Sri Ratnala Rama Sankara Rao, Bobbili v. The ITO, Ward-1, Vizianagaram

ITA 251/VIZ/2009 | 2005-2006
Pronouncement Date: 16-02-2010 | Result: Allowed

Appeal Details

RSA Number 25125314 RSA 2009
Assessee PAN ABEPR5132P
Bench Visakhapatnam
Appeal Number ITA 251/VIZ/2009
Duration Of Justice 9 month(s) 3 day(s)
Appellant Sri Ratnala Rama Sankara Rao, Bobbili
Respondent The ITO, Ward-1, Vizianagaram
Appeal Type Income Tax Appeal
Pronouncement Date 16-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 16-02-2010
Assessment Year 2005-2006
Appeal Filed On 13-05-2009
Judgment Text
PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.251/VIZAG/2009 ASSESSMENT YEAR: 2005-06 RATNALA RAMA SANKARA RAO PARVATHIPURAM VS. ITO WARD-1 VIZIANAGARAM (APPELLANT) (RESPONDENT) PAN NO.ABEPR 5132P APPELLANT BY: SHRI C.V.S. MURTHY CA & SHRI K. VISWESWARA RAO ADVOCATE RESPONDENT BY: SHRI G.S.S. GOPINATH DR ORDER PER SHRI B R BASKARAN ACCOUNTANT MEMBER : THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 09-03-2009 PASSED BY THE LD CIT (A) VISAKHAPATNAM AND IT RELAT ES TO THE ASSESSMENT YEAR 2005-06. 2. ADDITION OF RS.8 00 000/- MADE U/S 69 (WRONGLY M ENTIONED AS RS.8 24 000/-) HAVING BEEN CONFIRMED BY THE LD CIT(A) THE ASSESSE E IS IN APPEAL BEFORE US. 3. THE FACTS RELATING TO THE ISSUES ARE STATED IN B RIEF. THE ASSESSEE IS AN AGRICULTURIST AND ALSO DERIVES INCOME FROM PLYING O F JEEP. THE ASSESSING OFFICER RECEIVED INFORMATION THAT THE ASSESSEE HAS PURCHASED DEMAND DRAFTS WORTH RS.10 75 000/- IN DIFFERENT NAMES THROUGH HIS BANK ACCOUNT AND ALSO FROM ANOTHER BANK ACCOUNT. THE ASSESSEE HAD DISCLOSED ONLY AN AMOUNT OF RS.2 75 00 0/- IN HIS BALANCE SHEET AS INVESTMENT. THESE DDS WERE PURCHASED FOR THE PURP OSE OF PARTICIPATING IN THE AUCTION FOR ALLOTMENT FOR EXCISE LICENSE FOR RUNNING WINE S HOPS. THE AO CALLED EXPLANATION FROM THE ASSESSEE ON THE ABOVE SAID INFORMATION RECEIVED BY HIM. THE CASE OF THE ASSESSEE WAS THAT HE PURCHASED DDS WORTH RS.8.00 LAKHS ON BE HALF OF SOME OTHER PERSONS NUMBERING EIGHT AT THEIR SPECIFIC REQUEST BY UTILI ZING THE MONEY PROVIDED BY THEM. THE AO SUMMONED ALL THE 8 PERSONS. HOWEVER ONLY 6 PERS ONS APPEARED BEFORE HIM AND THEY CONFIRMED THAT THEY ONLY PAID THE MONEY FOR TH E PURCHASE OF DEMAND DRAFTS ON BEHALF OF THEM. HOWEVER THE AO WAS NOT SATISFIED WITH THE CREDIT WORTHINESS OF THESE PAGE 2 OF 4 PERSONS AND HENCE ADDED THE ENTIRE AMOUNT OF RS.8.0 0 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE COULD NOT SUCCEED IN THE AP PEAL FILED BEFORE LD CIT(A). HENCE THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD AR SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE ORDER DATED 28.01.2010 PASSED BY THIS BENCH IN THE CASE OF SHRI I. RAMA RAJU IN ITA NO.525/VIZAG/2007 WHEREIN THE TRIBUNAL HAS DELETED THE ITEMS WHERE THE PURCHASE OF DEMAND DRAFTS WERE CONFIRMED BY THE RESPECTIVE PART IES AND SET ASIDE THE ITEMS FOR FRESH VERIFICATION WHERE THE CONCERNED PARTIES DID NOT APPEAR BEFORE THE AO. THE LD AR FURTHER SUBMITTED THAT IN THE INSTANT CASE OUT OF EIGHT PARTIES ONLY TWO PARTIES COULD NOT APPEAR BEFORE THE AO. SIX PARTIES HAVE APPEARED BE FORE THE AO AND CONFIRMED THE OWNERSHIP OF THE IMPUGNED DEMAND DRAFTS. EVEN THE OTHER TWO PERSONS HAVE FURNISHED AFFIDAVITS EXPRESSING THEIR WILLINGNESS TO APPEAR B EFORE THE AO. ON THE OTHER HAND THE LD DR STOOD BY THE ORDER OF LD CIT(A). 5. WE HAVE HEARD THE PARTIES AND ALSO PERUSED THE O RDER PASSED IN THE CASE OF I. RAMARAJU CITED SUPRA. IN THAT CASE THIS BENCH H AS EXTRACTED THE FOLLOWING OBSERVATIONS MADE IN THE CASE OF BALAGAM SRINIVAS I N ITA NO.518/VIZAG/2007 IN THE ORDER DATED 13.11.2009: 4. WE HAVE HEARD THE PARTIES AND CAREFULLY PE RUSED THE RECORD. WE NOTICE THAT THE LD CIT (A) HAS CONSIDERED FOLLOWING CASE LAW IN SUPPORT OF HIS DECISION: A) R. THYAGARAJ VS. CIT (239 ITR 557( (MAD.)) IN THI S CASE THE APPLICATION FORM PURCHASE OF D.D. WAS SIGNED BY THE ASSESSEE. THE COURT HELD THAT THE INFERENCE DRAWN BY THE AO TO THE EFFECT THAT TH E ASSESSEE HAS PAID NECESSARY CASH FOR OBTAINING THE DRAFT IS NOT JUSTI FIED. B) MOHAN B. SAMTANI VS. CIT (199 ITR 370)(CAL.) IN T HIS CASE THE ASSESSEE CONSIGNED ANTIQUES AS A REPRESENTATIVE OF STATE TRA DING CORPORATION OF SIKKIM. THE DISPATCH OF THE GOODS WERE DONE ON THE ORAL INSTRUCTION OF CHOGYAL. CHOGYAL ALSO CLAIMED OWNERSHIP OF THE ANTI QUE AND HIS CLAIM WAS NOT DISPROVED. HENCE IT WAS HELD THAT THE VALUE OF ANTIQUE CANNOT BE ADDED TO THE ASSESSEES INCOME C) CIT VS. SMT. P.K. NOORJAHAN (237 ITR 570)(SC) IN THIS CASE THE ASSESSEE WAS FOUND TO BE NOT CAPABLE ENOUGH TO EARN THE INCOME DURING THE ASSESSMENT YEAR UNDER CONSIDERATION OR WAS IN A POSITION TO EARN IT FOR A DECADE OR MORE. THE HONBLE APEX COURT HELD THAT SECTION 69 CONFERS A DISCRETION TO THE ASSESSING OFFICER IN THE MATTER O F TREATING AN INVESTMENT AS INCOME OF THE ASSESSEE AND HENCE THE QUESTION WH ETHER THE SOURCE OF INVESTMENT SHOULD BE TREATED AS INCOME OR NOT U/S 6 9 HAS TO BE CONSIDERED IN THE LIGHT OF FACTS OF EACH CASE. PAGE 3 OF 4 D) JAYADAYA PODDAR VS. BIBI RAGRA AND OTHERS AIR (197 4 SC 171.) _ IN CASES FALLING U/S 69A 69B AND 69C THE PHRASEOLOGY USED GOES TO SHOW THAT BEFORE ANY OF THESE SECTIONS CAN BE INVOKED THE CO NDITION PRECEDENT AS TO THE EXISTENCE OF INVESTMENT EXPENDITURE OMISSION TO STATE OR MAKING UNDERSTATEMENT OF VALUE ETC. MUST BE CONCLUSIVELY ESTABLISHED BY EVIDENCE AND/OR MATERIAL ON RECORD. (E) PRAKASH NARIAN VS. CWT (20 CTR 147) (ALL.) THE BU RDEN OF SHOWING THAT A PARTICULAR TRANSACTION IS A BENAMI AND THE O WNER IS NOT THE REAL OWNER RESTS ON THE PERSON ASSERTING IT TO BE SO AND THIS BURDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCING LEGAL EVIDENCE OF D EFINITE CHARACTER WHICH WOULD EITHER DIRECTLY PROVE THE FACT OF BENAMI OR E STABLISH CIRCUMSTANCES UNERRINGLY AND REASONABLY RAISING AN INFERENCE OF T HE FACT. 4.1 WE NOTICE THAT THE ASSESSEE HAS FILE D CONFIRMATION LETTERS FROM ALL THE 18 PERSONS ON WHOSE BEHALF THE DDS WERE CLAIMED TO HAV E BEEN PURCHASED BY THE ASSESSEE. SUBSEQUENTLY THE ASSESSEE HAS ALSO PRODUC ED 17 PERSONS AND THE AO HAS RECORDED STATEMENT FROM THEM. IN THE SWORN STAT EMENT ALSO ALL THE 17 PERSONS HAVE CONFIRMED THE SUBMISSION OF THE ASSESS EE. THERE IS ALSO NO DISPUTE WITH REGARD TO THE FACT THAT THE DDS WERE UITILISED BY THESE 18 PERSONS ONLY FOR THEIR OWN PURPOSE I.E. FOR MAKING APPLICATION IN T HEIR RESPECTIVE NAMES. WE WERE ALSO INFORMED THAT THE REVENUE DID NOT CAUSE A NY INQUIRY WITH REGARD TO THE DEMAND DRAFTS IN THE INDIVIDUAL HANDS OF THE 18 PERSONS. IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION TH AT ONCE INDIVIDUAL PERSONS HAVE ADMITTED THAT THE DDS WERE PURCHASED ON THEIR BEHALF AND THAT THEY HAVE ONLY USED THEM FOR THEIR OWN PURPOSE THE ONUS PLAC ED UPON THE ASSESSEE GETS DISCHARGED. IN SUCH A SITUATION THE REVENUE MAY EXA MINE THE FINANCIAL STATUS OF THE INDIVIDUAL PERSONS AND THE ADDITION IF ANY IS CALLED FOR IN THEIR RESPECTIVE HANDS. WE NOTICE THAT THE LD CIT (A) HAS ANALYSED T HE ISSUE IN RIGHT PERSPECTIVE AND HAS RENDERED HIS DECISION ON A CONSPECTUS OF MA TTER. HENCE WE DO NOT FIND ANY NECESSITY TO INTERFERE IN HIS DECISION. 5.1 SIMILARLY IN THE CASE OF BUDDEPU VARA LAKSH MI IN ITA NO.15/VIZAG/2007 THIS BENCH VIDE ITS ORDER DATED 13-11-2009 HAS DECIDED AN IDE NTICAL ISSUE AS UNDER: 6. DURING THE COURSE OF HEARING A SPECIFIC QUERY WAS RAISED TO THE LD. DR I.E. WHETHER THE ASSESSING OFFICER HAS MADE ANY INVESTIG ATION IN THE INDIVIDUAL HANDS OF PERSONS ON WHOSE BEHALF THE DEMAND DRAFTS WERE PURC HASED BY THE ASSESSEE. LD. DR REPLIED IN NEGATIVE. LD DR ALSO CONFIRMED THAT ONLY THE PERSONS IN WHOSE BEHALF THE DEMAND DRAFTS WERE CLAIMED TO HAVE BEEN PURCHASED HAS APPLIED FOR OBTAINING LICENSE FOR RUNNING IMFL SHOPS. HENCE IT IS PROVED THAT THE DEMAND DRAFTS WERE USED BY THE RESPECTIVE PERSONS. FURTHE R ALL THE PERSONS HAVE APPEARED BEFORE THE AO AND CONFIRMED THAT THE ASSESSEE HAS O NLY FACILITATED THE PURCHASING OF DEMAND DRAFTS. ONCE THE INDIVIDUAL PERSONS HAVE ADMITTED THAT THE DEMAND DRAFTS WERE PURCHASED ON THEIR BEHALF AND THAT THEY ONLY HAVE USED THE SAID DEMAND DRAFTS FOR THEIR OWN PURPOSE IN OUR OPINION THE ONUS PLACED UPON THE ASSESSEE GETS DISCHARGED AND THE REVENUE WAS REQUIR ED TO EXAMINE THE FINANCIAL STATUS OF THE INDIVIDUAL PERSONS AND ADDITION IF A NY IS CALLED FOR IN THEIR RESPECTIVE HANDS. IN VIEW OF THE FORE GOING WE REVERSE THE O RDER OF LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.12.0 0 LAKHS. PAGE 4 OF 4 6. CONSISTENT WITH THE VIEW TAKEN IN THE CASES C ITED ABOVE WE REVERSE THE ORDER OF LD CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION MAD E IN RESPECT OF THE PARTIES WHO HAVE APPEARED BEFORE HIM AND HAVE CONFIRMED ABOUT THE OW NERSHIP OF THE DEMAND DRAFT. IN RESPECT OF THE TWO PARTIES WHO HAVE NOT APPEARED B EFORE THE AO THE ASSESSEE HAS FILED AFFIDAVITS FROM THOSE TWO PERSONS AND IN THE AFFIDA VITS THEY HAVE EXPRESSED THEIR WILLINGNESS TO APPEAR BEFORE THE AO. ACCORDINGLY WE SET ASIDE THE ISSUE RELATING TO THESE TWO PARTIES TO THE FILE OF THE AO WITH A DIRE CTION TO MAKE NECESSARY ENQUIRIES AND DECIDE THE ISSUE IN THE LIGHT OF THE PRINCIPLES DEC IDED BY THE TRIBUNAL AFTER GIVING NECESSARY OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 16/02/2010. SD/ - SD/ - (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE:16 TH FEBRUARY 2010. COPY TO 1 RATNALA RAMA SANKARA RAO S/O LATE ESWARA RAO DR.N O.44 - 6 AGRAHARAM STREET BOBBILI. 2 THE ITO WARD - 1 VIZIANAGARAM. 3 THE CIT - 1 VISAKHAPATNAM 4 THE CIT(A ) VISAKHAPATNAM 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM