Adipala Linga Reddy, Nalgonda V. Income Tax Officer, Ward-1, Nalgonda

ITA 1855/Hyd/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2407 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-03-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 13-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: D V ANJANEYULU
• Keywords: Principle of natural justice
• Section: 142(1); 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B BENCH: HYDERABAD BEFORE SMT. P.MADHAVI DEVI, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ITA. NO. 1855 /HYD/2017 ASSESSMENT YEAR: 201 2 - 201 3 ADIPALA LINGA REDDY, NALGONDA. PAN: ADTPL 6277 G VS. INCOME TAX OFFICER, WARD - 1, NALGONDA. (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI D.V. ANJANEYULU FOR REVENUE : SHRI K.J. RAO, DR DATE OF HEARING : 22.03.2018 DATE OF PRONOUNCEMENT : 23 .03.2018 ORDER PER D.S. SUNDER SINGH, AM . 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A) - 3, HYDERABAD AND IT PERTAINS TO A.Y. 2012 - 13. 2. ASSESSEE IS ENGAGED IN THE BUSINESS OF MILLING AND SELLING OF RICE IN THE NAME AND STYLE OF M/S. ANNAPURNA RIC E MILL, KISTAPURAM, HUZURNAGAR. FOR THE A.Y. 2012 - 13, ASSESSEE FILED ITS RETURN OF INCOME ON 11.09.2012 ADMITTING A TOTAL INCOME OF RS. 5,61,300/ - . THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSING OFFICER CALLED FOR THE VARIOUS DETAILS BY ISSUING NOT ICES U/S 143(2) AND 142(1) OF THE ACT. SINCE THERE IS NO RESPONSE FROM THE ASSESSEE, THE A.O. VERIFIED THE FINANCIAL STATEMENTS AND FOUND FROM THE BALANCE SHEET THAT ASSESSEE HA D OUTSTANDING SUNDRY CREDITORS OF RS. 3,27,40,100/ - AT THE END OF THE YEAR. TH E A.O. ALSO VERIFIED THE OUTSTANDING BALANCE OF SUNDRY CREDITORS IN THE IMMEDIATELY PRECEDING YEAR, AND FOUND AT RS. 32,56,209/ - . T HE 2 DIFFERENCE AMOUNT OF RS. 2,94,83,890/ - (RS. 3,27,40,100 RS. 32,56,209) WAS BROUGHT TO TAX AS UNPROVED CREDITORS . , SINCE ASSESSEE FA ILED TO FURNISH ANY DETAILS . T HE INCOME WAS ASSESSED AT RS. 3,00,45,190/ - . 3. AGGRIEVED BY THE ORDER OF THE A.O., ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND FILED REVISED BALANCE SHEET AND PROFIT AND LOSS BUT FAILED TO FURNISH THE BAN K ACCOUNT DETAILS / PASS BOOK, LEDGER ACCOUNT OF SUNDRY CREDITORS, AUDIT REPORT ETC.. T HE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO . 4. DURING THE FIRST APPEAL PROCEEDINGS, THE ASSESSEE FURNISHED THE REVISED PROFIT AND LOSS ACCOUNT AND BALAN CE SHEET BUT FAILED TO FURNISH THE BANK ACCOUNT DETAILS / PASS BOOK, LEDGER ACCOUNT OF SUNDRY CREDITORS, AUDIT REPORT ETC. THE ASSESSING OFFICER SUBMITTED THE REMAND REPORT STATING THAT THE ASSESSEE HAS FURNISHED THE LIST OF SUNDRY CREDITORS WITHOUT ADDRE SSES AND CONFIRMATION LETTERS. A CERTIFICATE FROM THE AGRICULTURAL MARKET COMMITTEE REGARDING THE PURCHASES SALES MADE IN THE FY 2011 - 12 WAS ALSO SUBMITTED. BEFORE THE A.O. ASSESSEE SUBMITTED A LETTER STATING THAT THE FINANCIAL STATEMENTS SUBMITTED ALONG WITH THE RETURN OF INCOME WAS CORRECT AND REQUESTED TO IGNORE THE REVISED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FURTHER BEFORE THE LD. CIT(A) - 3, HYDERABAD. HOWEVER, ASSESSEE DID NOT FURNISH QUANTITATIVE DETAILS, BALANCE AMOUNT DUE, THE DETAILED ADDRE SSES OF THE CREDITORS AND THE RELEVANT CONFIRMATIONS TO ESTABLISH THE GENUINENESS OF THE OU T STANDING CREDITS AND THE BOOKS WERE ALSO NOT PRODUCED BEFORE THE ASSESSING OFFICER. HENCE, ASSESSING OFFICER REQUESTED THE LD. CIT(A) TO DECIDE THE CASE ON MERITS. THE LD. CIT(A) FORWARDED THE REMAND REPORT TO THE ASSESSE FOR HIS COMMENTS, BUT THE ASSESSE FAILED TO RESPOND TO THE LD.CIT(A). T HE LD.CIT(A) CONSIDERED THE SUBMI SSIONS MADE BY THE ASSESSEE , REMAND REPORT OF THE AO AND THE FORWARDING COMMENTS OF THE AD DL. CIT AND HELD THAT , IN THE ABSENCE OF EVIDENCE TO SUBSTANTIATE THE 3 OUTSTANDING CREDITORS THE ASSESSING OFFICER HAS RIGHTLY TAXED THE SAME AS UNEXPLAINED LIABILITY AND ACCORDINGLY CONFIRMED THE ADDITION AND DISMISSED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL. 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS IN LAW, CONTRARY TO THE FACTS, PROBABILITIES OF THE CASE AND AGAINST THE PRINCIPLE OF EQUITY AND NATURAL JUSTICE. 2. THE LD. CIT(A) ERRED IN LAW BY SUSTAINING THE ADDITION OF RS. 2,94,83,890/ - MADE BY THE A.O. REPRESENTS THE AMOUNTS PAYABLE TO AGRICULTURAL FARMERS WITHIN THE VICINITY AGAINST THE PURCHASE OF PADDY, WHICH WAS SHOWN UNDER T HE HEAD SUNDRY CREDITORS THAT THE APPELLANT FAILED TO PROVE IDENTITY, CONFIRMATION AND GENUINENESS OF THE CREDITORS BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. 3. THE LD. CIT(A) SUSTAINED THE ADDITION BY NOT PROPERLY CONSIDERING EVEN AFTER MATERIA L EVIDENCE FURNISHED, THE STATEMENT OF RECONCILIATION OF SUNDRY CREDITORS, STATEMENT OF SALE RECEIPTS AND CREDIT PURCHASE BILLS TOWARDS PURCHASE PADDY, WHICH WAS SUPPORTED BY AGRICULTURAL MARKET COMMITTEE, MIRYALGUDA COVERED UNDER RULE 6DD [E(1) OF IT RULE S, 1962, SIMPLY BY SAYING NO QUALIFICATION OF THE BALANCE DUE TO BE PAID TO THE FARMERS AT THE END OF FY WHICH WAS SUBSEQUENTLY PAID AFTER THE RECEIPT OF SALE PROCEEDS FROM CIVIL SUPPLIES DEPARTMENT (GOVT OF AP) AND FOOD CORPORATION OF INDIA. 4. FOR THESE AND OTHER REASONS THAT MAY BE URGED AT THE TIME OF HEARING THE APPELLANT PRAYS THE HONBLE TRIBUNAL TO KINDLY DELETE THE ADDITIONS SUSTAINED BY THE LD. CIT(A). 6 . ALL THE ABOVE GROUNDS OF APPEAL ARE RELATE D TO ADDITION OF RS. 2,94,83,890/ - . DURING THE A PPEAL HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MILLING ANG SELLING OF RICE AND FURNISHED THE CERTIFICATE FROM THE AGRICULTURAL MARKET COMMITTE E WITH REGARD TO THE PURCHASE AND SALE OF RICE AND THERE IS N O DISPUTE IN TH IS REGARD . LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT THE CLOSING STOCK AS ON 31.03.2012 WAS RS. 3,15,76,030/ - AGAINST WHICH THE SUNDRY CREDITORS WERE RS. 3,27,40,100/ - , H ENCE THERE IS NO REASON TO SUSPECT THE SUNDRY CREDITORS . S INCE THE PURCHASE AND SALES ARE CERTIFIED BY TH E AGRICULTURAL MARKET 4 COMMITTEE, LEARNED COUNSEL FOR THE ASSESSEE FURTHER ARGUED THAT TRADING RESULTS TO BE ACCEPTED AND ADDITION MADE BY THE ASSESSING OFFICER BE DELETED. 7 . ON THE OTHER HAND, LEARNED DEPARTMENTAL REP RESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES. 8 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, IT IS EVIDENT FROM THE RECORD THAT THE ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNT, VOUCHERS ET C., BEFORE THE ASSESSING OFFICER. HENCE THE A.O. COMPLETED THE ASSESSMENT TO THE BEST SATISFACTION U/S 144 OF THE ACT. DURING THE APPEAL HEARING ALSO, ASSESSEE HAS NOT FURNISHED THE BOOKS OF ACCOUNT, BANK ACCOUNT DETAILS, LEDGER COPIES , AUDIT REPORT ETC. HOWEVER, HE HAS FURNISHED THE REVISED PROFIT & LOSS ACCOUNT AND BALANCE SHEET BUT D URING THE REMAND PROCEEDINGS, REQUESTED THE AO TO IGNORE THE REVISED BALANCE SHEET AND PROFIT & LOSS ACCOUNT . THOUGH THE ASSESSEE HAS PRODUCED THE BILL BOOKS, THE CROSS VE RIFICATION COULD NOT BE DONE BY THE ASSESSING OFFICER IN THE ABSENCE OF BOOKS OF ACCOUNT AND THE GENUINENESS OF THE OUTSTANDING UNDER TRADE CR EDITORS COULD NOT BE VERIFIED WITH THE RELEVANT BOOKS OF ACCOUNT DUE TO THE FAILURE OF - FURNISHING OF CONFIRM ATION LETTERS, BOOKS OF ACCOUNTS ETC. FURTHER, THOUGH THE LD. CIT(A) HAS GIVEN A COPY OF THE REMAND REPORT REQUESTING THE ASSESSEE TO SUBMIT THE COMMENTS, THE ASSESSEE DID NOT SUBMIT ANY COMMENTS TO THE LD. CIT(A). IN THE ABSENCE OF PRODUCTION OF BOOKS OF ACCO UNT, THE ASSESSING OFFICER COULD NOT VERIFY THE GENUINENESS OF THE EXPENDITURE DEBITED TO THE PROFIT AND LOSS ACCOUNT ALSO UNDER VARIOUS HEADS. THOUGH AGRICULTURAL MARKET COMMITTEE VIDE ITS CERTIFICATE DATED 08.11.2013 CERTIFIE D THE PURCHASE S AND SALE S , T HE GENUINENESS OF THE OUTSTANDING CREDITORS REQUIRED TO BE VERIFIED FROM THE BOOKS OF ACCOUNT AND FROM THE CONFIRMATION LETTERS. IN THIS REGARD, NEITHER THE A.O. NOR THE LD. CIT(A) COULD VERIFY ANY OF THE ISSUES RELATED TO THE PROFIT & LOSS ACCOUNT, BALAN CE SHEET AND TRADING 5 ACCOUNT IN THE ABSENCE OF NON - PRODUCTION OF THE BOOKS OF ACCOUNT. THE ASSESSEE IN THE APPEAL HEARING EXPLAINED THAT THE RICE MILLS IS CLOSED AND THE ASSESSEE IS SUFFERING FROM LOSSES AND THE REPRESENTATIVE WHO HAS TO TAKE CARE OF THE TAX MATTERS HAS NOT ATTEND ED BEFORE THE ASSESSING OFFICER. T HE CORRECTNESS OF THE EXPENDITURE IS REQUIRED TO BE VERIFIED FROM THE BOOKS OF ACCOUNT. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ENTIRE ASSESSMENT SHOULD BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO RE - DO THE ASSESSMENT DE NOVO . ACCORD INGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ENTIRE ASSESSMENT IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO RE - DO THE ASSESSMENT AFTER VERIFYING ALL THE DETAI LS. THE ASSESSEE IS DIRECTED TO COOPERATE WITH THE ASSESSING OFFICER AND SUBMIT THE REQUIRED INFORMATION AND PRODUCE THE BOOKS OF ACCOUNT FOR COMPLETING THE ASSESSMENT. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9 . ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MARCH, 2018. SD/ - SD/ - (SMT. P. MADHAVI DEVI) (D.S. SUNDER SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 23 RD MARCH, 2018. OKK, SR.PS COPY TO 1. M/S. ANJANEYULU & CO., CHARTERED ACCOUNTANTS, 30, BHAGYALAKSHMI NAGAR, GANDHI NAGAR, HYDERABAD 500 080. 2. INCOME TAX OFFICER, WARD - 1, NALGONDA. 3. CIT (A) - 3 , HYDERABAD. 4. PR. CIT - 3 , HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE