The ITO, Ward-2., Vizianagaram v. M/s MSN Varma,, Vizianagaram

ITA 515/VIZ/2007 | 2005-2006
Pronouncement Date: 29-01-2010 | Result: Dismissed

Appeal Details

RSA Number 51525314 RSA 2007
Bench Visakhapatnam
Appeal Number ITA 515/VIZ/2007
Duration Of Justice 2 year(s) 1 month(s) 5 day(s)
Appellant The ITO, Ward-2., Vizianagaram
Respondent M/s MSN Varma,, Vizianagaram
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 29-01-2010
Assessment Year 2005-2006
Appeal Filed On 24-12-2007
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. 515/VIZAG/2007 ASSESSMENT YEAR: 2005-06 ITO WARD-2 VIZIANAGARAM VS. M.S.N. VARMA VIZIANAGARAM (APPELLANT) PAN NO.AAIHM 9492 G APPELLANT BY: SHRI G.S.S. GOPINATH DR RESPONDENT BY: SHRI C.V.S. MURTHY CA ORDER PER SHRI B R BASKARAN ACCOUNTANT MEMBER : THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 26- 10-2007 PASSED BY THE LD CIT (A)-I VISAKHAPATNAM AN D IT RELATES TO THE ASSESSMENT YEAR 2005-06. 2. THE ONLY ISSUE AGITATED IN THIS APPEAL IS WHETHE R THE LD CIT (A) IS JUSTIFIED IN DELETING THE ADDITION OF RS.9.70 LA KHS. 3. THE FACTS ARE STATED IN BRIEF. THE ASSESSEE DERI VES INCOME FROM PROPERTY CONTRACT WORKS AND AGRICULTURAL ACTIVITIE S. THE ASSESSING OFFICER OBTAINED INFORMATION TO THE EFFECT THAT THE ASSESSEE HAS PURCHASED DEMAND DRAFTS TO THE TUNE OF RS.15.60 LAK HS IN THE NAME OF 24 PERSONS THROUGH THE BANK A/C MAINTAINED BY HI M WITH THE SBI S.KOTA BRANCH. IN THIS CONNECTION THE AO CALLED FOR EXPLANATIONS FROM THE ASSESSEE WITH REGARD TO THE ABOVE SAID DEM AND DRAFTS. THE CASE OF THE ASSESSEE IS THAT THE DEMAND DRAFTS WERE PURCHASED ON BEHALF OF OTHER PERSONS THROUGH HIS BANK ACCOUNT BY UTILIZING THE FUNDS PROVIDED BY THE RESPECTIVE PERSONS. HE FURTHE R EXPLAINED THAT THESE DDS WERE USED FOR APPLYING EXCISE LICENSE FOR RUNNING WINE PAGE 2 OF 4 SHOPS. TO SUPPORT HIS CONTENTIONS THE ASSESSEE FIL ED CONFIRMATION LETTERS FROM ALL THE PERSONS ON WHOSE BEHALF THE DD S WERE CLAIMED TO HAVE BEEN TAKEN. SUBSEQUENTLY 15 PERSONS WERE PRODU CED BEFORE THE AO AND IN THE STATEMENT RECORDED FROM THEM THEY C ONFIRMED THE SUBMISSIONS MADE BY THE ASSESSEE. HOWEVER THE AO A CCEPTED THE EXPLANATIONS TO THE EXTENT OF RS.40 000/- AND ADDED THE BALANCE AMOUNT OF RS.15.20 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE. IN THE APPEAL PREFERRED BEFORE THE LD CIT (A) THE FIRST A PPELLATE AUTHORITY DELETED THE ADDITION TO THE EXTENT OF RS.9.70 LAKHS BEING THE AMOUNT PERTAINING TO THE 15 PERSONS WHO HAVE CONFIRMED THE CASE OF THE ASSESSEE BEFORE AO. AGGRIEVED BY THE ORDER OF LD CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE RECORD. WE NOTICE THAT THE LD CIT (A) HAS CONSIDERED FOLLOW ING 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 THE ASSESSEE HAS PAID NECESSA RY CASH FOR OBTAINING THE DRAFT IS NOT JUSTIFIED. B) MOHAN B. SAMTANI VS. CIT (199 ITR 370)(CAL.) IN T HIS CASE THE ASSESSEE CONSIGNED ANTIQUES AS A REPRESEN TATIVE OF STATE TRADING CORPORATION OF SIKKIM. THE DISPATCH OF THE GOODS WERE DONE ON THE ORAL INSTRUCTION OF CHOGYAL. CHOGYAL ALSO CLAIMED OWNERSHIP OF THE ANTIQUE AND HIS CLAIM WAS NOT DISPROVED. HENCE IT WAS HELD THAT THE VALUE OF ANT IQUE 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 ENOU GH 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 T HE QUESTION WHETHER THE SOURCE OF INVESTMENT SHOULD BE TREATED AS INCOME OR NOT U/S 69 HAS TO BE CONSIDERE D 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 TH ESE SECTIONS CAN BE INVOKED THE CONDITION PRECEDENT AS TO THE EXISTENCE OF INVESTMENT EXPENDITURE OMISSION TO S TATE OR MAKING UNDERSTATEMENT OF VALUE ETC. MUST BE CONCLU SIVELY 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 BENAM I AND THE OWNER IS NOT THE REAL OWNER RESTS ON THE PERSON ASSERTING IT TO BE SO AND THIS BURDEN HAS TO BE STR ICTLY DISCHARGED BY ADDUCING LEGAL EVIDENCE OF DEFINITE CHARACTER WHICH WOULD EITHER DIRECTLY PROVE THE FAC T OF BENAMI OR ESTABLISH CIRCUMSTANCES UNERRINGLY AND REASONABLY RAISING AN INFERENCE OF THE FACT. 4.1 WE NOTICE THAT THE ASSESSEE HAS FILED CONFI RMATION LETTERS FROM ALL THE 15 PERSONS ON WHOSE BEHALF THE DDS WERE CLA IMED TO HAVE BEEN PURCHASED BY THE ASSESSEE. SUBSEQUENTLY THE AS SESSEE HAS ALSO PRODUCED THEM AND THE AO HAS ALSO RECORDED STATEMEN T FROM THEM. IN THE SWORN STATEMENT ALSO ALL THE 15 PERSONS HAVE CONFIRMED THE SUBMISSION MADE BY THE ASSESSEE. THERE IS ALSO NO D ISPUTE WITH REGARD TO THE FACT THAT THE DDS WERE UITILISED BY T HESE 15 PERSONS ONLY FOR THEIR OWN PURPOSE I.E. FOR MAKING APPLICA TION IN THEIR RESPECTIVE NAMES. WE WERE ALSO INFORMED THAT THE RE VENUE DID NOT CAUSE ANY INQUIRY WITH REGARD TO THE DEMAND DRAFTS IN THE INDIVIDUAL HANDS OF THE 15 PERSONS. IN THE FACTS AND CIRCUMST ANCES OF THE CASE WE ARE OF THE OPINION THAT ONCE INDIVIDUAL PERSONS HAVE ADMITTED THAT THE DDS WERE PURCHASED ON THEIR BEHALF AND THA T THEY HAVE ONLY USED THEM FOR THEIR OWN PURPOSE THE ONUS PLACED UP ON THE ASSESSEE GETS DISCHARGED. IN SUCH A SITUATION THE REVENUE MA Y EXAMINE THE FINANCIAL STATUS OF THE INDIVIDUAL PERSONS AND THE ADDITION IF ANY IS CALLED FOR IN THEIR RESPECTIVE HANDS. WE NOTICE THA T THE LD CIT (A) HAS ANALYSED THE ISSUE IN RIGHT PERSPECTIVE AND HAS REN DERED HIS DECISION ON A CONSPECTUS OF MATTER. HENCE WE DO NOT FIND ANY NECESSITY TO INTERFERE IN HIS DECISION. PAGE 4 OF 4 5. IN THE RESULT THE APPEAL FILED BY THE REVEN UE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 29-01-2010 SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM 29 TH JANUARY 2010. COPY TO 1 THE ITO WARD-2 KOPPU GURANNA BUILDINGS SIDDARTH NAGAR VIZIANAGARAM 2 SHRI M.S.N. VARMA T.B VARA VILLAGE S. KOTA MAND AL VIZIANGARAM 3 THE CIT (A)-I VISAKHAPATNAM 4 THE CIT VISAKHAPATNAM 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM