KILARI STYANARAYANA,VIZIANAGARAM vs. ITO, VIZIANAGARAM

ITA 478/VIZ/2017Status: DisposedITAT Visakhapatnam06 April 2018AY 2011-125 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s direction to the AO to verify the assessee's ITR for AY 2009-10 and grant credit for any available capital. Since this direction was in line with the assessee's request, no further relief was granted.

What were the facts?

The assessee introduced capital of Rs. 17,15,000/- in his IMFL business, claiming it was from own funds and relatives. However, he failed to provide documentary evidence to the Assessing Officer (AO). The AO treated this capital as unexplained and added it to the assessee's income.

What were the issues?

Whether the capital introduced by the assessee in his business was from unexplained sources, and if so, whether it should be added to his income.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

Before: SHRI V. DURGA RAO & SHRI D.S. SUNDER SINGH

For Appellant: Shri M.N. Murthy Naik, DR

Hearing: 27.03.2018Pronounced: 06.04.2018

आदेश / O R D E R

PER V. DURGA RAO, Judicial Member:

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

Commissioner of Income Tax (Appeals)-1, Visakhapatnam vide Appeal

No.440/2014-15 dated 16.6.2017 for the assessment year 2011-12.

Facts are in brief that the assessee is an individual carrying on

business in purchase and sale of Indian Made foreign Liquor (IMFL) in

ITA No.478 /Vizag/2017 K. Satyanarayana, Vizianagaram Vizianagaram District. He filed return of income by declaring total

income of ` 4,47,820/-. The return filed by the assessee was processed

u/s 143(1) of the Income Tax Act, 1961 (hereinafter called as 'the Act')

and thereafter, after following the due procedure, assessment is

completed u/s 143(3) of the Act. In the assessment order, the A.O.

noted that the assessee has made payments towards initial license fee,

first purchase of stock and FDR towards bank guarantee during the

months of June, 2010 and July, 2010 amounting to ` 15,78,729/-. The

capital contribution of the assessee as shown in the balance sheet filed

during the course of assessment proceedings is of ` 17,15,000/-. The

assessee tried to explain the source of capital of the assessee for

making payment of initial license fee, etc. before commencement of the

sale of new wine shop the then available funds representing his capital

and quasi capital from relatives and friends. But he failed to furnish any

documentary evidence regarding the then available funds representing

this capital, quasi capital from friends and relatives. Accordingly, the

capital contribution of the assessee treated as out of unexplained

sources and added income from other sources. Accordingly, he made

an addition of ` 17,15,000/- brought to tax under the head “income

from other sources”. On appeal, the Ld. CIT(A) directed the A.O. to

ITA No.478 /Vizag/2017 K. Satyanarayana, Vizianagaram verify the ITR of the assessee for the year 2009-10, if any capital is

available credit may be given to the assessee.

On being aggrieved, assessee carried matter in appeal before the

Tribunal. The Ld. Counsel for the assessee strongly relied on the

grounds of appeal.

On the other hand, the Ld. D.R. relied on the orders of the A.O.

We have heard both the parties, perused the materials available

on record and gone through the orders of the authorities below. In this

case, the assessee has introduced a capital of ` 17,15,000/-. When the

A.O. has asked the assessee, it was submitted that the capital

introduced by him in the IMFL business is his own capital and also

borrowed from his relatives and friends. However, no details were filed

before the A.O. Therefore, the A.O. treated the entire capital introduced

by him of ` 17,15,000/- as unexplained source and brought to tax under

the head “income from other sources”. On appeal before the CIT(A), it

was submitted that the assessee is having own capital, therefore, the

same may be considered and to that extent set off may be given. The

Ld. CIT(A) by considering explanation given by the assessee, he directed

the A.O. as under:

ITA No.478 /Vizag/2017 K. Satyanarayana, Vizianagaram “AO is directed to verify the ITR of the assessee for AY 2009-10, whether any balance sheet was also filed along with that ITR and in that balance sheet if the capital account as on 30.3.2009 reflects any capital, the same may be given credit. This direction is given in line with assessee’s submissions before AO (refer para 2 of page 5 of the asst. order), and also going the fact that the same AO has given credit to the b/f capital in other IMFL cases.” 6. In view of the direction given by the CIT(A), we find that the Ld.

CIT(A)’s direction is as requested by the Ld. A.R. of the assessee and

therefore, we find no further direction can be given in this case.

Accordingly, this appeal filed by the assessee is dismissed.

In the result, the appeal filed by the assessee is dismissed.

The above order was pronounced in the open court on 6th Apr’18.

Sd/- Sd/- ( ड.एस. . . . सु�दर "संह) (वी. दुगा�राव) (D.S. SUNDER SINGH) (V. DURGA RAO) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER #वशाखापटणम /Visakhapatnam: 'दनांक /Dated : 06.04.2018 VG/SPS आदेश क� ��त)ल#प अ*े#षत/Copy of the order forwarded to:-

अपीलाथ� / The Appellant – Killari Satyanarayana, Prop. Mahalaxmi Wines, Main

Road, Biyyalapeta, Vizianagaram 2. ��याथ� / The Respondent – The ITO, Ward-2, Lower Tankbund Road, Siddarth

Nagar, Balaji Nagar, Vizianagaram. 3. आयकर आयु+त / The Principal CIT-1, Visakhapatnam

ITA No.478 /Vizag/2017 K. Satyanarayana, Vizianagaram

आयकर आयु+त (अपील) / The CIT (A)-1, Visakhapatnam

#वभागीय ��त�न.ध, आय कर अपील�य अ.धकरण, #वशाखापटणम /

DR, ITAT, Visakhapatnam

गाड� फ़ाईल / Guard file

आदेशानुसार / BY ORDER // True Copy //

Sr. Private Secretary ITAT, VISAKHAPATNAM

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