Income Tax Appellate Tribunal - Panji
Grandhi Chalapathi Rao,, Secunderabad vs The Acit,, Rajahmundry on 10 January, 2018
ITA Nos.389 to 392/Vizag/2014
Grandhi Chalapathi Rao, Secunderabad
आयकर अपील य अ धकरण, वशाखापटणम पीठ, वशाखापटणम
IN THE INCOME TAX APPELLATE TRIBUNAL,
VISAKHAPATNAM BENCH, VISAKHAPATNAM
ी वी. दग
ु ाराव, या यक सद य एवं
ी ड.एस. सु दर "संह, लेखा सद य के सम%
BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER &
SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER
आयकर अपील सं./I.T.A.Nos.389 to 392/Vizag/2014
( नधारण वष / Assessment Years:
2005-06, 2006-07, 2007-08 & 2009-10)
Grandhi VVSLN Subba Rao
L.R. of late Grandhi Chalapathi Rao ACIT, Central Circle,
Secunderbad Rajahmundry
[PAN No.ACYPG8832C]
(अपीलाथ' / Appellant) (()याथ' / Respondent)
अपीलाथ क ओर से / Appellant by : Shri G.V.N. Hari, AR
याथ क ओर से / Respondent by : Shri Debakumar Sonowal,
DR
सुनवाई क तार ख / Date of hearing : 03.01.2018
घोषणा क तार ख / Date of Pronouncement : 10.01.2018
आदे श / O R D E R
PER Bench:
These appeals are filed by the assessee against order of the
Commissioner of Income Tax (Appeals), Guntur vide ITA No.453 to
456/CIT(A)/GNT/10-11 dated 24.2.2014 for the assessment years 2005-
06, 2006-07, 2007-08 & 2009-10.
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ITA Nos.389 to 392/Vizag/2014
Grandhi Chalapathi Rao, Secunderabad
2. A search u/s 132 was carried out in the group cases of the
assessee on 3.2.2009. During the course of search, certain
incriminating material was found relating to the assessee evidencing the
advances given by the assessee for the assessment year 2005-06, 2006-
07, 2007-08 & 2009-10. During the course of search in the residential
premises of Mr. G.V.V.S.L.N. Subba Rao, the assessee's son, loose
sheets containing the promissory notes related to the money lending
business were stated to be found and seized as Annexure GVS/1, GVS/3
& GVS/4. Shri Subba Rao, the son of the assessee was questioned
regarding the contents of the loose sheets and he has explained that the
loose sheets are related to his father and his relatives money lending
transactions. The A.O. summarized the contents of the loose sheets
found and quantified the unaccounted transactions yearwise as under:
Summary of loose sheets
S.No. Sheet No. Principal Financial Interest Financial
year amount year
1 GVS/1/18 100000 2005-06 14600 2005-06
2 18 60000 2005-06 3150 2005-06
3 18 100000 2005-06 8200 2005-06
4 19 -- -- 59163 2004-05
5 21 363400 2004-05 58080 2004-05
6 22 2200 2005-06 84 2005-06
7 GVS/3/3 70000 2004-05
8 7 70000 2006-07
9 9 30000 2004-05
10 11 80000 2004-05
11 13 80000 2006-07
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ITA Nos.389 to 392/Vizag/2014
Grandhi Chalapathi Rao, Secunderabad
S.No. Sheet No. Principal Financial Interest Financial
year amount year
12 17 20000 2004-05
13 21 40000 2005-06
14 18 50000 2008-09
15 GVS/4/10 180000 2005-06
16 33,45 to 57 309437 2006-07
Quantification of year wise Unaccounted Income
S.No. Financial Assessment Unaccounted income Total
year year addition
1 2004-05 2005-06 Principal- 563400 680643
Interest - 117243
2 2005-06 2006-07 Principal - 482200 508234
Interest - 26034
3 2006-07 2007-08 Principal - 459437 459437
Interest -
4 2007-08 2008-09 Nil
5 2008-09 2009-10 Principal - 50000 50000
Interest -
3. The A.O. called for the explanation of the assessee as to why the
above sum should not be assessed as undisclosed income of the
assessee. The assessee explained during the assessment proceedings
that the loose papers reflect the loans received by him from Smt. S.
Venkata Ratnam and the details of disbursement of principal amount
and interest are noted therein. The assessee further emphasized that
the monetary transactions reflected in the loose sheets belonged to Smt.
S.V. Ratnam but not belonged to him and he has maintained the affairs
on behalf of her to support his old aged aunt and submitted that none of
the transactions recorded in the loose sheets does belong to him, hence
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ITA Nos.389 to 392/Vizag/2014
Grandhi Chalapathi Rao, Secunderabad
requested not to make the assessment in his hands. The A.O. rejected
the explanation of the assessee since the assessee failed to furnish any
supporting evidence and assessed the sums as unaccounted income for
the assessment year 2005-06 to 2009-10 as under:
S.No. Financial Assessment Unaccounted income Total
year year addition
1 2004-05 2005-06 Principal- 563400 680643
Interest - 117243
2 2005-06 2006-07 Principal - 482200 508234
Interest - 26034
3 2006-07 2007-08 Principal - 459437 459437
Interest -
4 2007-08 2008-09 Nil
5 2008-09 2009-10 Principal - 50000 50000
Interest -
4. Aggrieved by the order of the A.O., the assessee went on appeal
before the CIT(A) and the Ld. CIT(A) dismissed the appeal of the
assessee.
5. Aggrieved by the order of the Ld.CIT(A) the assessee is in appeal
before this Tribunal. During the appeal hearing, the Ld. A.R. referring to
the his answer in question No. 5 argued that in the statement recorded
on 18/03/2009 Shri G.V.V.S.L.N. Subba Rao, son of the assessee had
stated that the loose sheets in Annexure No.GVS/3, Page
Nos.2,3,7,9,11,13,17,21 were promissory notes executed by his father
G. Subba Rao in the period of 2004-05 to 2005-06 in favour of S.V.
Ratnam and the addition was made in the hands of the assessee without
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ITA Nos.389 to 392/Vizag/2014
Grandhi Chalapathi Rao, Secunderabad
any evidence to disprove the statement of Sri Subba Rao which is
unjustified and required to be deleted.
5.1 The Ld. A.R. referring to page No.15 of paper book submitted that
the assessee had explained the transactions of the seized material
before the A.O. vide Page No.15 and 16 of the paper book wherein he
had denied all the transactions and explained the AO that entire
transactions were related to Smt. S.V. Ratnam. In fact the assessee has
furnished the page wise description of the transactions and the A.O. did
not bring any evidence to controvert the same. Referring to page No.17
to 18, the Ld. A.R. submitted that Smt. S.V. Ratnam also submitted a
letter to the Dy. Director of Investigation (Income Tax) stating that the
loose sheets marked as Annexure GVS/4 from page 1 to 57 and GVS/3
from page Nos.1 to 28 belongs to her but not belonged to the assessee.
She has also submitted a letter to the effect that that a sum of
Rs.1,90,000/- was deposited in Dhanalakshmi MAC Society and receiving
the interest through Mr. Subba Rao. The assessee Late Mr. G.
Chalapathi Rao has submitted a letter dated 20.12.2010 stating that the
loose sheets referred in GVS/3 & GVS/4 are relatable to S.V. Ratnam but
not relating to him. The Ld. A.R. further explained that sum of
Rs.3,90,000/- out of the promissory notes seized by the department
marked as Annexure GVS/3 represents the amounts taken as loan from
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ITA Nos.389 to 392/Vizag/2014
Grandhi Chalapathi Rao, Secunderabad
Shri S.V. Ratnam and the relevant promissory notes executed by him
which cannot be treated as income. Similarly, a sum of Rs.1,90,000/-
mentioned in the seized material stated to be out of the sums deposited
in Dhanalakshmi MAC Society in the name of Smt. S.V. Ratnam. The
Ld.A.R submitted that as explained by the assessee and as per the
submissions made by S.V. Ratnam the entire material found and seized
during the course of search marked as Annexure GVS/3 and GVS/4
belongs to S.V. Ratnam, his aunt but does not belong to the assessee.
The Ld.A.R. argued that the A.O. is incorrect in making the assessment
in the hands of the assessee instead of assessing the same in the hands
of Smt S.V. Ratnam.
7. On the other hand, the Ld. D.R. supported the orders of the lower
authorities.
8. We have heard both the parties, perused the material available on
record and gone through the orders of the authorities below. The
assessee has submitted the evidences with regard to the GVS/3 & GVS/4
from Smt. S.V. Ratnam stating that the transactions recorded in the
Annexure GVS/3 from page Nos.1 to 28 and GVS/4 from page Nos.1 to
57 belonged to her. She owned the entire transactions recorded in
Annexure GVS/3 & GVS/4 and the assessee has denied same before the
A.O. as well as the DDIT. The assessee has discharged his burden with
6
ITA Nos.389 to 392/Vizag/2014
Grandhi Chalapathi Rao, Secunderabad
regard to the ownership of the documents mentioned in Annexure
GVS/3 & GVS/4 and it is incumbent up on the A.O. to make further
verifications of the ownership and the contents of the Annexure GVS/3 &
GVS/4 and required to be assessed in the hands of the correct person by
taking appropriate action as available in law. Though assessee has
discharged his burden the A.O.'s has not shifted the burden to the
assessee. Merely relying on the statement of the assessee's son, the
A.O. cannot make addition in the hands of the assessee without bringing
any tangible evidence. Once the assessee furnished the details of the
transactions, the name and address of the person, the burden of the
assessee stands discharged and shifts to the revenue and the revenue
has to discharge its burden making necessary enquiries. In this case,
even though assessee has discharged the burden, the A.O. has not
discharged its burden. Therefore, we hold that the A.O. has not made
out a case for making addition in the hands of the assessee and the
transactions recorded in the Annexure GVS/3 & GVS/4 do not related to
the assessee and related to Smt. S. Venkata Ratnam and the addition if
any required to be made in her hands but not in the hands of the
assessee. Accordingly, the additions made on the basis of Annexure
GVS/3 & GVS/4 stands deleted.
7
ITA Nos.389 to 392/Vizag/2014
Grandhi Chalapathi Rao, Secunderabad
9. With regard to the additions made in respect of the seized material
marked as Annexure GVS/1, the assessee's son in question No.4 has
stated that the copies of the relevant documents in page Nos.18 to 22
represents the money lending transaction done by his father. This fact
was neither disputed by the assessee nor disputed by his son. In the
subsequent replies filed before the A.O., the assessee has not disputed
the contents of the loose sheets numbered in GVS/1, GVS/18 to 22. In
the loose sheets found and seized during the course of search in GVS/1,
there was a principal amount as well as the interest recorded which not
was disputed by the assessee and did not explain. Therefore, we hold
that the amounts recorded in the loose sheets in GVS/1 from page
Nos.18 to 22 are related to the money lending transactions of the
assessee as stated by the assessee's son in his statement dated
18.3.2009. Accordingly, we uphold the additions for the assessment
years 2005-06 to 2006-07 as under:
A.Y. Amount of addition Remarks
Seized material No.
2005-06 Principal Rs.3,63,400/- GVS/21
Interest Rs. 58,080/-
Total Rs.4,21,480/-
2006-07 Principal Rs.1,00,000/- GVS/1/18
Interest Rs. 14,600/-
Total Rs.1,14,600/-
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ITA Nos.389 to 392/Vizag/2014
Grandhi Chalapathi Rao, Secunderabad
A.Y. Amount of addition Remarks
Seized material No.
2006-07 Principal Rs. 60,000/- GVS/1/18
Rs.1,00,000/-
Interest Rs. 3,150/-
Rs. 8,200/-
Rs.1,71,350/-
2006-07 Principal Rs. 2,200/- GVS/1/22
Interest Rs. 84/-
Rs. 2,284/-
9. In the result, the appeals of the assessee are partly allowed.
The above order was pronounced in the open court on 10th Jan'18.
Sd/- Sd/-
(वी. दग
ु ाराव) ( ड.एस. सु दर "संह)
(V. DURGA RAO) (D.S. SUNDER SINGH)
या यक सद य/JUDICIAL MEMBER लेखा सद य/ACCOUNTANT MEMBER
#वशाखापटणम /Visakhapatnam:
'दनांक /Dated : 10.01.2018
VG/SPS
आदे श क त)ल#प अ*े#षत/Copy of the order forwarded to:-
1. अपीलाथ / The Appellant - G.V.V.S.N. Subba Rao, L/R of Grandhi Chalapathi Rao,
Prop Grandhi Subba Rao and Sons, D.No.27-7-5, Akellavari Lane, Temple Street,
Kakinada.
2. याथ / The Respondent - The ACIT, Central Circle, Rajahmundry
3. आयकर आयु+त / The CIT (Central), Guntur
4. आयकर आय+
ु त (अपील) / The CIT (A), Guntur
5. #वभागीय त न.ध, आय कर अपील य अ.धकरण, #वशाखापटणम /
DR, ITAT, Visakhapatnam
6. गाड फ़ाईल / Guard file
आदे शानुसार / BY ORDER
// True Copy // Sr. Private Secretary ITAT, VISAKHAPATNAM 9