DCIT, Central Circle, Tirupathi V. Sri C.V.Varadaraj (HUF), Tirupathi

ITA 607/HYD/2011

• Counselvise Citation: 60722514 RSA 2011
• Duration Of Justice: 2 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 11-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: S RAMA RAO
• Keywords: Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER S.NO. ITA NO. A.Y. APPELLANT RESPONDENT 1. 607/H/11 2006-07 DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI C.V.VARADARAJ, (HUF) TIRUPATHI. PAN AAAH6527J 2. 657/H/11 2007-08 C.V.VARADARAJ, (HUF) TIRUPATHI. PAN AAAH6527J DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI ASSESSEE BY SHRI S. RAMA RAO REVENUE BY SHRI P. SOMASEKHAR REDDY DATE OF HEARING : 31-10-2013 DATE OF PRONOUNCEMENT : 20-12-2013 O R D E R PER BENCH: THESE TWO APPEALS ARE IN THE STATUS OF C.V. VARADAR AJ HUF. IN AY 2006-07 REVENUE IS IN APPEAL WHEREAS IN AY 2007- 08 ASSESSEE IS IN APPEAL. THERE WAS A SEARCH IN THE CASE OF ASSESS EE ON 27-09-07 AND ASSESSMENTS WERE COMPLETED BASED ON WAYS AND ME ANS STATEMENT PREPARED BY ASSESSEE. SINCE COMMON ISSUE S ARE INVOLVED IN THESE APPEALS, THE SAME ARE BEING DISPOSED OF BY WAY OF A COMMON ORDER. ITA NO. 607/HYD/2011 REVENUE APPEAL 2. IN THE WAYS & MEANS STATEMENT OF ASSESSEE, AN AM OUNT OF RS. 10,00,000/- WAS SHOWN AGAINST ASSESSEES SON SHRI C . RADHAKRISHNA AS AN ADVANCE. IN THE ABSENCE OF CONFIRMATION FROM ASSESSEE SON, AO TREATED THE AMOUNT OF RS. 10 LAKHS AS UNEXPLAINE D INVESTMENT AND ADDED THE SAME TO THE INCOME RETURNED. THE LEARNED CIT(A) 2 ITA NOS. 607 & 657/HYD/11 SHRI C.V. VARADARAJI (HUF.) CONSIDERED THE EXPLANATION OF ASSESSEE AND DELETED THE ADDITION BY STATING AS UNDER: 4. IN RESPONSE TO THE CASE POSTED FOR HEARING, SRI VEERA RAGHAVAN, CA ATTENDED AND DISCUSSED THE CASE. IT IS SUBMITTED BY THE AUTHORIZED REPRESENTATIVE THAT THE AO IS NOT JUSTIFIED TO MAKE AN ADDITION OF RS. 10 LAKHS WHICH WAS SHOWN IN THE WAYS AND MEANS ACCOUNT OF THE APPELLANT-HUF. IT IS ALSO SUBMITTED THAT THE APPELLANT HAD ENOUGH FUNDS AND IN WAYS AND MEANS ACCOUNT, THE APPELLANT HAD CLEARLY SHOWN RS. 10 LAK HS IS GIVEN TO SRI RADHAKRISHNA WHO HAPPENS TO BE A SON OF SRI C.V. VARADARAJ OUT OF FUNDS OF M/S C.V. VARADARAJ (HUF) AND THE APPELLANT-HUF IS HAVING ENOUGH CASH BALANCES AND IN COME, THEREFORE, THE AO SHOULD NOT HAVE MADE SUCH ADDITIO N. THE AR ALSO FURNISHED THE WAYS AND MEANS ACCOUNT OF THE AP PELLANT AND THE BALANCE SHEET ETC. 4.1 HAVING PERUSED THE DETAILS FURNISHED BY THE APP ELLANT AND HAVING EXAMINED THE ARS ARGUMENT, I AM OF THE VIEW THAT THERE WAS NO VALID REASON FOR THE AO TO MAKE THE ABOVE SA ID ADDITION SINCE THE APPELLANT HAS BEEN ADMITTING INCOME FROM INTEREST WHO HAS BEEN DOING MONEY LENDING BUSINESS AND THE APPELLANTS CAPITAL ACCOUNT I.E. WAYS AND MEANS ACC OUNT IS HAVING SUFFICIENT FUNDS TO LEND TO SRI C. RADHAKRIS HNA. HENCE, HAVING VERIFIED THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION MADE BY THE AO IS DELETED. 3. CONSIDERING RIVAL ARGUMENTS AND PERUSING THE STA TEMENTS PLACED ON RECORD, WE DO NOT SEE ANY REASON TO INTER FERE WITH THE ORDER OF LEARNED CIT(A). FIRST OF ALL, THE AO HIMSELF WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS. 10 LAKHS, WHICH WAS SHOW N IN THE ASSETS SIDE OF THE BALANCE SHEET OF ASSESSEE, AS UNEXPLAIN ED INVESTMENT. AS TO HOW THE INVESTMENT SHOWN IN THE WAYS AND MEANS S TATEMENT CAN BECOME UNEXPLAINED IS NOT EXPLAINED BY AO. THERE IS NO DISPUTE WITH REFERENCE TO THE SOURCE OF FUNDS AND SO, THE ADDITI ON MADE BY THE AO ITSELF IS NOT CORRECT. THE LEARNED CIT(A) AFTER CON SIDERING THE FACTS AND PERUSING THE STATEMENTS FILED HAS RIGHTLY DELET ED THE AMOUNT. REVENUE SHOULD NOT HAVE COME IN APPEAL AND WE DO NO T FIND ANY MERIT IN THE GROUNDS RAISED AND ACCORDINGLY THE SAM E ARE REJECTED. 4. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 3 ITA NOS. 607 & 657/HYD/11 SHRI C.V. VARADARAJI (HUF.) ITA NO. 657/HYD/2011 APPEAL BY ASSESSEE 5. THIS APPEAL IS DIRECTED AGAINST THE ORDER OF LE ARNED CIT(A)-VII, HYDERABAD DATED 31-01-2011. IN THE BRIEF ORDER MADE BY THE AO, THE AO ADDED AN AMOUNT OF RS. 5 LAKHS AS UNEXPLAINED IN VESTMENT STATING THAT ASSESSEE HAD DEPOSITED RS. 5 LAKHS ON 27-01-20 06 IN THE SB ACCOUNT OF TIRUPATI COOPERATIVE BANK. BEFORE THE LE ARNED CIT(A), IT WAS EXPLAINED THAT THE AMOUNT OF RS. 5 LAKHS DEPOSI TED IN THE BANK ACCOUNT ON 27-01-2006 AND WITHDRAWN ON 08-11-2006 A ND THIS DEPOSIT AND WITHDRAWAL WAS SHOWN IN WAYS AND MEANS ACCOUNT. THE LEARNED CIT(A) DID NOT AGREE WITH ASSESSEES CONTENTIONS AN D CONFIRMED THE ADDITION BY STATING AS UNDER: 4. IN RESPONSE TO THE CASE POSTED FOR HEARING, SRI VEERA RAGHAVAN, CA ATTENDED AND DISCUSSED THE CASE. IT IS SUBMITTED BY THE AR THAT THE AO IS NOT JUSTIFIED TO MAKE AN A DDITION OF RS. 5,00,000/- WHICH HAS BEEN DEPOSITED WITH TIRUPATI C OOPERATIVE BANK LTD. IT IS SEEN FROM THE STATEMENT OF TIRUPATI COOPERATIVE BANK LTD THAT THE APPELLANT HAS DEPOSITED RS. 5,00, 000/- ON 27- 01-2006 AND THEREAFTER WITHDRAWN ON 08-11-2006. THE APPELLANT CLAIMS THAT THE SAID DEPOSIT WAS DRAWN FROM THE WAY S AND MEANS ACCOUNT AND DEPOSITED IN TIRUPATI COOPERATIVE BANK LTD. HOWEVER, IT APPEARS TO ME THAT FROM THE WAYS AND ME ANS ACCOUNT, THERE IS NO DRAWING OF RS. 5,00,000/- SHOW N FOR MAKING DEPOSITS WITH TIRUPATI COOPERATIVE BANK LTD. THERE IS NO DOUBT THAT THE APPELLANTS BANK ACCOUNT WITH TIRUPATI COO PERATIVE BANK LTD. IS SHOWN BALANCE WITH RS. 5,00,970/- BUT THE ENTRY WITH REGARD TO THE WITHDRAWAL MADE FROM THE WAYS AN D MEANS ACCOUNT HAS NOT BEEN REFLECTED. THEREFORE, IN THE A BSENCE OF SUCH TRANSACTION APPEARING, IT CANNOT BE SAID THAT THE APPELLANT HAS WITHDRAWN SAID AMOUNT FROM HIS OWN CAPITAL ACCO UNT AND MADE THE DEPOSIT IN TIRUPATI COOPERATIVE BANK LTD. HENCE, I AM OF THE VIEW THAT THE AO IS JUSTIFIED TO MAKE THE AD DITION AS ABOVE. HENCE, ALL THE GROUNDS OF APPEAL IN THIS REG ARD ARE TREATED AS DISMISSED. 6. AFTER CONSIDERING RIVAL SUBMISSIONS AND PERUSING THE PAPER BOOK, WE ARE OF THE OPINION THAT BOTH THE AO AND CI T(A) WERE WRONG IN MAKING THE ADDITION OF RS. 5 LAKHS. AS SEEN FROM THE PAPER BOOK AT PAGE 44 AND AT PAGE 17, WHICH IS A BANK STATEMENT, THERE IS AN ENTRY WITH REFERENCE TO THE DEPOSIT OF RS. 5 LAKHS ON 27- 01-2006 AND 4 ITA NOS. 607 & 657/HYD/11 SHRI C.V. VARADARAJI (HUF.) WITHDRAWAL OF THE SAME ON 08-11-2006. THEREFORE, TH IS DEPOSIT PERTAINS TO AY 2006-07 AND NOT FOR THE IMPUGNED ASS ESSMENT YEAR 2007-08 AND ON THIS REASON THE ADDITION MADE BY AO CANNOT BE SUSTAINED. NOT ONLY THAT ASSESSEE EXPLAINED THAT T HIS AMOUNT WAS DEPOSITED ON 27-01-2006 AND WITHDRAWN ON 08-11-2006 , THE FACTS WHICH WERE EVIDENCED BY BANK STATEMENTS AS WELL. AS SESSEES BANK ACCOUNT ALSO REFLECTED THE BALANCE OF RS. 5,00,970/ -, WHICH HAS COME INTO WAYS AND MEANS STATEMENT. THEREFORE, SINCE THE ASSESSMENT WAS MADE BASED ON THE WAYS AND MEANS STATEMENT, WE ARE OF THE OPINION THAT THE LEARNED CIT(A) WRONGLY CONSIDERED THE FACT S AND SUSTAINED THE ADDITION. WHATEVER MAY BE THE REASON, THE ADDIT ION MADE BY THE AO CANNOT BE SUSTAINED AND ACCORDINGLY ASSESSEES G ROUND IS ALLOWED. 7. IN THE RESULT, APPEAL IS ALLOWED. 8. TO SUM UP, REVENUES APPEAL IN ITA NO. 607/HYD/2 011 IS DISMISSED AND ASSESSES APPEAL IN ITA NO. 657/HYD/2 011 IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2013. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B. R AMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT M EMBER HYDERABAD, DATED: 20 TH DECEMBER, 2013. KV COPY TO:- 1) SHRI C.V. VARADARAJ(HUF), C/O SHRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS RESIDENCY, ROAD NO. 9, H IMAYATNAGAR, HYDERABAD. 2) ACIT, CENTRAL CIRCLE, TIRUPATHI. 3) CIT(A)-VII, HYDERABAD. 4) CIT(CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 5 ITA NOS. 607 & 657/HYD/11 SHRI C.V. VARADARAJI (HUF.) DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER