Mahendra Kumar Agarwal, Hyderabad V. Asst. Commissioner of Income Tax, Circle-2(2), Hyderabad

ITA 316/Hyd/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4599 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 14-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SIRI KUMAR
• Assessee Lawyers: V RATNAKAR
• Section: 143(3); 68; 6

Judgement Text

ITA NOS 270 AND 316 OF 2018 MAHENDRA KUM AR AGARWAL HYDERABAD. PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS.270 AND 316/HYD/2018 (ASSESSMENT YEARS: 2013-14 & 2012-13) SHRI MAHENDRA KUMAR AGARWAL, HYDERABAD PAN: ABLPA4518K VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 2(2) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI V. RATNAKAR FOR REVENUE : SHRI J. SIRI KUMAR, CIT(DR) O R D E R PER SMT. P. MADHAVI DEVI, J.M. BOTH ARE ASSESSEES APPEALS FOR THE A.YS 2013-14 & 2012-13 RESPECTIVELY AGAINST THE ORDERS OF THE CIT (A)-2, HYDERABAD, DATED 1 ST DECEMBER, 2017. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL FOR THE A.Y 2013-14 .: 1. THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) IN ITA NO.0259/CIT(A)-2/HYD/2016-17, DATED 1 ST DECEMBER, 2017 IS CONTRARY TO LAW AND FACTS AND LEARNED COMMISSIONER (APPEALS) ERRED IN DISMISSING THE SAID APPEAL. 2. THAT THE LEARNED COMMISSIONER (APPEALS) ERRED IN UPHOLDING THE ADDITION OF RS.13,16,50,000 U/S. 68 O F THE ACT. HE HAS NOT APPRECIATED THE SUBMISSIONS OF THE APPELLANT AND THE RELEVANT DOCUMENTARY EVIDENCE PRODUCED BEFORE HIM THAT THE LOANS RECEIVED DURING THE YEAR FROM DIFFERENT PERSONS ARE GENUINE. THE APPELL ANT HAS FULLY DISCHARGED THE ONUS CAST UPON HIM IN EXPLAINING THE LOAN AMOUNTS RECEIVED BY HIM AND HAS ADEQUATELY PROVED THE IDENTITY OF LOAN CREDITORS, GENUINENESS OF TRANSACTIONS AND THE CREDIT WORTHINE SS OF THE CREDITORS. DATE OF HEARING: 01.08.2018 DATE OF PRONOUNCEMENT: 10.08.2018 ITA NOS 270 AND 316 OF 2018 MAHENDRA KUM AR AGARWAL HYDERABAD. PAGE 2 OF 4 3. THE FINDINGS/OBSERVATIONS OF THE LEARNED COMMISSIONER (APPEALS) WITH REGARD TO THE ADDITION OF RS.13,16,50,000 UNDER SECTION 68 OF THE ACT ARE AGA INST THE FACTS AND EVIDENCE ON RECORD. 4. FOR THESE AND OTHER GROUNDS THAT WILL BE SUBMITT ED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT PR AYS THAT THE ADDITION OF RS.13,16,50,000 BE DELETED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL AND THE MANAGING DIRECTOR OF M/S. GATI L TD, FILED HIS RETURN OF INCOME FOR THE A.Y 2013-14 ON 25.07.2013 RETURNING AN INCOME OF RS.2,04,11,890/-. DURING THE ASSESSMENT P ROCEEDINGS U/S 143(3) OF THE ACT, THE AO NOTICED FROM THE BALA NCE SHEET OF THE ASSESSEE THAT THE ASSESSEE HAS RECEIVED AN AMOU NT OF RS.19,34,45,000/- AS LOANS AND ADVANCES FROM VARIOU S SOURCES. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF TH E UNSECURED LOANS ALONG WITH THE INCOME TAX RETURNS FILED BY TH E LOAN CREDITORS FOR THE FINANCIAL YEARS 2011-12 AND 2012- 13. IN RESPONSE, THE ASSESSEE, VIDE LETTER DATED 22.01.201 5 SUBMITTED INFORMATION CALLED FOR PARTIALLY. THE AO OBSERVED T HAT SOME OF THE LOAN CREDITORS DO NOT HAVE CREDITWORTHINESS. THEREF ORE, HE ASKED THE ASSESSEE TO PRODUCE LOAN CREDITORS FOR CROSS EX AMINATION. THE ASSESSEE, VIDE LETTER DATED 26.2.2016 SUBMITTED THA T THE LOAN CREDITORS ARE NOT WILLING TO COME TO HYDERABAD AT S HORT NOTICE. THE AO, THEREAFTER, EXAMINED THE DOCUMENTARY EVIDENCE F ILED BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDING S AND OBSERVING THAT THE ASSESSEE HAS NOT PRODUCED THE LO AN CREDITORS FOR EXAMINATION AND HAS THUS NOT COOPERATED WITH HI M, HE HELD THAT THE ASSESSEE HAS FAILED TO PROVE THE CREDITWOR THINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS. HE GROUPED THE CREDITORS INTO FOUR DIFFERENT GROUPS AND FINALLY BR OUGHT THE LOANS OF RS.13,16,15,000 TO TAX. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A), WHO CONFIRMED THE ORDER OF THE AO AND ITA NOS 270 AND 316 OF 2018 MAHENDRA KUM AR AGARWAL HYDERABAD. PAGE 3 OF 4 THE ASSESSEE IS IN SECOND APPEAL BEFORE US. SIMILAR IS THE ISSUE IN THE A.Y 2012-13 AS WELL. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SRI Y. RATN AKAR, WHILE REITERATING THE SUBMISSIONS MADE BY THE ASSES SEE BEFORE THE AUTHORITIES BELOW, SUBMITTED THAT THE AO HAD REQUIR ED THE ASSESSEE TO PRODUCE THE PARTIES AT THE FAG END OF T HE ASSESSMENT PROCEEDINGS AND THE ASSESSEE COULD NOT PRODUCE THE PARTIES AT SHORT NOTICE AS THE CREDITORS REFUSED TO COME TO HY DERABAD AT A SHORT NOTICE. HE SUBMITTED THAT THE AO, WITHOUT PRO PERLY CONSIDERING THE DOCUMENTARY EVIDENCE FILED BY THE A O, HAS COMPLETED THE ASSESSMENT MAKING AN ADDITION OF ALL THE CREDITORS U/S 68 OF THE ACT. HE SUBMITTED THAT HE HAS FILED T HE INCOME TAX PAN NOS, ADDRESSES, CONFIRMATION LETTERS, I.T. RETU RNS, FINANCIAL STATEMENTS INCLUDING P&L A/C, BALANCE SHEETS, BANK STATEMENTS OF THE CREDITORS IN SUPPORT OF THE BORROWINGS, PAYM ENT OF INTEREST AND DETAILS OF LOAN CREDITORS BEFORE THE AO AS WELL AS CIT (A) IN THE FORM OF FIVE PAPER BOOKS, HOWEVER, NONE OF THE AUTH ORITIES HAVE VERIFIED THE SAME, BUT HAVE PROCEEDED TO MAKE THE D ISALLOWANCE AND THE CONSEQUENTIAL ADDITION TO THE INCOME. HE RE LIED UPON VARIOUS DECISIONS TO THE EFFECT WHEN THE AO HAS FAI LED TO MAKE NECESSARY ENQUIRIES BEFORE MAKING AN ADDITION U/S 6 8, SUCH AN ADDITION IS NOT SUSTAINABLE. 4. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS FILED THE NECESSARY DETAILS BEFORE THE AO TO PROVE THE GENUINENESS OF T HE TRANSACTION AND IDENTITY AS WELL AS CREDITWORTHINESS OF THE CRE DITORS. THE ASSESSEE, BY FILING THE COPIES OF THE IT RETURNS OF THE LOAN ITA NOS 270 AND 316 OF 2018 MAHENDRA KUM AR AGARWAL HYDERABAD. PAGE 4 OF 4 CREDITORS, HAS PROVED THEIR IDENTITY AND ALSO THE G ENUINENESS OF THE TRANSACTION BECAUSE MOST OF THE TRANSACTIONS AR E BY WAY OF CHEQUES. BY FILING THE I.T. RETURNS AND ALSO THE BA NK STATEMENTS, THE ASSESSEE HAS ALSO PROVED THE CREDITWORTHINESS O F THE LOAN CREDITORS. THE AO HAS NOT EXAMINED THE EVIDENCE PRO PERLY BUT HAS ONLY OBSERVED THAT THE ASSESSEE HAS FAILED TO PRODU CE THE CREDITORS FOR CROSS EXAMINATION. THE CIT (A) HAS SUMMARILY RE JECTED THE ASSESSEES CONTENTION. THOUGH THE LEARNED COUNSEL F OR THE ASSESSEE HAS RELIED UPON THE DECISIONS THAT WHERE T HE AO FAILS TO PERFORM HIS DUTY OF VERIFICATION, AN ADDITION U/S 6 8 IS NOT SUSTAINABLE, WE FIND THAT THE EVIDENCE FILED BY THE ASSESSEE CANNOT BE ACCEPTED WITHOUT VERIFICATION OF THE AUTHENTICIT Y AND VERACITY OF SUCH EVIDENCE. THEREFORE, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE FILE OF THE AO FOR BOTH THE A.YS WITH A DIRECTION TO VERIFY THE VERACITY AND AUTHENTICITY OF THE DOCUMEN TS FILED BY THE ASSESSEE AND IF THEY ARE FOUND TO BE CORRECT AND GE NUINE, THEN NO ADDITION SHALL BE MADE U/S 68 OF THE ACT. 5. IN THE RESULT, ASSESSEES APPEALS ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2018. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 10 TH AUGUST, 2018. VINODAN/SPS COPY TO: 1 SHRI MAHENDRA KUMAR AGARWAL, PLOT NO.20, SURVEY N O.12, KOTHAGUDA, KONDAPUR, HYDERABAD 500084 2 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 2(2) 5 TH FLOOR, SIGNATURE TOWERS, KOTHAGUDA, KONDAPUR, HYDERABAD 3 CIT (A)-2 HYDERABAD 4 PR. CIT 2 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER