Bhavanasi Anjaneyulu, V. The ACIT, Vijayawada

ITA 264/VIZ/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8785 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEBAKUMAR SONOWAL
• Keywords: Income from undisclosed sources; Loose papers
• Section: 68; 132

Judgement Text

ITA NO. 264 /VIZAG/ 2017 BHAVANASI ANJANEYULU, GUNTUR 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D .S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 264 /VIZAG/ 2017 ( / ASSESSMENT YEAR: 2009 - 10 ) BHAVANASI ANJANEYULU GUNTUR ACIT, CENTRAL CIRCLE VIJAYAWADA [PAN NO. ACJPB0329C ] ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI DEBAKUMAR SONOWAL, DR / DATE OF HEARING : 09.01.2018 / DATE OF PRONOUNC EMENT : 19.01.2018 / O R D E R PER BENCH : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 {CIT(A)}, VISAKHAPATNAM VIDE ITA NO.83/2015 - 16/CIT - (A) - 3/VSP/2016 - 17 DATED 21.2.2017 FOR THE ASSESSMENT YEA R 2009 - 10. ITA NO. 264 /VIZAG/ 2017 BHAVANASI ANJANEYULU, GUNTUR 2 2. DURING THE COURSE OF SEARCH U/S 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') IN THE CASE OF THE ASSESSEE ON 21.01.2011 , TWO PROMISSORY NOTES WERE FOUND IN THE NAME OF SMT. SRIRAM LAK SHMI KOTAMMA AND SMT. B. ANNAPU RNA AND SEIZED VIDE PAGE NOS.6 & 27 OF ANNEXURE A/BA/RAS/PO - 10 DATED 14.12.2011 FOR ` 20, 00, 000/ - & ` 25, 00, 000/ - RESPECTIVELY. IN ADDITION TO THE PROMIS SORY NOTES, UNDATED CHEQUES ISSUED BY M/S. VIJETHA CONSTRUCTIONS AND F OUNDATIONS (P) LTD. (VIJETHA CONSTRUCTIONS, IN SHORT) FOR ` 20, 00, 000/ - IN FAVOUR OF SMT. SRIRAM LAKSHMI KOTAMMA AND ` 25,00,000/ - IN FAVOUR OF SMT. B. ANNAPU RNA WAS ALS O SEIZED BY THE INCOME TAX DEPARTMENT . BOTH THE PROMISSORY NOTES AND THE CHEQUES WERE ISSUED BY M/S. VIJETHA CONSTRUCTIONS. THE CHEQUES WERE INDEXED AS PAGE NO.20 & 21 OF THE SAME ANNEXURE. THE ASSESSEE EXPLAINED THAT THE CHEQUES WERE ISSUED BY THE M/S. VIJETHA CONSTRUCTIONS AS A SECURITY FOR PAYMENT MADE FOR PURCHASE OF FLATS CONSTRUCTE D BY VIJETHA CONSTRUCTIONS. THE ASSESSEE ALSO FILED CONFIRMATIONS FROM THE DRAWER I.E. M/S. VIJETHA CONSTRUCTIONS. SINCE THE ASSESSEE WAS ENGAGED IN MONEY LENDING ACTIVITY ALSO , THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT CONVINCED TO THE A.O. AND AC CORDINGLY ASSESSED ` 45 LAKHS AS UNACCOUNTED INCOME TOWARDS THE AMOUNTS ADVANCED TO M/S. VIJETHA CONSTRUCTIONS. ITA NO. 264 /VIZAG/ 2017 BHAVANASI ANJANEYULU, GUNTUR 3 3. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) HAD OBSERVED THAT A SUM OF ` 25 LAKHS REPRESENTING THE PROMISSORY NOTE WAS ALREADY ASSESSED IN THE HANDS OF SMT.B.ANNAPURNA SEPARATELY , HENCE DELETED THE ADDITION OF ` 25 LAKHS AND CONFIRMED THE BALANCE AMOUNT. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFOR E THIS TRIBUNAL. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE REVENUES CASE IS THAT THE PROMISSORY NOTE WAS FOUND IN THE NAME OF SMT. LAKSHMI KOTAMMA IN THE PREMISE S OF THE ASSESSEE, HENCE AS PER THE PRESUMPTION U/S 292C OF THE ACT, IT IS THE OBLIGATION ON THE PART OF THE ASSESSEE TO REBUT THE PRESUMPTION SINCE THE ASSESSEE HAD NOT SATISFACTORILY EXPLAINED , THE SAME IS BROUGHT TO TAX IN HIS HANDS. THE ASSESSEES CAS E IS THAT THE ASSESSEE HAS NOT GIVEN ANY LOAN TO M/S. VIJETHA CONSTRUCTIONS AND THE PROMISSORY NOTE WAS TAKEN AS A SECURITY FOR THE AMOUNTS ADVANCED BY M/S. FIRST TEK PVT. LTD. TO M/S. VIJETHA ITA NO. 264 /VIZAG/ 2017 BHAVANASI ANJANEYULU, GUNTUR 4 CONSTRUCTIONS FOR PURCHASE OF PROPERTY. NO AMOUNTS WERE ADVANC ED TO M/S. VIJETHA CONSTRUCTIONS , HENCE THE SAME CANNOT BE TREATED AS INCOME IN THE HANDS OF THE ASSESSEE. THE ASSESSEE ALSO HAS FURNISHED CONFIRMATION LETTERS FROM M/S. VIJETHA CONSTRUCTION, WHICH IS ENCLOSED IN PAPER BOOK SUBMITTED BY THE ASSESSEE AS P AGE NO.8 OF THE PAPER BOOK. M/S. VIJETHA CONSTRUCTIONS HAS CONFIRMED THAT THEY HAVE TAKEN AN AMOUNT OF ` 1 .00 CRORE AS AN ADVANCE FROM M/S. FIRST TEK PVT. LTD. BY CHEQUE NOS.810105, 810106 DATED 22.7.2008 DRAWN IN FAVOUR OF ING VYSYA BANK, MAD H APUR FOR SA LE OF FLAT NOS.405, 501 & 504 IN VIJETHA PINNACLE AND THE SALE DEED WAS EXECUTED VIDE DOCUMENT NOS. 3822/10 DATED 2.11.2010. IN THE MEANTIME, THE COMPANY HAS GIVEN PROMISSORY NOTES AND CHEQUES IN FAVOUR OF THE COMPANY M/S. FIRST TEK PVT. LTD. AND THE DIREC TORS AND THEIR FAMILY MEMBERS AS A SECURITY. THE ASSESSEE HAS ENCLOSED BALANCE SHEET ALONG WITH RETURN OF INCOME AND THERE WAS NO SUCH ENTRY OF LOAN GIVEN TO M/S. VIJETHA CONSTRUCTIONS THROUGH SMT. SRIRAM LAKSHMI KOTAMMA. THE A.O. HAS NOT BROUGHT ON RECO RD ANY EVIDENCE TO ESTABLISH THAT ASSESSEE HAD GIVEN A LOAN TO M/S. VIJETHA CONSTRUCTIONS. M/S. VIJETHA CONSTRUCTIONS HAS CONFIRMED THAT IT HAS GIVEN PROMISSORY NOTE AND CHEQUE S TO THE FAMILY MEMBERS OF DIRECTORS OF FIRST TEK PVT. LTD., THERE WAS N O DUES OUTSTANDING FROM THE ASSESSEE AND THERE WAS NO EVIDENCE WHATSOEVER TO ESTABLISH THAT THE PROMISSORY ITA NO. 264 /VIZAG/ 2017 BHAVANASI ANJANEYULU, GUNTUR 5 NOTE IN THE NAME OF SMT. SRIRAM LAKSHMI KOTAMMA WAS AN ADVANCE GIVEN BY THE ASSESSEE TO M/S. VIJETHA CONSTRUCTIONS. THOUGH THE PROMISSORY NOTE WAS FOUN D IN THE PREMISES OF THE ASSESSEE, SINCE THE NAME WAS CLEARLY MENTIONED IN THE PROMISSORY NOTE , EVEN IF IT IS PRESUMED THAT THE PROMISSORY NOTE REPRESENT GENUINE LOAN THE SAME SHOULD BE ASSESSED IN THE HANDS OF SMT. SRIRAM LAKSHMI KOTAMMA BUT NOT IN THE HANDS OF THE ASSESSEE. T HE ASSESSEE HAS DISCHARGED ITS BURDE N AND REBUTTED SATISFACTORILY BY FURNISHING CONFIRMATION LETTERS FROM M/S. VIJETHA CONSTRUCTIONS EVIDENCING THE PROMISSORY NOTE AND CHEQUE GIVEN AS A SECURITY. BUT THE REVENUE HAS NOT DISCHARGED ITS BURDEN TO ESTABLISH THAT THE PROMISSORY NOTE REALLY REPRESENTS THE ADVANCE GIVEN BY THE ASSESSEE. THE PRESUMPTION AS ENVISAGED IN SECTION 292C IS LIMITED TO THE CORRECTNESS OF THE DOCUMENTS FOUND AT THE TIME OF SEARCH OR SURVEY, BUT THAT PRESUMPTION H AS NOT BEEN EXTENDED BY THE STATUTE TO PRESUME AN AMOUNT TO BE THE INCOME OF THE ASSESSEE. HONBLE HIGH COURT OF DELHI IN THE CASE OF PRIN CIPAL COMMISSIONER OF INCOME - TA X V. DELCO INDIA (P.) LTD. [2016] 67 TAXMANN.COM 357 (DELHI) RELIED UP ON BY THE ASSE SSEE HELD THAT N O ADDITION COULD BE MADE UNDER SECTION 68 ON BASIS OF LOOSE PAPERS FOUND DURING SEARCH IN ASSESSEE'S CASE INDICATING ASSESSEE'S TRANSACTION WITH A COMPANY WHEN ASSESSEE NOT ONLY CLEARLY DENIED HAVING ANY DEALING WITH SAID COMPANY BUT ALSO ITA NO. 264 /VIZAG/ 2017 BHAVANASI ANJANEYULU, GUNTUR 6 P RODUCED ALL NECESSARY DETAILS FOR ASSESSING OFFICER TO MAKE NECESSARY INQUIRIES AND A LETTER FROM DIRECTOR OF THAT COMPANY CONFORMING THAT SAID COMPANY DID NOT HA VE ANY TRANSACTION WITH ASSESSE. IN THE INSTANT CASE THE ASSESEE HAS COMPLETELY DENIED HAVING GIVEN ANY LOAN TO M/S. VIJETHA CONSTRUCTIONS AND ALS O FURNISHED A CONFIRMATION LETTER TO THAT EFFECT. HENCE, WE HOLD THAT THE PROMISSORY NOTE AND THE CHEQUE RELATES TO THE ADVANCES GIVEN BY M/S. FIRST TEK PVT. LTD. FOR PURCHASE OF PROPERTY AND GIVEN AS S ECURITY AND THUS THERE IS NO CASE FOR MAKING ANY ADDITION IN THE HANDS OF THE ASSESSEE . A CCORDINGLY WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND ALLOW THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. T H E ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 19 TH JAN 1 8 . SD/ - SD/ - ( . . ) ( . ) ( D.S. SUNDER SINGH ) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER /VISAKHAPATNAM: /DATED : 19.01.2018 VG/SPS ITA NO. 264 /VIZAG/ 2017 BHAVANASI ANJANEYULU, GUNTUR 7 / COPY OF THE ORDER FORWARDED TO : - 1. / THE APPELLANT BHAVANASI ANJANEYULU, S/O SATYANARAYANA, SRI BALAJI CHEMICAL INDUSTRIES, PIDUGURALLA, GUNTUR DIST. 522 413. 2 . / THE RESPONDENT ACIT, CENTRAL CIRCLE, VIJAYAWADA 3 . / THE PRINCIPAL CIT (CENTRAL), VISAKHAPATNAM 4 . ( ) / THE CIT (A) - 3, VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM