DCIT, Central Circle-5, Hyderabad V. M/s. Sri Krishna Jewellery Mart, Hyderabad

ITA 1467/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59344 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 17-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: M V ANIL KUMAR
• Keywords: Search and seizure; Additional evidence; Bad and doubtful debts; Tax effect
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 1467/HYD/2011 (ASSESSMENT YEAR : 2006-07) I.T.A. NO. 1468/HYD/2011 (ASSESSMENT YEAR : 2009-10) DY. COMMISSIONER OF INCOME-TAX, CENT. CIRCLE-5, HYDERABAD VS. M/S. SRI KRISHNA JEWELLERY MART, HYDERABAD PAN: AAJFS6312C APPELLANT RESPONDENT APPELLANT BY: SHRI V. SRINIVAS RESPONDENT BY: SHRI M.V. ANIL KUMAR DATE OF HEARING: 22 .03.2012 DATE OF PRONOUNCEMENT: 22.03.2012 O R D E R PER CHANDRA POOJARI, AM: THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAI NST THE DIFFERENT ORDERS OF THE CIT(A)-VII, HYDERABAD DATED 31.5.2011 FOR A.YS. 2006-07 AND 2009-10. I.T.A. NO. 1467/HYD/2011 (A.Y. 2006-07): 2. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINI ON THAT THE TAX EFFECT IN THIS APPEAL IS LESS THAN RS. 3 LAKHS. IN VIEW OF THE INSTRUCTION NO. 3 OF 2011 (F. NO. 279/MISC. 142/200 7-ITJ), DATED 9TH FEBRUARY, 2011 ISSUED BY THE CBDT, THIS APPEAL OF THE REVENUE INVOLVING TAX EFFECT OF LESS THAN RS. 3 LAK HS IS NOT MAINTAINABLE BEFORE THIS TRIBUNAL AND ACCORDINGLY T HE SAME IS DISMISSED IN LIMINE . I.T.A. NOS. 1467 & 1468/HYD/2011 M/S. SRI KRISHNA JEWELLERY MART ========================== 2 I.T.A. NO. 1467/HYD/2011 (A.Y. 2006-07): 3. GROUND NO. 1 BY THE REVENUE IS GENERAL IN NATURE AN D REQUIRES NO ADJUDICATION. ACCORDINGLY THIS GROUND IS DISMISSED. 4. GROUND NOS. 2 AND 3 RAISED BY THE REVENUE ARE AS FO LLOWS: 2. THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ADDI TION OF RS. 8,354/- MADE ON ACCOUNT OF TDS PROVISIONS RE AD WITH SEC. 40(A)(IA) OF THE I.T. ACT AS THE ASSESSEE 'S BOOKS CLEARLY DEPICT APPLICABILITY OF TDS DEDUCTION / PAYMENT AS ASSESSEE REFLECTED THE SAME UNDER CURREN T LIABILITIES. 3. THE ASSESSEE'S CONTENTION THAT THE DISALLOWANCE IS COVERED UNDER NON-DEDUCTION UNDER 15G OR 15H FORMS IS NEITHER RELATABLE WITH ASSESSEE'S BOOKS OF ACCOU NT NOR RECONCILABLE. 5. FACTS OF THE ISSUE IN BRIEF ARE THAT THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER U/S. 143(3) R.W.S. 153A OF THE I.T. ACT, 1961 BY DETERMINING THE TOTAL INCOME AT RS. 6, 91,79,562 AGAINST THE INCOME RETURNED AT RS. 4,81,74,308 BY M AKING CERTAIN ADDITIONS. THERE WAS A SEARCH AND SEIZURE OPERATIO N U/S. 131 OF THE ACT IN THE ASSESSEE'S CASE ON 5.6.2008. CONSEQ UENT TO THE SEARCH, THE ASSESSEE'S CASE IS NOTIFIED WITH CENTRA L CIRCLE, HYDERABAD AND THE ASSESSING OFFICER HAS COMPLETED T HE ASSESSMENT ACCORDINGLY. THE ASSESSING OFFICER DISA LLOWED AN AMOUNT OF RS. 8,354 UNDER SEC. 40(A)(IA) OF THE ACT . THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). 6. BEFORE THE CIT(A) THE AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER IS NOT JUSTIFIED TO MAKE AN ADDIT ION OF RS. 8,354 U/S. 40(A)(IA) OF THE ACT. THE ASSESSEE HAD RECEIV ED DECLARATIONS IN FORMS U/S. 15G/15H FROM THE DEPOSIT HOLDERS, THEREF ORE, THE ASSESSING OFFICER SHOULD NOT HAVE PRESUMED THAT THE ASSESSEE HAD NOT MADE TDS ON INTEREST PAYMENTS AND THEREBY THE A SSESSING OFFICER SHOULD NOT HAVE DISALLOWED THE ABOVE INTERE ST EXPENDITURE. IT IS ALSO SUBMITTED BY THE AR OF THE ASSESSEE THAT THE ASSESSEE I.T.A. NOS. 1467 & 1468/HYD/2011 M/S. SRI KRISHNA JEWELLERY MART ========================== 3 HAD MADE TDS ON INTEREST PAYMENTS WHEREVER IT IS AP PLICABLE AND IN SOME CASES THE ASSESSEE HAD RECEIVED DECLARATION S IN FORMS 15G/15H OF THE INCOME-TAX RULES, 1962. THEREFORE, THE ASSESSING OFFICER SHOULD NOT HAVE TREATED THE ASSESSEE AT DEF AULT. 7. THE CIT(A) AFTER HEARING THE AR OF THE ASSESSEE AND CONSIDERING THE DETAILS FURNISHED BY HIM, HE WAS OF THE VIEW THAT THE ADDITION MADE BY THE ASSESSING OFFICER CANNOT B E JUSTIFIED IN VIEW OF THE ABOVE EXPLANATION GIVEN BY THE AR. ACC ORDINGLY, THE CIT(A) ALLOWED THIS GROUND OF THE ASSESSEE. AGAINS T THIS THE REVENUE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. WE FIND NO INFIRMITY IN THE A CTION OF THE CIT(A) ON THIS ISSUE. ACCORDINGLY, WE UPHOLD THE SAME. 9. GROUND NOS. 4 AND 5 RAISED BY THE REVENUE ARE AS FO LLOWS: 4. THE LEARNED CIT(A) OUGHT NOT HAVE ADMITTED ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A(3) WHI LE GIVING RELIEF. 5. THE ASSESSEE'S MERE CLAIM OF SUCH HUGE AMOUNT AS ADVANCE FOR PURCHASE OF BULLION WITHOUT ANY GUARANTEE FOR SUPPLY OF BULLION WITHOUT ANY GUARANT EE FOR SUPPLY OF BULLION APPEARS INHERENTLY ILLOGICAL AND UNSOUND PROPOSITION TO CLAIM THE SAME AS WRITE OFF EXPENSES UNDER BAD DEBTS. 10. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE HAD BUSINESS DEALINGS WITH BUSINESS ENTITY CALLED 'KARAT24'. DU RING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CON SIDERATION, THE ASSESSEE HAD PAID RS. L,89,96,900 FOR THE PURCH ASE OF GOLD. HOWEVER, KARAT24 DID NOT SUPPLY THE GOLD. THE ASSES SEE HAD INSISTED FOR RETURN OF THE ABOVE SAID MONEY. IT APP EARS THE ASSESSEE HAD RECEIVED CHEQUE FROM KARAT24 FOR RS. L CRORE TOWARDS PART PAYMENT AND SAID CHEQUE WAS BOUNCED SINCE KARA T24 DID NOT HAVE SUFFICIENT BALANCE. THE ASSESSEE HAD FILED COM PLAINT IN THE I.T.A. NOS. 1467 & 1468/HYD/2011 M/S. SRI KRISHNA JEWELLERY MART ========================== 4 COURT OF HON'BLE XIV ADDITIONAL CHIEF METROPOLITAN MAGISTRATE AT HYDERABAD AND THE WHEREABOUTS OF KARAT24 IS NOT KNO WN AND EVEN THE COURT IS NOT IN A POSITION TO SERVE THE LEGAL N OTICE. THEREFORE, IT IS SUBMITTED BY THE AUTHORIZED REPRESENTATIVES THAT SINCE THE ASSESSEE HAD TRIED ITS BEST TO RECOVER THE MONEY AN D THE WHEREABOUTS OF THE DEBTORS KARAT24 IS NOT KNOWN, TH EREFORE, THE ASSESSEE HAD DECIDED TO TREAT THE ADVANCES GIVEN TO KARAT24 AS BAD DEBTS AND ALSO WRITTEN OFF IN THE BOOKS OF ACCO UNTS. THE SAME IS CLAIMED IN THE PROFIT & LOSS ACCOUNT. THE ASSESS ING OFFICER, HOWEVER, HAS NOT ACCEPTED THE ASSESSEE'S CLAIM AND HE HAS DISALLOWED THE ENTIRE CLAIM OF BAD DEBTS. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. IN THIS CASE THE CIT(A) DELET ED THE ADDITION BY HOLDING AS UNDER: 'HAVING PERUSED THE FACTS AND CIRCUMSTANCES OF THE CASE AND AFTER HEARING THE AUTHORISED REPRESENTATIV ES AND AFTER VERIFYING THE DECISION OF HON'BLE SUPREME COURT, I FIND THAT ASSESSEE HAD GENUINE GROUND WITH REGARD TO BAD DEBTS CLAIMED. THE ASSESSEE HAD ADVANCED MONEY FOR PURCHASE OF GOLD SINCE THE ASSESSEE DEALS IN BULLIONS ETC. HOWEVER, THE ASSES SEE NOT RECEIVED BULLIONS AGAINST THE ADVANCES MADE TO KARAT24. IT APPEARS THAT THE WHEREABOUTS OF THE SA ID ACCUSED ARE NOT KNOWN AND EVEN THE COURT OF LAW WHERE THE ASSESSEE HAD FILED A CASE AGAINST KARAT24 COULD NOT SERVE THE LEGAL NOTICE. THEREFORE, THE ASSESSEE HAD REASONABLE GROUND TO BELIEVE THAT ADVANCES GIVEN HAVE BECOME BADE DEBT AND THE SAME IS WRITTEN OFF IN THE BOOKS OF ACCOUNT AND CLAIMED IN THE PROFIT AND LOSS A/C. FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. HENCE, IN VIEW OF THE DECISION OF HONBLE SUPREME COURT AS CI TED ABOVE, THE ASSESSEE'S CLAIM TOWARDS BAD DEBTS WRITT EN OFF IS ALLOWED. HENCE, THIS GROUND OF APPEAL IS ALLOWED.' 12. WHILE DELETING THE SAME, THE CIT(A) DID NOT GIVEN OPPORTUNITY TO THE ASSESSING OFFICER TO CONSIDER TH E EVIDENCE I.T.A. NOS. 1467 & 1468/HYD/2011 M/S. SRI KRISHNA JEWELLERY MART ========================== 5 PRODUCED BY THE ASSESSEE BEFORE HIM. BEING SO, IN OUR OPINION, THE GROUND RAISED BY THE REVENUE IS HAVING MERIT. ACCORDINGLY, WE ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND REM IT BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRE SH CONSIDERATION. 13. IN THE RESULT, THE APPEAL IN I.T.A. NO. 1467/HYD/20 11 IS DISMISSED AND THE APPEAL IN I.T.A. NO. 1468/HYD/201 1 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH, 2012. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 22 ND MARCH, 2012 COPY FORWARDED TO: 1. THE DEPUTY COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - 5, 8 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD- 500 004. 2. M/S. SRI KRISHNA JEWELLERY MART, 15 - 6 - 1, SIDDIAMBER BAZAAR, HYDERABAD. 3. THE CIT(A) - VII, HYDERABAD. 4 . THE CIT (CENTRAL), HYDERABAD. 5 . THE DR A BENCH, ITAT, HYDERABAD. TPRAO