THE INCOME TAX OFFICER, WARD-1(1), VISAKHAPATNAM, Visakhapatnam V. Smt P.Mahalakshmi, Visakhapatnam

ITA 255/VIZ/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94102 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 15-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M N M NAIK SR
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, VISHAKHAPATNAM BENCH, VISHAKHAPATNAM BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI B.R.BASKARAN, ACCOUNTANT MEMBER I.T.A. NO.255/VIZ/2012 ASSESSMENT YEAR : 2006-07 THE INCOME TAX OFFICER, WARD-1(1), VISAKHAPATNAM VS. P. MAHALAKSHMI, 7-5-5/15, FLAT NO.301, ARIHANT APARTMENTS, PANDURANGAPURAM, VISAKHAPATNAM PAN/GIR NO. : AHAPP 8708 R APPELLANT ) .. RESPONDENT ) APPELLANT BY : SHRI M.N.M. NAIK, SR. A.R. RESPONDENT BY : NONE DATE OF HEARING : 28/7/ 2015 DATE OF PRONOUNCEMENT : 28/7/2015 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD CIT(A)- VISAKHAPATNAM AND IT PERTAINS TO ASSESSMENT YEAR 20 06-07. 2. THE ONLY GROUND AGITATED BY THE REVENUE READS AS UNDER: WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT(A), VISAKHAPATNAM IS CORRECT IN ALLOWING THE BENEFIT OF TELESCOPING THE UNEXPLAINED CREDITS OF RS.16,17,000/- OUT OF THE UNEXPLAINED DE POSITS OF RS.24,73,293/- AS MENTIONED AT PARA 3.2 OF PAGE 7 OF THE CIT(A) ORDER . 3. THOUGH THE NOTICE WAS SERVED THROUGH THE ASSESSI NG OFFICER, WHO SERVED IT BY WAY OF AFFIXTURE, NONE APPEARED ON BEHALF OF THE ASSESSEE. WE, THEREFORE, PROCEED TO DISPOSE OF THE APPEAL EXPARTE, QUA THE ASSESSEE. 2 I.T.A. NO.255/VIZ/2012 ASSESSMENT YEAR : 2006-07 4. WE HAVE HEARD THE LD DEPARTMENTAL REPRESENTATIVE AND CAREFULLY PERUSED THE RECORDS. THE FACTS IN SHORT ARE THAT THE ASSESSEE IS ENGAGED IN REAL ESTATE BUSINESS. IN THE YEAR UNDER CONSIDERATION SHE DECLARED TOTAL INCOME OF RS.1,02, 800/-, DERIVED FROM BUSINESS AND INCOME FROM HOUSE PROPERTY. WHEN THE CASE WAS SELECTED FO R SCRUTINY, THE ASSESSING OFFICER CALLED FOR VARIOUS DETAILS AND NOTICED THAT THERE WAS DEPOSITS AGGREGATING TO RS.24,73,293/- IN THE BANK ACCOUNT OF ANDHRA BANK AND IT WAS ALSO NOTICED THAT THE ASSESSEE INTRODUCED CREDITORS DURING THE YEAR TO THE EXTENT OF RS.16,17,000/-. DESPITE GIVING AMPLE OPPORTUNITY, THE ASSESSEE DID NOT FURNISH DETAILS AND, THEREFORE, THE ASSESSING O FFICER COMPLETED THE ASSESSMENT BY TREATING UNEXPLAINED DEPOSITS AND UNEXPLAINED CREDITORS AS U NEXPLAINED INCOME OF THE ASSESSEE WITHIN THE MEANING OF SECTION 68 OF THE ACT. 5. AGGRIEVED, THE ASSESSEE CONTENDED BEFORE THE LD CIT(A) THAT SHE WAS MISLED BY HER COUNSEL WITH REGARD TO INCOME TAX MATTERS AND THUS, SHE COULD NOT RESPOND TO THE PROCEEDINGS BEFORE THE ASSESSING OFFICER. HE SUBMITTED THAT TH E IMPUGNED DEPOSITS NEVER REPRESENTED THE INCOME OF THE ASSESSEE AND THE DEPOSITS WERE RECEIV ED IN THE COURSE OF HER REAL ESTATE BUSINESS. SIMILAR EXPLANATION WAS GIVEN WITH REGAR D TO CASH CREDIT. 6. THE LD CIT(A), HOWEVER, REJECTED THE EXPLANATION OF THE ASSESSEE AND OBSERVED THAT THE ONUS IS ON THE ASSESSEE TO PROVE THE IDENTITY, CAPA CITY AND GENUINENESS OF THE PERSONS AND SINCE THE ASSESSEE DID NOT PROVE THE ABOVE THREE IN GREDIENTS, THE CASH CREDITS ARE LIABLE TO BE TAXED UNDER SECTION 68 OF THE ACT. SIMILARLY, WITH REGARDS TO DEPOSITS IN THE BANK, THE LD CIT(A) OBSERVED THAT THERE IS NO RELATION BETWEEN THE PAYM ENTS MADE INTO THE BANK ACCOUNT AND PAYMENTS RECEIVED FROM THE VENDORS OF THE LAND SINC E IN MOST OF THE CASES, PURCHASE CONSIDERATION WAS SEPARATELY RECEIVED BY WAY OF CHE QUES OR DDS. HE, THUS CONCLUDED THAT THE 3 I.T.A. NO.255/VIZ/2012 ASSESSMENT YEAR : 2006-07 AMOUNTS DEPOSITED IN THE BANK ACCOUNT BELONGS TO TH E ASSESSEE AND DESERVES TO BE ADDED UNDER SECTION 68 OF THE ACT. 7. HOWEVER, HE ACCEPTED THE ALTERNATIVE PLEA OF THE ASSESSEE FOR TELESCOPING OF UNEXPLAINED CREDITORS AGAINST BANK DEPOSITS. IN THI S REGARD, HE OBSERVED AS UNDER: HOWEVER, I FIND THAT THERE IS FORCE IN THE ALTERNA TE ARGUMENTS OF THE ASSESSEE REGARDING TELESCOPING. ASSESSEE GOT SOME UNEXPLAIN ED INCOME WHICH IS DEPOSITED IN BANK ACCOUNT. UNEXPLAINED CREDITORS A RE MOST PROBABLY CREATED TO EXPLAIN THESE DEPOSITS OR ATLEAST PART OF THE DEPOS ITS. ONCE THE ENTIRE DEPOSITS WHICH ARE MORE THAN UNEXPLAINED LIABILITIES ARE ALR EADY ADDED AS INCOME NO SEPARATE ADDITION ON ACCOUNT OF LIABILITIES IN THE FORM OF UNEXPLAINED CREDITS IS CALLED FOR. IN VIEW OF THE ABOVE, I DIRECT THE AO TO ALLOW THE BENEFIT OF TELESCOPING THE UNEXPLAINED CREDITORS OF RS.16,17,0 00/- INTO THE UNEXPLAINED DEPOSITS OF RS.24,73,293/-. THUS, THERE IS NO REQU IREMENT OF SEPARATELY ADDING THE UNEXPLAINED CREDITORS. TAKING OVERALL VIEW OF THE CIRCUMSTANCES ADDITION OF RS.,214,73,293/- BEING EXPLAINED DEPOSITS IN BANK A CCOUNT IS UPHELD AND THE ADDITION OF RS.16,17,000/- ON ACCOUNT OF UNEXPLAINE D CREDITORS IS CONSIDERED NO LONGER NECESSARY THOUGH IN PRINCIPLE IT IS HELD THA T THE CREDITORS ARE NOT PROVED. THE ASSESSEE THUS GETS RELIEF OF RS.16,17,000 BY WA Y OF TELESCOPING BENEFIT. 8. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 9. THOUGH THE LD D.R. SUPPORTED SPECIFIC GROUND THA T THE VIEW EXPRESSED BY THE LD CIT (A) IS NOT IN ACCORDANCE WITH LAW, NO MATERIAL, WHATSOE VER, WAS PLACED BEFORE US TO CONTROVERT THE FINDINGS OF THE LD CIT(A). HAVING REGARD TO THE CI RCUMSTANCES OF THE CASE, WE HAVE NO OTHER OPTION BUT TO UPHOLD THE ORDER OF THE LD CIT(A) AND THUS, THE APPEAL OF THE REVENUE IS DISMISSED. 10. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/07/20 15 . SD/- SD/- (B.R.BASKARAN) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT DATED 28/07/2015 B.K.PARIDA , SR. PS 4 I.T.A. NO.255/VIZ/2012 ASSESSMENT YEAR : 2006-07 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT : THE INCOME TAX OFFICER, WARD - 1(1), VISAKHAPATNAM 2. THE RESPONDENT: P. MAHALAKSHMI, 7-5-5/15, FLAT NO.301, ARIHANT APARTMENTS, PANDURANGAPURAM, VISAKHAPATNAM 3. THE CIT(A) - VISHAKHAPATNAM 4. CIT , VISHAKHAPATNAM 5. DR, ITAT, VISHAKHAPATNAM 6. GUARD FILE. BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY ITAT, VISHAKHAPATNAM