N. Subba Reddy, Hyderabad V. ITO,Ward 2(2), Hyderabad

ITA 254/HYD/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6408 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 19-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained cash credit; Principle of natural justice; Additional evidence
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 254/HYD/2014 ASSESSMENT YEAR: 2010-11 N. SUBBA REDDY, APPELLANT HYDERABAD. (PAN AAXPN4238J) VS. INCOME-TAX OFFICER, RESPONDENT WARD 2(2), HYDERABAD. APPELLANT BY : SHRI A.V. RAGHU RAM RESPONDENT BY : SHRI SOLGY JOSE T. KOTTARAM DATE OF HEARING : 10/04/2014 DATE OF PRONOUNCEMENT : 10/04/ 2014 ORDER PER CHANDRA POOJARI, A.M.: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF CIT(A)-III, HYDERABAD DATED 17/01/2014 FOR THE ASSESSMENT YEAR 2010-11 WHEREIN THE ASSESSEE HAS RA ISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE CIT(A) IS ERRONEOUS BOTH ON FAC TS AND IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED BY UPHOLDING THE ADDITIONS, W ITHOUT CONSIDERING THE ADDITIONAL EVIDENCES FILED BY THE A PPELLANT. HE FAILED TO GIVE ANY REASONS FOR NOT CONSIDERING S UCH EVIDENCES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED TH E ADDITIONAL EVIDENCES FILED BY THE APPELLANT, AS HE WAS PREVENTED FROM FILING SUCH EVIDENCES BEFORE THE AO FOR GENUINE REASONS WHICH WERE BEYOND HIS CONTROL AND A S SUCH THE FAILURE WAS NEITHER DELIBERATE NOR INTENTIONAL. ITA NO. 254/HYD/14 SRI N. SUBBA REDDY 2 4. THE CIT(A) ERRED BY NOT FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED BY UPHOLDING THE ADDITION OF RS. 14,31,467/- U/S 68, WHICH REPRESENTS TRADE CREDIT OUTSTANDING AS AT THE END OF THE YEAR IN THE NAME O F MR. VIJAYA RAGHAVAN REDDY. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED BY UPHOLDING THE ADDITION OF RS. 86,18,727/- U/S 68, WHICH REPRESENTS TRADE CREDIT OUTSTANDING AS AT THE END OF THE YEAR IN THE NAME O F MR. K. SRINIVAS. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED BY UPHOLDING THE ADDITION OF RS. 1,51,26,406/- U/S 68, WHICH REPRESENTS TRADE CREDIT OUTSTANDING AS AT THE END OF THE YEAR IN THE NAME O F KRISHNA CHAITANYA PROJECTS. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED BY NOT ADJUDICATING ON THE AD DITIONAL GROUND, RAISED BY THE APPELLANT VIDE WRITTEN SUBMIS SIONS FILED DURING THE APPELLATE PROCEEDINGS, WITH REGARD TO THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF PURCHAS ES. 9. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED BY UPHOLDING THE ADDITION OF RS. 14,41,400/- TOWARDS DISALLOWANCE OF PURCHASES. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS A MANAGING DIRECTOR OF M/S HYDERABAD MECH SYSTEMS PVT . LTD. HE HAS FILED HIS RETURN OF INCOME FOR THE ASSESSMENT Y EAR 2010-11 ON 25/09/2010, DECLARING TOTAL INCOME OF RS. 24,81,280 /-. THE AO COMPLETED THE ASSESSMENT ON 31/03/2013 U/S 143(3) O F THE ACT, DETERMINING THE TOTAL INCOME AT RS. 2,91,22,001/-BY MAKING THE FOLLOWING ADDITIONS: I) ADDITION TOWARDS UNAPPROVED PURCHASES AT RS. 14 ,41,400 II) ADDITION TOWARDS INTEREST ON FDS RS. 64,720/- III) ADDITION TOWARDS UNEXPLAINED CREDITS RS. 14,3 1,467/- IV) ADDITION TOWARDS UNEXPLAINED CREDITS RS. 2,37, 45,133 ITA NO. 254/HYD/14 SRI N. SUBBA REDDY 3 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). 4. IN THE IMPUGNED ORDER, THE CIT(A) NOTED THAT THE RE IS ONLY ONE ISSUE IN APPEAL AND THAT RELATES TO THE AD DITIONS ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68 OF THE I T ACT. THE FACTS ARE THAT THE ASSESSEE IS THE MD OF M/S HYDERA BAD MECHANICAL SYSTEMS AND A PARTNER IN M/S SVRS INDUST RIES, HYDERABAD. DURING THE YEAR, THE ASSESSEE WAS IN REC EIPT OF RS. 5,20,98,875/- TOWARDS CONTRACT BILLS AND HAD SHOWN SUNDRY CREDITORS AMOUNTING TO RS. 3,95,90,180/-. AFTER VER IFICATION, THE AO FOUND THAT THE ASSESSEE COULD NOT PROVIDE EVIDEN CE WITH RESPECT TO THE FOLLOWING THREE SUNDRY CREDITORS: SHRI. VIJAY RAGHAVA REDDY RS. 14,31,467 SHRI K. SRINIVAS RS. 86,18,727 SH. KRISHNA CHAITANYA RS. 1,51,26,406/- 4.1 THE REASONS GIVEN BY THE AO FOR MAKING THE SAID ADDITIONS WERE EXTRACTED BY THE CIT(A) IN THE IMPUG NED ORDER AT PAGES 3 TO 8. 5. WHEN THE ASSESSEE FAILED TO ESTABLISH IDENTITY O F THE CREDITORS, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS, THE CIT(A) CONFIRMED THE ADDITIONS MADE BY THE AO. BEFORE THE CIT(A) THE ASSESSEE FILED AN ADDITIONAL GROUND AND ADDITIONAL EVIDENCES, BUT, THE CIT(A) FAILED TO CONSIDER THE S AME AS THE ASSESSEE FILED THE SAME AFTER PASSING THE ORDER BY THE CIT(A). 6. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 7. BEFORE US, THE LEARNED AR SUBMITTED THAT THERE A RE CERTAIN CRUCIAL EVIDENCES FILED BEFORE THE CIT(A), WHICH WERE NOT PROPERLY APPRECIATED BY THE CIT(A) AND THE ASSESSEE WAS ITA NO. 254/HYD/14 SRI N. SUBBA REDDY 4 PREVENTED FROM GENUINE REASONS WHICH WERE BEYOND H IS CONTROL IN NOT SUBMITTING THE SAME BEFORE THE AO FOR PROVI NG GENUINENESS OF THE TRANSACTIONS AND AS SUCH THE FAI LURE WAS NEITHER DELIBERATE NOR INTENTIONAL. HE, THEREFORE, PRAYED FOR ONE MORE OPPORTUNITY MAY BE GIVEN TO SUBSTANTIATE HIS C LAIM BEFORE THE AO WITH THE EVIDENCES. MORE SO, THE AO HAS NOT GIVEN REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE A S THE ASSESSMENT WAS MADE AT THE LAST DATE OF FY 31/03/20 13. SIMILAR IS THE CASE BEFORE THE CIT(A). THOUGH THE ASSESSEE SOUGHT FOR TIME TO FURNISH INFORMATION AND THE SAME WAS FILED BEFORE THE CIT(A) ON 05/02/2014, AS FOLLOWS: 1. LEDGER ACCOUNT OF SRI KRISHNA CHAITANYA PROJECT S IN THE BOOKS OF HEMS CONSTRUCTIONS FOR THE PERIOD 01/04/2009 TO 31/03/2012 AND LETTER FROM SMT. D. KRISHNAVENI WITH REGARD TO CONFIRMATION OF DEATH O F HER HUSBAND AND UNDERTAKING OF SUB-CONTRACTS ALONG WIT H DEATH CERTIFICATE. 2. LEDGER ACCOUNT OF K. SRINIVAS IN THE BOOKS OF H EMS CONSTRUCTIONS FOR THE PERIOD 01/04/2009 TO 31/03/2 012 AND LETTER FROM SMT. K. JAYALAKSHMI WITH REGARD TO CONFIRMATION OF DEATH OF HER HUSBAND AND UNDERTAKI NG OF SUB-CONTRACTS ALONG WITH DEATH CERTIFICATE. 3. DETAILED STATEMENT OF PURCHASES MADE FROM SRI V ISHNU SPUN PIPES FOR THE PERIOD 01/08/2009 TO 31/03/2010 . 7.1 THE AR CONTENDED THAT, IN SPITE OF THIS, THE CI T(A) PASSED THE ORDER ON 09/01/2014. HE, THEREFORE, PRAYED THAT THE ISSUE MAY BE REMITTED BACK TO THE FILE OF THE AO TO SUBST ANTIATE HIS CLAIM BY WAY OF DOCUMENTARY EVIDENCE, WHICH WERE NO T FILED BEFORE THE AO DUE TO PAUCITY OF TIME. 8. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW, HOWEVER, HE HAS NOT CONTR OVERTED THE SUBMISSION OF THE AR FOR REMITTING THE ISSUE TO THE FILE OF THE AO. ITA NO. 254/HYD/14 SRI N. SUBBA REDDY 5 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES, PERUSED THE RECORD AND HAVE GONE THROUGH THE ORDERS OF THE REVENUE AUTHORITIES. ADMITTEDLY, IT IS SEEN IN THIS CASE THAT WHEN THE APPEAL CAME FOR HEARING BEFORE THE CIT(A) ON 09 /01/2014 AND THE ORDER WAS PASSED BY THE CIT(A) ON 17/01/2014. W E FIND THAT THE ASSESSEE HAS FILED CERTAIN EVIDENCES BEFORE THE CIT(A) ON 5/02/2014 AND THE CIT(A) DID NOT GET AN OCCASION TO CONSIDER THE SAME AS HE HAS PASSED THE ORDER PRIOR TO THAT ON 17 /01/2014. WE ARE OF THE VIEW THAT THE EVIDENCES FILED BEFORE THE CIT(A) ARE VERY IMPORTANT IN DECIDING THIS APPEAL. SINCE THE A SSESSEE HAS NOT FILED THESE EVIDENCES BEFORE THE AO, THE AO HAD NO OCCASION TO CONSIDER THE SAME. THEREFORE, TO MEET THE ENDS OF J USTICE, WE REMIT THE ISSUE BACK TO THE FILE OF THE AO WITH A D IRECTION TO CONSIDER THE EVIDENCES FILED BY THE ASSESSEE, WHICH ARE ON RECORD, AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER P ROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 9.1 AS WE HAVE REMITTED THE ENTIRE FILE TO AO FOR F RESH CONSIDERATION, WE DO NOT FIND IT NECESSARY TO COMME NT ANYTHING ON MERITS OF THE GROUNDS RAISED BY THE ASSESSEE. TH US, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STAT ISTICAL PURPOSES. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT 10/04/2014. SD/- SD/- (SAKTIJIT DEY) (CHA NDRA POOJARI) JUDICIAL MEMBER ACCOUNTA NT MEMBER HYDERABAD, DATED: 10 TH APRIL, 2014 KV ITA NO. 254/HYD/14 SRI N. SUBBA REDDY 6 COPY TO:- 1) SHRI N. SUBBA REDDY, C/O MD, HYDERABAD ELECTRO MECH . SYSTEMS P. LTD., B-8, CIE, BALANAGAR, HYDERABAD. 2) ITO, WARD 2(2), IT TOWERS, HYDERABAD. 3) THE CIT (A)-III, HYDERABAD 4) THE ADDL. CIT-II, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., YDE RABAD.