Ragi Amarnath, Karimnagar, Hyderabad V. ITO, Ward-1, Karimnagar, Karimnagar

ITA 699/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6083 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-10-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 16-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: D. SATYANARAYANA
• Keywords: Peak credit; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

1 ITA.NO.699/HYD/2016 SHRI RAGI AMARNATH, KARIMNAGAR. IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC) : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA.NO.699/HYD/2016 ASSESSMENT YEAR 2008-2009 SHRI RAGI AMARNATH KARIMNAGAR. PAN AAXPR4500K VS. THE INCOME TAX OFFICER WARD-1 KARIMNAGAR. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI D. SATYANARAYANA FOR REVENUE : SHRI K.J. RAO DATE OF HEARING : 11.01.2017 DATE OF PRONOUNCEMENT : 10.03.2017 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER PASSED BY CIT(A)-2, HYDERABAD AND IT PERTAINS TO A.Y. 2008-2009. FOLLOWING GROUNDS WERE URGED BEFORE THE TRIBUNAL. 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS BOTH ON F ACTS AND IN LAW. 2. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF TH E A.O. IN HOLDING THAT THE DEPOSITS MADE INTO THE BANK ACCOUNT ARE NO T PROPERLY EXPLAINED AND FURTHER ERRED IN CONFIRMING THE ADDIT ION MADE BY THE A.O. OF RS.13,07,731. 3. THE LD. CIT(A) ERRED IN HOLDING THAT THERE IS ANY I NVESTMENT IN CHITS AND FURTHER ERRED IN CONFIRMING THE ADDITION OF RS.18,164. 4. ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT TH E TIME OF HEARING. 2. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STA TED IN BRIEF. THE ASSESSEE IS AN INDIVIDUAL MAINLY DERIVING SHARE INCOME FROM FIRM. FOR THE YEAR UNDER CONSIDERATION HE ADMITTED TOTAL INCOME OF 2 ITA.NO.699/HYD/2016 SHRI RAGI AMARNATH, KARIMNAGAR. RS.1,12,670. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE A.O. NOTICED HUGE CASH DEPOSITS TO THE TUNE OF RS.16,4 5,900 IN THE S.B. ACCOUNT MAINTAINED IN ING VYSYA BANK. WHEN CALLED-UPO N TO FURNISH THE SOURCE OF THE DEPOSITS, ASSESSEE MERELY STATED THAT AS AND WHEN FUNDS ARE NEEDED BY THE FIRM M/S. RAGI LAXMAIAH & CO ., KARIMNAGAR, HE USED TO DEPOSIT CASH IN BANK AND ISSUED CHEQUES IN THE NAME OF THE FIRM. 2.1. ASSESSING OFFICER OBSERVED THAT REVENUE IS INTER ESTED IN VERIFYING THE SOURCE OF THE DEPOSITS AND NOT THE ULTIMAT E DESTINATION AFTER DEPOSITS. THEREFORE, THE ASSESSEE WAS AGAIN CAL LED-UPON TO FURNISH THE SOURCE. 2.2. ASSESSEE SUBMITTED THAT CERTAIN AMOUNTS WERE BORROW ED FROM OUTSIDE AND CERTAIN AMOUNTS WERE TAKEN FROM THE MOTH ER AND WIFE BECAUSE HE WAS MAINTAINING THE FINANCIAL AFFAIRS OF BOTH OF THEM. HOWEVER, NO MATERIAL WHATSOEVER WAS FURNISHED TO PRO VE THE SOURCE OF CASH WHICH WAS DEPOSITED IN THE BANK. THE A.O. WAS THE REFORE, OF THE OPINION THAT THE AMOUNT DEPOSITED BY HIM HAD COME FROM U NEXPLAINED SOURCE AND ACCORDINGLY, CONCLUDED THE SAID INCOME IS ASSESSABLE TO TAX. HE NOTICED THAT THERE WERE CERTAIN WITHDRAWALS FROM THE F IRM ON THE DAY ON WHICH DEPOSITS WERE MADE IN THE BANK AND TO THAT EXTEN T THE PLEA OF THE ASSESSEE WAS ACCEPTED. SUCH WITHDRAWALS WORKED OU T TO RS.3,38.169 AND THIS AMOUNT WAS TREATED AS SOURCE FOR MAKING DEPOSITS IN THE BANK. BALANCE AMOUNT OF RS.13,07,731 WAS ADDED BY THE A.O. 2.3. THE ASSESSEE WAS CONTRIBUTING AMOUNT IN MARGADAR SI CHIT FUND AND DURING THE YEAR HE RECEIVED DIVIDEND OF RS. 18,164 WHICH WAS NOT OFFERED TO TAX AND HENCE, THE SAID AMOUNT WAS INCLUD ED AS ASSESSABLE INCOME. 3 ITA.NO.699/HYD/2016 SHRI RAGI AMARNATH, KARIMNAGAR. 3. AGGRIEVED, ASSESSEE CHALLENGED THE ORDER OF THE A .O. ON BOTH THE ISSUES. AT THE OUTSET, IT MAY BE NOTICED THAT WITH REGARD TO CHIT DIVIDEND INCOME THERE IS NO DISCUSSION IN THE ORDER OF THE CIT(A) BUT WITH REGARD TO OTHER SOURCE OF CASH DEPOSIT DETAILED SU BMISSIONS OF THE ASSESSEE WERE TAKEN INTO CONSIDERATION BUT REJECTED THE SAME ON THE GROUND THAT THOUGH THERE WERE WITHDRAWALS TO THE EXTENT O F RS.11,42,933 FROM THE PARTNERSHIP FIRM, IT IS NOT CLEAR WHETHER THE SAME WITHDRAWALS HAVE FOUND PLACE IN THE BANK ACCOUNT OF TH E ASSESSEE AND IN THE ABSENCE OF ANY EVIDENCE PLACED ON RECORD, THE ADDITION MADE BY THE A.O. WAS CONFIRMED BY THE CIT(A). 4. FURTHER AGGRIEVED ASSESSEE IS IN APPEAL BEFORE TH E TRIBUNAL. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE MATER IAL PLACED ON RECORD WAS NOT PROPERLY GONE INTO BY THE TAX AUTHORITIES. HE ADVERTED OUR ATTENTION TO THE WRITTEN SUBMISSIONS FILED BEFORE THE LD. CIT(A) TO SUBMIT THAT PEAK CREDIT IN THE BANK ACCOUNT WORKS OUT TO R S.2,85,830 WHICH COULD HAVE BEEN ADDED EVEN IF THE SOURCE FOR TH E CASH DEPOSITS ARE NOT PROVED BUT THE LD. CIT(A) IGNORED THE CONTENTION OF THE ASSESSEE. 4.1. WITH REGARD TO CHIT DIVIDEND OF RS.18,164 IT WAS CONTENDED THAT THERE WAS LOSS AT THE TIME OF BID AND THE SAID AMOUNT WAS NOT CLAIMED. THE NET EFFECT OF THE IMPUGNED CONTRIBUTION TO WARDS CHIT AND THE AMOUNT REALISED IS NOT A GAIN AND THE A.O. IS NOT JU STIFIED IN TAXING THE DIVIDEND INCOME SEPARATELY IN THIS YEAR. 5. LD. D.R. ON THE OTHER HAND, RELIED UPON THE ORDER S PASSED BY THE TAX AUTHORITIES. 6. I HAVE GONE THROUGH THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. AS REGARDS THE DEPOSITS MADE INTO THE BANK ACCOUNT, EVEN BEFORE US NO MATERIAL WAS PLACED TO PROVE THAT HE HAD AUTHENTIC 4 ITA.NO.699/HYD/2016 SHRI RAGI AMARNATH, KARIMNAGAR. SOURCE TO MAKE THE DEPOSITS. HOWEVER, IT IS APPROPRIATE IN SUCH CIRCUMSTANCES TO TAKE THE PEAK AMOUNT INTO CONSIDERATION R ATHER THAN ADDING ALL THE DEPOSITS MADE IN THAT YEAR. SINCE THIS AS PECT WAS NOT CONSIDERED BY THE LD. CIT(A) AS WELL AS THE A.O. I SE T ASIDE THE MATTER TO THE FILE OF THE A.O. WITH A DIRECTION TO TAKE INTO CONSIDE RATION ONLY THE PEAK CREDIT FOR THE PURPOSE OF MAKING ADDITION. 7. SIMILARLY, WITH REGARD TO CHIT DIVIDEND, THE CLAIM OF THE ASSESSEE WAS THAT NET EFFECT IS LOSS AND IF GAIN HAS TAKEN SEPARATELY THE LOSS PORTION OUGHT TO HAVE BEEN CONSIDERED. THIS ASPE CT WAS ALSO NOT LOOKED INTO NEITHER BY THE CIT(A) NOR BY THE A.O.. I, T HEREFORE, DEEM IT FIT AND REASONABLE TO SET ASIDE THIS ASPECT TO THE FILE OF TH E A.O. FOR FRESH CONSIDERATION, AFTER GIVING ADEQUATE OPPORTUNITY OF HE ARING TO THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.03.2017. SD/- (D. MANMOHAN) VICE PRESIDENT HYDERABAD, DATED 10 TH MARCH, 2017 VBP/- COPY TO 1. SHRI RAGI AMARNATH, KARIMNAGAR. C/O.SHRI S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, 3-6-643, STR EET NO.9, HIMAYATNAGAR, HYDERABAD 500 029. 2. THE INCOME TAX OFFICER, WARD-1, KARIMNAGAR. 3. CIT(A)-2, HYDERABAD. 4. PR. CIT-2, HYDERABAD. 5. D.R. ITAT B (SMC) BENCH, HYDERABAD 6. GUARD FILE.