Govind Prasad Chandak, Hyd, Hyderabad V. ITO, Ward-6(2), Hyderabad, Hyderabad

ITA 1041/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2617 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-08-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 19-07-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained cash credit; Source of fund
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1041/HYD/2016 ASSESSMENT YEAR: 2007-08 GOVIND PRASAD CHANDAK, HYDERABAD. PAN ABFPC6739E VS. INCOME-TAX OFFICER, WARD 6(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SMT. SUMAN MALIK DATE OF HEARING : 03-08-2017 DATE OF PRONOUNCEMENT : 27-09-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - 9, H YDERABAD, DATED 28-03-2016 FOR AY 2007-08. 2. ON PERUSAL OF RECORD, WE FIND THAT THE ASSESSEE FILED THIS APPEAL BEFORE US WITH A DELAY OF 23 DAYS. IN THIS CONNECTI ON, ASSESSEE FILED A PETITION REQUESTING FOR CONDONATION OF THE SAID D ELAY WHEREIN IT WAS STATED THAT AT THE RELEVANT POINT OF TIME, HE BECAM E SICK AND TO THIS EFFECT A MEDICAL CERTIFICATE IS ENCLOSED TO THE SAI D PETITION. HE ALSO FILED AN AFFIDAVIT AFFIRMING THE REASONS MENTIONED IN THE CONDONATION PETITION. HE, THEREFORE, REQUESTED TO CONDONE THE S AID DELAY AND ADMIT THE APPEAL FOR ADJUDICATION. AS THE ASSESSEE WAS P REVENTED BY SUFFICIENT CAUSE IN NOT FILING THE APPEAL WITHIN TH E STIPULATED TIME, WE CONDONE THE SAID DELAY AND ADMIT THE APPEAL FOR HEA RING AND ADJUDICATION. 2 ITA NO. 1041/H/16 GOVIND PRASAD CHANDAK 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS AN INDIVIDUAL AND HIS SOURCES OF INCOME ARE FROM BUSI NESS, HOUSE PROPERTY AND CAPITAL GAIN. THE ASSESSEE MAINLY DEAL S WITH RETAIL TRADING OF FERTILIZERS AND GIRVI BUSINESS. FOR THE AY 2007-08, HE FILED RETURN OF INCOME ON 13/10/2007 DECLARING A TOTAL IN COME OF RS. 14,02,810/-, WHICH WAS PROCESSED U/S 143(1) AND LAT ER ON THE CASE WAS CONVERTED TO SCRUTINY AND ASSESSMENT WAS COMPLE TED U/S 143(3) OF THE ACT ON 16/12/2009 DETERMINING THE TOTAL INCO ME OF THE ASSESSEE AT RS. 16,72,980/- BY MAKING THE FOLLOWING ADDITION S: 1. ADDITION OF RS. 1,81,530/- U/S 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED CASH CREDITS. 2. ADDITION OF RS. 88,820/- U/S 40(A)(IA) OF THE AC T FOR NON DEDUCTION OF TDS. 4. ON APPEAL, THE CIT(A), DELETED THE ADDITION OF R S. 88,820/- MADE U/S 40(A)(IA) AND SUSTAINED THE ADDITION OF RS . 1,81,530/- MADE U/S 68 OF THE ACT. THEREFORE, THE SUBJECT MATTER OF APPEAL IS AGAINST THE ADDITION OF RS. 1,81,530/- MADE U/S 68 OF THE A CT. 5. THE FACTS RELATING TO ADDITION OF RS. 1,81,530/ - ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO EXAMINED T HE LOANS TAKEN BY THE ASSESSEE OF RS. 1,81,350/-, WHICH WERE ACTUA LLY ADVANCES TAKEN FROM AGRICULTURISTS TOWARDS FERTILIZERS. AO W AS NOT SATISFIED WITH THE CONFIRMATION LETTERS PRODUCED BY THE ASSESSEE A ND HENCE, TREATED THESE AMOUNTS AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 6. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT T HE SAID AMOUNT WAS RECEIVED TOWARDS ADVANCE AGAINST SUPPLY OF FERT ILIZERS, FOR WHICH LETTERS OF CONFIRMATION WERE FILED BEFORE THE ASSES SING OFFICER AND THE AMOUNTS WERE REPAID AT THE TIME OF SALE OF FERTILIZ ERS. THE DETAILS OF THE AMOUNTS PAID WERE ALSO MENTIONED. FURTHER HE SU BMITTED THAT HE IS CARRYING ON THE BUSINESS ACTIVITY AT SANKARAPALL I, MEDAL DISTRICT AND THE AGRICULTURISTS AROUND THE AREA PAY THE COST OF FERTILIZERS IN 3 ITA NO. 1041/H/16 GOVIND PRASAD CHANDAK ADVANCE SO AS TO ENABLE THEM TO GET THE SUPPLIES OF FERTILIZERS WITHOUT ANY PROBLEM. IN THE PROCESS, THE ASSESSEE DURING TH E YEAR UNDER CONSIDERATION, RECEIVED THE SAID AMOUNT TOWARDS ADV ANCE. SOME OF THE AMOUNTS WERE REPAID DURING THE YEAR AND THE PER SONS HAVE CONFIRMED THE FACT THAT THEY PAID THE AMOUNTS AS AD VANCES. HE THEREFORE, SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE LETTERS OF CONFIRMATION AND IN MAKING ADDITION. 7. AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE, C IT(A) OBSERVED THAT THE ASSESSEE'S CONTENTIONS ARE NOT ACCEPTABLE, AS THE ASSESSING OFFICER HAS ALREADY EXAMINED THE CONFIRMATION LETTE RS PRODUCED DURING THE ASSESSMENT PROCEEDINGS AND ANALYZED THE CIRCUMS TANCES UNDER WHICH THE ADDITION WAS MADE. FURTHER HE OBSERVED TH AT IT WAS SEEN FROM THE ASSESSMENT ORDER THAT MOST OF THE LOANS WH ICH HAVE BEEN TAKEN ARE REPAID BY THE ASSESSEE AND WHAT HAS NOT B EEN REPAID IS STILL AVAILABLE WITH THE ASSESSEE AND HENCE INFERENCE WAS DRAWN THAT THESE LOANS HAVE NOT BEEN TAKEN FOR THE PURPOSE OF PURCHASE OF FERTILIZERS. HE OBSERVED THAT AS CORRECTLY OPINED B Y THE ASSESSING OFFICER IT IS VERY UNLIKELY THAT THE FARMERS KEEP T HEIR MONEY WITH THE ASSESSEE FOR SUCH A LONG TIME FOR THE PURPOSE OF BU YING FERTILIZERS. FURTHER, HE OBSERVED THAT IT IS ALSO UNLIKELY THAT THEY TAKE BACK THEIR MONEY WITHOUT BUYING FERTILIZERS WHICH IS THE REASO N WHY THE ADVANCES HAD BEEN GIVEN AND AS NOTED BY THE AO THE ASSESSEE HAS NOT PRODUCED THESE PARTIES FOR VERIFICATION BEFORE THE ASSESSING OFFICER AND AS SUCH THESE AMOUNTS REMAIN UNSUBSTANT IATED. HE OBSERVED THAT EVEN DURING THE APPELLATE PROCEEDINGS , NO FURTHER EVIDENCE HAS BEEN PRODUCED BY THE ASSESSEE IN SUPPO RT OF HIS CONTENTIONS. IN VIEW OF THE ABOVE OBSERVATIONS, THE CIT(A) CONFIRMED THE ADDITION OF RS. 1,81,350/- MADE BY THE AO U/S. 68. 8. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 4 ITA NO. 1041/H/16 GOVIND PRASAD CHANDAK 1. THE ORDER OF CIT(A) IS ERRONEOUS TO THE EXTENT I T IS PREJUDICIAL TO THE APPELLANT. 2. THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF R S. 1,81,350/- MADE BY THE AO U/S 68 OF THE IT ACT. 9. CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL FA CTS ON RECORD. THE ASSESSEE HAS ALREADY RECEIVED ADVANCES FROM FAR MERS TOWARDS SUPPLY OF FERTILIZERS. THE ASSESSEE HAS FILED CONFI RMATION LETTERS BUT DID NOT PRODUCE ANY FARMERS BEFORE AO TO SUBSTANTIA TE THE GENUINENESS OF THE TRANSACTION. EVEN BEFORE US, THE ASSESSEE HAS SUBMITTED LETTERS OF CONFIRMATION SUBMITTED BEFORE THE AO AND LEDGER EXTRACT OF FERTILIZER SALES. THE AMOUNT DISALLOWED WAS RS. 1,81,350/- BUT THE LETTER OF CONFIRMATION SUBMITTED WAS CONFIR MING THE AMOUNT WHICH WAS SETTLED PRIOR TO MARCH07 AND ONLY TWO CO NFIRMATIONS WHICH RELATE TO THE LOANS OUTSTANDING IN THE LIST OF SUND RY CREDITORS. THE LEDGER EXTRACTS CONFIRM THE ADVANCES RECEIVED AND S UBSEQUENT SALE OF FERTILIZERS, BUT, IT DOES NOT CARRY ANY CLOSING BAL ANCE OF DUES. THESE ARE NOT PROPER EVIDENCES TO BE CONSIDERED IN THE PR ESENT APPEAL. WE ARE IN AGREEMENT WITH THE FINDINGS OF CIT(A) THAT S MALL FARMERS WILL NOT DEPOSIT AMOUNT IN ADVANCE TO PROCURE FERTILIZER S. WE HAVE NOTICED THAT THE DURATION TIME OF THE TRANSACTION FROM ADVA NCE RECEIPT TO SALE OF FERTILIZERS IN THE LEDGER SUBMITTED BEFORE US AR E ONE MONTH. NO FARMER WILL LEAVE HIS/HER HARD EARNED MONEY WITH TH E OTHER PERSON. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) AND GROUND RAISED BY THE ASSESSEE ON THIS COUNT IS DISMISSED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RA HMAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 27 TH SEPTEMBER, 2017. KV 5 ITA NO. 1041/H/16 GOVIND PRASAD CHANDAK COPY TO:- 1) SHRI GOVIND PRASAD CHANDAK, C/O SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREE T NO. 9, HIMAYAT NAGAR, HYDERABAD 500 029 2) ITO, CIRCLE 6(2), IT TOWERS, AC GUARDS, HYDERA BAD. 3) CIT(A) - 9, HYDERABAD 4 PR. CIT - 6, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE