The ITO, Ward-5(2)., Visakhapatnam V. Sri Balagam Srinivas, Visakhapatnam

ITA 518/VIZ/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1674 (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
• 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.518/VIZAG/2007 ASSESSMENT YEAR: 2005-06 ITO, WARD-5(2), VISAKHAPATNAM VS. BALAGAM SRINIVAS, BHIMILI (APPELLANT) (RESPONDENT) PAN NO. AAFPB 4925 M 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.17.00 LAKH S. 3. THE FACTS ARE STATED IN BRIEF. THE ASSESSEE FILE D ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06, ADMITTING A TOTAL INCO ME OF RS.1,05,400/-. THE ASSESSING OFFICER OBTAINED INFORMATION TO THE EFFEC T THAT THE ASSESSEE HAS PURCHASED DEMAND DRAFTS TO THE TUNE OF RS.19.00 LAK HS IN THE NAME OF 19 PERSONS THROUGH THE BANK A/C MAINTAINED BY HIM WITH THE SBI, BHIMILI. IN THIS CONNECTION, THE AO CALLED FOR EXPLANATIONS AND ALSO RECORDED A STATEMENT FROM THE ASSESSEE ON 27.04.2005. THE CASE OF THE ASSESSE E IS THAT ONLY ONE DEMAND DRAFT FOR RS.1.00 LAKH WAS PURCHASED BY HIM FOR HIS OWN PURPOSE AND PAGE 2 OF 4 THE REMAINING DEMAND DRAFTS WERE PURCHASED ON BEHAL F OF 18 OTHER PERSONS. HE FURTHER EXPLAINED THAT THESE DDS WERE USED FOR A PPLYING EXCISE LICENSE FOR RUNNING WINE SHOPS. TO SUPPORT HIS CONTENTIONS, THE ASSESSEE FILED CONFIRMATION LETTERS FROM 18 PERSONS ON WHOSE BEHAL F THE DDS WERE CLAIMED TO HAVE BEEN TAKEN. SUBSEQUENTLY ALL THE PERSONS EXCEP T ONE PERSON NAMED SHRI J. SURYANARAYANA WERE ALSO PRODUCED BEFORE THE AO A ND IN THE STATEMENT RECORDED FROM ALL OF THEM, THEY HAVE CONFIRMED THE SUBMISSIONS OF THE ASSESSEE. HOWEVER, THE AO DID NOT ACCEPT THE EXPLAN ATIONS AND ADDED RS.18.00 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE. IN THE APPEAL PREFERRED BEFORE THE LD CIT (A), THE FIRST APPELLATE AUTHORIT Y, DELETED THE ADDITION TO THE EXTENT OF RS.17.00 LAKHS AND CONFIRMED THE ADDITION OF BALANCE OF RS.1.00 LAKH PERTAINING TO J.SURYANARAYANA SINCE HE WAS NOT PROD UCED BEFORE THE AO. 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 PAGE 3 OF 4 OF TREATING AN INVESTMENT AS INCOME OF THE ASSESSEE AND HENCE THE QUESTION WHETHER THE SOURCE OF INVESTMENT SHOULD BE TREATED AS 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 FILED CONFI RMATION LETTERS FROM ALL THE 18 PERSONS ON WHOSE BEHALF THE DDS WERE CLAIMED TO HAVE BEEN PURCHASED BY THE ASSESSEE. SUBSEQUENTLY THE ASSESSEE HAS ALSO PR ODUCED 17 PERSONS AND THE AO HAS RECORDED STATEMENT FROM THEM. IN THE SWO RN STATEMENT ALSO ALL THE 17 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 18 PERSONS ONLY FOR THEIR OWN PURPOSE, I.E.FOR MAKING APPLICAT ION 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 18 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 PAGE 4 OF 4 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. 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 SHRI BALAGAM SRINIVAS, C/ KALINGA HOTEL, OLD BUS STAND, BHIMILI 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