Singirikonda Venugopal, Warangal V. ITO, Ward-1, Warangal

ITA 286/HYD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2940 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV BENJWAL
• Assessee Lawyers: G MANIKYA PRASAD
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER . ITA NO.286/HYD/13 : ASSESSMENT YEAR 2009-10 SHRI SINGIRIKONDA VENUGOPAL, WARANGAL. ( PAN - BJLPS 2575 P ) V/S. INCOME-TAX OFFICER, WARD-1, WARANGAL. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.MANIKYA PRASAD RESPONDENT BY : SHRI RAJEEV BENJWAL, DR DATE OF HEARING 30.5.2013 DATE OF PRONOUNCEMENT 31.5.2013 O R D E R PER B.RAMAKOTAIAH, ACCOUNTANT MEMBER: THIS AN ASSESSEES APPEAL AGAINST THE ORDER OF T HE COMMISSIONER OF INCOME-TAX(APPEALS) VI. HYDERABAD DATED 24.11.2012 FOR THE ASSESSMENT YEAR 2009-10. 2. ASSESSEE IS AGGRIEVED ON ACCOUNT OF ADDITION SUSTAINED OF AN AMOUNT OF RS.19,45,000 BY THE CIT(A) OUT OF THE TOTAL ADDITION MADE BY THE ASSESSING OFFICER OF RS.39,99,183. ITA NO.286/ HYD/2013 SHRI SINGIRIKONDA VENUGOPAL, WARANGAL. 2 3. THE ASSESSEE IS A PARTNER IN M/S. SRI RAJA RAJ ESHWARA RICE & OIL MILLS, NARSAMPET, AND IN THE CAPACITY OF IND IVIDUAL, HE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10, DECL ARING, APART FROM REMUNERATION AND INTEREST RECEIVED FROM THE FIRM, O THER INCOMES ALSO. CONSEQUENT TO THE INFORMATION RECEIVED FROM THE BAN K THAT THE ASSESSEE HAS MADE DEPOSITS OF ABOVE RS.10- LAKHS, T HE CASE WAS SELECTED FOR SCRUTINY AND VARIOUS NOTICES WERE ISSU ED TO THE ASSESSEE. AS THERE IS FAILURE ON THE PART OF THE ASSESSEE TO FURNISH INFORMATION AS CALLED FOR, THE ASSESSING OFFICER INVOKED THE PROV ISIONS OF S.144 BUT COMPLETED THE ASSESSMENT UNDER S.143(3) TREATING T HE DEPOSITS IN THE BANK ACCOUNT, INCLUDING THE CHEQUE DEPOSITS AS UNEX PLAINED INCOME OF THE ASSESSEE. ASSESSEE SUBMITTED VARIOUS ADDITIONA L EVIDENCE BEFORE THE CIT(A), EXPLAINING THE SUFFICIENT CAUSE FOR NO T APPEARING BEFORE THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS AND LEARNED CIT(A) REMANDED THE MATTER TO THE ASSESSING OFFICER FOR EXAMINATION. THE ASSESSING OFFICER SUBMITTED A REPO RT DATED 4.9.2012, IN WHICH THE ASSESSEES VARIOUS DEPOSITS WERE CATEG ORIZED AND DEPOSIT OF RS.9,500.000 SUPPOSED TO BE FROM OTHER PERSON BY NAME, B.VINODA WAS ACCEPTED AND THE AMOUNTS OF RS.96,500 STATED TO BE TRANSFERRED FROM SON IN LAW WAS ALSO ACCEPTED. IN ADDITION, DEP OSITS BY CHEQUE/TRANSFER REPRESENTING FDS AND INTEREST ETC. WERE ALSO ACCEPTED BY THE ASSESSING OFFICER AND THE CIT(A) ACCORDINGLY GAVE RELIEF TO THAT EXTENT. HOWEVER, THE AMOUNT OF DEPOSITS OF RS.19,45 ,000 STATED TO HAVE BEEN WITHDRAWALS FROM THE FIRM WERE NOT ACCEPT ED BY THE ASSESSING OFFICER AND THE CIT(A) CONFIRMED THE SAME VIDE PARA 6.2 OF HIS ORDER, WHICH READS AS UNDER- ITA NO.286/ HYD/2013 SHRI SINGIRIKONDA VENUGOPAL, WARANGAL. 3 6.2. II) RS. 19,45,000/-: THESE AMOUNTS WERE STATED TO BE THE WITHDRAWALS MAD E BY THE APPELLANT FROM M/S. RAJA RAJESWARA RICE & OIL M ILL, WHEREIN APPELLANT IS THE MANAGING PARTNER. AS PER T HE APPELLANT, THE AMOUNTS WERE WITHDRAWN FROM THE BOOK S OF THE FIRM AND WERE RETURNED TO THE FIRM, AT REGULAR INTERVALS AND THE SAID WITHDRAWALS WERE FOR THE PURPOSE OF PU RCHASE OF ASSET/LAND AND SINCE THE PROPOSALS WERE NOT MATE RIALISED, THE AMOUNTS WERE RETURNED TO THE FIRM, AS PER THE CONFIRMATION FURNISHED BY THE APPELLANT. REGARDING THE COMMENT OF THE ASSESSING OFFICER THAT WITHDRAWALS W ERE MADE LUMPSUM AMOUNTS IN CASH AND RETURNED ALSO IN C ASH, BUT IN PIECE MEAL BASIS, THE APPELLANT COM MENTED THAT SINCE BOTH THE APPELLANT HIMSELF AND HIS SON ARE PARTNERS , HE IS AT LIBERTY TO DRAW THE EXCESS AMOUNTS IN CASH AND RETU RNED AS IT IS CONVENIENT TO HIM. THIS IS ONLY A PARTIAL SID E OF THE TRUTH AND APPEARS AN AFTERTHOUGHT, SINCE THE APPELLANT ORIGINALLY SUBMITTED THAT SUCH CASH WAS DRAWN FOR THE PURPOSE OF FIXED ASSET FOR HIS FAMILY BUT SUBSEQUENTLY SUCH AMOUNTS WERE EXPLAINED TO BE THE SOURCE FOR DEPOSITS IN TO BANK ACCOUNT. HAVING DEPOSITED THE AMOUNTS INTO BANK ACCOUNT, IT IS NOT EXPLAINED WHY THE AMOUNTS WERE NOT KEPT IN THE BANK , FOR BUYING FIXED ASSET AND IT WAS ALSO NOT EXPLAINED, H OW THE AMOUNTS WERE TAKEN TO THE BOOKS OF THE FIRM, IN PIE CE MEAL INSTALMENTS BASIS, WITHOUT EXPLAINING SUCH CASH WIT HDRAWALS FROM THE BANK ACCOUNT. AS PER THE INFORMATION BROUG HT ON THE RECORD, THE CASH BALANCES WITH THE FIRM FOR THE PURPOSE OF WITHDRAWALS MADE BY THE APPELLANT, BEING THE PAR TNER, MIGHT NOT BE DISPUTED, BUT THE NEXUS FOR THE IMMEDI ATE SOURCES FOR CASH CREDITS IN TO BANK ACCOUNT, ON ACC OUNT OF CONTRADICTORY EXPLANATION OFFERED BY THE APPELLANT, IS HELD TO BE NOT ACCEPTABLE. IN THIS CONTEXT, IT IS RELEVANT TO MENTION THAT THE MEANS AND NATURE OF TRANSACTION ARE CASH C REDIT INTO BANK ACCOUNT. IN THIS CONTEXT IT IS ALSO RELEV ANT TO MENTION THAT IN ORDER TO PROVE THAT CASH CREDITS AR E GENUINE, THE GENUINENESS OF TRANSACTIONS IS AS IMPORTANT AS THE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR. IN T HIS CASE, THE APPELLANT HELD TO HAVE FAILED TO PROVE THE GENU INENESS OF SUCH TRANSACTIONS OF CASH CREDITS AMOUNTING TO RS. 19,45,000/-. AS SUCH THE AMOUNT OF RS. 19,45,000/- WHICH WAS SHOWN AS SOURCE OF THE CASH DEPOSITED INTO BANK ACCOUNT IS HELD TO BE NOT EXPLAINED / ESTABLISHED, AS SUCH THE SAME IS UPHELD AS UNACCOUNTED/UNEXPLAINED INCOM E OF ITA NO.286/ HYD/2013 SHRI SINGIRIKONDA VENUGOPAL, WARANGAL. 4 THE APPELLANT. HENCE, THE ADDITION TO THE EXTENT OF RS. 19,45,000/- IS UPHELD 5. THE LEARNED COUNSEL REFERRING TO PAPER BOOK CO NTAINING 27 PAGES, SUBMITTED THAT THE ASSESSEE IS A PARTNER IN M/S. RAJA RAJESWARA RICE & OIL MILLS ALONGWITH HIS SON AND THE BUSINESS IS AS GOOD AS A FAMILY CONCERN AND THERE IS NO DISPUTE WITH REFEREN CE TO THE WITHDRAWALS FROM THE FIRM. HE REFERRED TO THE COPI ES OF ACCOUNTS INCLUDING THE STATEMENT OF THE BANK ACCOUNT PLACED IN THE PAPER BOOK FROM PAGES 24 TO 27 TO SUBMIT THAT ALL THE CASH DEP OSITS IN THE BANK ACCOUNT ON THE RESPECTIVE DATES ARE WITHDRAWN FROM THE FIRM AND THERE ARE CORRESPONDING WITHDRAWALS IN THE FIRMS ACCOUNT . LIKEWISE, THERE ARE WITHDRAWALS FROM THE BANK ACCOUNT ON VARIOUS DA TES WHICH WERE RE-DEPOSITED IN THE FIRMS ACCOUNT, AND THEREFORE, THE DEBITS AND CREDITS IN THE FIRMS ACCOUNT OF RS.19,45,000 WITH REFERENCE TO THE DEPOSITS IN THE BANK ACCOUNT IT WAS HIS SUBMISSION THAT THE ASSESSING OFFICER AND THE CIT(A) ARE NOT CORRECT IN REJECTIN G THE ASSESSEES EXPLANATION. IT WAS HIS SUBMISSION THAT THE DEPOS IT IN THE BANK ACCOUNT ARE GENUINE WITHDRAWALS FROM THE FIRM AND T O THAT EXTENT, ADDITION OF THAT AMOUNT IS NOT CALLED FOR. FURTHER, IT WAS CONTENDED THAT THERE IS NO DISPUTE WITH THE DRAWALS FROM FIRM BUT AUTHORITIES HAVE NOT ACCEPTED THE SAME ON THE REASON THAT EXPLANATIO N WAS NOT GENUINE. 6. THE LEARNED DR HOWEVER REFERRED TO THE EXPLANA TION GIVEN BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND T HE CONTRADICTIONS IN THE STATEMENT, PARTICULARLY STATEMENT AT PAGE 22, I .E. PART OF ITA NO.286/ HYD/2013 SHRI SINGIRIKONDA VENUGOPAL, WARANGAL. 5 OBJECTIONS TO THE REMAND REPORT AND THE REPORT OF T HE ASSESSING OFFICER, ISSUE 4 IN THE REMAND REPORT, TO SUBMIT TH AT THERE ARE CONTRADICTORY STATEMENTS, AND THEREFORE, THE ASSESS EES EXPLANATION THAT THE MONIES ARE WITHDRAWN FROM THE FIRMS ACCOU NT CANNOT BE ACCEPTED. IT WAS SUBMITTED THAT THE EXPLANATION WA S NOT NORMALLY PRUDENT AND NO RELIANCE CAN BE PLACED ON THE SELF-C ONTRADICTORY STATEMENTS OF THE ASSESSEE. HE REFERRED TO THE OUT STANDING LOAN AMOUNT IN THE ANDHRA BANK NARSAMPET, TO THE EXTENT OF ABOUT RS.22 LAKHS TO SUBMIT THAT THE ASSESSEE COULD HAVE DEPOSI TED THE FUNDS IN THE OD ACCOUNT, AND THE EXPLANATION THAT HE HAS TAK EN THE MONEY FROM THE FIRM TO DEPOSIT IN HIS PERSONAL ACCOUNT CA NNOT BE ACCEPTED. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND E XAMINED THE DOCUMENTS ON RECORD, INCLUDING THE REPORTS OF T HE ASSESSING OFFICER AND THE CIT(A). IT IS TRUE THAT THE ASSESSEE DID N OT EXPLAIN THE DEPOSITS IN THE BANK ACCOUNT BEFORE THE ASSESSING O FFICER, BUT BEFORE THE CIT(A), HE FILED ADDITIONAL EVIDENCE IN THAT BE HALF. ASSESSEE HAS EXPLAINED THE CASH DEPOSITS IN THE BANK ACCOUNT AS REPRESENTED BY THE WITHDRAWALS FROM THE FIRM, AND THERE IS NO DISPUTE ABOUT THE ASSESSEES ACCOUNT COPY WITH THE FIRM. THE OUTSTAND ING CLOSING BALANCE OF RS.34,550 IN ASSESSEES CURRENT ACCOUNT WITH THE FIRM IS MATCHING WITH THE BALANCES SHEET OF M/S. RAJA RAJESWARA RICE & OIL MILLS PLACED IN THE PAPER BOOK AT PAGE 7. THEREFORE, TO THAT EX TENT, ACCOUNT COPIES OF THE FIRM ARE NOT DISPUTED. THERE IS NO DISPUTE WITH REFERENCE TO THE TRANSACTIONS ALSO. AS SEEN FROM THE CURRENT ACCOUN T COPY PLACED ON RECORD ALONGWITH THE BANK ACCOUNT, THERE ARE CORRES PONDING DEPOSITS ITA NO.286/ HYD/2013 SHRI SINGIRIKONDA VENUGOPAL, WARANGAL. 6 IN THE BANK ACCOUNT SUPPORTED BY WITHDRAWALS BY THE FIRM ITEM BY ITEM. LIKEWISE, THE REDEPOSITS IN THE FIRMS ACCOU NT ARE ALSO MATCHING WITH THE WITHDRAWALS FROM THE BANK ACCOUNT. THEREFO RE, AS FAR AS THE DEPOSITS IN THE BANK ACCOUNT WHICH ARE CONSIDERED A S UNACCOUNTED BY THE ASSESSING OFFICER ARE CONCERNED, THEY ARE SUPPO RTED BY THE WITHDRAWALS FROM THE FIRM BY THE PARTNER. EXPLANAT ION OFFERED BEFORE THE ASSESSEE MAY BE SELF-CONTRADICTORY. THE NATURE OF WITHDRAWAL, THE PURPOSE FOR WHICH IT WAS WITHDRAWN ARE KNOWN ONLY T O THE ASSESSEE, BUT THE FACT IS THAT THE DEPOSITS ARE SUPPORTED BY WITHDRAWALS FROM THE FIRM, AND THEREFORE, TO THAT EXTENT THE SOURCE OF D EPOSITS CAN CERTAINLY BE IDENTIFIED WITH REFERENCE TO WITHDRAWALS FROM TH E FIRM. 8. HOWEVER, THE VERY FIRST ENTRY IN THE CASH DEPOS IT AND WITHDRAWAL IN THE FIRMS ACCOUNT AND SUM DEPOSITED AND WITHDRAWN IN THE BANK ACCOUNT ON 27.6.2008 OF RS 1,00,000 COULD NOT BE EXPLAINED PROPERLY. DURING THE COURSE OF ARGUMENTS, THE LEAR NED COUNSEL WAS ASKED WHETHER THE DEPOSITS IN THE BANK ACCOUNT WAS FIRST OR IN THE PARTNERS ACCOUNT WITH THE FIRM , AS THERE ARE TWO CREDITS I.E. IN FIRM AND BANK ACCOUNT AND TWO WITHDRAWALS FROM THE BANK AS WELL AS THE FIRM ON THE SAME DAY. EVEN THOUGH THESE TRANSACTI ONS ARE MATCHING WITH EACH OTHER, BUT THE SOURCE OF THE DEPOSIT OF R S.1 LAKH FOR THE FIRST TIME EITHER IN THE BANK ACCOUNT OR IN THE FIRMS AC COUNT STOOD UNEXPLAINED. SINCE THERE ARE CONTRA ENTRIES IN THE FIRM AS WELL AS BANK ACCOUNT, SOURCE FOR THE AMOUNT OF RS.1 LAKH DE POSITED CANNOT BE EXPLAINED AS THAT OF WITHDRAWAL FROM THE FIRM OR VI CE VERSA, AND THIS QUESTION WAS POSED TO THE COUNSEL, WHO COULD NOT EX PLAIN THE SOURCE ITA NO.286/ HYD/2013 SHRI SINGIRIKONDA VENUGOPAL, WARANGAL. 7 FOR RS. 1 LAKH DEPOSITED AND WHICH ONE WAS FIRST DE POSIT. REST OF THE DEPOSITS /ENTRIES ARE TALLYING WITH THAT OF WITHDRA WALS FROM THE FIRM OR DEPOSITS IN THE FIRM AS DRAWAL FROM BANK. THEREFOR E, TO THE EXTENT OF RS.18,45,000 CORRESPONDING WITH THE DEPOSITS IN THE BANK FROM 10.12.2008 TO 3.1.2009 CAN BE ACCEPTED AS THAT OF W ITHDRAWALS FROM THE FIRM. AN AMOUNT OF RS.1 LAKH DEPOSITED IN THE B OOKS OF ACCOUNT ON 27.6.2008 CAN ONLY BE CONSIDERED AS UNACCOUNTED DEP OSIT MADE BY THE ASSESSEE. ACCORDINGLY, RELIEF IS GIVEN ONLY TO THE EXTENT OF RS.18,45,000 BY DELETING THE ADDITION MADE BY THE A SSESSING OFFICER TO THAT EXTENT, AND ADDITION OF RS. 1 LAKH ALONE O UT OF THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A) IS UPHELD. WE GIVE PARTIAL RELIEF ACCORDINGLY. 9. IN THE RESULT, ASSESSEES APPEAL IS PARTLY AL LOWED. ORDER PRONOUNCED IN THE COURT ON 31 ST MAY, 2013 SD/- SD/- (SAKTIJIT DEY) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTA NT MEMBER DT/- 31 ST MAY, 2013 COPY FORWARDED TO: 1. SHRI SINGIRIKONDA VENUGOPAL, WARANGAL. C/O. G.S.MADHAVA RAOI & CO., CHARTERED ACCOUTNANTS H.NO.11-26-53, M.G. ROAD, WARANGAL 2 . INCOME - TAX OFFICER, WARD - 1, WARANGAL. 3. COMMISSIONER OF INCOME - TAX(APPEALS) V I HYDERABAD ITA NO.286/ HYD/2013 SHRI SINGIRIKONDA VENUGOPAL, WARANGAL. 8 4. COMMISSIONER OF INCOME - TAX V HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S