THE ITO WARD - 1, Amalapuram V. Sri Mudapaka Kanaka Nageswara Rao, Amalapuram

ITA 56/VIZ/2014

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9781 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 18-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S ARAVINDAKSHAN
• Assessee Lawyers: N O N E
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence
• Section: 144

Judgement Text

ITA NOS.55&56/VIZAG/2014 SRI M. KANAKA NAGESWARA RAO, AMALAPURAM ` 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER ./I.T.A.NOS.55&56/VIZAG/2014 ( / ASSESSMENT YEAR: 2009-10) ITO, WARD - 1, AMALAPURAM VS. SRI M. KANAKA NAGESWARA RAO, AMALAPURAM [PAN: AKLPM1660P ] ( / APPELLANT) ( ! / RESPONDENT) / APPELLANT BY : SHRI R.S. ARAVINDAKSHAN, DR / RESPONDENT BY : N O N E / DATE OF HEARING : 17.10.2016 / DATE OF PRONOUNCEMENT : 26.10.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THESE APPEALS FILED BY ASSESSEE ARE DIRECTED AGAIN ST THE ORDER OF THE CIT(A), VISAKHAPATNAM DATED 13.2.2013 FOR THE A SSESSMENT YEAR 2009-10. ITA NOS.55&56/VIZAG/2014 SRI M. KANAKA NAGESWARA RAO, AMALAPURAM ` 2 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS AN INDIV IDUAL. HE HAS FILED HIS RETURN OF INCOME BY DECLARING TOTAL INCOME OF ` 64,610/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTIC ES WERE ISSUED. THE ASSESSEE DID NOT APPEAR BEFORE THE A.O. IN THE ASS ESSMENT ORDER, THE A.O. NOTED THAT CASH DEPOSITS WERE MADE IN THE ASSE SSEES BANK ACCOUNT TO THE TUNE OF ` 37,20,200/- DURING THE YEAR. THE A.O. HAS ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN THE SO URCE OF THE ABOVE AMOUNT. HOWEVER, THERE IS NO RESPONSE FROM THE ASS ESSEE. ACCORDINGLY, THE A.O. HAS COMPLETED ASSESSMENT U/S 144 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') ADD ING AN AMOUNT OF ` 37,20,200/- TO THE INCOME OF THE ASSESSEE. 3. ON BEING AGGRIEVED, ASSESSEE CARRIED MATTER IN A PPEAL BEFORE CIT(A). IT WAS SUBMITTED BEFORE THE CIT(A) THAT TH E IMPUGNED BANK ACCOUNT WAS JOINT ACCOUNT HELD BY ASSESSEE ALONG WI TH HIS FATHER AND HIS FATHER DEPOSITED CASH INTO THE BANK ACCOUNT AND THA T THE SOURCE FOR THE SAID CASH DEPOSIT FOR LOAN BORROWED BY HIS FATHER F ROM M/S. SRIRAM CITY UNION FINANCE LTD., AMALAPURAM. THE LD. CIT(A) BY CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, HE HAS CALLED THE REMAND REPORT FROM THE A.O. THE A.O. SUBMITTED A REMAND REPORT V IDE LETTER DATED 12.11.2013. THE RELEVANT PORTION OF THE REMAND REP ORT IS EXTRACTED AS UNDER: ITA NOS.55&56/VIZAG/2014 SRI M. KANAKA NAGESWARA RAO, AMALAPURAM ` 3 CONSIDERING THE EXPLANATION GIVEN IN THE PETITION F OR ADDITIONAL EVIDENCE, I CONSIDER IT FAIR AND APPROPRIATE TO ADMI T THE ADDITIONAL EVIDENCE. THE AO WAS CALLED UPON TO GIVE HIS COMME NTS ON THE ADDITIONAL EVIDENCE AFTER MAKING NECESSARY INQUIRIES. THE AO SUBMITTED HIS REPORT VIDE LETTER DATED 12.11.2013 AS FOLLOWS: IT IS TO SUBMIT THAT M/S. SHRIRAM CITY UNION FINA NCE LIMITED HAD FILED A LETTER CONFIRMING THE GOLD LOAN S SANCTIONED TO SRI M. VENKATESWARA RAO, FATHER OF SR I M.K. NAGESWARA RAO DURING THE F.Y. 2008-09. IT IS SEEN FROM THE STATEMENT THAT SRI M. VENKATESWARA RAO OBTAINED GOL D LOANS TO THE TUNE OF RS.81.23 LAKHS DURING THE F.Y. 2008- 09. FURTHER, AN OPPORTUNITY OF BEING HEARD IS GRANTED T O THE ASSESSEE REGARDING HIS SUBMISSIONS. THE ASSESSEES FATHER SRI M. VENKATESWARA RAO FILED A LETTER STATING THAT THE GOLD LOAN AMOUNTS WERE DEPOSITED IN THE BANK ACCOUNT OF ICICI BANK. IN THE VIEW OF THE ABOVE, IT APPEARS THAT THE ASSESSEE USED THE LOAN AMOUNTS TO DEPOSIT THE SAME IN THE BA NK ACCOUNT IN WHICH THE ASSESSEE AND HIS FATHER ARE JO INT HOLDERS. 4. THE LD. CIT(A) BY CONSIDERING THE REMAND REPORT, HE DIRECTED THE A.O. TO DELETE THE ADDITION. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: I HAVE CONSIDERED THE DETAILS AVAILABLE ON RECORD. IT IS SEEN THAT THE ASSESSMENT WAS ORIGINALLY COMPLETED U/S 144 OF THE ACT WITHOUT GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE CASH DEPOSITS FOUND IN HIS BANK ACCOUNT. AS A RESULT, THE AO HAD MADE THE IMPUGNED ADDITION OF ` 37,20,200/-. DURING THE APPELLATE PROCEEDINGS, TH E ASSESSEE HAS FILED ADDITIONAL EVIDENCE SHOWING THAT THE AMOUNTS BORROW ED BY HIS FATHER FROM M/S. SHRIRAM CITY UNION FINANCE LTD., WAS DEPO SITED INTO THE BANK ACCOUNT, WHICH WAS A JOINT ACCOUNT HELD WITH HIS FA THER. THE INQUIRIES MADE BY THE AO DURING THE REMAND PROCEEDINGS ALSO P ROVE THE FACTUM OF BORROWINGS BY THE ASSESSEES FATHER MR. M. VENKATES WARA RAO AND THAT THE ASSESSEE HOLDS THE IMPUGNED BANK ACCOUNT JOINTL Y WITH HIS FATHER. IN THE LIGHT OF THE ADDITIONAL EVIDENCE AND THE INQUIR IES MADE THERE IS SUFFICIENT MATERIAL TO INDICATE THAT THE IMPUGNED D EPOSITS IN THE BANK ACCOUNT WAS OUT OF THE BORROWINGS OF THE ASSESSEES FATHER MR. M. VENKATESWARA RAO. HENCE I AM OF THE VIEW THAT THE IMPUGNED CASH DEPOSITS IN THE ASSESSEES BANK ACCOUNT CANNOT BE C ONSIDERED AS UNEXPLAINED INCOME OF THE ASSESSEE. THEREFORE THE AO IS DIRECTED TO DELETE THE ADDITION MADE OF RS.37,20,200/-. ITA NOS.55&56/VIZAG/2014 SRI M. KANAKA NAGESWARA RAO, AMALAPURAM ` 4 5. ON BEING AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. D.R. RELIED ON THE ORDER OF THE A.O. 6. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPOR TED THE ORDER PASSED BY THE CIT(A). 7. I HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATING TO THE SOURC E OF DEPOSITS IN THE ASSESSEES BANK ACCOUNT. WHEN THE A.O. HAS CALLED T HE EXPLANATION FROM THE ASSESSEE, ASSESSEE DID NOT APPEAR BEFORE T HE A.O. THEREFORE, THE A.O. HAS CONSIDERED THE ENTIRE DEPOSIT AMOUNT I N THE HANDS OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT, ACCORDINGLY AD DITION WAS MADE. ON APPEAL, ASSESSEE HAS EXPLAINED DETAILS ABOUT THE SOURCE OF THE CASH DEPOSITS BEFORE THE CIT(A). THE LD. CIT(A) CALLED THE REMAND REPORT AND IN THE REMAND REPORT, THE A.O. ACCEPTED THAT TH E SOURCE OF THE BANK DEPOSITS ARE SOURCE OF THE ASSESSEES FATHER AND TH E ASSESSEES FATHER BORROWED FUNDS FROM M/S. SHRIRAM CITY UNION FINANCE LTD., AMALAPURAM. THE LD. CIT(A) BY CONSIDERING THE REMA ND REPORT DIRECTED THE A.O. TO DELETE THE ADDITION. I FIND NO INFIRMI TY IN THE ORDER PASSED BY THE CIT(A). THUS, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NOS.55&56/VIZAG/2014 SRI M. KANAKA NAGESWARA RAO, AMALAPURAM ` 5 ITA NO.56/VIZAG/2014: 8. THIS APPEAL IS RELATING TO THE PENALTY IN RESPEC T OF THE BANK DEPOSITS. THE A.O. HAS INITIATED THE PENALTY PROCE EDINGS ON ACCOUNT OF UNEXPLAINED CASH CREDITS OF ` 37,20,200/-. THE A.O. HAS ISSUED A NOTICE U/S 271(1)(C) OF THE ACT AND CALLED FOR THE EXPLANA TION. ON BEING NOT SATISFIED, LEVIED A PENALTY OF ` 11,91,964/-. ON APPEAL, CIT(A) HAS OBSERVED THAT THE ADDITION IS ALREADY DELETED BY OR DER DATED 13.12.2013 AND PENALTY CANNOT SUSTAIN. 9. ON BEING AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 10. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT WHEN THE VERY BASIS ON WHICH ADDITION IS DELETED, THE PENALT Y PROCEEDINGS HAVE NO LEGS TO STAND. 11. THE LD. D.R. HAS NOT RAISED ANY OBJECTION AND S IMPLY SUPPORTED THE ORDER PASSED BY THE A.O. 12. I HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE VERY BASIS ON WHICH PENALTY IS LEVIED IS ALREADY CONSIDE RED BY THE LD. CIT(A) IN THE QUANTUM APPEAL ITSELF AND ADDITION IS DELETE D. THUS, THE CIT(A) OF THE OPINION THAT PENALTY CANNOT BE LEVIED. I ALSO FIND THAT THE VERY BASIS ITA NOS.55&56/VIZAG/2014 SRI M. KANAKA NAGESWARA RAO, AMALAPURAM ` 6 ON WHICH PENALTY IS LEVIED SUBSEQUENTLY, THE QUANTU M APPEAL IS DELETED, THE PENALTY CANNOT BE LEVIED U/S 271(1)(C) OF THE A CT. THUS, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 13. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCT16. SD/- ( . ) (V. DURGA RAO) /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 26.10.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO, WARD-1, AMALAPURAM 2. / THE RESPONDENT SRI MUDAPAKA KANAKA NAGESWARA R AO, D.NO.7-2-105, VYDYANADHAM STREET, AMALAPURAM 3. ) / THE PRINCIPAL CIT, RAJAHMUNDRY 4. ) ( ) / THE CIT(A), VISAKHAPATNAM 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM