K Raghava Reddy, Hyderabad V. ADIT (Inv.), Unit -I(2), Hyderabad, Hyderabad

ITA 1902/HYD/2014

• Counselvise Citation: 190222514 RSA 2014
• Duration Of Justice: 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MOHARANA
• Assessee Lawyers: M V JOSHI
• Keywords: Unexplained cash credit; Search and seizure; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B'(SMC), HYDERABAD BEFORE THE HONBLE VICE PRESIDENT, SHRI D.MANMOH AN ITA NO.1902/HYD/2014 (ASST. YEAR 2008-09) SHRI K.RAGHAVA REDDY, HYDERABAD ( PAN - AEMPL 0325 E) V/S. ASST. DIRECTOR OF INCOME-TAX (INVESTIGATION), UNIT 1(2), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.V.JOSHI RESPONDENT BY : SHRI MOHARANA DATE OF HEARING 28 . 8 .201 5 DATE OF PRONOUNCEMENT 21.10.2015 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX(APPEALS) VI, HYDE RABAD AND IT PERTAINS TO ASSESSMENT YEAR 2008-09 2. THIS APPEAL, TOGETHER WITH CONNECTED APPEALS, I TA NOS.1898 TO 1901/HYD/2014, WAS ORIGINALLY FIXED FOR HEARING ON 7.4.2015 AND AT THE REQUEST OF THE ASSESSEE, IT WAS ADJOURNED TO 4.8.20 15, AND THEREAFTER POSTED FOR HEARING ON 28.8.2015. ON BEHALF OF THE ASSESSE ES COUNSEL, SHRI M.V.JOSHI, CHARTERED ACCOUNTANT APPEARED AND SOUGHT ADJOURNMENT ON THE GROUND THAT LEARNED COUNSEL IS OUT OF INDIA. IN OR DER TO GO ABROAD, ONE HAS TO SEEK VISA AND FOLLOW OTHER FORMALITIES, WHICH AR E BEING ORDINARILY DONE AT LEAST THREE WEEKS IN ADVANCE, AND THUS, THE COUNSEL IS WELL AWARE THAT HE WOULD BE OUT OF INDIA, IN WHICH EVENT, IT IS HIS DU TY TO FILE AN APPLICATION SEEKING ADJOURNMENT, EXPLAINING THE URGENCY OF GOIN G ABROAD, AS OTHERWISE, ADJOURNMENT IS NOT A MATTER OF RIGHT. IN FACT, HAD THE ASSESSEE SOUGHT ADJOURNMENT WELL IN ADVANCE, SOME OTHER CASES WOULD HAVE BEEN ACCOMMODATED ON THAT DATE. THE PRACTICE OF ASSUMING THAT THE CASES WOULD ITA NO.1902/HYD/2014 SHRI K.RAGHAVA REDDY, HYDERABAD 2 BE AUTOMATICALLY ADJOURNED, AND SEEKING ADJOURNMENT ON THE DAY WHEN THE CASES ARE LISTED FOR HEARING, CANNOT BE ENCOURAGED. UNDER THESE CIRCUMSTANCES, I REFUSED TO GRANT ADJOURNMENT AND R EQUESTED, SHRI JOSHI, CHARTERED ACCOUNTANT (WHOSE NAME IS MENTIONED IN TH E POWER OF ATTORNEY, BUT HE HAS NOT APPENDED HIS SIGNATURE) TO ARGUE T HE MATTER, BUT HE MERELY PLEADED THAT HE IS NOT AWARE OF THE FACTS AND HE HA S TAKEN IT FOR GRANTED THAT ADJOURNMENT WOULD BE AUTOMATIC. THE BENCH HAVING REFUSED TO GRANT ADJOURNMENT, REQUESTED THE LEARNED DEPARTMENTAL RE PRESENTATIVE TO BRIEFLY EXPLAIN THE FACTS. HE MERELY READ OUT THE ORDER OF THE CIT(A) AS WELL AS THE GROUNDS OF APPEAL AND SUBMITTED THAT THE MATTER WAS MERELY SET ASIDE AND THUS NO PREJUDICE IS CAUSED TO THE ASSESSEE. 3. PARTIES ARE DIRECTED TO FILE WRITTEN SUBMISSIO NS. LEARNED CIT-DR, SHRI MOHARANA HAS NOT FILED WRITTEN SUBMISSIONS, BU T AFTER LONG LAPSE OF TIME, ANOTHER CIT-DR SOUGHT TO FILE WRITTEN SUBMISSIONS, WHICH ARE NOT TAKEN ON RECORD, SINCE SHE HAS NOT REPRESENTED THE MATTER. 4. SIMILARLY, THE LEARNED COUNSEL FOR THE ASSESSE E FILED THE WRITTEN SUBMISSIONS, WHEREIN IT IS MERELY CONTENDED THAT IN THE LIGHT OF THE SPECIAL BENCH(MUMBAI) DECISION OF THE TRIBUNAL IN ALL CARGO GLOBAL LOGISTICS LTD. (137 ITD 287), WHEN THERE IS NO INCRIMINATING MATER IAL FOUND DURING THE COURSE OF SEARCH, NO ASSESSMENT CAN BE MADE UNDER S.143(3) READ WITH S.153A OF THE ACT. IN HIS OPINION, THE MATTER HAVI NG BEEN SET ASIDE PURELY ON THE GROUND THAT THE ASSESSING OFFICER MADE THE A DDITIONS ON THE BASIS OF ASSUMPTIONS, IT IMPLIES THAT THERE IS NO INCRIMINAT ING MATERIAL FOUND AT THE TIME OF SEARCH. 5. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES. THE ONLY GROUND URGED BY THE ASSESSEE IN THIS APPEA L READS AS UNDER- ITA NO.1902/HYD/2014 SHRI K.RAGHAVA REDDY, HYDERABAD 3 1. . 2. THE LD. CIT(A)-IV HAVING HELD THAT THE AMOUNT OF RS.2,00,000/- IS EXPLAINABLE WITH THE HELP OF BANK ACCOUNT, IDENTIFIED WITH AN ENTRY, THE SAME MAY NOT BE LIABLE TO BE TREATED AS UNEXPLAINED CREDIT, HAS ERR ED IN DIRECTING THE ASSESSING OFFICER TO VERIFY THE BANK TRANSACTION BEFORE TREATING THE CREDIT AS EXPLAINE D. 3. .. 6. ASSESSEE IS A DIRECTOR OF M/S. MIDWEST GRANITES PVT. LTD. (MGPL). SEARCH AND SEIZURE OPERATION UNDER S.132 OF THE ACT WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF THE ASSESSEE AND THE BUSINE SS PREMISES OF THE COMPANY, M/S. MIDWEST GRANITES PVT. LTD., AND CONSE QUENT THERETO NOTICE UNDER S.153A WAS ISSUED, SINCE SOME FOREIGN CURRENC Y WAS FOUND DURING THE COURSE OF SEARCH PROCEEDINGS. IN OTHER WORDS, BASED ON INCRIMINATING MATERIAL PROCEEDINGS UNDER S.153A WERE INITIATED. 7. THE ASSESSEE FIELD A RETURN ADMITTING AN INCOME OF RS.6,30,070 ORIGINALLY. IN RESPONSE TO NOTICE UNDER S.153A, AS SESSEE DECLARED INCOME OF RS.7,26,750. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED TO HA VE RECEIVED HAND LOAN OF RS.2 LAKHS FROM M/S. SUVEN ENGINEERING ENTERPRISES. ACCORDING TO THE ASSESSING OFFICER, THE LOAN WAS ONLY TO ACCOMMODATE THE SOURCES OF INVESTMENTS/EXPENDITURE REFLECTED ON THE PAYMENTS S IDE OF THE RECEIPTS AND PAYMENTS ACCOUNT. HE ALSO OBSERVED THAT FULL DETAI LS WITH REGARD TO THE ADDRESS OF THE CONCERN, CHEQUE NO. (THROUGH WHICH T HE AMOUNT IS RECEIVED) AND THE FINANCIAL CAPACITY OF THE SAID CONCERN WERE NOT ESTABLISHED. ACCORDINGLY, HE MADE AN ADDITION OF RS.2 LAKHS TOWA RDS UNEXPLAINED CASH CREDITS. 8. BEFORE THE LEARNED CIT(A), ASSESSEE CONTENDED T HAT THE AFOREMENTIONED AMOUNT OF RS.2 LAKHS REPRESENTS REP AYMENT PART OF THE LOAN ON 19.3.2008 AGAINST LOAN OF RS.6,00,000 GRANTED BY HIM TO M/S. SUVEN ITA NO.1902/HYD/2014 SHRI K.RAGHAVA REDDY, HYDERABAD 4 ENGINEERING ENTERPRISES ON 11.7.2006; AND BOTH THE SE TRANSACTIONS HAVE BEEN ROUTED THROUGH BANK, THOUGH CONFIRMATION COULD NOT BE FURNISHED. IT WAS ALSO CONTENDED THAT THE ASSESSING OFFICER HAS M ADE THE ADDITION, WITHOUT AFFORDING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. UPON PERUSAL OF THE RECORD, THE LEARNED CIT(A) OBSERVED THAT THE ASSESSING OFFICER HAS NOT PUT TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS, THE REASONS AS TO WHY HE IS MAKING AN ADDITION. SINCE AN EXPLANATION IS TENDERED BEFORE THE CIT(A), THE MATTER WAS SET ASID E TO THE FILE OF THE ASSESSING OFFICER, WHO IS DIRECTED TO VERIFY THE BA NK TRANSACTIONS, AND IF IT IS FOUND THAT THE TRANSACTIONS WERE ROUTED THROUGH TH E BANK, NO ADDITION CAN BE MADE, AS OBSERVED BY THE LEARNED CIT(A). 9. AGGRIEVED BY THE DIRECTION OF THE CIT(A), ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL, CONTENDING INTER ALIA THAT THE AMOUNT OF RS.2 LAKH IS EXPLAINABLE WITH REFERENCE TO THE BANK ACCOUNT, IDE NTIFIABLE WITH BANK ENTRIES, AND HENCE, THE SAME OUGHT TO HAVE BEEN TRE ATED AS EXPLAINED, IN WHICH EVENT, THERE IS NO NEED TO SET ASIDE THE MATT ER. 10. THE CASE OF THE LEARNED DEPARTMENTAL REPRESEN TATIVE ON THE OTHER HAND, IS THAT IN RESPECT OF CASH CREDITS, THE INITIAL ONUS IS UPON THE ASSESSEE TO PROVE THE SOURCE, IDENTITY AND CREDITW ORTHINESS OF THE CREDITOR, WHEREAS IN THE INSTANT CASE, THE ASSESSEE DID NOT FURNISH THE DETAILS BEFORE THE ASSESSING OFFICER, AND EVEN ASSUMING FOR A MOM ENT THAT THE ASSESSING OFFICER HAS NOT CALLED FOR COMPLETE DETAILS, EVEN B EFORE THE CIT(A) THE ASSESSEE ADMITS THAT THE CONFIRMATION LETTER COULD NOT BE FILED; AND INITIAL ONUS CAN BE SAID TO HAVE BEEN DISCHARGED ONLY WHEN ALL THE THREE INGREDIENTS HAVE BEEN PROVED, AND IN THE INTERESTS OF SUBSTANTI AL JUSTICE, LEARNED CIT(A) WAS JUSTIFIED IN SETTING ASIDE THE MATTER TO THE FI LE OF THE ASSESSING OFFICER FOR DE NOVO CONSIDERATION. ITA NO.1902/HYD/2014 SHRI K.RAGHAVA REDDY, HYDERABAD 5 11. HERE ALSO, THE LEARNED COUNSEL FOR THE ASSESS EE IN HIS WRITTEN SUBMISSIONS MERELY SUBMITS THAT IN THE ABSENCE OF I NCRIMINATING MATTERIAL, ADDITION CANNOT BE MADE IN VIEW OF THE DECISION OF THE SPECIAL BENCH (MUMBAI) OF THE TRIBUNAL IN THE CASE OF ALL CARGO G LOBAL LOGISTICS LTD. V/S. DCIT(137 ITD 287). HOWEVER, IT IS NOT DENIED THAT THE NOTICE UNDER S.153A WAS ISSUED BASED ON THE INCRIMINATING MATERIAL AND IN FACT, THE ASSESSEE HAS DECLARED MORE INCOME THAN WHAT WAS DECLARED IN THE ORIGINAL RETURN OF INCOME. UNDER THESE CIRCUMSTANCES, IT CANNOT BE SAI D THAT THE ASSESSMENT WAS MADE IN THE ABSENCE OF INCRIMINATING MATERIAL. IN FACT, THE LEARNED CIT(A), IN THE CIRCUMSTANCES, ACCEPTED THE CLAIM OF THE ASSESSEE SUBJECT TO VERIFICATION OF THE SOURCE AND GENUINENESS OF THE R ECEIPT, WHICH, IN MY CONSIDERED OPINION, IS IN ACCORDANCE WITH LAW. UND ER THESE CIRCUMSTANCES, APPEAL FILED BY THE ASSESSEE IS DISMISSED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISM ISSED. PRONOUNCED IN THE COURT ON 21 ST OCTOBER, 2015 SD/- (D.MANMOHAN) VICE PRESIDENT DT/- 21 ST OCTOBER, 2015 COPY FORWARDED TO: 1. SHRI K.RAGHAVA REDDY, C/O. M/S.P.MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-6755/2/3, 1ST FLOOR, SOMAJIGUDA, HYDERABAD-82 2 . ASSTT. DIRECTOR OF INCOME - TAX(INV) HYDERABAD 3. 4. COMMISSIONER OF INCOME-TAX(APPEALS) VI, HYDERABAD DIRECTOR OF INCOME-TAX(INV) HYDERABAD 5 . DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S