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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO, HON’BLE & SHRI D.S. SUNDER SINGH, HON’BLE
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HON’BLE ACCOUNTANT MEMBER ITA No. 46/VIZ/2016 (Asst. Year : 2007-08) Karri Venkata Krishna Reddy, vs. ITO, Ward-3, 3-25, Vijaya Gardens, Kakinada. RAmanayyapeta, Kakinada. PAN No. AAGHK 6282 H (Appellant) (Respondent)
Assessee by : Shri G.V.N. Hari – Advocate. Department By : Shri Ch. Sanjeev – Sr.DR
Date of hearing : 06/09/2018. Date of pronouncement : 26/09/2018. O R D E R PER V. DURGA RAO, JUDICIAL MEMBER
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-2, Visakhapatnam, dated 27/11/2015 for the Assessment Year 2007-08. 2. The assessee has raised the following grounds:- “1. The first Appellate Authority viz., Commissioner of Income- tax (Appeals) Visakhapatnam should have deleted the additions made by the assessing officer viz., Income-tax Officer, Ward - 2, Kakinada; 2. No proper opportunity is given for furnishing the details before the lower authorities. 3. ADDITION TOWARDS DISALLOWANCE OF UNSECURED
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LOANS:- Rs.1,50,47,321/-: The learned assessing officer made an addition of Rs.1,50,47,321/- whereas the first appellate authority viz., learned Commissioner of Income- tax, Visakhapatnam deleted an amount of Rs. 82,00,184 leaving balance of Rs.68,47,137/-. Since the appellant furnished entire evidence the balance of Rs.68,47,137/- may also be deleted. 4. ADDITION TOWARDS DISALLOWANCE U/S. 40A(3):_ 22,50,000/-: The first appellate authority should have deleted the addition made u/s. 40A(3) Assessing Officer towards purchase of land for which the appellant made cash payment. The first appellate authority viz., learned Commissioner of Income-tax (Appeals), Visakhapatnam should deleted the addition as sufficient evidence is produced before the lower authority by the appellant. 5. ADDITION TOWARDS DISALLOWANCE OF INTEREST PAYMENT:- 4,67,066/-: The first appellate authority should have deleted the addition made by the assessing officer towards interest payments made by the appellant u/s.40(a)(i) of I. T. Act, 1961 as the appellant failed to remit T.D.S. on interest. The first appellate authority viz., learned Commissioner of Income-tax (Appeals) Visakhapatnam should deleted the addition as sufficient evidence is produced before the lower authority by the appellant. 6. Any other grounds of appeal that may be urged at the time of hearing.”
Ground Nos. 1 & 6 are general in nature, no adjudication is required, therefore same are dismissed. 4. Ground No. 2 relates to no proper opportunity was given to the assessee. 5. We find that Assessing Officer as well as ld. CIT(A) has given sufficient opportunities to substantiate his case before them. Therefore, there is no merit in this ground, hence, same is dismissed.
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Ground No.3 relates to disallowance of unsecured loans amounting to Rs. 45,95,636/- and Rs. 12,50,000/-. 7. Insofar as Rs.45,95,636/- is concerned, before the Assessing Officer the assessee has not filed any details in respect of creditworthiness of the creditor and genuineness of the transaction, therefore, the Assessing Officer has made the addition. 8. On appeal before the ld. CIT(A) also, the assessee failed to prove the creditworthiness and genuineness of the transaction. Even in the course of remand proceedings, the assessee has failed to prove the creditworthiness and genuineness of the transaction. Therefore, ld. CIT(A) confirmed the order of the Assessing Officer. 9. On appeal before us, ld. counsel for the assessee has pointed out from the paper book at page No. 10 and submitted that Mr.Karri Krishna Reddy has issued a confirmation letter stating that he has received money from Mr. K. Tirumala Reddy, who resides in USA and the amounts received from his son have been advanced to the assessee. The assessee has failed to prove the creditworthiness of the creditor, genuineness of the transaction and the source of the amounts received by the father, simply he filed a letter stating that father has received funds from his son and the same was advance to the assessee. This evidence cannot
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be accepted in the absence of source of income, creditworthiness of the creditor and genuineness of the transaction. Therefore, we find that the assessee has failed to explain the amounts received from Mr. K. Tirumala Reddy of Rs. 45,95,636/- is a genuine transaction. Therefore, we find that ld.CIT(A) correctly confirmed the order of the Assessing Officer and our interference is not called for. 10. Insofar as addition of Rs. 12,50,000/- is concerned, the case of the assessee is that he has borrowed an amount of Rs.12,50,000/- from Chundru Srihari Rao. During the course of assessment proceedings, no details were filed. Before the ld.CIT(A), the assessee has filed a confirmation letter. The ld.CIT(A) by considering the confirmation letter he has observed that there is no information as to source of making the impugned advance, no evidence has been shown that the transaction was reflected in the credit side of the books of account and also no information was given that the said creditor was assessed to tax. Accordingly, addition was confirmed. 11. Even before us, the assessee only relied on the confirmation letter given by Mr. Chundru Srihari Rao, which is placed in paper book at page No.12. From the confirmation letter, it is not clear what is the source of impugned advance and creditworthiness of
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the creditor, genuineness of the transaction and PAN number is also not mentioned. Under these facts and circumstances of the case, we are of the opinion that assessee has failed to explain the source of credit, creditworthiness of the creditor and genuineness of the transaction. Therefore, we find that the ld. CIT(A) correctly confirmed the order of the Assessing Officer. Thus, this ground of appeal raised by the assessee is dismissed. 12. Ground No.4 relates to addition of disallowance of Rs.22,50,000/- under section 40A(3) of the Act. 13. In the assessment order, the Assessing Officer has noted that assessee has paid in cash for the purchase of land from Smt.Goli Leela Kumari vide document Nos. 1082/2006 & 1083/2006, dated 22/05/2006. The Assessing Officer has observed that as the land purchased is stock-in-trade, the provisions of section 40A(3) are attracted and the assessee is failed to give any explanation, therefore same is added to the total income of the assessee. 14. On appeal before the ld. CIT(A), no explanation has been submitted, therefore, ld. CIT(A) confirmed the order of the Assessing Officer. Even before us, assessee has neither filed any explanation nor submitted any details. Therefore, we find no
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infirmity in the order of the ld. CIT(A). Thus, this ground of appeal raised by the assessee is dismissed. 15. Ground No. 5 relates to disallowance of interest payment of Rs. 4,67,066/-. 16. In the assessment order, the Assessing Officer has noted that the assessee had made interest payment to the following non-residents and has not deducted TDS as required under section 195 of the Act. a) Sri Karri Srinivas Rs. 44,900/- b) Smt. Karri Hemalatha Rs. 63,165/- c) Smt. Karri Shanti Rs. 44,978/- d) Sri Karri Tirumala Reddy Rs. 3,14,023/-
The Assessing Officer has called the assessee to explain why the disallowance of the amount of Rs. 4,67,066/- should not be made under section 40(a)(ia) of the Act. The assessee has not given any explanation before the Assessing Officer. Therefore, the Assessing Officer has added the same to the total income of the assessee. 17. On appeal before the ld. CIT(A), no explanation was given. Even before us, assessee has not given any explanation in respect of the above addition made by the Assessing Officer. Therefore, we find no infirmity in the order of the ld. CIT(A). Thus, this ground of appeal raised by the assessee is dismissed.
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In the result, appeal filed by the assessee is dismissed. Order Pronounced in open Court on this 26th day of Sep., 2018.
Sd/- sd/- (D.S. SUNDER SINGH) (V. DURGA RAO) Accountant Member Judicial Member Dated : 26th Sep., 2018. vr/- Copy to: 1. The Assessee – Karri Venkata Krishna Reddy, 3-25, Vijaya Gardens, Ramanayyapeta, Kakinada. 2. The Revenue – ITO, Ward-3, Kakinada. 3. The CIT-2, Visakhapatnam. 4. The CIT(A)-2, Visakhapatnam. 5. The D.R., Visakhapatnam. 6. Guard file. By order
(VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Visakhapatnam.