Sri S Suresh Babu, Visakhapatnam V. The ITO, Ward-1(1), Visakhapatnam

ITA 512/VIZ/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50135 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 30-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 08-10-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SINGH
• Keywords: Unexplained investment; Deemed to accrue or arise in india; Additional evidence
• Section: 6; 2

Judgement Text

ITA 512 OF 08 S SURESH BABU, VSKP IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 512 /VIZAG/ 20 0 8 ASSESSMENT YEAR : 200 5 - 0 6 S. SURESH BABU VISAKHAPATNAM VS. ITO WARD - 1(1) VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.BBTPS 0236H APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI R.K. SINGH, DR ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) CONFIRMING THE ADDITION OF RS.28,62,000/- TO WARDS UNEXPLAINED INVESTMENT. 2. THE FACTS BORNE OUT FROM THE RECORD ARE THAT ON ENQUIRY, IT WAS NOTICED BY THE A.O. THAT THERE WAS A DEPOSIT OF RS.21 LAKHS IN THE BANK ACCOUNT OF THE ASSESSEE MAINTAINED IN THE STATE BANK OF HYDERABAD. ON FURTHER ENQUIRIES, IT WAS REVEALED THAT FROM THE SAID BANK ACCOUNT, 21 DE MAND DRAFTS EACH OF THE VALUE OF RS.1 LAKH WERE TAKEN IN FAVOUR OF THE EXCI SE DEPARTMENT FOR OBTAINING LIQUOR LICENSE FOR THE RETAIL LIQUOR SHOP S. IN ORDER TO ENQUIRE THE SOURCE OF THESE DEPOSITS, ASSESSEE WAS SUMMONED AND EXAMINED AND DURING THE COURSE OF HIS EXAMINATION, IT WAS STATED BY THE ASSESSEE THAT HE ALONG WITH 20 OTHER PERSONS CONSTITUTED A PARTNERSHIP FIR M UNDER THE NAME AND STYLE OF M/S. S. SURESH BABU & CO. DATED 15.2.200 5 TO CARRY ON BUSINESS OF THE SALE OF IMFL BY OBTAINING THE NECESSARY LICENS E BY WAY OF FILING THE TENDERS WITH THE EXCISE DEPARTMENT. IT WAS FURTHER SUBMITTED THAT THE AMOUNT OF RS.21 LAKHS FOUND DEPOSITED IN HIS BANK A CCOUNT REPRESENTS THE CAPITAL CONTRIBUTION MADE BY 21 PARTNERS WHO CONSTI TUTED THE SAID FIRM. IN SUPPORT OF THESE CONTENTIONS, HE HAS FURNISHED THE NAMES & ADDRESSES OF THE ITA 512 OF 08 S SURESH BABU, VSKP 2 SO CALLED PARTNERS AND THE COPY OF THE PARTNERSHIP DEED. SUBSEQUENTLY, THERE WAS A CHANGE IN THE GOVERNMENT POLICY AND THE AMOUN TS PAID TO EXCISE DEPARTMENT WAS REFUNDED WHICH WAS IN TURN RETURNED TO THE PARTNERS WHO DEPOSITED SUCH FUNDS AND THE SAID PARTNERSHIP FIRM COULD NOT CARRY ON ITS BUSINESS. THESE EXPLANATIONS OF THE ASSESSEE WERE NOT ACCEPTED BY THE ASSESSING OFFICER FOR THE REASONS THAT THE SO CALLE D PARTNERS DID NOT HAVE ANY CREDITWORTHINESS. IN ADDITION TO THIS, THE ASSESSI NG OFFICER ALSO FOUND THAT THERE WAS A CASH DEPOSIT OF RS.3,00,600/- ON 18.2.2 005, RS.50,000/- ON 17.3.2005 AND RS.4,12,000/- ON 23.2.2005. THE ASSE SSEE OFFERED NO EXPLANATION REGARDING THE SOURCE OF THESE DEPOSITS. THEREFORE, THE ASSESSING OFFICER TREATED THIS DEPOSIT OF RS.7,62,000/- AS UN EXPLAINED DEPOSITS FOUND IN THE BANK ACCOUNT OF THE ASSESSEE AS DEEMED INCOME O F THE ASSESSEES. THUS TOTAL DEPOSIT FOUND IN THE BANK ACCOUNT OF THE ASSE SSEE OF RS.28,62,600/- WAS TREATED AS THE DEEMED INCOME OF THE ASSESSEES. 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A) BUT DID NOT FIND FAVOUR WITH HIM. NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT THE DRAFTS WERE P URCHASED BY ALL THESE SO CALLED PARTNERS AND ASSESSEE WAS USED ONLY AS A FAC ILITATOR. THE CASH WAS DEPOSITED IN HIS BANK ACCOUNT AND DEMAND DRAFTS WER E PURCHASED. IN SUPPORT OF THESE CONTENTIONS, ASSESSEE HAS MOVED AN APPLICATION FOR THE ADMISSION OF ADDITIONAL EVIDENCE OF THE AFFIDAVITS OF 20 PERSONS WHO HAVE PURCHASED THE DEMAND DRAFTS TO OBTAIN THE EXCISE LI CENSE. IN THEIR AFFIDAVITS, THEY HAVE ADMITTED THE PURCHASE OF DEMAND DRAFTS AN D ALSO USE OF ASSESSEES ACCOUNT FOR THE SAME PURPOSE. THE ASSESSEE HAS PRO DUCED SOME OF THE PERSONS BEFORE THE ASSESSING OFFICER AND THEY HAVE ACCEPTED THAT THEY HAVE DEPOSITED THE AMOUNT IN THE ASSESSEES ACCOUNT TO P URCHASE A DEMAND DRAFT. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO INVITED O UR ATTENTION TO THE ORDER OF THE TRIBUNAL IN THE CASE OF KARRI RAMU VS. ITO IN I TA NO.120/VIZAG/2007 IN WHICH THE ASSESSEE WAS USED AS A FACILITATOR AND DE MAND DRAFT WERE PURCHASED BY SOME OTHER PERSONS FOR APPLYING THE EX CISE LICENSE. IN THOSE CASES, THESE INDIVIDUAL PERSONS HAVE ACCEPTED THAT THEY HAVE DEPOSITED THE ITA 512 OF 08 S SURESH BABU, VSKP 3 CASH IN THE ASSESSEES ACCOUNT TO PURCHASE DEMAND D RAFTS. IN THAT CASE THE TRIBUNAL HAS RESTORED THE MATTER BACK TO THE FILE O F THE ASSESSING OFFICER WITH A DIRECTION TO RE-EXAMINE THE ISSUE IN THE LIGHT OF STATEMENTS OF ALL THESE PERSONS. 4. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTEND ED THAT IN THE LIGHT OF THESE FACTS, THE MATTER MAY BE SENT BACK FOR FURTHE R EXAMINATION BY THE ASSESSING OFFICER AFTER ADMITTING THE ADDITIONAL EV IDENCE. 5. THE LD. D.R. ON THE OTHER HAND HAS PLACED A RELI ANCE UPON THE ORDER OF THE CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y EXAMINED THE ORDERS OF THE AUTHORITIES BELOW AND DOCUMENTS PLACE D ON RECORD. BEFORE THE ASSESSING OFFICER ASSESSEE HAS PLEADED THAT HE WAS USED AS A FACILITATOR BY OTHER PERSONS TO PURCHASE THE DEMAND DRAFT FOR OBTA INING THE EXCISE LICENSE FOR CARRYING ON BUSINESS OF SALE OF IMFL. BEFORE T HE ASSESSING OFFICER SOME OF THE PERSONS WERE PRODUCED AND THEY HAVE ACCEPTED TH E FACT THAT THEY HAVE DEPOSITED THE AMOUNT IN THE ASSESSEES ACCOUNT. BU T ALL THE PERSONS HAVE NOT RESPONDED TO THE NOTICES ISSUED BY THE ASSESSING OF FICER. BEFORE US THE ASSESSEE HAS FILED THE AFFIDAVITS OF ABOUT 12 PERSO NS WHO HAS DEPOSED THAT THEY HAVE PURCHASED THE DEMAND DRAFTS FROM THE BANK ACCOUNT OF THE ASSESSEES BY DEPOSITING THE CASH AND THE ASSESSEE W AS USED AS A FACILITATOR. THOUGH THIS EVIDENCE WAS FILED FIRST TIME BEFORE TH E TRIBUNAL BUT WE ARE OF THE VIEW THAT THIS EVIDENCE IS QUITE MATERIAL FOR T HE ADJUDICATION OF THE IMPUGNED ISSUE; WHETHER THE ASSESSEE WAS USED AS A FACILITATOR FOR OTHER PEOPLE IN PURCHASING THE DEMAND DRAFTS OR IT WAS UN ACCOUNTED MONEY OF THE ASSESSEE WHICH WAS DEPOSITED IN THE BANK ACCOUNT FO R PURCHASE OF DEMAND DRAFT AND THE LICENSE WAS APPLIED IN THE NAME OF DI FFERENT PERSONS. THEREFORE, WE ADMIT THIS EVIDENCE AND SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE A.O. TO VERIF Y THE CREDITWORTHINESS OF THE ASSESSEE AS WELL AS THE OTHER PERSONS WHO CLAIMED T O HAVE DEPOSITED THE ITA 512 OF 08 S SURESH BABU, VSKP 4 MONEY IN THE ASSESSEES ACCOUNT FOR PURCHASE OF DEM AND DRAFT TO OBTAIN EXCISE LICENSE TO CARRY ON BUSINESS OF IMFL AND THE RE AFTER TO ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW. 7. IN THE RESULT, THE APPEAL OF THE ASSESEE IS ALLO WED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 6.4.2011 SD/- SD/- (BR BASKARAN) (SUNIL KUMA R YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 6 TH APRIL, 2011 COPY TO 1 SRI S. SURESH BABU, D.NO.10 - 7 - 71/1, RAM NAGAR, VISAKHAPATNAM 2 ITO WARD - 1(1), VISAKHAPATNAM 3 THE CI T, VI SAKHAPATNAM 4 THE CIT (A) - I, VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM