Income Tax Officer, Ward-11(1), Hyderabad V. Smt.Amita Desai, Hyderabad

ITA 1671/HYD/2013

• Counselvise Citation: 167122514 RSA 2013
• Duration Of Justice: 1 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 02-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained cash credit; Business income
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1671/HYD/2013 ASSESSMENT YEAR 2009-10 THE INCOME TAX OFFICER WARD-11(1) HYDERABAD VS. SMT. AMITA DESAI HYDERABAD PAN: ADLPD2754L APPELLANT RESPONDENT APPELLANT BY: SRI RAMAKRISHNA BANDI RESPONDENT BY: SRI S. RAMA RAO DATE OF HEARING: 0 1 .1 2 .2014 DATE OF PRONOUNCEMENT: 24. 12.2014 O R D E R PER ASHA VIJAYARAGHAVAN, JM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VI, HYDERABAD DATED 23.8.2013 F OR ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DOING FABRICATION WORK. THE ASSESSEE FILED RETURN OF INCO ME FOR A.Y. 2009-10 ON 30.9.2009 ADMITTING INCOME FROM BUS INESS AT RS. 4,98,010. THE SAME WAS PROCESSED U/S. 143(1 ) OF INCOME-TAX ACT, 1961. NOTICES U/S. 143(2) AND 142( 1) WERE ISSUED TO THE ASSESSEE. DURING THE COURSE OF SCRUT INY PROCEEDINGS, THE ASSESSEE'S AR PRODUCED BOOKS OF ACCOUNT AND DETAILS CALLED FOR. WHILE COMPUTING TA XABLE INCOME OF THE ASSESSEE, THE ASSESSING OFFICER OBSER VED THAT ASSESSEE OBTAINED ADVANCES IN CASH FROM VARIOU S ITA NO. 1671/HYD/2013 SMT. AMITA DESAI =================== 2 PARTIES AND PENDING PAYMENT/SETTLEMENT AS ON 31.3.2 009. SUCH AMOUNT WAS QUANTIFIED AT RS. 45,66,748. THE A O ALSO OBSERVED THAT THE ASSESSEE DID NOT FURNISH FULL DET AILS OF SUCH CASH CREDITS, IN SPITE OF REPEATED REQUESTS. IN TWO INSTANCES, WHERE ENQUIRIES WERE SHOWN TO HAVE BEEN MADE, THE ASSESSING OFFICER OBSERVED THAT THE PARTI ES HAVE DENIED TRANSACTIONS WITH THEM. AS THE ASSESSE E FAILED TO DISCHARGE ONUS OF PROVING GENUINENESS OF CASH CREDITS, ENTIRE AMOUNT OF CREDITS OF RS. 45,66,748 STANDING IN THE NAMES OF 16 PARTIES WAS BROUGHT TO TAX. 3. THE ASSESSEE OBJECTED FOR SUCH ADDITION AND SUBMITTED THAT THE ASSESSING OFFICER DID NOT DISCUS S EACH OF CREDIT INDIVIDUALLY AND WITHOUT PROVIDING PROPER OPPORTUNITY, TREATED THE ENTIRE CREDITS OF RS. 45,6 6,748 AS INCOME. IT WAS FURTHER ELABORATED THAT THE AMOUNTS WERE RECEIVED AS ADVANCE FROM THE CUSTOMERS, IN RUNNING ACCOUNTS, FOR WHICH EITHER SUPPLIES WERE MADE AND REFLECTED IN SALES OF THE BUSINESS, AND IN FEW CASE S, THE AMOUNTS WERE REFUNDED, EITHER DUE TO INCOMPLETE JOB S OR AT THE INSISTENCE OF THE CUSTOMERS. THE ASSESSEE FURNISHED ACCOUNT EXTRACTS OF 8 OUT OF 16 OF SUCH P ARTIES, DURING THE APPELLATE PROCEEDINGS. THE CIT(A) SENT THE FILE TO THE AO FOR REMAND REPORT ALONG WITH SUBMISSIONS OF THE ASSESSEE. 4. THE CIT(A) OBSERVED THAT THE ASSESSEE HAS SHOWN TO HAVE RECEIVED CERTAIN AMOUNTS FROM FEW CUSTOMERS AS ADVANCES DURING THE YEAR WHICH WERE SETTLED AGAINST SALES MADE TO THEM SUBSEQUENTLY. THE CIT(A) FURTHER OBSE RVED THAT SALES WERE ALSO MADE IN THE EARLIER YEAR TO TH E PARTIES AGAINST WHOM DEBIT BALANCES WERE INDICATED AND THE SALE CONSIDERATIONS WERE RECEIVED SUBSEQUENTLY EITHER IN THE ITA NO. 1671/HYD/2013 SMT. AMITA DESAI =================== 3 FORM OF CASH OR THROUGH CHEQUES AND THE SALES WERE EFFECTED IN THE BOOKS AS AND WHEN THE BILLS WERE RA ISED. THE CIT(A) NOTED THAT THE ACCOUNT EXTRACTS WHICH WE RE FORWARDED TO THE ASSESSING OFFICER FOR FURTHER VERI FICATION THROUGH THE REMAND REPORT COULD NOT BE VERIFIED DUE TO NON-APPEARANCE OF THE ASSESSEE AND FAILURE ON THE P ART OF THE ASSESSEE TO EXPLAIN THE CREDITS MADE DURING THE YEAR IN THE RESPECTIVE ACCOUNTS. SINCE THERE WERE NO CONFIRMATIONS OR EVIDENCES FROM THE ASSESSEE'S SIDE AND, THEREFORE, THE ASSESSING OFFICER REQUESTED IN THE R EMAND REPORT TO CONFIRM THE ADDITIONS MADE. 5. THE CIT(A) FURTHER OBSERVED THAT PERUSAL OF INFORMATION AND ACCOUNTS EXTRACTS OF THE CREDITORS INDICATED THAT THE AMOUNTS WERE MOSTLY RECEIVED IN CASH AND FEW TIMES THROUGH BANKING CHANNELS ON A FEW OCCASIONS THROUGH JOURNAL EXTRACTS WHERE CONNECTED PARTIES WERE INVOLVED. THE CIT(A) STATED THAT IN F EW OF THE CASES, SUCH RECEIPTS/CREDITS ARE SET OFF AGAINST SA LES MADE BY THE ASSESSEE, EITHER DURING THE YEAR OR IN EARLI ER YEARS. THE CIT(A) STATED THAT AS COULD BE SEEN FROM THE TRANSACTIONS, IT REVEALS THAT THE SAID CREDITS REPR ESENTED THE BUSINESS RECEIPTS EITHER RECEIVED AS ADVANCES O R SALES CONSIDERATION. THE CIT(A) HELD THAT IT WAS NOT THE CASE OF THE ASSESSING OFFICER TO PROVE THAT THE SAID CREDIT S REPRESENT THE UNEXPLAINED INCOME, BEING THE UNEXPLA INED CREDITS, WHERE SUCH CREDITS WERE EITHER NULLIFIED B Y THE SALES POSTED IN BOOKS OF ACCOUNT OF THE ASSESSEE OR BY REFUND OF THE AMOUNTS OR BY ADJUSTMENT THROUGH JOUR NAL ENTRIES. FURTHER, THE CIT(A) STATED THAT IT WAS ALS O NOT THE CASE OF THE ASSESSING OFFICER TO PROVE THAT THE ASS ESSEE FAILED TO FURNISH THE BOOKS OF ACCOUNT TO EXPLAIN S UCH ENTRIES AND DURING THE ASSESSMENT PROCEEDINGS, AS I T HAS ITA NO. 1671/HYD/2013 SMT. AMITA DESAI =================== 4 BEEN OBSERVED, THE ASSESSEE HAS FURNISHED THE BOOKS OF ACCOUNT. THE CIT(A) CONCLUDED THAT THE CREDITS WERE MADE AS PART OF BUSINESS TRANSACTIONS WHICH WERE ADJUSTE D MOSTLY AGAINST THE SALES. 6. THE CIT(A) FURTHER STATED THAT WITHOUT DOUBTING THE SALES OR THE REFUNDS, AS INDICATED BY THE ASSESSEE THROUGH BOOKS, THE AO TREATED THE ENTIRE CREDITS AS UNEXPLA INED WHICH IS NOT JUSTIFIED, SINCE THE ASSESSEE HAD EXPL AINED WITH REASONABLENESS AND DETAILS ON THE GENUINENESS OF THE CREDITS AND IDENTITY OF THE CREDITORS IN MAJORITY O F THE CASES, AGAINST THE OBSERVATIONS/FINDINGS MADE BY TH E AO IN ONE OR TWO CREDITS. THEREFORE, THE ADDITION OF RS. 45,66,748 REPRESENTING CREDITS INTO ACCOUNTS OF 16 PARTIES WAS DELETED BY THE CIT(A). AGGRIEVED BY THE ORDER OF THE CIT(A), THE DEPARTMENT IS IN APPEAL BEFORE US AND R AISED THE FOLLOWING EFFECTIVE GROUND: 'THE LD. CIT(A) HAS ERRED IN ALLOWING THE RELIEF OF UNEXPLAINED CASH CREDITS OF RS. 45,66,748 THOUGH THE ASSESSEE HAS FAILED TO PROVE GENUINENESS OF THE TRANSACTIONS.' 7. WITH RESPECT TO DETAILS OF CASH RECEIPT THE CIT(A) HAD STATED AT PARA 5.2 OF HIS ORDER THAT THE ASSESSEE F URNISHED ACCOUNT EXTRACTS OF 8 PARTIES OUT OF 16 OF SUCH PAR TIES DURING THE APPELLATE PROCEEDINGS. THE 8 PARTIES AR E AS FOLLOWS: SL. NO. NAME OF THE PARTY AMOUNT (RS.) 1) AMRUTH PARBOILED RICE INDUSTRIES 199690 2) AMARI BUILDERS 128392 3) BORRA NARSIMHA REDDY 76000 4) CONMIX RMC PVT. LTD. 167750 5) MICRO WEIGH SYSTEM 890000 6) NEELU INDUSTRIES 325173 7) PUJA IMPRESS (P) LTD. 41184 8) SRK WEIGH SYSTEMS P. LTD. ITA NO. 1671/HYD/2013 SMT. AMITA DESAI =================== 5 8. HOWEVER, WE FIND WITH RESPECT TO THE FOLLOWING 8 RECEIPTS HAVE NOT BEEN SATISFACTORILY EXPLAINED BEF ORE THE LOWER AUTHORITIES: SL. NO. NAME OF THE PARTY AMOUNT (RS.) 1) CONSOLIDATED CONSTRUCTIONS 126261 2) KISTA TILES 820875 3) KONDAPUR TOWERS PVT. LTD. 220428 4) RATNA INFRASTRUCTURE PROJECTS 259668 5) SRI CHAKRA CEMENTS 127086 6) SRI PADMAVATHI OIL FLOOR MILLS 312000 7) TRIDENT TECHNOLOGIES 249600 8) VISHAL INFRASTRUCTURE LTD. 88000 9. THE ASSESSING OFFICER HAS GIVEN A FINDING THAT M/S. CONSOLIDATED CONSTRUCTION CONSORTIUM LTD. FROM WHIC H THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED RS. 1,86,261 ON DIFFERENT DATES AND M/S. SRI CHAKRA CEMENTS IN WHOS E NAME THE ASSESSEE IS SHOWING A DEBIT BALANCE OF RS. 1,27,086, HAVE DENIED HAVING ANY TRANSACTION WITH T HE ASSESSEE. THE ASSESSEE HAS FAILED TO OBTAIN CONFIR MATIONS FROM THE PARTIES AND TO SUBSTANTIATE ITS CLAIM. HE NCE THE ASSESSING OFFICER WAS OF THE OPINION THAT THE ASSES SEE HAD RECORDED CASH RECEIPTS AS AND WHEN FUNDS ARE REQUIR ED AND, THEREFORE, TREATED THE CASH CREDITS APPEARING IN THE NAMES OF THE PARTIES (16 IN NUMBER) AS UNEXPLAINED CASH CREDITS U/S. 68 OF THE ACT. THE ASSESSEE PRODUCED DETAILS AND ACCOUNT EXTRACTS ONLY IN THE CASE OF 8 OUT OF 1 6 SUCH PARTIES DURING THE APPEAL PROCEEDINGS BEFORE THE CI T(A). THE CIT(A) OUGHT TO HAVE DELETED THE ADDITION WITH RESPECT TO ONLY THE 8 PARTIES AND NOT THE ENTIRE ADDITION O F RS. 45,66,748. 10. IN THESE CIRCUMSTANCES, WE DEEM IT FIT TO RESTORE T HE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR VERI FICATION OF THE 8 PARTIES IN WHOSE CASES THERE HAS BEEN NO ITA NO. 1671/HYD/2013 SMT. AMITA DESAI =================== 6 CONFIRMATION IN SUPPORT OF CASH RECEIPTS IN THEIR N AMES ON DIFFERENT DATES. THE ASSESSING OFFICER SHALL EXAMI NE THE ASSESSEE'S ACCOUNTS AND BURDEN OF PROVING THE CORRECTNESS OF RECEIPT OF CASH, DEBIT BALANCES OR B USINESS TRANSACTIONS LIES ON THE ASSESSEE WHO SHALL GIVE TH E DETAILS IN SUPPORT OF HER CLAIM. THEREAFTER THE ASSESSING OFFICER SHALL DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 11. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 24 TH DECEMBER, 2014. SD/ - (P.M. JAGTAP) ACCOUNTANT MEMBER SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD, DATED 24 TH DECEMBER, 2014 TPRAO COPY FORWARDED TO: 1. THE INCOME TAX OFFICER, WARD - 11(1), 6 TH FLOOR, 'B' BLOCK, IT TOWERS, AC GUARDS, HYDERABAD-4. 2. SMT. AMITA DESAI, 11/159, PHASE - I, IDA, JEEDIMETLA, HYDERABAD. 3. THE CIT(A) - V I , HYDERABAD . 4. THE CIT - V , HYDERABAD . 5. THE DR 'A' BENCH, ITAT, HYDERABAD