DCIT, Central Circle-2, Hyderabad v. Sri Pendurthi Chandrasekhar,, Hyderabad

ITA 314/HYD/2011 | 2002-2003
Pronouncement Date: 03-02-2012 | Result: Partly Allowed

Appeal Details

RSA Number 31422514 RSA 2011
Assessee PAN AMOPP4019L
Bench Hyderabad
Appeal Number ITA 314/HYD/2011
Duration Of Justice 11 month(s) 2 day(s)
Appellant DCIT, Central Circle-2, Hyderabad
Respondent Sri Pendurthi Chandrasekhar,, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 03-02-2012
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 03-02-2012
Assessment Year 2002-2003
Appeal Filed On 01-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH HYDERABAD BEFORE CHANDRA POOJARI ACCOUNTANT MEMBER & SMT. ASHA VIJAYARAGHAVAN JUDICIAL MEMBER ITA NO. 314/HYD/2011 ASSESSMENT YEAR 2002-03 THE DCIT CENTRAL CIRCLE 2 HYDERABAD VS SRI PENDURTHI CHANDRASEKHAR HYDERABAD (PAN AMOPP4019L) APPELLANT RESPONDENT CO.NO.30/H/2011 IN ITA NO. 314/HYD/2011 ASSESSMENT YEAR 2002-03 SRI PENDURTHI CHANDRASEKHAR HYDERABAD (PAN AMOPP4019L) VS THE DCIT CENTRAL CIRCLE 2 HYDERABAD APPELLANT RESPONDENT ASSESSEE BY : SHRI V. SRINIVAS REVENUE BY : SHRI C. SUKUMAR BABU DATE OF HEARING : 14.12.2011 DATE OF PRONOUNCEMENT : 3.2.2012 ORDER PER ASHA VIJAYARAGHAVAN JM . THIS APPEAL PREFERRED BY THE REVENUE IS D IRECTED AGAINST THE ORDER PASSED BY THE CIT(A) I HYDERABAD DATED 17.12.2010 AND PERTAINS TO THE ASSESSMENT YEAR 2002-03. TH E REVENUE IS IN APPEAL AGAINST THE DELETION OF VARIOUS ADDITIONS MADE BY THE CIT(A). ITA NO.314/H/2011 SHRI PENDURTHI CHANDRASEKHAR HYD 2 2. BRIEF FACTS OF THE CASE ARE THAT A SEARCH A ND SEIZURE OPERATION WAS CONDUCTED IN THE CASE OF THE APPELLAN T WHO IS A DIRECTOR OF M/S DAKSHIN SHELTERS P. LTD. CONSEQUEN T TO THE SEARCH NOTICES U/S 153A WAS ISSUED IN RESPONSE TO WHICH THE APPELLANT FILED THE RETURN OF INCOME FOR THE YEAR U NDER CONSIDERATION ADMITTING TOTAL INCOME OF RS 59 150/- IN COURSE OF THE ASSESSMENT PROCEEDING THE ASSESSING OFFICER FOU ND THAT AS PER THE STATEMENT OF AFFAIRS AND CASH FLOW STATEMEN T THE APPELLANT HAD TAKEN HAND LOANS FROM FIVE PERSONS AM OUNTING TO A TOTAL OF RS 16 LAKHS. AFTER DISCUSSING IN DETAIL THE AO TREATED THE ENTIRE LOAN AS UNEXPLAINED CASH CREDIT AND ADDE D THE SAME TO THE TOTAL INCOME. HE FURTHER ADDED AN AMOUNT OF RS 13 04 488/- ON ACCOUNT OF UNEXPLAINED OPENING CAPIT AL. HE ALSO ADDED RS 3 00 000/- ON ACCOUNT OF MEAGRE DRAWINGS. DURING THE YEAR THE APPELLANT HAD RECEIVED A GIFT OF RS 96 000 /- FROM HIS RELATIVE BABU RAO. THE ASSESSING OFFICER TREATED T HE SAME AS UNEXPLAINED CASH CREDIT AND ADDED THE SAME TO THE T OTAL INCOME. BEING AGGRIEVED AGAINST THESE ADDITIONS THE ASSESSE E FILED AN APPEAL BEFORE THE CIT(A). THE CIT(A) DELETED THE AD DITIONS AGAINST WHICH THE REVENUE IS ON APPEAL BEFORE US. 3. THE FIRST ISSUE ON APPEAL RELATES TO THE ADDITI ON OF RS 16 00 000/- BEING THE UNSECURED LOANS RECEIVED BY T HE APPELLANT. DURING THE COURSE OF HEARING BEFORE THE CIT(A) THE AUTHORISED REPRESENTATIVE OF THE APPELLANT SUBMITTE D THAT THE AO HAD MADE THE ADDITION OF RS 16 LAKHS ON ACCOUNT OF UNSECURED LOAN RECEIVED FROM THE FOLLOWING PERSONS. 1. P. RAJA BABU (P. RAJENDRA PRASAD) RS 2 00 000/- 2. N. SYAKUNTHALAMMA RS.5 00 0 00/- 3. A. SUBBA RAO RS 3 00 000/- 4. P. SUBBA RAO RS. 2 00 000/- 5. K. KOTESWARA RAO RS. 4 00 000/- ITA NO.314/H/2011 SHRI PENDURTHI CHANDRASEKHAR HYD 3 4. ALL THESE AMOUNTS WERE RECEIVED ON 22 ND JANUARY 2001 WHICH FALLS IN THE FINANCIAL YEAR 2000-01 RELEVANT TO THE AY 2001-02 AND NOT RELEVANT TO THE AY 2002-03. THE AM OUNTS WERE RECEIVED BY WAY OF DEMAND DRAFTS AND WERE DEPOSITED INTO THE STATE BANK A/C ON 22.1.2001. THE CONFIRMATION LETT ERS FOR ALL THE LOAN CREDITORS WERE ALREADY SUBMITTED BEFORE TH E AO AND PRODUCED IN THE PAPER BOOK WHICH ESTABLISHES THE FA CT THAT THE CREDITS PERTAIN TO ASSESSMENT YEAR 2001-02 AND NOT AY 2002-03. ACCORDINGLY THE ADDITION MADE BY THE AO IN THE AY 2 002-03 IS NOT JUSTIFIED. THE ASSESSEE FILED A COPY OF THE BAN K A/C IN STATE BANK OF INDIA FOR THE RELEVANT PERIOD. 5. THE CIT(A) DELETED THE ADDITION OBSERVING AS UN DER: I HAVE GONE THOUGH THE FACT OF THIS ISSUE. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS OBSERVED THAT THE LOAN FROM P. RAJA BABU WAS OBTAINED ON 22.1.2001. THE ASSESSM ENT ORDER ALSO CONFIRMS THAT ALL THE FIVE PERSONS HAVE FILED CONFIRMATION LETTER BEFORE THE AO. FROM THE COPY OF THE BANK A/C FILED BY THE APPELLANT THERE IS A DEPOSIT OF RS 16 LAKHS ON 22.1.2001 BY WAY OF BANKERS CHEQUE AND DRAFTS. THIS SHOWS THAT THE LOANS HAVE BEEN OBTAINED BY THE APPE LLANT DURING THE FY 2000-01 AND THE LOAN DOES NOT ORIGINA TE IN THE FY 2001-02 RELEVANT TO AY 2002-03. THEREFORE I N MY VIEW INVOKING THE PROVISION OF SECTION 68 IN THE AS SESSMENT YEAR 2002-03 IS LEGALLY NOT JUSTIFIED. IDENTICAL IS SUE WAS DECIDED BY ME IN THE CASE OF SRI K.SRINIVASA RAO IN ITA 0357/CC-2/ CIT(A)-I/09-10 DATED 8.3.2010. IN THAT CASE WHILE DIRECTING THE AO TO DELETE THE ADDITION MADE I HAD RELIED ON THE DECISION OF ITAT DELHI IN THE CASE O F SURAJ BHAN BAJAJ VS ITO ( 21 SOT 22) WHEREIN IT WAS HELD BY THE HONBLE TRIBUNAL THAT WHILE INVOKING THE DEEMING PR OVISION OF SECTION 68 FOR MAKING ADDITION INCOME TAX DOES N OT ITA NO.314/H/2011 SHRI PENDURTHI CHANDRASEKHAR HYD 4 EMPOWER REVENUE AUTHORITIES TO INCLUDE CERTAIN RECE IPTS AS INCOME OF THE YEAR WHICH ACTUALLY PERTAIN TO SOME O THER YEARS. I HAD ALSO RELIED ON THE DECISION OF ITAT AGRA IN THE CASE OF BAIDEV COLD STORAGE AND ICE FACTORY P. LTD VS ACIT ( 1 SOT 45) WHEREIN THE HONBLE ITAT OBSERVED THAT UNEXPLAINED CASH CREDIT U/S 68 SHALL BE ADDED TO T HE INCOME OF ASSESSEE FOR THAT PREVIOUS YEAR IN WHICH THE SUM ARE FOUND. A SIMILAR VIEW HAS BEEN HELD BY ITAT DE LHI HBENCH IN THE CASE OF SHRI VARDHMAN OVERSEAS LTD VS ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 8(1) N EW DELHI (2008) 24 SOT 393 (DELHI) CONSIDERING THE JUDICIAL DECISIONS AS ABOVE IN MY VIEW IF THE UNSECURED LOAN S WERE OBTAINED IN THE FINANCIAL YEAR 2000-01 RELEVANT TO AY 2001- 02 ADDITION AS UNEXPLAINED CASH CREDIT WILL NOT BE CALLED FOR IN THE AY 2002-03. SINCE THE ASSESSING OFFICER HAS NOT EXAMINED THIS ASPECT HE IS DIRECTED TO RE VERIFY TH E CONTENTION RAISED BY THE APPELLANT. IF THE UNSECURE D LOANS HAVE BEEN RECEIVED IN THE FINANCIAL YEAR 2000-01 AS CONTENDED BY THE APPELLANT THE ADDITION OF THE SAME WILL NOT BE JUSTIFIED IN THE ASST. YEAR 2002-03 AND CONSEQUE NTLY THE SAME SHOULD BE DELETED. 6. AGGRIEVED THE REVENUE IS ON APPEAL. AS POINTED OUT BY THE CIT(A) THE LOANS WERE TAKEN BY THE ASSESSEE FROM T HESE PARTIES THROUGH REGULAR BANKING CHANNEL AND THE ASSESSEE HA D ALSO FILED LETTERS OF CONFIRMATION FROM THESE PARTIES. WHEN TH E CREDIT ENTRIES DO NOT PERTAIN THE ASSESSMENT YEAR UNDER AP PEAL ADDITION CANNOT BE MADE OF THE OPENING CREDIT BALAN CES U/S 68. THIS IS SUPPORTED BY DECISION OF THE DELHI HIGH COU RT IN THE CASE OF CIT V USHA STUD AGRICULTURAL FARMS LTD (301 ITR 384). HOWEVER IN THE PRESENT CASE THE AO HAS NO OCCASIO N TO EXAMINE THE BANK ACCOUNTS TO SEE WHETHER THESE CREDITS ARE RELATING TO ITA NO.314/H/2011 SHRI PENDURTHI CHANDRASEKHAR HYD 5 THE ASSESSMENT YEAR UNDER CONSIDERATION OR RELATING TO EARLIER ASSESSMENT YEAR. ACCORDINGLY WE FEEL IT APPROPRIA TE TO SET ASIDE THE ISSUE TO THE FILE OF AO TO EXAMINE WHETHER THES E CREDITS ARE RELATING TO THE PRESENT ASSESSMENT YEAR UNDER CONSI DERATION OR ANY OTHER EARLIER ASSESSMENT YEAR. IF IT RELATES T O EARLIER ASSESSMENT YEAR NO ADDITION IS CALLED FOR. THIS I SSUE IS SET ASIDE TO THE FILE OF AO FOR VERIFICATION. THE GROUND RAI SED BY THE REVENUE IS ALLOWED. 7. THE NEXT GROUND OF APPEAL RELATES TO ADDITION O F RS 13 04 408/-. IN THE ASSESSMENT ORDER THE ASSESSIN G OFFICER OBSERVED THAT THE OPENING CAPITAL FOR THE YEAR UNDE R CONSIDERATION WAS RS. 82 76 124/- AND THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME. APPARENTLY THE ASSESSEE FILED A DETAIL REPLY ON 20.10.2009 GIVING THE BREAK UP AS UNDER. OPENING CAPITAL FOR FY 2000-01 RS 81 18 326 GIFT FROM FATHER IN LAW RS .92 000 EXCESS INCOME OVER EXPENDITURE RS.65 798 TOTAL RS 82 76 124 8. FOR THE OPENING CAPITAL OF RS 81 18 326/- THE A PPELLANT HAD FILED A DETAILED EXPLANATION STATING THAT RS 50 LAKHS GIFT WAS RECEIVED FROM HIS FATHER IN LAW WHICH WAS DEPOSITED INTO HIS BANK A/C OF M/S PENDURTHI CONSTRUCTION P. LTD. THE SAID AMOUNT WAS PAID TO VST INDUSTRIES ON 30 TH MAY 1998 TOWARDS DEPOSIT FOR DEVELOPMENT. VST INDUSTRIES RETURNED BA CK RS 60 LAKHS ON 9.6.2000 WHICH WAS DEPOSITED INTO PENDURTH I CONSTRUCTION LTD. THIS 60LAKHS WAS TRANSFERRED INTO THREE TERM DEPOSIT ACCOUNTS. FURTHER AN AMOUNT OF RS 19 71 63 6/- WAS STANDING TO THE ASSESSEES CAPITAL A/C IN THE YEAR 2000-01 WITH THE PARTNERSHIP FIRM VENKATESWARA ESTATES. VIJAYAW ADA ITA NO.314/H/2011 SHRI PENDURTHI CHANDRASEKHAR HYD 6 ASSESSED BY ITO 2(1) VIJAYAWADA. ACCORDINGLY THE AS SESSEE FILED THE BREAK UP OF THE CAPITAL A/C FOR THE FINANCIAL Y EA 2000-01 AS BELOW: AMOUNT REFUNDED BY VST INDUSTRIES RS 60 00 000 CAPITAL A/C WITH FIRM RS.19 71 636 BANK INTEREST ON THE FDRS RS. 1 46 690 TOTAL RS.81 18 326 9. AFTER GOING THROUGH THE EXPLANATION THE AO OBSE RVED THAT THE INITIAL GIFT FROM FATHER IN LAW WAS RS 50 LAKHS WHICH WAS GIVEN TO VST INDUSTRIES AND VST INDUSTRIES RETURNED RS 60LAKHS AND HENCE THE DIFFERENCE AMOUNT OF RS 10 LAKHS S NO THING BUT INTEREST WHICH IS TO BE TREATED AS UNEXPLAINED IN COME. THE AO FURTHER OBSERVED THAT THE INTEREST ON FDRS ARE NOTH ING BUT INCOME EARNED BY THE ASSESSEE IN INDIA AND HENCE HA S TO BE ADDED AS UNDISCLOSED INCOME. THE AO ALSO OBSERVED T HAT THE ASSESSEE COULD MATCH THE OPENING CAPITAL FOR AY 20 02-03 WAS RS 82 76 124/- HENCE THE BALANCE AMOUNT OF RS 1 57 796/- WAS NOTHING BUT UNEXPLAINED INVESTMENT INCOME CREDITED TO THE CAPITAL A/C. WITH THESE OBSERVATIONS THE AO MADE TH E ADDITION OF RS 13 04 488/- (RS.10 00 000/- PLUS RS 1 46 690/- P LUS 1 57 796/-) 10. IN THE WRITTEN SUBMISSION FILED DURING THE APP ELLATE PROCEEDINGS THE APPELLANT STATED THAT RS 10 LAKHS R ECEIVED FROM VST INDUSTRIES WAS RECEIVED IN THE FINANCIAL YEAR 2 000-01 RELEVANT TO THE AY 2001-02. SIMILARLY THE INTEREST RECEIVED ON THE BANK FDRS WAS ALSO RECEIVED IN THE FINANCIAL YE AR 2000-01. ACCORDINGLY THE ADDITIONS MADE BY THE AO IN THE AY 2002-03 ARE WRONG NOT JUSTIFIED. AS REGARDS THE OPENING BALANC E THE ITA NO.314/H/2011 SHRI PENDURTHI CHANDRASEKHAR HYD 7 APPELLANT STATED THAT THE AO HAD WRONGLY TAKEN THE OPENING BALANCE. 11. THE CIT(A) HELD AS FOLLOWS: I HAVE GONE THROUGH THE ISSUE AND I HAVE ALSO GONE THROUGH THE PAPER BOOK AND SUBMISSIONS FILED BY THE APPELLA NT. IT IS NOT DISPUTED BY THE AO THAT THE APPELLANT HAD RECEI VED RS 60 LAKHS FROM VST INDUSTRIES AS AGAINST RS 50 LAKHS GIVEN BY APPELLANT. THE AO TREATED THE DIFFERENTIAL AMOU NT AS INTEREST. IT IS THE CONTENTION OF THE APPELLANT T HAT THE DIFFERENTIAL AMOUNT OF RS 10 LAKHS WAS NOT RECEIVED DURING THE FINANCIAL YEAR 2001-02 BUT IN THE FY 2000-01. IN FACT THE SAME HAS BEEN EXPLAINED BY THE APPELLANT BEFORE THE AO WHICH IS PRODUCED IN THE ASSESSMENT ORDER. IT IS CLEAR FROM THE SAID EXPLANATION GIVEN IN THE ASST ORDER THAT RS 60 LAKHS WAS RECEIVED BY THE APPELLANT ON 9.6.2000 WHI CH FAILS IN THE FY 2000-01. THEREFORE I AM OF THE VIE W THAT THE EXCESS AMOUNT OF RS 10 LAKHS RECEIVED BY THE APPELL ANT DOES NOT FALL IN THE FY 2001-02 RELEVANT TO THE AY 2002-03. ACCORDINGLY RELYING ON THE DECISION OF ITAT DELHI IN THE CASE OF SURAJ BHAN BAJAJ VS ITO (21 SOT 22) REFERREDTO A BOVE THE ADDITION MADE BY THE AO IN THE ASSESSMENT YEAR UNDE R CONSIDERATION IS NOT JUSTIFIED AND THE SAME IS DIRE CTED TO BE DELETED. 12. AS REGARDS THE INTEREST OF RS 1 46 690/- THE A PPELLANT SUBMITTED BEFORE THE AO THAT THE SAME INTEREST WAS RECEIVED ON THE FDRS WHICH WERE MADE FROM OUT OF THE AMOUNT OF RS 60 LAKHS RECEIVED FROM VST INDUSTRIES. THE APPELLANT CONTENDS THAT THE SAME INTEREST WAS ALSO RECEIVED IN THE FY 2000- 01. THE AO IS DIRECTED TO VERIFY THE RECEIPT OF BANK INTEREST AND IF THE SAID INTEREST IS CREDITED TO THE A/C OF THE APPELLANT IN THE FY 2000-01 ITA NO.314/H/2011 SHRI PENDURTHI CHANDRASEKHAR HYD 8 AS CONTENDED BY THE APPELLANT THEN THE ADDITION ON ACCOUNT OF THE INTEREST STANDS DELETED SINCE THE SAME DOES NOT FALL IN THE AY 2002-03. 13. AS REGARDS THE DIFFERENTIAL AMOUNT OF RS 1 5 7 796/- THE AO OBSERVED THAT THE ASSESSEE COULD EXPLAIN HIS OP ENING CAPITAL TO THE EXTENT OF RS 81 18 326/- HOWEVER THE OPENING CAPITAL OF AY 2002-03 WAS RS 82 76 124/- AND HENCE THE BALANCE AMOUNT OF RS. 1 57 796/- WAS NOTHING BUT UNEXPLAINED INCOM E CREDITED TO THE CAPITAL A/C. THE APPELLANT IN THE WRITTEN S UBMISSION STATED THAT THE ADDITION MADE BY THE AO IS INVALID. THE ASSESSING AUTHORITY COMPARED WITH THE OPENING BALAN CES OF RS 81 18 326/- WITH THE CAPITAL BALANCE OF RS 82 76 12 4/- (NOT OPENING BALANCE) IN THE BALANCE SHEET OF THE ASSESS EE FOR THE AY 2002-03 AND WRONGLY CONCLUDED THAT IT IS THE DIFFER ENCE IN OPENING BALANCE. THE ACTUAL FACT IS AS FOLLOWS: OPENING BALANCE OF CAPITAL RS 81 18 326 ADD: GIFT RECEIVED FROM DR.BABURAO (WHICH HE ADDED IN THE SAME FY) RS . 92 000 ADD: INTEREST FOR AY 2002-03 RS.59 149 ADD: SHARE OF PROFIT RS.16 239 LESS: EXCESS OF EXPENDITURE OVER INCOME (RS .9 590) TOTAL RS. 82 76 124/- 14. BY OVERSIGHT THE ASSESSING AUTHORITY HAD CONSI DERED THE OPENING BALANCE SHOWN IN THE STATEMENT OF AFFAIRS O F AY 2002-03 AS THE OPENING CAPITAL AND COMPARED THIS WITH THE O PENING CAPITAL OF EARLIER YEAR I.E. 2001-02. BASED ON THE ABOVE THE ITA NO.314/H/2011 SHRI PENDURTHI CHANDRASEKHAR HYD 9 ASSESSEE SUBMITTED THAT THE ADDITION IS INVALID AND SHOULD BE DELETED. 15. THE CIT(A) HAS ACCEPTED THE SUBMISSIONS OF THE ASSESSEE AND DELETED THE ADDITION OF. RS 13 04 488/- OBSERVI NG AS UNDER: I HAVE GONE THROUGH THE SUBMISSION OF THE APPELLA NT. AS DISCUSSED EARLIER WHILE WORKING OUT THE OPENING CAP ITAL OF RS 81 18 326/- THE AO HAD CONSIDERED THE AMOUNT REFUNDED BY VST INDUSTRIES OF RS 60 LAKHS AS ALSO B ANK INTEREST ON FDR OF RS 1 46 690/- IT HAS ALREADY BEE N MENTIONED ELSEWHERE IN THIS ORDER THAT THESE AMOUNT S WERE RECEIVED IN THE FY 2000-01 MEANING HEREBY THAT RS 81 18 326/- COULD AT BEST BE THE CLOSING BALANCE OF THE FY 2000-01 I.E. AS ON 31.3.2001. THUS THE OPENING BAL ANCE FOR THE FINANCIAL YEAR 2001-02 BECOMES RS 81 18 326/- A DDED TO THAT IS THE GIFT FROM FATHER IN LAW ON 6.9.2001 AND THE EXCESS OF INCOME OVER EXPENDITURE OF RS 65 798/- TH E CLOSING BALANCE AS ON 31.3.2002 COMES TO RS 82 76 124/-. THIS CLOSING BALANCE IS THE OPENING CAPITAL FOR THE AY 2002- 03. THE ASSESSING OFFICER HAS SIMPLY ADDED RS 1 57 796/- COMPARING THE OPENING BALANCE AS ON 1.4.2001 WITH T HE CLOSING BALANCE AS ON 31.3.2002 WITHOUT LOOKING INT O THE ASPECT OF ADDITIONS MADE DURING THE YEAR SUCH AS TH E GIFT CLAIMED TO HAVE BEEN RECEIVED INTEREST AS CLAIMED B Y THE ASSESSEE AS ALSO THE SHARE OF PROFIT. IN MY VIEW THE AO HAS MADE THE ADDITION WITHOUT LOOKING INTO THE TOTA LITY OF THE FACT AND MADE A WRONG COMPARISON .INSOFAR AS T HE RECEIPT OF GIFT FROM DR. BABURAO OF RS 92 000/- THE AO HAS ALREADY CONSIDERED THE SAME WHILE MAKING AN ADDITIO N OF UNEXPLAINED CASH CREDIT AS PER PARA 4 OF THE ASSESS MENT ORDER (PAGE 16 OF THE ASSESSMENT ORDER). HE HAS AL SO INCLUDED THE SAME WHILE MAKING A DISALLOWANCE OF RS ITA NO.314/H/2011 SHRI PENDURTHI CHANDRASEKHAR HYD 10 1 57 796/- AS DIFFERENCE IN THE BALANCE. THIS LEAD S TO DOUBLE ADDITION OF THE SAME AMOUNT WHICH IS NOT JUS TIFIED. THUS FROM OUT OF RS 1 57 796/- WHICH INCLUDES RS 92 000/- AS GIFT FROM DR. BABURAO FATHER IN LAW OF THE APPE LLANT ADDITION OF RS 92 000/- IS DIRECTED TO BE DELETED S INCE IT IS CONSIDERED SEPARATELY AS UNEXPLAINED CASH CREDIT IN PARA 4 OF THE ASSESSMENT ORDER. AS REGARDS THE BALANCE AMO UNT THE AO MAY EXAMINE THE CONTENTION OF THE APPELLANT SINCE THE SAME HAS NOT BEEN DISCUSSED IN THE ASSESSMENT O RDER AND IF THE CONTENTION OF THE APPELLANT IS FOUND TO BE CORRECT THE BALANCE AMOUNT SHOULD ALSO BE DELETED. 16. AGGRIEVED THE REVENUE IS ON APPEAL. WE DO NOT SEE ANY MERIT IN THE REVENUES APPEAL. THE ADDITION OF RS. 13 04 488/- ON ACCOUNT OF CAPITAL ACCOUNT HAS BEEN CLEARLY EXPL AINED BY THE ASSESSEE. OUT OF THIS AMOUNT THE SUMS OF RS. 10 00 000/- AND RS 1 46 690/- REPRESENTS INTEREST RECEIVED FROM M/S VST INDUSTRIES AND THE BANKS FOR THE IMMEDIATELY PRECED ING ASSESSMENT YEAR. HENCE THE SAME CANNOT BE ADDED AS UNEXPLAINED INCOME OF THIS YEAR. AS REGARDS THE BAL ANCE AMOUNT OF RS. RS 1 57 796/- THE ASSESSEE HAS EXPLAINED T HE MOVEMENT IN THE CAPITAL ACCOUNT. THE ASSESSING OFFICER HAS S IMPLY ADDED RS 1 57 796/- COMPARING THE OPENING BALANCE AS ON 1 .4.2001 WITH THE CLOSING BALANCE AS ON 31.3.2002 WITHOUT LO OKING INTO THE ASPECT OF ADDITIONS MADE DURING THE YEAR SUCH A S THE GIFT CLAIMED TO HAVE BEEN RECEIVED INTEREST AS CLAIMED B Y THE ASSESSEE AS ALSO THE SHARE OF PROFIT. THUS THE ASS ESSEE HAS FACTUALLY EXPLAINED THE ALLEGED DIFFERENCE OF RS. 1 3 04 488/-. THE ENTIRE AMOUNT PERTAINS TO THE EARLIER YEAR AND THER EFORE CANNOT BE ADDED AS UNEXPLAINED IN COME OF THIS YEAR. IN VI EW OF THIS FACTUAL MATRIX WE UPHOLD THE ORDER OF THE CIT(A) A ND DISMISS THE APPEAL OF THE REVENUE ON THIS ISSUE. ITA NO.314/H/2011 SHRI PENDURTHI CHANDRASEKHAR HYD 11 17. THE NEXT GROUND OF APPEAL RELATES TO THE ADDIT ION OF RS 96 000/- AS UNEXPLAINED CASH CREDITS. AT PARA 4 OF THE ASSESSMENT ORDER THE AO OBSERVED THAT ON VERIFICATI ON OF THE CAPITAL A/C AS WELL AS BREAK UP FILED BY THE ASSESS EE IT WAS NOTICED THAT AN AMOUNT OF RS 92 000/- WAS CREDITED AS GIFT FROM SHRI. BABURAO THE ASSESSEE WAS ASKED TO FURNISH TH E DOCUMENTARY EVIDENCE AND THE NATURE OF GIFT. THE AO ALSO REPRODUCED THE SWORN STATEMENT OF THE APPELLANT. TH EREAFTER HE OBSERVED THAT DURING THE PERIOD 2002-03 TO 2008-09 THE APPELLANT NEVER GAVE ANY GIFT TO ANY PERSON. HE ALS O OBSERVED THAT THE DONOR COULD NOT BE EXAMINED AS HE IS NOT A RESIDENT OF INDIA. THEREFORE THE AO MADE THE ADDITION OF RS 96 000/- AS UNEXPLAINED CASH CREDIT. 18. DURING THE APPELLATE PROCEEDING BEFORE THE CI T(A) THE ASSESSEE SUBMITTED THAT HE HAD RECEIVED CHEQUE NO.0000011837 OF RS 92 000/- FROM HIS FATHER IN LAW DR. BABURAO CHOWDRY CHEPARALA AND THE SAID GIFT WAS REC EIVED OUT OF NATURAL LOVE AND AFFECTION. THE COPY OF THE BAN K A/C FILED BY THE ASSESSEE SHOWED THAT RS 92 000/- WAS CREDITED T O HIS A/C IN STATE BANK OF INDIA ON 6.9.2001. SINCE THE TRANSACT ION HAS BEEN MADE THROUGH BANKING CHANNEL PRIMA FACIE THE IDENTI TY OF THE DONOR IS ESTABLISHED. EVEN DURING THE APPELLATE PRO CEEDING THE APPELLANT HAS FILED A COPY OF THE CONFIRMATION FROM DR.BABURAO CHAPARALA WHO WAS APPARENTLY A BRITISH CITIZEN AND WORKING AS A CONSULTANT PSYCHIATRIST FOR BRITISH NATIONAL HEAL TH SERVICE. APART FROM THIS GIFT HE HAD ALSO STATED THAT HE HAD GIVEN A FEW MORE GIFTS TO HIS SON IN LAW. APPELLANTS WIFE IS T HE ONLY DAUGHTER TO THE DONOR AND THE GIFT HAD BEEN MADE THROUGH BA NK TRANSFER. 19. THE CIT(A) DELETED THE ADDITION OBSERVING AS U NDER: ITA NO.314/H/2011 SHRI PENDURTHI CHANDRASEKHAR HYD 12 THE FACTS THAT A FATHER IN LAW HAS GIVEN GIFT TO H IS SON IN LAW WITHOUT ANY RECIPROCAL GIFT CANNOT BE A VALID G ROUND FOR STATING THAT THE AMOUNT RECEIVED AS GIFT IS UNEXPLA INED CASH CREDIT. IN MY VIEW SINCE THE IDENTITY OF THE DONOR IS ESTABLISHED AND THE GIFT IS RECEIVED THROUGH BANKIN G CHANNEL WHICH IS NOT DISPUTED THE SAME CANNOT PRIMA FACIE BE TREATED AS UNEXPLAINED FURTHER THE SAME ASSESSIN G OFFICER HAS OBSERVED ELSEWHERE IN THE ASSESSMENT O RDER THAT THE APPELLANT HAD RECEIVED GIFT OF RS 50 LAKH WHICH WAS INVESTED IN VST INDUSTRIES . NO ADVERSE VIEW HA S BEEN TAKEN ON THAT GIFT. THEREFORE CONSIDERING THE TOTA LITY OF THE FACT I AM OF THE VIEW THAT THE ADDITION MADE BY THE AO IS NOT JUSTIFIED. THE SAME IS ACCORDINGLY DIRECTED TO BE DELETED. I MAY MENTION HERE THAT THE AO HAS MADE AN ADDITIO N OF RS 96 000/- THOUGH IN THE BEGINNING OF THE PARAGRAP H 4 HE HAS OBSERVED THAT THE GIFT RECEIVED WAS RS. 92 000/ -THIS COULD BE A TYPOGRAPHICAL MISTAKE. 20. THE REVENUE IS ON APPEAL BEFORE US. THE DONOR IS THE FATHER IN LAW OF THE ASSESSEE AND PRIMA FACIE HE HAS THE R ESOURCES TO MAKE THE GIFT OF RS. 96 000/-. THE GIFT HAS BEEN MA DE THROUGH BANKING CHANNELS AND THE GIFT HAS BEEN CONFIRMED BY THE DONOR. NOTHING FURTHER WAS ADDUCED BEFORE US TO PERSUADE U S TO TAKE A DIFFERENT VIEW THAN THAT ADOPTED BY THE CIT(A).IN T HE CIRCUMSTANCES WE AGREE WITH THE CIT(A) THAT THE GIF T OF RS. 96 000/- RECEIVED FROM ASSESSEES FATHER IN LAW CAN NOT BE ADDED AS UNEXPLAINED CREDIT IN THE HANDS OF THE ASSESSEE. THE REVENUES APPEAL ON THIS ISSUE IS DISMISSED. 21. WE HEARD BOTH THE PARTIES AND PERUSED THE MAT ERIALS AVAILABLE ON RECORD. THE REVENUE HAD RAISED A GENE RAL GROUND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT NOT TO HAVE ACCEPTED THE ADDITIONAL EVIDENCES SUBMITTED BY HIM AS THE ITA NO.314/H/2011 SHRI PENDURTHI CHANDRASEKHAR HYD 13 SAME WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER AT THE TIME OF HEARING WHERE SUFFICIENT OPPORTUNITIES WERE GIVE N TO THE ASSESSEE. WE FIND THAT ALL THE EVIDENCES BASED ON WHICH THE CIT(A) HAS COME TO THE CONCLUSION WERE BEFORE THE A SSESSING OFFICER. THE FIRST TWO ADDITIONS WERE ON THE BASIS OF ENTRIES IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WHICH WAS BEFORE THE AO. THE THIRD ISSUE REGARDING GIFT WAS ALSO EXPLAINED BEFOR E THE AO. WE THEREFORE ARE OF THE VIEW THAT NO SUBSTANTIAL NEW E VIDENCES WERE FURNISHED BY THE ASSESSEE BEFORE THE CIT(A) WHICH WAS NOT THERE BEFORE THE AO. HENCE THIS GROUND OF THE REVENUE THA T THE CIT(A) OUGHT NOT TO HAVE ACCEPTED ADDITIONAL EVIDENCES IS WITHOUT MERIT AND IS DISMISSED. 22. THE ASSESSEE RAISED THE FOLLOWING GROUNDS IN H IS CROSS OBJECTION: 1. THE CIT(A) IS JUSTIFIED IN ALLOWING THE APPEAL OF THE ASSESSEE ON ACCOUNT OF THE FOLLOWING ADDITIONS BOTH UNDER LAW AND ON FACTS: A) ADDITION BY DISBELIEVING THE UNSECURED LOAN OF RS.16 00 000 RECEIVED BY THE ASSESSEE IN THE FINANC IAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2001-02. B) ADDITION BY DISBELIEVING THE OPENING BALANCES OF RS.13 04 488/- WHICH ARE BEING C) ADDITION BY DISBELIEVING THE UNEXPLAINED GIFT OF RS.92 000/- RECEIVED FROM FATHER IN LAW. 2. THE CIT(A) IS ALSO JUSTIFIED IN CONSIDERING THE EVIDENCES FURNISHED BEFORE THE AO REGARDING OPENING BALANCES OF RS.13 04 488/- UNSECURED LOAN OF RS.16 00 000/- AND GIFT OF RS.92 000/-. ITA NO.314/H/2011 SHRI PENDURTHI CHANDRASEKHAR HYD 14 23. THE CROSS OBJECTION MERELY SUPPORTS THE ORDER OF THE CIT(A) AND SINCE THE REVENUES APPEAL IN ITA NO.314 /H/2011 IS PARTLY ALLOWED THE CROSS OBJECTION IN CO NO.30/HYD /2011 BECOME INFRUCTUOUS. 22. IN THE RESULT THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED AND THE CROSS OBJECTION IN CO NO.30/H/2011 IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON: 3.2.2012 SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER DATED THE 3 RD FEBRUARY 2012 COPY FORWARDED TO: 1. SRI PENDURTHI CHANDRASEKHAR PLOT NO.8-2-696/697 FL AT NO.LA CREATIVE HEIGHTS ROAD NO.12 BANJARA HILLS HYDERABAD 2. THE DCIT CENTRAL CIRCLE 2 HYDERABAD 3. THE CIT(A)-I HYDERABAD 4. THE CIT HYDERABAD 5. THE DR ITAT HYDERABAD NP/