Triplaar School of Learning, Guntur V. ACIT, Guntur

ITA 71/VIZ/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50212 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-05-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 11-02-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Assessee Lawyers: C SUBRAMANYAM
• Keywords: Unexplained cash credit; Unexplained investment; Source of fund
• Section: 133A; 148; 144; 2

Judgement Text

ITA NO 71 OF 09 TRIPLAAR SCHOOL OF LEARNING GUNTUR PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 71 & 31/VIZAG/2009 ASSESSMENT YEAR: 2004-05 AND 2005-06 M/S TRIPLAAR SCHOOL OF LEARNING, GUNTUR VS. ACIT, CIRCLE-2(1) GUNTUR (APPELLANT) PAN NO: 3828 K (RESPONDENT) APPELLANT BY: SHRI C. SUBRAMANYAM, CA RESPONDENT BY: SHRI G. MALLIKARJUNA, DR ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST THE SEPARATE ORDERS PASSED BY LEARNED CIT(A), GUNTUR AND THEY RE LATE TO THE ASSESSMENT YEARS 2004-05 AND 2005-06. 2. THE APPEAL NUMBERED AS ITA 31/VIZAG/2009 IS BARRED BY LIMITATION BY FOUR DAYS. THOUGH THE ASSESSEE WAS COMMUNICATED AB OUT THE DEFECT WAY BACK IN FEBRUARY, 2009, NO PETITION SEEKING CONDONA TION OF DELAY BY EXPLAINING THE REASONS FOR THE DELAY HAS BEEN FILED BY THE ASSESSEE TILL DATE. HENCE THE SAID APPEAL IS DISMISSED IN LIMINE, AS UN ADMITTED. 3. IN THE APPEAL NUMBERED AS ITA 71/VIZAG/2009, THE ASSESSEE HAS RAISED MANY GROUNDS, BUT ALL OF THEM ARE DIRECTED A GAINST THE DECISION OF THE LEARNED CIT (A) IN CONFIRMING THE ADDITION OF R S.38,48,714/- RELATING TO CASH CREDITS. 4. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE IS A FIRM, RUNNING AN EDUCATION INSTITUTION. A SURVEY OP ERATION WAS CONDUCTED ITA NO 71 OF 09 TRIPLAAR SCHOOL OF LEARNING GUNTUR PAGE 2 OF 6 UNDER SECTION 133A OF THE ACT IN THE BUSINESS PREMI SES OF THE ASSESSEE ON 30.01.2004. SINCE THE ASSESSEE FAILED TO FURNISH TH E RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05, A NOTICE UNDER SECTION 148 WAS ISSUED ON 24.1.2006 CALLING FOR THE RETURN OF INCOME. HOWEVER , THE ASSESSEE DID NOT RESPOND TO THE SAID NOTICE AND ALSO TO THE SUBSEQUE NT NOTICES ISSUED TO IT. HENCE THE ASSESSING OFFICER PROCEEDED TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE TO THE BEST OF HIS JUDGMENT UNDER SECTION 144 OF THE ACT AND DETERMINED THE TOTAL INCOME AT RS.91,00,600/- AS UN DER: INCOME FROM BUSINESS ESTIMATED 28,00,000 UNEXPLAINED INVESTMENT IN BUSINESS 39,00,600 UNEXPLAINED REPAYMENT OF LOAN 24,00,000 ---------------- 91,00,600 ======== THE ADDITION OF UNEXPLAINED INVESTMENT IN BUSINESS AMOUNTING TO RS.39,00,600/- WAS MADE BY THE ASSESSING OFFICER ON THE BASIS OF CERTAIN IMPOUNDED MATERIAL WHICH DISCLOSED THAT THE ASSESSE E HAS INTRODUCED THE SAID AMOUNT AS INVESTMENT BETWEEN 3.11.2003 AND 28. 1.2004. HOWEVER, THE ASSESSING OFFICER DID NOT FURNISH THE DETAILS O F THE INVESTMENT IN THE ASSESSMENT ORDER. 5. THE ASSESSEE CHALLENGED ALL THE ADDITIONS BEFORE THE LEARNED CIT (A). IN RESPECT OF ESTIMATION OF INCOME FROM BUSINESS, TH E LEARNED CIT(A) GAVE PARTIAL RELIEF. THE UNEXPLAINED REPAYMENT OF LOAN WAS DELETED. THE LEARNED CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER AND IN THE REMAND REPORT THE ASSESSING OFFICER GAVE THE DE TAILS OF UNEXPLAINED INVESTMENT IN BUSINESS AMOUNTING TO RS.39,00,600/- AS UNDER: NAME AMOUNT (RS.) V. GANDHI 18,86,760 M.V. LAKSHMI 5,86,484 M. MADAN MOHAN RAO 11,20,280 CH. RAMESH BABU 2,55,190 SUNDRY PERSONS 57,200 INTRODUCTION OF THESE AMOUNTS INTO THE BUSINESS OF T HE ASSESSEE WAS NOTICED FROM THE ROUGH BOOK MAINTAINED BY THE ASSES SEE. THE LEARNED CIT ITA NO 71 OF 09 TRIPLAAR SCHOOL OF LEARNING GUNTUR PAGE 3 OF 6 (A) NOTICED THAT THE AMOUNT OF RS.57,200/- ACTUALLY REPRESENTED COLLECTION OF SCHOOL FEES AND ACCORDINGLY DELETED THE SAME. H OWEVER SHE CONFIRMED THE ADDITION OF REMAINING CASH CREDITS CITED ABOVE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT. HENCE THE A SSESSING OFFICER HAS ESTIMATED THE INCOME AS A PERCENTAGE OF GROSS RECEI PTS AND THE SAID GROSS RECEIPTS WERE ALSO ESTIMATED BY THE ASSESSING OFFIC ER. ACCORDING TO LEARNED A.R, ONCE THE INCOME IS ESTIMATED, THERE IS NO SCOPE FOR MAKING ANY ADDITION TOWARDS CASH CREDITS. ALTERNATIVELY, HE SUBMITTED THAT THE ASSESSEE SHOULD BE GIVEN TELESCOPING BENEFIT TO EXT ENT OF INCOME ESTIMATED AGAINST THE IMPUGNED ADDITION. THE LEARNED AUTHORI SED REPRESENTATIVE RELIED UPON THE FOLLOWING CASE LAW IN SUPPORT OF HI S CONTENTIONS: (A) CIT VS. KSM GURUSWAMY NADAR & SONS (149 ITR 1 27 (MAD)) (B) CIT VS. VENKATESWARA TIMBER DEPOT (222 ITR 768 (AP) 7. THE LEARNED CIT, WHO WAS GIVEN TRIBUNAL CHAR GE, HAS FILED THE WRITTEN SUBMISSIONS AND THE SAME WAS TAKEN ON RECORD. 8. WE HAVE HEARD THE CONTENTIONS OF LEARNED A.R AND ALSO CAREFULLY PERUSED THE WRITTEN SUBMISSIONS FILED BY LEARNED CI T AND THE RECORD. THE LEARNED A.R HAS RAISED TWO LEGAL ISSUES DURING THE COURSE OF HIS CONTENTIONS. THE FIRST ONE IS THAT THE ASSESSEE SH OULD BE GIVEN TELESCOPING BENEFIT OF THE INCOME ESTIMATED AGAINST THE CASH CR EDIT ADDITIONS. IN THIS REGARD, WE NOTICE THAT THE ASSESSEE DID NOT MAINTAI N REGULAR BOOKS OF ACCOUNT, BUT A ROUGH CASH BOOK WAS IMPOUNDED DURING THE COURSE OF SURVEY OPERATION. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE INCOME OF THE ASSESSEE COULD NOT BE CORRECTLY DEDUCED FRO M THE ABOVE SAID ROUGH ITA NO 71 OF 09 TRIPLAAR SCHOOL OF LEARNING GUNTUR PAGE 4 OF 6 CASH BOOK. HENCE THE ASSESSING OFFICER HAD NO OTHE R OPTION BUT TO ESTIMATE THE INCOME OF THE ASSESSEE FROM RUNNING OF EDUCATIO NAL INSTITUTION. NOW THE QUESTION THAT ARISES IS WHETHER THE ASSESSEE SH OULD BE GIVEN TELESCOPING BENEFIT IN THIS KIND OF SITUATION. WE HAVE GONE THROUGH THE CASE LAW RELIED UPON BY THE ASSESSEE. WE NOTICE TH AT THE SITUATION IN THE ABOVE SAID CASE LAW WAS THAT (A) THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNT AND H AS ARRIVED AT A PROFIT BY DULY PREPARING A PROFIT AND LOSS ACC OUNT. (B) THE ASSESSING OFFICER HAS ENHANCED THE SAID PROFIT BY MAKING ESTIMATION OF INCOME. HOWEVER, IN THE INSTANT CASE, THE ASSESSEE HAS NOT MAINTAINED REGULAR BOOKS OF ACCOUNT AND ALSO DID NOT FILE RETURN OF IN COME. THE ASSESSEE HAS ALSO NOT PREPARED THE PROFIT AND LOSS ACCOUNT AND S TRUCK AT A PROFIT/LOSS. IN THIS KIND OF SITUATION, THE QUESTION OF ASCERTAININ G THE ENHANCEMENT OF THE INCOME VIS--VIS THE INCOME DISCLOSED BY THE ASSESS EE DOES NOT ARISE. CONSEQUENTLY THE QUESTION OF GIVING TELESCOPING BEN EFIT ALSO DOES NOT ARISE. ACCORDINGLY WE ARE NOT CONVINCED WITH THE SAID PLEA OF THE ASSESSEE. 9. THE NEXT LEGAL ISSUE RAISED BY THE LEARNED A .R IS THAT THE ASSESSING OFFICER SHOULD NOT HAVE RELIED UPON THE SAME BOOKS WHICH HE HAS REJECTED FOR MAKING THE IMPUGNED CASH CREDIT ADDITIONS. THI S ARGUMENT ALSO DOES NOT HOLD THE WATER AS THE ASSESSEE HAS NOT MAINTAIN ED THE BOOKS OF ACCOUNT AND HENCE THE QUESTION OF REJECTION OF THE BOOKS DI D NOT ARISE AT ALL. FROM THE ROUGH CASH BOOK MAINTAINED BY THE ASSESSEE, THE ASSESSING OFFICER HAS ONLY MADE AN ATTEMPT TO DEDUCE THE INCOME OF THE AS SESSEE. FROM THE VARIOUS REPLIES AND EXPLANATIONS FILED BY THE ASSES SEE, IT IS NOTICED THAT THE ASSESSEE DID NOT DISPUTE THE INTRODUCTION OF MONEY IN VARIOUS NAMES. HENCE, IN OUR VIEW THIS LEGAL POINT ALSO DOES NOT A PPLY TO THE FACTS OF THE INSTANT CASE. 10. ON MERITS, WE NOTICE THAT THE LEARNED CIT(A ) HAS CONFIRMED THE ADDITION OF IMPUGNED CASH CREDITS WITH THE FOLLOWIN G OBSERVATIONS: ITA NO 71 OF 09 TRIPLAAR SCHOOL OF LEARNING GUNTUR PAGE 5 OF 6 13.01 WITH REGARD TO THE BALANCE AMOUNTS SHOWN AS RECEIVED, IT WAS CONTENDED THAT THESE ALSO REPRESEN T FEE RECEIPTS. IT WAS CONTENDED THAT THE CREDITS OF RS.18 ,86,760/- IN THE NAME OF V. GANDHI AND RS.11,20,280/- IN THE NAME OF M. MADAN MOHAN RAO SHOULD NOT HAVE BEEN ADDED BACK AND THE ASSESSING OFFICER OUGHT TO HAVE CONSIDERED THA T THE FEES COLLECTIONS FROM STUDENTS FROM APRIL 2003 TO OCTOBE R, 2003 WERE AVAILABLE WITH THE MANAGING PARTNER TO BRING T HESE AMOUNTS INTO THE FIRM IN THEIR NAMES AS INVESTMENTS WITH AN INTENTION TO CLAIM IT AS THEIR INVESTMENTS. THE AP PELLANT FURTHER CONTENDED THAT SHRI V. GANDHI HAD ALSO WITH DRAWN TOTAL AMOUNT OF RS.3,05,450/- ON VARIOUS DATES AND THIS SHOULD HAVE BEEN CONSIDERED AS AVAILABLE CASH BALAN CE. 13.02 THIS AGREEMENT (SIC.ARGUMENT) OF THE APPELLAN T CANNOT BE ACCEPTED, AND IS BASED ONLY ON ASSUMPTIONS AND PRESUMPTIONS. AS SEEN, THE ROUGH DAY BOOK ALSO CLEA RLY NARRATES RECEIPT OF SCHOOL FEES AS SUCH. THEREFORE, THERE IS NO CAUSE TO PRESUME THAT AMOUNTS INTRODUCED IN THE NAM ES OF THE PARTNERS AND OTHERS ARE ON ACCOUNT OF SCHOOL FE ES. SIMILARLY, AMOUNTS WITHDRAWN BY THE PARTNERS CANNOT BE TAKEN AS AVAILABLE FUNDS WITH THEM. THE PARTNER IS NOT ASSESSED TO TAX AND HIS SOURCES OF INCOME/EXPENDITURE/INVESTMENTS ARE NOT KNOWN. THERE FORE, THE ENTIRE AMOUNT INTRODUCED BY THEM IS BROUGHT TO TAX AS UNEXPLAINED CREDIT IN THE HANDS OF THE FIRM. 14.00 THE ROUGH BOOK SHOWS CREDITS OF RS.2,55,190/- IN THE NAMES OF SHRI G. RAMESH BABU, MANAGER AND PRINCIPAL OF THE SCHOOL AND OF RS.5,86,484/- IN THE NAME OF SMT. M.V . LAKSHMI, ANOTHER PARTNER. IT WAS ARGUED THAT SHRI G. RAMESH BABU WAS PAID A MONTHLY REMUNERATION OF RS.30,000/- AND THEREFORE, HE HAD THE SOURCES TO MAKE THE INVESTMEN T. WITH REGARD TO SMT. M.V. LAKSHMI, IT WAS SUBMITTED THAT SHE WITHDRAW RS.4,92,210/- FROM THE FIRM AND THIS WAS A VAILABLE CASH BALANCE. THE BALANCE WAS EXPLAINED AS OUT OF H ER EARNINGS FROM BEING THE CANTEEN CONTRACTOR FOR THE PERIOD. AGAIN, IN THE CASE OF THESE TWO CREDITS ALSO, NO CO NFIRMATIONS HAVE BEEN FILED FROM PERSONS CONCERNED. NO DETAILS OF THEIR CAPACITY TO ADVANCE THESE AMOUNTS HAS ALSO BEEN BRO UGHT ON RECORD. THE AMOUNTS WITHDRAWN CAN ALSO NOT BE CONSI DERED AS AVAILABLE CASH BALANCE, SINCE THE UTILIZATION/PU RPOSE FOR SUCH WITHDRAWAL IS NOT KNOWN. THEREFORE, EXCEPT FOR A GENERAL STATEMENT THAT THE PERSONS HAD THE SOURCES, NO SPEC IFIC INFORMATION HAS BEEN FILED TO SUBSTANTIATE THE AMOU NTS CREDITED. THE ADDITIONS ARE CONFIRMED. ITA NO 71 OF 09 TRIPLAAR SCHOOL OF LEARNING GUNTUR PAGE 6 OF 6 ON A CAREFUL PERUSAL OF THE OBSERVATIONS OF LEARNED CIT(A), WE NOTICE THAT THE ASSESSEE HAS TAKEN ONLY GENERAL ARGUMENTS AND D ID NOT PRODUCE ANY MATERIAL IN SUPPORT OF ITS CONTENTIONS. IN OUR VIE W, THE LEARNED CIT(A) HAS ANALYSED THE ISSUE IN A PROPER PERSPECTIVE AND HAS TAKEN A CONSCIOUS DECISION OVER THE MATTER. ACCORDINGLY WE UPHOLD HI S ORDER ON THIS ISSUE. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSE SSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 25 TH MAY, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 25-05-2011 COPY TO 1 M/S TRIPLAAR SCHOOL OF LEARNING, C/O B. SUBBA RAO , ADVOCATE, 29-5-1 OPP: GLAXO, PRAKASAM ROAD, GOVERNORPET, VIJAYAWADA 520 002 2 THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-2(1) GUNTUR 3 4. THE CIT GUNTUR THE CIT(A), GUNTUR 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM