Sri KS Sai Babu., Kakinada V. The ITO, Ward-2.,

ITA 346/VIZ/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2844 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 31-03-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 16-06-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J SIRI KUMAR
• Keywords: Unexplained cash credit; Gift
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.346/VIZAG/2008 ASSESSMENT YEAR : 2005-06 K.S. SAI BABU KAKINADA ITO WARD-2 KAKINADA (APPELLANT) VS. (RESPONDENT) PAN NO.AERPK 0265J APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI J. SIRI KUMAR, DR ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) ON FOLLOWING GROUNDS: 1. THE LD. CIT(A) IS NOT CORRECT IN DISMISSING THE APP EAL OF THE ASSESSEE 2. THE LD. CIT(A) SHOULD HAVE ALLOWED THE APPEAL SINCE THE ASSESSEE HAD PROVED THE GENUINENESS OF THE TRANSACTION AND T HE CREDITOR 3. THE LD. CIT(A) SHOULD HAVE SEEN THAT THE TRANSACTIO NS ARE MADE BY WAY OF CHEQUES AND THERE IS NO REASON FOR THE ASSES SING OFFICER TO BELIEVE THAT THE CREDIT IS NOT GENUINE. 4. THE LD. CIT(A) SHOULD HAVE APPRECIATED THE FACT THA T IF AT ALL AN ADDITION HAS TO BE MADE, IT SHOULD BE CONSIDERED IN THE HANDS OF THE CREDITOR AND NOT IN THE HANDS OF THE ASSESSEE. 5. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 2. THOUGH THE ASSESSEE HAS RAISED VARIOUS GROUNDS, BUT THEY ALL RELATE TO AN ADDITION OF RS.28,93,477/- AS UNEXPLAINED CREDIT U/S 68 OF THE I.T. ACT. 3. BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURIN G THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ENGAGED IN THE BUSINE SS OF TRADING IN ELECTRONIC GOODS AND HE HAD REPAID THE UNSECURED LO ANS WITH INTEREST TO 15 PARTIES AGGREGATING TO RS.28,93,477/-, THE SOURCE O F WHICH HAS BEEN ATTRIBUTED TO A LOAN TAKEN OF AN IDENTICAL AMOUNT F ROM HIS WIFE SMT. KODURI SRIVATSALA. WHEN THE ASSESSEE WAS REQUIRED TO ESTA BLISH THE GENUINENESS OF 2 THE CREDIT IN THE NAME OF HIS WIFE, THE ASSESSEE HA S FILED A CONFIRMATION LETTER, WHEREIN, IT WAS STATED, INTERALIA, THAT AT THE TIME OF HER MARRIAGE WITH THE ASSESSEE IN THE YEAR 1999, HER FATHER HAD GIFTED 23 .44 ACRES OF AGRICULTURAL LAND AT LODIDALANKA VILLAGE, KALIDINDI MANDAL, KRIS HNA DISTRICT, AS STRIDHAN, AND SUCH LAND WAS SUBSEQUENTLY SOLD FOR RS.29 LAKHS , FROM, OUT OF WHICH THE LOAN TO HER HUSBAND WAS ADVANCED. WHEN REQUIRED TO ADDUCE DOCUMENTARY EVIDENCE IN SUPPORT OF SUCH CLAIM, THE ASSESSEE FIL ED (A) COPY OF PATTADAR PASS BOOK IN THE NAME OF SMT. K. VATSALA ISSUED BY TAHSILDAR, KALIDINDI MANDALAM DATED (NOT CLEAR) BEARING NO.330007, (B) P HOTOCOPY OF A LETTER DATED 2.12.2007 CAPTIONED AS DHRUVEEKARANA UTTARAM FROM ONE SHRI CHITTURI SUBBA RAO, AN EX-MUNSIFF (UPTO 1985) OF LO DIDALANKA VILLAGE. FOR THE PURPOSE OF VERIFYING THE GENUINENESS OF THE PURPORT ED EVIDENCES FURNISHED ON BEHALF OF THE CREDITOR, THE ASSESSING OFFICER CAUSE D INQUIRIES THROUGH THE WARD INSPECTOR OF INCOME TAX WITH THE SUB-REGISTRAR, KAIKA LURU, TAHSILDAR OFFICE, KALIDINDI, AND PANCHAYAT OFFICE, LODIDALANKA VILLAG E ETC. IT WAS ASCERTAINED FROM THE O/O THE SUB-REGISTRAR, KAIKALURU, THAT NEI THER THE NAMES OF THE ALLEGED CREDITOR SMT. KODURI SRIVATSALA AND ANY OF HER PARENTAL FAMILY MEMBERS, BEING HER FATHER, MOTHER, TWO BROTHERS AS WELL AS THE ALLEGED LESSEE OF THE SO CALLED AGRICULTURAL LANDS SITUATED AT KALIDINDI VIDE THE ALLEGED SURVEY NUMBERS MENTIONED IN THE PATTADAR PASS BOOKS FIGURED IN ANY IMMOVABLE PROPERTY TRANSACTION NOR THE SAID LANDS S UBJECTED TO TRANSFER AT ANY POINT OF TIME BETWEEN 1.4.2004 TO 31.3.2005. T HE SUB-REGISTRAR, KAIKALURU ISSUED A CERTIFICATE CONFIRMING SUCH FIND ING. ENQUIRIES IN THE O/O THE TAHSILDAR, KALIDINDI MANDALAM, REVEALED THAT TH E PATTADAR PASS BOOK PRODUCED ON BEHALF OF THE CREDITOR WAS A FABRICATED AND BOGUS ONE, FOR THE REASONS THAT THE O/O THE TAHSILDAR, KALIDINDI MANDA LAM WAS CREATED ONLY IN THE MONTH OF FEBRUARY, 2007, WHEREAS THE FABRICATED PATTADAR PASS BOOK BEARING RUBBER STAMP AS TAHSILDAR, KALIDINDI MANDA LM, KRISHNA DISTRICT APPEARS TO HAVE BEEN ISSUED MUCH EARLIER TO THE COM ING INTO EXISTENCE OF O/O THE TAHSILDAR IN THE MONTH OF FEBRUARY, 2007. THE ASSESSING OFFICER ALSO POINTED OUT ANOTHER SUSPICIOUS FEATURE, IN AS MUCH AS, THE LAND STATED TO HAVE BEEN RECEIVED AS STRIDHAN WAS CLAIMED TO HAVE BEEN SOLD DURING THE FINANCIAL YEAR 2004-05 ITSELF, AND IF THAT IS TRUE, THERE WAS NO SCOPE FOR GRANTING A PATTADAR PASS BOOK IN THE NAME OF THE AL LEGED CREDITOR, AND FURTHER 3 THAT IT WAS A PRACTICE TO PRODUCE A COPY OF PATTADA R PASS BOOK BEFORE THE SUB-REGISTRAR AT THE TIME OF TRANSFER OF THE LANDS, AND, IF THE CLAIM THAT THE ASSESSEE SOLD AWAY THE AGRICULTURAL LANDS WAS TRUE, THEN, THE PATTADAR PASS BOOK WOULD HAVE BEEN SURRENDERED BEFORE THE SUB-REG ISTRAR AND WOULD NOT HAVE BEEN AVAILABLE IN THE HANDS OF THE CREDITOR. LIKEWISE, INQUIRIES REGARDING THE VERACITY OF A LETTER DATED 2.12.2007 PURPORTEDLY WRITTEN BY ONE SHRI CHITTURI SUBBA RAO CONFIRMING THAT THE ALLEGED CREDITOR SMT. KODURI SRIVATSALA HAD RECEIVED 23.44 ACRES OF AGRICULTURAL LANDS FROM HER FATHER AS PASUPU KUMKUMA DURING THE TIME OF HER MARRIAGE AL SO TURNED OUT TO BE A CONCOCTED ONE, ALTHOUGH ONE SHRI CHITTURI SUBBA RAO DID HOLD THE POST OF MUNSIFF OF LODIDALANKA VILLAGE UPTO 1985. ENQUIRIE S WITH ONE SHRI CHITTURI MOHANA VENKATA KRISHNA PRASAD ALIAS BUJJI, WHO HAPP ENS TO BE THE GRANDSON OF SHRI CHITTURI SUBBA RAO, EX-MUNSIFF, STATED THAT HIS GRANDFATHER EXPIRED IN THE YEAR 1999 ITSELF, AND, THEREFORE, COULD NOT HAV E ISSUED A LETTER DATED 2.12.2007. THE SAID SHRI CHITTURI MOHANA VENKATA K RISHNA PRASAD ALIAS BUJJI FURNISHED THE WRITTEN SUBMISSION CONFIRMING THE DEA TH OF HIS GRANDFATHER IN THE YEAR 1999. SINCE IT WAS PROVED BEYOND REASONAB LE DOUBT THAT THE ALLEGED CREDITOR HAD FABRICATED THE PATTADAR PASS BOOK TO M ISLEAD THE TAX AUTHORITIES INTO BELIEVING THAT SHE HAD THE CAPACITY TO LEND TO THE ASSESSEE A SUM OF RS.28,93,477, THE ASSESSING OFFICER CONFRONTED THE ASSESSEE WITH THE OUTCOME OF INQUIRIES COMPLETELY DISPROVING THE ALLEGED CRED ITORS CLAIM, AND SHOW- CAUSED VIDE HIS LETTER DATED 19.12.2007 TO EXPLAIN AS TO WHY THE CREDIT INTRODUCED IN THE NAME OF HIS WIFE SMT. KODURI SRIV ATSALA BE NOT TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. IN RESP ONSE, THE ASSESSEE MERELY PRODUCED THE BOOKS OF ACCOUNTS, BUT DID NOT PRODUCE ANY ORAL OR WRITTEN EXPLANATION WITH REGARD TO THE SHOW-CAUSE NOTICE IS SUED ON 19.12.2007. THEREAFTER, THE ASSESSING OFFICER CONCLUDED THAT AL THOUGH THE ASSESSEE COULD PROVE THE IDENTITY OF THE ALLEGED CREDITOR, HE HAD, HOWEVER, PATHETICALLY FAILED TO PROVE THE CREDITWORTHINESS OF THE ALLEGED CREDIT OR AND THE GENUINENESS OF THE TRANSACTION. ACCORDINGLY, THE ASSESSING OFFICE R ADDED THE CREDIT AMOUNT OF RS.28,93,477 STANDING IN THE NAME OF SMT. KODURI SRIVATSALA TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. 4 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A) WITH THE SUBMISSION THAT U/S 68 IT IS IMPERATIVE ON THE ASSE SSEE TO PROVE PRIMA FACIE TRANSACTIONS WHICH RESULTS IN CASH CREDITS IN HIS B OOKS OF ACCOUNTS AND THAT SUCH PROOF INCLUDES OF IDENTITY OF THE CREDITOR, TH E CAPACITY OF SUCH CREDITOR TO ADVANCE MONEY AND LASTLY THE GENUINENESS OF THE TRA NSACTIONS AND ONCE THE AFORESAID 3 REQUIREMENTS ARE SATISFACTORILY MET BY THE ASSESSEE THEN THE ONUS SHIFTS TO THE DEPARTMENT. SINCE THE ASSESSEE HAS D ISCHARGED ITS ONUS WHICH PRIMARILY LAY UPON IT, THE REVENUE IS NOT JUSTIFIED IN MAKING AN ADDITION U/S 68 OF THE ACT. 5. THE CIT(A) RE-EXAMINED THE ISSUE BUT WAS NOT CON VINCED WITH THE EXPLANATIONS OF THE ASSESSEES AND HE CONFIRMED THE ADDITIONS. 6. NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND REITERATED ITS CONTENTIONS. THE LD. D.R. ON THE OT HER HAND HAS PLACED A HEAVY RELIANCE UPON THE ORDER OF THE CIT(A). 7. WE HAVE CAREFULLY EXAMINED THE ORDER OF THE LOWE R AUTHORITIES AFTER GIVING A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBM ISSIONS AND THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEES AND WE FIND THAT THE ASSESSING OFFICER HAS MADE A NECESSARY INVESTIGATION WITH REGARD TO THE O WNERSHIP OF THE AGRICULTURAL LAND AS HE HAS BROUGHT THE EVIDENCE ON RECORD TO PROVE THAT ASSESSEE HAS ARRANGED THE FABRICATED DOCUMENTS TO J USTIFY THE LOAN RECEIVED FROM HIS WIFE. HAVING CAREFULLY EXAMINED THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT ASSESSEE HAS SIMPLY PROVED THE IDENTITY O F THE ALLEGED CREDITORS BUT COULD NOT PROVE THE CREDITWORTHINESS OF THE ALLEGED CREDITORS AND GENUINENESS OF THE TRANSACTIONS. MERELY BECAUSE THE AMOUNTS AG GREGATE TO RS.28,93,477/- HAVE BEEN RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUES, DOES NOT BY ITSELF ESTABLISHES THE GENUINENESS OF SUCH T RANSACTIONS PARTICULARLY IN THE LIGHT OF THE FACT THAT ASSESSEE HAS MISERABLY F AILED TO PROVE THE CREDITWORTHINESS OF THE ALLEGED CREDITOR. RATHER T HE ASSESSING OFFICER UPON UNDERTAKING THE INQUIRIES AS SYSTEMATICALLY HAS DIS PROVED AND DEMOLISHED THE DOCUMENTARY EVIDENCE AND THE CLAIM OF THE ALLEGED C REDITOR THAT SHE HAD FUNDED THE LOAN ADVANCED TO THE ASSESSEE FROM OUT O F SALE PROCEEDS OF 5 AGRICULTURAL LAND WHEN NO SUCH AGRICULTURAL LAND WE RE EVER SOLD. WE HAVE CAREFULLY EXAMINED THE ORDER OF THE CIT(A) AND WE F IND THAT CIT(A) THOROUGHLY EXAMINED THE IMPUGNED ISSUE AND WE FIND NO INFIRMITY IN HIS ORDER. WE THEREFORE, CONFIRM THE ORDER OF THE CIT( A). 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON 8.9.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 8 TH SEPTEMBER, 2010 COPY TO 1 K.S. SAIBABU, PROP: SEETHA RAMA ELECTRONICS, 20-1 -37, MAIN ROAD, KAKINADA 2 ITO, WARD-2, KAKINADA 3 THE CIT, RAJAHMUNDRY 4 THE CIT(A), RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM