CGR Logistics Private Limited, Hyderabad, Hyderabad V. ITO, Ward-1(4), Hyderabad, Hyderabad

ITA 122/HYD/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2693 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 25-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: S RAMA RAO
• Keywords: Opportunity of being heard; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 122/HYD/2017 ASSESSMENT YEAR: 2012-13 CGR LOGISTICS PRIVATE LIMITED, HYDERABAD [PAN: AAECC7289C] VS THE INCOME TAX OFFICER, WARD-1(4), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO, AR FOR REVENUE : SMT. SUMAN MALIK, DR DATE OF HEARING : 24-01-2018 DATE OF PRONOUNCEMENT : 25-01-2018 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-1, HYDERABAD, DATED 16-11-2016 FOR THE AY. 2012-13 CONFIRMING THE ADDITIO N OF SHARE APPLICATION, SHARE CAPITAL AND SHARE PREMIUM IN THE HA NDS OF ASSESSEE-COMPANY. 2. BRIEFLY STATED, ASSESSEE-COMPANY WAS INCORPORATED O N 14-02- 2012 AND IS IN THE BUSINESS OF WAREHOUSING AND LOGIS TICS. IT HAS RECEIVED SHARE CAPITAL, PREMIUM AND SHARE APPLICATIO N MONEY IN THE MONTH OF FEBRUARY, 2012. DURING THE YEAR, ASSESSE E HAS A I.T.A. NO. 122/HYD/2017 :- 2 - : TURNOVER OF RS. 13 LAKHS AND ADMITTED AN INCOME OF RS . 71,704/-. IN THE SCRUTINY PROCEEDINGS, ASSESSING OFFICER (AO) A SKED FOR CONFIRMATION OF THE MONIES RECEIVED. ASSESSEE COULD FURNISH CONFIRMATION OF ITS TWO DIRECTORS, THEIR MINOR CHILDREN AND THREE INVESTORS TO AN EXTENT OF RS. 1,72,24,520/-, BUT COULD NOT FURNISH THE CONFIRMATIONS FOR THE REST OF THE PERSONS. AO TREAT ED THE BALANCE AMOUNT OF RS. 1,54,70,000/- AS UNEXPLAINED. HE ALSO ESTIMATED THE INCOME AT 10% OF THE RECEIPTS AS ASSESSE E DID NOT FURNISH THE BOOKS OF ACCOUNT. THUS, FURTHER ADDITION O F RS. 58,296/- WAS BROUGHT TO TAX. 3. BEFORE THE LD.CIT(A), ASSESSEE FURNISHED THE CONFI RMATION FROM THE SHAREHOLDERS. INSTEAD OF GETTING THE SAME VERI FIED BY THE AO, LD.CIT(A) UNDERTOOK THE EXERCISE OF EXAMINING THE CONFIRMATIONS. LD.CIT(A) NOTICED THAT MOST OF THE PERSON S HAVE DEPOSITED CASH AND ISSUED CHEQUES. AFTER DETAILED AN ALYSIS, LD.CIT(A) REJECTED THE CONFIRMATION AND CONFIRMED THE ADDITION BY STATING AS UNDER: 6.3 I DO NOT ACCEPT THE CONFIRMATION EVIDENCES SUB MITTED BY THE APPELLANT BECAUSE OF THE FOLLOWING REASONS: (A) THESE ARE ALL STEREOTYPED CONFIRMATION LETTERS (SAME FORMAT). (B) CREDITWORTHINESS OF THESE APPLICATIONS PROVED O THERWISE (BANK ACCOUNTS SHOW VERY SMALL BALANCES. HENCE INCAPABLE OF HIGH TRANSACTION). (C) ALL THE CHEQUES HAVE BEEN ISSUED FROM CASH DEPO SIT MADE A DAY BEFORE OR IN CASES SAME DAY (DETAILS GIVEN ABOVE). (D) APPELLANT HAS NOT SUBMITTED ANY DETAILS REGARDI NG SHARE ALLOTMENT. (SHARE CERTIFICATE NUMBER). (E) SHARE APPLICATION REGISTER HAS NOT BEEN MAINTAI NED. I.T.A. NO. 122/HYD/2017 :- 3 - : (F) NO INTEREST HAS BEEN PAID TO THE SHARE SUBSCRIB ERS, IN CASES WHERE SHARE ALLOTMENT HAS NOT BEEN MADE, THE ADDRESSES, P AN NUMBERS OR ANY OTHER DOCUMENTS OF THE SUBSCRIBERS TO SHARES NOT SU BMITTED. IN VIEW OF THE ABOVE, I DO NOT ACCEPT THE SUBMISSIO N OF THE APPELLANT ON THIS ISSUE. THE ADDITION MADE ON THIS GROUND BY THE ASSESSING OFFICER IS UPHELD. - GROUND DISMISSED. 4. IT WAS THE SUBMISSION OF LD. COUNSEL THAT LD.CIT(A) WAS NOT CORRECT IN REJECTING THE CONFIRMATION WITHOUT DUE VERIFI CATION. IT WAS POINTED OUT THAT MOST OF THE SHAREHOLDERS ARE INCOME TAX A SSESSEES WITH PAN NUMBERS AND FEW SHAREHOLDERS ARE HAVING AG RICULTURAL INCOMES. LD. COUNSEL PLEADED THAT THE SAME MAY BE REM ANDED TO THE AO FOR NECESSARY EXAMINATION, AS THE COMPANY COULD NOT EARN THAT MUCH MONEY, HAVING BEEN INCORPORATED ON 14-02-201 2 ONLY. HE RELIED ON VARIOUS CASE LAW FOR THE PROPOSITION TH AT ASSESSEE COULD NOT EARN THE INCOME AT THE INCEPTION OF THE COMPANY ITSELF. 5. LD.DR, HOWEVER, SUBMITTED THAT LD.CIT(A) HAS ANALYS ED AND REJECTED THE CONFIRMATION VALIDLY. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. CONSIDER ING THAT THE COMPANY WAS INCORPORATED DURING THE YEAR ON 14-02- 2012 AND THE INVESTMENTS BY DIRECTORS AND OTHERS TO AN EXTENT OF RS. 1.72 CRORES WAS ACCEPTED BY THE AO IN THREE CASES BASED ON THE CONFIRMATIONS FILED, WE ARE OF THE OPINION THAT LD.CIT (A) SHOULD HAVE REMANDED THE ADDITIONAL EVIDENCE FILED TO AO FOR PROPER VERIFICATION. PRIMA-FACIE CONFIRMATION INDICATES THAT MOST OF THE INVESTORS ARE INCOME TAX ASSESSEES WITH PAN NUMBERS. STEREO TYPED CONFIRMATIONS SHOULD NOT BE CONSIDERED AGAINST UNLESS THE CONTENTS THERE IN ARE PROVED WRONG. SINCE THE VERACITY OF THE I.T.A. NO. 122/HYD/2017 :- 4 - : CONFIRMATIONS ARE NOT EXAMINED IN DETAIL BY THE AO, WE SET ASIDE THE ORDERS OF AO AND LD.CIT(A) AND RESTORE THE MATTER T O THE FILE OF AO TO EXAMINE AFRESH AND DECIDE BASED ON FACTS AND LA W. ASSESSEE SHOULD BE GIVEN DUE OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JANUARY, 2018 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 25 TH JANUARY, 2018 TNMM I.T.A. NO. 122/HYD/2017 :- 5 - : COPY TO : 1. CGR LOGISTICS PRIVATE LIMITED, C/O. S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO. 9, HIMAYAT NAGAR, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-1(4), HYDERABAD. 3. CIT(APPEALS)-1, HYDERABAD 4. PR.CIT-1, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.