Globe Steel Pipe Company, Secunderabad V. Income Tax Officer, Ward-10(4), Hyderabad

ITA 2277/Hyd/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9766 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 23-09-2019
• Assessment Year: 2007-2008
• Appeal Filed On: 29-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMISHA S GUPT
• Assessee Lawyers: C P RAMASWAMI
• Keywords: Deemed to accrue or arise in india; TDS; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES SMC, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A. NO. 2277/HYD/2017 ASSESSMENT YEAR: 2007-08 M/S.GLOBE STEEL PIPE CO., SECUNDERABAD [PAN: AABFG5983F] VS INCOME TAX OFFICER, WARD-10(4), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI C.P.RAMASWAMI, AR FOR REVENUE : SMT. AMISHA S.GUPT, DR DATE OF HEARING : 25-09-2019 DATE OF PRONOUNCEMENT : 30-09-2019 O R D E R THIS APPEAL FILED BY THE ASSESSEE FOR THE AY.2007-08, IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCO ME TAX (APPEALS)9, HYDERABAD, DATED 31-07-2017. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A PARTNERSHIP FIRM, ENGAGED IN MERCANTILE BUSINESS, FIL ED ITS RETURN OF INCOME FOR THE AY.2007-08 ON 31-10-2017, AD MITTING AN INCOME OF RS.4,14,808/-. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S.14 3(3) OF THE INCOME TAX ACT [ACT], THE ASSESSEE WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNT ALONG WITH SUPPORTING VOUCHERS AN D BILLS. ASSESSEE FILED THE SAME AND ON PERUSAL OF THE SAID BO OKS OF ACCOUNT, THE ASSESSING OFFICER (AO) NOTICED THAT THE ASS ESSEE ITA NO. 2277/HYD/2017 :- 2 -: HAS UNSECURED LOANS AND SUNDRY CREDITORS. ASSESSEE W AS THEREFORE ASKED TO FILE CONFIRMATIONS WITH RESPECT TO THE SAID LOANS AND CREDITORS. 4. IN REPLY, THE LD.AR FILED INFORMATION IN RESPECT OF UN- SECURED LOANS ALONG WITH DETAILS, SUCH INTEREST PAID TH EREON AND THE TDS MADE THEREFROM. AS REGARDS THE SUNDRY CRED ITORS ALSO, ASSESSEE FILED CONFIRMATIONS FROM ALL PARTIES E XCEPT IN RESPECT OF ONLY TWO PARTIES I.E., M/S.BANGALORE TUBES AND M/S.TRANSPORT CORPORATION OF INDIA, WHEREIN OUTSTANDI NG AMOUNTS WERE RS.9,47,333/- AND RS.4,98,848/- RESPECTI VELY. 5. WHEN QUESTIONED, THE ASSESSEE STATED THAT IN CASE OF M/S.TRANSPORT CORPORATION OF INDIA, ASSESSEE-FIRM HAS INFORMED THAT THE TRANSPORTER IS DEMANDING HIGHER DUES AND ALSO WHILE TRANSPORTING THE GOODS THERE WERE DAMAGES TO THE MATERIAL BROUGHT BY THE TRANSPORTER AND HENCE THERE IS A DISPUTE AND NO PAYMENTS WERE MADE. 5.1. IN RESPECT OF M/S.BANGALORE TUBES, ASSESSEE STAT ED THAT THERE ARE SOME DIFFERENCES BETWEEN THE FATHER AND SON , DUE TO WHICH THEY HAVE CLOSED THE SHOP AND NO PAYMENT HAS BEE N MADE DURING THE RELEVANT FINANCIAL YEAR AND NOW THEY H AVE STARTED MAKING PAYMENTS. 6. THE AO, HOWEVER, CONCLUDED THAT THE CONTENTION OF ASSESSEE CANNOT BE ACCEPTED IN TOTO AS PRIMARY ONUS IS ON ASSESSEE TO PROVE THAT THE LOANS AND CREDITORS ARE GENUI NE. ITA NO. 2277/HYD/2017 :- 3 -: SINCE THE SAME WAS NOT PROVED WITH ANY EVIDENCE, THE AO TREATED THE ENTIRE OUTSTANDING AMOUNT OF RS.4,98,848/- TO M/S.TRANSPORT CORPORATION OF INDIA, AS DEEMED INCOME OF THE ASSESSEE AND BROUGHT IT TO TAX. IN THE CASE OF M/S.BANGA LORE TUBES ALSO, AO HELD THAT THE ASSESSEE HAS NOT ESTABLISHE D THE GENUINENESS OF THE CREDITOR AND THEREFORE, HE BROUGHT THE SUM OF RS.9,47,333/- ALSO TO TAX AS UN-EXPLAINED EXPENDI TURE AND BROUGHT IT TO TAX. 6.1. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A), STATING THAT THE TRANSACTIONS ARE GENUINE, ARE RE FLECTED IN THE BOOKS OF ACCOUNT AS WELL AS VAT RETURNS. IT WAS ALSO CONTENDED THAT TREATING THE CREDIT BALANCE OF M/S.TRANSPO RT CORPORATION OF INDIA AS DEEMED INCOME DURING THE YEAR UNDER CONSIDERATION IS INCORRECT AS THE SAME HAS EMANATED IN THE EARLIER YEAR AND WAS SUBSTANTIATED DURING SCRUTINY AS SESSMENT PROCEEDINGS OF EARLIER YEARS. THE ASSESSEE ALSO FIL ED CONFIRMATION LETTERS AND ACCOUNT COPIES OF M/S.BANGALOR E TUBES AND M/S.TRANSPORT CORPORATION OF INDIA AS ADDITI ONAL EVIDENCE. THE LD.CIT(A) CALLED FOR REMAND REPORT FR OM THE AO WHICH WAS SUBMITTED BY THE AO. FROM THE REMAND REPORT, THE LD.CIT(A) OBSERVED THAT THE AO IN THE REMAND REPORT HAS STATED THAT THE ASSESSEE DID NOT FILE THE REQUIRED DOCUME NTS BEFORE HIM. THE LD.CIT(A) AGAIN CALLED FOR AN EXPLA NATION FROM THE ASSESSEE WITH A DIRECTION TO ATTEND BEFORE THE AO IN TH E REMAND PROCEEDINGS FOR VERIFICATION OF THE CONFIRMATIO N LETTERS AND THE COPIES OF THE ACCOUNTS OF THE ABOVE TWO PARTIES. ASSESSEE DID NOT APPEAR BEFORE THE AO AND THEREFORE, T HE AO ITA NO. 2277/HYD/2017 :- 4 -: SUBMITTED A REPORT ACCORDINGLY. THEREFORE, THE CIT(A) DISMISSED THE APPEAL OF ASSESSEE. 6.2. AGGRIEVED BY THE ORDER OF LD.CIT(A), THE ASSESSE E IS IN SECOND APPEAL BEFORE THE ITAT, RAISING THE FOLLOWING GROUNDS: 1) THE ORDER OF THE LEARNED CIT(A), IN SO FAR AS I T IS PREJUDICIAL TO THE INTEREST OF THE APPELLANT, IS AGAINST LAW, W EIGHT OF EVIDENCE AND PROBABILITIES OF THE CASE. 2) THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF RS.4,98,848/- APPEARING AS SUNDRY CREDIT IN THE NAM E OF M/S. TRANSPORT CORPORATION OF INDIA (TCI) DESPITE THE FA CT THAT IT WAS THE BROUGHT FORWARD BALANCE FROM THE FINANCIAL YEAR 2005-06 RELEVANT TO A.Y.2006-07. HE OUGHT TO HAVE DELETED T HE SAME. 3) THE LEARNED CIT(A) ERRED IN CONFIRMING THE OUTST ANDING BALANCE OF RS.9,47,333/- IN THE NAME OF MIS. BANGAL ORE TUBES AS HE FAILED TO APPRECIATE THAT IT WAS THE AGGREGAT E OF PURCHASES DURING F.Y.2006-07 AND THAT THERE WAS DISPUTE KNOWN TO THE DECEASED PARTNER AND THE DISPUTE WAS RESOLVED DURIN G THE FINANCIAL YEAR 2009-10 RELEVANT TO A.Y.2010-11. 4) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT BOT H THE OUTSTANDING CREDIT BALANCES OF TCI AND BANAGALORE T UBES WERE PAID OFF THROUGH ACCOUNT PAYEE CHEQUES DURING THE F INANCIAL YEARS 2011-12 AND 2009-10 RESPECTIVELY SUBSTANTIATI NG THAT THEY WERE GENUINE CREDITS AND THAT THE DISPUTES REL ATING TO SUCH CREDIT BALANCES WERE RESOLVED IN THE LATER YEARS AN D ACCEPTED AS SUCH IN THE RETURNS OF INCOME FOR A.Y.2010-11 AND A .Y.2012-13. 5) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE REASONS GIVEN BY THE A.O. WERE FICTITIOUS AND FLIMSY IN THE IMPUG NED ASSESSMENT ORDER FOR TREATING THE TWO OUTSTANDING C REDIT BALANCES AS NOT GENUINE AND CONSEQUENTLY ERRED IN C ONFIRMING THE ADDITIONS. ITA NO. 2277/HYD/2017 :- 5 -: 6) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT A D ISGRUNTLED EMPLOYEE OF THE APPELLANT FILED AN UNAUTHORIZED REP LY BEFORE THE A.O. DURING THE REMAND PROCEEDINGS AND CONSEQUENTLY ERRED IN CONFIRMING THE ADDITION. 7) FOR THE ABOVE GROUNDS AND SUCH OTHER GROUNDS THA T MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS T HAT THE APPEAL BE ALLOWED. 8) THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR M ODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIM E OF HEARING OF THE APPEAL, IF IT IS CONSIDERED NECESSARY. 7. AT THE TIME OF HEARING, LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TWO SUNDRY CREDITORS WERE PAID THE AMOUNTS IN THE SUBSEQUENT ASSESSMENT YEARS AND THIS PRO VES THAT THESE TRANSACTIONS ARE GENUINE. THEREFORE, HE PRA YED THAT THE ISSUE MAY BE SET ASIDE TO THE FILE OF AO FOR RE-VER IFICATION OF THESE FACTS. 8. LD.DR, HOWEVER, OPPOSED THE CONTENTIONS OF ASSESS EE AND ARGUED THAT AT THE TIME OF ASSESSMENT PROCEEDINGS AS WELL AS THE REMAND PROCEEDINGS, THE ASSESSEE DID NOT CO-OPE RATE WITH THE AO. THEREFORE, ACCORDING TO HIM, NO PURPOSE WILL BE SERVED BY REMANDING THE ISSUE AGAIN TO THE AO AT THIS ST AGE. 9. HAVING REGARD TO THE RIVAL CONTENTIONS, MATERIAL ON RECORD AND PARTICULARLY THE CONTENTIONS OF ASSESSEE THAT THE ASSESSEE HAS ALREADY REPAID THESE CREDITORS IN THE SUBSEQUENT ASSESSMENT YEARS. I FIND THAT THE ASSESSEE HAS ALSO FI LED CONFIRMATION LETTERS IN THIS REGARD, BEFORE THE CIT(A) AND THE REMAND REPORT WAS CALLED-FOR. IN THESE CIRCUMSTANCES, I DEEM ITA NO. 2277/HYD/2017 :- 6 -: IT FIT AND PROPER TO REMAND THE ISSUE BACK TO THE FILE OF AO WITH A DIRECTION TO VERIFY AND CONSIDER THE ISSUE AFRESH. THE ASSESSEE ALSO SHALL APPEAR AND CO-OPERATE WITH THE AO FOR EARLY COMPLETION OF THE ASSESSMENT PROCEEDINGS. IF THE ASSESS EE FAILS TO PRODUCE ANY EVIDENCE BEFORE THE AO, THE AO SHALL CO MPLETE THE ASSESSMENT ON THE BASIS OF THE MATERIAL ALREADY FILE D BY THE ASSESSEE BEFORE THE AO. 10. IN THE RESULT, THE APPEAL OF ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER, 2019 SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED: 30-09-2019 TNMM ITA NO. 2277/HYD/2017 :- 7 -: COPY TO : 1. M/S.GLOBE STEEL PIPE CO., C/O. DR.C.P.RAMASWAMI, ADVOCATE, FLAT NOS.102 & 303, GITANJALI APTS., PLOT NO.108, SRINAGAR COLONY, HYDERABAD. 2. INCOME TAX OFFICER, WARD-10(4), HYDERABAD. ) 3. CIT(APPEALS)-9, HYDERABAD. 4. PR.CIT-6, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.