K. Govardhana Rao, Tenali V. ITO, Ward -2, , Tenali

ITA 352/VIZ/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6701 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 12-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S ARAVINDAKSHAN
• Keywords: Unexplained investment
• Section: 40A(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 3 52 /VIZ/ 201 7 ( /ASSESSMENT YEAR: 201 0 - 1 1 ) STAY PETITION NO.09/VIZ/2017 ARISING OUT OF I.T.A.NO. I.T.A.NO.352/VIZ/2017 ( /ASSESSMENT YEAR:2010 - 11) SRI K.GOVARDHANA RAO PROP : KANAKAMAHALAKSHMI JEWELLERS 7 - 3 - 11(1), JAIN TEMPLE STREET TENALI [ PAN : A C UPK4471F ] INCOME TAX OFFICER WARD - 2 TENALI ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI , AR / RESPONDENT BY : S HRI R. S.ARAVINDAKSHAN , DR / DATE OF HEARING : 12 .0 9 .2017 / DATE OF PRONOUNCEMENT : 15 . 0 9 .2017 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD.CIT(A) VIDE ITA NO.106/2012 - 13/CIT(A - 1)/GNT DATED 18.05.2017 FOR THE ASSESSMENT YEAR 2010 - 11. 2 ITA NO. 352 /VIZ/201 7 SRI K.GOVARDHANA RAO, TENALI 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ADDITION MADE BY THE ASSESSING OFFICER AMOUNTING TO RS.12,80,000/ - ON PROTECTIV E BASIS RELATING TO THE ADVANCE GIVEN TO HEERA BULLION CORPORATION, VIJAYAWADA (SUPPLIERS) FOR PURCHASE OF GOLD BISCUITS . THE ASSESSEE FILED THE RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.3,24,340/ - ON 14.12.2012. THE ASSESSING OFFICER RECEIVED INFORMATION FROM THE DDIT(INV) STATING THAT DURING THE SEARCH OPERATIONS CONDUCTED IN THE CASE OF HEERA BULLION CORPORATION ( SUPPLIERS ) , THE SUPPLIER STATED THAT S HE HAD RECEIVED THE ADVANCE OF RS.12,80,000/ - FROM THE ASSESSEE FOR PURCHASE OF GOLD. THE INSPECTOR OF INCOME TAX VISITED THE PREMISES OF THE ASSESSEE AND MADE THE ENQUIRIES . T HE ASSESS E E HA D ACCEPTED PAYMENT OF ADVANCE OF RS.12,80,000/ - FOR PURCHASE OF GOLD . H OWEVER THE INSPECTOR OF INCOME T AX FOUND THAT THERE WERE NO ENTRIES IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE RELATING TO THE ADVANCE PAID TO THE SUPPLIERS . WHEN ASSESSING OFFICER PROPOSED TO MAKE THE ADDI TION, THE ASSESSEE SUBMITTED AN EXPLANATION STATING THAT THE S UM OF RS.12,80,000/ - WAS GIVEN TO THE SUPPLIER AS ADVANCE AS ON 24.09.2009 FROM THE AVAILABLE CASH BALANCE OF RS.35,04,269/ - . SINCE THERE WAS NO GOLD AVAILABLE WITH THE SELLER, THE AMOUNT WAS PAID AS ADVANCE AND RECORDED THE SAME IN THE SUSPENSE 3 ITA NO. 352 /VIZ/201 7 SRI K.GOVARDHANA RAO, TENALI ACCOUNT UNDER THE HEAD TRAVELLING ACCOUNT. THE ASSESSEE FURTHER STATED THAT THE GOLD WAS PROPOSED TO BE PURCHASED AS INVESTMENT , H ENCE, SECTION 40A(3) DOES NOT ATTRACT IN THIS TRANSACTION. THE SUPPLIER SUPPLIED THE GOLD ON 09.11.2009 WHICH WAS DULY ACCOUNTED IN THE BOOKS OF ACCOUNTS. SINCE THE AMOUNT WAS SENT THROUGH STAFF ON 24.09.2009, PENDING RECEIPT OF GOLD, THE SAID SUM WAS RECORDED IN THE SUSPENSE ACCOUNT. NOT BEING CONVINCED WITH THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER MADE THE ADDITIO N OF RS.12,80,000/ - ON PROTECTIVE BASIS. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER STATING THAT THE CASH BALANCE AVAILABLE WITH THE ASSESSE E AS ON 24.09.20 09 HAS NOTHING TO DO WITH PAYMENT OF RS.12,80,000/ - WHICH WAS PAID TO THE SUPPLIER AND THE SAID AMOUNT WAS PAID OVER AND ABOVE THE CASH BALANCE AVAILABLE AS ON 24.09.2009. ACCORDINGLY, THE LD.CIT(A) CONFIRMED THE ADDITION ON SUBSTANTIVE BASIS U/S 69A/69B AND DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 4 ITA NO. 352 /VIZ/201 7 SRI K.GOVARDHANA RAO, TENALI 3. DURING THE APPEAL HEARING, THE LD.AR ARGUED THAT THE ASSESSEE HAS GIVEN A SUM OF RS.12,80,000/ - TO THE SUPPLIER FROM THE CASH BALANCE AVAILABLE WITH THE ASSESSEE AS ON 24.09.2009. THERE WAS CASH BALANCE OF RS.35,04,269/ - AVAILABLE WITH THE ASSESSEE WHICH IS NOT IN DISPUTE. PENDING RECEIPT OF THE GOLD , T HE AMOUNT PAID TO THE SUPPLIER WAS ACCOUNTED IN THE SUSPENSE ACCOUNT UNDER THE HEAD TRAVELLING ACCOUNT. THE ASSESSING OFFI CER HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THAT THE ASSESSEE HAS MADE THE PAYMENT OF RS.12,80,000/ - OVER AND ABOVE THE CASH B ALANCE AVAILABLE IN THE BOOKS OF ACCOUNTS. SUBSEQUENTLY, THE ASSESSEE HAS RECEIVED THE BULLION FROM THE SUPPLIER WHICH WAS DULY ACCOUNTED IN THE BOOKS OF ACCOUNTS. THE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT FOUND ANY DEFECTS WITH REGARD TO THE ADVANCE PAYMENT MADE TO THE SUPPLIER AND SUBSEQUENT ENTRY MADE AFTER THE RECEIPT OF THE GOLD . THEREFORE, LD.AR ARGUED THAT THE ASSESSING OFFICER HAS MADE THE ADDITION WITH A SUSPICION AND SURMISES WITHOUT BRIN GING ANY EVIDENCE ON RECORD TO SHOW THAT THE ASSESSEE HAS MADE THE PAYMENT OUTSIDE BOOKS OF ACCOUNTS. 5 ITA NO. 352 /VIZ/201 7 SRI K.GOVARDHANA RAO, TENALI 4. ON THE OTHER HAND, LD.DR ARGUED THAT THE ASSESSEE HAS MADE THE PAYMENT WITHOUT MAKING ENTRY IN THE CASH BOOK WHICH SHOWS THAT THE PAYMENT WAS MADE OUT SIDE THE BOOKS OF ACCOUNTS AND THE ASSESSING OFFICER HAS RIGHTLY MADE THE ADDITION AS UNEXPLAINED INVESTMENT WHICH WAS CONFIRMED BY THE LD.CIT(A). ACCORDING TO THE LD.DR, THE LD.CIT(A) HAS R IGHTLY CONFIRMED THE ORDER OF THE AO AND NO INTERFERENCE IS CALLE D FOR . 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE HA D MADE THE PAYMENT OF RS.12,80,000/ - TO THE SUPPLIER OF GOLD AS ADVANCE FOR PURCHASE OF GOLD BISCUITS STATED TO HAVE BEEN ACCOUNTED IN THE SUSPENSE ACCOUNT UNDER THE HEAD TRAVELLING ACCOUNT. THE ASSESSING OFFICER MADE THE ADDITION UNDER THE IMPRESSION THAT THE PAY MENT WAS MADE OUTSIDE THE BOOKS OF ACCOUNTS. THERE WAS A CASH BALANCE OF RS.35,04,269/ - AS ON 24.09.2009 AND IT IS AN UNDISPUTED FACT. THE INSPECTOR FROM THE OFFICE OF THE DDIT(INV) HAS VISITED THE ASSESSEES BUSINESS PREMISES BUT DID NOT VERIFY THE PHY SICAL CASH BALANCE AS ON 25.09.2009 TO CONFIRM WHETHER THE PAYMENT WAS MADE FROM THE BOOK BALANCE OR OUTSIDE THE BOOKS OF ACCOUNTS . HAVING 6 ITA NO. 352 /VIZ/201 7 SRI K.GOVARDHANA RAO, TENALI VISITED THE BUSINESS PREMISES, HE SHOULD HAVE VERIFIED THE PHYSICAL CASH TO FI ND OUT THE FACT WHETHER THE PAYMENT WAS MADE TO THE BULLION SUPPLIER OR NOT . WHEN THE SOURCE WAS AVAILABLE WITH THE ASSESS E E AND STATED THAT THE ADVANCE WAS PAID OUT OF AVAILABLE CASH IT IS INCORRECT TO HOLD THAT THE PAYMENT WAS MADE OUTSIDE THE BOOKS OF ACCOUNTS WI THOUT ANY EVIDENCE TO ESTABLISH THE SAME. SUBSEQUENTLY, THE SUPPLIER HAD SUPPLIED THE GOLD WHICH WAS RECORDED IN THE BOOKS OF ACCOUNTS AND THE ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUNTS DURING THE ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER AND T HE ASSESSING OFFICER DID NOT FIND ANY DEFECT WITH REGARD TO THE PAYMEN T MADE TO THE BULLION DEALER AND THE RECEIPT OF GO LD. AS ON THE DATE OF PAYMENT , THERE WAS SUFFICIENT CASH BALANCE AVAILABLE WITH THE ASSESS E E AND NO EVIDENCE WAS BROUGHT RECORD TO HOLD THAT THE PAYMENT WAS MADE OUTSIDE THE BOOKS OF ACCOUNTS . HENCE THERE IS NO CASE FOR MAKING THE ADDITION U/S 69A/69B. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND ALLOW THE APPEAL OF THE ASSESSEE. 7 ITA NO. 352 /VIZ/201 7 SRI K.GOVARDHANA RAO, TENALI 7 . IN THE RESULT, APPEAL OF THE A SSESSEE IS ALLOWED AND STAY PETI TI ON FILED BY THE ASSESSEE IS DISMISSED . T HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 15 TH SEP 20 17 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM / DATED : 15 . 0 9 .2017 L. RAMA, SPS /COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT SRI K.GOVARDHANA RAO , PROP : KANAKAMAHALAKSHMI JEWELLERS , 7 - 3 - 11(1), JAIN TEMPLE STREET , TENALI 2 . / THE RESPONDENT INCOME TAX OFFICER, WARD - 2, TENALI 3 . THE CHIEF COMMISSIONER OF INCOME TAX, VIJAYAWADA 4. ( ) / THE COMMISSIONER OF INCOME TAX(A) - 1, GUNTUR 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM