GRANDHI CHALAPATHI RAO,SECUNDERABAD vs. THE ACIT, RAJAHMUNDRY

आदेश / 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.

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

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 -

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

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 -

before the CIT(A) and the Ld. CIT(A) dismissed the appeal of the

assessee.

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

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

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.

authorities.

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

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.

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/-

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/-

The above order was pronounced in the open court on 10th Jan’18.

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 : 10.01.2018 VG/SPS आदेश क� ��त)ल#प अ*े#षत/Copy of the order forwarded to:-