The ACIT, Guntur V. M/s. Sreepathi Agros & Land Developrs Pvt..Ltd, Guntur

ITA 331/VIZ/2016

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 7282 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 30-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Residential status
• Section: 68; 69; 148

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. 331 /VIZ/ 201 6 ( / ASSESSMENT YEAR: 20 11 - 20 1 2 ) ACIT, CIRCLE - 2(1) GUNTUR VS. M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD. SUNIL TOWERS, GUJJANAGUNDLA GUNTUR [PAN : AAMCS8668M] ( / APPELLANT) ( / RESPONDENT) ./ I .T.A.NO. 163 /VIZ/201 7 ( / ASSESSMENT YEAR: 20 11 - 201 2 ) ACIT, CIRCLE - 2(1) GUNTUR VS. SRI KAVURI SRINIVASA RAO LEGALLY REPRESENTED BY GPA HOLDER SRI KAVURI PRASADA RAO C/O M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD. SUNIL TOWERS, GUJJANAGUNDLA GUNTUR [PAN : EASPK8951G ] ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI D.V.SUBBA RAO , D R / RESPONDENT BY : SHRI M MADHUSUDHAN , A R / DATE OF HEARING : 2 4 . 09. 2018 / DATE OF PRONOUNCEMENT : 28 .0 9 .2018 2 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) [CIT(A)] - 1, GUNTUR VIDE I.T.A.NO.68/CIT(A) - 1/GNT/2014 - 15DATED 23.03.2016 AND I.T.A.NO.38 /2016 - 17/CIT(A - 1)/GNT DATED 22.02.2017 FOR THE ASSESSMENT YEAR 2011 - 12. SINCE THE COMMON ISSUES ARE INVOLVED IN THESE APPEALS BOTH THE APPEALS ARE CLUBBED AND HEARD TOGETHER AND DISPOSED IN A COMMON ORDER FOR THE SAKE OF CONVENIENCE. I.T.A.NO.331/VIZ/2016 - M/S SREEPATHI AGROS & LAND DEVELOPERS PVT.LTD 2. GROUND NOS. 1 AND 5 ARE GENERAL WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 3. GROUND NO.2 IS RELATED TO THE ADDITION OF RS.98,00,000/ - RELATED TO THE ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY ON PROTECTIVE BASIS U/S 68 OF INCOME TAX ACT, 1961(HEREINAFTER CALLED AS ACT) IN THE HANDS OF THE COMPANY . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) FOUND THAT THE ASSESSEE COMPANY HAD ACCEPTED THE SHARE APPLICATION MONEY OF RS.98,00 ,000/ - . ON BEING EXAMINED, IT WAS EXPLAINED BY THE ASSESSEE 3 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR COMPANY THAT THE INVESTMENT WAS MADE BY ONE OF THE DIRECTORS, SHRI K.SRINIVASA RAO WHO IS NON RESIDENT INDIAN (NRI) AND SELF EMPLOYED IN USA. THE ASSESSEE HAS BEEN ASKED TO FURNISH THE EVIDENCE AND THE ASSESSEE HAD FURNISHED THE CONFIRMATION LETTER FROM SHRI K.SRINIVASA RAO STATING THAT HE HAD INVESTED THE SUM OF RS.98,00,000/ - TOWARDS SHARE APPLICATION MONEY IN THE COMPANY. THE AO FURTHER ASKED THE ASSESSEE TO FURNISH C ASH FLOW STATEMENT WITH MATCHING DATES FOR INVESTMENT MADE IN THE COMPANY TOWARDS SHARE APPLICATION MONEY OF SHRI K.SRINIVASA RAO AND IT WAS EXPLAINED THAT HE HAD REMITTED THE FUNDS FROM THE USA TO THE CREDIT OF HIS BANK ACCOUNT IN DHANALAKSHMI BANK, GUNT UR IN HIS NRE AND NRO ACCOUNTS AND THE SAME FUNDS WERE USED FOR THE PURPOSE OF INVESTMENT. THE AO EXAMINED THE BANK ACCOUNTS I.E. SB ACCOUNT (NRE) A/C NO.0171005000000082, WHERE HE HAD DEPOSITED A SUM OF RS.88,47,435/ - DURING THE PERIOD BETWEEN 18.01.2006 AND 10.08.2006 BY WAY OF FOREIGN INWARD REMITTANCE AND THE ENTIRE AMOUNT WAS TRANSFERRED TO DIFFERENT PERSONS THROUGH CHEQUE BY CLEARING OR BANK TRANSFER AND THERE WAS NO CASH WITHDRAWAL DURING THE ENTIRE PERIOD WHEN THE ACCOUNT WAS OPERATIVE AND THE AC COUNT WAS CLOSED ON 10.08.2006. 3.1. SIMILARLY IN SAVINGS BANK NRO A/C NO.017100400000140 OF DHANALAKSHMI BANK, GUNTUR, THERE WERE TWO MAJOR CREDITS IN 2006 - 07, FOR 4 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR SUM OF RS.69,44,000/ - AND RS.27,69,000/ - WERE CREDITED BY WAY OF TRANSFER FROM THE FOLLOWI NG TWO LOAN ACCOUNTS : LOAN AGAINST DEPOSIT NO. : 17009000000921 LOAN AGAINST DEPOSIT NO. : 17119000000990 THE SAID LOANS WERE REPAID AND THE LOAN ACCOUNTS WERE ALSO CLOSED ON 31.10.2006 AND 30.08.2011 RESPECTIVELY. THE AO ALSO FURNISHED YEAR WISE CASH DEPOSITS AND WITHDRAWALS FROM F.Y.2006 - 07 TO 2009 - 10 IN THE SAID SAVINGS BANK ACCOUNT AS UNDER : 3.2. THE AO FURTHER OBSERVED THAT SHRI K. SRINIVASA RAO H AS ALSO TAKEN ONE MORE LOAN WITH ACCOUNT NO.171557000000122 FROM DHANALAKSHMI BANK, GUNTUR FOR AN AMOUNT OF RS.50,00,000/ - WHICH WAS SANCTIONED IN DECEMBER, 2006 , TO BE REPAID IN EQUAL MONTHLY INSTALMENTS ( EMIS ) OF RS.1,23,179/ - P.M. THE ENTIRE LOAN WAS DISBURSED IN THE MONTH S OF DECEMBER AND JANUARY, 2007 AND THE EMI CONTINUED TO BE REPAID TILL SEPTEMBER 2012. ACCORDING TO THE AO, THE ENTIRE FUNDS OF RS.8 8 ,47,435/ - FIN.YEAR TOTAL CASH DEPOSITED TOTAL CASH WITHDRAWN 2006 - 07 NIL RS.33,03,501 2007 - 08 RS.27,98,000 NIL 2008 - 09 RS.26,02,000 RS.61,000 2009 - 10 NIL NIL TOTAL RS.54,00,000 RS.33,64,501 5 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR TRANSFERRED BY WAY OF FOREIGN REMITTANCE WAS WITHDRAWN AND EXHAUSTED BY 10.08.2006. THE LOANS SANCTIONED TO SHRI K. SRINIVASA RAO FOR RS.69,44,000/ - BY DHANALAKSHMI BANK WITH ACCOUNT NOS.17009000000921 AND 17119000000990 REFERRED ABOVE WA S GRANTED IN 2006 - 07 AND DEPOSITED IN THE SAVINGS BANK NRO A/C NO.017100400000140. THE ACCOUNT WAS OPERATED DURING THE PERIOD OF 2006 - 07 TO 2008 - 09 AND SUBSEQUENTLY THERE WERE NO OPERATIONS. THE LOAN AMOUNT OF RS.50 LAKHS GRANTED BY DHANA LAKSHMI BANK WI TH LOAN A/C NO.171557000000122 IN DECEMBER 2006AND NO CASH TRAIL IS MADE AVAILABLE FROM THE DATE OF DISBURSEMENT OF LOAN TO TILL DATE. HENCE, THE AO WAS OF THE VIEW THAT SHRI K.SRINIVASA RAO, DIRECTOR HAD NO RESOURCES TO MAKE THE INVESTMENT OF RS.98,00,0 00/ - AS SHARE APPLICATION MONEY AND ACCORDINGLY HELD THAT THOUGH THE IDENTITY OF THE CREDITOR WAS ESTABLISHED, THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION SINCE THE TRANSACTION WAS ADMITTEDLY IN CASH. THE AO FURTHER VIEWED THAT THE CRED IT WORTHINESS OF THE CREDITOR FOR THE SAID AMOUNT OF INVESTMENT AT PARTICULAR POINT OF TIME WAS NOT ESTABLISHED WITH DATE OF RECEIPT AND INVESTMENT . SINCE SHRI K SRINIV ASA RAO IS NOT RESIDENT OF INDIA AND HAD NOT FILED THE RETURN OF INCOME, THE AO HELD T HAT THE AMOUNT OF RS.98,00,000/ - REQUIRED TO BE INCLUDED IN THE ASSESSEES COMPANY FOR THE ASSESSMENT YEAR 2011 - 12 U/S 68 OF THE ACT 6 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR UNDER THE HEAD INCOME FROM OTHER SOURCES. HOWEVER, TAKING INTO CONSIDERATION OF THE FACT THAT RS.98,00,000/ - WAS DECLAR ED AS SHARE APPLICATION MONEY IN THE BOOKS OF THE ASSESSEE COMPANY IN THE NAME OF SHRI K SRINIVASA RAO, THE DIRECTOR WHO HAS CONFIRMED THE INVESTMENT, THE AO HELD THAT THE ADDITION REQUIRED TO BE MADE IN THE HANDS OF SHRI K.SRINIVASA RAO, DIRECTOR U/ S 69 OF THE ACT SUBSTANTIVELY AND IN THE HANDS OF THE COMPANY ON PROTECTIVE BASIS. ACCORDINGLY, THE AO MADE THE ADDITION OF RS.98,00,000/ - U/S 68 AS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES ON PROTECTIVE BASIS. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) OBSERVED THAT IN THIS CASE, THE ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY FROM SHRI K.SRINIVASA RAO, DIRECTOR. THE DIRECTOR HAS FURNISHED THE CONFIRMATION LETTERS AND ALSO FURNISHED THE C ASH FLOW STATEMENT FOR THE AMOUNTS OF REMITTANCES MADE BY HIM THE AMOUNTS TAKEN AS LOANS FROM THE BANKS AND ITS APPLICATION BEGINNING FROM 2006 TILL THE INVESTMENT IS MADE. ACCORDING TO THE ASSESSEE, THE FLOW OF FUNDS OF SHRI K.SRINIVASA RAO IS AS UNDER (EXTRACTED FROM THE CIT(A) ORDER PAGE NO.11 TO 13) 7 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR FIRSTLY, IT MAY BE SUBMITTED THAT THE AFORESAID SHARE APPLICATION MONEY WAS PAID TO THE APPELLANT - COMPANY BY THE SAID DIRECTOR, SRI K. SRINVASARAO FROM OUT OF HIS OWN SOURCES ON 01 - 04 - 2010. AND THE FLOW OF SUCH MONEY FROM SRI SRINIVASARAO TO THE ASSESSEE - COMPANY IS AS UNDER: SL.NO. PERIOD / MODE OF TRANSACTION AMOUNT TRANSMITTED REMARKS 1. CHEQUE DATED 21.08.2006 ON DHANALAKSHMI BANK 34,000 AN AMOUNT OF RS.92,88,600/ - WAS REMITTED BY SRI K.SRINIVASARAO, NRI THROUGH DHANALAKSHMI BANK (VIDE ABSTRACT / ACCOUNT FILED) FOR PURCHASE OF MACHINERY TO BE UTILIZED BY THE CONCERN, VIZ., M/S SRIPATHI SPINNERS (A NEW CONCERN MEANT FOR SPINNING ACTIVITY THEREIN) 2. CHEQUE DATED 06.09.2006 ON DHANALAKSH MI BANK 82,54,600 IN THIS COMPANY, SRI KAVURIPRASADARAO (FATHER OF SRI SRINIVASARAO), SRI K.RAVICHANDRA (BROTHER OF SRI SRINIVASARAO), SRI P.NAGESWARARAO AND SRI K.SUBBARAO ARE THE DIRECTORS 3. CHE DATED 13.09.2006 ON DHANALAKSHMI BANK TOTAL 10,00,000 92,88,600 A/C OF DHANALAKSHMI BANK IS ALSO FILED FOR CROSS VERIFICATION OF THOSE CHEQUE PAYMENTS. HOWEVER, DUE TO THE UNFAVOURABLE CIRCUMSTANCES WITH WHICH THIS COMPANY ISCONFRONTED,IT ABANDONED ITS PROPOSED INSTALLATION OF SPINNING MILL. 4. THERE UPON M/S SRIPATHI SPINNERS REQUESTED THE SUPPLIER COMPANY, VIZ., M/S LAKSHMI WORKS LTD., TO SUPPLY THE ABOVE MACHINERY TO M/S VASANTHA SPINNERS WHEREIN ONE OF THE DIRECTORS OF M/S SRIPATHI SPINNERS CO., BY NAME SRI K.RAVICHANDRA HAPPENED TO BE THE DIRECTOR OF M/S VASANTHA SPINNERS. 5. THEN AT THEIR INSTANCE, THE SUPPLIER CO., VIZ., M/S SUPER SALES LTD. (AGENT OF M/S LAKSHMI WORKS) SUPPLIED THE MACHINERY TO M/S VASANTHA SPINNERS. 6. M/S SRIPATHI SPINNERS REQUESTED THE SUPPLIER COMPANY, VIZ., M/S SUPER SALES INDIA LTD., COIMBATORE VIDE LETTER DATED 12.09.2009 TO SUPPLY THE SPINNING MACHINERY TO VASANTHA SPINNERS LTD., WORTH RS.82,54,600/ - 7. M/S VASANTHA SPINNERS LTD., ALSO MADE A REQUEST IN ITS LETTER DATED 12.09.2009 8 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR ADDRESSED TO M/S SUPER STEELS INDIA LTD., COIMBATORE TO SUPPLY THE ABOVE SPINNING MILL MACHINERY WORTH RS.82,54,600/ - TO IT IN VIEW OF ACCEPTANCE OF THE TRANSFER OF PROJECT ORDER FROM THEIR SISTER CONCERN, M/S SRIPATHI SPINNERS PVT. LTD. COPIES OF THESE LETTERS ARE ANENEXED. 8. IN VIEW OF THE ABOVE, THE ISTER CONCERN, M/S VASANTH LTD. PAID THE MACHINERY COST OF RS.82,54,600/ - TO THE SISTER CONCERN, BYNAME M/S SRIPATHI SPINNERS (P) LTD. (VIDE ACCOUNT STATEMENT NO.2 ANNEXED HEREWITH) PAYMENTS MADE BY M/S VASANTHA SPINNERS TO SRIPATHI SPINNERS. AS RECORDED ABOVE THE SUPPLIER COMPANY SUPPLY THE MACHINERY TO MIS. VASANTHA SPINNERS HAS REQUESTED BY SRIPATHI SPINNERS WHO MADE WITH THE PAYMENT FOR SUPPLY OF MACHINERY EARLIER. HENCE MIS.VASANTHA SPINNERS PAID THE FOLLOWING AMOUNTS TO SRIPATHI SPINNERS. 06.10.2009 (CHEQUE ON LAKSHMI VILAS BANK A/C ENCLOSED) 22,54,600 06.10.2009 (CHEQUE ON LAKSHMI VILAS BANK A/C ENCLOSED) 50,00,000 12.10.2009 (CHEQUE ON LAKSHMI VILAS BANK A/C ENCLOSED) 10,00,000 82,54,000 M/S. SRIPATHI SPINNERS IN TURN MADE PAYMENTS BY MEANS OF CHEQUES TO SRI K. PRASADARAO, AND THOSE CHEQUES WERE CREDITED TO THE ACCOUNT OF SRI K. PRASADARAO IN LAKSHMI WAS BANK LTD ON THE FOLLOWING DATES. 5. THE LD.CIT(A) HAS OBSERVED SHRI K.SRINIVASA RAO HAS REMITTED A SUM OF RS.34,000/ - ON 21.08.2006, RS.82,54,600/ - ON 06.09.2006 AND RS.10,00,000/ - ON 13.09.2006 AGGREGATING TO RS.92,88,600/ - WHICH WAS SL.NO. DATE OF DEPOSIT / CREDIT AMOUNT CREDITED (RS.) 1. 07.10.2009 30,00,000 2. 09.10.2009 28,00,000 3. 24.11.2009 34,00,000 TOTAL CREDITS 92,00,000 9 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR CREDITED TO HIS BANK ACCOUNT WITH DHANALAKSHMI BANK, GUNTUR AND INVESTED IN M/S SRIPATHI SPINNERS, M/ S LAKSHMI WORKS LTD., M/S VASANTHA SPINNERS AND M/S SUPER SALES LTD., FOR SUPPLY OF MACHINERY , BUSINESS PURPOSES AS EXPLAINED IN THE PRECEDING PARAGRAPHS AND ULTIMATELY RECEIVED BACK THE AMOUNTS AND CREDITED IN LAKSHMI VILAS BANK IN THE ACCOUNT OF SRIPATH I SPINNERS BY CHEQUE. M/S SRIPATHI SPINNERS MADE THE PAYMENTS BY CHEQUES TO SHRI K.PRASAD A RAO WHICH WAS CREDITED IN HIS BANK ACCOUNT IN LAKSHMI VILAS BANK / DHANALAKSHMI BANK AND WITHDRAWN BY MR.PRASADA RAO IN CASH ON VARIOUS DATES FOR REAL ESTATE BUSINESS. SINCE THE REAL ESTATE BUSINESS COULD NOT TAKE OFF, THE AMOUNT OF RS.98,00,000/ - WAS PROVIDED BY SHRI K.PRASADA RAO, FATHER OF THE ASSESSEE TO, SHRI K.SRINIVASA RAO WHICH WAS INVESTED AS SHARE APPLICATION MONEY IN THE COMPANY ON 01.04.2010. 5.1. THE LD.CIT(A) HAS ALSO OBSERVED THAT THE AO CONSIDERED THE CLOSURE OF ACCOUNTS IN DIFFERENT YEARS AND ARRIVED AT THE CONCLUSION THAT THERE WAS NO DOCUMENTARY EVIDENCE TO ESTABLISH GENUINENESS AND CREDIT WORTHINESS OF THE DIRECTOR WHO CONTRIBUTED A SUM OF RS.98,00,000/ - TOWARDS THE SHARE APPLICATION MONEY. THE AO DID NOT TAKE INTO CONSIDERATION OF THE JOINT A/C NO.017100100012656 OPERATED BY SHRI K.PRASADA RAO AND HIS TWO CHILDREN, SHRI K.RAVICHANDRA AND SHRI K.SRINIVASA RAO WHERE ALL THE SUMS WERE DEPOSI TED AND HANDLED THOUGH THE AO HAD REFERRED THE JOINT ACCOUNT 10 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR IN PARA NO.6 OF THE ASSESSMENT ORDER. THE LD.CIT(A) HELD THAT THE ASSESSEE IS A NRI, HAD NO TAXABLE INCOME IN INDIA, THUS, HE DID NOT FILE ANY RETURN OF INCOME IN I NDIA. HE IS SELF EMPLOYED IN USA AND THE MONEY WAS TRANSMITTED FROM USA THROUGH BANKING CHANNELS. THE ASSESSEE HAD FURNISHED THE CONFIRMATION LETTER AND CONFIRMED THE SUBSCRIPTION TOWARDS THE SHARE APPLICATION MONEY. THEREFORE, HELD THAT THERE IS NO REASON TO SUSPECT THE CREDIT WORTH INESS AND GENUINENESS OF THE TRANSACTION AND ACCORDINGLY DELETED THE ADDITION MADE BY THE AO U/S 68 OF THE ACT. THE LD.CIT(A) RELIED ON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF SHANKAR INDUSTRIES VS. CIT [114 ITR 689], HONBE MADRAS HIGH COURT IN THE CASE OF S.HASTIMAL VS. CIT [49 ITR 273]. 6. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IT IS THE CASE OF REVENUE THAT THE ASSESSEE HAD NOT EXPLAINED THE GENUINENESS OF TRANSACTION WITH MATCHING DATES FOR INVESTMENT IN SHARE APPLICATION MONEY. ACCORDING TO THE AO, T HE CASH FLOW SUBMITTED BY THE ASSESSEE DOES NOT SUPPORT THE INVESTMENT WITH MATCHING TIME SCHEDULE, HENCE THE AO SUSPECTED THE GENUINENESS OF THE TRANSACTION AND THE SOURCE. 11 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR THE ASSESSEES CASE IS THAT SHRI K.SRINIVASA RAO IS THE DIRECTOR OF THE COMPANY WHO IS NRI, SELF EMPLOYED IN USA AND HIS ACCUMULATED SAVINGS WERE TRANSMITTED THROUGH BANKING CHANNELS IN THE ACCOUNTS MAINTAINED WITH DHANALAKSHMI BANK, GUNTUR, WHICH WAS USED IN THEIR BUSINESS CONCERNS, M/S SRIPATHI SPINNERS, M/S LAKSHMI WORKS LTD, M/S VASAN THA SPINNERS AND ULTIMATELY RECEIVED THE AMOUNT S BACK FROM THE SAID COMPANIES AND DEPOSITED IN THE ACCOUNT OF SHRI K.PRASADA RAO, FATHER OF THE ASSESSEE IN LAKSHMI VILAS BANK. SUBSEQUENTLY SHRI PRASADA RAO HAS WITHDRAWN THE AMOUNT AND PROVIDED TO HIS SON, SHR I K.SRINIVASA RAO FOR MAKING INVESTMENT IN SHARE APPLICATION MONEY. FURTHER THE ASSESSEE ARGUED THAT THE ASSESSEE HAD TAKEN LOANS OF RS.69,44,000/ - AND RS.50 LAKHS FROM DHANALAKSHMI BANK ON DIFFERENT DATES AND ALL THESE FUNDS ARE AVAILABLE TO THE ASSESSEE TO MAKE THE INVESTMENT. THEREFORE, THE LD.AR SUBMITTED THAT SHRI K.SRINIVASA RAO IS HAVING SUFFICIENT SOURCE FOR MAKING THE INVESTMENT AND THUS THERE IS NO CASE FOR DOUBTING THE GENUINENESS OF THE TRANSACTION AND CREDIT WORTHINESS OF THE SUBSCRIBE R TO SHARE CAPITAL. 7.1. IN THE INSTANT CASE, THERE IS NO DISPUTE THAT SHRI K.SRINIVASA RAO HAS REMITTED THE FUNDS OF RS.82,54,600/ - , THROUGH BANKING CHANNELS FROM USA TO THE NRI ACCOUNTS MAINTAINED IN DHANALAKSHMI BANK, GUNTUR. SIMILARLY ANOTHER SUM O F RS.10,00,000/ - WAS TRANSMITTED ON 13.09.2006. THE SAID 12 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR AMOUNTS WERE INVESTED IN M/S SRIPATHI SPINNERS, A CONCERN MANAGED AND OPERATED BY HIS FATHER, SHRI K.PRASADA RAO, HIS BROTHER, SHRI K RAVICHANDRA AND WITH TWO OTHER DIRECTORS. THE FACT THAT THE ASS ESSEE HAD REMITTED THE AMOUNT FROM USA IN 2006 IS NOT DISPUTED. IT IS ALSO AN UNDISPUTED FACT THAT RS.82,54,600/ - WAS PAID BY M/S VASANTHA SPINNERS TO M/S SRIPATHI SPINNERS WHICH WAS CREDITED IN THE LAKSHMI VILAS BANK ON 06.10.2009 AND 12.10.2009 IN 3 DIF FERENT CHEQUES OF RS.22,54,600/ - , RS.50,00,000/ - AND RS.10,00,000/ - AGGREGATING TO RS.82,54,000/ - . IN TURN, M/S SRIPATHI SPINNERS MADE PAYMENTS TO SHRI K.PRASADA RAO FOR AN AMOUNT OF RS.92,00,000/ - AS UNDER : 7.2. SHRI K.PRASADA RAO HAD WITHDRAWN THE AMOUNTS DEPOSITED IN LAKSHMI VILAS BANK AND DHANALAKSHMI BANK AND PROVIDED THE FUNDS TO HIS SON, SHRI K.SRINIVASA RAO. THE DEPARTMENT, DURING THE APPEAL HEARING DID NOT PROVIDE ANY EVIDENCE TO CONTROVERT THE FINDING OF FACT GIVEN BY THE LD.CIT(A) THAT THE FUNDS WERE PROVIDED BY SHRI K.PRASADA RAO FROM THE WITHDRAWALS MADE FOR THE PURPOSE OF REAL ESTA TE BUSINESS. THE DEPARTMENT SL.NO. DATE OF DEPOSIT/ CREDIT AMOUNT CREDITE D (RS.) 1. 07.10.2009 30,00,000 2. 09.10.2009 28,00,000 3. 24.11.2009 34,00,000 TOTAL CREDITS 92,00,000 13 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR ALSO DID NOT BRING ANY EVIDENCE TO SHOW THAT THE FUNDS TRANSMITTED THROUGH BANKING CHANNELS FROM US AND THE LOANS RAISED IN INDIA FOR RS.69,44,000/ - AND RS.50,00,000/ - AS DISCUSSED EARLIER IN THIS ORDER AGGREGATING TO RS.1,19,44 ,000/ - APART FROM THE FUNDS TRANSFER R ED FROM US AMOUNTING TO RS.92,54,600/ - WAS INVESTED IN ANY OTHER MANNER OTHER THAN THE INVESTMENT IN THE ASSESSEE COMPANY. THEREFORE, EVIDENCES PLACED BY THE ASSESSEE ESTABLISH THAT THE SUFFICIENT SOURCES ARE AVAILABLE TO S HRI K. SRINIVASA R AO TO MAKE THE INVESTMENT OF RS.98,00,000/ - . BEFORE THE LD.CIT(A) THE ASSESSEE HAS GIVEN COMPLETE CASH TRAIL AND CASH FLOW TO EXPLAIN THE SOURCES AND THE DEPARTMENT DID NOT BRING ANY EVIDENCE TO CONTROVERT THE FINDING GIVEN BY THE LD.CIT( A ). THEREFORE, IN THE INSTANT CASE,. IDENTITY OF THE INVESTOR CREDIT WORTHINESS AND GENUINENESS IS ESTABLISHED AND WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) AND THE SAME IS UPHELD. 7.3. IN TH E ASSESSEES CASE, THE ADDITION WAS MADE ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE COMPANY AND COMPLETED THE ASSESSMENT OF SHRI K.SRINIVASA RAO ON SUBSTANTIVE BASIS. ONCE THE ASSESSMENT IS MADE ON SUBSTANTIVE BASIS ON THE CORRECT PERSON, THE PROTECTIVE ASSESSMENT HAS NO LEGS TO STAND AND REQUIRED TO BE DELETED. ON THIS REASON ALSO WE DELETE THE 14 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR ADDITION MADE BY THE AO . ACCORDINGLY THE APPEAL OF THE REVENUE ON THIS GROUND IS DISMISSED. 8. GROUND NO.3 OF THE APPEAL IS RELATED TO THE ADDITION MADE U/S 68 IN RESPECT OF RS.50,00,000/ - TOWARDS THE RENT DEPOSIT RECEIVED FROM NRI EDUCATIONA L SOCIETY. THE AO FOUND THAT AN AMOUNT OF RS.50,00,000/ - HAS BEEN DEBITED TO CASH ACCOUNT ON 01.04.2010 AND CREDITED TO RENT DEPOSIT ACCOUNT WITH A NARRATION THAT THE RENT DEPOSIT RECEIVED FROM NRI EDUCATIONAL SOCIETY(TENANT IN SHORT) THROUGH SHRI K.PRASADA RAO. THE AO OBSERVED THAT THE TENANT HAD TAKEN THE PREMIS ES OF THE ASSESSEE ON RENT AND PAYING THE MONTHLY RENT TO THE ASSESSEE @RS.5,00,000/ - P.M. , SINCE 2010. THE TENANT HAD DEPOSITED A SUM OF RS.50,00,000/ - AS RENT ADVANCE IN THE DIRECTORS PERSONAL ACCOUNT AND THE DIRECTOR HAS PAID THE ADVANCE AMOUNT IN CASH TO THE ASSESSEE COMPANY ON 01.04.2010. THE AO FOUND THAT THE TENANT HAS PAID THE ADVANCE OF RS.50,00,000/ - ON VARIOUS DATES DURING THE FINANCIAL YEAR 2008 - 09 AND 2009 - 10 THROUGH CHEQUES WHICH WERE ISSUED IN THE NAME OF SHRI K PRASADA RAO, DIRECTOR WHO H AS DEPO S ITED THE AMOUNTS IN SAVINGS BANK ACCOUNT 017100100012656 IN DHANALAKSHMI BANK. THE AO FOUND THAT ALL THE AMOUNTS RECEIVED FROM THE TENANT WERE WITHDRAWN SOON AFTER DEPOSITING IN THE ACCOUNT. AS ON 31.03.2010, THERE 15 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR WAS MEAGER BALANCE OF RS.3,184 / - IN THE SAID ACCOUNT. THEREFORE, THE AO SUSPECTED THE AVAILABILITY OF CASH AS ON THE DATE OF PAYMENT, 01.04.2010, HENCE, THE GENUINENESS OF THE TRANSACTION HELD TO BE UNEXPLAINED. ACCORDINGLY, THE AO BROUGHT THE SUM OF RS.50,00,000/ - U/S 68 OF THE ACT IN THE HANDS OF THE COMPANY. 9. ON APPEAL BEFORE THE CIT(A), THE LD.CIT(A) OBSERVED FROM THE FINANCIAL STATEMENT SUBMITTED BY SHRI K.PRASADA RAO FOR THE PERIOD ENDING 31.03.2010, THAT THERE WAS CASH BALANCE IN HAND OF RS.1,52,78,047/ - WHEN THE RENTAL DEPOSIT OF RS.50,00,000/ - WAS DEPOSITED TO THE COMPANYS ACCOUNT, THE ACCOUNT OF SHRI.K.SRINIVASA RAO WAS DEBITED AND PAID TO THE ASSESSEE COMPANY. THE ASSESSEE ALSO FURNISHED THE ACCOUNT COPY OF K.SRINIVASA RAO BEFORE THE LD.CIT(A). THE LD.CIT(A) AFTER VERIFYING THE DETAILS ACCEPTED THAT SHRI SRINIVASA RAO HAD THE CASH BALANCE OF RS.1,52,78,047/ - WHICH IS SUFFICIENT SOURCE TO MAKE THE PAYMENT OF RS.50,00,000/ - IN CASH AND ACCORDINGLY HELD THAT THE TRANSACTION IS GENUINE AND THE ASSESSEE HAS ESTABLISHED THE IDENTITY, CREDIT WORTHINESS OF THE CREDITOR, THEREFORE, DELETED THE ADDITION. 10. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE FILED APPEAL BEFORE THE TRIBUNAL. DURING THE APPEAL HEARING, THE LD.DR SUPPORTED THE 16 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR ORDER OF THE AO. PER CONTRA, THE LD.AR ARGUED THAT THERE WAS SUFFICIENT CASH BALANCE IN THE ACCOUNT OF SHRI K.SRINIVASA RAO TO FUND THE SUM OF RS.50,00,000/ - , THEREFORE, THERE IS NO CASE FOR MAKING ANY ADDITION U/S 68 OF THE ACT AND RELIED ON THE ORDER OF THE LD.CIT(A). 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE IS OWNING THE PROPERTY OF 4840 SQ.YARDS WHICH WAS LEASED OUT TO THE TENANT REPRESENTED BY SECRETARY AND CORRESPONDENT, SRI ALAPATI RAJ ENDRA PRASAD. AS PER THE AGREEMENT DATED 16.05.2009, THE TENANT HAS PAID RS.50,00,000/ - AS RENT DEPOSIT TO THE ASSESSEE COMPANY AND AS PER THE LEASE AGREEMENT, THE TEN A NT IS REQUIRED TO PAY THE LEASE RENT OF @RS.5,00,000/ - PER MONTH. THE LESSEE HAS MADE THE RENT DEPOSIT OF RS.50,00,000/ - ON VARIOUS DATES AS UNDER : DATE AMOUNT 10.02.2009 10,00,000 06.03.2009 15,00,000 24.11.2009 5,00,000 19.11.2010 5,00,000 17.02.2010 5,00,000 08.03.2010 3,00,000 15.03.2010 7,00,000 TOTAL 50,00,000 THE SAID AMOUNTS OF RS.50,00,000/ - WAS PAID THROUGH CHEQUES WHICH 17 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR WAS DEPOSITED IN SHRI K.PRASADA RAO, DIRECTORS ACCOUNT IN SAVINGS BANK A/C NO.017100100012656 WITH DHANALAKSHMI BANK, GUNTUR. THE SAID SAVINGS BANK ACCOUNT WAS HELD IN THE NAMES OF SHRI K. PRASADA RAO, SHRI K.RAVI CHANDRA AND SHRI K.SRINIVASA RAO, DIRECTORS OF THE COMPANY. SHRI K.PRASADA RAO , DIRECTOR , THOUGH DEPOSITED THE SAID SUMS IN THE BANK ACCOUNT FOUND TO HAVE WITHDRAWN THE ENTIRE AMOUNT AND THERE WAS A BALANCE OF RS.3,184/ - IN THE BANK ACCOUNT AS AT THE END OF 31.03.2010. SINCE THERE WAS NO BALANCE IN THE BANK ACCOUNT AND THE BALANCE OUTSTANDING WAS RS.3,184/ - IN THE BANK ACCOUNT, THE AO WAS OF THE OPINION THAT SHRI K.PRASADA RAO HAS NO ADEQUATE RESOURCES TO REMIT THE RENTAL DEPOSIT OF RS.50,00,000/ - TO THE ASSESSEE COMPANY, THEREFORE, MADE THE ADDITION. 11.1. IN THIS CASE, THE ASSESSEE COMPANY HAD RECEIVED THE RENTAL DEPOSIT FROM THE TENANT WHICH IS NOT IN DISPUTE. SHRI K.PRASADA RAO HAS CONFIRMED THAT THE RENTAL DEPOSITS WERE WI THDRAWN FROM HIS BANK ACCOUNT AND REMITTED THE FUNDS BACK TO THE ASSESSEE COMPANY, THIS FACT WAS ALSO ACCEPTED BY THE AO. SINCE THE SOURCE OF THE FUNDS WERE EXPLAINED AND THE IDENTITY OF THE PERSON WHO HAS REMITTED THE CASH WAS ESTABLISHED, THERE IS NO CASE FOR MAKING THE ADDITION IN THE HANDS OF THE COMPANY. EVEN OTHERWISE SHRI K.PRASADA RAO IS OPERATING JOINT ACCOUNT WITH HIS TWO CHILDREN, WHEREIN, THE RENT DEPOSITS WERE CREDITED IN HIS ACCOUNT, WHICH 18 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR WAS WITHDRAWN PERIODICALLY AND THE KEPT WITH HIM IN THEIR POSSESSION . T HIS FACT WAS SUPPORTED BY THE AVAILABILITY OF CASH BALANCE AS ON 31/03/2010. BEFORE THE LD.CIT(A), THE ASSESSEE HAD FURNISHED THE FINANCIAL STATEMENTS, AS PER WHICH THE CASH IN HAND AS ON 31.03.2010 WAS RS.1,52,78,047 AS PER THE ORDER OF THE LD.CIT(A). SHRI K.SRINIVASA RAO IS HOLDING CASH BALANCE OF RS.1,52,78,047/ - AND THE AMOUNT REMITTED FOR RENT DEPOSIT WAS ONLY RS.50,00,000/ - TO THE COMPANYS ACCOUNT DEBITING THE ACCOUNT OF SHRI K.SRINIVASA RAO, THUS THE SOURCE O F RS.50,00,000/ - STANDS EXPLAINED. SINCE THE DEPARTMENT DID NOT PLACE ANY EVIDENCE TO CONTROVERT THE FINDING GIVEN BY THE LD.CIT(A) WITH REGARD TO THE AVAILABILITY OF THE CASH BALANCE, WE HOLD THAT THE SOURCE OF THE DEPOSIT, IDENTITY AND GENUINENESS OF TH E CREDIT WAS EXPLAINED AND WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A). ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. I.T.A.163/VIZ/2017 - SHRI K. SRINIVASA RAO 12. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ADDITION OF RS.98,00,000/ - U/S 69 OF THE ACT. THE ASSESSEE MADE THE INVESTMENT OF RS.98,00,000/ - AS SHARE APPLICATION MONEY IN M/S SRIPATHI AGROS AND LAND DEVELOPERS 19 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR PVT.LTD. WHILE FRAMING TH E ASSESSMENT IN THE CASE OF M/S SRIPATHI AGROS AND LAND DEVELOPERS PVT. LTD., THE AO FOUND THAT THE ASSESSEE HAS MADE THE INVESTMENT IN SHARE APPLICATION MONEY IN THE SAID COMPANY FOR RS.98,00,000/ - FOR THE ASSESSMENT YEAR 2011 - 12. SINCE THE ASSESSEE HAS NOT FILED RETURN OF INCOME, THE AO ISSUED THE NOTICE U/S 148 AND TAKEN UP THE CASE FOR SCRUTINY AND CONSEQUENT NOTICES WERE ISSUED. THE AO MADE THE ADDITION OF RS.98,00,000/ - U/S 68 IN THE HANDS OF THE COMPANY ON PROTECTIVE MANNER AND VIEWED THAT SAID AMO UNT OF RS,98,00,000/ - REQUIRED TO BE TAXED IN THE HANDS OF THE ASSESSEE ON SUBSTANTIVE BASIS . THE AO CALLED FOR THE SOURCES OF INVESTMENTS, AND THE ASSESSEE HAS EXPLAINED THE SOURCES STATING THAT HE HAS MADE THE FOREIGN REMITTANCES THROUGH NRI ACCOUNT WIT H THE SAVINGS BANK ACCOUNT OF NRE AND NRO ACCOUNTS WITH DHANALAKSHMI BANK, GUNTUR AS UNDER : SL.NO. NAME ACCOUNT NO. DATE 1 SAVINGS BANK NRE 0171005000000082 10.08.2006 2. SAVINGS BANK NRO 017100400000140 3. LOAN AGAINST DEPOSIT NO. 17009000000921 31.10.2006 4. LOAN AGAINST DEPOSIT NO. 17119000000990 30.08.2011 5. LOAN AGAINST DEPOSIT NO. 17119000000940 30.08.2011 20 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR 13. THE AO VERIFIED THE EXPLANATION AND OBSERVED THAT THE REMITTANCES WERE MADE IN 2006 WHICH WAS ROTATED THROUGH OTHER CONCERNS SUCH AS M/S SRIPATHI SPINNERS AND VASANTHA SPINNERS AND THERE WAS NO EVIDENCE TO SHOW THE CASH FLOW FOR INVESTMENT WITH MATCHING DATES. HENCE, THE AO HELD THAT THE INVESTMENT MADE AS SHARE APPLICATION MONEY OF RS.98, 00,000/ - AS UNEXPLAINED MONEY U/S 69 OF THE ACT AND ACCORDINGLY BROUGHT TO TAX. 14. THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DELETED THE ADDITION MADE BY THE AO HOLDING THAT THE SOURCE IS EXPLAINED AND THERE IS NO CASE FOR MAKING ADDITION. 15. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 16. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON REC O RD. THE ASSESSEE IS A NRI, REMITTED THE FUNDS THROUGH BANKING CHANNELS TO TH E NRO/NRE ACCOUNTS MAINTAINED WITH DHANALAKSHMI BANK, GUNTUR AS DISCUSSED IN THIS ORDER IN THE CASE OF SRIPATHI AGROS AND LAND DEVELOPERS PVT.LTD. IN I.T.A. NO.331/VIZ/2016. THE ASSESSEE HAD REMITTED THE FUNDS TO THE EXTENT OF RS.98.54 LAKHS APART FROM TH E LOANS RAISED IN THE COUNTRY FOR AN AMOUNT OF RS.1,19,44,000/ - FROM DHANALAKSHMI BANK, GUNTUR. INITIALLY, 21 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR THE SAID AMOUNTS WERE INVESTED IN SISTER CONCERNS THROUGH HIS FATHER, SHRI K.PRASADA RAO IN M/S SRIPATHI SPINNERS PVT. LTD., M/S LAKSHMI WORKS LTD, M /S VASANTHA SPINNERS AND SUPER SALES LTD. THE FUNDS WERE ROTATED THROUGH THE ABOVE BUSINESS CONCERNS TO FACILITATE AND ACCOMMODATE THE REQUIREMENTS OF THE CONCERNS IN WHICH THE ASSESSEE AND HIS FAMILY MEMBERS HAVE SUBSTANTIAL INTEREST AND RECEIVED BACK TH E PAYMENTS THROUGH CHEQUES FROM M/S SRIPATHI SPINNERS TO THE ACCOUNT OF SHRI K.PRASADA RAO WHICH WERE DEPOSITED IN LAKSHMI VILAS BANK AND DHANALAKSHMI BANK ON VARIOUS DATES IN THE FINANCIAL YEAR 2009 - 10. THE FUNDS DEPOSITED IN THE LAKSHMI VILAS BANK AND DHANALAKSHMI BANK WERE WITHDRAWN BY SHRI K.PRASADA RAO IN CASH ON VARIOUS DATES AND PROVIDED TO HIS SON SHRI K SRINIVASA WHO HAS INVESTED IT AS SHA R E APPLICATION MONEY IN THE COMPANY . THE ENTIRE CASH FLOW WAS EXPLAINED IN THE APPEAL OF SRIPATHI AGRO AND LAND DEVELOPERS IN THIS ORDER IN ITA NO.331 /VIZ/2016 . THE FACT THAT THE ASSESSEE HAD REMITTED THE FUNDS OF RS.92.54 LAKHS FROM BANKING CHANNELS AND RAISED THE LOANS WITH DHANALAKSHMI BANK FOR AN AMOUNT OF RS.1,19,44,000/ - WAS NOT DISPUTED BY THE AO. AS OB SERVED BY THE LD.CIT(A), THERE WAS CASH BALANCE OF RS.1,52,78,047/ - AS PER THE FINANCIAL STATEMENT SUBMITTED BY SHRI K.SRINIVASA RAO AS AT THE END OF 31.03.2010 . FROM THE ABOVE, IT IS ESTABLISHED THAT SHRI K.SRINIVASA RAO IS HAVING SUFFICIENT SOURCE 22 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR TO MAKE THE INVESTMENT OF SHARE APPLICATION MONEY IN THE COMPANY. THEREFORE, THERE IS NO CASE FOR SUSPECTING THE GENUINENESS OF THE TRANSACTION HAVING ESTABLISHED THE IDENTITY, CREDIT WORTHINESS AND SOURCE OF THE CAPITAL. HENCE, THERE IS NO CASE OF MAKING THE ADDITION U/S 69, ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 17 . IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER, 2018. SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 28 . 0 9 .2018 L.RAMA, SPS 23 I.T.A. NO S.331 /VIZ/201 6 & 163/VIZ/2017 M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD., & KAVURI SRINIVASA RAO, GUNTUR / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - M/S SREEPATHI AGROS & LAND DEVELOPERS PVT. LTD. SUNIL TOWERS, GUJJANAGUNDLA, GUNTUR 2. / THE REVENUE ACIT, CIRCLE - 2(1) , GUNTUR 3. THE PR. COMMISSIONER OF INCOME TAX, GUNTUR 4. THE COMMISSIONER OF INCOME - TAX (APPEALS) - 1 , GUNTUR 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM