Burra Vinay Kumar, Hyderabad V. ITO, Karimnagar

ITA 293/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66203 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-07-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 22-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: RAVI SESHAGIRI RAO
• Keywords: Income from undisclosed sources; Source of fund; Additional evidence; Corroborative evidences
• Section: 143(3); 147; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 293/HYD/2010 ASSESSMENT YEAR: 2004-05 BURRA VINAY KUMAR, ... APPELLANT HYDERABAD. (PAN AERPB5468C) VS. INCOME TAX OFFICER, RESPONDENT WARD-I, KARIMNAGAR. APPELLANTBY : SHRI RAVI SESHAGIRI RAO RESPONDENT BY : SMT. NIVEDITA BISWAS DATE OF HEARING : 9/07/2012 DATE OF PRONOUNCEMENT :31/08/2 012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-III, HYDERABAD DATED 11/12/2009 FOR THE ASSESSMENT YEAR 2004-05. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN INDIVIDUAL AND DERIVES INCOME FROM PROFESSION AND F ROM HOUSE PROPERTY. FOR THE YEAR UNDER CONSIDERATION, T HE ASSESSEE HAD NOT FILED ANY RETURN OF INCOME WITHIN THE STIPULATED PERIOD AS PER SECTION 139(1) OF THE ACT. THE ASSESSING OFFICER HAD RECEIVED INFORMATION THAT DUR ING THE FY RELEVANT TO THIS ASSESSMENT YEAR, THE ASSESSEE H AD MADE INVESTMENT OF RS. 38,55,000/- IN THE FIRM M/S VENNE LA HOSPITAL, SINCE THE ASSESSEE HAD NOT FILED THE RETU RN OF INCOME FOR THIS ASSESSMENT YEAR, THE ASSESSING OFFI CER HAD ITA NO. 293/HYD/10 BURRA VINAY KUMAR 2 REOPENED THE ASSESSMENT U/S 147 OF THE ACT AND ACCO RDINGLY HAD ISSUED A NOTICE U/S 148 FOR THIS ASSESSMENT YEA R ON 04/04/2006 AND THE SAME WAS SERVED ON THE ASSESSEE ON 05/04/2006. IN RESPONSE TO THIS NOTICE, THE ASSESSE E HAD FILED A RETURN OF INCOME FOR A.Y. 2004-05 ON 15/12/ 2006 SHOWING INCOME OF RS. 76,800/-. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IN RESPONSE TO THE QUERY RAISED BY THE ASSESSING OFFIC ER FOR EXPLAINING THE SOURCE OF INVESTMENT OF RS. 38,55,00 0/- MADE BY HIM IN THE SAID FIRM, THE ASSESSEE HAD FILED A C ASH FLOW STATEMENT FOR THE PERIOD FROM 01/04/2003 TO 31/03/2 004. IN THE SAID STATEMENT, THE ASSESSEE HAD SHOWN RECEIPT OF A SUM OF RS. 3,55,000/- FROM CHIT LIFTING AMOUNT FROM VIP ANCHI CHIT FUND LTD., KARIMNAGAR. FROM THE VERIFICATION OF DET AILS FILED BY THE ASSESSEE, THE ASSESSING OFFICER NOTICED THAT THE SUBSCRIBER FOR THE SAID CHIT WAS SMT. B. PADMAJA, W IFE OF THE ASSESSEE. SMT. PADMAJA HAD SUBMITTED THAT HER HUSBA ND SB. VINAY KUMAR HAD SUBSCRIBED CHITS IN HER NAME AND TH E CHIT INSTALMENTS WERE PAID EITHER BY HIM PERSONALLY IN I NDIVIDUAL STATUS OR FROM HUF FUNDS. IT WAS FURTHER SUBMITTED THAT THE CHIT FUND COMPANY HAD PAID THE CHIT BID AMOUNTS IN CASH AND CHEQUES. THE CASH AMOUNT RECEIVED BY HER WAS GIVEN TO HER HUSBAND AND THE CHEQUES RECEIVED WERE DEPOSITED IN HER BANK ACCOUNT AND LATER AFTER WITHDRAWAL, THE CASH W AS GIVEN TO HER HUSBAND. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH SUCH SUBMISSIONS. HE NOTED THAT THER E WAS A TOTAL CONTRIBUTION OF RS. 94,447/- TOWARDS CHIT SUB SCRIPTION DURING FY 2003-04 AND THE ASSESSEE CANNOT MEET THE EXPENDITURE OF CHIT SUBSCRIPTION OUT OF HIS SOURCES OF INCOME. HE FURTHER NOTED THAT THE CHEQUE RECEIVED F ROM CHIT FUND COMPANY WAS DEPOSITED INTO THE BANK ACCOUNT OF THE ITA NO. 293/HYD/10 BURRA VINAY KUMAR 3 WIFE OF THE ASSESSEE AND THE SAME WAS ENCASHED BY H ER. WITH THESE OBSERVATIONS, THE ASSESSING OFFICER NOTE D THAT THE SOURCE OF INVESTMENT FOR AN AMOUNT OF RS. 3,55, 500/- THOUGH CLAIMED TO BE FROM CHIT BID AMOUNT, REMAINS UNEXPLAINED. 4. THE ASSESSING OFFICER FURTHER NOTED FROM THE SAI D CASH FLOW STATEMENT THAT THE ASSESSEE HAD SHOWN RECOVERY OF LOAN OF RS. 7,14,400/- AND CASH OF RS. 32,600/- AND OF R S. 50,000/- FROM SRI B. VINAY KUMAR (HUF). HOWEVER, SI NCE THE RETURNS OF INCOME IN THE STATUS OF HUF WERE FILED O N 15/12/2006, THAT IS WELL AFTER THE STATUTORY TIME L IMIT FOR FILING THE RETURN, THE ASSESSING OFFICER OBSERVED T HAT THE SAME WERE LODGED. HE HELD THAT NO COGNIZANCE CAN BE TAKEN THEREOF. HE, THUS, HELD THAT OUT OF THE INVESTMENT OF RS. 38,55,000/- MADE BY THE ASSESSEE IN THE SAID FIRM, THE SOURCE OF INVESTMENT TO THE EXTENT OF RS. 11,55,000 /- REMAINS UNEXPLAINED. ACCORDINGLY, HE ADDED BACK THE SAID AMOUNT U/S 69 OF THE ACT AND COMPLETED THE ASSESSME NT ON A TOTAL INCOME OF RS. 12,31,800/- U/S 143(3) R.W.S. 147 OF THE ACT. 5. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A). 6. BEFORE THE CIT(A), IT WAS SUBMITTED THAT A SUM O F RS. 3,55,000/- WAS RECEIVED BY SMT. B. PADMAJA, WIFE OF THE ASSESSEE FROM VIPANCHI CHIT FUND PVT. LTD. IT WAS S TATED THAT A CERTIFICATE WAS ISSUED BY VIPANCHI CHIT FUND S PVT. LTD., KARIMNAGAR, ON 19/12/2007 CERTIFYING THAT AN AMOUNT OF RS. 3,55,500/- WAS PAID TO SMT. B. PADMAJA ON BI D OF CHIT. IT WAS FURTHER SUBMITTED THAT AN AMOUNT OF RS . ITA NO. 293/HYD/10 BURRA VINAY KUMAR 4 2,00,200/- WAS RECEIVED THROUGH CHEQUE AND THE SAME WAS DEPOSITED IN HER ANDHRA BANK ACCOUNT AND THEREAFTER , A SUM OF RS. 2,00,000/- WAS WITHDRAWN IMMEDIATELY. IT WAS FURTHER SUBMITTED THAT SMT. B. PADMAJA HAD FILED A LETTER O F CONFIRMATION STATING THAT THE SAID AMOUNT WAS PAID TO THE ASSESSEE. WITH THESE SUBMISSIONS, THE LD. AR OF THE ASSESSEE CONTENDED THAT THE ASSESSING OFFICER WAS NOT JUSTIF IED IN ADDING BACK AN AMOUNT OF RS. 3,55,500/- TO THE INCO ME OF THE ASSESSEE. 7. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD RECEIVED AGGREGATE AMOUNT OF RS. 8,01,000/-, BEING RS. 7,17,400/- TOWARDS RECOVERY OF LOAN FROM HUF, RS. 5 0,000/- AMOUNT AS LOAN FROM HUF AND CASH OF RS. 32,600/- FR OM THE HUF DURING THE YEAR. IT WAS SUBMITTED THAT THE RETU RN FOR THE AY 2004-05 IN THE CASE OF HUF HAS BEEN FILED, W HERE THE ASSESSEE HAD ADMITTED INCOME OF RS. 3,00,000/-. STA TING THAT THE SAME WAS DONE AS AGREED TO DURING THE COUR SE OF SURVEY AND FURTHER SUBMITTING THAT THE HUF HAS INDE PENDENT SOURCE OF INCOME, THE LD. AR CONTENDED THAT THE ASS ESSING OFFICER WAS NOT JUSTIFIED IN REJECTING SUCH RETURN FILED BY THE HUF ON 15/12/2006. LATER, FURNISHING A COPY OF RELE VANT PAGE OF BANK ACCOUNT OF DR. B.PADMAJA WITH ANDHRA B ANK, KARIMNAGAR, A/CIT (A) NO. 01/00031823, WHEREIN AN A MOUNT OF RS. 2,00,200/- BEING CHEQUE RECEIVED FROM THE SA ID CHIT FUND COMPANY WAS DEPOSITED, AND THE PHOTOCOPIES OF THE RETURNS OF INCOME FILED IN THE CASE OF HUF FOR AY 2 002-03 & 2003-04 AND FILING A PETITION SEPARATELY IN THAT RE GARD, THE LD. AR REQUESTED THAT THE SAID DOCUMENTS MAY BE ADM ITTED AS THE ADDITIONAL EVIDENCES. ITA NO. 293/HYD/10 BURRA VINAY KUMAR 5 8. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) FORWARDED THE ADDITIONAL DOCUMENTS SUBMITTED BY THE ASSESSEE TO THE ASSESSING OFFICER AND ASKED FOR REM AND REPORT. AFTER CONSIDERING THE REMAND REPORT OBTAINE D FROM THE ASSESSING OFFICER, THE CIT(A) OBSERVED THAT THE RE IS NO MERIT IN SUBMISSIONS OF THE ASSESSEE. HE FURTHER OB SERVED THAT IN THE RETURNS OF INCOME FILED BY THE ASSESSEE IN HIS INDIVIDUAL STATUS FROM AY 2001-02 TO 2003-04, IT IS SEEN THAT HE HAS NEVER FILED ANY BALANCE SHEET SHOWING DETAIL S OF ASSETS AND LIABILITIES. THE CIT(A) HELD THAT, UNDER THESE CIRCUMSTANCES, I.E. IN ABSENCE OF ANY BALANCE SHEET FILED BY THE ASSESSEE SHOWING ADVANCING OF ANY AMOUNT TO HIS HUF, SUCH CONTENTION REGARDING GIVING LOANS TO THE HUF E ARLIER, CANNOT BE ACCEPTED. HE FURTHER HELD THAT ON MERE FI LING OF A RETURN FOR AY 2001-02/2002-03, IN THE STATUS OF THE HUF, SHOWING SRI B. VINAY KUMAR (INDL.) AS A CREDITOR WI TH AN AMOUNT OF RS. 7,00,000/-, IT CANNOT BE SAID THAT TH E ASSESSEE HAS ACTUALLY ADVANCED AN AMOUNT OF RS. 7,0 0,000/- TO HIS HUF DURING SUCH PERIOD. NO EVIDENCE HAS BEEN FURNISHED BEFORE THE ASSESSING OFFICER NOR BEFORE H IM TO PROVE THAT THE ASSESSEE HAS ADVANCED AN AMOUNT OF R S. 7,00,000/- TO HIS HUF EARLIER. THE CIT(A) NOTED THA T THE ASSESSEE HAS ALSO FAILED TO FURNISH ANY COPY OF THE BANK ACCOUNT/STATEMENT IN THE NAME OF HUF. IT WAS ALSO A DMITTED BY THE LD. AR THAT THERE WAS NO SEPARATE BANK ACCOU NT FOR HUF. THE CIT(A) HELD THAT THERE IS IOTA OF TRUTH IN SUCH CLAIM OF THE ASSESSEE REGARDING RECOVERY OF OLD LOAN OF R S. 7,17,400/- FROM THE HUF DURING THE PREVIOUS YEAR, W HICH HAS BEEN INVESTED IN THE FIRM M/S VENNALA HOSPITAL. THE CIT(A) FURTHER HELD THAT IN FACT THE INVESTMENT TO THE ABOVE EXTENT MADE BY THE ASSESSEE IN THE SAID FIRM DURING THE PREVIOUS YEAR, HAS BEEN MADE OUT OF HIS UNACCOUNTED ITA NO. 293/HYD/10 BURRA VINAY KUMAR 6 INCOME DURING THE CURRENT PREVIOUS YEAR. IN THE ABS ENCE OF ANY SUPPORTING EVIDENCE FURNISHED IN THAT REGARD, T HE CONTENTION OF THE ASSESSEE ABOUT CASH RECEIPTS OF R S. 32,600/- AND OF RS. 50,000/- FROM THE SAID HUF DURI NG THE PREVIOUS YEAR CANNOT BE ACCEPTED. HE, THEREFORE, HE LD THAT THE INVESTMENT TO THE EXTENT OF ABOVE AMOUNTS TOTAL ING TO RS. 82,600/- (RS. 32600 + 50000) WERE MADE BY THE ASSESSEE OUT OF HIS UNACCOUNTED INCOME DURING THE P REVIOUS YEAR. THE CIT(A) CONCLUDED THAT OUT OF THE TOTAL IN VESTMENT MADE BY THE ASSESSEE IN M/S VENNALA HOSPITAL DURING THE PREVIOUS YEAR, INVESTMENT TO THE EXTENT OF RS. 8,00 ,000/- (RS. 7,17,400 + 82600) WERE MADE OUT OF UNACCOUNTED INCOME DURING THE PREVIOUS YEAR. HE, THEREFORE, UPH ELD THE ACTION OF THE ASSESSING OFFICER IN MAKING THE ADDI TION OF RS. 8,00,000/- U/S 69 OF THE ACT. 9. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS O F APPEAL. 1. THE ORDER OF THE CIT(A) IS ERRONEOUS TO THE EXTE NT IT IS PREJUDICIAL TO THE APPELLANT HEREIN. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF RS. 8 LAKHS MADE BY THE ASSESSING OFFICER DISBELIEVING THE CLAIM THAT THE SAID AMOUNT WAS RECEIVED FROM THE HUF. 3. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION MADE OF RS. 8 LAKHS U/S 69 OF THE ACT. THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE H UF FILED ITS RETURNS OF INCOME AND EXPLAINED THAT THIS AMOUNT HAS BEEN PAID BY THE HUF TO THE INDIVIDUAL A ND THAT THE SAID AMOUNT IS FROM OUT OF THE SOURCES AVAILABLE WITH THE HUF. 10. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES , PERUSED THE RECORD AND GONE THROUGH THE ORDERS OF T HE AUTHORITIES BELOW. WE FIND THAT THE RETURN OF INCOM E FILED IN THE STATUS OF B. VINAYA KUMAR, HUF FOR THE AY 2004- 05 ITA NO. 293/HYD/10 BURRA VINAY KUMAR 7 BELATEDLY HAS BEEN LODGED AND THE SAID RETURN HAS B EEN TREATED AS NON-EST BY THE AO. HOWEVER, WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO ASCER TAIN THE RETURN OF INCOME OF THE HUF AND EVEN IF IT IS TO BE VERIFIED BY REOPENING THE ACCOUNT OF HUF FOR THAT YEAR, THE ASSESSING OFFICER SHALL DETERMINE WHETHER THE AMOUNTS HAVE BE EN PAID BY THE HUF TO THE INDIVIDUAL, FROM OUT OF THE SOURC ES AVAILABLE WITH THE HUF. THE ASSESSING OFFICER SHALL INVESTIGATE FROM THE HUF ACCOUNT REGARDING RECOVERY OF OLD LOAN OF RS. 7,17,400/- FROM THE HUF DURING THE PREV IOUS YEAR WHICH HAS BEEN INVESTED IN THE FIRM M/S VENNEL A HOSPITAL. THE AMOUNT OF CASH RECEIPT OF RS. 32,600/ - AND RS. 50,000/- FROM THE SAID HUF DURING THE PREVIOUS YEAR IS ALSO TO BE VERIFIED TO FIND OUT WHETHER THE INVESTMENT T O THE EXTENT OF RS. 8,00,000/-HAS BEEN SOURCED FROM THE H UF. THE ASSESSING OFFICER MAY, THEREAFTER, DECIDE THE ISSUE IN ACCORDANCE WITH LAW WITH RESPECT TO THE ADDITION U/ S 69 OF THE ACT, AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 31/08/2012. SD/- SD/- ( CHANDRA POOJARI) (ASHAVIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED:31 ST AUGUST, 2012. KV ITA NO. 293/HYD/10 BURRA VINAY KUMAR 8 COPY TO:- 1) SHRI BURRA VINAY KUMAR, C/O, SHRI S. RAMA RAO, ADVOCATE, 102, SHRIYAS ELEGANCE, DOOR NO. 3-6- 643, ST. NO. 9, HIMAYATNAGAR, HYDERABAD. 2) ITO, WARD 1, KARIMNAGAR. 3) THE CIT (A)-III, HYDERABAD 4) THE ADDL. CIT, KARIMNAGAR RANGE, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD.