TMI Blog2015 (2) TMI 1335X X X X Extracts X X X X X X X X Extracts X X X X ..... tes to the confirmation of the addition for the loan from Shri Vyjanath R Patil and Shri Naganna Swadi. Addition on disbelieving the confirmation filed by one Shri Parakash Kattimani - AY 1999-2000 - HELD THAT:- It is an admitted position that Shri Prakash Kattimani in his confirmation dated 14-02-2012 had stated that he had no banks statement or books of accounts with him to show the source of the payment. A look at the affidavit of Shri Prakash Kattimani does not prove anything. It simply gives the cheque Nos. through which payment of ₹ 10,00,955/- was effected. This would not in any way show that the payments were made by Shri Prakash Kattimani himself. Nor does it show any light of the credit worthiness of Shri Prakash Kattimani. Further, the assessee had changed his version before the CIT(A). Before the AO it had given in the confirmation letter from one Dasharath and one M/s Amar Trading Co., against the above sum. Before the CIT(A) assessee roped in one Shri Prakash Kattimani as the creditor, to whom he claimed he had given sub-lease of Ron Taluk Range. We are of the opinion that the lower authorities were justified in disbelieving the version given by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter requires a fresh look by the AO. If the assessee is able to show that the confirmations had the details of the DD s, and source for raising the amounts, and if the DD numbers tally, with the list given by the AO of his order reproduced by us in the annexure and provide details as to the account from which the money for which the DD s were drawn, then, in our opinion the additions would not stand - we do make a note that it is the onus of the assessee to substantiate its contentions regarding the claim. Thus, against the deletion of ₹ 96,96,996/- the order of the CIT(A) is sustained to the extent whereas for the balance of sum of ₹ 68 lakhs pertaining to his order is set aside and issues remitted back to the file of the AO for consideration afresh in accordance with law. Addition by the CIT(A) admittedly, Sri D.I.Kamalakar, was an assessee and his financial statement reflected the loans given to assessee, who was his son, has not been disputed by the revenue. Hence, we are of the opinion that the CIT(A) justified in deleting this addition. Sustaining the addition against DD s obtained from Thirupathaiah, we find that the assessee had indeed furnished a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment proceedings were re-opened by issue of notices u/s 148 of the Act. In the return filed pursuant to such notice also assessee declared the same income as declared in the original return. In the balance sheet filed by the assessee along with the return he had shown certain loans which inter-alia included the following amounts; i) Shri D.I.Kamalakar ₹ 4,50,000/- ii) Shri K.I.Raghavendra ₹ 4,75,000/- iii) ShriVyjanath R Patil ₹ 1,00,000/- iv) Shri Naganna Swadi ₹ 50,000/- 6. During the course of the assessment proceeding assessee filed confirmations from the above creditors. AO rejected the confirmations on the ground that these were incomplete. As per the AO assessee had investments in a hotel in Gandhinagar, in Ram films and Rambabu films and the loans were shown in order to justify the investments. He disbelieved the loans and made an addition of ₹ 10,65,000/-. 7. Aggrieved assessee moved in appeal before the CIT(A). Argument of the assessee before the CIT(A) was that Shri D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that assessee did not place any of the record relied on by him, before the AO during the course of assessment proceedings. According to him, learned CIT(A) had accepted the claim of loans from Shri D.I.Kamalakar and K.I.Raghavendra, without giving an opportunity to the AO to examine the evidence submitted by the assessee. According to him, filing a mere confirmation would not wriggle out the assessee from its onus to show the credit worthiness of the creditors. Assessee having failed to do so, as per the learned DR, CIT(A) erred in deleting the addition in respect of the alleged loans from Shri D.I.Kamalakar and K.I.Raghavendra and was justified in confirming the addition for the alleged loans from Shri Vyjananth R Patil and Shri Naganna Swadi. 14. We have perused the orders and heard the rival contentions. What we find is that learned CIT(A) had during the course of appeal proceedings before him sought a remand report from the AO. A remand report dated 06-03-2012 was given by the AO. In the said remand report it is stated by the AO that the VDIS declaration given by Shri D.I.Kamalakar was not substantiated. As for Shri K.I.Raghavendra, AO states that the said Shri K.I.Raghave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... others. A sum of ₹ 10,00,955/- was deposited by the assessee since he was successful bidder in the excise bidding. During the course of assessment proceedings assessee was required to explain the source of the deposit. Assessee s stated that a sum of ₹ 5.00 lakhs was given to him by one Shri Dashrath and also filed a confirmation letter dated 15-01-1999 from the said Shri Dashrath. Assessee also furnished a letter from one M/s Amar Trading Co. in which the said concern stated that a sum of ₹ 2.5 lakhs was provided by them to the assessee by way of DD. However, the AO did not accept the former confirmation for want of address and latter one for a reason that the distinctive number of the DD mentioned by the party did not tally with the details provided by the Excise Department. He made an addition of ₹ 10,00,955/- as income. 21. AO also noted that assessee had in addition to his successful bidding for Ron Taluk, participated in the bidding process for other Taluks as well. For this purpose he had submitted DD worth ₹ 14.00 Lakhs to the excise authorities as earnest money deposits. Explanations were sought on this. As per the assessee the source for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 10,00,955/- was concerned, assessee had given different versions before the AO and before him. According to learned CIT(A) Shri Prakash Kattimani, could not give his PAN nor his assessment details. However, in so far as loans from Shri Basanth Kumar Patil, Smt D.Pushpalatha and Shri M.J.Torgal, were concerned CIT(A) held that assessee had discharged his onus for proving their identify and credit worthiness. He also noted that the AO had inadvertently added ₹ 9.5 lakhs against the actual amount of ₹ 8.5 Lakhs. Thus, he confirmed the addition of ₹ 10,00,955/- and deleted the addition of ₹ 9,50,000/-. 24. AO had also noted during the course of assessment proceedings that the liability to the extent of ₹ 4,36,170/- shown by the assessee in its balance sheet filed along with the revised return against his assets could not be proved by the assessee. According to him, loan of ₹ 98,000/- from Shri Chidambara Shetty ₹ 28.170/- from Shri Kamalakar and Car loan of ₹ 3,10,000/- from M/s Standard Chartered Bank were not substantiated. He made an addition of ₹ 4,36,170/-. 25. On these addition argument of the assessee before the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) had fell in error in going by the confirmation of Shri Basant Kumar Patil and Smt.D.Pushpalatha and Shri M.J.Torgal. According to him, confirmation letters ispso facto would not prove the loans. In the case of M.J.Torgal, assessee did not even file a proper confirmation. However, as per the learned DR the CIT(A) was justified in confirming the addition of ₹ 10,00,955/- since assessee had given different versions at different times. According to him, it could not be believed that a person without PAN could have deposited a sum of ₹ 10,00,955/- with Excise department for obtaining sub-lease of a range. 29. We have perused the orders and heard the rival contentions. First we take up the addition of ₹ 10,00,955/- which was confirmed by the CIT(A). It is an admitted position that Shri Prakash Kattimani in his confirmation dated 14-02-2012 had stated that he had no banks statement or books of accounts with him to show the source of the payment. A look at the affidavit of Shri Prakash Kattimani does not prove anything. It simply gives the cheque Nos. through which payment of ₹ 10,00,955/- was effected. This would not in any way show that the payments were ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) has mentioned that documents were produced before him. AO has not made any comments in the remand report. The amount of ₹ 28,170/- shown as due to Shri D.I.Kamalakar, who is assessee s father, is stated to be three instalments of ₹ 9,390/- each paid by Shri D.I.Kamalakar,to M/s ANZ Grindlays Bank, against the Car loan. On this also, AO has not made any comments in his remand report. However, in the Balance sheet a sum of ₹ 98,000/- was shown as due to Shri Chidambara Shetty whereas before the CIT(A) assessee had given confirmation from one Smt.D.Chitra, Proprietrix of M/s Chitra Enterprises. Nevertheless, confirmation which stated that the amount was paid by cheque to the assessee was not doubted by the AO in the remand report. We are therefore, of the opinion that CIT(A) was justified in considering the loans of ₹ 4,36,170/- appearing in the liability side of the balance sheet of the assessee to be genuine. 32. In the result, ground no.2 of the revenue is partly allowed for statistical purposes whereas its ground no.3 is dismissed. Other grounds of the revenue are general in nature. Grounds raised by the assessee in its appeal are dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was unable to explain the source. 37. In addition to the above, from the balance sheet filed by the assessee, it was noted that the assessee had obtained additional credits of ₹ 2.00 lakhs and ₹ 1,12,680/- from one Shri U.A.Ballal and his Father Shri D.I.Kamalakar, during the relevant previous year. As per the AO, no confirmations were filed for these. He made an addition of ₹ 3,12,680/- on this count also. 38. Aggrieved assessee moved in appeal before the CIT(A). Argument of the assessee was that participants in excise bidding for liquor ranges, mobilized EMDs by getting DD s from friends and relatives in the name of Excise Commissionerate. As per the assessee this was a usual procedure adopted everywhere. Such DD s deposited with the excise authorities, would be encashed by the excise authorities only in respect of the successful bidder. For the un-successful bidders, DD s were returned as such by the excise department. As per the assessee, it had mobilized DD s from the following persons for this purpose. i. Sri Ganapathi Kohli, Bidar ₹ 1,99,996/- ii.Sri Raghavendra Dall Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the assessee and also remand report of the AO held that assessee could substantiate DD s received from 12 persons mentioned in the list at para -38 above. However, according to him, for the DD s worth ₹ 42,50,000/- claimed to have been received from Sri Thirupathaiah and Sri M.J.Torgal, assessee was unable to produce any evidence. Vis- -vis the claim of the assessee that sum of ₹ 1,12,680/- appearing in its balance sheet in the name of his Father Sri D.I.Kamalakar, was a genuine loan, learned CIT(A) noted that the financial statement of Sri D.I.Kamalakar did reflect these amounts. However, vis- -vis the alleged loan of ₹ 2.00 lakhs from Sri U.A. Ballal, CIT(A) noted the assessee was unable to produce any confirmation. In the result, out of the total addition of ₹ 1,39,49996/- made on account of DD s deposited for bidding, CIT(A) deleted ₹ 96,99,996/- and sustained addition of ₹ 42,50,000/-. He also deleted the addition for the loan of ₹ 1,12,680/- from Sri D.I.Kamalakar, while confirming the addition of ₹ 2.00 lakhs made in respect of alleged loan from Shri U.A.Ballal. 41. Now before us, learned AR strongly assailing the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 96,99,996/-. Again as per the learned DR, CIT(A) had without verifying the credit worthiness of Shri D.I.Kamalakar, accepted the version of the assessee. 43. Learned DR supporting the order of the CIT(A) to the extent it was favourable to the revenue submitted that the CIT(A) was justified in rejecting the evidence filed by the assessee with regard to the DD s given by Sri Thirupathaiah. As per the learned DR, no evidence whatsoever was produced by the assessee with regard to the alleged loan from Sri M.J.Torgal. 44. We have perused the orders and heard the rival contentions. Assessee has not disputed that it had participated in the bidding for various excise auctions and for that purpose had deposited DD s for ₹ 1,75,69,996/-. AO had painstakingly analyzed the information received by him from excise department and complied the DD s which was submitted by the assessee for the purpose of bidding at page-8 of his assessment order. This is reproduced at Annexure-I to this order. Claim of the assesee was that all these amounts were DD s given by his friends and known people and were returned to such persons, when bidding was over since assessee was unsuccessful. It cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions were recorded in his bank statement. In the case of confirmation dated 12-12- 2011 given by M/s Superhit Films, signed by Sri M.B.Babu, he has not given any details as to where the money for the DD was raised. The copy of the confirmation filed in the case of N.R.Veerappa, before us is incomplete. Confirmation dated 11-02-2005 from S.Govindaiah Goud,for DD s worth ₹ 20.00lakhs, though it gives the DD numbers does not carry any detail as to his business source of earning or tax assessment. In the circumstances, the confirmations obtained from Sri Ganapathy Kohli, D.I.Kamalakar and Basant Kumar Patil, in our opinion, were rightly accepted by the CIT(A). These totaling to ₹ 28,99,996/-. Confirmation if any received from M/s Raghavendra Dall Industries, Sri Goverdhan Auto Finance, M/s Sangameshwara Enterprises, and Sri B Manik Rao are not before. However, learned CIT(A) does mention that the confirmation of all the 12 persons were available with him. Hence, with respect of the balance of ₹ 68,00,000/- we are of the opinion that the matter requires a fresh look by the AO. If the assessee is able to show that the confirmations for the sum of ₹ 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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