Savvy Spechems Private Limited, Hyderabad, Hyderabad V. DCIT, Circle-3(1), Hyderabad, Hyderabad

ITA 287/HYD/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2436 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-03-2018
• Assessment Year: 2006-2007
• Appeal Filed On: 20-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained cash credit
• Section: 143(3); 68; 2

Judgement Text

ITA NO 287 OF 2017 SAVVY SPECHEMS P LTD HYDERABAD. PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B SMC BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.287/HYD/2017 (ASSESSMENT YEAR: 2006-07) M/S. SAVVY SPECHEMS P LTD HYDERABAD PAN: AAICS 3998 L VS DY. COMMISSIONER OF INCOME TAX, CIRCLE 3(1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO FOR REVENUE : SMT. N. SWAPNA, DR O R D E R THIS IS ASSESSEES APPEAL FOR THE A.Y 2006-07 AGAIN ST THE ORDER OF THE LEARNED CIT (A)-3, HYDERABAD, DATE D 2.11.2016. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, ENGAGED IN THE BUSINESS OF MANUFACTURING OF FERTILI ZERS, CHEMICALS AND PAINTS, FILED ITS RETURN OF INCOME FOR THE A.Y 2006-07 ON 24.11.2006 ADMITTING LOSS OF RS.5,41,530. THE ASSES SMENT WAS ORIGINALLY COMPLETED ON 26.11.2008 BY MAKING THE AD DITIONS ON THE FOLLOWING ISSUES: I) UNEXPLAINED CREDITS U/S 68 II) EXCISE DUTY ON FINISHED GOODS III) DISALLOWANCE U/S 40(A)(IA) 3. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE T HE CIT (A), WHO AFTER CALLING A REMAND REPORT FROM THE AO, GRANTED PARTIAL RELIEF TO THE ASSESSEE, AGAINST WHICH THE ASSESSEE AS WELL AS THE DEPARTMENT PREFERRED APPEALS TO THE ITAT. THE ITAT HAD SET ASIDE THE ASSESSEES APPEAL WITH A DIRECTION TO RECONSIDE R THE ADDITIONS DATE OF HEARING: 14.03 . 201 8 DATE OF PRONOUNCEMENT: 21.03.2018 ITA NO 287 OF 2017 SAVVY SPECHEMS P LTD HYDERABAD. PAGE 2 OF 6 MADE U/S 68 OF THE ACT. CONSEQUENT THERETO, THE AO ISSUED A NOTICE U/S 143(2) OF THE ACT. IN RESPONSE TO THE SA ME, THE ASSESSEE FILED CONFIRMATION LETTERS ALONG WITH THE COPY OF T HE PAPER BOOK SUBMITTED BEFORE THE TRIBUNAL. AFTER CONSIDERING TH E INFORMATION FURNISHED BY THE ASSESSEE, THE AO WAS NOT CONVINCED WITH THE CONTENTIONS OF THE ASSESSEE AND MADE THE ADDITION O F RS.23,51,000 U/S 68 OF THE ACT. AGGRIEVED, THE ASSE SSEE PREFERRED AN APPEAL BEFORE THE CIT (A), WHO CONFIRMED THE ADD ITION OF RS.7,68,000 BEING THE SHARE APPLICATION MONEY RECEI VED FROM SHRI B. RAGHU AND SRI B. RAGHAVENDRA RAO RESPECTIVELY, A ND ALSO RS.11,88,000 ON ACCOUNT OF UNSECURED CREDITORS. AGG RIEVED, THE ASSESSEE IS IN APPEAL BEFORE US BY RAISING THE FOLL OWING GROUNDS OF APPEAL: 1) THE ORDER OF THE LEARNED CIT (A) IS ERRONEOUS T O THE EXTENT IT IS PREJUDICIAL TO THE APPELLANT. 2) THE LEARNED CIT (A) OUGHT TO HAVE PROVIDED FURTH ER OPPORTUNITY TO THE APPELLANT BEFORE DECIDING THE APPEAL; 3) THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDI TION OF RS. 7 ,68,000 BEING THE AMOUNT RECEIVED FROM SRI B.RAGHU OF RS.3,84,000 AND FROM SRI D.RAGHAVENDER OF RS.3,84,000 AS THE INCOME OF THE APPELLANT. 4) THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDI TION OF RS.2,02,000 MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE AMOUNT RECEIVED FROM SRI N.K.AGARWAL REPRESENTS THE INCOME OF THE APPELLANT. 5) THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDI TION OF RS.L,75,000 MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE AMOUNT RECEIVED FROM SMT. OM DEVI AGARWAL REPRESENTS THE INCOME OF THE APPELLANT. 6) THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDI TION OF RS.LL,88,000 MADE BY THE ASSESSING OFFICER ON TH E GROUND THAT THE AMOUNT RECEIVED FROM SRI SURESH, SR I NISAR AHMED AND 7 OTHERS REPRESENTS THE INCOME OF THE APPELLANT. ITA NO 287 OF 2017 SAVVY SPECHEMS P LTD HYDERABAD. PAGE 3 OF 6 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAS FILED ALL THE RELEVANT MATERIAL BE FORE THE AO INCLUDING THE CONFIRMATION LETTERS FROM THE RELEVAN T PARTIES, BUT THE AO, WITHOUT CONSIDERING THE SAME IN A PROPER PE RSPECTIVE, HAS MADE THE SAME ADDITION AS MADE IN THE ASSESSMENT U/ S 143(3) OF THE ACT. HE SUBMITTED THAT THE CIT (A) ALSO HAS NOT CONSIDERED THE EVIDENCE FILED BY THE ASSESSEE AND HAS CONFIRMED TH E ADDITIONS MADE BY THE AO. HE HAS DRAWN OUR ATTENTION TO THE C ONFIRMATION LETTERS FILED BY THE ASSESSEE TO EXPLAIN THE IDENTI TY AND CREDITWORTHINESS OF THE PARTIES AND GENUINENESS OF THE TRANSACTIONS. HE PRAYED THAT THE ADDITIONS BE DELET ED. 5. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE SHARE APPLICATION MONEY AS WELL AS THE UNSECURED LOANS WE RE ALL MADE IN CASH AND THEREFORE, THE BURDEN WAS ON THE ASSESS EE TO PROVE THE GENUINENESS OF THE TRANSACTION AS WELL AS THE I DENTITY AND CREDITWORTHINESS OF THE PARTIES. HE SUBMITTED THAT EXCEPT FOR FILING OF THE CONFIRMATION LETTERS, THE ASSESSEE HAS FAILE D TO PROVIDE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF THE TRANSACTIONS AND SHE PLACED RELIANCE UPON THE FOLLOWING DECISIONS IN SUP PORT OF THE ORDERS OF THE AO: A) CIT VS. KORLAY TRADING CO. LTD REPORED IN (1998) 232 ITR 820 (CAL.) B) CIT VS. MAITHAN INTERNATIONAL REPORTED IN (2015) 275 ITR 123 (CAL.) C) CIT VS. YOUTH CONSTRUCTION (P) LTD REPORTED IN ( 2014) 357 ITR 197 (DEL.) D) RAJMANDIR ESTATES (P) LTD VS. PR.CIT REPORTED IN (2016) 386 ITR 162 (CAL.) E) RAJMANDIR ESTATES (P) LTD VS. PR. CIT REPORTED I N (2017) 77 TAXMANN.COM 285 (S.C) 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS RECEIVED S HARE ITA NO 287 OF 2017 SAVVY SPECHEMS P LTD HYDERABAD. PAGE 4 OF 6 APPLICATION MONEY OF RS.7,68,000 FROM TWO PERSONS I .E. SRI B.RAGHU AND SRI D.RAGHAVENDER, EACH OF WHOM PAID RS .3,80,000. THE ASSESSEE HAD FILED THE CONFIRMATION LETTERS OF BOTH THE PARTIES WHEREIN THEY HAVE EXPLAINED THE SOURCE FOR THE SHAR E APPLICATION MONEY AS THEIR PARENTS INCOME AND ALSO THE AGRICULT URE INCOME. HOWEVER, THE ASSESSEE HAS NOT FURNISHED ANY SUPPORT ING EVIDENCE TO EXPLAIN THE SOURCES. BY WAY OF CONFIRMATION LETT ERS, THE ASSESSEE MAY HAVE BEEN ABLE TO PROVIDE IDENTITY OF THE TRANSACTIONS BUT HAS FAILED TO PROVE THE CREDITWORT HINESS OF THE PARTIES AS WELL AS THE GENUINENESS OF THE TRANSACTI ONS, PARTICULARLY WHEN BOTH THE PARTIES ARE NOT INCOME TAX ASSESSEES AND THE PAYMENTS ARE MADE IN CASH. THE CIT (A) HAS CLEARLY BROUGHT OUT THAT THE ASSESSEE DID NOT SUBMIT THE DETAILS OF THE MODE OF PAYMENT BY THESE TWO PERSONS AND THAT NEITHER THEIR IDENTITY NOR THE CREDITWORTHINESS NOR THE GENUINENESS OF THE TRA NSACTIONS IS PROVED. THEREFORE, WE DO NOT SEE ANY REASON TO INTE RFERE WITH THE ORDER OF THE CIT (A) ON THIS ISSUE AND THE ADDITION OF RS.7,68,000 IS CONFIRMED. 7. AS REGARDS THE ADDITIONS MADE ON ACCOUNT OF UNSECURED LOANS, THE ASSESSEE IS STATED TO HAVE TAK EN LOANS IN CASH FROM THE FOLLOWING PERSONS: 1 SRI N.K. AGARWAL RS.2,02,000 2 SMT.OM DEVI AGARWAL RS.1,75,000 3 SRI SURESH RS.50,000 4 SRI NISAR AHMED RS.50,000 5 SRI TULASI RS.2,50,000 6 SRI B. KISTAIAH RS.1,50,000 7 SRI HARI KRISHNA REDDY RS.1,50,000 8 SRI P.V.MURALI KRISHNA RS.2,00,000 9 SRI Y. RAMA RAO RS.1,50,000 1 0 Y.SEKHAR REDDY RS.1,88,000 8. BEFORE THE AO, THE ASSESSEE HAD FILED THE CONFIR MATION LETTERS OF THE PARTIES, BUT COULD NOT DEMONSTRATE T HE MODE OF ITA NO 287 OF 2017 SAVVY SPECHEMS P LTD HYDERABAD. PAGE 5 OF 6 ACCEPTANCE NOR COULD DISCHARGE THE ONUS OF PROVING THE IDENTITY, CREDITWORTHINESS OF THE PARTIES AND THE GENUINENESS OF THE TRANSACTION AND THEREFORE, THE AO MADE THE ADDITION OF RS.23,51,000.ON APPEAL, THE CIT (A) HAS BROUGHT OUT THAT SHRI N.K. AGARWAL IS AN INCOME-TAX ASSESSEE AND HAS REFL ECTED THE INCOME OF RS.1.00 LAKHS IN THE A.YS 2005-06 AND 200 6-07 AND THAT HE DID NOT RECEIVE ANY INTEREST IN EITHER OF T HE YEARS AND THOUGH, HE HAS SHOWN SUNDRY DEBTORS OF RS.3,12,623 AND RS.3,00,000 RESPECTIVELY FOR A.Y 2005-06 & 2006-07, THERE ARE NO DETAILS OF ANY OF THE PARTIES. SINCE NO BANK STATEM ENT WAS PROVIDED AND THE DETAILS OF THE MODE OF PAYMENT WER E NOT GIVEN, THE CIT (A) HELD THAT THE IDENTITY OF SHRI N.K. AGA RWAL, THOUGH IS PROVED, THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IS NOT PROVED. SIMILARLY, WITH REGARD TO SMT. OM DE VI AGARWAL, THE CIT (A) OBSERVED THAT THE IDENTIFY OF SMT. OM D EVI AGARWAL IS PROVED SINCE SHE IS AN INCOME-TAX ASSESSEE, BUT SIN CE SHE HAS NOT GIVEN THE MODE OF PAYMENT AND THE DETAILS OF TH E SUNDRY DEBTORS, THE CREDITWORTHINESS AND GENUINENESS OF TH E TRANSACTION IS NOT PROVED. AS REGARDS THE UNSECURED LOANS OF RS .11,88,000, THE CIT (A) HAS OBSERVED THAT THE SOURCES MENTIONED IN THE CONFIRMATION LETTERS OF THE RESPECTIVE PARTIES ARE NOT PROVED BY ANY EVIDENCE AND THAT THE MODE OF PAYMENT IS NOT SU BMITTED BY THE ASSESSEE AND AS NONE OF THE PERSONS ARE ASSESSE D TO TAX, THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IS NOT PROVED. 9. THE LEARNED COUNSEL FOR THE ASSESSEE AGAIN RELIE D UPON THE CONFIRMATION LETTERS FILED BY THE RESPECTI VE PARTIES. AS RIGHTLY POINTED OUT BY THE LEARNED DR, THE IDENTITY OF ONLY TWO PARTIES HAS BEEN PROVED, WHEREAS THE CREDITWORTHINE SS AND GENUINENESS OF ANY OF THE TRANSACTIONS HAS NOT BEEN PROVED BY ITA NO 287 OF 2017 SAVVY SPECHEMS P LTD HYDERABAD. PAGE 6 OF 6 THE ASSESSEE. THE ONUS WAS ON THE ASSESSEE TO PROVE WITH NECESSARY EVIDENCE, THE GENUINENESS OF THE TRANSACT IONS. THIS IS THE SECOND ROUND OF LITIGATION AND THE ASSESSEE, TH OUGH, HAS BEEN GIVEN A FRESH OPPORTUNITY TO PROVE HIS CASE BEFORE THE AO AND THE CIT (A), HAS FAILED TO PRODUCE ANY EVIDENCE. NO EVI DENCE IS FILED EVEN BEFORE US ALSO. IN VIEW OF THE SAME, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT (A). THE DECISIONS RELIED UPON BY THE LEARNED DR HAVE ALL LAID DOWN TH AT THE ONUS OF PROVING THE IDENTITY AND CREDITWORTHINESS OF THE CR EDITORS AND THE GENUINENESS OF THE TRANSACTION IS ON THE ASSESSEE. THEREFORE, THESE DECISIONS ARE CLEARLY APPLICABLE TO THE FACTS OF THE CASE BEFORE US AND THEREFORE, THE ASSESSEES APPEAL IS D ISMISSED. 10. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST MARCH, 2018. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 21 ST MARCH 2018. VINODAN/SPS COPY TO: 1 M/S. SAVVY SPECHMES PVT LTD, FLAT NO.402, SAL TEJ A APARTMENTS, 6 TH PHASE, KPHB COLONY, KUKATPALLY, HYDERABAD 500072 2 DY. CIT, CIRCLE 3(1) SIGNATURE TOWERS, KONDAPUR, HY DERABAD 3 CIT (A)-3 HYDERABAD 4 PR. CIT 3 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER