Sri Emmadi Ramesh, Nalgonda District v. ITO, Nalgonda

CO 52/HYD/2010 | 2005-2006
Pronouncement Date: 07-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 5222523 RSA 2010
Assessee PAN AAHPE6679A
Bench Hyderabad
Appeal Number CO 52/HYD/2010
Duration Of Justice 3 month(s) 20 day(s)
Appellant Sri Emmadi Ramesh, Nalgonda District
Respondent ITO, Nalgonda
Appeal Type Cross Objection
Pronouncement Date 07-01-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 07-01-2011
Assessment Year 2005-2006
Appeal Filed On 17-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A' HYDERABAD BEFORE SHRI G.C.GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.455/HYD/10 : ASSTT. YE AR 2005-06 INCOME-TAX OFFICER NALGONDA. V/S. SHRI EMMADI RAMESH CHITYALA NALGONDA DIST. ( PAN AAHPE6679 A ) (APPELLANT) (RESPONDENT) AND CROSS OBJECTION NO.52/HYD/2010 (IN ITA NO.455/HYD/10) : ASSTT. YEAR 2005-06 SHRI EMMADI RAMESH CHITYALA NALGONDA DIST. ( PAN AAHPE6679 A ) V/S. INCOME-TAX OFFICER NALGONDA. (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI K.V.N.CHARYA ASSESSEE BY : SHRI A.V.RAGHURAM O R D E R PER G.C.GUPTA VICE PRESIDENT: THIS APPEAL BY THE REVENUE AND THE CROSS-OBJECTION BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06 ARE DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS). SINCE COMMON ISSU ES ARE INVOLVED THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDAT ED ORDER. REVENUE'S APPEAL: ITA NO.455/HYD/10 : ASSTT. YEAR 2005-06 2. GROUNDS OF THE REVENUE IN THIS APPEAL READ AS UNDE R- '1. THE ORDER OF THE CIT(A) IS ERRONEOUS ON FACTS A ND IN LAW. ITA NO.455./HYD/10 & CO NO.52/HYD/2010 SHRI EMMADI RAMESH CHITYALA NALGONDA DIST. 2 2. THE CIT(A) ERRED IN GIVING CREDIT TO CASH CREDITS I N THE NAME OF MINOR CHILDREN WITHOUT VERIFYING THE GENUINENESS AN D CREDITWORTHINESS IN SUCH CREDITS. 3. THE CIT(A) ERRED ON FACTS GIVING CREDIT TO THE AMOU NTS WHICH ARE CLAIMED TO BE WITHDRAWN BY SRI NARENDER REDDY A ND SRI RAVI KUMAR AND RE-DEPOSITED THROUGH THE ASSESSEE DID NOT PRODUCE ANY COGENT EVIDENCE IN THIS REGARD. 4. THE CIT(A) ERRED IN GIVING CREDIT TO CLAIM OF AVAIL ABILITY OF CASH OUT OF THE WIRTHDRAWAL FROM M/S. E.RAJAIAH DISTRIBU TORS CHITYAL EVEN WHEN THE ASSESSEE COULD NOT PRODUCE ANY COGENT PROOF OF AVAILABILITY OF SUCH CASH. 5. THE CIT(A) ERRED IN GIVING CASH DEPOSITS OF RS.17 5 1 751/- ON THE ABOVE THREE POINTS WITHOUT THE ASSESSEE PRODUC ING ANY COGENT PROOF. ' 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS RELI ED ON THE ORDER OF THE ASSESSING OFFICER. HE REFERRED TO THE RELEVANT PA RAS OF THE ASSESSMENT ORDER IN SUPPORT OF HIS ARGUMENTS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITIONAL EVIDENCE IN SUPPORT OF T HE CASH CREDITS IN THE NAMES OF MINOR CHILDREN OF THE ASSESSEE BEING CONFIRMATIO N LETTERS WERE FORWARDED BY THE CIT(A) TO THE ASSESSING OFFICER FOR EXA MINING THE SAME AND THE CIT(A) HAS RECORDED IN PARA 6.2 OF THE APPELL ATE ORDER THAT THE ASSESSING OFFICER HAS NOT MADE ANY ADVERSE COMMENTS WITH REF ERENCE TO THE SAME. HE RELIED ON THE ORDER OF THE CIT(A). THE LE ARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE CIT(A) HAS RECORDED IN T HE APPELLATE ORDER THAT DURING THE REMAND PROCEEDINGS SWORN STATEMENTS OF SHRI RAVI SHANKAR AND SHRI NARENDER REDDY WERE RECORDED BY THE ASSESSING O FFICER AND THEY HAVE AFFIRMED THAT THEY HAVE WITHDRAWN CASH ON THE ASSE SSEE'S BANK ACCOUNT ON BEHALF OF THE ASSESSEE AND HAVE GIVEN THE SAME TO THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT T HE CIT(A) HAS RECORDED DETAILED REASONING FOR DELETING THE ADDITIO N ON ACCOUNT OF CASH AVAILABILITY OUT OF WITHDRAWALS FROM M/S. E.RAJAIAH DISTRIBUTORS. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND T HAT THE ASSESSING OFFICER HAS SUBMITTED A REMAND REPORT TO THE CIT (A) AND THE ITA NO.455./HYD/10 & CO NO.52/HYD/2010 SHRI EMMADI RAMESH CHITYALA NALGONDA DIST. 3 CIT(A) HAS PASSED A WELL REASONED SPEAKING ORDER ON THE ISSUE. THE CIT(A) HAS RECORDED THAT IN THE REMAND REPORT FURNISHED BY TH E ASSESSING OFFICER HE HAS NOT MADE ANY ADVERSE COMMENTS WITH REFERENCE TO THE CASH CREDITS SHOWN IN THE NAMES OF THE MINOR CHILDREN OF THE ASSESSEE. LIKEWISE THE CIT(A) HAS RECORDED THAT AS MAY BE SEEN FROM THE REMAN D REPORT OF THE ASSESSING OFFICER BOTH SHRI RAVI SHANKAR AND SHRI NARE NDER REDDY HAVE CONFIRMED IN THEIR SWORN STATEMENT THAT THEY HAVE WITH DRAWN CASH FROM ASSESSEE'S BANK ACCOUNT ON BEHALF OF THE ASSESSEE AND HAVE GI VEN THE SAME TO THE ASSESSEE. WE FIND THAT THE CIT(A) HAS DETAILE D VARIOUS WITHDRAWALS WITH REGARD TO THE ISSUE OF AVAILABILITY OF CASH OUT OF THE WITHDRAWALS FROM M/S. E.RAJAIAH DISTRIBUTORS AND HE HAS ALLOWED THE CASE OF THE ASSESSEE WITH REGARD TO A SUM OF RS.5 LAKHS WHICH WAS WITHDRAWN ON 3 1.3.2004. WITH REGARD TO THE BALANCE AMOUNT OF RS.4 75 009 THE ADD ITION HAS BEEN CONFIRMED BY CIT(A) AND IT IS THE SUBJECT MATTER OF CRO SS OBJECTION FILED BY THE ASSESSEE WHICH WILL BE CONSIDERED SEPARATELY. THER E BEING NO MISTAKE IN THE ORDER OF THE CIT(A) WITH REGARD TO THE RELIE F ALLOWED BY THE CIT(A) WE HOLD THAT NO INTERFERENCE WITH THE ORDER OF THE CIT( A) IS CALLED FOR. IT IS ACCORDINGLY CONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE REJECTED. ASSESSEE'S CROSS OBJECTION NO.52/HYD/2010(IN ITA NO.455/HYD/10) : ASSTT. YEAR 2005-06 5. THE FIRST GROUND OF THE ASSESSEE IS AS UNDER- ' THE LEARNED CIT(A) FAILED TO APPRECIATE THE FAC T THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 09.01.2007 V OLUNTARILY AND NOT IN RESPONSE TO NOTICE U/S. 142(1) AND THERE BY ERRED IN HOLDING THAT CONVERSION OF THE CASE INTO SCRUTINY I S VALID.' 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FILED HIS RETURN OF INCOME ON 9.1.2007 VOLUNTARILY AND NOT IN RESPONSE TO NOTICE UNDER S.142(1) OF THE ACT AND THEREFORE CONVE RSION OF THE CASE INTO SCRUTINY WAS NOT VALID. THE LEARNED DEPARTMENTAL REPR ESENTATIVE REFERRED ITA NO.455./HYD/10 & CO NO.52/HYD/2010 SHRI EMMADI RAMESH CHITYALA NALGONDA DIST. 4 TO PARA 5.3 OF THE ORDER OF THE CIT(A) AND SUBMITTE D THAT THE ASSESSING OFFICER HAS ISSUED NOTICE UNDER S.142(1) OF THE ACT ON TH E BASIS OF AIR INFORMATION IN RESPECT OF THE ASSESSEE AND IN RESPONSE THER ETO THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR 2005-06 ON 9.1.2007. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND TH AT THE CIT(A) HAS CLEARLY RECORDED THAT THE ASSESSING OFFICER HAS ISSUED NOTICE UNDER S.142(1) OF THE ACT TO THE ASSESSEE ON THE BASIS OF AIR INFORMATION IN RESPECT OF THE ASSESSEE RELEVANT TO THE FINANCIAL YEAR 2004-05 AND IN RESPONSE THERETO THE ASSESSEE HAS FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 ON 9.1.2007 DECLARING AN INCOME O F RS.1 42 470. THE ASSESSEE COULD NOT PRODUCE ANY MATERIAL TO CONTROVERT THE FINDING RECORDED BY THE CIT(A) ON THIS ISSUE. ACCORDINGLY WE FI ND NO MERIT IN THE GROUND NO.1 OF THE ASSESSEE WHICH IS ACCORDINGLY REJECTED. 8. GROUND NO.2 OF THE ASSESSEE IN HIS CROSS-OBJECTION IS A S UNDER- ' THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT THAT THE DEPOSITS IN BANK IN APRIL 2004 ARE FROM THE WITHDRA WALS BY THE ASSESSEE FROM PARTNERSHIP FIRM WHICH IS CONFIRMED AND THEREBY ERRED IN SUSTAINING ADDITIONS OF RS.4 75 009.' 9. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS AN OPENING BALANCE OF RS.9 75 009 ON 1.4.2004 WHICH W AS EXPLAINED TO THE ASSESSING OFFICER TO BE OUT OF WITHDRAWALS MADE BY THE ASSE SSEE FROM HIS CAPITAL ACCOUNT FROM 30.7.2003 TO 31.3.2004 TOTALLING TO RS.11 60 000. HE SUBMITTED THAT THE CIT(A) ACCEPTED THE SOURCE TO THE E XTENT OF RS.5 LAKHS WITHDRAWN ON THE LAST DAY OF THE PREVIOUS YEAR I.E. 31.3.2004 AND DID NOT GIVE ANY CREDIT FOR THE WITHDRAWALS MADE FROM 30.7.20 03 TO 31.10.2003. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT A PERSON WITHDRAWS MONEY ONLY WHEN HE IS IN DIRE NECESSITY OF THE SAME AN D IT IS BEYOND ITA NO.455./HYD/10 & CO NO.52/HYD/2010 SHRI EMMADI RAMESH CHITYALA NALGONDA DIST. 5 HUMAN PROBABILITY THAT SOMEBODY WILL MAKE WITHDRAWAL FOR THE PURPOSE OF ACCUMULATING THE SAME. HE SUBMITTED THAT THE ASSESSEE COULD NOT EXPLAIN THE REASON FOR THE WITHDRAWALS MADE BY HIM WITH REGA RD TO THE CASH WITHDRAWALS OF RS.6 60 000 ON DIFFERENT DATES FROM 30 .7.2003 TO 31.10.2003. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU SED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND THAT THE CIT(A) HAS RECORDED THAT THE ASSESSEE HAS FURNISHED COPY OF THE RETU RN OF INCOME OF M/S. EMMADI RAJAIAH DISTRIBUTORS FILED FOR THE ASSESSMENT YEAR 2004-05. IN THE ANNEXURE OF THE SAID RETURN ON PAGE 57 THERE WA S CAPITAL ACCOUNT OF THE ASSESSEE. ON THE DEBIT SIDE OF THE SAID ACCOUNT WITHDRAW ALS TOTALING TO RS.11 60 000 ON FIVE DIFFERENT DATES FROM 30.7.2003 T O 31.3.2004 ARE MENTIONED. THE CIT(A) HAS ACCEPTED THE SOURCE OF RS.5 L AKHS OUT OF THE OPENING BALANCE OF RS.9 75 009 ON 1.4.2004 ON THE G ROUND THAT THE AMOUNT OF RS. 5 LAKHS WHICH WAS WITHDRAWN JUST ONE DAY EARLIE R I.E. ON 31.3.2004 ALONE COULD BE EXPECTED TO BE AVAILABLE WITH THE ASSESSE E. REGARDING THE BALANCE AMOUNT OF RS.4 75 009 OUT OF THE OPENING BAL ANCE THE CIT(A) HELD THAT AS PER NORMAL HUMAN PROBABILITY A PERSON WITHDR AWS MONEY WHENEVER THERE IS NEED OR URGENCY FOR THE SAME AND DOES NOT MAKE WITHDRAWAL JUST FOR THE PURPOSE OF ACCUMULATING THE SAME. THE CIT(A) CONCLUDE D THAT THE OTHER WITHDRAWALS MADE TOTALING TO RS.6 60 000 FROM 30.7.20 03 TO 31.10.2003 MUST HAVE BEEN SPENT BY THE ASSESSEE BEFORE MARCH 2004. WE FIND THAT THERE IS NO SUCH PRESUMPTION THAT A PERSON WITHDRAWS MONE Y ONLY WHEN THERE IS DIRE NEED FOR THE SAME AND THAT THE MONEY WI THDRAWN MUST HAVE BEEN SPENT BY HIM BEFORE THE END OF THE RELEVANT ACCOU NTING YEAR. THERE IS NO MATERIAL BROUGHT ON RECORD TO SUGGEST THAT THE ASSESSE E HAS SPENT THE AMOUNTS WITHDRAWN ON VARIOUS DATES FROM 30.7.2003 TO 3 1.10.2003 TOTALLING TO RS.6 60 000. AS PER THE HUMAN PROBABILITY IT CAN BE ASSUMED THAT SOME PORTION OUT OF THE WITHDRAWALS MADE MAY HAVE BEEN SPENT BY THE ASSESSEE FOR HIS PERSONAL PURPOSES. IN THE ABSENCE OF ANY EVIDEN CE TO INDICATE THAT ITA NO.455./HYD/10 & CO NO.52/HYD/2010 SHRI EMMADI RAMESH CHITYALA NALGONDA DIST. 6 THE ASSESSEE HAS UTILIZED THE AMOUNTS WITHDRAWN FOR SOME OF HIS PERSONAL PURPOSES AND ALSO THAT THE ASSESSEE HAS CLAIMED THAT HE HA S ACCUMULATED THE AMOUNTS OF WITHDRAWALS MADE WE HOLD THAT ENDS OF JUSTICE SHALL BE MET IF THE ADDITION ON ACCOUNT OF UNEXPLAINED SOURCE FOR TH E OPENING BALANCE AS ON 1.4.2004 IS RESTRICTED TO RS.1-LAKH AS AGAINST RS.4 75 009 SUSTAINED BY THE CIT(A). ACCORDINGLY GROUND NO.2 OF THE ASSESSEE IS PA RTLY ALLOWED. 11. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED AND CROSS- OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 7.1.2011 SD/- SD/- (CHANDRA POOJARI) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 7TH JANUARY 2011 COPY FORWARDED TO: 1. SHRI EMMADI RAMESH H.NO.11-128/2 MAIN ROAD CHITYAL NALGONDA DIST. 2. INCOME TAX OFFICER NALGONDA 3. COMMISSIONER OF INCOME-TAX(APPEALS)-VI HYDERABAD. 4. COMMISSIONER OF INCOME-TAX VI HYDERABAD 5. THE DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD. B.V.S