Korapolu Kanaka Raju, Visakhapatnam V. The ITO, Visakhapatnam

ITA 424/VIZ/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8776 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 24-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SESHA SRINIVAS
• Keywords: Business income; Income from undisclosed sources; Corroborative evidences
• Section: 143(3); 131

Judgement Text

ITA NO.424/VIZAG/2016 KORAPOLU KANAKA RAJU, VSKP 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.NO.424/VIZAG/2016 ( / ASSESSMENT YEAR: 2009-10) KORAPOLU KANAKA RAJU VISAKHAPATNAM ITO, WARD - 1(4), VISAKHAPATNAM [PAN NO. AHXPK2566R ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI C. SUBRAHMANYAM, AR / RESPONDENT BY : SHRI SESHA SRINIVAS, DR / DATE OF HEARING : 07.02.2018 / DATE OF PRONOUNCEMENT : 09.02.2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE COMMISSIONER OF INCOME TAX-1 {CIT(A)}, VISAKHAPATNA M VIDE ITA NO.0254/2014-15/ITO W-1(4),VSP/2015-16 DATED 30.9.2 016 FOR THE ASSESSMENT YEAR 2009-10. ITA NO.424/VIZAG/2016 KORAPOLU KANAKA RAJU, VSKP 2 2. THE ASSESSEE FILED RETURN OF INCOME DECLARING TO TAL INCOME OF ` 3,31,219/-. THE CASE WAS SELECTED FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. FOUND THE UNDISCL OSED BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH INDIAN BANK, MAHARA NIPETA, VISAKHAPATNAM WITH ACCOUNT NO.713957051. THE A.O. CALLED FOR THE BANK ACCOUNT AND FOUND THAT THE ASSESSEE HAD MADE A GGREGATE DEPOSITS OF ` 30,04,218/- IN THE BANK ACCOUNT, INCLUSIVE OF CASH DEPOSITS OF ` 14 LAKHS AND THE REMAINING AMOUNT OF ` 16,04,218/- BY CHEQUE. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. CALLED FOR EXPLANA TION OF THE ASSESSEE FOR CASH DEPOSITS AND THE ASSESSEE EXPLAINED THAT T HE CASH DEPOSIT OF ` 11.00 LAKHS WAS MADE OUT OF THE ADVANCES RECEIVED F OR SALE OF AGRICULTURAL LANDS AS PER AGREEMENTS DATED 18.7.200 8 FOR ` 5 LAKHS AND 18.8.2008 FOR ` 6 LAKHS AND A SUM OF ` 2 LAKHS WAS OUT OF PERSONAL SAVINGS. THE ASSESSEE HAS NOT OFFERED ANY EXPLANAT ION FOR THE BALANCE AMOUNT OF ` 1 LAKH. THE A.O. BEING NOT CONVINCED WITH THE EXP LANATION OF THE ASSESSEE TREATED THE ENTIRE CASH DEPOSITS OF ` 14 LAKHS AS UNACCOUNTED INCOME AND ACCORDINGLY BROUGHT TO TAX. 3. WITH REGARD TO THE CHEQUE DEPOSITS, THE ASSESSEE HAS EXPLAINED THAT THE SOURCES WERE OUT OF POSTAL SAVINGS SCHEME AND ASSURED TO FURNISH THE NECESSARY EVIDENCES TO THE AO BUT FAILE D TO FURNISH THE ITA NO.424/VIZAG/2016 KORAPOLU KANAKA RAJU, VSKP 3 EVIDENCES. HENCE, THE A.O. TREATED THE ENTIRE CHEQ UE DEPOSITS AS UNEXPLAINED INCOME AND BROUGHT TO TAX. 4. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) CONFIRMED THE CASH DEPOSIT OF ` 14 LAKHS AND ALSO CONFIRMED THE CHEQUE DEPOSIT OF ` 15,04,218/- AND ALLOWED RELIEF IN RESPECT OF ` 1 LAKH CHEQUE DEPOSIT SINCE THE SAME WAS EXPLAINED. 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE AS SESSEE FILED APPEAL RAISING THE FOLLOWING GROUNDS OF APPEAL: 1.0 THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE AND PROVISIONS OF LAW THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 1 47 OF THE I.T. ACT IS BAD IN LAW. 1.1 THE LEARNED COMMISSIONER OF INCOME TAX(A)(IN S HORT 'CIT(A)') IS NOT CORRECT IN CONFIRMING THE ACTION OF THE AG IN M AKING ADDITION PERTAINING TO CASH DEPOSITS TO THE TUNE OF RS.14 LA KHS IN BANK A/C. THE LEARNED CIT(A) RENDERED HIS DECISION ON MERE SU SPICION AND WITHOUT ANY SUBSTANTIVE ACCEPTABLE REASONING. 1.2 THE LEARNED CIT(A) IF HE HAD CONSIDERED THE AS SESSEE'S SUBMISSIONS IN THE RIGHT PERSPECTIVE HE WOULD NOT HAVE RESORTED TO CONFIRMING THE ADDITION PERTAINING TO CHEQUE DEPOSIT IN BANK OF RS .15,04,218/-. THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THESE CHEQU E DEPOSITS FROM OUT OF BUSINESS RECEIPTS. 1.3 FOR THESE AND OTHER REASONS THAT ARE TO BE URG ED AT THE TIME OF HEARING OF THE CASE THE APPELLANT PRAYS TH AT THE ORDERS OF THE LEARNED CIT(A) ARE TO BE QUASHED IN THE INTEREST OF JUSTICE AND FAIR PLAY. 6 . GROUND NO.1 IS NOT PRESSED BY THE LD. A.R., THEREFO RE GROUND NO.1 IS DISMISSED AS NOT PRESSED. ITA NO.424/VIZAG/2016 KORAPOLU KANAKA RAJU, VSKP 4 7.0 GROUND NO.1.3 IS GENERAL IN NATURE, WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 8.0 GROUND NO.1.1 IS RELATED TO THE CASH DEPOSITS A MOUNTING ` 14 LAKHS IN THE UNDISCLOSED BANK ACCOUNT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. FOUND THE CASH DEP OSIT OF ` 14 LAKHS WHICH WAS EXPLAINED AS ADVANCES RECEIVED FOR SALE O F AGRICULTURAL LANDS. THE ADVANCES RECEIVED WERE ` 5 LAKHS FROM SHRI N. SWAMI NAIDU ON 18.7.2008, ` 6 LAKHS FROM SHRI K. RAMAKRISHNA ON 18.7.2008, ` 2 LAKHS WAS STATED TO BE PERSONAL SAVINGS AND THE SOURCE OF REMAINING ` 1 LAKH WAS NOT EXPLAINED. THE AGGREGATE CASH DEPOSITS MAD E IN THE BANK ACCOUNT WAS ` 14 LAKHS. THE BANK ACCOUNT WAS NOT DISCLOSED TO T HE INCOME TAX DEPARTMENT AND THERE WAS AN OUTSTANDING BALANCE OF ` 29,04,894/- AS AT THE END OF THE YEAR IN THE INDIAN BANK SAVINGS BANK ACCOUNT, WHICH REPRESENTS THE UNDISCLOSED ASSET. D URING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS C ALLED FOR THE SOURCE OF CASH DEPOSITS AND THE ASSESSEE HAD EXPLAINED THA T THE SOURCE OF ` 11.00 LAKHS WAS OUT OF THE ADVANCES RECEIVED FROM T HE BUYERS OF THE LAND BY AN AGREEMENT DATED 18.7.2008 AND 18/08/2008 . ` 2 LAKHS WAS FROM PERSONAL SAVINGS AND NO EXPLANATION WAS OFFERE D FOR THE REMAINING AMOUNT OF ` 1 LAKH. WITH REGARD TO THE ADVANCES RECEIVED ITA NO.424/VIZAG/2016 KORAPOLU KANAKA RAJU, VSKP 5 FOR SALE OF LAND, THE ASSESSEE HAS FURNISHED THE PH OTOCOPY OF THE SALE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH MR. K. RAMAKRISHNA FOR ` 7 LAKHS FOR SALE OF LAND AT REVALLAPALEM, MADHURA WADA VISAKHAPATNAM DIST. ADMEASURING 50 SQYDS. IN SURVEY NO.27 ALONG WITH THATCHED HOUSE. THE AGREEMENT WAS UNREGISTERE D AND AS PER THE RECITALS OF THE AGREEMENT, OUT OF ` 7 LAKHS, THE ASSESSEE HAD RECEIVED A SUM OF ` 6 LAKHS FROM SHRI K. RAMA KRISHNA BY AN AGREEMENT DATED 18.8.2008 IN CASH AND THE BALANCE A MOUNT OF ` 1 LAKHS REQUIRED TO BE PAID BY THE BUYER WITHIN ONE M ONTH FROM THE DATE OF THE AGREEMENT AND THE ASSESSEE REQUIRED TO TRANS FERRED THE LAND TO THE BUYER OR THE NOMINEE OF THE BUYER. SIMILARLY, THE ASSESSEE HAD ALSO ENTERED INTO AN AGREEMENT FOR SALE OF LAND AT. , SRINIVASAPURAM COLONY, KOVVUR MANDALAM, W.G. DIST ADMEASURING 884 SQ.YDS. FOR A CONSIDERATION OF ` 6 LAKHS AND HAD RECEIVED A SUM OF ` 5 LAKHS AS ADVANCE AND BALANCE DUE WAS ` 1 LAKHS WHICH SHOULD BE PAID ACCORDING TO THE AGREEMENT WITHIN 2 MONTHS FROM THE DATE OF THE AGREEMENT AND THE ASSESSEE REQUIRED TO REGISTER THE LAND TO THE BUYER OR TO THE NOMINEE OF THE BUYER. THE ASSESSEE HAS F URNISHED BOTH THE PHOTO COPIES OF THE AGREEMENT BEFORE THE A.O BUT NO T THE ORIGINALS. THE A.O. HAS ISSUED SUMMONS TO ONE OF THE BUYER MR. M. SWAMI NAIDU WHO HAD NOT RESPONDED TO THE SUMMONS ISSUED U/S 131 OF THE INCOME ITA NO.424/VIZAG/2016 KORAPOLU KANAKA RAJU, VSKP 6 TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT'). T HEREFORE, THE A.O. ISSUED SUMMONS TO THE ASSESSEE AND REQUESTED THE AS SESSEE TO APPEAR BEFORE HIM ALONG WITH ORIGINAL SALE AGREEMENT, SALE DEEDS AND OTHER EVIDENCES TO SUBSTANTIATE THE SOURCES OF THE CASH. THE ASSESSEE FAILED TO FURNISH THE EVIDENCES AND DID NOT RESPOND TO THE SUMMONS ISSUED BY THE A.O. THEREFORE, THE A.O. TREATED THE ENTIRE AM OUNT OF ` 14 LAKHS CASH DEPOSIT AS UNEXPLAINED AND MADE THE ADDITION T O THE RETURNED INCOME. BEFORE THE LD. CIT(A), THE ASSESSEE HAD RE ITERATED THE SUBMISSIONS MADE BEFORE THE A.O. BUT DID NOT FURNIS H ANY FRESH EVIDENCE TO SUBSTANTIATE THE CASH DEPOSITS. THEREF ORE, THE LD. CIT(A) CONFIRMED THE ADDITION. 9.0 DURING THE APPEAL HEARING, THE LD. A.R. AR GUED THAT THE SOURCE OF CASH DEPOSIT WAS ADVANCES RECEIVED FROM THE BUYE RS OF THE LAND. THE LD. A.R. FILED PAPER BOOK ENCLOSING THE PHOTO C OPIES OF AGREEMENT DISCUSSED ABOVE. THE LD. A.R. ARGUED THAT SINCE TH E ASSESSEE HAS PRODUCED THE COPIES OF SALE AGREEMENTS, THE THE SAM E SHOULD BE TREATED AS GENUINE AND ADDITION BE DELETED. THE LD . A.R. FURTHER SUBMITTED THAT IN THE CASE OF MR. N. SWAMI NAIDU, T HE ENTIRE ADVANCE WAS REPAID, HENCE ARGUED THAT THE RECEIPT OF ADVANC E IS GENUINE AND REQUESTED TO DELETE THE ADDITIONS. ITA NO.424/VIZAG/2016 KORAPOLU KANAKA RAJU, VSKP 7 10.0 WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MA TERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE HAD MADE THE CASH DEPOSITS OF ` 14 LAKHS IN THE SAVINGS BANK ACCOUNT AND THE SAVINGS BANK ACCOUNT W AS NOT DISCLOSED TO THE INCOME TAX DEPARTMENT. THERE WAS A BALANCE OF ` 29,04,894/- IN THE BANK ACCOUNT, WHICH REMAINED UNDISCLOSED ASS ET. THE ASSESSEE EXPLAINED BEFORE THE A.O., THE LD. CIT(A) AND BEFO RE US THAT THE CASH DEPOSITS WERE OUT OF THE ADVANCES RECEIVED FOR SALE OF LAND. THE AGREEMENTS WERE NOT REGISTERED AND THE SALE DEEDS W ERE NOT EXECUTED. THE ENTIRE ADVANCE WAS RECEIVED IN CASH. EXCEPT PH OTOCOPY OF THE SALE AGREEMENT, NO OTHER EVIDENCE WAS PLACED BEFORE US T O SUBSTANTIATE THE CLAIM THAT AMOUNTS WERE IN FACT RECEIVED FROM MR. K . RAMA KRISHNA AND MR. N. SWAMI NAIDU AS ADVANCES. THE ASSESSEE HAD N EITHER FURNISHED THE ORIGINAL SALE AGREEMENTS BEFORE THE A.O. OR BEF ORE THE CIT(A), NO CONFIRMATION LETTER WAS ALSO FURNISHED BY THE ASSES SEE TO THE A.O. IT IS OBLIGATION ON THE PART OF THE ASSESSEE TO PROVE THE SOURCE OF CASH DEPOSITS. WHEN ASSESSEE CLAIMED TO HAVE RECEIVED TH E ADVANCES, IT IS ALSO OBLIGATION ON THE PART OF THE ASSESSEE TO ESTA BLISH THE RECEIPT WITH THE IDENTITY OF THE PERSON FROM WHOM THE ADVANCE RE CEIVED, GENUINENESS AND CREDITWORTHINESS OF THE ADVANCES GI VEN BY THE CREDITORS. IN THE INSTANT CASE, THE ASSESSEE HAS N EITHER FURNISHED ITA NO.424/VIZAG/2016 KORAPOLU KANAKA RAJU, VSKP 8 CONFIRMATION LETTER NOR PRODUCED THE CREDITORS WHO HAS MADE THE ADVANCES TO THE ASSESSEE. THE PHOTO COPY OF UNREGI STERED SALE AGREEMENT CANNOT BE CONSIDERED AS A VALID EVIDENCE UNLESS IT IS SUPPORTED BY THE SALE DEED OR THE CONFIRMATION FROM THE BUYER. THOUGH THE SUMMONS WERE ISSUED TO ONE OF THE CREDIT ORS, THERE WAS NO RESPONSE FROM THE CREDITOR. THE A.O. HAS ISSUED TH E SUMMONS TO THE ASSESSEE BUT THERE WAS NO RESPONSE FROM THE ASSESSE E. DURING THE APPEAL HEARING BEFORE THE FIRST APPELLATE AUTHORITY ALSO THE ASSESSEE DID NOT PLACE ANY EVIDENCE TO ESTABLISH THE SOURCE OF T HE CREDITS EXCEPT THE PHOTOCOPIES OF THE UNREGISTERED SALE AGREEMENTS WHI CH CANNOT BE TREATED AS A VALID EVIDENCE UNLESS IT IS SUPPORTED BY THE REGISTERED SALE DEEDS OR THE CONFIRMATION FROM THE CREDITOR. IN T HIS CASE AS SUBMITTED BY THE ASSESSEE THE SALE DID NOT MATERIALISE IN RES PECT OF BOTH THE AGREEMENTS AND IN CASE OF MR. SWAMI NAIDU THE AGREE MENT WAS CANCELLED AND THE ASSESSEE STATED TO HAVE REPAID TH E ENTIRE ADVANCE IN CASH AND IN CASE OF MR. RAMA KRISHNA TILL DATE THE SALE WAS NOT CONCLUDED. AS STATED EARLIER, THE ENTIRE TRANSACTI ONS WERE IN CASH AND NO SUPPORTING EVIDENCE WAS FURNISHED FOR RECEIPT OF ADVANCE. HENCE WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE FAILED TO ESTABLISH THE SOURCE OF RS.11.00 LAKHS AND THE PHOTO COPIES O F SALE AGREEMENTS ARE NOTHING BUT SELF SERVING DOCUMENTS. ITA NO.424/VIZAG/2016 KORAPOLU KANAKA RAJU, VSKP 9 11.0 WITH REGARD TO ` 2 LAKHS PERSONAL SAVING CLAIMED THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE BEFORE LOWER AUTHORI TIES AND NO EXPLANATION WAS OFFERED IN RESPECT OF THE REMAINING AMOUNT OF RS.1.00 LAC. THEREFORE, WE HOLD THAT THE ASSESSEE FAILED TO ESTABLISH THE SOURCE OF THE DEPOSIT OF RS.14.00 AND ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL OF THE ASS ESSEE ON THIS GROUND. 12.0 GROUND NO.1.2 IS RELATED TO CHEQUE DEPOSIT IN BANK ACCOUNT FOR A SUM OF ` 16,04,218/-. THE ASSESSEE EXPLAINED BEFORE THE A. O. SOURCE FOR THE DEPOSITS REPRESENT POSTAL SAVINGS BU T NO EVIDENCE WAS FURNISHED. BEFORE THE LD. CIT(A) STATED THAT THE D EPOSITS REPRESENT BUSINESS RECEIPTS. THERE WAS APPARENT INCONSISTENC Y IN THE EXPLANATION OFFERED BY THE ASSESSEE BEFORE THE A.O. AND THE LD. CIT(A). THE LD. CIT(A) HAS DELETED THE ADDITION OF ` 1.00 LAC AND CONFIRMED THE BALANCE AMOUNT OF ` 15,04,218/- FOR WANT OF EVIDENCE. 13.0 DURING THE APPEAL HEARING BEFORE US, THE LD. A.R. SUBMITTED THAT THE CHEQUE DEPOSITS REPRESENT THE BUSINESS REC EIPTS, BUT NO EVIDENCE WAS PLACED BEFORE US TO ESTABLISH THE BUSI NESS RECEIPTS. NO BILLS OR VOUCHERS ETC. WERE FURNISHED BEFORE THE LO WER AUTHORITIES. FOR A QUERY FROM THE BENCH WITH REGARD TO THE DETAILS OF EXPENSES RELATING TO ITA NO.424/VIZAG/2016 KORAPOLU KANAKA RAJU, VSKP 10 THE BUSINESS RECEIPTS, THE LD. A.R. COULD NOT PLACE ANY DETAILS OF EXPENSES RELATABLE TO THE PURPORTED BUSINESS RECEIP TS OF ` 15.04 LAKHS AND THE RELEVANT EXPENDITURE. THEREFORE, IT IS EST ABLISHED THAT THERE WAS NO EXPENDITURE INCURRED FOR EARNING THE INCOME (UNACCOUNTED RECEIPT) OF ` 15,04,218/-. SINCE THE ASSESSEE FAILED TO FURNISH ANY EVIDENCES TO SUBSTANTIATE THE SOURCE OF ` 15,04,218/-, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CI T(A) WHO CONFIRMED THE ADDITION. ACCORDINGLY, THIS GROUND OF APPEAL O F THE ASSESSEE IS DISMISSED. 14.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 9 TH FEB18. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 09.02.2018 VG/SPS ITA NO.424/VIZAG/2016 KORAPOLU KANAKA RAJU, VSKP 11 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT KORAPOLU KANAKA RAJU, D.NO.16-3- 3, OFFICIAL COLONY, MAHARANIPETA, VISAKHAPATNAM 2. / THE RESPONDENT THE ITO, WARD-1(4), VISAKHAPATN AM 3. + / THE PRINCIPAL CIT-1, VISAKHAPATNAM 4. + ( ) / THE CIT (A)-1, VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM