Desaraju Ravi Shankar, Secunderabad v. ITO, Wd-12(3),, Hyderabad

ITA 1801/HYD/2012 | 2008-2009
Pronouncement Date: 05-11-2014 | Result: Allowed

Appeal Details

RSA Number 180122514 RSA 2012
Assessee PAN AKYPD0343D
Bench Hyderabad
Appeal Number ITA 1801/HYD/2012
Duration Of Justice 1 year(s) 10 month(s) 23 day(s)
Appellant Desaraju Ravi Shankar, Secunderabad
Respondent ITO, Wd-12(3),, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 05-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 05-11-2014
Assessment Year 2008-2009
Appeal Filed On 13-12-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA.NO.1801/HYD/2012 ASSESSMENT YEAR 2008-2009 DESARAJU RAVI SHANKAR HYDERABAD PAN AKYPD0343D VS. INCOME TAX OFFICER WARD 12 (3) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. S. RAMA RAO FOR REVENUE : MR. RAJAT MITRA DATE OF HEARING : 30.09.2014 DATE OF PRONOUNCEMENT : 05.11.2014 ORDER PER B. RAMAKOTAIAH A.M. THIS IS AN ASSESSEES APPEAL AGAINST THE ORDER OF LD. CIT(A)-II HYDERABAD DATED 11.09.2012 FOR THE A .Y. 2008- 09. THE ONLY EFFECTIVE GROUND NO.2 IS AS UNDER : THE LD. CIT(A) IS IN-CORRECT TO REJECT THE EXPLANA TION OFFERED BY THE APPELLANT AND TO CONFIRM THE CREDITS OF RS.27 82 050 APPEARING IN THE BANK ACCOUNT. 2. BRIEFLY STATED A.O. NOTICED THAT THERE ARE CAS H DEPOSITS AMOUNTING TO RS.28 87 650 IN ASSESSEES BA NK ACCOUNTS AND ASKED TO EXPLAIN THE SOURCE FOR THESE CASH DEPOSITS. ASSESSEE HAVING NO INCOME AND BEING PARTL Y EMPLOYED AT THE RELEVANT POINT OF TIME EXPLAINED TH AT MONIES WERE WITHDRAWN USING HIS CREDIT CARDS FROM M/S. GAN DHI JEWELLERY AND SRI KRISHNA SAREES ON COMMISSION BASI S AT 3% AND THE SAID AMOUNTS WERE GIVEN TO HIS FRIEND MR. S RINIVAS WHO WAS RUNNING AN AIRTEL RELATIONSHIP CENTRE IN THE NAME OF SURYA TEJA COMMUNICATIONS IN MALKAJGIRI SECUNDERAB AD. MONEY SO OBTAINED BY WAY OF DISCOUNTING WITH THE SA ID CONCERNS WERE ADVANCED FOR THE BUSINESS PURPOSES OF MR. SRINIVAS AND AS AND WHEN THE DUES OF CREDIT CARDS C AME UP FOR PAYMENT THE CASH WAS REPAID TO ASSESSEE AND THE SA ME IN TURN WAS DEPOSITED IN THE BANK ACCOUNTS AND REPAID TO THE CREDIT CARDS. A.O. ASKED THE ASSESSEE TO PRODUCE TH E ABOVE MENTIONED THREE PARTIES. LATER A.O. ALSO ISSUED SU MMONS TO MR. SRINIVAS AS PER ADDRESS PROVIDED BY ASSESSEE. S INCE THE SUMMONS WERE RETURNED UN-SERVED A.O. WAS OF THE VI EW THAT EXPLANATION GIVEN BY ASSESSEE IS NOT PROVED AND THE REFORE BROUGHT THE ENTIRE AMOUNT OF RS.27 82 060 AS UNEXPL AINED INCOME BEING DEPOSITS IN THE BANK ACCOUNT. 3. BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT ASSESSEE WITHDREW MONEY BY USING HIS CREDIT CARDS B Y MAKING BOGUS PURCHASES IN THE KNOWN SHOPS AND PAYING SHOP- KEEPER ONLY THE PROCESSING CHARGES OF 2% AND ADDITIONAL 1% TOWARDS HANDLING CHARGES (TOTAL 3%) AND FUNDS SO RECEIVED I N THE DEAL ARE ADVANCED TO MR. SRINIVAS. IN SUPPORT EVIDENCE F URNISHED BEFORE A.O. LIKE THAT OF TRANSACTIONS OF CREDIT CAR D DEPOSITS IN THE BANK ACCOUNT AND REPAYMENT TO CREDIT CARDS AND THE NEGOTIATIONS BETWEEN MR. SRINIVAS AND ASSESSEE WHEN THERE IS DEFAULT AND SUCH OTHER EVIDENCES WERE FURNISHED BEF ORE THE LD. CIT(A) AS WELL. FURTHER AS RECORDED BY LD. CIT(A) ASSESSEES FATHER WAS ALSO PRESENT IN THE APPEAL PROCEEDINGS A ND SUBMITTED AS UNDER : 4.1. THE APPELLANT'S FATHER WAS ALSO PRESENT DURI NG THE APPEAL PROCEEDINGS AND REITERATED WHAT WAS STA TED BEFORE THE AO AND SUBMITTED THAT: 'MR. SRINIVAS PUT US IN GREAT TROUBLE FOR LONG TIME WITH THE SKILL OF ESCAPISM. AFTER SO MANY PHONE CALLS VIGOROUS PERSUATION HE FINALLY GAVE US AROUND RS.2 .7 LAKHS AS AGAINST RS. 6.00 LAKHS WHICH TOO IN PIECE MEAL BASIS CONTINUED TILL MARCH 2012 AS FINAL SETTLEMEN T BESIDES GIVEN THREE UNDATED CHEQUES OF RS.35 000/- EACH OF BANK OF BARODA MALKAJGIRI BRANCH COPIES ENCLOSED. THIS IS THE EVIDENCE TO SHOW MR SRINIVAS HAS AVAILED FINANCES ARRANGED BY MY SON TO RUN THE AIRTEL SHOP. AT THIS STAGE YOUR DEPARTMENT ISSUED A NOTICE SIMULTANEOUSLY WITH MY SON TO. MR SRINIVAS TO HIS S HOP ADDRESS BUT WAS RETURNED UN-DELIVERED. I TRIED MY BEST TO OBTAIN AN AFFIDAVIT FROM MR SRINIVAS TO THE FACT THAT HE UTILIZED THE MONEY ARRANGED BY MY SON ON ROTATION BASIS AND REPAID BY HIM IN TO. ING VYSY A A/C. BUT HE IS NOT AT ALL CO-OPERATING. HERE I WOULD LIKE TO INVITE YOUR ATTENTION TO A LET TER DATED 6 TH NOV 2011 ADDRESSED AND SUBMITTED TO. THE THEN INCOME TAX OFFICER WARD. 12(3) 2 ND FL OOR AAYAKAR BHAVAN BASHEERBAGH HYDERABAD WHEREIN MY SON EXPLAINED ALL THE FACTS AND REQUESTED FAR DROPPING THE CASE ON MERCY GROUNDS IN ONE OF THE HEARINGS. (COP Y ENCLOSED FOR PERUSAL) IN NOV.2011 I GOT AROUND RS.3.5 LAKHS AS MY PROVIDENT FUND SAVINGS UPON MY RETIREMENT WHICH I CLUBBED WITH THE MONEY COLLECTED FROM MR SRINIVAS AND APPROACHE D THE CREDIT CARD BANKS WITH A REQUEST FOR ONE TIME SETTLEMENT OF DUES AND ALSO TO PERMANENTLY CLOSE TH E CARDS TO ARREST FURTHER USE. THE BANKS OBLIGED MY REQUEST AND WAIVED OFF PENALTIES OVERDUE INTERESTS ETC.. THUS I HAVE CLOSED ALMOST ALL THE CREDIT CARDS AS WELL AS LOANS OBTAINED AGAINST THE CARDS (COPIES OF LETTERS/RECEIPTS OBTAINED AGAINST CLOSUR E OF DIFFERENT CREDIT CARDS AFTER ONE TIME PAYMENT ARE ENCLOSED FOR PERUSAL). AS A FATHER I DID ALL THIS TO GIVE HIM A CHANCE TO SET RIGHT HIS BEHAVIOUR SAFEGUARD CAREER AND KEEP AWAY FROM BAD FRIENDSHIPS AND WRONG ACTS. IT IS A FACT THAT I HAVE OBSERVED REPENTANCE BESIDES CHANGE IN HIS BEHAVIOUR. 4. HOWEVER LD. CIT(A) DID NOT ACCEPT THE ASSESSE ES CONTENTIONS ON THE REASON THAT ASSESSEE HAS NOT DIS CHARGED THE ONUS IN PROVING THE ABOVE STATEMENTS BY STATIN G AS UNDER: 4.2. ALONG WITH THE WRITTEN SUBMISSIONS THE APPELLANT FILED A COPY OF BANK STATEMENT WHICH HAS ALREADY BEEN FILED BEFORE THE AO AND A COPY OF THE ALLEGED SETTLEMENT RECEIPT WITH SRI SRINIVAS. HOWEV ER THE APPELLANT EXPRESSED HIS INABILITY TO PRODUCE SR I SRINIVAS FOR EXAMINATION OR ANY CONFIRMATION FROM H IM TO SUPPORT THE CLAIM OF PAYMENTS RECEIVED FROM HIM. THE ONUS IS ON THE APPELLANT TO SUBSTANTIATE HIS CL AIM THAT THE SAID DEPOSITS IN THE BANK ACCOUNT WERE THE AMOUNTS RECEIVED FROM SRI SRINIVAS WHICH WERE THE REPAYMENT OF MONIES PAID BY HIM BY WITHDRAWING THE MONEY THROUGH THE ABOVE MENTIONED MODUS OPERANDI OF CREDIT CARDS. THE APPELLANT HAS FAILED IN DISCHA RGING THIS ONUS. IN ABSENCE OF ANY EVIDENCES SUBSTANTIATI NG THE CLAIM THE CONTENTION OF THE APPELLANT CANNOT B E ACCEPTED AND THEREFORE THE ADDITION MADE BY THE AO IS HEREBY CONFIRMED. 5. LD. COUNSEL REITERATED THE SUBMISSIONS MADE AND FILED DETAILED PAPER BOOK OF THE ENTIRE EVIDENCES A VAILABLE WITH ASSESSEE AND WAS SUBMITTED BEFORE THE AUTHORITIES FROM PAGES 1 TO 169. IT WAS THE SUBMISSION THAT ASSESSEE DID U SE HIS CREDIT CARDS OBTAINED DURING HIS EMPLOYMENT AS SOFT WARE ENGINEER FROM ICICI BANK CITI BANK HSBC BANK AX IS BANK SBI ABN AMRO ING VYSYA BANK AND CITI BANK-RELIANC E. ALL THE STATEMENTS OF CREDIT CARD TRANSACTIONS WERE PLA CED ON RECORD. THE FULL AND FINAL CARD SETTLEMENTS BY WAY OF VARIOUS BANKS WERE ALSO PLACED IN PAPER BOOK AT PAGES 136 T O 157 THE ARRANGEMENT BETWEEN MR. SRINIVAS AND ASSESSEE TOWAR DS FINAL PAYMENT OF RS.2 72 000 IN A STAMP PAPER WAS ALSO PL ACED ON RECORD ALONG WITH VARIOUS PAYMENTS OF DRAFTS TOWARD S SETTLEMENT. CORRESPONDENCE WITH VARIOUS CREDIT CARD ISSUERS WERE ALSO PLACED ON RECORD TO EXPLAIN THAT THOSE CR EDIT CARD INSTITUTIONS WAIVED THE PENALTIES AND INTEREST ALSO CONSIDERING 5 ITA.NO.1801/HYD/2012 MR. DESARAJU RAVI SHANKAR SECUNDERABAD. THE NATURE OF TRANSACTIONS. IT WAS THE SUBMISSION T HAT ASSESSEE ACCOMMODATED HIS FRIEND WHO DEFAULTED AT THE END AN D PUT THE ASSESSEE TO LOT OF INCONVENIENCE AND ASSESSEES FAT HER HAS TO DISCHARGE THE LIABILITIES AND IN VIEW OF THE STRAIN ED RELATIONSHIP BETWEEN ASSESSEE AND HIS FRIEND MR. SRINIVAS HE CO ULD NOT BE PRODUCED BEFORE THE AUTHORITIES. WITH REFERENCE TO EXPLANATION THAT MONIES WERE OBTAINED ON 3% COMMISSION HE REFE RRED TO THE STATEMENTS PLACED ON RECORD OF THE CREDIT CARDS AND MOST OF THE PURCHASES ARE FROM M/S GANDHI GOLD JEWELERS AND M/S SRIKRISHNA SAREES SHOP. IT WAS ALSO SUBMITTED THAT REVENUE DID NOT CONSIDER THAT ASSESSEE WAS IN THE TRADING O F EITHER JEWELLERY OR SAREES OR INVESTED IN THEM. THEREFORE THE EXPLANATION GIVEN BY ASSESSEE STANDS NOT DISPROVED. IN VIEW OF THIS SINCE THE ASSESSEE HAS GIVEN A BONAFIDE EXPLA NATION ON THE FACTS THE SAME SHOULD BE ACCEPTED. 6. LEARNED D.R. HOWEVER SUBMITTED THAT ASSESSEE HA S NOT PRODUCED PARTIES FOR EXAMINATION. THEREFORE AU THORITIES ARE JUSTIFIED IN CONFIRMING THE AMOUNTS AS UNEXPLAI NED. 7. AFTER CONSIDERING THE RIVAL CONTENTIONS AND EXAMINING THE DETAILED STATEMENTS/DOCUMENTS PLACED ON RECORD ALONG WITH THE EXPLANATION OF THE ASSESSEES FATHER PLACED BEFORE THE LD. CIT(A) AS EXTRACTED IN THE OR DER WE ARE OF THE OPINION THAT ASSESSEE HAS GENUINELY EXPLAINED T HE WHOLE ARRANGEMENT. IN THE COURSE OF APPEAL BEFORE US ASS ESSEE WAS ALSO PRESENT IN THE COURT ROOM AND ADMITTED THAT HE HAS TAKEN SOME BENEFIT FROM HIS FRIEND WHEN HE WAS UNEMPLOYED AND WITH THAT LOYALTY HE ACCOMMODATED HIS FRIEND IN PR OVIDING FINANCE TO HIS BUSINESS OF AIRTEL RELATIONSHIP CENT RE. SINCE THEY ARE FRIENDS AND SINCE HE WAS GENUINELY HONOURING TH E PAYMENTS TO CREDIT CARDS AS AND WHEN BECAME DUE HE WAS NOT 6 ITA.NO.1801/HYD/2012 MR. DESARAJU RAVI SHANKAR SECUNDERABAD. HAVING ANY PROBLEM AT THAT POINT OF TIME AND HAS NO T CONSIDERED THE INCOME TAX ANGLE AT ALL BEING A SOF TWARE ENGINEER. HE ADMITTED THAT MR. SRINIVAS HAS INCURRE D LOSSES AND CONSEQUENTLY THERE WAS DEFAULT AT HIS END WHIC H ASSESSEE HAS TO FULFILL PUTTING LOT OF BURDEN ON HIS PARENTS . CONSIDERING THE EXPLANATION GIVEN BY ASSESSEE AND CONDUCT OF AS SESSEE WHICH CAN BE GAUGED FROM THE PERIODIC CREDIT CARD T RANSACTIONS WITH THE TWO PARTIES OF PURCHASE OF GOLD AND SAREES REGULARLY AND REPAYING THE AMOUNT BY OBTAINING CASH FROM MR. SRINIVAS DO INDICATE THAT ASSESSEES EXPLANATION IS GENUINE. NOT ONLY THAT STATEMENTS WITH VARIOUS CREDIT CARD INSTITUTI ONS AND THE FINAL RECEIPT GIVEN BY MR. SRINIVAS ON A STAMP PAPE R DO INDICATE THAT ASSESSEE WAS REALLY PUT TO INCONVENIE NCE BY THE DEFAULT OF MR. SRINIVAS. THE RECEIPT GIVEN BY ASSES SEE TO MR. SRINIVAS IS AS UNDER : RECEIPT I D. RAVI SHANKER S/O. D. NARASIMHA AGED 29 YEAR S OCCUPATION : PRIVATE SERVICE RESIDENT OF MALKAJGIR I HYDERABAD DO HEREBY ACKNOWLEDGE THE RECEIPT OF CHEQ UE BEARING NO.531173 FOR AMOUNT OF RS.2 72 000 (RS. TW O LAKH SEVENTY TWO THOUSAND ONLY) DRAWN IN BANK OF BARODA MALKAJGIRI BRANCH HYDERABAD DATED 31.05.2011 FROM M. SRINIVAS S/O. M.GURAVAIH AGED ABOUT 41 YEARS RESI DENT OF H.NO.20 PAIGAH COLONY S.P. ROAD SECUNDERABAD TO WARDS THE AMOUNTS RECEIVABLE FROM HIM. THE PREVIOUS CHEQUES OF (B.O.B) BANK OF BARODA MAL KAJGIRI BRANCH VIDE CHEQUE BARING NOS.504740 527432 52743 3 527434 527435 AND 527436 WILL BE CANCELLED. THE REMAINING DOCUMENTS IF ANY AND AGREEMENTS AND RECEI PTS IT IS RELATED FOR ANY TRANSACTIONS PREVIOUS ENTERED SH ALL GET CANCELLED IN LIEU OF THE ABOVE CHEQUE PAYMENT. IN WITNESS WHEREOF THE ABOVE SAID PARTIES HAVE SIGN ED IN THE PRESENCE OF THIS THE 13 TH DAY OF MARCH 2011 AT SECUNDERABAD IN BEFORE THE WITNESSES. 7 ITA.NO.1801/HYD/2012 MR. DESARAJU RAVI SHANKAR SECUNDERABAD. WITNESSES : 01. SD/-XXX SD/- D. RAVI SHANKER (D. RAVI SHANKER) FIRST PARTY 02.SD/-XXX SD/- SRINIVAS (M. SRINIVAS) SECOND PARTY. 8. COUPLED WITH THE FACT THAT ASSESSEES FATHER HA D SETTLED HIS P.F. AMOUNT OF RS. 3.5 LAKHS ALSO IN S ETTLEMENT OF CREDIT CARD DUES AND HIS EXPLANATION BEFORE THE LD. CIT(A) ALSO INDICATE THAT THE TRANSACTIONS ARE GENUINE TRANSACT IONS. IT IS GENERAL PRACTICE IN THE MARKET THAT SOME OF THE SHO PS ARE ACCOMMODATING CREDIT CARD HOLDERS BY PROVIDING CASH ON DISCOUNT OF 3% TO 4% AND AS SEEN FROM THE TRANSACTI ONS OF M/S. GANDHI JEWELLERS AND SRIKRISHNA SAREES AND PER IODIC PURCHASES FROM THEM AND REPAYMENTS TO THE CREDIT CA RDS DO INDICATE THAT FUNDS ARE OBTAINED IN THIS MANNER FOR MR. SRINIVAS BUSINESS PURPOSES AND THESE ARE ONLY TEMPO RARY FINANCE ARRANGEMENT UNDERTAKEN TO HELP ASSESSEES F RIEND. THEREFORE WE ARE OF THE OPINION THAT A.O. IS NOT C ORRECT IN CONSIDERING ALL DEPOSITS AS UNEXPLAINED WHEN THERE IS EXPLANATION FROM ASSESSEE WHICH IS NOT DISPROVED. N OT ONLY THAT WE ARE SURPRISED TO SEE THAT THE A.O. AS WELL AS LD. CIT(A) DID NOT ACCEPT ANY OF THE STATEMENTS PLACED ON RECO RD AND INSISTED TO PRODUCE MR. SRINIVAS. LD. CIT(A) CONFIR MED THE ADDITION ONLY ON THE REASON THAT ASSESSEE HAS NOT D ISCHARGED THE ONUS. IT IS A FACT THAT MR. SRINIVAS HAS DEFAUL TED AND PRESENT WHEREABOUTS ARE NOT KNOWN TO ASSESSEE. IN T HESE CIRCUMSTANCES THE OTHER EVIDENCES FURNISHED BY ASS ESSEE SHOULD HAVE BEEN CONSIDERED BY REVENUE. SINCE THE OVERWHELMING EVIDENCE FURNISHED BY ASSESSEE DOES IN DICATE THAT THE TRANSACTIONS ARE UNDERTAKEN TO HELP HIS FR IEND IN 8 ITA.NO.1801/HYD/2012 MR. DESARAJU RAVI SHANKAR SECUNDERABAD. GETTING TEMPORARY FINANCE FOR HIS BUSINESS AND SINC E MR. SRINIVAS REPAID THE AMOUNTS TO A LARGE EXTENT OUT O F TOTAL TRANSACTIONS WE ARE OF THE OPINION THAT DEPOSITS I N THE BANK ACCOUNT CANNOT BE CONSIDERED AS UNEXPLAINED. AS SEE N FROM THE CREDIT CARD STATEMENTS AS WELL AS BANK STATEMEN TS THERE ARE PAYMENTS TO AIRTEL ALSO WHICH INDICATES THAT MR . SRINIVAS HAD AIRTEL BUSINESS TRANSACTIONS. IN VIEW OF THIS WE ARE OF THE OPINION THAT THE AUTHORITIES WERE NOT JUSTIFIED IN TREATING THE CASH DEPOSITS AS INCOME OF ASSESSEE AS UNEXPLAINED. SINCE ASSESSEE HAS GIVEN BONAFIDE EXPLANATION WHICH IS NO T DISPROVED THE SAME SHOULD BE ACCEPTED. IN THE CIRC UMSTANCES WE SEE NO REASON TO ASSESS THE ENTIRE CASH DEPOSITS MADE PERIODICALLY INTO THE BANK ACCOUNT FOR REPAYMENT OF CREDIT CARD AMOUNTS CANNOT BE CONSIDERED AS INCOME OF THE ASSES SEE. THEREFORE WE DELETE THE SAME. ASSESSEES GROUNDS A RE ALLOWED. 9. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 05.11.2014. SD/- SD/- (SMT. P. MADHAVI DEVI) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD DATED 05 TH NOVEMBER 2014 VBP/- COPY TO 1. MR. DESARAJU RAVI SHANKAR MALKAJGIRI HYDERABAD . C/O. SRI S. RAMA RAO ADVOCATE FLAT NO.102 SHRIYA S ELEGANCE 3-6-643 STREET NO.9 HIMAYATNAGAR HYDERABAD 500 029. 2. THE INCOME TAX OFFICER WARD 12(3) AAYAKAR BHAV AN HYDERABAD. 3. COMMISSIONER OF INCOME TAX-II HYDERABAD 4. COMMISSIONER OF INCOME TAX-I HYDERABAD 5. D.R. B BENCH ITAT HYDERABAD.