Income Tax Officer, Ward-13(2), Hyderabad V. Sri. U. Annam Naidu, Secunderabad

ITA 609/HYD/2014

• Counselvise Citation: 60922514 RSA 2014
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained investment
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 609/HYD/2014 ASSESSMENT YEAR: 2009-10 INCOME-TAX OFFICER, WARD 13(2), HYDERABAD SRI U. ANNAM NAIDU, SECUNDERABAD PAN AMMPU 9667 M (APPELLANT) (RESPONDENT) REVENUE BY SHRI RAMAKRISHNA BANDI ASSESSEE BY SHRI S. RAMA RAO DATE OF HEARING 02-03-2015 DATE OF PRONOUNCEMENT 13-03-2015 O R D E R PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-V, HYDERABAD DATED 23/12/2013 FOR AY 2009-10 , WHEREIN THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS: 2. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIO N MADE TOWARDS UNEXPLAINED INVESTMENT MADE U/S 69A OF THE ACT IN THE ABSENCE OF SUBSTANTIAL DOCUMENTARY EVIDENCE OF THE ASSESSEE IN SUPPORT OF THE CREDITWORTHINESS OF THE SOURCE OF THE CASH DEPOSITS MADE IN ASSESSEES BANK ACCOUNT. 3. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE FACT THAT EXCEPT PENSION AMOUNT NO OTHER AMOUNTS HAVE BEEN CR EDITED IN THE BANK ACCOUNT OF THE ASSESSEES FATHER-IN-LAW AS STATED BY ASSESSEE. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE IS WORKING AS DY. CHIEF ENGINEER, I&CAD DEPARTMENT, GOVT. OF ANDHRA P RADESH. HE FILED THE RETURN OF INCOME FOR THE YEAR UNDER CONSI DERATION DECLARING 2 ITA NO. 609/HYD/2014 SRI U. ANNAM NAIDU TOTAL INCOME OF RS. 3,53,684. THE AO FOUND THAT HE HAD A BANK ACCOUNT WITH HDFC BANK AND CERTAIN DEPOSITS WERE MA DE AGGREGATING TO RS. 25,40,000 DURING OCTOBER, 2008 TO FEBRUARY, 2009 ON VARIOUS DATES. WHEN THE AO REQUIRED THE ASSESSEE TO EXPLAIN THE SOURCE FOR SUCH DEPOSITS, ASSESSEE SUBMITTED THAT HIS FATHER-I N-LAW SRI CH. BAIRAGI NAIDU PASSED AWAY ON 15/06/2008. HE WAS THE RETIRED HEAD MASTER IN GOVT. SCHOOL AT GUPTAVELLI VILLAGE BURJA MANDAL OF SRIKAKULAM DIST. SRI BAIRAGI NAIDU WAS IN POSSESSIO N OF 10 ACRES OF WET AGRICULTURAL LANDS AND HE DERIVED SUBSTANTIAL A GRICULTURAL INCOME. HE HAD SUBSTANTIAL SAVINGS FROM HIS AGRICULTURAL IN COME. FROM OUT OF SUCH SAVINGS HE KEPT THE AMOUNTS WITH HIS DAUGHTER, ASSESSEES WIFE. HE WAS DERIVING PENSION AND ALSO INTEREST INCOME FR OM THE MONIES HE USED TO LED TO OTHERS. THE SAID SRI BAIRAGI NAIDU L EFT A WILL ACCORDING TO WHICH ASSESSEES WIFE HAS TO GET AN AMOUNT OF RS . 5 LAKHS, SMT. ANNAPURNA, MOTHER-IN-LAW HAS TO GET AN AMOUNT OF RS . 4,00,000, SRI CH. V. SANYASI RAO, BROTHER-IN-LAW OF THE ASSESSEE HAS TO GET AN AMOUNT OF RS. 12,00,000, AND SMT. CH. TIRUMALA, WIF E OF BROTHER-IN- LAW HAS TO GET AN AMOUNT OF RS. 4,00,000, TOTALING RS. 25 LAKHS. THE SAID AMOUNT WAS KEPT WITH ASSESSEE THROUGH A WILL A S THE FATHER-IN- LAW OF ASSESSEE GOT IMMENSE FAITH IN ASSESSEE. AFTE R THE DEATH OF THE FATHER-IN-LAW, ASSESSEE DEPOSITED THE AFORESAID AMO UNT IN HIS BANK ACCOUNT ON DIFFERENT DATES AND PAID THE SAME TO THE ABOVE SAID PERSONS AS PER THE WILL. TO THIS EFFECT, COPY OF TH E BANK ACCOUNT AND COPY OF THE WILL AND OTHER DOCUMENTS WERE FURNISHED BEFORE AO. IN ADDITION, ASSESSEE ALSO FURNISHED CONFIRMATION LETT ERS FROM THE ABOVE SAID PERSONS IN TOKEN OF PAYMENT OF THE AMOUNTS TO THEM. ASSESSEE ALSO FILED CONFIRMATION LETTERS FROM THE WITNESSES TO THE WILL. THE AO DID NOT ACCEPT THE SUBMISSIONS MADE BY ASSESSEE AND MADE AN ADDITION OF RS. 25 LAKH BY HOLDING THAT THE CREDITW ORTHINESS OF THE ASSESSEES FATHER-IN-LAW IS NOT PROVED. AGGRIEVED B Y THE ORDER OF AO, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A). 3 ITA NO. 609/HYD/2014 SRI U. ANNAM NAIDU 3. IN COURSE OF APPELLATE PROCEEDINGS, LD. AR OF AS SESSEE WAS DIRECTED TO FILE COPIES OF THE BANK ACCOUNTS TO SHO W THE WITHDRAWALS FOR PAYMENTS MADE AS PER THE WILL. ASSESSEE ACCORDI NGLY FILED COPIES OF THE BANK ACCOUNTS WHICH ARE AS FOLLOWS: I) A/C NO. 06961930000789 WITH HDFC BANK, PETBASHEE RABAD BRANCH, HYDERABAD FOR THE PERIOD FROM 03/10/2008 TO 12/04/2010. II) A/C NO. 06961930001125 WITH HDFC BANK, PETBASHE ERABAD BRANCH, HYDERABAD FOR THE PERIOD FROM 16/11/2009 TO 24/09/2010. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E AS WELL AS THE DOCUMENTARY EVIDENCE PRODUCED BEFORE HIM, THE C IT(A) DELETED THE ADDITION OF RS. 25,40,000 BY OBSERVING AS UNDER : 5.3..I FIND THAT SRI BYRAGI NAIDU WAS EMPLOY ED AS HEAD MASTER OF SCHOOL IN SRIKAKULAM DISTRICT AND WORKED AS SUCH FOR NUMBER OF YEARS. HE POSSESSED AGRICULTURAL LAND ADMEASURING 10 ACRES, THE REVENUE RECORDS OF WHICH WERE SUBMITTED. THE SAID SRI BYRAGI NAIDU RETIRED ON SUP ERANNUATION. AS BECOMING OLD, SRI BYRAGI NAIDU LEFT A WILL, A CO PY WHICH IS FILED. ACCORDING TO THE WILL, HE AUTHORIZED THE APP ELLANT TO DISTRIBUTE THE AMOUNT OF RS. 25 LAKHS AMONG HIS LEG AL HEIRS. HE PASSED AWAY ON 15/06/08. THE DEPOSITS WERE MADE DUR ING OCTOBER, 2008 TO FEBRUARY, 2009. THE APPELLANT ALSO EFFECTED WITHDRAWALS OF THE AMOUNT ON 15/01/2010 FOR BEING P AID TO THE LEGAL HEIRS AS PROVIDED FOR IN THE WILL. 5.4 THE APPELLANT FILED THE SUPPORTING DOCUMENTS I. E. WILL DATED 15/05/2008 WHEREIN IT IS MENTIONED THAT AN AM OUNT OF RS. 25 LAKHS WAS DUE FROM VARIOUS PERSONS WHICH WAS AUT HORIZED TO BE COLLECTED BY THE APPELLANT. THE APPELLANT FILED LETTERS OF CONFIRMATION FROM SRI D. ANANDA RAO, K.V. SATYANARA YANA CONFIRMING THE FACT THAT THE WILL WAS EXECUTED IN T HEIR PRESENCE. THE APPELLANT ALSO FILED LETTERS OF CONFIRMATION FR OM CH. ANNAPURNA, U. VANISRI, CH. V. SANYASI RAO AND CH. T IRUMALA CONFIRMING THE FACT OF THE EXISTENCE OF THE WILL AN D THE RECOVERY OF THE AMOUNT OF RS. 25 LAKHS BY THE APPELLANT FROM THE DEBTORS AND THE DISTRIBUTION OF THE AMOUNT AMONGST THE LEGA L HEIRS. ALL THE ABOVE EVIDENCES CLEARLY INDICATE THAT THE AMOUN T OF RS. 25,40,000 DEPOSITED BY THE APPELLANT IS PROPERLY EX PLAINED. THE FACTS OF THE CASE AND THE EVIDENCES PRODUCED BY THE APPELLANT CLEARLY SUPPORT THE CASE OF THE APPELLANT. 4 ITA NO. 609/HYD/2014 SRI U. ANNAM NAIDU 5.5 THEREFORE, I HOLD THAT THE AMOUNT OF RS. 25,40, 000 IS PROPERLY EXPLAINED BY THE APPELLANT AND, THEREFORE, I DELETE THE ADDITION. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 5. BEFORE US, THE LD. DR SUBMITTED THAT THE MONEY F LOW SHOULD BE VERIFIED. FURTHER, HE ARGUED THAT SINCE THERE WERE NO CHEQUE PAYMENTS IT IS PROBABLE THAT RELATIVES HAD ACCOMMOD ATED TO LEND THEIR NAMES FOR THE ABOVE SCHEME EVOLVED BY THE SON-IN-LA W, VIZ. SRI ANNAM NAIDU, THE ASSESSEE. THE LD. DR FURTHER SUBMI TTED THAT ACCORDING TO THE EMPLOYEE CONDUCT RULES OF THE STAT E GOVT., PRIOR PERMISSION IS TO BE OBTAINED WITH RESPECT TO ANY AM OUNT RECEIVED FROM ANY ONE. IN CERTAIN CASES, AT LEAST THE SAME IS TO BE INFORMED TO THE GOVT. 6. THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATT ENTION TO THE RULE 9 OF CONDUCT RULES AND BROUGHT TO OUR NOTICE S UB-RULE 5(I) WHICH STATES THAT THE PROVISIONS OF SUB-RULES (1) & (2) S HALL NOT APPLY TO (I) THE ACQUISITION OR POSSESSION OF ANY PROPERTY A S TRUSTEE, EXECUTOR OR ADMINISTRATOR; (II) ANY GOVERNMENT LAND WHICH IS SOLD OR GRANTED O N LEASE TO ANY GOVERNMENT EMPLOYEE, IN ACCORDANCE WITH THE RUL ES IN FORCE. THE LEARNED COUNSEL FOR ASSESSEE DRAWING SUPPORT SU B-RULE (5) ARGUED THAT AS GOVERNMENT EMPLOYEE, ASSESSEE IS NOT REQUIRED TO SEEK PERMISSION FOR RECEIVING AMOUNTS FROM HIS FATH ER-IN-LAW IN THE CAPACITY OF TRUSTEE. THE LD. COUNSEL FURTHER PRODUC ED DETAILS IN RESPONSE TO THE QUERY OF THE BENCH WITH RESPECT TO THE WITHDRAWALS, AS UNDER: DATE CHQ NO. AMOUNT TRANSACTION DETAILS REMARKS 15/0/2010 288140 9,00,000 CHQ PAID- HYDERABAD-PETB CASH WITHDRAWAL USING CHEQUE 15/0/2010 288141 9,00,000 CHQ PAID- HYDERABAD-PETB CASH WITHDRAWAL USING CHEQUE 5 ITA NO. 609/HYD/2014 SRI U. ANNAM NAIDU 15/0/2010 288142 2,00,000 CHQ PAID- HYDERABAD-PETB CASH WITHDRAWAL USING CHEQUE 16/0/2010 288143 1,50,000 CHQ PAID- HYDERABAD-PETB CASH WITHDRAWAL USING CHEQUE 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WELL AS MATERI AL ON RECORD. THE AO AFTER NOTICING THAT ASSESSEE HAD DEPOSITS AMOUNT ING TO RS. 25,40,000 IN HIS HDFC BANK, TREATED THE SAME AS UNE XPLAINED INVESTMENT U/S 69A AFTER REJECTING THE SUBMISSIONS MADE BY ASSESSEE. CIT(A) DELETED THE ADDITION MADE BY AO HO LDING THAT THE EVIDENCES PRODUCED BY ASSESSEE CLEARLY SUPPORT THE CASE OF ASSESSEE. 8. THE BASIS FOR DELETION OF THE AMOUNT WAS SO CALL ED WILL EXECUTED ON 15/05/08, SUPPORTED BY CONFIRMATION LE TTERS RECEIVED FROM THE LEGAL HEIRS CH. ANNAPURNA, U. VANI SRI, CH . V. SANYASI RAO AND CH. TIRUMALA. THESE DOCUMENTS, IN OUR OPINION, ARE NOT ENOUGH TO EXPLAIN THAT THE FUNDS DEPOSITED IN THE BANK ACC OUNT ARE ARISING FROM THE SOURCES OF ASSESSEES FATHER-IN-LAW. WHAT ASSESSEE HAS EXPLAINED IS SOURCE OF THE SOURCE. IT MAY BE THAT A SSESSEES FATHER-IN- LAW IS HAVING HIS OWN SOURCES AND MAY ALSO BE TRUE THAT THE MONIES ARE KEPT WITH THE ASSESSEE FOR MONEY CIRCULATION. IN A WAY ASSESSEE HAS EXPLAINED THE SOURCE OF SOURCE AND NOT THE IMME DIATE SOURCE OF THE FUNDS. THE IMMEDIATE SOURCE OF DEPOSITS, WHICH HAPPENED AFTER THE DEATH OF ASSESSEES FATHER-IN-LAW WAS NOT AT AL L EXPLAINED. IT MAY BE NOTED THAT THE DEPOSITS HAPPENED MUCH LATER TO T HE DEATH OF ASSESSEES FATHER-IN-LAW. EVEN THOUGH THE WILL EXEC UTED BY ASSESSEES FATHER-IN-LAW SHRI BAIRAGI NAIDU SAYS TH AT THE AMOUNT OF RS. 25 LAKHS WAS IN CUSTODY OF ASSESSEE, THE SAME WAS NOT KEPT IN BANK ACCOUNT. IF THE MONEY IS IN CIRCULATION AS CL AIMED, THEN, THE RECOVERY OF THE MONEY HAS TO BE EXPLAINED, AS DEPOS ITS HAPPENED AT A LATER POINT OF TIME. THEREFORE, WHAT IS REQUIRED TO BE EXPLAINED IS THE NAME OF THE PERSONS FROM WHOM MONIES WERE COLLECTED SO AS TO 6 ITA NO. 609/HYD/2014 SRI U. ANNAM NAIDU DEPOSIT IN BANK THE AMOUNT. THIS IMMEDIATE SOURCE W AS NOT EXPLAINED. FURTHER, ASSESSEE ALSO HAS TO EXPLAIN TH E TIME GAP FROM THE DEATH OF FATHER-IN-LAW TO THE TIME OF DEPOSITS AND WHY THE MONIES ARE KEPT IN FDS IN ASSESSEES NAME, WHEN THE SAME A RE TO BE DISTRIBUTED TO THE HEIRS AS PER THE WILL. WE WERE ALSO INFORMED THAT INTEREST ON FDS WAS OFFERED BY ASSESSEE. THE BANK S TATEMENT FILED IN SUPPORT OF THE PAYMENTS MADE TO HEIRS INDICATE THAT THE AMOUNTS WERE PAID BY CHEQUES. THERE IS ALSO VARIATION IN THE AMO UNTS MENTIONED IN THE CHEQUES, STATED TO HAVE BEEN GIVEN IN DISCHARGE OF WILL, TO THAT OF AMOUNTS ACKNOWLEDGED BY THE LEGAL HEIRS. ON ENQUIRY ASSESSEES COUNSEL FILED A LETTER INDICATING THAT THEY ARE CAS H WITHDRAWALS ONLY, ON 15 JANUARY, 2011. SINCE THIS EVIDENCE REQUIRES EXAMINATION AND THE ISSUES RAISED ABOVE REQUIRE ENQUIRY, IN THE IN TEREST OF JUSTICE, WE ARE OF THE OPINION THAT THE MATTER CAN BE REEXAMINE D BY THE AO BY GIVING OPPORTUNITY TO ASSESSEE. ACCORDINGLY, WE SE T ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER TO THE FILE OF AO FOR FRESH EXAMINATION AND DECIDING BOTH ON FACTS AND LAW. NEE DLESS TO STATE THAT ASSESSEE SHOULD BE GIVEN DUE OPPORTUNITY. 9. IN THE RESULT, APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 13 TH MARCH, 2015 SD/- SD/- (B. RAMAKOTAIAH) (ASHA VIJAYARA GHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 13 TH MARCH, 2015 KV 7 ITA NO. 609/HYD/2014 SRI U. ANNAM NAIDU COPY TO:- . 1. INCOME-TAX, WARD - 13(2), ROOM NO. 612, 2 ND FLOOR, AAYAKAR BHAVAN, L.B. STADIUM ROAD, BASHEERBAGH, HYDERABAD 500 004. SRI U. ANNAM NAIDU, FLAT NO. 503, PAVANI RESIDENCY, PET BASHEERBAGH, JEEDIMETLA VILLAGE, MEDCHAL ROAD, SECUNDERABAD. 3. CIT(A)-V, HYDERABAD 11. CIT-I, HYDERABAD 12. THE DR, ITAT, HYDERABAD