Cauvery Iron and Steel (India) Limited , Hyderabad V. Dy. Commissioner of Income Tax , Circle-1(2), Hyderabad

ITA 118/Hyd/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7223 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 01-09-2020
• Assessment Year: 2015-2016
• Appeal Filed On: 31-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANJALA SAHU
• Keywords: Set aside
• Section: 68; 143(3)

Judgement Text

ITA NOS 883 1043 OF 2018 AND 118 OF 2019 CAUVERY I RON AND STEEL INDIA LTD SECUNDERABAD PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ITA NOS.883/HYD/2018 AND 118/HYD/2019 ASSESSMENT YEARS: 2014-15 & 2015-16 CAUVERY IRON AND STEEL INDIA LTD SECUNDERABAD PAN:AABCC3576F VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(2) HYDERABAD (APPELLANT) (RESPONDENT) ITA NO.1043/HYD/2018 ASSESSMENT YEARS: 2014-15 DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(2) HYDERABAD VS. CAUVERY IRON AND STEEL INDIA LTD SECUNDERABAD PAN:AABCC3576F (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI P. MURALI MOHAN RAO REVENUE BY : SMT. ANJALA SAHU, DR DATE OF HEARING: 01/09/2020 DATE OF PRONOUNCEMENT: 04/09/2020 ORDER PER D.S. SUNDER SINGH, A.M. BOTH THE ASSESSEE AND REVENUE HAVE FILED APPEALS FO R THE ASSESSMENT YEAR (A.Y) 2014-15 AGAINST THE ORDE R OF THE LD.CIT(A) IN APPEAL NO.0224/CIT(A)-1,HYD/2016-17/20 17-18 DATED 26/02/2018 AND THE ASSESSEE IS IN APPEAL FOR THE A.Y 2015- 16. 2. FOR THE A.Y 2014-15, BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. ITA NOS 883 1043 OF 2018 AND 118 OF 2019 CAUVERY I RON AND STEEL INDIA LTD SECUNDERABAD PAGE 2 OF 6 NIL ON 29.11.2014. THE CASE WAS SELECTED FOR SCRU TINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT, ON TOTAL INCOME OF RS.16,98,38,110/-. IN THE ASSESSMENT MADE U/S 14 3(3) OF THE ACT, THE AO MADE THE ADDITION OF RS.9,48,38,105/- U /S 68 OF THE ACT REPRESENTING UNSECURED LOANS RECEIVED BY THE AS SESSEE FROM VARIOUS COMPANIES/PERSONS AS UNDER: S.NO NAME OF ENTITY AMOUNT OF UNSECURED LOAN (RS.) 1 MONOPOLY INFRASTRUCTURE P LTD 4,00,000 2 VIJAYAPATH INFRA PVT LTD 10,00,000 3 KINGFISHER PROPERTIES P LTD 1,50,00,000 4 RIVERGROW FINANCE LTD 1,40,00,000 5 MOREISON TRADERS DEV. P LTD 1,48,76,563 6 MONTREE NIRMAN P LTD 1,14,04,296 7 TATASHIR PLAZZA P LTD 1,13,80,921 8 FOOTLASH INFRA P LTD 1,16,14,390 9 MANGALVANIN INFRABUILD P LTD 1,15,61,935 TOTAL 9,48,38,105 3. APART FROM THE ABOVE, THE AO ALSO BROUGHT TO TAX THE SHARE APPLICATION MONEY AMOUNTING TO RS.7,50,00,000 /- U/S 68 R.W.S. 115BBE OF THE ACT. THUS, THE AO MADE THE ADD ITION OF RS. 16,98,38,110/- U/S 68 R.W.S 115BBE OF THE ACT. 4. AGAINST THE ORDER OF THE AO THE ASSESSEE WENT ON APPEAL BEFORE THE CIT (A) AND THE LEARNED CIT (A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. THE LEARNED CIT (A) CONFIRMED THE ADDITIO N OF RS.9,48,38,105/- AND THE DISALLOWANCE OF RS.73,04,9 12/- REPRESENTING THE INTEREST EXPENDITURE ON LOANS AND ALLOWED THE RELIEF OF RS.7.50 CRORES RELATING TO SHARE APPLICAT ION MONEY RECEIVED BY THE ASSESSEE. THEREFORE, BOTH THE DEPAR TMENT AND THE ASSESSEE HAVE FILED CROSS APPEALS CHALLENGING THE O RDER OF THE LD.CIT (A). ITA NOS 883 1043 OF 2018 AND 118 OF 2019 CAUVERY I RON AND STEEL INDIA LTD SECUNDERABAD PAGE 3 OF 6 5. DURING THE APPEAL HEARING, THE LEARNED AR SUBMIT TED THAT THE SHARE APPLICATION MONEY AS WELL AS THE UNS ECURED LOANS WERE RECEIVED BY THE ASSESSEE FROM GENUINE PARTIES AND FILED ALL THE INFORMATION BEFORE THE AO AND THE SAME WAS NOT VERIFIED. HE FURTHER SUBMITTED THAT OUT OF UNSECURED LOAN ADDED BY THE AO OF RS.9,48,38,105/-, A SUM OF RS.6,08,38,105/- PERTAI NS TO THE OPENING BALANCE WHICH CANNOT BE ADDED IN THE IMPUGN ED ASSESSMENT YEAR. WITH REGARD TO THE BALANCE AMOUNT OF RS.3,40,00,000/- THE LEARNED AR SUBMITTED THAT ALL THE UNSECURED CREDITORS ARE THE LOCAL PARTIES BEING ASSESSED TO I NCOME TAX AND IN SOME CASES WITH THE SAME AO. THEREFORE, SUBMITTE D THAT ALL PARTIES ARE HAVING CREDITWORTHINESS AND ARE GENUINE . EVEN THOUGH ENTIRE INFORMATION WAS PLACED BEFORE THE LEARNED LD .CIT (A), THE SAME WAS NOT VERIFIED HENCE, REQUESTED TO REMIT THE MATTER BACK TO THE FILE OF THE AO IN THE INTEREST OF JUSTICE. 6. WITH REGARD TO THE SHARE APPLICATION MONEY, THE LEARNED AR RELIED ON THE ORDERS OF THE CIT (A). 7. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT THE AO HAS GIVEN SUFFICIENT OPPORTUNITIES TO THE ASSES SEE, BUT THE ASSESSEE FAILED TO SUBMIT THE DETAILS AND ESTABLISH THE GENUINENESS AND THE CREDIT WORTHINESS OF THE CREDI TORS DURING THE ASSESSMENT PROCEEDINGS. THEREFORE, SUBMITTED THAT A LL THE OPPORTUNITIES WERE GIVEN TO THE ASSESSEE. THE COMPA NIES FROM WHICH THE UNSECURED AND SHARE APPLICATION MONIES WE RE ACCEPTED ARE SHELL COMPANIES WITHOUT HAVING ANY MEANS, CREDI TWORTHINESS AND FINANCIAL STANDING, AND HENCE, ARGUED TO RESTOR E THE ASSESSMENT ORDER. ITA NOS 883 1043 OF 2018 AND 118 OF 2019 CAUVERY I RON AND STEEL INDIA LTD SECUNDERABAD PAGE 4 OF 6 8. WITH REGARD TO THE ASSESSMENT MADE U/S 115BBE OF THE I.T. ACT, THE LEARNED AR SUBMITTED THAT FOR THE ASSESSMENT YEAR 2014-15, THE UNSECURED LOANS WERE RECEIVED PRI OR TO 2016 AND AS PER THE BOARD CIRCULAR NO.11 OF 2009, THE S ET OFF OF LOSS IS NOT ALLOWABLE W.E.F. A.Y 2016-17 ONWARDS BUT NOT FO R THE EARLIER A.YS. SINCE THE ASSESSMENT INVOLVED IS 2014-15 AS P ER THE CLARIFICATION GIVEN BY THE CBDT, THE AO OUGHT TO HA VE ALLOWED SET OFF OF LOSSES AGAINST THE ADDITIONS MADE U/S 68. 9. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE OF TAX ING THE SUMS U/S 115BBE.. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE INSTANT CASE, THE AO MADE ADDITION OF RS.16.98 CRORES U/S 68 R.W.S. 115BBE OF THE IT ACT. AS PER THE LEARNED AR, IT INCLUDES THE OPENING BALANCE AS ON 1.4.2013 AMOUNTING TO RS.6.08 CRORES. FURTHER, AS D ISCUSSED BY THE LD AR, ALL THE PARTIES ARE NOT SHELL COMPANIES. SOME OF THE SUBSCRIBES TO THE SHARE CAPITAL AS WELL AS UNSECURE D CREDITORS ARE GENUINE CREDITORS AND THEIR CREDIT WORTHINESS CAN B E ESTABLISHED, PROVIDED THE OPPORTUNITY IS GIVEN TO THE ASSESSEE. IT IS ALSO SUBMITTED BY THE ASSESSEE THAT SOME OF THE CREDITOR S ARE ASSESSED IN HYDERABAD AND FILING THE RETURNS REGULARLY. THOU GH THE ENTIRE FACTS WERE PLACED BEFORE THE CIT (A), IT SEEMS THAT THE LEARNED CIT (A) DID NOT CONSIDER THE EVIDENCES PLACED BEFORE HI M. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUES NEEDS TO BE VERIFIED BY THE AO WITH REGARD TO THE GENUINENESS AND THE CREDITWORTHINESS OF THE CREDITORS AS WELL AS THE SH ARE APPLICANTS/SHARE APPLICATIONS MONEY RECEIVED BY THE ASSESSEE. ITA NOS 883 1043 OF 2018 AND 118 OF 2019 CAUVERY I RON AND STEEL INDIA LTD SECUNDERABAD PAGE 5 OF 6 HENCE, WE REMIT BACK THE MATTER TO THE FILE OF THE AO TO REDO THE ASSESSMENT DE NOVA TAKING INTO CONSIDERATION OF ALL THE EVIDENCES PLACED BEFORE HIM BY THE ASSESSEE. HOWEVER, WE DIRE CT THE AO TO CONSIDER THE ISSUE OF ADDITION WITH REGARD TO THE O PENING BALANCE AND SET OFF OF LOSSES U/S 115BBE OF THE ACT AS PER THE LAW AND IN THE LIGHT OF THE BOARD CIRCULAR ISSUED BY THE CBDT IN CIRCULAR NO.11 OF 2009. ACCORDINGLY, THE APPEAL OF THE ASSES SEE AS WELL AS THE REVENUE ARE SET ASIDE TO THE FILE OF THE AO FOR DE NOVA CONSIDERATION. 11. IN THE RESULT, APPEALS ARE ALLOWED FOR STATISTI CAL PURPOSES. ITA NO.118/HYD/2019, A.Y 2015-16 12. THIS APPEAL IS FILED BY THE ASSESSEE AND THE IS SUE INVOLVED IS WITH REGARD TO THE ADDITION MADE U/S 68 R.W.S 115BBE OF THE I.T. ACT. SINCE THE FACTS ARE IDENTICAL TO T HAT OF A.Y.2014-15, WE REMIT THE MATTER BACK TO THE FILE OF THE AO TO G IVE OPPORTUNITY TO THE ASSESSEE AND TO DECIDE THE ISSUE AFRESH ON M ERITS. IN THIS CASE ALSO, THE AO IS DIRECTED TO CONSIDER THE ISSUE WITH REGARD TO SET OFF LOSSES U/S 115BBE IN THE LIGHT OF THE CIRCU LAR NO.11 OF 2009. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH SEPTEMBER, 2020. SD/- SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER (D.S.SUNDER SINGH) ACCOUNTANT MEMBER HYDERABAD, DATED 4 TH SEPTEMBER, 2020. VINODAN/SPS ITA NOS 883 1043 OF 2018 AND 118 OF 2019 CAUVERY I RON AND STEEL INDIA LTD SECUNDERABAD PAGE 6 OF 6 COPY TO: 1 CAUVERY IRON & STEEL INDIA LTD C/O P MURALI & CO. C.AS, 6-3- 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500082 2 DY.CIT, CIRCLE 1(2) HYDERABAD 3 CIT (A)- 4 PR. CIT - 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER