M/s. Healthline Oils P. Ltd, Hyderabad V. The ITO, Ward-2(2), Hyderabad

ITA 1489/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59409 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 29-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B V PRASAD REDDY
• Keywords: Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER. ITA NO.1489/HYD/2010 : ASSESSMENT Y EAR 2006-07 M/S. HEALTHLINE OILS PVT. LTD., HYDERABAD (PAN - AABCH 4361 H ) V/S INCOME TAX OFFICER, WARD-2(2), HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.S.R.V.V.SURYA RAO RESPONDENT BY : DR. B.V.PRASAD REDDY DATE OF HEARING 2 7 3.2012 DATE OF PRONOUNCEMENT 30.3.2012 O R D E R PER D.KARUNAKARA RAO, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE CIT(A)-III HYDERABAD DATED 27.8.2010 FOR THE AS SESSMENT YEAR 2006-07. 2. THERE ARE TEN GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL. ALL OF THEM ARE AGAINST THE CONFIRMATION OF ADDITIO N OF RS.18 LAKHS INVOLVING SHRI K.PRATAP REDDY, CREDITOR AND RS.1 LA KH INVOLVING SHRI R.NARASIMHA RAJU, CREDITOR. 3. AT THE OUT SET, THE LEARNED COUNSEL INVITED OUR ATTENTION TO THE DISCUSSION GIVEN ON PAGES 14-15 OF THE IMPUGNED ORD ER OF THE CIT(A) AND MENTIONED THAT THE CIT(A) HAS CONFIRMED THE ADDITI ON OF RS.18 LAKHS INVOLVING SHRI K.PRATAP REDDY, MERELY FOR THE REASO N THAT THE ASSESSEE FAILED TO FILE PERSONAL BALANCE SHEET AND FULL CASH FLOW STATEMENT OF SHRI PRATAP REDDY. RELEVANT DISCUSSION IS REPRODUCED AS UNDER- ITA NO.1489/HYD/2010 M/S. HEALTHLINE OILS PVT. LTD., HYD 2 (5) SRI K.PRATAP REDDY; .HE FURTHER STATED THAT IN ABSENCE OF PERSONAL BALANCE SHEET AND FULL CASH FLOW STATEM ENT FILED BY THE ABOVE PERSON, IT IS DIFFICULT TO VERIFY THE SOURCES FOR ADVANCING SUCH LOAN. IN THIS CONTEXT, I MAY MENTION HERE, WH EN THE MATTER WAS FORWARDED TO THE AO FOR CARRYING OUT VERIFICATI ON, HE SHOULD HAVE MADE NECESSARY ENQUIRIES FOR ASCERTAINING THE SOURCES IN THE HANDS OF THE ABOVE CREDITOR, FOR GIVING SUCH AMOUNT TO THE APPELLANT COMPANY. WHEN SRI REDDY VIDE HIS LETTER D ATED 10.11.2009 FILED DURING THE REMAND PROCEEDINGS, HAS SUBMITTED THAT HE IS ASSESSED TO TAX UNDER PAN AEXPK 7507 F A ND IS ALSO FILING HIS IT RETURNS REGULARLY, THE AO SHOULD HAVE ASKED THE SOURCE OF INCOME DURING THE PREVIOUS YEAR, RELEVANT TO ASST. YEAR 2006-07, FOR GIVING SUCH ADVANCES TO THE APPELLANT COMPANY. ON FORWARDING THE ABOVE REM AND REPORT OF THE AO TO THE APPELLANT, THE LATTER HAS MERELY SUBMITTED THAT ON BASIS OF SU CH CONFIRMATION LETTER AND OTHER DOCUM ENTS FILED BY SRI REDDY, SUCH AMOUNT SHOWN IN HIS NAME SHOULD BE ACCEPTED. HOWEVER, I AM UNAB LE TO AGREE WITH SUCH CONTENTION OF APPELLANT. IN FACT, IT IS FOR THE APPELLANT TO FURNISH FULL FACTUAL INFORM ATION WITH REFERENCE TO SUCH AMOUNTS CLAIMED TO HAVE BEEN RECEIVED FROM SRI REDDY. AFTER SUCH REPORT OF THE AO, THEY HAVE NOT CLARIFIED WITH REFERENCE TO T HE DETAILS OF RECEIPT OF THE BALANCE AMOUNT OF RS.18,00,000/- FRO M SRI REDDY, POINTED OUT BY THE AOSINCE THE APPELLANT HAS FA ILED TO EXPLAIN THE SOURCE OF THE BALANCE AMOUNT OF RS.18,0 0,000/- CLAIMED TO HAVE BEEN RECEIVED FORM SRI REDDY WITH S UPPORTING EVIDENCES, DEPOSITS TO THAT EXTENT CANNOT BE ACCEPT ED AS GENUINE AND HENCE THE SAID AMOUNT SHALL BE ADDED TO THE INC OME OF THE APPELLANT TREATING THE SAME AS UNEXPLAINED CREDIT U /S. 68 OF THE ACT. I MAY MENTION HERE, SINCE THE APPELLANT HAS S HOWN UNSECURED LOAN FROM THE ABOVE PERSON AT RS.83,00,000/- AND SHARE APPLICATION MONEY FROM HIM AT RS.10,00,000/- DURING THE PREVIOUS YEAR, OUT OF SUCH AMOUNT OF RS.18,00,000/- A SUM OF RS.8,00,000 /- (83,00,000-75,00,000) SHALL BE ADDED TOWARDS UNEXPLAINED CREDIT AND THE BALANCE AMOUNT OF RS.10, 00,000/- TOWARDS UNEXPLAINED SHARE APPLICATION MONEY U/S. 68 OF THE ACT. THE AO IS DIRECTED ACCORDINGLY. THIS IS A CASE WHERE ASSESSING OFFICER ACCEPTED THE EVIDENCE FURNISHED BY THE ASSESSEE, BUT REJECTED BY THE CIT(A) ON THE RE ASONING THAT THE DOCUMENTS RELATING TO PERSONAL BALANCE SHEET AND F ULL CASH FLOW STATEMENT OF SHRI PRATAP REDDY WERE NOT AVAILABLE. IT HAS BEEN ARGUED BY THE LEARNED COUNSEL THAT THIS IS A CASE WHERE TH E ASSESSEE HAS DISCHARGED ITS ONUS IN FURNISHING ALL THE INFORMAT ION INCLUDING THE PAN, IDENTITY, CREDITWORTHINESS OF THE CREDITOR AND THE RELEVANT BANK DETAILS, ALONGWITH THE CONFIRMATION LETTER IN SUPPORT OF THE CLAIM OF THE ASSESSEE. WHEN SUCH BASIC INFORMATION IS FURNISHED, THE FINDI NG OF THE CIT(A) THAT ONUS WAS NOT DISCHARGED IS NOT PROPER. ITA NO.1489/HYD/2010 M/S. HEALTHLINE OILS PVT. LTD., HYD 3 4. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REP RESENTATIVE FOR THE REVENUE, RELIED ON THE ORDERS OF THE REVENU E. 5. WE HEARD BOTH THE PARTIES ON THIS ISSUE OF SUST ENANCE OF ADDITION OF RS.18 LAKHS AND WE FIND THAT THE ASSESS EE FURNISHED CONFIRMATION LETTER CONTAINING THE RELEVANT INFORMA TION TO REVEAL THE IDENTITY AND CREDITWORTHINESS AND THE GENUINENESS O F THE TRANSACTION. THESE TRANSACTIONS ARE EFFECTED THROUGH BANKING CHA NNELS. THERE IS NOT EVEN AN IOTA OF EVIDENCE TO SUGGEST THAT TRANSACTIO NS ARE NOT GENUINE. WHEN SUCH VOLUMINOUS INFORMATION IS MADE AVAILABLE TO THE ASSESSING OFFICER, IN OUR OPINION, IT IS NOT PROPER TO HOLD THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS. THEREFORE, WE ARE OF THE OP INION THAT THE ORDER OF THE CIT(A) ON THIS ISSUE IS REQUIRED TO BE REVERSE D. WE DO SO ACCORDINGLY, AND RELEVANT GROUNDS ON THIS ISSUE ARE ALLOWED. 6. OTHER ISSUE RELATES TO SUSTENANCE OF ADDITION O F RS. 1 LAKH INVOLVING SHRI R.NARASIMHA RAJU. IN THIS CASE ALSO , THE ASSESSEE FILED A CONFIRMATION LETTER IN SUPPORT OF THE PAYMENT OF RS .1 LAKH BY SHRI NARASIMHA RAJU TO THE ASSESSEE BY WAY OF DEMAND DRA FT DATED 10.4.2005. THE CIT(A) CONFIRMED THE ADDITION FOR WA NT OF FULL PARTICULARS OF THE DRAFT. BUT THE FACTS ARE THAT SHRI RAJU CON FIRMED THE SAID PAYMENT, AND HE IS AN AGRICULTURIST HAVING 1 ACRE AND 53 GHU NTAS OF LAND AT SAKINETIPALLI, WEST GODAVARI DISTRICT FOR THE PAST FORTY YEARS. THE SAID AMOUNT WAS GIVEN TO THE ASSESSEE TOWARDS SHARE APPL ICATION MONEY, FROM THE ACCUMULATED SAVINGS GENERATED OUT OF THE AGRICU LTURAL INCOME. THE EVIDENCE IN SUPPORT OF SUCH INCOME LIKE PATTADAR PA SS BOOK, ETC. WERE MADE AVAILABLE TO THE ASSESSING OFFICER. IN THIS R EGARD, LEARNED COUNSEL ARGUED THAT ALL THE CONDITIONS MENTIONED IN S.68 OF THE ACT ARE SUCCESSFULLY DISCHARGED BEFORE THE ASSESSING OFFICE R. IN THE CIRCUMSTANCES, SUSTENANCE OF THIS ADDITION BY THE C IT(A) IS UNCALLED FOR. ITA NO.1489/HYD/2010 M/S. HEALTHLINE OILS PVT. LTD., HYD 4 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR TH E REVENUE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 8. WE HEARD BOTH THE PARTIES AND FIND THAT THE CR EDITOR IS CLEARLY QIDENTIFIABLE AND HE HAS AGRICULTURAL INCOME AS SOU RCE OF INCOME FOR THE LAST FOUR DECADES. IT IS NOT THE CASE OF THE R EVENUE THAT SHRI NARASIMHA RAJU IS A PROFESSIONAL NAME LENDER FOR SU CH CREDITS. IT IS ALSO NOT MADE OUT BY THE REVENUE THAT THE SAID SHRI RAJU HAS LENT MONEY OUT OF THE AGRICULTURAL INCOME IN OTHER YEARS OR TO OTHER ASSESSEES. THEREFORE, GENERATING A SAVINGS OF A LAK H OF RUPEES OVER A PERIOD OF FORTY YEARS OUT OF SOURCES OF AGRICULTU RAL INCOME IS NOT AN IMPOSSIBILITY. THEREFORE, WE ARE OF THE OPINION THAT SUSTENANCE OF THIS ADDITION BY THE CIT(A) ALSO CALLS FOR REVERSA L. WE DO SO ACCORDINGLY AND RELEVANT GROUNDS OF THE ASSESSEE ON THIS ISSUE ARE ALLOWED. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 30.3.2012 SD/- SD/- (SAKTIJIT DEY) (D.KARUNAKARA RAO) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/- 30TH MARCH, 2012 COPY FORWARDED TO: 1. M/S. HEALTHLINE OILS PVT. LTD., C/O. M/S. A.RA MACHANDRA RAO & CO., CHARTERED ACCOUNTANTS, 3-6-369/A/11, 1 ST FLOOR, STREET NO.1, HIMAYATNAGAR, HYDERABAD 2. INCOME - TAX OFFICER, WARD 2 ( 2 ), HYDERABAD ITA NO.1489/HYD/2010 M/S. HEALTHLINE OILS PVT. LTD., HYD 5 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) - III HYDERABAD COMMISSIONER OF INCOME-TAX II, HYDERABAD 5. THE DEPARTMENTAL REPRESENTATIVE, ITAT HYDERABAD B.V.S.