Bandreddi Venkateswara Rao, V. THE ITO., WARD-1, Machilipatnam

ITA 151/VIZ/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2029 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 18-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: I SARISH KUMAR
• Keywords: Unexplained investment
• Section: 142(1); 69

Judgement Text

ITA NO.151/VIZAG/2013 BANDREDDI VENKATESWARA RAO, NAGAYALANDA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.151/VIZAG/2013 ( / ASSESSMENT YEAR: 2009-10) BANDREDDI VENKATESWARA RAO NAGAYALANKA VS. ITO , WARD - 1 , MACHILIPATNAM [PAN: AGGPB 2647E ] ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI I. SARISH KUMAR, DR / DATE OF HEARING : 01.03.2016 / DATE OF PRONOUNCEMENT : / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A), VIJAYAWADA DATED 21.12.2010 AND IT PERTAINS TO THE ASSESSMENT YEAR 2009-10. ITA NO.151/VIZAG/2013 BANDREDDI VENKATESWARA RAO, NAGAYALANDA 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL, DERIVING INCOME FROM RUNNING A RICE MILL IN THE NAM E AND STYLE OF SRI VENKATESWARA TRADERS, FILED HIS RETURN OF INCOME FO R THE ASSESSMENT YEAR 2009-10 ON 29.9.2009 DECLARING TOTAL INCOME OF ` 1,25,870/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX A CT, 1961 (HEREINAFTER CALLED AS 'THE ACT'). SUBSEQUENTLY, T HE CASE HAS BEEN SELECTED FOR SCRUTINY AND ACCORDINGLY, NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO NOTICES, THE AUTHOR IZED REPRESENTATIVE OF THE ASSESSEE APPEARED AND FILED BOOKS OF ACCOUNTS A ND OTHER INFORMATION. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLA IMED TRADE CREDITORS OF ` 78,12,670/-. THEREFORE, TO EXAMINE THE CORRECTNESS OF THE CLAIM, ISSUED A LETTER ASKING TO FURNISH THE CONFIRMATION LETTER FROM THE TRADE CREDITORS. IN RESPONSE TO SHOW CAUSE NOTICE, THE A SSESSEE FILED CONFIRMATION LETTER FROM ALL THE CREDITORS. THE ASS ESSING OFFICER, AFTER RECEIPT OF CONFIRMATION LETTER FROM THE ASSESSEE, D EPUTED INSPECTOR OF INCOME TAX OF HIS OFFICE TO CAUSE ENQUIRIES WITH TH E CREDITORS, TO KNOW THE CORRECTNESS OF THE CONFIRMATION LETTERS FILED B Y THEM. THE INSPECTOR OF INCOME TAX CAUSED ENQUIRIES AND SUBMITTED HIS RE PORT AND STATED THAT OUT OF THE TOTAL CREDITORS, CREDITORS AMOUNTING TO ` 9,34,108/- HAVE STATED THAT THEY HAVE RECEIVED THE AMOUNT IMMEDIATE LY AFTER SALE OF ITA NO.151/VIZAG/2013 BANDREDDI VENKATESWARA RAO, NAGAYALANDA 3 PADDY. THEREFORE, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE CREDITORS TO THE EXTENT OF ` 9,34,108/- WAS NOT GENUINE AND HENCE, MADE ADDITIONS U/S 69 OF THE ACT. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT HE HAD PURCHASED PADDY AT THE END OF THE FINANCIAL YEA R AND SUBSEQUENTLY PAID THE AMOUNT TO THE FARMERS. THE ASSESSEE FURTHE R SUBMITTED THAT HIS FAMILY AND HIS FOREFATHERS ARE RICE MILLERS FOR PAS T SEVERAL YEARS, BECAUSE OF HIS GOODWILL THE FARMERS SUPPLIED PADDY ON CREDI T AND TAKE THE MONEY SUBSEQUENTLY. HE FURTHER SUBMITTED THAT HE HAD FIL ED THE CONFIRMATION LETTER FROM THE FARMERS TO PROVE THE IDENTITY AND A LSO GENUINENESS OF THE TRANSACTIONS. THE ASSESSING OFFICER WITHOUT EXAMINI NG THE DETAILS, SIMPLY MADE ADDITIONS BY STATING THAT THE FARMERS HAVE STA TED THAT THEY HAVE RECEIVED THE AMOUNT IMMEDIATELY AFTER SALE. THE CIT (A) AFTER CONSIDERING THE DETAILS FILED BY THE ASSESSEE, CONF IRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER. THE CIT(A) HELD THA T IT IS A FACT THAT THE INSPECTOR OF INCOME TAX CAUSED ENQUIRIES AND DURING THE COURSE OF ENQUIRY, IT WAS FOUND THAT THE FARMERS HAVE STATED THAT THEY HAVE RECEIVED THE AMOUNT IMMEDIATELY AFTER SALE. IN THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE HAS NOT PUT ANY EFFECTIVE DEFENCE, EXCEPT ITA NO.151/VIZAG/2013 BANDREDDI VENKATESWARA RAO, NAGAYALANDA 4 SAYING THAT THE SAME WAS NOT PUT TO THE APPELLANT F OR REBUTTAL. SINCE, THE TRANSACTION BEING IN CASH AND DUE TO CLOSE NEXU S BETWEEN THE FARMERS AND THE MILLERS, IN MY CONSIDERATION THE A. O. TOOK A RIGHT DECISION IN SUBJECTING SUCH CREDIT BALANCES TO TAX AND ACCORDINGLY, THE ACTION OF THE ASSESSING OFFICER IS UPHELD. AGGRIEV ED BY THE CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT THE CIT(A) WAS ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OF FICER TOWARDS ALLEGED UNEXPLAINED INVESTMENT WITH REGARD TO TRADE CREDITO RS. THE AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE HAS PRODUCED CONFIRMATION LETTER BEFORE THE ASSESSING OFFICER. T HE ASSESSING OFFICER IGNORED THE EVIDENCES FILED BY THE ASSESSEE AND SIM PLY MADE ADDITIONS BASED ON THE ITI REPORT, WITHOUT AN OPPORTUNITY TO THE ASSESSEE TO REBUTTAL THE ITI REPORT. THE AUTHORISED REPRESENTAT IVE FURTHER SUBMITTED THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER IS QUITE HIGH, THEREFORE, IT MAY BE DIRECTED TO RESTRICT THE ADDITIONS TO ` 4 TO 5 LAKHS. 5. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORT ED THE ORDER OF THE CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ITA NO.151/VIZAG/2013 BANDREDDI VENKATESWARA RAO, NAGAYALANDA 5 FACTUAL MATRIX OF THE CASE IS THAT THE ASSESSEE HAS PURCHASED PADDY ON CREDIT AND SUBSEQUENTLY MADE THE PAYMENT. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FURNISHED CONFIRMATION LETTERS FROM THE CREDITORS. THE ASSESSING OFFICER, TO VERIF Y THE CORRECTNESS OF THE CONFIRMATION LETTERS, ASKED THE ITI ATTACHED TO HIS OFFICE TO CAUSE ENQUIRIES WITH THE CREDITORS. THE ITI AFTER CAUSING ENQUIRIES WITH THE CREDITORS SUBMITTED HIS REPORT AND STATED THAT THE CREDITORS HAVE STATED THAT THEY HAVE RECEIVED THE AMOUNT IMMEDIATELY AFTE R THE SALE. THEREFORE, THE ASSESSING OFFICER COME TO THE CONCLU SION THAT THE CREDITORS CLAIMED BY THE ASSESSEE IS BOGUS, THEREFO RE, ADDITION WAS MADE U/S 69 OF THE ACT. IT WAS THE CONTENTION OF T HE ASSESSEE THAT HE HAD PURCHASED THE PADDY AT THE END OF THE FINANCIAL YEAR AND MADE THE PAYMENT SUBSEQUENTLY. IT IS A USUAL PRACTICE IN THI S LINE OF BUSINESS THAT FARMERS SUPPLY PADDY ON CREDIT FOR ABOUT 10 TO 15 D AYS BECAUSE OF HIS REPUTATION IN THE MARKET AND LATER COLLECT MONEY. 7. THE ASSESSING OFFICER MADE ADDITIONS SOLELY ON T HE BASIS OF THE ITI REPORT. IT WAS THE CONTENTION OF THE ASSESSEE THAT THE ASSESSING OFFICER WAS ERRED IN MAKING ADDITION WITHOUT CONFRONTING TH E ITI REPORT FOR REBUTTAL. WE FIND FORCE IN THE ARGUMENTS OF THE ASSE SSEE FOR THE REASON THAT THE A.O., BEFORE RELYING UPON THE REPORT OF IN SPECTOR OF INCOME TAX ITA NO.151/VIZAG/2013 BANDREDDI VENKATESWARA RAO, NAGAYALANDA 6 SHOULD HAVE BEEN CONFRONTED THE SAME TO THE ASSESSE E FOR HIS EXAMINATION. IN THE PRESENT CASE ON HAND, THE ASSE SSING OFFICER WITHOUT CONFRONTING THE REPORT OF THE ITI, SIMPLY MADE THE ADDITIONS WHICH IS NOT CORRECT. THEREFORE, TO MEET THE ENDS OF JUSTICE, W E DEEM IT APPROPRIATE TO REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSIN G OFFICER AND DIRECT THE ASSESSING OFFICER TO ALLOW ASSESSEE TO REBUTT THE I TI REPORT. ACCORDINGLY, WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER, TO PASS FRESH ASSESSMENT ORDER IN ACCORDANCE WITH LAW. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18 TH MAR16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 18.03.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT BANDREDDI VENKATESWARA RAO, PROP .SRI VENKATESWARA TRADERS, 11-141, DEENADAYALAPURAM ROAD, NAGAYALANKA, KRISHNA DISTRIC T. 2. / THE RESPONDENT THE ITO WARD-1, MACHILIPATNAM 3. + / THE CIT, VIJAYAWADA 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY //