Sri Dharipalli Sriramulu, Warangal V. ACIT, Central Circle-2, Visakhapatnam

ITA 417/VIZ/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4725 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 14-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEBAKUMAR SONOWAL
• Assessee Lawyers: M V ANIL KUMAR
• Keywords: Search and seizure; Peak credit
• Section: 132; 144

Judgement Text

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.NO. 414 TO 420 / VIZ /201 7 ( A . Y S : 2006 - 07 TO 2012 - 13 ) SRI DHARIPALLI S RIRAMULU D.NO.11 - 23 - 2053, TEACHERS COLONY L.B.NAGAR , WARANGAL . [PAN : A IVP D 6738K ] VS. ACIT, CENTRAL CIRCLE - 2 VISAKHAPATNAM . ( APPELLANT) ( RESPONDENT) ASSESSEE BY : SRI M.V. ANIL KUMAR, AR REVENUE BY : SRI DEBA KUMAR SONOWAL, CIT DR DATE OF HEARING : 2 3 . 10 . 2018 DATE OF PRONOUNCEMENT : 26 . 10 .2018 O R D E R PER BENCH : THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 3 , VISAKHAPATNAM, ALL DATED 10.03.2017 FOR THE ASSESSMENT YEARS 2006 - 07 TO 2012 - 13. SINCE GROUNDS RAISED IN THESE APPEALS ARE COMMON, THE APPEALS ARE CLUBBED , HEARD TOGETHER AND DISPOSED OF BY WAY OF COMMON ORDER FOR SAKE OF CONVENIENCE. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL FOR THE A.Y. 2006 - 07 , WHICH ARE COMMON FOR ALL THE ASSESSMENT YEARS OF 2006 - 07 TO 2012 - 13 : - 1. THE CIT(A) ERRED IN LAW AND FACTS OF THE CASE IN CONFIRMING THE 2 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) ADDITION OF RS. 2,40,300/ - AND RS. 73,305/ - MADE IN ASSESSMENT. 2. THE CIT(A) AND THE ASSESSING OFFICER OUGHT TO HAVE ACCEPTED THE FACT THAT RS. 2,40,300/ - BEING CASH DEPOSITED IN BANK AND RS. 73,3905/ - BEING INVESTMENT IN LAND WAS OUT OF DAILY FINANCE COLLECTIONS AND THE ADDITION MAY BE DELETED. 3. THE ASSESSING OFFICER AS WELL AS LD. CIT(A) OUGHT TO HAVE CONSIDER THE INCOME ADMITTED UNDER SECTION 132(4) OF THE INCOME TAX ACT, 1961, VIDE LETTER DATED 27/03/2014. 4. YOUR APPELLANT SUBMITS THAT THE ADDITION IS NOT BASED ON ANY SEIZED MATERIAL BUT BASED ON CASH DEPOSITED IN BANK ACCOUNT, THE ADDITION , IS BAD IN LAW AND MAY BE DELETED. 5. YOUR APPELLANT SUBMITS THAT CIT(A) AND ASSESSING OFFICER ERRED IN LAW AND FACTS OF THE CASE IN DISALLOWING RS. 24,000/ - , BEING DEDUCTION UNDER CHAPTER VIA OF THE INCOME TAX ACT, 1961. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING YOUR APPELLANT PRAYS THAT THE HON'BLE MEMBERS MAY PASS SUCH ORDERS DEEMED FIT. 3 . GROUND NO S .1 AND 2 ARE RELAT ED TO THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CASH DE POSIT S IN THE BANK ACCOUNTS . THIS ISSUE IS ALSO INVOLVED IN ALL THE ASSESSMENT YEARS ( A.Y. ) AS UNDER: 2006 - 07 2,40,300 2007 - 08 4,06,900 2008 - 09 4,51,000 2009 - 10 14,11,000 2010 - 11 7,38,000 2011 - 12 7,73,000 2012 - 13 1,15,000 4. DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS, THE EVIDENCES WERE FOUND EVIDENCING THAT HUGE CASH DEPOSITS MADE IN THE VARIOUS BANK ACCOUNTS. THE ASSESSEE WAS ASKED TO EXPLAI N THE SOURCES FOR CASH DEPOSITS . T HE ASSESSEE FILED EXPLANATION STATING THAT THE CASH DEPOSITS REPRESENT ED 3 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) DAILY FINANCE BUSINESS OF THE ASSESS EE I.E COLLECTION S FROM THE DEBTORS AND WITHDRAWALS , WHICH WERE USED FOR FURTHER FINANCE AND RE - DEPOSIT S IN BANK ACCOUNTS . THE ASSESSEE ALSO EXPLAINED THAT HE MADE INITIAL INVESTMENT OF RS.4 .00 LAKHS TOWARDS CIRCU LATING CAPITAL AND GIVEN DAILY FINANCE FOR A PERIOD OF 100 DAYS , OUT OF WHICH 10% WAS DEDUCTED AS CHARGES AND BALANCE WAS PAID TO THE BORROWER , WHICH IS EVIDENT FROM THE SEIZED MATERIAL A/DS/8, A/DS/4, A/DS/6, A/DS/5 AND A/DS/13. HE FURTHER STATED THAT THE DAILY FINANCE ACTIVITY WAS STARTED IN THE YEAR 2005 WITH INITIAL CAPITAL OF RS.4 .00 LAKHS AND ALSO ADMITTED A SUM OF RS. 2 .00 LAKHS AS UNDISCLOSED IN COME FOR THE A.Y. 2006 - 07. IN A NUT SHELL, THE ASSESSEE EXPLAINED THAT THERE WAS AN EVIDENCE REGARDING DAILY CASH FINANCE MADE BY THE ASSESSEE IN THE SEIZED MATERIAL AND THE ENTIRE CASH DEPOSITS WERE RELATABLE TO THE DAILY FINANCE BUSINESS DONE BY THE ASSESSEE , ON WHICH HE RECEIVED INTEREST AS INCOME. THE DAILY FINANCE BUSINESS AND THE DEPOSITS ARE INTER LINKED , WHICH WAS FOUND AND SEIZED AT THE TIME OF SEARCH. THEREFORE, SUBMITTED THAT THE SOURCE OF CASH DEPOSIT S WAS DAILY RECEIPT S FROM THE FINANCE BUSINESS. THE AO NOT BEING SATISFIED WITH THE EXPLANATION OFFERED BY THE ASSESSEE AND HAVING FAILED TO PRODUCE ANY EVIDENCE, MADE THE ADDITION TOWARDS CASH DEPOSITS AS UNEXPLAINED INCOME FOR THE A.YS. 2 006 - 07 TO 2012 - 13 . THE 4 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) YEAR - WISE DETAILS OF THE CASH DEPOSITS IN THE BANK ACCOUNT FROM THE A.Y.2006 - 07 TO 2012 - 13 ARE AS UNDER: NAME OF THE A/C HOLDER NAME OF THE BANK ACCOUNT NO. DEPOSITS (IN RS.) FINANCIAL YEAR 2005 - 06 RELEVANT TO A.Y.2006 - 07 F.Y.2005 - 06 D.SRIRAMULU DEVELOPMENT CREDIT BANK, WARANGAL 01510100079499 2,40,300 TOTAL 2,40,300 FINANCIAL YEAR 2006 - 07 RELEVANT TO A.Y.2007 - 08 F.Y.2006 - 07 D.SRIRAMULU DEVELOPMENT CREDIT BANK, WARANGAL 01510100079499 3,75,900 D.SRIRAMULU STATE BANK OF HYDERABAD, WARANGAL 62027650050 31,000 TOTAL 4,06,900 FINANCIAL YEAR 2007 - 08 RELEVANT TO A.Y.2008 - 09 F.Y.2007 - 08 D.SRIRAMULU DEVELOPMENT CREDIT BANK, WARANGAL 01510100079499 1,78,000 D.SRIRAMULU STATE BANK OF HYDERABAD, WARANGAL 62027650050 60,000 D.SRIRAMULU AXIS BANK, WARANGAL 292010100075004 2,13,000 FINANCIAL YEAR 2008 - 09 RELEVANT TO A.Y.2009 - 10 F.Y.2008 - 09 D.SRIRAMULU DEVELOPMENT CREDIT BANK, WARANGAL 01510100079499 8,000 D.SRIRAMULU STATE BANK OF HYDERABAD, WARANGAL 62027650050 40,000 D.SRIRAMULU AXIS BANK, WARANGAL 292010100075004 13,13,000 LAKSHMI DHARIPELLI AXIS BANK, RAMNAGAR, VISAKHAPATNAM 369010200017736 50,000 TOTAL 14,11,000 FINANCIAL YEAR 2009 - 10 RELEVANT TO A.Y.2010 - 11 F.Y.2009 - 10 D.SRIRAMULU AXIS BANK, WARANGAL 292010100075004 6,88,000 LAKSHMI DHARIPELLI AXIS BANK, RAMNAGAR, VISAKHAPATNAM 369010200017736 50,000 FINANCIAL YEAR 2010 - 11 RELEVANT TO A.Y.2011 - 12 F.Y.2010 - 11 5 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) D.SRIRAMULU STATE BANK OF HYDERABAD, WARANGAL 62027650050 29,500 D.SRIRAMULU AXIS BANK, WARANGAL 292010100075004 3,97,000 LAKSHMI DHARIPELLI AXIS BANK, RAMNAGAR, VISAKHAPATNAM 369010200017736 2,38,500 LAKSHMI DHARIPELLI AXIS BANK, RAMNAGAR, VISAKHAPATNAM 910010042658404 1,08,000 TOTAL 7,73,000 FINANCIAL YEAR 2010 - 11 RELEVANT TO A.Y.2011 - 12 F.Y.2011 - 12 D.SRIRAMULU AXIS BANK, WARANGAL 292010100075004 90,000 LAKSHMI DHARIPELLI AXIS BANK, RAMNAGAR, VISAKHAPATNAM 369010200017736 25,000 TOTAL 1,15,000 FROM F.YS. 2005 - 06 TO 2011 - 12 RELEVANT TO A.YS 2006 - 07 TO 2012 - 13 TOTAL DEPOSITS 41,35,200 5 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) , WHO CONFIRMED THE ADDITION SINCE THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE. THE REFORE, ASSESSEE CARRIED THE MATTER BEFORE THIS TRIB UNAL. 6 . DURING THE APPEAL HEARING, LD.AR SUBMITTED THAT ASSESSEE IS CARRYING ON THE BUSINESS OF DAILY FINANCE AND THE DEPOSITS WERE MADE OU T OF THE DAILY FINANCE BUSINESS COLLECTION. THE AO MADE THE ADDITION OF ENTIRE CASH DEPOSITS , S INCE , THE ASSESSEE HAS MADE THE CASH DEPOSITS AND WITHDRAW A L S AND USED TO CIRCULATE THE AMOUNT OF RS.4 .00 LAKHS EITHER FOR DEPOSIT OR FOR FINANCE BUSINESS , THE LD.AR ARGUED THAT THE AO OUGHT TO HAVE MADE THE ADDITION OF PEAK CREDIT, INSTEAD OF ENTIRE CASH DEPOS IT S AS UNDISCLOSED INCOME . THE LD.AR SUBMITTED THAT ASSESSEE COULD NOT APPEAR BEFORE THE AO AND SUBMIT THE EXPLANATION WITH PROPER EVIDENCES SINCE THE ASSESSEES 6 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) BROTHER - SHRI D.SAMPATH IS HAVING LIFE THREAT AND ASSESSEE IS ALSO UNDER PRESSURE AND SCARED OF SMT. U RAJYA LAKSHMI IN CONNECTION WITH THE TRANSACTION S OF SHRI D.SAMPATH WITH THE SAID RAJJYA LAKSHMI . THEREFORE, REQUESTED TO REMIT THE MATTER BACK TO THE FILE OF THE AO TO CONSIDER THE PEAK CREDITS IN PLACE OF THE ADDITION ON ACCOUNT OF ENTI RE DEPOSITS . 7 . ON THE OTHER HAND, THE LD.DR VEHEMENTLY OPPOSED TO REMIT THE MATTER BACK TO THE FILE OF THE AO AND ARGUED THAT THE ASSESSEE HAS NOT FURNISHED THE INFORMATION EITHER BEFORE THE AO OR BEFORE THE LD .CIT(A) IN SPITE OF GIVING NUMBER OF OPPORTUNITIES , THEREFORE, ARGUED THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD. CIT(A). 8 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, THE ASSESSMENT WAS COMPLETED U/S 144 R.W.S. 153C OF THE ACT AND THE ASSESSEE HAS GIVEN THE REASON FOR NON - COMPLIANCE AS POSSIBLE THREAT FROM SMT. U RAJYA LAKSHMI AND O THERS , SINCE THE ASSESSEE HAPPENS T O BE BROTHER OF SHRI D.SAMPATH WHO HAD HANDLED THE FINANCIAL TRANSACTIONS OF SMT.U RAJYA LAKSHMI. THE ASSESSEE ALSO EXPLAINED THAT HE HAS CARRIED ON THE BUSINESS OF DAILY FINANCE AND THE CASH DEPOSITS REPRESENT THE CASH COLLECTIONS OF DAILY FINANCE BUSINESS . ACCORDING TO THE ASSESSEE, HE MADE INITIAL INVESTMENT O F RS.4 .00 LAKHS FOR DAILY FINANCE AND ADVANCED THE AMOUNT FOR 100 DAYS BY DEDUCT ING 10% AS HIS CHARGES AT SOURCE . THE 7 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) INTEREST ON DAILY FINANCE AND THE CHARGES COLLECTED BY THE ASSESSEE REPRESENTS HIS INCOME. THE ASSESSEE SUBMITTED EXTRACT OF BANK ACCOUNT , WHICH IS PLACED IN THE PAPER BOO K AND SUBMITTED THAT DURING THE APPEAL HEARING THAT THERE WERE FREQUENT CASH WITHDRAWALS AND DEPOSITS IN THE BANK ACCOUNT WHICH R EQUIRED TO BE CONSIDERED IN TOTAL AND ONLY THE PEAK CREDITS REQUIRED TO BE BROUGHT TAX , BUT NOT THE ENTIRE DEPOSITS. THE LD.A.R ASSURED FOR EXTENDING FULL COOPERATION TO THE AO IN COMPLYING WITH THE SUBMISSION OF REQUIRED INFORMATION. THEREFORE, WE ARE OF THE CONSIDERED OPINION THA T THE ISSUE NEEDS DETAILED VERIFICATION AT THE END OF THE AO TO ASSESS THE INTEREST INCOME AND THE FINANCE CHARGES COLLECTED BY THE ASSESSEE AS WELL AS THE UNEXPLAINED INCOME ON ACCOUNT OF CASH DEPOSITS MADE IN THE BANK ACCOUNT. THE AO IS REQUIRED TO WORK OUT THE PEAK DEPOSITS OF EACH ASSESSMENT YEAR AND TO TAX THE SAME. THE ASSESSEE IS DIRECTE D TO COOPERATE WITH THE AO BY FURNISHING NECESSARY INFORMATION TO COMPLETE THE ASSESSMENT. ACCORDINGLY, WE SET ASIDE THE ORDER S OF THE LOWER AUTHORITIES ON THIS ISSUE AND REMIT THE MATTER BACK TO THE FILE OF THE AO FOR FRESH CONSIDERATION. ACCORDINGLY, A PPEAL S OF THE ASSESSEE FOR THE A.Y S . 2006 - 07 TO 2012 - 13 ON THIS GROUND ARE ALLOWED FOR STATISTICAL PURPOS E S . 9 . THE NEXT ISSUE FOR THE A.Y. 2006 - 07 IN GROUND NO.1 & 2 IS WITH REGARD TO THE ADDITION OF 73,305/ - FOR PURCHASE OF LAND ADMEASURING 166.83 SQ.YDS. 8 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) DURING THE COURSE OF SEARCH PROCEEDINGS IN THE CASE OF SHRI D.SAMPATH, AS PER THE SEIZED MATERIAL ANNEXURE A/DS/13 , IT IS FOUND THAT THE ASSESSEE HAD ACQUIRED THE LAND ADMEASURING 166.83 SQ.YDS AT GORREKUNTA , STHAMBAMPALLI (V) THROUGH SALE DEED EXECUTED ON 28.02.2006 VIDE DOCUMENT NO.2178/2006 FOR AN AMOUNT OF RS.73,305/ - . THE AO ISSUED THE SHOW CAUSE NOTICE TO EXPLAIN THE SOURCES OF THE PAYMENT AND THE ASSESSEE EXPLAINED THAT THE EXPENDITURE WAS ME T OUT OF HIS INCOME AND THE AMOUNTS RECEIVED FROM HIS FATHER. WITH REGARD TO HIS INCOME, IT IS OBSERVED THAT THE ASSESSEE DID NOT FILE THE RETURN OF INCOME AND THUS THE SOURCE REMAIN ED UNEXPLAINED. WITH REGARD TO THE ADVANCE RECEIVED FROM HIS FATHER ALSO , NO EVIDENCE WAS FURNISH ED FROM HIS FATHER. IN THE ABSENCE OF ANY EVIDENCE, THE AO TREATED THE SUM OF RS.73,305/ - AS UNDISCLOSED INCOME AND MADE THE ADDITION. 1 0 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) , WHO CONFIRMED THE ADDITION. 1 1 . AGGRIEVED BY THE ORDER OF THE LD.CIT(A) , THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.AR DID NOT FURNISH ANY EVIDENCE TO SUPPORT THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE WAS HAVING SURP LUS INCOME TO MEET THE INVESTMENT FOR PURCHASE OF THE LAND. THE ASSESSEE ALSO DID NOT FURNISH ANY EVIDENCE TO SHOW THAT HE HA D 9 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) RECEIVED THE SAID SUM FROM HIS FATHER. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) AND TH E SAME IS UPHELD. 1 2 . GROUND NO. 3 FOR THE A.Y.2006 - 07 IS TO CONSIDER THE INCOME ADMITTED U/S 132(4) OF THE ACT. DURING THE APPEAL HEARING, THE LD.AR DID NOT FURNISH ANY EVIDENCE HAVING ADMITTED THE INCOME U/S 132(4) AND PAID RELEVANT TAXES FOR THE IMPUGN ED ASSESSMENT YEARS. AS PER THE ASSESSMENT ORDER, THE ASSESSEE DID NOT FILE THE RETURN OF INCOME IN RESPONSE TO THE NOTICE ISSUED U/S 153C. HAVING NOT FILED THE RETURN OF INCOME AND DID NOT PAY THE TAXES, THERE IS NO SANCTITY FOR THE ADMISSION GIVEN BY T HE ASSESSEE U/S 132(4), HENCE, THE APPEALS OF THE ASSESSEE ON THIS GROUND ARE DISMISSED FOR ALL THE A.YS. 2006 - 07 TO 2012 - 13. 1 3 . GROUND NO.4 IS RELATED TO THE VALIDITY OF THE ASSESSMENT MADE U/S 153C , WITHOUT HAVING THE SEIZED MATERIAL AND THIS IS A COMMON GROUND FOR THE A.YS 2006 - 07 TO 2012 - 13. DURING THE APPEAL HEARING, LD.AR SUBMITTED THAT SEARCH U/S 132 WAS CONDUCTED IN THE CASE OF SHRI DHARIPALLI SAMPATH AND THE ASSESSMENT WAS MADE IN THE CASE OF THE ASSESSEE U/S 153C OF THE ACT. THE LD.AR ARGU ED THAT THE ADDITIONS WERE MADE ON THE BASIS OF THE BANK DEPOSITS BUT NOT ON THE BASIS OF THE SEIZED MATERIAL, HENCE, ARGUED THAT THE ASSESSMENTS MADE U/S 153C ARE BAD IN LAW. 10 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) 1 4 . ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 1 5 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. AS PER THE INFORMATION AVAILABLE ON RECORD, THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME FOR THE IMPUGNED A.YS. 2006 - 07 TO 2012 - 13 BEFORE THE ISSU ANCE OF NOTICE U/S 153C AND NO ASSESSMENTS WERE MADE U/S . 1 4 3(3). SEARCH U/S 132 WAS CONDUCTED IN THE CASE OF SHRI D.SAMPATH AND DURING THE COURSE OF SEARCH, BANK ACCOUNTS RELATING TO THE ASSESSEE WERE FOUND WHEREIN, HUGE CASH DEPOSITS WERE MADE IN THE BANK AC COUNTS APART FROM THE EVIDENCE FOR PURCHASE OF LAND AS PER THE IMPOUNDED MATERIAL ANNEXURE A/DS/13 AT PAGE NO.101 TO 110. FURTHER THE PROMISSORY NOTES WERE ALSO FOUND AND SEIZED RELATING TO THE ADVANCES MADE BY THE A SSESSEE DURING THE F.Y.2006 - 07 - 2010 - 11. ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH, THE AO ISSUED NOTICE U/S 153C AND INITIATED PROCEEDINGS FOR COMPLETING THE SEARCH ASSESSMENTS. IN THIS CASE, THE LD.AR DID NOT BRING ANY EVIDENCE TO SHOW THAT THE ASSESSEE HAD FILED THE REGULAR RETURN S FOR THE A.Y.S INVOLVED BEFORE THE DATE OF SEARCH OR BEFORE INITIATING THE PROCEEDINGS U/S153C. THERE IS NO CASE OF COMPLETED ASSESSMENTS WHICH ARE REQUIRED TO BE DISTURBED. SINCE THE BANK ACCOUNTS AND THE DEPOSITS WERE NEVER DISCLOSED BY THE ASSE SSEE AND SAID BANK ACCOUNTS WERE 11 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) FOUND DURING THE COURSE OF SEARCH , THE INFORMATION FOUND CONSTITUTE THE INCRIMINATING MATERIAL FOR TAKING THE ACTION U/S 153C. DURING THE SEARCH ASSESSMENT PROCEEDINGS ALSO , THOUGH , AO HAD ISSUED NOTICE U/S 153C OF THE A CT, ASSESSEE HAS NOT FILED THE RETURN OF INCOME FOR ALL THE ASSESSMENT YEARS OF 2006 - 07 TO 2012 - 13. THEREFORE, WE HOLD THAT THE AO HAS RIGHTLY INITIATED THE PROCEEDINGS U/S 153C , A ND WE DO NOT FIND ANY INFIRMITY IN THE ORDER S OF THE LOWER AUTHORITI ES AND ACCORDINGLY, DISMISS THE APPEAL S OF THE ASSESSEE ON THIS GROUND FOR THE A.YS. 2006 - 07 TO 2012 - 13. 1 6 . FOR THE A.Y. 2007 - 08 APART FROM THE ISSUES RAISED IN APPEAL FOR THE A.Y.2006 - 06 DISCUSSED IN PARAGRAPH NO. 2 TO 1 5 IN THIS ORDER , THE ASSESSEE HAS RAISED THE FOLLOWING ISSUE AS GROUND NO.4. THE CIT(A) HAVING CALLED FOR THE RECORDS AND ASSESSMENT ORDERS OF SMT. U.RAJYSALAKSHMI OUGHT TO HAVE GIVEN AN OPPORTUNITY TO VERIFY THE SAME AND EXPLAIN THE FACTS, AFTER CONSIDERING THE SAME OUGHT TO HAVE DEL ETED THE ADDITION. THIS ISSUE IS ALSO INVOLVED FOR THE A.YS 2007 - 08 2012 - 13. DURING THE APPEAL HEARING, THE LD.AR DID NOT EXPLAIN THE CONNECTION BETWEEN SMT. U . RAJYA LAKSHMI AND THE ASSESSEE AND ALSO DID NOT PLACE ANY EVIDENCE TO SHOW THAT THE TRANSACTIONS OF THE ASSESSEE AND SMT . U . RAJYA LAKSHMI ARE INTER LINKED. THE LD.AR DID NOT PRESS THIS GROUND DURING THE APPEAL HEARING. THEREFORE, THE APPEAL OF THE ASSESSEE ON THIS GROUND IS DISMISSED AS NOT PRESSED FOR THE A.Y. 2007 - 08 TO 2012 - 13. 12 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) 1 7 . GR OUND NO.5 FOR THE A.Y. 2007 - 08 IS RELATED TO THE ADDITION OF RS.75,000/ - GIVEN AS LOANS AND ADVANCES . THIS ISSUE IS INVOLVED FOR THE A.YS 2007 - 08 TO 2011 - 12. THE DETAILS OF ADVANCES MADE BY THE ASSESSEE FOR THE ASSESSMENT YEARS FROM 2007 - 08 TO 2011 - 12 , AS PER THE SEIZED MATERIAL ARE AS UNDER: - F.Y. NAME OF PERSON TO WHOM ADVANCE WAS GIVEN AMOUNT REFERENCE IN SEIZED MATERIAL F.Y. 2006 - 07 VARIOUS PERSONS ON PROMISSORY NOTES 55,000 PAGE NO. 1 TO 6 IN ANNEXUREA/DS/13 F.Y. 2006 - 07 SAMBA MURTHY 20,000 PAGE NO. 44 IN ANNEXUREA/DS/13 TOTAL FOR F.Y. 2006 - 07 RELEVANT A.Y. 2007 - 08 75,000 F.Y. 2007 - 08 VARIOUS PERSONS ON PROMISSORY NOTES 1,00,000 PAGE NO. 1 TO 6 IN ANNEXUREA/DS/13 F.Y. 2007 A.P. SRINU 23,340 PAGE NO. 18 IN ANNEXURE A/DS/11 F.Y. 2007 GATTU VENKATA RAMANA 15,000 PAGE NO. 54 IN ANNEXURE A/DS/13 TOTAL FOR F.Y. 2007 - 08 RELEVANT A.Y. 2008 - 09 1,38,340 F.Y. 2008 - 09 VARIOUS PERSONS ON PROMISSORY NOTES 15,000 PAGE NO. 1 TO 6 IN ANNEXURE A/DS/13 F.Y. 2008 G. SATTEMMA 25,000 PAGE NO. 27 IN ANNEXURE A/DS/13 F.Y. 2008 A. RAVIKUMAR 15,000 PAGE NO. 32 IN ANNEXURE A/DS/13 F.Y. 2008 G. NAVEEN KUMAR 40,000 PAGE NO. 47 IN ANNEXURE A/DS/13 F.Y. 2008 J. RAMACHANDER 20,000 PAGE NOS. 51 & 52IN ANNEXURE A/DS/13 TOTAL FOR F.Y. 2008 - 08 RELEVANT A.Y. 2009 - 10 F.Y. 2009 - 10 MATHENA SURENDER 20,000 PAGE NO. 53 IN ANNEXURE A/DS/13 F.Y. 2009 - 10 VARIOUS PERSONS 3,65,000 PAGE NOS. 67 TO 85 IN ANNEXURE A/DS/13 TOTAL FOR F.Y. 2009 - 10 RELEVANT A.Y. 2010 - 11 13 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) F.Y. 2010 - 11 T. SARASWATHI 36,000 PAGE NO. 77 IN ANNEXUREA/DS/11 F.Y. 2010 - 11 VARIOUS PERSONS (15 IN NUMBER) 8,76,000 PAGE NO. 18 IN ANNEXUREA/DS/11 F.Y. 2010 - 11 VARIOUS PERSONS (15 IN NUMBER) 1,90,000 PAGE NO. 69 IN ANNEXUREA/DS/12 TOTAL FOR F.Y. 2010 - 11 RELEVANT A.Y. 2011 - 12 19,12,000 GRANT TOTAL 26O,25,340 DURING THE COURSE OF SEARCH, THE AO FOUND THAT THE ASSESSEE HAS MADE THE ADVANCES TO VARIOUS PERSONS ON PROMISSORY NOTES AS PER DETAILS G IVEN IN ANNEXURE A/DS/13 . SINCE THE ASSESSEE FAILED TO EXPLAIN THE SO URCES, THE AO MADE THE ADDITION AS UNDISCLOSED INCOME FOR THE A.YS . 2007 - 08 TO 2012 - 13 AS UNDER: A.Y (UNDISCLOSED INCOME RELATING TO AMOUNT OF LOANS AND ADVANCES ) 2007 - 08 75,000 2008 - 09 1,38,000 2009 - 10 3,85,000 2010 - 11 1,15,000 2011 - 12 19,12,000 1 8 . ON APPEAL , THE LD.CIT(A) CONFIRMED THE ADDITION SINCE THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE TO EXPLAIN THE SOURCES. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT THE RELEVANT PART OF THE ORDE R OF THE CIT(A) IN PARA NO.4.3 FOR THE A.Y.2006 - 07 IS AS UNDER : 4.3. REGARDING THE LOANS AND ADVANCES GIVEN TO VARIOUS PERSONS, IT IS THE CONTENTION OF THE APPELLANT THAT THE SOURCE FOR THE SAME WAS HIS DAILY FINANCE BUSINESS AND INTEREST INC OME EARNED THEREON. BUT, THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXP L ANATION OFFERED BY THE APPELLANT AS HE HAS NOT PRODUCED ANY EVIDENCE TO PROVE THAT THE LOANS AND ADVANCES ARE OUT OF 14 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) HIS DAILY FINANCE BUSINESS AND TREATED THE SAME UNEXPLAINED LOANS A ND ADVANCES IN THE HANDS OF THE APPELLANT. ADDED BACK THE ENTIRE AMOUNT OF RS.75,000/ - TO THE INCOME. EVEN DURING THE APPELLATE PROCEEDINGS, NO EVIDENCE WAS FURNISHED / PRODUCED BY THE APPELLANT. ACCORDINGLY, THE ADDITION OF RS.75,000/ - IS HEREBY CONFIRMED . 19 . DURING THE APPEAL HEARING, THE LD.AR DID NOT PRODUCE ANY FRESH MATERIAL TO SUPPORT SOURCES. THE ASSESSEE ALSO DID NOT FILE ANY RETURN OF INCOME FOR THE A.Y. UNDER CONSIDERATION. THE ASSESS E E EXPLAI N ED THAT THE CASH DEPOSITS, WITHDRAWALS AND THE DAILY FINANCE ARE INTERLINKED, HENCE , THE CASH DEPOSITS AND THE LOANS AND ADVANCES CANNOT BE SEEN IN ISOLATION. SI NCE THE ASSESSEE IS DEALING IN DAILY FINANCE AS STATED BY HIM AND THE CASH DEPOSITS , WITHDRAWA LS AND THE SOURCES FOR FINANCES AS WELL AS COLLECTIONS FROM THE DEBTORS REQUIRED TO BE CONSIDERED COLLECTIVELY , HENCE, IN THE INTEREST OF JUSTICE , WE ARE OF THE CONSIDERED VIEW THAT THIS I SSUE REQUIRE S TO BE CONSIDERED ALONG WITH THE SOURCES OF CASH DEPOSITS. THE A SSESSING O FFICER REQUIRED TO CONSIDER THE TOTALITY OF THE FACTS FOR THE SOURCES IN FINANCE BUSINESS, COLLECTIONS, CASH DEPOSITS MADE IN THE BANK ACCOUNT AND THE CASH WITHDRAWALS AND ITS APPLICATION AND REQUIRED TO TAX THE AMOUNTS REPRESENTING THE UNEX PLAINED SOURCES AND THE INTEREST INCOME EARNED THEREFROM. ACCORDINGLY, WE REMIT THE MATTER BACK TO THE FILE OF THE AO FOR FRESH CONSIDERATION AND TO EXAMINE THE ENTIRE ISSUE OF LOANS AND ADVANCES AND DE CIDE THE ISSUE AFRESH ON MERITS. THE ASSESSEE REQUIRED TO COOPERATE 15 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) WITH THE DEPARTMENT AND SUBMIT NECESSARY INFORMATION TO COMPLETE THE ASSESSMENT IN TIME FRAME. ACCORDINGLY THE APPEAL OF THE ASSESSEE , ON THIS GROUND , FOR THE A.YS2007 - 08 TO 2011 - 12 IS ALLOWED FOR STATISTICAL PURPOSES. 2 0 . THE NEXT ISSUE FOR THE A.Y 2008 - 09 RAISED IN GROUND NO.5 IS RELATED TO THE ADVANCE FOR PURC HASE OF LAND AT WADDEPALLI FOR RS.1,64,350/ - . DURING THE COURSE OF SEARCH, THE AO FOUND THAT THE ASSESSEE MADE THE INVESTMENT OF RS.1,64,350/ - FOR PURCHASE OF LAND IN NIRUP NAGAR, WADDEPALLI (V) ADMEASURING 250 SQ.YDS FROM HIS CO - BROTHER S HRI D.VENKATACHARI THROUGH SALE DEED DATED 05.10.2007 VIDE DOCUMENT NO.11687/2007 , WHICH WAS FOUND VIDE SEIZED IN ANNEXURE A/DS/13 AT PAGE NO.111 TO 122. THE ASSESSEE HAS BEEN AS KED TO EXPLAIN THE SOURCE FOR RS.1,64,350/ - , BUT ASSESSEE FAILED TO EXPLAIN THE SOURCE. THE ASSESSEE IN HIS REPLY SUBMITTED TO THE SHOW - CAUSE NOTICE DATED NIL , HAS ACCEPTED RS.1, 64,350/ - AS UNDISCLOSED INCOME FOR THE A.Y. 2008 - 09. THEREFORE, THE ASSESSING OFFICER MADE THE ADDITION OF RS. 1,64,350/ - AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. 2 1 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) , WHO CONFIRMED THE ADDITION SINCE THE ASSESSEE HAS NEITHER COO PERATED WITH THE DEPARTMENT NOR FURNISHED ANY EVIDENCE BEFORE THE LD.CIT(A). 16 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) DURING THE APPEAL HEARING, THE LD.AR DID NOT FURNISH ANY EVIDENCE TO SUPPORT THE SOURCE FOR PURCHASE OF LAND AT WADDEPALLI. AS EVIDENCED FROM THE CIT(A) S ORDER AND THE ASSESSMENT OR DER, THE ASSESSEE DID NOT COOPERATE WITH THE DEPARTMENT AND SUPPORT HIS CASE IN SPITE OF REPEATED OPPORTUNITIES. SINCE THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE BEFORE THE LOWER AUTHORITIES AS WELL AS DURING THE APPEAL HEARIN G, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) AND THE SAME IS UPHELD. 2 2 . THE NEXT ISSUE IN GROUND NO.6 FOR THE A.Y. 2008 - 09 IS PURCHASE OF GOLD FOR RS.40,000/ - . THE AO FOUND DURING THE COURSE OF SEARCH IN THE CASE OF D.SAMPATH AS PER THE S EIZED MATERIAL ANNEXURE A/DS/11 PAGE NO.77, THAT THE ASSESSEE HAD PURCHASED GOLD WORTH RS.40,000/ - DURING THE FINANCIAL YEAR 2007 - 08. THE A O ISSUED SHOW CAUSE NOTICE REQU ESTING THE ASSESSEE TO EXPLAIN AS TO WHY THE SAME SHOULD NOT BE TREATED AS UNDISCLOSED INCOME. THE ASSESSEE EXPLAINED THAT THE GOLD WAS PURCHASED OUT OF THE INTEREST INCOME WHICH WAS UNDISCLOSED , THE REFORE, THE AO MADE THE ADDITION OF RS.40,000/ - AS UNDISCLOSED INCOME . 23 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) , WHO CONFIRMED THE ADDITION SINCE NO CREDIBLE INFORMATION HAD BEEN FILED EVEN BEFORE THE LD.CIT(A). 17 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) 24 . AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. DURING THE APPEAL HEARING, THE LD.AR DID NO T FURNISH ANY EVIDENCE TO EXPLAIN THE SOURCE F OR PURCHASE OF GOLD. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND THE SAME IS UPHELD. 2 5 . THE NEXT ISSUE IN GROUND NO.9 FOR THE A.Y. 2008 - 09 IS DISALLOWANCE OF DEDUCTION CLAIMED U/S EC. CHAPTER - VIA FOR RS.82,127/ - . THIS ISSUE IS INVOLVED FOR THE A.Y S . 2009 - 10, 2010 - 11 AND 2011 - 12. THE ASSESSEE DID NOT FURNISH ANY EVIDENCE BEFORE THE A O/CIT(A) TO SUPPORT HIS CLAIM. D URING THE APPEAL HEARIN G BEFORE US , THE LD.AR FAIRLY CONCEDED THAT N O EVID ENCE IS AVAILABLE FOR THE CLAIM . THEREFORE , APPEAL S OF THE ASSESSEE ON THIS GROUND ARE DISMISSED FOR A.Y.2008 - 09 TO 2011 - 12 . 26 . IN THE RESULT, APPEAL S OF THE ASSESSEE FOR THE A.YS . 2006 - 07 TO 2012 - 13 ARE PARTLY ALLOWED. O RDER PRONOUNCED IN OPEN COURT ON THIS 26 TH DAY OF OCTOBER , 2018. S D/ - SD/ - ( D.S. SUNDER SINGH ) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER VISAKHAPATNAM DATED : 26 . 10 .2018 L.RAMA & VR , SPS 18 I.T.A. NO S.4 14 - 420 / VIZ /201 7 ( SRI DHARIPALLI SRIRAMULU ) COPY OF THE ORDER FORWARDED TO: - 1. THE ASSESSEE - SRI DHARIPALLI SRIRAMULU, D.NO.11 - 23 - 2053, TEACHERS COLONY, L.B.NAGAR, WARANGAL 2. THE REVENUE ACIT, CENTRAL CIRCLE - 2, VISAKHAPATNAM 3. THE PR. COMMISSIONER OF INCOME TAX (CENTRAL) , VI SAKHAPATNAM 4. THE COMMISSIONER OF INCOME - TAX(APPEALS) - 3 , VISAKHAPATNAM. 5 . DR, ITAT, VISAKHAPATNAM 6 . GUARD FILE BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM