Sri I Ramaraju,, Vizianagaram v. The ITO, Ward-2., Vizianagaram

ITA 525/VIZ/2007 | 2005-2006
Pronouncement Date: 28-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 52525314 RSA 2007
Assessee PAN AAAHI5431R
Bench Visakhapatnam
Appeal Number ITA 525/VIZ/2007
Duration Of Justice 2 year(s) 1 month(s)
Appellant Sri I Ramaraju,, Vizianagaram
Respondent The ITO, Ward-2., Vizianagaram
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 28-01-2010
Assessment Year 2005-2006
Appeal Filed On 28-12-2007
Judgment Text
PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO. 525 /VIZAG/200 7 ASSESSMENT YEAR: 2005 - 06 I. RAMA RAJU VIZIANAGARAM VS. ITO WARD - 2 VIZIANAGARAM (APPELLANT) (RESPONDENT) PAN NO. AAAHI 5431 R ITA NO. 516/VIZAG/2007 ASSESSMENT YEAR: 2005 - 06 ITO WARD - 2 VIZIANAGARAM VS. I. RAMA RAJU VIZIANAGARAM (APPELLANT) PAN NO.AAAHI 5431 R APPELLANT BY: SHR I G.S.S. GOPINATH DR RESPONDENT BY: SHRI C.V.S. MURTHY CA ORDER PER SHRI B R BASKARAN ACCOUNTANT MEMBER : THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 25-10-2007 PASSED BY THE LD CIT (A)-I VISAKHAPATNAM AND THEY R ELATE TO THE ASSESSMENT YEAR 2005-06. 2. THE REVENUE IS CONTESTING THE DECISION OF THE LD CIT (A) IN GRANTING RELIEF OF RS.5 90 000/- WHILE THE ASSESSEE IS CONTES TING THE ADDITION OF RS.4 55 000/- SUSTAINED BY THE LD CIT (A). 3. THE FACTS RELATING TO THE ISSUES ARE STATED IN B RIEF. THE ASSESSEE IS AN AGRICULTURIST. THE ASSESSING OFFICER RECEIVED INFORMAT ION THAT THE ASSESSEE HAS PURCHASED DEMAND DRAFTS WORTH RS.11 50 000/- IN DIFFERENT NAMES THROUGH HIS BANK ACCOUNT MAINTAINED WITH THE STATE BANK OF INDIA. THESE DDS WERE PURCHASED FOR THE PURPOSE OF PARTICIPATING IN TH E AUCTION FOR ALLOTMENT PAGE 2 OF 6 FOR EXCISE LICENSE FOR RUNNING WINE SHOPS. THE AO CAL LED EXPLANATION FROM THE ASSESSEE ON THE ABOVE SAID INFORMATION RECEIVED BY HIM. THE CASE OF THE ASSESSEE WAS THAT HE PURCHASED DDS WORTH RS.11.10 L AKHS ON BEHALF OF SOME OTHER PERSONS AT THEIR SPECIFIC REQUEST BY UTILIZING THE MONEY PROVIDED BY THEM. IN SUPPORT OF THESE STATEMENTS THE ASSESSEE FIL ED CONFIRMATION LETTERS FROM ALL THE PERSONS NUMBERING 15 ON WHOSE BEHALF THE DDS WERE CLAIMED TO HAVE BEEN TAKEN. THE AO SUMMONED ALL THE 15 PERSONS . HOWEVER ONLY 10 PERSONS APPEARED BEFORE HIM AND THEY CONFIRMED THE STATEMENTS MADE BY THE ASSESSEE. ON THE BASIS OF THE SWORN STATEMENTS AND C ONFIRMATION LETTERS FILED THE AO ACCEPTED TO THE EXTENT OF RS.2.00 LAKHS AND A DDED THE BALANCE AMOUNT OF RS.9.10 LAKHS. THE ASSESSEE HIMSELF HAD PURCHASED A DEMAND DRAFT FOR RS.80 000/- AND THE SAME WAS ADDED BY THE AO AS INC OME FROM UNDISCLOSED SOURCES. IN THE RETURN OF INCOME FILED THE ASSESSEE HAD SHOWN AGRICULTURAL INCOME OF RS.1 20 000/- FROM OUT OF 13 ACRES OF AGRICUL TURAL LAND HELD BY HIM. THE AO ACCEPTED THE AGRICULTURAL INCOME TO THE EXTE NT OF RS.65 000/- AND ADDED THE BALANCE AMOUNT OF RS.55 000/- TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TH E LD CIT (A). THE FIRST APPELLATE AUTHORITY DELETED THE ADDITION PERTAINING TO THE PERSONS WHO HAVE APPEARED BEFORE THE AO AND CONFIRMED THE ADDITION RE LATING TO THE FOLLOWING PERSONS WHO DID NOT APPEAR BEFORE THE AO: A) SHRI PASALA SURYABABU - RS. 1 00 000/- B) SHRI KILLANA SURYANARAYANA - RS. 80 000/- C) SHRI B.V. SATYANARAYANA - RS. 80 000/- D) SHRI G. RAMANA - RS. 60 000/- - ------------------ TOTAL = RS. 3 20 000/- ========= 4. THE LD CIT (A) ALSO CONFIRMED THE ADDITION OF RS.80 000/- RELATING TO THE DD PURCHASED IN THE ASSESSEES NAME AND ALSO RS.55 000/- RELATING TO THE AGRICULTURAL INCOME. AGGRIEVED BY THE ORDER PASSED BY THE LD CIT (A) BOTH THE PARTIES ARE IN APPEAL BEFORE US. PAGE 3 OF 6 5. WE HAVE HEARD THE PARTIES. IT WAS BROUGHT TO OU R NOTICE THAT IDENTICAL ISSUE WAS CONSIDERED BY THE BENCH IN SOME OTHER APPEALS ALSO. WE NOTICE THAT IN THE CASE OF BALAGAM SRINIVAS IN I TA NO.518/VIZAG/2007 THIS BENCH VIDE ITS ORDER DATED 13.11.2009 HAS DEC IDED THE ISSUE AS UNDER: 4. WE HAVE HEARD THE PARTIES AND CAREFULLY PER USED THE RECORD. WE NOTICE THAT THE LD CIT (A) HAS CONSIDERED FOLLOWING CASE LAW IN SUPPORT OF HIS DECISION: A) R. THYAGARAJ VS. CIT (239 ITR 557( (MAD.)) IN THI S CASE THE APPLICATION FORM PURCHASE OF D.D. WAS SIGNED BY THE A SSESSEE. THE COURT HELD THAT THE INFERENCE DRAWN BY THE AO TO THE EFFECT THAT THE ASSESSEE HAS PAID NECESSARY CASH FOR OBTAIN ING THE DRAFT IS NOT JUSTIFIED. B) MOHAN B. SAMTANI VS. CIT (199 ITR 370)(CAL.) IN T HIS CASE THE ASSESSEE CONSIGNED ANTIQUES AS A REPRESENTATIVE OF S TATE TRADING CORPORATION OF SIKKIM. THE DISPATCH OF THE GOODS WER E DONE ON THE ORAL INSTRUCTION OF CHOGYAL. CHOGYAL ALSO CLAIM ED OWNERSHIP OF THE ANTIQUE AND HIS CLAIM WAS NOT DISPROVED. HENCE IT WAS HELD THAT THE VALUE OF ANTIQUE CANNOT BE ADDED TO THE AS SESSEES INCOME C) CIT VS. SMT. P.K. NOORJAHAN (237 ITR 570)(SC) IN THIS CASE THE ASSESSEE WAS FOUND TO BE NOT CAPABLE ENOUGH TO EARN THE INCOME DURING THE ASSESSMENT YEAR UNDER CONSIDERATION OR W AS IN A POSITION TO EARN IT FOR A DECADE OR MORE. THE HON BLE APEX COURT HELD THAT SECTION 69 CONFERS A DISCRETION TO THE ASS ESSING OFFICER IN THE MATTER OF TREATING AN INVESTMENT AS INCOME OF THE ASSESSEE AND HENCE THE QUESTION WHETHER THE SOURCE OF INVEST MENT SHOULD BE TREATED AS INCOME OR NOT U/S 69 HAS TO BE CONSID ERED IN THE LIGHT OF FACTS OF EACH CASE. D) JAYADAYA PODDAR VS. BIBI RAGRA AND OTHERS AIR (197 4 SC 171.) _ IN CASES FALLING U/S 69A 69B AND 69C THE PHRASEOLO GY USED GOES TO SHOW THAT BEFORE ANY OF THESE SECTIONS CAN BE INVO KED THE CONDITION PRECEDENT AS TO THE EXISTENCE OF INVESTMEN T EXPENDITURE OMISSION TO STATE OR MAKING UNDERSTATE MENT OF VALUE ETC. MUST BE CONCLUSIVELY ESTABLISHED BY EVI DENCE AND/OR MATERIAL ON RECORD. (E) PRAKASH NARIAN VS. CWT (20 CTR 147) (ALL.) THE BU RDEN OF SHOWING THAT A PARTICULAR TRANSACTION IS A BENAMI A ND THE OWNER IS NOT THE REAL OWNER RESTS ON THE PERSON ASSERTING IT TO BE SO AND THIS BURDEN HAS TO BE STRICTLY DISCHARGED BY AD DUCING LEGAL EVIDENCE OF DEFINITE CHARACTER WHICH WOULD EITHER DIR ECTLY PROVE THE FACT OF BENAMI OR ESTABLISH CIRCUMSTANCES UNERRIN GLY AND REASONABLY RAISING AN INFERENCE OF THE FACT. PAGE 4 OF 6 4.1 WE NOTICE THAT THE ASSESSEE HAS FILE D CONFIRMATION LETTERS FROM ALL THE 18 PERSONS ON WHOSE BEHALF THE DDS WERE CLAIMED TO HAVE BEEN PURCHASED BY THE ASSESSEE. SUBSEQUENTLY THE ASSESSE E HAS ALSO PRODUCED 17 PERSONS AND THE AO HAS RECORDED STATEME NT FROM THEM. IN THE SWORN STATEMENT ALSO ALL THE 17 PERSONS HAVE CONFIRMED THE SUBMISSION OF THE ASSESSEE. THERE IS ALSO NO DISPUT E WITH REGARD TO THE FACT THAT THE DDS WERE UITILISED BY THESE 18 PERSON S ONLY FOR THEIR OWN PURPOSE I.E. FOR MAKING APPLICATION IN THEIR RESPE CTIVE NAMES. WE WERE ALSO INFORMED THAT THE REVENUE DID NOT CAUSE AN Y INQUIRY WITH REGARD TO THE DEMAND DRAFTS IN THE INDIVIDUAL HANDS OF THE 18 PERSONS. IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THAT ONCE INDIVIDUAL PERSONS HAVE ADMITTED THAT THE DDS WERE PURCHASED ON THEIR BEHALF AND THAT THEY HAVE ONLY USED THEM FO R THEIR OWN PURPOSE THE ONUS PLACED UPON THE ASSESSEE GETS DIS CHARGED. IN SUCH A SITUATION THE REVENUE MAY EXAMINE THE FINANCIAL STAT US OF THE INDIVIDUAL PERSONS AND THE ADDITION IF ANY IS CALL ED FOR IN THEIR RESPECTIVE HANDS. WE NOTICE THAT THE LD CIT (A) HAS ANALYSED THE ISSUE IN RIGHT PERSPECTIVE AND HAS RENDERED HIS DECISION ON A CONSPECTUS OF MATTER. HENCE WE DO NOT FIND ANY NECESSITY TO INTERFE RE IN HIS DECISION. 5.1 SIMILARLY IN THE CASE OF BUDDEPU VARA LAKSHM I IN ITA NO.15/VIZAG/2007 THIS BENCH VIDE ITS ORDER DATED 13-11-2009 HAS DE CIDED AN IDENTICAL ISSUE AS UNDER: 6. DURING THE COURSE OF HEARING A SPECIFIC QUERY W AS RAISED TO THE LD. DR I.E. WHETHER THE ASSESSING OFFICER HAS MADE ANY INVES TIGATION IN THE INDIVIDUAL HANDS OF PERSONS ON WHOSE BEHALF THE DEMAND DRAFTS WE RE PURCHASED BY THE ASSESSEE. LD. DR REPLIED IN NEGATIVE. LD DR ALSO CONFIRMED THAT ONLY THE PERSONS IN WHOSE BEHALF THE DEMAND DRAFTS WERE CLAIME D TO HAVE BEEN PURCHASED HAS APPLIED FOR OBTAINING LICENSE FOR RUNNI NG IMFL SHOPS. HENCE IT IS PROVED THAT THE DEMAND DRAFTS WERE USED BY THE RESPE CTIVE PERSONS. FURTHER ALL THE PERSONS HAVE APPEARED BEFORE THE AO AND CONFIRMED THAT THE ASSESSEE HAS ONLY FACILITATED THE PURCHASING OF DEMAND DRAFTS. ON CE THE INDIVIDUAL PERSONS HAVE ADMITTED THAT THE DEMAND DRAFTS WERE PURCHASED ON THEIR BEHALF AND THAT THEY ONLY HAVE USED THE SAID DEMAND DRAFTS FOR THEIR OWN PURPOSE IN OUR OPINION THE ONUS PLACED UPON THE ASSESSEE GETS DIS CHARGED AND THE REVENUE WAS REQUIRED TO EXAMINE THE FINANCIAL STATUS OF THE INDIVIDUAL PERSONS AND ADDITION IF ANY IS CALLED FOR IN THEIR RESPECTIVE HANDS. IN VIEW OF THE FORE GOING WE REVERSE THE ORDER OF LD. CIT(A) AND DIRECT THE AS SESSING OFFICER TO DELETE THE ADDITION OF RS.12.00 LAKHS. 6. THE DECISION OF LD CIT(A) IN DELETING THE AD DITION PERTAINING TO THE PARTIES WHO HAVE CONFIRMED THE STATEMENT OF THE ASSES SEE BY APPEARING BEFORE THE ASSESSING OFFICER IS CONSISTENT WITH THE V IEW TAKEN BY THIS BENCH IN THE ABOVE CITED CASES. HENCE WE DO NOT FIND ANY NEC ESSITY TO INTERFERE IN HIS DECISION. WITH REGARD TO THE PERSONS WHO DID NOT APPEAR BEFORE THE AO WE NOTICE THAT THEY HAVE FILED CONFIRMATION LETTERS AND THE LD AR SUBMITTED THAT PAGE 5 OF 6 THE ASSESSEE COULD NOT PRODUCE THEM BEFORE THE AO DU E TO THEIR PRE- OCCUPATION AND HENCE ONE MORE OPPORTUNITY MAY BE GI VEN TO THEM. ACCORDINGLY WE SET ASIDE THE MATTER RELATING TO RS. 3 20 000/- WHICH PERTAINS TO FOUR PERSONS CITED SUPRA TO THE FILE OF THE AO W ITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO PRODUCE THEM AN D DECIDE THE ISSUE ACCORDINGLY. 7. THE NEXT ISSUE IN ASSESSEES APPEAL IS WITH REGA RD TO THE ADDITION OF RS.80 000/-. THE EXPLANATION OF THE ASSESSEE IS THAT HE PURCHASED THE SAID DD FROM OUT OF HIS SAVINGS FROM THE AGRICULTURAL INCO ME. WITH REGARD TO THE OWNERSHIP OF 13 ACRES OF AGRICULTURAL LAND THE ASSES SEE PRODUCED COPY OF PATTADAR PASSBOOK BEFORE THE AO BUT DID NOT PRODUCE ANY INCOME AND EXPENDITURE DETAILS PERTAINING TO THE AGRICULTURAL INCOME. THE LD CIT (A) CONFIRMED THE ADDITION AS THE ASSESSEE FAILED TO PRO DUCE THE EVIDENCE WITH REGARD TO THE AGRICULTURAL INCOME AND FURTHER THE AS SESSEE DID NOT DEPOSIT THE SURPLUS AGRICULTURAL INCOME IN HIS BANK ACCOUNT. HO WEVER WE NOTICE THAT THE AVAILABILITY OF AGRICULTURAL LAND WITH THE ASSESSEE IS NOT DOUBTED WITH. THE ASSESSING OFFICER HIMSELF HAS ESTIMATED THE INCOME AT RS.65000/- PER ANNUM WITHOUT MAKING REFERENCE TO ANY OTHER DOCUMENTARY P ROOF. IN VIEW OF THE AVAILABILITY OF THE AGRICULTURAL INCOME THE POSSIB ILITY OF SAVING OF RS.80 000/- OVER THE YEARS CANNOT BE RULED OUT. ACCORDINGLY WE REVERSE THE ORDER OF THE LD CIT (A) ON THIS ISSUE AND DIRECT THE AO TO DELET E THE SAID ADDITION OF RS.80 000/-. 8. THE NEXT ISSUE IN THE APPEAL OF THE ASSESSEE REL ATES TO THE ADDITION OF RS 55 000/- OUT OF THE AGRICULTURAL INCOME DECLARED BY HIM. AS STATED EARLIER THE ASSESSEE DECLARED THE AGRICULTURAL INCOME OF RS .1 20 000/- IN HIS RETURN OF INCOME. HOWEVER THE AO ESTIMATED THE AGRICULTURA L INCOME AT RS.65 000/- AND ADDED THE BALANCE AMOUNT OF RS.55 000/- AS INCOM E FROM OTHER SOURCES. WE NOTICE FROM THE ASSESSMENT ORDER THAT THE ASSESS EE ORIGINALLY CLAIMED IN THE AGRICULTURAL INCOME OF RS.1.00 LAKH PER ANNUM. H OWEVER IN THE RETURN OF INCOME HE DECLARED AN AGRICULTURAL INCOME OF RS.1 2 0 000/-. IN VIEW OF THE ABOVE WE DIRECT THE AO TO ADOPT THE AGRICULTURAL IN COME AT RS.1.00 LAKH AND TREAT THE BALANCE AMOUNT OF RS.20 000/- AS INCOME FR OM OTHER SOURCES. PAGE 6 OF 6 9. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 28-01-2010 SD/ - SD/ - (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM 28 TH JANUARY 2010. COPY TO 1 SHRI I. RAMARAJU RAJEEVPETA S.KOTA VIZIANAGARAM 2 ITO WARD - 2 KOPPU GURANNA BUILDINGS SIDDARTHNAGAR VIZIANAGARAM 3 THE CIT (A) - I V ISAKHAPATNAM 4 THE CIT VISAKHAPATNAM 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM