Tammana Suryanarayana, Machilipatnam V. THE ITO., WARD-1, Machilipatnam

ITA 153/VIZ/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2003 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 18-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Tax effect
• Section: 68

Judgement Text

ITA NO.101&153/VIZAG/2013 & CO 67/VIZAG/2013 TAMMANA SURYANARAYANA, MACHILIPATNAM 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.101/VIZAG/2013 ( / ASSESSMENT YEAR: 2009-10) ITO WARD - 1 MACHILIPATNAM VS. TAMMANA SURYANARAYANA MACHILIPATNAM [PAN: ADHP T8046M ] ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NO.153/VIZAG/2013 ( / ASSESSMENT YEAR: 2009-10) TAMMANA SURYANARAYANA MACHILIPATNAM VS. ITO WARD - 1 MACHILIPATNAM ( % / APPELLANT) ( &'% / RESPONDENT) C.O. NO.67/VIZAG/2013 (ARISING OUT OF I.T.A.NO.153/VIZAG/2013) ( / ASSESSMENT YEAR: 2009-10) TAMMANA SURYANARAYANA MACHILIPATNAM VS. ITO WARD - 1 MACHILIPATNAM ( % / APPELLANT) ( &'% / RESPONDENT) ITA NO.101&153/VIZAG/2013 & CO 67/VIZAG/2013 TAMMANA SURYANARAYANA, MACHILIPATNAM 2 / APPELLANT BY : SHRI M.N. MURTHY NAIK, DR / RESPONDENT BY : SHRI G.V.N. HARI, AR / DATE OF HEARING : 21.03.2016 / DATE OF PRONOUNCEMENT : 24.03.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THESE CROSS APPEALS FILED BY THE REVENUE AND THE AS SESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A), VIJAYAWAD A DATED 21.12.12 FOR THE ASSESSMENT YEAR 2009-10. THE ASSESSEE ALSO FIL ED A CROSS APPEAL AGAINST THE ORDER OF THE CIT(A). ITA 101/VIZAG/2013: 2. WHEN THIS APPEAL IS TAKEN UP FOR HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE TAX EFFECT INVOLVED IN THIS APPEAL IS BELOW RS.10 LAKHS. AS PER THE LATEST CIRCULAR NO.2 1/2015 DATED 10.12.2015 OF CBDT BEING RETROSPECTIVE IN NATURE, T HE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. THE LD. D.R. HAS NOT RAISED ANY OBJECTION. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. HENCE, THE SAME IS DISMISSED. 3. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ITA NO.101&153/VIZAG/2013 & CO 67/VIZAG/2013 TAMMANA SURYANARAYANA, MACHILIPATNAM 3 ITA NO.153/VIZAG/2013: 4. SO FAR AS CROSS APPEAL FILED BY THE ASSESSEE IS CONCERNED, THERE IS A DELAY OF 27 DAYS IN FILING THE APPEAL. THE LD. C OUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE DELAY IS NEITHER INTENTIONAL NOR DELIBERATE AND WAS ON ACCOUNT OF REASONS BEYOND HIS CONTROL. TO T HAT EFFECT HE FILED AN AFFIDAVIT AND SUBMITTED THAT DELAY MAY BE CONDONED. 5. ON THE OTHER HAND, THE LD. D.R. HAS NOT RAISED A NY OBJECTION. 6. WE HAVE GONE THROUGH THE AFFIDAVIT FILED BY THE A SSESSEE AND WE FIND THAT THE DELAY IS NEITHER INTENTIONAL NOR DELI BERATE AND THE DELAY WAS ON ACCOUNT OF REASONS BEYOND THE CONTROL OF THE ASS ESSEE. WE FIND IT IS A FIT CASE TO CONDONE THE DELAY AND ACCORDINGLY DEL AY IS CONDONED. 7. SO FAR AS MERITS OF THE CASE IS CONCERNED, IN TH E ASSESSMENT ORDER, THE A.O. HAS NOTED THAT THE ASSESSEES BALANCE SHEE T SHOWS SUNDRY CREDITORS OF RS.1,26,73,736/-, WHICH INCLUDES CASH CREDITS TO THE TUNE OF RS.6,04,366/- AND TRADE CREDITORS OF RS.1,30,56,249 /-. THE A.O. HAS ASKED THE ASSESSEE TO PRODUCE THE DETAILED NAMES AN D ADDRESSES OF THE SUNDRY CREDITORS AND ALSO CONFIRMATION LETTERS FROM THE CREDITORS FOR VERIFICATION. THE ASSESSEE FURNISHED THE CONFIRMAT ION LETTERS FROM THE CASH CREDITORS. THE ASSESSEE ALSO FURNISHED TRADE CREDITORS INCLUDING PADDY CREDITORS OF RS.1,27,47,873/- AND ASSESSEE FU RNISHED CONFIRMATION ITA NO.101&153/VIZAG/2013 & CO 67/VIZAG/2013 TAMMANA SURYANARAYANA, MACHILIPATNAM 4 LETTERS FROM SUCH CREDITORS. THE A.O. HAS OBSERVED THAT ON PERUSAL OF THE SAME, IT WAS NOTICED THAT FOR MANY CREDITORS, T HE PAYMENT WAS MADE BEYOND ONE YEAR PERIOD WHICH IS UNUSUAL AND ALSO TH E CREDITORS ARE MOSTLY ILLITERATE AND DO NOT KNOW HOW TO READ AND W RITE. THEREFORE, THE ITI OFFICE WAS ASKED TO CAUSE ENQUIRIES ABOUT THE G ENUINENESS OF THE TRANSACTION AND ALSO ABOUT THE CREDITWORTHINESS OF THE CREDITORS. ON ENQUIRY BY THE ITI, IT WAS FOUND THAT TRADE CREDITO RS NEAR ABOUT 18 DENIED THAT THEY HAVE SUPPLIED THE RICE TO THE ASSE SSEE AND STATED THAT THEY HAVE SOLD THE PADDY THROUGH THE LOCAL COMMISSI ON AGENT AND PAYMENT WAS ALSO RECEIVED THROUGH THE LOCAL COMMISS ION AGENTS ONLY. THE A.O. AFTER CONSIDERING THE ENQUIRY MADE BY THE INSPECTOR NOTED THAT SINCE THE 18 CREDITORS HAVE DENIED THE FACT THAT TH EY HAVE SUPPLIED THE PADDY DIRECTLY TO THE ASSESSEE AND ALSO DID NOT CON FIRM THAT THEY HAVE RECEIVED THE PAYMENT IN THE SUBSEQUENT YEAR, A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE AGAIN AND CALLED FOR THE EXP LANATION. THE ASSESSEE HAS SUBMITTED THAT THIS IS A VERY COMMON P RACTICE IN THIS LINE OF BUSINESS AND GENERALLY MANY FARMERS DIRECTLY SUP PLIED THE PADDY TO THE RICE MILLS AND SOMETIMES THEY ARE BEING BROUGHT BY THE COMMISSION AGENTS THEY WILL SELL THE PADDY IN THE NAME OF THE FARMER ONLY. SINCE THE COMMISSION AGENT MENTIONED THE NAME OF THE FARM ER, THE SAME AS NOTED IN THE BOOKS OF THE ASSESSEE. THE A.O. AFTER CONSIDERING THE ITA NO.101&153/VIZAG/2013 & CO 67/VIZAG/2013 TAMMANA SURYANARAYANA, MACHILIPATNAM 5 EXPLANATION OF THE ASSESSEE ALSO REPORT OF THE INCO ME TAX INSPECTOR THE ENTIRE AMOUNT OF RS.16,01,359/- TREATED AS UNEXPLAI NED CASH CREDIT U/S 68 OF THE ACT. ON APPEAL BEFORE THE CIT(A), THE AS SESSEE HAS SUBMITTED THAT THE ADDITION MADE BY THE A.O. U/S 68 OF THE AC T IS AN EXCESSIVE AND THE SAME MAY BE DELETED. HOWEVER, THE LD. CIT(A) C ONFIRMED THE ORDER OF THE A.O. 8. ASSESSEE CARRIED MATTER IN APPEAL BEFORE THE TRI BUNAL AND SUBMITTED THAT THE ADDITION MADE BY THE A.O. IS EXC ESSIVE AND THE SAME MAY BE REDUCED. 9. ON THE OTHER HAND, THE LD. D.R. HAS SUPPORTED TH E ORDER PASSED BY THE CIT(A). 10. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ISSUE RELATES TO PURCHASE OF PADDY AND SUBSEQUENT P AYMENTS TO THE FARMERS. THE ASSESSEE HAS FILED ALL THE DETAILS BE FORE THE A.O. AND ALSO CONFIRMATION LETTERS FROM THE FARMERS. THE A.O. MA DE ENQUIRY THROUGH INSPECTOR. THE FARMERS WHO RECEIVED THE PAYMENT FR OM THE ASSESSEE AS PER HIS BOOKS OF ACCOUNT, DENIED THE SUPPLY OF THE PADDY TO THE ASSESSEE. THEREFORE, THE A.O. BASED ON THE ENQUIRY MADE BY THE INSPECTOR, MADE AN ADDITION OF RS.16,01,359/-. THE ONLY CASE OF THE ITA NO.101&153/VIZAG/2013 & CO 67/VIZAG/2013 TAMMANA SURYANARAYANA, MACHILIPATNAM 6 ASSESSEE BEFORE US IS THAT THE ASSESSING OFFICER WI THOUT CONFRONTING WITH THE INSPECTOR REPORT ADDITION WAS MADE WHICH IS CON TRARY TO PRINCIPLES OF NATURAL JUSTICE AND SUBMITTED THAT THE ADDITION IS EXCESSIVE. AFTER CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF T HE CASE, WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTICE TO MEET THE ENDS OF JUSTICE, THE DISALLOWANCE IS RESTRICTED TO RS.8 LAKHS AND THE A. O. IS DIRECTED ACCORDINGLY. THE APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. CO 67/VIZAG/2013: 11. SO FAR AS CO FILED BY THE ASSESSEE IS CONCERNED , IN VIEW OF THE ABOVE ORDER IN THE ASSESSEES APPEAL, THE C.O. FILE D BY THE ASSESSEE IS INFRUCTUOUS AND IS DISMISSED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AND THE C.O . FILED BY THE ASSESSEE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 24 TH MAR16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 24.03.2016 VG/SPS ITA NO.101&153/VIZAG/2013 & CO 67/VIZAG/2013 TAMMANA SURYANARAYANA, MACHILIPATNAM 7 '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO, WARD-1. MACHILIPATNAM 2. / THE RESPONDENT SHRI TAMMANA SURYANARAYANA, PRO P: SRI SWAMY AYYAPPA TRADERS, INDUSTRIAL ESTATE, MACHILIPATNAM 3. ) / THE PRINCIPAL CIT-2, VISAKHAPATNAM 4. ) ( ) / THE CIT(A),VIJAYAWADA 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM