Maganti Hema Sundara Rao, Eluru V. The ITO, Eluru

ITA 305/VIZ/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0285 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V APPALA RAJU
• Keywords: Unexplained cash credit; Source of fund; Revised return

Judgement Text

, , 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. 3 05 /VIZ/ 201 7 ( / ASSESSMENT YEAR: 20 09 - 1 0 ) MAGANTI HEMA SUNDARA RAO D.NO.16B - 12 - 2 TANGELLAMUDI NEAR VENUGOPALA SWAM TEMPLE ELURU [PAN : A HNPM6745N ] VS. THE INCOME TAX OFFICER WARD - 2 ELURU ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI , A R / RESPONDENT BY : SHRI V.APPALA RAJU , D R / DATE OF HEARING : 1 1 . 0 9 . 2018 / DATE OF PRONOUNCEMENT : 19 .0 9 .2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)], VIJAYAWADA VIDE ITA.NO.189/CIT(A)/VJA/2016 - 17 DATED 28.02.2017 FOR THE ASSESSMENT YEAR 20 09 - 10 . 2 I.T.A. NO . 3 05 /VIZ/201 7 SRI MAGANTI HEMA SUNDARA RAO , ELURU 2. THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.3,85,825/ - ON 25.09.2009. SUBSEQUENTLY, FILED THE REVISED RETURN OF INCO ME ON 26.02.1010 REVISING THE TOTAL INCOME TO RS.4,40,511/ - . THE CASE WAS SELECTED FOR SCRUTINY AND DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) OBSERVED THAT THE ASSESSEE HAD INTRODUCED THE CAPITAL OF RS.15,77,000/ - IN CASH ON 01.07.2008. THE AO CALLED TO EXPLAIN THE SOURCES FOR THE CAPITAL INTRODUCTION. THE ASSESSEE CLAIMED THE SAME TO BE UNSECURED LOANS TAKEN FROM VARIOUS PERSONS AND FILED CONFIRMATION LETTERS FROM 24 PERSONS TO THE EXTENT OF RS.4,80,000/ - , AND FAILED TO FURNISH THE CONFIRMATION LETTERS IN RESPECT OF THE REMAINING CASES, THEREFORE, THE AO TREATED THE DIFFERENCE AMOUNT OF RS.10,97,000/ - AS UNEXPLAINED CASH CREDIT AND ACCORDINGLY BROUGHT TO TAX. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND FILED WRITTEN SUBMISSIONS BEFORE HIM. THE LD.CIT(A)CONSIDERED THE WRITTEN SUBMISSIONS MADE BY THE ASSESSEE AND OBSERVED THAT THE ASSESSEE FAILED TO ESTABLISH THE SOURCE OF CASH CREDIT AMOUNTING TO RS.10,97,000/ - AND ACCORDINGLY CONFIRMED THE ADDITION MADE BY THE AO. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT RELEVANT PART OF THE ORDER OF THE LD.CIT(A) WHICH READS ASUNDER : 3 I.T.A. NO . 3 05 /VIZ/201 7 SRI MAGANTI HEMA SUNDARA RAO , ELURU 6.2. A.O. NOTICED THAT THE APPELLANT HAD SHOWN CAPITAL INTRODUCTIO N OF RS.15,77,000/ - IN CASH AS ON 01.07.2008. WHEN A.O. ASKED THE SOURCE FOR THE SAME, APPELLANT CLAIMED THAT THEY WERE OUT OF UNSECURED LOANS TAKEN FROM VARIOUS PARTIES. ON BEING SATISFIED WITH THE CONFIRMATION LETTERS PRODUCED IN RESPECT OF 24 PERSONS AM OUNTING TO RS.4,80,000/ - A.O. ALLOWED THE SAME AND CONSIDERED - BALANCE SUM OF RS.10,97,000/ - (RS.15,77 , 000 RS.4 , 80,000) FOR ADDITION TOWARDS UNEXPLAINED CREDIT AS GENUINENESS OF SUCH CREDITS WAS NOT ESTABLISHED. 6.2.1. AT THE OUTSET, THE CAPITAL INTRODU CTION OF RS.15,77,000/ - WAS AS ON 01.07.2008, I.E. DURING F.Y.2008 - 09. HON'BLE MADRAS HIGH COURT IN THE CASE OF C.PAKIRSAMY V. ACIT (MAD) 315 ITR 293 HELD AS FOLLOWS: 'REJECTION OF OPENING CAPITAL ON THE GROUND THAT THE APPELLANT FAILED TO PROVE THE SOURCE AND HOW IT GOT ACCUMULATED OVER THE YEARS IS JUSTIFIED.' 6.2.2. HENCE, AO. IS JUSTIFIED IN ADDING A SUM OF RS.10,97,000/ -- AS MUCH RELIANCE CANNOT BE PLACED ON THE CONFIRMATION LETTERS FILED IN RESPECT OF ABOVE AMOUNT FOR THE FOLLOWING REASONS: 1) CONFIRMATION LETTERS ARE ALL STEREO TYPED. 2) SOURCES OF INCOME OF CREDITORS ARE SAID TO BE MOSTLY AGRICULTURAL INCOME. 3) MOST OF THE CREDITORS HAD WHITE RATION CARDS. 4) ANNUAL INCOME OF CREDITORS AS PER THEIR RATION CARDS IN MANY CASES IS AROUND RS.10,000/ - . 5) MOST OF THEIR OCCUPATION AS PER RATION CARD IS I) COOLI E / PORTER I HAND CART PULLER II) AGRICULTURE LABOUR III) DAILY WAGE EARNER IV) HOUSE WIFE ETC. 6) CREDIT WORTHINESS AND GENUINENESS OF LOAN TRANSACTION IN RESPECT OF RS 10,97,000/ - WAS NOT PROVED EITHER BEFORE AO. OR DURING APPEAL PROCEEDINGS. 6.2.3. HENCE, I FIND NO REASON TO INTERFERE WITH ADDITION OF RS.10,97,000/ - MADE BY AO. THEREFORE, CONFIRM ADDITION OF RS.10,97,000/ - . 4 I.T.A. NO . 3 05 /VIZ/201 7 SRI MAGANTI HEMA SUNDARA RAO , ELURU 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THOUGH A SUM OF RS.15,77,000/ - WAS SHOWN AS CAPITAL INTRODUCTION AND THE SOURCE TO BE UNSECURED LOANS, THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE BEFORE THE AO OR BEFORE THE LD.CIT (A) TO EXPLAIN THE SOURCES OF THE CAPITAL. THE ASSESSEE FILED CONFIRMATIONS BEFORE THE LD.CIT(A) WHICH SHOWS THAT NONE OF THE CREDITORS ARE HAVING MEANS TO EXTEND THE LOANS TO THE ASSESSEE. ALL THE CREDITORS ARE AGRICULTURAL LABOURERS, DAILY COOLIE, PORTE R AND WH ITE RATION CARD HOLDERS AND HAVING MEANS FOR SAVINGS. THEREFORE, WE HOLD THAT THE LD.CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION AND THE SAME IS UPHELD. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 19 TH SEP TEMBER , 201 8 . S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 19 . 0 9 .2018 L.RAMA, SPS 5 I.T.A. NO . 3 05 /VIZ/201 7 SRI MAGANTI HEMA SUNDARA RAO , ELURU / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - MAGANTI HEMA SUNDARA RAO, D.NO.16B - 12 - 2 TANGELLAMUDI, NEAR VENUGOPALA SWAM TEMPLE, ELURU 2. / THE REVENUE THE INCOME TAX OFFICER, WARD - 2, ELURU 3. THE PR. COMMISSIONER OF INCOME TAX, RAJAHMUNDRY 4. THE COMMISSIONER OF INCOME - TAX(APPEALS), VIJAYAWADA 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM