Kaspa Hyothi Ganesh, Srikakulam V. THE ITO, Srikakulam

ITA 95/VIZ/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1094 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 03-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAVI
• Assessee Lawyers: S V SATYANARAYANA
• Keywords: Unexplained cash credit; Rejection of books of accounts; Unexplained expenditure; Opportunity of being heard; Source of fund
• Section: 143(3)

Judgement Text

ITA NOS.616 632 633 634 635/VIZAG/2014; ITA NOS.2 87 94 127 360/VIZAG/2015 & ITA NOS.95 101 104 105/VIZAG/2016 K. HEMA SUNDRA RAO, SRIKAKULAM & OTHERS 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.616/VIZAG/2014 ( / ASSESSMENT YEAR: 2011-12) K. HEMA SUNDRA RAO, SRIKAKULAM VS. ITO, WARD - 2, SRIKAKULAM [PAN: BQNPK 7417K] ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NO.632/VIZAG/2014 ( / ASSESSMENT YEAR: 2011-12) POTNURU BABU RAO SRIKAKULAM VS. ITO, WARD - 2, SRIKAKULAM [PAN: AKYPB1527F ] ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NO.633/VIZAG/2014 ( / ASSESSMENT YEAR: 2011-12) DUVVADA RAMANA RAO, SRIKAKULAM VS. ITO, WARD - 2, SRIKAKULAM [PAN: AGRPD5853D ] ( % / APPELLANT) ( &'% / RESPONDENT) ITA NOS.616 632 633 634 635/VIZAG/2014; ITA NOS.2 87 94 127 360/VIZAG/2015 & ITA NOS.95 101 104 105/VIZAG/2016 K. HEMA SUNDRA RAO, SRIKAKULAM & OTHERS 2 ./I.T.A.NO.634&635/VIZAG/2014 ( / ASSESSMENT YEAR: 2009-10&2010-11) SALADI GOVINDA RAO , SRIKAKULAM VS. ITO, WARD - 2, SRIKAKULAM [PAN: CCZPS2521M ] ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NO.2/VIZAG/2015 ( / ASSESSMENT YEAR: 2011-12) SIMHADRI MUKUNDA RAO, SRIKAKULAM VS. ITO, WARD - 1, SRIKAKULAM [PAN: AIWPS0299K ] ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NO.87/VIZAG/2015 ( / ASSESSMENT YEAR: 2011-12) KAMSU HARI GOPAL CHOWDARY (HUF), SRIKAKULAM VS. ITO, WARD - 2, SRIKAKULAM [PAN: AAIHK0356F ] ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NO.94/VIZAG/2015 ( / ASSESSMENT YEAR: 2011-12) LABALA PRABHAKARA RAO, PATHAPATNAM VS. ITO, WARD - 2, SRIKAKULAM [PAN: ABHPL5887C ] ( % / APPELLANT) ( &'% / RESPONDENT) ITA NOS.616 632 633 634 635/VIZAG/2014; ITA NOS.2 87 94 127 360/VIZAG/2015 & ITA NOS.95 101 104 105/VIZAG/2016 K. HEMA SUNDRA RAO, SRIKAKULAM & OTHERS 3 ./I.T.A.NO.127/VIZAG/2015 ( / ASSESSMENT YEAR: 2011-12) BODDU NARASIMHA M OO RTHY , VISAKHAPATNAM VS. ITO, WARD - 1 , ANAKAPALLI [PAN: AMYPB8479J ] ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NO.360/VIZAG/2015 ( / ASSESSMENT YEAR: 2011-12) SIMMA PAPA RAO, AMADALAVALASA VS. ITO, WARD - 1, SRIKAKULAM [PAN: BOJPS5912M ] ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NO.95/VIZAG/2016 ( / ASSESSMENT YEAR: 2011-12) KASPA JYOTHI GANESH SRIKAKULAM VS. ITO, WARD - 2, SRIKAKULAM [PAN: AHHPJ8029Q ] ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NO.101/VIZAG/2016 ( / ASSESSMENT YEAR: 2011-12) KORADA VY K UNTA RAO NARASANNAPETA VS. ITO, WARD - 1, SRIKAKULAM [PAN: AKCPK4197L ] ( % / APPELLANT) ( &'% / RESPONDENT) ITA NOS.616 632 633 634 635/VIZAG/2014; ITA NOS.2 87 94 127 360/VIZAG/2015 & ITA NOS.95 101 104 105/VIZAG/2016 K. HEMA SUNDRA RAO, SRIKAKULAM & OTHERS 4 ./I.T.A.NO.104/VIZAG/2016 ( / ASSESSMENT YEAR: 2011-12) PEKALA NARAYANA RAO SRIKAKULAM VS. ITO, WARD - 1, SRIKAKULAM [PAN: BHUPP 6145B ] ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NO.105/VIZAG/2016 ( / ASSESSMENT YEAR: 2011-12) BORA MALLESWARA RAO SRIKAKULAM VS. ITO, WARD - 2, SRIKAKULAM [PAN: AEAPB5438F ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI S.V. SATYANARAYANA, AR / RESPONDENT BY : SHRI K. RAVI, DR / DATE OF HEARING : 24.05.2016 / DATE OF PRONOUNCEMENT : 23.06.2016 ITA NOS.616 632 633 634 635/VIZAG/2014; ITA NOS.2 87 94 127 360/VIZAG/2015 & ITA NOS.95 101 104 105/VIZAG/2016 K. HEMA SUNDRA RAO, SRIKAKULAM & OTHERS 5 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THESE APPEALS FILED BY DIFFERENT ASSESSEES ARE DIR ECTED AGAINST THE ORDER OF CIT(A), VISAKHAPATNAM DATED 26 .9.2014 FOR THE ASSESSMENT YEARS 2009-10, 2010-11 & 2011-12. SINCE , THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED OFF, BY WAY OF THIS COMMON ORDER FOR THE S AKE OF CONVENIENCE. ITA 616/VIZAG/2014: 2. THE FACTS IN THIS CASE ARE IN BRIEF THAT THE ASS ESSEE IS CARRYING ON BUSINESS FOR INDIAN MADE FOREIGN LIQUOR (IMFL). TH E ASSESSEE HAD FILED A RETURN OF INCOME BY DECLARING TOTAL INCOME OF ` 2,02,690/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND AFTER FOLLOWING THE DUE PROCEDURE, ASSESSMENT WAS COMPLETED U/S 143(3) OF T HE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT'). 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. HAS NOTED THAT ASSESSEE HAS MADE PURCHASES TO THE TUNE OF ` 91,11,524/- AND DECLARED SALES OF ` 1,16,83,213/- AND ADMITTED NET PROFIT OF ` 2,02,690/-. THE A.O. HAS CALLED THE ASSESSEE TO P RODUCE THE BILLS & VOUCHERS FOR THE LIQUOR SALES AND SUPPORTING EVIDEN CE FOR EXPENDITURE ITA NOS.616 632 633 634 635/VIZAG/2014; ITA NOS.2 87 94 127 360/VIZAG/2015 & ITA NOS.95 101 104 105/VIZAG/2016 K. HEMA SUNDRA RAO, SRIKAKULAM & OTHERS 6 INCURRED. THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY BILLS & VOUCHERS. HE HAS SUBMITTED THAT THE ASSESSEE HAS TO PURCHASE LIQUOR FROM ANDHRA PRADESH BEVERAGES CORPORATION LTD. (APBCL) AND THER EAFTER HE HAS TO INCUR VARIOUS EXPENDITURES, THE MARGIN OF WHICH IS VERY LIMITED AND SUBMITTED THAT THE PROFIT DECLARED BY THE ASSESSEE MAY BE ACCEPTED. THE A.O. AFTER CONSIDERING THE EXPLANATION OF THE A SSESSEE, HE IS OF THE OPINION THAT THE ASSESSEE IS IN THE LIQUOR BUSINESS , THE MARGIN LEVEL OF PROFIT IS VERY HIGH AND THEREFORE HE HAS ESTIMATED THE PROFIT AT 20% ON STOCK PUT FOR SALE. ASSESSEE CARRIED MATTER IN APP EAL BEFORE THE CIT(A) AND SUBMITTED THAT THE ESTIMATION MADE BY THE A.O. IS ARBITRARY AND VERY HIGHER SIDE AND SUBMITTED THAT THE PROFIT SHOW N BY THE ASSESSEE MAY BE ACCEPTED. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE, HE HAS RESTRICTED ESTIMATION MADE BY THE A.O. AT 10% ON PURCHASE PRICE AND DIRECTED THE A.O. TO RE-COMPUTE THE INCOME AT 10% OF THE PURCHASE PRICE. ON BEING AGGRIEVED, ASSESSE E CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT THE ASSESSEE IS IN THE BUSINESS OF INDIAN MADE FOREIGN LIQUOR (I MFL) SALE AND UNDER SIMILAR FACTS AND CIRCUMSTANCES, THE COORDINATE BEN CH OF THE VISAKHAPATNAM TRIBUNAL HAS CONSIDERED THE ISSUE AND HELD THAT NET ITA NOS.616 632 633 634 635/VIZAG/2014; ITA NOS.2 87 94 127 360/VIZAG/2015 & ITA NOS.95 101 104 105/VIZAG/2016 K. HEMA SUNDRA RAO, SRIKAKULAM & OTHERS 7 PROFIT AT 5% OF THE PURCHASE OR STOCK PUT FOR SALE HAS TO BE CONSIDERED AS THE PROFIT IN THIS LINE OF BUSINESS AND SUBMITTE D THAT THE SAME MAY BE FOLLOWED AND APPLIED IN THE ASSESSEES CASE. 5. ON THE OTHER HAND, THE LD. D.R. HAS STRONGLY SUP PORTED THE ORDER PASSED BY THE AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ASSESSEE IS CARRYING IN INDIAN MADE FOREIGN LIQUOR (IMFL) BUSINESS AND HE FILED A RETURN OF INCOME WHEREIN HE HAS DECLARED TOTAL INCOME OF ` 2,02,690/-. WHEN THE A.O. HAS ISSUED SHOW CAUSE NO TICE TO THE ASSESSEE ASKING THE ASSESSEE TO FILE BOOKS OF ACCOU NTS AND BILLS & VOUCHERS, THE ASSESSEE HAS PRODUCED THE BOOKS OF AC COUNTS, HOWEVER, HE HAS NOT PRODUCED ANY BILLS & VOUCHERS FOR THE SA LE RECEIPTS. THE ASSESSEE HAS ALSO NOT PRODUCED STOCK REGISTER AND D ETAILS OF THE SALES MADE BRAND-WISE OR ANY OTHER SALE DETAILS. ACCORDI NGLY, THE A.O. HAS REJECTED THE BOOKS OF ACCOUNTS AND HE HAS ESTIMATED THE NET PROFIT AT 20% OF THE STOCK PUT FOR SALE. ON APPEAL, CIT(A) H AS RESTRICTED THE DISALLOWANCE TO 10%. BEFORE US, THE LD. COUNSEL FO R THE ASSESSEE HAS RELIED ON THE COORDINATE BENCH OF THE TRIBUNAL IN T HE CASE OF T. ITA NOS.616 632 633 634 635/VIZAG/2014; ITA NOS.2 87 94 127 360/VIZAG/2015 & ITA NOS.95 101 104 105/VIZAG/2016 K. HEMA SUNDRA RAO, SRIKAKULAM & OTHERS 8 APPALASWAMY, VISAKHAPATNAM VS. ACIT IN ITA NO.65 & 66/VIZAG/2012 DATED 3.3.2014. WE HAVE GONE THROUGH THE ORDERS PA SSED BY THE COORDINATE BENCH AND WE FIND THAT THE FACTS OF THE CASE AND THE BUSINESS CARRIED ON BY THE ASSESSEE ARE SIMILAR TO THE CASE RELIED BY THE LD. COUNSEL FOR THE ASSESSEE. THAT APART, THE COORDINA TE BENCH OF THE TRIBUNAL RECENTLY IN THE CASE OF TANGUDU JOGISETTY IN ITA NO.96/VIZAG/2016 DATED 2.6.2016 HAS CONSIDERED THE VERY SAME ISSUE AND RESTRICTED THE ESTIMATION AT 5% ON TOTAL PURCHA SES NET OF ALL DEDUCTIONS BY FOLLOWING THE CASE OF T. APPALASWAMY, VISAKHAPATNAM (SUPRA). THE RELEVANT PORTION OF THE ORDER IS EXTR ACTED AS UNDER: 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE A.O. ESTIMATED NET PROFIT OF 20% ON STOCK PUT FOR SALE. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS NOT MAINTAINED PROPER BOOKS OF ACCOUNTS AND VOUCHERS IN SUPPORT OF PURCHASES AND SALES. TH E A.O. FURTHER OBSERVED THAT THE ASSESSEE HAS FAILED TO MAINTAIN S TOCK REGISTERS AND BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE ARE NO T SUSCEPTIBLE FOR VERIFICATION, THEREFORE REJECTED THE BOOKS OF ACCOU NTS AND ESTIMATED NET PROFIT OF 20% BY RELYING UPON THE DECISION OF HONB LE A.P. HIGH COURT. IT IS THE CONTENTION OF THE ASSESSEE THAT THE NET PROF IT ESTIMATED BY THE A.O. IS QUITE HIGH WHEN COMPARED TO THE NATURE OF BUSINE SS CARRIED ON BY THE ASSESSEE. IT IS FURTHER SUBMITTED THAT THE CASE LAW RELIED UPON BY THE ASSESSEE IS NOT APPLICABLE TO THE FACTS OF THE PRES ENT CASE. THE CASE BEFORE THE HONBLE A.P. HIGH COURT WAS THAT THE ASS ESSEE IS INTO THE BUSINESS OF TRADING IN ARRACK, WHEREAS IT IS IN THE BUSINESS OF DEALING IN IMFL. THE ASSESSEE FURTHER CONTENDED THAT IMFL TRAD E WAS CONTROLLED BY THE STATE GOVERNMENT THROUGH A.P. STATE BEVERAGES C ORPORATION LTD. AND THE PRICES OF THE PRODUCTS ARE FIXED BY THE STATE G OVERNMENT. THE ASSESSEE BEING A LICENSE HOLDER OF STATE GOVERNMENT CANNOT SELL THE ITA NOS.616 632 633 634 635/VIZAG/2014; ITA NOS.2 87 94 127 360/VIZAG/2015 & ITA NOS.95 101 104 105/VIZAG/2016 K. HEMA SUNDRA RAO, SRIKAKULAM & OTHERS 9 PRODUCTS OVER AND ABOVE THE MRP FIXED BY THE STATE GOVERNMENT. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE A.O. HAS ESTIMATED THE NET PROFIT BY RELYING UPON THE DE CISION OF A.P. HIGH COURT IN THE CASE OF CIT VS. R. NARAYANA RAO IN ITA NO.3 OF 2003 WHICH IS RENDERED UNDER DIFFERENT FACTS. THE A.P. HIGH COUR T HAS CONSIDERED THE CASE OF AN ARRACK DEALER, WHEREAS, THE ASSESSEE IS INTO THE BUSINESS OF DEALING IN IMFL. THEREFORE, WE ARE OF THE VIEW THA T THE A.O. WAS NOT JUSTIFIED IN RELYING UPON THE JUDGEMENT, WHICH WAS RENDERED UNDER DIFFERENT FACTS TO ESTIMATE THE NET PROFIT. ON THE OTHER HAND, THE LD. A.R. FOR THE ASSESSEE, RELIED UPON THE DECISION OF ITAT, VISAKHAPATNAM BENCH IN THE CASE OF T. APPALASWAMY VS. ACIT IN ITA NO.65 & 66/VIZAG/2012. WE HAVE GONE THROUGH THE CASE LAWS RELIED UPON BY T HE ASSESSEE IN THE LIGHT OF THE FACTS OF THE PRESENT CASE AND FINDS TH AT THE COORDINATE BENCH OF THIS TRIBUNAL, UNDER SIMILAR CIRCUMSTANCES HELD THAT ESTIMATION OF 5% NET PROFIT ON PURCHASES IS REASONABLE. THE RELEVAN T PORTION OF THE ORDER IS REPRODUCED HEREUNDER: 3. WE HAVE HEARD THE PARTIES, PERUSED THE ORDERS O F THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. IT IS THE CONTENTION OF THE LD. A.R. THAT THE ESTIMATION OF PROFIT AT 16% IS HI GH AND EXCESSIVE CONSIDERING THE NORMAL RATE OF PROFIT IN THIS LINE OF BUSINESS. WHEREAS, THE LD. D.R. SUPPORTED THE ORDER OF THE CIT(A). HAVING CONSIDERED THE SUBMISSIONS OF THE ASSESSEE, WE ARE OF THE VIEW THA T THE ISSUE IS NO MORE RES INTEGRA IN VIEW OF A SERIES OF DECISIONS OF THE ITAT HYDERABAD BENCH IN SIMILAR CASES. THE COORDINATE BENCH IN CASE OF ITA NO.127/HYD/12 AND OTHERS DATED 18.05.2012 AS WELL AS A NUMBER OF OTHE R CASES HAVE HELD THAT PROFIT IN CASE OF BUSINESS IN INDIAN MADE FOREI GN LIQUOR HAS TO BE ESTIMATED AT 5% OF THE PURCHASES MADE BY THE ASSESS EE. THEREFORE, FOLLOWING THE DECISION OF THE ITAT HYDERABAD BENCH, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICE R TO ESTIMATE THE PROFIT FROM THE WINE BUSINESS OF THE ASSESSEE BY APPLYING THE RATE OF 5% OF THE PURCHASES MADE NET OF ALL OTHER DEDUCTIONS. THE AS SESSING OFFICER SHOULD ALSO BEAR IN MIND THAT IN NO CASE THE INCOME DETERM INED SHOULD BE BELOW THE INCOME RETURNED. 9. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO RESPECTFULLY FOLLOWING THE RATIOS OF COORDINATE BEN CH, WE ARE OF THE VIEW THAT THE NET PROFIT ESTIMATED BY THE A.O. BY RELYIN G UPON THE DECISION OF HONBLE A.P. HIGH COURT (SUPRA), WHICH WAS RENDERED UNDER DIFFERENT FACTS IS QUITE HIGH. ON THE OTHER HAND, THE ASSESSEE REL IED UPON THE DECISION OF COORDINATE BENCH AND THE COORDINATE BENCH UNDER SIM ILAR CIRCUMSTANCES ESTIMATED THE NET PROFIT OF 5% ON TOTAL PURCHASES N ET OF ALL DEDUCTIONS. NO CONTRARY DECISION IS PLACED ON RECORD BY THE REV ENUE TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE CO ORDINATE BENCH. THEREFORE, WE DIRECT THE A.O. TO ESTIMATE THE NET P ROFIT OF 5% ON TOTAL PURCHASES NET OF ALL DEDUCTIONS. ORDERED ACCORDING LY. ITA NOS.616 632 633 634 635/VIZAG/2014; ITA NOS.2 87 94 127 360/VIZAG/2015 & ITA NOS.95 101 104 105/VIZAG/2016 K. HEMA SUNDRA RAO, SRIKAKULAM & OTHERS 10 7. IN VIEW OF ABOVE ORDER OF THE COORDINATE BENCH O F THE TRIBUNAL, WE SET ASIDE THE ORDER PASSED BY THE LD. COMMISSIONER AND WE DIRECT THE A.O. TO RESTRICT THE ESTIMATION AT 5% ON TOTAL PURC HASES NET OF ALL DEDUCTIONS. 8. THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. SO FAR AS OTHER APPEALS IN RESPECT OF ESTIMATION OF PROFIT IS CONCERNED, IN VIEW OF OUR DECISION ABOVE, WE SET AS IDE THE ORDER PASSED BY THE LD. CIT(A) AND REMIT THE MATTER BACK TO THE A.O. TO RESTRICT THE ESTIMATION AT 5% ON TOTAL PURCHASES NET OF ALL DEDU CTIONS. 10. THIS GROUND OF APPEAL RAISED IN ALL THE APPEALS IS ALLOWED FOR STATISTICAL PURPOSES. 11. SO FAR AS ANOTHER GROUND RAISED BY THE ASSESSEE IN RESPECT OF OPENING CAPITAL AND UNEXPLAINED EXPENDITURE ARE CON CERNED, IN THE ASSESSMENT ORDER, THE A.O. HAS NOTED THAT THE ASSES SEE HAS SHOWN OPENING CAPITAL BALANCE AT ` 10,15,000/-. THE ASSESSEE HAS ASKED THE SOURCE OF THE ABOVE AMOUNT. IT WAS SUBMITTED BEFOR E THE A.O. THAT THOUGH ASSESSEE HAS NOT FILED ANY RETURN OF INCOME FOR THE EARLIER YEARS ITA NOS.616 632 633 634 635/VIZAG/2014; ITA NOS.2 87 94 127 360/VIZAG/2015 & ITA NOS.95 101 104 105/VIZAG/2016 K. HEMA SUNDRA RAO, SRIKAKULAM & OTHERS 11 FOR THE REASON THAT HIS INCOME HAS BEEN BELOW THE T AXABLE LIMIT AND SUBMITTED THAT HE HAS BEEN EARNING INCOME SINCE 20 YEARS AND HIS EARNINGS ARE BEING ACCUMULATED EVERY YEAR. THE ACC UMULATED EARNINGS OF ` 10,15,000/- HAVE BEEN BROUGHT BY HIM AS HIS OPENIN G CAPITAL FOR THE FINANCIAL YEAR 2010-11. THE A.O. AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, HE IS OF THE OPINION THAT ASSESSEE IS UNABLE TO SHOW ANY PHYSICAL EXISTENCE OF CAPITAL IN THE EARLIER YEARS LIKE WHERE THE SAVINGS OUT OF THE INCOME EARNED ARE PLACED LIKE BANK, MUTU AL FUNDS, ETC. OR IN ANY PHYSICAL ASSET LIKE REAL ESTATE, ETC. FURTHER A SSESSEE IS UNABLE TO PROVE THAT HIS EARNINGS ARE SUFFICIENT ENOUGH FOR S AVINGS, HE HAS CLAIMED AFTER MEETING DOMESTIC AND OTHER EXPENDITURE AND TH E A.O. HAS TREATED ABOVE AMOUNT AT ` 10,15,000/- AS UNEXPLAINED CREDIT TO THE CAPITAL ACCOUNT AND THE SAME WAS BROUGHT TO TAX UNDER THE H EAD OTHER SOURCES OF INCOME. IN THE ASSESSMENT ORDER, THE A.O. FURTH ER OBSERVED THAT THE ASSESSEE HAD MADE TWO PURCHASES INITIALLY WORTH ` 3,28,351/- ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF THE ABOVE AMOUNT. IT WAS SUBMITTED BEFORE THE A.O. THAT THE FIGURE TAKEN BY THE A.O. O F ` 3,28,355/- IS NOT CORRECT. THE ACTUAL AMOUNT INCURRED BY HIM FOR INI TIAL PURCHASE IS WORTH ONLY ` 1,31,480/- AND SUBMITTED THAT HE HAS TAKEN UNSECUR ED LOAN OF ` 1,50,000/- EACH LESS THAN ` 20,000/- DURING THE MONTH OF JUNE, 2016. ITA NOS.616 632 633 634 635/VIZAG/2014; ITA NOS.2 87 94 127 360/VIZAG/2015 & ITA NOS.95 101 104 105/VIZAG/2016 K. HEMA SUNDRA RAO, SRIKAKULAM & OTHERS 12 THESE UNSECURED LOANS WERE ALSO REPAID DURING THE F INANCIAL YEAR 2010- 11 ITSELF. HOWEVER, THE ASSESSEE IS NOT ABLE TO PR ODUCE ANY EVIDENCE. THE A.O. AFTER CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE, THE ENTIRE AMOUNT OF ` 3,28,351/- IS TREATED AS UNEXPLAINED EXPENDITURE A ND BROUGHT TO TAX UNDER THE HEAD OTHER SOURCES FOR T HE REASON THAT THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE SOURCES WI TH ANY EVIDENCE. 12. ASSESSEE CARRIED MATTER IN APPEAL BEFORE THE LD . CIT(A). LD. CIT(A) CONFIRMED THE ORDER OF THE A.O. 13. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT IN SO FAR AS CAPITAL INDUCTION OF ` 10,15,000/- IS CONCERNED, ASSESSEE IS INTO VARIOUS BUSINESSES FOR THE LAST 20 YEARS AND OUT OF SAVINGS, HE HAS MADE THE INVESTMENTS THOUGH HE HAS NOT FILED ANY RETURN OF INCOME AND SUBMITTED THAT ONE MORE OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE TO SUBSTANTIATE HIS CASE BEFORE THE A.O. HE ALSO SUBM ITTED THAT ALL THE DETAILS ARE AVAILABLE WITH THE ASSESSEE AND PRAYED THAT THE ISSUE MAY BE REMITTED BACK TO THE A.O. IN BOTH THE COUNTS I.E. O PENING BALANCE AS WELL AS UNSECURED LOANS. 14. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPOR TED THE ORDER PASSED BY THE AUTHORITIES. ITA NOS.616 632 633 634 635/VIZAG/2014; ITA NOS.2 87 94 127 360/VIZAG/2015 & ITA NOS.95 101 104 105/VIZAG/2016 K. HEMA SUNDRA RAO, SRIKAKULAM & OTHERS 13 15. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE CASE OF THE A.O. IS THAT THE ASSESSEE HAS INTRODUCE D A CAPITAL OF ` 10,15,000/- AND HE HAS FAILED TO EXPLAIN THE SOURC E OF ABOVE AMOUNT, NO DETAILS ARE FILED AND HE IS UNABLE TO DISCHARGE THE BURDEN CAST UPON HIM AND THEREFORE THE ENTIRE AMOUNT HAS TO BE TREAT ED AS UNEXPLAINED CREDIT TO THE CAPITAL ACCOUNT AND THE SAME WAS BROU GHT TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. THE CASE OF THE ASSESSEE IS THAT IN THE PAST 20 YEARS, HE HAS BEEN CARRYING OUT VARIOUS SMALL BUSINESSES AND HE IS ABLE TO SAVE SOME MONEY, HE HAS NOT FILED ANY RETURNS, BECAUSE HIS EARNINGS ARE BELOW TAXABLE LIMIT. OUT OF THE SAVINGS, THE ASSESSEE INTRODUCED THE CAPITAL. THE ASSESSEE IS N OT ABLE TO SUBSTANTIATE HIS CASE NEITHER BEFORE THE A.O. NOR B EFORE THE CIT(A). NOW BEFORE US, HE HAS SUBMITTED THAT HE HAS QUANTIF IED ALL THE DETAILS AND PRAYED FOR ONE MORE OPPORTUNITY TO SUBSTANTIATE HIS CASE BEFORE THE A.O. BY CONSIDERING THE REQUEST MADE BY THE ASSESS EE AND ALSO KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTICE, ONE MORE OPPORTUNI TY SHOULD BE GIVEN TO THE ASSESSEE. IN VIEW OF THE ABOVE, WE SET ASIDE T HE ORDER PASSED BY THE LD. COMMISSIONER AND REMIT THE MATTER BACK TO T HE A.O., IN RESPECT ITA NOS.616 632 633 634 635/VIZAG/2014; ITA NOS.2 87 94 127 360/VIZAG/2015 & ITA NOS.95 101 104 105/VIZAG/2016 K. HEMA SUNDRA RAO, SRIKAKULAM & OTHERS 14 OF OPENING BALANCE AS WELL AS SOURCE OF INITIAL PUR CHASES MADE BY THE ASSESSEE OF ` 3,28,351/- AND DIRECT THE A.O. TO DECIDE THE ISSUE DE-NOVO IN ACCORDANCE WITH LAW AFTER BEING GIVEN AN OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. 16. THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 17. SO FAR AS OTHER APPEALS ARE CONCERNED, THE FACT S ARE SIMILAR, IN RESPECT OF CAPITAL AND UNEXPLAINED EXPENDITURE. TH AT THE ASSESSEE HAS SUBMITTED MORE OR LESS SIMILAR SUBMISSIONS BEFORE T HE A.O. HOWEVER, THE A.O. HAS NOT SATISFIED WITH THE EXPLANATION GIV EN BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEES ARE NOT ABLE TO SUBST ANTIATE THE STAND TAKEN BY THEM AND ADDITIONS WERE MADE. CIT(A) CONF IRMED THE SAME. AFTER HEARING BOTH THE SIDES BY CONSIDERING THE REQ UEST OF THE LD. COUNSEL FOR THE ASSESSEE, WE ARE OF THE OPINION THA T ONE MORE OPPORTUNITY SHOULD BE GIVEN TO THE ASSESSEE IN THE INTEREST OF JUSTICE. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE C IT(A) AND REMIT THE MATTER BACK TO THE A.O., IN RESPECT OF OPENING BALA NCE AS WELL AS SOURCE OF INITIAL PURCHASES MADE BY THE ASSESSEE AND DIREC T THE A.O. TO DECIDE ITA NOS.616 632 633 634 635/VIZAG/2014; ITA NOS.2 87 94 127 360/VIZAG/2015 & ITA NOS.95 101 104 105/VIZAG/2016 K. HEMA SUNDRA RAO, SRIKAKULAM & OTHERS 15 THE ISSUE DE-NOVO IN ACCORDANCE WITH LAW AFTER BEIN G GIVEN AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 18. THIS GROUND OF APPEAL RAISED BY THE ASSESSEES I N ALL THE APPEALS IS ALLOWED FOR STATISTICAL PURPOSES. 19. IN THE RESULT, ALL THE APPEALS FILED BY THE ASS ESSEES ARE ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 23 RD JUN16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 23.06.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT KADAMBALA HEMA SUNDRA RAO, PROP: SRI VEERANJANEYA WINES, D.NO.417, MAIN ROAD, AKKUPALLI, VAJRAPUKOTTU RU, SRIKAKULAM DIST. 2. / THE APPELLANT POTNURU BABU RAO, PROP: SRI VEER ANJANEYA WINES, D.NO.19-92, C/O BAMMIDI SIMHACHALAM, GANDI NAGAR, K ASIBUGGA, SRIKAKULAM DIST 3. / THE APPELLANT DUVVADA RAMANA RAO, PROP: SRI PR ASANNANJANEYA WINES, S/O CHINNA BABU, WARD NO.11, OPP. E SEVA CEN TRE, NITYANANDA NAGAR, KASIBUGGA, SRIKAKULAM-532222. 4. / THE APPELLANT SALADI GOVINDA RAO, S/O KONDALA RAO, 01, GANESH WINES, KAVITI, SRIKAKULAM DISTRICT. 5. / THE APPELLANT SIMHADRI MUKUNDA RAO, PROP: M/S. SIMHADRI WINES, MAIN ROAD, HIRAMANDALAM, SRIKAKULAM DIST. 532 459. ITA NOS.616 632 633 634 635/VIZAG/2014; ITA NOS.2 87 94 127 360/VIZAG/2015 & ITA NOS.95 101 104 105/VIZAG/2016 K. HEMA SUNDRA RAO, SRIKAKULAM & OTHERS 16 6. / THE APPELLANT KAMSU HARI GOPAL CHOWDARY (HUF), PROP: SRI SANTHOSI WINES, D.NO.1-835, MAIN ROAD, VAJRAPUKOTTURU, SRIKA KULAM DIST. 7. / THE APPELLANT LABALA PRABHAKARA RAO, PROP: NEE LAMANI DURGA WINES, S/O KOTESWARA RAO, SIVA SANKAR COLONY, 3 RD LINE, PATHAPATNAM, SRIKAKULAM DIST. 8. / THE APPELLANT BODDU NARASIMHA MOORTHY, PROP: R AMA KRISHNA WINES, D.NO.8/57/1, K. KOTAPADU, VISAKHAPATNAM-531 022. 9. / THE APPELLANT SIMMA PAPA RAO, S/O LAXMINARAYAN A, CHINTADA VILLAGE, AMADALAVALASA, SRIKAKULAM DIST. 10. / THE APPELLANT SMT. KASPA JYOTHI GANESH, PROPX: SRI MANIKANTA WINES AND SRI SAI SIVA JYOTHI MESS, D/O RAJAMAHANTH Y VENUGOPALA KRISHNA RAO, ARTS COLLEGE ROAD, SRIKAKULAM 11. / THE APPELLANT SRI KORADA VYKUNTA RAO, OLD BUS STAND, NARASANNAPETA, SRIKAKULAM DIST. 12. / THE APPELLANT PEKALA NARAYANA RAO, PROP: GEETH A WINES, S/O SUBBA RAO, GULLA SEETHARAMPURAM, SANTHAKAVITI MANDA LAM, SRIKAKULAM DIST. 13. / THE APPELLANT BORA MALLESWARA RAO, PROP: SRI N EELAMANI DURGA WINES, D.NO.18-1, REDDIKI STREET, PALASA, SRIKAKULA M DIST. 14. / THE RESPONDENT THE ITO WARD-1, SRIKAKULAM 15. / THE RESPONDENT THE ITO WARD-2, SRIKAKULAM 16. / THE RESPONDENT THE ITO WARD-1, ANAKAPALLI 17. ) / THE CIT-2, VISAKHAPATNAM 18. ) ( ) / THE CIT(A), VISAKHAPATNAM 19. ) ( ) / THE CIT(A)-2, VISAKHAPATNAM 20. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 21 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM