B.Subba Rao, Visakhapatnam V. THE ACIT, CENTRAL CIRCLE-2, Visakhapatnam

ITA 363/VIZ/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8829 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 23-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R GOVINDARAJAN
• Keywords: Gift; Search and seizure
• Section: 44AD; 153A; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HON'BLE JUDICIAL MEMBER ITA NO. 363 / VIZ /201 3 (ASST. YEAR : 20 06 - 07 ) B. SUBBA RAO, 31 - 5 - 6, SATHAVAHANA NAGAR, KURMANNAPALEM, VISAKHAPATNAM . VS. A CIT, CENTRAL CIRCLE - 2, VISAKHAPATNAM. PAN NO. ASSPB 4332 L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI R. GOVINDA RAJAN CIT DR DATE OF HEARING : 2 5 / 0 7 /201 7 . DATE OF PRONOUNCEMENT : 04 / 0 8 /201 7 . O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1 , HYDERABAD , DATED 28 /0 2 /2013 FOR THE ASSESSMENT YEAR 2006 - 07 . 2. FACTS ARE IN BRIEF THAT A SEARCH WAS CONDUCTED IN THE GROUP OF M/S. SRAVAN SHIPPING SERVICES PVT. LTD. CONSEQUENT TO THAT, A SEARCH AND SEIZURE OPERATION IN THE CASE OF ASSESSEE UNDER SECTION 132 WAS CONDUCTED ON 25/11/2009 . THE ASSESSEE IS DERIVING INCOME FROM PENSION AND OTHER SOURCES. THE ASSESSING OFFICER CONSEQUENT TO THE SEARCH, A NOTICE UNDER SECTION 153A WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THAT, ASSESSEE HAS FILED A RETURN ON 31/12/2010 ADMITTING 2 ITA NO. 363/VIZ/2013 (B. SUBBA RAO) INCOME OF 4,09,030/ - . SUBSEQUENTLY, T HE ASSESSING OFFICER HAS ISSUED A NOTICE UNDER SECTION 143(2) ON 28/06/2011 AND ALSO ISSUED QUESTIONNAIRE TO THE ASSESSEE. IN RESPON S E TO THE NOTICE, THE AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE APPEARED BEFORE THE ASSESSING OFFICER AND FILED INFORMATION AS CALLED FOR BY THE ASSESSING OFFICER. 3. IN THE ASSESSMENT ORDER , THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS SHOWN TOTAL CREDITS AT 38,99,814/ - , OUT OF WHICH AN AMOUNT OF 37,79,375/ - PERTAINS TO THE YEAR IN QUESTION. IN THE COURSE OF ASSESSMENT PROCEEDINGS , IT WAS STATED BY THE ASSESSEE THAT THE SAID AMOUNT PERTAINS TO SIX CREDITORS , NAMELY ( 1) CH. RAMANA , ( 2) G. MANMADHA RAO, ( 3) M. DEMUDU, ( 4) S.K. TAJUDDIN, ( 5) V. SANYASI RAO AND ( 6) V.TRIMURTHULU. IT WAS ALSO SUBMITTED BY THE ASSESSEE THAT THESE CREDITORS WERE REPAID , FROM THE AMOUNTS RECEIVED AS GIFT FROM HIS DAUGHTER SMT. G. HANUMASREE IN THE YEAR 2008 - 09 . THE ASSESSING O FFICER HAS ASKED THE ASSESSEE TO PRODUCE THE CREDITORS ON OR BEFORE 29/12/2011. THE ASSESSEE HAS SUBMITTED THAT IN SHORT NOTICE PERIOD, HE COULD NOT PRODUCE THE CREDITORS AND REQUESTED FURTHER TIME TO PRODUCE THE M . HOWEVER, THE ASSESSING OFFICER BY CONSI DERING THE STATEMENT GIVEN BY ASSESSEES SON - IN - LAW SHRI G. SAMBASIVA RAO , WHO IS THE MANAGING DIRECTOR OF M/S. SRAVAN SHIPPING SERVICES PVT. LTD. ADMITTED THAT THE BALANCE PERTAINING TO THE CREDITORS OF 34,90,995/ - WAS UNEXPLAINED / UNDISCLOSED INCOME OF THE ASSESSEE FOR THE ASSESSMENT 3 ITA NO. 363/VIZ/2013 (B. SUBBA RAO) YEAR 2009 - 10 SINCE SUCH CREDITORS WERE UN - VERIFIABLE AND NOT GENUINE. KEEPING IN VIEW OF THE STATEMENT GIVEN BY THE SON - IN - LAW OF THE ASSESSEE, THE ASSESSING OFFICER HAS COMPL E TED THE ASSESSMENT BY ADDING 37,79 ,375/ - AS UNEXPLAINED INCOME OF THE ASSESSEE. 4 . ON APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 5 . ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL . 6 . LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT UNDER SECTION 44AD OF THE ACT AND ESTIMATED THE INCOME OF THE ASSESSEE AND , THEREFORE, NO SEPARATE ADDITION CAN BE MADE. LEARNED COUNSEL FURTHER SUBMITTED THAT T HE IMPUG N ED ADDITION MADE BY THE ASSESSING OFFICER IN RESPECT OF SIX CREDITORS PERTAINING TO ASSESSMENT YEAR 2006 - 07 AND PAYMENTS WERE MADE IN THE ASSESSMENT YEAR 2010 - 11 . IT HAS ALSO BEEN SUBMITTED THAT THE TRADE CREDITORS SUPPLIED MATERIAL IN THE YEAR 2006 - 07 AND IN THE ASSESSMENT YEAR 2010 - 11 , PAYMENTS WERE MADE AFTER RECEI V ING GIFT FROM THE DAUGHTER OF THE ASSESSEE. HE RELIED ON THE FOLLOWING DECISION S BY THE COORDINATE BE N C H OF THE TRIBUNAL : - A) ITO VS. V. JAYANAGA ANITHA (ITA NO. 506/VIZ/2013, ORDER DATED 31/03/2016) B) DCIT VS. M/S. VIJAYA AGRO PRODUCTS LTD., (ITA NO. 508/VIZ/2014, ORDER DATED 29/07/2016) 7 . ON THE OTHER HAND , L EARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE ASSESSEE IS NOT ABLE TO PRODUCE THE TRADE CREDITORS 4 ITA NO. 363/VIZ/2013 (B. SUBBA RAO) BEFORE THE ASSESSING OFFICER AND ALSO NOT FILED ANY ADDRESSES, THEREFORE THE ADDITION HAS TO BE CONFIRMED . HE FURTHER SUBMITTED THAT HE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THAT THE TRADE CREDITORS HAVE SUPPLIED THE MATERIAL TO THE ASSESSEE AND STRONGLY S UPPORTED THE ORDER S PASSED BY THE AUTHORITIES BELOW. 8 . I HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW . 9 . THERE IS A SEARCH IN THE CASE OF ASSESSEE UNDER SECTION 132 OF THE ACT ON 25/11/2009 . SUBSEQUENTLY , A NOTICE WAS ISSUED UNDER SECTION 1 5 3A OF THE ACT . IN RESPONSE TO THAT, THE ASSESSEE HAS FILED A RETURN ADMITTING TOTAL INCOME OF 4,09,030/ - . SUBSEQUENTLY , THE ASSESSING OFFICER HAS ISSUED NOTICE UNDER SECTION 142(1)/143(2) OF THE ACT. I N RESPONSE TO THAT, ASSESSEES AUTHORISED REPRESENTATIVE APPEARED BEFORE THE ASSESSING OFFICER AND FILED DETAILS AS CALLED FOR BY THE ASSESSING OFFICER. FROM THE DETAILS FILED BY THE ASSESSEE, THE ASSESSING OFFICER HAS FOUND THAT THE ASSESSEE HAS S HO W N TOTAL CREDITS AT 38,99,814/ - , OUT OF WHICH AN AMOUNT OF 37,79,375/ - PERTAINS TO THE YEAR UNDER CONSIDERATION . THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO PRODUCE THE DETAILS OF THE ABOVE CREDITS. IT WAS SUBMITTED THAT THESE ABOVE AMOUNTS WERE B ORROWED FROM SIX TRADE CREDITORS , NAMELY 1) CH.RAMANA, 2) G. MANMADHA RAO, 3) M. DEMUDU, 4) S.K. TAJUDDIN, 5) V. SANYASI RAO AND 6) V. TRIMURTHULU. WHEN ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THESE TRADE CREDITORS , T HE ASSESSEE HAS 5 ITA NO. 363/VIZ/2013 (B. SUBBA RAO) SUBMITTED THAT THE TIME GIVEN TO HIM IS NOT SUFFICIENT AND REQUESTED SOME MORE TIME TO PRODUCE THEM. HOWEVER, THE ASSESSING OFFICER BY CONSIDERING THE STATEMENT GIVEN BY THE SON - IN - LAW OF THE ASSESSEE SHRI G.SAMBASIVA RAO, WHO IS THE MANAGING DIRECTOR OF M/S.SRAVAN SHIPPING SERVICES PVT. LTD., THE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED INCOME OF THE ASSESSEE. ON APPEAL, T HE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT THE AMOUNT OF 37,79,375/ - PERTAINS TO THE ASSESSMENT YEAR 2006 - 07 AND PAYMENTS WERE MADE IN THE ASSESSMENT YEAR 2010 - 11. THEREFORE, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE AS THE CREDITORS ARE BEING THE TRADE CREDITORS. 10 . THERE IS NOTHING ON RECORD TO SHOW THAT WHEN THE ASSESSEE H AS PURCHASED THE MATERIAL, WHAT IS THE NATURE OF MATERIAL, THE PURPOSE OF WHICH MATERIAL USED. THEREFORE, I FIND THAT THE ASSESSEE IS FAILED TO DISCHARGE BURDEN CASTED UPON HIM TO SUBSTANTIATE HIS CASE. I ALSO FIND THAT PAPER BOOK AT PAGE NO. 4 THE ASSES SEE HAS RECEIVED SUBSTANTIAL AMOUNTS FROM 1) CH. RAMANA 10,10,500/ - , 2) G. MANMADHA RAO 10,87,500/ - , 3) M. DEMUDU 86,356/ - , 4) S.K. TAJUDDIN 9,57,500/ - , 5) V. SANYASI RAO 7,24,225/ - AND 6) V. TRIMURTHULU 34,083/ - . THE ASSESSEE HAS SHOWN REPAYMENT S TO THE TRADE CREDITORS FROM PAPER BOOK PAGE NO S . 29 TO 51 WHEREIN THE ASSESSEE HAD MADE PAYMENTS OF 18,750/ - , 19,850, AND 18560/ - LIKE THAT. WHEN THE TRADE CREDITORS HAVE SUPPLIED THE MATERIAL IN THE ASSESSMENT YEAR 2006 - 07, THE ASSESSEE MADE PAYMENTS TO THEM IN THE ASSESSMENT YEAR 2010 - 11 , 6 ITA NO. 363/VIZ/2013 (B. SUBBA RAO) WHICH WERE BELOW 20,000/ - ON VARIOUS DATES. WHEN THIS FACT IS SPECIFICALLY POINTED OUT, ASSESSEE IS NOT ABLE TO EXPLAIN WHY THE PAYMENTS ARE MADE AFTER A LONG PERIOD. IN THIS CASE, A SEARCH WAS CONDUCTED IN THE CASE OF M/S. SRAV AN SHIPPING SERVICES PVT. LTD. , WHERE THE MANAGING DIRECTOR OF THE COMPANY , WHO IS THE SON - IN - LAW OF THE ASSESSEE HAS ADMITTED THAT THE TRADE CREDITORS ARE NOT GENUINE. THE ABOVE STATEMENT GIVEN BY THE ASSESSEES SON - IN - LAW IS NOWHERE DISPUTED BY THE ASSESSEE. I FIND THAT THE ASSESSEE IS NOT ABLE TO SUBSTANTI A TE HIS CASE NEITHER BEFORE THE ASSESSING OFFICER NOR BEFORE THE LD. CIT(A) . EVEN BEFORE THE TRI BUNAL, NO RELIABLE EVIDENCE FOR REPAYMENT OF THOSE AMOUNTS HAS BEEN FILED. SO, KEEPING IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE ADDITION MADE BY THE ASSESSING OFFICER WAS RIGHT L Y CONFIRMED BY THE LD. CIT(A). SO FAR AS CASE LAWS RELIED ON BY THE ASSESSEE , HAVE NO APPLICATION TO THE FACTS OF THE PRESENT CASE. THUS, THIS APPEAL FILED BY THE ASSESSEE IS DISMISSED. 1 1 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 0 4 T H DAY OF AUGUST , 201 7 . S D / - ( V. DURGA RAO ) JUDICIAL MEMBER DATED : 0 4 T H AUGUST , 201 7 . VR/ - 7 ITA NO. 363/VIZ/2013 (B. SUBBA RAO) COPY TO: 1. THE ASSESSE E - B. SUBBA RAO, 31 - 5 - 6, SATHAVAHANA NAGAR, KURMANNAPALEM, VISAKHAPATNAM. 2. THE REVENUE - ACIT, CENTRAL CIRCLE - 2, VISAKHAPATNAM. 3. THE CIT (CENTRAL), HYDERABAD . 4. THE CIT(A) - 1, HYDERABAD . 5. THE D.R. , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SENIOR PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.