The ITO, Ward-1., Srikakulam v. Sri S Venkat Rao,, Srikakulam

ITA 327/VIZ/2007 | 2003-2004
Pronouncement Date: 29-03-2010 | Result: Allowed

Appeal Details

RSA Number 32725314 RSA 2007
Bench Visakhapatnam
Appeal Number ITA 327/VIZ/2007
Duration Of Justice 2 year(s) 9 month(s)
Appellant The ITO, Ward-1., Srikakulam
Respondent Sri S Venkat Rao,, Srikakulam
Appeal Type Income Tax Appeal
Pronouncement Date 29-03-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 29-03-2010
Assessment Year 2003-2004
Appeal Filed On 29-06-2007
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH: VISAKHAPATNAM BEFORE: SRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SRI B.R. BASKARAN ACCOUNTANT MEMBER ITA NO.323/VIZAG/2007 ASSESSMENT YEAR: 2003-04 S. VENKATA RAO VS. ITO WAR5D-1 SRIKAKULAM SRIKAKULAM PAN NO:AIXPS 0746 C (APPELLANT) (RESPONDENT) ITA NO. 327/VIZAG/2007 ASSESSMENT YEAR: 2003-04 ITO WARD-1 VS. S.VENKATA RAO SRIKAKULAM SRIKAKULAM PAN NO:AIXPS 0746 C (APPELLANT) (RESPONDENT) ITA NO. 325/VIZAG/2007 ASSESSMENT YEAR: 1999-2000 ITO WARD-1 VS. S.VENKATA RAO SRIKAKULAM SRIKAKULAM PAN NO:AIXPS 0746 C (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S. RAMA RAO ADVOCATE RESPONDENT BY: SHRI G. S.S. GOPINATH DR O R D E R PER B..R. BASKARAN ACCOUNTANT MEMBER : 1. THE CROSS APPEALS RELATING TO THE ASSESSMENT YEAR 2003-04 AND THE APPEAL OF THE REVENUE RELATING TO THE ASSESSMENT YEAR 1999 -2000 ARE DIRECTED AGAINST THE ORDERS PASSED BY LD CIT(A)-II VISAKHAPATNAM. SINCE ALL THE APPEALS WERE HEARD TOGETHER WE FIND IT CONVENIENT TO DISPOSE TH EM OF BY THIS COMMON ORDER. 2 2. WE TAKE UP THE CROSS APPEALS RELATING TO THE ASSESSMENT YEAR 2003-04 FIRST. IN THE APPEAL OF THE ASSESSEE FOLLOWING THREE ISSU ES ARE CONTESTED. A. SHORTFALL OF SOURCES FOR INVESTMENT - RS.1 84 419/- B. DEPOSITS STANDING IN THE NAME OF OTHERS - RS .8 88 526/- C. VALUE OF GOLD JEWELLERY - RS.2 85 754/- 3. IN THE APPEAL FILED BY THE DEPARTMENT THE R EVENUE IS QUESTIONING THE ACTION OF LD CIT(A) IN DELETING THE ADDITION TO THE EXTENT OF RS.3 93 150/- BY PLACING RELIANCE ON THE ADDITIONAL EVIDENCES IN VIOLATION OF RULE 46A OF THE INCOME TAX RULES. 4. THE FACTS OF THE CASE ARE STATED IN BRIEF. THE ASSESSEE IS WORKING AS ASST. MOTOR VEHICLE INSPECTOR IN THE TRANSPORT DEPARTMENT OF GOVERNMENT OF ANDHRA PRADESH. THE ANTI CORRUPTION AUTHORITIES CONDUCTED A SEARCH IN THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 24.2.2003 AND STUMBLED UPON DOCUMENTS RELATING TO VARIOUS INVESTMENTS MADE IN THE NAME OF THE ASSESSE E HIS FAMILY MEMBERS AND RELATIVES. BASED ON THE INFORMATION OBTAINED FROM THE ACB AUTHORITIES THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS REO PENED BY ISSUING NOTICE U/S 148 OF THE ACT. 5. THE FIRST ISSUE IN THE APPEAL OF THE ASSESS EE RELATES TO THE ADDITION OF RS.1 84 419/- CONFIRMED BY THE AO. THE APPEAL OF T HE REVENUE IS ALSO RELATED TO THIS ISSUE AND HENCE WE DISPOSE THESE TWO ISSUES TO GETHER. THE ASSESSEE CLAIMED THAT CERTAIN ASSETS WITH AN AGGREGATE VALUE OF RS.2 3 57 858/- WERE ACQUIRED FROM OUT OF FUNDS AVAILABLE IN THE HUF STATUS OF THE ASS ESSEE. THE AO ANALYSED EACH OF THE SOURCES AND ACCEPTED THE SOURCES ONLY TO THE EXTENT OF RS.16 79 315/-. ACCORDINGLY THE SHORT FALL IN THE SOURCES (RS.2357 858 (-) 1679315) RS.6 78 543/- WAS ADDED. IN THE APPEAL PREFERRED BY THE ASSESSEE THE LD CIT (A) GRANTED FURTHER RELIEF TO THE EXTENT OF RS.4 94 124/- AND C ONFIRMED THE BALANCE AMOUNT OF RS.1 84 419/-. THE RELIEF GIVEN BY LD CIT(A) INCL UDES A SUM OF RS.3 93 150/- RELATING TO CHIT AUCTION PRIZE AMOUNT. AGAINST TH IS RELIEF THE REVENUE HAS FILED APPEAL CLAIMING VIOLATION OF RULE 46A OF THE I.T. R ULES. 3 5.1 AMONGST THE SOURCES CLAIMED BY THE ASSESSEE THE TAX AUTHORITIES DID NOT ACCEPT THE CLAIM OF REFUND OF MORTGAGE LOANS AGGREG ATING TO RS.4.00 LAKHS. THE ASSESSEE CLAIMED THAT HE HAS RECEIVED BACK LOANS AD VANCED BY HIM IN THE EARLIER YEARS. HOWEVER THE TAX AUTHORITIES DID NOT ACCEPT THE SAID SOURCE SINCE THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN THIS REG ARD. IN THE PROCEEDINGS BEFORE US THE LD AR SUBMITTED THAT THE ASSESSEE FI LED AFFIDAVITS OBTAINED FROM THE BORROWERS BEFORE THE TAX AUTHORITIES AND CONTEN DED THAT THE TAX AUTHORITIES HAVE NOT CONSIDERED THE SAME. HOWEVER ON VERIFICA TION OF THE COPIES OF AFFIDAVITS WHICH ARE PLACED IN THE ASSESSEES PAPE R BOOK AT PAGES 289 TO 296 WE NOTICE THAT THESE AFFIDAVITS HAVE BEEN OBTAINED AFTER THE DATE OF PASSING OF ORDER BY LD CIT(A). HENCE THERE COULD BE NO CHANC E FOR THE TAX AUTHORITIES TO CONSIDER THE SAME. HENCE IN OUR OPINION THE ASSE SSEE CANNOT PLACE RELIANCE ON THESE AFFIDAVITS AT THIS STAGE. 5.2 THE UNDISPUTED FACT IS THAT THE ASSESSEE IS HAVING AGRICULTURAL LANDS IN HIS HUF STATUS AND THE AGRICULTURAL INCOME TO THE EXTEN T OF RS.7.17 LACS HAS BEEN ACCEPTED FOR THE YEAR UNDER CONSIDERATION. THE AS SESSEE HAS CLAIMED AVAILABILITY OF AGRICULTURAL INCOME IN HIS HUF STATUS IN EARLIER YEARS ALSO. THE ASSESSEE HAS FILED CASH FLOW STATEMENT FOR THE HUF STATUS FOR TH E EARLIER YEARS ALSO. THE CONTENTION OF THE ASSESSEE IS THAT HE HAS UTILIZED THE SAID FUNDS FOR GIVING LOANS ON MORTGAGE OF LANDS IN THE EARLIER YEARS. IN THE C ASH FLOW STATEMENT FILED FOR THE EARLIER YEARS THE ASSESSEE HAS DISCLOSED THE LOANS GIVEN. THOUGH THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN THIS REGARD HIS CONTENTIONS CANNOT BE ALTOGETHER DISCOUNTED WITH IN VIEW OF THE AVAILABIL ITY OF THE AGRICULTURAL INCOME. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE H AS CLAIMED INTEREST INCOME OF RS.23 500/- FROM OUT OF THE MORTGAGE LOANS. SINCE THE AO DID NOT ACCEPT THE EXISTENCE OF LOANS HE DID NOT CONSIDER THE INTERES T INCOME AS A SOURCE. HOWEVER IF WE TAKE THE RATE OF INTEREST @ 24% P.A. THE INTEREST RECEIPTS SHOWN BY THE ASSESSEE WOULD GIVE RISE TO A PRINCIPAL AMOU NT OF RS.97 916/-. IN THE RECEIPTS AND PAYMENTS ACCOUNT RELATING TO THE EARLI ER YEARS ALSO THE ASSESSEE HAS DISCLOSED THE INTEREST INCOME. THE ASSESSEE HA D MADE BANK DEPOSITS IN THE EARLIER YEARS AND WHEN THE SAID DEPOSITS WERE RENEW ED DURING THE YEAR UNDER CONSIDERATION THE AO HAS ACCEPTED THE SAME BY MAKI NG A REFERENCE TO THE 4 EARLIER YEAR RECORD. IN VIEW OF THE ABOVE WE ARE OF THE VIEW THAT A REASONABLE AMOUNT MAY BE GIVEN CREDIT TOWARDS REALIZATION OF L OANS AS WELL AS THE RECEIPT OF INTEREST. IN OUR VIEW A CREDIT OF RS.1 25 000/- W OULD BE REASONABLE AND ALSO IT WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY WE DI RECT THE AO TO ACCEPT FURTHER SOURCES TO THE EXTENT OF RS.1 25 000/- AS RELATING TO THE REALIZATION OF LOANS AND INTEREST. THE ORDER OF LD CIT(A) IS MODIFIED ACCOR DINGLY. 6. AS STATED EARLIER THE APPEAL OF THE REVENUE IS RELATED TO THIS ISSUE ONLY. THE ASSESSEE CLAIMED ONE OF THE SOURCES AS THE CHIT AUCTION PRIZE AMOUNT OF RS.3 93 150/- RECEIVED FROM M/S SRI RAM CHITS. THE SAID CHIT ACCOUNT STOOD IN THE NAME OF THE WIFE OF THE ASSESSEE NAMED S.V.PADM A. SINCE THE ASSESSEE COULD NOT PRODUCE BEFORE THE AO ANY EVIDENCE TO SU PPORT THE CLAIM OF RECEIPT OF CHIT PRIZE AMOUNT THE AO DID NOT ACCEPT THE SAID S OURCE. HOWEVER THE LD CIT(A) GRANTED RELIEF ON THE BASIS OF CERTAIN DOCUM ENTS PRODUCED BEFORE HIM IN THIS REGARD WITHOUT CONFRONTING THEM TO THE AO. H ENCE THE REVENUE IS ASSAILING THE DECISION OF LD CIT(A) BY FILING APPEAL BEFORE U S. 6.1 THE UNDISPUTED FACT IS THAT THE ASSESSEE HA S FILED COPIES OF CHIT ACCOUNT AND THE COPIES OF BANK ACCOUNT IN WHICH THE CHEQUE OF RS.3 93 150/- WAS DEPOSITED BEFORE THE LD CIT(A) FOR THE FIRST TIME. HENCE THE LD CIT(A) SHOULD HAVE CONFRONTED THE SAID DOCUMENTS TO THE AO. ACCO RDINGLY WE REVERSE THE ORDER OF LD CIT(A) ON THIS ISSUE AND SET ASIDE THE MATTER TO THE FILE OF AO FOR VERIFICATION OF THE RELEVANT DOCUMENTS AND DIRECT T HE AO TO GIVE CREDIT OF THE ABOVE SAID SUM ON OBTAINING SATISFACTION ON EXAMINA TION OF THE RELEVANT DOCUMENTS. NEEDLESS TO MENTION THE ASSESSEE SHOUL D BE GIVEN PROPER OPPORTUNITY OF BEING HEARD. 7. THE NEXT ISSUE IN THE APPEAL OF THE ASSESSEE RELATES TO THE ADDITION OF RS.8 88 526/- AS UNEXPLAINED INVESTMENT OF THE ASSE SSEE. DURING THE COURSE OF ACB RAIDS THE ASSESSEE WAS FOUND TO BE IN POSSESSI ON OF CERTAIN FIXED DEPOSIT RECEIPTS WHICH WERE STANDING IN THE NAME OF HIS REL ATIVES. THE DETAILS OF THE SAID 5 DEPOSITS ARE FURNISHED BELOW:- A. DADI LAKSHMI (SISTER) - FD WITH VYSYA B ANK 1 08 243 B. KALLA RAMANAMMA (SISTER) - FD WITH VYSYA B ANK 1 08 243 C. KALLA APPARO (BROTHER IN LAW) -FD WITH VYS YA BANK 1 08 243 D DADI SRINIVASA RAO (NEPHEW) - FD WITH VYSYA BANK 1 08 243 E RAPETI SATYAVATI (SISTER OF MOTHER IN LAW) FD WITH ANDHRA BANK 2 16 486 H. KALLA LAKSHMI (NEPHEWS WIFE) ANDHRA BANK F D 1 19 068 F KALLA LAKSHMI (NEWPHEWS WIFE) MARGADARSI FINANCE 70 000 G. KALLA LAKSHMI ( ) GOWR I CO-OP SOCIETY 50 000 ---------------- 8 88 526 ========== THE ASSESSEE CLAIMED THAT THE ABOVE SAID DEPOSITS D O NOT BELONG TO HIM AND HIS RELATIVES HAVE KEPT THE FD RECEIPTS WITH HIM FOR SA FE CUSTODY. THE AO EXAMINED ALL THE PERSONS ON OATH. IN THE STATEMENT ALL THE PERSONS ACCEPTED THE OWNERSHIP OF THE FIXED DEPOSIT RECEIPTS. HOWEVER THE AO FELT THAT THESE PARTIES DO NOT HAVE ADEQUATE SOURCES OF INCOME TO MAKE THOS E DEPOSITS AND HENCE THEY COULD NOT HAVE MADE THESE DEPOSITS. ACCORDINGLY TH E AO CAME TO THE CONCLUSION THAT THE ASSESSEE ONLY SHOULD HAVE MADE THESE DEPOS ITS IN THE BENAMI NAMES. IN VIEW OF THE ABOVE THE AO ADDED THE ABOVE SAID A MOUNT OF RS.8 88526/- TO THE TOTAL INCOME OF THE ASSESSEE. THE SAID ADDITIO N WAS CONFIRMED BY THE LD CIT(A). 7.1 BEFORE US THE LD AR REITERATED THE CONTENT IONS MADE BEFORE THE TAX AUTHORITIES. LD AR ALSO SUBMITTED THAT THE ASSESSE E HAS DISCHARGED THE ONUS PLACED UPON HIM BY PRODUCING THE PERSONS IN WHOSE N AME THE FIXED DEPOSIT RECEIPTS STAND AND IN THE STATEMENT TAKEN FROM THEM THEY HAVE ALSO CONFIRMED THE SUBMISSIONS MADE BY THE ASSESSEE. FURTHER THE LD AR RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT V K.CHINNATHAMBAN REPORTED IN (2007) (292 ITR 682) WHEREIN IT WAS HE LD AS UNDER:- (HEAD NOTES) 6 IN ORDER TO FIND OUT WHETHER THE ASSESSEE IS THE O WNER OF THE MONEY IN TERMS OF SECTION 69A OF THE INCOME TAX ACT 1961 WHICH PROVIDES THAT ANY UNEXPLAINED MONEY ETC. MAY BE DEEMED BY THE ASSESSING OFFICER TO BE THE INCOME OF THE AS SESSEE THE PRINCIPLE OF COMMON LAW JURISPRUDENCE IN SECTION 11 0 OF THE EVIDENCE ACT 1872 CAN BE APPLIED. WHERE A DEPOSIT STANDS IN THE NAME OF A THIRD PERSO N AND THAT PERSON IS RELATED TO THE ASSESSEE THE PROPER COURS E WOULD BE TO CALL UPON THE PERSON IN WHOSE BOOKS THE DEPOSIT APP EARS OR THE PERSON IN WHOSE NAME THE DEPOSIT STANDS TO EXPLAIN SUCH DEPOSIT. IN THIS CASE ONE PARTNERSHIP FIRM WAS SUBJECTED TO SEARCH. DURING THE COURSE OF SEARCH FIXED DEPOSIT RECEIPTS STANDING IN THE NAME OF VARIOUS PARTNERS WERE FOUND. HOWEVER THE MAIN PERSON NAMED SHRI K.PALANI SAMY ADMITTED THAT THE PARTNERS OF THE FIRM WERE FICTITIOUS. HENCE THE AO PROCEEDED TO FRAME ASSESSMENT IN THE HANDS OF K.PALANISAMY ON PROTECTI VE BASIS AND IN THE HANDS OF THE CONCERNED DEPOSIT HOLDERS ON SUBSTANTIVE BASIS. THOUGH THE DEPOSIT HOLDERS CLAIMED THAT THEY HAVE MADE THE DEPOSITS FROM OUT O F THE MONEY RECEIVED BY THE FIRM FROM THE MEMBERS OF THE PUBLIC YET THEY COULD NOT PRODUCE ANY EVIDENCE IN THAT REGARD. FINALLY THE HONBLE SUPREME COURT HE LD THAT THE DEPARTMENT IS RIGHT IN MAKING ASSESSMENT IN THE HANDS OF DEPOSIT HOLDER S. THE LD AR ALSO RELIED UPON THE DECISION OF HONBLE PUNJAB AND HARYANA HIG H COURT IN THE CASE OF CIT V ROSHAN LAL SETH WHEREIN IT WAS HELD THAT THE DEPOS IT STANDING IN THE NAME OF ASSESSEES WIFE CANNOT BE ASSESSED IN THE HANDS OF THE ASSESSEE. 7.2 ON THE OTHER HAND THE LD DR SUBMITTED THAT THE CONCERNED PERSONS HAVE GIVEN ONLY ORAL STATEMENTS WITH OUT FURNISHING ANY SUPPORTING EVIDENCE. FURTHER THE FDRS CAN BE ENCASHED BY THE CONCERNED DEPOSITOR ONLY AND HENCE THE REASONING OF SAFE CUSTODY PURPOSES CANNOT BE TREA TED AS A PROPER EXPLANATION. 7.3 THE UNDISPUTED FACT REMAINS THAT THE IMPUGN ED DEPOSITS DO NOT STAND IN THE NAME OF THE ASSESSEE. THE AO HAS PRESUMED THAT THE ASSESSEE HAS MADE THE DEPOSITS IN BENAMI NAMES BUT HE HAS NOT ESTABL ISHED THAT THESE PERSONS ARE ACTUALLY THE BENAMIDARS OF THE ASSESSEE. THE LD CI T(A) IN THE ORDER PASSED IN THE HANDS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 1 999-2000 HAS EXTRACTED THE 7 PROPOSITIONS LAID DOWN BY HONBLE ALLAHABAD HIGH CO URT IN THE CASE OF PRAKASH NARAIN V CIT (20 CTR 147) FOR ESTABLISHING THE BEN AMI NATURE OF THE PROPERTIES. WE HAVE EXTRACTED THE RELEVANT PORTION S INFRA WHILE DEALING WITH THE APPEAL OF THE REVENUE RELATING TO THE ASSESSMENT YE AR 1999-2000. IN OUR OPINION THE AO HAS FAILED TO ESTABLISH THE BENAMI NATURE OF THESE IMPUGNED FIXED DEPOSIT RECEIPTS. 7.4 THE LD CIT(A) CONFIRMED THE ADDITION BY PLA CING RELIANCE ON THE BASIC PRESUMPTION PROVIDED THE LAW THAT IF ANY MONEY BUL LION JEWELLERY OR VALUABLES FOUND IN THE POSSESSION OF ANY PERSON HE SHALL BE PRESUMED TO BE THE OWNER OF THE SAME. HOWEVER THE FIXED DEPOSIT RECEIPTS SHA LL FALL UNDER ANY OF THE CATEGORIES MENTIONED IN THE BASIC PRESUMPTION IS NO T FREE FROM DOUBT. WE NOTICE THAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF BHAGWANDAS NARAYANDAS V CIT (1975) 98 ITR 194 HAS HELD THAT THE DOCUMENTS O F TITLE OF IMMOVABLE PROPERTY OR THE FIXED DEPOSIT RECEIPTS CANNOT BE TR EATED AS VALUABLE ARTICLE OR THINGS FOR THE PURPOSE OF THEN EXISTING SECTION 13 2(5) OF THE ACT. THE IMPUGNED FIXED DEPOSITS WERE STANDING IN THE NAME OF SOME OT HER PERSONS AND UPON MAKING ENQUIRY WITH THEM; THEY HAVE ALSO CONFIRMED THE OWNERSHIP OF THE IMPUGNED FIXED DEPOSIT RECEIPTS. ACCORDING TO THE M THE MONEY AND THE BENEFIT OBTAINED FROM THE DEPOSITS MADE FROM OUT OF THE SAI D MONEY BELONG TO THEM ONLY. THIS CLAIM HAS BEEN BRUSHED ASIDE BY THE AO ONLY ON SURMISES. IN ADDITION TO THE ABOVE IT WAS BROUGHT TO OUR NOTICE THAT TH IS BENCH VIDE ITS ORDER DATED 18.5.2009 PASSED IN THE HANDS OF THIS ASSESSEE IN I TA NO.213/V/2006 HAS DELETED SIMILAR ADDITION MADE FOR THE ASSESSMENT YEAR 2002- 03 IN RESPECT OF THE DEPOSITS FOUND IN THE NAME OF THE RELATIVE NAMED KALLA LAK SHMI. IN VIEW OF THE FOREGOING DISCUSSIONS WE ARE OF THE VIEW THAT THE IMPUGNED ADDITION RELATING TO THE FIXED DEPOSITS STANDING IN THE NAME OF RELATIVE S IS NOT WARRANTED IN THE HANDS OF THE ASSESSEE FOR THE REASONS STATED ABOVE. ACCO RDINGLY WE DIRECT THE AO TO DELETE THE IMPUGNED ADDITION OF RS.8 88 526/- . 8. THE NEXT ISSUE IN THE APPEAL OF THE ASSESSEE RELATES TO THE ADDITION OF RS.2 85 754/- MADE ON THE PROTECTIVE BASIS ON THE V ALUE OF GOLD JEWELLERY FOUND WITH THE ASSESSEE. THE ASSESSEE CLAIMED THAT OUT O F THE TOTAL JEWELLERY FOUND 8 JEWELLERY WEIGHING 633.200 GMS BELONG TO THE FAMILY MEMBERS OF HIS IN-LAWS IN WHOSE HOUSE HE WAS STAYING AT THE TIME OF SEARCH. THE FAMILY MEMBERS OF HIS IN-LAWS HAVE ALSO FILED PETITIONS BEFORE THE HONBL E SPECIAL JUDGE FOR ACB CASES CLAIMING OWNERSHIP AND ALSO PRAYING FOR RETURNING O F THAT JEWELLERY. ACCORDINGLY THE AO MADE THE ADDITION OF RS.2 85 754 BEING THE VALUE OF THE ABOVE SAID JEWELLERY ON PROTECTIVE BASIS. THE LD CIT(A) ALSO DID NOT INTERFERE WITH THE SAME AS THE MATTER IS SUB-JUDICE. IN VIEW OF THE ABOVE WE ALSO DECLINE TO INTERFERE WITH THE DECISION OF THE LD CIT(A) SINCE THE VALID ITY OF THE ADDITION IS DEPENDENT UPON THE RESULT OF PETITIONS FILED BY THE RELATIVES BEFORE THE HONBLE SPECIAL JUDGE OF ACB CASES. 9. NOW WE SHALL TAKE UP THE APPEAL OF THE REVENUE RELATING TO THE ASSESSMENT YEAR 1999-2000. THE ONLY ISSUE URGED IN THIS APPE AL IS WHETHER THE LD CIT(A) IS JUSTIFIED IN DELETING THE ADDITION RELATING TO THE VALUE OF A HOUSE PROPERTY STANDING IN THE NAME OF THE MOTHER IN LAW OF THE AS SESSEE. THE RELEVANT FACTS ARE STATED IN BRIEF. THE ASSESSEE WAS RESIDING IN A HOUSE LOCATED AT MURALI NAGAR VISAKHAPATNAM. THE SAID HOUSE PROPERTY STOOD IN TH E NAME OF SMT. S. PARVATHI THE MOTHER IN LAW OF THE ASSESSEE. THE AO MADE ENQ UIRIES TO FIND OUT THE REAL OWNER OF THE SAID HOUSE PROPERTY. SMT. S. PARVATH I STATED THAT THE SAID HOUSE WAS PURCHASED IN HER NAME BY HER HUSBAND SHRI S.GOW RI NAIDU. THE AO ALSO RECORDED STATEMENT FROM SHRI S. GOWRI NAIDU WHEREI N THE SOURCES FOR PURCHASING THE HOUSE PROPERTY WAS EXPLAINED BY SHRI GOWRI NAID U. THE AO MADE A PERSONAL VISIT TO THE HOUSE AND NOTICED THAT THE HOUSE WAS N AMED AS RAMAPPA NIVAS BEING RESEMBLANCE OF THE NAME OF THE FATHER OF THE ASSESSEE. FURTHER THE NAME OF THE ASSESSEE AND HIS WIFE WAS FOUND ENGRAVED IN A GRANITE STONE. HENCE THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE IS THE REAL OWNER OF THE HOUSE AND ACCORDINGLY ASSESSED A SUM OF RS.8 58 130/- RELATIN G TO THE COST OF THE HOUSE INCLUDING THE STAMP DUTY AND REGISTRATION CHARGES. 9.1 IN THE APPEAL FILED BY THE ASSESSEE THE LD CIT(A) NOTICED THAT THE DOCUMENTARY EVIDENCES SUCH AS REGISTERED DOCUMENT MUNICIPAL TAX RECEIPTS ELECTRICITY WATER AND TELEPHONE CONNECTIONS WERE I N THE NAME OF SMT. S.PARVATHI. IN THE SWORN STATEMENT RECORDED FROM SMT. S.PARVATHI AND HER 9 HUSBAND SHRI GOWRI NAIDU THEY HAVE CATEGORICALLY S TATED THAT THEY ONLY HAVE ACQUIRED THE SAID PROPERTY OUT OF THEIR OWN SOURCES . THE LD CIT(A) ALSO NOTICED THAT THERE IS NO EVIDENCE WHATSOEVER TO ESTABLISH THAT THE SAID PROPERTY BELONGED TO THE ASSESSEE. ACCORDING TO THE LD CIT( A) THE ASSESSEE HAS DISCHARGED THE PRIMARY ONUS PLACED UPON HIM. THE L D CIT(A) HAS ALSO OBSERVED THAT SECTION 69 OF THE ACT WOULD COME INTO PICTURE ONLY IF THE AO IS ABLE TO SUCCESSFULLY PROVE THAT THE FUNDS HAVE FLOWN FROM T HE ASSESSEES HAND TO MAKE THE INVESTMENTS STANDING IN THE NAME OF SOME BODY E LSE. IN VIEW OF THE ABOVE THE LD CIT(A) DELETED THE IMPUGNED ADDITION BY MAKI NG FOLLOWING OBSERVATIONS WITH REGARD TO THE CLAIM OF BENAMI NATURE OF THE P ROPERTIES. 4.2 THE HONBLE ALLAHABAD HIGH COURT IN THE CASE O F PRAKASH NARAIAN V CIT WEALTH TAX REPORTED IN 20 CTR 147 EX AMINED THE QUESTION WHETHER PROPERTY WAS PURCHASED BENAMI BY A N ASSESSEE. FROM A SURVEY OF RELEVANT CASE LAW REGARDING THE DE TERMINATION OF BENAMI NATURE OF PROPERTIES THE HONBLE HIGH COURT LAID DOWN THE FOLLOWING PROPOSITIONS: I) THE BURDEN OF PROOF REGARDING BENAMI IS UPON THE ON E WHO ALLEGES BENAMI. II) TO PROVE BENAMI THE MOST IMPORTANT POINT IS TO EXAM INE THE SOURCES OF CONSIDERATION AND ALONG WITH THAT THERE ARE CERTAIN OTHER CRITERIA WHICH SHOULD BE TAKEN INTO ACCOUNT. SUCH CRITERIA HAVE BEEN LAID DOWN IN JADAYAL PODDAR V BI BI RAGNA & ORS AIR 1974 SC 171. III) A FINDING REGARDING BENAMI IS A FINDING OF FACT IV) A FINDING OF FACT CANNOT BE QUESTIONED IN THE REFER ENCE PROCEEDINGS UNLESS IT IS WITHOUT ANY EVIDENCE IN SU PPORT OF IT OR IS PERVERSE IN THE SENSE THAT NO PERSON ACTING JUDICIALLY AND PROPERLY INSTRUCTED AS TO THE RELEVANT LAW WOU LD REASONABLY COME TO SUCH A FINDING. V) THE MERE REJECTION OF AN EXPLANATION WOULD NOT ENTI TLE THE DEPARTMENT TO CLAIM THAT THE CONSIDERATION FOR THE PURCHASE OF THE PROPERTY IN THE NAME OF A NON-ASSESSEE WAS P ROVIDED BY THE ASSESSEE. VI) APART FROM THE RELATIONSHIP BETWEEN THE PARTIES TH ERE MUST BE SOME MATERIAL OR EVIDENCE TO SUPPORT THE CASE OF BENAMI NATURE OF THE TRANSACTION. VII) WHEN A FINDING IS BASED ON MATERIAL PARTLY RELEVANT AND PARTLY IRRELEVANT THEN SUCH A FINDING IS VITIATED IN LAW. VIEWED AGAINST THE ABOVE PROPOSITIONS IF THE APPELLANTS CASE IS EXAMINED IT IS SEEN THAT THERE IS ABSOLUTE LY NO EVIDENCE TO ESTABLISH THE FACT THAT SMT. S. PARVATHI IS THE BEN AMI HOLDER OF THE 10 PROPERTY ACQUIRED BY THE APPELLANT. THE AO HAS FAIL ED TO DISCHARGE THE PRIMARY ONUS OF PROVIDING THAT THE PROPERTY HEL D IN THE NAME OF THE APPELLANTS MOTHER-IN-LAW BELONGED TO THE APPEL LANT HIMSELF. THEREFORE THE AMOUNT OF RS.8 58 130/- TREATED AS U NEXPLAINED INVESTMENT IN THE HANDS OF THE APPELLANT IS HEREBY DELETED. FROM THE FOREGOING DISCUSSIONS WE NOTICE THAT THE LD CIT(A) HAS ANALYSED THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO THE LE GAL PROPOSITION IN CONNECTION THEREWITH IN PROPER PERSPECTIVE AND HAS ARRIVED AT THE CONCLUSION BY MAKING A CONSCIOUS DECISION. IN VIEW OF THE ABOVE WE DO NO T FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A). 10. IN THE RESULT THE APPEAL OF THE ASSESSEE F OR ASSESSMENT YEAR 2003-04 IS PARTLY ALLOWED. THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2003-04 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THE A PPEAL OF THE REVENUE FOR ASSESSMENT YEAR 1999-2000 IS DISMISSED. PRONOUNCED ACCORDINGLY ON 29-03-2010. SD/- SD/- (SUNIL KUMAR YADAV) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE : 29 TH MARCH 2010. A COPY OF THIS ORDER IS FORWARDED TO : 01 SHRI S. VENKATA RAO DOOR NO.39-8-59/1 MURALINA GAR VISAKHAPATNAM-7 02 ITO WARD-1 SRIKAKULAM 03 THE CIT (A)-II VISAKHAPATNAM 04 THE CIT VISAKHAPATNAM 05 THE DR ITAT VISAKHAPAATNAM 06 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY ITAT VISAKHAPATNAM BENCH