Sri K Pratap Reddy, Hyderabad V. DCIT, Hyderabad

ITSSA 55/HYD/2005

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9119 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 19-07-2010
• Assessment Year: misc
• Appeal Filed On: 04-03-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A PATRA CITDIR
• Assessee Lawyers: P MURALIKRISHNA
• Keywords: Unexplained cash credit; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER IT(SS) A NO.55/HYD/ 2005 BLOCK PD: 1990-91 TO 1999-2000 & FROM 1-4-1999 TO 18 -11-1999 SHRI K.PRATAP REDDY, HYDERABAD PAN ACVPK4069Q VS. DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1,HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.MURALIKRISHNA, CA RESPONDENT BY : SHRI A.PATRA, CIT-DIR O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS) IV, HYDERABAD D ATED 9-12-2004 AND PERTAINS TO THE BLOCK PD: 1990-91 TO 19 99-2000 & FROM 1-4-1999 TO 18-11-1999. 2. ASSESSEE RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: 1. THE ORDER OF THE CIT(A) DT.9-12-2004 IS CONTRARY TO LAW AND FACTS. 2. THE CIT ERRED IN SUSTAINING THE ADDITION OF RS.1 ,24,659 UNDER THE HEAD UNEXPLAINED CREDITS IN THE BANK ACCOUNTS. 2.1 THE APPELLANT CONTENDS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) OUGHT TO HAVE DELETED THE ENTIRE A DDITION OF RS.3,32,955 AS THE SAME DO NOT FALL WITHIN THE DEFINITION OF UNDIS CLOSED INCOME UNDER CLAUSE (B) OF SEC.158B OF THE INCOME TAX ACT, 1961. 2.2 THE CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.1,24,659 IGNORING THE FACT THAT THE ASSESSING OFFICER DID NOT IDENTIFY AN Y SPECIFIC UNEXPLAINED CASH CREDITS IN THE BANK ACCOUNTS. IT(SS)A NO.55/HYD/2005 SHRI K. PRATAP REDDY, HYDERABAD 2 2.3 THE CIT(A) ERRED IN HOLDING THAT THE APPELLANT DID NOT FURNISH EVIDENCE IN SUPPORT OF THE TRAVELING EXPENSES OF RS.14,374 AND LOAN OF RS.20,000 FROM HIS WIFE. 2.4 THE CIT(A) ERRED IN SUSTAINING THE ADDITION TO THE EXTENT OF RS.1,24,659 ARBITRARILY. 3. THE CIT(A) ERRED IN SUSTAINING THE ADDITION UNDE R THE HEAD UNEXPLAINED/UNACCOUNTED CASH OF RS.99,947. 3.1 THE APPELLANT CONTENDS THAT ON THE FACTS AND CI RCUMSTANCES OF THE CASE, THE CIT(A) OUGHT TO HAVE DELETED THE ENTIRE ADDITIO N OF RS.1,20,508 AS THE SAME DO NOT FALL WITHIN THE DEFINITION OF UNDISCLOS ED INCOME UNDER CLAUSE (B) OF SEC.158B OF THE INCOME TAX ACT, 1961. 3.2 THE CIT(A) ERRED IN HOLDING THAT THE APPELLANT FAILED TO SUBSTANTIATE WITH EVIDENCE THAT THE CASH FOUND TO THE EXTENT OF RS.99 947 WAS FROM DISCLOSED SOURCES. 4. THE CIT(A) ERRED IN NOT CONSIDERING THE LEGAL PO SITION APPLICABLE TO THE FACTS OF THE CASE URGED AT THE TIME OF HEARING. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE FURNISHED CASH FLOW STATEMENTS TO EXPLAIN THE T RANSACTIONS. THE ASSESSING OFFICER NOTICED THAT OUT FLOW OF THE FUNDS D OES NOT MATCH WITH THE CASH AVAILABLE WITH THE ASSESSEE FOR THE BLOCK PE RIOD. THE ASSESSEE SUBMITTED THAT THE FUNDS WERE DRAWN FROM THE BAN K TO MEET THESE EXPENSES. FROM THE CASH FLOW STATEMENTS GIVEN BY T HE ASSESSEE, THE ASSESSING OFFICER CONSTRUCTED THE BANK TRANSACTIONS FOR THE BLOCK PERIOD. THE YEAR WISE DETAILS ARE AVAILABLE AT PAGES 3 ,4,5 AND 6 OF THE ASSESSMENT ORDER. THE TRANSACTION AS PER CASH FLOW STATEMEN TS GIVEN BY THE ASSESSEE AND THE ENTRIES AVAILABLE IN THE BANK PA SS BOOKS WERE CONSIDERED FOR ARRIVING AT THESE YEAR WISE CASH FLOW STATE MENT. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE MAINTAINED THE ACCO UNTS WITH VIJAYA BANK AND CORPORATION BANK. IN THE STATEMENTS WORKED OUT BY THE ASSESSING OFFICER, THE ENTRIES RELATING TO CORPORATIO N BANK ONLY ARE CONSIDERED. SINCE THE NUMBER OF ENTRIES IN THE VIJAYA BANK WERE LESS, THE ASSESSING OFFICER DID NOT ATTEMPT TO WORK OUT THE STA TEMENT OF THE IT(SS)A NO.55/HYD/2005 SHRI K. PRATAP REDDY, HYDERABAD 3 VIJAYA BANK. THE CREDIT BALANCE IN THE VIJAYA BANK ACCOUNT AS ON 31-3- 1999 IS DULY CONSIDERED WHILE ARRIVING AT THE TRANSACTIO NS OF CORPORATION BANK. THE ASSESSING OFFICER NOTICED THAT AS PER THE DETAIL S WORKED OUT, THE CORPORATION BANK ACCOUNT SHOWS DEBIT BALANCE OF RS.3 ,29,236 AS ON 31-3-1999 WHEREAS AS PER THE COPY OF THE BANK ACCOUNT, THE DEBIT BALANCE WAS ONLY 27,140 AS ON 31-3-1999. THE ASSESSING OF FICER PROPOSED TO ASSESS THE DIFFERENCE AMOUNT OF RS.3,32,955 AS UNDISCLOSED INCOME. THE ASSESSEE FURNISHED THE BANK ACCOUNT STATEMENTS O F VIJAYA BANK AND CORPORATION BANK, WHEREUPON THE ASSESSING OFF ICER AFTER DUE EXAMINATION OF THE SAME NOTED THAT AN AMOUNT OF RS.1 LAKH IN THE CORPORATION BANK ACCOUNT WAS CLAIMED AS REIMBURSEMENT OF LOAN FROM MR. IBRAHIM KHAN KSKATHI AND RS.1,08,296 AS DIVIDEND R ECEIVED. FURTHER, AN AMOUNT OF RS.20,000 WAS CLAIMED AS LOAN RE CEIVED FROM THE ASSESSEES WIFE IN THE CORPORATION BANK ACCOUNT IN THE FIN ANCIAL YEAR 1991-92. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS N OT FURNISHED ANY PROOF FOR THE RECEIPT OF THIS AMOUNT AND HENCE REJ ECTED THE ASSESSEES CLAIM. THE ASSESSING OFFICER HELD THAT THE VIJAYA BANK ACCOUNT SHOWS A CREDIT BALANCE OF RS.78,589 AS ON 31-3-1999 WHICH WAS CONSIDERED FOREST OFF BEFORE ARRIVING AT THE DIFFERENCE OF RS.3,32,955 WHICH PROPOSED TO BE ASSESSED AS UNDISCLOSED INCOME. THE ASSESSIN G OFFICER ALSO REJECTED THE CLAIM OF THE ASSESSEE THAT AN AMO UNT OF RS.25,000 WAS RECEIVED BY WAY OF TRANSFER FROM VIJAYA BANK TO HIS CORPORATION BANK ACCOUNT AS THE SAME AS FOUND TO BE FALS E. THUS, THIS AMOUNT OF RS.3,32,955 WAS ADDED BY THE ASSESSING OFFICER AS UNDISCLOSED INCOME IN THE BLOCK ACCOUNT. AGGRIEVED BY THI S ORDER OF THE ASSESSING OFFICER, THE ASSESSEE WENT IN APPEAL BEFORE THE CI T(A), WHO GAVE PART RELIEF THEREON. STILL AGGRIEVED, THE ASSESSE E IS IN APPEAL BEFORE US. IT(SS)A NO.55/HYD/2005 SHRI K. PRATAP REDDY, HYDERABAD 4 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MAT ERIAL ON RECORD. THE ASSESSING OFFICER RECONSTRUCTED THE CORPORATION BANK ACCOUNT AND WORKED OUT THE NOTIONAL OVER-DRAFT AT RS.3 ,89,236 AS AGAINST THE ACTUAL OVERDRAFT OF RS.27,140. ACCORDING T O THE ASSESSING OFFICER, THE ASSESSEE HAD DEPOSITED RS.3,32,955 INTO THIS O VERDRAFT ACCOUNT SO AS TO REDUCE THE SAME AT RS.27,140. ACCORDING TO THE ASSESSEES COUNSEL, THERE WERE DEPOSITS INTO THIS ACCOUNT IN T HE ASSESSMENT YEAR 1997-98 AT RS.91,000 AND RS.17,000 IN TH E YEAR 1998-99 AND THEY WERE NOT CONSIDERED BY THE LOWER AUT HORITIES, THOUGH THE CIT(A) HAS CONSIDERED LOAN FROM IBRAHIM KHAN MASK ATHI AND DIVIDEND RECEIPT. HOWEVER, THE CIT(A) REJECTED THE CLAI M OF THE ASSESSEE WITH REGARD TO REIMBURSEMENT OF TRAVELLING EXPENSES AN D LOAN RECEIVED FROM ASSESSEES WIFE SINCE THERE WAS NO SUPPORTING EVIDENCE. THE FACT OF DEPOSITS MADE BY THE ASSESSEE AT RS.91,000 AND RS.17,00 0 IN THE ASSESSMENT YEAR 1997-98 AND 1998-99, IS NOT CONTROVERTED BY THE DEPARTMENT OR THE EXPLANATION OFFERED BY THE ASSESSEE W AS NOT FOUND TO BE FALSE AND IT IS NOT ALL REJECTED BY THE CIT(A), HEN CE, IN OUR OPINION DUE CREDIT IS TO BE GIVEN TO THESE DEPOSITS AND ADDITION IS TO BE DELETED ACCORDINGLY. 5. AS REGARDS THE SUSTENANCE OF THE ADDITION TO THE EXT ENT OF RS.99,947, THE FACTS RELEVANT ARE THAT THE ASSESSEE CLAIMED TO HAVE RECEIVED ADDITIONAL FEE RECEIPTS TO THE EXTENT OF RS.1, 15,000. THESE FEE RECEIPTS ARE NOT AVAILABLE IN THE CASH FLOW STATEMENT O RIGINAL FILED BEFORE THE ASSESSING OFFICER. THE FEE RECEIPTS TAKEN INTO ACCOUN T IN THE CASH FLOW STATEMENT FILED ORIGINALLY IS RS.1,65,000. THE ASSESSEE FILED REVISED CASH FLOW STATEMENT ON 3-12-2001 STATING THAT THE FEE R ECEIPTS FOR THE YEAR IS RS.2,80,000. THE ASSESSEE HAS SUBMITTED THAT IN T HE CASH FLOW STATEMENT SUBMITTED ORIGINALLY, THE FEES UPTO THE DAT E OF THE SEARCH IT(SS)A NO.55/HYD/2005 SHRI K. PRATAP REDDY, HYDERABAD 5 WERE NOT CONSIDERED. HOWEVER, THE ASSESSEE FAILED TO FURN ISH EVIDENCE IN SUPPORT OF THE FEE RECEIPTS CLAIMED TO BE RECEIVED P RIOR TO THE DATE OF SEARCH. THE ASSESSEE ALSO DID NOT MAINTAIN ANY BOOKS OF A CCOUNT TO SUBSTANTIATE SUCH FEE RECEIPTS. FURTHER, THE ASSESSEE CONTEND S THAT THE ADDITIONAL FEE RECEIPT OF RS.1,15,000 WAS INCLUDED IN T HE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2000-01 FILED IN THE NO RMAL COURSE. THE CIT(A) NOTICING THAT THE SAID RETURN WAS FILED AF TER THE SEARCH PROCEEDINGS AND THERE BEING NO EVIDENCE THAT THE CASH F OUND TO THE EXTENT OF RS.99,947 ( RS.1,20,508 20,561) AS DISCLOSED, REJECTED THE CLAIM OF THE ASSESSEE. ACCORDINGLY, THE CIT(A) WAS IN AGR EEMENT WITH THE ORDER OF THE ASSESSING OFFICER IN MAKING THE SAID ADD ITION. 6. WE HAVE HEARD BOTH SIDES AND PERUSED THE MATERIAL O N RECORD. THE ASSESSEE CLAIMED TO HAVE RECEIVED ADDITIONAL FEE RECEIPTS T O THE EXTENT OF RS.1,15,000. THESE FEE RECEIPTS ARE NOT AVAILABLE IN THE CASH FLOW STATEMENT ORIGINAL FILED BEFORE THE ASSESSING OFFICER. THE FEE RECEIPTS TAKEN INTO ACCOUNT IN THE CASH FLOW STATEMENT FILED ORIG INALLY IS RS.1,65,000. THE ASSESSEE FILED REVISED CASH FLOW STATEMENT ON 3-12- 2001 STATING THAT THE FEE RECEIPTS FOR THE YEAR IS RS.2 ,80,000. THE ASSESSEE HAS SUBMITTED THAT IN THE CASH FLOW STATEMENT SUBMIT TED ORIGINALLY, THE FEES UPTO THE DATE OF THE SEARCH WERE NOT CONSIDERED. HOWEVER, THE ASSESSEE FAILED TO FURNISH EVIDENCE IN SUPPO RT OF THE FEE RECEIPTS CLAIMED TO BE RECEIVED PRIOR TO THE DATE OF SEA RCH. THE ASSESSEE ALSO DID NOT MAINTAIN ANY BOOKS OF ACCOUNT TO SUBSTA NTIATE SUCH FEE RECEIPTS. FURTHER, THE ASSESSEE CONTENDS THAT THE A DDITIONAL FEE RECEIPT OF RS.1,15,000 WAS INCLUDED IN THE RETURN OF IN COME FOR THE ASSESSMENT YEAR 2000-01 FILED IN THE NORMAL COURSE. THE CIT(A) NOTICING THAT THE SAID RETURN WAS FILED AFTER THE SEARCH PROCEEDINGS AND THERE BEING NO EVIDENCE THAT THE CASH FOUND TO THE EXT ENT OF RS.99,947 IT(SS)A NO.55/HYD/2005 SHRI K. PRATAP REDDY, HYDERABAD 6 ( RS.1,20,508 20,561) AS DISCLOSED, REJECTED THE CLAIM OF THE ASSESSEE. ACCORDINGLY, THE CIT(A) WAS IN AGREEMENT WITH T HE ORDER OF THE ASSESSING OFFICER IN MAKING THE SAID ADDITION. WE AR E IN AGREEMENT WITH THE DECISION OF THE CIT(A) AND HIS ORDER CALLS FOR NO INTERFERENCE FROM US. THOUGH THE ASSESSEE ARGUED BEFORE US THAT THE AB OVE ADDITIONS DO NOT FALL WITHIN THE DEFINITION OF UNDISCLOSED INCOME UNDER CLAUSE (B) OF SEC.158B OF THE IT ACT, THE FACT IS THAT THERE IS A DEFICIENCY IN CASH BALANCE TO THIS EXTENT WHICH WAS NOT EXPLAINED BY THE A SSESSEE, BEING SO, THE ADDITION TO BE MADE. THIS GROUND OF THE ASSESSEE IS DISMISSED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWE D. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON: 23.7. 2010. SD/- SD/- G.C.GUPTA CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER. DT/- 23-7-2010. *VNR COPY FORWARDED TO: 1. SHRI K.PRATAP REDDY, 3-6-480, HIMAYATNAGAR, HYDERA BAD. 2 DCIT, CENTRAL CIRCLE 1, HYDERABAD 3. 4 CIT(A) IV, HYDERABAD CIT, AP., HYDERABAD. 5. THE D.R., ITAT, HYDERABAD.