Sri Vallabhaneni Balaji, Vijayawada, Hyderabad v. The ACIT, Central Circle, Vijayawada

MA 51/VIZ/2009 | misc
Pronouncement Date: 22-07-2010 | Result: Allowed

Appeal Details

RSA Number 5125324 RSA 2009
Assessee PAN AABHV0506R
Bench Visakhapatnam
Appeal Number MA 51/VIZ/2009
Duration Of Justice 9 month(s)
Appellant Sri Vallabhaneni Balaji, Vijayawada, Hyderabad
Respondent The ACIT, Central Circle, Vijayawada
Appeal Type Miscellaneous Application
Pronouncement Date 22-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 22-07-2010
Date Of Final Hearing 29-01-2010
Next Hearing Date 29-01-2010
Assessment Year misc
Appeal Filed On 22-10-2009
Judgment Text
MA NO.51 & 71/VIZ/2009 VALLABHANENI BALAJI VIJAYAWADA PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER MA NO. 51/VIZAG/2009 (ARISING OUT OF IT(SS) A NO.10/VIZ/2008) BLOCK PERIOD 1-4-1996 TO 14-2-2003 SRI. VALLABHANENI BALAJI VIJAYAWADA VS. ACIT CENTRAL CIRCLE VIJAYAWADA (APPELLANT) (PAN NO. AABHV 0506 R) ) (RESPONDENT) MA NO. 71/VIZAG/2009 (ARISING OUT OF IT(SS) A NO.10/VIZ/2008) BLOCK PERIOD 1-4-1996 TO 14-2-2003 DCIT CENTRAL CIRCLE VIJAYAWADA VS. SRI. VALLABHANENI BALAJI VIJAYAWADA (RESPONDENT) (APPELLANT) (PAN NO. AABHV 0506 ) APPELLANT BY: SHRI S. RAMA RAO ADVOCATE RESPONDENT BY: SHRI SUBRATA SARKAR CIT(DR) ORDER PER SHRI B. R. BASKARAN ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED HIS PETITION WITH THE PRAYER FOR APPROPRIATE RELIEF WITH THE SUBMISSION THAT CERTAIN MISTAKES AP PARENT FROM RECORD HAVE CREPT IN IN RESPECT OF THE FOLLOWING MATTERS IN T HE ORDER DATED 22-12-2008 PASSED IN IT(SS)A NO.12/VIZAG/2008. A) ADDITION ON ACCOUNT OF CREDIT FOUND IN BANK A/C B) ADDITION ON ACCOUNT OF EXPENDITURE ON FISH CULTIVAT ION MA NO.51 & 71/VIZ/2009 VALLABHANENI BALAJI VIJAYAWADA PAGE 2 OF 8 2. THE SUBMISSIONS OF THE ASSESSEE ARGUMENTS OF TH E LEARNED DEPARTMENTAL REPRESENTATIVE AND THE NATURE OF MISTA KE THAT HAVE CREPT IN HAVE BEEN DISCUSSED IN DETAIL IN MA NO.50/VIZAG/200 9 (ARISING OUT OF IT(SS)A NO.9/VIZAG/2008) IN THE CASE OF SMT. VALLAB HANENI VENKATSUBBAMMA WHEREIN IDENTICAL ISSUES WERE CONSI DERED. WITH REGARD TO THE FIRST ISSUE THE TRIBUNAL HAD PASSED ITS ORIGINA L ORDER BY PLACING RELIANCE ON THE PROVISIONS OF SEC.68 OF THE ACT IN ORDER TO CONFIRM THE ADDITION. SINCE THE ASSESSEE DOES NOT MAINTAIN ANY BOOKS OF ACCOUNT THE LEARNED AUTHORISED REPRESENTATIVE INTER ALIA CONTENDED THA T THE PROVISIONS OF SEC.68 DOES NOT APPLY TO THE FACTS OF THE ISSUE. IT WAS ALSO BROUGHT TO THE NOTICE OF THE BENCH THAT THE IMPUGNED DEPOSITS ARE RELATABLE TO THE SALE PROCEEDS OF FISHES AND THE SAME HAD ESCAPED THE ATT ENTION OF THE TRIBUNAL. ACCORDINGLY IN THE ABOVE CITED CASE IT WAS NOTIC ED THAT A MISTAKE APPARENT FROM THE RECORD HAS CREPT IN AND SUITABLE MODIFICAT ION OF THE RELEVANT PARAGRAPH OF THE ORDER WAS MADE. THE OPERATIVE PORT ION OF THE MODIFIED ORDER IS EXTRACTED BELOW: THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT A LL THE FAMILY MEMBERS OF THE ASSESSEE ARE ENGAGED IN THE BUSINESS OF FISH FARMING AND INCOME OFFERED BY THEM HAVE BEEN ACCEPT ED IN EARLIER YEARS. DURING THE COURSE OF SEARCH PROCEEDI NGS THE DISPATCH SLIPS WERE FOUND OUT WHICH REVEALED THAT THE DISPATCHES OF FISHES WERE MADE TO WEST BENGAL. THE DDS WHICH HAVE BEEN FOUND DEPOSITED IN THE BANK A/C OF THE AS SESSEE HAVE BEEN PURCHASED FROM THE STATE OF WEST BENGAL O NLY. BESIDES THIS THE GROSS SALE VALUE OF DISPATCHES MAD E WERE DETERMINED AT RS.4 96 86 000/- AND THE NET PROFIT W AS DETERMINED AT RS.17 39 010/-. THE TOTAL AMOUNT OF I NCOME FROM THIS SOURCE AS DISCLOSED BY THE FAMILY MEMBERS OF T HE ASSESSEE STOOD AT RS.4 58 700/- AND HENCE THE UNDISCLOSED IN COME FROM THIS SOURCE WAS DETERMINED AT RS.12 80 310/-. SINCE THE PACKING SLIPS CONTAINED NAMES OF DIFFERENT CONCERNS FOR THE SAKE OF CONVENIENCE THE SAID UNDISCLOSED INCOME WA S ASSESSED IN THE HANDS OF SHRI VALLABHANENI VENKATARAMAIAH. T HUS IT CAN BE SEEN THAT HERE IS A CORRELATION BETWEEN THE SALE OF FISH AND RECEIPT OF DDS. IN THESE CIRCUMSTANCES AS OBSERVED B Y THE LEARNED CIT (A) UNLESS THERE IS ANY INFORMATION CO NTRARY TO THE MA NO.51 & 71/VIZ/2009 VALLABHANENI BALAJI VIJAYAWADA PAGE 3 OF 8 CLAIM OF THE ASSESSEE WE DO NOT FIND ANY REASON TO REJECT THE CLAIM OF THE ASSESSEE THAT THE IMPUGNED DEPOSITS RE PRESENT SALES REALIZATION. IN THE INSTANT CASE OUT OF THE TOTAL AMOUNT OF RS. 27 86 679/- ADDED BY THE ASSESSING OFFICER A S UM OF RS.27 68 554/- HAVE BEEN DEPOSITED DURING THE PERIO D FROM SEPTEMBER 2002 TO JANUARY 2003. BESIDES THE SALE S AND THE CORRESPONDING INCOME RELATING TO UNDISCLOSED ITEMS HAVE BEEN ASSESSED IN THE HANDS OF SHRI VALLABHANENI VENKATAR AMAIAH BY THE ASSESSING OFFICER ONLY FOR THE SAKE OF CONVENIE NCE. HENCE WE ARE OF THE VIEW THAT THE LEARNED CIT (A) IS NOT CORRECT TO PLACE RELIANCE ON THE CASH FLOW STATEMENT TO RESTRI CT THE RELIEF TO RS.24 50 000/-. IN VIEW OF THE FOREGOING DISCUSSIONS WE ARE OF THE VIEW THAT THE IMPUGNED DEPOSITS MADE INTO THE B ANK ARE RELATABLE TO THE SALES REALIZATION. SINCE THE INCOM E FROM FISH SALES HAVE ALREADY BEEN ASSESSED IN THE HANDS OF TH E ASSESSEE AND HIS FAMILY MEMBERS NO SEPARATE ADDITION IS WAR RANTED IN RESPECT OF SALES REALIZATION. IN VIEW OF THE ABOVE WE DIRECT THE ASSESSING OFFICER TO DELETE THE ENTIRE ADDITION OF RS.27 86 679/- . 3. IN VIEW OF THE DISCUSSION MADE IN THEN PRECEDING PARAGRAPH WE ARE OF THE VIEW THAT A MISTAKE APPARENT FROM THE RECORD HAS CREPT IN IN THE INSTANT CASE ALSO. ACCORDINGLY WE SUBSTITUTE PARA N O.8 OF THE ORDER DATED 22-12-2008 WITH THE FOLLOWING PARAGRAPH: PARA 8. THE FIRST ISSUE IN THE REVENUES APPEAL IS WITH REGARD TO THE ADDITION OF RS.21 38 045/- WHICH IS FOUND CRED ITED IN THE BANK ACCOUNT OF THE ASSESSEE. THE DECISION OF LEA RNED CIT (APPEALS) IN THIS CONNECTION IS GIVEN AT PARA 7.2 O F HIS ORDER WHICH IS EXTRACTED BELOW: I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND VARIOUS DETAILS. I HAVE VERIFIED COPY OF THE BANK STATEMENT FILED AND RELEVANT CREDITS APPEARED IN THE BANK STATEMENT WITH NARRATIONS LIKE DRAFTS BY CLEARING BY TRANSFER ETC. SHOWING CLEARLY THAT THE DEPOSITS WERE BY WAY OF CHEQUES OR DDS AND NOT BY WAY OF CASH. ACCORDINGLY THE DEPOSITS ARE NOT IN CASH. THE APPELLANT HAS FILED COPIES OF THE DEMAND DRAFTS RELATING TO FY 2002- 03. IN ANY CASE THE SOURCE OF DEPOSITS COULD ALWAYS BE ENQUIRED INTO SINCE THE TRANSACTIONS ARE BY DD/CHEQUES. ACCORDINGLY IT IS NOT CORRECT ON MA NO.51 & 71/VIZ/2009 VALLABHANENI BALAJI VIJAYAWADA PAGE 4 OF 8 THE PART OF THE ASSESSING OFFICER TO HOLD THAT DEPOSITS ARE IN CASH AND FROM UNDISCLOSED SOURCES WHEREAS DEPOSITS ARE IN CHEQUES/DD AND THE SOURCES CAN ALWAYS BE FOUND OUT IF LITTLE ENQUIRIES WERE DONE. THE CLAIM OF THE ASSESSEE THAT THE AMOUNTS ARE OUT OF FISH SALES HAVE BEEN SUMMARILY REJECTED WITHOUT ENQUIRIES. SINCE THE ASSESSEE DOES NOT MAINTAIN BOOKS OF ACCOUNT THE SALE PROCEEDS COULD NOT HAVE BEEN VERIFIED FROM THE BOOKS OF ACCOUNT. AS PER REGULAR RETURNS FILED THE ASSESSEE HAS BEEN OFFERING INCOME FROM FISH CULTIVATION FOR ALL THE YEARS. SOME OF THE SALES APPEAR TO HAVE BEEN RECEIVED BY CHEQUES OR DD AND SAME COULD NOT BE CONSIDERED AS INCOME SINCE IT REPRESENTS GROSS RECEIPTS AND THE ASSESSEE SHOWING INCOME FROM FISH BUSINESS IN THE REGULAR RETURNS. ACCORDINGLY IT IS NOT CORRECT TO TAKE GRO SS AMOUNT OF SALES REPRESENTED BY BANK DEPOSITS AS INCOME. ACCORDINGLY THE ADDITION OF RS. 21 38 045/- IS DELETED. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT ALL THE FAMILY MEMBERS OF THE ASSESSEE ARE ENGAGED IN THE BUSINESS OF FISH FARMING AND THE INCOME OFFERED BY THEM WERE ACCEPTED IN EARLIER YEARS. IN ONE OF THE GROUP CASES NAMED VALL ABHANENI VENKATARAMAIAH THE CORRELATION BETWEEN THE SALE OF FISH AND THE RECEIPT OF DDS WAS ACCEPTED AS THERE WAS NO INFO RMATION CONTRARY TO THE CLAIM OF THE ASSESSEE IN THAT REGARD . IN THE INSTANT CASE ALSO THE ASSESSING OFFICER REJECTED SIMI LAR CLAIM OF THE ASSESSEE ONLY FOR THE REASON THAT THE ASSESSEE COULD NOT PROVE THE SAID CLAIM WITH BOOKS OF ACCOUNT. SINC E A VIEW HAS ALREADY BEEN TAKEN THAT THE DDS RECEIVED ARE RE LATABLE TO THE SALES CONSISTENT WITH THE VIEW TAKEN THEREIN WE HOLD THAT THE IMPUGNED AMOUNT OF RS.21 38 045/- IS RELATA BLE TO THE SALES REALIZATION AND HENCE NO SEPARATE ADDITIO N IS WARRANTED. ACCORDINGLY WE UPHOLD THE ORDER OF THE L EARNED CIT (A) ON THIS ISSUE. 4. THE NEXT ISSUE ON WHICH THE ASSESSEE POINTS OUT MISTAKE RELATES TO THE ADDITION OF RS.22.00 LAKHS WITH REGARD TO THE EXPEN DITURE ON FISH CULTIVATION. THE MA NO.51 & 71/VIZ/2009 VALLABHANENI BALAJI VIJAYAWADA PAGE 5 OF 8 LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT TH E ASSESSEE DID NOT CARRY ON THE ACTIVITIES OF FISH CULTIVATION ON THE 88 ACRES WHICH WERE TAKEN ON LEASE DURING THE YEAR UNDER CONSIDERATION. THE RETURN OF INCOME FILED THE ASSESSEE HAS OFFERED ONLY LEASE INCOME FROM THE ABOVE SAID 88 AC RES. ACCORDINGLY THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THERE IS N O QUESTION OF INCURRING ANY EXPENDITURE ON DEVELOPMENT OF PONDS AND BREEDING OF FISHES AS IN THE CASE OF OTHER MEMBERS OF THE FAMILY AND HENCE THE ADDITION SUSTAINED BY THE TRIBUNAL IS ERRONEOUS. 5. FROM THE ORDER DATED 22-12-2008 PASSED BY THE TR IBUNAL IN THE HANDS OF THE ASSESSEE WE NOTICE THAT THE TRIBUNAL HAS CONFI RMED THE ADDITION OF RS.22.00 LAKHS UNDER THE IMPRESSION THAT THE ASSESSEE HAS DE VELOPED 88 ACRES OF LAND AS FISH PONDS. WE NOTICE FROM THE ASSESSMENT ORDER THA T THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAS TAKEN 88 A CRES OF LAND ON LEASE. HENCE A MISTAKE APPARENT FROM RECORD HAS CREPT IN ON THIS I SSUE. ACCORDINGLY WE SUBSTITUTE PARA NO.9 TO 9.3 WITH THE FOLLOWING PARA GRAPHS: 9. THE ONLY OTHER ISSUE IS WITH REGARD TO THE ADDITION OF RS.77 04 700/- ON ACCOUNT OF UNEXPLAINED EXPENDITUR E ON FISH CULTIVATION. THE ASSESSING OFFICER ESTIMATED T HE EXPENDITURE ON DEVELOPMENT OF 88 ACRES OF LAND DURI NG THE FINANCIAL YEAR 1998-99 @ RS.47 500/- PER ACRE AND ACCORDINGLY MADE AN ADDITION OF RS.41.80 LAKHS. IN ADDITION TO THE ABOVE THE ASSESSING OFFICER HAS ALSO ESTIMAT ED THE EXPENDITURE TOWARDS LEASE RENTALS AT RS.9.96 LAKHS AND EXPENDITURE TOWARDS COST OF LIME COW DUNG LITTER ETC. AT RS.25.29LAKHS. THE LEARNED CIT DELETED THE ABOVE SA ID ADDITION ON THE GROUND THAT THERE IS NO BASIS FOR E STIMATING THE UNDISCLOSED EXPENDITURE PARTICULARLY WHEN NO BO OKS OF ACCOUNT ARE MAINTAINED SUFFICIENT FUNDS ARE AVAILA BLE AND FURTHER THE GIFTS RECEIVED FROM NRIS HAVE BEEN TAXE D AS MA NO.51 & 71/VIZ/2009 VALLABHANENI BALAJI VIJAYAWADA PAGE 6 OF 8 UNDISCLOSED INCOME. THE LEARNED CIT (APPEALS) DELE TED THE SAID ADDITION ON THE GROUND THAT THERE IS NO BASIS FOR ESTIMATING THE UNDISCLOSED EXPENDITURE PARTICULARLY WHEN NO BOOKS OF ACCOUNT ARE MAINTAINED SUFFICIENT FUND S ARE AVAILABLE AND UNDISCLOSED INCOME BROUGHT TO BOOKS I N THE FORM OF NRI GIFTS HAVE BEEN ADDED BY THE ASSESSING OFFICER. THE LEARNED CIT (APPEALS) ALSO ACCEPTED THE FOLLOWI NG ARGUMENTS PUT FORTH BY THE ASSESSEE: A) THE ASSESSEE DOES NOT MAINTAIN REGULAR BOOKS OF ACCOUNT AND HENCE THE METHOD ADOPTED BY THE A.O IS NOT CORRECT. B) SINCE THE ASSESSEE OFFERS INCOME ON ESTIMATE BAS IS THE QUESTION OF ASSESSMENT YEAR UNDERSTATEMENT OF EXPENDITURE DOES NOT ARISE. C) NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARC H REGARDING UNDERSTATEMENT OF EXPENDITURE. D) WHEN INCOME IS ESTIMATED IT HAS TO BE PRESUMED T HAT ALL THE EXPENDITURE HAS BEEN TAKEN INTO ACCOUNT. TH E ASSESSEE RELIED UPON THE DECISION OF HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF INDWELL CONSTRUCTION VS. CIT 232 ITR 776. E) THE A.O RELIED UPON THE BOOKS OF RAJYALAKSHMI PO ULTRY PRODUCTS PT. LTD. WHEREIN THE INCOME OFFERED WORKS OUT TO RS.197/- PER ACRE. IN THE CASE OF BALAJI AGRO OILS LTD. THE NET INCOME OFFERED WORKS OUT TO RS.100/- PER ACRE. HOWEVER THE ASSESSEE IS ESTIMATING AN INCOME OF RS .5000/- TO RS.6000/- PER ACRE WHICH IS MUCH HIGHER THAN THE PROFIT DECLARED BY BOTH THE CONCERNS. F) THE A.O HAS BASED UPON THE BOOK RESULTS OF TWO S ISTER CONCERNS FOR THE PERIOD RELEVANT TO THE ASSESSMENT YEAR MA NO.51 & 71/VIZ/2009 VALLABHANENI BALAJI VIJAYAWADA PAGE 7 OF 8 2003-04 AND THE SAME RATE HAS BEEN APPLIED EVEN FOR THE PERIOD RELEVANT TO ASSESSMENT YEAR 1997-98. IN ADDITION TO THE ABOVE LEARNED CIT (A) ALSO CONS IDERED THE INTEREST PAID BY THE ASSESSEE AND TOOK THE VIEW THAT THE ASSESSEE COULD HAVE USED THE BORROWINGS FOR MEETING THE EXPENDITURE. 9.1 WE HAVE HEARD THE PARTIES IN THIS REGARD. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE H AS TAKEN 88 ACRES OF LAND DURING FINANCIAL YEAR 1998-99 ON L EASE. THE SAID LANDS WERE LEASED OUT TO M/S RAJYALAKSHMI POUL TRY PRODUCTS (P) LTD. THUS THE ASSESSEE DID NOT CARRY ON ANY ACTIVITY OF FISH CULTIVATION DURING THE FINANCIAL Y EAR 1998-99. THERE IS NO MATERIAL ON RECORD TO REPUDIATE THE CLA IM OF THE ASSESSEE. IN THESE CIRCUMSTANCES THE QUESTION OF ESTIMATING ANY INVESTMENT TOWARDS INITIAL DEVELOPME NT OF FISH PONDS AND BREEDING EXPENSES DOES NOT ARISE. TH E ASSESSING OFFICER HAS ALSO ADDED A SUM OF RS.9.96 L AKHS TOWARDS LEASE RENTALS AND FURTHER A SUM OF RS.25.29 LAKHS TOWARDS BREEDING EXPENSES. WITH REGARD TO THE LEASE RENTALS THE LEARNED CIT (A) NOTICED THAT THE ASSESSING OFFI CER HAS VERIFIED THE FACT THROUGH INSPECTOR THAT THE ASSESS EE HAS NOT PAID THE SAID LEASE RENTALS IN ADVANCE. WITH REGARD TO THE ADDITION OF RS.25.29 LAKHS SINCE THE ASSESSEE DID NOT CARRY ON FISH CULTIVATION THE QUESTION OF MAKING SAID AD DITION DOES NOT ARISE. IN VIEW OF THE ABOVE WE UPHOLD THE ORDER OF THE LEARNED CIT (A) ON THIS ISSUE. 6. IN THE PETITION FILED BY THE REVENUE IT HAS BEEN POINTED OUT THAT THE ADDITION MADE TOWARDS LEASE RENT OF RS.9.96 LAKHS A ND EXPENDITURE TOWARDS LIME COW DUNG LITTER ETC. AMOUNTING TO RS.25 28 700/- HAVE NOT BEEN ADJUDICATED. IN MA NO.51 & 71/VIZ/2009 VALLABHANENI BALAJI VIJAYAWADA PAGE 8 OF 8 THE PRECEDING PARAGRAPHS WE HAVE SUBSTITUTED PARA N O.9 TO 9.3 WITH THE NEW PARAGRAPHS STATED ABOVE. IN THE SUBSTITUTED PARAGRA PHS THE SAID TWO ISSUES HAVE BEEN ADDRESSED. 7. ACCORDINGLY THE MISCELLANEOUS PETITION OF THE AS SESSEE IS DISPOSED OF. 8. IN THE RESULT THE MISCELLANEOUS APPLICATION OF T HE ASSESSEE AS WELL AS REVENUE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 22/07/2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE: 22 ND JULY 2010 COPY TO 1 SRI VALLABHANENI BALAJI D.NO.74-12-7 NEW RTC CO LONY PATAMATA VIJAYAWADA 2 SRI S. RAMA RAO ADVOCATE FLAT NO.103 H.NO.3-6- 542/4 INDIRADEVI NILAYAM ST.NO.7 HIMAYATHNAGAR HYDERABAD 500029 3 4. THE ACIT CENTRAL CIRCLE VIJAYAWADA THE DCIT CENTRAL CIRCLE VIJAYAWADA 5 6 THE CIT (CENTRAL) HYDERABAD THE CIT(A) CENTRAL HYDERABAD 7 THE DEPARTMENTAL REPRESENTATIVE ITAT VISAKHAPAT NAM. 8 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM