Y.R. Venugopal, Tumkur v. DCIT, Tumkur

ITA 1007/BANG/2009 | 2007-2008
Pronouncement Date: 30-03-2010 | Result: Dismissed

Appeal Details

RSA Number 100721114 RSA 2009
Bench Bangalore
Appeal Number ITA 1007/BANG/2009
Duration Of Justice 4 month(s) 27 day(s)
Appellant Y.R. Venugopal, Tumkur
Respondent DCIT, Tumkur
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-03-2010
Date Of Final Hearing 08-03-2010
Next Hearing Date 08-03-2010
Assessment Year 2007-2008
Appeal Filed On 03-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE DR. O.K NARAYANAN VICE PRESIDENT AND SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER ITA NO.1007 /BANG/20 09 (ASST. YE AR -2007-08) SHRI Y.R VENUGOPAL CONTRACTOR GARDEN ROAD MARUTHINAGAR TUMKUR. . APPELLANT VS. THE DY. COMMISSIONER OF INCOME-TAX CIRCLE-1 TUMKUR. . RESPONDENT APPELLANT BY : SHRI H.N KHINCHA CHARTERED ACCOU NTANT RESPONDENT BY : SHRI JASON P BOAZ COMMISSIONER OF INCOME-TAX SMT. JACINTA ZIMIK VASHAI ADDL. COMMISSIONER OF INCO ME-TAX O R D E R PER DR. O.K NARAYANAN VICE PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2007-08. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-II AT BANGALORE DATED 11.09.2009 AND ARISE S OUT OF THE ASSESSMENT COMPLETED U/S 144 OF THE INCOME-TAX ACT 1961. ITA NO.1007/B/09 2 2. THE ASSESSEE IS A CIVIL CONTRACTOR. HE FILED TH E RETURN OF INCOME FOR RS.16 93 660/-. THE ASSESSING OFFICER HAS MADE CERTAIN ADDITIONS TO THE INCOME RETURNED BY THE ASSESSEE AGAINST THE UNPROVED CREDIT BALANCES REFLECTED IN THE BOOKS OF ACCOUNT AS ON TH E LAST DAY OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. HE MADE AN ADDITION OF RS.5 68 000/- AGAINST THE BOGUS LOAN CREDITORS. HE MADE ANOTHER ADDITION OF RS.18 88 000/- REPRESENTIN G THE OUTSTANDING BALANCES IN THE NAME OF THREE SUNDRY CREDITORS NAME LY SHRI S.P ANAND SHRI SATISH AND SHRI RAJA SHEKHAR ON THE GRO UND THAT THE CREDITORS HAVE DENIED ANY SUCH AMOUNT PAYABLE BY TH E ASSESSEE TO THEIR CREDIT. THE ASSESSING OFFICER HAS FURTHER MA DE AN ADDITION OF RS.22 70 000/- ON THE GROUND THAT THE ADDRESSES OF THE CREDITORS WERE NOT FURNISHED AND THEREFORE BONAFIDES OF THOSE CR EDIT BALANCES COULD NOT BE VERIFIED. THUS IN TOTAL HE MADE AN ADDITIO N OF RS.47 26 000/- TOWARDS UNPROVED CREDITS AND DETERMINED THE TAXABLE INCOME OF THE ASSESSEE AT RS.64 19 660/-. 3. THE ASSESSMENT WAS TAKEN UP IN FIRST APPEAL TO A GITATE SEVERAL ADDITIONS MADE BY THE ASSESSING AUTHORITY. THE CIT (A) CONFIRMED THE ADDITIONS OF RS.5 68 000/- AND RS.18 88 000/- AFTER CONFIRMING THE FINDINGS MADE BY THE ASSESSING AUTHORITY AND AFTER EXAMINING THE ITA NO.1007/B/09 3 VARIOUS CONTENTIONS RAISED BY THE ASSESSEE IN DETAI L. HE ALSO CONFIRMED THE ADDITION OF RS.22 70 000/-. 4. IN ADDITION TO CONFIRMING OF THE ABOVE THREE SET S OF ADDITIONS THE CIT(A) FURTHER DIRECTED THE ASSESSING OFFICER T O CONSIDER A FURTHER ADDITION OF RS.6 48 500/-. THE ASSESSING OFFICER I N FACT IN HIS ASSESSMENT ORDER HAS HELD THAT AN AMOUNT OF RS.6 48 500/- WAS TO BE DISALLOWED U/S 40A(IA) BUT WHILE COMPUTING THE TAXA BLE INCOME THIS AMOUNT WAS OMITTED BY THE ASSESSING OFFICER. THE C IT(A) OBSERVED THAT THE ASSESSEE HAS NOT BROUGHT ON RECORD ANY EVI DENCES TO CONTROVERT THE FINDINGS AND OBSERVATION OF THE ASSE SSING OFFICER IN RESPECT OF THE SAID AMOUNT OF RS.6 48 500/-. THEREF ORE THE CIT(A) HELD THAT THIS AMOUNT ALSO TO BE ADDED TO THE INCO ME OF THE ASSESSEE. HE HAS NOT ISSUED ANY SPECIFIC NOTICE TO ENHANCE TH E INCOME BY THE SAID AMOUNT OF RS.6 48 500/- FOR THE REASON THAT HE WAS ONLY RECTIFYING THE MISTAKE APPARENT IN THE ORDER PASSED BY THE ASS ESSING AUTHORITY. 5. IN SHORT THE CIT(A) HAS NOT ONLY CONFIRMED THE QUANTITATIVE ADDITION OF RS.47 26 000/- BUT ALSO ENHANCED THE AD DITION BY A FURTHER SUM OF RS.6 48 500/-. THE ASSESSEE IS AGGRIEVED AND THEREFORE THIS SECOND APPEAL BEFORE US. ITA NO.1007/B/09 4 6. THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEA L READ AS BELOW: (I) THE ORDER PASSED U/S 143(3) OF THE I.T ACT 1961 BY THE ASSESSING OFFICER WAS NOT IN ACCORDANCE WITH THE PROVISIONS LAID DOWN IN LAW AND BAD IN LAW IS LIABLE TO BE QUASHED AND THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS INSTEAD OF QUASHING THE ORDER ERRED IN CONFIRMING THE SAME. (II) THE LEARNED CIT(A) HAS ALSO ERRED IN ENHANCING THE INCOME. THE ENHANCEMENT OF INCOME BY CIT(A) BEING NOT IN ACCORDANCE WITH LAW AND IN ANY CASE BEING ERRONEOUS ON FACTS IS TO BE DELETED. (III) IN ANY CASE AND WITHOUT PREJUDICE THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT THE LOAN/SUNDRY CREDITORS ARE BOGUS/NOT GENUINE DESPITE THE FACT THAT MOST OF THE CREDITORS SUMMONED HAVE CONFIRMED THE BUSINESS NEXUS WITH THE APPELLANT AND ALSO THE FACTS OF GIVING LOAN. ON PROPER APPRECIATION OF FACTS AND LAW APPLICABLE THE ENTIRE ITA NO.1007/B/09 5 LOAN/SUNDRY CREDITORS BEING GENUINE IS TO BE CONSIDERED AS SUCH AND ADDITIONS MADE ON THIS COUNT IS TO BE DELETED. (IV) THE LEARNED ASSESSING OFFICER HAS ERRED IN PASSING THE ORDER WITHOUT PROVIDING PROPER OPPORTUNITY TO CROSS EXAMINE OF WITNESSES/CREDITORS. THE ORDER PASSED WITHOUT GIVING A PROPER OPPORTUNITY BECOMES BAD IN LAW IS LIABLE TO BE QUASHED. (V) THE LOWER AUTHORITIES HAVE ERRED IN DISALLOWING CERTAIN EXPENDITURE U/S 40(A)(IA) OF I.T ACT HOLDING THAT THE APPELLANT IS LIABLE TO DEDUCT TAX AT SOURCE ON THE ALLEGED SUB-CONTRACTS. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW APPLICABLE THE DISALLOWANCE U/S 40(A)(IA) IS NOT CALLED FOR AND THE DISALLOWANCE MADE UNDER THIS SECTION IS TO BE DELETED. (VI) THE APPELLANT DENIES THE LIABILITIES TO PAY INTEREST U/S 234B OF I.T ACT. THE INTEREST HAVING BEEN LEVIED ERRONEOUSLY IS TO BE DELETED. ITA NO.1007/B/09 6 7. WE HEARD SHRI H.N KHINCHA THE LEARNED CHARTERED ACCOUNTANT APPEARING FOR THE ASSESSEE AND SHRI JASON P BOAZ L EARNED COMMISSIONER OF INCOME-TAX AND SMT. JACINTA ZIMIK K VASHAI THE LEARNED ADDL. COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENUE. 8. IN RESPECT OF THE LOAN CREDITORS AND BOGUS LOAN CREDITS OF RS.5 68 000/- THE AO HAS OBSERVED IN THE ASSESSMEN T ORDER THAT THREE PERSONS VIZ. S/SHRI RAMAIAH SETTY K SUDHIR AND CHI KKGANGANNA HAD NO CONNECTION WITH THE BUSINESS CARRIED ON BY THE A SSESSEE AND THOSE THREE PERSONS HAVE MADE CASH LOANS TO THE ASSESEE T OTALING TO RS.5 68 000/-. THE ASSESSING OFFICER HAS ALSO OBSE RVED THAT THE CASH LOANS WERE PAID TO THE CREDITORS AFTER 31.3.07. I T IS IN RESPECT OF THESE CASH LOANS THE ASSESSING OFFICER HAS MADE DETAILED ENQUIRY. IN THE CASE OF SHRI RAMAIAH SETTY THE EXPLANATION WAS TH AT HE HAD GIVEN A LOAN OF RS.60 000/- TO THE ASSESSEE IN SEVERAL OCC ASIONS. WHERE AS SHRI K SUDHIR HAS STATED THAT HE HAS GIVEN INTEREST FREE LOAN OF RS.3 83 000/- TO THE ASSESEE AND THE SOURCE WAS AGR ICULTURAL INCOME. SHRI CHIKAGANGANNA STATED THAT A LOAN OF RS.1 25 00 0/- WAS GIVEN TO THE ASSESEE ON FRIENDSHIP. IN RESPECT OF THIS ISSU E THE CIT(A) HAS CALLED FOR A REMAND REPORT. WHILE EXAMINING THE SOU RCES AS PAST ITA NO.1007/B/09 7 SAVINGS AND AGRICULTURAL INCOME IT WAS TURNED OUT IN THE ENQUIRY THAT THE CREDITORS DID NOT REMEMBER THE PARTICULARS OF A LLEGED LOANS GIVEN TO THE ASSESSEE. NO DOCUMENTARY EVIDENCES WERE ALS O PRODUCED BEFORE THE ASSESSING AUTHORITY. IT WAS LATER ON SU BMITTED BEFORE THE ASSESSING AUTHORITY THAT THE CREDITS WERE OF GOODS SUPPLIED AND SERVICES RENDERED. BUT NO DOCUMENTARY EVIDENCES LI KE BILLS VOUCHERS WERE PRODUCED TO PROVE THE SUPPLY OF GOODS AND REND ERING OF SERVICES. 9. ON GOING THROUGH THE ABOVE FACTS AND CIRCUMSTANC ES OF THE CASE WE FIND THAT THE ASSESSEE HAS NOT GIVEN CONVI NCING EXPLANATION REGARDING THE NATURE OF CREDITS APPEARING IN THE BO OKS OF ACCOUNT. AT ONE STAGE HE HAS STATED THAT THE LOANS WERE CASH L OANS WHEREAS THE CREDITORS HAVE STATED THAT THE LOANS WERE FOR GOODS SUPPLIED AND SERVICES RENDERED. NO DOCUMENTARY EVIDENCES WERE P RODUCED EITHER FOR CASH LOANS IF SO OR IN RESPECT OF GOODS SUPPLI ED AND SERVICES RENDERED. THE SO CALLED CREDITORS DID NOT HAVE IDE A ABOUT THE DETAILS AND THE PARTICULARS OF THE LOAN. NO CONVINCING PRO OF REGARDING THE SOURCE OF INCOME AVAILABLE IN THE HANDS OF THE CRED ITORS WERE PRODUCED. IN THESE CIRCUMSTANCES THE EXPLANATIONS OFFERED BY THE ASSESSEE REMAINED AS EXPLANATIONS FOR SELF CONSUMPT ION AND WE HOLD ITA NO.1007/B/09 8 THAT THE CREDIT HAS NOT BEEN PROVED BY THE ASSESSEE . THEREFORE WE CONFIRM THE ADDITION AND AGREE WITH THE FINDINGS OF THE CIT(A). 10. THE NEXT ADDITION IS OF RS.18 88 000/- RELATING TO THE SUNDRY CREDITORS. THE SUNDRY CREDITORS WERE S/SHRI S.P AN AND SATISH AND RAJASHEKAR. SHRI S.P ANAND STATED BEFORE THE ASSES SING OFFICER THAT NO CREDIT BALANCE WAS PAYABLE TO HIM BY THE ASSESSE E AS ON 31.3.07 AND WHENEVER HE HAD SUPPLIED MATERIAL TO THE ASSESS EE PAYMENTS WERE IMMEDIATELY MADE. HE FURTHER STATED THAT ON THE O THER HAND HE HAD AVAILED LOANS FROM THE ASSESSEE FROM TIME TO TIME. SHRI SATISH ALSO DENIED ANY SUCH CREDIT BALANCES IN HIS FAVOUR. SHR I RAJASHEKAR ALSO REPORTED IN THE SAME MANNER. WHEN THE CREDITORS HA VE DENIED THE OUTSTANDING BALANCES SHOWN BY THE ASSESSEE IN THEIR FAOVUR AND THE ASSESSEE DOES NOT HAVE ANY EVIDENCES TO REBUT THE S TATEMENTS MADE BY THE CREDITORS AND THERE WAS NO PROOF TO SHOW THE MO VEMENT OF FUNDS FROM ALLEGED CREDITORS TO THE ASSESSEE IT IS VERY DIFFICULT TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE CREDITS WERE GE NUINE. THE LOWER AUTHORITIES ARE JUSTIFIED IN ADDING THE AMOUNT OF R S.18 88 000/- AS THOSE AMOUNTS REMAINED UNEXPLAINED. THIS ADDITION IS ALSO THEREFORE CONFIRMED. ITA NO.1007/B/09 9 11. THE THIRD ISSUE IS IN RESPECT ADDITION OF RS.22 70 000/-. 12. THE AMOUNT OF RS.22 70 000/- RELATED TO THE N INE PERSONS. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCES BEFORE THE ASSESSING AUTHORITY TO EXPLAIN AND PROVE THE CREDITS FROM THE SE PERSONS. IF THEY WERE CREDITORS FOR GOODS SUPPLIED THE ASSESSEE CO ULD HAVE PRODUCED BILLS VOUCHERS BOOKS OF ACCOUNT AND OTHER EVIDENC ES MAINTAINED IN THE ORDINARY COURSE OF BUSINESS. BEFORE THE CIT(A) THE ASSESSE HAS PRODUCED CONFIRMATORY LETTERS. BUT THOSE CONFIRMA TION LETTERS DO NOT HAVE ADDRESS OF THE CREDITORS DETAILS REGARDING TH E DATE AND MODE OF PAYMENTS AND OTHER RELEVANT INFORMATION. SO WITHO UT MUCH SAYING IT IS EVIDENT THAT THESE CREDITORS HAVE NOT BEEN PROVE D. THEREFORE THIS ADDITION IS ALSO JUSTIFIED AND ACCORDINGLY CONFIRME D. 13. THE REMAINING ISSUE IS THE SUGGESTED ADDITION O F RS.6 48 500/- MADE BY THE CIT(A). 14. AS RIGHTLY POINTED OUT BY THE CIT(A) IT IS NOT AN ENHANCEMENT MADE BY THE CIT(A) THROUGH A FRESH ADDITION. THE A SSESSING OFFICER HIMSELF HAS PROPOSED THE ADDITION IN THE BODY OF TH E ASSESSMENT ORDER. BUT HE MADE AN ARITHMETICAL MISTAKE IN NOT CARRYIN G OVER THE AMOUNT ITA NO.1007/B/09 10 TO THE COMPUTATION PORTION OF THE ASSESSMENT ORDER. THE CIT(A) POINTED OUT THAT THIS MISTAKE APPARENT FROM THE ASS ESSMENT ORDER AND SOUGHT THE EXPLANATION OF THE ASSESSEE. AS HAPPENED IN THE CASE OF OTHER ADDITIONS HERE ALSO THE ASSESSEE COULD NOT P ROVE THAT THOSE CREDITORS WERE GENUINE. ACCORDINGLY THE CIT(A) DI RECTED THE ASSESSING OFFICER TO INCLUDE THOSE AMOUNT IN THE C OMPUTATION OF TOTAL INCOME. THEREFORE WE AGREE WITH THE CIT(A) THAT T HIS IS NOT A CASE OF ENHANCEMENT BUT ONLY A CASE OF RECTIFICATION OF MIS TAKE APPARENT IN THE ASSESSMENT ORDER. THIS RECTIFICATION HAS BEEN CARRIED OUT BY THE CIT(A) AFTER HEARING THE ASSESSEE. THEREFORE WE F IND NO INVALIDITY IN THE DIRECTION GIVEN BY THE CIT(A). 15. IN SHORT AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER AN D CONFIRMED BY THE CIT(A) ALL RELATED TO UNPROVED CREDIT BALANCES. SI NCE THE CREDIT BALANCE ARE NOT PROVED EVEN PRIMA FACIE THERE IS N O MERIT IN THE CONTENTIONS RAISED BY THE ASSESSEE. ACCORDINGLY W E CONFIRM THE ORDER OF THE CIT(A). 16. IN RESULT THE APPEAL FILED BY THE ASSESSEE I S DISMISSED. ITA NO.1007/B/09 11 ORDER PRONOUNCED ON 30TH DAY OF MARCH 2010 AT BANGALORE. SD/- SD/- (SHAILENDRA KUMAR YADAV) (DR. O.K NARAYA NAN) JUDICIAL MEMBER VICE PR ESIDENT VMS. COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF 7..GF ITAT NEW DELHI. BY ORDE R ASST. REGISTRAR ITAT BANGALORE.