The ACIT, Circle-1(1), Guntur, V. Sri L .Narasa Reddy, Guntur

ITA 164/VIZ/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8602 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-12-2014
• Assessment Year: misc
• Appeal Filed On: 14-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: I SARISH KUMAR
• Assessee Lawyers: N O N E
• Keywords: Reopening of assessment; Bogus purchase
• Section: 148

Judgement Text

ITA NOS.163&164/VIZAG/2012 L. NARASA REDDY, GUNTUR IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NOS.163&164/VIZAG/2012 ASSESSMENT YEAR : 1984 - 85 & 1985 - 86 ACIT CIRCLE-1, GUNTUR VS. L. NARASA REDDY GUNTUR (APPELLANT) (RESPONDENT) PAN NO.N-705 ASSESSEE BY: N O N E REVENUE BY: SHRI I. SARISH KUMAR, DR DATE OF HEARING : 02.12.2014 DATE OF PRONOUNCEMENT : 02.12.2014 ORDER PER D. MANMOHAN, VICE PRESIDENT:- THESE APPEALS ARE DIRECTED AGAINST THE ORDER PASSE D BY THE CIT(A), GUNTUR. SINCE THE ISSUE INVOLVED IN BOTH THE APPEA LS IS COMMON, WE PROCEED TO DISPOSE OF THESE APPEALS BY A COMBINED ORDER, FO R THE SAKE OF CONVENIENCE. 2. FACTS NECESSARY FOR THE DISPOSAL OF APPEAL ARE S TATED IN BRIEF. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF PESTICIDES. IN RESPECT OF THE PREVIOUS YEARS RELEVANT TO THE ASS ESSMENT YEARS 1984-85 AND 1985-86, ASSESSEE FILED LOSS RETURNS AND ASSESS MENTS WERE COMPLETED ACCORDINGLY BUT LATER RE-OPENED BY ISSUANCE OF NOTI CE U/S 148 OF THE INCOME- TAX ACT, 1961 ON THE GROUND THAT THE ASSESSEE MADE SUBSTANTIAL PURCHASE OF TECHNICAL MATERIAL FOR BOTH THE ASSESSMENT YEARS FR OM UNVERIFIABLE PARTIES AND THE NATURE OF EXPENDITURE TOWARDS SUCH PURCHASE WAS NOT PROPERLY SHOWN. AFTER HEARING THE ASSESSEE, ASSESSMENTS WERE COMPLE TED BY MAKING CERTAIN ADDITIONS TOWARDS BOGUS PURCHASES, CASH CREDITS AND INTEREST ON CASH CREDITS. ITA NOS.163&164/VIZAG/2012 L. NARASA REDDY, GUNTUR 2 3. AGGRIEVED BY THE ORDERS PASSED BY THE ASSESSING OFFICER ADDITIONS WERE CHALLENGED BEFORE THE CIT(A) ON THE GROUND THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITIONS. THE LD. CIT(A) VIJAYAWADA DI SPOSED OF THE APPEALS EX- PARTE WHEREIN HE CONFIRMED THE ADDITIONS MADE BY TH E AO IN RESPECT OF BOGUS PURCHASES. WITH REGARD TO THE CASH CREDITS TO THE TUNE OF RS.2,49,000/- FOR ASSESSMENT YEAR 1984-85 AND RS.84,900/- FOR THE ASS ESSMENT YEAR 1985-86, LD. CIT(A) OBSERVED THAT THEY WERE ALREADY OFFERED BY THE ASSESSEE IN THE SETTLEMENT PETITION FILED FOR THE ASSESSMENT YEARS 1986-87 AND 1987-88 AND HENCE THE SAME CREDITS SHOULD NOT BE TAXED IN THIS YEAR. THE CIT(A) HOWEVER, CONFIRMED THE INTEREST ON THE ABOVE SAID B OGUS CREDITS. 4. AGAINST THE ORDER PASSED BY THE CIT(A), ASSESSEE AS WELL AS THE DEPARTMENT FILED CROSS APPEALS BEFORE THE ITAT. TH E TRIBUNAL RESTORED THE MATTER TO THE FILE OF THE CIT(A) SINCE THE ASSESSE E RAISED A NEW GROUND WITH REGARD TO THE VALIDITY OF REOPENING OF ASSESSMENT. THUS, THE MATTER WAS PLACED BEFORE THE CIT(A) GUNTUR WHOSE ORDER IS IMPU GNED BEFORE US. 5. THE LD. CIT(A) OBSERVED THAT THERE WAS VALID REA SONS FOR REOPENING THE ASSESSMENT AND ONCE IT IS VALIDLY REOPENED, FUL L ASSESSMENT IS OPEN BEFORE THE AO. 6. WITH REGARD TO THE OTHER GROUND I.E. ADDITION OF BOGUS PURCHASES OF RS.6,81,000/- FOR THE ASSESSMENT YEAR 1984-85, RS.8 ,27,817/- FOR THE ASSESSMENT YEAR 1985-86, THE PLEA OF THE ASSESSEE W AS NOT ACCEPTED AND THUS THE ORDER PASSED BY HIS PREDECESSOR AS WELL AS THE ORDER OF THE ASSESSING OFFICER WAS AFFIRMED BY THE LD. CIT(A). 7. AS REGARDS THE ADDITION TOWARDS CASH CREDITS AND INTEREST THEREON, THE CASE OF THE ASSESSEE BEFORE THE LD. CIT(A) WAS THAT THE SETTLEMENT COMMISSION, WHILE DELIVERING THEIR ORDER HAD ACCEPT ED THE AMOUNT REFERABLE TO CASH CREDITS AS INCOME ASSESSABLE TO TAX FOR THE ASSESSMENT YEAR 1987-88 AND HENCE THERE CANNOT BE SEPARATE ADDITION FOR THE YEARS UNDER ITA NOS.163&164/VIZAG/2012 L. NARASA REDDY, GUNTUR 3 CONSIDERATION. IT WAS ALSO CONTENDED THAT THE ITAT WHILE DELIVERING THEIR JUDGEMENTS VIDE COMMON ORDER DATED 22.2.1999 FOR TH E ASSESSMENT YEARS 1980-81 TO 1983-84 HELD THAT CASH CREDIT COULD BE A DDED BACK TO INCOME ONLY ONCE AND THE SAME CASH CREDIT COULD NOT BE ADDED BA CK IN ANY OTHER YEAR. 8. HAVING REGARD TO THE CIRCUMSTANCES, THE LD. CIT( A) DELETED THE ADDITION BY OBSERVING AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPEL LANT. WHATEVER BE THE ARGUMENTS THAT ONE MAY MAKE THE BASIC TENANT (SIC., TENET) OF THE TAXATION LAWS ARE THAT NO INCOME IS TAXED TWICE. IN LIGHT OF THIS PRINCIPLE, IF THE SAME QUANTUM WAS SUBJECTED IN ANOTHER ASSESSMEN T YEAR (FROM BOGUS CREDITORS) AS A RESULT OF SETTLEMENT COMMISSION ORD ER, THEN THE SAME CREDITORS CANNOT BE SUBJECTED TO ADDITION FOR THE IMPUGNED AS SESSMENT YEARS UNDER CONSIDERATION. IN VIEW OF THIS, THE AO IS DIRECTED TO DELETE THE SAME AS THE SAME CREDITORS WERE SUBJECTED FOR ADDITION FOR OTHE R ASSESSMENT YEARS AS SPELT OUT IN THE ORDER OF THE SETTLEMENT COMMISSION REFERRED TO HEREIN ABOVE, AFTER VERIFICATION WITH THE RECORDS ENSURING THAT D OUBLE ADDITION WAS NOT MADE. 9. SINCE THE INTEREST PERTAINS TO THE ABOVE CASH CR EDITS, THE SAME ANALOGY WAS ADOPTED BY THE LD. CIT(A) AND THE AO WAS DIRECT ED TO DELETE THE SAME AFTER ASCERTAINING THE CORRECTNESS OF THE CLAIMS. 10. AGGRIEVED BY THE DELETION OF THE ADDITION TOWAR DS CASH CREDIT AND INTEREST THEREON, REVENUE PREFERRED APPEALS BEFORE THE TRIBUNAL. NONE APPEARED FOR THE ASSESSEE. 11. WE HAVE HEARD THE LD. D.R. AND CAREFULLY PERUSE D THE RECORDS. IT IS NOT DISPUTED THAT THE IMPUGNED AMOUNT WAS ALREADY O FFERED TO TAX BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION AND IT WA S ASSESSED ACCORDINGLY. IN SUCH AN EVENT OF THE MATTER, THERE CANNOT BE DOUB LE TAXATION OF THE SAME AMOUNT. IN FACT, THE LD. CIT(A) MERELY SET ASIDE T HE MATTER TO THE FILE OF THE AO WITH A DIRECTION THAT HE SHOULD VERIFY THE FACTU AL POSITION AND ENSURE THAT DOUBLE TAXATION WAS NOT MADE. WE DO NOT FIND ANY I NFIRMITY IN THE VIEW TAKEN BY THE LD. CIT(A) SINCE IT IS SETTLED LAW THA T SAME AMOUNT CANNOT BE TAXED IN TWO ASSESSMENT YEARS. HAVING REGARD TO TH E CIRCUMSTANCES, WE ITA NOS.163&164/VIZAG/2012 L. NARASA REDDY, GUNTUR 4 UPHOLD THE ORDER PASSED BY THE LD. CIT(A) AND DISMISS THE APPEALS FILED BY THE REVENUE. PRONOUNCED IN THE OPEN COURT ON 2 ND DECEMBER14 SD/- SD/- (J. SUDHAKAR REDDY) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT VG/SPS VISAKHAPATNAM, DATED 2 ND DECEMBER, 2014 COPY TO 1 THE ACIT, CIRCLE-1(1), GUNTUR 2 L. NARASA REDDY, PROP: SRI VENKATESWARA AGRO CHEM ICALS INDUSTRIES D.NO.2-14-101, 2 ND LINE, SYAMALANAGAR, GUNTUR 3 THE CIT, GUNTUR 4 THE CIT(A), GUNTUR 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM