Sumadhura Technologies Limited, Hyderabad V. Asst.CIT,Circle 3(2), Hyderabad

ITA 380/HYD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2723 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-08-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 05-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained cash credit; Gift; Salary income; Source of fund; Additional evidence
• Section: 44AD; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A. NO. 380/HYD/2014 ASSESSMENT YEAR: 2010-11 SUMADHURA TECHNOLOGIES LTD., HYDERABAD [PAN: AAECS1721K] VS THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-3(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO, AR FOR REVENUE : SHRI A.G.V. PRASAD, DR DATE OF HEARING : 08-08-2017 DATE OF PRONOUNCEMENT : 11-08-2017 O R D E R PER CHANDRA POOJARI, A.M. : THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-IV, HYDERABAD , DATED 13-12-2013. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL THAT CIT(A) ERRED IN CONFIRMING THE ADDITION MADE U/S. 68 OF THE INCOME TAX ACT [ACT] IN RESPECT OF THE FOLLOWING PARTIES WHIC H WAS RECEIVED AS SHARE APPLICATION MONEY: ITA NO. 380/HYD/14 SUMADHURA TECHNOLOGIES LTD., :- 2 - : S.NO NAME (S/SHRI/SMT) AMOUNT (RS) 1. ANTARA MALLORKAR 5 , 0 0,000 2. K. GIRISH 7,00 ,000 3. CHITTI KRISHNA REDDY 10,00,000 4. CHITTI SHASHIDHAR REDDY 8,00,000 5. CHITTI SRIKANTH REDDY 8,00,000 6. CHITTI SANTOSH REDDY 6,00,000 TOTAL : 44,00,000 3. IT WAS THE SUBMISSION OF LD.AR THAT ASSESSEE RECEI VED RS. 5 LAKHS FROM SMT. ANTARA MALLORKAR THROUGH CHEQUE DRAWN ON CANARA BANK, BEGUMPET BRANCH. SHE WAS EMPLOYED WIT H M/S. CONSIM INFO PVT. LTD., DRAWING SALARY FROM 2004 ONWAR DS, THAT SHE HAD SAVINGS FROM HER SALARY INCOME, AND THAT SHE HAD INTEREST INCOME AS WELL AS INCOME FROM TUITIONS. THE AR SUBMITTE D THAT HER DOMESTIC EXPENSES WERE TAKEN CARE OF BY HER HUSBAND A ND THEREFORE SHE HAD ADEQUATE SAVINGS. THE AR SUBMITTED THAT THE ASSESSING OFFICER (AO) HAD FAILED TO TAKE NOTE OF HER INCOME FROM TUITIONS AND INTEREST ON LOANS ADVANCED TO VARIOUS PERS ONS. THE AR ALSO SUBMITTED THAT THE INVESTMENT IN THE COMPANY AS WELL A S THE REFUND OF RS. 2,50,000/- WAS RECORDED IN HER BANK S TATEMENT. THE AR FURTHER SUBMITTED THAT IN SO FAR AS SHARE APPLICATIO N MONEY WAS CONCERNED, THE RESPONSIBILITY OF THE ASSESSEE WAS MER ELY TO PROVE THE GENUINENESS OF THE TRANSACTION WHICH HAD BEEN ADEQU ATELY ESTABLISHED. THE AR ALSO FILED COPY OF RETURN OF INCO ME FILED ON 04-11-2013 BY SMT. ANTARA MALLORKAR BEFORE CIT(A). 3.1. THE TOTAL AMOUNT RECEIVED FROM SMT. ANTARA MALLORKA R WAS RS. 5,00,000/- OF WHICH A SUM OF RS. 2,50,000/- HAD BEEN REFUNDED TO HER BY THE ASSESSEE ON 07-03-2011. THEREF ORE, THE ONUS TO ESTABLISH THE CREDITWORTHINESS OF THE CREDITOR AND THE GENUINENESS OF THE CREDIT APPLIED TO THE ENTIRE SUM OF R S. ITA NO. 380/HYD/14 SUMADHURA TECHNOLOGIES LTD., :- 3 - : 5,00,000/- AND NOT MERELY TO THE SUM OF RS. 2,50,000/- VIDE THE LETTER OF CIT(A) DATED 12-11-2013, THE ASSESSEE WAS DIRECTED TO EXPLAIN WHY THE ADDITION U/S 68 SHOULD NOT BE ADOPTED A T A SUM OF RS. 5,00,000/- AND NOT MERELY RS. 2,50,000/- AS DONE BY THE AO. 4. FURTHER, BEFORE THE CIT(A), ASSESSEE FILED THE AFFI DAVIT AS FOLLOWS: 'AT PRESENT I AM WORKING AS RELATIONSHIP MANAGER WI TH CADSYS (INDIA) LTD, HYDERABAD. I WORKED WITH VARIOUS ORGAN ISATIONS SINCE 2004 AND DERIVED INCOME FROM SALARY. ALL MY REQUIREMENTS ARE LOOKED AFTER BY MY HUSBAND WHO DERIVES INCOME FROM BUSINESS. HE IS ASSESSED TO TAX. THEREFORE, THE SALARY INCOME DERIVED BY ME WAS MOST LY LENT TO CLOSE RELATIVES AND FRIENDS FOR NOMINAL INTEREST. I HAVE INVESTED A SUM OF RS.5 LAKHS IN THE SHARE APPLICATION MONEY VIDE CHEQUE NO .282101 & 282102 DATED 25.02.2010 FOR RS.2,50,000 EACH. THE SAID AMO UNT REPRESENTS THE AMOUNTS COLLECTED BACK FROM THE SUNDRY DEBTORS OF R S.3 LAKHS AND AN AMOUNT OF RS.2 LAKHS GIFTED BY MY FATHER AT THE TIM E OF MY BROTHER'S MARRIAGE. THEREFORE, I HAVE THE REQUIRED SOURCE FOR INVESTMENT OF RS.5 LAKHS IN SUMADHURA TECHNOLOGIES LTD, HYDERABAD. OUT OF RS.5 LAKHS INVESTED BY ME, RS.2,50,000 WAS REFUNDED BY THE COM PANY ON 09.03.2011 THROUGH CHEQUE NO. 75720. THE ABOVE FACT WAS ALSO CONFIRMED BY ME VIDE MY LETTER DATED 29.10.2012 FILED BEFORE THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-3(2), HYDERABAD . 5. THE LD.CIT(A) OBSERVED THAT ASSESSEE HAS NOT SATIS FACTORILY EXPLAINED THE CREDITWORTHINESS OF THE CREDITOR AND GEN UINENESS OF THE CREDIT OF ENTIRE RS. 5 LAKHS AND NOT MERELY THE SUM OF RS. 2,50,000/- ON THE MERE FACT THAT ASSESSEE HAD REFUNDED RS. 2.5 LAKHS WHICH DOES NOT MEAN THAT THE INVESTMENT RECEIVED BY ASSESSEE TOWARDS SHARE APPLICATION MONEY IS TRUE. 5.1. FURTHER IT WAS OBSERVED BY THE CIT(A) THAT, THE ANN UAL SALARY OF SMT. ANTARA MALLORKAR, AS PER HER SALARY STATEMENT, W AS RS.2,00,000/-. THE LADY CLAIMED THAT HER ENTIRE DOMESTI C EXPENSES WERE MET BY HER HUSBAND WHO WAS AN INCOME TAX ASSESSE E. THE ITA NO. 380/HYD/14 SUMADHURA TECHNOLOGIES LTD., :- 4 - : FACT THAT HER HUSBAND, SRI K. GIRISH WAS AN INCOME TAX ASSESSEE IS FACTUALLY MISLEADING SINCE THE RETURN OF INCOME WAS FI LED BY HIM ON 05-11-2013 I.E., LONG AFTER THE ASSESSMENT PROCEEDINGS WERE COMPLETED. AS THIS RETURN APPEARS TO BE AN AFTERTHOUGH T TO ESTABLISH HIS CREDITWORTHINESS PARTICULARLY WHEN THE CL AIM OF INCOME MADE THEREIN IS ALSO SUSPECT. HENCE, CIT(A) THE REFORE, NOT SATISFIED BY THE CLAIM THAT THE ENTIRE DOMESTIC EXPENSES OF SMT. ANTARA MALLORKAR WERE MET BY HER HUSBAND. 5.2. IT HAD BEEN SUBMITTED BEFORE THE AO THAT THE INVESTMEN T IN THE ASSESSEE'S SHARES HAD BEEN MADE OUT OF HER SALARY AND PAST SAVINGS. VIDE HER AFFIDAVIT DATED 05-12-2013, IT HAS B EEN CLAIMED THAT APART FROM INCOME FROM SALARY, THE LADY WAS DERIVI NG INCOME FROM INTEREST ON AMOUNTS LENT TO OTHERS, THAT SHE HAD RECE IVED GIFT OF RS.2 LAKHS FROM HER FATHER THAT THE GIFT OF RS.2 LAKH S AND A SUM OF RS.3 LAKHS RECOVERED FROM HER DEBTORS AND INVESTE D IN THE ASSESSEE'S SHARES. THE AFFIDAVIT IS A NEW EVIDENCE F ILED BY THE ASSESSEE DURING THE FIRST APPELLATE PROCEEDINGS. THE AR HAS NOT EXPLAINED WHY THIS EVIDENCE WAS NOT FILED DURING THE ASSESSMENT PROCEEDINGS NOR WHY IT SHOULD BE ADMITTED AT THIS STAGE. ADMISSION OF ADDITIONAL EVIDENCE IS NOT A MATTER OF RIGHT. THEREFO RE, THE CIT(A) REFUSED ADMISSION OF THE AFFIDAVIT AS AN ADDITIONAL E VIDENCE. 5.3. FURTHER, A NEW CLAIM HAS BEEN MADE IN THE AFFIDA VIT THAT IS IN COMPLETE CONTRADICTION TO THE CLAIM MADE DURING THE AS SESSMENT PROCEEDINGS. THE CREDITOR HAD EARLIER CLAIMED THAT THE INVESTMENT HAD BEEN MADE OUT OF HER SALARY AND PAST SAVINGS, WHE REAS FOR THE FIRST TIME NOW, THE CREDITOR HAS CLAIMED THAT THE INVESTMEN T HAD BEEN MADE OUT OF GIFTS AND OUT OF HER INVESTMENT IN HER MONEY- ITA NO. 380/HYD/14 SUMADHURA TECHNOLOGIES LTD., :- 5 - : LENDING BUSINESS. FURTHER, NO EVIDENCE HAS BEEN FUR NISHED IN SUPPORT OF THESE CLAIMS. THE CONTENTS OF THE AFFIDAVIT AR E THEREFORE, REJECTED EVEN ON MERITS BY THE CIT(A). 5.4. RELIANCE HAS ALSO BEEN PLACED BY THE AR ON THE R ETURN OF INCOME FILED BY SMT. ANTARA MALLORKAR. THE RETURN OF I NCOME WAS FILED ON 04-11-2013 AND SHOWS THE FOLLOWING INCOME: INCOME FROM SALARY RS. 1,09,180 INCOME FROM BUSINESS OF TUITIONS RS. 88,137 INCOME FROM OTHER SOURCES: I. INTEREST FROM SUNDRY DEBTORS RS. 37,200 II. INTEREST FROM SB A/C RS. 49 RS. 3 7,249 GROSS TOTAL INCOME RS. 2,34,566 THE CIT(A) OBSERVED THAT NO EVIDENTIARY VALUE CAN BE A TTACHED TO THIS RETURN. FIRSTLY, IT WAS FILED NOT MERELY AFTER THE TI ME PROVIDED U/S. 139(1), NOT MERELY LONG AFTER THE ASSESSMENT PROCE EDINGS WERE COMPLETED BUT EVEN LONG AFTER THE FILING OF THE APPEAL . THE RETURN OF INCOME IN FACT IS AN ADDITIONAL EVIDENCE THAT CANNOT BE TAKEN COGNIZANCE OF FOLLOWING THE DECISION IN THE CASE OF BABU KHAN A K VS. CWT [1976] 102 ITR 757 (AP) WHERE THE COURT HELD AS FOLLOWS: 'RULE 29 OF THE INCOME-TAX (APPELLATE TRIBUNAL) RUL ES, 1963, IS NOT INTENDED TO ALLOW THE PARTIES TO PATCH UP WEAK PART S OR TO FILL UP OMISSIONS. THE DISCRETION SHOULD BE EXERCISED SPARI NGLY AND CAUTIOUSLY AND ONLY WHEN ANY POINT IS REQUIRED TO BE CLEARED UP IN THE INTERESTS OF JUSTICE. THOUGH YEAR AFTER YEAR THE ASSESSEE WAS GIVEN OPPOR TUNITY TO PRODUCE MATERIAL IN SUPPORT OF HIS CLAIM, HE HAD NOT CHOSEN TO DO SO. THE ASSESSEES WHO WERE GUILTY OF REMISSNESS AND GROSS N EGLIGENCE, AS IN THE INSTANT CASE, ARE NOT ENTITLED TO INDULGENCE BEING SHOWN TO ADDUCE ADDITIONAL EVIDENCE IN SECOND APPEAL.' ITA NO. 380/HYD/14 SUMADHURA TECHNOLOGIES LTD., :- 6 - : IT WAS OBSERVED BY CIT(A) THAT THE RETURN IS NOTHING B UT AN ATTEMPT TO CREATE AN EVIDENCE TO PATCH UP A WEAKNESS IN THE ARG UMENT OF THE ASSESSEE. 5.5. FURTHER, THERE IS NO EVIDENCE OF THE CLAIMS MADE IN THE RETURN. NO DETAILS OF THE INTEREST INCOME HAS BEEN FURNI SHED, E.G. NAMES AND ADDRESS OF THE DEBTORS TO WHOM THE AMOUNTS E RE ADVANCED, THE AMOUNTS AND DATE OF SUCH ADVANCE. THERE IS NO EVIDENCE OF THE GIFT FROM HER FATHER. THERE IS NO INFO RMATION ABOUT THE VARIOUS ORGANIZATIONS FOR WHICH SHE WORKED SINCE 2004 NOR THE DETAILS OF SALARY RECEIVED FROM EACH. IN VIEW OF THE ABOVE, THE CLAIMS MADE IN THE RETURN OF INCOME AND THE AFFIDAVIT A RE REJECTED BY THE CIT(A). 5.6. THE CIT(A) FURTHER OBSERVED THAT, AS NOTED BY THE A O, THE SALARY OF SMT. ANTARA MALLORKAR WAS LESS THAN RS.2,00 ,000/- P.A. WHICH WAS NOT SUFFICIENT FOR AN INVESTMENT OF RS.5,00,0 00/- AND HER EXPLANATION THAT IT WAS SOURCED FROM HER SAVINGS W AS ALSO NOT REFLECTED IN HER BANK STATEMENT. SINCE THE ASSESSEE HAS BEEN UNABLE TO ESTABLISH THE CREDITWORTHINESS OF SMT. ANTARA M ALLORKAR OR THE GENUINENESS OF THE CREDIT FROM HER, THE ASSESSM ENT OF THE SUM OF RS.2,50,000/- CLAIMED TO BE INVESTED BY HER I S UPHELD. THE ASSESSMENT IS ALSO ENHANCED BY A SUM OF RS. 2,50,000 /- BEING THE ADDITIONAL SUM INVESTED BY HER AND NOT BROUGHT TO TAX BY THE AO. 5.7. BEFORE US, THE LD.AR IN SUPPORT OF HIS CONTENTION S, HAS RELIED ON THE FOLLOWING JUDGMENTS: I. CIT VS. FIVE VISION PROMOTERS (P) LTD., [380 ITR 289] (DELHI); II. CIT VS. SVP BUILDERS (INDIA) LTD., [238 TAXMAN 653] (DELHI); ITA NO. 380/HYD/14 SUMADHURA TECHNOLOGIES LTD., :- 7 - : III. CIT VS. SHIV DHOOTI PEARLS & INVESTMENT LTD., [237 TAX MAN 104] (DELHI); IV. CIT VS. LOVELY EXPORTS (P) LTD., [216 CTR 195] (SC); THUS, ACCORDING TO HIM, ONCE, THE ASSESSEE WAS ABLE TO IDENTIFY ITS SHAREHOLDER, WHO DEPOSITED THE AMOUNT WITH IT TOWARDS SHARE CAPITAL, ADDITION OF THE AMOUNT OF SUCH SHARE APPLICATI ON MONEY CANNOT BE MADE IN THE HANDS OF ASSESSEE-COMPANY TREATI NG THIS AMOUNT AS UNEXPLAINED U/S. 68 OF THE ACT. IT IS NOT FO R THE ASSESSEE-COMPANY TO ESTABLISH BUT IT IS FOR THE DEPARTME NT TO ENQUIRE WITH THE INVESTORS ABOUT THE CAPACITY TO INVEST TH E AMOUNT IN THE SHARES. ACCORDING TO LD.AR, ASSESSEE FILED CO NFIRMATION FROM THE INVESTOR AND THAT PARTY IS HAVING PAN NUMBER AND EVEN AN ENQUIRY BY AO, IT WAS CONFIRMED THAT SHE HAS INVEST ED IN THE ASSESSEE-COMPANY. BEING SO, ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE-COMPANY. 6. BEFORE US, THE LD.AR REITERATED THAT ARGUMENTS MADE BEFORE THE CIT(A) AND ALSO STATED THAT THE CIT(A) HAS NOT CONSIDE RED THE ADDITIONAL EVIDENCE WHICH WAS IN THE FORM OF AFFIDAV IT FILED BY ASSESSEE AND PRAYED FOR ADMISSION OF THE ADDITIONAL E VIDENCE BEFORE US. THE LD.DR RELIED ON THE ORDER OF THE CIT( A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, ASSESSEE S AID TO BE RECEIVED RS. 5 LAKHS FROM SMT. ANTARA MALLORKAR THAT SM T. ANTARA MALLORKAR HAS DEPOSITED RS. 5 LAKHS THROUGH HER BANK ACCOUNT WITH CANARA BANK, BEGUMPET BRANCH ON 23-02-2010 BY C ASH. LATER, SHE ISSUED TWO CHEQUES OF RS. 2.5 LAKHS EACH BEARING NOS. ITA NO. 380/HYD/14 SUMADHURA TECHNOLOGIES LTD., :- 8 - : 282102 AND 282101 ON 23-02-2010. HOWEVER, THERE WAS A REFUND OF RS. 2.5 LAKHS BY ASSESSEE-COMPANY ON 07-03-2011. ACCORDING TO LD.AR, THE REFUND OF RS. 2.5 LAKHS WERE ACCEPTED B Y THE AO, THE RECEIPT OF RS. 2.5 LAKHS BY ASSESSEE FROM SMT. ANTARA MALLORKAR IS TO BE ACCEPTED AS THERE IS NO CONTRA MATERIAL COLLECTE D BY THE DEPARTMENT AGAINST THE ASSESSEE AND MORE SO, WHEN IT WAS CONFIRMED BY AN AFFIDAVIT BY SMT. ANTARA MALLORKAR. 7.1. IN OUR OPINION, IN THE PRESENT CASE, ASSESSEE HA S PROVED THE IDENTITY OF THE INVESTOR BUT FACTS SHOWN THAT SMT. ANTARA MA LLORKAR HAS DEPOSITED A SUM OF RS. 5 LAKHS ON 23-02-2010. I MMEDIATELY WITHIN THREE DAYS, HE TRANSFERRED THIS AMOUNT TO ASSES SEES ACCOUNT BY WAY OF CHEQUE ON 26-02-2010. IT WAS EXPLA INED BY ASSESSEE THAT SMT. ANTARA MALLORKAR RECEIVED RS. 3 LAKH S FROM HER DEBTORS AND SUM OF RS. 2 LAKHS AS A GIFT FROM HER FA THER. TO THAT EFFECT, ASSESSEE GOT IT FILED AN AFFIDAVIT FROM SMT. AN TARA MALLORKAR. HOWEVER, THIS AFFIDAVIT WAS UN-SUBSTANTIATED AND NOT AT ALL SUPPORTED BY ANY CORROBORATIVE EVIDENCE IN SUPPORT OF THE SOURCE OF FUNDS. SO THE ASSESSEE HAS NOT PROVED THE CREDITWORTHIN ESS OF ALLEGED SHARE APPLICANTS AND THE GENUINENESS OF THE SH ARE APPLICATION MONEY SHOWN BY IT. BEING SO, WHETHER AN A DDITION IS TO BE MADE IN THE HANDS OF THE ASSESSEE-COMPANY OR INDIV IDUAL ASSESSEE IN SUCH CIRCUMSTANCES DEPENDS UPON THE FACTS OF THE CASE. PRIMARY ONUS LIES UPON THE ASSESSEE TO ESTABLI SH THAT ASSESSEE IS NOT LIABLE FOR ADDITION U/S. 68 AS THE AM OUNT IN FACT BELONGING TO THE PERSONS WHO HAD APPLIED AND SUBMITTE D SHARE APPLICATION MONEY. ASSESSEE HAVING FAILED TO DISCHAR GE SUCH ONUS IN THE PRESENT CASE, IN OUR OPINION, THE CIT(A) JUSTIF IED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS. 2.5 LAKHS. MERE ITA NO. 380/HYD/14 SUMADHURA TECHNOLOGIES LTD., :- 9 - : REFUND OF RS. 2.5 LAKHS BY ASSESSEE-COMPANY TO THE A LLEGED SHARE HOLDER DOES NOT DIS-ENTITLE THE AO TO CONSIDER THE BALANC E OF RS. 2.5 LAKHS AS UNEXPLAINED CREDIT U/S. 68 IN THE HANDS OF THE ASSESSEE. THE AO DURING THE COURSE OF ASSESSMENT PR OCEEDINGS ON PERUSAL OF THE INFORMATION FURNISHED BY ASSESSEE, FOU ND THE ASSESSEE, WHO IS ONLY DISCLOSED THE NAME AND ADDRESS OF THE PERSON AND PROVING ONLY IDENTITY AND NOT THE PROVING OF CREDITWORTHINESS OF THE PARTIES. REGARDING RELIANCE P LACED BY LD.AR ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CA SE OF CIT VS. LOVELY EXPORTS (P) LTD., [216 CTR 195] (SC), WHE REIN THE HON'BLE SUPREME COURT DISMISSED THE SLP FILED BY THE R EVENUE. IN OUR OPINION, DISMISSAL OF SLP CANNOT BE SAID THAT ANY RATIO LAID DOWN BY THE HON'BLE SUPREME COURT AND IT CANNOT BE APP LIED TO THE FACTS OF THE PRESENT CASE. THE QUESTION AS TO THE SOU RCE FROM WHICH A PARTICULAR INCOME IS RECEIVED BY THE INVESTOR IN THE COMPANY. ON ENQUIRY, THE PRESENT ASSESSEE WAS NOT AB LE TO PROVE ALL THE INGREDIENTS REQUIRED U/S. 68 OF THE I.T. ACT T O THE SATISFACTION OF THE AO. ON APPRECIATION OF MATERIAL BR OUGHT ON RECORD BY THE ASSESSEE, IT COULD NOT BE SAID THAT ASSESS EE HAS DISCHARGED THE ONUS PROVING THE GENUINENESS OF TRANSA CTION, HENCE, NO CREDENCE COULD BE GIVEN TO THE ARGUMENT OF TH E LD.AR. HENCE, IT IS JUSTIFIED IN TREATING SUCH AMOUNT AS UNEXP LAINED CREDIT IN THE HANDS OF THE ASSESSEE. WE DO NOT FIND ANY INF IRMITY ON THIS ISSUE OF TREATING RS. 2.5 LAKHS AS UNEXPLAINED CREDIT IN THE HANDS OF THE ASSESSEE. HENCE, THE SAME IS CONFIRMED. 8. NEXT ISSUE IS WITH REGARD TO RECEIPT OF RS. 7 LAKHS SHARE APPLICATION MONEY FROM SHRI K. GIRISH. IN THIS CASE, THE ASSESSEE HAD RECEIVED A SUM OF RS.7,00,000/- FROM SRI K. GIR ISH, HUSBAND ITA NO. 380/HYD/14 SUMADHURA TECHNOLOGIES LTD., :- 10 -: OF SMT. ANTARA MALLORKAR. THE AR HAD SUBMITTED A LETTER DATED 03- 07-2012 FROM SRI K. GIRISH BEFORE THE AO STATING THAT THE INVESTMENT WAS SOURCED OUT OF HIS EARNINGS FROM BUSINE SS OF TRADING IN AUTOMOBILE SPARE PARTS AND THAT HE HAD NOT FI LED HIS RETURNS OF INCOME AS HIS INCOME WAS BELOW THE TAXABLE LIMIT. SRI K. GIRISH LATER FILED A LETTER DATED 29-10-2012 STATING TH AT OUT OF THE TOTAL INVESTMENT OF RS. 7,00,000/-, RS.2,50,000/- WAS S OURCED FROM HIS BUSINESS SAVINGS, RS.2,00,000/- FROM HIS M OTHER'S PENSION AND RS.2,50,000/- FROM A RELATIVE. THE AO NO TED THAT THE SUBMISSIONS IN THE TWO LETTERS, DATED 03-07-2012 & 2 9-10-2012 WERE CONTRADICTORY WITH EACH OTHER. HE ALSO NOTED THAT N O EVIDENCE FOR THE SOURCES OF RS. 7,00,000/- HAD BEEN FURNISHED , THAT HIS BANK STATEMENT DID NOT REFLECT THE INVESTMENT, THAT THE BANK STATEMENT DID NOT HAVE ADEQUATE CREDITS TO ESTABLISH THE CLAIM OF BUSINESS SAVINGS, THAT THE BANK STATEMENTS OF HIS MOTHER DID NOT REFLECT ANY SAVINGS FROM PENSION OR THE INVESTMENT IN TH E SHARE APPLICATION MONEY. THE AO ALSO NOTED THAT THOUGH IT WAS C LAIMED THAT RS.4,50,000/- WAS REFUNDED TO SRI K. GIRISH ON 31 -02-2011, THIS WAS NOT ESTABLISHED THROUGH THE BANK ACCOUNT STATEMEN T OF THE ASSESSEE. THE AO, THEREFORE, HELD THAT NEITHER THE CREDITWORTHINESS OF THE CREDITOR NOR THE GENUINENESS OF THE TRANSACTION HAD BEEN SATISFACTORILY EXPLAINED AND ASSES SED THE SUM OF RS.7,00,000/- AS UNEXPLAINED CREDITS U/S 68. 8.1. IN THE COURSE OF FIRST APPELLATE PROCEEDINGS, THE AR SUBMITTED THAT SRI K. GIRISH WAS IN THE BUSINESS OF AUTOMOBILE SP ARE PARTS AND MACHINING WORK, THAT HE HAD FILED A COPY OF HIS P ASSPORT AND BANK ACCOUNT AND THAT HE HAD CONFIRMED THE DEPOSIT OF ITA NO. 380/HYD/14 SUMADHURA TECHNOLOGIES LTD., :- 11 -: RS.7,00,000/-. THE AR ALSO FILED A COPY OF THE RETURN OF INCOME FILED BY SRI K. GIRISH 05-11-2013 FOR AY. 2010-11. 8.2. IT IS NOTEWORTHY THAT WHILE SRI K. GIRISH CLAIMED B EFORE THE AO THAT HIS INCOME FOR THE YEAR WAS BELOW TAXABLE LIMIT S, HE LATER FILED A RETURN OF INCOME ON 05-11-2013 ADMITTING INCO ME MORE THAN THE TAXABLE LIMITS. IT IS ALSO NOTEWORTHY THAT HE CLAI MED TO HAVE RECEIVED SALARY FROM KISHAN AUTO AGENCIES TO WHI CH NO REFERENCE HAD EVER BEING MADE IN THE COURSE OF THE A SSESSMENT PROCEEDINGS. SIMILARLY, WHILE SEC. 44AD PRESCRIBES ESTIMATING OF INCOME AT 8%, SRI K. GIRISH HAS ADMITTED INCOME AT 15% OF THE GROSS RECEIPTS. WHILE THE APPARENT EAGERNESS OF SRI K. GIRISH TO ADMIT ALL SUCH INCOMES IN HIS RETURN WOULD HAVE BEEN LAUDABLE IN THE NORMAL COURSE, IT MUST BE SEEN WITH SUSPICION IN TH E LIGHT OF HIS EARLIER ASSERTION THAT HIS INCOME WAS LESS THAN T HE TAXABLE LIMIT AND THE FACT THAT IT WAS FILED NOT ONLY LONG AFTER THE DUE DATE PRESCRIBED U/S 139(1) AND LONG AFTER THE ASSESSMENT PR OCEEDINGS WERE COMPLETED, BUT ALSO LONG AFTER THE APPEAL HAD BEE N FILED. THEREFORE, THE CLAIM MADE IN THE RETURN OF INCOME CANN OT BE CONSIDERED ANYTHING OTHER THAN A POST FACTO ATTEMPT TO CRE ATE EVIDENCE FOR THE ALLEGED INVESTMENTS. FURTHER, AS HELD IN THE CASE OF SMT. ANTARA MALLORKAR, THE RETURN OF INCOME CONSTITUTES A DDITIONAL EVIDENCE WHICH CANNOT BE ADMITTED FOR THE REASONS DISCU SSED IN HER CASE. 8.3. AS NOTED BY THE AO, THE ASSESSEE HAS BEEN UNABLE TO SUBSTANTIATE THE SOURCES OF INVESTMENT MADE BY SRI K. GI RISH. NO EVIDENCE HAS BEEN FILED FOR THE VARIOUS CLAIMS MADE BY HIM. IT IS, THEREFORE, HELD THAT THE ASSESSEE HAS BEEN UNABLE TO ESTA BLISH THE ITA NO. 380/HYD/14 SUMADHURA TECHNOLOGIES LTD., :- 12 -: CREDITWORTHINESS OF SRI K. GIRISH AND THE GENUINENES S OF THE CREDIT FROM HIM. THEREFORE CIT(A) UPHELD THE ADDITION OF RS .7,00,000/- U/S 68 OF THE ACT. 9. AS DISCUSSED IN THE CASE OF SMT. ANTARA MALLORKAR, HEREIN ALSO ASSESSEE NOT DISCHARGED THE ONUS COST UPON IT. I N OUR OPINION, ONCE IT WAS ESTABLISHED THAT SHAREHOLDER WAS G ENUINE AND ALSO CREDITWORTHINESS AND THAT HE HAD THE REQUISITE AMOU NT FOR MAKING THE INVESTMENT-IN-QUESTION, NO ADDITION COULD BE MADE U/S. 68 IN THE HANDS OF THE ASSESSEE-COMPANY. AS HEL D BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SOPHI A FINANCE LTD., [205 ITR 98] (DELHI) (FB) FOLLOWED BY ANAND WO OLEN MILLS PVT. LTD., VS. CIT [254 ITR 112] (SC) IN WHICH IT HAS BEEN HELD THAT AMOUNT APPEARING IN THE BOOKS OF THE ASSESSEE-COMPANY AND DESCRIBED AS SHARE APPLICATION MONEY COULD BE CONSID ERED AS UNEXPLAINED AND ASSESSED IN THE HANDS OF THE ASSESSEE U/S. 68 IN THE EVENT OF NON-PROVING OF GENUINENESS OF THE TRANSACTI ON. SO, THE ASSESSEE HAS TO ESTABLISH THE CREDITWORTHINESS OF THE S HARE APPLICANTS AND ALSO GENUINENESS OF THE TRANSACTION. IN THIS CASE, ASSESSEE WAS FAILED TO DO SO. BEING SO, IN OUR OPIN ION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). 10. NEXT ISSUE IS WITH REGARD TO RECEIPT OF INVESTMENT FR OM THE FOLLOWING PERSONS: I. CHITTI KRISHNA REDDY - RS. 10,00,000/- II. CHITTI SHASHIDHAR REDDY - RS. 8,00,000/- III. CHITTI SRIKANTH REDDY - RS. 8,00,000/- IV. CHITTI SANTOSH REDDY - RS. 6,00,000/- ITA NO. 380/HYD/14 SUMADHURA TECHNOLOGIES LTD., :- 13 -: IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, IT WAS SUB MITTED THAT THE INVESTMENTS WERE MADE THROUGH VARIOUS DDS, THAT THE CREDITORS WERE ALL AGRICULTURISTS AND THAT THEY HAD NOT FILED ANY RETURN OF INCOME SINCE AGRICULTURE WAS THEIR ONLY SOU RCE OF INCOME. THE AO ALSO DIRECTED THEM TO FURNISH A COPY OF BANK S TATEMENT SHOWING AGRICULTURAL SAVINGS AND PROOF OF ANY AGRIC ULTURAL INCOME SINCE MERE FURNISHING OF PASS BOOKS COULD NOT BE ACC EPTED AS ADEQUATE PROOF. NO SUCH EVIDENCE WAS FILED. THE AR SUBMITTED THAT THE DDS WERE TAKEN BY CASH AND HENCE WAS NOT REFLECTED IN THEIR BANK ACCOUNTS. THE AO HELD THAT IN A SCENARIO WHERE FA RMERS WERE COMMITTING SUICIDES DUE TO NON-VIABILITY IN THE AGRIC ULTURAL SECTOR, IT WAS BEYOND IMAGINATION THAT THESE CREDITORS HAD SAVIN GS OF RS.6 LAKHS TO RS.L0 LAKHS FROM AGRICULTURAL INCOME BUT HAD NO EVIDENCE IN ITS SUPPORT. HE ALSO NOTED THAT MERE FURNISHING OF PA SSBOOKS COULD NOT BE TREATED AS PROOF OF EARNING AGRICULTURA L INCOME. HE THEREFORE HELD THAT THE CREDITWORTHINESS OF THE CREDITOR A ND THE GENUINENESS OF THE TRANSACTION HAD NOT BEEN SATISFACTOR ILY EXPLAINED AND ASSESSED THEIR ALLEGED CREDITS AS UNEXP LAINED CASH CREDIT U/S 68. 10.1. IN THE COURSE OF THE FIRST APPELLATE PROCEEDINGS , THE AR SUBMITTED THAT THESE FOUR PERSONS WERE IN POSSESSION OF AGRICULTURAL LAND AND HAD FILED A CONFIRMATION AND TH EREFORE, THE AO WAS NOT JUSTIFIED IN ADDING THEIR INVESTMENTS U/S 68 . 10.2. THE PATTA PASS BOOKS AND VRO'S CERTIFICATE PRODUC ED BY THE ASSESSEE DO CONSTITUTE EVIDENCE THAT THE ALLEGED CREDITOR S WERE OWNERS OF THE AGRICULTURAL LAND IN QUESTION. THESE DOC UMENTS DO NOT, HOWEVER, ESTABLISH THAT THE OWNERS OF THE AGRICULTURA L LANDS ITA NO. 380/HYD/14 SUMADHURA TECHNOLOGIES LTD., :- 14 -: ACTUALLY DERIVED ANY AGRICULTURAL INCOME FROM SUCH L AND. THEY DEFINITELY DO NOT ESTABLISH THE QUANTUM OF AGRICULTURAL INCOME, IF ANY, DERIVED FROM THE LAND. 10.3. THE CIT(A) PLACED RELIANCE IN THE CASE OF PARA S COLLINS DISTILLERIES VS. ITO [2011] 07 ITR 614, THE ASSESSEE WAS A FIRM IN WHICH THE PARTNERS HAD CLAIMED TO HAVE INTRODUCED CAPI TAL. THE ASSESSEE EXPLAINED THE SOURCES FOR THE INTRODUCTION OF CAPITAL BY ONE OF THE PARTNERS ON THE BASIS OF A CERTIFICATE FROM TAHSILDAR WHICH DISCLOSED ANNUAL YIELD PER ACRE. THE ITAT REJ ECTED THIS EVIDENCE WITH THE FOLLOWING OBSERVATIONS: 'FURTHER, EVEN IF THE PARTIES ARE HAVING AGRICULTUR AL INCOME, THE ASSESSEE HAS TO PUT BEFORE THE ASSESSING OFFICER THE PROPER MATERIAL WHICH WOULD ENABLE HIM TO COME TO A CONCLUSION THAT THE IMPUGNE D INCOME IS INDEED AGRICULTURAL INCOME. IT IS NOT FOR THE ASSESSING OF FICER TO PROVE THAT THE SOURCE OF CREDIT IS AGRICULTURAL INCOME. THE ONUS O F PROOF CONSIDERED IN THE LEGISLATIONS OF VARIOUS STATUTES PERTAINING TO AGRI CULTURAL INCOME, CANNOT STRAIGHTAWAY BE BORROWED FOR THE PURPOSE OF THE INC OME TAX ACT, 1961. IF THE ASSESSEE CLAIMS THE SOURCES OF INVESTMENT IS AN AGRICULTURAL INCOME/THE ONUS WOULD BE ON THE ASSESSEE TO PROVE T HAT IT IS AGRICULTURAL INCOME. IN THE PRESENT CASE/THOUGH THE ASSESSEE CLA IMED THE SOURCE OF INVESTMENT IS AN AGRICULTURAL INCOME/IT FAILED TO L EAD SUBSTANTIAL EVIDENCE IN SUPPORT OF IT. JUST HOLDING OF LAND IS NOT ENOUG H TO HOLD THAT THE ASSESSEE HAS ACTUALLY EARNED THE IMPUGNED INCOME FR OM AGRICULTURAL LAND. THE CERTIFICATE FROM TAHSILDHAR IS NOT WELL SUFFICI ENT TO SUBSTANTIATE THE ASSESSEES CLAIM THAT IT IS AN AGRICULTURAL INCOME. THE ASSESSEE DID NOT DISCHARGE THE BURDEN CAST UPON IT. AS SUCH BENEFIT OF AGRICULTURAL INCOME CANNOT BE GIVEN AS CLAIMED BY THE ASSESSEE.' (EMPHA SIS ADDED) 10.4. THE ITAT HAD IN THIS CASE REJECTED THE INCOME CERTIFICATE OF THE VILLAGE OFFICER AS EVIDENCE OF CREDITWORTHINESS O F THE DONOR. THE ASSESSEE'S CASE IS IDENTICAL. THEREFORE, THE CLAIM OF CREDIT WORTHINESS CANNOT BE ACCEPTED MERELY ON THE BASIS OF OWNERSHIP OF AGRICULTURAL LAND NOR ON THE BASIS OF A CERTIFICATE ISSUED BY A VILLAGE OFFICER. FOR SUCH A CLAIM TO BE ACCEPTED, IT WAS NECESSARY FOR ITA NO. 380/HYD/14 SUMADHURA TECHNOLOGIES LTD., :- 15 -: THE APPELLANT TO FURNISH EVIDENCE IN THE FORM OF BILLS AND INVOICES OF THE AGRICULTURAL OPERATIONS, IF ANY, CARRIED OUT BY TH E PERSONS CONCERNED. NO SUCH EVIDENCE HAS BEEN FURNISHED. 10.5. THE LD.CIT(A) ALSO OBSERVED THAT EVEN IF IT WERE TO BE PRESUMED THAT THE CREDITORS DID EARN THE CLAIMED AGRICUL TURAL INCOME, IT DOES NOT ESTABLISH THE AVAILABILITY OF CASH WITH THEM FOR BEING ADVANCED TO THE ASSESSEE. HE PLACED RELIANCE I N THE CASE OF ACIT V INDIAN ART EMPORIUM [1994] 209 ITR (AT) L (TM ), THE ASSESSEE HAD FILED AS MANY AS 15 PIECES OF EVIDENCE FOR ITS AGRICULTURAL INCOME, WHICH WAS STILL FOUND INADEQUATE BY ITAT WHICH HELD AS FOLLOWS: 'MERE DISCLOSURE OF INCOME IN A RETURN FILED BEFORE THE DEPARTMENT DOES NOT PROVE THE EXISTENCE OF SO MUCH OF INCOME I N CASH EITHER ON THE DATE THE RETURN WAS FILED OR AT THE END OF THE PREV IOUS YEAR OR ON THE LAST DAY OF THE PREVIOUS YEAR IN RESPECT OF WHICH THAT R ETURN WAS FILED. THE EVIDENCE COLLECTED AND RELIED UPON BY THE COMMISSIO NER OF INCOME-TAX ONLY SHOWED THAT AGRICULTURAL OPERATIONS WERE CARRIED ON , MAY BE ON AN EXTENSIVE SCALE.' 10.6. THE CIT(A) OBSERVED THAT THE CLAIM OF THE ASSESS EE THAT THE CREDITORS HAD ADVANCED THE SHARE APPLICATION MONEY OUT OF THEIR AGRICULTURAL INCOME IS, THEREFORE, HELD TO BE NOT ESTAB LISHED AND THE CLAIM IS REJECTED BY THE CIT(A). THE ADDITION OF CRE DITS FROM SRI CHITTI KRISHNA REDDY OF RS. 10,00,000/- FROM SRI CHI TTI SHASHIDHAR REDDY OF RS.8,00,000/-, FROM SRI CHITTI SRIKANTH REDDY OF RS.8,00,000/- AND FROM SRI CHITTI SANTOSH REDDY OF RS. 6,00,000/- AS UNEXPLAINED CREDITS U/S 68 IS UPHELD BY THE CIT(A) . 11. AS DISCUSSED IN EARLIER PARA, HEREIN ALSO ASSES SEE FAILED TO ESTABLISH ALL THE INGREDIENTS REQUIRED U/S. 68 OF THE A CT I.E., ITA NO. 380/HYD/14 SUMADHURA TECHNOLOGIES LTD., :- 16 -: IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANS ACTIONS. BEING SO, FOLLOWING THE EARLIER DISCUSSION IN THIS OR DER, WE DISMISS THE GROUND TAKEN BY ASSESSEE IN RESPECT OF THESE THREE C REDITS ALSO. 12. IN THE RESULT, APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH AUGUST, 2017 SD/- SD/- (P. MADHAVI DEVI) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 11 TH AUGUST, 2017 TNMM COPY TO : 1. SUMADHURA TECHNOLOGIES LTD., C/O. SRI S. RAMA RA O, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO. 9, HIMAYAT NAGAR, HYDERABAD. 2. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-3( 2), HYDERABAD. 3. CIT (APPEALS)-IV, HYDERABAD. 4. CIT-III, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.