Sri P.Sathi Reddy, Hyderabad v. ITO, Hyderabad

ITA 1246/HYD/2008 | 2003-2004
Pronouncement Date: 03-09-2010 | Result: Partly Allowed

Appeal Details

RSA Number 124622514 RSA 2008
Assessee PAN AEWPP0624D
Bench Hyderabad
Appeal Number ITA 1246/HYD/2008
Duration Of Justice 2 year(s) 1 month(s) 27 day(s)
Appellant Sri P.Sathi Reddy, Hyderabad
Respondent ITO, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 03-09-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 03-09-2010
Date Of Final Hearing 11-08-2010
Next Hearing Date 11-08-2010
Assessment Year 2003-2004
Appeal Filed On 07-07-2008
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.1246/HYD/08 : ASSTT. YEAR 2003-04 SHRI P.SATHI REDDY HYDERABAD ( PAN AEWPP 0624 D ) V/S. INCOME-TAX OFFICER WARD 9(1) HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.RAMA RAO RESPONDENT BY : SMT. V.MADHUVANI O R D E R PER G.C.GUPTA VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-04 IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME- TAX (APPEALS). 2. GROUND OF APPEAL NO.1 OF THE ASSESSEE IS GENERAL IN NATURE AND NEEDS NO ADJUDICATION. GROUND OF APPEAL NO.2 OF THE ASSESSEE READS AS UNDER- 'THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.9 LAKHS BEING THE AMOUNT DEPOSITED WITH MAHANAGAR CO-OP URBAN BANK AS THE IN COME OF THE APPELLANT. THE LEARNED COMMISSIONER OF INC OME- TAX(APPEALS) OUGHT TO HAVE CONSIDERED THE EXPLANATI ON OFFERED AND OBSERVED THAT THE AMOUNT IS NOT TAXABLE .' 3. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS RAISED LOANS FROM FOUR CREDITORS TOTALING TO RS. 9 LAKHS AND THE SAME HAS BEEN ASSESSED AS INCOME IN THE HANDS OF TH E ASSESSEE. HE SUBMITTED THAT IN THIS CASE IDENTITY OF THE CREDITORS IS ITA NO1246./HYD/08 SHRI P.SATHI REDDY HYDERABAD 2 PROVED BEYOND DOUBT AND ALL THE FOUR CREDITORS WERE P RODUCED BEFORE THE ASSESSING OFFICER AND THEY HAVE ADMITTED HAVI NG ADVANCED LOAN AMOUNTS TO THE ASSESSEE. HE SUBMITTED THAT T HE CREDITORS WERE AGRICULTURISTS AND WERE HAVING SUFFICIE NT AGRICULTURAL LAND HOLDINGS TO ADVANCE THE LOAN AMOUNTS TO THE ASSESSEE 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS OPPOSE D THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. SH E SUBMITTED THAT NO EVIDENCE WAS PRODUCED BY THE ASSESSEE IN SUPPORT OF HIS CASE REGARDING THE GENUINENESS OF THE CRE DIT ENTRIES. SHE SUBMITTED THAT THE LOAN AMOUNTS WERE RECEIVED IN CASH AND THERE IS NO DETAIL AVAILABLE WITH THE ASSESSEE TO SHOW WH EN THESE LOAN AMOUNTS WERE REPAID BY THE ASSESSEE. SHE SUBMITTED THAT THERE WAS NO EVIDENCE WITH THE CREDITORS TO SHOW THAT TH E AMOUNTS ADVANCED TO THE ASSESSEE AS LOANS WERE LYING WITH THEM IN CASH AND REPRESENT THEIR SAVINGS FROM THE AGRICULTURAL INCOME. S HE RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. W E HAVE PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND THAT THE ASSESSEE HAS PROVED THE IDENTITY OF THE FOUR CREDITORS BEYOND DOUBT AND IT IS NOT THE CASE OF THE R EVENUE THAT THE IDENTITY OF THE CREDITORS WAS DOUBTFUL. ASSESSEE HA S PRODUCED ALL THE FOUR CREDITORS BEFORE THE ASSESSING OFFICER AND TH EIR STATEMENTS ON OATH UNDER S.131 OF THE ACT WERE RECORDED BY THE ASSESSING OFFICER. COPIES OF THOSE STATEMENTS HAVE BEEN FIL ED BY THE ASSESSEE IN THE COMPILATION BEFORE THE TRIBUNAL. A P ERUSAL OF THOSE STATEMENTS RECORDED ON SA OF ALL THE FOUR CREDIT ORS BY THE ASSESSING OFFICER SHOWS THAT THEY WERE HAVING SUFFICIENT HO LDINGS OF AGRICULTURAL LAND AND THEIR AGRICULTURAL INCOME WAS SUFF ICIENT TO ITA NO1246./HYD/08 SHRI P.SATHI REDDY HYDERABAD 3 COVER THE AMOUNTS ADVANCED BY THE THEM AS LOANS TO THE ASSESSEE. THE CREDITORS HAVE ADMITTED THE FACT OF HAVING ADVANCED THE AMOUNTS OF LOAN TO THE ASSESSEE AND HAVE EXPLAINED THE SO URCES THEREOF IN THEIR STATEMENTS RECORDED BY THE ASSESSING OFFI CER. THE ARGUMENT OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE CREDITORS COULD NOT ESTABLISH THAT CASH WAS LYING WITH TH EM AT THE TIME OF ADVANCING THE LOANS TO THE ASSESSEE IS NOT SUSTAIN ABLE IN LAW. THERE IS NO LEGAL PROVISION WHICH MANDATES THAT TH E AGRICULTURISTS OR FOR THAT MATTER ANY OTHER PERSON HAS TO DEPOSIT HIS SAVINGS IN BANKS ONLY AND COULD NOT HAVE THE SAVINGS IN THE FORM OF CASH. WE FIND THAT THE CIT(A) HAS NOT GIVEN ANY VAL ID REASON FOR CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER ON THIS ISSUE. WE FIND THAT NO MATERIAL WAS PLACED ON RECORD ON BEHALF OF THE REVENUE TO DOUBT THE CREDITWORTHINESS OF THE FOUR AGRICULTURIST CREDITORS OR TO DOUBT THE GENUINENESS OF THE TRANSACTION S OF LOANS TO THE ASSESSEE. THE ASSESSEE BY PROVING THE IDENTITY OF THE CR EDITORS AND PROVING BEYOND DOUBT THE LAND HOLDINGS OF THE CREDITORS AND ALSO BY PRODUCING THEM BEFORE THE ASSESSING OFFICER FOR RE CORDING THEIR STATEMENTS IN WHICH THE CREDITORS HAVE NOT ONLY AD MITTED THE FACT OF LOANS TO THE ASSESSEE BUT HAVE ALSO EXPLAINED THE SOURCES OF THE MONEY ADVANCED AS LOANS TO THE ASSESSEE HAS DISCHARGED T HE ONUS ON HIM TO PROVE THE GENUINENESS OF THE CREDIT ENTR IES. IN THE CIRCUMSTANCES WE HOLD THAT NO CASE OF ADDITION ON ACCOUNT O F UNPROVED LOANS COULD BE MADE OUT BY THE DEPARTMENT A ND ACCORDINGLY THE ADDITION OF RS.9 LAKHS AS UNDISCLOSED INCOM E OF THE ASSESSEE IS DELETED AND THE GROUND OF APPEAL NO.2 OF THE ASSESSEE IS ALLOWED. 6. GROUND OF APPEAL NO.3 OF THE ASSESSEE IS AS UNDER- ITA NO1246./HYD/08 SHRI P.SATHI REDDY HYDERABAD 4 'THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) E RRED IN CONFIRMING ESTIMATE OF INCOME MADE BY THE ASSESS ING OFFICER AT 20% OF THE GROSS RECEIPTS OR AT RS.2 37 375/-. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ALTHOUGH THE ASSESSEE DOES NOT MAINTAIN ANY ACCOUNT BOOKS IN HIS BUSINESS OF SALE OF PLOTS BUT THE ESTIMATE OF NET INCOME AT THE RATE OF 20% OF THE GROSS RECEIPTS IS EXCESSIVE. 8. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED TH AT IT IS COMMON KNOWLEDGE THAT IN REAL ESTATE BUSINESS NET PRO FIT WAS AT LEAST 20% OF THE GROSS RECEIPTS IN THE REAL ESTATE BUSIN ESS. SHE RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT (A). 9. `WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT ADMITTEDLY THE ASSESSEE WAS NOT MAINTAINING ANY R ECORDS FOR HIS REAL ESTATE BUSINESS. THE CIT(A) HAS RECORDED THAT NO SUBMISSIONS WERE MADE IN THE COURSE OF APPELLATE PROCEEDIN GS ON THIS ISSUE BEFORE HIM. THE ASSESSEE COULD NOT PRODUCE NECESSARY DETAILS WITH REGARD TO PURCHASE AND SALE OF PLOTS BEFORE THE REVENUE AUTHORITIES. IN THE ABSENCE OF DETAILS OF TH E SALE AND PURCHASE OF PLOTS AND IN THE ABSENCE OF ANY MATERIAL TO SUGGEST THAT THE NET PROFIT RATE APPLIED BY THE ASSESSING OFFICER WAS EXCESSIVE WE HOLD THAT NO INTERFERENCE WITH THE ORDER OF THE C IT(A) ON THIS ISSUE IS CALLED FOR WHICH IS ACCORDINGLY CONFIRMED AND THE GROUND OF APPEAL NO.3 OF THE ASSESSEE IS DISMISSED. 10. GROUND OF APPEAL NO.4 IS AS UNDER- 'THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) E RRED IN CONFIRMING LEVY OF INTEREST U/S. 234A OF RS.17 9 26/-; U/S. 234B OF RS.1 29 623/- AND U/S. 24C OF RS.1 265/-. ITA NO1246./HYD/08 SHRI P.SATHI REDDY HYDERABAD 5 11. WE HAVE HEARD THE PARTIES. THE ISSUE OF CHARGING OF INTEREST UNDER S.234A 234B AND 234C IS CONSEQUENTIAL I N NATURE AND WE DIRECT ACCORDINGLY. 12. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE COURT ON 3.9.2010 SD/- SD/- (CHANDRA POOJARI) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 3.9.2010 COPY FORWARDED TO: 1. SHRI P. SATHI REDDY C/O. SHRI S.RAMA RAO ADVOCA TE FLAT NO.103 H.NO.3-7-542/4 HIMAYATNAGAR HYDERABAD 2. INCOME-TAX OFFICER WARD 9(1) CENTRAL CIRCLE-5 HY DERABAD. 3. COMMISSIONER OF INCOME-TAX(APPEALS)-VI HYDERABAD. 4. COMMISSIONER OF INCOME-TAX VI HYDERABAD 5. THE DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD. B.V.S .