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2018 (3) TMI 786
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....tion of Rs. 73,30,000/- made towards unexplained capital introduction in the name of partners of the assessee firm relying on the decision of Hon'ble High Court of Andhra Pradesh reported in 232 Taxmann 123 in the case of CIT vs. Venkateswara Rao." 3. Facts of the case in brief are that during the course of assessment proceedings, the Assessing Officer has noted from the balance sheet that as on 31/03/2010, a sum of Rs. 56,55,000/- & Rs. 16,75,000/- was introduced into the business as partners capital contribution and partners current account, the details of which are as follows:- Name of the partner Capital contribution Partners current account Total Sathi Ramakrishna Reddy 2001000 Sathi Achiyamma 801000 Sathi Venkayamma 1401000 Sathi Rani 1001000 Tadi Satyanarayana Reddy 451000 S. Achiyamma 975000 S. Venkayamma 700000 Total 5655000 1675000 73,30,000 The Assessing Officer has called upon the assessee to explain the source for the amounts brought into the business by th....
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....nse to the same the assessee firm has filed a written submission stating that all the partners are income tax assessees on the rolls of the Income Tax Officer, ward-1, Kakinada by enclosing the affidavits stated to be obtained from the respective partners. As per the information filed by the firm the partners have allegedly introduced the following amounts in the firm. Name of the Partner Amount invested in F.Y 2009-10 relevant to A.Y 2010-11 Amount invested in F.Y 2010-11 relevant to AY 2011-12 Sathi Ramakrishna Reddy 2001000 0 Sathi Achiyamma 801000 1200000 Sathi Venkayamma 1401000 600000 Sathi Rani 1001000 1000000 Tadi Satyanarayana Reddy 451000 - 1550000 However neither the assessee firm nor its partners Smt S. Achiyamma and Smt. S. Venkayamma have explained anything about the amounts invested by the above two partners at Rs. 9,75,000 and Rs. 7,00,000/- respectively aggregating Rs. 16,75,000/-. The assessee firm's explanation along with the copies of affidavits filed by the respective partners of the firm are carefully examined and found the explanation ) offered by the firm and the partners towards the....
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.... of income, if so, please give details? Ans. I have been regularly filing my returns of income individually as and when I was earning taxable income. However, I was not filing my returns of income for thelast 5-6 years as I was not having taxable income for all these years. Therefore as discussed above: In the absence of any proof towards the sources for the partners in introducing the capital in cash as alleged by the assessee firm, in the light of the deposition of the Managing Partner of the assessee that does not have any sources of income and also in view of the fact that he assessee firm was not maintaining any books of account on the date of survey and also in view of the fact that the assessee firm has filed its return of income for the Asst. Year 2010-11 only in response to the notice issued u/s 148 of the IT Act., subsequent to the survey operation conducted in its business premises, the assessee firm's contention towards the partners introduction of capital in cash during the year under consideration aggregating Rs. 56,55,000/- is not acceptable and hence the same has been treated as unexplained cash credit in the assessee firm's books of account and bro....
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.... capital contribution, and Rs. 16,75,000/- towards current account contribution. The Assessing Officer has called for identify, creditworthiness of the partners and also genuineness of the transactions. The partners have filed their affidavits before the Assessing Officer that the contributions are made by them. However the Assessing Officer has not accepted the explanation given by the partners and came to a conclusion that the partners did not have sufficient source for introducing the amounts into the business towards their capital contribution and current account contribution and the investments made by the partners are added in the name of the firm as unsubstantiated cash credits under section 68 of the Act. On appeal before the ld.CIT(A), it was submitted that all the partners filed their affidavit and having PAN numbers and also their return of incomes, and therefore, if at all addition has to be made, it is to be made in the hands of the partners and not in the hands of the firm. Ld. CIT(A) by considering the submissions of the assessee and also by following the judgment of the Hon'ble Jurisdictional High Court in the case of M. Venkateswara Rao (supra), deleted the add....
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....artner is not an assessee, he can be required to file a return and explain the source. Undertaking of such an exercise, vis-a-vis the partnership firm itself, is impermissible in law. 7.3.1 Thus the capital contribution made by the partners and confirmed by them cannot be assessed in the hands of the firm Respectfully following the decision of the Hon'ble Jurisdictional High Court, the AO is directed to delete the addition of Rs. 73.30,000/-. However, the AG is at liberty to examine and consider these amounts (contribution to capital accounts and current accounts) in the hands of the respective partners. 10. We find that ld. CIT(A) by flowing the decision of the Hon'ble Jurisdictional High Court in the case of M. Venkateswara Rao (supra) deleted the addition made in the hands of the firm. Therefore, respectfully following the above referred to judgment of the Hon'ble Jurisdictional High Court, we find no infirmity in the order of the ld. CIT(A). Thus, this appeal filed by the Revenue is dismissed. ITA No. 392/VIZ/2017 11. 11. The revenue has raised a similar ground as has been raised in Assessment Year 2010-11, which reads as under:- "2. The l....
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....99,450/-. As the assessee firm has stated that athe sources for the leanders in respect of the unsecured loans were out of their agricultural income and other savings and as the assessee has not filed any proof in support of the same during the course of survey proceedings or during the course of scrutiny proceedings, vide this office notice under section 142(1) dated 23-01-2014, besides asking the names and complete addreses of the parties from whom the loans were alleged to be raised, the assessee firm was asked to explain the sources and creditworthiness of the lenders and genuineness of the transactions along with verifiable supporting evidences. In response to the same vide its letter submitted on 06/02/2014, the firm has furnished copies of the confirmation letters alleged to be given by the lenders. Except the confirmation letters the firm has not furnished any evidences towards the identification, sources and creditworthiness of the lenders and the genuineness of the transactions. Therefore In the- absence of any supporting evidences towards the identification, sources and creditworthiness of the alleged lenders and also genuineness of the transactions it was proposed to tr....
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....rthiness of these creditors and merely filing of confirmation letters, is not amounting to discharge of its onus and confirmed the order of the Assessing Officer. 18. On being aggrieved, assessee carried the matter in appeal before the Tribunal. 19. Ld. counsel for the assessee has drawn our attention to page Nos. 50 to 53 of the paper book and submitted that the assessee has borrowed Rs. 19,00,000/- from four parties namely G. Syam, Kota Ayyappa Gupta, Tetali Subbirami Reddy & Datla Sitaram Raju. He further submitted that all the details in respect of loan creditors are available and once the assessee has filed all the details in respect of loan creditors, the assessee has discharged his onus and therefore, if at all any doubt, the Assessing Officer has to make enquiries. In this case, without making any enquiry, simply addition is made, therefore same may be deleted. 20. On the other hand, ld. Departmental Representative relied on the orders passed by the authorities below. 21. We have heard both the sides, perused the material available on record and orders of the authorities below. 22. The assessee has borrowed an amount of Rs. 19,00,000/- from four loan creditor....
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....ny doubt with regard to creditworthiness of the creditors, he has to summon the loan creditors and examine them. In this case, all the payments received through banking channels and repayments also through banking channels. Therefore, we find that the finding given by the ld. CIT(A) that the assessee failed to discharge his burden, is not correct. Therefore, we reverse the order passed by the ld. CIT(A) and hold that the assessee has discharged burden in respect of loan received from four creditors and Assessing Officer failed to make enquiries, therefore we reverse the order of the ld. CIT(A). Thus, this ground of appeal raised by the assessee is allowed. 23. The next ground of appeal relating to difference between the rates of CPWD & PDW. 24. In the assessment order, the Assessing Officer has noted that the assessee has not maintained any books of account and any construction account of the complex, i.e. Gowthami Complex, constructed by the assessee. The Assessing Officer referred the building valuation to the Departmental Valuation Officer (DVO) to estimate the total cost of construction of the said property. The DVO vide his report dated 03/06/2013 estimated the cost of c....
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....n towards self-supervision charges from the value arrived by the DVO applying the CPWD rates. The CIT(A), after considering the facts that the assessee has maintained books of accounts and bills for construction, scaled down the addition to Rs. 7,25,000/-. We do not find any error or infirmity in the order of the C1T(A). Therefore, we inclined to upheld the order of the CIT(A) and reject the ground raised by the revenue." 29. By respectfully following the order of the coordinate bench of the tribunal, we allow further deduction of 10% in addition to 5% which has already been granted by the ld. CIT(A) to meet the ends of justice. Accordingly, Assessing Officer is directed to allow deduction of 15% on variation of rates between CPWD and PWD. Thus, this ground of appeal raised by the assessee is partly allowed. 30. Ground No.5 relates to sustenance of addition of Rs. 9,75,000/- towards unexplained flat advances from customers. 34. In the assessment order, the Assessing Officer has noted that there was a negative balance of Rs. 9,75,000/- under the head sundry debtors. The Assessing Officer called upon the assessee to furnish the explanation for the above. The assessee firm su....
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....file its objections for the same along with necessary supporting evidences. In response to the same the assessee firm submitted a letter on 18-03-14, with a fresh explanation stating that the firm has opened the Said bank account only on 20-10-2039, and they are not in a position to explain why this amount of Rs. 9,03,000/- was remitted in the bank on 27-09-09. It was further stated by the assessee firm that the bankers were also unable to clarify the same. Therefore as the assessee firm was unable to explain the deposit, as proposed the cash deposit of Rs. 9,00,000/- made in the aforesaid bank account on 27-09-2014, has been treated as assessee firm's unexplained Investment and brought the same to tax accordingly. It is noticed from the analysis of remittances made into the firms bank account held with M/s. Indian Bank, Maharanipet, Visakhapatnam Vide A/c No. 858761196, filed on 11-02-2014, that sources for an amount of Rs. 45,000/- credited in the bank account was on account of receipt of the said amount from one Sri BS Patnaik towards flat advance. As the assessee firm has not filed any proof in support of the same it was, proposed to treat the same as assessee firm....
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....e bank account. This fact was not disputed by the ld. Departmental Representative. We have considered the assessee's bank account maintained with Indian Bank (page no. 32 of the paper book No.1) and a perusal of the bank statement shows that on 20/10/2009 the assessee has opened the bank account with initial deposit Rs. 9,000/-. It is also very clear that on 27/10/2009 the assessee has deposited cash of Rs. 9,00,000/- nor on 27/09/2009. Under these facts and circumstances of the case, the Assessing Officer as well as ld.CIT(A) is not correct in taking the date as 27/09/2009 contrary to the bank statement on 27/10/2009. Thus, this addition made by the Assessing Officer and confirmed by the ld. CIT(A) are deleted by reversing the order passed by the ld. CIT(A). Thus, this ground of appeal raised by the assessee is allowed. 36. So far as addition of Rs. 45,000/- is concerned, the assessee has not placed any evidence before the Assessing Officer nor before the ld. CIT(A), even before us also. Under these circumstances, we find no infirmity in the order passed by the ld.CIT(A). Thus, this ground of appeal raised by the assessee is dismissed. ITA No. 323/VIZ/2017 37. The assesse....
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....disallowance under section 40A(3) of the Act. 43. The Assessing Officer has disallowed in respect of construction amount of Rs. 34,36,489/-, which was debited to the profit & loss account. 44. The said amount of Rs. 34,36,489/- was incurred towards purchase of material for the period from 30/04/2010 to 31/03/2011. Out of the said amount, as per the cash book produced at page No. 28 of the paper book, the assessee stated that a sum of Rs. 15,75,134/- was transferred to Sathi Ramakrishna Reddy & Sathi Subbi Reddy and the balance amount of Rs. 18,61,355/- was debited to the profit & loss account and claimed as expenditure. This is evidenced from the construction material account placed in the paper book. Therefore, the actual expenditure debited to the profit & loss account towards construction material was Rs. 18,61,355/- and not Rs. 34,36,489/- If at all, the expenditure required to be disallowed under section 40A(3) in respect of construction material, the aggregate amount of Rs. 18,61,355/- should be disallowed but not Rs. 34,36,489/- as worked out by the ld. Assessing Officer. The Assessing Officer has disallowed the entire amount of Rs. 34,36,489/- stating that the amount ....
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....t the amount of Rs. 6,00,000/- is received from Mr. Subbirama Reddy through a cheque and all the details are available with the assessee and therefore he may be permitted to substantiate his case before the Assessing Officer. 52. We have heard both the sides and find that assessee received the amount in question through cheque, but failed to explain on what purpose this amount is received and whether the creditor Mr. Subbirama Reddy has creditworthiness or not. Therefore, in the interest of justice, this issue has to be remitted back to the file of the Assessing Officer for fresh adjudication. We therefore, set aside the order passed by the ld. CIT(A) and direct the Assessing Officer to re-adjudicate this ground afresh in accordance with law after providing reasonable opportunity of being heard to the assessee. It is also directed the assessee to file all the relevant material before the Assessing Officer. This ground of appeal is allowed for statistical purposes. 53. Insofar as credit of Rs. 3,06,000/- is concerned, it was submitted before the Assessing Officer that the amount has been received from the customer, but no name, no details / information has been given. Therefor....