Deputy Commissioner of Income Tax, Tirupathi V. Shri C.V. Thotadri, Tirupathi

ITA 770/HYD/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69987 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained cash credit; Gift; Search and seizure
• Section: 153A

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 NOS. 770 & 609/HYD/2011 ASSESSMENT YEARS : 2006-07 & 2007-08 DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE, HYDERABAD. VS. C.V. THOTADRI, TIRUPATHI PAN: AEIPT8688P (APPELLANT) (RESPONDENT) AND ITA NO. 662/HYD/2011 ASSESSMENT YEAR: 2007-08 C.V. THOTADRI, TIRUPATHI PAN: AEIPT8688P VS. DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE, HYDERABAD. 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 APPEALS BY ASSESSEE ARE AGAINST ORDER S OF LD.CIT(A) IN RESPECTIVE YEARS. THIS CASE IS RELATED TO SRI C VAR ADARAJU IN WHOSE CASE SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED U / 132 ON 27-09 AND ASSESSEE IS SON OF THAT PERSON. ASSESSMENTS IN THE GROUP WERE COMPLETED ON THE BASIS OF WAYS AND MEANS STATEMENTS FILED. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS THEY WE RE CLUBBED AND HEARD, THEREFORE, A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. 2 ITA NOS. 770, 609 & 662/HYD/2011 C.V. THOTADRI ITA NO. 770/HYD/2011 FOR AY 2006-07 BY REVENUE 2. THIS APPEAL IS DIRECTED AGAINST THE ORDER OF CIT (A)-VII, HYDERABAD DATED 02-02-2011. THE GRIEVANCE OF REVENU E IS AGAINST THE ACTION OF THE CIT(A) IN DELETING THE ADDITIONS MADE TOWARDS UNEXPLAINED CASH DEPOSITS OF RS. 5,00,000/- AND RS. 12,00,000/- BY THE AO. 3. AS REGARDS THE CASH DEPOSIT OF RS. 5,00,000/-, T HE AO OBSERVED THAT ASSESSEE HAD MADE A DEPOSIT OF RS. 5,00,000/- IN BANK OF BARODA, TIRUPATI AND ASSESSEE DID NOT FURNISH ANY D ETAILS ABOUT THE SAID DEPOSIT. THE AO, THEREFORE, TREATED THE SAID D EPOSIT AS UNEXPLAINED CREDIT. BEFORE THE CIT(A), IT WAS SUBMI TTED THAT AO DID NOT APPRECIATE THE WAYS AND MEANS ACCOUNT FURNISHED IN CASE OF ASSESSEE, AS ASSESSEE HAD DRAWN RS. 5,00,000/- FROM HIS WAYS AND MEANS ACCOUNT AND DEPOSITED WITH BANK OF BARODA, TI RUPATHI. HE, THEREFORE, CONTENDED THAT THE AO SHOULD NOT HAVE TR EATED THE SAID DEPOSIT AS UNEXPLAINED. THE AR OF ASSESSEE HAD FILE D A COPY OF THE WAYS AND MEANS ACCOUNT BEFORE THE CIT(A) AND THE CI T(A) NOTED THAT ASSESSEE HAD SUFFICIENT FUNDS FROM WHICH HE HAD DEP OSITED RS. 5,00,000/- WITH BANK OF INDIA. AFTER CONSIDERING T HE SUBMISSIONS OF AR AND ALSO AFTER VERIFYING THE DETAILS FURNISHED, THE CIT(A) DELETED THE ADDITION OF RS. 5,00,000/- MADE BY THE AO. 4. AS REGARDS THE CASH DEPOSIT OF RS. 12,00,000/-, THE AO TREATED THE SAID AMOUNT AS UNEXPLAINED CASH CREDIT AND ADDE D TO THE INCOME OF THE ASSESSEE BY HOLDING THAT THERE WAS NO SATISF ACTORY EXPLANATION FROM ASSESSEE AND ALSO NO BOOKS OF ACCOUNT WERE FIL ED. BEFORE THE CIT(A) IT WAS CONTENDED THAT THOUGH THE NECESSARY DETAILS WITH REGARD TO THE DEPOSIT MADE IN THE BANK ACCOUNT, THE AO MADE THE ADDITION AS UNEXPLAINED CREDIT. IT WAS SUBMITTED TH AT ASSESSEE HAD 3 ITA NOS. 770, 609 & 662/HYD/2011 C.V. THOTADRI ENOUGH AMOUNT IN THE WAYS AND MEANS ACCOUNT AND THE SAID DEPOSITS MADE IS ALSO WITHDRAWN FROM WAYS AND MEANS ACCOUNT AND DEPOSITED WITH ANDHRA BANK, TIRUCHANOOR ROAD, TIRUPATI. HE, T HEREFORE, SUBMITTED THAT THE AO SHOULD HAVE APPRECIATED THAT ASSESSEE HAD ENOUGH OF FUNDS FOR MAKING A DEPOSIT. AFTER CONSID ERING THE SUBMISSIONS OF ASSESSEE, THE CIT(A) DELETED THE ADD ITION MADE BY OBSERVING AS UNDER: 5.1 THE AR HAS ALSO FILED THE DETAILS IN SUPPORT OF HIS ARGUMENT. IT MAY BE SEEN THAT THE APPELLANT HAS BEE N MAINTAINING HIS CAPITAL ACCOUNT WHICH IS CALLED WAY S AND MEANS ACCOUNT FROM WHICH THE APPELLANT IS SEEM TO HAVE DR AWN RS. 12,00,000/- AND DEPOSITED WITH ANDHRA BANK, TIRUCHA NOOR ROAD, TIRUPATHI. THEREFORE, HAVING VERIFIED THE FAC TS AND CIRCUMSTANCES OF THE CASE, I AM INCLINED TO DELETE THE ADDITION MADE BY THE AO. HENCE, THIS GROUND OF APPEAL IS ALL OWED. 5. AFTER CONSIDERING RIVAL SUBMISSIONS AND PERUSING THE PAPER BOOK, WE ARE OF THE OPINION THAT BOTH THE AO WAS W RONG IN MAKING THE ADDITIONS. AS SEEN FROM THE PAPER BOOK AT PAGES 8 AND 9, WHICH ARE WAYS AND MEANS ACCOUNT AND BALANCE SHEET AND AT PAGES 21-22, COPY OF BANK STATEMENT OF ANDHRA BANK AND AT PAGES 23-24 COPY OF BANK STATEMENT OF BANK OF BARODA, THERE ARE ENTRIE S WITH REFERENCE TO THE DEPOSITS OF RS. 5 LAKHS AND RS. 12,00,000/- AND CORRESPONDING WITHDRAWALS. THE GENUINENESS OF THESE TRANSACTIONS HAVE BEEN DEMONSTRATED BY ASSESSEE BY WAY OF DOCUMENTARY EVID ENCE PLACED IN THE PAPER BOOK AS ABOVE. THEREFORE, SINCE THE ASSES SMENT WAS MADE BASED ON THE WAYS AND MEANS STATEMENT, WE ARE OF TH E OPINION THAT THE LEARNED CIT(A) HAS RIGHTLY DELETED THE ADDITION BY GIVING A CATEGORICAL FINDING THAT IT IS CLEAR FROM THE WAYS AND MEANS ACCOUNT THAT ASSESSEE HAD SUFFICIENT FUNDS TO DEPOSIT THE A MOUNTS IN THE BANKS AND, ACCORDINGLY, WE UPHOLD THE ORDER OF CIT( A) AND DISMISS THE GROUND RAISED BY REVENUE IN THIS REGARD. 6. IN THE RESULT, APPEAL OF REVENUE IN ITA NO. 770/ HY/2011 IS DISMISSED. 4 ITA NOS. 770, 609 & 662/HYD/2011 C.V. THOTADRI ITA NO. 609/HYD/2011 BY THE REVENUE FOR AY 2007-08 7. THIS APPEAL IS PREFERRED BY REVENUE AGAINST THE ORDER OF CIT(A)-VII, HYDERABAD DATED 24-01-2011, WHEREIN REV ENUE HAS RAISED THE FOLLOWING GROUND OF APPEAL: THE CIT(A) HAS FAILED TO NOTICE THAT THE ASSESSEE H AS NOT PAID THE TAX ON THE ADMITTED INCOME AND HENCE HE IS OUGH T TO HAVE DISMISSED THE APPEAL OF THE ASSESSEE AS PER SECTION 249(4) OF THE IT ACT. 8. ON THIS ISSUE, THE LEARNED COUNSEL EXPLAINED THA T ASSESSEE HAD PAID THE TAX BEFORE THE APPEAL WAS HEARD BY THE CIT (A), THEREFORE, THE GROUND IS NOT MATERIAL. FACTS ON RECORD INDICATE TH AT ASSESSEE DISCHARGED THE TAX LIABILITY BY THE TIME CIT(A) HEA RD THE CASE. THEREFORE, WE ARE OF THE VIEW THAT SINCE THE ENTIRE DEMAND ADMITTED BY ASSESSEE WAS PAID BEFORE THE APPEAL WAS CONSIDER ED BY THE LEARNED CIT(A), THIS GROUND RAISED BY REVENUE HAS N O MERIT. TAKING CLUE FROM THE PRINCIPLES LAID DOWN BY THE HONBLE S UPREME COURT IN THE CASE OF CIT VS. FILMISTAN LTD., 42 ITR 163, SIN CE ASSESSEE HAS PAID THE TAX BEFORE THE APPEAL WAS TAKEN UP BY THE LEARNED CIT(A), THE SAME CAN BE CONSIDERED AS MAINTAINABLE AND EVE N IF THERE WAS ANY DELAY IN PAYMENT OF TAX AFTER FILING OF APPEAL, THE SAME IS DEEMED TO HAVE CONDONED. WE, THEREFORE, DO NOT SEE ANY MER IT IN REVENUES GROUND AND ACCORDINGLY THE SAME IS DISMISSED. 9. IN THE RESULT, APPEAL OF REVENUE IN ITA NO. 609/ HYD/2011 IS DISMISSED. ITA NO. 622/HYD/2011 APPEAL BY ASSESSEE FOR AY 2007 -08 10. THIS APPEAL IS DIRECTED AGAINST THE ORDER OF CI T(A)-VII, HYDERABAD, DATED 24-01-2011. THE GRIEVANCE OF ASSES SEE IN THIS APPEAL IS AGAINST THE ACTION OF CIT(A) IN SUSTAININ G THE ADDITION OF RS. 5 ITA NOS. 770, 609 & 662/HYD/2011 C.V. THOTADRI 18,30,000/-, MADE BY THE AO AS UNEXPLAINED INCOME O N ACCOUNT OF DEPOSITS MADE IN THE BANKS, AS UNDER: I) RS. 1,00,000 ON 15/03/2007 BANK OF BARODA II) RS 1,30,000/- ON 28/03/2007 BANK OF BARODA III) RS. 6,00,000/- ON 05/04/2006 ANDHRA BANK IV) RS. 10,00,000/- ON 01/08/2006 ANDHRA BANK 11. THE AO NOTICED THAT THERE WAS A CASH CREDIT OF RS. 1,00,000/- AND RS. 1,30,000/- ON 15-03-2007 AND 28-03-2007 RES PECTIVELY IN THE SB ACCOUNT OF ASSESSEE OF BANK OF BARODA, TIRUPATHI . WHEN IT WAS QUESTIONED ABOUT THE SOURCE OF THE SAID DEPOSITS, A SSESSEE COULD NOT REPLY PROPERTY AND, THEREFORE, IN THE ABSENCE OF BO OKS OF ACCOUNT AND SATISFACTORY EXPLANATION, THE AO TREATED THE SAID A MOUNTS AS UNEXPLAINED CASH CREDIT AND ADDED TO THE TOTAL INCO ME. IN THE SIMILAR WAY, ASSESSEE DEPOSITED THE AMOUNTS OF RS. 6,00,000 /- AND RS. 10,00,000/- ON 05-04-2006 AND 01-08-2006, IN HIS AC COUNT AT ANDHRA BANK WHICH WERE ALSO TREATED BY THE AO AS UNEXPLAIN ED CASH CREDITS AND ADDED THE SAME TO THE INCOME OF ASSESSEE. 12. BEFORE THE CIT(A), IT WAS SUBMITTED WITH REGARD TO THE DEPOSIT OF RS. 2,30,000/- THAT ASSESSEE HAD FILED THESE DETAIL S WHILE FILING THE ORIGINAL RETURN OF INCOME AND ALSO WHILE FILING THE RETURN OF INCOME IN RESPONSE TO THE NOTICE ISSUED U/S 153A OF THE ACT. FURTHER, IT WAS SUBMITTED THAT THESE AMOUNTS WERE DRAWN FROM ASSESS EES OWN INCOME AND DEPOSITED IN THE BANK ACCOUNT. IT WAS, T HEREFORE, CONTENDED THAT THE AO SHOULD NOT HAVE MADE ANY ADDI TION ON THIS COUNT. AFTER CONSIDERING THE SUBMISSIONS OF ASSESSE E, THE CIT(A) CONFIRMED THE ADDITION MADE BY OBSERVING AS UNDER: 5.1 IT MAY BE SEEN THAT THE AR HAS FURNISHED WAYS A ND MEANS ACCOUNT OF APPELLANT FOR THE PERIOD ENDING 31.03.20 07. IT IS THE CLAIM OF THE AR THAT RS. 1,00,000 AND RS. 1,30,000 WERE DEPOSITED ON 15.03.2007 AND 28.03.2007 IN APPELLANT S BANK ACCOUNT NO. 20012842 WITH BANK OF BARODA, TIRUPATHI . FROM THE WAYS AND MEANS ACCOUNT FURNISHED BY THE APPELLANT, I DO NOT FIND THE ABOVE SAID AMOUNTS HAVE BEEN DRAWN AND DEP OSITED IN 6 ITA NOS. 770, 609 & 662/HYD/2011 C.V. THOTADRI APPELLANTS BANK ACCOUNT. ACTUALLY, IT IS SEEN THAT THE APPELLANT HAS CLAIMED DRAWINGS OF RS. 60,000 ONLY AND THERE A RE OTHER DEPOSITS TOWARDS LIC, INCOME-TAX AND OTHERS BUT THE RE ARE NO TRANSACTIONS LIKE RS. 1,00,000 AND RS. 1,30,000 DRA WN FROM THE APPELLANTS BANK ACCOUNT AND DEPOSITED IN BANK OF B ARODA, TIRUPATHI. IT IS SEEN THAT THE APPELLANTS ACCOUNT WITH BANK OF BARODA IS HAVING SUFFICIENT BALANCE BUT IT IS NOT K NOWN HOW THE SAID AMOUNT HAS BEEN APPEARING IN THE SAID ACCOUNT AND THERE IS NO ENTRY AS SUCH IN WAYS AND MEANS ACCOUNT OF TH E APPELLANT INDICATING DRAWINGS AND MAKING DEPOSIT WITH BANK. T HEREFORE, IN THE ABSENCE OF THE SAME, I AM INCLINED TO CONFIRM T HE ADDITION MADE BY THE AO. HENCE, THIS GROUND OF APPEAL IS DIS MISSED. 13. AS REGARDS THE DEPOSITS OF RS. 16,00,000/-, IT WAS SUBMITTED THAT ASSESSEE HAD DRAWN THESE AMOUNTS FROM HIS WAYS AND MEANS ACCOUNT AND DEPOSITED THE SAME IN ANDHRA BANK ON 05 -04-2006 OF RS. 6,00,000/- AND RS. 10,00,000/- AND, THEREFORE, AO SHOULD NOT HAVE MADE THE SAID ADDITION. ASSESSEE FILED WAYS AN D MEANS STATEMENT AND CLAIMED THAT ASSESSEE HAD DRAWN THESE AMOUNTS FROM HIS WAYS AND MEANS ACCOUNT. AFTER CONSIDERING THE S UBMISSIONS OF ASSESSEE, CIT(A) SUSTAINED THE ADDITION BY OBSERVIN G AS UNDER: 6.1 IT IS SEEN FROM THE WAYS AND MEANS ACCOUNT THAT THE DRAWINGS APPEARING ARE AS RS. 60,000 ONLY AND THOUG H CERTAIN PAYMENTS ARE SHOWN TOWARDS LIC, PURCHASE OF HOUSE, TAXES AND SOME DEPOSITS IN BANK BUT THE ANDHRA BANK ACCOU NT IS NOT SHOWN WITH DEPOSITS OF RS. 16,00,000/- EVEN THOUGH THE ANDHRA BANK ACCOUNT IS WITH BALANCE OF RS. 2,49,284/-. THE APPELLANT SHOULD HAVE MADE CLEAR WITH REGARD TO RECEIPTS AND PAYMENTS IN APPELLANTS WAYS AND MEANS ACCOUNT. THE WAYS AND ME ANS ACCOUNT IS NOT CLEAR WITH REGARD TO THE PAYMENTS MA DE EVEN THOUGH RECEIPTS ARE SHOWN IN THE ACCOUNTS FOR HAVIN G RECEIVED GIFTS, CERTAIN INCOMES BY THE APPELLANT AND MATURED FIXED DEPOSITS ETC. THEREFORE, I FIND THAT THE WAYS AND M EANS ACCOUNT IS NOT SELF-EXPLANATORY WITH REGARD TO THE DEPOSITS MADE IN ANDHRA BANK ACCOUNT FOR HAVING WITHDRAWN AND MADE D EPOSITS. HENCE, I AM OF THE OPINION THAT THE AO HAS RIGHTLY MADE THE ABOVE SAID ADDITION. THEREFORE, THIS GROUND OF APPE AL IS ALSO TREATED AS DISMISSED. 14. BEFORE US, THE LEARNED COUNSEL SUBMITTED THAT T HE LEARNED CIT(A) FAILED TO NOTE THAT THE BANK ACCOUNT DISCLOS ED IN THE WAYS AND MEANS STATEMENT SUBMITTED CONTAINED BOTH DEPOSITS A ND WITHDRAWALS AND EACH DEPOSIT AND WITHDRAWAL WILL NOT FIGURE IN THE SAID STATEMENT 7 ITA NOS. 770, 609 & 662/HYD/2011 C.V. THOTADRI AND THE OPENING BALANCE AT THE BEGINNING OF THE YEA R AND CLOSING BALANCE AT THE END OF THE YEAR WILL ONLY BE REFLECT ED, THEREBY THE DEPOSITS AND WITHDRAWALS OF THE ENTIRE YEAR ARE MER GED LEAVING THE UNACCOUNTED SOURCES OF THE ENTIRE REPRESENTING AS T HE INCOME OF THAT YEAR. HE, THEREFORE, SUBMITTED THAT THE INCOME DIS CLOSED BY HIM IS THUS THE CUMULATIVE EFFECT OF SUCH BANK DEPOSIT AND WITHDRAWALS. FURTHER, IT WAS SUBMITTED THAT ASSESSEE DISCLOSED O PENING CASH AND DEBTORS FROM WHOM THE COLLECTIONS ARE UTILIZED FOR SUCH DEPOSITS BRINGING THE CLOSING BALANCE OF THE SAID CASH TO A LESSER AMOUNT. IT WAS ALSO SUBMITTED THAT WHILE ACCEPTING THE SAID ST ATEMENT FOR PURPOSES OF FRAMING THE ASSESSMENT, REVENUE AUTHORI TIES ERRED IN HOLDING THAT THE DEPOSIT IS UNEXPLAINED WHICH AMOUN T TO A DOUBLE ASSESSMENT OF SIMILAR AMOUNT. FINALLY, IT WAS SUBMI TTED THAT THIS ADDITION IS NOT OUT OF ANY SEIZED MATERIAL AND RELY ING ON THE DECISION IN THE CASE OF VIZAYABHAI N. CHANDRANI 231 CTR 474 (GUJ.), THE ADDITION IS NOT LEGAL AND MAY BE DELETED. 15. THE LEARNED DR, HOWEVER, RELIED UPON THE ORDERS OF THE AO AND CIT(A). 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE RECORD. THE LEARNED COUNSEL INVITED OUR ATTENTION T O PAGES 29, 42-43 & 44-45 WHEREIN COPY OF WAYS AND MEANS ACCOUNT, AND COPIES OF BANK STATEMENT OF ACCOUNT FROM ANDHRA BANK, TIRUPAT HI AND BANK OF BARODA ARE PLACED TO ESTABLISH THAT THE ENTRIES OF THE SAID DEPOSITS HAVE BEEN APPEARED IN THE SAID STATEMENTS. THEREFOR E, SINCE ASSESSEE HAS PROVED THE GENUINENESS OF HIS CLAIM BY WAY OF DOCUMENTARY EVIDENCE AND SINCE ASSESSMENT WAS MADE BASED ON THE WAYS AND MEANS STATEMENT, WE ARE OF THE OPINION THA T THE LEARNED CIT(A) WRONGLY CONSIDERED THE FACTS AND SUSTAINED T HE ADDITION. SAME REASONING GIVEN BY LD. CIT(A) IN DELETING THE ADDIT ION (ITA 609/ H/11 REVENUE APPEAL) IN EARLIER YEAR APPLY HERE ALSO. THE ADDITION MADE 8 ITA NOS. 770, 609 & 662/HYD/2011 C.V. THOTADRI BY THE AO CANNOT BE SUSTAINED AND ACCORDINGLY ASSES SEES GROUND IS ALLOWED. 17. IN THE RESULT, APPEAL OF ASSESSEE IN ITA NO. 66 2/HYD/2011 IS ALLOWED. 18. TO SUM UP, BOTH APPEALS OF REVENUE ITA NOS. 770 & 609/HYD/2011 ARE DISMISSED AND APPEAL OF ASSESSEE I TA NO. 662/HYD/2011 IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2013. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B. RA MAKOTAIAH) JUDICIAL MEMBER ACC OUNTANT MEMBER HYDERABAD, DATED: 20 TH DECEMBER, 2013. KV COPY TO:- 1) C.V. THOTADRI , C/O SHRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS RESIDENCY, ROAD NO . 9, HIMAYATNAGAR, HYDERABAD. 2) DCIT, CENTRAL CIRCLE, TIRUPATHI. 3) CIT(A)-VII, HYDERABAD. 4) CIT(CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.