DCIT, Hyderabad V. Sri Mukesh Kumar Vijaywargi, Hyderabad

ITA 1647/HYD/2010

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6542 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 22-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Keywords: Unexplained cash credit; Search and seizure; Assessment record
• Section: 153A; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1647/HYD/2010 ASSESSMENT YEAR: 2007-08 DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE - 2, HYDERABAD. VS. SRI MUKESH KUMAR VIJAYWARGI, HYDERABAD. PAN AENPK 9824P (ASSESSEE) (RESPONDENT) REVENUE BY : SHRI M. SITARAM ASSESSEE BY : SHRI K.C. DEVDAS DATE OF HEARING 16-05-2016 DATE OF PRONOUNCEMENT 20-05-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) I , HYDERABAD, DATED 20/10/2010 FOR AY 2007-08. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCOME-TAX ACT (IN SHORT T HE ACT) WAS CONDUCTED IN THE BUSINESS PREMISES OF M/S DHATRI CO NSTRUCTIONS PVT. LTD. ON 10/10/2007. CONSEQUENTLY, NOTICE U/S 153A W AS ISSUED AND SERVED ON THE ASSESSEE. IN RESPONSE TO THE SAME, TH E ASSESSEE FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION A DMITTING NIL INCOME. IN COURSE OF THE ASSESSMENT PROCEEDING, THE AO FOUND THAT THE ASSESSEE WAS IN RECEIPT OF UNSECURED LOAN TO TH E TUNE OF RS. 35 LAKHS FROM G.S.G. BUILDERS AND RS. 25 LAKHS FROM SB PL INFRASTRUCTURE LTD. THE AO OBSERVED THAT IN SPITE OF SUFFICIENT OP PORTUNITY GIVEN, THE 2 ITA NO. 1647/H/10 SHRI MUKESH KUMAR VIJAYWARGI ASSESSEE HAS NOT FILED ANY CONFIRMATION LETTER REGA RDING THE UNSECURED LOAN. THEREFORE, THE ASSESSING OFFICER TR EATED THE UNSECURED LOAN AS UNEXPLAINED CASH CREDIT AND ADDED THE SAME WHILE COMPUTING THE TOTAL INCOME. THE INCOME WAS ASSESSED AT RS.61,55,000/- AND A TAX DEMAND OF RS.27,17,961/- W AS RAISED. 3. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE FILED A PPEAL BEFORE THE CIT(A). 4. DURING THE COURSE OF APPELLATE PROCEEDING, THE ASSESSEE SUBMITTED THAT THE UNSECURED LOANS WERE OBTAINED F ROM TWO CORPORATE ENTITIES M/S. GSG BUILDERS & INFRASTRUCTURE LTD AND M/S. SBPL INFRASTRUCTURE LTD. BOTH THE CORPORATE ENTITIES ARE ASSESSED TO TAX IN HYDERABAD. THE ASSESSEE SUBMITTED THAT THE ASSESSIN G OFFICER AT NO POINT OF TIME CALLED FOR THE DETAILS OF UNSECURED L OANS OR DIRECTED THE ASSESSEE TO FILE THE CONFIRMATION LETTERS. THE ASSE SSEE WAS DIRECTED TO FILE THE DETAILS DURING THE COURSE OF HEARING ON 3-11-2009. IT WAS FURTHER SUBMITTED THAT AFTER HAVING OBTAINED THE CO NFIRMATION LETTERS PAN AND BANK STATEMENTS, THE ASSESSEE PROCEEDED TO FILE THE SAME IN PERSON ON 22-12-2009. THE AO REFUSED TO ACCEPT T HE SAME. WHEN THE ASSESSEE APPROACHED THE INWARD SECTION, IT WAS EQUALLY REFUSED. CONSEQUENTLY, THE ASSESSEE HAD NO OTHER OPTION BUT TO SEND THE CONFIRMATION LETTERS ALONG WITH XEROX COPIES OF BAN K CONFIRMATION BY SPEED POST ON 23-12-2009 WHICH THUS FORMS PART OF T HE ASSESSMENT RECORD. THE AO PASSED THE ASSESSMENT ORDER ON 29-12 -2009 DULY ADDING THE UNSECURED LOANS AS UNEXPLAINED CASH CRED IT, THE FACT ON RECORD IS THAT THE ASSESSEE PRODUCED THE EVIDENCE R EGARDING THE LOAN. WITHOUT ANY FURTHER ENQUIRY, THE AO OUGHT NOT TO HA VE MADE THE ADDITION WHEN THE CORPORATE ENTITIES WERE IN EXISTE NCE, THE LOANS WERE RECEIVED THROUGH BANKING CHANNEL AND NO ADVERSE MAT ERIAL HAS BEEN BROUGHT ON RECORD BY THE AO TO VIEW THE LOAN OTHERW ISE. REFERRING TO PROVISION OF SEC. 68 OF THE ACT, THE ASSESSEE SUBMI TTED THAT THE AO WAS NOT JUSTIFIED IN STATING THAT THE ASSESSEE OFFE RED NO EXPLANATION 3 ITA NO. 1647/H/10 SHRI MUKESH KUMAR VIJAYWARGI FOR THE UNSECURED LOAN. THE ASSESSEE HAS DISCHARGED ITS ONUS BY SUBMITTING CONFIRMATION LETTER WHICH ESTABLISHES TH E PROOF OF IDENTITY, THE BANK A/C OF THE LOAN CREDITOR AND THE PERMANENT ACCOUNT NUMBER, TO PROVE THE GENUINENESS OF THE UNSECURED LOAN. THE AO WAS THEREFORE NOT JUSTIFIED IN TREATING THE SAME AS UNE XPLAINED CASH CREDIT AND MAKING THE ADDITION IN THE ASSESSMENT ORDER. TH E ASSESSEE RELIED ON A NUMBER OF JUDICIAL DECISIONS IN SUPPORT OF THE CONTENTION RAISED BY AO 5. SINCE THE ASSESSEE CONTENDED THAT HE HAD FILED THE CONFIRMATION LETTER WHICH WAS REFUSED TO BE ACCEPTE D BY THE AO, A REPORT WAS SOUGHT FROM THE ASSESSING OFFICER BY THE CIT(A). 6. IN THE REPORT SUBMITTED, THE AO HAS NOT GIVEN ANY COMMENT ON THE ALLEGATION OF THE ASSESSEE THAT WHEN THE CONFIR MATION LETTERS, PAN, ETC WERE TO BE FILED, THE SAME WERE REFUSED TO BE ACCEPTED BY THE AO. THE ASSESSING OFFICER STATED THAT THE ASSES SEE DID NOT FILE ANY CONFIRMATION LETTER FROM THE CREDITORS. HE FURT HER STATED THAT THE SPEED POST WAS RECEIVED IN HIS OFFICE ON 29-12-2009 . SINCE THE ASSESSMENT ORDER WAS ALREADY PASSED, THE LETTER OF THE ASSESSEE WAS SIMPLY KEPT ON RECORD. THE AO FURTHER STATED THAT W HEN THE ASSESSMENT PROCEEDING WAS INITIATED ON 24-07-2009, NOTHING PREVENTED HIM TO FILE THE SAME WHEN THE CASE WAS PO STED FOR HEARING ON 3-11-2009, 4-11-2009, 2-12-2009 AND 17-12-2009. THE SO CALLED CONFIRMATION LETTERS FILED BY THE ASSESSEE ON 29-12 2009 WAS ALSO NOT A CONFIRMATION LETTER GIVEN BY THE CREDITORS. 7. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE AOS REMAND REPORT, DELETED THE ADDITION MA DE BY THE AO BY OBSERVING AS UNDER: 04.0 I HAVE GONE THROUGH THE FACT OF THE CASE, THE SUBMISSION OF THE ASSESSEE AND THE REPORT FILED BY THE ASSESSING OFFICER. IT IS THE CONTENTION OF THE ASSESSEE THAT ALL THE INFORMA TION RELATING TO THE UNSECURED LOAN TRANSACTIONS WAS FILED BEFORE TH E ASSESSING 4 ITA NO. 1647/H/10 SHRI MUKESH KUMAR VIJAYWARGI OFFICER. EVEN THE CONFIRMATION LETTERS, ETC WERE TO BE PRODUCED BEFORE THE AO BUT THE SAME WAS REFUSED TO BE ACCEPT ED. THE FACT THAT THE AO HAS REMAINED SILENT ON THE ISSUE WHEN S PECIFICALLY ASKED TO CLARIFY THE SAME IN THE REPORT INDICATES T HAT THERE COULD BE SOME TRUTH IN THE CONTENTION RAISED BY THE ASSES SEE. OTHERWISE ALSO, I HAVE GONE THROUGH THE ASSESSMENT RECORDS FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09. THE AO ST ATES THAT NOTHING PREVENTED THE ASSESSEE TO FILE THE CONFIRMA TION LETTER WHEN THE PROCEEDING WAS INITIATED ON 24-07-2009. I FIND FROM THE ASSESSMENT RECORD THAT THE FIRST NOTICE CALLING FOR INFORMATION RELATING TO ASSESSMENT YEARS 2002-03 TO 2007-08 AND 2008-09 WAS CALLED FOR VIDE LETTER DATED 27-4-2009. IN THE SAID NOTICE NOTHING SPECIFIC WAS ASKED RELATING TO THE ALLEGED UNSECURED LOAN. THE ASSESSEE WAS ASKED TO APPEAR ON 7-5-2009. THE ASSESSMENT RECORD SHOWS THAT ANOTHER NOTICE U/S.142 (1) WAS APPARENTLY ISSUED ON 13-10-2009 BUT THE SAME WAS NO T TRACED IN THE ASSESSMENT RECORD OF EITHER 2007-08 OR 2008-09. A FURTHER NOTICE DATED 16-11-2009 WAS ISSUED BUT NO SPECIFIC QUERY RELATING TO ALLEGED UNSECURED LOAN APPEARED IN THE SAID NOTICE. A FURTHER NOTICE DATED 9-12-2009 WAS ISSUED BUT THE S AID NOTICE WAS FOR THE ASSESSMENT YEAR 2008-09. IN THIS NOTICE ALSO THERE WAS NO REFERENCE TO THE UNSECURED LOAN OBTAINED BY THE ASSESSEE. THE ASSESSING OFFICER FOR THE FIRST TIME NOTED IN THE ORDER SHEET ENTRY DATED 17-12-2009 THAT THE CONFIRM ATION OF UNSECURED LOAN NOT SUBMITTED. ONLY THE LEDGER EXTRA CT ARE SUBMITTED. I FIND FROM THE ASSESSMENT RECORD THAT T HE ASSESSEE HAS FILED LEDGER EXTRACTS OF M/S. GSG BUILDERS & IN FRASTRUCTURE LTD AND M/S. SBPL INFRASTRUCTURE LTD DULY AUTHENTIC ATED BY THE RESPECTIVE COMPANIES AND GIVING DETAIL OF PAN AND A SSESSMENT CIRCLE. THIS IS VERY MUCH AVAILABLE IN THE ASSESSME NT RECORD. IF THE AO REQUIRED TO CROSS-VERIFY THE SAME, HE COULD HAVE MADE THE VERIFICATION SINCE THE ASSESSMENT DETAILS WERE AVAILABLE WITH HIM. FURTHER, THE ASSESSEE HAD ALSO FILED ITS BANK A/C COPY WHICH CLEARLY SHOWS THAT ON 12-08-2006 RS.25 LAKHS WAS CR EDITED INTO THE A/C OF THE ASSESSEE IN UTI BANK FROM SBPL INFRA STRUCTURE A/C. THE ASSESSEE HAS FURTHER CONTENDED THAT HE HAS SENT THE REQUISITE DETAILS BY SPEED POST DATED 23-12-2009 WH ICH IS ALSO AVAILABLE IN THE ASSESSMENT RECORD. IN THE SAID LET TER RECEIVED BY THE ASSESSING OFFICER ON' 29-12-2009, THE ASSESSEE HAS CLARIFIED THE UNSECURED LOAN RECEIVED FROM GSG BUILDERS AND S BPL INFRASTRUCTURE AND ALL THE DETAILS HAVE BEEN GIVEN BY THEM. THE ASSESSEE HAS ALSO FILED THE CONFIRMATION LETTERS FR OM THE BANKERS OF GSB BUILDERS AND INFRASTRUCTURE, M/S. SYNDICATE BANK, BANJARA HILLS CONFIRMING PAYMENT OF RS.35 LAKHS TO THE A/C OF THE ASSESSEE. SIMILARLY, AXIS BANK, BEGUMPET HAD ALSO C ONFIRMED THAT RS.25 LAKHS WAS DEBITED FROM THE A/C OF M/S. S BPL INFRASTRUCTURE LTD FOR PAYMENT IN FAVOUR OF THE ASS ESSEE. THUS CIRCUMSTANTIAL EVIDENCE CLEARLY INDICATES THAT THE ASSESSEE HAD OBTAINED THE UNSECURED LOAN OF RS.60 LAKHS THROUGH BANKING 5 ITA NO. 1647/H/10 SHRI MUKESH KUMAR VIJAYWARGI CHANNELS AND THE IDENTITY OF THE LOAN CREDITORS ARE ALSO ESTABLISHED. FURTHER, THEY ARE ALSO INCOME-TAX ASSE SSEES AS PER THE LEDGER EXTRACT AVAILABLE ON RECORD. SO IN MY VI EW, PRIMA FACIE THE ASSESSEE HAS DISCHARGED ITS ONUS OF THE UNSECUR ED LOANS- OBTAINED BY IT. THEREFORE, IT CANNOT BE SAID THAT T HE UNSECURED LOAN OBTAINED BY THE ASSESSEE ARE UNEXPLAINED CASH CREDIT. I THEREFORE, FIND NO JUSTIFICATION IN ADDING THE SAME AS UNEXPLAINED CASH CREDIT IN ASSESSEE'S HAND. THE SAME IS DIRECTE D TO BE DELETED. 8. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) THE COMMISSIONER OF INCOME-TAX (A) ERRED IN FACT S AND IN LAW. 2) THE COMMISSIONER OF INCOME-TAX (A) OUGHT NOT TO HAVE CONSIDERED ALL THE ARGUMENTS OF THE ASSESSEE WHILE DECIDING THE ISSUE OF CASH CREDITS, AS THE CREDITOR HAS NOT FILE D CONFIRMATION LETTER FROM HIS SIDE. 3) THE COMMISSIONER OF INCOME-TAX (A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE ONUS OF PROVING THE C ASH CREDIT OF THE CREDITORS ALWAYS LIES ON THE ASSESSEE AND IN TH E PRESENT CASE, THE SAME WAS NOT DISCHARGED. 4) THE COMMISSIONER OF INCOME-TAX (A) OUGHT TO HAVE NOTED THAT THE ASSESSEE HAS NOT FILED THE CONFIRMATION LETTER FROM THE CREDITORS AT ANY STAGE OF THE PROCEEDINGS OF ASSESS MENT AND ALSO DURING THE COURSE OF APPEAL PROCEEDINGS. 9. LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFI CER. 10. LD. AR SUBMITTED THAT ASSESSEE HAS FILED THE RE LEVANT CONFIRMATION FROM CREDITORS THROUGH SPEED POST DUE TO THE FACT THAT ASSESSEE WAS PREVENTED FROM FILING THE CONFIRMATION LETTER AS THE ASSESSING OFFICER HAD ALREADY FINALISED THE ASSESSM ENT ORDER. THE CONFIRMATION LETTERS SUBMITTED WERE PROPER IN ALL C OUNTS. HE RELIED ON THE CIT(A)S ORDER. 11. CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND MATERIAL FACTS ON RECORD AS WELL AS THE ORDERS OF REVENUE AU THORITIES. THE REVENUE FILED THIS APPEAL MAINLY DUE TO THE FACT TH AT THE CONFIRMATION LETTER AND ONUS OF PROVING CASH CREDIT WERE NOT SUB MITTED BEFORE THE 6 ITA NO. 1647/H/10 SHRI MUKESH KUMAR VIJAYWARGI ASSESSING OFFICER. FOR THE ABOVE CONTENTION, LD. AR SUBMITTED THAT ASSESSEE WAS PREVENTED FROM FILING BEFORE ASSESSING OFFICER AS THE ASSESSMENT ORDER WAS ALREADY PASSED. THE SAME CONFI RMATION LETTERS WERE FILED BEFORE THE CIT(A). THE CIT(A) HAD RIGHTL Y ASKED FOR REMAND REPORT. AFTER CONSIDERING THE ASSESSEES SUBMISSION S AND REMAND REPORT, CIT(A) HAD DELETED THE ADDITION. WE ARE IN AGREEMENT WITH THE ORDER OF CIT(A) AND NOT INCLINED TO INTERFERE WITH THE ORDER PASSED BY THE CIT(A). ACCORDINGLY, GROUNDS RAISED BY THE RE VENUE ARE DISMISSED. 12. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. PRONOUNCED IN THE OPEN COURT ON 20 TH MAY, 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 20 TH MAY, 2016 KV COPY TO:- 1) DCIT, CENTRAL CIRCLE - 2, 7 TH FLOOR, AAYAKAR BHAVAN, LB STADIUM ROAD, BASHEERBAGH, HYDERABAD 500 004. 2) SHRI MUKESH KUMAR VIJAYWARGI, H. NO. 8-2-293/82/ 2, PLOT NO. 76, MLA COLONY, ROAD NO. 12, BANJARA HILLS, HYDERABA D. 3 CIT(A) I, HYDERABAD 4) CIT(CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 7 ITA NO. 1647/H/10 SHRI MUKESH KUMAR VIJAYWARGI S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER