The ITO, Gudivada V. Sri Koganti Poornachandra Prasad, Gudivada

ITA 38/VIZ/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8699 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 27-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANGARI
• Section: 143(3); 133(6); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 38 / VIZ /201 7 (ASST. YEAR : 20 11 - 12 ) ITO, WARD - 3(1), VIJAYAWADA. V S . KOGANTI POORNACHANDRA PRASAD, D.NO. 8 - 315 - 3, RAJENDRA NAGAR, GUDIVADA. PAN NO. AIBPK 7846 F (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE . DEPARTMENT BY : SHRI M.R. BANGARI SR. DR DATE OF HEARING : 27 / 0 2 /201 8 . DATE OF PRONOUNCEMENT : 07 / 03 /201 8 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) , VIJAYAWADA , DATED 22 /0 9 /201 6 FOR THE ASSESSMENT YEAR 20 11 - 12 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS WORKING AS A B USINESS D EVELOPMENT M ANAGER IN SHRIRAM LIFE INSURANCE COMPANY LTD. , FILED HIS RETURN OF INCOME ADMITTING TOTAL INCOME OF RS. 2,29,600/ - . RETURN FILED BY THE ASSESSEE WAS INITIALLY PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 2 ITA NO. 38/VIZ/2017 ( KOGANTI POORNACHANDRA PRASAD ) (HEREINAFTER REFERRED TO AS 'ACT'). SUBSEQUENTLY, ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND AFTER FOLLOWING DUE PROCE DURE , ASSESSMENT IS COMPLETED UNDER SECTION 143(3) BY ASSESSING INCOME OF THE ASSESSEE AT RS. 2,16,41,242/ - . IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDING S, HE CALLED THE DETAILS OF BANK ACCOUNT S OPERATED BY THE ASSESSEE . IN RESPONSE TO WHICH, THE ASSESSEE HAS FURNISHED THE DETAILS OF THE BANK ACCOUNTS IN RESPECT OF MANY SAVINGS BANK ACCOUNTS HELD WITH ICICI BANK LTD., AXIS BANK LTD., STATE BANK OF INDIA, UNION BANK OF INDIA, HDFC BANK AND KARUR VYSYS BANK LTD. ON VERIFICATION OF THE COPIES OF THE BANK ACCOUNTS, THE ASSESSING OFFICER FOUND THAT ASSESSEE HAS MADE VOLUMINOUS TRANSACTIONS IN THE GUISE OF DEPOSITS AND WITHDRAW A LS. THE ASSESSING OFFICER FOUND THAT TOTAL UNEXPLAINED DEPOS I TS WERE MADE IN ALL BANK ACCOUNTS , AMOUNT ING TO RS. 2,14,11,644/ - . WHEN THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF THE SAID DEPOSITS AND THE PURPOSE OF WITHDRAW A LS, THE ASSESSEE SUBMITTED THAT HIS MA IN SOURCE OF INCOME IS ONLY SALARY. THE SAID AMOUNTS IN THE BANK ACCOUNTS ARE COLLECTED BY THE AGENTS OF SHRIRAM GROUP OF COMPA NIES AGAINST INSURANCE PREMIA AND NCDS. FOR THAT PURPOSE, THE COMPANY PROVIDED HIM A TEMPORARY RECEIPT BOOK AND ALSO RRR BOOK A ND THESE REC E IPTS ARE VALID UP TO 3 ITA NO. 38/VIZ/2017 ( KOGANTI POORNACHANDRA PRASAD ) ISSUANCE OF PERMANENT RECEIPT BY THE COMPANY . IT WAS ALSO SUBMITTED THAT ALL THE DEPOSITS IN THE BANK ACCOUNTS ARE BELONGING TO THE COMPANY , WHICH WERE COLLECTED FROM CUSTOMERS THROUGH AGENTS . F OR SECURITY REASONS, THE DEPOSITS WERE MADE IN HIS BANK ACCOUNT AND SUBSEQUENTLY TRANSFERRED TO THE ACCOUNTS OF SHRIRAM GROUP OF COMPANIES . IN HIS DEPOSITION DATED 28/01/2014, HE HAS SUBMITTED THAT HE IS WORKING AS BUSINESS DEVELOPMENT MANAGER IN SHRIRAM LIFE INSURANCE COMPANY LT D. AND DRAWING A SALARY OF RS.20,900/ - P.M. AND HE DOES NOT GET ANY COMMISSION ON ANY POLICY OR BOND AND THAT HE GETS YEARLY INCENTIVE, IF HE ACHIEVES THE TARGET; THAT ABOUT 20 AGENTS ARE WORKING UNDER HIS SUPERVISION AND HIS D U T Y IS TO MOTIVATE THE AGENTS SO AS TO GET BUSINESS FOR THE COMPANY; THAT SHRIRAM LIFE INSURANCE COMPANY LTD. AND ITS SISTER CONCERNS VIZ., SRI RAM TRANSPORT FINANCE COMPANY LT D., SRI CITY UNION FINANCE LTD. AND SRI RAM INSURANCE COMPANY LTD. ETC. D O NOT ACCEPT CASH PAYMENTS TOWARDS INSURANCE AND F IXED DEPOSITS AND ONLY CHEQUES/ DEMAND DRAFTS ARE ACCEPTED. HENCE, THE CASH COLLECTED BY THE AGENTS ARE INITIALLY HANDED OVER TO THE ASSESSEE, WHICH WERE IN TURN DEPOSITED BY HIM IN HIS SAVINGS ACCOUNT S. AFTERWARDS , THE PAYMENTS ARE MADE BY HIM TO THE COMPANY THROUGH CHEQUES ON BEHALF OF THE CUSTOMERS; THAT HE MAINTAINS THE RECEIPT BOOK AND RECEIPTS ARE ISSUED TO THE INDIVIDUAL 4 ITA NO. 38/VIZ/2017 ( KOGANTI POORNACHANDRA PRASAD ) CUSTOMERS AND THE USED BOOK IS RETURNED TO THE COMPANY; THAT THERE WERE ABOUT 150 CUSTOMERS DURING THE FINANCIAL YEAR 2010 - 11. IT WAS FURTHER SUBMITTED THAT A SIMILAR ISSUE CAME UP BEFORE THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2009 - 10 , WHO DELETED THE ADDITION OF RS. 1,67,24,827/ - TOWARDS UNEXPLAINED DEPOSITS UNDER SECTION 69 OF THE ACT . THE ASSESSEE FILED A LETTER DATED 22/03/2014 ISSUED BY THE COMPANY TO THE EXTENT OF RS. 84,23,694/ - , WHEREIN IT HAS BEEN MENTIONED THAT MR. K.P.C. PRASAD B.D.M., GUDIVADA COLLECTED FROM AGENTS POLICY HOLDERS ON BEHALF OF THE COMPANY AND ISSUED TR IN THEI R FAVOUR FOR LIFE INSURANCE BUSINESS FOR THE FINANCIAL YEAR 2010 - 11 RELEVANT TO ASSESSMENT YEAR 2011 - 12. SUBSEQUENTLY, ASSESSING OFFICER HAS ISSUED NOTICE UNDER SECTION 133(6) TO THE SHRIRAM LIFE INSURANCE COMPANY LTD. AND NOT RECEIVED ANY RESPONSE. THER EFORE, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE AMOUNT S DEPOSITED IN VARIOUS BANKS BY THE ASSESSEE TO THE TUNE OF RS. 2,14,11,644/ - HAS BEEN TREATED AS UNEXPLAINED INCOME WITHIN THE MEANING OF SECTION 69 OF THE ACT. 3 . ON APPEAL, LD. CIT(A) HAS ISSUED NOTICES ON VARIOUS DATES TO THE ASSESSEE, HOWEVER, ASSESSEE HAS NOT APPEARED BEFORE THE LD. CIT(A). THE LD. CIT(A) BY CONSIDERING THE MATERIAL AVAILABLE ON RECORD, PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE. LD. CIT(A) 5 ITA NO. 38/VIZ/2017 ( KOGANTI POORNACHANDRA PRASAD ) HAS NOTED THAT ITMR ( INFORMATION TECHNOLOGY A ND MEDIA RESOURCE CLUB ) REVEALED THAT SHRIRAM LIFE INSURANCE COMPANY LTD. IN HIS LETTER DATED 22/03/2014 CONFIRMED THAT MR. K.P.C. PRASAD B.D.M. , GUDIVADA COLLECTED FROM AGENTS POLICY HOLDERS ON BEHALF OF THE COMPANY AND ISSUED TR IN THEIR FAVOUR FOR LIFE INSURANCE BUSINESS FOR THE FINANCIAL YEAR 2010 - 11 , AMOUNT OF RS. 84,23,694/ - . THE LD. CIT(A) HAS ALSO CONSIDERED ANOTHER LETTER ISSUED BY SRI RAM TRANSPORT FINANCE COMPANY LTD., DATED 22/03/2014 WHEREIN IT IS STATED THAT MR. K.P.C. PRASAD B.D.M., GUDIVADA COLLECTED FROM AGENTS DEPOSITS/NCDS ON BEHALF OF THE COMPANY AND ISSUED TR IN THEIR FAVOUR FOR DEPOSITS/NCD BUSINESS FOR THE FINANCIAL YEAR 2010 - 11 AMOUNT OF RS.82,24,000/ - THE LD. CIT(A) HAS C ONSIDERED BOTH THE LETTERS ISSUED BY SHRIRAM GROUP OF COMPANIES AND CAME TO A CONCLUSION THAT ASSESSEE IS DULY EXPLAINED THE SOURCE OF CASH DEPOSITS TO THE EXTENT OF RS.1,66,47,494/ - (RS. 84,23,694 + RS.82,24,000) . THE LD. CIT(A) HAS CONSIDERED THAT THE A SSESSING OFFICER HAS NOT BELIEVED THE ASSESSEE ON THE GROUND THAT SHRIRAM GROUP OF COMPANIES HAVE NOT RESPONDED TO THE NOTICE ISSUED UNDER SECTION 133(6) OF THE ACT. HOWEVER, SHRIRAM GROUP OF COMPANIES CONFIRMED THE SOURCE OF DEPOSITS TO THE TUNE OF RS. 1 ,66,47,694/ - . THEREFORE, LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION TO THE EXTENT OF RS. 1,66,47,694/ - 6 ITA NO. 38/VIZ/2017 ( KOGANTI POORNACHANDRA PRASAD ) AND RESTRICT THE ADDITION TO THE TUNE OF RS.47,63,950/ - ( RS. 2,14,11,646 RS. 1,66,47,694) . 4 . ON BEING AGGRIEVED , REVENUE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 6 . IN THIS CASE, THE ASSESSEE HAS MADE VARIOUS DEPOSITS IN DIFFERENT BANKS, AMOUNTING TO RS. 2,14,11,646/ - . WHEN THE ASSESSING OFFICER HAS ASKED TO EXPLAIN THE SOURCE OF DEPOSITS, IT IS SUBMITTED TH A T HE IS WORKING IN THE SHRIRAM GROUP OF COMPANIES AND THE AGENTS WILL COLLECT MONEY FROM THE CUSTOMERS, THE SAME IS DEPOSITED IN HIS BANK ACCOUNT S AN D S UBSEQUENTLY, TRANSFERRED TO THE ACCOUNTS OF SHRIRAM GROUP OF COMPANIES. IN TURN, SHRIRAM GROUP OF COMPANIES AFTER RECEIVING THE P A YM E NT, ISSUED BONDS/ CERTIFICATE/ REGULAR RECEIPTS ETC. THE ASSESSING OFFICER AFTER CONSIDERING THE EXPLANATION GIVEN BY T HE ASSESSEE, HAS ISSUED A NOTICE TO THE SHRIRAM GROUP OF COMPANIES UNDER SECTION 133(6) OF THE ACT. THE SHRIRAM GROUP OF COMPANIES HAVE NOT RESPONDED TO THE NOTICE ISSUED, THEREFORE, THE ASSESSING OFFICER IS OF THE OPINION THAT THE ASSESSEE FAILED TO PROV E THE GENUINENESS OF THE TRANSACTIONS AND ADDITION WAS MADE TO THE EXTENT OF RS.2,14,11,646/ - . ON APPEAL, LD. CIT(A) HAS CONSIDERED THE 7 ITA NO. 38/VIZ/2017 ( KOGANTI POORNACHANDRA PRASAD ) CONFIRMATION LETTERS ISSUED BY THE COMPANY DATED 22/03/2014 BY STATING THAT MR. K.P.C. PRASAD B.D.M., GUDIVADA COLLECTED FROM AGENTS, POLICY HOLDERS ON BEHALF OF THE COMPANY AND ISSUED TR IN THEIR FAVOUR FOR LIFE INSURANCE BUSINESS FOR THE FINANCIAL YEAR 2010 - 11 , AMOUNT OF RS. 84,23,694/ - AND IN ANOTHER LETTER RS. 82,24,000/ - . THE LD. CI T(A) BY CONSIDERING THE LETTERS ISSUED BY THE SHRIRAM GROUP OF COMPANIES DATED 22/03/2014 , DELETED THE ADDITION ON THE GROUND THAT ASSESSEE HAS EXPLAINED THE SOURCE OF CASH DEPOSITS TO THE EXTENT OF RS. 1,66,47,694/ - , HENCE, DIRECTED THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO RS. 47,63,950/ - . THEREFORE, W E FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). THUS, THIS APPEAL FILED BY THE REVENUE IS DISMISSED. 7 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 0 7 T H DAY OF MARCH , 201 8 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 7 T H MARCH , 201 8 . VR/ - COPY TO: 1. THE ASSESSEE - KOGANTI POORNACHANDRA PRASAD, D.NO. 8 - 315 - 3, RAJENDRA NAGAR, GUDIVADA. 2. THE REVENUE ITO, WARD - 3(1), VIJAYAWADA. 3. THE PR. CIT , VIJAYAWADA. 4. THE CIT(A) , VIJAYAWADA. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER