The DCIT, Central Circle-2, Visakhapatnam v. S/Shri Smt.S Vimala Devi & Smt.I.Uma, L/Hs of Late Sri SSPVG Krishnam Raju (S Ranga Raju), Visakhapatnam

ITSSA 17/VIZ/2005 | misc
Pronouncement Date: 17-03-2011 | Result: Dismissed

Appeal Details

RSA Number 1725316 RSA 2005
Bench Visakhapatnam
Appeal Number ITSSA 17/VIZ/2005
Duration Of Justice 5 year(s) 11 month(s) 30 day(s)
Appellant The DCIT, Central Circle-2, Visakhapatnam
Respondent S/Shri Smt.S Vimala Devi & Smt.I.Uma, L/Hs of Late Sri SSPVG Krishnam Raju (S Ranga Raju), Visakhapatnam
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 17-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 17-03-2011
Date Of Final Hearing 14-03-2011
Next Hearing Date 14-03-2011
Assessment Year misc
Appeal Filed On 18-03-2005
Judgment Text
IT(SS)A 17 OF 2005 SSPVG KRISHNA RAJU VISAKHAPATNAM 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 IT(SS)A NO.17/VIZAG/2005 BLOCK PERIOD: 12-12-2001 DY.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2 VISAKHAPATNAM SMT. SARIPALLI VIMALA DEVI SMT. INDUKURI UMA L/H OF LATE SRI S.S.P.V.G. KRISHNAM RAJU ALIAS (SARIPALLI RANGA RAJU) VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) GIR NO:S-720/CENTRAL CIRCLE- 2/VSP. APPELLANT BY: SHRI T.H. LUCAS PETER CIT (DR) RESPONDENT BY: SHRI K.J.D. SRIEENIVAS CA ORDER PER SHRI B. R. BASKARAN ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE O RDER DATED 10-1- 2005 PASSED BY LEARNED CIT (A)-II VISAKHAPATNAM AND IT RELATES TO THE BLOCK PERIOD 1996-97 TO 2001-02. 2. THE ADDITION OF RS.48 LAKHS MADE BY THE ASSESSIN G OFFICER HAVING BEEN DELETED BY THE LEARNED CIT (A) THE REVENUE IS IN APPEAL BEFORE US. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE HEREIN IS THE PROPRIETOR OF TWO CONCERNS NAMELY M/S HOTEL AMARAVATI AND M/S RAJA WINES. THE DEPARTMENT CARRIED OUT SEARCH & SEIZURE OPERATION AT THE RESIDENTIAL PREMISES OF THE ASSESSEE. DURING TH E COURSE OF SEARCH THE DEPARTMENT STUMBLED UPON WITH THE RUBBER STAMPS AND KEYS OF CERTAIN WINE SHOPS WHICH WERE STANDING IN THE NAME OF SOME OTHER PERSONS. DURING THE COURSE OF INQUIRY SOME OF THE PERSONS/E MPLOYEES WHO WERE FOUND TO BE IN CHARGE OF THE IMPUGNED WINE SHOPS A DMITTED THAT THEY IT(SS)A 17 OF 2005 SSPVG KRISHNA RAJU VISAKHAPATNAM PAGE 2 OF 4 WERE HANDING OVER THE DAILY SALES REPORT TO THE ASS ESSEE. THE ASSESSING OFFICER WAS OF THE VIEW THAT THESE WINE SHOPS ARE R UN AS A SYNDICATE IN THE NAME OF R.R. SYNDICATE. THE DEPARTMENT ALSO SEIZED CERTAIN DAILY SALES STATEMENTS OF THESE SHOPS. IN VIEW OF THE FINDINGS MADE BY HIM THE ASSESSING OFFICER CONDUCTED INQUIRIES TO ASCERTAIN CREDITWORTHINESS OF THE LICENSE HOLDERS OF THESE SHOPS AND CONCLUDED THAT T HE LICENSE HOLDERS WERE NOT HAVING REQUIRED CREDIT WORTHINESS. ACCORDINGLY HE CAME TO THE CONCLUSION THAT THEY ARE ONLY THE BENAMIDARS OF THE ASSESSEE. THESE PERSONS HAD MADE INITIAL DEPOSITS FOR OBTAINING THE LICENSE WHICH AGGREGATED TO RS.48.00 LAKHS. THE ASSESSING OFFICE R ASSESSED THE ABOVE SAID RS.48.00 LAKHS MADE FOR OBTAINING THE LICENSE OF 6 WINE SHOPS AS THE UNDISCLOSED INCOME OF THE ASSESSEE. IN THE APPEAL P REFERRED BY THE ASSESSEE THE LEARNED CIT (A) DELETED THE SAID ADDI TION. HENCE THE REVENUE IS IN APPEAL BEFORE US. 4. LEARNED DR HEAVILY PLACED RELIANCE ON THE ASSESS MENT ORDER. HE INVITED THE ATTENTION OF THE BENCH TO PARA 3.02 OF THE ASSESSMENT ORDER AND SUBMITTED THAT ASSESSING OFFICER HAD LISTED OUT IN THAT PARAGRAPH THE DETAILS OF THE MATERIALS ON THE BASIS OF WHICH HE C OULD COME TO THE CONCLUSION THAT THE ASSESSEE HEREIN WAS THE REAL OW NER OF THE 6 WINE SHOPS. HE PARTICULARLY INVITED OUR ATTENTION TO TH E UNDISPUTED FACT THAT A PERSON NAMED SHRI C.V.M.S. SASTRY WAS USED TO BUY T HE DEMAND DRAFTS ON BEHALF OF ALL THE 6 SHOPS AND HE WAS AN EMPLOYEE OF THE ASSESSEE HEREIN. HE FURTHER STATED THAT THE DEPARTMENT HAS SEIZED TH E DOCUMENT WHICH CONTAINED THE DETAILS OF TOTAL STOCK PURCHASED BY T HESE SHOPS DURING THE FINANCIAL YEAR 1998-99. THE LEARNED DR ALSO INVITED OUR ATTENTION TO THE DETAILS OF PAY ORDERS PURCHASED BY THESE SHOPS DURI NG THE MONTHS OF NOVEMBER AND DECEMBER 2001 AND SUBMITTED THAT THE EMPLOYEE OF THE ASSESSEE SHRI SASTRY HAS TAKEN DDS ON BEHALF OF ALL THE SHOPS AND THIS FACT PROVES THAT THE ASSESSEE IS THE REAL OWNER OF THESE SHOPS. ACCORDINGLY HE CONTENDED THAT THE ORDER OF THE ASSESSING OFFICER S HOULD BE RESTORED. IT(SS)A 17 OF 2005 SSPVG KRISHNA RAJU VISAKHAPATNAM PAGE 3 OF 4 5. HOWEVER THE LEARNED AR SUBMITTED THAT THE ASSES SEE IS A PROMINENT PERSONALITY OF THE CITY AND HE IS ENGAGED IN VARIOU S TYPES OF PUBLIC ACTIVITIES. HE WAS THE PRESIDENT OF HOTELIERS ASSOC IATION AND WINE SHOPS ASSOCIATION AND WAS ALSO ONE OF THE PROMINENT CONGR ESS LEADERS OF THE STATE. BECAUSE OF THIS REASONS MANY PEOPLE USED T O VISIT AT HIS OFFICE TO MEET HIM TO GET THEIR GRIEVANCES REDRESSED. DURING THE COURSE OF SEARCH THE DDIT (INV.) HAS EXAMINED ALL THE LICENSE HOLDER S AND RECORDED STATEMENT FROM THEM. ALL THESE PERSONS HAVE ACCEPTE D THE OWNERSHIP OF THESE SHOPS AND THEY HAVE ALSO SUBMITTED THEIR RESP ECTIVE INCOME TAX ASSESSMENT RECORDS EXPLAINED THEIR RESPECTIVE SOUR CES FOR MAKING THE IMPUGNED INVESTMENT IN THE WINE SHOP. THEY HAVE ALS O CONFIRMED THAT THEY WERE NOT HAVING ANY RELATIONSHIP WITH THE ASSESSEE EXCEPT THE TRADE RELATIONSHIP AS THE PRESIDENT OF THE WINE SHOP ASSO CIATION. THE LEARNED A.R FURTHER SUBMITTED THAT ALL THE LICENSE HOLDERS ARE ASSESSED TO INCOME TAX EVEN PRIOR TO THE DATE OF SEARCH/ SURVEY; THEY GOT THEIR ACCOUNTS AUDITED U/S 44AB OF THE ACT. WITH REGARD TO THE RU BBER STAMPS AND KEYS FOUND DURING THE COURSE OF SEARCH THE LEARNED AR S UBMITTED THAT THEY MIGHT HAVE BEEN KEPT THERE BY THE COMMON ACCOUNTANT EMPLOYED BY THESE SHOPS. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORDS. THE FACT REMAINS THAT ALL THE LICENSE HOLD ERS ARE SEPARATELY ASSESSED TO INCOME TAX WHEREIN THE IMPUGNED INVEST MENTS HAVE BEEN SAID TO HAVE BEEN DISCLOSED. IT WAS ALSO STATED THAT TH E SAID PERSONS WERE FILING THEIR RESPECTIVE INCOME TAX RETURNS EVEN PRIOR TO T HE DATE OF SEARCH/SURVEY. IT WAS ALSO STATED THAT THE DDI (INV.) HAVE EXAMINE D ALL THESE PERSONS AND NOTHING ADVERSE TO THE ASSESSEE HEREIN WAS FOUND OU T. AS STATED BY THE LEARNED CIT (A) THE CONCEPT OF EMPLOYING COMMON PA RT-TIME CLERK BY ALL THESE SHOPS IS A COMMON TRADE PRACTICE PREVAILING I N ANY KIND OF TRADE AND HENCE THE SAME CANNOT BE TAKEN AS A GROUND TO ASSUM E THAT THE ASSESSEE IS THE OWNER OF THE SHOPS. AS SUBMITTED BY THE LEAR NED AUTHORISED REPRESENTATIVE IT CANNOT BE RULED OUT THAT THE CO MMON ACCOUNTANT COULD IT(SS)A 17 OF 2005 SSPVG KRISHNA RAJU VISAKHAPATNAM PAGE 4 OF 4 HAVE KEPT THE KEYS OF THESE SHOPS AT THE RESIDENCE OF THE ASSESSEE. THUS IT IS SEEN THAT NO CONCRETE EVIDENCE IS BROUGHT ON RECORD BY THE ASSESSING OFFICER IN SUPPORT OF HIS CONTENTION THAT THE ASSES SEE IS THE REAL OWNER OF THE IMPUGNED SIX SHOPS. THUS IN OUR VIEW THE ASSE SSING OFFICER HAS FAILED TO ESTABLISH THAT THE ASSESSEE HEREIN IS THE REAL O WNER OF THE SHOPS AND THE LICENSE HOLDERS ARE MERE NAME LENDERS. IN VIEW OF THE FOREGOING DISCUSSIONS WE DO NOT FIND ANY INFIRMITY IN THE DE CISION OF THE LEARNED CIT (A) IN HOLDING THAT THERE IS NO MATERIAL TO ESTABLI SH THAT THE ASSESSEE IS THE OWNER OF THE SHOPS AND FURTHER THE IMPUGNED INVESTM ENTS WERE FUNDED BY THE ASSESSEE. ACCORDINGLY WE UPHOLD THE ORDER OF THE LEARNED CIT (A). 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON 17.3.2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE: 17 TH MARCH 2011. COPY TO 1 THE ASST. COMMISSIONER OF INCOME TAX CIRCLE-1(1) 4 TH FLOOR MVP DOUBLE ROAD OPP. RYTU BAZAAR VISAKHAPATNAM 2 SMT. SARIPALLI VIMALA DEVI SMT. INDUKURI UMA L/ H OF LATE SRI SSPVG KRISHNAM RAJU ALIAS (SARIPALLI RANGARAJU) PROP.: H OTEL AMARAVATHI DABA GARDENS VISAKHAPATNAM 3 4. THE CIT (CENTRAL) HYDERABAD THE CIT(A)-II VISAKHAPATNAM 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM