SMT. VALLABHANENI JHANSI, L/R OF VALLABHANENI TRIVEDI(LATE), Vijayawada V. PRINCIPAL COMMISSIONER OF INCOME TAX, Vijayawada

ITA 145/VIZ/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0867 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-09-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 25-07-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 263; 143(3); 142(1); 143(2); 2(A)

Judgement Text

आयकरअपीलȣयअͬधकरण, ͪवशाखापटणमपीठ, ͪवशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM Įीदुåवूǽआरएलरेɬडी, ÛयाǓयकसदèयएवंĮीएसबालाकृçणन, लेखासदèयकेसम¢ BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकरअपीलसं./ I.T.A. No.145/VIZ/2022 (Ǔनधा[रणवष[/ Assessment Year :2017-18) Smt. Vallabhaneni Jhansi Rani L/R of Vallabhaneni Trivedi (Late) Bapulapadu, Vijayawada -521 105. PAN: ABAPV 6639 H Vs. Principal Commissioner of Income Tax, Vijayawada Charges, Vijayawada. (अपीलाथȸ/ Appellant) (Ĥ×यथȸ/ Respondent) अपीलाथȸकȧओरसे/ Appellant by : Sri MV Prasad, CA Ĥ×याथȸकȧओरसे/ Respondent by : Sri MN Murthy Naik, CIT-DR सुनवाईकȧतारȣख/ Date of Hearing : 08/09/2022 घोषणाकȧतारȣख/Date of Pronouncement : 13/10/2022 O R D E R PERS. BALAKRISHNAN, Accountant Member : This appeal filed is by the assessee against the order of the Ld. Principal Commissioner of Income Tax [Ld. Pr CIT] vide DIN & Order No. ITBA/REV/F/REV5/2021-22/1042129931(1), dated 2 30/03/2022 arising out of the order passed U/s. 143(3) of the Income Tax Act, 1961 [the Act] for the AY 2017-18. 2. Brief facts of the case are that the assessee is an individual filed his return of income for the AY 2017-18 on 4/11/2017 declaring a total income of Rs. 4,49,340/-. The assessee carries on the business in the name and style of Sri Sarojini Medical and Fancy Stores. The case was selected for complete scrutiny under CASS to verify the cash deposits during the demonetization. Accordingly statutory notices U/s. 143(2) dated 24/9/2018 & notice U/s. 142(1) dated 9/1/2019 and show cause notice dated 19/11/2019 were issued and served on the assessee to explain the sources of cash deposits. During the assessment proceedings, the assessee submitted that the cash deposits are made by M/s. Mulpuri Fisheries Pvt Ltd [in short MFPL] for Rs. 39,99,900/- in discharge of repayment of loan availed from Axis Bank. Accepting the explanation offered by the assessee, the Ld. AO treated the income returned as accepted. The Ld. Pr. CIT exercising his powers U/s. 263 of the Act found that the said assessment order liable to be considered as erroneous insofar as it is prejudicial to the interests of the revenue within the meaning and scope of section 263 of the Act 3 and therefore issued a detailed show cause notice u/s 263 of the Act to the assessee calling for objections. In respect of Smt. V. Jhansi Rani, the Legal Representative of the assessee filed a letter along with Notarized Affidavit dated 15/2/2022 claiming herself as legal heir of the assessee. Accordingly, a fresh show cause notice was issued to Smt. V. Jhansi Rani, Legal Representative of the assessee on 4/3/2022. In response to the notice, the assessee filed written submissions along with enclosures before the Ld. Pr. CIT. The Ld. Pr. CIT considering the submissions, directed the Ld. AO to re-do the assessment by examining the evidences submitted by the assessee during the revision proceedings in accordance with law and after affording a reasonable opportunity of being heard to the assessee. Aggrieved by the order of the Ld. Pr. CIT, the assessee carried the matter in appeal before Tribunal. 3. The assessee has raised the following grounds of appeal: “1. On the facts and circumstances of the case and in law, the Pr. CIT, Vijayawada erred in passing the order U/s. 263 of the Ac t which is contrary to the material on record and provisions of the Ac t, unjust and bad in law. 2. On the fac ts and in the circumstance of the case, the order passed by the Ld. Pr. CIT is no t valid as per the Explanation 2(a) of section 263 of the Ac t since the AO has passed the order only af ter due 4 inquiry and verification. Hence the observation of the Ld. Pr. CIT that the order passed by the Ld. AO dated 23/12/2019 has been comple ted without any inquiry is not correc t. 3. On the fac ts and in the circumstances of the case, the Ld. Pr. CIT is no t correc t in holding that the loan obtained from Axis Bank belong to the appellant only even though the company Mulpuri Fisheries Pvt Ltd., categorically affirmed the loan has been obtained by the co mpany and repayment was also made by the co mpany and also confirmed that such loan was shown in its books of account. 4. On the facts and circumstances of the case, the Ld. Pr. CIT ought to have appreciated that the AO called for the de tails of loan and also confirmation from the co mpany and examined such infor mation and hence it is not correc t to state that proper verification has not been carried on by the AO. 5. On the facts and circumstances of the case, the Ld. Pr. Cit ought to have appreciated that transac tions of obtaining of loan and its repayments were disclosed and brought to the books of account of the co mpany and such the Assessment Order passed is not erroneous and prejudicial to the interests of the Revenue. 6. On the fac ts and circumstances of the case, invoking section 263 is bad in law as the AO has taken a plausible view while co mple ting the Assessment and hence the Assessment order cannot be treated as erroneous which is prejudicial to the interest of revenue. 7. On the facts and circumstances of the case, the ld. Pr. CIT is not having jurisdiction to invoke provisions of sec tion 263 of the Ac t. 8. Any other ground or grounds that may be urged at the time of hearing.” 5 4. The Learned Authorized Representative [Ld. AR] submitted that Late Sri Vallabhaneni Trivedi obtained cash credit of Rs. 79,00,000/- during the Financial Year 2009-10 on behalf of M/s. MFPL from Axis Bank, Nuziveedu Branch. The Ld. AR further submitted that loan was taken fully by M/s. MFPL and utilized and repaid by M/s. MFPL- from the date of sanction of the Cash credit facility. The assessee has facilitated the cash credit from Axis Bank as M/s. MFPL could not obtain a cash credit facility being in the initial period of its business operations. The Ld. AR therefore pleaded that M/s. MFPL is repaying the loan taken by the assessee and has shown in its Balance Sheet for all the accounting years from FY 2009-10 onwards. The Ld. AR also submitted that M/s. MFPL has also deposited cash into the cash credit account maintained with Axis Bank on earlier instances also. The Ld. AR therefore pleaded that the order of the Ld. AO be restored. Per contra, the Ld. Departmental Representative submitted that the Axis Bank cash credit account is not a Joint Account as claimed by the assessee but only in the individual name of Late Trivedi Vallabhaneni. The Ld. DR relied on the order of the Ld. Pr. CIT and argued in support of the order. 6 5. We have heard both the parties and perused the material available on record and the orders of the Ld. Revenue Authorities. Admitted facts are that the assessee Late Trivedi Vallabhaneni has obtained a cash credit facility for M/s. MFPL during the Financial Year 2009-10 for Rs. 79 lakhs. Further, it is also not disputed that the loan amount was fully utilized by M/s. MFPL as the company cannot avail any credit facilities during its initialyear of operations. It is also seen from the loan statement from FY 2009-10 that cash is being regularly deposited into the account and the interest accrued on the loans have been paid by M/s. MFPL. It is also seen from the balance sheet submitted by the Ld. AR in page No. 53 of the paper book in ‘Note-3(ii)’, the loan amount has been shows as Long Term borrowings in the books of account of M/s. MFPL. It is clearly evident from the Financial Statement that the loan has been undertaken by M/s. MFPL as it could not obtain the credit facilities being in the initial period of operations. We therefore find merit in the arguments advanced by the Ld. AR that the cash deposit was made by M/s. MFPL into the cash credit account shown as a Long Term liability in the books of account of the company cannot be treated as a cash deposit by the assessee. Further, it is also noticed from the bank statement that M/s. 7 MFPL is regularly depositing cash in partial discharge of the cash credit facility. We also find from page 37 of the Paper Book that the assessee has filed cash deposit details from 9/11/2016 to 30/12/2016 as cash received from identifiable persons namely M/s. MFPL (PAN: AAGCM2044K) towards loan repayment in cash. In view of the above discussions, we find that the cash deposited by M/s. MFPL into the account of the assessee as the cash credit has been undertaken by the company M/s. MFPL. We therefore have no hesitation to allow the grounds raised by the assessee and consequently quash the order passed U/s. 263 of the Act by the Ld. Pr. CIT and restore the order of the Ld. AO. It is ordered accordingly. 6. In the result, appeal filed by the assessee is allowed. Pronounced in the open Court on the 13 th October , 2022. Sd/- Sd/- (दुåवूǽआर.एलरेɬडी) (एसबालाकृçणन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) ÛयाǓयकसदèय/JUDICIAL MEMBER लेखासदèय/ACCOUNTANT MEMBER Dated : 13/10/2022 OKK - SPS 8 आदेशकȧĤǓतͧलͪपअĒेͪषत/Copy of the order forwarded to:- 1. Ǔनधा[ǐरती/ The Assessee–Smt. Vallabhaneni Jhansi Rani L/R of Vallabhaneni Trivedi (Late), C/o. CA MV Prasad, D.No. 60-7-13, Ground Floor, Siddhartha Nagar, 4 th Lane, Vijayawada, Andhra Pradesh – 520 010. 2. राजèव/The Revenue – The Principal Commissioner of Income Tax, Vijayawada – Revenue Colony, Siddhartha School Road, Moghalrajapuram, Vijayawada, Andhra Pradesh- 520010. 3. The Principal Commissioner of Income Tax, Ward-1, Gudiwada. 4. आयकरआयुÈत (अपील)/ The Commissioner of Income Tax 5. ͪवभागीयĤǓतǓनͬध, आयकरअपीलȣयअͬधकरण, ͪवशाखापटणम/ DR,ITAT, Visakhapatnam 6. गाड[फ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam