Sheetal Refineries P. Ltd, Hyderabad V. DCIT, Circle-3 (1), Hyderabad

ITA 1127/HYD/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1385 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 07-06-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 10-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMISHA S GUPT
• Assessee Lawyers: K NEERAJA
• Keywords: Opportunity of being heard
• Section: 40A(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, J.M. AND SHRI B.R.BASKARAN, A.M. ITA NO.1127/HYD/2011 (ASSESSMENT YEAR 20 07-08) M/S. SHEETAL REFINERIES (P) LTD., HYDERABAD ( PAN - AAGCS 2477 Q ) V/S. DY. COMMISSIONER OF INCOME - TAX, CIRCLE 3(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : S MT. K.NEERAJA RESPONDENT BY : S MT. AMISHA S.GUPT DR DATE OF HEARING 2.1 .201 3 DATE OF PRONOUNCEMENT 4.1.2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 31.3.2011 PASSED BY LEARNED CIT(A)-IV, HYDERABAD A ND IT RELATES TO THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE IS CONTESTING THE FOLLOWING ADDITI ONS CONFIRMED BY LEARNED CIT(A) BEFORE US. (A) ADDITION OF RS.1,32,21,661/- MADE U/S 68 OF T HE ACT. (B) ADDITION OF RS.3,17,982/- MADE U/S 40A(3) OF THE ACT. ITA NO.1127/HYD/2011 M/S. SHEETAL REFINERIES (P) LTD., HYDERABAD 2 3. DURING THE COURSE OF HEARING, THE LEARNED COUN SEL APPEARING FOR THE ASSESSEE DID NOT PRESS THE GROUND NO.3 AND ACCORDIN GLY THE SAME IS DISMISSED AS NOT PRESSED. THE ASSESSEE HAS ALSO FILED FOLLOWING ADDITIONAL GROUND AND IT RELATES TO THE ADDITION OF RS.1,32,21,661/- REFERRED ABOVE. THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING A N ADDITION OF RS.1,32,21,661/- TOWARDS UNACCOUNTED RECEIPTS FROM BUSINESS, WHILE THE APPELLANT OFFERED/DECLARED RS.70,00,000/- AS TH E UNEXPLAINED RECEIPTS FOR THE EARLIER ASSESSMENT YEAR I.E., 2006 -07 AND THE BALANCE OF RS.65,00,000/- FOR THE YEAR UNDER CONSIDERATION R OUNDING OF THE AMOUNT OF RS.1,32,21,661/- TO RS.1,35,00,000/-. TH US, THE ADDITION OF RS.1,32,21,661/- FOR THE SUBJECT ASST. YEAR IS DOUB LE ADDITION OF THE AMOUNTS OFFERED BY THE APPELLANT FOR THE SAID TWO A SST. YEARS. 3. DURING THE COURSE OF HEARING, THE LEARNED A.R ADVANCED HER ARGUMENTS ON THE ADDITIONAL GROUND ONLY WHILE CONTE STING THE ADDITION OF RS.1,32,21,661/-. 4. THE FACTS RELATING TO THE ISSUES ARE STATE D IN BRIEF. THE DEPARTMENT CARRIED OUT A SURVEY OPERATION U/S 133A OF THE ACT IN THE BUSINESS PREMISES OF THE ASSESSEE ON 10-08-2006. DURING THE COURSE OF SURVE Y CERTAIN INCRIMINATING MATERIAL SHOWING RECEIPT OF CASH FROM A PERSON NAME D, SHRI VIJAY TIBREWAL WAS IMPOUNDED. IT WAS EXPLAINED BY THE ASSESSEE THAT S HRI VIJAY TIBREWAL WAS ONE OF THEIR AGENTS AND THE AMOUNT RECORDED IN THE SAID MA TERIAL REPRESENTS COLLECTIONS MADE BY HIM. THE ASSESSING OFFICER COMPARED THE SA ID COLLECTIONS WITH THE LEDGER MAINTAINED BY THE ASSESSEE AND FOUND THAT THE CASH RECEIPTS REFLECTED IN THE IMPOUNDED DOCUMENTS DID NOT FIND PLACE IN THE STATE MENT OF ACCOUNT FILED BY THE ASSESSEE. ACCORDINGLY, THE ASSESSING OFFICER TREAT ED THE UNACCOUNTED RECEIPTS OF RS.1,32,21,661 AS INCOME OF THE ASSESSEE UNDER S.6 8 OF THE ACT. BEFORE THE LEARNED CIT(APPEALS) ALSO, THE ASSESSEE COULD NOT GIVE SATISFACTORY EXPLANATION, WITH REGARD TO THE RECEIPT OF MONEY FROM SHRI VIJAY TIBREWAL AND HENCE, THE LEARNED CIT(APPEALS) ALSO CONFIRMED THE SAID ADDIT ION. THE ASSESSING OFFICER ALSO NOTICED THAT THE ASSESSEE HAS MADE PAYMENTS B Y WAY OF CASH IN VIOLATION OF ITA NO.1127/HYD/2011 M/S. SHEETAL REFINERIES (P) LTD., HYDERABAD 3 PROVISIONS OF S.40A(3) OF THE ACT TO THE TUNE OF RS . 15,89,910. HENCE, THE ASSESSING OFFICER DISALLOWED 20% OF THE SAID AMOUNT , I.E. RS.3,17,982, FOR VIOLATION OF S.40A(3) OF THE ACT. THE LEARNED CIT (APPEALS) CONFIRMED THE SAID ADDITION ALSO. AGGRIEVED, ASSESSEE IS IN APPEAL B EFORE US. 5. DURING THE COURSE OF HEARING, THE LEARNED COUNS EL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD OFFERED ADDITIONAL INCOME OF RS.70 LAKHS IN THE ASSESSMENT YEAR 2006-07 AND RS.65 LAKHS IN THE ASSE SSMENT YEAR UNDER APPEAL, THUS AGGREGATING TO RS.1,35,00,000. THE SAID OFF ER WAS MADE BY THE ASSESSEE TO COVER UP THE DEFICIENCIES NOTICED DURING THE COU RSE OF SURVEY WHICH ALSO INCLUDES THE AMOUNT RECEIVED FROM SHRI VIJAY TIBREW AL. ACCORDINGLY, THE LEARNED COUNSEL SUBMITTED THAT THE ASSESSMENT OF RS.1.32 C RORES OVER AND ABOVE THE INCOME OF RS.1.35 CRORES VOLUNTARILY OFFERED BY THE ASSESSEE WOULD AMOUNT DOUBLE ASSESSMENT OF THE SAME INCOME. 6. ON THE CONTRARY, THE LEARNED DEPARTMENTAL REPRE SENTATIVE SUBMITTED THAT THE ADDITIONAL INCOME IS NORMALLY OF FERED OVER AND ABOVE THE RETURNED INCOME. INVITING OUR ATTENTION TO THE COM PUTATION OF INCOME, MADE BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08, THE L EARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAD OFFE RED AN INCOME OF RS.1.41 CRORES WHICH INCLUDES THE ALLEGED ADDITIONAL INCOME OF RS.65 LAKHS. IF THE SAID AMOUNT IS EXCLUDED, THE RETURNED INCOME WOULD COME TO A LOWER FIGURE WHICH REVEALS THE FACT THAT THE ASSESSEE HAS ADJUSTED THE BOOKS OF ACCOUNT TO TAKE CARE OF THE ADDITIONAL INCOME OFFERED BY IT. INVITING O UR ATTENTION TO THE LIST OF MISCELLANEOUS CASH RECEIPTS ANNEXED TO THE ORDER OF THE LEARNED CIT(APPEALS), LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS RECEIVED ONLY A SUM OF RS.11,25,000 DURING THE YEAR RELEVA NT TO ASSESSMENT YEAR 2006- 07, WHEREAS THE ASSESSEE HAS OFFERED A SUM OF RS.70 LAKHS IN THAT YEAR. ACCORDINGLY, THE LEARNED DEPARTMENTAL REPRESENTATI VE SUBMITTED THAT THE CLAIM OF THE ASSESSEE FOR SETTING OFF OF THE SAID AMOUNT OF RS.70 LAKHS DOES NOT FIT INTO ITA NO.1127/HYD/2011 M/S. SHEETAL REFINERIES (P) LTD., HYDERABAD 4 ANY LOGIC, AS THE UNACCOUNTED RECEIPTS RELATING TO THAT YEAR IS ONLY RS.11.25 LAKHS. 7. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISS UE AND PERUSED THE RECORDS. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS OFFERED ADDITIONAL INCOME OF RS.70 LAKHS IN THE ASHY 2006-07 AND RS.65 LAKHS IN THE ASSESSMENT YEAR 2007-08. ACCORDING TO THE ASSESSEE , THE SAID ADDITIONAL INC OMES WERE OFFERED TO COVER UP THE DEFICIENCIES FOUND DURING THE COURSE OF SURVEY. THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION OF RS.1.32 CRORES, ON TH E BASIS OF THE INCRIMINATING MATERIAL IMPOUNDED DURING THE COURSE OF SURVEY. HE NCE, IN OUR VIEW, THERE IS A LINK BETWEEN THE VOLUNTARILY OFFER MADE BY THE ASSE SSEE AND THE INCOME ASSESSED BY THE ASSESSING OFFICER. THERE IS NO MATERIAL TO SHOW THAT BOTH THE ITEMS ARE NOT INTER-CONNECTED. HENCE, WE ARE OF THE VIEW THAT TH ERE IS SOME JUSTIFICATION IN THE CLAIM OF THE ASSESSEE FOR SETTING OFF OF THE VOLUNT ARY OFFER AGAINST THE INCOME ASSESSED BY THE ASSESSING OFFICER. HOWEVER, THE S AID CLAIM REQUIRES EXAMINATION AT THE END OF THE ASSESSING OFFICER, SINCE THE LEAR NED DEPARTMENTAL REPRESENTATIVE HAS POINTED OUT THAT THE VOLUNTARY O FFER OF RS.70 LAKHS MADE BY THE ASSESSEE IN THE ASSESSMENT YEAR 2006-07 DOES NO T MATCH WITH THE FIGURES NOTED IN THE INCRIMINATING MATERIAL. ACCORDINGL Y, WE SET ASIDE THE ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE C LAIM OF THE ASSESSEE FOR SET OFF AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LA W AFTER AFFORDING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 8. NEXT ISSUE RELATES TO THE ADDITION MADE IN TERM S OF S.40A(3) OF THE ACT. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTE D THAT THE IMPUGNED PAYMENTS WERE MADE TO LORRY DRIVERS TOWARDS FREIGHT CHARGES UNDER EXCEPTIONAL CIRCUMSTANCES. HOWEVER, THE LEARNED AUTHORISED R EPRESENTATIVE COULD NOT POINT OUT AS TO HOW THE SAID PAYMENTS ARE COVERED BY THE EXCEPTIONS GIVEN UNDER RULE ITA NO.1127/HYD/2011 M/S. SHEETAL REFINERIES (P) LTD., HYDERABAD 5 6DD OF THE INCOME-TAX RULES. UNDER THESE CIRCUMSTA NCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(APPEALS) IN CONFIRMING THIS ADDITION. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 04.01.2013 SD/- SD/- ( ASHA VIJAYARAGHAVAN ) ( B.R.BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED/- 04 TH JANUARY, 2013 COPY FORWARDED TO: 1. M/S. SHEETAL REFINERIES (P) LTD., 7 - 4 - 13/1, GAGANPAHAD, RANGAREDDY DIST., (HYDERABAD) 2. 3. 4. 5. DY. COMMISSIONER OF INCOME-TAX CIRCLE 3(1), HYDERA BAD COMMISSIONER OF INCOME-TAX(APPEALS) IV, HYDERABAD COMMISSIONER OF INCOME-TAX, III, HYDERABAD DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.