The ACIT, Vijayawada V. M/s Lalitha Bullion Corporation, Vijayawada

ITA 448/VIZ/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3836 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 16-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVASA RAO
• Section: 133A

Judgement Text

ITA NO.448 /VIZAG/2016 M/S. LALITHA BULLION CORPORATION, VIJAYAWADA 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.448/VIZAG/2016 ( / ASSESSMENT YEAR: 2012-13) THE ACIT, CIRCLE - 1(1), VIJAYAWADA M/S. LALITHA BULLION CORPORATION VIJAYAWADA [PAN NO. AADFL2327C ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI V. SRINIVASA RAO, DR / RESPONDENT BY : SHRI G.V.N. HARI, AR / DATE OF HEARING : 12.03.2018 / DATE OF PRONOUNCEMENT : 0 4.04.2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST ORDER OF THE COMMISSIONER OF APPEALS {CIT(A)}, VIJAYAWADA VIDE I TA NO.120/CIT(A)/VJA/2015-16 DATED 23.8.2016 FOR THE A SSESSMENT YEAR 2012-13. ITA NO.448 /VIZAG/2016 M/S. LALITHA BULLION CORPORATION, VIJAYAWADA 2 2. IN THIS CASE, THE ASSESSEE FILED RETURN OF INCOM E ADMITTING TOTAL INCOME OF RS.53,92,500/- ON 31.3.2012. THE CASE WA S SELECTED FOR SCRUTINY AND DURING THE ASSESSMENT PROCEEDINGS, A S URVEY U/S 133A OF THE ACT WAS CONDUCTED ON 14.5.2012. DURING THE POS T SURVEY PROCEEDINGS, A STATEMENT WAS RECORDED ON 13.6.2012 FROM SRI RAMPRASAD WHO IS THE MANAGING PARTNER OF THE FIRM. IN THE STATEMENT RECORDED, THE MANAGING PARTNER HAS ADMITTED UNEXPLA INED INCOME OF RS.1,00,10,000/- FOR THE ASSESSMENT YEAR 2012-13 RE LATING TO INTRODUCTION OF CAPITAL IN THE YEAR UNDER CONSIDERA TION. DURING THE IMPUGNED ASSESSMENT YEAR, THE PARTNERS HAVE INTRODU CED FRESH CAPITAL OF RS.57,30,000/- BY SHRI R. RAMPRASAD AND ` 79,20,000/- BY SHRI R. ANJANA RAO AND IN THE STATEMENT RECORDED ON 13.6.20 12 THE A.O. HAS ASKED TO EXPLAIN THE SOURCES OF CAPITAL AND THE AS SESSEE COULD NOT EXPLAIN THE SOURCE TO THE EXTENT OF ` 1,00,10,000/-, HENCE, ADMITTED THE ADDITIONAL INCOME. SUBSEQUENTLY, MR. R. RAMPRASAD, PARTNER OF THE FIRM COMMITTED SUICIDE ON 15.6.2012 AND ANOTHER PARTNER MR. R. ANJANA RAO RETRACTED FORM THE STATEMENT AND STATED THAT LATE R . RAMPRASAD HAS INTRODUCED THE CAPITAL FROM HIS OWN SOURCES AND EXP LAINED IN HIS PERSONAL ASSESSMENTS. HE FURTHER STATED THAT MR. R AMPRASAD IS ASSESSED TO INCOME TAX REGULARLY BEFORE ITO WARD-1(1 ), VIJAYAWADA WITH PAN NO.ACJBR9563Q. SIMILARLY, IN THE CASE OF MR. R . ANJANA RAO, HE IS ITA NO.448 /VIZAG/2016 M/S. LALITHA BULLION CORPORATION, VIJAYAWADA 3 ALSO ASSESSED TO TAX WITH ITO WARD-1(1), VIJAYAWADA UNDER PAN NO.ACJPR9564K AND ARGUED THAT BOTH THE PARTNERS ARE ASSESSED TO TAX AND THE CAPITAL WAS INTRODUCED FROM THEIR OWN EXPLA INED SOURCES, HENCE, NO ADDITION IS CALLED FOR IN THE HANDS OF THE FIRM. THE ASSESSEE FURTHER ARGUED THAT IF THE ADDITION REQUIRED TO BE MADE, TH E SAME SHOULD BE MADE IN THE HANDS OF THE PARTNERS BUT NOT IN THE HA NDS OF THE FIRM. IT WAS ALSO EXPLAINED BY THE ASSESSEE THAT THE WITHDRA WALS MADE BY THE ASSESSEES WERE REINTRODUCED AS CAPITAL BUT NO FRESH CAPITAL WAS INFUSED. NOT BEING SATISFIED WITH THE EXPLANATION OF THE ASS ESSEE, THE A.O. MADE THE ADDITION OF ` 1,00,10,000/- IN THE HANDS OF THE FIRM. 3. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) DELETED THE AD DITION. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE RE VENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. A SURVEY U/S 133A OF THE INCOME TAX ACT, 1961 (HEREIN AFTER CALLED AS 'THE ACT') WAS CONDUCTED IN THE ASSESSEES CASE AND DURI NG THE POST SURVEY ENQUIRIES, THE A.O. FOUND THAT THE PARTNERS OF THE FIRM HAVE INTRODUCED CAPITAL OF ` 1,36,50,000/- IN THE PARTNERSHIP FIRM. THE SOURCE WAS SAID TO BE EXPLAINED FROM THE ACCRETIONS OF THEIR OWN SO URCES OF THE PARTNERS. ITA NO.448 /VIZAG/2016 M/S. LALITHA BULLION CORPORATION, VIJAYAWADA 4 THE PARTNERS ARE REGULARLY ASSESSED TO TAX. THE AD MISSION WAS GIVEN BY MR. R. RAMPRASAD, WHO WAS EXPIRED DURING THE ASSESS MENT PROCEEDINGS. THE ASSESSEE HAS EXPLAINED THE SOURCES FOR INTRODUC TION OF CAPITAL BEFORE THE LD.CIT(A) AS UNDER: 4. IT IS PERTINENT TO MENTION HERE THAT, FOR THE AS SESSMENT YEAR UNDER CONSIDERATION, I.E., 2012-13, THE PARTNERS IN DIVIDUAL RETURNS WAS ALSO ASSESSED BY THE RESPECTIVE ASSESSING OFFIC ER EXAMINED THE SOURCES OF CAPITAL INFUSION IN THE LALITHA BULLION CORPORATION. SRI RAMANADHAM ANJANA RAO WAS ASSESSED AT ITO WARD 1(1) , VIJAYAWADA AND SRI RAMANADHAM RAM PRASAD WAS ASSESS ED AT DCIT CIRCLE 1(1), VIJAYAWADA. BOTH THE OFFICERS HAVE PAS SED THE ASSESSMENT ORDERS AFTER EXAMINING THE SOURCES FOR I NVESTMENT MADE BY THE PARTNERS IN THE APPELLANT FIRM M/S LALITHA B ULLION CORPORATION. (ASSESSMENT ORDERS ENCLOSED). THE FOLLOWING IS THE TABLE SHOWING THE INVESTMENT MADE BY THE TWO PARTNERS IN THE APPE LLANT FIRM. IT IS ALSO EVIDENT THAT THE PARTNERS HAVE ACCOUNTED IN TH EIR INDIVIDUAL BOOKS OF ACCOUNTS AND FILED THE RETURNS OF INCOME B Y ADMITTING THE INVESTMENT MADE IN THE FIRM. SRI RAMANADHAM ANJANA RAO HAS INTRODUCED CAPITAL OF RS.79,20,000/-DURING THE FINANCLAL YEAR 2011-12 AND THE SOURCES WERE EXPLAINED IN THE FOLLOWING TABLE: SI DATE AMOUNT IN REMARKS NO PS 06.05.2011 28,30,000 BY OBTAINING LOAN FROM SUNDARAM HOUSING 1 FINANCE WHICH IS EVIDENT IN THE BALANCE SHEET. 2 10.09.2011 13,00,000 OUT OF EARLIER WITHDRAWALS FROM FIRM LALITHA BULLION CORPORATION AND OUT OF THE BANK BALANCE IN THE CORPORATION BANK 3 05.10.2011 1,50,000 OUT OF THE BANK BALANCE IN THE CORPORATION BANK 4 12.11.2011 1,00,000 OUT OF THE BANK BALANCE IN THE CORPORATION BANK 5 16.11.201 1 2,90000 OUT OF THE BANK BA LANCE IN THE CORPORATION BANK 6 29.03.2012 2,50,000 OUT OF WITHDRAWAL FROM FIRM LALITHA BULLION CORPORATION AND OUT OF THE BANK BALANCE IN THE CORPORATION BANK. ON THE SAME DAY BOTH TRANSACTIONS TOOK PLACE WHICH IS EVIDENT FROM ITA NO.448 /VIZAG/2016 M/S. LALITHA BULLION CORPORATION, VIJAYAWADA 5 THE BAN K STATEMENT. 7 31.03.201 2 30,00,000 THE PARTNER SRI RAMANADHAM ANJANA RAO HAS OBTAINED UNSECURED LOAN FROM THE D. VENKATA VARDHAN RAO THROUGH RTGS. TOTAL 79,20,000 SRI RAMANADHAM RAM PRASAD HAS INTRODUCED CAPITAL OF RS.57,30,000/DURING THE FINANCIAL YEAR 2011-12 AND THE SOURCES WERE EXPLAINED IN THE FOLLOWING TABLE: SI DATE AMOUNT IN REMARKS NO RS 1 20.05.2011 5,00,000 OUT OF UNSECURED LOANS FROM S.V.LORTY SERVICES OBTAINED THROUGH BANK TRANSFER. 2 26.05.2011 2830,000 BY OBTAINING LOAN FROM SUNDARAM HOUSING FINANCE WHICH IS EVIDENT IN THE BALANCE SHEET. 3 12.11.2011 1,00,000 BY OBTAINING LOAN FROM CORPORATION BANK INVESTED IN MIS LALITHA BULL/ION CORPORATION. 4 17.11.2011 23,00.000 BY WITH DRA WING - FROM THE VARUN GOLD TRADING ACCOUNT PROP: RAMANADHAM PAM MAINTAINED AT AXIS BANK. TOTAL 57,30,000 THE ABOVE INVESTMENT IS THROUGH BANK TRANSFER. HENC E DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE APPELLANT HAS SUBMITTE D THE ACCOUNT COPIES OF M/S LALITHA BULLION CORPORATION IN THE BOOKS OF THE PARTNERS, BANK STATEMENTS ETC AND STATED THAT THE TWO PARTNERS ARE REGULAR INCOME TAX ASSESSEE'S WITHPAN. THE LD. CIT(A) DELETED THE ADDITION HOLDING THE T HAT THE A.O. HAS NOT ESTABLISHED THE INTRODUCTION OF CAPITAL WAS FRO M UNEXPLAINED SOURCES AND THUS THE ADDITION WAS UNSUSTAINABLE. FOR READY REFERENCE, WE EXTRACT RELEVANT PARA OF THE ORDER OF THE LD. CIT(A ). ITA NO.448 /VIZAG/2016 M/S. LALITHA BULLION CORPORATION, VIJAYAWADA 6 5.1 ADMITTEDLY, ASSESSING OFFICER SIMPLY RELIED ON THE STATEMENT RECORDED FROM ONE OF THE PARTNERS, NAMELY, SRI RAMA NADHAM RAM PRASAD, TO ARRIVE AT THE UNDISCLOSED INCOME IN THE HANDS OF APPELLANT TOWARDS CAPITAL INFUSION BY THE PARTNERS IN THE FIRM. ASSESSING OFFICER DID NOT LET IN ANY EVIDENCE EITHE R BY WAY OF INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SURVEY OR SUBSEQUENT ENQUIRIES CONDUCTED BY THE DEPARTMENT TO SUGGEST THAT THE AMOUNTS BROUGHT IN BY THE PARTNERS WERE TH E ACTUAL INCOME OF THE APPELLANT FROM THE UNDISCLOSED SOURCE S. FURTHER, NO EXCESS STOCK OR DEFICIT STOCK WAS NOTICED AT THE TI ME OF SURVEY WHICH MAY LEAD TO THE DISCLOSURE OF CONCEALED INCOM E OF APPELLANT. 5.2. A.R. OF APPELLANT SUBMITTED COPIES OF THE FOLL OWING DURING APPEAL PROCEEDINGS WHICH WERE SUBMITTED BEFORE AO A LSO I. CAPITAL A/C OF BOTH PARTNERS IN THE BOOKS OF APPELL ANT FOR ASST. YEAR 2012-13 AND THEIR BANK ACCOUNT STATEMENT S FOR ASST. YEAR 2012-13. II. INCOME TAX RETURN COPIES OF BOTH PARTNERS FOR ASST. YEAR 2012-13 INCLUDING PROFIT & LOSS ACCOUNT, BALANCE SH EET. III. COPIES OF INCOME TAX SCRUTINY ASSESSMENT ORDER FOR ASST. YEAR 2012-13 IN RESPECT OF BOTH PARTNERS. IV. COPIES OF PARTNERSHIP DEED DATED 23.11.2008, 01.04. 2012 AND RETIREMENT DEED DATED 01.09.2012. 5.2.1. FROM PERUSAL OF ABOVE DETAILS, IT IS EVIDENT THAT THE PARTNERS HAD ACCOUNTED IN THEIR INDIVIDUAL BOOKS OF ACCOUNTS AND FILED THEIR RETURNS OF INCOME BY ADMITTING THE INVESTMENT IN TH E APPELLANT FIRM. THUS, WHEN THE INVESTMENT IS REFLECTED IN THE INDIV IDUAL BOOKS OF THE PARTNERS AND THEY HAVE ADMITTED THE SAME IN THEIR B OOKS OF ACCOUNTS AND THE SAME WAS EXAMINED DURING THE COURSE OF SCRU TINY ASSESSMENT PROCEEDINGS IN THEIR CASES IT WILL NOT BECOME UNDIS CLOSED INCOME IN THE HANDS OF APPELLANT FIRM. 5.3. HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V S. S.KHADAR KHAN SON (2008) 300 ITR 157 HELD THAT EVIDENCE COLLECTED AND STATEMENTS RECORDED DURING THE SURVEY U/S 133A WERE NOT CONCLU SIVE PIECE OF EVIDENCE BY THEMSELVES. ITA NO.448 /VIZAG/2016 M/S. LALITHA BULLION CORPORATION, VIJAYAWADA 7 6. ON GOING THROUGH THE ORDERS OF THE LD.CIT(A) AND THE SUBMISSIONS MADE BY THE ASSESSEE WHICH IS REPRODUCED ABOVE, IT IS ESTABLISHED THAT THE SOURCES FOR THE CAPITAL ACCOUNTS WERE EXPLAINED AND THE ABOVE TRANSACTIONS WERE THROUGH BANK ACCOUNTS. THE LD.CIT (A) HAS EXAMINED THE CAPITAL ACCOUNTS, INCOME TAX RETURNS AND BALANC E SHEETS OF BOTH THE PARTNERS AND OBSERVED THAT SCRUTINY ASSESSMENT ORDE RS WERE PASSED IN THE CASE OF PARTNERS AND GIVEN A FINDING THAT THE I NVESTMENT IN CAPITAL ACCOUNT OF THE FIRM REFLECTED IN THEIR INDIVIDUAL R ETURNS AND THE SAME CANNOT BE HELD AS UNDISCLOSED INCOME IN THE HANDS O F THE FIRM. THE LD. CIT(A) ALSO RELIED ON THE DECISION OF HONBLE MADRA S HIGH COURT IN THE CASE OF S. KHADER KHAN SUPRA AND HELD THE STATEMENT RECORDED DURING THE COURSE OF SURVEY IS NOT CONCLUSIVE PROOF OF EVI DENCE. IN THE INSTANT CASE THE PARTNERS HAVE DECLARED THE INVESTMENTS IN THEIR INDIVIDUAL RETURNS AND THE SAME WAS EXAMINED BY THE RESPECTIVE AOS. SINCE THE AO COMPLETED ASSESSMENTS AND DID NOT FIND ANY INFIR MITY WITH REGARD TO THE INDIVIDUAL ASSESSMENTS, THERE IS NO CASE FOR MA KING ADDITION IN THE HANDS OF THE FIRM. THE DEPARTMENT COULD NOT CONTROV ERT THE FINDING OF THE LD. CIT(A) WITH TANGIBLE EVIDENCE. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SA ME IS UPHELD. ITA NO.448 /VIZAG/2016 M/S. LALITHA BULLION CORPORATION, VIJAYAWADA 8 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 4 TH APR18. SD/- SD/- ( . ) ( . .. . . . . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 04.04.2018 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ACIT, CIRCLE-1(1), VIJAYAWAD A 2. / THE RESPONDENT M/S. LALITHA BULLION CORPORATIO N, D.NO.11-60-29, WYUZULLAH SAHEB STREET, VIJAYAWADA 3. + / THE CIT, VIJAYAWADA 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM