Sri K Koteswara Rao, Gudivada v. The ACIT, Central Circle, Vijayawada

ITA 240/VIZ/2010 | 2007-2008
Pronouncement Date: 17-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 24025314 RSA 2010
Assessee PAN AJXPK6865D
Bench Visakhapatnam
Appeal Number ITA 240/VIZ/2010
Duration Of Justice 11 month(s) 11 day(s)
Appellant Sri K Koteswara Rao, Gudivada
Respondent The ACIT, Central Circle, Vijayawada
Appeal Type Income Tax Appeal
Pronouncement Date 17-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 17-03-2011
Date Of Final Hearing 14-03-2011
Next Hearing Date 14-03-2011
Assessment Year 2007-2008
Appeal Filed On 05-04-2010
Judgment Text
ITA NOS.238 239&240/VIZAG/2010 K. KOTESWARA RAO GU DIVADA 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 NOS.238 TO 240/VIZAG/2010 ASSESSMENT YEAR: 2004-05 2005-06 & 2007-08 K. KOTESWARA RAO GUDIVADA ACIT CENTRAL CIRCLE VIJAYAWADA (APPELLANT) PAN NO: AJXPK 6865D VS. (RESPONDENT) APPELLANT BY: SHRI TH.L. PETER CIT(DR) RESPONDENT BY: SHRI C. SUBRAHMANYAM CA ORDER PER SHRI B. R. BASKARAN ACCOUNTANT MEMBER: THESE THREE APPEALS FILED BY THE ASSESSEE ARE DIRE CTED AGAINST THE ORDERS OF LEARNED CIT(A) VIJAYAWADA AND THEY RELAT E TO THE ASSESSMENT YEARS 2004-05 2005-06 AND 2007-08. SINCE THE ISSU ES URGED IN THESE THREE APPEALS ARE INTER CONNECTED THEY WERE HEARD TOGETH ER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF C ONVENIENCE. 2. IN THE APPEAL RELATED TO THE ASSESSMENT YEAR 2 004-05 THE ASSESSEE IS CONTESTING THE ADDITION OF CASH CREDITORS MADE UNDE R SECTION 68 OF THE ACT AND ALSO THE CONSEQUENTIAL DISALLOWANCE OF INTEREST CLAIMED ON THOSE CASH CREDITS. IN OTHER TWO YEARS THE ISSUE IS RELATED TO THE DISALLOWANCE OF INTEREST CLAIMED ON THE CASH CREDITS CITED ABOVE. 3. THE FACTS RELATING TO THE ISSUES ARE STATED IN BRIEF. A SEARCH OPERATION UNDER SECTION 132 OF THE ACT WAS CONDUCTED IN THE R ESIDENTIAL PREMISES OF THE ASSESSEE AND OTHER CONNECTED CASES OF GOWTHAM G ROUP ON 24-7-2006. CONSEQUENT THERETO THE PROCEEDINGS UNDER SECTION 15 3A OF THE ACT WERE INITIATED IN THE HANDS OF THE ASSESSEE. DURING THE COURSE OF ASSESSMENT ITA NOS.238 239&240/VIZAG/2010 K. KOTESWARA RAO GU DIVADA PAGE 2 OF 6 PROCEEDINGS RELATING TO THE ASSESSMENT YEAR 2004-05 THE ASSESSING OFFICER ADDED FOLLOWING CASH CREDITS UNDER SECTION 68 OF TH E ACT IN THE HANDS OF THE ASSESSEE AS HE WAS NOT SATISFIED WITH THEIR GENUIN ENESS. 1. CHIGULURI SRIKANTH 4 00 000 2. K.JAYA PRASADA RAO 4 00 000 3. V. NAGESWARA RAO 5 00 000 4. K.S.J.KANYA KUMARI 4 00 000 5. Y.V.SRINIVASA RAO 5 00 000 6. K.APPA RAO 1 96 000 7. K.V.KRISHNA RAO 4 00 000 8. K.KOTESWARA RAO 4 00 000 --------------- 31 96 000 ======== THE ASSESSING OFFICER ALSO DISALLOWED THE INTEREST PAID/CREDITED ON THE ABOVE SAID CASH CREDITS IN ALL THE THREE ASSESSMENT YEARS UNDER CONSIDERATION. THE LEARNED CIT(A) ALSO CONFIRMED T HE ORDER OF THE ASSESSING OFFICER IN ALL THE THREE YEARS. HENCE TH E ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. THE LEARNED A.R FAIRLY CONCEDED THAT THE ASSESSEE D ID NOT DISCHARGE THE BURDEN OF PROOF PLACED UPON HIM UNDER SECTION 68 OF THE ACT IN RESPECT OF SHRI K.APPA RAO AND SHRI K.V.KRISHNA RAO WHO ARE L ISTED AS PARTY NO.6 AND 7 IN THE LIST EXTRACTED IN THE PRECEDING PARAGRAPH. HENCE THE ADDITION PERTAINING TO THESE TWO CREDITORS INCLUDING THE ADD ITION OF INTEREST PERTAINING TO THEM ARE CONFIRMED. 5. WITH REGARD TO THE FIRST FIVE CREDITORS SHOWN IN THE LIST CITED ABOVE IT WAS SUBMITTED THAT THESE CREDITORS HAD TAKEN MONEY FROM A PERSON NAMED SHRI G. KRISHNA MOHAN FOR ADVANCING THE IMPUGNED LO ANS TO THE ASSESSEE AND HENCE THEY HAVE ACTED ONLY AS AGENTS OF SHRI G. KRISHNA MOHAN. IT WAS FURTHER SUBMITTED THAT THE SAID SHRI G.KRISHNA MOHA N HAD SUFFICIENT SOURCES SINCE HE HAD RECEIVED A SUM OF RS.25.25 LAKHS BY WA Y OF CHEQUE FROM M/S ITA NOS.238 239&240/VIZAG/2010 K. KOTESWARA RAO GU DIVADA PAGE 3 OF 6 GOWTHAMI RESIDENTIAL JR. COLLEGE AND THE SAID AMOUN T WAS UTILIZED TO GIVE FUNDS TO THE ASSESSEE THROUGH THE FIVE PERSONS MENT IONED ABOVE. IN THIS REGARD THE LEARNED A.R INVITED OUR ATTENTION TO TH E VARIOUS LETTERS DATED NIL FILED BY THE ABOVE SAID SHRI G.KRISHNA MOHAN TO THE ASSESSING OFFICER CONFIRMING THE ABOVE SAID FACTS. THE SAID LETTERS OF SHRI G.KRISHNA MOHAN ALONG WITH COPY OF HIS BANK ACCOUNT ARE PLACED IN P AGES 20-36 OF THE PAPER BOOK COMPILED BY THE ASSESSEE. THE LEARNED A.R ALS O INVITED OUR ATTENTION TO THE LETTER DATED 03-11-2008 FILED BY THE ASSESSE E BEFORE THE ASSESSING OFFICER WHEREIN IT IS STATED IN POINT NO.6 THAT TH E ASSESSEE IS PRODUCING FOLLOWING CREDITORS BEFORE THE ASSESSING OFFICER FO R VERIFICATION. A. KOLLI KOTESWARA RAO. B. V. NAGESWARA RAO. C. K. JAYA PRASADA RAO D. CH. SRIKANTH. IT WAS SUBMITTED THAT THE ASSESSING OFFICER DID NOT EXAMINE THESE PERSONS AND ALSO SHRI G. KRISHNA MOHAN BEFORE MAKING THE AD DITION UNDER SECTION 68 OF THE ACT. 5.1 WE NOTICE THAT THE ASSESSEE HAS PRODUCED FO UR CREDITORS BEFORE THE ASSESSING OFFICER FOR VERIFICATION BUT THE ASSESSI NG OFFICER HAS NOT EXAMINED THEM. BESIDES THE ABOVE FIVE CREDITORS H AVE CLAIMED TO HAVE ACTED ON BEHALF OF SHRI G.KRISHNA MOHAN AND THE SAI D CLAIMS HAVE ALSO BEEN REJECTED BY THE ASSESSING OFFICER WITH OUT EXAMININ G THEM AND ALSO SHRI G. KRISHNA MOHAN WHICH IN OUR VIEW DOES NOT APPEAR T O BE PROPER. WE HAVE ALSO NOTICED THAT THE ABOVE SAID SHRI G.KRISHNA MOH AN HAS CONFIRMED THAT THESE FIVE PERSONS HAVE ACTED ON BEHALF HIM AND HE ONLY PROVIDED FINANCE TO THE ASSESSEE THROUGH THESE FIVE PERSONS. THE ASS ESSING OFFICER HAS REJECTED THE SAID CLAIM ALSO WITH OUT DOING NECESSA RY VERIFICATION FROM SHRI G.KRISHNA MOHAN. IN OUR VIEW THE ASSESSING OFFICE R SHOULD HAVE MADE FURTHER ENQUIRIES BEFORE REJECTING THE EXPLANATIONS OF THESE PERSONS. HENCE WE ARE OF THE VIEW THAT THE CREDITS STANDING IN THE NAME OF THE FIRST FIVE PERSONS CITED IN THE LIST IN PARAGRAPH 3 (SUPR A) NEED TO BE EXAMINED ITA NOS.238 239&240/VIZAG/2010 K. KOTESWARA RAO GU DIVADA PAGE 4 OF 6 AFRESH BY DULY CONSIDERING THE EXPLANATIONS FILED B Y THEM AND IF NECESSARY AFTER EXAMINING THEM INCLUDING SHRI G.KRISHNA MOHAN . ACCORDINGLY WE SET ASIDE THE ORDER OF LEARNED CIT(A) IN RESPECT OF THE FIRST FIVE CREDITORS CITED ABOVE AND RESTORE THE MATTER BACK TO THE FILE OF TH E ASSESSING OFFICER FOR CONSIDERING THE MATTER AFRESH IN ACCORDANCE WITH LA W. 6. WITH REGARD TO THE LOAN OF RS.4.00 LAKHS STAN DING IN THE NAME OF SHRI K.KOTESWARA RAO (WITH SIMILAR NAME AS THAT OF THE A SSESSEE) IT WAS SUBMITTED BY HIM THAT HE HAS SUFFICIENT AGRICULTURA L INCOME AND THE IMPUGNED LOAN WAS GIVEN OUT OF SAVINGS MADE FROM TH E AGRICULTURAL INCOME. THE ASSESSING OFFICER HOWEVER NOTICED THAT THE LOA N CHEQUE HAS BEEN ISSUED TO THE ASSESSEE BY MAKING CASH DEPOSIT INTO THE BANK ACCOUNT. THE ASSESSING OFFICER ALSO NOTICED THAT THERE WAS NO FU RTHER TRANSACTION IN THE SAID BANK ACCOUNT. DURING THE COURSE OF APPELLATE P ROCEEDINGS THE LEARNED CIT(A) CALLED FOR A REMAND REPORT IN RESPECT OF THI S CREDITOR. IN THE REMAND REPORT THE ASSESSING OFFICER ANALYSED THE FAMILY E XPENDITURE OF THE ASSESSEE AND CAME TO THE CONCLUSION THAT THE LOAN C REDITOR SHRI K.KOTESWARA RAO COULD NOT HAVE ACCUMULATED A SUM OF RS.4.00 LAKHS. THE LEARNED D.R SUBMITTED THAT THE SAID CREDITOR HAS CL AIMED TO HAVE CULTIVATED AGRICULTURAL LANDS BELONGING TO HIM HIS WIFE AND H IS MOTHER IN LAW IN ALL AGGREGATING TO 27.34 ACRES OF LAND WITHOUT ADDUCIN G PROOF THAT HE HAS ALSO CULTIVATED THE LANDS BELONGING TO WIFE AND MOTHER I N LAW. THE LEARNED D.R FURTHER SUBMITTED THAT THE AGRICULTURAL INCOME REAL IZED FROM A LAND SHOULD NORMALLY BELONG TO THE CONCERNED LAND OWNER UNLESS THERE IS SUFFICIENT PROOF TO SHOW OTHERWISE. THE LEARNED D.R ALSO SUBM ITTED THAT THE SAID CREDITOR HAS FAILED TO PROVE THAT HE HAS ACTUALLY E ARNED A SUM OF RS.20 000/- PER ACRE EXCEPT PLACING RELIANCE ON TH E CERTIFICATE GIVEN BY VILLAGE REVENUE OFFICER WHO IS NOT A COMPETENT AUT HORITY TO GIVE SUCH KIND OF CERTIFICATES. HOWEVER THE LEARNED A.R STRONGL Y PLACED RELIANCE ON THE CONFIRMATION LETTER FILED BY THE SAID CREDITOR. ITA NOS.238 239&240/VIZAG/2010 K. KOTESWARA RAO GU DIVADA PAGE 5 OF 6 6.1 ON A CAREFUL PERUSAL OF THE CONFIRMATION LE TTER FILED BY THE CREDITOR NAMED SHRI K.KOTESWARA RAO WE NOTICE THAT THE SAID CREDITOR HAS CLAIMED TO HAVE CULTIVATED 27.34 ACRES OF LAND INCLUDING 1 3.72 ACRES OF LAND BELONGING TO HIS WIFE AND MOTHER IN LAW. HE HAS AL SO CLAIMED THAT HE USED TO GET NET AGRICULTURAL INCOME OF RS.20 000/- PER A CRE. IN SUPPORT OF THE LAND HOLDING HE HAS FURNISHED PATTADAR PASS BOOKS. IN SUPPORT OF THE CLAIM OF RECEIPT OF INCOME OF RS.20 000/- PER ACRE HE HA S FILED A CERTIFICATE OBTAINED FROM VILLAGE REVENUE OFFICER. HOWEVER AS POINTED OUT BY LEARNED D.R THE SAID CREDITOR HAS FAILED TO SHOW THAT HE W AS ALLOWED BY HIS WIFE AND MOTHER IN LAW TO RETAIN THE AGRICULTURAL INCOME GENERATED OUT OF THEIR LAND. WE ARE ALSO OF THE VIEW THAT THE CERTIFICATE ISSUED BY THE VILLAGE REVENUE OFFICER IS NOT SUFFICIENT TO PROVE THE AVAI LABILITY OF AGRICULTURAL INCOME AS CLAIMED BY THE CREDITOR. IT IS A WELL SE TTLED PRINCIPLE THAT THE ASSESSEE IN ORDER TO DISCHARGE THE BURDEN OF PROOF PLACED UPON HIM UNDER SECTION 68 OF THE ACT HAS TO PROVE THREE MAIN INGRE DIENTS VIZ. THE IDENTITY OF THE CREDITOR THE CREDIT WORTHINESS OF THE CREDI TORS AND THE GENUINENESS OF THE TRANSACTION. UNLESS THE ABOVE SAID THREE IN GREDIENTS ARE PROVED IT CANNOT BE SAID THAT THE ASSESSEE HAS DISCHARGED THE BURDEN OF PROOF PLACED UPON HIM. IN THE INSTANT CASE THE ASSESSEE HAS FAI LED TO PROVE THE CREDIT WORTHINESS OF THE CREDITOR. ACCORDINGLY WE FIND N O INFIRMITY IN THE ORDER OF LEARNED CIT(A) IN CONFIRMING THE IMPUGNED ADDITION. 7. CONSEQUENT TO OUR DECISIONS ON THE IMPUGNED CASH CREDITS DISCUSSED ABOVE THE DISALLOWANCE OF INTEREST PERTAINING TO T HE THREE LOAN CREDITORS VIZ. SHRI K.APPA RAO SHRI K.V.KRISHNA RAO AND SHR I K.KOTESWARA RAO MADE IN ALL THE THREE YEARS ARE CONFIRMED. IN RESPECT O F THE REMAINING FIVE CREDITORS WE SET ASIDE THE MATTER OF DISALLOWANCE OF INTEREST IN ALL THE THREE YEARS TO THE FILE OF THE ASSESSING OFFICER SINCE W E HAVE SET ASIDE THE MATTER OF ADDITION OF LOAN STANDING IN THEIR NAMES ALSO TO THE FILE OF ASSESSING OFFICER FOR FRESH EXAMINATION. ITA NOS.238 239&240/VIZAG/2010 K. KOTESWARA RAO GU DIVADA PAGE 6 OF 6 8. IN THE RESULT ALL THE THREE APPEALS OF THE ASSE SSEE ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 17.3.2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM DATE: 17 TH MARCH 2011 COPY TO 1 K. KOTESWARA RAO GOWTHAM CONCEPT SCHOOL BYPASS ROAD SANTHINAGAR GUDIVADA 2 ACIT CENTRAL CIRCLE VIJAYAWADA 3 4. THE CIT VIJAYAWADA THE CIT(A) VIJAYAWADA 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM