The ITO, Ward-1(1)., Visakhapatnam v. Sri M Mahesh,, Visakhapatnam

ITA 393/VIZ/2007 | 2003-2004
Pronouncement Date: 19-08-2010 | Result: Dismissed

Appeal Details

RSA Number 39325314 RSA 2007
Assessee PAN ADPPM7522H
Bench Visakhapatnam
Appeal Number ITA 393/VIZ/2007
Duration Of Justice 2 year(s) 11 month(s) 8 day(s)
Appellant The ITO, Ward-1(1)., Visakhapatnam
Respondent Sri M Mahesh,, Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 19-08-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 19-08-2010
Assessment Year 2003-2004
Appeal Filed On 10-09-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.388/VIZAG/2007 ASSESSMENT YEAR : 2003-04 M. MAHESH VISAKHAPATNAM ITO WARD-1(1) VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) PAN NO.ADPPM 7522H ITA NO.393/VIZAG/2007 ASSESSMENT YEAR : 2003-04 ITO WARD-1(1) VISAKHAPATNAM M. MAHESH VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI C.V.S. MURTHY CA RESPONDENT BY: SHRI D.S. SUNDER SINGH DR ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER:- THESE CROSS APPEALS ARE PREFERRED BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE ORDER OF THE CIT(A) PERTAINING TO THE ASSESSMENT YEAR 2003-04. SINCE THESE APPEALS WERE HEARD TOGETHER THESE ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF BREVI TY AND CONVENIENCE. WE HOWEVER PREFER TO ADJUDICATE THEM ONE AFTER THE OTH ER. ITA NO.388 OF 2007: 2. THIS IS AN APPEAL OF THE ASSESSEE IN WHICH THE O RDER OF THE CIT(A) IS ASSAILED ON A SOLITARY GROUND THAT HE HAS ERRED IN CONFIRMING THE ADDITION IN RESPECT OF LOAN OF RS. 5 LAKHS TAKEN BY THE ASSESSE E FROM SMT. R.K. RUKMINI WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE HAS INTRODUCED A CASH CREDIT OF RS. 5 LAKHS IN THE NAME OF SMT. RUKMINI. DURING 2 THE COURSE OF ASSESSMENT PROCEEDINGS WHEN THE ASSES SEE WAS ASKED TO EXPLAIN HE PRODUCED THE CONFIRMATION LETTER ALONG WITH BANK STATEMENT IN ORDER TO PROVE THAT THIS CREDIT WAS RECEIVED THROUG H BANKING CHANNEL AND THE CREDITOR IS HAVING A SUFFICIENT BALANCE IN HIS BANK ACCOUNT. THE ASSESSING OFFICER EXAMINED THE BANK STATEMENT AND HAS NOTED T HAT BEFORE ISSUING A CHEQUE A CASH OF RS. 5 LAKHS WAS DEPOSITED IN HIS BANK ACCOUNT. THE A.O. ACCORDINGLY DOUBTED THE GENUINENESS OF THE CASH CRE DITS AND MADE THE ADDITION U/S 68 OF THE ACT. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) BUT DID NOT FIND FAVOUR WITH HIM. 4. NOW THE ASSESSEE IS BEFORE US WITH THE SUBMISSIO NS THAT HE HAS PLACED THE RELEVANT EVIDENCE TO PROVE THE GENUINENESS OF T HE TRANSACTIONS AND THE CREDITWORTHINESS OF THE CREDITORS. THE ASSESSEE IS ONLY REQUIRED TO PROVE THE SOURCE OF CASH CREDIT AND NOT THE SOURCE OF SOURCE. IN ORDER TO PROVE THESE FACTS HE HAS PLACED THE CONFIRMATION LETTERS AND T HE BANK STATEMENTS. THEREFORE HE HAS DISCHARGED HIS ONUS PRIMARILY LAY UPON IT. BUT THE REVENUE WANTED THE ASSESSEE TO PROVE THE SOURCE OF SOURCE W HICH IS NOT PERMISSIBLE UNDER THE LAW. THE LD. D.R. PLACED A HEAVY RELIANC E UPON THE ORDER OF THE LOWER AUTHORITIES WITH THE SUBMISSION THAT THE ONUS IS UPON THE ASSESSEE TO PROVE THE GENUINENESS OF TRANSACTIONS CREDITWORTHI NESS AND IDENTITY OF THE CREDITORS. BUT THE ASSESSEE HAS FAILED TO PROVE TH ESE THREE INGREDIENTS. THUS THE ASSESSING OFFICER HAS RIGHTLY TREATED THIS CASH CREDIT AS AN UNEXPLAINED AND MADE THE ADDITION U/S 68 OF THE ACT. 5. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CA REFUL PERUSAL OF THE ORDER OF THE LOWER AUTHORITIES AND THE DOCUMENTS PL ACED ON RECORD WE FIND THAT ASSESSEE HAS FILED THE CONFIRMATION LETTERS AN D THE BANK STATEMENTS OF THE CREDITORS TO PROVE GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS AND IDENTITY OF THE CREDITORS. THE SAID DOCUMENTS ARE ALSO PLACED BEFORE US AND ON ITS PERUSAL WE FIND THAT CASH CREDIT WAS INTROD UCED THROUGH THE BANKING CHANNELS. THE OBJECTION OF THE DEPARTMENT IS ONLY T HAT BEFORE THE CHEQUE WAS ENCASHED A SUM OF RS. 5 LAKHS WAS DEPOSITED IN THE BANK ACCOUNT. IN THIS REGARD THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMIT TED THAT THE CREDITOR WAS HAVING A SUFFICIENT FUNDS AS `STHRIDHAN. THIS ASP ECT WAS NOT EXAMINED BY THE ASSESSING OFFICER. WHEN THE ASSESSEE HAS DISCH ARGED ITS ONUS PRIMARILY 3 LAY AT IT BY PLACING THE CONFIRMATION LETTER AND TH E BANK STATEMENT THE ONUS SHIFTS UPON THE REVENUE TO DISPROVE THE CLAIM OF TH E ASSESSEE AND FOR THIS PURPOSE ASSESSING OFFICER WAS REQUIRED TO SUMMON T HE CASH CREDITORS AND TO EXAMINE HER IN ORDER TO ASCERTAIN HER CREDITWORTHIN ESS. BUT THE ASSESSING OFFICER HALFHEARTEDLY INVESTIGATED THE MATTER AND H AS DROPPED THE INQUIRY AT THE STAGE WHERE HE COULD HAVE MOVED FURTHER TO PROV E THE FINANCIAL STATUS OF THE CREDITOR. DURING THE COURSE OF HEARING THE LD . D.R. HAS CONTENDED THAT THE MATTER MAY BE SENT BACK TO THE ASSESSING OFFICE R SO THAT HE COULD MAKE FURTHER INVESTIGATION. WE DO NOT AGREE WITH THE CO NTENTION OF THE LD. D.R. BECAUSE FOR THE LAPSES OF THE ASSESSING OFFICER TH E ASSESSEES SHOULD NOT SUFFER. IT IS FOR THE ASSESSING OFFICER TO MAKE A P ROPER INVESTIGATION AND SHOULD NOT LEAVE THE ENQUIRY IN THE MIDDLE. WE THE REFORE OF THE VIEW THAT ASSESSEE HAS DISCHARGED ITS ONUS PRIMARILY LAY UPON IT. THEREFORE THE ADDITION OF RS. 5 LAKHS IS UNCALLED FOR. ACCORDING LY WE SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE ADDITION. ITA NO.393 OF 2007: 6. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER:- 1) THE ORDER OF THE CIT(A) IS ERRONEOUS BOTH IN LAW AN D ON FACTS. 2) THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF TH E ASSESSING OFFICER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 3) THE ASSESSEES BUSINESS ITSELF IS SUCH THAT EXCHANG E OF FOREIGN CURRENCY. SRI J.S. PRAKASA RAO SIMPLY APPEARED AND STATED THAT HE LENT THE MONEY. HE HAS NOT PRODUCED ANY SUPPORT TO THIS EFFECT. THE ONUS CAST UPON THE ASSESSEE CANNOT BE SAID TO BE DISCHAR GED BY MERELY FILING THE CONFIRMATORY LETTER FROM THE CREDITORS. CREDIT WORTHINESS TO LEND MONEY ALSO NEEDS TO BE PROVED. HE HAS NOT FIL ED EVEN HIS SALARY CERTIFICATE. THEREFORE HE HAS NOT PROVED HIS CREDI T WORTHINESS. 4) IN RESPECT OF SMT. J. RATNAM THE LD. CIT(A) IS NOT AT ALL JUSTIFIED IN ALLOWING APPEAL SINCE THE PARTY HAS NOT AT ALL ATTE NDED THE OFFICE. ON HER BEHALF HER SON APPEARED AND STATED THAT SHE LE ND THE AMOUNT. THE ONUS IS ON THE PART OF THE CREDITOR TO PROVE HE R CREDIT WORTHINESS AND GENUINENESS OF THE CREDIT. IN THE ABSENCE OF CO NFIRMATION LETTER OR APPEARANCE BY THE CREDITOR THE CIT(A) IS NOT JUSTI FIED IN ALLOWING THE APPEAL. 4 IN THIS CONNECTION THE DECISIONS OF ITAT VISAKHAP ATNAM VIDE ITA NO.167/VIZAG/1998 ITA NO.575/V/2002 ITA NO.8/V/20 06 MAY PLEASE BE TAKEN INTO CONSIDERATION. 5) ANY OTHER GROUND/GROUNDS THAT MAY BE URGED AT THE T IME OF HEARING. 7. THESE GROUNDS RELATE TO THE LOAN TAKEN FROM SHRI J.S. PRAKASA RAO AT RS.3 59 114/- AND FROM SMT. J. RATNAM AT RS. 5 17 9 36/-. THIS LOAN WAS ALSO TREATED TO BE UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEES BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE FACT THA T BOTH THESE CASH CREDITORS HAVE ADMITTED IN THEIR STATEMENTS THAT THEY HAVE GI VEN THE SAID LOAN TO THE ASSESSEES. SHRI J.S. PRAKASA RAO AND SMT. J. RATNA M ARE SON AND MOTHER AND MR. PRAKASA RAO IS A NRI AND IS NOT ASSESSED TO TAX IN INDIA. HE IS WORKING IN SINGAPORE IN A SUPERVISORY CADRE AND HE RECEIVED SOME FOREIGN CURRENCIES WHICH AFTER EXCHANGE WAS GIVEN TO THE AS SESSEE. HE WAS EXAMINED BY THE A.O. AND HE ADMITTED THE ADVANCEMEN T OF LOAN TO THE ASSESSEE. THE EVIDENCE WITH REGARD TO THE FINANCIA L STATUS WAS ALSO PLACED BEFORE THE LOWER AUTHORITIES AND BEING CONVINCED WI TH THE EVIDENCE THE CIT(A) HAS DELETED THE ADDITIONS OF THE AFORESAID U NEXPLAINED CASH CREDIT. NOW THE REVENUE IS BEFORE US AND PLACED THE RELIANC E UPON THE ASSESSMENT ORDER. 8. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND HAS PLACED HEAVY RELIANCE UPON THE ORDER OF THE CIT(A). IT WAS ALSO CONTENDED THAT ASSESSEE HAS PLACED THE RELEVANT EVIDENCE TO PROVE THE GENUI NENESS OF TRANSACTIONS CREDITWORTHINESS AND THE IDENTITY OF THE CREDITORS AND THE REVENUE HAS NOT BROUGHT ANYTHING ON RECORD TO DISPROVE THE CREDITWO RTHINESS OF THE CREDITORS. 9. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS WE FIND THAT SHRI J. PR AKASA RAO IS A NRI AND WAS WORKING IN SINGAPORE IN A SUPERVISORY CADRE. HE EX CHANGED ON 19.7.2002 5 AND 20.7.2002 $6680 AND 1350 SINGAPORE DOLLARS RES PECTIVELY THROUGH THE ASSESSEES WHO IS AN OFFICIAL MONEY CHANGER. IN EXC HANGE HE WAS ENTITLED TO RECEIVE RS.3 59 114/- IN INDIAN CURRENCY. THE SAID FOREIGN EXCHANGE WAS OUT OF HIS EARNING ABROAD. MR. PRAKASA RAO WAS ALSO EX AMINED BY THE A.O. AND HE HAS ADMITTED THE ADVANCEMENT LOAN TO THE ASSESSE E. IT WAS ALSO BROUGHT ON RECORD THAT THE ASSESSEE HAS FURTHER EXCHANGED R S.1650/- SINGAPORE DOLLARS ON 17.7.2002 AND $900 ON 23.7.2002. THERFO RE THE A.OS PRESUMPTION THAT THE ENTIRE FOREIGN EXCHANGE BROUGHT BY THE CRE DITORS WAS ADVANCED AS A LOAN TO ASSESSEE IS NOT CORRECT. WITH REGARD TO HI S MOTHER THE RELEVANT EVIDENCE WAS PLACED WITH REGARD TO THE EXCHANGE OF 10881 U.S. DOLLARS FOR RS.5 17 936/- THROUGH THE ASSESSEES. SINCE THE ASS ESSEE HAS PLACED ALL THE RELEVANT EVIDENCE TO PROVE THE GENUINENESS OF TRANS ACTIONS IDENTITY AND CREDITWORTHINESS OF CREDITORS THE ADDITION ON ACCO UNT OF UNEXPLAINED CREDIT IS NOT CALLED FOR. WE HAVE ALSO EXAMINED THE ORDER OF CIT(A) AND WE FIND THAT HE HAS PROPERLY EXAMINED THE IMPUGNED ISSUE IN THE LIGHT OF AVAILABLE FACTS. SINCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) WE CONFIRM THE SAME. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED AND THAT OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 19.8.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 19 TH AUGUST 2010 6 COPY TO 1 M. MAHESH D.NO.27-4-50/1 MAIN ROAD VISAKHAPATN AM 2 ITO WARD-1(1) VISAKHAPATNAM 3 THE CIT VISAKHAPATNAM 4 THE CIT(A)-I VISAKHAPATNAM 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM