Sri T Srinivasa Rao, Hyderabad V. ITO,Ward -1, Kurnool

ITA 699/HYD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91713 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 16-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA.NO.699/HYD/2014 ASSESSMENT YEAR 2009-2010 MR. T. SRINIVASA RAO KURNOOL 518001. PAN ACUPTO0348N VS. THE INCOME TAX OFFICER, WARD-1, KURNOOL. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. K.A. SAIPRASAD FOR REVENUE : MR. R. CLEMENT RAMESH KUMAR DATE OF HEARING : 26.05.2015 DATE OF PRONOUNCEMENT : 29.05.2015 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-IV, HYDERABAD D ATED 10.01.2014 FOR THE A.Y. 2009-2010. 2. BRIEFLY STATED, THE ASSESSEE RUNS A WHOLESALE BUSINESS IN CEMENT, TYRES AND TUBES AND ALSO RUNS M OTOR CARS ON HIRE. HE FILED HIS RETURN OF INCOME ON 29.09.200 9 ADMITTING TAXABLE INCOME OF RS.9,84,908. THE A.O. ASSESSED A SUM OF RS.22 LAKHS DEPOSITED IN ASSESSEES BANK ACCOUNT AS UNEXPLAINED CASH CREDITS UNDER SECTION 68 OF THE AC T. AGGRIEVED BY THE ORDER OF THE A.O. THE ASSESSEE FIL ED APPEAL BEFORE THE LD. CIT(A). IN THE ASSESSMENT PROCEEDING S BEFORE THE A.O., IT WAS CONTENDED BY THE LEARNED A.R. OF THE A SSESSEE THAT THE DEPOSIT OF RS.22 LAKHS HAS BEEN MADE IN HIS ICI CI BANK 2 ITA.NO.699/HYD/2014 MR. T. SRINIVASA RAO, KURNOOL. ACCOUNT OUT OF RS.11 LAKHS RECEIVED FROM MR. V. MAL LIKARJUN CHOUDARY AND ANOTHER RS.11 LAKHS FROM MR. K. RAMAKR ISHNA REDDY AS ADVANCE FOR SALE OF LAND. THE ASSESSEE FIL ED UN- REGISTERED AGREEMENT COPIES IN SUPPORT OF HIS CLAIM . 2.1. THE A.O. HAD DIRECTED TO PRODUCE THE BANK EXTRACTS OF THE TWO PERSONS VIZ., MR. V. MALLIKARJU N CHOUDARY AND MR. K. RAMAKRISHNA REDDY TO ESTABLISH THE GENUI NENESS OF THE TRANSACTIONS. THE A.R. PRODUCED THE CONFIRMATIO N LETTERS OF THE TWO PARTIES ALONG WITH THEIR LAND HOLDING DETAI LS AND BILLS IN RESPECT OF SALE OF AGRICULTURAL PRODUCE. THE A.O . POINTED OUT THAT THE LEARNED A.R. HAS FAILED TO PRODUCE THE BAN K ACCOUNT EXTRACTS OF THE TWO PARTIES FROM WHOM THE ADVANCES WERE RECEIVED AND HELD THAT IN THE ABSENCE OF RECEIPT OF MONEY THROUGH BANKING CHANNELS TOWARDS THE ALLEGED ADVANC ES FOR SALE OF AGRICULTURAL LAND, THE TRANSACTION WOULD NO T BE TREATED AS GENUINE. THE A.O. ALSO STATED THAT THE ASSESSEE FAILED TO PRODUCE NECESSARY EVIDENCE TO PROVE THAT THE TRANSA CTION OF RECEIPT OF ADVANCE FOR SALE OF AGRICULTURAL LAND (W HICH WAS SUBSEQUENTLY CANCELLED). IN THESE CIRCUMSTANCES, TH E A.O. TREATED THE SUM OF RS. 22 LAKHS AS UNEXPLAINED CRED IT. 3. BEFORE THE LD. CIT(A), THE LEARNED A.R. SUBMITT ED THAT AGREEMENT OF SALE WAS NOT STATUTORILY REQUIRED TO BE REGISTERED AND STATED THAT AN UNREGISTERED AGREEMEN T OF SALE WAS PERMISSIBLE AS EVIDENCE. THE LEARNED A.R. RELIE D ON THE CONFIRMATION LETTERS, PATTADAR PASSBOOKS AND SALE B ILLS OBTAINED FROM KURNOOL MARKET YARD AND ALSO THE AGRE EMENT OF SALE ENTERED INTO FOR SUPPORTING HIS CLAIM. 4. THE LEARNED CIT(A) OBSERVED THAT THE UNREGISTER ED AGREEMENTS DO NOT CARRY ANY CORROBORATIVE EVIDENTIA RY VALUE AS 3 ITA.NO.699/HYD/2014 MR. T. SRINIVASA RAO, KURNOOL. A REGISTERED AGREEMENT WOULD HAVE DONE. HE FURTHER OBSERVED THAT THE EVIDENTIARY VALUE OF THIS AGREEMENT FOR ES TABLISHING THE GENUINENESS OF THE TRANSACTION IS COMPROMISED D UE TO SUBSEQUENT CANCELLATION OF THE AGREEMENT. SECONDLY, THE LD. CIT(A) OBSERVED THAT IT WAS NECESSARY FOR THE ASSES SEE TO ESTABLISH THE CREDITWORTHINESS OF THE PARTIES CONCE RNED IN ORDER TO ESTABLISH HIS CLAIM FOR THE CREDITS INTO HIS BAN K ACCOUNT. THE LD. CIT(A) OPINED THAT THE DOCUMENTS PRODUCED B Y THE ASSESSEE DO NOT ESTABLISH THAT THE CREDITORS WERE O WNERS OF AGRICULTURAL LAND AND ACTUALLY DERIVED AGRICULTURAL INCOME FROM THE LAND. FURTHER, THE DOCUMENTS PRODUCED BY THE AS SESSEE DOES NOT ESTABLISH THE QUANTUM OF AGRICULTURAL INCO ME DERIVED FROM THE LAND. THE LD. CIT(A) RELIED ON THE DECISIO N OF PARAS COLLINS DISTILLERIES VS. ITO (2011) 7 ITR 614. 4.1. THE LD. CIT(A) RELIED ON THE DECISION OF ACIT VS. INDIAN ART EMPORIUM (1994) 209 ITR (AT) 1 (T.M.) AN D HELD THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE CREDI TWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. THE LD. CIT(A) CONFIRMED THE ADDITION OF RS. 22 LAKHS AS UN EXPLAINED CREDIT UNDER SECTION 68 OF THE I.T. ACT AND UPHELD THE ORDER OF THE INCOME TAX OFFICER. 5. AGGRIEVED, THE ASSESSEE PREFERRED THE APPEAL BE FORE US. THE FACTS ARE THAT MR. V. MALLIKARJUN CHOUDARY AND MR. K. RAMAKRISHNA REDDY INTENDED TO PURCHASE THE LAND FOR A TOTAL AREA OF AC.4.32 GTS IN RAYAMAKULAKUNTA (V) IN MAHAB UBNAGAR DISTRICT FROM MR. T. SRINIVASA RAO, KURNOOL. THEY C OMBINEDLY ENTERED INTO AN AGREEMENT OF SALE WITH MR. T. SRINI VASA RAO ON 26.08.2008. AGAINST THE SALE AGREEMENT ON 26.08.200 8, AN ADVANCE OF RS. 11 LAKHS WAS PAID BY WAY OF CASH FRO M EACH ONE OF THEM I.E., RS.11 LAKHS FROM MR. V. MALLIKARJUN C HOUDARY 4 ITA.NO.699/HYD/2014 MR. T. SRINIVASA RAO, KURNOOL. AND RS.11 LAKHS FROM MR. K. RAMAKRISHNA REDDY. THE COPIES OF THE AGREEMENTS WERE ALSO FILED AND WE FIND THAT THE AGREEMENTS HAVE NOT BEEN REGISTERED. THE A.O. HELD THAT IN THE ABSENCE OF RECEIPT OF MONEY THROUGH BANKING CHANNEL S TOWARDS THE ALLEGED ADVANCE FOR SALE OF AGRICULTURAL LANDS, THE TRANSACTION CANNOT BE TREATED AS GENUINE ONE. THE A .O. ALSO OBSERVED THAT NON-PRODUCTION OF BANK ACCOUNT EXTRAC TS OF THE PERSONS WHO HAD ADVANCED MONEY WOULD LEAD TO THE CONCLUSION THAT THE TRANSACTION IS NOT A GENUINE ON E. 5.1. ON FURTHER APPEAL TO THE LD. CIT(A), THE LD. CIT(A) STATED THAT THE ASSESSEE HAD PRODUCED THE CONFIRMAT ION LETTER FROM MR. V. MALLIKARJUN CHOUDARY AND MR. K. RAMAKRI SHNA REDDY AND PATTADAR PASS BOOKS AND SALE BILLS OBTAIN ED FROM THE KURNOOL MARKET YARD AGENT. BUT HOWEVER SHE HELD THAT THESE EVIDENCES DO NOT ESTABLISH THAT THE OWNER OF THE AGRICULTURAL LANDS ACTUALLY DERIVE ANY AGRICULTURAL INCOME FROM THE LANDS IN QUESTION AND DO NOT ESTABLISH THE QUAN TUM OF AGRICULTURAL INCOME, IF ANY, DERIVED FROM THE LAND. 5.2. FURTHER, THE LD. CIT(A) WRONGLY AT PARA 4.7 H AS STATED THAT NONE OF THE BILLS ARE IN THE NAME OF T WO ALLEGED CREDITORS MR. V. MALLIKARJUN CHOUDARY AND MR. K. RAMAKRISHNA REDDY. IN FACT ON THE PERUSAL OF THE P APER BOOK AT PAGES 11 AND 12, WE FIND THE NAME OF MR. V. MALL IKARJUN CHOUDARY AS THE CREDITOR. HENCE, THE LD. CIT(A) HAS COMMITTED A FACTUAL ERROR IN HIS STATEMENT. IN THE BILLS IT H AS BEEN CLEARLY STATED THAT THE NAME OF THE AGRICULTURIST TO BE MR. V. MALLIKARJUN CHOUDARY AT PAGES 13 AND 14 AND THE COM MODITY GROWN IS SUN FLOWER. THE BILL GIVEN BY THE SALES AG ENT, MARKET YARD, KURNOOL MR. KATTA ASWARTHANARAYANA SETTY EVID ENCES THE SALE OF THE CROP CULTIVATED BY MR. V. MALLIKARJ UN CHOUDARY. 5 ITA.NO.699/HYD/2014 MR. T. SRINIVASA RAO, KURNOOL. SIMILARLY AT PAGES 23 AND 24 THE AGRICULTURIST IS M R. K. RAMAKRISHNA REDDY AND THE COMMODITY IS TURDAL WHICH HAS BEEN SOLD TO MR. KATTA ASWARTHANARAYANA SETTY WHO I S A SALES AGENT IN MARKET YARD, KURNOOL. HENCE, BOTH THE LOWE R AUTHORITIES HAVE ERRED IN APPRECIATION OF THE FACTS OF THE CASE. THE ASSESSEES HAVE PRODUCED THE CONFIRMATION LETTER S, PATTADAR PASS BOOK, COPIES OF BILLS AS WELL AS AGREEMENT OF SALE. IT CAN BE SEEN THAT MR. V. MALLIKARJUN CHOUDARY HAS AC.20.33 OF LAND AND MR. K. RAMAKRISHNA REDDY HAS AC.17.00 OF LAND O N PERUSING THE PATA. HENCE, IT IS HIGHLY PROBABLE THA T BY CULTIVATION OF THE LAND FOR PAST 30 YEARS BOTH OF T HEM COULD HAVE ACCUMULATED SOME MONEY WHICH THEY HAD PAID AS ADVANCE TO MR.SRINIVASA RAO. FURTHER, THAT BOTH OF THEM HAVE BEEN CULTIVATING THEIR RESPECTIVE LANDS IS EVIDENCE D BY THE SALE BILLS OF MARKET YARD, KURNOOL. HENCE, WE ARE OF THE OPINION THAT THE DEPARTMENT HAS NOT BROUGHT OUT ANY MATERIAL TO PROVE THAT AMOUNT OF RS. 22 LAKHS IS UNEXPLAINED CASH CREDIT. IN THESE CIRCUMSTANCES, AS BOTH MR. V. MALLIKARJUN CHOUDARY AND MR. K. RAMAKRISHNA REDDY HAVE AGRICULTURAL INCOME FROM CULTIVATION OF LAND DURING THE PERIOD OF 30 YEARS, THE CASH CREDITS CANNOT BE TREATED AS UNEXPLAINED AND HENCE WE DELETE THE ADDITION MADE UNDER SECTION 68 OF THE ACT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 29.05.2015. SD/- SD/- (INTURI RAMA RAO) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 29 TH MAY, 2015 VBP/- 6 ITA.NO.699/HYD/2014 MR. T. SRINIVASA RAO, KURNOOL. COPY TO 1. MR. T. SRINIVASA RAO KURNOOL. C/O. CH. PARTHASARATH Y & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST.NO.1, ASHOKNAGAR, HYDERABAD 500 020. 2. THE INCOME TAX OFFICER, WARD-1, KURNOOL 3. CIT(A)-IV, HYDERABAD. 4. CIT-III, HYDERABAD. 5. D.R. I.T.A.T. B BENCH, HYDERABAD. 6. GUARD FILE