Grandhi Chalapathi Rao, Secunderabad V. THE ACIT, Rajahmundry

ITA 391/VIZ/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8818 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 09-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEBAKUMAR SONOWAL
• Keywords: Income from undisclosed sources; Loose papers; Corroborative evidences
• Section: 132; 2

Judgement Text

ITA NOS.389 TO 392/VIZAG/2014 GRANDHI CHALAPATHI RAO, SECUNDERABAD 1 , , 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.NOS.389 TO 392/VIZAG/2014 ( / ASSESSMENT YEARS: 2005-06, 2006-07, 2007-08 & 2009-10) GRANDHI VVSLN SUBBA RAO L.R. OF LATE GRANDHI CHALAPATHI RAO SECUNDERBAD ACIT, CENTRAL CIRCLE, RAJAHMUNDRY [PAN NO. ACYPG8832C ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI DEBAKUMAR SONOWAL, DR / DATE OF HEARING : 03.01.2018 / DATE OF PRONOUNCEMENT : 10.01.2018 / O R D E R PER BENCH: THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS), GUNTUR VIDE I TA NO.453 TO 456/CIT(A)/GNT/10-11 DATED 24.2.2014 FOR THE ASSESS MENT YEARS 2005- 06, 2006-07, 2007-08 & 2009-10. ITA NOS.389 TO 392/VIZAG/2014 GRANDHI CHALAPATHI RAO, SECUNDERABAD 2 2. A SEARCH U/S 132 WAS CARRIED OUT IN THE GROUP CA SES OF THE ASSESSEE ON 3.2.2009. DURING THE COURSE OF SEARCH, CERTAIN INCRIMINATING MATERIAL WAS FOUND RELATING TO THE AS SESSEE EVIDENCING THE ADVANCES GIVEN BY THE ASSESSEE FOR THE ASSESSMENT Y EAR 2005-06, 2006- 07, 2007-08 & 2009-10. DURING THE COURSE OF SEARCH IN THE RESIDENTIAL PREMISES OF MR. G.V.V.S.L.N. SUBBA RAO, THE ASSESSE ES SON, LOOSE SHEETS CONTAINING THE PROMISSORY NOTES RELATED TO T HE MONEY LENDING BUSINESS WERE STATED TO BE FOUND AND SEIZED AS ANNE XURE GVS/1, GVS/3 & GVS/4. SHRI SUBBA RAO, THE SON OF THE ASSESSEE W AS QUESTIONED REGARDING THE CONTENTS OF THE LOOSE SHEETS AND HE H AS EXPLAINED THAT THE LOOSE SHEETS ARE RELATED TO HIS FATHER AND HIS RELA TIVES MONEY LENDING TRANSACTIONS. THE A.O. SUMMARIZED THE CONTENTS OF THE LOOSE SHEETS FOUND AND QUANTIFIED THE UNACCOUNTED TRANSACTIONS YEARWISE AS UNDER: SUMMARY OF LOOSE SHEETS S.NO. SHEET NO. PRINCIPAL FINANCIAL YEAR INTEREST AMOUNT FINANCIAL YEAR 1 GVS/1/18 100000 2005-06 14600 2005-06 2 18 60000 2005-06 3150 2005-06 3 18 100000 2005-06 8200 2005-06 4 19 -- -- 59163 2004-05 5 21 363400 2004-05 58080 2004-05 6 22 2200 2005-06 84 2005-06 7 GVS/3/3 70000 2004-05 8 7 70000 2006-07 9 9 30000 2004-05 10 11 80000 2004-05 11 13 80000 2006-07 ITA NOS.389 TO 392/VIZAG/2014 GRANDHI CHALAPATHI RAO, SECUNDERABAD 3 S.NO. SHEET NO. PRINCIPAL FINANCIAL YEAR INTEREST AMOUNT FINANCIAL YEAR 12 17 20000 2004-05 13 21 40000 2005-06 14 18 50000 200 8 - 09 15 GVS/4/10 180000 2005-06 16 33,45 TO 57 309437 2006-07 QUANTIFICATION OF YEAR WISE UNACCOUNTED INCOME S.NO. FINANCIAL YEAR ASSESSMENT YEAR UNACCOUNTED INCOME TOTAL ADDITION 1 2004 - 05 2005 - 06 PRINCIPAL - 563400 INTEREST - 117243 680643 2 2 005 - 06 2006 - 07 PRINCIPAL 482200 INTEREST 26034 508234 3 2006 - 07 2007 - 08 PRINCIPAL 459437 INTEREST - 459437 4 2007 - 08 2008 - 09 NIL 5 2008 - 09 2009 - 10 PRINCIPAL 50000 INTEREST - 50000 3. THE A.O. CALLED FOR THE EXPLANATION OF THE ASSES SEE AS TO WHY THE ABOVE SUM SHOULD NOT BE ASSESSED AS UNDISCLOSED INC OME OF THE ASSESSEE. THE ASSESSEE EXPLAINED DURING THE ASSESS MENT PROCEEDINGS THAT THE LOOSE PAPERS REFLECT THE LOANS RECEIVED BY HIM FROM SMT. S. VENKATA RATNAM AND THE DETAILS OF DISBURSEMENT OF P RINCIPAL AMOUNT AND INTEREST ARE NOTED THEREIN. THE ASSESSEE FURTHE R EMPHASIZED THAT THE MONETARY TRANSACTIONS REFLECTED IN THE LOOSE SH EETS BELONGED TO SMT. S.V. RATNAM BUT NOT BELONGED TO HIM AND HE HAS MAIN TAINED THE AFFAIRS ON BEHALF OF HER TO SUPPORT HIS OLD AGED AUNT AND S UBMITTED THAT NONE OF THE TRANSACTIONS RECORDED IN THE LOOSE SHEETS DOES BELONG TO HIM, HENCE ITA NOS.389 TO 392/VIZAG/2014 GRANDHI CHALAPATHI RAO, SECUNDERABAD 4 REQUESTED NOT TO MAKE THE ASSESSMENT IN HIS HANDS. THE A.O. REJECTED THE EXPLANATION OF THE ASSESSEE SINCE THE ASSESSEE FAILED TO FURNISH ANY SUPPORTING EVIDENCE AND ASSESSED THE SUMS AS UNACCO UNTED INCOME FOR THE ASSESSMENT YEAR 2005-06 TO 2009-10 AS UNDER: S.NO. FINANCIAL YEAR ASSESSMENT YEAR UNACCOUNTED INCOME TOTAL ADDITION 1 2004 - 05 2005 - 06 PRINCIPAL - 563400 INTEREST - 117243 680643 2 2005 - 06 2006 - 07 PRINCIPAL 482200 INTEREST 26034 508234 3 2006 - 07 2007 - 08 PRINCIPAL 459437 INTEREST - 459437 4 2007 - 08 2008 - 09 NIL 5 2008 - 09 2009 - 10 PRINCIPAL 50000 INTEREST - 50000 4. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED BY THE ORDER OF THE LD.CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, T HE LD. A.R. REFERRING TO THE HIS ANSWER IN QUESTION NO. 5 ARGUED THAT IN THE STATEMENT RECORDED ON 18/03/2009 SHRI G.V.V.S.L.N. SUBBA RAO, SON OF T HE ASSESSEE HAD STATED THAT THE LOOSE SHEETS IN ANNEXURE NO.GVS/3, PAGE NOS.2,3,7,9,11,13,17,21 WERE PROMISSORY NOTES EXECU TED BY HIS FATHER G. SUBBA RAO IN THE PERIOD OF 2004-05 TO 2005-06 IN FAVOUR OF S.V. RATNAM AND THE ADDITION WAS MADE IN THE HANDS OF TH E ASSESSEE WITHOUT ITA NOS.389 TO 392/VIZAG/2014 GRANDHI CHALAPATHI RAO, SECUNDERABAD 5 ANY EVIDENCE TO DISPROVE THE STATEMENT OF SRI SUBBA RAO WHICH IS UNJUSTIFIED AND REQUIRED TO BE DELETED. 5.1 THE LD. A.R. REFERRING TO PAGE NO.15 OF PAPER B OOK SUBMITTED THAT THE ASSESSEE HAD EXPLAINED THE TRANSACTIONS OF THE SEIZED MATERIAL BEFORE THE A.O. VIDE PAGE NO.15 AND 16 OF THE PAPER BOOK WHEREIN HE HAD DENIED ALL THE TRANSACTIONS AND EXPLAINED THE A O THAT ENTIRE TRANSACTIONS WERE RELATED TO SMT. S.V. RATNAM. IN FACT THE ASSESSEE HAS FURNISHED THE PAGE WISE DESCRIPTION OF THE TRANSACT IONS AND THE A.O. DID NOT BRING ANY EVIDENCE TO CONTROVERT THE SAME. REF ERRING TO PAGE NO.17 TO 18, THE LD. A.R. SUBMITTED THAT SMT. S.V. RATNAM ALSO SUBMITTED A LETTER TO THE DY. DIRECTOR OF INVESTIGATION (INCOME TAX) STATING THAT THE LOOSE SHEETS MARKED AS ANNEXURE GVS/4 FROM PAGE 1 T O 57 AND GVS/3 FROM PAGE NOS.1 TO 28 BELONGS TO HER BUT NOT BELONG ED TO THE ASSESSEE. SHE HAS ALSO SUBMITTED A LETTER TO THE EFFECT THAT THAT A SUM OF RS.1,90,000/- WAS DEPOSITED IN DHANALAKSHMI MAC SOC IETY AND RECEIVING THE INTEREST THROUGH MR. SUBBA RAO. THE ASSESSEE L ATE MR. G. CHALAPATHI RAO HAS SUBMITTED A LETTER DATED 20.12.2 010 STATING THAT THE LOOSE SHEETS REFERRED IN GVS/3 & GVS/4 ARE RELATABL E TO S.V. RATNAM BUT NOT RELATING TO HIM. THE LD. A.R. FURTHER EXPLAINE D THAT SUM OF RS.3,90,000/- OUT OF THE PROMISSORY NOTES SEIZED BY THE DEPARTMENT MARKED AS ANNEXURE GVS/3 REPRESENTS THE AMOUNTS TAK EN AS LOAN FROM ITA NOS.389 TO 392/VIZAG/2014 GRANDHI CHALAPATHI RAO, SECUNDERABAD 6 SHRI S.V. RATNAM AND THE RELEVANT PROMISSORY NOTES EXECUTED BY HIM WHICH CANNOT BE TREATED AS INCOME. SIMILARLY, A SU M OF RS.1,90,000/- MENTIONED IN THE SEIZED MATERIAL STATED TO BE OUT O F THE SUMS DEPOSITED IN DHANALAKSHMI MAC SOCIETY IN THE NAME OF SMT. S.V . RATNAM. THE LD.A.R SUBMITTED THAT AS EXPLAINED BY THE ASSESSEE AND AS PER THE SUBMISSIONS MADE BY S.V. RATNAM THE ENTIRE MATERIAL FOUND AND SEIZED DURING THE COURSE OF SEARCH MARKED AS ANNEXURE GVS/ 3 AND GVS/4 BELONGS TO S.V. RATNAM, HIS AUNT BUT DOES NOT BELON G TO THE ASSESSEE. THE LD.A.R. ARGUED THAT THE A.O. IS INCORRECT IN MA KING THE ASSESSMENT IN THE HANDS OF THE ASSESSEE INSTEAD OF ASSESSING T HE SAME IN THE HANDS OF SMT S.V. RATNAM. 7. ON THE OTHER HAND, THE LD. D.R. SUPPORTED THE OR DERS OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE ASSESSEE HAS SUBMITTED THE EVIDENCES WITH REGARD TO THE GVS/3 & GVS/4 FROM SMT. S.V. RATNAM STATING THAT THE TRANSACTIONS RECORDED IN THE ANNEXURE GVS/3 FROM PAGE NOS.1 TO 28 AND GVS/4 FROM PAGE NOS.1 TO 57 BELONGED TO HER. SHE OWNED THE ENTIRE TRANSACTI ONS RECORDED IN ANNEXURE GVS/3 & GVS/4 AND THE ASSESSEE HAS DENIED SAME BEFORE THE A.O. AS WELL AS THE DDIT. THE ASSESSEE HAS DISCHAR GED HIS BURDEN WITH ITA NOS.389 TO 392/VIZAG/2014 GRANDHI CHALAPATHI RAO, SECUNDERABAD 7 REGARD TO THE OWNERSHIP OF THE DOCUMENTS MENTIONED IN ANNEXURE GVS/3 & GVS/4 AND IT IS INCUMBENT UP ON THE A.O. TO MAKE FURTHER VERIFICATIONS OF THE OWNERSHIP AND THE CONTENTS OF THE ANNEXURE GVS/3 & GVS/4 AND REQUIRED TO BE ASSESSED IN THE HANDS OF T HE CORRECT PERSON BY TAKING APPROPRIATE ACTION AS AVAILABLE IN LAW. THO UGH ASSESSEE HAS DISCHARGED HIS BURDEN THE A.O.S HAS NOT SHIFTED TH E BURDEN TO THE ASSESSEE. MERELY RELYING ON THE STATEMENT OF THE A SSESSEES SON, THE A.O. CANNOT MAKE ADDITION IN THE HANDS OF THE ASSES SEE WITHOUT BRINGING ANY TANGIBLE EVIDENCE. ONCE THE ASSESSEE FURNISHED THE DETAILS OF THE TRANSACTIONS, THE NAME AND ADDRESS OF THE PERSON, T HE BURDEN OF THE ASSESSEE STANDS DISCHARGED AND SHIFTS TO THE REVENU E AND THE REVENUE HAS TO DISCHARGE ITS BURDEN MAKING NECESSARY ENQUIR IES. IN THIS CASE, EVEN THOUGH ASSESSEE HAS DISCHARGED THE BURDEN, THE A.O. HAS NOT DISCHARGED ITS BURDEN. THEREFORE, WE HOLD THAT THE A.O. HAS NOT MADE OUT A CASE FOR MAKING ADDITION IN THE HANDS OF THE ASSESSEE AND THE TRANSACTIONS RECORDED IN THE ANNEXURE GVS/3 & GVS/4 DO NOT RELATED TO THE ASSESSEE AND RELATED TO SMT. S. VENKATA RATNAM AND THE ADDITION IF ANY REQUIRED TO BE MADE IN HER HANDS BUT NOT IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, THE ADDITIONS MADE ON THE B ASIS OF ANNEXURE GVS/3 & GVS/4 STANDS DELETED. ITA NOS.389 TO 392/VIZAG/2014 GRANDHI CHALAPATHI RAO, SECUNDERABAD 8 9. WITH REGARD TO THE ADDITIONS MADE IN RESPECT OF T HE SEIZED MATERIAL MARKED AS ANNEXURE GVS/1, THE ASSESSEES SON IN QUE STION NO.4 HAS STATED THAT THE COPIES OF THE RELEVANT DOCUMENTS IN PAGE NOS.18 TO 22 REPRESENTS THE MONEY LENDING TRANSACTION DONE BY HI S FATHER. THIS FACT WAS NEITHER DISPUTED BY THE ASSESSEE NOR DISPUTED B Y HIS SON. IN THE SUBSEQUENT REPLIES FILED BEFORE THE A.O., THE ASSES SEE HAS NOT DISPUTED THE CONTENTS OF THE LOOSE SHEETS NUMBERED IN GVS/1, GVS/18 TO 22. IN THE LOOSE SHEETS FOUND AND SEIZED DURING THE COURSE OF SEARCH IN GVS/1, THERE WAS A PRINCIPAL AMOUNT AS WELL AS THE INTERES T RECORDED WHICH NOT WAS DISPUTED BY THE ASSESSEE AND DID NOT EXPLAIN. THEREFORE, WE HOLD THAT THE AMOUNTS RECORDED IN THE LOOSE SHEETS IN GV S/1 FROM PAGE NOS.18 TO 22 ARE RELATED TO THE MONEY LENDING TRANS ACTIONS OF THE ASSESSEE AS STATED BY THE ASSESSEES SON IN HIS STA TEMENT DATED 18.3.2009. ACCORDINGLY, WE UPHOLD THE ADDITIONS FO R THE ASSESSMENT YEARS 2005-06 TO 2006-07 AS UNDER: A.Y. AMOUNT OF ADDITION REMARKS SEIZED MATERIAL NO. 2005 - 06 PRINCIPAL RS.3,63,400/ - INTEREST RS. 58,080/- TOTAL RS.4,21,480/ - GVS/21 2006 - 07 PRINC IPAL RS.1,00,000/ - INTEREST RS. 14,600/- TOTAL RS.1,14,600/- GVS/1/18 ITA NOS.389 TO 392/VIZAG/2014 GRANDHI CHALAPATHI RAO, SECUNDERABAD 9 A.Y. AMOUNT OF ADDITION REMARKS SEIZED MATERIAL NO. 2006 - 07 PRINCIPAL RS. 60,000/ - RS.1,00,000/- INTEREST RS. 3,150/- RS. 8,200/- RS.1,71,350/- GVS/1/18 2006 - 07 PRINCIPAL RS. 2,200/ - INTEREST RS. 84/- RS. 2,284/- GVS/1/22 9. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE P ARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 10TH JAN18. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 10.01.2018 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT G.V.V.S.N. SUBBA RAO, L/R OF GRA NDHI CHALAPATHI RAO, PROP GRANDHI SUBBA RAO AND SONS, D.NO.27-7-5, AKELL AVARI LANE, TEMPLE STREET, KAKINADA. 2. / THE RESPONDENT THE ACIT, CENTRAL CIRCLE, RAJAH MUNDRY 3. + / THE CIT (CENTRAL), GUNTUR 4. + ( ) / THE CIT (A), GUNTUR 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM