B.Visweswara Rao, V. THE ACIT, Vijayawada

ITA 546/VIZ/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8814 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 20-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SATYANANDAM
• Keywords: Unexplained cash credit; Peak credit; Additional evidence
• Section: 133A; 131

Judgement Text

ITA NO.546/VIZAG/2014 B. VISWESWARA RAO, GANNAVARAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.546/VIZAG/2014 ( / ASSESSMENT YEAR: 2010-11) B. VISWESWARA RAO, GANNAVARAM ACIT, CIRCLE - 1(1), VIJAYAWADA [PAN NO. AGKPB1581H ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI T. SATYANANDAM, DR / DATE OF HEARING : 04.01.2018 / DATE OF PRONOUNCEMENT : 10.01.2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) {CIT(A)}, VIJAYAWADA VIDE APPEAL NO.71/CIT(A)/VJA/13-14 DATED 30.7.2014 FOR T HE ASSESSMENT YEAR 2010-11. ITA NO.546/VIZAG/2014 B. VISWESWARA RAO, GANNAVARAM 2 2. ASSESSEE FILED RETURN OF INCOME FOR THE ASSESSME NT YEAR 2010-11 ADMITTING TOTAL INCOME OF RS.2,43,740/- AND AGRICUL TURAL INCOME OF RS.2.00 LAKHS. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT (HEREINAFTER CALLED AS THE ACT) AND THE ASSES SMENT WAS COMPLETED ON TOTAL INCOME OF ` 54,71,345/-. ALL THE GROUNDS OF APPEAL ARE RELATE D TO THE ADDITION MADE BY THE A.O. AMOUNTING TO RS.52 ,77,605/- U/S 69A OF THE ACT TOWARDS PEAK UNEXPLAINED CASH CREDITS. IN THIS CASE, THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INC OME OF RS.2,43,740/- AND AGRICULTURAL INCOME OF RS.2.00 LAKHS ON 27.7.20 10. THE CASE WAS SELECTED FOR SCRUTINY AND THE NOTICE U/S 143(2) OF THE ACT WAS ISSUED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A. O. FOUND THAT THE ASSESSEE HAD MADE CASH DEPOSITS IN SAVINGS BANK ACC OUNT TO THE EXTENT OF RS.67,15,000/- IN INDIAN BANK AND RS.93,00,605/- IN STATE BANK OF INDIA AND RS.45,32,364/- IN ANDHRA BANK. THE A.O. COMPILED THE CASH FLOW STATEMENT AND ARRIVED AT THE PEAK CREDIT BALAN CE OF RS.52,27,605/- AND TREATED THE SAME AS UNEXPLAINED CASH DEPOSITS U /S 69A OF THE ACT AND BROUGHT TO TAX. 3. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND EXPLAINED BEFORE THE CIT(A) T HAT HE HAD RECEIVED CASH OF RS.2.00 CRORES FROM HIS FATHER AND MADE VAR IOUS INVESTMENTS IN SHARES WORTH RS.3,83,00,000/-. FROM THE ADVANCES G IVEN BY HIM TO THE ITA NO.546/VIZAG/2014 B. VISWESWARA RAO, GANNAVARAM 3 FARMERS, THE CASH RECEIVED WAS CIRCULATED AND DEPOS ITED IN THE BANK ACCOUNT AND THE SAME WAS WITHDRAWN. THE ASSESSEE E XPLAINED THAT THE DEPOSITS MADE IN THE ANDHRA BANK, STATE BANK OF IND IA AND INDIAN BANK IN SAVINGS BANK ACCOUNT WAS NOTHING BUT CASH ROTATI ON OUT OF THE FUNDS AVAILABLE WITH HIM AND REALIZATION OF ADVANCES FROM THE FARMERS. THE ASSESSEE ALSO STATED THAT HE HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS. HOWEVER, THE EXPLANATION OFFERED BY THE ASSESSEE DI D NOT CONVINCE THE LD. CIT(A) AND SHE CONFIRMED THE ADDITION MADE BY T HE A.O. AND THE APPEAL OF THE ASSESSEE WAS DISMISSED. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, TH E LD. A.R. ARGUED THAT THE ASSESSEE IS AN INCOME TAX ASSESSEE ON ROLLS FOR SEVERAL YEARS AND FILING THE RETURNS OF INCOME REGULARLY. THERE WAS CASH DEPOSITS MADE IN THE STATE BANK OF INDIA, INDIAN BANK AND ANDHRA BAN K AND THE A.O. HAS PREPARED A CASH FLOW STATEMENT FOR ARRIVING AT THE PEAK CASH CREDIT. THE ASSESSEE WAS MAINTAINING ALWAYS SUFFICIENT CASH BAL ANCE WHICH IS EVIDENCED BY THE STATEMENTS RECORDED ON OATH ON 7.5 .2012 BY THE A.O. U/S 131 OF THE ACT, WHEREIN THE ASSESSEE HAD REPLIE D TO QUESTION NO.4 THAT HE HAD CASH BALANCE OF RS.10 LAKHS TO RS.15 LA KHS IN HIS HOUSE AND RS.2 LAKHS IN VARIOUS BANK ACCOUNTS, WHICH EVIDENCE S THAT THE ASSESSEE ITA NO.546/VIZAG/2014 B. VISWESWARA RAO, GANNAVARAM 4 WAS MAINTAINING HUGE CASH BALANCES FOR ROTATION OF THE CASH TO GIVE ADVANCES TO THE FARMERS ON INTEREST BASIS. THE LD. A.R. BROUGHT TO OUR NOTICE THAT THOUGH ASSESSEE WAS FILING THE RETURNS ADMITTING INCOME FOR SEVERAL YEARS, THE A.O. HAS COMPILED THE CASH BOOK BY TAKING OPENING CASH BALANCE ON 2.4.2009 AS ZERO WHICH IS APPARENTL Y CONTRADICTORY TO THE FINANCIAL STATUS OF THE ASSESSEE, AS EVIDENCED BY THE RETURNS OF INCOME. THE LD. A.R. INVITED OUR ATTENTION TO THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08, WHEREIN THE ASSESSEE H AD ADMITTED THE CAPITAL GAINS OF SHARES OF RS.18,73,981/- FOR SALE OF SHARES AMOUNTING TO RS.2,73,88,316/-. THE LD. A.R. SUBMITTED THAT ON S ALE OF SHARES, THE ASSESSEE HAD REALIZED THE NET SALE PRICE OF RS.2,73 ,88,316/- AND ADMITTED THE CAPITAL GAINS OF RS.18,73,981/-. SINC E THE ASSESSEE WAS REGULARLY ADMITTING THE INCOME, THE LD. A.R. ARGUED THAT COMPILING THE CASH FLOW STATEMENT WITH ZERO OPENING BALANCE IS IN CORRECT AND REQUIRE RECONSIDERATION. THE LD. A.R. ARGUED THAT ASSESSEE WAS HAVING SUFFICIENT CASH BALANCE FOR MAKING ANY DEPOSITS. KEEPING IN V IEW OF THE RETURNS OF INCOME, THE WORKING OF THE CASH FLOW STATEMENT IS I NCORRECT. THEREFORE, REQUESTED TO ALLOW THE APPEAL OF THE ASSESSEE. THE LD. A.R. ALSO FILED ADDITIONAL EVIDENCE WITH A PETITION FOR ADMISSION O F ADDITIONAL EVIDENCE STATING THAT THE ASSESSEE HAD RECEIVED THE ADVANCES TO THE EXTENT OF ITA NO.546/VIZAG/2014 B. VISWESWARA RAO, GANNAVARAM 5 RS.50 LAKHS FOR SALE OF LAND. THE SALE AGREEMENT W AS UNREGISTERED AND ON A PLAIN PAPER. 5. ON THE OTHER HAND, THE LD. D.R. SUPPORTED THE OR DERS OF THE LOWER AUTHORITIES AND ARGUED THAT THE ASSESSEE HAS NEITHE R PRODUCED ANY EVIDENCE IN RESPECT OF OPENING CASH BALANCE NOR FUR NISHED THE CASH FLOW STATEMENTS. THEREFORE, THE A.O. HAS RIGHTLY WORKED OUT THE CASH FLOW STATEMENT WITH ZERO OPENING BALANCE AND THE LD. CIT (A) CONFIRMED THE PEAK CREDITS AND NO INTERFERENCE IS CALLED FOR AND REQUESTED TO UPHOLD THE ORDER OF THE CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ASSESSEE HAS MADE CASH DEPOSITS IN SAVINGS BANK ACC OUNT OF STATE BANK OF INDIA, ANDHRA BANK AND INDIAN BANK. THE ASSESSE E IS FILING THE RETURNS OF INCOME REGULARLY WITH THE INCOME TAX DEP ARTMENT AND ADMITTING THE POSITIVE INCOME. FOR THE ASSESSMENT YEAR 2007-08, THE ASSESSEE HAD SHOWN SALE OF SHARES WORTH ` 2,73,88,316/- AND DECLARED THE SHORT TERM CAPITAL GAINS OF ` 18,73,981/-. APPLICATION OF THE SAID FUNDS WAS NOT CONSIDERED BY THE A.O. WHILE PREPARIN G CASH FLOW STATEMENT. A SURVEY U/S 133A OF THE ACT WAS CONDUC TED IN THE ITA NO.546/VIZAG/2014 B. VISWESWARA RAO, GANNAVARAM 6 ASSESSEES CASE AND A STATEMENT WAS RECORDED FROM T HE ASSESSEE AS ON THE DATE OF SURVEY ON 7.5.2012. DURING THE COURSE OF SURVEY, THE ASSESSEE HAD STATED THAT HE WAS HAVING CASH BALANCE OF ` 10 TO 15 LAKHS IN HOUSE AND ` 2 LAKHS IN VARIOUS BANKS WHICH INDICATES THAT THE ASSESSEE IS MAINTAINING SUBSTANTIAL CASH BALANCES I N HOUSE. ALL THESE FACTS INDICATE THAT THE ASSESSEE IS HAVING SUFFICIE NT CASH SOURCES TO MAKE THE DEPOSITS IN THE BANK ACCOUNTS. THOUGH ASSESSEE HAS FILED RETURNS OF INCOME REGULARLY, THE A.O. HAS TAKEN ZERO OPENING B ALANCE WHILE WORKING THE CASH FLOW STATEMENT TO ARRIVE AT THE PE AK CREDITS WHICH NEEDS TO BE RECONSIDERED. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE CASE REQUIRED TO BE REMITTED BACK TO THE F ILE OF THE A.O. FOR DE- NOVO CONSIDERATION TO REWORK THE CASH FLOW STATEMEN T ADOPTING APPROPRIATE OPENING CASH BALANCE CONSIDERING THE FU NDS AVAILABLE WITH THE ASSESSEE AS PER THE RETURNS OF INCOME. THE ASS ESSEE HAS FILED PETITION FOR ADMISSION OF ADDITIONAL EVIDENCE ALONG WITH COPY OF UNREGISTERED SALE AGREEMENT FOR SALE OF AGRICULTURA L LAND. THIS REQUIRED TO BE CONSIDERED AFTER VERIFYING THE SUBSEQUENT SAL E DEEDS EXECUTED BY THE ASSESSEE WITH THE RELEVANT DATES OF PAYMENT. T HEREFORE, WE DIRECT THE ASSESSEE TO CANVASS THE ADDITIONAL EVIDENCE BEF ORE THE A.O. WHO WILL CONSIDER IT ON MERITS. ACCORDINGLY, WE SET ASIDE T HE ORDER OF THE LOWER ITA NO.546/VIZAG/2014 B. VISWESWARA RAO, GANNAVARAM 7 AUTHORITIES AND REMIT THE MATTER BACK TO THE FILE O F THE A.O. FOR DE-NOVO CONSIDERATION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 10 TH JAN18. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 10.01.2018 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SHRI B. VISWESWARA RAO, D.NO.4-6 4, DAVAJIGUDEM, GANNAVARAM-521 101. 2. / THE RESPONDENT THE ACIT, CIRCLE-1(1), VIJAYAWA DA 3. + / THE CIT, VIJAYAWADA 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM