Income Tax Officer, Ward-1, Nellore V. Arjun Traders Private Limited , Nellore

ITA 259/Hyd/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5527 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 09-09-2021
• Assessment Year: 2009-2010
• Appeal Filed On: 11-03-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: C P RAMASWAMI
• Keywords: Income from undisclosed sources; Principle of natural justice; Accommodation entries; Onus to prove; Set aside
• Section: 143(3); 142(1); 143(2); 139(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER IT A NO. 259 /H/20 20 ASSESSMENT YEAR: 2 0 09 - 10 INCOME - TAX OFFICER, WARD 1, NELLORE VS. ARJUN TRADERS PVT. LTD., HYDERABAD. PAN AAFCA 6014N (APPELLANT) (RESPONDENT) REVENUE BY: S MT. N. SWAPNA ASSESSEE BY: S HRI C.P. RAMASWAMI DATE OF HEARING: 09 /0 9 /2021 DATE OF PRONOUNCEMENT: 20 /0 9 /2021 O R D E R PER L.P. SAHU, A.M. : TH IS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST CIT(A) , KURNOOL S ORDER DATED 30 / 12 / 20 19 FOR AY 20 09 - 10 INVOLVING PROCEEDINGS U/S 143( 3 ) R.W.S. 147 OF THE INCOME TAX ACT, 1961 ; IN SHORT THE ACT , ON THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD.C1T(A) IS ERRONEOUS BOTH ON THE FACTS OF THE CASE AND IN LAW. I TA NO. 259 /HYD /20 20 M/S ARJUN TRADERS PVT. LTD , HYD. : - 2 - : 2. THE ID. C1T(A) ERRED IN HOLDING THAT THE AD H AS NO EVIDENCE ON RECORD IS BAD IN LAW SINCE CREDIBLE INFORMATION AND REPORTS ARE RECEIVED FROM THE INVESTIGATION AUTHORITIES OF THE DEPARTMENT AS A RESULT OF INVESTIGATIONS MADE CATEGORICALLY ALONG WITH SWORN STATEMENTS RECORDED FROM THE PERSONS WHO ADMIT TED THE FACT THAT THEY WERE ENGAGED IN THE BUSINESS OF ACCOMMODATING ACCOMMODATION ENTRIES TO THE BENEFICIARIES, THE ASSESSEE COMPANY BEING ONE OF SUCH BENEFITTED COMPANY DURING THE FY 2008 - 09 RELEVANT TO THE AY 2009 - 10. 3. THE LD. CIT(A) ERRED IN HOLDIN G THAT THE AD HAS NOT GIVEN ANY OPPORTUNITY TO REBUT THE MATERIAL USED AGAINST THE ASSESSEE THOUGH THE ASSESSEE WAS DULY INTIMATED THE INFORMATION RECEIVED BY THE AD AND HAS GIVEN AN OPPORTUNITY LETTER DATED 19.12.2016. 4. THE LD.C1T(A) ERRED IN NOT CONS IDERING THE FACT THAT THE ASSESSEE WHO IS WELL AWARE THAT THE TIME LIMITATION FOR COMPLETION OF ASSESSMENT GETS BARRED BY 31.12.2016 HAS FILED INFORMATION FOR THE FIRST TIME ON 02.12.2016, AT THE FAG END, AND FURTHER VIDE LETTER DATED 23.12.2016 HAD SOUGHT FOR GRANT OF SOME MORE TIME FOR FURNISHING INFORMATION. THE LD.CIT(A), KURNOOL OUGHT TO HAVE CALLED FOR THE SAID INFORMATION FROM THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS. 5. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF TRADING IN STEEL. HOWEVER, IT IS OBSERVED FROM THE DETAILS AVAILABLE ON RECORD THAT THE ASSESSEE HAD STOPPED CARRYING ON THE BUSINESS SINCE PAST TEN YEARS , AND, THEREFORE, CATEGORIZED AS A DEFUNCT COMPANY FURTHER, THE ASSESSEE DID NOT FILE ANY I TA NO. 259 /HYD /20 20 M/S ARJUN TRADERS PVT. LTD , HYD. : - 3 - : RETURN OF INCOME FOR THE IMPUGNED A Y 2009 - 10 EITHER WITHIN THE DUE DATE STIPULATED U/S 139(1) OF THE ACT, OR BELATEDLY U/S.139(4) OF THE ACT. 2.1 IN THE M EANWHILE, THE AO INITIATED PROCEEDINGS U/S.148 OF THE ACT, AND ISSUED NOTICE U/S 148 OF THE ACT DATED 30/03/2016, CALLING FOR THE RETURN OF INCOME FOR THE IMPUGNED AY 2009 - 10. IN RESPONSE TO THE NOTICE, THE ASSESSEE, FILED THE RETURN OF INCOME ON 02.12.20 16 ADMITTING A TOTAL INCOME OF RS. NIL. ACCORDINGLY, THE A O ISSUED THE STATUTORY NOTICES U/S. 143(2) AND 142(1) OF THE ACT, AND CONDUCTED HEARINGS WITH THE AR OF THE ASSESSEE. 2.2 SUBSEQUENTLY, THE A O CONCLUDED THE PROCEEDINGS U/S. 143(3) R. W .S. 147 OF THE ACT, VIDE ORDER DATED 30.12.2016, DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.1,74,20,000/ - . WHILE DOING SO, THE A O ASSESSED A SUM OF RS.1,74,20,000/ - AS INCOME OF THE ASSESSEE SAID TO BE CASH DEPOSITS MADE IN THE BANK ACCOUNTS OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A), THE ASSESSEE BESIDES FILING WRITTEN SUBMISSIONS, CONTENDED THAT THE AO HAD FAILED TO DISCHARGE BURDEN OF PROOF WITH REGARD TO ALLEGED CASH TRANSAC TIONS REFLECTED IN THE BANK ACCOUNTS OF THE ASSESSEE TO THE EXTENT I TA NO. 259 /HYD /20 20 M/S ARJUN TRADERS PVT. LTD , HYD. : - 4 - : OF RS. 1,74,20,000/ - . FURTHER, IT WAS CONTENDED THAT THE AO HAD FAILED TO FOLLOW THE PRINCIPLES OF NATURAL JUSTICE WITH REGARD TO PROVIDING AN OPPORTUNITY TO CROSS EXAMINE THE WITNESS OF TH E DEPARTMENT. IT WAS ALSO SUBMITTED THAT THE AO HAD MADE THE ADDITION ON THE GROUND THAT THE UNACCOUNTED CASH TRANSACTIONS WERE REFLECTED IN THE ASSESSEES BANK ACCOUNTS BUT WITHOUT ADDUCING ANY EVIDENCE TO DEMONSTRATE THE ACTUAL DEPOSIT OF CASH IN ASSESS EES BANK ACCOUNTS. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ANALYSING THE CASE WITH CASE LAW ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE IMPUGNED ADDITION MADE BY THE AO TO THE EXTENT OF RS, 1,74,20,000/ - HAS NO LEGS TO STAND AND ACCORDINGLY DIRECTED THE AO TO DELETE THE ADDITION. 6. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE THE ITAT. 7. BEFORE US, THE LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT CARRIED ANY BUSINESS ACTIVITY FOR THE PAS T 10 YEARS, BUT, THE CASH HAS BEEN DEPOSITED INTO THE ASSESSEES BANK ACCOUNT. HE FURTHER SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE APPEAL OF THE ASSESSEE WITHOUT ANY COGENT MATERIAL FOR PROVING GENUINENESS OF THE TRANSACTIONS IN THE BAN K STATEMENT OF THE ASSESSEE. HE, THEREFORE I TA NO. 259 /HYD /20 20 M/S ARJUN TRADERS PVT. LTD , HYD. : - 5 - : SUBMITTED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE ORDER OF AO IS RESTORED. 8. THE LD. AR, ON THE OTHER HAND, RELIED ON THE ORDER OF CIT(A) AND SUBMITTED THAT THE AO DID NOT DISCLOSE ANY EVIDENCE EITHER DIRECT OR CIRCUMSTANTIAL TO THE ASSESSEE BEFORE RESORTING TO THE IMPUGNED ADDITION. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AN D PERUSED THE MATERIAL ON RECORD AS WELL AS GONE THROUGH THE ORDERS OF REVENUE AUTHORITIES. AS PER THE FINDINGS OF THE AO, THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY AND HAS DEPOSITED CASH IN HIS BANK ACCOUNT. WHILE, ALLOWING THE ASSESSEES, T HE CIT(A), INTER - ALIA, OBSERVED AS UNDER: 7.13 FURTHER, THE AD HAS NOT BROUGHT ANY OTHER MATERIAL INCLUDING BANK ACCOUNTS HELD IN THE NAME OF THE ASSESSEE IN WHICH THE SAID AMOUNTS HAVE BEEN DEPOSITED. ALSO, THE A O HAS NOT CONDUCTED NECESSARY INVESTIGATI ON IN ORDER TO ASCERTAIN THE NATURE OF THE CASH DEPOSITS AND THE PERSON FROM WHOM THE ASSESSEE HAD RECEIVED THE CASH. NEITHER THE AD HAS BROUGHT ANY EVIDENCE ON RECORD TO DEMONSTRATE THAT THE ALLEGED UNACCOUNTED INCOME RECEIVED IN THE FORM OF CASH HAS BEEN CONVERTED INTO FIXED DEPOSITS OR OTHER ASSETS OR EXPENDED FOR PERSONAL PURPOSES, AS THE CASE MAY BE. 7.14 IN THE NORMAL COURSE, WHEN THE AO CONTEMPLATES ASSESS MENT OF ADDITIONAL INCOME IN THE HANDS OF THE ASSESSEE, ON THE BASIS OF THE INFORMATION COLLE CTED FROM HIS OWN INVESTIGATION OR RECEIVED FROM EXTERNAL SOURCES, THEN, IT IS THE LEGAL OBLIGATION OF THE AO TO PROVIDE THE ASSESSEE THE DETAILS OF INFORMATION AND NATURE OF ADDITIONAL INCOME DETECTED, FOR HIS COMMENTS AND I TA NO. 259 /HYD /20 20 M/S ARJUN TRADERS PVT. LTD , HYD. : - 6 - : REBUTTAL, IF ANY. ALSO, IT IS WE LL SETTLED LEGAL POSITION THAT NO MATERIAL CAN BE USED AGAINST THE ASSESSEE UNLESS, HE IS CONFRONTED WITH SUCH MATERIAL AND GIVEN AN OPPORTUNITY TO REBUT THE SAME. FURTHER, IN A CASE, ANY EVIDENCE IS USED AGAINST THE ASSESSEE WITHOUT CONFRONTING THE SAME T O THE ASSESSEE, SUCH ACTION OF THE AO CAN BE RENDERED AS ILLEGAL, AND THEREFORE, ANY ADDITION MADE THEREOF, CANNOT BE SUSTAINED IN THE EYES OF THE LAW. 7.15 IN THE INSTANT CASE, IT IS AN ADMITTED FACT THAT THE AO HAS NOT FOLLOWED THIS SETTLED POSITION OF LAW. ON THE OTHER HAND, THE AO HAD ACTUALLY INSISTED THE ASSESSEE TO FURNISH THE DETAILS OF THE BANK ACCOUNTS IN WHICH THE ALLEGED CASH/ AMOUNT WAS DEPOSITED. FURTHER, THE AO HAS NOT STATED IN THE ASSESSMENT ORDER THE SECTION UNDER WHICH THE SAID AMOUNT H AD BEEN BROUGHT TO TAX AS INCOME OF THE ASSESSEE. 9.1 THE LD. DR ALSO CONTENDED THAT THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE WITHOUT ADDRESSING THE ISSUES RAISED BY THE AO IN HIS ORDER. THEREFORE, CONSIDERING THE TOTALITY OF THE CASE OF THE CASE, WE REMIT THE ISSUE BACK TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE APPEAL TAKING INTO CONSIDERATION THE OBSERVATIONS OF THE CIT(A) AND CONTENTIONS OF THE ASSESSEE BEFORE THE CIT(A) AS WELL AS BEFORE HIM IN ACCORDANCE WITH LAW AFTER PROVIDING REAS ONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE IN THE MATTER. THE ASSESSEE IS DIRECTED TO SUBSTANTIATE ITS CLAIM BY WAY OF DOCUMENTARY EVIDENCE BEFORE THE AO. THUS, THE GROUNDS RAISED BY THE REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. I TA NO. 259 /HYD /20 20 M/S ARJUN TRADERS PVT. LTD , HYD. : - 7 - : 10. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES, IN ABOVE TERMS. PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER , 2021 . SD/ - SD/ - ( S.S. GODARA ) (L . P . SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDE RABAD, DATED : 21 ST SEPTEMBER , 20 2 1 . K V C OPY TO : 1 ITO, WARD NO. 1, D.NO. 24 - 2 - 438, 1 ST FLOOR, GNT ROAD, DARGAMITTA, NELLORE . 2 M/S ARJUN TRADERS PVT. LTD., D.NO. 24 - 2 - 1850, 2 ND CROSS ROAD, PLOT NO. 374, MAGUNTA LAYOUT, NELLORE 524 003 3 C I T(A) , KURNOOL 4 PR. CIT , TIRUPATI 5 ITAT, DR, HYDERABAD. 6 GUARD FILE.