Star Granites Private Limited, Chittoor V. Dy. Commissioner of Income Tax, Circle-3(2), Hyderabad

ITA 1145/Hyd/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4369 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-10-2018
• Assessment Year: 2004-2005
• Appeal Filed On: 05-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Additional evidence; Bad and doubtful debts
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER I.T.A. NO. 1145/HYD/2017 ASSESSMENT YEAR: 2004-05 STAR GRANITES PRIVATE LIMITED, CHITTOOR DIST., ANDHRA PRADESH [PAN: AADCS2194R] VS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI V. SIVA KUMAR, AR FOR REVENUE : SHRI SUNKU SRINIVASU, DR DATE OF HEARING : 11-10-2018 DATE OF PRONOUNCEMENT : 31-10-2018 O R D E R PER S. RIFAUR RAHMAN, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)10 , HYDERABAD, DATED 27-03-2017, FOR THE AY. 2004-05. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED H IS RETURN OF INCOME ON 30-11-2006 FOR THE CURRENT ASSESSM ENT YEAR, DECLARING LOSS OF RS. 75,97,005/-. THE RETURN OF LOSS WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT [ACT] ON 26-05-2006. THE SAME WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) OF THE ACT WAS SERVED ON THE ASSESSEE. TH E ITA NO. 1145/HYD/2017 :- 2 -: ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S. 143(3 ) MAKING THE FOLLOWING DISALLOWANCES: RS. A DIFFE R ENCE IN SUNDRY DEBTORS 4 5,45,463 B DISALLOWANCE U/S. 43B 4,62,545 C INTEREST RECEIVABLE 5,86,375 D CST CLAIM RECOVERABLE 9,30,852 E INTEREST ON DEPOSIT 17,457 AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERRED A N APPEAL BEFORE THE CIT(A). LD.CIT(A) GAVE PARTIAL RELIEF TO TH E ASSESSEE. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERRED A N APPEAL BEFORE US, RAISING THE FOLLOWING GROUNDS OF APPEAL: 1 THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) IS ERRONEOUS IN LAW AND ON THE FACTS OF THE CASE. 2 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN SUSTAINING THE DISALLOWANCE OF RS. 45,45,463/- TOWA RDS THE DIFFERENCE IN SUNDRY DEBTORS. 3 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN SUSTAINING THE DISALLOWANCE OF RS.4,49,332/- TOWARD S MUNICIPAL TAXES, OUT OF TOTAL DISALLOWANCE OF RS. 4,62,542/- U/S. 43B, SINCE SUCH MUNICIPAL TAXES WERE ALREADY PAID BUT AT ERRONEOUSL Y DISCLOSED AS PAYABLE IN THE FINANCIAL STATEMENTS. 3.1 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) OUGHT TO HAVE VERIFIED WHETHER OR NOT SUCH AN AMOUNT OF RS. 4,49, 332/- TOWARDS MUNICIPAL TAXES HAD BEEN CLAIMED AS EXPENDITURE FOR THE CURRENT YEAR BEFORE SUSTAINING THE DISALLOWANCE. 3.2 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN DIRECTING THE ASSESSING OFFICER TO VERIFY THE CLAIM OF RS.10,681/- TOWARDS PROVIDENT FUND, OUT OF TOTAL DISALLOWANCE O F RS.4,62,542/- U/S 43B, AFTER HAVING PERUSED THE EVIDENCE OF PAYME NT OF SUCH PROVIDENT FUND AND OUGHT TO HAVE DIRECTED THE ASSES SING OFFICER TO DELETE THE DISALLOWANCE. ITA NO. 1145/HYD/2017 :- 3 -: 4 THE LEARNED COMMISSIONER OF LNCOME-TAX (APPEALS) ERRED IN SUSTAINING THE DISALLOWANCE OF RS. 5,86,375/- TOWAR DS INTEREST RECEIVABLE, IRRESPECTIVE OF THE FACT THAT THE ASSES SING OFFICER IN HIS REMAND REPORT OBSERVED THAT THE CLAIM OF THE ASSESS EE IS CORRECT. 4.1 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) OUGHT TO HAVE CONSIDERED THAT THE AMOUNT OF RS. 5,86,375/- CONSIS TS OF AMOUNTS WHICH WAS ALREADY TAXED IN EARLIER YEAR OR NOT LIAB LE FOR TAX IN THE CURRENT YEAR AND HENCE ERRED IN SUSTAINING THE DISA LLOWANCE. 5 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDIT ION OF RS. 9,30,852/- TOWARDS CST CLAIM RECOVERABLE, UPON VERIFICATION ON CE AGAIN BY THE ASSESSING OFFICER, SINCE THE ASSESSING OFFICER DURI NG REMAND PROCEEDINGS ALREADY VERIFIED THE DOCUMENTS AND STAT ED THAT THE CLAIM OF ASSESSEE IS CORRECT. 6 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDIT ION OF RS. 17,457/- TOWARDS INTEREST, UPON VERIFICATION ONCE AGAIN BY T HE ASSESSING OFFICER, SINCE THE ASSESSING OFFICER DURING REMAND PROCEEDINGS ALREADY VERIFIED THE DOCUMENTS AND STATED THAT THE CLAIM OF ASSESSEE IS CORRECT. 7 ANY OTHER GROUND OF APPEAL THAT MAY BE PLEADED WI TH THE PRIOR APPROVAL BY THE HON'BLE TRIBUNAL DURING THE COURSE OF APPELLATE PROCEEDINGS. 3. GROUND NOS. 1 & 7 ARE GENERAL IN NATURE. ACCORDI NGLY, THE SAME ARE DISMISSED. 4. WITH REGARD TO GROUND NO. 2, ADDITION ON DIFFERENCE IN SUNDRY DEBTORS, THE BRIEF FACTS ARE THAT ASSESSEE HAS D ECLARED AN AMOUNT OF RS. 1,24,03,582/- IS OUTSTANDING ON THE HE AD SUNDRY DEBTORS AND DECLARED TOTAL GROSS SALES DURING THE YEAR TO BE RS. 7,58,992/-. THE ASSESSING OFFICER ASKED TH E ASSESSEE TO JUSTIFY THE SUNDRY DEBTORS DECLARED IN THE BALANCE SH EET. IN THIS REGARD, ASSESSEE SUBMITTED A RECONCILIATION STATEM ENT WHICH IS REPRODUCED BELOW: ITA NO. 1145/HYD/2017 :- 4 -: PARTICULARS AMOUNT (RS) OPENING BALANCES AS ON 01.04.2002 1,27,47,162 ADD: SALES DURING THE YEAR 13,71,525 1,41,18,687 LESS: AMOUNT RECEIVED DURING THE YEAR AMOUNT RECEIVED IN INR 12,58,1 29 AMOUNT RECEIVED IN FOREIGN CURRENCY 8 ,51,517 FOREIGN EXCHANGE DIFFERENCE 21, 911 21,31,557 CLOSING BALANCE AS ON 31.03.2003 1,19,87,130 * DETAILS OF SUNDRY DEBTORS FOR THE YEAR 2003-04 AS SUBMITTED BY THE ASSESSEE PARTICULARS AMOUNT (RS) OPENING BALANCE AS ON 01.04.2003 1,19,87,130 ADD: SALES DURING THE YEAR 7,58,992 1,27,46,122 3,42,540 CLOSING BALANCE AS ON 31.03.2004 1,24,03,582 4.1. FURTHER, ASSESSING OFFICER NOTICED THAT ASSESSEE SUBMITTED AN AMOUNT OF RS. 3,42,540/- WAS RECEIVED DUR ING THE YEAR. THE NOTES FORMING PART OF THE ACCOUNTS ENCLO SED IN BALANCE SHEET FOR THIS ASSESSMENT YEAR AS SHOWN IN SR. NO.4 THAT EARNING IN FOREIGN EXCHANGE REPORTED BY THE COMPAN Y TO THE GOVT. OF INDIA AND ALSO CERTIFIED BY THE MANAGEMENT THAT WAS SHOWN AS NIL. ACCORDING TO THE ASSESSING OFFIC ER, THERE MAY BE CHANCE THAT THE ASSESSEE MIGHT HAVE RECEIVED REMITTANCE FROM DEBTORS IN INDIAN CURRENCY. HOWEVER, TH E ASSESSEE HAS NOT JUSTIFIED THE AMOUNT SO RECEIVED DURI NG THE YEAR TO THE EXTENT OF RS. 3,42,540/-. SINCE THE ASSESS EE COULD NOT PRODUCE OR FURNISH THE DETAILS CALLED FOR THE SUNDR Y ITA NO. 1145/HYD/2017 :- 5 -: DEBTORS RELATING TO AY. 2003-04 AND 2004-05, IT WAS RE-WORKED OUT BY THE ASSESSING OFFICER AS BELOW: STATEMENT - 1: SL NO DESCRIPTION AMOUNT (RS) 1 SUNDRY DEBTORS AS ON 31-03-2002 1,27,47,1162 2 OPENING SUNDRY DEBTORS AS ON 01-04-2002 1,27,47,1 62 3 ADD: EXPORT SALES DURING TAX YEAR 13,71,525 4 TOTAL 1,41,18,687 5 LESS: AMOUNT COLLECTED BY BANK AS PER (NOTES TO THE A/C) 8,51,517 6 TOTAL 1,32,67,170 7 LESS: WRITTEN OFF DURING THE YEAR 61,68,043 8 TOTAL SUNDRY DEBTORS AS ON 31-03-2003 70,99,127 9 SUNDRY DEBTORS AS SHOWN IN THE BALANCE SHEET FILED ALONG WITH THE RETURN FOR THE ASST. YEAR 2003-04 1,19,87,130 10 DIFFERENCE IN SUNDRY DEBTORS 48,88,003 STATEMENT - 2: SL NO DESCRIPTION AMOUNT (RS) 1 SUNDRY DEBTORS AS ON 31-03-2003 70,99,127 2 OPENING SUNDRY DEBTORS AS ON 01-04-2003 70,99,127 3 ADD: EXPORT SALES DURING THE TAX YEAR 7,58,992 4 TOTAL 78,58,119 5 LESS: AMOUNT COLLECTED BY BANK AS PER (NOTES TO THE A/C) NIL 6 TOTAL 78,58,119 7 LESS: WRITTEN OFF DURING THE YEAR NIL 8 TOTAL SUNDRY DEBTORS AS ON 31-3-2003 78,58,119 9 SUNDRY DEBTORS AS SHOWN IN THE BALANCE SHEET FILED ALONG WITH THE RETURN FOR ASST. YEAR 2004-05 1,24,03,582 10 DIFFERENCE IN SUNDRY DEBTORS 45,45,463 4.2. AS PER THE ABOVE STATEMENT, THE DIFFERENCE AS ARRI VED BY THE ASSESSING OFFICER WAS DISALLOWED. AGGRIEVED WITH THE ABOVE ITA NO. 1145/HYD/2017 :- 6 -: ORDER, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A ). BEFORE THE CIT(A), ASSESSEE MADE THE FOLLOWING SUBMISSIONS: 6.2. THE A.O RECORDED IN THE ASSESSMENT ORDER THAT THE FIGURE OF SUNDRY DEBTORS SHOWN IN THE BALANCE SHEET IS RS.1,2 4,03,582 AND THAT THE GROSS SALES DURING THE YEAR UNDER 'ACCOUNT WERE ONLY RS, 7,58,992/-. THE A.O STATED THAT ON ACCOUNT OF THIS REASON, THE ASSESSEE WAS ASKED TO 'JUSTIFY THE SUNDRY DEBTORS S HOWN'. THE A.O RECORDED THAT THE ASSESSEE FURNISHED A RECONCILIATI ON STATEMENT. THE A.O OBSERVED THAT THE FOREIGN CURRENCY EARNINGS WER E NIL AS PER NOTES FORMING PART OF BALANCE SHEET, AT SL.NO.4 HE RECORD ED THAT THE ASSESSEE WAS ASKED TO PRODUCE DETAILS OF AMOUNT OF RS.3,42,540 HE REJECTED THE SAME WITHOUT ASSIGNING ANY COGENT REAS ONS. AFTER MAKING SOME OBSERVATIONS ABOUT THE CORRECTNESS OF THE RECE IPT OF RS.3,42,540/- RECEIVED DURING THE YEAR. HE STATED T HAT THE ASSESSEE DID NOT PRODUCE THE SAME. THEREAFTER THE A.O RECAST AND REWORKED THE SUNDRY DEBTORS FOR F.Y 2002-03 AND F.Y 2003-04 AS U NDER: (THE TABLE GIVEN IS EXTRACTED FROM THE ASSESSMENT ORDER) STATEMENT NO. 1: SL NO DESCRIPTION AMOUNT (RS) 1 SUNDRY DEBTORS AS ON 31-03-2002 1,27,47,1162 2 OPENING SUNDRY DEBTORS AS ON 01-04-2002 1,27,47,1 62 3 ADD: EXPORT SALES DURING TAX YEAR 13,71,525 4 TOTAL 1,41,18,687 5 LESS: AMOUNT COLLECTED BY BANK AS PER (NOTES TO THE A/C) 8,51,517 6 TOTAL 1,32,67,170 7 LESS: WRITTEN OFF DURING THE YEAR 61,68,043 8 TOTAL SUNDRY DEBTORS AS ON 31-03-2003 70,99,127 9 SUNDRY DEBTORS AS SHOWN IN THE BALANCE SHEET FILED ALONG WITH THE RETURN FOR THE ASST. YEAR 2003-04 1,19,87,130 10 DIFFERENCE IN SUNDRY DEBTORS 48,88,003 STATEMENT NO. 2: SL NO DESCRIPTION AMOUNT (RS) 1 SUNDRY DEBTORS AS ON 31-03-2003 70,99,127 2 OPENING SUNDRY DEBTORS AS ON 01-04-2003 70,99,127 3 ADD: EXPORT SALES DURING THE TAX YEAR 7,58,992 4 TOTAL 78,58,119 ITA NO. 1145/HYD/2017 :- 7 -: 5 LESS: AMOUNT COLLECTED BY BANK AS PER (NOTES TO THE A/C) NIL 6 TOTAL 78,58,119 7 LESS: WRITTEN OFF DURING THE YEAR NIL 8 TOTAL SUNDRY DEBTORS AS ON 31-3-2003 78,58,119 9 SUNDRY DEBTORS AS SHOWN IN THE BALANCE SHEET FILED ALONG WITH THE RETURN FOR ASST. YEAR 2004-05 1,24,03,582 10 DIFFERENCE IN SUNDRY DEBTORS 45,45,463 6.3 THE ASSESSEE SUBMITS THAT THE AMOUNT OF RS.61,6 8,043 REDUCED BY THE AO IN THE F.Y 2002-03 (VIDE ITEM 7 IN STATEM ENT NO.1 GIVEN ABOVE) IN FACT PERTAINS TO F.Y 2001-02. HENCE THE S AID REDUCTION IS AN ARITHMETICAL ERROR. IN THIS CONNECTION THE ASSESSEE INVITES ATTENTION TO SCHEDULE 10 ON PAGE 10 OF THE ADDITIONAL EVIDENCE W HEREIN THE AMOUNT OF RS.61,88,044 WAS REDUCED IN THE FINANCIAL YEAR 2001-02. ON THE BASIS OF THIS EVIDENCE, IT MAY BE SEEN THAT THE AO IS NOT CORRECT IN REDUCING RS.61,68,043 IN FINANCIAL YEAR 2002-03. 6.4 THE ASSESSEE ALSO INVITES ATTENTION TO THE FACT THAT THE AMOUNT OF RS.61,88,043 WAS ADDED IN THE ASSESSMENT FOR ASST. YEAR 2002-03. AS CAN BE SEEN FROM THE ASSESSMENT ORDER FOR A.Y 20 02-03 SUBMITTED AT PAGES 22 TO 24 OF THE ADDL. EVIDENCE SUBMITTED B EFORE C.I.T(A). 6.5 IT IS OF UTMOST IMPORTANCE TO NOTE THAT THE DIS CREPANCIES IN THE STATEMENTS OF EARLIER YEARS CANNOT BE THE BASIS FOR MAKING ADDITIONS IN THE CURRENT YEAR. ACCORDINGLY, THE OPENING BALAN CE OF SUNDRY DEBTORS AS AT 1-4-2003 COULD NOT HAVE BEEN DISTURBE D BY THE AO FOR MAKING ADDITIONS IN F.Y 2003-04 (A.Y 2004-05). CONS EQUENTLY, THE ONLY ADDITION, IF AT ALL, THAT THE A.O COULD MAKE W AS BY DISBELIEVING THE RECEIPTS OF RS.3,42,540 DURING THE CURRENT YEAR (F.Y 2003-04). TO ILLUSTRATE: OP.BAL. OF SUNDRY DEBTORS AS AT 1-4-03 RS.1,19,87 ,130 ADD: SALES DURING THE YEAR RS. 7,58,992 TOTAL RS.1,27,46,122 CL.BAL AS SHOWN BY ASSESSEE RS.1,24,03,582 DIFFERENCE RS. 3,42,540 6.6 THE DIFFERENCE OF RS. 3,42,540 IS WHAT THE AO D ISBELIEVED AS PER NARRATION IN THE ASSESSMENT ORDER. 6.7 THUS THE AO IS NOT CORRECT IN MAKING ADDITION O F RS.45,45,063. AT BEST HE COULD HAVE MADE ADDITION OF RS.3,42, 540 EV EN WHICH HAS NO BASIS SINCE THE SAID AMOUNT REPRESENTS RECEIPTS DUR ING THE YEAR. ITA NO. 1145/HYD/2017 :- 8 -: 6.8 THE ASSESSEE PRAYS THAT THE ADDITION OF RS. 45, 45,463 MAY BE DIRECTED TO BE DELETED. 5. AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE, LD. CIT(A) CONFIRMED THE ADDITION BY OBSERVING BELOW: 7.6 MAJOR DIFFERENCE AROSE SINCE THE ASSESSEE DID NOT CONSIDER THE AMOUNT OF RS.61,68,043/- WRITTEN OFF DURING THE FY 2002-03 AND CONSIDERED BY THE ASSESSING OFFICER AND NOT CONSIDE RED BY THE ASSESSEE IN THE WRITTEN SUBMISSIONS. EVEN THOUGH, T HERE IS A CLAIM THAT THE AMOUNT OF RS. 61,88,043/- RELATES TO FY 20 01-02 THE ASSESSEE DID NOT PROVE THIS BY FILING THE FINANCIAL ACCOUNTS FOR FY 2002-03 WHEREIN SUNDRY DEBTORS WERE SHOWN. SINCE TH E ASSESSEE DID NOT PROVE THAT THE ACTION OF THE ASSESSING OFFICER IS NOT CORRECT IN SPITE OF GIVING SEVERAL OPPORTUNITIES NO RELIEF CAN BE GR ANTED TO THE ASSESSEE ON THIS. THE ASSESSEE ALSO MENTIONED THAT THE ADDIT ION TO THE EXTENT OF RS.3,42,540/- COULD HAVE BEEN MADE BY THE ASSESSING OFFICER. EVEN THIS AMOUNT WAS NOT PROVED BEFORE THE ASSESSING OFF ICER BY FILING THE REQUISITE DETAILS LIKE BANK ACCOUNT ETC. IN VIEW O F THE FINDING OF CIT(A) FOR A.Y 2002-03 ALSO THE ACCOUNTS OF THE ASSESSEE A RE NOT RELIABLE AND NO RELIEF CAN BE GRANTED TO THE ASSESSEE. THEREFORE , THIS GROUND OF APPEAL IS DISMISSED. 5.1. BEFORE US, LD.AR BROUGHT TO OUR NOTICE (IN PG. NO. 9 OF THE PAPER BOOK), WHICH IS SUNDRY DEBTORS SCHEDULES FOR TH E FINANCIAL YEAR ENDING 31-03-2002, WHICH IS RELATING TO AY. 2002-03 WHICH HAS OUTSTANDING BALANCE OF RS. 1,27,47, 164/- AND ALSO BROUGHT TO OUR NOTICE IN PG. NO. 10 OF THE P APER BOOK THAT IN SCHEDULE 10 IN WHICH ASSESSEE HAS WRITTEN-OFF THE SUNDRY DEBTORS TO THE EXTENT OF RS. 61,88,044/-. FURTHE R, HE BROUGHT TO OUR NOTICE IN PG. NOS. 22 TO 24, WHICH IS THE ASSESSMENT ORDER FOR THE AY. 2002-03 IN WHICH THE AS SESSING OFFICER HAS DISALLOWED THE BAD DEBTS WRITTEN-OFF DURING THAT AY. 2002-03. HE SUBMITTED THAT SINCE THE BAD DEBTS WRITTEN-OF F IS DISALLOWED BY THE ASSESSING OFFICER IN THAT ASSESSMENT YEAR, ONCE AGAIN THE ASSESSING OFFICER CANNOT DISALLOW THE SAME ITA NO. 1145/HYD/2017 :- 9 -: AMOUNT DURING THIS ASSESSMENT YEAR. SINCE THE BAD DEB TS IS DISALLOWED, IT AMOUNTS TO CARRY FORWARD OF THE OUTSTANDI NG BALANCE IN THE AY. 2002-03, WHICH IS CARRIED ON WITH THE ADJUSTMENT IN THE CURRENT ASSESSMENT YEAR ALSO, AS SUCH THERE IS NO CHANGE IN THE CARRY FORWARD OF AMOUNT OF THE SUN DRY DEBTORS. THEREFORE, THE ASSESSING OFFICER SHOULD NOT HAVE RE- WORKED THE OUTSTANDING BALANCE OF THE SUNDRY DEBTORS, ASSESSING OFFICER HAS DOUBT ONLY WITH REGARD TO COLLEC TION FROM SUNDRY DEBTORS TO THE EXTENT OF RS. 3,42,540/-. IF AT A LL TO BE DISALLOWED, HE SHOULD HAVE DISALLOWED ONLY TO THE EXT ENT OF THIS AMOUNT. 5.2. ON THE OTHER HAND, LD.DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 5.3. CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL O N RECORD. WE NOTICED THAT THE ASSESSING OFFICER HAS RE-WORKED THE SUNDRY DEBTORS FOR THE CURRENT ASSESSMENT YEAR FROM THE PERIOD 31-03-2002 TO 31-03-2004. IN ARRIVING THE CLO SING BALANCE AS ON 31-03-2003, ASSESSING OFFICER REDUCED RS. 61,68,043/- AS THE ASSESSEE HAS WRITTEN OFF DURING THE YEAR AND ARRIVED AT THE REVISED CLOSING BALANCE OF RS. 70 ,99,127/-. AS BROUGHT TO OUR NOTICE THE BALANCE SHEET AS ON 31-03 -2002 WHICH IS PLACED ON RECORD AT PG. NO.9 OF THE PAPER BO OK, IT IS CLEARLY SHOWN THAT THE ASSESSEE HAS CLOSING BALANCE O F SUNDRY DEBTORS, WHICH IS LESS THAN SIX MONTHS TO THE EXTENT OF RS. 1,27,47,164/-. THIS CLOSING BALANCE IS ARRIVED ONLY AFTER WRITING-OFF OF THE SUNDRY DEBTORS TO THE EXTENT OF ITA NO. 1145/HYD/2017 :- 10 -: RS. 61,88,043/-. THEREFORE, IN THAT ASSESSMENT YEAR, A SSESSING OFFICER HAS DISALLOWED THE CLAIM OF ASSESSEE WITH REG ARD TO SUNDRY DEBTORS WRITTEN-OFF. IT HAS NO RELEVANCE AS FAR AS CARRY FORWARD OF THE CLOSING BALANCE AS ON 31-03-2002. SIM PLY BECAUSE THE ABOVE BALANCE OF RS. 1,27,47,164/- IS NO THING BUT CLOSING BALANCE AFTER WRITING-OFF OF THE BAD DEBTS DUR ING THE YEAR. THEREFORE, THE OPENING BALANCE CARRIED OVER BY THE ASSESSEE IS PROPER. THEREFORE, THE ADJUSTMENT MADE BY THE ASSESSING OFFICER WITH REGARD TO RS. 61,68,043/- IS NOT PROPER. ACCORDINGLY, IT IS DELETED. WITH REGARD TO THE COLLECTIO N OF RS. 3,42,540/-, ASSESSEE HAS NOT SUBMITTED ANY INFORMATION. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DISALL OW TO THIS EXTENT. THEREFORE, THIS GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 6. WITH REGARD TO GROUND NO. 3 I.E., DISALLOWANCE U/S . 43B OF THE ACT, ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN THE PROVISIONS TO THE EXTENT OF RS. 9,51,869/-. THE FOLLOWING AMOUNTS SHOWN BY THE ASSESSEE ARE UNPAID D URING THIS YEAR WHICH FALLS UNDER THE CATEGORY OF SECTION 43 B OF THE ACT: RS. A) PROVIDENT FUND PAYABLE 10,681 B) PROFESSIONAL TAX PAYABLE 2,532 C) MUNICIPAL TAXES PAYABLE 4,49,332 TOTAL: 4,62,545 6.1. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERR ED AN APPEAL BEFORE THE CIT(A). AFTER VERIFICATION OF THE SU BMISSIONS ITA NO. 1145/HYD/2017 :- 11 -: OF ASSESSEE, LD.CIT(A) FOUND THAT PROVIDENT FUND PAYAB LE BY THE ASSESSEE IS TO THE EXTENT OF RS. 10,681/- IS FOUND TO B E PROPER AND HE DIRECTED THE ASSESSING OFFICER TO VERIFY THE S AME AND ALLOW THE ABOVE DEDUCTION. WITH REGARD TO PROFESSIONAL TAX PAYABLE AND MUNICIPAL TAX PAYABLE, LD.CIT(A) REJECTE D THE CONTENTIONS OF ASSESSEE. 6.2. SINCE THE ASSESSEE DOES NOT WANT TO PURSUE GROUND NO. 3.1, THE SAME IS DISMISSED. 6.3. WITH REGARD TO GROUND NO. 3.2, HE SUBMITTED THAT LD.CIT(A) HAS REMITTED THE MATTER BACK TO THE ASSESSING OFFICER TO ALLOW AFTER VERIFICATION OF THE INFORMATION SUBMITTED BEFORE HIM. THEREFORE, THERE IS NO GRIEVANCE TO THE ASSESSEE . 6.4. CONSIDERED THE RIVAL SUBMISSIONS AND FACTS ON RE CORD. WE NOTICED THAT THE LD.CIT(A) HAS REMITTED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO ALLOW THE CONTENTIONS OF ASSES SEE AFTER VERIFICATION, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDERS. THIS GROUND IS DISMISSED. 7. GROUND NO. 4 IS WITH REFERENCE TO ADDITION OF INTER EST RECEIVABLE. DURING THE SCRUTINY, ASSESSING OFFICER OB SERVED THAT THE DETAILS ARE SUBMITTED BY THE ASSESSEE WITH REGARD TO LOANS AND ADVANCES AND DEPOSITS FOR THE AY. 2004-05. THE I NTEREST RECEIVABLE IS TO THE EXTENT OF RS. 5,86,375/-. ASSESS EE WAS ASKED TO JUSTIFY THE SAME AND ASSESSEE FAILED TO JUSTI FY THE SAME. ACCORDINGLY, THIS AMOUNT WAS ADDED. ITA NO. 1145/HYD/2017 :- 12 -: AGGRIEVED WITH THE ABOVE FINDINGS, ASSESSEE PREFERRE D AN APPEAL BEFORE THE CIT(A) AND MADE SUBMISSIONS. LD.CI T(A) FORWARDED THE SUBMISSIONS OF ASSESSEE TO ASSESSING OF FICER AND IN THE REMAND REPORT, ASSESSING OFFICER AGREED WITH TH E SUBMISSIONS OF ASSESSEE. HOWEVER, LD.CIT(A) DISMISS ED THE GROUND RAISED BY THE ASSESSEE WITH THE FOLLOWING FINDI NGS AND OBSERVATIONS: 9.4 THE DETAILS FILED BY THE ASSESSEE ARE AS UNDER : 'EXTRACT OF ACCOUNT OF RECEIVABLES FOR THE PERIOD FROM 01.04.2003 TO 31.03.2004 DATE PARTICULARS AMOUNT (DR) AMOUNT (CR) BALANCE INTEREST RECEIVABLES 01.04.2003 OPENING BALANCE 2,71,370.00 01.04.2003 BALANCE TRANSFERRED FROM EXPENSE PAYABLE A/C 1,57,577.00 1,13,793.00 WEALTH TAX RECEIVABLES 01.04.2003 OPENING BALANCE 4,72,582.00 4,72,582.00 7,43,952.00 1,57,577.00 5,86,375.00 CLOSING BALANCE AS ON 31.03.2004 DEBIT RS. 586375.0 0.' 9.5 FROM THE ABOVE IT IS DEAR THAT THE AMOUNT OF RS .2,71,370/- IS OPENING BALANCE AND ADDITION MADE DURING THIS ASSES SMENT YEAR COMPRISES AN ADDITION OF RS.4,72,582/- WHICH IS MEN TIONED AS OPENING BALANCE AS ON 01.04.2003. THEREFORE, THE SU BMISSION OF THE ASSESSEE IS INCORRECT AS THERE IS NO CLARITY WITH R EGARD TO THE ITEMS MENTIONED IN THE ASSESSMENT ORDER I.E., INTEREST RE CEIVABLE ON LOANS AND ADVANCES. 9.6 THE SUBMISSIONS OF THE ASSESSEE AND REMAND REPO RT OF THE ASSESSING OFFICER HAVE BEEN CONSIDERED. IN THE REMA ND REPORT THE ASSESSING OFFICER ACCEPTED THAT THE ASSESSEE'S GROU NDS OF APPEAL APPEAR TO BE CORRECT. HOWEVER, CIT(A) CONFIRMED THE ADDITION OF ITA NO. 1145/HYD/2017 :- 13 -: RS.2,71,370/- FOR A.Y 2002-03. SINCE THE ASSESSEE D ID NOT CLARIFY THE EXACT NATURE OF RECEIVABLES NO RELIEF CAN BE GIVEN TO THE ASSESSEE. THERE IS ALSO DISCREPANCY IN THE FIGURES MENTIONED IN THE TABLE REPRODUCED ABOVE. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED. 7.1. LD.AR SUBMITTED THAT THE INTEREST RECEIVABLE TO THE EXT ENT OF RS. 2,71,370/- IS OPENING BALANCE AS ON 01-04-20 03. THIS CANNOT BE DISALLOWED AS THE SAME IS NOT RELATING TO THE C URRENT ASSESSMENT YEAR. 7.2. CONSIDERED THE RIVAL SUBMISSIONS AND FACTS ON RE CORD. WE NOTICED THAT THE CIT(A) CAME TO THE CONCLUSION AFTER VER IFYING THE TABLE, WHICH IS REPRODUCED HEREIN: 'EXTRACT OF ACCOUNT OF RECEIVABLES FOR THE PERIOD FROM 01.04.2003 TO 31.03.2004 DATE PARTICULARS AMOUNT (DR) AMOUNT (CR) BALANCE INTEREST RECEIVABLES 01.04.2003 OPENING BALANCE 2,71,370.00 01.04.2003 BALANCE TRANSFERRED FROM EXPENSE PAYABLE A/C 1,57,577.00 1,13,793.00 WEALTH TAX RECEIVABLES 01.04.2003 OPENING BALANCE 4,72,582.00 4,72,582.00 7,43,952.00 1,57,577.00 5,86,375.00 CLOSING BALANCE AS ON 31.03.2004 DEBIT RS. 586375.0 0.' 7.3. FROM THE ABOVE TABLE, IT IS NOTICED THAT THE INTEREST RECEIVABLE TO THE EXTENT OF RS. 2,71,370/- AND WEALTH TA X RECEIVABLE TO THE EXTENT OF RS. 4,72,582/-, BOTH ARE O PENING BALANCES AS ON 01-04-2003. THERE IS AN ADJUSTMENT IN INTEREST ITA NO. 1145/HYD/2017 :- 14 -: RECEIVABLE ACCOUNT ON 01-04-2003 TO THE EXTENT OF RS. 1,57,577/-. SO MAKING THE BALANCE OF INTEREST RECEIVA BLE TO THE EXTENT OF RS. 1,13,793/- EVEN THE WEALTH TAX RECEIVABLE IS OPENING BALANCE. THEREFORE, WE ARE NOT IN AGREEMENT WITH THE FINDINGS OF THE LD.CIT(A). BOTH THE INTEREST RECEIV ABLE AND WEALTH TAX RECEIVABLE WHICH IS OUTSTANDING AS ON 31-03 -2004, COMBINED TOGETHER RS. 5,86,375/- WHICH IS DISALLOWED BY THE ASSESSING OFFICER. THEREFORE, WE DIRECT THE ASSESSIN G OFFICER TO DELETE THE DISALLOWANCE OF RS. 5,86,375/-. THIS GROU ND IS ALLOWED. 8. AS FAR AS GROUND NO. 5 IS CONCERNED, DURING THE ASSESSMENT PROCEEDINGS, ASSESSING OFFICER NOTICED THAT ASSESSEES CLAIM OF CST RECOVERABLE AMOUNTING TO RS. 9,30,852/-, WHICH WAS SHOWN UNDER THE HEAD SUNDRY CREDITORS AND OTHERS. SINCE THE ASSESSEE FAILED TO S UBMIT RELEVANT INFORMATION, THE SAME WAS MADE AS ADDITION. AGGRIEVED WITH THE ABOVE FINDINGS, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND MADE SUBMISSIONS. LD.CIT(A) F ORWARDED THE SAME TO ASSESSING OFFICER FOR HIS REMAND REPORT. IN THE REMAND REPORT, ASSESSING OFFICER AGREED WITH THE SUBMI SSIONS OF ASSESSEE. HOWEVER, LD.CIT(A) REMITTED THE ISSUE BA CK TO THE FILE OF ASSESSING OFFICER TO VERIFY THE SAME AND ALLO W. ACCORDINGLY, THIS GROUND WAS PARTLY ALLOWED. 8.1. LD.AR SUBMITTED THAT THE ASSESSING OFFICER AGREED TH E SUBMISSIONS MADE BY THE ASSESSEE IN HIS REMAND REPO RT AND THE LD.CIT(A) EVEN THOUGH REMITTED BACK TO THE FILE OF A SSESSING ITA NO. 1145/HYD/2017 :- 15 -: OFFICER FOR FURTHER VERIFICATION. HE PRAYED THAT THIS AD DITION SHOULD BE DELETED. 8.2. CONSIDERED THE RIVAL SUBMISSIONS AND FACTS ON RE CORD. WE NOTICE THAT ASSESSEE HAS SUBMITTED RELEVANT INFORMATION B EFORE THE ASSESSING OFFICER DURING THE REMAND PROCEEDINGS. THE ASSESSING OFFICER IN HIS REMAND REPORT AGREED WITH THE INFORMATION SUPPLIED BY THE ASSESSEE AND CONFIRMED TH AT THIS MAY BE DELETED. IT DOES NOT PROVE ANY POINT AGAIN REM ITTING THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR FURTHE R VERIFICATION. THEREFORE, THE GROUND RAISED BY THE ASS ESSEE IS ALLOWED. 9. GROUND NO. 6 IS WITH REFERENCE TO DELETION OF ADDITI ON OF RS. 17,457/- TOWARDS INTEREST. SINCE THE ASSESSEE FAIL ED TO SUBMIT RELEVANT INFORMATION, THE SAME WAS MADE AS ADDITI ON. AGGRIEVED WITH THE ABOVE FINDINGS, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND MADE SUBMISSIONS. LD.CIT(A) F ORWARDED THE SAME TO ASSESSING OFFICER FOR HIS REMAND REPORT. IN THE REMAND REPORT, ASSESSING OFFICER AGREED WITH THE SUBMI SSIONS OF ASSESSEE. HOWEVER, LD.CIT(A) REMITTED THE ISSUE BA CK TO THE FILE OF ASSESSING OFFICER TO VERIFY THE SAME AND ALLO W. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 9.1. LD.AR SUBMITTED THAT THE ASSESSING OFFICER AGREED TH E SUBMISSIONS MADE BY THE ASSESSEE IS HIS REMAND REPOR T AND THE LD.CIT(A) EVEN THOUGH REMITTED BACK TO THE FILE OF A SSESSING ITA NO. 1145/HYD/2017 :- 16 -: OFFICER FOR FURTHER VERIFICATION. HE PRAYED THAT THIS AD DITION SHOULD BE DELETED. 9.2. CONSIDERED THE RIVAL SUBMISSIONS AND FACTS ON RE CORD. WE NOTICE THAT ASSESSEE HAS SUBMITTED RELEVANT INFORMATION B EFORE THE ASSESSING OFFICER DURING THE REMAND PROCEEDINGS. THE ASSESSING OFFICER IN HIS REMAND REPORT AGREED WITH THE INFORMATION SUPPLIED BY THE ASSESSEE AND CONFIRMED TH AT THIS MAY BE DELETED. IT DOES NOT PROVE ANY POINT AGAIN REM ITTING THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR FURTHE R VERIFICATION. THEREFORE, THE GROUND RAISED BY THE ASS ESSEE IS ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2018 SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHMA N) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 31 ST OCTOBER, 2018 TNMM ITA NO. 1145/HYD/2017 :- 17 -: COPY TO : 1. STAR GRANITES PRIVATE LIMITED, CHITTOOR DIST., C /O. M/S. SANKAR RAJA, CHARTERED ACCOUNTANTS, 3-6-211, W EST MARREDPALLY, SECUNDERABAD. 2. DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(2), HYD ERABAD. 3. CIT(APPEALS)-10, HYDERABAD. 4. PR.CIT-III, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.