Dhanekula Laksmiah, Vijayawada V. The ITO, Vijayawada

ITA 360/VIZ/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6566 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 29-07-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Peak credit; Corroborative evidences
• Section: 40A(3); 54F; 133A; 69; 148; 12; 11

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 84 /VIZ/201 6 ( / ASSESSMENT YEAR:20 0 6 - 0 7 ) ./ I.T.A.NO. 3 85 /VIZ/201 6 ( / ASSESSMENT YEAR:20 0 7 - 0 8 ) ./ I.T.A.NO. 38 6 /VIZ/201 6 ( / ASSESSMENT YEAR:20 0 8 - 0 9 ) ./ I.T.A.NO. 3 87 /VIZ/201 6 ( / ASSESSMENT YEAR:20 0 9 - 1 0 ) THE INCOME TAX OFFICER WARD - 1(3 ) VI JAYAWADA VS. SRI DHANEKULA LAKSHMAIAH S/O DHANEKULA ANJAIAH RAO, D.NO.6 - 67, DEVINENIVARI STREET, NEAR POST OFFICE GOLLAPUDI, VIJAYAWADA [PAN : A UKKPD7244B ] ( / APPELLANT) ( / RESPONDENT) ./ I.T.A.NO. 35 9 /VIZ/201 6 ( / ASSESSMENT YEAR:20 0 6 - 0 7 ) ./ I.T.A.NO. 3 60 /VIZ/201 6 ( / ASSESSMENT YEAR:20 08 - 09 ) ./ I.T.A.NO. 36 1 /VIZ/201 6 ( / ASSESSMENT YEAR:20 09 - 10 ) SRI DHANEKULA LAKSHMAIAH S/O DHANEKULA ANJAIAH RAO, D.NO.6 - 67, DEVINENIVARI STREET, NEAR POST OFFICE GOLLAPUDI, VIJAYAWADA [PAN : A UKKPD7244B ] VS. THE INCOME TAX OFFICER WARD - 1 ( 2 ) VI JAYAWADA ( / APPELLANT) ( / RESPONDENT) / REVENUE BY / ASSESSEE BY : : SHRI M. K . SETHI , DR SHRI C SUBRA H MANYAM, AR / DATE OF HEARING : 05.10.2017 / DATE OF PRONOUNCEMENT : 27 .10 .2017 2 ITA NO S . 35 9 - 36 1 /VIZ/201 6 AND ITA NOS.3 84 - 3 87 /VIZ/2016 SRI DHANEKULA LAKSHMAIAH , V IJAYAWADA / O R D E R PER BENCH: ITA NOS.384 - 387/VIZ/2016 , A.YS.1006 - 07 TO 2009 - 10 1. THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)], VIJAYAWADA VIDE ITA NOS.91, 92, 93 & 94/CIT(A)/VJA/2014 - 15 DATED 31 . 03 .2016 FOR THE A.YS. 2006 - 07 TO 2009 - 10 . SINCE, C OMMON GROUNDS ARE INVOLVED, ALL THE APPEALS ARE CLUBBED HEARD TOGETHER AND DISPOSED OFF IN COMMON ORDER AS UNDER. 2. COMMON GROUNDS OF APPEAL IN ALL THE ASSESSMENTS RAISED BY REVENUE ARE RELATED TO THE ADDITION MADE BY THE ASSESSING OFFICER TOWARDS UNEXPLAINED CASH DEPOSITS . THE ASSESSEE IS AN INDIVIDUAL. SURVEY U/S 133A WAS CONDUCTED IN THE CASE OF M/S VASUDHA SHELTERS, LIC COLONY, GOLLAPUDI, VIJAYAWADA ON 23.02.2010 AND DURING THE COURSE OF SURVEY PROCEEDINGS, IT WAS NOTICED THAT M/S VASUDHA SHELT ERS HAS ENTERED INTO DEVELOPMENT AGREEMENT DATED 16.06.2008 WITH SHRI DHANEKULA LAKSHMAIAH AND OTHERS (LAND OWNERS) FOR CONSTRUCTION OF APARTMENTS AT GOLLAPUDI. SIMULTANEOUSLY, SURVEY U/S 133A WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE ON 23.02.2010 AN D DURING THE COURSE OF SURVEY, CERTAIN LOOSE SHEETS / 3 ITA NO S . 35 9 - 36 1 /VIZ/201 6 AND ITA NOS.3 84 - 3 87 /VIZ/2016 SRI DHANEKULA LAKSHMAIAH , V IJAYAWADA DOCUMENTS / BANK STATEMENTS WERE FOUND WHICH WERE IMPOUNDED U.S 133A(3)(IA) OF THE INCOME TAX ACT, 1961. AS THE ASSESSEE HAS NOT FILED THE RETURN S OF INCOME, N OTICE U/S 148 WAS ISSUED ON 15.06.2012. T HE ASSESSEE IS HAVING SAVINGS BANK ACCOUNT IN STATE BANK OF INDIA, GOLLAPUDI BEARING A/C NO.10103401208 AND ANOTHER ACCOUNT IN M/S SWAR N A COOPERATIVE URBAN BANK LTD ., A/C NO.189 . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSES SEE HAS MADE THE CASH DEPOSITS AS UNDER : ASST. YEAR TOTAL CASH DEPOSITS (RS.) 2006 - 07 28,76,000 2007 - 08 13,85,000 2008 - 09 18,50,000 2009 - 10 61,60,000 2.1. THE ASSESSING OFFICER CALLED FOR THE EXPLANATION OF THE ASSESSEE AS TO WHY THE CASH DEPOSITS SHOULD NOT BE TREATED AS UNEXPLAINED INCOME. THE ASSESSEE COULD NOT OFFER SATISFACTORY EXPLANATION. THE ASSESSEE STATED IN HIS EXPLANATION BEFORE THE ASSESSING O FFICER THAT THE SOURCES OF THE CASH WAS BUSINESS TURNOVER AND THE ASSESSEE WAS NOT MAINTAINING THE BOOKS OF ACCOUNTS AND REQUESTED THE ASSESSING OFFICER TO ESTIMATE THE INCOME @ 5% TO 8% OF THE TURNOVER AND COMPLETE THE ASSESSMENT. NOT BEING CONVINCED 4 ITA NO S . 35 9 - 36 1 /VIZ/201 6 AND ITA NOS.3 84 - 3 87 /VIZ/2016 SRI DHANEKULA LAKSHMAIAH , V IJAYAWADA WIT H THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT HOLDING THAT THE CASH DEPOSITS MADE IN STATE BANK OF INDIA AS WELL AS SWAR N A COOPERATIVE URBAN BANK LTD. AS UNEXPLAINED AND BROUGHT TO TAX THE UNEXPLAINED CASH DEPOSITS AS UN DER : ASST. YEAR TOTAL CASH DEPOSITS (RS.) 2006 - 07 28,76,000 2007 - 08 13,85,000 2008 - 09 18,50,000 2009 - 10 61,60,000 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) AGREED WITH THE ASSESSING OFFICERS OBSERVATION THAT THE ASSESSEE WAS UNABLE TO FURNISH (A) SINCE WHEN HE IS IN SUCH THE REAL ESTATE BUSINESS ( B) WHAT WAS THE EXTENT OF INITIAL CAPITAL AND SOURCE THEREOF (C) NAMES AND ADDRESSES OF PARTIES FROM WHOM ADVANCES WERE RECEIVED (D) NAMES AND ADDRESSES OF PARTIES TO WHOM ADVANCES WERE RETURNED (E) DATE OF RECEIPT AND RETURN OF SUCH ADVANCES (F) DOCUMENTA RY EVIDENCE LIKE AGREEMENT FOR SUCH PURPORTED LAND TRANSACTIONS (G) OPENING CASH BALANCE AVAILABLE FINANCIAL YEAR WISE ETC. HOWEVER, T HE LD.CIT(A) APPLIED THE PEAK CREDIT THEORY AND CONFIRMED THE ADDITION OF 5 ITA NO S . 35 9 - 36 1 /VIZ/201 6 AND ITA NOS.3 84 - 3 87 /VIZ/2016 SRI DHANEKULA LAKSHMAIAH , V IJAYAWADA RS.8,00,000/ - FOR A.Y.2006 - 07, RS.73,000/ - FOR THE A.Y.2007 - 08, RS.6,49,000/ - FOR THE A.Y.2008 - 09 AND RS.12,20,000/ - FOR THE A.Y.2009 - 10. AGGRIEVED BY THE ORDER OF THE LD.CIT(A) THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 4 . APPEARING FOR THE REVENUE, LD.DR ARGUED THAT THE ASSESSEE HAS MADE HUGE CASH DEPOSITS IN THE BANK ACCOUNT AND THE LD.CIT(A) CONFIRMED THE ADDITION OF RS.8,00,000/ - FOR A.Y.2006 - 07, RS.73,000/ - FOR THE A.Y.2007 - 08, RS.6,49,000/ - FOR THE A.Y.2008 - 09 AND RS.1 2,20,000/ - FOR THE A.Y.2009 - 10 AND DELETED THE REMAINING ADDITION S EVEN THOUGH THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE. THOUGH THE ASSESSEE HAS MADE HUGE CASH DEPOSITS FOR WHICH THE SOURCE WAS NOT EXPLAINED, THE CIT(A) DELETED THE ADDITION APPLYING P EAK CREDIT THEORY WHICH IS NOT CORRECT. THE ASSESSING OFFICER HAS EXAMINED THE SUBMISSIONS OF THE ASSESSEE AND SINCE THE ASSESSEE FAILED TO EXPLAIN THE NATURE AND SOURCE OF EACH RECEIPT, THE ASSESSING OFFICER MADE THE ADDITION U/S 69 OF THE I.T.ACT. LD.D R ARGUED THAT CLOSE SCRUTINY OF THE BANK ACCOUNT OF THE ASSESSEE REVEALS THAT THE ASSESSEE HAS WITHDRAWN THE AMOUNTS AND AFTER SUFFICIENT GAP OF TIME MADE THE DEPOSITS DURING THE INTERVENING PERIOD, THE ASSESSEE HAS WITHDRAWN THE SMALL AMOUNTS ALSO WHICH I NDICATE THAT THERE WAS NO CASH AVAILABLE WITH THE ASSESSEE OUT OF THE 6 ITA NO S . 35 9 - 36 1 /VIZ/201 6 AND ITA NOS.3 84 - 3 87 /VIZ/2016 SRI DHANEKULA LAKSHMAIAH , V IJAYAWADA WITHDRAWALS TO MAKE REDEPOSIT. THE CONDUCT OF ACCOUNT CLEARLY SHOWS THAT THE ASSESSEE HAS MADE USE OF THE WITHDRAWN AMOUNT AND THEN DEPOSITED THE CASH FOR WHICH SOURCE WAS NOT EXPLAINED . THE CONDUCT OF ACCOUNT SHOWS THAT THE ASSESSEE MIGHT HAVE SPENT THE WITHDRAWN AMOUNT FOR UNACCOUNTED INVESTMENTS. THOUGH THE ASSESSEE HAS CLAIMED THAT THE ASSESSEE WAS IN THE BUSINESS, THE NATURE OF BUSINESS WAS NOT EXPLAINED BY THE ASSESSEE AND NEVER FI LED THE RETURNS OF INCOME. THE RETURNS OF INCOME WERE FILED ONLY AFTER THE ISSUE OF NOTICES U/S 148. THE HUGE CREDITS AND DEBITS OF THE CASH DEPOSITS SHOWED THAT THE ASSESSEE IS IN THE UNKNOWN BUSINESS. THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO SH OW THAT IT HAS CARRIED ON BUSINESS. THOUGH THE LD.CIT(A) APPLIED PEAK CREDIT THEORY, THE LD.CIT(A) HAS NOT GIVEN ANY OPPORTUNITY TO THE ASSESSING OFFICER AT LEAST TO VERIFY THE TRUE NATURE OF THE RECEIPTS BEFORE APPLYING THE PEAK CREDIT THEORY. FURTHER, THE ASSESSEE HIMSELF HAS ADMITTED DURING THE ASSESSMENT PROCEEDINGS TO ESTIMATE THE INCOME @ 5% TO 8% ON THE RECEIPTS WHICH THE LD.CIT(A) DID NOT CONSIDER DURING THE APPELLATE PROCEEDINGS. THEREFORE, LD.DR ARGUED THAT THE AGGREGATE OF DEPOSITS SHOULD BE C ONFIRMED AND THE CIT(A)S ORDER IS TO BE SET ASIDE AND THE ASSESSING OFFICERS ORDER TO BE RESTORED. 7 ITA NO S . 35 9 - 36 1 /VIZ/201 6 AND ITA NOS.3 84 - 3 87 /VIZ/2016 SRI DHANEKULA LAKSHMAIAH , V IJAYAWADA 5 . ON THE OTHER HAND, LD.AR ARGUED THAT THE ASSESSEE IS IN REAL ESTATE ACTIVITY EARNING COMMISSION INCOME TOWARDS SERVICES RENDERED TO THE CUSTOMERS. T HE ASSESSEE HAS RECEIVED THE ADVANCE FOR PURCHASE OF LANDED PROPERTY ON BEHALF OF ITS CUSTOMERS WHICH WAS PAID TO THE VENDORS. THE CREDITS AND DEBITS IN THE SAVINGS BANK ACCOUNT RELATED TO THE REAL ESTATE BUSINESS. THEREFORE, LD.AR ARGUED THAT NO PRUDENT PERSON WILL MAKE HUGE WITHDRAWALS AND DEPOSITS WITHIN THE SHORT PERIOD UNLESS HE IS ENGAGED IN THE BUSINESS ACTIVITY. THEREFORE, LD.AR ARGUED THAT THE LD.CIT(A) HAS RIGHTLY APPLIED THE PEAK CREDIT THEORY WHICH IS IN CONSONANCE WITH THE JUDICIAL PRECEDENT AND REQUIRED TO BE UPHELD. 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR, THE ASSESSEE HAS MADE THE CASH DEPOSITS IN THE SAVINGS BANK ACCOUNTS AS PER THE DET AILS GIVEN BELOW ASST. YEAR TOTAL CASH DEPOSITS (RS.) 2006 - 07 28,76,000 2007 - 08 13,85,000 2008 - 09 18,50,000 2009 - 10 61,60,000 8 ITA NO S . 35 9 - 36 1 /VIZ/201 6 AND ITA NOS.3 84 - 3 87 /VIZ/2016 SRI DHANEKULA LAKSHMAIAH , V IJAYAWADA 7 . THE ASSESSEE ALSO HAS MADE CASH WITHDRAWALS OUT OF THE ABOVE DEPOSITS. HOWEVER, THE ASSESSEE HAS NOT FURNISHED THE RETURN OF INCOME AND THE DETAILS OF BUSINESS CARRIED ON IN THE EARLIER YEARS AND NO EVIDENCE WAS FURNISHED BY THE ASSESSEE WITH REGARD TO THE BUSINESS CARRIED ON BY THE ASSESSEE. DURING THE SURVEY PROCEEDINGS ALSO, THE DEPARTMENT COULD NOT L AY THEIR HANDS ON THE BUSINESS ACTIVITY CARRIED ON BY THE ASSESSEE. IN THESE FACTS AND CIRCUMSTANCES, THE TRUE AND CORRECT NATURE OF THE RECEIPTS WAS NOT ASCERTAINED. THOUGH THE ASSESSEE STATED THAT IT HAD RECEIVED THE ADVANCES FROM THE BUYERS OF THE LAN DS AND PAID TO THE VENDORS, THE NAMES AND ADDRESSES OF THE BUYERS AND VENDORS WAS NOT FURNISHED BY THE ASSESSEE. IN THE ABSENCE OF NON FURNISHING THE NAMES AND ADDRESSES OF THE BUYERS AND VENDORS, THE ASSESSEE HAS BECOME AN INSTRUMENT TO EVADE THE INCOME TAX BY THE BUYERS AND VENDORS OF THE PROPERTIES. IT IS A KNOWN FACT THAT LOT OF UNACCOUNTED MONEY WAS PUMPED IN TO REAL ESTATE BUSINESS. THOUGH THE ASSESSEES SUBMISSION THAT THE ASSESSEE HAD RECEIVED THE AMOUNTS FROM THE BUYERS AND VENDORS IS ACCEPTED, I T IS NOT CLEAR WHETHER THE ASSESSEE HAS PURCHASED THE PROPERTY AND SOLD OR MERELY ACTED AS AN AGENT OR THE ASSESSEE HAS CARRIED ON HAWALA ACTIVITY FOR TRANSFER OF FUNDS FROM ONE HAND TO ANOTHER. IF IT IS ACCEPTED THAT THE ASSESSEE IS CARRYING ON BUSINESS T HE APPLICABILITY OF THE PROVISIONS OF SECTION 40A(3) AND 40(A)(IA) IS REQUIRED 9 ITA NO S . 35 9 - 36 1 /VIZ/201 6 AND ITA NOS.3 84 - 3 87 /VIZ/2016 SRI DHANEKULA LAKSHMAIAH , V IJAYAWADA TO BE EXAMINED WHICH WAS NOT EXAMINED EITHER BY THE ASSESSING OFFICER OR BY THE LD.CIT(A) . THOUGH THE ASSESSING OFFICER MADE THE ADDITION OF CASH DEPOSITS IN THE BANK ACCOUNT WHILE APPLYING THE PEAK CREDIT THEORY, THE LD.CIT(A) HAS NEITHER CONDUCTED THE NECESSARY ENQUIRY NOR GIVEN ANY OPPORTUNITY TO THE ASSESSING OFFICER TO FIND OUT THE TRUE AND CORRECT NATURE OF THE RECEIPTS. THE CONDUCT OF THE ACCOUNT SHOWS THAT WITHDRAWALS WERE MADE AFTER SUBSTANTIAL GAP OF CREDIT AND IN BETWEEN THE ASSESSEE HAS WITHDRAWN SMALL AMOUNTS ALSO ON CERTAIN OCCASIONS. THE ACCOUNT SHOWS THAT THE AMOUNTS WITHDRAWN ARE NOT AVAILABLE TO THE ASSESSEE FOR REDEPOSIT. THE ASSESSEE HAS WITHDRAWN THE AMOU NTS IN QUICK SUCCESSION WHICH SHOWS THAT THE AMOUNTS ARE NOT AVAILABLE TO THE ASSESSEE FOR MAKING ANY DEPOSITS OF THE SAME. THEREFORE, IT IS NECESSARY TO ASCERTAIN THE TRUE NATURE OF THE RECEIPTS, NAMES OF THE PERSONS FROM WHOM THE ADVANCES WERE RECEIVED AND NAMES AND ADDRESSES OF THE PERSONS TO WHOM THE ADVANCES WERE PAID. IN THE ABSENCE OF ANY SUCH INFORMATION, THE ENTIRE DEPOSITS REQUIRED TO BE BROUGHT TO TAX SINCE THE ASSESSEE NEITHER ESTABLISHED THAT IT HAS CARRIED ON THE BUSINESS NOR ESTABLISHED THE SOURCE OF THE CREDIT. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DK GARG, 84 TAXMANN.COM 257 HELD THAT IN THE CASE OF ACCOMMODATION ENTRY PROVIDER IF THE ASSESSEE IS UNABLE TO EXPLAIN ALL SOURCES OF DEPOSITS AND CORRESPONDING PAYMENTS HE WOULD N OT 10 ITA NO S . 35 9 - 36 1 /VIZ/201 6 AND ITA NOS.3 84 - 3 87 /VIZ/2016 SRI DHANEKULA LAKSHMAIAH , V IJAYAWADA BE ENTITLED TO BENEFIT OF PEAK CREDIT. IN THE ASSESSEES CASE, THE ASSESSEE HAS NEITHER ESTABLISHED THE FACT THAT HE IS CARRYING ON BUSINESS AND THE SOURCES OF THE CREDIT. THOUGH THE ASSESSEE HAD OFFERED THE INCOME ON ESTIMATION BASIS RANGING FROM 5% TO 8% ON TURNOVER, THE LD.CIT(A) HAS NOT CONSIDERED THE SAME AT THE TIME OF DISPOSING THE APPEAL. DURING THE APPEAL HEARING ALSO THE ASSESSEE COULD NOT FURNISH ANY DETAILS WITH REGARD TO THE SOURCES OF DEPOSIT AND THE DESTINATION OF PAYMENT. NO EVIDENCE WAS FILED BY THE ASSESSEE TO ESTABLISH THAT HE IS CARRYING ON THE BUSINESS. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE MATTER SHOULD BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO ASCERTAIN THE TRUE NATURE OF THE RECEI PTS AND PAYMENTS AND THE DETAILS OF PERSONS TO WHOM THE MONIES WERE PAID AND RECEIVED. THE AO IS DIRECTED TO OBTAIN AND FIND OUT THE COMPLETE MODUS OPERANDI AND DECIDE THE ISSUE AFRESH ON MERITS. ACCORDINGLY, APPEAL OF THE REVENUE ON THIS ISSUE FOR THE A SSESSMENT YEAR 200 6 - 0 7 TO 200 9 - 1 0 IS ALLOWED FOR STATISTICAL PURPOSES. 8 . THE NEXT ISSUE OF REVENUE FOR THE ASSESSMENT YEAR 2009 - 10 IS THE ASSESSEES CLAIM OF DEDUCTION U/S 54F OF I.T.ACT. THE ASSESSEE CLAIMED DEDUCTION U/S 54F ON CAPITAL GAINS, WHICH WAS REJECTED BY THE ASSESSING OFFICER , S INCE THE ASSESSEE HAS GIVEN THE PROPERTY ON RENT TO NRI ACADEMY 11 ITA NO S . 35 9 - 36 1 /VIZ/201 6 AND ITA NOS.3 84 - 3 87 /VIZ/2016 SRI DHANEKULA LAKSHMAIAH , V IJAYAWADA WHICH IS AN EDUCATIONAL ACADEMY. T HE PROPERTY WAS NOT USED FOR THE PURPOSE OF RESIDENTIAL PURPOSE, HENCE THE ASSESSING OFFICER VIEWED THAT THE ASSESSE E IS NOT ELIGIBLE FOR DEDUCTION U/S 54F. ACCORDINGLY REJECTED THE CLAIM OF THE ASSESSEE U/S 54F OF I.T.ACT. THE ASSESSEE WENT ON APPEAL BEFORE THE LD.CIT(A) AND THE LD.CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. HENCE, THE REVENUE IS IN APPEAL BEFORE US. 9 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. AS PER THE DEVELOPMENT AGREEMENT, THE ASSESSEE HAS ACQUIRED THE RESIDENTIAL FLAT BUT GIVEN IT TO NRI ACADEM Y FOR RUNNING THE SCHOOL. THE ASSESSING OFFICER WA S OF THE VIE W THAT THE ASSESSE E HAD ACQUIRED THE COMMERCIAL PROPERTY BUT NOT THE RESIDENTIAL PROPERTY AND USING IT FOR COMMERCIAL PURPOSE. IT IS NOT ASCERTAINABLE FROM THE INFORMATION WHETHER THE FLAT IN QUESTION WAS RESIDENTIAL OR NOT AND REQUIRE FURTHER VERIFICATION AT THE LEVEL OF ASSESSING OFFICER . THEREFORE WE REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO MAKE FURTHER VERIFICATION S OF THE IMPUGNED PROPERTY AND GIVE FINDING WHETHER THE PROPERTY GIVEN FOR RENT TO THE SCHOOL IS RESIDENTIAL PROPERTY WI TH ALL AMENITIES LIKE KITCHEN ETC.. OR NOT AND DECIDE THE ISSUE AFRESH ON MERITS. THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 12 ITA NO S . 35 9 - 36 1 /VIZ/201 6 AND ITA NOS.3 84 - 3 87 /VIZ/2016 SRI DHANEKULA LAKSHMAIAH , V IJAYAWADA ITA NOS.35 9 - 36 1 /VIZ/2016 10 . THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)], VIJAYAWADA VIDE ITA NOS.91, 92, 93 & 94/CIT(A)/VJA/2014 - 15 DATED 31 . 03 .2016 FOR THE A.YS. 2006 - 07 TO 2009 - 10 . COMMON I SSUE IN ALL THE APPEALS IS CREDIT FOR OPENING BALANCE. THE REMAINING GROUNDS WERE NOT PRESSED BY THE LD.AR. 11. THE ASSESSING OFFICER MADE THE ADDITION OF CASH DEPOSITS MADE IN THE BANK FOR THE A.Y.2006 - 07 TO 2009 - 10 AS PER THE DETAILS GIVEN BELOW : 2006 - 07 28,76,000 2007 - 08 13,85,000 2008 - 09 18,50,000 2009 - 10 61,60,000 12. THE ASSESSEE WENT ON APPEAL BEFORE THE LD.CIT(A) AND THE LD.CIT(A) CONFIRMED THE PEAK CREDITS AS DISCUSSED IN REVENUE APPEAL IN THIS ORDER AS UNDER: 2006 - 07 8,00,000 2007 - 08 73,000 2008 - 09 6,49,000 2009 - 10 12,22,000 13 ITA NO S . 35 9 - 36 1 /VIZ/201 6 AND ITA NOS.3 84 - 3 87 /VIZ/2016 SRI DHANEKULA LAKSHMAIAH , V IJAYAWADA 1 3 . AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL REQUEST ED TO ALLOW THE OPENING CASH BALANCE AS ON 01.04.2005. ACCORDING TO THE LD.AR AS ON 01.04.2005, THERE WAS OPENING CASH BALANCE OF RS.1 4 , 9 0, 0 00/ - WHICH SHOULD BE ALLOWED FROM THE PEAK CREDIT WORKED OUT BY THE LD.CIT(A). LD.CIT(A) REJECTED THE CLAIM OF THE ASSESSEE SINCE THE ASSESSEE FAILED TO FURNISH THE RETURN OF INCOME FOR THE EARLIER YEARS AND THERE WAS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAS CARRIED ON THE BUSINESS. THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNTS. THE ASSESSEE DID NOT FILE ANY RE GULAR RETURN OF INCOME TILL THE SURVEY WAS CONDUCTED AND THE RETURNS WERE FILED ONLY AFTER THE ISSUE OF NOTICE U/S 148. IN THE ABSENCE OF ANY EVIDENCE TO ESTABLISH THAT THE BUSINESS WAS CARRIED ON BY THE ASSESSEE AND EARNED THE INCOME, THE LD.CIT(A) HELD THAT THE OPENING CASH BALANCE CLAIMED BY THE ASSESSEE IS NOT ESTABLISHED AND CANNOT BE TREATED AS EXPLAINED. LD.CIT(A) RELIED ON THE JUDGEMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF C.PAKIRSAMY VS. ACIT(MAD) [315 ITR 293] AND DISMISSED THE APPEAL OF T HE ASSESSEE. LD.CIT(A) HAS CONFIRMED THE ADDITION HOLDING THAT THE ASSESSEE DID NOT FILE THE RETURN OF INCOME AND FAILED TO FURNISH ANY EVIDENCE WITH REGARD TO THE OPENING CASH BALANCE ON REAL ESTATE BUSINESS AND DID NOT MAINTAIN THE BOOKS OF ACCO UNTS. 14 ITA NO S . 35 9 - 36 1 /VIZ/201 6 AND ITA NOS.3 84 - 3 87 /VIZ/2016 SRI DHANEKULA LAKSHMAIAH , V IJAYAWADA 1 4 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THOUGH THE ASSESSEE STATED TO HAVE OPENING CASH BALANCE OF RS.1 4 , 90 , 0 00/ - THERE WAS NO EVIDENCE TO ESTABLISH THE CASH BALANCE AVAILABLE WITH THE ASSESSEE. AS RIGHTLY S TATED BY THE CIT(A), THE ASSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE EARLIER YEARS AND IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT THE CASH BALANCE WAS AVAILABLE AND SUFFERED TO TAX THE SAME REQUIRED TO BE BROUGHT TO TAX. MERE CLAIM OF AVAIL ABILITY OF SUFFICIENT OPENING BALANCE WITHOUT SUPPORTING EVIDENCE IS NOT ACCEPTABLE. LD.CIT(A) RELIED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF SRI C.PAKIRISAMY VS. ACIT [315 ITR 293] AND CONFIRMED THE ADDITION. DURING THE APPEAL PROCEE DINGS BEFORE US ALSO, THE ASSESSEE HAS NOT PLACED ANY EVIDENCE TO SHOW THAT THERE WAS SUFFICIENT CASH BALANCE AVAILABLE WITH THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) AND THE SAME IS UPHELD. ACCORDINGLY, THE APPEA LS OF THE ASSESSEE FOR THE A.Y. 2006 - 07, 2007 - 08 AND THE A.Y.2008 - 09 ARE DISMISSED. 1 5 . IN THE RESULT APPEAL S OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSE AND THE APPEAL OF THE ASSESSEE ARE DISMISSED . 15 ITA NO S . 35 9 - 36 1 /VIZ/201 6 AND ITA NOS.3 84 - 3 87 /VIZ/2016 SRI DHANEKULA LAKSHMAIAH , V IJAYAWADA THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27 TH OCT 2017. SD/ - SD/ - ( . . ) ( . ) ( D.S. SUNDER SINGH ) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIALMEMBER /VISAKHAPATNAM /DATED : 27 .10.2017 L. RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE A SSESSEE - SRI DHANEKULA LAKSHMIAH, VIJAYAWADA 2 . / THE RE VENUE THE INCOME TAX OFFICER , WARD - 1 (2) , VI JAYAWADA 3 . THE PR. COMMISSIONER OF INCOME TAX, VIJAYAWADA 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - , VIJAYAWADA 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM