Boddu Maheswara Rao, Visakhapatnam V. ITO, Anakapalle

ITA 30/VIZ/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1667 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 19-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G S S GOPINATH
• Section: 69B; 69

Judgement Text

PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.30/VIZAG/2009 ASSESSMENT YEAR: 2005-06 BODDU MAHESWARA RAO, VISAKHAPATNAM VS. ITO, WARD-1, ANAKAPALLE (APPELLANT) (RESPONDENT) PAN NO: AJPB 4112 G APPELLANT BY: SHRI GVN HARI, CA RESPONDENT BY: SHRI G.S.S. GOPINATH, DR ORDER PER SHRI B R BASKARAN, ACCOUNTANT MEMBER : THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 6-11- 2008 PASSED BY THE LD CIT (A)-I, VISAKHAPATNAM AND I T RELATES TO THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE IS ASSAILING THE DECISION OF LD CIT (A) IN CONFIRMING THE FOLLOWING ADDITIONS: A) CASH CREDIT USED FOR PURCHASE OF DEMAND DRAFT - RS. 2,00,000.00 B) UNEXPLAINED BANK DEPOSITS - RS. 15,000.00 C) COST OF APPLICATION FORMS - RS. 10,000.00 3. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE, A SECONDARY GRADE TEACHER IN KOTTURU VILLAGE FILED HI S RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 DISCLOSING AN INCOME OF RS. 80,450/- WHICH INCLUDE AGRICULTURAL INCOME OF RS.35,000/-. THE AO RECEIVED INFORMATION TO THE EFFECT THAT THE ASSESSEE HAD PURCHASED 11 DEMAND DRAFTS WO RTH RS.11.00 LAKHS FROM HIS BANK A/C MAINTAINED WITH SRI VISAKHA GRAMEENA B ANK. THE AO CALLED FOR EXPLANATIONS AND THE ASSESSEE SUBMITTED THAT HE HAS NOT PURCHASED THESE DEMAND DRAFTS, BUT ONLY FACILITATED SOME PERSONS TO PURCHASE DDS. THE AO PAGE 2 OF 4 ACCEPTED THE EXPLANATION OF THE ASSESSEE TO THE EXT ENT OF RS.9.00 LAKHS. WITH REGARD TO THE BALANCE AMOUNT OF RS.2.00 LAKHS, THE SUBMISSION OF THE ASSESSEE WAS THAT 2 DDS FOR RS.1.00 LAKH EACH WERE PURCHASED IN THE NAME OF SHRI B. GOVIND AND SHRI T. RAMU THROUGH A PERSON NAMED SHRI SIMHADRI NAIDU WHO WAS THE POST MASTER IN HIS VILLAGE. IT WAS EXPLAINED THAT THE SAID AMOUNT OF RS.2.00 LAKHS WAS MOBILIZED BY SHRI SIMHADRI NAIDU. THE AO EXAMINED ON OATH ALL THE 3 PERSONS NAMELY SHRI SIMHADRI NAIDU, SHRI B. GOVIND AND SHRI T. RAMU. IN THE SWORN STATEMENT THEY HAVE ACCEPTED THE SUBMISSIONS MADE BY THE ASSESSEE. HOWEVER, THE AO WAS NOT SATISFIED WIT H THE CREDITWORTHINESS OF THESE PERSONS AND HENCE MADE THE ADDITION. 3.1 IN THE BANK A/C OF THE ASSESSEE, A SUM OF RS .50,000/- WAS FOUND DEPOSITED ON 10.04.2004. THE ASSESSEE EXPLAINED THE SAME AS HIS AGRICULTURAL INCOME. SINCE THE ASSESSEE HAD DISCLOS ED AN AGRICULTURAL INCOME OF RS.35,000/- ONLY, THE AO TREATED THE DIFF ERENCE OF RS.15,000/- AS HIS INCOME FROM OTHER SOURCES. SINCE THE AO WAS NOT SATISFIED THE CREDITWORTHINESS OF SHRI B. GOVIND A ND SHRI T. RAMU AS STATED ABOVE, THE AO ADDED THE COST OF APPLICATION OF RS.10,000/- IN THE HANDS OF THE ASSESSEE. THE ASSESSEE COULD NOT SUCCE ED THE APPEAL FILED BEFORE THE LD CIT (A). HENCE THE ASSESSEE IS IN APP EAL BEFORE US. 4. WE HAVE HEARD THE PARTIES AND ALSO PERUSED TH E RECORD. WITH REGARD TO THE ISSUE RELATING TO PURCHASE OF DEMAND DRAFTS, AN IDENTICAL CASE WAS CONSIDERED BY US IN THE CASE OF BALAGAM SRINIVAS, I TA NO.187/V/2009, WHEREIN IT WAS HELD AS UNDER: 4. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE RECORD. WE NOTICE THAT THE LD CIT (A) HAS CONSIDER ED FOLLOWING CASE LAW IN SUPPORT OF HIS DECISION: A) R. THYAGARAJ VS. CIT (239 ITR 557( (MAD.)) IN THI S CASE, THE APPLICATION FORM PURCHASE OF D.D. WAS SIGNED BY THE ASSESSEE. THE COURT HELD THAT THE INFERENCE DRAWN BY THE AO TO TH E EFFECT THAT THE ASSESSEE HAS PAID NECESSARY CASH FOR OBTAINING THE DRAFT IS NOT JUSTIFIED. B) MOHAN B. SAMTANI VS. CIT (199 ITR 370)(CAL.) IN T HIS CASE, THE ASSESSEE CONSIGNED ANTIQUES AS A REPRESENTATIVE OF STATE TRADING CORPORATION OF SIKKIM. THE DISPATCH OF THE GOODS W ERE DONE ON THE ORAL INSTRUCTION OF CHOGYAL. CHOGYAL ALSO CLAIMED O WNERSHIP OF THE PAGE 3 OF 4 ANTIQUE AND HIS CLAIM WAS NOT DISPROVED. HENCE IT WAS HELD THAT THE VALUE OF ANTIQUE CANNOT BE ADDED TO THE ASSESSEES INCOME C) CIT VS. SMT. P.K. NOORJAHAN, (237 ITR 570)(SC) IN THIS CASE, THE ASSESSEE WAS FOUND TO BE NOT CAPABLE ENOUGH TO EARN THE INCOME DURING THE ASSESSMENT YEAR UNDER CONSIDERATION OR W AS IN A POSITION TO EARN IT FOR A DECADE OR MORE. THE HONBLE APEX COURT HELD THAT SECTION 69 CONFERS A DISCRETION TO THE ASSESSING OF FICER IN THE MATTER OF TREATING AN INVESTMENT AS INCOME OF THE ASSESSEE AND HENCE THE QUESTION WHETHER THE SOURCE OF INVESTMENT SHOULD BE TREATED AS INCOME OR NOT U/S 69 HAS TO BE CONSIDERED IN THE LI GHT OF FACTS OF EACH CASE. D) JAYADAYA PODDAR VS. BIBI RAGRA AND OTHERS, AIR (1974 SC 171.) _ IN CASES FALLING U/S 69A, 69B AND 69C, THE PHRASEOLOGY USED GOES TO SHOW THAT BEFORE ANY OF THESE SECTIONS CAN BE INVOK ED, THE CONDITION PRECEDENT AS TO THE EXISTENCE OF INVESTMENT, EXPEND ITURE, OMISSION TO STATE OR MAKING UNDERSTATEMENT OF VALUE ETC., MU ST BE CONCLUSIVELY ESTABLISHED BY EVIDENCE AND/OR MATERIA L ON RECORD. (E) PRAKASH NARIAN VS. CWT (20 CTR 147) (ALL.) THE BU RDEN OF SHOWING THAT A PARTICULAR TRANSACTION IS A BENAMI A ND THE OWNER IS NOT THE REAL OWNER RESTS ON THE PERSON ASSERTING IT TO BE SO AND THIS BURDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCI NG LEGAL EVIDENCE OF DEFINITE CHARACTER WHICH WOULD EITHER D IRECTLY PROVE THE FACT OF BENAMI OR ESTABLISH CIRCUMSTANCES UNERRINGL Y AND REASONABLY RAISING AN INFERENCE OF THE FACT. 4.1 WE NOTICE THAT THE ASSESSEE HAS FILED CONFI RMATION LETTERS FROM ALL THE 18 PERSONS ON WHOSE BEHALF THE DDS WERE CLAIMED TO HAVE BEEN PURCHASED BY THE ASSESSEE. SUBSEQUENTLY THE ASSESSE E HAS ALSO PRODUCED 17 PERSONS AND THE AO HAS RECORDED STATEME NT FROM THEM. IN THE SWORN STATEMENT ALSO ALL THE 17 PERSONS HAVE CO NFIRMED THE SUBMISSION OF THE ASSESSEE. THERE IS ALSO NO DISPUT E WITH REGARD TO THE FACT THAT THE DDS WERE UITILISED BY THESE 18 PERSON S ONLY FOR THEIR OWN PURPOSE, I.E.FOR MAKING APPLICATION IN THEIR RESPEC TIVE NAMES. WE WERE ALSO INFORMED THAT THE REVENUE DID NOT CAUSE ANY IN QUIRY WITH REGARD TO THE DEMAND DRAFTS IN THE INDIVIDUAL HANDS OF THE 18 PERSONS. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINIO N THAT ONCE INDIVIDUAL PERSONS HAVE ADMITTED THAT THE DDS WERE PURCHASED O N THEIR BEHALF AND THAT THEY HAVE ONLY USED THEM FOR THEIR OWN PURPOSE , THE ONUS PLACED UPON THE ASSESSEE GETS DISCHARGED. IN SUCH A SITUATI ON THE REVENUE MAY EXAMINE THE FINANCIAL STATUS OF THE INDIVIDUAL PERS ONS AND THE ADDITION, IF ANY, IS CALLED FOR IN THEIR RESPECTIVE HANDS. WE NO TICE THAT THE LD CIT (A) HAS ANALYSED THE ISSUE IN RIGHT PERSPECTIVE AND HAS RENDERED HIS DECISION ON A CONSPECTUS OF MATTER. HENCE WE DO NOT FIND ANY NECESSITY TO INTERFERE IN HIS DECISION. PAGE 4 OF 4 4.1 THE FACTS OBTAINING IN THE INSTANT CASE IS SIMILAR TO THE ONE DECIDED BY US EARLIER. HENCE WE HOLD THAT NO ADDITION IS CALL ED FOR IN CONNECTION WITH THE PURCHASE OF THE DEMAND DRAFT OF RS.2.00 LAKHS, AS T HE ASSESSEE IS NOT THE BENEFICIAL OWNER OF THE SAME NOR IT WAS PROVED THAT THE TWO PERSONS IN WHOSE NAME THE DEMAND DRAFTS WERE PURCHASED ARE THE BENAM IDARS OF THE ASSESSEE. CONSEQUENTLY, THE ADDITION OF RS.10,000/- PERTAININ G TO THE COST OF APPLICATION FORMS IS ALSO LIABLE TO BE DELETED. WE ORDER ACCOR DINGLY. 4.2 WITH REGARD TO THE ADDITION OF RS.15,000/- PERTAINING TO THE DEPOSIT MADE IN THE BANK ACCOUNT OF THE ASSESSEE, WE NOTICE THAT THE ASSESSEE HAS FAILED TO OFFER EXPLANATIONS TO THE SATISFACTION OF THE ASSESSING OFFICER. HENCE WE UPHOLD THE ORDER OF LD CIT(A) ON THIS ISSUE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 30.11.200 9 SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATED 30 TH NOVEMBER, 2009. COPY TO 1 SHRI BODDU MAHESWARA RAO, A. KODURU, K. KOTAPADU MANDALAM, VISAKHAPATNAM DISTT. 2 THE ITO WARD-1, ANAKAPALLE 3 THE CIT (A)-I, VISAKHAPATNAM 4 THE CIT, VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM