Nidamanuri Nageswara Rao, V. THE ITO, Rajahmundry

ITA 90/VIZ/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6533 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 05-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V MADHUVANI
• Keywords: Unexplained cash credit; Corroborative evidences
• Section: 40A(3); 133A

Judgement Text

ITA NO.90/VIZAG/2015 SRI NIDAMANURI NAGESWARA RAO, KORUKONDA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.90/VIZAG/2015 ( / ASSESSMENT YEAR: 2010-11) SRI NIDAMANURI NAGESWARA RAO KORUKONDA ITO, WARD - 3, RAJAHMUNDRY [PAN NO. ABFPN7748A ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI SMT. V. MADHU VANI, DR / DATE OF HEARING : 08.11.2017 / DATE OF PRONOUNCEMENT : 10.11.2017 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) {CIT(A)}, RAJA HMUNDRY VIDE ITA NO.101/0004/13-14/ITO W-3 RJY/2014-15 DATED 30.1.20 15 FOR THE ASSESSMENT YEAR 2010-11. ITA NO.90/VIZAG/2015 SRI NIDAMANURI NAGESWARA RAO, KORUKONDA 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS AND ALSO THE LAW APPLICABLE T O THE FACTS OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.41,000 MADE BY THE AS SESSING OFFICER U/S 40(A) (IA) OF THE ACT. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN GRANTING RELIEF ONLY FOR A SUM OF RS.1,15,000 OUT O F ADDITION OF RS.16,69,407 MADE BY THE ASSESSING OFFICER U/S 40(A ) (3) OF THE ACT. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.3,00,097 MADE BY THE ASSESSING OFFICER TOWARDS UNEXPLAINED CREDITS IN THE BANK ACCOUNT WIT HOUT APPRECIATING THE CONTENTION THAT THE BANK ACCOUNT BELONGED TO HU F OF THE APPELLANT. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE HELD THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN APPORTIONMENT OF THE COST OF CONSTRUCTION BETWEEN A.YS. 2009-2010 TO 201 0-2011 WITHOUT APPRECIATING THE CONTENTION THAT THE ALLEGED UNEXPL AINED INVESTMENT, IF ANY, TOOK PLACE ONLY DURING A.YS. 2010-2011 AND 2011-2012. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE DECIDED THE GROUND RAISED BY THE APPELLANT WITH REG ARD TO EXCESSIVE AMOUNT OF COST OF CONSTRUCTION DETERMINED BY THE DV O AND ADOPTED BY THE ASSESSING OFFICER FOR ARRIVING AT THE UNEXPL AINED INVESTMENT. 3. GROUND NOS.1 & 7 ARE GENERAL IN NATURE, WHICH DO NOT REQUIRE SPECIFIC ADJUDICATION. 4. GROUND NO.2 IS RELATED TO THE ADDITION MADE BY T HE A.O. U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') FOR NON DEDUCTION OF TAX AT SOURCE ON THE INT EREST PAYMENT MADE TO SMT. N. SARVARI. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR, THE ASSESSEE MADE PAYMENT OF ` 41,000/- AS ITA NO.90/VIZAG/2015 SRI NIDAMANURI NAGESWARA RAO, KORUKONDA 3 INTEREST TO SMT. N. SARVARI, WIFE OF THE ASSESSEE W ITHOUT DEDUCTION OF TAX AT SOURCE. THE ASSESSEE HAS COLLECTED FORM 15 G FROM SMT. N. SARVARI, HOWEVER, IT WAS FOUND THAT FORM 15G WAS DATED 1.9.2010, WHEREAS THE INTEREST WAS CREDITED TO HER ACCOUNT ON 31.3.2010 FOR THE YEAR ENDING 31.3.2010. SINCE THE ASSESSEE HAS NEITHER COLLECTED FORM 15G NOR DEDUCTED THE TAX AT SOURCE AS AT THE END OF THE YEAR I.E. 31.3.2010, THE A.O. HELD T HAT THE PAYMENT WAS HIT BY SECTION 40(A)(IA) OF THE ACT AND ACCORDI NGLY MADE THE ADDITION. 5. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) CONFIRM ED THE ADDITION MADE BY THE A.O. AND THE ASSESSEE CARRIED THE MATTER TO THE TRIBUNAL. DURING THE APPEAL HEARING, THE LD. A .R. ARGUED THAT THE RECIPIENT OF THE INTEREST IS THE WIFE OF THE AS SESSEE AND SHE IS NOT ASSESSED TO TAX AND HER TOTAL INCOME IS BELOW T HE TAXABLE LIMIT AND THE ASSESSEE WAS AWARE OF THE FACT THAT SHE HAS NO TAXABLE INCOME. HENCE, THE ASSESSEE HAS OBTAINED FORM 15G AND FORWARDED THE SAME TO THE CONCERNED CIT. THE LD. A .R. FURTHER ARGUED THAT THOUGH THE INTEREST WAS CREDITED BY 31. 3.2010, THE PAYMENT WAS NOT MADE TO THE RECIPIENT DEDUCTEE, HEN CE, ARGUED THAT THERE IS NO CASE FOR MAKING ADDITION U/S 40(A) (IA) OF THE ACT. ITA NO.90/VIZAG/2015 SRI NIDAMANURI NAGESWARA RAO, KORUKONDA 4 6. ON THE OTHER HAND, THE LD. D.R. SUPPORTED THE OR DERS OF THE LD. CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE HAS MADE THE YMENT OF ` 41,000/- AS INTEREST TO THE DEDUCTEE SMT. N. SARVARI WHO HAPPENED TO BE THE WIFE OF THE ASSESSEE. THOUGH THE AMOUNT WAS CREDITED TO HE R ACCOUNT IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THE PAYMENT WAS NOT MADE TO HER AND BEFORE MAKING THE PAYMENT AND FILING THE RETURN OF INCOME, THE ASSESSEE HAD OBTAINED THE FORM 15G AND FORWARDED TO THE LD. CIT. SINCE THE RECIPIENT WAS NOT HAVING TAXABLE INCOME, OBTAINING FORM 15G BEFORE MAKING THE PAYMEN T WOULD BE SUFFICIENT COMPLIANCE AND HENCE, WE HOLD THAT THE A DDITION U/S 40(A)(IA) OF THE ACT DOES NOT ATTRACT, ACCORDINGLY, WE DELETE THE ADDITION MADE BY THE A.O. AND SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND ALLOW THE APPEAL OF THE ASSESSEE ON THIS GROUND. 8. GROUND NO.3 IS RELATED TO THE ADDITION OF ` 16,69,407/- U/S 40A(3) OF THE ACT. DURING THE ASSESSMENT PROCEEDIN GS, THE A.O. FOUND THAT THE ASSESSEE MADE PAYMENT OF ` 16,69,407/- TO VARIOUS PERSONS OTHERWISE THAN BY CROSSED CHEQUES I N VIOLATION OF SECTION 40A(3) OF THE ACT. HENCE, THE ASSESSING OF FICER HELD THAT ITA NO.90/VIZAG/2015 SRI NIDAMANURI NAGESWARA RAO, KORUKONDA 5 THE PAYMENT ATTRACTS THE DISALLOWANCE U/S 40A(3) OF THE ACT AND ACCORDINGLY, MADE THE ADDITION. 9. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) EXAMINE D THE ISSUE IN DETAIL AND GIVEN A FINDING THAT THE ASSESSEE HAS MADE THE PAYMENT OF ` 1,15,000/- ON SUNDAYS AND HOLIDAYS AND DIRECTED TO EXCLUDE THE SAME FROM THE DISALLOWANCE U/S 40A(3) O F THE ACT AND CONFIRMED THE REMAINING ADDITION OF ` 13,54,407/-, WHICH IS CHALLENGED BY THE ASSESSEE BEFORE THIS TRIBUNAL. D URING THE APPEAL HEARING, THE LD. A.R. VEHEMENTLY SUPPORTED T HAT THE PAYMENT WAS MADE IN EXCEPTIONAL CIRCUMSTANCES AND O N DEMAND OF THE SUPPLIERS, THEREFORE, REQUESTED TO ALLOW THE APPEAL. 10. ON THE OTHER HAND, THE LD. D.R. SUPPORTED THE O RDERS OF THE LOWER AUTHORITIES. 11. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE LD. CIT(A) FOUND THAT ` 1,15,000/- WAS MADE DURING THE HOLIDAYS AND DIRECTED THE A.O. TO EXCLUDE THE S UM OF ` 1,15,000/- FROM THE DISALLOWANCE U/S 40A(3) OF THE ACT AND CONFIRMED THE REMAINING AMOUNT OF ` 13,54,407/-. DURING THE APPEAL HEARING, THOUGH THE LD. A.R. VEHEMENTLY ARGU ED, NO ITA NO.90/VIZAG/2015 SRI NIDAMANURI NAGESWARA RAO, KORUKONDA 6 SUPPORTING EVIDENCE WAS PLACED BEFORE US TO ESTABLI SH THAT THE PAYMENT OF ` 13,54,407/- WAS PAID IN EXCEPTIONAL CIRCUMSTANCES OR ON HOLIDAYS. THEREFORE, WE DO NOT FIND ANY INFI RMITY IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS CONFIRMED. THE APPEAL OF THE ASSESSEE ON THIS GROUND IS DISMISSED. 12. GROUND NO.4 IS RELATED TO THE ADDITION OF ` 3,00,097/- TOWARDS UNEXPLAINED CASH CREDITS IN THE BANK ACCOUN T. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. FOUND THAT THE ASS ESSEE HAS MADE CASH CREDITS OF ` 3 LAKHS ON THE FOLLOWING DATES. 23.7.2009 - ` 2 LAKHS 18.3.2010 - ` 1 LAKH DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE CL AIMED THAT THE FUNDS WERE BELONGING TO THE HUF. HOWEVER, THE ASSESSEE HAD NOT MAINTAIN THE BOOKS OF ACCOUNTS FOR HUF AND NO EVIDENCE WAS FURNISHED BEFORE THE A.O. TO ESTABLISH THAT THE FUNDS WERE TRANSFERRED FROM HUF. THEREFORE, THE A.O. MADE THE ADDITION OF ` 3 LAKHS ALONG WITH INTEREST OF ` 97/- AGGREGATING TO ` 3,00,097/-. THE LD. CIT(A) CONFIRMED THE ADDITION SINCE THE ASS ESSEE FAILED TO ESTABLISH THAT THE AMOUNT WAS BELONGING TO HUF. 13. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE A SSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEA RING, THE LD. ITA NO.90/VIZAG/2015 SRI NIDAMANURI NAGESWARA RAO, KORUKONDA 7 A.R. DID NOT PLACE ANY EVIDENCE TO ESTABLISH THE GE NUINENESS OF THE CREDITS FLOWN FROM THE HUF ACCOUNT. AS THE ASS ESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS AND THERE WAS NO E VIDENCE TO SHOW THAT THE CREDITS WERE BELONGING TO HUF, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SA ME IS UPHELD. THE APPEAL OF THE ASSESSEE ON THIS GROUND IS DISMIS SED. 14. GROUND NOS.5 & 6 ARE RELATED TO THE APPORTIONME NT OF COST OF CONSTRUCTION FOR THE ASSESSMENT YEARS 2009-10 AN D 2010-11 AS AGAINST THE CONTENTION OF THE ASSESSEE FOR THE ASSE SSMENT YEARS 2010-11 & 2011-12. A SURVEY U/S 133A OF THE ACT WA S CONDUCTED IN THIS CASE BY THE A.O. AND DURING THE COURSE OF S URVEY, THE A.O. FOUND THAT THE ASSESSEE HAD CONSTRUCTED A GODOWN-CU M-BUILDING LOCATED AT DR.NO.1-17-1, TEMPLE STREET, KORUKONDA A ND RECORDED THE COST OF CONSTRUCTION AT ` 17,20,000/- AS AT THE END OF THE YEAR 31.3.2011. HOWEVER, DURING THE COURSE OF SURVEY, T HE ASSESSEE HAD ADMITTED ADDITIONAL INCOME OF ` 27,77,000/- DECLARING THE TOTAL COST OF CONSTRUCTION AT ` 44,97,000/-. THE ASSESSEE HAS GIVEN A BREAKUP FOR COST OF CONSTRUCTION AND THE AD DITIONAL INCOME FOR THE ASSESSMENT YEARS 2010-11 & 2011-12 AS UNDER : ITA NO.90/VIZAG/2015 SRI NIDAMANURI NAGESWARA RAO, KORUKONDA 8 ADDITIONAL INCOME COST OF CONSTRUCTION A.Y. 2010-11 - ` 19,02,000/- ` 30,72,748 A.Y. 2011-12 - ` 8,75,000/- ` 14,24,252 TOTAL - ` 27,77,000/- ` 44,97,000 15. THE A.O. REFERRED THE COST OF CONSTRUCTION TO T HE DEPARTMENTAL VALUATION OFFICER WHO HAS VALUED COST OF CONSTRUCTION OF THE BUILDING AT ` 53,81,000/- FOR THE A.YS. 2008-09 TO 2010-11 AS UNDER: SL.NO. PERIOD OF CONSTRUCTION ASSESSMENT YEAR ASSESSED FAIR COST OF CONSTRUCTION ( ` ) 1. 2008-09 2009-10 7,84,550/- 2. 2009-10 2010-11 23,19,211/- 3. 2010-11 2011-12 22,77,239/- TOTAL 53,81,000/- 16. THE ASSESSEE HAS DECLARED THE COST OF CONSTRUCT ION FOR THE ASSESSMENT YEAR 2010-11 AT ` 30,72,748/- AS AGAINST THE COST OF CONSTRUCTION ESTIMATED BY THE DVO AT ` 23,19,211/-. THE A.O. ACCEPTED THE COST OF CONSTRUCTION DECLARED BY THE A SSESSEE BUT DID NOT GIVE ANY FINDING WITH REGARD TO THE BALANCE AMO UNT OF ` 7,53,537/- (` 30,72,748 (-) ` 23,19,211/-). THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) CHALLENGING THE COST OF CO NSTRUCTION DETERMINED BY THE DVO AND THE APPORTIONMENT FOR F.Y . 2008-09 TO 2010-11 AGAINST THE ADMISSION IN THE A.Y. 2010-11 T O 2011-12. FURTHER, THE ASSESSEE ARGUED TO CONSIDER THE BALANC E AMOUNT ITA NO.90/VIZAG/2015 SRI NIDAMANURI NAGESWARA RAO, KORUKONDA 9 SPENT IN THE SUBSEQUENT YEARS. THE LD. CIT(A) CONF IRMED THE ORDER OF THE A.O. AND DID NOT CONSIDER THE OBJECTIO N RAISED BY THE ASSESSEE WITH REGARD TO THE APPORTIONMENT OF THE BA LANCE AMOUNT OF ` 7,53,737, SINCE THE ASSESSMENT FOR THE A.Y. 2008-0 9 & 2009- 10 IS NOT COMPLETE AND ACCORDINGLY, DISMISSED THE A PPEAL OF THE ASSESSEE. 17. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSES SEE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEA RING, THE LD. A.R. ARGUED THAT THE ASSESSEE HAD DECLARED THE COST OF CONSTRUCTION FOR THE ASSESSMENT YEAR 2010-11 AT ` 30,72,748/- INCLUSIVE OF ADDITIONAL INCOME DECLARED BY THE ASSE SSEE. THE BUILDING WAS NOT COMMENCED IN F.Y. 2008-09 AND THE BUILDING WAS COMMENCED DURING THE FINANCIAL YEAR 2009-10 AND COM PLETED IN 2010-11. THEREFORE, THE ESTIMATION OF COST OF CONS TRUCTION FOR THE ASSESSMENT YEAR 2009-10 BY THE DVO IS INCORRECT AND AGAINST THE FACTS. THE A.O. SIMPLY SKIPPED THE ISSUE WITHOUT G IVING A FINDING ON THE ADDITIONAL AMOUNT DECLARED BY THE ASSESSEE. THEREFORE, THE LD. A.R. ARGUED THAT THE DIFFERENCE AMOUNT OF C OST OF CONSTRUCTION ADMITTED BY THE ASSESSEE FOR THE ASSES SMENT YEAR 2010-11 IS REQUIRED TO BE CONSIDERED IN THE SUBSEQU ENT ASSESSMENT YEARS. ITA NO.90/VIZAG/2015 SRI NIDAMANURI NAGESWARA RAO, KORUKONDA 10 18. WE HAVE CAREFULLY GONE THROUGH THE SUBMISSIONS OF THE ASSESSEE AND THE ARGUMENTS OF THE LD. D.R. AND IT A PPEARS LOGICAL TO CONSIDER THE ADDITIONAL AMOUNT OF COST OF CONSTR UCTION ADMITTED BY THE ASSESSEE IN THE TOTAL COST OF CONSTRUCTION O F THE BUILDING AND TO CONSIDER THE SAME IN SUBSEQUENT ASSESSMENT Y EARS. THEREFORE, WE DIRECT THE A.O. TO CONSIDER THE REMAI NING AMOUNT ADMITTED BY THE ASSESSEE IN THE SUBSEQUENT ASSESSME NT YEARS AND SET OFF THE SAME AGAINST THE TOTAL COST OF CONSTRUC TION. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES. 19. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 10 TH NOV17. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 10.11.2017 VG/SPS ITA NO.90/VIZAG/2015 SRI NIDAMANURI NAGESWARA RAO, KORUKONDA 11 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT NIDAMANURI NAGESWARA RAO, PROP: SRI DEVI TRADERS, D.NO.28-10-23-2-3, MAIN ROAD, KORUKONDA, E.G. DIST. 2. / THE RESPONDENT THE ITO, WARD-3, RAJAHMUNDRY 3. + / THE CIT, RAJAHMUNDRY 4. + ( ) / THE CIT (A), RAJAHMUNDRY 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM