Income Tax Officer Ward-5(2)(3), Bangalore V. Shri Vinod Kumar , Bangalore

ITA 1463/BANG/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2177 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 22-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SRINANDINI DAS
• Keywords: Unexplained cash credit; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. 1463 /BANG/201 7 ASSESSMENT YEAR : 20 1 2 - 1 3 THE INCOME TAX OFFICER, WARD 5 (2) (3), BANGALORE. VS. SHRI VINOD KUMAR, PRO: M/S. SUVI GRANITE EXPORTS, # NO. 11/2C, 2 ND FLOOR, IBH PRAKASHANA, 5 TH MAIN, NEW JAYADEVA HOSPITAL, COMMERCIAL COMPLEX, GANDHINAGAR, BANGALORE 560 004. PAN: AFJPK2861F APPELLANT RESPONDENT APPELLANT BY : SMT. SRINANDINI DAS, ADDL. CIT (DR) RESPONDENT BY : NONE DATE OF HEARING : 1 5 . 11 .2018 DATE OF PRONOUNCEMENT : 16 . 11 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE REVENUE AND THE SAME IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-5, BANGALORE DATED 27.03.2017 FOR ASSESSMENT YEAR 2012-13. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER. 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) - 5, BANGALORE, IS OPPOSED TO THE LAW AND NOT ON THE FAC TS AND CIRCUMSTANCES OF THE CASE. 2. WHETHER THE CIT(A) IS ERRED IN ALLOWING THE DIFF ERENCE OF RS.2,95,43,962/-. AS PER ASSESSEE AN OUTSTANDING SE CURED LOAN OF RS.5,90,99,428/-. WHEREAS PER BANK LOAN ACCOUNT THE OUTSTANDING LOAN WAS AT RS.2,95,55,466/-. IN VIEW OF RULE 46A, SINCE THE ASSESSING OFFICER HAS NOT BEEN GIVEN A REASONABLE OPPORTUNITY BY THE HON'BLE CIT(A) TO CROSS VERIFY AND GIVE HIS COMMENTS 3. WHETHER THE CIT(A) ERRED IN ALLOWING THE LOANS B Y OBTAINING MERE LEDGER COPIES FOR HAVING RECEIVED VARIOUS LOANS AND PACKING CREDITS AND TERM LOAN AND THE BALANCES AS ON 31.03.2012. 4. WHETHER THE CIT(A) ERRED IN ACCEPTING THE ADDITI ONAL EVIDENCE I.E. ITA NO. 1463/BANG/2017 PAGE 2 OF 5 CONFIRMATION LETTER FROM BANK WHICH IS NOT PRODUCED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT. 5. WHETHER THE CIT(A) WAS RIGHT IN ADMITTING EVIDEN CE UNDER RULE 46A OF THE INCOME-TAX RULES, THE APPELLANT SHALL NO T BE ENTITLED TO PRODUCE BEFORE [DCIT(APPEALS)] THE ANY EVIDENCE, WH ETHER ORAL OR DOCUMENTARY OTHER THAN EVIDENCE PRODUCED BY HIM DUR ING THE COURSE OF PROCEEDINGS BEFORE THE AO EXCEPT IN SOME CIRCUMS TANCES. 6. WHETHER THE CIT(A) WAS RIGHT ADMITTING THE EVIDE NCE IN VIEW OF RULE 46A, SINCE THE AO HAS NOT BEEN GIVEN A REASONA BLE OPPORTUNITY TO CROSS VERIFY THE SAME. 7. WHETHER THE CIT(A) WAS RIGHT IN ACCEPTING THE EV IDENCE PRODUCED DURING THE APPELLANT PROCEEDINGS WITH CALLING REMAN D REPORT FROM THE AO ON THE DOCUMENTS OR SUCH EVIDENCES PRODUCED. 8. THE CIT(A) WAS ERRED IN ACCEPTING ADDITIONAL EVI DENCE I.E., CONFIRMATION LETTER FROM BANK WHICH IS NOT PRODUCED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT. 9. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED UP ON, THE ORDER OF THE CIT(A) MAY BE REVERSED AND THAT ASSESSMENT ORDE R BE RESTORED. 3. THIS APPEAL WAS EARLIER FIXED FOR HEARING LASTLY ON 07.05.2018. ON THIS DATE, THE LD. AR OF ASSESSEE SHRI K. VINOD KUMAR MOVED AN APP LICATION FOR ADJOURNMENT AND ON HIS REQUEST, THE HEARING WAS ADJOURNED TO 07 .08.2018. ON THIS DATE I.E. ON 07.08.2018, THE BENCH DID NOT FUNCTION AND THERE FORE, THE HEARING WAS AGAIN ADJOURNED TO 15.11.2018 AND NOTICE OF HEARING WAS S ENT TO THE ASSESSEE BY RPAD WHICH HAS BEEN DULY SERVED ON THE ASSESSEE AS PER ACKNOWLEDGEMENT AVAILABLE ON RECORD. ON 15.11.2018, NONE APPEARED ON BEHALF OF THE ASSESSEE AND THEREFORE, THE APPEAL OF THE REVENUE WAS HEARD EX-PARTE QUA THE ASSESSEE. THE LD. DR OF REVENUE SUBMITTED THAT AS PER GROUND NO. 2 OF THE APPEAL RAISED BY THE REVENUE, THIS IS THE OBJECTION OF THE REVENU E THAT THE ORDER OF LD. CIT(A) IS IN VIOLATION OF RULE 46A OF INCOME TAX RULES, 1962. THE BENCH WANTED TO KNOW ABOUT THE ADDITIONAL EVIDENCE WHICH HAS BEEN CONSID ERED BY CIT(A) TO DECIDE THE ISSUE WITHOUT CONFRONTING THE SAME TO THE AO. IN REPLY, IT WAS SUBMITTED BY LD. DR OF REVENUE THAT AS PER PARA NO. 7 OF THE IMP UGNED ORDER OF LD. CIT(A), HE HAS STATED THAT THE AO DURING THE SCRUTINY ASSESSME NT PROCEEDINGS HAS WRITTEN TO ANDHRA BANK MANAGER FOR CONFIRMATION OF BANK LOA NS AND UPON THE RECEIPT OF THE REPLY THAT THE BALANCES ARE ONLY RS. 2,95,55,46 6/- DUE TO THE BANK FROM THE ITA NO. 1463/BANG/2017 PAGE 3 OF 5 ASSESSEE AS AGAINST THE DUES SHOWN AT RS. 5,90,99,4 28/- IN THE BOOKS OF ASSESSEE, ADDITION WAS MADE BY THE AO FOR THE BALAN CE AMOUNT BY HOLDING THAT THIS MUCH IS UNEXPLAINED CREDIT. SHE ALSO SUBMITTED THAT LD. CIT(A) HAS PASSED HIS DECISION ON THE BASIS OF COPIES OF THE CONFIRMA TION LETTERS FROM ANDHRA BANK, JAYANAGARA BRANCH SUBMITTED BEFORE CIT(A) FOR THE FIRST TIME ALONG WITH THE LEDGER COPIES OF THE ASSESSEES BOOKS FOR HAVIN G RECEIVED VARIOUS LOANS. SHE SUBMITTED THAT THE ISSUE WAS DECIDED BY CIT(A) AS PER PARA 7.2 OF HIS ORDER BASED ON SUCH CONFIRMATION LETTERS RECEIVED F ROM THE BANK WITHOUT CONFRONTING THE SAME TO THE AO. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR OF REVENUE AND FOR THE SAKE OF READY REFERENCE, WE REPRODUCE PARAS 7 TO 7.2 FRO M THE IMPUGNED ORDER OF CIT(A). 7. THE GROUNDS TAKEN ON THE DISCREPANCY IN THE BANK LOAN BALANCES AND BANK INTEREST ARE TAKEN TOGETHER FOR ADJUDICATI ON. THE ASSESSING OFFICER DURING THE SCRUTINY PROCEEDINGS HAS WRITTEN TO ANDHRA BANK MANAGER FOR CONFIRMATION OF BANK LOANS AND UPON THE RECEIPT OF THE REPLY THAT THE BALANCES ARE ONLY RS.2,95,55,466/- D UE TO THE BANK FROM THE APPELLANT AS AGAINST THE DUES SHOWN AT RS.5,90, 99,428/- IN THE BOOKS OF APPELLANT. THEREFORE, THE BALANCE OF RS.2, 95,43,962/- WAS ADDED AS UNEXPLAINED CREDIT. FURTHER, AN ADDITION WAS MADE ON ACCOUNT OF EXCESS INTEREST DEBITED TO P&L ACCOUNT. DURING THE APPELLATE PROCEEDINGS THE APPELLANT FURNISHED THE C OPIES OF THE CONFIRMATION LETTERS FROM ANDHRA BANK, JAYANAGARA B RANCH ALONG WITH THE LEDGER COPIES FOR HAVING RECEIVED VARIOUS LOANS AND PACKING CREDIT AND TERM LOAN AND THE BALANCES AS ON 31/03/2 012, SUBMITTING THAT AS PER THE APPELLANT'S BOOKS A SUM OF RS.5,90, 99,428/- WAS DUE TO THE BANK AND THE SAME IS DULY EXPLAINED. AS PER THE APPELLANT'S BOOKS THE LOANS DUE TO ANDHRA BANK AS ON 31.03.2012 WERE AS FOLLOWS : SECURED LOANS : 1. ANDRA BANK PC 2,97,20,828-00 2. ANDRA BANK PC 001 12,00,000-00 3. ANDRA BANK PC 002 25,00,000-00 4. ANDRA BANK PC 003 10,00,000-00 5. ANDRA BANK PC 004 5,00,000-00 6. ANDRA BANK PC 005 25,00,000-00 7. ANDRA BANK PC 006 10,00,000-00 8. ANDRA BANK PC 007 30,00,000-00 9. ANDRA BANK PC 008 30,00,000-00 10. ANDRA BANK PC 009 30,00,000-00 11. ANDRA BANK PC 010 30,00,000-00 12. ANDRA BANK PC 011 30,00,000-00 ITA NO. 1463/BANG/2017 PAGE 4 OF 5 13. ANDRA BANK PC 012 30,00,000-00 14. ANDRA BANK PC 013 30,20,828-00 15. ANDRA BANK TERM LOAN 2,93,78,600-00 -------------------- RS 5,90,99,420-00 7.1 AS REGARDS THE ADDITION OF RS.25,08,465/-MADE O N ACCOUNT OF EXCESS INTEREST DEBITED TO P&L ACCOUNT THE APPELLAN T SUBMITTED THAT IT HAD DEBITED A SUM OF RS.1,01,84,583/- TO THE PROFIT AND LOSS ACCOUNT AS INTEREST TO BANK. THIS INTEREST COMPRISED OF INT EREST ON TERM LOAN OF RS.26,59,429/-, INTEREST ON PC LOANS OF RS.72,63.04 7/- AND INTEREST ON OD ACCOUNT OF RS.2,62,107/-. THE COPIES OF THE CONF IRMATION LETTERS RECEIVED FROM THE BANK FURNISHED HAVE BEEN PERUSED. IN THE ORDER THE ASSESSING OFFICER HAS INADVERTENTLY MENTIONED THE I NTEREST PAID ON OD ACCOUNT AT RS.53,09,140/- AS AGAINST RS.2,62,107/- DEBITED TO PROFIT AND LOSS ACCOUNT. INTEREST PAID ON PC LOANS IS MENT IONED AT RS.31,48,169/- AS AGAINST RS.72,63,047/- DEBITED TO PROFIT AND LOSS ACCOUNT. A COPY OF LEDGER ACCOUNT OF INTEREST PAID ON OD ACCOUNT AND PC LOANS IS FURNISHED. THE APPELLANT SUBMITTED THAT THE ASSESSING OFFICER HAS OBSERVED THAT THE INTEREST ON TERM LOAN IS CONFIRMED BY BANK AT RS.26,59,429/-, INTEREST ON OD ACCOUNT IS C ONFIRMED AT RS.50,94,561/- AND THAT NO INTEREST ON PC ACCOUNT H AS BEEN REPORTED BY BANK. SO THE TOTAL INTEREST AMOUNT OF RS.77,53,9 90/- IS CONFIRMED BY THE BANK. THEREFORE THE DIFFERENCE OF RS.24,30,593/ - BEING THE DIFFERENCE BETWEEN THE INTEREST DEBITED TO PROFIT A ND LOSS ACCOUNT AND THE INTEREST SUPPOSED TO HAVE BEEN CONFIRMED BY THE BANK IS DISALLOWED AND ADDED TO INCOME. 7.2 I HAVE PERUSED THE BANK STATEMENTS OF VARIOUS L OANS AND ALSO CONFIRMATION LETTERS RECEIVED FROM BANK AND THE LED GER EXTRACTS. IN VIEW OF THE FACTS OF THE CASE THAT THE CONFIRMATION RECEIVED FROM THE BANK, IT IS INFERRED THAT THE BALANCES SHOWN IN THE BOOKS OF ACCOUNT ARE IN ACCORDANCE WITH THE BANK RECORDS, THEREFORE, THE GROUNDS TAKEN ON THE DISCREPANCY IN THE BANK LOAN BALANCES AND BA NK INTEREST ARE HEREBY ALLOWED. 5. FROM THE ABOVE PARAS REPRODUCED FROM THE ORDER O F CIT(A), IT IS SEEN THAT THE AO MADE A REQUEST TO ANDHRA BANK MANAGER FOR CONFIR MATION OF BANK LOAN AND AS PER THE REPLY RECEIVED FROM THE BANK, THERE WAS OUTSTANDING OF ONLY RS. 2,95,55,466/- RECEIVABLE BY THE BANK FROM THE ASSES SEE AS AGAINST THE DUES SHOWN BY THE ASSESSEE PAYABLE TO THE BANK OF RS. 5, 90,99,428/- AS PER THE BOOKS OF THE ASSESSEE AND ON THIS BASIS, REGARDING THE BALANCE AMOUNT OF RS. 2,95,43,962/-, ADDITION WAS MADE BY THE AO AS UNEXP LAINED CREDIT AND CONSEQUENTIAL INTEREST ON SUCH EXCESS UNEXPLAINED C REDIT. THE LD. CIT(A) HAS DECIDED THE ISSUE ON THE BASIS OF SUBSEQUENT CONFIR MATION LETTERS RECEIVED FROM THE BANK AS PER WHICH THE OUTSTANDING AMOUNT AS PER BANK TALLIED WITH THE ITA NO. 1463/BANG/2017 PAGE 5 OF 5 OUTSTANDING AMOUNT AS PER ASSESSEES BOOKS BEING PA YABLE TO THE BANK. BUT CIT(A) HAS NOT OBTAINED REMAND REPORT FROM THE AO I N RESPECT OF THESE ADDITIONAL EVIDENCES FURNISHED BEFORE HIM FOR THE F IRST TIME. HENCE, WE FEEL IT PROPER TO SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER BACK TO HIS FILE FOR FRESH DECISION AFTER OBTAINING REMAND REPORT FROM T HE AO. WE ORDER ACCORDINGLY. IN VIEW OF THIS DECISION, NO ADJUDICA TION IS CALLED FOR AT THE PRESENT STAGE REGARDING THE OTHER GROUNDS ON MERIT RAISED B Y THE REVENUE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 16 TH NOVEMBER, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.