Palli Sreedhar Reddy, Hyderabad V. Income-Tax Officer, Ward-2, Kurnool

ITA 9/HYD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91674 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V RAJITHA
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained cash credit; Peak credit; Source of fund; Additional evidence; Corroborative evidences
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO. 09/HYD/2014 ASSESSMENT YEAR: 2009-10 PALLI SREEDHAR REDDY, KURNOOL PAN AYUPS 2212G VS. INCOME TAX OFFICER, WARD 2, KURNOOL. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : MS. V. RAJITHA DATE OF HEARING 21-05-2015 DATE OF PRONOUNCEMENT 27-05-2015 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE OR DER DATED 04/10/2013 OF LD. CIT-IV, HYDERABAD FOR THE AY 200 9-10. 2. THE ONLY DISPUTE IN THIS APPEAL IS IN RELATION T O ADDITION OF AN AMOUNT OF RS. 24,23,140. 3. BRIEFLY THE FACTS RELATING TO THE ISSUE IN DISPU TE ARE, ASSESSEE IS AN INDIVIDUAL. FOR THE AY UNDER CONSIDERATION, ASSE SSEE FILED HIS RETURNOF INCOME ON 16/07/2009 DECLARING TOTAL INCOM E OF RS. 1,75,690 BESIDES AGRICULTURAL INCOME OF RS. 3,20,310. AS ALL EGED BY AO THOUGH ASSESSEE VIDE ORDER SHEET ENTRY DATED 09/12/11 WAS ASKED TO EXPLAIN THE SOURCES FOR CASH DEPOSITS MADE IN THE BANK ACCO UNT AND ALSO TO PRODUCE BOOKS OF ACCOUNT, HOWEVER, SINCE ASSESSEE F AILED TO COMPLY TO THE DIRECTIONS OF AO ASSESSMENT WAS COMPLETED EX PARTE U/S 144 OF THE ACT, BY ADDING THE PEAK OF THE CASH DEPOSITS MA DE INTO THE BANK 2 ITA NO. 9 /HYD/2014 PALLI SREEDHAR REDDY ACCOUNT AMOUNTING TO RS. 24,23,140. BEING AGGRIEVED OF SUCH ADDITION, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT( A). 4. IN COURSE OF HEARING OF APPEAL, EXPLAINING THE S OURCE OF CASH DEPOSITS MADE INTO THE BANK ACCOUNT, ASSESSEE SUBMI TTED THAT NOT ONLY CASH DEPOSITS WERE ROUTED THROUGH THE BOOKS OF ACCOUNT BUT IT WAS FROM EXPLAINED SOURCES. IT WAS SUBMITTED, ASSE SSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE AGENT AND THE CASH D EPOSITS REPRESENT ADVANCES RECEIVED FROM PROSPECTIVE PURCHASERS OF LA ND. IN SUPPORT OF SUCH CONTENTION, ASSESSEE SUBMITTED, CONFIRMATION L ETTERS FROM THE CONCERNED PERSONS, WHO ACCORDING TO ASSESSEE HAD GI VEN ADVANCES FOR PURCHASE OF LAND. SINCE THE CONFIRMATIONS BY WA Y OF ADDITIONAL EVIDENCE WERE SUBMITTED FOR THE FIRST TIME BEFORE L D. CIT(A), HE SENT THEM FOR EXAMINATION OF THE AO AND CALLED FOR A REM AND REPORT. ON THE BASIS OF THE CONFIRMATION LETTERS, AO EXAMINED THE PERSONS STATED TO HAVE ADVANCED MONEY TO ASSESSEE AND AFTER EXAMIN ING THEM SUBMITTED REPORT STATING THEREIN THAT THE CONCERNED PERSONS, NAMELY, S/SHRI J. NAVEEN KUMAR REDDY, Y. VINOD REDDY AND S. BALA VEERAIAH, THOUGH, ADMITTED OF HAVING ADVANCED AMOUN TS TO ASSESSEE, BUT, ACCORDING TO AO, THEY DO NOT HAVE ADEQUATE CRE DITWORTHINESS TO MAKE SUCH ADVANCES. THEREFORE, HE OPINED THAT ASSES SEES CLAIM OF HAVING RECEIVED ADVANCES FROM THESE PERSONS CANNOT BE ACCEPTED. ON THE BASIS OF REMAND REPORT SUBMITTED BY AO, LD. CIT(A) CONFIRMED THE ADDITION OF RS. 24,23,140 BY OBSERVING THAT THO UGH ASSESSEE HAS PROVED THE IDENTITY OF THE CREDITORS, BUT, HE HAS F AILED TO ESTABLISH EITHER CREDITWORTHINESS OF THE CREDITOR OR THE GENU INENESS OF THE TRANSACTION. 5. LD. AR SUBMITTED BEFORE US, NOT ONLY THE PERSONS WHO HAD ADVANCED MONEY TO ASSESSEE TOWARDS INVESTMENT IN LA ND HAVE CONFIRMED OF HAVING ADVANCED THE AMOUNT, BUT, IN CO URSE OF THEIR EXAMINATION BEFORE AO HAVE ALSO CATEGORICALLY STATE D THAT THEY HAVE 3 ITA NO. 9 /HYD/2014 PALLI SREEDHAR REDDY MADE ADVANCES TO ASSESSEE. IN THIS CONTEXT, LD. AR REFERRED TO THE CONFIRMATIONS ISSUED BY THE CONCERNED PERSONS AND T HEIR ACCOUNT COPIES IN THE BOOKS OF ASSESSEE. HE ALSO REFERRED T O THE STATEMENTS RECORDED FROM THE CONCERNED CREDITORS BY AO. LD. AR SUBMITTED, WHEN ASSESSEE HAS EXPLAINED THE SOURCE OF CASH DEPO SITS IN THE BANK ACCOUNT WITH SUPPORTING EVIDENCE AND THE CONCERNED PERSONS HAVE ALSO ADMITTED THE SAID FACT AO CANNOT OVERRIDE SUCH EVIDENCE AND MAKE ADDITION BY INSISTING THAT ASSESSEE HAS TO PRO VE THE SOURCE OF THE CREDITORS ALSO. LD. AR SUBMITTED, NEITHER AO NO R LD. CIT(A) HAVE PROPERLY VERIFIED THE BANK ACCOUNT AND MERELY ON PR ESUMPTION AND SURMISES HAVE MADE ADDITION OF PEAK CREDIT. 6. LD. DR, ON THE OTHER HAND, STRONGLY SUPPORTING T HE REASONING OF AO AND CIT(A) SUBMITTED, ASSESSEE HAVING FAILED TO ESTABLISH THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F THE TRANSACTION, CASH DEPOSITS MADE INTO THE BANK ACCOUNT HAVE TO BE TREATED AS UNEXPLAINED CREDIT OF ASSESSEE. LD. DR SUBMITTED, T HE STATEMENTS OF THE CREDITORS ARE NOT BELIEVABLE AS ALLEGED DATE OF ADVANCING MONEY BY THEM DO NOT MATCH WITH THE DATE OF DEPOSIT INTO THE BANK ACCOUNT. THEREFORE, MUCH RELIANCE CANNOT BE PLACED ON THE CO NFIRMATION OF THE CREDITORS. THUS, IT WAS SUBMITTED BY LD. DR, ADDITI ON MADE HAS TO BE SUSTAINED. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. AS COULD BE SEEN, IN COURSE OF ASSESSMENT PROCEEDIN G, SINCE ASSESSEE FAILED TO APPEAR AND EXPLAIN THE SOURCE OF CASH DEPOSITS MADE INTO BANK ACCOUNT, AO TREATED THE PEAK OF SUCH DEPOSITS AMOUNTING TO RS. 24,23,140 AS UNEXPLAINED CREDIT AN D ADDED IT TO THE INCOME OF ASSESSEE. HOWEVER, BEFORE LD. CIT(A), ASS ESSEE STATED THAT THE CASH DEPOSITS MADE INTO THE BANK ACCOUNT REPRES ENT ADVANCES RECEIVED FROM SOME PERSONS, NAMELY, S/SHRI J. NAVEE N KUMAR REDDY, 4 ITA NO. 9 /HYD/2014 PALLI SREEDHAR REDDY Y. VINOD REDDY AND S. BALA VEERAIAH, WHO WANTED TO PURCHASE LAND THROUGH ASSESSEE. IT IS ALSO A FACT ON RECORD NOT O NLY ASSESSEE HAD SUBMITTED CONFIRMATION LETTERS ALONG WITH ACCOUNT C OPIES OF THE AFORESAID PERSONS BEFORE LD. CIT(A), BUT, DURING RE MAND PROCEEDING THESE THREE PERSONS WERE ALSO EXAMINED ON OATH BY A O. ON PERUSAL OF THE STATEMENT RECORDED FROM THESE PERSONS, COPIE S OF WHICH ARE PLACED AT PAGES 18, 20 & 36 OF THE PAPER BOOK, IT I S MANIFEST THAT ALL OF THEM HAVE CATEGORICALLY STATED BEFORE AO THAT TH EY HAVE MADE ADVANCES TO ASSESSEE. THEY ALSO EXPLAINED THE SOURC E FROM WHICH THEY EARNED INCOME FOR ENABLING THEM TO ADVANCE THE AMOUNTS TO ASSESSEE. AS IT APPEARS, AO DID NOT ACCEPT THE STAT EMENTS OF THESE PERSONS WHILE SUBMITTING THE REMAND REPORT MAINLY F OR THE REASON THAT THE CONCERNED PERSONS DID NOT HAVE THE CAPACITY TO ADVANCE MONEY. LD. CIT(A) HAS ALSO ACCEPTED THE VIEW EXPRESSED BY AO. HOWEVER, WHEN THE PERSONS CONCERNED HAVE NOT ONLY CONFIRMED, BUT, IN THEIR STATEMENTS ON OATH HAVE ALSO CATEGORICALLY ACCEPTED OF HAVING ADVANCED MONIES TO ASSESSEE, THE STATEMENT MADE BY THEM HAVE TO BE PRESUMED TO BE CORRECT UNLESS POSITIVE EVIDENCE IS BROUGHT ON RECORD TO DISPROVE SUCH STATEMENT. ON THE OTHER HAN D, AO, AS IT APPEARS, MERELY ON ASSUMPTIONS AND PRESUMPTIONS HAS DOUBTED THE CREDITWORTHINESS OF THE CONCERNED PERSONS BY OBSERV ING THAT THEY DO NOT HAVE THE CAPACITY TO ADVANCE THE AMOUNT. ON PER USAL OF STATEMENTS RECORDED ON OATH FOLLOWING FACTS HAVE BE EN NOTICED. SHRI J. NAVEEN KUMAR REDDY OWNS ABOUT 28 ACRES OF AGRICU LTURAL LAND AND CLAIMED TO HAVE EARNED AGRICULTURAL INCOME OF RS. 8 TO 10 LAKHS PER ANNUM. SRI SOMA BALAVEERAIAH IS ON REAL ESTATE BUSI NESS FROM WHICH HE EARNS ANNUAL INCOME OF RS. 4 LAKHS. SHRI Y. VINO D REDDY IS SOFTWARE ENGINEER. THE STATEMENTS FURTHER REVEAL, E ACH OF THE CREDITOR HAS EXPLAINED THE SOURCE OF FUND WITH THEM. ON PERU SAL OF REMAND REPORT IT IS VERY MUCH CLEAR AO HAS NOT MADE ANY I NDEPENDENT ENQUIRY TO FIND OUT WHETHER THESE PERSONS ACTUALLY HAVE CREDITWORTHINESS OR NOT. MOREOVER, WHEN ASSESSEE HA S EXPLAINED THE SOURCE OF CASH DEPOSITS, WHICH WERE NOT ONLY SUPPOR TED BY 5 ITA NO. 9 /HYD/2014 PALLI SREEDHAR REDDY CONFIRMATION LETTERS OBTAINED FROM THE CONCERNED PE RSONS, BUT, THE CONCERNED PERSONS THEMSELVES APPEARED BEFORE AO AND IN THEIR STATEMENTS ON OATH HAVE ACCEPTED OF HAVING ADVANCED THE AMOUNTS, ASSESSEE CANNOT FURTHER BE ASKED TO EXPLAIN THE SOU RCE OF SOURCE. THEREFORE, IN ABSENCE OF ANY OTHER CONTRARY EVIDENC E BROUGHT ON RECORD BY AO TO DISPROVE THE CLAIM OF ASSESSEE, IN OUR VIEW, ADDITION CANNOT BE SUSTAINED. ACCORDINGLY, WE DELETE THE ADD ITION OF RS. 24,23,140 BY ALLOWING THE GROUNDS RAISED BY ASSESSE E. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 27 TH MAY, 2015. SD/- SD/- (INTURI RAMA RAO) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 27 TH MAY, 2015 KV COPY TO:- 1) SHRI PALLI SREEDHAR REDDY, C/O SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, H. NO. 3-6-643 , ST. NO. 9, HIMAYAT NAGAR, , HYDERABAD 500 029 2) ITO, WARD 2, HYDERABAD 3 CIT(A)-IV, HYDERABAD 4) CIT-III, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.