The ITO, Ward-2(3), Vijayawada V. Smt D Indira, Vijayawada

ITA 406/VIZ/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2698 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-10-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 10-08-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Keywords: Unexplained cash credit; Onus to prove
• Section: 68

Judgement Text

ITANO.406 OF 09 D. INDIRA VIJAYAWADA PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.406/VIZAG/2009 ASSESSMENT YEAR: 2006-07 ITO WARD-2(3) VIJAYAWADA VS. D. INDIRA, VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO:AGIPD 6089 Q APPELLANT BY: SHRI D.S. SUNDER SINGH, DR RESPONDENT BY: SHRI D.L. NARASIMHA RAO, ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE O RDER DATED 22-6- 2009 PASSED BY LD CIT (A) VIJAYAWADA AND IT RELATES TO THE ASSESSMENT YEAR 2006-07. 2. THE REVENUE IS ASSAILING THE DECISION OF THE LD CIT (A) IN DELETING THE ADDITION OF RS.9,50,500/- MADE U/S 68 OF THE ACT. 3. THE FACTS RELATING TO THE SAID ISSUE ARE STATED IN BRIEF. THE AO DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, PERUSED T HE BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH ING VYSIA BANK AND NOTI CED THAT THE ASSESSEE HAD MADE HUGE CASH DEPOSITS WHICH WERE NOT REFLECTED IN THE RETURN OF INCOME. THE ASSESSEE STATED THAT THE BANK A/C WAS USED FOR PURCHASE AND SALE OF SHARES AND SINCE SHE INCURRED LOSS ON SHARES TRANSACTIONS, SHE DID NOT DISCLOSE THE BANK ACCOUNT IN THE RETURN OF INCOME. SHE STATED THAT SHE HAS RECEIVED LOANS AMOUNTING TO RS.9,50,500/- FROM HER RELATIVES WHO ARE AGRICULTURISTS AS DETAILED BE LOW FOR SHARE TRADING: 1. KADIYALA SRIHARI, DAGADARTHY VILLAGE, NELLORE DI STT. 80,000 2. K. NARASAIAH, DAGADARTHY VILLAGE, NELLORE DISTT 95,000 3. P. SURI BABU, DAGADARTHY VILLAGE, NELLORE DISTT 75,000 4. T. RAMAIAH, DAGADARTHY VILLAGE, NELLORE DISTT 1,00,000 5. V. PITCHI NAIDU, DAGADARTHY VILLAGE, NELLORE DIS TT 70,000 ITANO.406 OF 09 D. INDIRA VIJAYAWADA PAGE 2 OF 3 6. V. KONDAPA NAIDU, DAGADARTHY VILLAGE, NELLORE DI STT 72,500 7. M. SUDHAKARA RAO, DAGADARTHY VILLAGE, NELLORE DI STT 82,000 8. V. SUDHAKAR, DAGADARTHY VILLAGE, NELLORE DISTT 76,000 9. K. RAVI, DAGADARTHY VILLAGE, NELLORE DISTT 95 ,000 10. K. ANJAIAH, DAGADARTHY VILLAGE, NELLORE DISTT 95,000 11. CH. SUBBA RAO, DAGADARTHY VILLAGE, NELLORE DIST T 60,000 12. V. KOTESWARA RAO, DAGADARTHY VILLAGE, NELLORE D ISTT 50,000 4. THE ASSESSEE WAS ASKED TO PROVE THE CASH CREDITS AND THE ASSESSEE FILED CONFIRMATION LETTERS AND ALSO CERTIFICATES OB TAINED FROM THE VILLAGE REVENUE OFFICER CONFIRMING THE EXTENT OF LAND AND T HE ANNUAL INCOME DERIVED THERE FROM. HOWEVER, NONE OF THE CREDITORS COULD FURNISH THE PATTADAR PASS BOOKS IN SUPPORT OF AGRICULTURAL HOLD INGS. THE AO SUMMONED ALL THE CREDITORS AND ALL OF THEM EXCEPT SHRI V. PI TCHI NAIDU APPEARED BEFORE THE A.O. BASED ON THE STATEMENT RECORDED FROM THEM , THE AO NOTICED THAT MOST OF THEM ARE IN THE HABIT OF OBTAINING LOANS FR OM BANKS IN ORDER TO MEET THEIR AGRICULTURAL EXPENDITURE AND ACCORDINGLY CAME TO THE CONCLUSION THAT THEY ARE NOT HAVING ENOUGH WORTHINESS TO ADVAN CE THE IMPUGNED LOANS TO THE ASSESSEE. ACCORDINGLY HE ADDED THE ABO VE SAID AMOUNT OF RS.9,50,500/- IN THE HANDS OF THE ASSESSEE U/S 68 O F THE ACT AS UNEXPLAINED CASH CREDITS. SINCE THE LD CIT (A) DELE TED THE SAID ADDITION, THE REVENUE IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. THE LD AR PLACED RELIANCE ON THE DECISION O F THIS BENCH DATED 12- 11-2009 IN THE CASE OF CHEMICAL BIOTECH LTD., IN IT A 505/VIZAG/2008. IN OUR VIEW THE SAID DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. UNDER SECTION 68 OF THE ACT, THE PRIMARY ONUS IS PL ACED UPON THE ASSESSEE TO EXPLAIN THE CASH CREDIT. WITH REGARD TO THE CASH CREDITS THE ASSESSEE HAS TO SATISFY THE 3 MAIN INGREDIENTS VIZ., IDENTIFY OF THE CREDITORS, CREDIT WORTHINESS OF THE CREDITORS, AND GENUINENESS OF THE TRANSACTIONS. IN THE INSTANT CASE THE ASSESSEE HAS PROVED THE IDENTITY O F THE 11 CREDITORS BY PRODUCING THEM BEFORE THE AO. WITH REGARD TO THE CR EDITWORTHINESS, THESE CREDITORS COULD FURNISH ONLY A CERTIFICATE OBTAINED FROM THE VILLAGE REVENUE OFFICER AND THE AO HAS SUBSEQUENTLY POINTED OUT THA T THEY HAVE FAILED TO FURNISH THE PATTADAR PASS BOOKS IN SUPPORT OF THEIR RESPECTIVE CLAIM OF ITANO.406 OF 09 D. INDIRA VIJAYAWADA PAGE 3 OF 3 AGRICULTURAL LAND HOLDINGS. FURTHER, THE AO HAS AL SO NOTICED THAT THESE CREDITORS ARE IN THE HABIT OF OBTAINING AGRICULTURA L LOANS FROM BANKS IN ORDER TO MEET THEIR AGRICULTURAL EXPENDITURE. THE FACTS CITED ABOVE SHOW THAT THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS O F THESE CREDITORS. IT WAS ALSO POINTED OUT BY THE LD DR THAT THE ASSESSEE HAS CLAIMED TO HAVE OBTAINED LOANS FROM THESE PERSONS BY WAY OF CASH AN D HENCE THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THESE TRANSA CTIONS. FROM THE FOREGOING DISCUSSIONS IT CAN BE SEEN THAT THE ASSES SEE HAS FAILED TO DISCHARGE THE INITIAL BURDEN OF PROOF PLACED UPON H ER U/S 68 OF THE ACT. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF THE LD CIT (A) AND RESTORE THE ADDITIONS MADE BY THE AO. 6. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 19 TH NOVEMBER, 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 19-11-2010 COPY TO 1 THE ITO WARD - 2(3), VIJAYAWADA 2 SMT. DODDAPANENI INDIRA, D.NO.32 - 2 - 10/5C, G - 4, MOGULRAJPURA, VIJAYAWADA 3 4. THE CIT VIJAYAWADA THE CIT(A), VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM