The Income-tax Officer, Ward -7(3), Hyderabad V. M/s Super Industries, Hyderabad

ITA 349/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66501 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 05-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMISHA S GUPT
• Assessee Lawyers: KISHORE KUMAR KABRA
• Keywords: Unexplained cash credit; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 349/HYD/2012 ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, APPELLANT WARD 7(3), HYDERABAD VS. M/S SUPER INDUSTRIES, RESPONDENT HYDERABAD (PAN AAOFS1453R) APPELLANT BY : SMT. AMISHA S. GUPT RESPONDENT BY : SHRI KISHORE KUMAR KABRA DATE OF HEARING : 20/11/2012 DATE OF PRONOUNCEMENT : 23/11/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER OF THE CIT(A), HYDERABAD, DATED 26/12/2011 FO R THE ASSESSMENT YEAR 2006-07. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE FIRM ENGAGED IN TRADING IN PULSES AND MANUFACTURE OF PUT ANA FILED ITS RETURN OF INCOME ON 30/10/2006 DECLARING A TOTAL IN COME OF RS. 1,08,880/-. THE AO ADDED A SUM OF RS. 8,00,000/- AS UNEXPLAINED CREDIT WITH THE FOLLOWING OBSERVATIONS: DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E ASSESSEE WAS ASKED TO FURNISH THE CONFIRMATIONS TOW ARDS THE UNSECURED LOANS ALONG WITH THE SOURCES. THE CONFIRM ATION IN ITA NO. 349/HYD/2012 M/S SUPER INDUSTRIES. 2 RESPECT OF ONE OF THE LOAN CREDITOR VIZ., DWARKADAS DAMODARLAL HEDA FROM WHOM THE ASSESSEE HAD TAKEN LOAN OF RS. 8,00,000/-DURING THE YEAR UNDER CONSIDERATION, COUL D NOT BE FURNISHED TILL DATE. WHEN THIS WAS QUESTIONED TO TH E ASSESSEES C.A., HE HAS EXPRESSED HIS INABILITY TO FILE THE SA ME. IN THE ABSENCE OF THE CONFIRMATION LETTER/SOURCES, THE INV ESTMENT SAID TO HAVE BEEN MADE BY THE DWARKADAS DAMODARLAL HEDA IS HEREBY TREATED AS THE UNEXPLAINED CREDIT OF THE ASS ESSEE AND IS ADDED TO THE INCOME RETURNED. 3. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APP EAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT I T HAD DULY FILED THE CONFIRMATION LETTER FROM M/S DWARKADAS DA MODARLAL HEDA VIDE ITS LETTERS DATED 24/11/2008 AND 28/11/2008 AN D THAT THE CONFIRMATION SHOWED THAT M/S DWARKADAS DAMODARLAL H EDA WAS ASSESSED TO TAX IN RANGE-7, HYDERABAD ITSELF. THE A R OF THE ASSESSEE ALSO FILED COPIES OF THE COVERING LETTERS FILED ON 24/11/2008 AND 28/11/2008 ALONG WITH THE RELEVANT C ONFIRMATION. THE AR ALSO SUBMITTED THAT THE AO HAD WRONGLY OBSER VED THAT THE AR HAD EXPRESSED HIS INABILITY TO FURNISH THE CONFI RMATION WHEREAS THE FACT IS THAT THE AR HAD ONLY EXPRESSED HIS INAB ILITY TO FURNISH THE COPY OF THE INCOME TAX RETURN OF THE CREDITOR, BUT, HAD FURNISHED THE CONFIRMATION LETTERS. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A), BECAUSE OF THE CONTRADICTORY FACTUAL SITUATION AS P ER THE AO ON ONE HAND AND THE ASSESSEE ON THE OTHER, CALLED FOR ASSE SSMENT RECORD OF THE ASSESSEE FOR AY 2006-07 AND FOUND THAT THE CONF IRMATIONS AS CLAIMED BY THE ASSESSEE WERE VERY MUCH ON RECORD. F URTHER, THE ORDER SHEET NOTING DATED 01/12/2008 READ AS FOLLOWS : ITA NO. 349/HYD/2012 M/S SUPER INDUSTRIES. 3 IN RESPECT OF THE LOAN CREDITOR FROM DWARKADAS DAMO DARLAL HEDA WHO HAD ADVANCED THE LOAN 8 LACS DURING THE YE AR, THERE IS NO CONFIRMATION OF SOURCE FILED. HENCE, I AM TRE ATING THE SAME AS UNEXPLAINED CREDIT IN THE HANDS OF THE ASSE SSEE. CASE IS DISCUSSED. 6. THE CIT(A), THEREFORE, CONCLUDED THAT SINCE THE ASSESSEE FILED CONFIRMATION OF THE LOAN, IT WAS FOR THE AO TO VERI FY FROM THE CREDITORS ASSESSMENT RECORDS WHETHER THE LOAN HAD BEEN REFLECTED THEREIN AS THE CREDITOR WAS ALSO ASSESSED IN THE SA ME RANGE. THE CIT(A) HELD THAT THE ASSESSEE HAD DULY DISCHARGED T HE ONUS CAST ON IT, AND, THEREFORE, HE DIRECTED THE AO TO DELETE TH E ADDITION OF RS. 8,00,000/- MADE BY HIM AS UNEXPLAINED CREDIT. 7. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE CIT(A) ERRED IN FACTS AND IN LAW IN DELETING THE ADDITION OF RS. 8,00,000/- MADE ON ACCOUNT OF UNEXPLAINED CR EDIT OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. 2. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT TH AT THE ASSESSEE HAD FAILED TO DISCHARGE ITS ONUS AND PROVE CONCLUSIVELY THE GENUINENESS OF THE LOAN AMOUNT OF RS. 8,00,000/-. 8. BEFORE US, THE LEARNED DR SMT. AMISHA S. GUPT RE LIED UPON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F ROSHAN DI HATTI VS. CIT, 107 ITR 938 WHEREIN IT WAS HELD THAT THE LAW IS WELL SETTLED THAT THE ONUS OF PROVING THE SOURCE OF A SU M OF MONEY FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE IS ON HIM. IF HE DISPUTES THE LIABILITY FOR TAX, IT IS FOR HIM TO SHOW EITHER THA T THE RECEIPT WAS NOT INCOME OR THAT IF IT WAS, IT WAS EXEMPT FROM TAXATI ON UNDER THE PROVISIONS OF THE ACT. IN THE ABSENCE OF SUCH PROOF , THE REVENUE IS ENTITLED TO TREAT IT AS TAXABLE INCOME. TO PUT IT D IFFERENTLY, WHERE ITA NO. 349/HYD/2012 M/S SUPER INDUSTRIES. 4 THE NATURE AND SOURCE OF A RECEIPT, WHETHER IT BE O F MONEY OR OF OTHER PROPERTY, CANNOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE, IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS THE INCOM E OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW T HAT THAT INCOME IS FROM ANY PARTICULAR SOURCE. THE LEARNED DR ALSO RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F KALE KHAN MOHAMMAD HANIF VS. CIT, 50 ITR 1 WHEREIN IT WAS HEL D THAT IT IS WELL ESTABLISHED THAT THE ONUS OF PROVING THE SOURC E OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVED BY THE ASSESSEE I S ON HIM. IF HE DISPUTES LIABILITY FOR TAX, IT IS FOR HIM TO SHOW E ITHER THAT THE RECEIPT WAS NOT INCOME OR THAT IF IT WAS, IT WAS EXEMPT FRO M TAXATION UNDER THE PROVISIONS OF THE INCOME-TAX ACT. IN THE ABSENC E OF SUCH PROOF, THE ITO IS ENTITLED TO TREAT IT AS TAXABLE INCOME. 9. REFERRING TO THE RATIO LAID DOWN BY THE APEX COU RT IN THE ABOVE CASES, THE LEARNED DR SUBMITTED THAT MERE CONFIRMAT ION LETTERS WILL NOT SUFFICE AND THE CONFIRMATION OF THE SOURCE OF T HE CREDITOR IS TO BE ESTABLISHED, THEREFORE, THE AO WAS RIGHT IN HOLD ING THE SUM OF RS. 8,00,000/- AS UNEXPLAINED CREDIT IN THE HANDS O F THE ASSESSEE. 10. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI KISHO RE KUMAR KABRA RELIED UPON THE ORDER OF THE CIT(A). 11. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES , PERUSED THE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AS WELL AS DECISIONS CITED. WE ARE OF THE VIEW THAT CONFIRM ATION OF THE SOURCE OF THE LOAN IS THAT WHICH IS REQUIRED TO DEC IDE THE ISSUE IN DISPUTE AND NOT THE CONFIRMATION OF THE LOAN ITSELF , THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE ITA NO. 349/HYD/2012 M/S SUPER INDUSTRIES. 5 AO WITH A DIRECTION TO VERIFY FROM THE CREDITORS A SSESSMENT RECORD WHICH IS IN RANGE 7 ITSELF AS TO WHETHER THE CRED ITOR HAS THE SOURCE FOR THE INVESTMENT OF RS. 8 LAKHS AND THERE AFTER THE AO SHALL ADJUDICATE UPON THE GENUINENESS OF THE TRANSACTION. 12. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 23 RD NOVEMBER, 2012. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGH AVAN) ACCOUNTANT MEMBER JUDICIAL MEMBE R HYDERABAD, DATED: 23 RD NOVEMBER, 2012. KV COPY TO:- 1) ITO, WARD 7(3), HYDERABAD 2) M/S SUPER INDUSTRIES, 15-2-214, MAHARAJGUNJ, HYDERA BAD. 3) THE CIT (A)-VI, HYDERABAD 4) THE CIT-VI, HYDERABAD, 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.