ACIT, Anantapur V. M/s Sundaraiah Constructions, Anantapur

ITA 222/HYD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9770 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 16-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMLAN TRIPATHY
• Keywords: Gift; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMBER ITA NO.222/HYD/09 : ASST T. YEAR 200 6-07 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1, ANANTAPUR. V/S. M/S. SUNDARAIAH CONSTRUCTIONS, ANANTAPUR. ( PAN - AARFS 5124 Q ) (APPELLANT) (RESPONDENT) AND C.O. NO.39/HYD/2009 (IN ITA NO.222/HYD/09) : ASSTT. YEAR 2006-07 M/S. SUNDARAIA H CONSTRUCTIONS, ANANTAPUR. ( PAN - AARFS 5124 Q ) V/S. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1, ANANTAPUR. (CROSS - OBJECTOR) (APPELLANT - IN - APPEAL) DEPARTMENT BY : SHRI AMLAN TRIPATHY ASSESSEE BY : SHRI R AMA RAO O R D E R PER G.C.GUPTA, VICE PRESIDENT: THIS APPEAL BY THE REVENUE AND THE CROSS-OBJECTIO N BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 ARE DIRECT ED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS). ITA NO.222/HYD/09 & CO 39/HYD/2009 M/S. SUNDARAIAH CONSTRUCTIONS, ANANTAPUR. 2 REVENUES APPEAL: ITA NO.222/HYD/09 : ASSTT. YEAR 200 6-07 2. GROUNDS OF APPEAL OF THE REVENUE ARE AS UNDER- 1. THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APP EALS) TIRUPATI IS BAD IN LAW AND AGAINST THE FACTS OF THE CASE. 2. THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN IGNORING THE REMAND REPORT OF THE ASSESSING OFFICER , IN RESPECT OF DISALLOWANCE OF EXPENDITURE WHICH IS BAS ED BY NON PRODUCTION OF VOUCHERS. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS R ELIED ON THE ORDER OF THE ASSESSING OFFICER. THE LEARNED COU NSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) HAS ALLOWED THE EXPENSES AFTER VERIFICATION OF THE VOUCHERS PRODUCED AND THEREFORE , THE GROUNDS OF APPEAL OF THE REVENUE HAVE NO MERIT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND H AVE PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND THAT THE CIT(A) HAS PASSED A WELL REASONED ORDER ON THE ISSUE. HE HAS VERIFIED THE VOUCHERS PRODUCED BY THE ASSESSEE AND AFTER VERIFICATION HAS ALLOWED THE EXPENSES. IN THESE FACTS, WE FIND N O JUSTIFICATION FOR INTERFERENCE WITH THE ORDER OF THE CIT(A). WE ACCO RDINGLY UPHOLD THE ORDER OF THE CIT(A) AND REJECT THE GROUNDS OF THE R EVENUE IN THIS APPEAL. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMIS SED. ITA NO.222/HYD/09 & CO 39/HYD/2009 M/S. SUNDARAIAH CONSTRUCTIONS, ANANTAPUR. 3 ASSESSEES CROSS OBJECTION C.O. NO.39/HYD/2009 (IN ITA NO.222/HYD/09) : ASSTT. YEAR 2006-07 6. FIRST GROUND OF CROSS OBJECTION OF THE ASSESSEE IS AS UNDER- THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITIO N OF RS.4,25,000/- MADE BY THE ASSESSING OFFICER DISBELI EVING THE INVESTMENT MADE BY THE PARTNERS IN THEIR CAPITAL AC COUNTS. THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THE FACT TH AT THE ASSESSEE PRODUCED THE LETTERS OF CONFIRMATION FROM ALL THE PARTNERS AND ALSO PRODUCED PROOF FOR SUCH INVESTMEN TS MADE BY THEM . 7. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CREDITS TOTALING TO RS.4,25,000 WERE APPEARING IN T HE CAPITAL ACCOUNTS OF THE PARTNERS WHO ARE SEPARATELY ASSESSED TO TAX. THEY HAVE CONFIRMED THE FACT OF HAVING DEPOSITED THE SAME AMO UNT DURING THE RELEVANT PERIOD WITH THE ASSESSEE FIRM. THE ASSESSE E WENT A STEP FURTHER AND PROVED THE SOURCE OF THE SOURCES BY FIL ING CONFIRMATION LETTERS/AFFIDAVITS OF THE PERSONS WHO HAVE GIVEN TH E AMOUNTS TO THE PARTNERS. THEY HAVE ALSO FILED DOCUMENTARY EVIDEN CE IN SUPPORT OF THEIR AGRICULTURAL LAND HOLDING AND NO ADVERSE MAT ERIAL COULD BE FOUND BY THE REVENUE TO DISPUTE THE EVIDENCE PRODUCED B Y THE ASSESSEE. HE SUBMITTED THAT IF AT ALL ANY ACTION IS CALLED FO R, THE REVENUE SHOULD HAVE INITIATED THE SAME IN THE PERSONAL ASSESSMENTS OF THE PARTNERS. 8. LEARNED DEPARTMENTAL REPRESENTATIVE HAS OPPOSE D THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE . HE SUBMITTED THAT DISTINCT RELATIVES OF THE PARTNERS OF THE ASSE SSEE FIRM HAVE FILED CONFIRMATIONS/AFFIDAVITS AND THEY ARE NOT CLOSE REL ATIVES OF THE PARTNERS OF THE ASSESSEE FIRM, AND THE DOCUMENTS PRODUCED AR E MERELY SELF ITA NO.222/HYD/09 & CO 39/HYD/2009 M/S. SUNDARAIAH CONSTRUCTIONS, ANANTAPUR. 4 SERVING DOCUMENTS. HE SUBMITTED THAT ONUS IS ON TH E ASSESSEE TO PROVE THE GENUINENESS OF THE CREDIT ENTRIES. HE SU BMITTED THAT ASSESSEES CLAIM THAT DISTANT RELATIVES OF THE PART NERS HAVE MADE GIFTS TO THEM, IS HIGHLY IMPROBABLE AND IT IS NOT SUPPORT ED BY ANY CORROBORATIVE EVIDENCE. HE RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). HE ALSO RELIED ON A SERIES OF DECISIONS IN SUPPORT OF HIS ARGUMENTS, INCLUDING THE FOLLOWING- (A) SRI KRISHNA (BY LRS RAM RATAN AND OTHERS) V/S. CIT (142 ITR 168)-ALL (B) RAJENDER KUMAR MITTAL V/S. ACIT (3 ITR(AT) 508)-DEL (C) TIRATH RAM GUPTA V/S. CIT (304 ITR 145)-P&H (D) SUBHASH CHAND CERMA V/S. CIT (311 ITR 239)-P&H 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT THE CREDIT ENTRIES TOTALING TO RS.4,25,000 WERE MADE IN THE ACCOUNTS OF VARIOUS PARTNERS. THE PARTNERS HAVE CONFIRMED THE AMOUNTS OF CREDITS MADE BY THEM IN THE ASSESSEE FIRM. THE PARTNERS HAV E FURTHER FILED EVIDENCE REGARDING THE SOURCE OF AMOUNT RECEIVED BY THEM AND HAVE FIELD CONFIRMATIONS/AFFIDAVITS OF THE RELATIVES WHO HAVE GIVEN THE AMOUNTS TO THEM. THE PARTNERS HAVE BEEN SEPARATELY ASSESSED TO INCOME-TAX. WE FIND THAT SMT.M.ARUNA, PARTNER DEPOS ITED A SUM OF RS.1.5 LAKHS WITH THE ASSESSEE FIRM. SHE CLAIMED TH AT RS.1 LAKH WAS RECEIVED BY HER FROM ONE SHRI P.VENKATA SUBBAIAH, B ROTHER OF HER FATHER, WHO POSSESSES 22 ACRES OF AGRICULTURAL LAND AND THE BALANCE RS.50,000 WAS RECEIVED BY HER FORM OTHER CLOSE RELA TIVES. AFFIDAVITS OF SMT.M.ARUNA ALONGWITH SHRI P.VENKATA SUBBAIAH WERE FILED BEFORE THE ASSESSING OFFICER. LIKEWISE, SHRI M.KRISHNAIAH, PA RTNER HAS INTRODUCED A SUM OF RS.1.25 LAKHS WITH THE ASSESSEE FIRM AND H IS FATHER IN LAW, ITA NO.222/HYD/09 & CO 39/HYD/2009 M/S. SUNDARAIAH CONSTRUCTIONS, ANANTAPUR. 5 SHRI A.SRI HARI NAIDU HAS FILED AFFIDAVIT STATING T HAT HE POSSESSES 7 ACRES OF AGRICULTURAL LAND AND HAS GIFTED AN AMOUNT OF RS. 1.25 LAKHS TO SHRI M.KRISHNAIAH. SHRI M.SUNDARAIAH, PARTNER HAS INTRODUCED A SUM OF RS.1.5 LAKHS WITH THE ASSESSEE FIRM AND HAS CLAI MED THAT RS.1 LAKH WAS RECEIVED BY HIM FROM ONE SHRI P.SESHAIAH NAIDU, SON OF HIS FATHERS SISTER, WHO POSSESSES 22 ACRES OF AGRICULT URAL LAND AND THE BALANCE RS.50,000 WAS PROVIDED BY OTHER CLOSE RELAT IVES. AFFIDAVITS OF SHRI M. SUNDARAIAH ALONGWITH THAT OF SHRI P.SESHAIA H NAIDU WERE SUBMITTED BEFORE THE ASSESSING OFFICER. WE FIND THA T THE DONORS OF THE PARTNERS COULD NOT BE SAID TO BE DISTANT RELATIVES OF THE PARTNERS. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE DEPARTME NT TO DOUBT THE GENUINENESS OF THE CLAIM MADE BY THE PARTNERS OF TH E ASSESSEE FIRM DULY SUPPORTED BY THE AFFIDAVITS OF THE RELATIVES A ND THE DOCUMENTARY EVIDENCE SUPPORTING THEIR CLAIM OF HOLDING OF AGRIC ULTURAL LAND. ONUS IS NO DOUBT, ON THE ASSESSEE TO PROVE THE SOURCE OF TH E CREDIT ENTRIES IN THE PARTNERS ACCOUNT, BUT IN THE FACTS OF THE CASE , WE FIND THAT THE ASSESSEE FIRM HAS BEEN ABLE TO DISCHARGE THIS ONUS. IN THE ABSENCE OF ANY MATERIAL TO DOUBT THE IDENTITY OF THE PERSONS W HO HAVE CLAIMED TO HAVE GIVEN THE MONEY TO THE PARTNERS OF THE ASSESSE E FIRM OR THEIR CREDITWORTHINESS OR THE GENUINENESS OF THE TRANSACT IONS, WE HOLD THAT NO CASE OF ADDITION OF THE AMOUNTS IN QUESTION COUL D BE MADE OUT BY THE REVENUE. ACCORDINGLY, THE ADDITION OF RS.4.25 LAKHS MADE BY THE ASSESSING OFFICER IS DELETED AND THE FIRST GROUND O F CROSS-OBJECTION OF THE ASSESSEE IS ALLOWED. 10. SECOND GROUND OF CROSS OBJECTION OF THE ASSESS EE IS AS UNDER- THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) OU GHT TO HAVE DIRECTED THE ASSESSING OFFICER TO ALLOW DEPREC IATION ITA NO.222/HYD/09 & CO 39/HYD/2009 M/S. SUNDARAIAH CONSTRUCTIONS, ANANTAPUR. 6 CLAIMED OF RS.15,11,205/- WHICH IS AN ALLOWABLE DED UCTION AND DIRECTED THE ASSESSING OFFICER TO ALLOW THE SAME WH ILE REWORKING THE TOTAL INCOME. 11. WE HAVE HEARD THE PARTIES. WE FIND THAT THE CI T(A) HAS DIRECTED THE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE REGARDING DEPRECIATION AND TO ALLOW THE SAME AS PER LAW. NO PREJUDICE IS CAUSED TO THE ASSESSEE WITH THESE DIRECTION OF T HE CIT(A). ACCORDINGLY WE HOLD THAT NO INTERFERENCE WITH THE O RDER OF THE CIT(A) IS CALLED FOR ON THIS ISSUE. WE THEREFORE, REJECT GROUND NO.2 OF THE CROSS-OBJECTIONS OF THE ASSESSEE. 12. IN THE RESULT, ASSESSEES CROSS-OBJECTION IS P ARTLY ALLOWED. 13. TO SUM UP, REVENUES APPEAL, BEING ITA NO.222/ HYD/2009 IS DISMISSED AND THE ASSESSEES CROSS-OBJECTION, BE ING C.O. NO.39/HYD/2009, IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 11.3.2011 SD/- SD/- (AKBER BASHA) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 11 TH MARCH, 2011 COPY FORWARDED TO: 1. M/S. SUNDARAIA H CONSTRUCTIONS, 1 - 429, FIRST FLOOR, DWARKANAGAR ANANTAPUR. 2. ASSTT. COMMISSIONER OF INCOME TAX , CIRCLE - 1 , ANANTAPUR . 3. COMMISSIONER OF INCOME - TAX(APPEALS), TIRUPATI ITA NO.222/HYD/09 & CO 39/HYD/2009 M/S. SUNDARAIAH CONSTRUCTIONS, ANANTAPUR. 7 4. COMMISSIONER OF INCOME-TAX TIRUPATI 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.