Sri B Veera Raghavaiah Chowdary,, Eluru v. The ACIT, Circle-1,, Eluru

ITA 570/VIZ/2008 | 2003-2004
Pronouncement Date: 17-08-2010 | Result: Partly Allowed

Appeal Details

RSA Number 57025314 RSA 2008
Assessee PAN AEXPB0370B
Bench Visakhapatnam
Appeal Number ITA 570/VIZ/2008
Duration Of Justice 1 year(s) 9 month(s) 4 day(s)
Appellant Sri B Veera Raghavaiah Chowdary,, Eluru
Respondent The ACIT, Circle-1,, Eluru
Appeal Type Income Tax Appeal
Pronouncement Date 17-08-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 17-08-2010
Date Of Final Hearing 15-03-2010
Next Hearing Date 15-03-2010
Assessment Year 2003-2004
Appeal Filed On 12-11-2008
Judgment Text
ITA NO.570/VIZAG/2008 B.VEERA RAGHAVAIAH CHOWDARY ELURU PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.570/VIZAG/2008 ASSESSMENT YEAR: 2003-04 B. VEERA RAGHAVAIAH CHOWDARY ELURU VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1 ELURU (APPELLANT) PAN NO: AEXPB 0370 B (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI CA RESPONDENT BY: SHRI D.S. SUNDER SINGH (DR) ORDER PER SHRI B. R. BASKARAN ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 11.9.2008 PASSED BY LD. CIT(A) RAJAHMUNDRY AND IT RELATES TO THE ASSESSMENT YEAR 2003-04. 2. THE MAIN ISSUE URGED IN THIS APPEAL IS WHETHE R LEARNED CIT(A) IS JUSTIFIED IN CONFIRMING THE ADDITIONS PERTAINING TO THE CAPITAL CONTRIBUTIONS MADE BY OTHER PARTNERS OF THE FIRM. 3. THE FACTS RELATING TO THE ISSUE ARE DISCUSSE D IN BRIEF. THE ASSESSEE IS ONE OF THE PARTNERS OF THE FIRM NAMED M/S BRC CONST RUCTIONS. ACCORDING TO LEARNED AUTHORISED REPRESENTATIVE THE ASSESSMENT O F THE SAID FIRM WAS COMPLETED BY ACCEPTING THE CAPITAL CONTRIBUTION OF ALL THE PARTNERS. SUBSEQUENTLY THE ASSESSMENT OF THE ASSESSEE HEREIN WAS REOPENED U/S 148 OF THE ACT IN ORDER TO ASSESS IN HIS HANDS THE CAP ITAL CONTRIBUTIONS MADE BY TWO OTHER PARTNERS OF THE FIRM AS DETAILED BELOW. B.RAMAKRISHNA - RS.36 55 825/- M.SATYANARAYANA - RS.13 62 640 /- ------------------- RS.50 18 465/- ITA NO.570/VIZAG/2008 B.VEERA RAGHAVAIAH CHOWDARY ELURU PAGE 2 OF 5 IN THE HANDS OF THE ABOVE SAID TWO PARTNERS THE ADD ITIONS WERE MADE ON PROTECTIVE BASIS AND HENCE THE ADDITION WAS PROPOSE D TO BE MADE SUBSTANTIVE BASIS IN THE HANDS OF THE ASSESSEE HERE IN AS ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE HEREIN HAS ACTUALLY CONTRIBUTED THE ABOVE CITED AMOUNTS IN THEIR NAMES. IN THE RETURN OF INC OME FILED BY THE TWO PARTNERS BOTH THE PARTNERS CLAIMED THE SOURCES OF CAPITAL CONTRIBUTION TO BE THE AGRICULTURAL INCOME. IN SUPPORT OF THEIR RESPECT IVE CLAIMS BOTH THE PARTNERS FILED INCOME CERTIFICATE AND EVIDENCES FOR AGRICULTURAL HOLDINGS. HOWEVER ON MAKING NECESSARY ENQUIRES WITH MANDAL R EVENUE OFFICER IT WAS FOUND THAT THE SAID RECORDS WERE ONLY FABRICATE D RECORDS. HENCE THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE A BOVE CITED TWO PARTNERS ARE NOT MEN OF MEANS AND IT IS THE ASSESSEE HEREIN WHO HAS ACTUALLY CONTRIBUTED THE CAPITAL AMOUNT STANDING IN THEIR NA MES. ACCORDINGLY THE ASSESSING OFFICER ADDED THE ABOVE SAID AMOUNT OF CA PITAL CONTRIBUTIONS IN THE HANDS OF THE ASSESSEE. THE ASSESSEE COULD NOT WIN HIS APPEAL FILED BEFORE LEARNED CIT(A). HENCE THE ASSESSEE IS IN AP PEAL BEFORE US. 4. ACCORDING TO LEARNED AUTHORISED REPRESENTATI VE THE FIRM M/S BRC CONSTRUCTIONS WAS DULY FORMED BY A PARTNERSHIP DEED AND ITS ASSESSMENT FOR THE ASSESSMENT YEAR 2003-04 WAS COMPLETED U/S 1 43(3) OF THE ACT ON 25.11.2005 AFTER MAKING DETAILED ENQUIRIES. THE PA RTNERSHIP FIRM WAS FOUND TO BE GENUINE AND THE CAPITAL CONTRIBUTIONS M ADE BY THE PARTNERS WERE ALSO ACCEPTED. FURTHER ACCORDING TO LEARNED A UTHORISED REPRESENTATIVE THE ADDITION COULD NOT BE MADE LEGA LLY IN THE HANDS OF THE ASSESSEE HEREIN IN RESPECT OF THE CAPITAL CONTRIBUT ION MADE BY THE OTHER TWO PARTNERS. THE LEARNED AUTHORISED REPRESENTATIVE FU RTHER SUBMITTED THAT THE ALLEGATION THAT BOTH THE PARTNERS ARE THE BENAM IDARS OF THE ASSESSEE HEREIN IS A WILD ALLEGATION WITHOUT ANY BASIS. HE FURTHER SUBMITTED THAT ONE OF THE PARTNERS NAMED SHRI M.SATYANARAYANA HAS APPE ARED BEFORE THE ASSESSING OFFICER AND IN THE SWORN STATEMENT TAKEN FROM HIM; HE HAS ACCEPTED THE CAPITAL CONTRIBUTION MADE BY HIM. ITA NO.570/VIZAG/2008 B.VEERA RAGHAVAIAH CHOWDARY ELURU PAGE 3 OF 5 5. ON THE CONTRARY THE LEARNED DEPARTMENTAL RE PRESENTATIVE SUBMITTED THAT BOTH THE PARTNERS HAVE FILED FABRICATED DOCUME NTS IN SUPPORT OF THEIR CLAIM OF AVAILABILITY OF THE AGRICULTURAL INCOME AN D HENCE THE ASSESSING OFFICER HAS COME TO THE CONCLUSION THAT THEY DID NO T HAVE MEANS TO MAKE THE IMPUGNED CAPITAL CONTRIBUTIONS. FURTHER THE AS SESSING OFFICER HAS NOTICED THAT ALL THE AFFAIRS OF THE FIRM HAVE BEEN CARRIED ON BY THE ASSESSEE HEREIN IN HIS OWN PREMISES AND HENCE THE ASSESSING OFFICER HAS COME TO THE CONCLUSION THAT BOTH THE PERSONS ARE THE BENAMIDARS OF THE ASSESSEE HEREIN. THUS THE LEARNED DEPARTMENTAL REPRESENTATI VE STRONGLY CONTENDED THAT THE ORDER OF THE LEARNED CIT(A) SHOULD BE UPHE LD. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. WHILE COMPLETING THE ASSESSMENT OF THE FIRM THE AS SESSING OFFICER HAS NOTICED THAT THE TWO PARTNERS VIZ. SHRI B.RAMAKRIS HNA AND SHRI M.SATYANARAYANA HAVE NOT BEEN ASSESSED TO INCOME TA X IN THE EARLIER YEARS. HENCE THE ASSESSING OFFICER CALLED FOR THE RETURN O F INCOME FROM THEM IN ORDER TO VERIFY THE SOURCES OF INVESTMENTS MADE BY THEM IN THE FIRM M/S BRC CONSTRUCTIONS. INITIALLY THERE WAS NO COMPLIAN CE FROM THEM AND THE NOTICES ISSUED U/S 142(1) WAS ALSO RETURNED UN SERV ED. LATER THE RETURN OF INCOME WAS FILED BY SHRI M.SATYANARAYANA ON 29.11.2 006 AND ON BEHALF OF SHRI B.RAMAKRISHNA THE ASSESSEE HEREIN FILED THE R ETURN ON 15.12.2006 AS HIS POWER OF ATTORNEY HOLDER. HOWEVER DURING THE COURSE OF SCRUTINY PROCEEDINGS IT WAS FOUND OUT THAT THE DOCUMENTS FI LED BY BOTH THE PERSONS IN SUPPORT OF THEIR CLAIM OF AVAILABILITY OF AGRICU LTURAL INCOME WERE FOUND TO BE FABRICATED. HENCE THE ASSESSING OFFICER ISSUED SUMMONS U/S 131 OF THE ACT ON BOTH THE PERSONS BUT IT COULD NOT BE SERVED UPON THEM. HENCE THE ASSESSING OFFICER CONCLUDED THAT BOTH THE PERSONS A RE ONLY DUMMY PARTNERS AND ARE THE BENAMIDARS OF THE ASSESSEE HEREIN. SIN CE BOTH THE PERSONS DID NOT HAVE ANY CREDIT WORTHINESS THE ASSESSING OFFIC ER PROCEEDED TO ASSESS THE IMPUGNED CAPITAL CONTRIBUTIONS IN THE HANDS OF THE ASSESSEE HEREIN. 7. A CAREFUL PERUSAL OF THE FACTS WOULD SHOW TH AT THE ASSESSEE HEREIN WAS ASSOCIATED WITH THE TWO PERSONS CITED ABOVE AS A PA RTNER IN THE FIRM M/S ITA NO.570/VIZAG/2008 B.VEERA RAGHAVAIAH CHOWDARY ELURU PAGE 4 OF 5 BRC CONSTRUCTIONS. THE ASSESSMENT OF THE SAID FIRM WAS COMPLETED BY MAKING DUE ENQUIRIES U/S 143(3) OF THE ACT. AFTER THE COMPLETION OF THE ASSESSMENT IN THE HANDS OF THE FIRM THE ASSESSING OFFICER PROCEEDED TO ENQUIRE ABOUT THE SOURCE OF INVESTMENTS MADE BY THE TWO PERSONS VIZ. SHRI B.RAMAKRISHNA AND SHRI M.SATYANARAYANA. BOTH THE P ARTNERS HAVE FILED THEIR RESPECTIVE RETURN OF INCOME. THOUGH IT IS CO NTENDED THAT THE ASSESSEE HEREIN HAS FILED THE RETURN OF INCOME ON BEHALF OF SHRI B.RAMAKRISHNA YET THE MAIN FACT THAT SHOULD BE NOTICED IS THAT THE SA ID RETURN OF INCOME WAS FILED BY THE ASSESSEE HEREIN IN HIS CAPACITY AS A P OWER OF ATTORNEY HOLDER ONLY. 8. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HEREIN HAS PRODUCED SHRI M. SATYANARAYANA AND IN THE SWORN STA TEMENT TAKEN FROM HIM HE HAS ACCEPTED THE IMPUGNED INVESTMENT MADE BY HIM IN THE FIRM. IN THAT CASE IN OUR VIEW THE ADDITION IF ANY HAS T O BE MADE IN THE HANDS OF THE SAID PERSON ONLY. ACCORDINGLY WE DIRECT THE A SSESSING OFFICER TO DELETE THE ADDITION PERTAINING TO THE CAPITAL CONTRIBUTION OF SHRI M.SATYANARAYANA WHICH WAS MADE IN THE HANDS OF THE ASSESSEE. 9. WITH REGARD TO THE ADDITION PERTAINING TO TH E CAPITAL CONTRIBUTION OF SHRI M.RAMAKRISHNA IT WAS SUBMITTED THAT THE SAID PERSON IS NOW RESIDING IN USA. HOWEVER THE FACT REMAINS THAT THE ASSESSE E HEREIN IS THE POWER OF ATTORNEY HOLDER OF THE ABOVE SAID SHRI M.RAMAKRISHN A AND HENCE THE ASSESSEE HEREIN HAS AN OBLIGATION TO SUBMIT THE DET AILS CALLED FOR BY THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS CONST RAINED TO MAKE THE ADDITION IN THE HANDS OF THE ASSESSEE HEREIN SINCE THE ASSESSING OFFICER COULD NOT TRACE SHRI M.RAMAKRISHNA. AS A POWER OF ATTORNEY HOLDER IF THE ASSESSEE IS NOT ABLE TO PRODUCE THE SAID PERSON HE COULD HAVE FURNISHED THE ADDRESS OF THE ABOVE SAID PERSON TO THE ASSESSI NG OFFICER. HENCE WE ARE OF THE VIEW THAT IN THE INTEREST OF NATURAL JUS TICE THIS ISSUE PERTAINING TO THE ADDITION OF CAPITAL CONTRIBUTION MADE IN THE NA ME OF SHRI M.RAMAKRISHNA NEEDS TO BE INVESTIGATED AFRESH AND A CCORDINGLY SET ASIDE THE SAME TO THE FILE OF THE ASSESSING OFFICER. IF TH E ABOVE SAID SHRI ITA NO.570/VIZAG/2008 B.VEERA RAGHAVAIAH CHOWDARY ELURU PAGE 5 OF 5 M.RAMAKRISHNA IS IDENTIFIED AND FURTHER HE ACCEPTS THE CAPITAL CONTRIBUTION AS HIS OWN THEN NO ADDITION IS CALLED FOR IN THE H ANDS OF THE ASSESSEE. THE ORDER OF LEARNED CIT(A) STANDS MODIFIED IN ACCORDAN CE WITH OUR DECISION STATED ABOVE. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE I S TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 17 TH AUGUST 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE: 17-08-2010 COPY TO 1 SHRI B. VEERA RAGHAVAIAH CHOWDARY D.NO.25-11-20/ 4 OPP: SAI BABA TEMPLE N.R. PET ELURU 2 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1 ELURU 3 4. THE CIT RAJAHMUNDRY THE CIT(A) RAJAHMUNDRY 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM