Suryavanshi Industries Limited,Hyd, Secunderabad V. ACIT, Circle-3(2), Hyd, Hyderabad

ITA 1269/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2389 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 03-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SIRI KUMAR
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Unexplained cash credit
• Section: 143(3); 142(1); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1269/HYD/2016 ASSESSMENT YEAR: 2010-11 SURYAVANSHI INDUSTRIES LTD., SECUNDERABAD. PAN AADCS 2204 C VS. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 3(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V. SIVAKUMAR REVENUE BY : SHRI SIRI KUMAR DATE OF HEARING : 31-10-2017 DATE OF PRONOUNCEMENT : 22-11-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (A) - 5, HYDERABAD, DATED 15-07-2016 FOR AY 2010-11. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY IS ENGAGED IN THE BUSINESS OF EXTRACTION OF COTTON LIN T, SEED, SEED CAKE AND SEED OIL. IT FILED ITS RETURN OF INCOME FOR THE AY 2010-11 ON 14/10/2010 DECLARING A TOTAL INCOME OF RS. 48,57,47 9/-. THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS AND NOTICES U/S 143(2) AND 142(1) WERE ISSUED TO THE ASSESSEE, AGAINST WHICH, REQUIRE D INFORMATION WAS FURNISHED BY THE ASSESSEE. THE AO COMPLETED THE ASS ESSMENT U/S 143(3) OF THE ACT BY DETERMINING THE ASSESSED INCOM E OF THE ASSESSEE AT RS. 7,46,25,660/- BY MAKING VARIOUS ADD ITIONS INCLUDING THE ADDITION OF RS. 44,00,000/- U/S 68 OF THE ACT T OWARDS CASH CREDITS, WHICH IS THE SUBJECT MATTER IN THIS APPEAL. 2 ITA NO. 1269/H/16 SURYAVANSHI INDUSTRIES LTD., SECBAD. 3. THE FACTS RELATING TO THIS GROUND ARE THAT DURIN G THE FY 2009-10, THE ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY O F RS. 44,00,000/- FOR WHICH THE COMPANY CLAIMED TO HAVE R ECEIVED FROM M/S WEST END DEVELOPERS LTD., KOLKATA. WHEN THE ASSESSE E WAS ASKED TO PROVE THE CREDIT WORTHINESS FOR THE SHARE APPLICATI ON MONEY INVESTED AS REQUIRED U/S 68 OF THE ACT, THE ASSESSEE FAILED TO FURNISH EVIDENCE BEFORE THE AO. SINCE THE ASSESSEES FAILURE TO DISC HARGE ITS ONUS OF PROVING THE CREDITWORTHINESS OF THE TRADERS, THE AO TREATED THE SAID AMOUNT AS UNEXPLAINED CASH CREDITS U/S 68 OF THE AC T AND BROUGHT TO TAX AS INCOME FROM OTHER SOURCES. 4. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT(A). 5. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT W ESTEND DEVELOPERS LTD. IS ASSESSED TO TAX WITH PAN AAACW21 95B AND WARD 10 3(1), KOLKATA JURISDICTION. THE ASSESSEE OBTAINE D CONFIRMATION LETTER FROM THIS PARTY ALONG WITH ITS BANK ACCOUNT AND BALANCE SHEET AND IT WAS ARGUED THAT THE SHARE APPLICATION MONEY WAS RECEIVED THROUGH BANKING CHANNEL. 6. THE CIT(A) NOTED THAT THE AO IN HIS REMAND REPOR T STATED THAT THE ASSESSEE PRODUCED A COPY OF THE RETURN FILED BY M/S WESTEND DEVELOPERS LTD. AND A COPY OF THE BANK ACCOUNT HELD BY THEM WITH HDFC EVIDENCING RECEIPT OF AMOUNT TOWARDS SHARE APP LICATION MONEY. HE FURTHER NOTED THAT THE AO HAS NEITHER DISCUSSED ANYTHING NOR COMMENTED ON IT. THE CIT(A) REFERRING TO THE PROVI SIONS OF SECTION 68 OF THE ACT AS WELL AS REFERRING TO THE DECISIONS OF HONBLE COURTS, HELD THAT MERE FURNISHING OF THE PARTICULARS IS NOT ENO UGH, BUT, IT IS FOR THE ASSESSEE TO PROVE THE IDENTITY OF THE CREDITORS, TH EIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS. SINCE, THE ASSESSEE FAILED TO PROVE ALL THESE INGREDIENTS, THE CIT(A) CONFIRME D THE ADDITION MADE BY THE AO. 3 ITA NO. 1269/H/16 SURYAVANSHI INDUSTRIES LTD., SECBAD. 7. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE I S IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APP EALS)- 5, HYDERABAD DATED 15.07.2016 IS ERRONEOUS, CONTRARY T O LAW AND FACTS OF THE CASE. 2. A) THE COMMISSIONER OF INCOME TAX (APPEALS) IS N OT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.44,00,000/- MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF SHARE APPLICATION M ONEY RECEIVED FROM WESTEND DEVELOPERS LTD STATING THAT T HE DETAILS FURNISHED DO NOT PROVE THE CREDITWORTHINESS OF THE KOLKATA BASED COMPANY, WHICH CONTRIBUTED SHARE SUBSCRIPTION TO THE APPELLANT COMPANY. B) THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT T O HAVE SEEN THAT WESTEND DEVELOPERS LTD IS ASSESSED TO INC OME TAX UNDER PAN: AAACW2195B, BEFORE THE ASSESSING OFFICER , WARD- 10(3), KOLKATA AND THE CONFIRMATION LETTER, BANK AC COUNT COPY, ANNUAL ACCOUNTS AND INCOME TAX ACKNOWLEDGMENT FURNI SHED BY THEM ESTABLISHES THE IDENTITY / CREDITWORTHINESS OF THE SAID COMPANY WHICH HAD DEPOSITED THE SHARE APPLICATION M ONEY WITH THE APPELLANT. 3. FOR ALL OF THE ABOVE AND SUCH OTHER GROUNDS AS M AY BE URGED AT THE TIME OF HEARING IT IS MOST RESPECTFULLY PRAY ED THAT THE HON'BLE TRIBUNAL BE PLEASED TO DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF RS.44,00,000/- MADE IN T HE ASST. ORDER U/S.68 IN THE INTEREST OF JUSTICE. 8. LD. AR SUBMITTED THAT THE ASSESSEE HAS SUBSTANTI ATED THE PROOF OF RECEIPT OF THE APPLICATION MONEY FROM M/S WESTEN D DEVELOPERS BY SUBMITTING THE CONFIRMATION LETTER ALONG WITH PAN D ETAILS AND BALANCE SHEET IN WHICH THE COMPANY HAS SHOWN THE REMITTANCE AS INVESTMENT. HE SUBMITTED THAT THE PAYMENTS WERE RECEIVED THROUG H BANKING CHANNELS, FOR WHICH, THE ASSESSEE HAS SUBMITTED BAN K STATEMENT AND COPY OF LEGER OF THE COMPANY. HE, THEREFORE, SUBMIT TED THAT IT PROVES THAT THE TRANSACTION IS GENUINE. CREDIT WORTHINESS IS NOT IN QUESTION AND IDENTITY OF THE PARTY HAS ALREADY BEEN ESTABLIS HED BY SUBMITTING PAN AND CONFIRMATION LETTERS. 4 ITA NO. 1269/H/16 SURYAVANSHI INDUSTRIES LTD., SECBAD. 9. THE LD. DR, ON THE OTHER HAND FILED WRITTEN SUBM ISSIONS WHEREIN IT WAS STATED THAT WHILE DECIDING THE ISSUE THE LD. CIT(A) HAS RELIED ON THE FOLLOWING HIGH COURT DECISIONS, WHICH ARE RELEV ANT TO THE FACTS OF THE INSTANCE CASE, THEREFORE, THE SAME MAY BE CONSI DERED FAVOURABLY: 1. CIT VS. NIVEDAN VANIJYA NIYOJAN LTD., 130 TAXMN 153 (CAL.) 2. CIT VS. ACTIVE TRADERS P. LTD., [1993] 69 TAXMA N 282 (CAL.) 10. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE THE MATERIAL FACTS ON RECORD AS WELL AS THE DECISIONS CITED BY LD. DR. THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY FROM WESTEND DEVEL OPERS LTD. THROUGH HDFC BANK. EVEN THOUGH THE ASSESSEE HAS FIL ED CONFIRMATION LETTERS AND FINANCIAL STATEMENTS ALONG WITH PAN DET AILS FILED BEFORE THE CIT(A) BUT NOT BEFORE THE AO, THE CIT(A) HAS NO T ACCEPTED THE INFORMATION FILED ON THE BELIEF THAT THE COMPANY I S CLOSELY HELD COMPANY AND DOUBTING THE EXISTENCE OF THE COMPANY, WE HAVE VERIFIED THE DETAILS SUBMITTED BY LD. AR, VIZ., PAN DETAILS, CIRCLE IN WHICH IT IS ASSESSED AND CONFIRMATION LETTERS, THIS PROVES THE IDENTITY OF THE INVESTOR. WITH REGARD TO CREDIT WORTHINESS, ASSESSEE HAS FILED FINANCIAL STATEMENTS, WHICH IS PROPERLY AUDITED. TH E BALANCE SHEET SHOWS IT IS RUNNING COMPANY, IT SATISFIES THE CREDI T WORTHINESS. WITH REGARD TO GENUINENESS, THE ASSESSEE HAS FILED THE B ANK STATEMENT WITH THE DETAILS OF RECEIPT. THE ASSESSEE HAS UTILI ZED THE FUNDS IN THE REGULAR BUSINESS. AO HAS NOT FOUND ANYTHING UNUSUAL IN THE BOOKS OF THE ASSESSEE WITH REGARD TO RECEIPT OF THE SHARE AP PLICATION MONEY AND ITS UTILISATION IN THE BUSINESS. SINCE, THE ASS ESSEE HAS ESTABLISHED THE GENUINENESS, IDENTITY AND CREDIT WO RTHINESS OF THE INVESTOR, IN OUR OPINION, WE CANNOT STRETCH OUR IMA GINATION FURTHER TO DOUBT ANY FURTHER. 10.1 COMING TO THE SUBMISSIONS OF LD. DR, HE RELIED ON TWO CASE LAW TO JUSTIFY THE ADDITION. ON CAREFUL READING OF THES E JUDGMENTS, THE FACTS IN THOSE CASES ARE DIFFERENT. IN THE CASE OF CIT VS. NIVEDAN VANIJYA NIYOJAN LTD. (SUPRA), THE ASSESSEE HAS NOT FILED ANY EVIDENCE 5 ITA NO. 1269/H/16 SURYAVANSHI INDUSTRIES LTD., SECBAD. TO PROVE THE IDENTITY, CREDIT WORTHINESS AND GENUIN ENESS. THE HONBLE COURT HELD THAT ASSESSEE HAS TO PROVE THE THREE ING REDIENTS AS PER SECTION 68 TO ESTABLISH THE TRANSACTION AS GENUINE. IN THE GIVEN CASE, THE ASSESSEE HAS FULFILLED ALL THE BASIC INGREDIENT S AS PER SECTION 68. HENCE, THE ABOVE CASE IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE. COMING TO THE CIT VS. ACTIVE TRADERS P. LTD. (SUPRA ), THE AO HAS SENT SUMMONS TO THE SHARE HOLDERS DIRECTLY. SOME SHARE H OLDERS ADDRESSES ARE NOT GENUINE, LETTERS SENT WERE RETURN ED UNSERVED, SOME OF THE SHARE HOLDERS INSTEAD OF PERSONAL APPEA RANCE, FILED CONFIRMATION LETTERS, THESE CONFIRMATION LETTERS WE RE FOUND TO BE IDENTICAL AND SCRIPS WERE ALSO IDENTICAL. HENCE, CO URT HAS DISMISSED THESE ARE NOT GENUINE. IN THE GIVEN CASE, NO SUCH A CTIVITIES WERE INITIATED BY AO EVEN THOUGH THE ASSESSMENT CIRCLE D ETAILS WERE SUBMITTED AND ADDRESS WAS ALSO MADE AVAILABLE. MERE LY DISBELIEVING THE DETAILS SUBMITTED BEFORE THEM AND DISALLOWING U /S 68 IS IMPROPER. HENCE, ADDITION MADE IS DELETED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 22 ND NOVEMBER, 2017. SD/- SD/- (D. MANMOHAN) (S. RIFAUR RAHMAN ) VICE PRESIDENT A CCOUNTANT MEMBER HYDERABAD, DATED: 22 ND NOVEMBER, 2017. KV COPY TO:- 1) SURYAVANSHI INDUSTRIES LTD., 105, SURYA TOWERS, SP ROAD, SECUNDERABAD 500 003. 2)ACIT, CIRCLE 3(2), HYDERABAD. 3) CIT(A) 5, HYDERABAD 4 PR. CIT 3, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE