G. Ashok Reddy, Hyderabad, Hyderabad V. ITO, Ward-4(1), Hyderabad, Hyderabad

ITA 563/HYD/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3513 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 28-01-2020
• Assessment Year: 2009-2010
• Appeal Filed On: 28-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift; Business expenditure; TDS; FORM 26AS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES SMC, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A. NO. 563/HYD/2017 ASSESSMENT YEAR: 2009-10 G. ASHOK REDDY, HYDERABAD [PAN: AEOPG8648C] VS INCOME TAX OFFICER, WARD-4(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SMT. S.SANDHYA, AR FOR REVENUE : SHRI SOLGY JOSE T.KOTTARAM, DR DATE OF HEARING : 28-01-2020 DATE OF PRONOUNCEMENT : 05-03-2020 O R D E R THIS IS ASSESSEES APPEAL FOR THE AY.2009-10, DIRECT ED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -1, HYDERABAD, DATED 29-12-2016. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN IND IVIDUAL, DERIVING COMMISSION INCOME FROM DISTRIBUTORSHIP OF AM WAY PRODUCTS, FILED HIS RETURN OF INCOME FOR THE AY.2009-1 0 ON 31-08- 2009, DECLARING TOTAL INCOME OF RS.2,34,464/-. 3. DURING THE ASSESSMENT PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT [ACT], THE ASSESSING OFFICER (AO) MADE FOUR AD DITIONS. AS REGARDS THE FIRST ISSUE, THE AO OBSERVED THAT THE ASSESSE E HAS RECEIVED DIVIDEND FROM OSMANIA CHIT FUND AMOUNTING TO I.T.A. NO. 563/HYD/2017 :- 2 -: RS.31,861/- AND SUFFERED A LOSS OF RS.22,000/- ON B IDDING IT AND AFTER ADJUSTING THE LOSS TO THE DIVIDEND, A SURPLUS DIVI DEND OF RS.9,861/- ONLY REMAINED. ACCORDINGLY, THE AO BROUGH T RS.9,000/- TO TAX. 3.1. THE SECOND ISSUE IS THAT FROM THE AIR DATA, THE AO FOUND THAT THE TOTAL RECEIPTS DURING THE YEAR WAS RS.13,71,527/ -, RS.6,10,038/- (I.E., FROM PROFESSION), AND RS.7,61, 489/-FROM COMMISSION. BUT THE ASSESSEE HAD DECLARED ONLY A SUM OF RS.11,96,475/- (RS.6,07,497/- + RS.5,88,978/-) IN TH E PROFIT & LOSS A/C. THE DIFFERENCE OF THE RECEIPTS OF RS.1,75,0 52/- WAS BROUGHT TO TAX BY THE AO. 3.2. FURTHER, THE AO OBSERVED THAT THE ASSESSEE HAS CRE DITED RS.5 LAKHS EACH ON 13-12-2008 AND 22-01-2009 INTO HIS ACC OUNT IN SBH, DOMALGUDA BRANCH. WHEN ASKED TO EXPLAIN, ASSESS EE STATED THAT HE HAD RECEIVED AN AMOUNT OF RS.15 LAKHS TOWARDS S ETTLEMENT OF HIS SHARE FROM HIS OWN BROTHER SHRI G.RAVINDER RE DDY, WHO IS STAYING AT USA FOR THE LAST 25 YEARS. IN THIS REGARD, H E ALSO FILED CONFIRMATION LETTER FROM HIS BROTHER, SHRI G.RAVINDER REDDY. THE AO, HOWEVER, DID NOT ACCEPT THE CONTENTIONS OF ASSESSEE AND BROUGHT THE SUM OF RS.10 LAKHS TO TAX U/S.68 OF THE ACT . 3.3. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS CLAI MED FOREIGN TOUR EXPENSES OF RS.1,52,596/- FOR HIMSELF A ND HIS WIFE, SMT. SREETHI REDDY. THOUGH THE ASSESSEE HAD CLAIMED THE SAME AS BUSINESS EXPENSES, THE ASSESSEE COULD NOT SUBSTANTIATE THE SAME WITH ANY DETAILS SUCH AS INVITATION CARD, BROCHURE OR BOOK LET RELATING TO THE MEETINGS ATTENDED BY THE ASSESSEE AND HIS WIFE. HE I.T.A. NO. 563/HYD/2017 :- 3 -: THEREFORE DISALLOWED THE SAME AND BROUGHT THE SUM OF RS.1,52,596/- ALSO TO TAX. 4. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A), WHO GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGAINST THE CONFI RMATION OF ADDITIONS BY THE CIT(A), THE ASSESSEE IS IN SECOND APP EAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS: 1) THE ORDER OF THE LEARNED CIT (A) IS ERRONEOUS T O THE EXTENT IT IS PREJUDICIAL TO THE APPELLANT. 2) THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDI TION OF RS.9,000/- TOWARDS CHIT DIVIDEND FROM OSMANIA CHIT FUNDS. 3) THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDI TION OF RS.1,75,052/- ON THE GROUND THAT THERE IS A DIFFERENCE IN THE COMMIS SION RECEIVED. 4) THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDI TION OF RS.10,00,000/- REPRESENTING THE CREDITS INTO THE BANK ACCOUNT OF S TATE BANK OF HYDERABAD, DOMALGUDA BRANCH, HYDERABAD. 5) THE LEARNED CIT (A) ERRED IN CONFIRMING DISALLOW ANCE OF FOREIGN TOUR EXPENSES OF RS.1,52,596/-. 6) ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIAL O N RECORD, I FIND THAT AS REGARDS THE ADDITION OF RS.9,000 /- IS CONCERNED, THE ASSESSEE STATED THAT HE HAS RECEIVED A SUM OF RS.27,482/- ONLY AS DIVIDEND AND NOT RS.31,861/-. THE LD.CIT(A) OBSERVED THAT THE ASSESSEE HAS NOT FILED COPY OF THE R ECEIPT OF RS.27,482/- ONLY OR THAT IT IS NOT RELATING TO THE YEAR OF ACCOUNT. EVEN BEFORE THE TRIBUNAL, NO EVIDENCE IS FILED. THER EFORE, THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE IS REJEC TED. I.T.A. NO. 563/HYD/2017 :- 4 -: 5.1. AS REGARDS THE ADDITION OF RS.1,75,052/- TOWARDS COMMISSION RECEIVED, THE ASSESSEE HAS POINTED OUT THAT THERE IS A MI STAKE IN ARRIVING AT THE FIGURE OF RS.13,71,527/- (PROFESSION/ TECHNICAL RS.6,10,038/- + COMMISSION RS.7,61,489/-) AS AGAI NST THE CORRECT AMOUNT OF RS.13,50,647/-. IN THIS CONNECTION, LD.COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO FORM 26AS, W HERE THE RECEIPT TO THE EXTENT OF RS.13,50,647/- WERE REFLECTED, ON WHICH, TDS WAS ALSO DEDUCTED. ON PERUSAL OF THE ORDER OF THE CIT(A), I FIND THAT THE LD.CIT(A) HAS CORRECTED THIS MISTAKE AND RESTRICT ED THE ADDITION TO THE EXTENT OF RS.1,54,172/- ONLY. THEREFORE, I FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A) AND THE GROUND RAISED BY ASSESSEE IN THIS REGARD, IS DISMISSED. 5.2. AS REGARDS THE ADDITION OF RS.10 LAKHS, LD.COUNS EL FOR THE ASSESSEE SUBMITTED THAT THERE WAS A SETTLEMENT OF PROPER TIES AMONGST THE FAMILY MEMBERS AND THE ASSESSEES SHARE O N LAND WAS ALSO GIVEN TO HIS BROTHER, SHRI RAVINDER REDDY, WHO I N TURN HAS PAID A SUM OF RS.15 LAKHS TO THE ASSESSEE, OUT OF WHI CH RS.10 LAKHS HAS BEEN DEPOSITED BY HIM INTO HIS BANK ACCOUN T. IN SUPPORT OF THIS CONTENTION, THE ASSESSEE HAS FILED A CO PY OF GIFT DEEDS DT.16-08-2008 AND 23-10-2008. FROM THESE DOCUMENTS, IT IS EVIDENT THAT ASSESSEES MOTHER HAS GIFTED SOME PROPERTY TO SHRI G.RAVINDER REDDY, AND THE ELDER BROTHER OF ASSESSEE A S WELL AS HIS MOTHER HAVE ALSO GIFTED ANOTHER PROPERTY TO SHRI G.RAV INDER REDDY. THE ASSESSEE WAS NOT BE ABLE TO PRODUCE ANY OTHER DOCU MENTARY EVIDENCE, EXCEPT CONFIRMATION LETTER FROM SHRI G.RAVIN DER REDDY, WHICH IS PLACED AT PG.5 OF THE PAPER BOOK. THE CONTEN TS OF THE SAME ARE REPRODUCED HEREUNDER FOR READY REFERENCE: I.T.A. NO. 563/HYD/2017 :- 5 -: I GUMMAKONDA RAVINDER REDDY S/O.G.LAKSHMA REDDY ST AYING AT UNITED STATES OF AMERICA AND MY INDIAN ADDRESS PLOT NO.152 NAGARJUNA COLONY, NR PEDDAGUTTA, HASTINAPURAM, HYDERABAD-79, HAVING 2 ELDER BROTHERS & ONE YOUNGER BROTHER, OUT OF ONE BROTHER G.MANIPAL R EDDY IS STAYING AT U.S AND OTHER 2 BROTHERS ARE STAYING AT INDIA, HYDERABA D, ARE DOING BUSINESS. WE HAD A JOINT PROPERTY OF AGRICULTURAL LAND WITH M Y MOTHER G.NARSAMMA NAME & MY 1 ST ELDER BROTHER G.VENKAT REDDY NAME AT TURKAYAMZAL VILLAGE, HAYATNAGAR (M) RAGANNAGUDAM (V) RANGA REDD Y DIST VIDE SY NO.317 THE PROPERTY WAS SETTLED MY PARENTS FOR THE YEAR 2008 AS PER THE SETTLEMENT OF PROPERTY I WAS GIVEN A CASH OF RS.150 0000/- TO MY YOUNGER BROTHER G.ASHOK REDDY STAYING HYDERABAD T/W THE ABO VE PROPERTY SETTLEMENTS AHRE AMOUNT, THE PROPERTY WAS TRANSFERR ED WITH MY NAME FOR THE YEAR 2008, RECEIVED WITH MY MOTHER NARSAMMA PRO PERTY OF (AC 0-05 GTS) & G.VITTAL REDDY (ELDER BROTHER) AC 3-30 GTS., THE SETTLEMENT MADE MY PARENTS WITHOUT ANY SETTLEMENT DEED, THE SETTLEMENT MADE ONLY VERBALLY, OUT OF THE SETTLEMENT I PAID CASH OF RS.1500000/- ( RS FIFTEEN LKS) TO MY YOUNGER BROTHER G.ASHOK REDDY THE AMOUNT WAS GIVEN TO BROTHER AT HYDERABAD IN FRONT OF MY PARENTS. 5.2.I. I FIND THAT THE REGISTERED SETTLEMENT DEEDS WERE EXECUTED ON 16-08-2008 & 23-10-2008, WHILE THE CASH WAS DEPOSITED ON 13- 12-2008. THEREFORE, THE POSSIBILITY OF A FAMILY SETTLE MENT CANNOT BE RULED OUT. IT IS ALSO SEEN THAT THE ELDER BROTHER OF THE ASSESSEE, SHRI VENKAT REDDY AND ALSO THE MOTHER OF THE ASSESSEE H AVE EXECUTED THE SETTLEMENT DEEDS. SINCE THE REVENUE ALSO H AS NOT BROUGHT OUT THAT THERE WERE OTHER PROPERTIES WHICH HAVE BE EN SETTLED IN FAVOUR OF THE ASSESSEE, THE CONTENTION OF ASSE SSEE THAT HE HAS RECEIVED RS.15 LAKHS TOWARDS SETTLEMENT OF FAMILY P ROPERTY CANNOT BE RULED OUT TOTALLY. CONSIDERING THE PREPONDERAN CE OF PROBABILITIES AND CIRCUMSTANTIAL EVIDENCE, I AM INCL INED TO ACCEPT THE SOURCE OF DEPOSIT OF RS.10 LAKHS AS THE RECEIPT OF THE AMOUNT FROM HIS BROTHER. THEREFORE, THE ADDITION TO THE EXTENT OF RS.10 LAKHS IS DELETED AND THE GROUND RAISED BY ASSESSEE IN THIS REGARD IS ALLOWED. I.T.A. NO. 563/HYD/2017 :- 6 -: 5.3. AS REGARDS THE DISALLOWANCE OF FOREIGN TOUR EXP ENSES OF RS.1,52,596/-, SINCE THE LD.COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE TO ESTABLISH THAT THE TRAVE L WAS FOR BUSINESS PURPOSES, I SEE NO REASON TO INTERFERE WITH THE WELL REASONED ORDER OF THE LD.CIT(A) ON THIS ISSUE. HENCE , THIS GROUND OF APPEAL IS REJECTED. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS TREATED AS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MARCH, 2020 SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED: 05-03-2020 TNMM I.T.A. NO. 563/HYD/2017 :- 7 -: COPY TO : 1. SHRI G.ASHOK REDDY, 1-2-412/20 & 20/1, FLAT NO.3 02, RELIANCE JAYA TOWERS, DOMALGUDA, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-4(1), HYDERABAD. 3. CIT (APPEALS)-I, HYDERABAD. 4. THE PR.CIT-I, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.