THE ITO, Rajahmundry V. Nallabantu Chandra Bhusan, Rajahmundry

ITA 348/VIZ/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8817 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 28-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C DAS
• Keywords: Accommodation entries; Tax effect
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HON'BLE JUDICIAL MEMBER ITA NO. 348 / VIZ /201 5 (ASST. YEAR : 20 11 - 1 2 ) ITO, WARD - 1(2), RAJAHMUNDRY. VS. NALLABANTU CHANDRA BHUSANAM, PROP. SAI LAKSHMI ENTERPRISES, FORT GATE, RANGREEJPETA, RAJAHMUNDRY. PAN NO. ABG PN 3069 B (APPELLANT) (RESPONDENT) C.O.NO. 57/VIZ/2016 ( ITA NO. 348 / VIZ /201 5) (ASST. YEAR : 20 11 - 1 2 ) NALLABANTU CHANDRA BHUSANAM, PROP. SAI LAKSHMI ENTERPRISES, FORT GATE, RANGREEJPETA, RAJAHMUNDRY. VS. ITO, WARD - 2, RAJAHMUNDRY. PAN NO. ABGPN 3069 B (APPELLANT) (RESPONDENT) ITA NO. 3 66 / VIZ /201 5 (ASST. YEAR : 20 11 - 1 2 ) NALLABANTU CHANDRA BHUSANAM, PROP. SAI LAKSHMI ENTERPRISES, FORT GATE, RANGREEJPETA, RAJAHMUNDRY. VS. ITO, WARD - 1(2), RAJAHMUNDRY. PAN NO. ABGPN 3069 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI K.C. DAS - SR. DR DATE OF HEARING : 26 / 0 7 /201 7 . DATE OF PRONOUNCEMENT : 31 / 0 7 /201 7 . 2 ITA NO S . 348 & 366 / VIZ /201 5 C.O.NO. 57/VIZ/2016 (NALLABANTU CHANDRA BHUSANAM) O R D E R THESE ARE THE APPEALS FILED BY THE REVENUE AND THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), RAJAHMUNDRY , DATED 19/06/2015 FOR THE ASSESSMENT YEAR 2011 - 12 . CROSS OBJECTION NO. 57/VIZ/2016 IS FILED BY THE ASSESSEE IN ITA NO. 348/VIZ/2015 . ITA NO. 348/VIZ/2015 2. AT THE OUTSET, L EARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT TAX EFFECT INVOLVED IN THIS APPEAL IS BELOW 10 LAKHS . AS PER THE CBDT CIRCULAR N O.21/2015 , DATED 10.12.2015 BEING RETROSPECTIVE IN NATURE, THE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. THE LEARNED DEPA RTMENTAL REPRESENTATIVE HAS NOT RAISED ANY OBJECTION. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. HENCE, THE SAME IS DISMISSED . C.O.NO. 57/VIZ/2016 3. WHEN THIS CROSS OBJECTION IS TAKEN FOR HEARING, L EARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT HE DOES NOT WANT TO PRESS THIS C.O. LEARNED DEPARTMENTAL REPRESENTATIVE HAS NO T RAISED ANY OBJECTION. IN VIEW OF THE ABOVE, CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 3 ITA NO S . 348 & 366 / VIZ /201 5 C.O.NO. 57/VIZ/2016 (NALLABANTU CHANDRA BHUSANAM) ITA NO.366/VIZ/2015 4 . THE ONLY GROUND RAISED BY THE ASSESSEE RELATING TO ADDITION OF 9,38,503/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER HAS OBSERVED THAT ASSESSEE HAS PRODUCED LEDGER ACCOUNT COP I ES OF MATERIAL ADVANCES AS ON 31/03/2011 AND ACCOUNT COPIES FOR THE SUBSEQUENT PERIOD I.E. FROM 01/04/2011 ALONG WITH SALE BILLS. IT IS FOUND THAT IN RESPECT OF SOME OF THE PARTIES FROM WHOM THE ASSESSEE WAS IN RECEIPT OF AMOUNTS IN ADVANCE FOR MATERIAL IN THE FOLLOWING CASES , THE OPE NING BALANCE AS ON 01/04/2011 WERE CONTINUED TILL 31 ST MARCH, 201 2 WITHOUT ANY TRADE WITH THOSE PARTIES. NAME OF THE PARTY FROM TO AMOUNT A) D NAGI REDDY (60) 01/04/2010 31/03/2011 1,13,125 B) M.P TRADERS (122) 31/03/2011 31/03/2012 1,44,000 C) S.R.R. ENTERPRISES, VJA (43) 31/03/2011 31/03/2012 1,40,000 D) SNKRPLM SRI SAI A TO Z BAZAR (525) 31/03/2011 31/03/2012 1,68,868 E) TEJA ADVERTISING (160) 31/03/2011 31/03/2012 1,05,000 F) TUNI SRI GOWRI ENTERPRISES (149) 31/03/2011 31/03/2012 2,68,510 TOTAL 9,38,503 FOR WHICH THE AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLEADED THEIR GENUINENESS , BUT COULD NOT PRODUCE ANY MATERIAL EVIDENCE IN SUPPORT OF HIS CONTENTION. THE LEDGER COPIES OF TH E SE ACCOUNT S ALSO DO NOT SUPPORT THE AR'S CONTENTION. THEREFORE, IT IS DEEMED THAT THESE MATERIAL ADVANCES WERE JUST ACCOMMODATION ENTRIES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THEREFORE, THEY ARE TREATED AS UNEXPLAINED 4 ITA NO S . 348 & 366 / VIZ /201 5 C.O.NO. 57/VIZ/2016 (NALLABANTU CHANDRA BHUSANAM) CREDITS IN THE BO O KS OF THE ASSESSEE AND AD DED TO INCOME RETURNED , UNDER SECTION 68 OF THE ACT. 5 . ON APPEAL BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT THE CREDIT LIABILI TI ES WERE GENUINE AND THE ADDITION MADE BY THE ASSESSING OFFICER WAS NOT CORRECT UNDER SECTION 68 OF THE ACT. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING THAT THOUGH , THE ASSESSEE HAS CLAIMED THAT THESE CREDITS PERTAINS TO EARLIER YEARS AND CA RRIED OVER TO SUBSEQUENT YEARS COULD NOT PROVE ANY EVIDENCE THAT THE CREDIT LIABILITY IS GENUINE , SUBSIST DURING THE YEAR. IN THE ABSENCE OF ANY EVIDENCE, IT CANNOT BE INFERRED THAT CREDIT LIABILITIES ARE GENUINE AND SUBSISTENCE . T HEREFORE, THE ASSESSING OFFICER IS JUSTIFIED IN MAKING THE IMPUG N ED ADDITION, HOWEVER, THE SAME IS LIABLE TO TAX UNDER THE PROVISIONS OF SECTION 41(1) AND NOT UNDER SECTION 68 OF THE ACT. 6 . ON BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 7 . LEAR NED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE AMOUNTS SHOWN AS A CREDIT BALANCE REPRESENT RECEIPT S FROM 06 PARTIES AND IT WAS CARRIED OVER TO SUCCEEDING YEAR AS OPENING BALANCE . THEREFORE, NO ADDITION CAN BE MADE UNDER SECTION 68 OF THE ACT. HE RELIED ON THE ORDER OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. VARDHAMAN OVERSEAS LTD. (343 ITR 408) . 5 ITA NO S . 348 & 366 / VIZ /201 5 C.O.NO. 57/VIZ/2016 (NALLABANTU CHANDRA BHUSANAM) 8 . ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE HAS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 9 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 10 . THE CASE OF THE ASSESSEE IS THAT HE HAS RECEIVED AN AMOUNT OF 9,38,503/ - FROM 06 PARTIES FOR SUPPLY OF MATERIAL ADVANCE AND T HESE AMOUNTS WERE CARRIED OVER AS A OPENING BAL ANCE AS ON 01/04/2011 AND WERE CONTINUED TO 31/03/2012 WITHOUT ANY TRADE WITH THE M . THE ASSESSING OFFICER ASKED THE ASSESSEE ABOUT GENUINENESS OF THE ADVANCES RECEIVED . THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE TRANSACTION IS GENUINE AND NO EVIDENCE IS PRODUCE D BEFORE THE ASSESSING OFFICER TO SUBSTANTIATE THE CLAIM. NOT ONLY THAT, THE ASSESSEE HAS NOT FILED ANY DETAILS TO SHOW THAT THE CREDITS PERTAINING TO EARLIER YEARS AND CARRIED OVER TO SUBSEQUENT YEARS , EVEN BEFORE THE LD . CIT(A) THE ASSESSEE IS NOT FILED ANY EVIDENCE. EVEN BEFORE THE TRIBUNAL , THE ASSESSEE HAS NOT FILED ANY MATERIAL TO SHOW TH A T THE CREDITS APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE PERTAINS TO EARLIER YEARS AND CARRIED OVER TO SUBSEQUENT YEARS. THEREFORE, I FIND THAT ASSESSEE HAS FAILED TO DISCHARGE BURDEN CASTED UPON HIM TO SHOW THAT THE CREDITS ARE GENUINE CREDITS . T HEREFORE, THE LD. CIT(A) RIGHTLY MADE THE ADDITION UNDER SECTION 41(1) OF THE ACT INSTEAD OF SECTION 68. SO FAR AS CASE LAW RELIED ON BY THE ASSESSEE IS CONCERNED, THE FACTS OF THE PRESENT CASE ARE ENTIRELY DIFFERENT FROM THE CASE LAW RELIED ON BY THE 6 ITA NO S . 348 & 366 / VIZ /201 5 C.O.NO. 57/VIZ/2016 (NALLABANTU CHANDRA BHUSANAM) L EARNED COUNSEL FOR THE ASSESSEE. IN THE PRESENT CASE, THE ASSESSEE IS NOT ABLE TO PROVE THE GENUINENESS OF THE CREDITS APPEARING IN THE BOOKS OF ACCOUNT . THEREFORE, THE CASE LAW RELIED ON BY THE L EARNED COUNSEL FOR THE ASSESSEE HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. THEREFORE, I FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). THUS, THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS DISMISSED. 1 1 . IN THE RESULT, APPEAL S FILED BY THE REVENUE AND THE ASSESSEE ARE DISMISSED ; CROSS OBJECTION FILED BY THE ASSESSEE IS ALSO DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 3 1 S T DAY OF JULY , 201 7 . S D / - ( V. DURGA RAO ) JUDICIAL MEMBER DATED : 3 1 S T JU LY , 201 7 . VR/ - COPY TO: 1. THE ASSESSEE - NALLABANTU CHANDRA BHUSANAM, PROP. SAI LAKSHMI ENTERPRISES, FORT GATE, RANGREEJPETA, RAJAHMUNDRY. 2. THE REVENUE ITO, WARD - 1(2), RAJAHMUNDRY. 3. THE CIT, RAJAHMUNDRY. 4. THE CIT(A) , RAJAHMUNDRY. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SENIOR PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.