 5 LAKHS ON 22/9, RS. 5 LAKHS ON 27/11, RS. 4.25 LAKHS ON 20/12, RS. 4.25 LAKHS ON 29/12, RS. 4 LAKHS ON 13/1 ARE SUBSTANTIAL AMOUNTS. IN TOTAL IT COMES TO RS. 28.50 LAKHS. THE ASSESSEE HAS DECLARED RS. 21.65 LAKHS AS BUSINESS INCOME. WE ARE NOT SURE, HOW MUCH AMOUNT BY WAY OF WITHDRAWALS ASSESSEE HAS UTILIZED FOR THE PURP OSE OF BUSINESS. TO ACHIEVE THE TURNOVER OF RS. 21.65 LAKHS, ASSESSEE SHOULD HAVE UTILIZED THE ABOVE WITHDRAWALS FOR THE PURPOSE OF BUSINESS ONLY. THEREFORE, FOR THE ADDITIONAL DEPOSITS TO THE EXTENT OF RS. 27.56 LAKHS, ASSESSEE HAS NO SOURCE TO OFFER. THE REFORE, WE ARE INCLINED TO ACCEPT THE FINDINGS OF LD. CIT(A) I.T.A. NO. 209 /HYD/1 8 VELEGATI RAJI REDDY, HYD. 6 AND UPHOLD THE ORDER OF CIT(A). ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 5 TH SEPTEMBER , 2019. SD/ - ( P. MADHAVI DEVI ) JUDICIAL MEMBER SD/ - ( S. RIFAUR RAHMAN ) ACCOUNTANT MEMBER HYDERABAD, DATED 5 TH SEPTEMBER , 201 9. KV COPY FORWARDED TO: 1. VELEGATI RAJI REDDY, C/O B. SHANTHI KUMAR, ADVOCATE, 111, TARAMANDAL COMPLEX, 5 - 9 - 13, SAIFABAD, HYDERABAD 500 004 2 . ITO, WARD NO. 5 ( 3 ), BASHEERBAGH, HYDERABAD - 4 3 . CIT (A) - 1 , HYDERABAD 4. PR. CIT - 1 , HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE