ACIT, Circle-11(1), Hyderabad V. M/s. Sunil Kumar Saraf, Hyderabad

ITA 1149/HYD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82219 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 15-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A V RAGHURAM
• Keywords: Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1149/HYD/11 : ASSESSMENT YEAR 2005 - 06 ASSTT. COMMISSIONE R OF INCOME - TAX CIRCLE 11(1), HYDERABAD V/S. SHRI SUNIL KUMAR SARAF, HYDERABAD ( PAN - ACQPS 4441 P) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.MOHAN REDDY DR RESPONDENT BY : SHRI A.V.RAGHURAM DATE OF HEARING 2.07. 2014 DATE OF PRONOUNCEMENT 13.08.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) VI, HYDERABAD DATED 31.3.2011 FOR THE ASSESSMENT YEAR 2005 - 0 6. 2. THE ONLY EFFECTIVE GRIEVANCE OF THE REVENUE IN THIS APPEAL IS AGAINST THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS.41,76,000, BEING CREDIT BALANCE OUTSTANDING IN THE NAME OF M/S. NASREEN OLD IRON TRADERS, KHAMMAM, UNDER S.68 OF THE ACT M ADE BY THE ASSESSING OFFICER, DISBELIEVING THE GENUINENESS OF THE TRANSACTIONS CLAIMED BY THE ASSESSEE. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE, AN INDIVIDUAL ENGAGED IN TRADING OF SCRAP IN THE NAME AN STYLE OF GAYATRI STEELS, FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2005 - 06, ADMITTING TOTAL INCOME OF RS.14,27,060. ASSESSMENT WAS COMPLETED ON A TOTAL INCOME OF RS.56,03,060, VIDE ORDER DATED 28.12.2007 PASSED UNDER S.143(3) OF THE ACT. WHILE DOING ITA NO.1149/HYD/2011 SHRI SUNIL KUMAR SARAF, HYDERABAD 2 SO, THE ASSESSING OFFICER MADE AN ADDITION OF RS.41,76,000, BEING CREDIT BALANCE OUTSTANDING IN THE NAME OF M/S. NASREEN OLD IRON TRADERS, KHAMMAM. IN THIS REGARD, A SWORN STATEMENT WAS RECORDED FORM ONE SHRI JANI MIYA, PROP OF M/S. NASREEN OLD IRON TRADERS, WHO HAD CONFIRMED THE TRANSACT IONS WITH THE ASSESSEE AND ALL THE RECEIPTS ARE THROUGH DRAFTS ONLY. HE ALSO SUBMITTED CONFIRMATION LETTERS FROM EIGHT PERSONS, WHO HAVE INVESTED THE SAID AMOUNT IN THE BUSINESS FROM OUT OF THEIR ACCUMULATED SAVINGS FROM AGRICULTURAL INCOME. THE ASSESSIN G OFFICER DID NOT BELIEVE THE CONFIRMATION LETTERS FILED IN THAT BEHALF, ON THE GROUND THAT THE SAID PERSONS DID NOT RESPOND TO THE SUMMONS ISSUED UNDER S.131 OF THE ACT. THE ASSESSING OFFICER HAS ALSO RECORDED SWORN STATEMENT FROM THE ASSESSEE, WHO STATED THAT THE STOCKS WERE RECEIVED BY HIM, AS EXPECTED AND HENCE, HE DID NOT SUPPLY THE SAME TO M/S. NASREEN OLD IRON TRADERS. IT WAS ALSO SUBMITTED THAT THE CREDIT BALANCE HAS BEEN ADJUSTED BY MAKING PAYMENT TO SINGARENI COLLIERIES BY M/S. SUNIL CASTINGS PV T. LTD., ON BEHALF OF M/S. NASREEN OLD IRON TRADERS, WHO HAVE PURCHASED MATERIAL FROM SINGARENI COLLIERIES. IN SUPPORT OF THIS VERSION, ALL THE RELEVANT STATEMENT OF ACCOUNTS OF M/S. NASREEN OLD IRON TRADERS, KHAMMAM IN THE BOOKS OF THE ASSESSEE, STATEME NT OF ACCOUNT OF M/S. NASREEN OLD IRON TRADERS IN THE BOOKS OF SUNIL CASTINGS PVT. LTD. AS ON 31.3.2007 ALONGWITH COPIES OF PURCHASE BILLS, ETC. HAVE BEEN SUBMITTED. THE TRANSACTIONS WITH M/S. MAHESWARI BROTHERS BY SUNIL CASTINGS P. LTD. HAVE ALSO BEEN SUB MITTED TO SHOW THE PAYMENTS TO M/S. MAHESWARI BROTHERS. THE ASSESSING OFFICER, NOT ACCEPTING THE GENUINENESS OF THE CREDIT BALANCE IN THE NAME OF M/S. NASREEN OLD IRON TRADERS, AS ALSO THE VERSION WITH REGARD TO PAYMENT MADE SUBSEQUENTLY BY M/S. SUNIL CAST INGS PVT. LTD., A SISTER CONCERN, OF THE ASSESSEE, OPINED THAT PAYMENT OF RS.4,50,000 CLAIMED BY THE ASSESSEE IS NOT DIRECT TO SINGARENI COLLIERIES. THE ASSESSING OFFICER ACCORDINGLY, MADE THE ADDITION OF RS.41,76,000 TREATING IT AS UNEXPLAINED CASH CRED IT UNDER S.68 OF THE ACT. 4. ON APPEAL BEFORE THE CIT(A), IT WAS SUBMITTED THAT THE ASSESSING OFFICER DID NOT APPRECIATE THE CONFIRMATIONS SUBMITTED BY SHRI JANI MIYA, PROP. ITA NO.1149/HYD/2011 SHRI SUNIL KUMAR SARAF, HYDERABAD 3 OF M/S. NASREEN OLD IRON TRADERS, KHAMMAM AND ALSO EIGHT OTHER PERSONS, WHO HAV E ADVANCED THE MONEY TO MR.JANI MIYA AND THE ALTER PAYMENTS AND IGNORING ALL THE RELEVANT FACTS AND EVIDENCE SUBMITTED IN SUPPORT OF THE VERSION OF THE ASSESSEE, MADE THE IMPUGNED ADDITION OF RS.41,76,000. CONSIDERING SOME OF THE DOCUMENTS FURNISHED BY TH E ASSESSEE BEFORE HIM, WHICH CONSTITUTED ADDITIONAL EVIDENCE AND THE PETITION OF THE ASSESSEE UNDER RULE 46A OF THE INCOME - TAX RULES, FOR ADMISSION OF SUCH ADDITIONAL EVIDENCE, ASSESSING OFFICER REMANDED THE MATTER TO THE FILE OF THE ASSESSING OFFICER, CA LLING FOR HIS COMMENTS. AFTER CONSIDERING THE REMAND REPORT OF THE ASSESSING OFFICER, WHEREIN HE JUSTIFIED THE ADDITION OF RS.41,76,000 MADE, AND THE SUBMISSIONS OF THE ASSESSEE ON SUCH REMAND REPORT AS WELL, THE CIT(A) DELETED THE ADDITION OF RS.41,76,00 0 MADE BY THE ASSESSING OFFICER 5. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE , STRONGLY SUPP O RTING TH E ORDER OF TH E ASSESSING OFFICER SUBMITTED THAT THE CIT(A) WAS NOT JU S TIFIED IN GRANTING ANY RELIEF TO TH E ASSESSEE . 7 . THE LEARNED COUNSEL FOR THE ASSESSEE, ON TH E OTH E R HAND, SUPPO R TING THE ORDER OF TH E CIT(A) , SUBMITTED BEFORE US THAT THE AMOUNT OF RS.4,50,000 HAS BEEN RECEIVED BY THE ASSESSEE FROM M/S. NASREEN OLD IRON TRADERS AS ADVANCE FOR PURCHASE OF MATERIAL AND THE AMOUNT IS RECEIVED THROUGH BANK DRAFT AND HAS BEEN CREDITED TO THEIR BANK ACCOUNT. FURTHER, IT WAS SUBMITTED THAT IT IS A TRADE ADVANCE AND NOT A CASE OF CASH CREDIT AND HENCE PROVISIONS OF S.68ARE NOT APPLICABLE. IT WAS ALSO SUBMITTE D THAT THIS AMOUNT HAS BEEN REPAID TO M/S. NASREEN OLD IRON TRADERS, BY MAKING PAYMENT OF RS.4,50,000 BY CHEQUE TO SINGARENI COLLERIES ON BEHALF OF M/S. NASREEN OLD IRON TRADERS ON 31.7.2006 AND RS.2,255 HAS BEEN PAID BY CASH AND THE BALANCE THROUGH A SIST ER CONCERN NAMELY, M/S. SUNIL CASTINGS LTD. THE SAID SISTER CONCERN, M/S. SUNIL CASTINGS , HAS PURCHASED A DRAFT IN FAVOUR OF SINGARENI ITA NO.1149/HYD/2011 SHRI SUNIL KUMAR SARAF, HYDERABAD 4 COLLERIES TOWARDS PAYMENT DUE BY M/S. NASREEN OLD IRON TRADERS. ASSESSEE S COUN S EL FURTHER SUBMITTED THAT THE PERSON W HO ADVANCED MONEY, I.E. M/S. NASREEN OLD IRON TRADERS IS A BIG CONTRACTOR, WITH HUGE TURNOVER, FOR SUPPLY OF MATERIAL AND THEREFORE THE CREDIT - WORTHINESS OF MS. NASEEN OLD IRON TRADERS IS NOT TO BE DOUBTED. IT WAS POINTED OUT THAT M/S. NASREEN OLD IRON TR ADERS ENTERED INTO A TRANSACTION OF SUPPLY OF MATERIA L OF MORE THAN RS.1 CORE AND HAS MADE A BID FOR PURCH AS E FROM SINGARENI COLLEREIS AND THE ASSESSEE THROUGH ITS SISTER CONCERN HAS PAID THE BALANCE AMOUNT IN THIS TRAN S ACTION, BY WAY OF DRAFT ON BEHALF OF M/S. NASREEN OLD IRON TRADERS. THE LEARNED COUNS E L SUBMITTED COPIES OF THE BANK STATEMENTS AND ALSO STATEMENTS FR OM T H E BOOKS OF M/S. SUNIL CASTINGS AND M/S. MAHESWARI BROTHERS, WHEREIN TH E PARTI E S HAVE CONFIRMED THE TRANSACTION FROM THEIR END. HE SUB MITTED THAT THIS STATEMENT PROVES THAT M/S. NASREEN OLD IRON TRADERS WERE PAID RS.72,76,255. IT WAS ALSO POINTED OUT THAT ANOTHER STATEMENT OF M/S. NASREEN OLD IRON TRADERS WOULD DEMONSTRATE THAT THAT RS.72,76,255 IS PAID TO M/S. MAHESWARI BROTHERS ON BE HALF OF M/S. NASREEN OLD IRON TRADERS. THE LEARNED AUTHORISED REPRESENTATIVE ALSO FILED A PETITION BEFORE THE CIT(A) UN D ER RULE 46A WITH ADDITIONAL EVIDENCE AND A REPORT WAS CALLED FOR BY THE CIT(A) FROM THE ASSESSING OFFICER . THE ASSESSING OFFICER VI DE LETTER DATED 1.10.2009 SENT A REMAND REPORT AND TH E SAME WAS FORWARDED TO THE ASSESSEE CALLING FOR HIS COMMENTS. IT WAS SUBMITTED BY THE AUTHORISED REPRESENTATIVE THAT ASSESSING OFFICER HAS SIMPLY REPRODUCED THE CONCLUSIONS DRAWN IN TH E ASSESSMENT O RDER AND HAS ALSO S TATED TH A T NO NEW EVI D ENCE IS BROU G HT ON RECORD. TH E LEARNED AUTHORISED REPRESENTATIVE POINTED OUT THAT THE CHEQUE DRAWN O N IOB ON 31.7.2006 HAS BEEN STATED BY THE ASSESSING OFFICER AS NOT TO BE FOUND IN THE BANK ACCOUN T OF M/S. NASREEN OLD IRON TRADERS WITH COR P O R ATION BANK. THE ISSUE WAS EXPLAINED BY TH E AUTHORISED REPRESENTATIVE THAT THIS AMOUNT WAS PAID TO S INGARENI COLLERIES LTD. THROUGH CHEQUE ON TH E SAME DAY THROU G H TH E SAME BANK ON BEHALF OF M/S. NASREEN OLD IRON TRADERS. HENCE , TH E AUTHORISED REPRESENTATIVE CONTENDED THAT THE EVIDENCE FILED WAS NOT C ON S I D ERED BY TH E ITA NO.1149/HYD/2011 SHRI SUNIL KUMAR SARAF, HYDERABAD 5 ASSESSING OFFICER IN THE REMAND PROCEEDINGS, WHO SIMPLY RELI E D ON THE ASSESSMENT ORDER FRAMED BY HIM. 8 . W E HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ONLY ISSUE IS WITH REGARD TO TH E ADDITION OF RS .41,76,000 MADE UN D ER S. 6 8 OF TH E A C T. TH E CLAIM OF TH E ASSESSEE IS TH A T TH E SAME IS RECEIVED FROM SHRI JANI MIYA PROPRIETOR OF M/S. N A SREEN OLD IRON TRADERS KHAMMAM, AND THE AMOUNT WAS RECEIVED THOUGH DRAFTS. TH E ASSESSING OFFICER DISBELI E VED THE RECEIPT ON TWO COUNTS. FIRSTLY, THERE ARE CERTAIN CONTRADICTIONS BETWEEN THE STATEMENT OF TH E ASSESSEE AND THAT OF TH E CREDITORS; AND SECONDLY, TH E CREDITOR HAS NOT PROVED TH E CREDIT - W O RTHINESS OF TH E PERSON FROM WHOM HE HAS BORROWED THE FUNDS. THE FIRST DISCREPANC Y IN TH E STATEMENTS OF THE ASSESSEE AND THAT OF TH E CREDITOR, AS OBSERVED BY TH E ASSESSING OFFICER , IS THAT THE ASSESSEE HAS STATED T HAT HE HAS ADJU S TED TH E ACCOUN T OF TH E CREDITOR BY DEBITING M/S. NASREEN OLD IRON TRADERS AND CREDITING M/S. MAHESWARI BROTHERS, WH E REAS EARLIER HE HAS STATED THAT THE SAME IS ADJU S TED BY DEBITING M/S. IRON OLD IRON T RADE R S AND CREDITING M/S. SUNIL CA STINGS ON 27.2.2007. TH E NEXT DISCR EPANCY POINTED OUT WAS TH A T THE ASSESSEE CLAIMED TO H A VE PAID RS.4, 5 0,000 TO M/S. NASREEN O LD I RON T RADERS THROUGH A CHEQUE DRAWN ON 31.7.2006, WHEREAS ON VERIFICATION OF BANK ACCOUNT OF M/S. NASREEN OLD IRON T RADE R S IN CORPO R ATION BANK, KHAMMAM, NO SUCH AMOUNT WAS FOUN D CR E DITED IN TH A T ACCOUNT. 9 . HOWEVER, IN HI S SUBMIS S ION B E FORE THE CIT(A), ASSESSEE HAS DEMON S TRATED THAT THE AMOUNT OF R S .2,255 W AS REPAID IN CASH, AND A NOTHER AMOU N T OF RS .72,76,255 W AS PAID THROUGH M/S. SU N IL CA STINGS L TD. T HROUGH M/ S. MAHE S WARI BROTHERS. FROM THE REL E VANT ACCOUNT COPIES FROM TH E BOOKS OF M/S. SUNIL C A STINGS LTD., AND THAT OF M /.S M AHE S WARI B ROTHERS, WHICH ARE FILED BY THE LEARNED C OUN S EL FO R TH E ASSESSEE BEFORE US, WE FIND THAT THE ASSESSEE HAS STATED TH E FACTS CORR ECTLY. ITA NO.1149/HYD/2011 SHRI SUNIL KUMAR SARAF, HYDERABAD 6 10. WITH REGARD TO OTH E R DI S CREPANCY OF NON - APPEARANCE OF RS .4,50,000 CLAIM E D TO HAVE BEEN PAID BY CHEQUE TROUGH IOB, IT WAS DEMON S TRATE D BY TH E LEARNED COUN S EL BEFORE THE CIT(A) T HAT THE SAID PAYMENT HAS BEEN MADE TO M/S. SINGARENI COLLIERIE S ON BEHALF OF M/S. NASREEN OLD IRON TRADERS. FURTHER, THE PERSON WHO HAS ADVAN C ED T H E MONEY, NAMELY, SH R I JANI MIYA, IS A MAN OF SUBSTANCE, AS HE HAS BID FOR A TENDER OF RS.8 CRORES, AND IS HAVIN G A OD LIMIT OF RS.20 LAKHS. HENCE, HIS C R EDITWORTHINESS IS BEYOND DOUBT . IN ANY EVENT, AS FAR AS THE ASSESSEE IS CONCERNED, THE SOURCE FOR THE CREDIT IN QUESTION HAS BEEN ESTABLISHED, BY DISCHARGING THE ONUS OF PROVING THE IDENTITY OF THE CREDITOR, HIS CREDIT WORTHINESS AND ALSO THE GENUINENESS OF THE TRANSAC TION, BUT WHAT THE ASSESSING OFFICER HAS BEEN INSISTING WAS FOR PROVING THE SOURCES OF THE SOURCE, AND EVEN THE ALLEGED CREDITOR HAS OWNED UP THE TRANSACTION. THAT BEING SO, THERE IS NO JUSTIFICATION FOR ANY ADDITION IN THE HANDS OF THE ASSESSEE, AND IF A T ALL, ANY SUCH ADDITION IS WARRANTED, THAT HAS TO BE EXAMINED IN THE HANDS OF THE CREDITOR OF THE ASSESSEE, VIZ. SHRI JANI MIYA IN THIS CASE. IN THIS VIEW OF THE MATTER, WE ARE OF THE OPINION THAT TH E ASSESSING OFFICER WAS NOT JUSTIFIED IN CONCLUD ING THA T THE PERSON WHO HAS CLAIMED TO HAVE PAID THE AMOUNT HAS NO SOURCES AND H E NCE, THE AMOUNT SHOUL D BE TREATED AS BELONGING TO TH E ASSESSEE HIMSELF . 11. IN THE LIGHT OF THE FOREGOING DISCUSSION, WE FIND NO MERIT IN THE GROUNDS OF THE REVENUE IN THI S APPEAL. WE ACCORDINGLY REJECT THE SAME AND CONFIRM THE ORDER O F THE CIT(A) . 12. IN THE RESULT, REVENUES APPEAL IS DISMI S SED. ORDER PRONOUNCED IN THE COURT ON 13 TH AUGUST, 2 0 14 SD/ - SD/ - (B.RAMAKOTAIAH) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 13 TH AUGUST, 2014 ITA NO.1149/HYD/2011 SHRI SUNIL KUMAR SARAF, HYDERABAD 7 COPY FORWARDED TO: 1. SHRI SUNIL KUMAR SARAF, PLOT NO.A - 26/1, IDA NACHARAM, HYDERABAD 2. ASST. COMMISSIONER OF INCOME - TAX CIRCLE 11(1), HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) VI HYDERABAD 4. COMMISSIONER OF INCOME - TAX V, HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S