Konark Refrigeration Industries Pvt.Ltd., Hyderabad V. ACIT, Cricle-2(1), Hyderabad

ITA 1117/HYD/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2336 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-07-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 20-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M NARMADA
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.1117/HYD/2012 ASSESSMENT YEAR 2006 - 2007 M/S. KONARK REFRIGERATION INDUSTRIES PVT LTD., 27/A, MODEL COLONY, SURUNDERNAGAR, HYDERABAD. PAN: AACCK6564E VS. ACIT, CIRCLE - 2(1), HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE: NONE FOR REVENUE : SMT. M. NARMADA, DR DATE OF HEARING : 13.07.2017 DATE OF PRONOUNCEMENT : 13.07.2017 ORDER PER D. MANMOHAN , VP. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A) - III, HYDERABAD. THOUGH, ASSESSEE RAISED 5 GROUNDS IN THE GROUNDS OF APPEAL, THEY REGARD TO TWO ISSUES I.E., (I) ADDITION TOWARDS SHARE APPLICATIO N MONEY AND (II) DISALLOWANCE OF EXPENDITURE U/S 40(A)(IA) OF THE ACT. THE APPEAL WAS POSTED FROM TIME TO TIME AND WAS ADJOURNED AT THE REQUEST OF THE ASSESSEE. WHEN THE CASE WAS LAST POSTED FOR HEARING ON 13.0 2 .2017, NONE APPEARED FOR THE ASSESSEE. A N OTICE WAS ISSUED TO THE ASSESSEE BY THE REGISTERED POST, WHICH WAS RETURNED UNSERVED. THEREAFTER, A NOTICE WAS SENT TO THE ADDR ESS OF THE CHARTERED ACCOUNTANT WHO FILED THE APPEAL. THOUGH THE SAME WAS RECEIVED BY THE CHARTERED ACCOUNTANT, NONE APPE ARED FOR THE ASSESSEE. UNDER THESE CIRCUMSTANCES, WE HAVE NO OTHER ALTERNATIVE EXCEPT TO DISPOSE OF THE APPEAL EX - PARTE QUA THE ASSESSEE. 2 2. FACTS GIVING RAISE TO THE ISSUES UNDER CONSIDERATION ARE STATED IN BRIEF. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING AND M ANUFACTURING OF REFRIGERATION APPLIANCES. FOR THE YEAR UNDER CONSIDERATION, IT DECLARED A TOTAL LOSS OF RS. 3,67,886/. THE MATTER WAS TAKEN UP FOR SCRUTINY, WHEREIN , IT WAS NOTICED THAT THE ASSESSEE HAS INTRODU CED UNEXPLAINED CREDITS UNDER THE HEAD OF SHARE CAPITAL; AS PER THE ASSESSING OFFICER, DOCUMENTARY EVIDENCE WAS NOT FURNISHED WITH REGARD TO THE SOURCE OF INVESTMENT BY THE FOLLOWING LIST OF SHAREHOLDERS: - 1. BAIKENTHANATH MALLICK - RS. 1,90,000/ - 2. BENETHAR MOHANY - RS. 2,20,000/ - 3. GOBIND CH SAMAL - RS. 2,05,000/ - 4. KAILASH CH SAMAL - RS. 2,07,000/ - 5. KANDA SAHOO - RS. 2,10,000/ - 6. PITHAMBER LENKA - RS. 1,30,000/ - 7. RAJENDRA SWAIN - RS. 2,35,000/ - 8. SUBODH CHANDRA SAMAL - RS. 2,22,000/ - RS. 16,19,000/ - IN RESPECT OF BALANCE AMOUNT OF RS.6,87,000/ - 1 NO CONFIRMATION LETTERS WERE FILED. 3. SINCE, THEY WERE NOT ASSESSED INCOME TAX, THE A.O. DOUBTED THE CREDITWORTHINESS AND DISALLOWED THE SAME U/S 68 OF THE ACT. THE TOTAL ADDITION WORKS OUT TO RS. 23,06,000/ - REFERABL E TO SHARE APPLICATION MONEY RECEIVED WITHOUT PROPER CONFIRMATION LETTERS. 4. SIMILARLY, THE DETAILS OF TDS INDICATES THAT THE ASSESSEE HAS EITHER NOT DEDUCTED OR UPON DEDUCTION, IT HAS NOT BEEN PAID TO THE GOVERNMENT ACCOUNT ON TIME. THEREFORE, HE INVOKE D THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND ADDED AN AMOUNT OF RS. 13,58,560/ - . THUS, ASSESSMENT WAS COMPLETED ON A TOTAL INCOME OF RS. 24,00,900/ - AFTER SETTING OFF BROUGHT FORWARD LOSSES OF RS. 8,99,385/ - . THOUGH THE ASSESSEE IS A GGRIEVED BY T HE ORDER OF THE CIT (A), ONLY THE ADDITION OF RS. 23,06,000/ - WAS CHALLENGED IN THE GROUNDS OF APPEAL. IN OTHER WORDS, NO SPECIFIC GROUND WAS RAISED WITH REGARD THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT. 5. LD. CIT(A) CONSIDERED THE WRITTEN SUBMISSIONS FILED AND ALSO THE MATERIAL AVAILABLE ON RECORD AND NOTICED THAT THE SAID PARTI ES COULD NOT HAVE SUFFICIENT SA VINGS AND CAPACITY TO INVEST IN SHARES. LD. CIT(A) FURTHER OBSERVED THAT T HE 8 PARTIES ARE NOT EVEN INCOME TAX ASSESSEES AND NO FURTHER INFORMATI ON WITH REGARD TO EARNING OF 3 INCOME WAS FILED. IN OTHER WORDS, ALLEGED INVESTORS DO NOT HAVE CREDITWORTHINESS THEREFORE, THE ADDITION MADE U/S 68 OF THE ACT WAS CONFIRMED. 6. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), ASSESSEE PREFERRED AN APPEAL BEFORE TH E TRIBUNAL, WHEREIN, APART FROM THE ADDITION MADE U/S 68 OF THE ACT, ASSESSEE CHALLENGED THE DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT. 7. WE HAVE HEARD THE LD DR, WHO HAS TAKEN US THROUGH THE FACTS TO SUBMIT THAT IN THE GIVEN FACTUAL MATRIX, ADDITION MA DE U/S 68 OF THE ACT IS IN ACCORDANCE WITH LAW AND THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF LOVELY EXPORTS LIMITED IS DISTINGUISHABLE INASMUCH AS THE TRANSACTIONS WERE NOT THROUGH CASH PAYMENTS AND THEY ARE NOT ASSESSED INCOME TAX. RELIANCE W AS ALSO PLACED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NAVODAYA CASTLES PVT LTD ( 367 ITR 306) , WHICH WAS CONFIRMED BY THE HONBLE SUPREME COURT IN THE CASE OF NAVODAYA CASTLE (P.) LTD. VS. CIT [2015] 230 TAXMAN 268 (SC) . 8. AS REGARDS THE SECOND ISSUE, LD DR SUBMITTED THAT THIS DOES NOT ARISE OUT OF THE ORDER OF THE CIT (A) AND NO MATERIAL WAS PLACED TO CONTRADICT THE FINDINGS OF THE ASSESSING OFFICER. 9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD DR AND PERUSE D THE RECORD. THE ASSESSEE HAS NOT FILED ANY PAPER BOOK OR MATERIAL TO CONTRADICT THE FINDINGS OF THE A.O. OR THE CIT (A). ADMITTEDLY, U/S 68 OF THE ACT, THE ONUS IS ON THE ASSESSEE TO PROVE THE SOURCE AND CREDITWORTHINESS OF THE CASH CREDITS WHICH WAS I NTRODUCED IN THE FORM OF SHARE APPLICATION MONEY. IN THE ABSENCE OF ANY EVIDENCE TO PROVE THAT THE ASSESSEE HAS FULFILLED THE NECESSARY CONDITIONS PRESCRIBED U/S 68 OF THE ACT, WE ARE OF THE OPINION THAT THE ORDER PASSED BY THE LD. CIT(A) DOES NOT CALL FO R ANY INTERFERENCE. UNDER THESE CIRCUMSTANCES , WE REJECT THE GROUNDS NO.1.0 TO 1.2 RAISED BEFORE US. SIMILARLY, NO MATERIAL WAS PLACED EVEN WITH REGARD TO THE GROUNDS NO. 1.3 AND 1.4. THE ASSESSING OFFICER CATEGORICALLY OBSERVED THAT THERE IS NO PROOF T HAT THE TAX WAS DEDUCTED OR IN CASE OF DEDUCTION, THE SAME WAS PAID WITHIN THE STIPULATED TIME. IN THE ABSENCE OF ANY MATERIAL PLACED BEFORE US, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE ASSESSING OFFICER, APART FROM THE FACT THAT NO SU CH GROUND WAS RAISED BEFORE THE CIT (A). 4 10. IN THE RESULT, AS PRONOUNCED IN THE OPEN COURT, THE APPEAL OF THE ASSESSEE IS DISMISSED. S D / - S D / - (S. RIFAUR RAHMAN) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED: 13 TH JULY , 2017 OKK, SR.PS COPY TO 1. M/S. KONARK REFRIGERATION INDUSTRIES PVT LTD., 27/A, MODEL COLONY, SURUNDERNAGAR, HYDERABAD. PAN: AACCK6564E 2. ACIT, CIRCLE - 2(1), HYDERABAD. 3. CIT(A) - III , HYDERABAD. 4. ADDL. CIT, RANGE - 2 , HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE