THE ACIT, VIJAYAWADA vs. M/S LALITHA BULLION CORPORATION, VIJAYAWADA

आदेश / O R D E R

PER D.S. SUNDER SINGH, Accountant Member:

This appeal filed by the revenue is directed against order of the

Commissioner of Appeals {CIT(A)}, Vijayawada vide ITA

No.120/CIT(A)/VJA/2015-16 dated 23.8.2016 for the assessment year

2012-13.

ITA No.448 /Vizag/2016 M/s. Lalitha Bullion Corporation, Vijayawada 2. In this case, the assessee filed return of income admitting total

income of Rs.53,92,500/- on 31.3.2012. The case was selected for

scrutiny and during the assessment proceedings, a survey u/s 133A of

the Act was conducted on 14.5.2012. During the post survey

proceedings, a statement was recorded on 13.6.2012 from Sri

Ramprasad who is the Managing partner of the firm. In the statement

recorded, the Managing partner has admitted unexplained income of

Rs.1,00,10,000/- for the assessment year 2012-13 relating to

introduction of capital in the year under consideration. During the

impugned assessment year, the partners have introduced fresh capital

of Rs.57,30,000/- by Shri R. Ramprasad and ` 79,20,000/- by Shri R.

Anjana Rao and in the statement recorded on 13.6.2012 the A.O. has

asked to explain the sources of capital and the assessee could not

explain the source to the extent of ` 1,00,10,000/-, hence, admitted the

additional income. Subsequently, Mr. R. Ramprasad, partner of the firm

committed suicide on 15.6.2012 and another partner Mr. R. Anjana Rao

retracted form the statement and stated that Late R. Ramprasad has

introduced the capital from his own sources and explained in his

personal assessments. He further stated that Mr. Ramprasad is

assessed to income tax regularly before ITO Ward-1(1), Vijayawada with

PAN No.ACJBR9563Q. Similarly, in the case of Mr. R. Anjana Rao, he is

ITA No.448 /Vizag/2016 M/s. Lalitha Bullion Corporation, Vijayawada also assessed to tax with ITO Ward-1(1), Vijayawada under PAN

No.ACJPR9564K and argued that both the partners are assessed to tax

and the capital was introduced from their own explained sources, hence,

no addition is called for in the hands of the firm. The assessee further

argued that if the addition required to be made, the same should be

made in the hands of the partners but not in the hands of the firm. It

was also explained by the assessee that the withdrawals made by the

assessees were reintroduced as capital but no fresh capital was infused.

Not being satisfied with the explanation of the assessee, the A.O. made

the addition of ` 1,00,10,000/- in the hands of the firm.

before the CIT(A) and the Ld. CIT(A) deleted the addition.

before this Tribunal.

on record and gone through the orders of the authorities below. A

survey u/s 133A of the Income Tax Act, 1961 (hereinafter called as 'the

Act') was conducted in the assessee’s case and during the post survey

enquiries, the A.O. found that the partners of the firm have introduced

capital of ` 1,36,50,000/- in the partnership firm. The source was said

to be explained from the accretions of their own sources of the partners.

ITA No.448 /Vizag/2016 M/s. Lalitha Bullion Corporation, Vijayawada

The partners are regularly assessed to tax. The admission was given by

Mr. R. Ramprasad, who was expired during the assessment proceedings.

The assessee has explained the sources for introduction of capital before

the Ld.CIT(A) as under:

Sri Ramanadham Anjana Rao has introduced capital of Rs.79,20,000/-during the financLal year 2011-12 and the sources were explained in the following table:

SI Date Amount in Remarks No Ps 06.05.2011 28,30,000 By obtaining loan from Sundaram Housing 1 Finance which is evident in the Balance sheet. Out of earlier withdrawals from firm 2 10.09.2011 13,00,000 Lalitha Bullion corporation and out of the Bank Balance in the Corporation Bank 3 05.10.2011 1,50,000 out of the Bank Balance in the Corporation Bank 4 12.11.2011 1,00,000 out of the Bank Balance in the Corporation Bank Out of the Bank Balance in the 5 16.11.201 2,90000 1 Corporation Bank Out of withdrawal from firm Lalitha 6 29.03.2012 2,50,000 Bullion corporation and out of the Bank Balance in the Corporation Bank. On the same day both transactions took place which is evident from 4

ITA No.448 /Vizag/2016 M/s. Lalitha Bullion Corporation, Vijayawada the Bank statement. 7 31.03.201 30,00,000 The partner Sri Ramanadham Anjana 2 Rao has obtained unsecured loan from the D. Venkata Vardhan Rao through RTGS. Total 79,20,000

Sri Ramanadham Ram Prasad has introduced capital of Rs.57,30,000/during the financial year 2011-12 and the sources were explained in the following table:

SI Date Amount in Remarks No Rs 20.05.2011 5,00,000 1 Out of Unsecured Loans from S.V.Lorty services obtained through Bank transfer. 2 26.05.2011 2830,000 By obtaining loan from Sundaram Housing Finance which is evident in the Balance sheet. By obtaining Loan from Corporation Bank 3 12.11.2011 1,00,000 invested in MIs Lalitha Bull/ion corporation. By with dra wing- from the Varun Gold 4 17.11.2011 23,00.000 Trading Account Prop: Ramanadham Pam maintained at Axis Bank. Total 57,30,000

The above investment is through Bank transfer. Hence during the course of scrutiny proceedings, the Appellant has submitted the account copies of M/s Lalitha Bullion corporation in the Books of the partners, Bank statements etc and stated that the two partners are regular income tax assessee's withPAN.

The Ld. CIT(A) deleted the addition holding the that the A.O. has

not established the introduction of capital was from unexplained sources

and thus the addition was unsustainable. For ready reference, we

extract relevant para of the order of the Ld. CIT(A). 5

ITA No.448 /Vizag/2016 M/s. Lalitha Bullion Corporation, Vijayawada “5.1 Admittedly, Assessing Officer simply relied on the statement recorded from one of the partners, namely, Sri Ramanadham Ram Prasad, to arrive at the undisclosed income in the hands of appellant towards capital infusion by the partners in the firm. Assessing Officer did not let in any evidence either by way of incriminating materials found during the course of survey or subsequent enquiries conducted by the Department to suggest that the amounts brought in by the partners were the actual income of the appellant from the undisclosed sources. Further, no excess stock or deficit stock was noticed at the time of survey which may lead to the disclosure of concealed income of appellant.

5.2. A.R. of appellant submitted copies of the following during appeal proceedings which were submitted before AO also

i. Capital a/c of both partners in the books of appellant for Asst. Year 2012-13 and their bank account statements for Asst. Year 2012-13.

ii. Income Tax return copies of both partners for Asst. Year 2012-13 including Profit & Loss Account, Balance Sheet.

iii. Copies of Income Tax scrutiny assessment order for Asst. Year 2012-13 in respect of both partners.

iv. Copies of partnership deed dated 23.11.2008, 01.04.2012 and retirement deed dated 01.09.2012.

5.2.1. From perusal of above details, it is evident that the partners had accounted in their individual books of accounts and filed their returns of income by admitting the investment in the appellant firm. Thus, when the investment is reflected in the individual books of the partners and they have admitted the same in their books of accounts and the same was examined during the course of scrutiny assessment proceedings in their cases it will not become undisclosed income in the hands of appellant firm.

5.3. Hon'ble Madras High Court in the case of CIT vs. S.Khadar Khan Son (2008) 300 ITR 157 held that evidence collected and statements recorded during the survey u/s 133A were not conclusive piece of evidence by themselves.”

ITA No.448 /Vizag/2016 M/s. Lalitha Bullion Corporation, Vijayawada 6. On going through the orders of the Ld.CIT(A) and the submissions

made by the assessee which is reproduced above, it is established that

the sources for the capital accounts were explained and the above

transactions were through bank accounts. The ld.CIT(A) has examined

the capital accounts, Income tax returns and Balance sheets of both the

partners and observed that scrutiny assessment orders were passed in

the case of partners and given a finding that the investment in capital

account of the firm reflected in their individual returns and the same

cannot be held as undisclosed income in the hands of the firm. The Ld.

CIT(A) also relied on the decision of Hon’ble Madras High court in the

case of S. Khader Khan supra and held the statement recorded during

the course of survey is not conclusive proof of evidence. In the instant

case the partners have declared the investments in their individual

returns and the same was examined by the respective AOs. Since the

AO completed assessments and did not find any infirmity with regard to

the individual assessments, there is no case for making addition in the

hands of the firm. The department could not controvert the finding of

the Ld. CIT(A) with tangible evidence. Therefore, we do not find any

infirmity in the order of the Ld. CIT(A) and the same is upheld.

ITA No.448 /Vizag/2016 M/s. Lalitha Bullion Corporation, Vijayawada

Sd/- Sd/- (वी. दुगा�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 : 04.04.2018 VG/SPS आदेश क� ��त)ल#प अ*े#षत/Copy of the order forwarded to:-