O.P ALI vs. THE COMMISSIONER OF INCOME TAX

The appellant contended that the credits were with respect to one S.Venkiteswara Rao, Kakinada with whom he had regular transactions. However, no details were produced before the AO and the proposal was -3- confirmed. Before the first appellate authority, the assessee again asserted that the credits were with respect to S.Venkiteswara Rao and gave the correct address of the person. We find that on the basis of the explanation submitted by the assessee, there was remand report called for by the first appellate authority more than once for the purpose of verifying the genuineness of the transactions as claimed by the assessee.

The first remand report of the AO dated 12.9.2006 is extracted at page 6 of the order of the first appellate authority (Annexure-B). It is seen that copy of intimation under Section 143(1) of the Income Tax Officer, Kakinada of having completed the assessment of S.Venkiteswara Rao, copies of profit and loss account and balance sheet as also copy of the ledger accounts were transmitted to the AO. The AO found on verification of the said documents that the closing balance in the name of Sri.O.P.Ali had a credit balance of Rs.1,50,000/-. Though there were regular transactions with O.P.Ali, the assessee herein, the closing balance was very negligible and far lower than -4- that claimed as credits in the accounts of the two firms in which the assessee was the proprietor.

The assessee then sought a right to cross- examine S. Venkiteswara Rao for which a further remand was made to the AO. The AO's report dated 12.1.2007 is also extracted in Annexure-B. At that point, the assessee raised a contention that there were other persons from whom credit was received by the assessee, which was on behalf of S.Venkiteswara Rao. The two other persons pointed out by the assessee were one Krishnakumar and Sathibabu with whom Venkiteswara Rao claims to have absolutely no connection. It was also pertinent that the assessee had not been maintaining any accounts in the names of the two persons later pointed out by the assessee. Again, the remand report categorically found that there is no material evidence to confirm the two sums, which were added on as un- explained credits under Section 68. 5. A further affidavit was filed by the assessee claiming that the credits in Venkiteswara Rao's accounts were not made by the assessee himself through its State Bank of India account. The assessee then -5- raised a claim that the other two persons pointed out by the assessee himself are benamies of Venkiteswara Rao. A further remand was made to the AO and a report obtained dated 19.3.2008. At that point, the assessee again submitted that his main account was maintained only in State Bank of India. The Manager, SBI submitted that the transactions of the year 2000-2001 were not immediately available. Copy of the ledger account submitted was only with respect to one account of the assessee held in the name of M/s.Sabna Sea Foods one of the firms in which the assessee was the partner. Again, the assessee was found to have not proffered any material evidence to prove that the credits were from genuine persons. It was on these findings that the first appellate authority rejected the appeal. The Tribunal also considered the issue elaborately. The Tribunal found that though many opportunities were granted to the assessee, he singularly failed to substantiate the credits having been made