Shanti Fire Works, Hyd, Hyderabad V. DCIT, Circle-9(1), Hyderabad, Hyderabad

ITA 26/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2631 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-08-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 08-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained investment
• Section: 143(3); 133A; 144

Judgement Text

ITA NO 26 OF 2016 SHANTI FIRE WORKS HYDERABAD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A (SMC) BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.26/HYD/2016 (ASSESSMENT YEAR: 2005-06) M/S. SHANTI FIRE WORKS HYDERABAD PAN: ABBFS 0977 N VS DY. COMMISSIONER OF INCOME TAX, CIRCLE 9 (1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO FOR REVENUE : SMT. SUMAN MALIK, DR O R D E R THIS IS ASSESSEES APPEAL FOR THE A.Y 2005-06 AGAINS T THE ORDER OF THE CIT (A)-7 HYDERABAD, DATED 15 TH OCTOBER, 2015. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1) THE ORDER OF THE LEARNED CIT (A) IS ERRONEOUS, UNJUST AND CONTRARY TO THE FACTS OF THE CASE. 2) THE LEARNED CIT (A) ERRED IN DECIDING THE APPEAL WITHOUT PROVIDING PROPER OPPORTUNITY TO THE APPELLANT; 3) THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.1,OO,867/- BY CONFIRMING THE ESTIMATION OF THE INCOME MADE BY THE ASSESSING OFFICER; 4) THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.23,53,755/-BY HOLDING THAT DATE OF HEARING : 21.08.2017 DATE OF PRONOUNCEMENT : 30.08.2017 ITA NO 26 OF 2016 SHANTI FIRE WORKS HYDERABAD PAGE 2 OF 5 THERE IS AN UNEXPLAINED INVESTMENT IN THE PURCHASES; 5) THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.2,OO,OOO/- MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THERE WERE UNACCOUNTED PURCHASES OF DEMAND DRAFTS. 6) THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.67,500/-BEING THE PROFIT ESTIMATED AT 22.5% OF THE PURCHASE VALUE OF RS.3,OO,OOO/- 7) THE LEARNED CIT (A) ERRED IN CONFIRMING THE INTEREST CHARGED U/S 224B OF RSA,04,092/- AND U/S 234C OF RS.2,762/-. 8) ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A FIRM TRADING IN CRACKERS, FILED ITS RETURN OF INCOME FOR THE A.Y 2005-06 ON 1.11.2005 ADMITTING TOTAL INCOME OF RS.2.00 LAKH S. SINCE THERE WAS A SURVEY U/S 133A OF THE ACT ON 10.11.2004 ON T HE PREMISES OF THE ASSESSEE, THE ASSESSMENT WAS TAKEN UP U/S 14 3(3) OF THE ACT. SINCE THE ASSESSEE DID NOT FURNISH EVIDENCE BE FORE THE AO IN SUPPORT OF ITS RETURN OF INCOME, THE AO COMPLETED T HE ASSESSMENT U/S 144 OF THE ACT ASSESSING THE INCOME AT RS.66,40 ,265. THE AO MADE THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTM ENT IN PURCHASES AND UNEXPLAINED INVESTMENT IN PURCHASE OF DDS AND ALSO ON THE GROSS PROFIT ON SALE OF PURCHASES MADE OUTSIDE THE BOOKS, BOTH ON UNEXPLAINED PURCHASES AND UNEXPLAINE D PURCHASE OF DDS. AGAINST THESE ADDITIONS, THE ASSESSEE PREF ERRED APPEALS BEFORE THE CIT (A) AND THEREAFTER BEFORE THE ITAT W HICH SET ASIDE ITA NO 26 OF 2016 SHANTI FIRE WORKS HYDERABAD PAGE 3 OF 5 THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO THE ASSESSEE TO PRODUCE ALL EVIDENCE BEFORE THE AO AND TO COOPERATE WITH THE AO. 3. DURING THE PROCEEDINGS U/S 143(3) R.W.S. 254 OF THE ACT, THE ASSESSEE AGAIN DID NOT SUBMIT ANY DETAILS DUE TO WHICH THE AO OBSERVED THAT THERE WAS NO MATERIAL TO SUBST ANTIATE THE CLAIM OF THE ASSESSEE. HE ACCORDINGLY MADE THE ADDI TIONS TO THE RETURNED INCOME AS WAS DONE IN THE EARLIER ASSESSME NT PROCEEDINGS. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT (A) AND THE CIT (A) CONSIDERED THE ASSESSEES E XPLANATION THAT RELEVANT MATERIAL WAS IMPOUNDED AND IS IN THE CUSTO DY OF THE DEPARTMENT AS CONTENDED IN THE EARLIER ROUND OF ASS ESSMENT PROCEEDINGS. HE HOWEVER, DID NOT ACCEPT THE ASSESSE ES CONTENTION ON THE GROUND THAT THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE BEFORE THE AO INSPITE OF THE SPECIFIC DIRECTIONS OF THE ITAT. THEREFORE, HE CONFIRMED THE ADDITIONS MADE BY THE A O AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT DURING THE COURSE OF SURVEY, ALL THE RELEVANT MATER IAL WAS SEIZED BY THE DEPARTMENT AND THEREFORE, THE ASSESSEE WAS P RECLUDED FROM FILING THE DETAILS BEFORE THE AO. HE FURTHER S UBMITTED THAT SIMILAR ADDITIONS WERE MADE IN THE A.YS 2003-04 AND 2004-05 AND THE ADDITIONS WERE CONFIRMED BY THE AO. ACCORDI NG TO HIM, SINCE THE ITAT HAS CONFIRMED THE ADDITIONS MADE IN THE EARLIER A.YS, THE INCOME AVAILABLE WITH THE ASSESSEE ON ACCO UNT OF SALE OF ITA NO 26 OF 2016 SHANTI FIRE WORKS HYDERABAD PAGE 4 OF 5 SUCH MATERIAL FROM SUCH DDS AND PURCHASES AND ALSO THE CONSEQUENT ADDITION OF GROSS PROFIT ON SALES OF SUC H MATERIAL SHOULD BE CONSIDERED AS THE SOURCE FOR INVESTMENT I N PURCHASES IN THE SUBSEQUENT A.YS. OTHERWISE, ACCORDING TO HIM , IT WOULD RESULT IN DOUBLE ADDITION. 6. THE LEARNED DR HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT THE ASSESSEE HAS NOT FILED T HE COPIES OF THE ORDERS OF THE ITAT IN THE EARLIER A.YS AND IT IS NOT KNOWN WHETHER THE ADDITIONS MADE BY THE AO AND CONFIRMED BY THE C IT (A) IN THE EARLIER YEARS HAS ATTAINED FINALITY. HOWEVER, I AM INCLINED TO ACCEPT THE ASSESSEES CONTENTION THAT THE INCOME AR ISING FROM SALE OF SUCH UNEXPLAINED INVESTMENT IN PURCHASES AND IN PURCHASE OF DDS SHOULD BE CONSIDERED AS A SOURCE FOR THE PURCHA SES DURING THE SUBSEQUENT A.YS. THEREFORE, I DEEM IT FIT AND PR OPER TO REMIT THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY IF THE ADDITION MADE IN THE EARLIER A.YS HAS ATTAINED FINAL ITY AND IF IT FOUND TO HAVE BEEN TAXED AS INCOME IN THE HANDS OF THE ASSESSEE, THEN HE SHOULD ALLOW THE TELESCOPING OF THE INCOME FROM SALE AS A SOURCE FOR UNEXPLAINED INVESTMENTS IN THE PURCHASES FOR THE RELEVANT A.YS BEFORE ME. WITH THESE DIRECTIONS, THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOS ES. ITA NO 26 OF 2016 SHANTI FIRE WORKS HYDERABAD PAGE 5 OF 5 8. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2017. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 30 TH AUGUST, 2017. VINODAN/SPS COPY TO: 1 SHRI S.RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYA'S E LEGANCE, 3-6- 643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500029 2 DY. COMMISSIONER OF INCOME TAX, CIRCLE 9(1) I.T. TOWERS, AC GUARDS, HYDERABAD 3 CIT (A)-7 HYDERABAD 4 PR. CIT 7 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER