ITO, CHENNAI V. Shri J.Madhava Reddy, CHENNAI

ITA 1815/CHNY/2009

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6572 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 05-07-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 04-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JUNIOR
• Assessee Lawyers: N DEVANATHAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI (BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER) .. I.T.A. NO. 1815/MDS/2009 ASSESSMENT YEAR : 2003-04 THE INCOME TAX OFFICER, BUSINESS WARD I(4), CHENNAI 600 034. (APPELLANT) V. SHRI J. MADHAVA REDDY, 52, G.N. CHETTY ROAD, ANKUR PLAZA, T. NAGAR, CHENNAI 600 0017. PAN : AHSPM9982G (RESPONDENT) APPELLANT BY : SHRI K.E.B. RENGARAJAN JUNIOR STANDING COUNSEL RESPONDENT BY : SHRI N. DEV ANATHAN O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, ITS GRIEVANCE IS THAT LD. CIT(APPEALS) DELETED ADDITION OF ` 1,20,000/- APPEARING IN THE NAME OF ONE SHRI SARANGAN AND ` 16,02,222/-/- APPEARING IN THE NAME OF M/S SRN ENGINEERING CONTRACTORS, AS CREDIT BALANCES IN THE BOOKS OF THE ASSESSEE. I.T.A. NO. 1815/MDS/09 2 2. SHORT FACTS APROPOS ARE THAT ASSESSEE, CARRYING ON BUSINESS AS CONTRACTORS LAYING TELECOM CABLE, HAD FILED HIS RET URN FOR IMPUGNED ASSESSMENT YEAR DECLARING TOTAL INCOME OF ` 4,31,610/-. DURING THE COURSE OF SCRUTINY PROCEEDINGS, ASSESSING OFFICER R EQUIRED THE ASSESSEE TO SUBSTANTIATE THE BALANCES UNDER THE HEA D TRADE CREDITORS. A.O. ISSUED SUMMONS TO ONE SHRI SARANG AN AGAINST WHOM A CREDIT BALANCE OF ` 1,20,000/- WAS APPEARING. SHRI SARANGAN, WHO WAS THE PROPRIETOR OF A CONCERN CALLE D SRIDEVI & CO, VIDE HIS LETTER DATED 16.3.2006, CONFIRMED RECEIPT OF ` 3,45,000/- FROM THE ASSESSEE. NEVERTHELESS, ASSESSING OFFICER WAS OF THE OPINION THAT THE ASSESSEE HAD SHOWN A CREDIT BALANCE OF ` 1,20,000/- ONLY AND THEREFORE, THE CONFIRMATION OF CREDIT BALANCE O F ` 3,45,000/- GIVEN BY SHRI SARANGAN COULD NOT BE CONSIDERED. 3. SIMILARLY, ASSESSING OFFICER ALSO ISSUED A LETTE R TO ONE M/S M/S SRN ENGINEERING CONTRACTORS AGAINST WHICH CREDIT BA LANCE SHOWN WAS ` 16,02,222/-. WHEN THE LETTER ISSUED WAS RETURNED, THE A.O. DEPUTED HIS INSPECTOR TO THE GIVEN ADDRESS WHO REPO RTED THAT THERE WAS NO SUCH ENTITY IN THE GIVEN ADDRESS. WHEN THIS WAS PUT TO THE I.T.A. NO. 1815/MDS/09 3 ASSESSEE, HE GAVE ANOTHER ADDRESS AND SUMMONS WAS A GAIN ISSUED BY THE A.O. TO THE NEW ADDRESS. SINCE THERE WAS NO REPLY RECEIVED FROM THE CREDITOR M/S SRN ENGINEERING CONTRACTORS, THE A.O. CONSIDERED SUCH AMOUNT ALSO AS UNEXPLAINED CASH CRE DIT. THUS, SHE MADE AN ADDITION OF ` 1,20,000/- AND ` 16,02,222/-, TOTALLING TO ` 17,22,222/-. 4. IN HIS APPEAL BEFORE LD. CIT(APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT IN SO FAR AS CREDIT BALANCE OF SH RI SARANGAN WAS CONCERNED, THE SAID PARTY HAD CONFIRMED ` 3,45,000/- AND THIS BEING MORE THAN THE AMOUNT SHOWN BY THE ASSESSEE, THERE W AS NO REASON FOR MAKING ADDITION. IN SO FAR AS CREDIT BALANCE O F ` 16,02,222/- IN THE NAME OF M/S SRN ENGINEERING CONTRACTORS WAS CONCERN ED, ASSESSEE PRODUCED BEFORE THE LD. CIT(APPEALS) BILLS OF THE S AID PARTIES ALONG WITH MEASUREMENT SHEETS AND ARGUED THAT THE TOTAL A MOUNT DUE TO THIS CONCERN WAS ` 21,50,205/-, OUT OF WHICH ` 3,50,000/- WAS PAID TO ONE SHRI NEHRU, PARTNER OF M/S SRN ENGINEERING CONT RACTORS. TO SUBSTANTIATE, THIS ASSESSEE ALSO PRODUCED BEFORE LD . CIT(APPEALS) A COPY OF HIS BANK ACCOUNT AS ALSO PARTNERSHIP DEED O F M/S SRN ENGINEERING CONTRACTORS. I.T.A. NO. 1815/MDS/09 4 5. ALL THESE EVIDENCES WERE PUT BY LD. CIT(APPEALS) TO THE A.O. FOR REMAND REPORT. IN THE REMAND REPORT, IT WAS STATED BY THE A.O. THAT HE HAD RECEIVED A LETTER DATED 27.3.2006 FROM SHRI G. SARANGAPANI, WHICH MENTIONED AS UNDER:- I, G. SARANGAPANI, HEREBY CONFIRM THAT THE SUM OF RS .3,45,000/- RECEIVED BY ME FROM J. MADHAV REDDY DURING THE FINANC IAL YEAR ENDED 31.03.2003 WAS ON ACCOUNT OF THE SUPPLY OF BLA CK TAR. WHEREAS ON ACCOUNT OF TOTAL SUBCONTRACT WORK OF RS. 1,20,000/- EXECUTED BY ME FOR M/S J.M. SKILTEC DURING THE FINAN CIAL YEAR ENDED 31.03.2003, THE ENTIRE AMOUNT OF RS.1,20,000/ - WAS DUE AS ON 31.03.2003. THE SAID FACT WAS BY MISTAKE OMITTED TO MENTION IN MY EARLIER LETTER BEFORE YOUR OFFICE. 6. VIS--VIS THE CREDIT BALANCE SHOWN IN THE NAME O F M/S SRN ENGINEERING CONTRACTORS, THE REPORT OF THE A.O. MEN TIONED THAT THE PERMANENT ACCOUNT NUMBER GIVEN BY THE ASSESSEE PERT AINED TO ONE M/S SATHYA PRAKASH RECREATION PRIVATE LTD. NEVERTH ELESS, IT SEEMS THERE WAS NO ADVERSE COMMENTS VIS--VIS BILLS PRODU CED BY THE ASSESSEE FOR THE WORK DONE BY M/S SRN ENGINEERING C ONTRACTORS. 7. LD. CIT(APPEALS), BASED ON THE CONFIRMATION GIVE N BY SHRI G. SARANGAPANI AND ALSO ON THE RECORDS PRODUCED BY THE ASSESSEE RELATING TO M/S SRN ENGINEERING CONTRACTORS, CAME T O A CONCLUSION I.T.A. NO. 1815/MDS/09 5 THAT ASSESSEE HAD SUFFICIENTLY PROVED THE CREDIT BA LANCE. HE, THEREFORE, DELETED THE ADDITIONS. 8. NOW BEFORE US, LEARNED D.R., ASSAILING THE ORDER OF LD. CIT(APPEALS), SUBMITTED THAT ASSESSEE COULD NOT PRO DUCE SUFFICIENT EVIDENCE TO PROVE THE CREDITS AND THE ADDITIONS WER E RIGHTLY MADE BY THE A.O. 9. PER CONTRA, LEARNED A.R. SUPPORTED THE ORDER OF LD. CIT(APPEALS). 10. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. IN SO FAR AS CREDIT BALANCE OF ` 1,20,000/- IN THE NAME OF SHRI G. SARANGAPANI, THE LETTER WRITTEN BY SHRI G. SARANGAP ANI TO THE ASSESSING OFFICER, REPRODUCED BY US AT PARA 5 ABOVE IS SELF- EXPLANATORY. A.O. HAD FOUND NOTHING WRONG WITH THE SAID LETTER WHICH IS CLEAR IN THAT THE AMOUNT DUE AS ON 31.03.2003 FR OM ASSESSEE TO SHRI G. SARANGAPANI WAS ` 1,20,000/-. IN SO FAR AS CREDIT BALANCE APPEARING IN THE NAME OF M/S SRN ENGINEERING CONTRA CTORS IS CONCERNED, ASSESSEE HAD PRODUCED PARTNERSHIP DEED O F THE SAID CONCERN WHICH UNDISPUTEDLY EVIDENCED THAT SHRI NEHR U TO WHOM I.T.A. NO. 1815/MDS/09 6 ASSESSEE HAD PAID ` 3,50,000/- WAS ITS PARTNER. ASSESSEE HAD ALSO PRODUCED BILLS FOR THE WORK DONE BY M/S SRN ENGINEE RING CONTRACTORS AND WAS ABLE TO DEMONSTRATE HOW THE CREDIT BALANCE IN THE NAME OF THE SAID CONCERN APPEARED IN HIS BOOKS. WE ARE OF THE OPINION THAT THE CREDIT BALANCE IN THE NATURE OF TRADE CREDITORS WERE SUFFICIENTLY PROVED BY THE ASSESSEE. THERE WAS NO ADVERSE FINDI NG BY THE A.O. IN THE REMAND REPORT ON THE RECORDS PRODUCED BY THE AS SESSEE. LD. CIT(APPEALS) WAS, THEREFORE, JUSTIFIED IN DELETED T HE ADDITIONS. NO INTERFERENCE IS REQUIRED. 11. IN THE RESULT, APPEAL FILED BY THE REVENUE STAN DS DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 8 TH JULY, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 8 TH JULY, 2011. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A)-VI, CHENNAI/ CIT-IV, CHENNAI/D.R./GUARD FILE