ITO, Mahabubnagar Dist V. M/s J.Anand Reddy Contractors, Mahabubnagar

ITA 1202/HYD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9776 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 15-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 10-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BABU
• Assessee Lawyers: MOHAMMED AFZAL
• Keywords: Unexplained cash credit; Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B , HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMBER ITA NO.1202/HYD/2010 : ASSESSMENT YEAR 2006- 07 INCOME - TAX OFFICER, WARD - 2, MAHABOOBNAGAR. VS M/S. J.ANANDA REDDY CONTRACTORS, MAHABOOBNAGAR. (PAN AAFFJ 5868 J) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.E.SUNIL BABU RESPONDENT BY : SHRI MOHAMMED AFZAL O R D E R PER G.C.GUPTA, VICE PRESIDENT: THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEA R 2006-07 IS DIRECTED AGAINST THE ORDER OF THE COMMIS SIONER OF INCOME- TAX(APPEALS). 2. GROUNDS OF APPEAL OF THE REVENUE ARE AS UNDER- 1. THE ORDER OF THE CIT(A) IS ERRONEOUS IN LAW OR FACTS OR BOTH. 2. THE CIT(A) IS NOT JUSTIFIED IN HOLDING THAT CAS H CREDITS IN PARTNERS ACCOUNTS CANNOT BE ADDED IN THE HANDS OF T HE FIRM. 3. THE CIT(A) IS NOT JUSTIFIED IN RELYING UPON TH E DECISION IN 268 ITR 381 AN 218 ITR 508 , WHEN THE FACTS OF THE ASSESSEES CASE ARE DIFFERENT. 4. THE CIT(A) OUGHT TO HAVE APPLIED THE RATIO IN TH E CASE OF KISHORILAL SANTOSHILAL (216 ITR 9)OF THE RAJASTHAN HIGH COURT, WHEREIN THE HONBLE COURT HELD THAT CASH CRE DITS FOUND IN THE PARTNERS ACCOUNTS CAN BE ASSESSED IN T HE HANDS OF THE FIRM. ITA NO.1202/H/2010 M/S. J.ANANDA REDDY CONTRACTORS, MAHABOOBNAGAR 2 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT THE ASSESSEE HAS INTRODUCED A SUM OF RS.18,00,000 I N THE NAME OF SHRI J.ANANDA REDDY; A SUM OF RS.8 LAKHS IN THE NAM E OF SHRI T.MOHAN REDDY; AND SUMS OF RS. 1 LAKH EACH IN THE NAMES OF TEN OTHER PERSONS, WHO ALL HAPPEN TO BE THE PARTNERS O F THE ASSESSEE FIRM. HE SUBMITTED THAT THE ASSESSEE COULD NOT PRO VE THE SOURCE FOR THE DEPOSIT OF MONEY BY THE PARTNERS IN THE ASSESSE E FIRM AND THEREFORE THE AMOUNT OF RS.36 LAKHS WAS ADDED BY TH E ASSESSING OFFICER UNDER S.68 OF THE ACT. THE LEARNED DEPARTM ENTAL REPRESENTATIVE SUBMITTED THAT IT HAS BEEN HELD IN A SERIES OF DECISIONS BY THE HONBLE COURTS THAT THE UNEXPLAINED CREDITS IN THE NAMES OF THE PARTNERS COULD BE ADDED IN THE CASE OF FIRM OF WHICH THEY WERE THE PARTNERS. HE SPECIFICALLY RELIED ON THE FOLLOW ING DECISIONS IN SUPPORT OF HIS ARGUMENTS (A) CIT V/S. MD. PERWEZ AHMAD AND OTHERS (268 ITR 3 81)-PATNA (B) INDIA RICE MILLS V/S. CIT (218 ITR 508)-ALL (C) DCIT V/S. PUNJAB KIRANA BHANDAR (64 ITD 92)-JAB ALPUR (D) CIT V.S, KISHORILAL SANTOSHILAL (216 ITR 9)-RAJ . (E) ANAND RAM RAITANI V/S. CIT (223 ITR 544)-GAU 4. THE LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOS ED THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTAT IVE. HE SUBMITTED THAT THE ISSUE OF UNEXPLAINED CREDITS OF THE PARTNERS WHETHER ASSESSABLE IN THE CASE OF THE FIRM IS COVER ED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HONBLE PUNJAB AN D HARYANA HIGH COURT IN CIT V/S. BURMAH ELECTRO CORPORATION (252 I TR 342). HE SUBMITTED THAT ALL THE PARTNERS OF THE FIRM CONFIRM ED THAT THEY HAVE INTRODUCED THE AMOUNTS SHOWN AGAINST THEM IN THE FI RM AND THOSE ITA NO.1202/H/2010 M/S. J.ANANDA REDDY CONTRACTORS, MAHABOOBNAGAR 3 AMOUNTS REPRESENT THEIR SAVINGS AND FEW OF THEM WER E ALSO INCOME- TAX ASSESSEES. HE REFERRED TO THE RELEVANT PORTION S OF THE APPELLATE ORDER OF THE CIT(A) IN SUPPORT OF HIS SUBMISSION TH AT CASH CREDITS AMOUNTING TO RS.36LAKHS COULD NOT BE ADDED IN THE H ANDS OF THE ASSESSEE FIRM. HE SUBMITTED THAT THE CIT(A) HAS DI RECTED THE ASSESSING OFFICER TO REOPEN THE CASES OF ALL THE PA RTNERS, WHERE THE CASH HAS BEEN INTRODUCED UNDER S.148 OF THE ACT AND EXAMINE THE ISSUE IN THOSE ASSESSMENTS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. WE HAVE PERUSED THE ORDERS OF THE ASSESSING OFFICER AN D THE CIT(A) AND COPIES OF THE CONFIRMATION LETTERS FILED BY THE ASS ESSEE BEFORE THE ASSESSING OFFICER IN SUPPORT OF THE CASH INTRODUCED BY THE PARTNERS WITH THE ASSESSEE FIRM. WE FIND THAT THE ONUS TO PR OVE THE GENUINENESS OF THE CASH INTRODUCED IN THE BOOKS OF THE ASSESSEE FIRM IS ON THE ASSESSEE. WE FIND THAT SHRI J.ANANDA RE DDY HAS INVESTED A SUM OF RS.18LAKHS WITH THE ASSESSEE FIRM AND THE SO URCE FOR INVESTING THE SAME HAS BEEN SHOWN AS HIS SAVINGS SINCE 1993 A ND GIFT RECEIVED BY HIM FROM HIS FATHER ON VARIOUS OCCASIONS. THE AS SESSEE COULD NOT FILE ANY CORROBORATIVE EVIDENCE TO PROVE THE GENUIN ENESS OF THE TRANSACTION OF CREDIT AND CREDITWORTHINESS OF THE D EPOSITOR. LIKEWISE, SHRI T.MOHAN REDDY HAS INTRODUCED A SUM OF RS.8 LAK HS WITH THE ASSESSEE FIRM AND HAS MERELY STATED IN HIS CONFIRMA TION THAT THE SOURCE FOR INVESTING THE SAID AMOUNT WAS HIS SAVING S SINCE 1993. NO CORROBORATIVE EVIDENCE WAS FILED BY SHRI T.MOHAN RE DDY IN SUPPORT OF HIS CONFIRMATION. THE ASSESSING OFFICER ALSO HAS NO T MADE ANY FURTHER ENQUIRIES IN THE MATTER. WE FIND THAT THE CIT(A) HA S DIRECTED THE ASSESSING OFFICER TO REOPEN THE CASES OF ALL THE PA RTNERS WHERE CASH HAS BEEN INTRODUCED UNDER S.148 OF THE ACT AND EXAM INE THE ISSUE IN ITA NO.1202/H/2010 M/S. J.ANANDA REDDY CONTRACTORS, MAHABOOBNAGAR 4 THOSE ASSESSMENTS. HOWEVER, NO FURTHER INFORMATION IS BROUGHT ON RECORD REGARDING THE FATE OF THE ASSESSMENTS -WHETH ER COMPLETED IN THE CASE OF THE PARTNERS WHERE CASH WAS INTRODUCED AND NOTICE UNDER S.148 WAS ISSUED. IN THESE FACTS OF THE CASE, WE A RE OF THE CONSIDERED VIEW THAT IT WOULD BE IN THE INTERESTS O F JUSTICE TO RESTORE THE ISSUE IN THE GROUNDS OF APPEAL OF THE REVENUE TO THE FILE OF THE ASSESSING OFFICER, WITH A DIRECTION TO PASS DE NOVO ASSESSMENT ORDER IN ACCORDANCE WITH LAW, AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE SHALL BE AT L IBERTY TO FILE EVIDENCE IN SUPPORT OF ITS CLAIM THAT THE CREDIT EN TRIES WERE GENUINE AND THE CREDITWORTHINESS OF THE DEPOSITORS. WE FURT HER DIRECT THAT IF ANY AMOUNT ON ACCOUNT OF UNEXPLAINED DEPOSIT HAS BE EN ADDED IN THE INDIVIDUAL ASSESSMENTS OF THE PARTNERS, WITH REGARD TO THE DEPOSIT OF AMOUNT WITH THE FIRM DURING THE RELEVANT PERIOD IN THE ASSESSMENT FRAMED/TO BE FRAMED BY THE ASSESSING OFFICER IN RES PONSE TO NOTICE UNDER S.148 ISSUED AS PER THE DIRECTIONS OF THE CIT (A), ASSESSING OFFICER SHOULD NOT TAX THE SAME AGAIN IN THE ASSES SMENT OF THE ASSESSEE FIRM. WE DIRECT ACCORDINGLY. 6. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 11.3.2011 SD/- SD/- (AKBER BASHA) ( G.C. G UPTA) ACCOUNTANT MEMBER VICE PRESIDENT DATED THE 11 TH MARCH, 2011 ITA NO.1202/H/2010 M/S. J.ANANDA REDDY CONTRACTORS, MAHABOOBNAGAR 5 COPY FORWARDED TO: 1. M/S. J.ANANDA REDDY CONTRACTORS, 7 - 2 - 21/6, NEW PREMNAGAR, MAHABOOBNAGAR. 2. INCOME TAX OFFICER, WARD - 2, MAHABOOBNAGAR. 3. CIT (A) - V , HYDERABAD. 4. COMMISSIONER OF INCOME - TAX I V , HYDERABAD 5. THE D.R., ITAT, HYDERABAD. B.V.S `