THE ITO, WARD - 4, Rajahmundry V. Smt. Sada Jayalakshmi, Rajahmundry

ITA 359/VIZ/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2102 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M N MURTHY NAIKDR
• Keywords: Unexplained cash credit; Additional evidence
• Section: 143(3)

Judgement Text

ITA NO.359/VIZAG/2013 SMT. SADA JAYALAKSHMI, RAJAHMUNDRY 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , ' BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.359/VIZAG/2013 ( / ASSESSMENT YEAR : 2009-10) ITO, WARD-4, RAJAHMUNDRY VS. SMT. SADA JAYALAKSHMI RAJAHMUNDRY [ PAN: AYJPS 2011C] ( / APPELLANT) ( / RESPONDENT ) / APPELLANT BY : SHRI M.N. MURTHY NAIK,DR #$ / RESPONDENT BY : SHRI G.V.N. HARI, AR ( / DATE OF HEARING : 27. 01.2016 ( / DATE OF PRONOUNCEMENT : 05.02.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE, IS DIRECTED AGAI NST THE ORDER OF CIT(A), VISAKHAPATNAM DATED 14.3.2013 AND IT PERTAI NS TO THE ASSESSMENT YEAR 2009-10. ITA NO.359/VIZAG/2013 SMT. SADA JAYALAKSHMI, RAJAHMUNDRY 2 2. THE BRIEF FACTS OF THE CASE, ARE THAT THE ASSESS EE IS AN INDIVIDUAL FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 30.9.2009 DECLARING TOTAL INCOME OF RS.8,86,230/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 (H EREINAFTER CALLED AS THE ACT) AND SUBSEQUENTLY THE CASE HAS BEEN SELEC TED FOR SCRUTINY UNDER CASS AND ACCORDINGLY, NOTICE U/S 143(2) OF TH E ACT WAS ISSUED. IN RESPONSE TO NOTICE, AUTHORISED REPRESENTATIVE OF TH E ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED BOOKS OF ACCOUNTS, BILLS & VOUCHERS, ETC. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A. O. NOTICED THAT THE ASESSEE HAS PARKED ON THE LIABILITY SIDE OF THE BAL ANCE SHEET UNDER THE HEAD BRANCH/DIVISIONS A SUM OF RS.1,06,78,367/-. TH E A.O. FURTHER OBSERVED THAT THIS TYPE OF TREATMENT OF THE ASSESSE ES OWN BRANCHES AS CREDITORS IN THE ASSESSEES BALANCE SHEET IS ABSURD IN NATURE BY VIRTUE OF THE ACCOUNTING PRINCIPLES. THEREFORE, ISSUED A SHO W CAUSE NOTICE AND ASKED TO CLARIFY THE TREATMENT OF THE BRANCH/DIVISI ONS IN THE LIABILITY SIDE OF THE BALANCE SHEET. IN RESPONSE TO SHOW CAUSE NO TICE, THE ASSESSEE COULD NOT EXPLAIN THE BRANCH/DIVISIONS PARKED ON TH E LIABILITY SIDE OF THE BALANCE SHEET TO THE SATISFACTION OF THE ASSESSING OFFICER. THEREFORE, THE A.O. TREATED AMOUNT LAYING IN THE BRANCHES/DIVISION S AS UNEXPLAINED CREDITORS AND BROUGHT TO TAX. ITA NO.359/VIZAG/2013 SMT. SADA JAYALAKSHMI, RAJAHMUNDRY 3 3. SIMILARLY, THE A.O. NOTICED THAT THE ASSESSEE HA S TAKEN FRESH CREDIT OF RS.13 LAKHS FROM MR. A. SUBBA RAYUDU, THEREFORE, ISSUED A NOTICE AND ASKED TO EXPLAIN THE NATURE AND SOURCE OF CREDIT. T HE ASSESSEE COULD NOT FURNISH THE CONFIRMATION LETTER FROM THE SAID CREDI TOR TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE C REDITOR. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS NOT DISCHARGED THE ONUS CAST UPON HER BY PROVING THE IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE CREDITORS, THEREFORE, THE SAME WAS ADDED TO THE INC OME OF THE ASSESSEE AS UNEXPLAINED CREDITS. WITH THESE TWO OBSERVATIONS , THE A.O. COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ON 21.12.2011. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE HAS FILED A WRITTEN SUBMISSION ON 16.1.2013 AND FILED ALL INFOR MATION WITH REGARD TO THE BRANCHES AT ANANTAPUR AND KADAPA FOR THE FINANC IAL YEAR 2008-09 ALONG WITH LEDGER ACCOUNT COPIES. THE ASSESSEE SUB MITTED THAT THE ACCOUNTANT WHO FINALIZED THE CONSOLIDATED FINANCIAL STATEMENTS, BY MISTAKE HAS ADOPTED THE BANK BALANCES APPEARED IN T HE BRANCH BOOKS AS BRANCHES/DIVISIONS, INSTEAD OF SHOWING THE INDIVIDU AL ITEM OF LIABILITIES BY NAME. THE ASSESSEE FURTHER SUBMITTED THAT THE BALA NCES APPEARED IN THE LIABILITY SIDE OF THE BALANCE SHEET UNDER THE H EAD BRANCHES/DIVISIONS ITA NO.359/VIZAG/2013 SMT. SADA JAYALAKSHMI, RAJAHMUNDRY 4 IS NOTHING BUT BANK BALANCES OF CITY UNION BANK IN ANANTAPUR BRANCH AND ING VYSYA BANK IN KADAPA BRANCH. THE SAID MISTA KES WERE RECTIFIED AND REVISED FINANCIAL STATEMENT HAS BEEN FILED ALON G WITH NECESSARY DETAILS. THE CIT(A), DURING THE COURSE OF APPELLATE PROCEEDINGS, FORWARDED THE WRITTEN SUBMISSIONS ALONG WITH DETAIL S FILED BY THE ASSESSEE TO THE ASSESSING OFFICER FOR HIS COMMENTS. THE A.O. VIDE HIS REMAND REPORT DATED 18.2.2013 SUBMITTED THAT THE BR ANCH/DIVISIONS APPEARED IN CREDIT SIDE OF THE BALANCE SHEET WAS VE RIFIED AND FOUND TO BE CORRECT. THE A.O. FURTHER STATED THAT THE ASSES SEE HAS FURNISHED ALL THE DETAILS RELATING TO BRANCH/DIVISIONS AND EXPLAI NED HOW THE MISTAKE WAS OCCURRED WHILE PREPARATION OF FINANCIAL STATEME NTS. AFTER VERIFICATION OF THE DETAILS FURNISHED BY THE ASSESS EE, THE A.O. STATED THAT THE BALANCE APPEARED IN THE LIABILITY SIDE OF THE B ALANCE SHEET UNDER THE HEAD BRANCH/DIVISIONS OF RS. 1,06,78,367/- STANDS E XPLAINED. SIMILARLY, WITH REGARD TO ADDITION OF RS. 13,00,000/-, THE A.O . HAS ACCEPTED THE EXPLANATION OF THE ASSESSEE AND STATED THAT THE AS SESSEE HAS FURNISHED CONFIRMATION LETTERS ALONG WITH LEDGER EXTRACT COPI ES OF SRI A. SUBBA RAYUDU FOR HAVING ACCEPTED THE UNSECURED LOANS. TH E A.O. FURTHER STATED THAT THE SOURCE FOR THE CREDIT IN THE BOOKS OF ACCOUNT STANDS EXPLAINED AND THIS ADDITION CAN ALSO BE DELETED IN THE APPEAL. THE CIT(A), AFTER CONSIDERING THE SUBMISSIONS MADE BY T HE ASSESSEE AND ITA NO.359/VIZAG/2013 SMT. SADA JAYALAKSHMI, RAJAHMUNDRY 5 ALSO TAKEN INTO ACCOUNT THE REMAND REPORT ISSUED BY THE A.O. DELETED THE ADDITIONS MADE BY THE A.O. TOWARDS BRANCH/DIVIS IONS AND UNEXPLAINED CREDITS. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. D.R. SUBMITTED THAT THE CIT(A) WAS ERRED IN DELETING THE ADDITIONS MADE BY THE A.O., AS THE CREDITS REMAINED UNVERIFIED EVEN AFTER THE REMAND REPORT. THE LD. D.R. FURTHER SUBM ITTED THAT THE CIT(A) OUGHT TO HAVE RECORDED REASONS FOR ADMISSION OF THE ADDITIONAL EVIDENCE DURING THE APPELLATE PROCEEDINGS UNDER RULE 46A IND EPENDENTLY FIRST AND THEN TO REMAND THE SAME TO THE FILE OF THE A.O. TH E LD. D.R. FURTHER SUBMITTED THAT THE ADDITION IN RESPECT OF UNEXPLAIN ED CREDITORS WAS UNVERIFIED, AS THE ASSESSEE PRODUCED UNAUTHENTICATE D REVISED BALANCE SHEET WHICH IS HAVING NO COMPARISON WITH THE ORIGIN AL BALANCE SHEET FILED ALONG WITH RETURN OF INCOME. THE LD. D.R. FU RTHER ARGUED THAT THE ASSESSEE HAS INTENTIONALLY FAILED TO FURNISH CONFIR MATION LETTER AND LEDGER ACCOUNT COPIES OF THE CREDITORS BEFORE THE A.O., TH EREFORE, FAILED TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINES S OF THE CREDITORS. THEREFORE, THE ADDITION MADE BY THE A.O. SHOULD BE UPHELD. ON THE OTHER HAND, THE LD. A.R. STRONGLY SUPPORTED THE ORD ER OF THE CIT(A). ITA NO.359/VIZAG/2013 SMT. SADA JAYALAKSHMI, RAJAHMUNDRY 6 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIALS AVAILABLE ON RECORD. THE A.O. HAS MADE ADDITIONS T OWARDS BRANCH/DIVISIONS APPEARED IN THE LIABILITY SIDE OF THE BALANCE SHEET FOR THE REASON THAT THE ASSESSEE HAS NOT EXPLAINED THE CREDITS WITH EVIDENCES. THE A.O. WAS OF THE OPINION THAT THIS T YPE OF TREATMENT OF THE ASSESSEES OWN BRANCH/DIVISIONS AS LIABILITY IN ASSESSEES BALANCE SHEET IS ABSURD IN NATURE BY VIRTUE OF THE ACCOUNTI NG PRINCIPLES. IT WAS THE CONTENTION OF THE ASSESSEE THAT THE BRANCH/DIVI SIONS APPEARED IN THE LIABILITY SIDE OF THE BALANCE SHEET IS NOTHING BUT THE BANK BALANCES APPEARED IN THE BRANCHES WHICH WAS SHOWN AS BRANCH/ DIVISIONS WHILE COMPILING THE CONSOLIDATED FINANCIAL STATEMENTS. DU RING THE COURSE OF APPELLATE PROCEEDINGS, THE CIT(A) HAS CALLED FOR A REMAND REPORT FROM THE A.O. WITH HIS COMMENTS. DURING REMAND PROCEEDIN GS, THE ASSESSEE HAS FURNISHED ALL THE DETAILS RELATING TO BRANCH/DI VISIONS AND EXPLAINED HOW THE MISTAKE WAS OCCURRED WHILE PREPARATION OF F INANCIAL STATEMENTS. THE A.O., VIDE HIS REMAND REPORT DATED 18.2.2013 HA S ACCEPTED THE EXPLANATIONS OF THE ASSESSEE AND STATED THAT THE AD DITIONS MAY BE DELETED IN THE APPELLATE PROCEEDINGS. SIMILARLY, T HE A.O. HAS ACCEPTED THE ASSESSEE EXPLANATION WITH REGARD TO UNEXPLAINED CREDITOR OF RS. 13,00,000/- AND STATED THAT THE ASSESSEE HAS FURNIS HED CONFIRMATION LETTERS ALONG WITH LEDGER EXTRACT COPIES OF SRI A. SUBBA RAYUDU FOR ITA NO.359/VIZAG/2013 SMT. SADA JAYALAKSHMI, RAJAHMUNDRY 7 HAVING ACCEPTED THE UNSECURED LOANS. THE A.O. FURT HER STATED THAT THE SOURCE FOR THE CREDIT IN THE BOOKS OF ACCOUNT STAND S EXPLAINED AND THIS ADDITION CAN ALSO BE DELETED IN THE APPEAL. THE CIT (A), AFTER CONSIDERING THE REMAND REPORT AND ALSO ON THE BASIS OF EVIDENCE S FURNISHED BY THE ASSESSEE DELETED THE ADDITIONS. THE FACTS REMAIN SA ME EVEN BEFORE US. THE REVENUE HAS FAILED TO PROVE WITH EVIDENCES, THE FINDINGS OF THE FACT RECORDED BY THE CIT(A) IS INCORRECT. THEREFORE, WE ARE OF THE OPINION THAT THERE IS NO ERROR OR INFIRMITY IN THE ORDER PA SSED BY THE CIT(A). HENCE, WE INCLINED TO UPHELD THE ORDER OF THE CIT(A ) AND REJECT THE GROUND RAISED BY THE REVENUE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 5 TH FEB16. SD/- SD/- (. ) ( . ) ( V. DURGA RAO ) ( G. MANJUNATHA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER , /VISAKHAPATNAM: 0 / DATED : 5.2.2016 VG/SPS ITA NO.359/VIZAG/2013 SMT. SADA JAYALAKSHMI, RAJAHMUNDRY 8 # 2, 3,/ COPY OF THE ORDER FORWARDED TO :- 1. / THE APPELLANT THE ITO WARD-4, RAJAHMUNDRY 2. #$ / THE RESPONDENT SMT. SADA JAYALAKSHMI, PROPX: JAYALAKSHMI MOTORS, 69-31-8, LALCHERUVU ROAD, GANDHIPURAM, RAJAHMUNDRY 3. 5 / THE CIT, VISAKHAPATNAM 4. 5 () / THE CIT (A), VISAKHAPATNAM 5. , # :, ( : , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // >? : ( SR.PRIVATE SECRETARY ) ( : , , / ITAT, VISAKHAPATNAM