Ganesh Chemicals, Visakhapatnam V. The Income Tax Officer, Ward-2, Vizianagaram

ITA 223/VIZ/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 8273 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 08-11-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Additional evidence
• Section: 68; 143(3); 143(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM (Through web-based video conferencing platform) BEFORE SHRI DUVVURU R L REDDY, HON’BLE JUDICIAL MEMBER & SHRI S. BALAKRISHNAN, HON'BLE ACCOUNTANT MEMBER I.T.A. No. 223/VIZ/2020 (Asst. Year : 2012-13) M/s. Ganesh Chemicals, D.No.50-78-71, Seethammapeta, Behind Petrol Pump, Visakhapatnam. Vs. Income Tax Officer Ward-2, Vijayanagaram. PAN No. AAHFG 4410 F (Appellant) (Respondent) Assessee by : Shri C.Subrahmanyam, FCA. Department by : Shri S.P.G.Mudaliar , Sr.DR Date of hearing : 09/02/2022. Date of pronouncement : 23/02/2022. O R D E R PER S. BALAKRISHNAN, ACCOUNTANT MEMBER: This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals)-1, [for short, “CIT(A)”], Visakhapatnam in order No.ITA No.172/2015-16/CIT(A)-1/VSP/ 2020-21, dated 15/09/2020 for the A.Y. 2012-13 arising out of the order passed by the AO u/sec. 143(3) of the Income Tax Act, 1961 (for short, „Act‟). 2. The assessee has raised the following grounds of appeal:- “1. That under the facts and circumstances of the case the additions made by the Assessing officer (in short 'AO), 2 ITA No. 223/VIZ/2020 (M/s. Ganesh Chemicals) vide orders passed u/s. 143(3) of IT Act, that were sustained partly by the learned Commissioner of Income Tax (Appeals) (in short „CIT(A)‟), are against the facts of the case and provisions of law. 2. The Ld. CIT(A) failed to take note that the assessee has discharged the burden cast on him in substantiating the cash credits in the manner provided under the provisions of Sec. 68 of the I.T. Act when such is so confirming the cash credits as unexplained is unwarranted and against the provisions of law. 3. The Ld. CIT(A), under the facts and circumstances, erred in confirming the cash credits to the extent of Rs.4,90,000/- & Rs. 17,64,880/-, though evidence in support of the credits were furnished and the burden of proving the credit has been discharged. 4. For these and other reasons that are to be urged at the time of hearing of the case the appellant prays that the orders passed u/s. 143(3) of the I.T. Act are to be quashed in the interest of justice 3. Brief facts of the case are that assessee firm filed its return of income for the A.Y. 2012-13 on 29/09/2012 admitting taxable income of Rs. 10,09,650/-. The return was processed u/sec. 143(1) of the Act and was selected for scrutiny under CASS. A notice u/sec. 143(2) was issued on 08/08/2013. Based on the verification of the details furnished by the assessee, the AO required the assessee to produce identity, creditworthiness and genuineness of loans taken by the firm from various individuals as listed below:- 1 Shri Praveen Kumar - Rs. 5,00,000 2 Shri Ramana Reddy - Rs. 3,20,000 3 Shri V.Nanda Kishore - Rs. 2,50,000 4 Shri Sasi Kiran - Rs. 9,00,000 5 Shri B.Rama Krishna - Rs.30,20,000 6 Shri D. Krishna - Rs. 5,00,000 7 Venkata Brahmini Agencies - Rs. 2,00,000 8 Shri Mohan Rao - Rs. 2,00,000 9 Shri P.Srinivasa Rao - Rs. 2,64,880 10 Shri D.Ramakanth - Rs. 6,00,000 3 ITA No. 223/VIZ/2020 (M/s. Ganesh Chemicals) 11 Shri V. Anil Kumar - Rs.12,50,000 Total - Rs. 80,04,880 The assessee was able to furnish lawyer notice sent by the creditors against non-payment of interest and principle due to them by the assessee-firm, totalling to Rs. 19,70,000/-. Considering the same, the AO disallowed an amount of Rs. 60,34,880/-, treating the same as unexplained credits. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the ld.CIT(A). Before the ld.CIT(A), the assessee produced additional evidence which was remitted back to the AO for verification. The AO rejected the additional evidence and confirmed the addition of Rs. 60,34,880/-. The ld.CIT(A) considered the additional evidences produced by the assessee and disallowed a sum of Rs.4,90,000/- and Rs. 17,64,880/- as unexplained credits. 5. Ld.AR relied on the grounds of appeal. 6. Ld.DR argued that the PAN and Aadhaar cards of the creditors were not produced and the creditworthiness was not established by the assessee to the satisfaction of the AO and the ld.CIT(A). 7. We have heard both the parties and perused the material available on record. The Hon'ble Madras High Court in the case of Mangilal Jain Vs ITO (315 ITR 105) has held as under:- “16. In all, the result of inquiries carried out by the department should reveal and satisfy transparently all parameters of section 68, concurrently. In the present case, the finding of fact is to the effect that neither the creditworthiness nor genuineness of the parties has been established by the assessee........... The appellant however failed to establish the genuineness of the cash contributions as 4 ITA No. 223/VIZ/2020 (M/s. Ganesh Chemicals) well as the capacity of the persons to have made such contributions in the first place. The findings of the fact arrived at by the tribunal are accepted and nothing has been placed on record to show that they are perverse.” 8. Respectfully following the judgment of the Hon'ble Madras High Court and considering the facts that the assessee has not provided the PAN and other details of the creditors and has not established the creditworthiness and genuineness of the transaction to the satisfaction of the AO, we find no infirmity in the order passed by the ld.CIT(A) and uphold the order of the ld.CIT(A). 9. In the result, appeal filed by the assessee is dismissed. Order Pronounced in open Court on this 23 rd day of Feb., 2022. sd/- sd/- (DUVVURU R L REDDY) (S. BALAKRISHNAN) Judicial Member Accountant Member Dated: 23 rd Feb., 2022. vr/- Copy to: 1. The Assessee - M/s. Ganesh Chemicals, D.No.50-78-71, Seethammapeta, Behind Petrol Pump, Visakhapatnam. 2. The Revenue –ITO,Ward-2, Vijayanagaram. 3. The Pr.CIT-1, Visakhapatnam. 4. The CIT(A)-1, Visakhapatnam. 5. The D.R., Visakhapatnam. 6. Guard file. By order (VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Visakhapatnam.