ITO, Ward-8(2), Hyderabad, Hyderabad V. Sayeed Brothers, Hyderabad, Hyderabad

ITA 1638/HYD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2524 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 05-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: B SHANTHI KUMAR
• Keywords: Unexplained cash credit; Business income
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 1638/HYD/2016 ASSESSMENT YEAR: 2012-13 THE INCOME TAX OFFICER, WARD-8(2), HYDERABAD VS M/S. SAYEED BROTHERS, HYDERABAD [PAN: AAKFS2013H] (APPELLANT) (RESPONDENT) FOR REVENUE : SMT. N. SWAPNA, DR FOR ASSESSEE : SHRI B. SHANTHI KUMAR, AR DATE OF HEARING : 14-02-2018 DATE OF PRONOUNCEMENT : 16-02-2018 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, HYDERABAD, DATED 28-07-2016. THE ISSUE IN THIS APPEAL IS WITH REFEREN CE TO ADDITION MADE BY THE ASSESSING OFFICER (AO) U/S. 68 O F THE INCOME TAX ACT [ACT] AS UNEXPLAINED CREDITS, EVEN THO UGH THE INCOMES WERE ESTIMATED BY THE AO REJECTING THE BOOKS. 2. AO WHILE COMPLETING THE ASSESSMENT, NOTICED THAT ASSESSEE HAS RECEIVED UNSECURED LOANS OF RS. 66,98, 500/- DURING THE YEAR. SINCE ASSESSEE DID NOT FURNISH ANY I.T.A. NOS. 1638/HYD/2016 :- 2 -: CONFIRMATIONS WITH REFERENCE TO THE UNSECURED LOANS, TH ESE WERE TREATED AS UNEXPLAINED CREDITS U/S. 68 OF THE A CT. 3. BEFORE THE LD.CIT(A), IT WAS SUBMITTED THAT THESE AMOUNTS ARE NOT UNSECURED LOANS, BUT THEY ARE ADVANCES FROM CUSTOMERS WHO HAVE RUNNING ACCOUNTS WITH ASSESSEE-FIR M. IT WAS SUBMITTED THAT THESE ADVANCES WERE CAPTIONED AS UNSECURED LOANS BY MISTAKE BUT MOST OF THE RECEIPTS W ERE THROUGH BANKS AND THEY WERE TRADE ADVANCES. ASSESSEE ALSO RELIED ON VARIOUS LEGAL PRINCIPLES THAT WHEN BOOKS AR E REJECTED AND INCOMES ARE ESTIMATED, NO FURTHER ADDITIONS CAN BE MADE. LD.CIT(A) WITHOUT EXAMINING THE CONTENTIONS WHETHER THES E ARE TRADE CREDITS OR CASH CREDITS, HOWEVER, RELIED ON VARI OUS CASE LAW, AS DETAILED IN PARA 7.2, AND DELETED THE ADDITIO N OF RS. 66,98,500/-. 4. REVENUE IS AGGRIEVED AND RAISED THE FOLLOWING GRO UNDS: 1. THE LD.CIT(A) ERRED ON BOTH FACTS AND LAW. 2. THE CIT(A) OUGHT TO HAVE UPHELD THE DECISION OF AO MAKING SEPARATE ADDITION U/S 68 OF I.T. ACT IN ADDITION TO ESTIMATION OF BUSINESS INCOME AS IT DOES NOT INVOLVE CASH CREDITS FOUND IN THE P&L A/C WHICH WAS REJECTED. 3. THE JUDICIAL PRONOUNCEMENTS RELIED ON BY LD.CIT( A) HAVE NO RELEVANCE TO THE FACTS OF THE CASE AND ARE NOT DEAL ING WITH ISSUES PERTAINING TO BALANCE SHEET. 4. THE LD.C1T(A) OUGHT TO HAVE APPRECIATED THE FACT S THAT THE AO DISALLOWED THE UNSECURED LOANS INTRODUCED IN CAPITA L ACCOUNT WHOSE IDENTITY, CREDIT WORTHINESS AND GENUINENESS ARE NOT PROVED. 5. THE LD.CIT(A) OUGHT TO HAVE UPHELD THE DECISION OF AO IN THE LIGHT OF THE HON'BLE SUPREME COURT'S DECISION IN THE CASE OF CIT VS. DEVI PRASAD VISWANATH PRASAD - 72 ITR 194, JURISDICTIONA L HIGH COURT'S DECISION IN CIT VS JANAB MOHD SULEMAN AND JURISDICT IONAL ITAT ORDER I.T.A. NOS. 1638/HYD/2016 :- 3 -: IN THE CASE OF ACIT VS. M/S. BISWAJIT ROY, WARANGAL WHEREIN IT HAS BEEN HELD THAT ADDITION U/S 68 OF THE I.T.ACT CAN B E MADE OVER AND ABOVE THE INCOME ESTIMATED AFTER REJECTING THE BOOK S OF ACCOUNT. 6. ANYOTHER GROUND THAT MAY BE URGED AT THE TIME HE ARING. 5. AT THE OUTSET, BOTH THE PARTIES HAVE AGREED THAT THIS ISSU E IS COVERED SQUARELY BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF KALE KHAN MOHAMMAD HANIF VS. CI T [50 ITR 1] (SC), WHICH IN TURN WAS FOLLOWED IN THE CASE O F CIT VS. DEVI PRASAD VISWANATH PRASAD [72 ITR 194] (SC) . IT IS FURTHER SUBMITTED THAT THE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT VS. MADURI RAJAIAHGARI KISTAIAH [120 ITR 294] (AP) ALSO UPHELD THE ADDITION OF CASH CREDITS SEPARATELY. HOWEVER, LD. COUNSEL SUBMITTED THAT THE CONTENTIONS RAISED BEFORE THE CIT(A) THA T THESE ARE NOT CASH CREDITS BUT TRADE CREDITS HAVE NOT BEEN EXAMINED AND GIVEN AN OPPORTUNITY HE WOULD SUBMIT THE NECESSARY DETAILS BEFORE THE AO. 6. HAVING CONSIDERED THE RIVAL CONTENTIONS AND PERUSIN G THE CASE LAW ON RECORD, WE ARE OF THE OPINION THAT THE ORD ER OF THE CIT(A) IS ERRONEOUS AND CANNOT BE UPHELD. THE HON'B LE SUPREME COURT HAS CLEARLY ESTABLISHED THAT THERE IS NOT HING IN LAW WHICH PREVENTS THE AO IN AN APPROPRIATE CASE IN TA XING THE CASH CREDITS, THE SOURCE AND NATURE OF WHICH IS NOT SATISFACTORILY EXPLAINED EVEN WHEN THE BUSINESS INCOM E ESTIMATED BY HIM AFTER REJECTING THE BOOKS OF ACCOUNT OF ASSESSEE AS UN-RELIABLE. THE JURISDICTIONAL HIGH CO URT IN THE CASE REFERRED ABOVE ALSO HELD THAT CASH CREDITS CAN B E ASSESSED SEPARATELY UNDER THE HEAD INCOME FROM OTHER SOURCES . CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE ORDER OF I.T.A. NOS. 1638/HYD/2016 :- 4 -: CIT(A) IS NOT ACCORDING TO THE PRINCIPLES OF LAW ESTAB LISHED BY THE HONBLE SUPREME COURT/ HIGH COURT AND ACCORDINGL Y, WE HAVE NO HESITATION IN SETTING ASIDE THE ORDER. 6.1. HOWEVER, ASSESSEE HAS RAISED ANOTHER CONTENTION THAT THESE ARE NOT CASH CREDITS BUT TRADE ADVANCES. AS THERE IS NO RESPONSE BEFORE THE AO, AO TREATED THE AMOUNTS CATEGORI ZED AS LOANS AS UNSECURED LOANS. SINCE THIS ASPECT HAS NOT B EEN EXAMINED, WE ARE OF THE OPINION THAT ASSESSEE SHOULD BE GIVEN ANOTHER OPPORTUNITY TO RENDER EVIDENCE IN SUPPORT OF I TS CLAIM. AO IS DIRECTED TO EXAMINE WHETHER THEY ARE CASH CREDITS OR TRADE CREDITS AND BRING THEM TO TAX AS PER THE PROVISION S OF LAW AND FACTS ON THE ISSUE. CONSEQUENTLY THE ORDER OF AO ON THIS IS ALSO SET ASIDE TO BE REDONE AFTER DUE EXAMINATION AS D IRECTED ABOVE. NEEDLESS TO SAY THAT ASSESSEE SHOULD BE GIVEN D UE OPPORTUNITY OF HEARING. 7. IN THE RESULT, APPEAL OF REVENUE IS CONSIDERED AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH FEBRUARY, 2018 SD/- SD/- (V. DURGA RAO) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 16 TH FEBRUARY, 2018 TNMM I.T.A. NOS. 1638/HYD/2016 :- 5 -: COPY TO : 1. THE INCOME TAX OFFICER, WARD-8(2), HYDERABAD. 2. M/S. SAYEED BROTHERS, D.NO. 21-2-133, OPP: MADIN A HOTEL, JUBILEE POST, HIGH COURT ROAD, HYDERABAD. 3. CIT(APPEALS)-2, HYDERABAD 4. PR.CIT-2, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.