Sonam Seed Technologies P. Ltd., Karimnagar, Hyderabad V. JCIT, Karimnagar Range, Karimnagar, Karimnagar

ITA 351/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6265 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 21-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92

Judgement Text

ITA NO 351 OF 2016 SONAM SEED TECHNOLOGIES P LTD KARIMNAGAR PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.351/HYD/2016 (ASSESSMENT YEAR: 2010-11) M/S. SONAM TECHNOLOGIES PRIVATE LIMITED KARIMNAGAR PAN: AAMCS 5542 E VS JT. COMMISSIONER OF INCOME TAX, KARIMNAGAR RANGE KARIMNAGAR FOR ASSESSEE : SHRI S. RAMA RAO FOR REVENUE : SHRI K.J. RAO, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2010-11. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF SEEDS, FILED ITS RETURN OF INCOME ON 15.10.2013 FOR THE A. Y 2010-11, ADMITTING AN INCOME OF RS.35,02,100. THERE WAS A SU RVEY IN THE CASE OF THE ASSESSEE ON 14.12.2009 DURING THE COURS E OF WHICH, THE ASSESSEE HAD ADMITTED AN INCOME OF RS.35.00 LAK HS TOWARDS CONSTRUCTION OF FACTORY AND OTHER DISALLOWANCES. TH E ASSESSEE INCLUDED THE SAID SUM IN THE RETURN OF INCOME FILED . THUS, THE NET PROFIT ADMITTED AFTER REDUCING THE SURVEY DISCLOSUR E, IS RS.2,100/- ONLY. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, DATE OF HEARING : 20.12.2016 DATE OF PRONOUNCEMENT : 11.01.2017 ITA NO 351 OF 2016 SONAM SEED TECHNOLOGIES P LTD KARIMNAGAR PAGE 2 OF 5 THE AO WAS OF THE OPINION THAT THE NET PROFIT OF RS .2,100/- IS VERY MEAGER IN THE ASSESSEES LINE OF BUSINESS. FURTHER, HE ALSO OBSERVED THAT THE ASSESSEE HAS INTRODUCED CASH OF R S.35.00 LAKHS IN THE CASH BOOK THROUGH JOURNAL ENTRY. AO OBSERVED THAT AT THE TIME OF SURVEY, AS PER THE CASH BOOK, THE CASH AVAI LABLE IS RS.97,045 ONLY. THEREFORE, THE AO ASKED THE ASSESSE E TO EXPLAIN AS TO HOW THE CASH WAS INTRODUCED WHEN THERE IS NO CASH AVAILABLE IN THE CASH BOOK. THE ASSESSEE EXPLAINED THAT THE SUM OF RS.35.00 LAKHS IS OFFERED TOWARDS CONSTRUCTION A ND ALSO DISCREPANCIES IN THE BOOKS OF ACCOUNT BY PASSING A JOURNAL ENTRY. AO OBSERVED THAT THE INCOME OFFERED AT THE TIME OF SURVEY CANNOT BE BROUGHT INTO THE BOOKS OF ACCOUNT AS CASH IN THE FORM OF OTHER SOURCES AND HENCE TREATED THE SUM OF RS.35.00 LAKH S AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT AND BROUGHT IT TO TAX IN ADDITION TO THE RETURNED INCOME. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRME D THE ORDER OF THE AO AND THE ASSESSEE IS IN 2 ND APPEAL BEFORE US. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAD NOT BEEN ABLE TO EXPLAIN THE SOURC ES OF INVESTMENT IN THE CONSTRUCTION OF A BUILDING AND TH ERE WERE CERTAIN OTHER DISCREPANCIES IN HIS BOOKS OF ACCOUNT , DUE TO WHICH, THE ASSESSEE HAD ADMITTED AN ADDITIONAL INCOME OF R S.35.00 LAKHS AND IN ACCORDANCE WITH THE SAID ADMISSION, THE ASSE SSEE HAS FILED THE RETURN OF INCOME OFFERING THE SUM OF RS.35.00 L AKHS AS OTHER INCOME ALONG WITH THE BUSINESS INCOME OF RS.2,100/- . HE SUBMITTED THAT BOTH THE AO AS WELL AS THE CIT (A) H AVE ERRONEOUSLY BROUGHT THE SAME TO TAX AGAIN AS UNEXPL AINED CASH CREDITS AND THEREFORE, IT AMOUNTS TO A DOUBLE ADDIT ION. ITA NO 351 OF 2016 SONAM SEED TECHNOLOGIES P LTD KARIMNAGAR PAGE 3 OF 5 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, IT IS SEEN FROM THE P&L A/C OF THE ASSES SEE FOR THE RELEVANT A.Y, THAT THE OTHER INCOME OFFERED BY THE ASSESSEE IS RS.35,05,040 AND IT FORMS PART OF SCHEDULE-19 AND O N PERUSAL OF SCHEDULE-19, WE FIND THAT THE FARMERS BOOKING IS RS .5,040/- AND OTHER INCOME IS SHOWN AS RS.35.00 LAKHS. THERE IS N O BIFURCATION OF THE SAID AMOUNT OF RS.35.00 LAKHS AND AS EXPLAIN ED BY THE ASSESSEE IT IS THE INCOME OFFERED DURING THE COURSE OF SURVEY. MERELY BECAUSE THE ASSESSEE HAS SHOWN IT BY WAY OF JOURNAL ENTRY, IT DOES NOT BECOME UNEXPLAINED CASH CREDIT. IT IS S ETTLED PRINCIPLE THAT AN ITEM OF INCOME CANNOT BE TAXED TWICE. THUS, THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE DURING THE COURSE OF SURVEY AND OFFERED IN THE RETURN OF INCOME, CANNOT BE BROUGHT TO TAX ON ACCOUNT OF AN ENTRY IN THE BOOKS OF THE ASSESSEE. T HEREFORE, WE ARE INCLINED TO ALLOW THE ASSESSEES APPEAL. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JANUARY, 2017. SD/- SD/- (B.RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 11 TH JANUARY, 2017. VINODAN/SPS ITA NO 351 OF 2016 SONAM SEED TECHNOLOGIES P LTD KARIMNAGAR PAGE 4 OF 5 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 JT. COMMISSIONER OF INCOME TAX, KARIMNAGAR RANGE, KARIMNAGAR 3 CIT (A)-9 HYDERABAD 4 PR. CIT 2 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER ITA NO 351 OF 2016 SONAM SEED TECHNOLOGIES P LTD KARIMNAGAR PAGE 5 OF 5