THE ACIT, Visakhapatnam V. Mallinenl Narasimhulu, Visakhapatnam

ITA 49/VIZ/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6802 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 08-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D J P ANAND
• Assessee Lawyers: S V SATYANARAYANA
• Keywords: Unexplained investment; Loose papers; Additional evidence
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 49 / VIZ /201 6 (ASST. YEAR : 20 1 0 - 11 ) ACIT, CIRCLE - 1(1), VISAKHAPATNAM. V S . MALLINENI NARASIMHULU, SECRETARY, M/S. MNR EDUCATIONAL SOCIETY, D.NO. 30 - 8 - 17/2, BHANU STREET, DABAGARDENS, VISAKHAPATNAM. PAN NO. AAGPN 0068 D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.V. SATYANARAYANA ADV. DEPARTMENT BY : SHRI D.J.P. ANAND SR. DR DATE OF HEARING : 09 / 0 8 /201 7 . DATE OF PRONOUNCEMENT : 30 / 0 8 /201 7 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THI S APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1 , VISAKHAPATNAM , DATED 26 / 11 /201 5 FOR THE ASSESSMENT YEAR 20 1 0 - 1 1 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS IN THE BUSINESS OF TEACHING & MANUFACTURING . A SURVEY WAS CARRIED OUT IN THE PREMISES OF M/S. MNR EDUCATIONAL SOCIETY, WHERE ASSESSEE IS A SECRETARY. DURING THE COURSE OF SURVEY AND SUBSEQUENT PROCEED INGS, BOOKS OF ACCOUNT, VARIOUS LOOSE PAPERS, REGISTERS, DIARIES AND OTHER DOCUMENTS 2 ITA NO. 49/VIZ/2016 ( MALLINENI NARASIMHULU ) IMPOUNDED . SUBSEQUENTLY, STATEMENTS WERE RECORDED FROM THE ASSESSEE. THE ASSESSING OFFICER HAS ISSUED VARIOUS NOTICES AND SEVERAL REMINDERS. THE ASSESSEE HAS NOT RESPOND ED, THEREFORE, THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER UNDER SECTION 144 OF THE ACT. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE IS NOT ABLE TO EXPLAIN ABOUT THE UNEXPLAINED INVESTMENT TO THE TUNE OF 67,60,000/ - AND ALSO NOTED THAT THE ASSESSEE HAD MADE A TOTAL INVESTMENT IN THE CONSTRUCTION OF FACTORY BUILDING IN M/S. MNR REFRACTORIES , PURCHASE OF PLANT & MACHINERY AND OTHER INCIDENTAL EXPENDITURE TO THE TUNE OF 4,50,00,000/ - . THE ASSESSING OFFICER AFTER VERIFICATION OF THE SOURCE TO MEET THE ABOVE INVESTMENT , NOTED THAT THE ASSESSEE HAD FURNISHED SOURCES ONLY TO THE TUNE OF 3,82,40,000/ - . THEREFORE, ASSESSING OFFICER TREATED THE BALANCE AMOUNT OF 67,60,000/ - AS UNEXPLAINED INVESTMENT AND THE SA ME IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2010 - 11. 3 . ON APPEAL, LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO VERIFY THE DETAILS OF THE DISBURSEMENT OF LOAN FROM A.P. STATE FINANCIAL CORPORATION (APSFC) AND DECIDE TO GIVE CREDIT OR NOT TO GIVE CREDI T FOR THIS AMOUNT TOWARDS SOURCE. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: - 8.5 I HAVE CONSIDERED THE SUBMISSIONS MADE, HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER AND REMAND REPORT OF THE AO. I FIND THAT THE AO ARRIVED AT THE UNEXPLAINED INVESTMENT AT RS. 67,60,000/ - AFTER TAKING INTO ACCOUNT THE SOURCES CLAIMED BY THE ASSESSEE FOR HIS INVESTMENTS MADE IN M/S.MNR REFRACTORIES . THE RELEVANT PORTION OF THE ASSESSMENT ORDER IS EXTRACTED BELOW : 3 ITA NO. 49/VIZ/2016 ( MALLINENI NARASIMHULU ) (I) LOAN FROM APSFC RS. 2,90,000 (II) M/S. SATYADEVA CHIT FUND BID AMOUNT (CHIT VALUE RS. 5 LAKHS) RS. 3,40,000 (III) M/S. MANIKANTA CHITS & FINANCE BID AMOUNT (INCLUDING LOAN OF RS. 3 LAKHS) RS. 5,00,000 (IV) PERSONAL LOAN TAKEN FROM HDFC, VIZAG RS. 7,00,000 (V) ICICI BANK RS. 7,00,000 (VI) CHIT BID AMOUNT FROM VISWANADHAM CHITS RS. 10,00,000 (VII) GOLD LOAN TAKEN FROM SRI RAM CHITS RS. 20,00,000 (VIII) CAPITAL CONTRIBUTION INVESTED BY ONE SRI M.K. CHAKRAVARTHY, HYDERABAD RS. 40,00,000 8.5.1 THE ASSESSEE CLAIMED THAT THE LOAN AMOUNT FROM APSFC WAS AT RS.3,49,00,895/ - AND NOT RS.2,90,00,000/ - AS STATED BY HIM IN HIS SWORN STATEMENT. HE ALSO FURNISHED DISBURSAL LETTER FROM APSFC IN THIS REGARD. THE ASSESSING OFFICER IN HIS REMAND REPORT DATED 21.9.2015 NOTED THAT TH E LOAN SANCTIONED BY APSFC WAS RS.3,49,00,895/ - . REGARDING THE LOAN FROM SMT.T.ANURADHA, THE AO NOTED THAT THOUGH THERE WAS A DECREE FROM LOK ADALAT, VISAKHAPATNAM TOWARDS FINAL SETTLEMENT, THE CREDITOR IS NOT ASSESSED TO INCOME TAX. THUS AS PER ASSESSING OFFICER NO CREDIT BE GI V EN FOR THE LOAN AMOUNT TAKEN FROM SMT.ANURADHA. FOR THE BALANCE AMOUNT OF RS.2,24,974/ - , THE ASSESSEE CLAIMED TO HAVE BORROWED RS.2,09,700/ - FROM ONE, SHRI K.RAMA RAO. THE AO NOTED THAT SHRI RAMA RAO IS NOT ASSESSED TO TAX AND THEREFORE HIS CREDITWORTHINESS IS NOT SUBSTANTIATED. 8.5.3 I HAVE CAREFULLY CONSIDERED THE ABOVE. SINCE THE ASSESSMENT WAS CO MPLETED U/S.144 OF THE I.T.ACT . THE ADDITIONAL EVIDENCE IN THE FORM OF ORDERS OF THE LOK ADALAT, VISAKHAPATNAM IS ADMITTED. 8. 5.4 AT THE OUTSET, IT IS TO BE MENTIONED THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER DID NOT SPECIFY THE INVESTMENTS MADE DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2010 - 11 AND ALSO THE SOURCES WITH REFERENCES TO SUCH INVESTMENTS MADE. NO DOUBT AS SEEN FROM THE DOCUMENTS, THE APSFC HAD GRANTED AND DISBURSED LOAN OF RS.3,49,00,895/ - . HOWEVER, THE DETAILS OF THE DISBURSAL OF LOAN WERE NOT EXAMINED BY THE AO WHILE PASSING THE ASSESSMENT ORDER. IN FACT THE LAST INSTAL L MENT OF LOAN WAS RELEASED ON 31.3.2010 I.E THE LAST DAY OF THE PREVIOUS YEAR. HENCE IT IS NOT CLEAR AS TO HOW THIS AMOUNT WAS UTILIZED TOWARDS INVESTMENT IN THE FACTORY, BEFORE 31.3.2010 IS NOT CLEAR. THEREFORE, THE AO IS DIRECTED TO EXAMINE THE SAME AND DECIDE TO GIVE OR NOT TO G IVE CREDIT FOR THIS AMOUNT TOWARDS SOURCE. 8.5.5 WITH REGARD TO LOAN TAKEN FROM SMT.ANURADHA OF RS. 15,00,000/ - , I FIND FROM THE ORDERS OF THE LOK ADALAT THAT THE ASSESSEE HAD TAKEN LOAN FROM SMT. ANURADHA AND THAT THE REPAYMENT OF THE SAME WAS SETTLED BY THE LOK ADA L AT. THEREFORE, WHETHER SHE IS INCOME TAX ASSESSEE OR NOT DOES NOT HAVE BEARING ON THE ASSESSEE'S CLAIM FOR THE SAID LOAN. THE AO IS DIRECTED TO TAKE THE SAID LOAN TAKEN FROM SM T. ANURADHA AS SOURCE FOR THE ABOVE INVESTMENT. 8.5.6 REGARDING LOAN FROM SHRI K.RAMA RAO OF RS.2,09,700/ - , THE AO, AFTER EXAMINING SHRI K.RAMA RAO, TOOK THE VIEW THAT HE DOES NOT HAVE THE CREDITWORTHINESS. EVEN DURING APPEAL PROCEEDINGS ALSO THE ASSESSEE 4 ITA NO. 49/VIZ/2016 ( MALLINENI NARASIMHULU ) DID NOT SUBSTANTIATE THE SAME. THEREFORE THE AO IS DIR ECTED TO TREAT THIS AMOUNT AS UNEXPLAINED INVESTMENT IN THE FACTORY. 4 . WE FIND THAT ASSESSEE HAS CLAIMED THAT HE HAS TAKEN LOAN FROM APSFC OF 3,49, 00, 895/ - AND NOT OF 2,90,00,000/ - . IN THE REMAND REPORT, THE ASSESSING OFFICER HAS NOTED THAT LOAN SANCTIONED BY THE APSFC WAS AT 3,49,00,895/ - , HOWEVER, THE ASSESSING OFFICER HAS NOT EXAMINED THE DETAILS OF THE DISBURSAL OF THE LOAN WHETHER IT IS 3,49,00,895/ - OR 2,90,00,000/ - . TH EREFORE, LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO EXAMINE THE DISBURSEMENT OF LOAN AND DECIDE IT ACCORDINGLY. WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). THUS, THIS GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 5. SO FAR AS LOA N TAKEN FROM SMT. ANURADHA OF 15 LAKHS IS CONCERNED, THE LD. CIT(A) BY CONSIDERING THE ORDER PASSED BY THE LOK ADALAT IN RESPECT OF LOAN TAKEN AND REPAYMENT MADE BY THE ASSESSEE, HE DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION. WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). THUS THIS GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 6 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON TH IS 3 0 T H DAY OF AUGUST , 201 7 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3 0 T H AUGUST , 201 7 . VR/ - 5 ITA NO. 49/VIZ/2016 ( MALLINENI NARASIMHULU ) COPY TO: 1. THE ASSESSEE - MALLINENI NARASIMHULU, SECRETARY, M/S. MNR EDUCATIONAL SOCIETY, D.NO. 30 - 8 - 17/2, BHANU STREET, DABAGARDENS, VISAKHAPATNAM. 2. THE REVENUE - ACIT, CIRCLE - 1(1), VISAKHAPATNAM. 3. THE CIT - 1, VISAKHAPATNAM. 4. THE CIT(A) - 1, VISAKHAPATNAM. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.