Dy. Commissioner of Income Tax, Circle-16(2), Hyderabad V. MS Agarwal Foundries Private Limited, Hyderabad

ITA 1063/Hyd/2017

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 4399 (ITAT-HYDERABAD)
• Duration Of Justice: 6 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2024
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 03-01-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 21-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence; Revised return; Set aside
• Section: 142(1); 143(2)

Judgement Text

ITA No 1063 of 2017 MS Agarwal Foundries Page 1 of 10 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ B ‘ Bench, Hyderabad Before Shri R.K. Panda, Vice-President AND Shri Laliet Kumar, Judicial Member ITA No.1063/Hyd/2017 Assessment Year: 2012-13 Dy.CIT Circle 16(2) Hyderabad Vs. M/s. M.S Agarwal Foundries (P) Ltd, Hyderabad PAN:AAICS4832K (Appellant) (Respondent) Revenue by : Shri K. Madhusudan, CIT(DR) Assessee by: Shri Sunil Kumar Jain, CA Date of hearing: 04/01/2024 Date of pronouncement: 05/01/2024 ORDER Per Laliet Kumar, J.M This appeal filed by the Revenue is directed against the order dated 23.03.2017 of the learned CIT (A)-4, Hyderabad relating to A.Y.2012-13. 2. Facts of the case, in brief, are that the assessee company is engaged in manufacture of sponge iron. It filed its return of income for the A.Y 2012-13 admitting income of Rs.5,730/- and also revised return of income admitting income of Rs.9,760/-. Subsequently, the case was converted into scrutiny under CASS and statutory notices u/s 143(2) and 142(1) of the I.T. Act, 1961 were issued and served on the assessee to which ITA No 1063 of 2017 MS Agarwal Foundries Page 2 of 10 the Authorised Representative appeared before the Assessing Officer and furnished the requisite details as called for. 3. It is the case of the Assessing Officer that during the year under consideration, the assessee had received huge share capital of Rs.21,85,00,000/- from M/s. Shri Kamal Fashion (P) Ltd. The Assessing Officer completed the assessment by making addition of Rs.21,85,00,000/- in the hands of the assessee. In para 5.2 to 5.6 of the assessment order, the Assessing Officer mentioned as under: ITA No 1063 of 2017 MS Agarwal Foundries Page 3 of 10 4. Aggrieved with such order of the Assessing Officer, the assessee filed appeal before the learned CIT (A), who in turn had allowed the appeal of the assessee while observing as under: ITA No 1063 of 2017 MS Agarwal Foundries Page 4 of 10 ITA No 1063 of 2017 MS Agarwal Foundries Page 5 of 10 5. Now the Revenue is in appeal before the Tribunal and raised the following grounds: 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in admitting additional evidence in contravention of Rule 46A without giving reasonable opportunity to the Assessing Officer to examine the additional evidence. 2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the Addition made on amount of Unexplained Cash Credits in the form of share application money of Rs. 18,65,00,000/- introduced in the name of M/s Kamal Fashions Pvt. Ltd. 3. On the facts and in the circumstances of the case and in law, the CIT(A) erred by not enhancing the addition made on amount of Unexplained Cash Credits in the form of share application money of M/s Kamal Fashions Pvt. Ltd., by Rs. 22,55,00,000/- which is the remaining amount of share application money introduced in the name of M/s Kamal Fashions Pvt. Ltd. 4. The Ld. CIT(A) erred in not appreciating the fact that AO has brought on record (page no.10 and page no.15 of assessment order), while discussing about survey material and in show- cause notice that total investment from M/s Kamal Fashions Pvt. Ltd., is Rs. 41.20 crores in the computation. 5. The CIT(A) ought to have corrected this bonafide mistake by enhancing the addition on account of bogus investment from M/s Kamal Fashions Pvt. Ltd., by Rs. Crores instead of deleting the whole addition. 6. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the addition made on amount of Unexplained Cash Credits in the form of share application money of Rs. 1,50,00,000/- introduced in the name of M/s Neelkamal Dealcomm Pvt, Ltd., M/s Sneshsil marketing Pvt. Ltd., and M/s Sugam Vinimay Pvt. Ltd. 7. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the addition made on amount of Unexplained Cash Credits in the form of share application money of Rs.70,00,000/- introduced in the name of M/s Pushpanjali Hirise Pvt. Ltd., and M/s. Sanskar Commodeal Pvt.Ltd. 8. On the facts and in the circumstances of the case and in law, the CIT(A) erred in holding that share application money of Rs. 70,00,000/- was not introduced in the name of M/s Pushpanjali Hirise Pvt. Ltd., and M/s. Sanskar ITA No 1063 of 2017 MS Agarwal Foundries Page 6 of 10 Commodeal Pvt.Ltd., in the previous year relevant to A.Y. 2012-13. 9. On the facts and in the circumstances of the case and in law, the CIT(A) erred in not following the ratio laid down in the case of Subhalakshmi Vanijya (P) Ltd vs. CIT (ITA No.1104/Kol/2014). 10. The appellant prays that the order of the CIT (A) on the grounds be set aside and that of the Assessing Officer be restored. 11 The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary”. 6. The learned CIT (DR) submitted that the Tribunal vide its earlier direction had directed the Revenue to file the report with respect to the settlement of M/s. Shrikamal Fashions (P) Ltd from which the assessee had revised the amount.The learned CIT (DR) had filed the report which is as under: ITA No 1063 of 2017 MS Agarwal Foundries Page 7 of 10 7. The learned CIT (DR) further submitted that after the settlement of the amount, nothing remained to be explained and therefore, the matter is required to be decided in accordance with the law. 8. Per contra, the learned AR submitted that the order passed by the Assessing Officer was not in accordance with the law as the Assessing Officer had made glaring errors while passing the order. It was submitted that the Assessing Officer has relied upon the statement given by one Shri Praveen Agarwal (Calcutta based company) which leads to the addition made by the Assessing Officer. It was submitted that in fact, the assessee has not received the money under consideration from the above person or from a company operated and managed by Shri Praveen Agarwal (Calcutta based company). In fact, it was submitted that the Assessing Officer obtained the statement of the Managing Director of Shri Kamal Fashion which was recorded on 25.03.2015 by the Revenue during the assessement proceedings. However, despite recording the statement of Shri Gopal Babu Agarwal, the Assessing Officer has wrongly mentioned herein above that the assessee has not given the details of persons from whom the money was received. It was submitted that the assessee had proved the identity, genuineness and creditworthiness of M/s. Shri Kamal Fashion (P) Ltd. The learned AR drew our attention to the paper book filed on 11.5.2021 whereby the assessee had filed Form I, II and III issued by the Department and thereafter, the order passed by the Tribunal in the case of Shri Kamal Fashion (P) whereby the appeal of Shri Kamal Fashion (P) Ltd was dismissed Ltd bearing No.895/Hyd/2019 being settled under the vivad-se-vishwas scheme. It was submitted that once the said assessee namely Sri Kamal Fashion (P) Ltd had stated in ITA No 1063 of 2017 MS Agarwal Foundries Page 8 of 10 the assessement proceedings that the amount was paid to the assessee by the said Shri Kamal Fashion (P) Ltd and thereafter the said company paid due taxes to the Department on the amount given by Shri Kamal Fashion (P) Ltd to the assessee. Therefore, the appeal of the revenue is to be dismissed. It was submitted that once Shri Kamal Fashion (P) Ltd had declared and disclosed the income, though under the vivad-se-vishwas scheme, then the amount on which the tax was paid would have been available with Sri Kaman Fashion (P) Ltd for giving it to the assessee. Thus, the assessee explained the legitimate source of income of the assessee namely Shri Kamal Fashion (P) Ltd and the amount received by the assessee was adequately been explained. 9. We have heard the rival arguments made by both the sides, perused the available material on record. We find from the perusal of the report filed by the Revenue, it is abundantly clear that the Revenue had accepted the settlement under vivad-se- vishwas scheme with Shri Kamal Fashion (P) Ltd. In fact, in the report the Assessing Officer had mentioned that the amount of Rs.41,20,00,000 were invested by the said company in the assessee company and the said Shri Kamal Fashion (P) Ltd had availed the benefit under vivad-se-vishwas scheme and paid the due taxes and further it was mentioned “that the amount incurred by Sri Kamal Fashions (P) Ltd cannot be taxed again in the hands of the assessee as unexplained credit is found to be acceptable”. 10. Once Shri Kamal Fashion (P) Ltd had paid the due taxes on the amount invested by the said company in the assessee company, then the necessary sequence to that the ITA No 1063 of 2017 MS Agarwal Foundries Page 9 of 10 money received by the assessee become the legitimate and explained money. Thus, the assessee was able to explain the source of the investment made in the assessee company by Shri Kamal Fashion (P) Ltd. 11. Since the learned CIT (A) decided the issue in favour of the assessee by relying upon the judgment of the Lovely Exports (Supra) and thereafter Shri Kamal Fashion (P) Ltd as mentioned herein above has availed the benefit under vivad-se-vishwas scheme and paid the due taxes, therefore, it is now essential for the Assessing Officer to examine afresh and record an independent finding whether the assessee was able to prove the identity, creditworthiness and genuineness of the transactions having regard to the said settlement made by M/s.Shri Kamal Fashion (P) Ltd under vivad-se-vishwas scheme. In the light of our above discussion, the matter is remanded back to the file of the Assessing Officer for fresh adjudication. Needless to say, the Assessing Officer shall decide the issue after affording due opportunity of being heard to the assessee. 12. In the result, appeal filed by the Revenue is allowed for statistical purposes. Order pronounced in the Open Court on 5 th January, 2024. Sd/- Sd/- (R.K. PANDA) VICE-PRESIDENT (LALIET KUMAR) JUDICIAL MEMBER Hyderabad, dated 5 th January, 2024 Vinodan/SPS ITA No 1063 of 2017 MS Agarwal Foundries Page 10 of 10 Copy to: S.No Addresses 1 Dy. CIT, Circle 16(2) 2 nd Floor, B Block IT Towers, AC Guards, Masab Tank, Hyderabad 2 M/s. MS Agarwal Foundries (P) Ltd., 5-4-83 Rama Towers, 2 nd Floor, TSK Chambers, Opp: Ranigunj Bus Depo,MG Road, Secunderabad 3 Pr. CIT – 4, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order