Rishi Agarwal., Hyderabad V. Dy. Commissioner of Income Tax, Circle-10(1)., Hyderabad

ITA 1337/Hyd/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2279 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 27-11-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 31-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: P MURALI MOHANA RAO
• Keywords: Opportunity of being heard; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI V.DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 1337/HYD/2017 ASSESSMENT YEAR: 2012-13 RISHI AGARWAL, HYDERABAD [PAN: AGYPA3123G] VS DCIT, CIRCLE-10(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P.MURALI MOHANA RAO, AR FOR REVENUE : SHRI NILANJAN DEY, DR DATE OF HEARING : 27-11-2019 DATE OF PRONOUNCEMENT : 04-12-2019 O R D E R PER D.KARUNAKARA RAO, A.M. : THIS APPEAL OF ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-6, HYDERABAD, DATED 10-04-2017, FOR THE AY.2012-13. 2. AT THE OUTSET, REFERRING TO THE GROUNDS OF APPEAL, LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT GROUND NO.2 CONSTITUTES THE CORE GROUND AND THE REMAINING GROUNDS ARE BASICALLY ARGU MENTATIVE IN NATURE. ACCORDINGLY, GROUND NO.2 READS AS UNDER: 2. THE LD.CIT(A) ERRED IN UPHOLDING THE ADDITION O F RS.78,20,000/- TOWARDS UNEXPLAINED INCOME U/S.68 OF THE ACT. 3. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT, ASSESSEE IS THE PROPRIETOR OF M/S.GLOBAL STEEL COMPANY DOING BUSINESS OF TRADING IN IRON AND STEEL, FABRICATION OF STEEL STRUCTURES AND JOB WORKS. HE FILED HIS RETURN OF INCOME FOR THE AY.2012-13 ON 30-09-2012, ITA NO. 1337/HYD/2017 :- 2 -: ADMITTING THE TOTAL INCOME AT RS.77,35,570/-. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) AS SESSED THE INCOME AT RS.1,62,55,570/- AGAINST THE RETURNED INCOME OF RS.77,35,570/-. THE AO MADE AN ADDITION OF RS.85,20 ,000/- U/S.68 OF THE INCOME TAX ACT [ACT]. 3.1. BRIEF FACTS RELATING TO THIS ADDITION INCLUDES THAT TH E ASSESSEE RECEIVED LOANS FROM 15 CREDITORS. THE DETAILS ARE GIV EN IN PARA 3 OF THE ASSESSMENT ORDER. IN THE SAID PARAGRAPH, THE AO DIS CUSSED THE DETAILS RELATING TO SOURCE OF CREDITS AND THE NATURE OF EVIDENCES FURNISHED BY THE AO ETC. THE AO DISCUSSED VARIOUS DE CISIONS BEFORE THE SAID ADDITION, MADE U/S.68 OF THE ACT. IN ANY CASE, THE CREDITOR- WISE DISCUSSION IS NOT ELABORATELY DISCUSSED IN THE OR DER. 4. DURING THE FIRST APPELLATE PROCEEDINGS, VARIOUS DE TAILS RELATING TO IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION WERE SUBMITTED. PAN DETAILS WERE GIVEN IN SOME CASES AND CONFIRMATION LETTERS WERE ALSO FURNISHED. THE CIT (A) SUSTAINED THE ADDITION TO THE EXTENT OF RS.75,20,000/-, RELYING ON CERTAIN CASE LAWS. THE DETAILS OF THE CREDITORS CONFIRMED BY THE C IT(A) ARE AS UNDER: S.NO. NAME OF THE CREDITOR (S/SHRI/SMT) AMOUNT OF LOAN TAKEN RS. 1. BASANT KUMAR 8,00,000 2. KAMLESH KUMAR 5,00,000 3. K.SUMITRA 7,00,000 4. MANOJ BANSAL 6,00,000 5. PREMLATA BANSAL 8,00,000 6. SITA RAM RAJU 5,00,000 7. RATNA BABU 5,20,000 8. SUSHMA AGARWAL 8,00,000 9. CHAMPA DEVI 3,00,000 10. SHANKARDEVI 10,00,000 11. BENET IBRAHIM 5,00,000 12. JIGNA MEHTA 5,00,000 13. RAJIV RATNA 3,00,000 ITA NO. 1337/HYD/2017 :- 3 -: ACCORDINGLY, CIT(A) GRANTED PART RELIEF TO THE ASSESSEE . 5. AGGRIEVED WITH THE SAID ORDER OF THE CIT(A), THE AS SESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL WITH THE GROUND MENTI ONED ABOVE. 6. LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS THE C ASE WHERE THE LOANS ARE REPAID IN SUBSEQUENT PERIOD. BASED ON THIS FACT, LD.COUNSEL MENTIONED THAT THESE REPAYMENT DETAILS WERE NOT PLACED BEFORE THE LOWER AUTHORITIES. THEREFORE, THIS ADDITIONA L INFORMATION IF CONSIDERED, ASSESSEE IS LIKELY TO GET RELIEF SUBSTA NTIALLY. FURTHER, LD.COUNSEL FURNISHED A WRITTEN SUBMISSION IN THIS REGA RD. RELEVANT LINES FROM THE WRITTEN SUBMISSIONS ARE EXTRACTED AS UNDE R: IN THIS REGARD, IT IS HUMBLY SUBMITTED THAT ALL TH E CREDITORS HAVE BEEN PAID BACK AS ON DATE THROUGH CHEQUES. SOME OF THESE AMOU NTS HAD ALREADY BEEN REPAID EVEN BEFORE THE DATE OF THE ORDER OF THE CIT (A). MOST OF THE CREDITORS ARE ASSESSED TO TAX. THE DETAILS OF THE LOAN AMOUNT S, DATES OF REPAYMENTS ETC.., ARE SUBMITTED AS UNDER: SL. NO NAME OF THE CREDITOR AMOUNT OF LOAN (RS) AMOUNT REPAID (RS) DATE OF REPAYMENT 1 BASANT KUMAR L.R. BY SMT.SHAKUNTALADEVI 8,00,000 8,00,000 25.09.2019 2 KAMLESH KUMAR 5,00,000 5,00,000 31.01.2015 3 K SUMITRA 7,00,000 7,00,000 30.01.2015 4 MANOJ BANSAL 6,00,000 6,00,000 08.12.2014 5 PREMALATA BANSAL 8,00,000 8,00,000 08.12.2014 6 SITA RAM RAJU 5,00,000 5,00,000 08.12.2016 07.01.2017 27.01.2017 7 RATNA BABU L.R. BY SRI V.MALLESHWAR RAO 5,20,000 5,20,000 25.09.2019 8 SUSHMA AGARWAL 8,00,000 8,00,000 13.12.2014 9 CHAMPA DEVI 3,00,000 3,00,000 24.09.2019 10 SHANKAR DEVI 4,00,000 10,00,000 15.04.2017 6,00,000 11 BENET IBRAHIM 5,00,000 5,00,000 24.09.2019 12 JIGNA MEHTA 5,00,000 5,00,000 28.09.2019 13 RAJIV RATNA 3,00,000 3,00,000 27.09.2019 ITA NO. 1337/HYD/2017 :- 4 -: IT IS TO SUBMIT THAT IN ALL THE ABOVE CASES, AFFIDA VITS/CONFIRMATIONS ARE FILED FROM THE CREDITORS ACKNOWLEDGING THE TRANSACTIONS A ND THE SOURCES. IN ORDER TO ESTABLISH THE IDENTITY OF THE CREDITORS, COPIES OF PAN CARDS WERE ALSO SUBMITTED. APART FROM THAT, COPY OF BANK STATEMENTS WERE ALSO SUBMITTED. FURTHER, COPIES OF INCOME TAX RETURNS OF THE LENDER S, EXCEPT IN RESPECT OF THOSE MENTIONED AT SL.NOS.6,7& 11 ABOVE FOR THE ASS ESSMENT YEAR UNDER CONSIDERATION HAVE ALSO BEEN SUPPLIED TO THE ASSESS ING OFFICER AND THE AMOUNTS LENT BY THEM TO THE ASSESSEE ARE ALSO REFLE CTED IN THE STATEMENT OF AFFAIRS FILED BY THE LENDERS BEFORE THE INCOME TAX DEPARTMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. HOWEVER, WITHOUT CONSIDERING ALL THESE DETAILS, THE ASSESSING OFFICER MADE THE ADDITION. DURING THE APPELLATE PROCEEDINGS, THE LD. CIT(A) RE MANDED THE ISSUE TO THE ASSESSING OFFICER FOR EXAMINATION OF THE CRE DITORS. IN THE REMAND REPORT DATED 15.02.2018, THE ASSESSING OFFICER AFTE R EXAMINING THE CREDITORS HAS STATED THAT IN THE CASE OF THE CREDIT ORS OF SRI. U. VIJAY KUMAR AND SMT.SEEMA BUCHA, THE ASSESSEE HAS PROVED THEIR IDENTITY, GENUINENESS OF THE TRANSACTIONS AND THEIR CREDITWOR THINESS. THE LD.CIT(A) DELETED THE ADDITION IN RESPECT OF THE CREDITORS, S RI.U. VIJAY KUMAR AND SMT.SEEMA BUCHA THOUGH MOST OF THE CONFIRMATIONS IN RESPECT OF THE ABOVE AMOUNTS WERE SUBMITTED BEFORE THE LD. CIT(A), SHE H AS CONFIRMED THE ADDITION FOR THE REASONS MENTIONED IN PARA NO.06.0 TO 06.2 OF HER ORDER. THE DETAILS OF THE LOAN RECEIVED AND THEIR REPAYMENT MA DE SUCH AS CONFIRMATION LETTERS AND COPY OF BANK STATEMENT HAVE ALREADY BEE N SUBMITTED BEFORE THE HON'BLE ITAT VIDE PAPER BOOKS FILED ON 06.07.2018 & 29.10.2019. THE ORDER OF THE LD. CIT (A) IS NOT ACCEPTABLE FOR THE FOLLOWING REASONS: IN ALL THE CASES, THE CREDITORS ARE IDENTIFIED WHO HAVE GIVEN SWORN STATEMENT SAYING THAT THEY HAVE LENT THE AMOUNTS TO THE ASSESSEE DURING THE YEAR OF ACCOUNT. ALL THE CREDITORS EXCEPT THOSE MENTIONED AT SI.NO.6, 7 & 11 ABOVE ARE INCOME TAX ASSESSEES. FURTHER, THE C REDITOR SRI KAMALESH KUMAR IS A CHARTERED ACCOUNTANT WHERE AS SRI RAJIV RATNA IS AN ADVOCATE. THE CREDITOR SRI MAJOJ BANSAL IS A SALARIED EMPLOYE E WHEREAS THE CREDITORS SMT. PREMALATA BANSAL AND SMT. SUSHMA AGARWAL ARE D OING BUSINESS. ALL THE TRANSACTIONS I.E., RECEIPT OF THE IMPUGNED LOAN S AS WELL AS THE REPAYMENT OF THE LOANS ARE ROUTED THROUGH BANKING C HANNELS. HENCE, THE ASSESSEE HAS ALREADY PROVED THE GENUINENESS OF CRED ITORS, FURTHER AS PER LAW, ASSESSEE CAN BE ASKED TO PROVE THE SOURCES OF CREDITS IN ITS BOOKS OF ACCOUNT BUT NOT SOURCE OF SOURCE. HENCE THE CREDITO RS TO WHOM THE AMOUNT IS REPAID SHALL NOT BE ELIGIBLE TO BE ADDED TO THE RETURN OF INCOME OF THE ASSESSEESS. WITHOUT DISPUTING ALL THESE FACTS, UPHO LDING THE ADDITION MADE U/S 68 OF THE ACT IS NOT WARRANTED. BOTH THE ASSESS ING OFFICER AND THE LD. CIT(A) FAILED TO UNEARTH ANY WRONG OR ILLEGAL DEALI NGS IN THE IMPUGNED LOAN TRANSACTIONS. IT IS TO SUBMIT THAT ALL THE DECISION S RELIED ON BY THE ASSESSING OFFICER ARE DISTINGUISHABLE ON FACTS. SINCE THE INI TIAL BURDEN ON THE ASSESSEE STANDS DISCHARGED, THE ONUS IS ON THE DEPARTMENT TO PROVE OTHERWISE OF THE ITA NO. 1337/HYD/2017 :- 5 -: FACTS MENTIONED BY THE CREDITORS IN THEIR AFFIDAVIT S AND SWORN STATEMENTS. THERE BEING NO FURTHER ENQUIRIES BY THE ASSESSING O FFICER IN RESPECT OF THE LOAN TRANSACTIONS, THE ADDITION HAS BEEN SUSTAINED BY THE LD. CIT(A) WHICH IS NOT CORRECT. THEREFORE, THE ADDITION SUSTAINED O F RS.78.20 LAKHS REQUIRES TO BE DELETED IN THE HANDS OF THE ASSESSEE. 6.1. FURTHER, LD.COUNSEL SUBMITTED THAT THE ASSESSEE DI SCHARGED INITIALLY THE ONUS, WHICH IS REQUIRED U/S.68 OF THE A CT. IF ACCEPTED, THE FACT OF REPAYMENT OF THE LOANS TO THE CREDITORS SHOULD HELP THE AO TO DECIDE IN FAVOUR OF THE ASSESSEE. FURTHER, LD.C OUNSEL EXPLAINED THE PROVISIONS OF SECTION 68 OF THE ACT. EV ENTUALLY, LD.COUNSEL ARGUED THAT THE ENTIRE ADDITION IS REQUIRED TO BE DELETED. WITHOUT PREJUDICE, LD.COUNSEL ALSO SUBMITTED THAT SINCE THE FACTS OF REPAYMENT ARE NOT PLACED BEFORE THE LOWER AUTHORITIE S, THE ISSUE CAN BE REMANDED TO THE FILE OF AO FOR FRESH ADJUDICATI ON, AFTER CONSIDERING THE FACT OF REPAYMENT OF THE LOANS TO THE CRE DITORS. 7. PER CONTRA, LD.DR FOR THE REVENUE RELIED HEAVILY O N THE ORDER OF AO AND THE CIT(A). LD.DR FURTHER SUBMITTED THAT THIS IS THE CASE WHERE CREDITORS DO NOT HAVE CREDITWORTHINESS TO LEND SO MUCH OF LOANS TO THE ASSESSEE. THE FACTS RELATING TO THE DEPOSITI NG OF CASH BEFORE THE CHEQUES ARE ISSUED IN THEIR HANDS AND ALS O THE FACT RELATING TO WITHDRAWAL OF ACTION, AFTER REPAYMENT IS MADE WOULD ALSO GO AGAINST THE ASSESSEE. REFERRING TO THE ADDITIONAL EVIDENCES PLACED AT PGS.81 TO 83, LD.DR SUBMITTED THAT THE SAID E VIDENCE SHOULD NOT BE ENTERTAINED AT THIS STAGE AND RELIED ON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF A.K. BABU KHAN VS. COMMISSIONER OF WEALTH TAX (1976) [102 ITR 757] (AND HRA PRADESH). FINALLY, LD.DR PRAYED FOR CONFIRMING THE ORDER OF CI T(A). ITA NO. 1337/HYD/2017 :- 6 -: 8. WE HEARD BOTH THE COUNSELS AND PERUSED PAPER BOOK PLACED BEFORE US. WE HAVE ALSO EXAMINED THE DETAILS OF REPA YMENTS I.E., DATE OF REPAYMENT ETC., AND THE CASE LAW PLACED BEFORE US. ADDITIONAL EVIDENCES: THE ADDITIONAL EVIDENCES WERE EXAMINED AND FOUND THA T THEY ARE BASICALLY COPIES OF THE AFFIDAVITS, CONFIRMATIONS GIV EN BY CERTAIN CREDITORS AND THE BANK STATEMENTS OF THOSE CREDITORS. IN PRINCIPLE, THEY RELATE TO THE ISSUE UNDER CONSIDERATION AND THEY G O TO THE ROOT OF THE MATTER AND SHALL DEFINITELY BE OF SOME USE FOR A DJUDICATION OF THE ISSUE JUDICIOUSLY. IN OUR OPINION, IT IS IN THE IN TEREST OF ADMINISTRATIONAL JUSTICE TO ADMIT THE SAME. ACCORDINGLY , WE DIRECT THE AO TO CONSIDER THE CONTENTS AVAILABLE ON THESE PAPERS AND USE THEM FOR ADJUDICATION OF THE ISSUE, AFTER GRANTING A REA SONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE AO IS FREE TO CONDUCT REQUISITE ENQUIRIES INTO THE CORRECTNESS OF THESE PAPERS , AS PER LAW. REPAYMENTS: THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE RELAT ING TO THE REPAYMENT TRANSACTIONS OF THE LOANS RECEIVED BY THE ASS ESSEE IS CONSIDERED AND FOUND THAT THE DATE OF PAYMENTS ARE OBV IOUSLY IN SUBSEQUENT IN PERIOD I.E., IN THE YEAR OF 2014-2019 . WE FIND THAT THESE FACTS OF REPAYMENT ARE CERTAINLY RELEVANT AS THEY G O TO THE IDENTITY AND THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITORS. AO WAS DIRECTED TO C ONSIDER THESE ADDITIONAL FACTS IN A RIGHT PERSPECTIVE AND MAKE USE O F THE SAME FOR ADJUDICATION OF THE ISSUE. REPAYMENT MEANS, ASSESSEE PAID THE DUES TO THE PERSON, WHO IS EXISTING. THAT PERSON RECEIVED T HE FUNDS AND TO THAT EXTENT, THE GENUINENESS OF THE TRANSACTION ASSUMES CREDIBILITY. SO LONG AS THERE IS NO EVIDENCE WITH THE AO TO ITA NO. 1337/HYD/2017 :- 7 -: DEMONSTRATE SUCH REPAYMENTS WERE ROUTED BACK TO THE PAYE R, THE TRANSACTION BECOMES GENUINE AND THEREFORE, THERE IS NO NEED FOR SUSPECTING THE SAME. THE TRANSACTION BECOMES SO GENU INE MORE SO WHEN THE PAYMENTS AND REPAYMENTS ARE DONE THROUGH THE BANKING CHANNELS. AO IS DIRECTED TO EXAMINE WHETHER THE REPAY MENTS ARE PROPERLY APPROPRIATED BY THE CREDITORS, IF NOT ROUTED BA CK INTO THE ACCOUNTS OF ASSESSEE. REASONABLE OPPORTUNITY OF BEIN G HEARD TO THE CREDITORS IS TO BE GIVEN IN CASE SUCH ENQUIRIES ARE U NDERTAKEN. THUS, KEEPING ALL THE ISSUES OPEN RELATING TO THE ADDITION OF RS.78,20,000/- (RAISED IN GROUND NO.2), THE ISSUE RA ISED IN GROUND NO.2 ALONG WITH OTHER ARGUMENTATIVE GROUNDS I.E., GROU ND NOS.1 TO 8 ARE REMANDED BACK TO THE FILE OF AO. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH DECEMBER, 2019 SD/- SD/- (V. DURGA RAO) (D. KARUNAKARA R AO) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 4 TH DECEMBER, 2019 TNMM ITA NO. 1337/HYD/2017 :- 8 -: COPY TO : 1. SHRI RISHI AGARWAL, HYDERABAD. C/O. P.MURALI & C O., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD. 2. THE DCIT, CIRCLE-10(1), HYDERABAD. 3. CIT(APPEALS)-6, HYDERABAD. 4. PR.CIT-6, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.