Vimala Devi Saripalli, Visakhapatnam V. The Income Tax Officer, Ward - 3(3), , Visakhapatnam

ITA 48/VIZ/2020

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0569 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 31-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: SUSEEL KUMAR AGARWAL
• Keywords: Application of stay; Set aside
• Section: 143(3); 48; 22

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM (THROUGH WEB - BASED VIDEO CONFERENCING PLATFORM) . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER S.A.NO S . 44/VIZ/2020 AND 45/VIZ/2020 (ARISING OUT OF I . T .A.NO S . 48 /V IZ /20 20 AND 49/VIZ/2020 RESPECTIVELY ) ( / ASSESSMENT YEAR : 20 0 7 - 08 AND 2008 - 09 RESPECTIVELY ) SARIPALLI VIMALA DEVI D.NO. 6 - 22 - 9/24 FLAT NO.103, SUN & SEA APARTMENTS VISAKHAPATNAM [PAN :BDPPS0883J] VS. INCOME TAX OFFICER WARD - 3(3) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) ./ I .T.A.NO. 48 /V IZ /20 20 & 49/VIZ/2020 ( / ASSESSMENT YEAR : 20 07 - 08 AND 2008 - 09 RESPECTIVELY ) SARIPALLI VIMALA DEVI D.NO.6 - 22 - 9/24 FLAT NO.103, SUN & SEA APARTMENTS VISAKHAPATNAM [PAN :BDPPS0883J] VS. INCOME TAX OFFICER WARD - 3(3) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / ASSESSEE BY : SHRI SUSEEL KUMAR AGARWAL, AR / REVENUE BY : S HRI RAMA KRISHNA BANDI, DR / DATE OF HEARING : 1 5 . 06. 20 20 / DATE OF PRONOUNCEMENT : 17 .06. 20 20 2 S.A.NO. 44 /VIZ/20 20 , 45/VIZ/2020 , I.T.A. NO . 4 8 /VIZ/20 20 AND 49/VIZ/20 20 A.Y.2007 - 08 AND 2008 - 09 VIMALA DEVI SARIPALLI, VISAKHAPATNAM / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : S.A. NO.44/VIZ/2020/ S.A. NO.45/VIZ/2020 THE ASSESSEE FILED STAY APPLICATIONS REQUESTING FOR STAY OF DEMANDS OF RS.10,65,483/ - FOR THE A.Y.2007 - 08 AND RS.69,80,469/ - FOR THE A.Y.2008 - 09. SINCE THE APPEALS ARE TAKEN UP SIMULTANEOUSLY, THE LD.AR DID NOT PRESS THE STAY APPLICATIONS, HENCE, THE STAY APPLICATIONS FILED BY THE ASSESSEE ARE DISMISSED AS NOT PRESSED. I.T.A. 48 /VIZ/20 20, A.Y.2007 - 08 & I.T.A.4 9 /VIZ/20 20 , A.Y. 200 8 - 09 2. THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 1, VISAKHAPATNAM VIDE ITA NOS. 10463& 10469/2016 - 17/CIT(A) - 1/VSP/2019 - 20 DATED19.12.2019. SINCE THE FACTS ARE IDENTICAL, THESE APPEALS ARE CLUBBED, HEARD TOGETHER AND DISPOSED OF IN A COMMON ORDER FOR THE SAKE OF CONVENIENCE AS UNDER: 3. ALL THE GROUNDS IN BOTH THE APPEALS ARE RELATED TO THE ADDITION MADE BY THE ASSESSING OFFICER (AO) REPRESENTING THE ADVANCES RECOVERED BY THE ASSESSEE. IN THIS CASE, ASSESSMENT WAS ORIGINALLY COMPLETED U/S 143(3) R.W.S. 147 BY AN ORDER DATED 17.03.2014 FOR BOTH THE ASSESSMENT YEARS I.E. 3 S.A.NO. 44 /VIZ/20 20 , 45/VIZ/2020 , I.T.A. NO . 4 8 /VIZ/20 20 AND 49/VIZ/20 20 A.Y.2007 - 08 AND 2008 - 09 VIMALA DEVI SARIPALLI, VISAKHAPATNAM 2007 - 08 AND 2008 - 09. SUBSEQUENTLY, THE LD.PRINCIPAL COMMISSIONER OF INCOME TAX (PR.CIT) - 1, VISAKHAPATNAM HAS TAKEN UP THE CASE FOR REVISION AND SET ASIDE THE ASSESSMENT ORDERS PASSED BY THE AO WITH A DIRECTION TO REDO THE ASSESSMENT DENOVA AFTER GIVING OPPORTUNITY TO THE ASSESSEE. ACCORDINGLY, THE AO PASSED THE ORDERS U/S 143(3) R.W .S. 263 BY AN ORDER DATED 30.12.2016 FOR BOTH THE ASSESSMENT YEARS. FOR THE A.Y.2007 - 08, THE AO MADE THE ADDITION OF RS.10,50,800/ - AND FOR THE A.Y.2008 - 09 MADE THE ADDITION OF RS.74,50,000/ - REPRESENTING ADVANCES RECOVERED BY THE ASSESSEE FROM THE OPENIN G BALANCES. THE AO DURING THE ASSESSMENT PROCEEDINGS, CALLED FOR THE DETAILS OF THE DEBTORS CLAIMED TO HAVE BEEN REALIZED BY THE ASSESSEE AND THE ASSESSEE FAILED TO FURNISH THE SAME, HENCE, D I S BELIEVED THE CLAIM OF THE ASSESSEE WITH REGARD TO REALIZATION OF THE DEBTORS, AND BROUGHT TO TAX THE SUMS OF REALIZATION OF DEBTORS AS UNEXPLAINED AND ADDED BACK TO THE INCOME. 4. AGAINST WHICH THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CONFIRMED THE ORDER OF THE AO HOLDING THAT, SINCE THE AS SESSEE WAS NOT IN A POSITION TO FURNISH THE DETAILS , LD.CIT(A) DID NOT FIND ANY 4 S.A.NO. 44 /VIZ/20 20 , 45/VIZ/2020 , I.T.A. NO . 4 8 /VIZ/20 20 AND 49/VIZ/20 20 A.Y.2007 - 08 AND 2008 - 09 VIMALA DEVI SARIPALLI, VISAKHAPATNAM REASON TO INTERFERE WITH THE ORDER OF THE AO, HENCE, UPHELD THE ORDER OF THE AO. 5. AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. DURING THE APPEAL HEARING, THE LD.AR SUBMITTED THAT THE ASSESSEE FURNISHED THE CASH FLOW STATEMENT S BEFORE THE AO AND TAKEN THE REALIZATION OF DEBTORS OF RS.10,50,000/ - AS SOURCES OF FUNDS FOR THE A.Y.2007 - 08 AND RS.74,50,000/ - FOR THE A.Y.2008 - 09. THE LD.PR.CIT DURING THE 263 PROCEEDINGS HA S CALLED FOR THE DETAILS OF THE DEBTORS, WHICH THE ASSESSEE COULD NOT FURNISH, DUE TO THE FACT THAT THE ENTIRE BUSINESS ACTIVITY OF THE ASSESSEE WAS LOOKED AFTER BY HER HUSBAND, WHO HAD EXPIRED ON 29.06.2010 AND SHE HA D NO IDEA WITH REGARD TO THE DETAILS O F THE DEBTORS. THE SAME EXPLANATION WAS FURNISHED BEFORE THE AO AS WELL AS THE LD.PR.CIT. THE ASSESSEE FURTHER SUBMITTED THAT THE DETAILS WERE MAINTAINED BY HER HUSBAND AS WELL AS THE AUDITOR , BUT THE AUDITOR HAS WITHDRAWN THE CASE AND DID NOT COOPERATE WITH HER . THE ASSESSEE WAS UNABLE TO TRACE THE OLD ACCOUNTS AS THE ACCOUNTANT ALSO LEFT THE JOB DUE TO DISCONTINUATION OF THE BUSINESS. IT WAS FURTHER SUBMITTED THAT THE BUILDING, WHERE THE RECORDS WERE MAINTAINED WAS ALSO SOLD AWAY AN D THE RECORDS WERE DESTROYED. ALL THE ABOVE FACTS MADE HER HELPLESS TO 5 S.A.NO. 44 /VIZ/20 20 , 45/VIZ/2020 , I.T.A. NO . 4 8 /VIZ/20 20 AND 49/VIZ/20 20 A.Y.2007 - 08 AND 2008 - 09 VIMALA DEVI SARIPALLI, VISAKHAPATNAM FURNISH THE DETAILS. THEREFORE, SUBMITTED THAT DUE TO THE ABOVE REASONS, THE ASSESSEE COULD NOT FURNISH THE DETAILS OF THE LIST OF DEBTORS. HOWEVER, THE LD.AR SUBMITTED THAT THE DEBTOR S ARE OPENING BALANCE S AND WAS DISCLOSED IN THE BALANCE SHEETS FILED ALONG WITH THE RETURNS OF INCOME, HENCE, REQUESTED TO CONSIDER THE INFORMATION AVAILABLE IN THE FINANCIAL STATEMENTS AND ALLOW THE APPEALS. 6. ON THE OTHER HAND, THE LD.DR ARGUED THAT TH E ASSESSEE FAILED TO FURNISH THE DETAILS OF THE LIST OF DEBTORS EITHER BEFORE THE LD.PR.CIT OR THE AO. THEREFORE, THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF REALIZATION OF DEBTORS, HENCE, ARGUED THAT THE AO HAS RIGHTLY MADE THE ADDITION AND NO INTERF ERENCE IS CALLED FOR IN THE ORDER OF THE LD.CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE INSTANT CASE, THE ASSESSMENT WAS RELATED TO 2007 - 08 AND 2008 - 09 AND THE ASSESSEES HUSBAND HAD EXPIRED ON 29.6.2010. AFTER THE LAPSE OF MORE THAN TWO YEARS OF COMPLETION OF THE ASSESSMENT YEAR, THE AO HAS TAKEN UP THE PROCEEDINGS U/S 143(3) R.W.S. 147, WHERE THE ASSESSEE HAS FURNISHED THE CASH FLOW STATEMENT, EXPLAINING THE SOURCES OF FUNDS AND COM PLETED THE ASSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT. THE AO DID NOT 6 S.A.NO. 44 /VIZ/20 20 , 45/VIZ/2020 , I.T.A. NO . 4 8 /VIZ/20 20 AND 49/VIZ/20 20 A.Y.2007 - 08 AND 2008 - 09 VIMALA DEVI SARIPALLI, VISAKHAPATNAM DOUBT THE GENUINENESS OF REALIZATION OF DEBTORS IN THE ASSESSMENT PROCEEDINGS. HOWEVER, THE LD.PR.CIT, DOUBTED THE REALIZATION OF DEBTORS AND DIRECTED THE AO TO REDO THE ASSESSMENT DE N OVO. IN THE INSTANT CASE, THE CLAIM OF THE ASSESSEE WAS THAT THE SOURCE S OF FUNDS WAS REALIZATION OF DEBTORS. THE LD.AR HAS EXPLAINED THAT THE 263 PROCEEDINGS WERE TAKEN UP IN 2016 VIDE NOTICE DATED 01.03.2016 I.E. AFTER MORE THAN SEVEN YEARS FROM THE EN D OF THE RELEVANT ASSESSMENT YEAR AND BY THAT TIME ALL THE TIME LIMITS WERE EXPIRED EXCEPT FOR 263 PROCEEDINGS . IT WAS ALSO SUBMITTED BY THE LD.AR THAT THE ASSESSEE COULD NOT FURNISH THE REQUIRED DETAILS DUE TO SAD DEMISE OF HER HUSBAND WHO LOOKED AFTER TH E BUSINESS AND THE ENTIRE FINANCIAL TRANSACTIONS. NORMALLY, IN INDIA, IT IS AN ACCEPTED PRACTICE THAT HUSBAND LOOKS AFTER THE BUSINESS AND FINANCIAL TRANSACTIONS OF THE WIFE. THE AO ALSO HAS NOT DISPUTED THIS FACT. FURTHER THOUGH THE ASSESSEE HAS STATED THAT THE INFORMATION WAS ALSO AVAILABLE WITH THE AUDITOR, THE AUDITOR HAS WITHDRAWN THE CASE FROM REPRESENTATION AND THE BUSINESS WAS DISCONTINUED AND THE ACCOUNTANT ALSO HAS LEFT THE JOB. APART FROM THE ABOVE, THE BUILDING WHERE THE RECORDS WERE STATED TO BE MAINTAINED WAS SOLD AWAY AND RECORDS WERE DESTROYED. ALL THE ABOVE REASONS APPEAR TO BE CONVINCING REASONS FOR NON - SUBMISSION OF THE DETAILS. IN THE INSTANT CASE, 7 S.A.NO. 44 /VIZ/20 20 , 45/VIZ/2020 , I.T.A. NO . 4 8 /VIZ/20 20 AND 49/VIZ/20 20 A.Y.2007 - 08 AND 2008 - 09 VIMALA DEVI SARIPALLI, VISAKHAPATNAM THE AO HAS NEITHER EXAMINED THE AUDITOR WHO HA D REPRESENTED THE CASE EARLIER AND ALS O DID NOT DISPUTE THE FACT THAT THE FINANCIAL TRANSACTIONS WERE LOOKED AFTER BY HER HUSBAND. IN ADDITION THE LD.PR.CIT AS WELL AS THE AO HAS CALLED FOR THE DETAILS AFTER THE LAPSE OF SIX YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. ALL THE ABOVE REASONS APPEAR TO BE GENUINE AND CONVINCING FOR NON - SUBMISSION OF THE DETAILS. THUS, WE HOLD THAT THE REASONS EXPLAINED BY THE LD.AR ARE THE CONVINCING REASONS FOR NON - SUBMISSION OF THE DETAILS. THEREFORE, IN OUR CONSIDERED OPINION THE CASE NEEDS TO BE DECIDED A S PER THE INFORMATION AVAILABLE IN THE STATEMENT OF AFFAIRS AND ACCORDINGLY WE DECIDE THE APPEALS AS UNDER: (A) A.Y.2007 - 08 FOR THE A.Y.2007 - 08, THE AO MADE THE ADDITION OF RS.10,50,800/ - ON ACCOUNT OF REALIZATION OF DEBTORS. THE ASSESSEE HAS FURNISHED TH E STATEMENT AFFAIRS ON 31.03.2016 WHICH WAS ALSO PLACED BEFORE THE LOWER AUTHORITIES. AS PER THE STATEMENT OF AFFAIRS AS ON 31 . 03 . 2016 OUTSTANDING DEBTORS WAS WAS RS.69,75,800/ - WHICH WAS THE OPENING BALANCE FOR THE YEAR UNDER CONSIDERATION. WHEREAS THE SAME BALANCE WAS REDUCED TO RS.59,25,000/ - BY THE END OF THE YEAR WHICH SHOWS THAT THERE WAS REDUCTION OF DEBTORS TO THE EXTENT OF RS.10,50,000/ - WHICH REPRESENTS THE REALIZATION OF DEBTORS. 8 S.A.NO. 44 /VIZ/20 20 , 45/VIZ/2020 , I.T.A. NO . 4 8 /VIZ/20 20 AND 49/VIZ/20 20 A.Y.2007 - 08 AND 2008 - 09 VIMALA DEVI SARIPALLI, VISAKHAPATNAM THEREFORE, THE CONTENTION OF THE ASSESSEE THAT THE REALIZATION OF DEBTORS WAS FROM THE OUTSTANDING BALANCE APPEARS TO BE CORRECT. THE AO HAS NEITHER DOUBTED THE OPENING BALANCES OF DEBTORS AND THE CLOSING BALANCES OF DEBTORS AND THE REDUCTION OF OUTSTANDING DEBTORS.. THEREFORE, THERE IS NO REASON TO SUSPECT THE REALI ZATION OF DEBTORS, HENCE, THERE IS NO CASE FOR MAKING THE ADDITION. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND DELETE THE ADDITION MADE BY THE AO. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR THE A.Y. 2007 - 08. (B) A.Y.2008 - 09 FOR THE A.Y.2008 - 09, AS PER THE BALANCE SHEET AS ON 31.03.2007, WHICH WAS FILED ALONG WITH THE RETURN OF INCOME, OUTSTANDING BALANCE OF DEBTORS WAS RS.59,25,000/ - UNDER THE HEAD OTHER DEBTORS AND RS.15,25,000/ - ON ACCOUNT OF ADVANCES FOR LAND PURCHASE. THE ASSESSEE HAS INVESTED AN AMOUNT OF RS.74,50,000/ - IN THE YEAR UNDER CONSIDERATION. AS AT THE END OF 31.03.2008, THE ABOVE ADVANCES WERE LIQUIDATED AND THERE WAS NO OUTSTANDING BALANCE AS ON 31.03.2008. THE AO HAS NOT GIVEN ANY FINDING THAT THE SUM OF RS.74,50,000/ - WAS INVESTED FOR ANY OTHER ASSET. SINCE THE ADVANCES WERE REDUCED AS AT THE END OF THE YEAR, THE SAME CLEARLY SHOWS THAT THE SOURCE FOR INVESTMENT WAS REALISATION OF ADVANCES FROM LAND 9 S.A.NO. 44 /VIZ/20 20 , 45/VIZ/2020 , I.T.A. NO . 4 8 /VIZ/20 20 AND 49/VIZ/20 20 A.Y.2007 - 08 AND 2008 - 09 VIMALA DEVI SARIPALLI, VISAKHAPATNAM ADVANCES AND OTHER DEBTORS. THEREFORE, THERE IS NO REASON TO SUSPECT THE SOURCE OF INVESTMENT AND THE CASH FLOW, HENCE, THERE IS NO CASE FOR MAKING THE ADDITION. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND DELETE THE ADDITION MADE BY THE AO. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR THE A.Y.2008 - 09. 8. IN T HE RESULT, STAY APPLICATIONS OF THE ASSESSEE ARE DISMISSED AND THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR BOTH THE ASSESSMENT YEARS. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JUNE 20 20 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 17 .06.20 20 L.RAMA, SPS 10 S.A.NO. 44 /VIZ/20 20 , 45/VIZ/2020 , I.T.A. NO . 4 8 /VIZ/20 20 AND 49/VIZ/20 20 A.Y.2007 - 08 AND 2008 - 09 VIMALA DEVI SARIPALLI, VISAKHAPATNAM / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - SARIPALLI VIMALA DEVI , D.NO.6 - 22 - 9/24 , FLAT NO.103, SUN & SEA APARTMENTS , VISAKHAPATNAM 2. / THE REVENUE INCOME TAX OFFICER, WARD - 3(3), VISAKHAPATNAM 3. THE PR. COMMISSIONER OF INCOME TAX - 1 , VISAKHAPATNAM 4. THE COMMISSIONER OF TAX (APPEALS) - 1 , VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM