P Thikka Reddy, R.R.Dist V. Dy.CIT, Circle-16(3), Hyderabad

ITA 100/HYD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6557 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 31-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: S RAMA RAO
• Keywords: Salary income; Peak credit
• Section: 143(3); 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NO.100/HYD/2013 ASSESSMENT YEAR 2007-2008 MR. P. THIKKA REDDY SHAMSHABAD, RR DIST PAN AHJPP4220B VS. THE DCIT, CIRCLE - 16(3) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. S. RAMA RAO FOR REVENUE : MR. B. KURMI NAIDU DATE OF HEARING : 2 2 .0 3 .2016 DATE OF PRONOUNCEMENT : 13 .05.2016 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y. 2007-08. AT THE OUTSET, IT IS SEEN THAT THERE IS A DELAY OF 548 DAYS IN FILING OF THIS APPEAL BEFORE THE TRIBUNAL. THE ASSE SSEE HAS FILED AN APPLICATION AND AN AFFIDAVIT EXPLAINING TH E CIRCUMSTANCES LEADING TO THE DELAY. IT WAS SUBMITTE D THEREIN THAT DURING THE RELEVANT PERIOD THERE WAS A DISPUTE BETWEEN THE PARAS COLLINS DISTILLERIES P. L TD., IN WHICH THE PETITIONER IS THE MANAGING DIRECTOR AND U NITED SPIRITS LTD., BANGALORE, WHICH FILED AN ARBITRATION PETITION BEFORE THE HONBLE HIGH COURT OF MUMBAI WHICH IS NUMBERED AS ARBITRATION PETITION NO.1072/2010. IT W AS SUBMITTED THAT IN THE ABOVE SUIT, THE HONBLE HIGH COURT 2 ITA.NO.100/HYD/2013 MR. P. THIKKA REDDY, SHAMSHABAD (V) RR DIST., OF BOMBAY PASSED ORDERS DATED 14.09.2010 WHEREIN FO R THE RECOVERY OF THE AMOUNT PAYABLE BY THE COMPANY P ARAS COLLINS 'COURT RECEIVER' WAS APPOINTED WHO TOOK THE POSSESSION OF THE FACTORY UNIT AND KEPT THE FACTORY PREMISES UNDER LOCK. A COPY OF THE ORDER OF THE HON 'BLE HIGH COURT OF BOMBAY IS SUBMITTED. PURSUANT TO THE COURT ORDERS, ENTIRE MANUFACTURING ACTIVITY AND THE BUSINESS OF THE UNIT CAME TO A HALT. AS THE UNIT WA S LOCKED, STAFF WORKING WITH THE COMPANY LEFT, AND TH E UNIT WAS UNDER THE LOCK AND IN THE POSSESSION OF COURT RECEIVER WITH EFFECT FROM 29.10.2010. THE MANAGING DIRECTOR OF THE COMPANY WAS MAKING FRANTIC EFFORTS TO GET THE MATTERS SETTLED AT THE EARLIEST TO REVIVE THE W ORKING OF THE COMPANY AND WAS PRE-OCCUPIED WITH THE AFFAIRS O F THE COMPANY. HE WAS REQUIRED TO GO ROUND THE PLACES VIZ ., MUMBAI, ETC., NUMBER OF TIMES. AS ALL THE EMPLOYEES LEFT THE COMPANY, THE PETITIONER WAS NOT HAVING ANY ASSISTANCE TO LOOK AFTER HIS MATTERS. THE PERSONAL RECORDS OF THE PETITIONER WERE ALSO IN THE COMPANY PREMISES WHICH WAS UNDER THE LOCK AND KEY OF THE 'COURT RECEIVER'. THE COMPANY PREMISES REMAINED DESERTED AS THE COURT RECEIVER IS STATIONED AT BOMBAY. WHEN THE COMMISSIO NER OF INCOME TAX-IV, HYDERABAD ISSUED A NOTICE U/S 263 OF THE I.T. ACT, POSTING THE CASE FOR HEARING ON 05.12 .2012 IT HAS COME TO THE KNOWLEDGE OF THE PETITIONER AND THE PETITIONER APPROACHED THE CHARTERED ACCOUNTANT IN T HE MONTH OF DECEMBER, 2012 FOR FURNISHING THE REPLIES TO THE NOTICE U/S 263 OF THE I.T. ACT. AT THIS JUNCTURE, H E CAME TO KNOW OF THE APPELLATE ORDER OF THE CIT(A). THE PETI TIONER, 3 ITA.NO.100/HYD/2013 MR. P. THIKKA REDDY, SHAMSHABAD (V) RR DIST., ON ACCOUNT OF CLOSURE OF THE FACTORY UNIT, WAS FACI NG FINANCIAL CRISIS AND SUFFERED GENUINE HARDSHIP IN P AYMENT OF APPEAL FEE. THE PETITIONER COULD CONSULT AN ADVO CATE IN THE LAST WEEK OF JANUARY, 2013 AND GOT THE APPEAL PREPARED. ACCORDINGLY, THE APPEAL BEFORE THE TRIBUN AL WAS FILED ON 31.01.2013 WITH A DELAY OF 548 DAYS. IT WA S PLEADED BY THE ASSESSEE THAT SINCE THE DELAY WAS FO R THE REASONS STATED ABOVE, AND WERE BEYOND THE CONTROL O F THE ASSESSEE AND IS NOT INTENTIONAL, THE DELAY OF 548 D AYS IN FILING THE APPEAL BEFORE THE TRIBUNAL MAY BE CONDON ED AND THE APPEAL BE ADJUDICATED ON MERITS. 2. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN SIMILAR CIRCUMSTANCES, THE A BENCH OF THI S TRIBUNAL IN THE CASE OF PARAS COLLINS DISTILLERIES P. LTD., IN ITA.NO.434/2014 DATED 17.04.2015 (TO WHICH ONE OF U S I.E., A.M. IS THE SIGNATORY), HAS CONDONED THE DELA Y OF 723 DAYS IN FILING OF THE APPEAL BEFORE THE TRIBUNAL AF TER TAKING THE ABOVE FACTS AND CIRCUMSTANCES INTO CONSIDERATIO N. WE FIND THAT IN THE SAID CASE ALSO, THE APPEAL WAS FIL ED ONLY ON 22.01.2013. WHILE THE APPEAL BEFORE US WAS FILED ON 31.01.2013. TAKING THE SAME INTO CONSIDERATION, THE DELAY OF 548 DAYS IS CONDONED. 3. COMING TO THE MERITS OF THE APPEAL, WE FIND THAT DURING THE ASSESSMENT PROCEEDINGS UNDER SECTIO N 143(3) OF THE ACT, THE A.O. OBSERVED THAT THE ASSES SEE HAS FILED HIS RETURN OF INCOME FOR THE A.Y. 2007-08 ON 14.02.2008 DECLARING INCOME OF RS.5,75,400 FROM SAL ARY 4 ITA.NO.100/HYD/2013 MR. P. THIKKA REDDY, SHAMSHABAD (V) RR DIST., AND AGRICULTURAL INCOME OF RS.20 LAKHS. THE ASSESSE E WAS DIRECTED TO PRODUCE THE PROOF FOR THE AGRICULTURAL HOLDINGS AND THE AGRICULTURAL INCOME DECLARED AT RS.20 LAKHS . THE ASSESSEE FURNISHED DETAILS OF THE LAND HOLDINGS TO AN EXTENT OF AC.50.00. IT WAS ALSO SUBMITTED BY THE AS SESSEE THAT THE INCOME WAS GENERATED OUT OF SALE PROCEEDS OF AGRICULTURAL PRODUCE SUCH AS SWEET LIME, ORANGES, W ATER MELON, COTTON, PADDY, CHILLY, SUNFLOWER ETC. AS NO PROOF WAS FURNISHED IN RESPECT OF ITS CLAIM OF RECEIVING INCOME FROM AGRICULTURAL ACTIVITY, THE A.O. DISALLOWED THE SAME AND TREATED IT AS INCOME FROM OTHER SOURCES. SUBSEQUENTLY, HE ALSO PERUSED THE BANK ACCOUNT OF T HE ASSESSEE HELD WITH ANDHRA BANK, SOMAJIGUDA BRANCH, WHEREIN HUGE CASH DEPOSITS TOTAL OF WHICH IS RS.47, 60,500 WAS MADE. AS THE ASSESSEE HAD DECLARED ONLY INCOME FROM SALARY OF RS.5,75,400 AND THE NET AGRICULTURAL INCO ME OF RS.20 LAKHS, HE WAS ASKED TO EXPLAIN THE SOURCE OF EACH OF THE CASH DEPOSITS ON THE DATES MENTIONED ALONG WITH THE EVIDENCE IN SUPPORT OF HIS CLAIM OF SOURCE. THE ASS ESSEE, VIDE LETTER DATED 18.11.2009 SUBMITTED THAT THE SOU RCE FOR DEPOSIT IN THE BANK ACCOUNT IS AGRICULTURAL INCOME. HOWEVER, NO FURTHER EVIDENCE WAS FURNISHED. THEREFO RE, AFTER GIVING CREDIT OF RS.20 LAKHS, THE A.O. BROUGH T THE BALANCE SUM OF RS.27,60,500 TO TAX UNDER SECTION 68 OF THE I.T. ACT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ADDITION AND TH E ASSESSEE IS IN SECOND APPEAL BEFORE US. 5 ITA.NO.100/HYD/2013 MR. P. THIKKA REDDY, SHAMSHABAD (V) RR DIST., 4. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED ONLY BY THE ADDITION MADE BY THE A.O. OF RS.27,60,500 UN DER SECTION 68 OF THE ACT. TREATING A SUM OF RS.20 LAKH S DECLARED BY THE ASSESSEE AS AGRICULTURAL INCOME, AS INCOME FROM OTHER SOURCES HAS NOT BEEN CHALLENGED BY THE ASSESSEE. IT IS ONLY THE CASE OF THE ASSESSEE T HAT THE ENTIRE DEPOSITS CANNOT BE CONSIDERED AS INCOME OF T HE ASSESSEE AND IT IS ONLY THE PEAK CREDIT THAT SHOULD BE TAKEN INTO CONSIDERATION. FURTHER, THE ASSESSEE HAS FILED BEFORE US COPY OF THE RETURN OF INCOME FOR THE A.Y. 2006- 07 ALONG WITH THE COMPUTATION OF TOTAL INCOME WHERE IN THE NET AGRICULTURAL INCOME RECEIVED FROM LANDS WAS SHOWN AT RS.15 LAKHS. FURTHER, IT WAS SUBMITTED THA T THE A.O. HAS ACCEPTED THE SAID COMPUTATION AND THIS AMO UNT SHOULD BE CONSIDERED AS THE SOURCE FOR THE CASH DEP OSITS. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS BEEN RETURNING THE AGRICULTURAL INCOME FOR THE EARLIER ASSESSMENT YEARS AS WELL AND THE A.O. HAS ALSO ACCE PTED THE SAME. THUS, ACCORDING TO HIM, THESE AMOUNTS WER E AVAILABLE FOR DEPOSITS INTO THE BANK ACCOUNT. HE HA S ALSO FILED A COPY OF THE BANK STATEMENT FOR THE PERIOD 01.04.2006 TO 31.03.2007 FROM WHERE IT IS SEEN THAT THERE ARE HUGE CASH DEPOSITS AND ALSO WITHDRAWALS. THEREF ORE, ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, EVEN THE DEBITS HAVE TO BE TAKEN INTO CONSIDERATION WHILE VE RIFYING THE SOURCES OF THE DEPOSITS. 5. THE LD. D.R. ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6 ITA.NO.100/HYD/2013 MR. P. THIKKA REDDY, SHAMSHABAD (V) RR DIST., 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THOUGH THE ASSESSE E HAS NOT CHALLENGED THE FINDINGS OF THE CIT(A) THAT THE SUM OF RS. 20 LAKHS HAS TO BE TREATED AS INCOME FROM OTHER SOURCES AND NOT INCOME FROM AGRICULTURE, IT IS TO B E SEEN THAT IN THE EARLIER ASSESSMENT YEAR, THE AGRICULTUR AL INCOME RETURNED BY THE ASSESSEE HAS BEEN ACCEPTED B Y THE REVENUE AS RIGHTLY POINTED OUT BY THE LD. COUNS EL FOR THE ASSESSEE FOR THE EARLIER ASSESSMENT YEAR I.E., 2006-07. THUS, WE FIND THAT THE SUM OF RS.15 LAKHS DECLARED AS AGRICULTURAL INCOME WAS AVAILABLE FOR DEPOSITS INTO THE BANK ACCOUNT. FURTHER, WE ALSO AGREE WITH THE CONTE NTION OF THE ASSESSEE THAT DEBITS ALSO HAVE TO BE TAKEN I NTO CONSIDERATION WHILE MAKING THE ADDITION UNDER SECTI ON 68 OF THE ACT. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO REMIT THIS ISSUE TO THE FILE OF THE A.O. WITH A DIRECTION TO RECONSIDER THE ISSUE AND TO TAKE ONLY THE PEAK CRED ITS INTO CONSIDERATION WHILE MAKING THE ADDITION UNDER SECTI ON 68 OF THE ACT. WHILE MAKING SUCH ADDITION, CREDIT FOR A SUM OF RS.20 LAKHS TREATED AS INCOME FROM OTHER SOURCE S SHALL BE GIVEN. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13.05.2016. SD/- SD/- (B. RAMAKOTAIAH) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 13 TH MAY, 2016 VBP/- 7 ITA.NO.100/HYD/2013 MR. P. THIKKA REDDY, SHAMSHABAD (V) RR DIST., COPY TO : 1. MR. P. THIKKA REDDY, CARE: PARAS COLLINS DISTILLERI ES P. LTD., SURVEY NO.662 & 663, OPP. BHARAT GARDENS, SHAMSHABAD (V), RANGA REDDY DISTRICT. 2. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE - 16(3), HYDERABAD. 3. CIT(A) - V , HYDERABAD . 4. CIT - IV , HYDERABAD . 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE