R.K. & Company, Hyderabad V. ITO, Ward -6(3), Hyderabad

ITA 1765/HYD/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0337 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 25-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 07-12-2012
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained cash credit; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 1765/HYD/2012 ASSESSMENT YEAR: 2006-07 M/S. R.K. & COMPANY HYDERABAD [PAN: AAIFR2451G] VS INCOME TAX OFFICER, WARD-6(3), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A .V . RAGHURAM, AR FOR REVENUE : SHRI RAJAT MITRA, DR DATE OF HEARING : 25 - 0 3 - 201 5 DATE OF PRONOUNCEMENT : 17 - 04 - 2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN ASSESSEE'S APPEAL FILED AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-IV, HYDERABAD D ATED 25-10-2012 CONFIRMING THE ADDITION OF RS.84,26,903 AS UN-EXPLA INED CREDIT WHICH WAS INTRODUCED BY THE PARTNER IN THE FIRM. 2. BRIEFLY STATED, THE MANAGING PARTNER SHRI CHAITA NYA RAVI KUMAR HAD INTRODUCED CAPITAL BY WAY OF BANK TRANSFERS FRO M HIS PERSONAL BANK ACCOUNT AMOUNTING TO RS.90,46,903/-. BEFORE THE AS SESSING OFFICER (AO) ASSESSEE WAS NOT ABLE TO PRODUCE ANY EVIDENCE REGAR DING THE AVAILABILITY OF FUNDS WITH THE PARTNER, HENCE THE SAME WAS TREAT ED AS UNEXPLAINED CREDIT U/S. 68 OF THE INCOME TAX ACT [ACT]. HOWEVE R, BEFORE THE CIT(A), I.T.A. NO. 1765/HYD/2012 R.K. & COMPANY :- 2 -: ASSESSEE HAS PRODUCED A COPY OF THE BANK ACCOUNT OB TAINED FROM UNION BANK OF INDIA, AS SUCH, THE ADDITION WAS DELETED BY THE CIT(A). ITAT VIDE THE ORDER IN ITA NO.705/HYD/2010 HAS SET ASIDE THE ISSUE TO AO ON THE REASON OF NOT FULFILLING THE RULE 46A OF ADDITIONAL EVIDENCE BY CIT(A). IN THE REVISED PROCEEDING, AO AGAIN REJECTED THE ASSES SEES CONTENTIONS AND CIT(A) CONFIRMED THE SAME. 3. LD. COUNSEL REFERRING TO THE FACTS OF THE CASE S UBMITTED THAT THIS WAS THE FIRST YEAR OF BUSINESS OF THE FIRM AND PART NER SRI CHAITANYA RAVI KUMAR HAS INTRODUCED HIS CAPITAL BY WAY OF CHEQUES/ BANK TRANSFER AND HE IS AN ASSESSEE IN HIS INDIVIDUAL CAPACITY AND HU F ALSO. HE HAS SOURCES OF FUNDS AND FILED COPIES OF ASSESSMENT ORD ERS ETC., TO CONTEND THAT : I. PARTNER HAS CREDITWORTHINESS; II. THE MONEYS ARE INTRODUCED BY WAY OF BANK THROUG H HIS PERSONAL A/C TO FIRMS A/C AND III. CREDIT OF PARTNER CANNOT BE CONSIDERED AS INCO ME OF THE FIRM IN THE FIRST YEAR OF BUSINESS; 4. LD. DR HOWEVER RELIED ON THE ORDERS OF THE AUTHO RITIES. 5. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE PA PER BOOK PLACED ON RECORD. APART FROM VARIOUS PRINCIPLES ON LAW, THERE IS NO DISPUTE TO THE FACT THAT THE MONEYS WERE INTRODUCED BY PARTNER THROUGH BANK AND SRI CHAITANYA RAVI KUMAR IS AN ASSESSEE AN D IN HIS PERSONAL CAPACITY THE INVESTMENTS IN FIRM ARE ACCEPTED BY TH E REVENUE IN THE SCRUTINY ASSESSMENTS COMPLETED. IN THESE CIRCUMSTA NCES, WE ARE UNABLE TO CONFIRM THE SAME IN THE HANDS OF SRI CHAITANYA R AVI KUMAR WHICH CAN ONLY BE ASSESSED IN HIS HANDS. AS FAR AS THE F IRM IS CONCERNED, THE GENUINENESS OF CREDIT, IDENTITY OF CREDITOR WAS EST ABLISHED. WE WERE I.T.A. NO. 1765/HYD/2012 R.K. & COMPANY :- 3 -: SURPRISED THAT LD. CIT(A) DEFERRED FROM HER PREDECE SSOR WITHOUT ANY REASON. THE ORDER OF LD. CIT(A) IN THE FIRST ROUND OF APPEAL WAS AS UNDER: '2.1. I HAVE CONSIDERED SUBMISSIONS MADE BY THE A PPELLANT. WITH REGARD TO THE ADDITION OF RS.90,46,903/- MAD E U/S.68, THE ASSESSING OFFICER HAS MADE THIS ADDITION ON THE GR OUND THAT COPIES OF THE BANK ACCOUNTS OF THE PARTNER WERE NOT FILED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. FROM THE COPY OF TH E LEDGER ACCOUNT FILED BEFORE ME IT IS SEEN THAT CAPITAL HAS BEEN I NTRODUCED MOSTLY THROUGH TRANSFERS FROM UNITED BANK OF INDIA. COPY OF THE BANK STATEMENT WAS ALSO FILED TO SHOW THESE TRANSFERS M ADE TO THE FIRM. IT IS SEEN THAT IN MOST OF THESE CASES THE NARRATION CLEARLY SHOWS THAT THE AMOUNTS ARE BEING TRANSFERRED TO THE APPELLANT FIRM. IN ANY CASE, THE APPELLANT HAS ALSO FILED DETAILS TO SHOW THAT THE MANAGING PARTNER HAS BEEN REGULARLY ASSESSED TO TAX. COPIES OF THE RETURNS OF INCOME FILED BY THE MANAGING PARTNER IN HIS INDIVI DUAL STATUS AND IN THE STATUS OF HUF WERE SUBMITTED BEFORE ME. COPY O F ASSESSMENT ORDER PASSED U/S.143(3) R.W.S.147 WAS ALSO FILED F OR THE ASSESSMENT YEAR 2006-07 WHEREIN IT IS SEEN THAT TH E ASSESSING OFFICER HAS ACCEPTED THE INCOME RETURNED OF RS.5,8 5,750/-. THEREFORE CONSIDERING THE FACTS THAT - (I) THERE IS NO QUESTION REGARDING THE IDENTITY O F THE PARTNER, (II) THE PARTNER HAS NOT DISPUTED THE INTRODUCTION OF THE CAPITAL, (III) THE CAPITAL HAS BEEN INTRODU CED THROUGH CHEQUES AND ARE REFLECTED IN THE BANK STATEMENTS PRODUCED BEFORE ME, (IV) THE PARTNER IS REGULARLY ASSESSE D TO TAX AND HAS BEEN FILING RETURNS WITH THE DEPARTMENT, I HOLD THAT THE GENUINENESS AND IDENTITY OF THE PARTNER HAS BEEN ESTABLISHED. SINCE NO ADVERSE FINDING HAS BEEN RE CORDED BY THE ASSESSING OFFICER ON COMPLETION OF SCRUTINY A SSESSMENT FOR THE ASSESSMENT YEAR 2006-07 IN THE CASE OF TH E PARTNER IT HAS TO BE HELD THAT THERE IS NO DISPUTE WITH REGA RD TO HIS CAPACITY EITHER. IN ANY CASE ANY SUCH QUESTION REGARDING THE SOURCE OF THE CAPITAL INTRODUCTION WILL HAV E TO BE CONSIDERED IN THE HANDS OF THE PARTNER AND CANNO T BE ADDED IN THE CASE OF THE FIRM UNDER SUCH CIRCU MSTANCES. I THEREFORE HELD THAT THE ASSESSING OFFICER ERRED I N ADDING BACK THIS AMOUNT OF RS.90,46,903/- U/S.68 OF THE ACT A ND DELETE THE ADDITION MADE'. 6. SINCE THE MATTER WAS RESTORED TO THE AO ON THE R EASON OF FULFILLING THE CONDITIONS OF RULE 46A, WE HAVE NO HESITATION I N HOLDING THAT THE I.T.A. NO. 1765/HYD/2012 R.K. & COMPANY :- 4 -: CREDITS ARE GENUINE AND THERE IS NO SCOPE TO MAKE A DDITION IN THE HANDS OF THE FIRM. WHAT AO WAS ASKING THE FIRM TO PROVE I S THE SOURCE IN THE HANDS OF SRI CHAITANYA KUMAR, WHICH CAN ONLY BE DON E IN HIS ASSESSMENT AND THE SAME WERE ACCEPTED AS SUCH. AS F AR AS FIRM IS CONCERNED IT DISCHARGED ITS ONUS AND CAN NOT BE EXP ECTED TO PROVIDE SOURCE OF SOURCE IN THIRD PERSON HANDS. IN VIEW OF THE ABOVE, WE ACCEPT THE GENUINENESS OF CREDITS AND DELETE THE ADDITION MADE. THE GROUNDS ARE ALLOWED. 7. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 17 TH APRIL, 2015. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD, DATED 17 TH APRIL, 2015 TNMM COPY TO : 1. R.K & COMPANY, C/O. M/S. MAHESH, VIRENDER & SRIRAM, CHARTERED ACCOUNTANTS, 6-3-788/36 & 37A, AMEERPET, HYDERABAD. 2. INCOME TAX OFFICER, WARD-6(3), HYDERABAD 3. CIT(APPEALS)-IV, HYDERABAD 4. CIT-III, HYDERABAD 5. D.R. ITAT, HYDERABAD