The ITO, Ward-5(2)., Visakhapatnam V. Sri Surakasi Rambabu, Visakhapatnam

ITA 517/VIZ/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1673 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 24-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S S GOPINATH
• Keywords: Unexplained investment
• Section: 69B; 69

Judgement Text

PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.517/VIZAG/2007 ASSESSMENT YEAR: 2005-06 ITO, WARD-5(2), VISAKHAPATNAM VS. SURAKASI RAMBABU, PADMANABHAM (APPELLANT) (RESPONDENT) PAN NO. BCLPS 6013 B APPELLANT BY: SHRI G.S.S. GOPINATH, DR RESPONDENT BY: SHRI G.V.N. HARI, CA ORDER PER SHRI B R BASKARAN, ACCOUNTANT MEMBER : THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 17-10- 2007 PASSED BY THE LD CIT (A)-I VISAKHAPATNAM AND I T RELATES TO THE ASSESSMENT YEAR 2005-06. 2. THE ONLY ISSUE AGITATED IN THIS APPEAL IS WHETHE R THE LD CIT (A) IS JUSTIFIED IN DELETING THE ADDITION OF RS.11.00 LAKH S. 3. THE FACTS ARE STATED IN BRIEF. THE ASSESSEE IS A SALES MAN IN A SHOP NAMED DINESH WINES, REDDIPALLI. THE AO RECEIVED INF ORMATION TO THE EFFECT THAT THE ASSESSEE HAS PURCHASED DEMAND DRAFTS TO TH E TUNE OF RS.13.00 LAKHS FROM SBI REDDIPALLI. IN THIS CONNECTION AO CALLED F OR EXPLANATIONS AND ALSO RECORDED A STATEMENT FROM THE ASSESSEE ON 27-04-200 5. THE ASSESSEE SUBMITTED THAT HE IS NOT CONNECTED WITH THE OWNERSH IP OF THE DEMAND DRAFTS PAGE 2 OF 4 AND HE HAS ONLY HELPED THESE PERSONS TO PURCHASE D DS BY FILLING THE APPLICATION FORM. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE PRODUCED ALL THE 13 PERSONS BEFORE THE AO AND IN TH E STATEMENT RECORDED FROM ALL OF THEM, THEY CONFIRMED THE SUBMISSIONS MADE BY THE ASSESSEE. HOWEVER, THE AO ACCEPTED THE EXPLANATIONS WITH REGARD TO TWO PERSONS ONLY TO THE TUNE OF RS.2.00 LAKHS. ACCORDINGLY, THE AO ADDED THE RE MAINING RS.11.00 LAKHS IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED INVESTMENT IN THE PURCHASE OF DEMAND DRAFTS. THE LD CIT (A) HOWEVER, DELETED THE ENTIRE ADDITION. AGGRIEVED BY THE ORDER OF LD CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE RECORD. WE NOTICE THAT THE LD CIT (A) HAS CONSIDERED FOLLOWING CASE L AW IN SUPPORT OF HIS DECISION: A) R. THYAGARAJ VS. CIT (239 ITR 557( (MAD.)) IN THI S CASE, THE APPLICATION FORM PURCHASE OF D.D. WAS SIGNED BY THE ASSESSEE. THE COURT HELD THAT THE INFERENCE DRAWN BY THE AO TO TH E EFFECT THAT THE ASSESSEE HAS PAID NECESSARY CASH FOR OBTAINING THE DRAFT IS NOT JUSTIFIED. B) MOHAN B. SAMTANI VS. CIT (199 ITR 370)(CAL.) IN T HIS CASE, THE ASSESSEE CONSIGNED ANTIQUES AS A REPRESENTATIVE OF STATE TRADING CORPORATION OF SIKKIM. THE DISPATCH OF THE GOODS W ERE DONE ON THE ORAL INSTRUCTION OF CHOGYAL. CHOGYAL ALSO CLAIMED O WNERSHIP OF THE ANTIQUE AND HIS CLAIM WAS NOT DISPROVED. HENCE IT WAS HELD THAT THE VALUE OF ANTIQUE CANNOT BE ADDED TO THE ASSESSEES INCOME C) CIT VS. SMT. P.K. NOORJAHAN, (237 ITR 570)(SC) IN THIS CASE, THE ASSESSEE WAS FOUND TO BE NOT CAPABLE ENOUGH TO EARN THE INCOME DURING THE ASSESSMENT YEAR UNDER CONSIDERATION OR W AS IN A POSITION TO EARN IT FOR A DECADE OR MORE. THE HONBLE APEX COURT HELD THAT SECTION 69 CONFERS A DISCRETION TO THE ASSESSING OF FICER IN THE MATTER OF TREATING AN INVESTMENT AS INCOME OF THE ASSESSEE AND HENCE THE QUESTION WHETHER THE SOURCE OF INVESTMENT SHOULD BE TREATED AS PAGE 3 OF 4 INCOME OR NOT U/S 69 HAS TO BE CONSIDERED IN THE LI GHT OF FACTS OF EACH CASE. D) JAYADAYA PODDAR VS. BIBI RAGRA AND OTHERS, AIR (1974 SC 171.) _ IN CASES FALLING U/S 69A, 69B AND 69C, THE PHRASEOLOGY USED GOES TO SHOW THAT BEFORE ANY OF THESE SECTIONS CAN BE INVOK ED, THE CONDITION PRECEDENT AS TO THE EXISTENCE OF INVESTMENT, EXPEND ITURE, OMISSION TO STATE OR MAKING UNDERSTATEMENT OF VALUE ETC., MU ST BE CONCLUSIVELY ESTABLISHED BY EVIDENCE AND/OR MATERIA L ON RECORD. (E) PRAKASH NARIAN VS. CWT (20 CTR 147) (ALL.) THE BU RDEN OF SHOWING THAT A PARTICULAR TRANSACTION IS A BENAMI A ND THE OWNER IS NOT THE REAL OWNER RESTS ON THE PERSON ASSERTING IT TO BE SO AND THIS BURDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCI NG LEGAL EVIDENCE OF DEFINITE CHARACTER WHICH WOULD EITHER D IRECTLY PROVE THE FACT OF BENAMI OR ESTABLISH CIRCUMSTANCES UNERRINGL Y AND REASONABLY RAISING AN INFERENCE OF THE FACT. 4.1 WE NOTICE THAT THE ASSESSEE HAS PRODUCED AL L THE 13 PERSONS AND THE AO HAS RECORDED STATEMENT FROM ALL OF THEM. IN THE SWORN STATEMENT, ALL THE 13 PERSONS HAVE CONFIRMED THE SUBMISSION OF THE ASS ESSEE. THERE IS ALSO NO DISPUTE WITH REGARD TO THE FACT THAT THE DDS WERE U ITILISED BY THESE 13 PERSONS ONLY FOR THEIR OWN PURPOSE, I.E. FOR MAKING APPLICA TION IN THEIR RESPECTIVE NAMES. WE WERE ALSO INFORMED THAT THE REVENUE DID N OT CAUSE ANY INQUIRY WITH REGARD TO THE DEMAND DRAFTS IN THE INDIVIDUAL HANDS OF THE 13 PERSONS. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT ONCE INDIVIDUAL PERSONS HAVE ADMITTED THAT THE DDS WERE PURCHASED O N THEIR BEHALF AND THAT THEY HAVE ONLY USED THEM FOR THEIR OWN PURPOSE, THE ONUS PLACED UPON THE ASSESSEE GETS DISCHARGED. IN SUCH A SITUATION THE R EVENUE MAY EXAMINE THE FINANCIAL STATUS OF THE INDIVIDUAL PERSONS AND THE ADDITION, IF ANY, IS CALLED FOR IN THEIR RESPECTIVE HANDS. WE NOTICE THAT THE LD CI T (A) HAS ANALYSED THE ISSUE IN RIGHT PERSPECTIVE AND HAS RENDERED HIS DECISION ON A CONSPECTUS OF MATTER. HENCE WE DO NOT FIND ANY NECESSITY TO INTERFERE IN HIS DECISION. PAGE 4 OF 4 5. IN THE RESULT, THE APPEAL FILED BY THE REVENU E IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 13-11-2009 SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, 13 TH NOVEMBER, 2009. COPY TO 1 THE INCOME TAX OFFICER, WARD-5(2), 2 ND FLOOR, DIRECT TAXES BUILDING, SECTOR-8, MVP COLONY, VISAKHAPATNAM-17 2 SRI SURAKASI RAMBABU, S/O ADINARAYANA, D.NO.6-13, REDDIPALLI AGRAHARAM, PADMANABHAM MANDAL 3 THE CIT (A)-I, VISAKHAPATNAM 4 THE CIT, VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM