ITO, Ward-9(3), Hyderabad V. Sri N.Chandra Sekhar Reddy, Hyderabad

ITA 472/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78015 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 05-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A V RAGHURAM
• Keywords: Source of fund; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.472/HYD/2013 ASSESSMENT YEAR 2007-08 ITO, WARD 9 (3) HYDERABAD VS. MR. N. CHANDRASEKHAR REDDY HYDERABAD. PAN ACWPN-6542-N (APPELLANT) (RESPONDENT) FOR REVENUE MR. SOLGY JOSE T. KOTTARAM FOR ASSESSEE MR. A.V. RAGHURAM DATE OF HEARING 16.07.2014 DATE OF PRONOUNCEMENT 25.07.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), VIJAYAWADA DATED 24.01.201 3. IN THIS REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APP EAL. 2. THE CIT(A) OUGHT TO HAVE NOT ACCEPTED THE ASSES SEES CONTENTION OF RECEIPT OF LOANS AGGREGATING RS.12,47,000/- FROM VARIOUS PERSONS AS THE CREDIT WORTHINESS OF THE SAID PERSONS WAS NOT ESTABLISHED. 3. THE CIT(A) OUGHT NOT TO HAVE ACCEPTED THE SOURCE S OF SALE OF AGRICULTURAL LAND AMOUNTING OF RS.4,60,000/ - WHICH WAS NOT EFFECTED IN THE BANK A/C OF THE ASSESSEE. 4. THE CIT(A) OUGHT NOT TO HAVE ACCEPTED THE CONTEN TION OF THE ASSESSEE IN RESPECT OF ADVANCE RECEIPTED ON SAL E OF LAND AT MOHABBAT NAGAR AMOUNTING TO RS.10,00,000/- 2 ITA.NO.472/HYD/2013 MR. N. CHANDRASEKHAR REDDY, HYDERABAD. AS NO EVIDENCE WAS ADDUCED IN SUPPORT OF THE TRANSACTION. 5. THE CIT(A) HAS ERRED IN DISREGARDING THE COMMENT S OF THE A.O. IN THE REMAND REPORT. 2. BRIEFLY STATED, ASSESSEE IS AN INDIVIDUAL EARNI NG INCOME FROM DAIRY, HOUSE PROPERTY. ON RECEIVING INF ORMATION THAT SUBSTANTIAL CASH DEPOSITS WERE MADE IN THE BAN K ACCOUNTS, ASSESSEES CASE WAS SELECTED FOR SCRUTINY . ASSESSEE BEING BASICALLY AN AGRICULTURIST AND HAVING NO BUSI NESS INCOME, DID NOT MAINTAIN ANY BOOKS OF ACCOUNTS. HE FURNISHED THE BANK ACCOUNTS AND EXPLAINED THE VARIOUS SOURCES AND FURNISHED NECESSARY EVIDENCES BEFORE THE A.O. HOWEV ER, A.O. AFTER EXAMINING THE VARIOUS SOURCES DECLARED BY THE ASSESSEE, GAVE CREDIT TO AN AMOUNT OF RS.7,71,560/- AS AVAILA BLE RESOURCES OUT OF TOTAL DEPOSITS OF RS.50,30,000/- A ND MADE AN ADDITION OF RS.42,58,440/-. 2.1. BEFORE THE LD. CIT(A), ASSESSEE SUBMITTED THA T A.O. WORKING OF DEPOSITS OF RS.50,30,000/- HAS NOT TAKEN INTO ACCOUNT THE WITHDRAWALS FROM THE BANK ACCOUNT AND A S PER THE PEAK CASH DEPOSITS IT WAS NOT EXCEEDING RS. 35 LAKH S. APART FROM THAT, ASSESSEE ALSO SUBMITTED THAT A.O. DID NO T CONSIDER CASH FLOW STATEMENT PREPARED DURING THE YEAR ALONG WITH THE BALANCE SHEET AND THE EVIDENCE FURNISHED BEFORE HIM IN SUPPORT OF HIS CONTENTIONS. LD. CIT(A) SENT THE DET AILS TO A.O. ON REMAND WHO OPINED THAT ALL THE INFORMATION WAS C ONSIDERED AT THE TIME OF ASSESSMENT PROCEEDINGS AND ASSESSEE HAS NOT FURNISHED ANY ADDITIONAL DOCUMENTS. A.O. HOWEVER, R EITERATED HIS OWN FINDINGS IN THE ASSESSMENT ORDER IN THE REP ORT DATED 21.06.2010. ON CONSIDERING THE REPORT OF THE A.O. A ND 3 ITA.NO.472/HYD/2013 MR. N. CHANDRASEKHAR REDDY, HYDERABAD. EXPLANATION OF THE ASSESSEE, THE LD. CIT(A) ARRIVED AT THE NET AVAILABLE CASH AS UNDER : LOANS FROM I. SMT. VINODHA RS.3,50,000 II. SRI VIJAYPAL REDDY RS. 3,50,000 III.SRI DHANPAL REDDY RS.3,80,000 IV. SRI P. RANGA REDDY RS. 1,67,000 RS.12 ,47,000 AMOUNT RECEIVED FROM SRI DASHRATH REDDY (FATHER) RS. 5,00,000 SALE PROCEEDS OF AGRICULTURE LAND RS. 4,60,000 ADVANCE RECEIVED IN RESPECT OF SALE OF LAND AT MOHABBAT NAGAR RS.10,00,000 AMOUNT R ECEIVED ON SALE OF FEED RS. 1,25,745 AMOUNT RECEIVED FROM DEBTORS RS. 84,021 TOTAL FUNDS AVAILABLE FROM VARIOUS SOURCES RS.34,16,766 AMOUNT CONSIDERED BY THE A.O. AS UNEXPLAINED RS.42,58,440 (-) RS. 8,41,674 2.2. IN DOING SO, LD. CIT(A) REJECTED THE PEAK CRE DIT CONCEPT INVOKED BY THE ASSESSEE AND THEREFORE, HE T OOK EXPLANATION FOR THE ENTIRE AMOUNT OF RS.42,58,440/- CONSIDERED BY THE A.O. AS AN UNEXPLAINED. HE CONFIR MED THE AMOUNT OF RS.8,41,674/- AS UNEXPLAINED WHILE DELETI NG THE BALANCE AMOUNT OF RS.34,16,766/- OUT OF THE ABOVE A MOUNTS. REVENUE IS AGGRIEVED THE FOLLOWING AMOUNTS (I) RS.1 2,47,000/- STATED TO BE LOANS FROM 4 PERSONS, AVAILABILITY OF SALE PROCEEDS OF AGRICULTURAL LAND AT RS.4,60,000/- AND AVAILABIL ITY OF ADVANCES RECEIVED IN RESPECT OF SALE OF LAND AT MOH ABBAT NAGAR OF RS. 10 LAKHS. ONLY THESE THREE AMOUNTS ARE BEING CONTESTED. 3. GROUND NO.5 PERTAIN TO DISREGARDING THE COMMENTS OF THE A.O. IN THE REMAND REPORT. THERE IS NO NEED TO ADJUDICATE GROUND NO.5 AS LD. D.R. COULD NOT PLA CE THE 4 ITA.NO.472/HYD/2013 MR. N. CHANDRASEKHAR REDDY, HYDERABAD. REMAND REPORT COPY ON RECORD FOR WHICH ADEQUATE TIM E WAS GIVEN BY ADJOURNING THE CASE SPECIFICALLY IN THE CO URSE OF HEARING FROM 04.07.2014 TO 16.07.2014. IN THE ABSEN CE OF REMAND REPORT ON RECORD, IT IS NOT POSSIBLE TO ADJU DICATE THE GROUND RAISED. ACCORDINGLY, GROUND IS TREATED AS IN FRUCTUOUS. 4. COMING TO THE ISSUE OF LOANS OF RS.12,47,000/- ASSESSEE HAS SUBMITTED BEFORE THE A.O. THAT HE HAS OBTAINED LOANS FROM THE ABOVE STATED 4 PERSONS. LD. CIT(A) C ONSIDERED THE NECESSARY EXPLANATION GIVEN BY ASSESSEE IN PAGE 6 OF THE ORDER AND NOTED HIS OBSERVATIONS AS UNDER : IN RESPECT OF LOANS OBTAINED THE APPELLANT FILED T HE AFFIDAVITS FROM THE CONCERNED. ALL THESE MATERIALS WERE MADE AVAILABLE TO THE A.O. FOR HIS COMMENTS. A.O. IN HIS REMAND MENTIONED THAT ALL THE INFORMATION AND DOCUMENTS SU BMITTED BY THE ASSESSEE WERE TAKEN INTO CONSIDERATION AT TH E TIME OF ASSESSMENT PROCEEDINGS. ASSESSMENT ORDER CONTAINS O NLY GENERAL OBSERVATIONS. THE MAIN REQUIREMENT SUCH AS IDENTITY OF THE PARTY, SOURCE FOR ADVANCING THE AMOUNT AND SUPPORTING EVIDENCE/CONFIRMATION IN RESPECT OF SUCH WORK ARE ESTABLISHED BY THE APPELLANT. IN SUCH A SITUATI ON THERE IS NO SCOPE TO IGNORE SUCH EVIDENCE. IN MY VIEW WITHOU T MAKING ANY REFERENCE EITHER IN THE ASSESSMENT ORDER OR IN REMAND REPORT THERE IS NO SCOPE TO REJECT SUCH VITA L EVIDENCE PRODUCED BY THE APPELLANT. 5. ON CONSIDERING THE ARGUMENTS OF THE LD. D.R. AN D LD. COUNSEL AND PERUSING THE PAPER BOOK PLACED ON R ECORD ALONG WITH THE COPIES OF CONFIRMATIONS FILED BEFORE THE LD. CIT(A), WE DO NOT SEE ANY REASON TO INTERFERE WITH THE OBSERVATIONS OF THE LD. CIT(A). IN FACT, SMT. P. VI NODHA IS MOTHER-IN-LAW OF THE ASSESSEE WHO FILED AN AFFIDAVI T AND SUBMITTED THAT SHE HAS FUNDS OUT OF RETIREMENT, DEA TH CUM- RETIREMENT BENEFIT OF HER HUSBAND PLUS INCOME FROM AGRICULTURAL LAND OF ABOUT AC.6.32 GTS. ASSESSEE BE ING SON-IN- LAW, SHE ADVANCED INTEREST FREE LOAN AND CONFIRMED THE 5 ITA.NO.472/HYD/2013 MR. N. CHANDRASEKHAR REDDY, HYDERABAD. AMOUNTS. WITH REFERENCE TO OTHER PERSONS THEY HAVE RECEIVED ADVANCES FOR SALE OF AGRICULTURAL LAND AND ACCORDIN GLY, ADVANCED AMOUNTS TO THE ASSESSEE. ASSESSEE BEING A SHAREHOLDER IN THE PROPERTY ALSO, THE SAME WERE ACC EPTED BY THE LD. CIT(A) AS A SOURCE. IN VIEW OF THIS, WE DO NOT FIND ANY NEED TO RESTORE THE MATTER TO THE FILE OF A.O. FOR EXAMINATION AS THE SAME INFORMATION AND CONFIRMATIONS WERE FILED A T THE TIME OF ASSESSMENT PROCEEDINGS AND ALSO AT THE TIME OF R EMAND REPORT. THEREFORE, WE CONFIRM THE ORDER OF THE LD. CIT(A). 6. THE NEXT GROUND IS WITH REFERENCE TO SOURCE OF RS.4,60,000/- FROM THE SALE OF AGRICULTURAL LAND WH ICH ACCORDING TO THE A.O. WAS NOT EFFECTED IN THE BANK ACCOUNT OF THE ASSESSEE. THIS ARGUMENT OF THE REVENUE CANNOT B E ACCEPTED AS THE ASSESSEE IS BASICALLY AN AGRICULTUR IST AND HAS EXPLAINED THE SOURCES OF CASH BY WAY OF SALE OF AGR ICULTURAL LAND WHICH WAS NOT DISPUTED. JUST BECAUSE THE SAME WAS NOT EFFECTED TO THE BANK ACCOUNT, IT DOES NOT MEAN THAT ASSESSEE DID NOT HAVE A SOURCE OF FUNDS. LD. CIT(A) HAS NOTE D THAT ASSESSEE HAS SOLD AC.2.12 GTS SITUATED AT MAHESWARA M MANDAL VIDE SALE DEED DOCUMENT NO.6513/2006 DATED 04.05.20 06 AND ASSESSEE WAS IN RECEIPT OF RS.4,60,000/-. IN SUPPO RT, COPY OF THE PATTADAR PASSBOOK AS NOTED BY THE REVENUE AUTHO RITIES WERE ALSO FILED. ON THE BASIS OF THE ABOVE EVIDENCE , WE DO NOT FIND ANY REASON IN NOT GIVING CREDIT TO THE ABOVE A MOUNT, JUST BECAUSE THE TRANSACTION HAS NOT ROUTED THROUGH THE BANK ACCOUNT. IN FACT, A.O. HAS VERIFIED THE CASH DEPOSI TS AND BANK ACCOUNT AND THE ASSESSEE ALSO EXPLAINED TO AO THE S OURCE OF DEPOSIT OUT OF SALE PROCEEDS RECEIVED IN CASH. GROU ND RAISED BY THE REVENUE HAS NO MERIT. ACCORDINGLY, THE SAME IS REJECTED. 6 ITA.NO.472/HYD/2013 MR. N. CHANDRASEKHAR REDDY, HYDERABAD. 7. THE NEXT GROUND IS WITH REFERENCE TO SOURCE OF RS. 10 LAKHS STATED TO BE ADVANCE RECEIVED ON SALE OF L AND AT MOHABBAT NAGAR. ASSESSEE EXPLAINED THAT ADVANCE OF RS.10 LAKHS WAS RECEIVED IN RESPECT OF AGREEMENT OF SALE DATED 20.03.2006. AS PER THE AGREEMENT, MR. N. DASHRATH R EDDY, FATHER OF THE ASSESSEE ALONG WITH OTHERS ENTERED IN TO AN AGREEMENT FOR SALE OF AC.2.00 OF LAND TO M/S. EUREK A ESTATES P. LTD. AND RECEIVED RS. 10 LAKHS AS ADVANCE. MR. DASA RADHA REDDY AND OTHER TWO SONS MR. N.VIJAYPAL REDDY AND M R. N. DHANPAL REDDY FILED AFFIDAVITS STATING THAT THE ADV ANCE AMOUNT HAS BEEN KEPT WITH ASSESSEE. THE EVIDENCE ON RECORD WAS IN THE FORM OF AGREEMENT OF SALE PLACED IN THE PAPER B OOK AT PAGE NO. 20 TO 24 AND AS PER THAT AN AMOUNT OF RS. 10 LA KHS WAS RECEIVED BY THE PARTIES. IN VIEW OF THIS, WE DO NOT SEE ANY REASON NOT TO GIVE CREDIT TO THE AMOUNT. EVEN THOUG H REVENUE IN ITS GROUNDS ALLEGED THAT NO EVIDENCE WAS ADDUCED IN RESPECT OF THE TRANSACTION, THE GROUND PER SE IS NOT CORRECT IN THE SENSE THAT THE SAME EXPLANATION WAS GIVEN BEFORE THE A.O. AND A.O. REJECTED THE SAME ON THE REASON THAT NO EVIDENCE WA S FURNISHED. ASSESSEE HAS SHOWN THE ABOVE AMOUNT IN T HE BALANCE SHEET PREPARED AS ADVANCE RECEIVED AND FURN ISHED NECESSARY EVIDENCE IN THE FORM OF AN AGREEMENT OF S ALE BEFORE THE LD. CIT(A) WITH NECESSARY ANNEXURES VIDE E & F WHICH WAS ALSO SENT TO THE A.O. IN THE REMAND. IF A.O. CHOSE TO IGNORE AND GIVES REPORT TO THE LD. CIT(A) THAT ALL THE INFORMA TION WAS AVAILABLE WITH THE A.O. AT THE TIME OF ASSESSMENT, THE LD. CIT(A) CANNOT BE FAULTED FOR ENTERTAINING THE EVIDE NCE AND GIVING A FINDING. SINCE THE ASSESSEE HAS SUBMITTED NECESSARY EVIDENCES IN SUPPORT OF CONTENTION THAT IT HAS RECE IVED RS. 10 LAKHS ADVANCE BY VIRTUE OF THE AGREEMENT OF SALE EN TERED WITH A COMPANY, WE DO NOT SEE ANY REASON TO DIFFER FROM TH E FINDING OF 7 ITA.NO.472/HYD/2013 MR. N. CHANDRASEKHAR REDDY, HYDERABAD. CIT(A). GROUND RAISED BY THE REVENUE HAS NO MERIT. IN VIEW OF THIS THE SAME IS REJECTED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.07.2014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 25 TH JULY, 2014 VBP/- COPY TO 1. INCOME TAX OFFICER, WARD 9(3), BLOCK NO.2D, INCO ME TAX TOWERS, A.C. GUARDS, HYDERABAD-4. 2. MR. N. CHANDRASEKHAR REDDY, PLOT NO.34, ROAD NO. 2, SRI RAM NAGAR COLONY, CHAMPAPET, HYDERABAD. 3. CIT(A), VIJAYAWADA 4. CIT-VI, HYDERABAD 7. D.R. B BENCH, ITAT, HYDERABAD.