ACIT, Circle-16(2), Hyderabad V. M/s Mancherial Cement Company P Ltd., Hyderabad

ITA 1435/HYD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2470 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-04-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 01-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1435/HYD/2014 ASSESSMENT YEAR: 2006-07 ASST. COMMISSIONER OF INCOME TAX, CIRCLE-16(2), HYDERABAD VS M/S. MANCHERIAL CEMENT COMPANY P LTD., HYDERABAD [PAN: AAECM4934A] (APPELLANT) (RESPONDENT) FOR REVENUE : SMT N. SWAPNA, DR FOR ASSESSEE : SHRI K.C. DEVDAS, AR DATE OF HEARING : 18-10-2017 DATE OF PRONOUNCEMENT : 27-10-2017 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, HYDERABAD, DATED 18-03-2014. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF CEMENT. SINCE ASS ESSEE HAS NOT FILED RETURNS OF INCOME, PROCEEDINGS U/S. 148 OF THE INCOME TAX ACT [ACT] WERE INITIATED. IN THE COURSE OF ASSESSMENT, ASSE SSING OFFICER (AO) MADE ADDITION OF RS. 3.60 CRORES WHICH WAS RECE IVED TOWARDS I.T.A. NO. 1435/HYD/2014 :- 2 - : SHARE CAPITAL BY THE ASSESSEE-COMPANY. ON APPEAL, LD .CIT(A)-5, HYDERABAD VIDE ORDER DT. 14-11-2011, DELETED THE ADDI TION OF RS. 3.60 CRORES STATING THAT ASSESSEE HAS FILED CONFIR MATION LETTERS GIVING COMPLETE IDENTITY OF THE PERSONS, WHO HAD SENT SHARE APPLICATION MONEY. AFTER EXTRACTING DETAILS FURNISHED BY ASSESSEE, CIT(A) HELD THAT ASSESSEE HAS DISCHARGED THE ONUS OF P ROVIDING INFORMATION ON THE IDENTITY, CREDITWORTHINESS AND GENUI NENESS OF THE TRANSACTIONS. AGGRIEVED BY THE ABOVE SAID ORDER OF THE CIT(A), REVENUE PREFERRED AN APPEAL BEFORE THE ITAT AND THE I TAT HAS REMITTED THE ISSUE TO THE FILE OF AO FOR FRESH CONSIDER ATION TO EXAMINE THE GENUINENESS OF THE TRANSACTIONS. 3. LD.CIT(A) CALLED FOR REMAND REPORT VIDE LETTER DT. 12-06-2013 AND AO HAS SENT A REPORT ON 25-09-2013. IN THE REMA ND REPORT, OUT OF THE FIVE SHAREHOLDERS AGAINST WHOM CREDITS WERE BROUGHT TO TAX, AO HAD ACCEPTED CREDITS IN THE HANDS OF TWO PERSON S I.E., SHRI S. HAREENDER RAO AND SHRI S. MAHENDER RAO. THE AO, HOWEVER, DID NOT ACCEPT THE CREDITS IN THE NAMES OF SHRI SHYAM SU NDER AGARWAL (RS. 88 LAKHS), SHRI K. VIDYA SAGAR RAO (RS . 65 LAKHS) AND SHRI S. ANAND RAO (RS. 60 LAKHS). LD.CIT(A) AF TER GIVING DETAILED REASONS ABOUT EACH OF THE CREDITS, HAS ACCEPTE D THE GENUINENESS OF THE TRANSACTIONS AND ALSO RELYING ON TH E PREDECESSORS ORDER, DELETED THE ADDITION IN THE HAND S OF SHRI S. ANAND RAO, SHRI VIDYA SAGAR RAO AND SHRI SHYAM SUND ER AGARWAL. REVENUE IS AGGRIEVED ON THESE THREE ITEMS A ND RAISED THE GROUNDS TO THE EXTENT OF RS. 2,13,00,000/-. 4. LD.DR HAD SUBMITTED THAT ASSESSEE HAS NOT PROVED THE GENUINENESS OF THE TRANSACTIONS. SHE RELIED ON THE DE TAILED REMAND I.T.A. NO. 1435/HYD/2014 :- 3 - : REPORT OF THE AO. IT WAS THE CONTENTION THAT THE ORDER OF CIT(A) REQUIRES TO BE SET ASIDE. 5. LD. COUNSEL IN REPLY SUBMITTED THAT ASSESSEE HAS FIL ED ALL THE DETAILS NOT ONLY BEFORE THE AO BUT ALSO BEFORE THE CIT(A ) AND BOTH OF THEM AT POINTS OF TIME HAVE ACCEPTED THE GENUINENES S OF THE TRANSACTIONS. IT WAS FURTHER SUBMITTED THAT THERE WERE DIS PUTES BETWEEN THE SHAREHOLDER GROUPS AND THESE DISPUTES HAV E BEEN ADJUDICATED BY THE COMPANY LAW BOARD, CHENNAI BENCH D T. 10-03- 2016. HE REFERRED TO THE ORDER PLACED ON RECORD TO SU BMIT THAT THE GENUINENESS OF THE AMOUNTS HAVE BEEN ACCEPTED BY THE COMPANY LAW BOARD AND FURTHER THE AMOUNTS WERE REFUNDED WITH IN TEREST (TDS WAS ALSO DONE) AND PLACED THE LETTERS ADDRESSED BY THE COMPANY DT. 16-05-2016 TO THE IMPUGNED THREE SHAREHOL DERS REFUNDING THE AMOUNTS. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE DOCUMENTS ON RECORD. AS SEEN FROM THE ORDER OF THE CI T(A), HE HAS EXAMINED THE CONFIRMATIONS FILED BEFORE THE AO ITSELF TO COME TO A CONCLUSION THAT THESE TRANSACTIONS ARE GENUINE. SUBSEQ UENT EVENTS ALSO DO INDICATE THAT THE SHAREHOLDERS ARE GENUINE AND THEIR MONEYS ARE ALSO GENUINE. CONSEQUENT TO CANCELLATION OF SHARE ALLOTMENTS, THE COMPANY ALSO REFUNDED THE AMOUNTS WITH I NTEREST, CONSEQUENT TO DIRECTIONS OF THE ORDER OF THE COMPANY LAW BOARD, CHENNAI BENCH. IN VIEW OF THIS, WE ARE OF THE OPINIO N THAT THE SHARE CAPITAL TRANSACTIONS ARE GENUINE AND HENCE, THERE IS NO NEED TO DIFFER FROM THE ORDER OF THE CIT(A). HOWEVER, THE O RDER OF CLB AND SUBSEQUENT REFUND WAS PLACED ON RECORD WITH A CER TIFICATION THAT THESE DOCUMENTS ARE AVAILABLE SUBSEQUENT TO ASSESSM ENT I.T.A. NO. 1435/HYD/2014 :- 4 - : PROCEEDINGS AND THEY GO TO ROOT OF THE MATTER. DR DID NO T RAISE ANY OBJECTION ON THESE DOCUMENTS. SINCE THE ORDER OF THE CO MPANY LAW BOARD AND SUBSEQUENT REFUND OF THE MONEYS ARE AT A LA TER DATE TO THE ORDER OF CIT(A), WE ARE OF THE OPINION THAT THESE DO CUMENTS ARE REQUIRED TO BE EXAMINED BY AO. THEREFORE, FOR GIVING AN OPPORTUNITY TO THE AO, IT WAS CONSIDERED TO REMIT THE ISS UE FOR THE LIMITED PURPOSE OF CONSIDERING THIS EVIDENCE. AO IS D IRECTED TO EXAMINE THE REFUND OF THE MONEY AND THEN ACCEPT THE CRED ITS AS GENUINE, IF THE AMOUNTS ARE REFUNDED AS DIRECTED BY C LB. WITH THESE DIRECTIONS, THE ISSUE IS RESTORED TO THE FILE OF A O FOR THE LIMITED PURPOSE OF EXAMINING THE ORDER OF COMPANY LA W BOARD AND SUBSEQUENT REFUND OF THE MONEYS. 7. IN THE RESULT, APPEAL OF REVENUE IS CONSIDERED ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER, 2017 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 27 TH OCTOBER, 2017 TNMM I.T.A. NO. 1435/HYD/2014 :- 5 - : COPY TO : 1. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-16(2), HYDERABAD. 2. M/S. MANCHERIAL CEMENT COMPANY PVT LTD., PLOT NO . 24, PANCHAVATI COOP HOUSING SOCIETY LTD., ROAD NO. 10, BANJARA HILLS, HYDERABAD. 3. CIT (APPEALS)-V, HYDERABAD. 4. CIT-IV, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.