K.B.Rolling Mills Private Limited, Ranga Reddy V. Asst. Commissioner of Income Tax, Central Circle-3(1), Hyderabad

ITA 401/Hyd/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5032 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 22-07-2021
• Assessment Year: 2015-2016
• Appeal Filed On: 22-07-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D.SRINIVAS
• Assessee Lawyers: P.MURALI MOHANA RAO
• Keywords: TDS; Bogus
• Section: 68; 2; 40A(3); 143(3); 153A; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 396/HYD/20 2010-11 M/S.K.B.ROLLING MILLS PRIVATE LIMITED, PETBASHEERABAD (V), QUTHBULLAPUR (M), RANGA REDDY DIST. [PAN: AABCK0631P] ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3(1), HYDERABAD 397/HYD/20 2011-12 398/HYD/20 2012-13 399/HYD/20 2013-14 400/HYD/20 2014-15 401/HYD/20 2015-16 402/HYD/20 2016-17 FOR ASSESSEE : SHRI P.MURALI MOHANA RAO, AR FOR REVENUE : SHRI D.SRINIVAS, DR DATE OF HEARING : 22-07-2021 DATE OF PRONOUNCEMENT : 24-09-2021 O R D E R PER S.S.GODARA, J.M. : THESE ASSESSEES SEVEN APPEALS FOR AYS.2010-11 TO 20 16- 17 ARISE AGAINST CIT(A)-11, HYDERABADS COMMON ORDE R DT.31- 01-2020, PASSED IN APPEAL NOS.306 TO 309 AND 311, 3 16, 320/2017-18/CIT(A)-11/HYD/2019-20, INVOLVING PROCEE DINGS U/S.143(3) R.W.S.153A FOR THE AYS.2010-11 TO 2015-16 AND M/S.K.B.ROLLING MILLS PRIVATE LIMITED (GROUP CASES) :- 2 -: U/S.143(3) (FOR THE AY.2016-17) OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]; RESPECTIVELY. HEARD BOTH THE PARTIES. CASE FILES PERUSED. 2. IT TRANSPIRES AT THE OUTSET THAT THE ASSESSEES PLEADING S RAISE ITS FOUR-FOLDED ISSUES IN LEAD AY.2010-11S A PPEAL ITA NO.396/HYD/2020 WHILST CHALLENGING LEGALITY OF THE IM PUGNED SECTION 143(3) R.W.S.153A ASSESSMENTS FOLLOWED BY S UPPRESSED INCOME ON ACCOUNT OF OUT OF BOOKS PRODUCTION/TURNOVER O F RS.12,29,20,136/- SECTION 40A(3) DISALLOWANCE OF RS.8,32,282/- AND SECTION 68 UN-EXPLAINED CASH CREDI TS ADDITION OF RS.3,75,75,971/- THEREBY TREATING COMMISSIO N INCOME AS BOGUS; RESPECTIVELY. THERE IS FURTHER NO D ISPUTE THAT THE ASSESSEE HAS RAISED IDENTICAL SUBSTANTIVE GROUNDS IN THE REMAINING SIX APPEALS AS WELL SINCE THE ONLY DIFFER ENCE THEREIN IS QUA QUANTUM OF THE IMPUGNED ADDITIONS AND DISALLOWANCES; AS THE CASE MAY BE. WE ADVERT TO THE BASIC RELEVANT FACTS. 3. THE ASSESSEE-COMPANY MANUFACTURE IRON AND STEEL INVOLVING RE-ROLLING, TMT BARS ETC. IT HAD FILED ITS RETURN OF INCOME ON 08-09-2010 IN THE LEAD AY.2010-11 DECLA RING INCOME OF RS.72,10,790/- WHICH STOOD SUMMARILY PRO CESSED U/S.143(1)(A) OF THE ACT. THE DEPARTMENT THEREAFTER APPE ARS TO HAVE CONDUCTED THE IMPUGNED SEARCH ON 29-10-2015. T HE ASSESSING OFFICER THEREAFTER INITIATED SECTION 153A PROCEEDINGS. THE ASSESSEE FILED ITS RETURN(S) DT.07-06 -2017. THE ASSESSING OFFICER NEXT COMPLETED HIS IMPUGNED SE CTION 143(3) R.W.S.153A ASSESSMENTS MAKING THE FOREGOING THR EE ADDITIONS (SUPRA). THE FIRST AND FOREMOST ISSUE ARISES FOR OUR APT ADJUDICATION IN THE GIVEN FACTS AND CIRCUMSTANCES IS AS TO M/S.K.B.ROLLING MILLS PRIVATE LIMITED (GROUP CASES) :- 3 -: WHETHER BOTH THE LEARNED LOWER AUTHORITIES HAVE RIGHTLY FRAMED SECTION 153A ASSESSMENT PROCEEDINGS FOLLOWED BY THE IMPUGNED CORRESPONDING DISALLOWANCES/ADDITIONS OR N OT? OUR REPLY TO THE SAME IS IN ASSESSEES FAVOUR AND AGA INST THE DEPARTMENT. THERE CAN BE HARDLY ANY DISPUTE THAT VARIOUS JUDICIA L PRECEDENTS I.E., I. CIT VS. KABUL CHAWLA, (2016) [380 ITR 573] (DELHI) II. CIT VS. CONTINENTAL WAREHOUSING CORPORATION (2015) [374 ITR 645] (BOM) III. PCIT VS. SAUMYA CONSTRUCTIONS (P) LTD. [387 ITR 529] IV. CIT VS. IBC KNOWLEDGE PARK PVT. LTD. [385 ITR 346] (K AR) AND V. CIT VS. VEERPRABHU MARKETING LTD (2016) [73 TAXMANN.COM 149] (CAL) HOLD IN IDENTICAL TERMS THAT SUCH A SEARCH ASSESSMENT IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND OR SEIZE D DURING THE COURSE OF SEARCH IS NOT SUSTAINABLE. THE REVENUES CASE IN LIGHT OF THE HON'BLE JURISDICTIONAL HIGH COURTS DECIS ION IN GOPAL LAL BHADRUKA VS. DCIT (2012) [346 ITR 106] (AP) CIT VS. RAJKUMAR ARORA [367 ITR 517] (ALL) & E.N.GOPA KUMAR VS. CIT (2016) [390 ITR 131 (KERALA) IS THAT THE DEPARTMENT CAN VERY WELL INITIATE/FRAME SECTION 153A ASSESSMENTS F OR DETERMINING TOTAL INCOME OF AN ASSESSEE INVOLVING S ECTION 132 SEARCH ACTION . WE FIND NO SUBSTANCE IN THE LATTERS PRECEDING ARGUMENTS SINCE THE HON'BLE JURISDICTIONAL HIGH COURT ; MORE PARTICULARLY, NOWHERE TOOK A CONTRARY VIEW THAT THE IMPU GNED ASSESSMENTS WOULD BE VALID EVEN IN ABSENCE OF INCRI MINATING M/S.K.B.ROLLING MILLS PRIVATE LIMITED (GROUP CASES) :- 4 -: MATERIAL. ALL WHAT THEIR LORDSHIPS HOLD IS THAT AN ASSE SSING OFFICER COULD VERY WELL TAKE UP ADDITIONAL ISSUES AS WELL IN CASE SECTION 153A PROCEEDINGS HAVE BEEN INITIATED ON THE BA SIS OF INCRIMINATING MATERIAL. 4. COUPLED WITH THIS, THERE IS HARDLY ANY QUARREL BET WEEN THE PARTIES THAT ALL WHAT THE DEPARTMENT HAD ALLEGEDLY RECOVERED DURING THE COURSE OF SEARCH FROM THE ASSESS EES BUSINESS PREMISES IS ANNEXURE-A/KBR OFF/01, I.E THE ELECTRICITY CONSUMPTION BILL OF THE FACTORY FOR THE FY. 14-15 AS PER THE ASSESSING OFFICERS DISCUSSION IN PG.6 PARA 10(B) OF THE ASSESSMENT ORDER. THERE IS NOT EVEN AN IOTA OF EVIDENC E OR SUPPORTIVE MATERIAL IN FAVOUR OF THE DEPARTMENT THAT THE S AME IN ANY CASE INVOLVED FACTS AND FIGURES WHICH RAN CON TRARY TO THE ASSESSEES BOOKS OF ACCOUNT, JOURNALS AND LEDGERS MAINTAINED IN THE REGULAR COURSE OF BUSINESS. WE THERE FORE HOLD THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AN D ON FACTS IN FRAMING THE IMPUGNED ASSESSMENT(S) IN ABSENC E OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEA RCH. LEARNED LOWER AUTHORITIES RATHER COMMITTED A FATAL ERROR RATHER IN TERMING THE FOREGOING POWER BILL AS INCRIMINATING MATERIAL. 5. THE OUTCOME OF ALL THE FOREGOING ISSUES ON MERITS A LSO IS NO DIFFERENT. THIS IS FOR THE REASON THAT WE HAVE ALREA DY INDICATED IN THE PRECEDING PARAS THAT THE DEPARTMENT HAD N OT FOUND ANY MATERIAL AT ALL; WHATSOEVER, WHICH COULD EVE N REMOTELY SUGGEST THAT THE ASSESSEE HAD CONCEALED ITS ALLE GED SUPPRESSED TURNOVER IN ALL THESE ASSESSMENT YEARS. THI S ITSELF IS THE PERFECT INSTANCE WHEREIN THE LEARNED DEPARTMENTA L AUTHORITIES HAVE GONE BY EXTRAPOLATION METHOD SO AS TO M/S.K.B.ROLLING MILLS PRIVATE LIMITED (GROUP CASES) :- 5 -: PRESUME THE SPECIFIED CLANDESTINE TURNOVER GOING BY ASSUMPTIONS IN POWER CONSUMPTIONS SECTORAL NORMS THAN FINDING ANY SPECIFIC FAULT WITH THE RAW-MATERIAL CONSUM ED AS WELL AS THE CORRESPONDING FIXED ASSETS ETC. SHOWING A NY ABNORMAL REPAIRS ETC. CASE LAW (2015) 371 ITR 373 ( P&H) CIT VS. RAM STEEL INDUSTRIES; (2020) 182 ITD 441 (AHMEDAB AD), DCIT VS. M/S.ASIAN GRANITO INDIA LTD. (246 ITR 671) (BOMBAY), CIT VS. C.J.SHAH AND CO. (2000) [246 ITR 671] (BOM) HOLD THAT SUCH AN ADDITION BASED MERELY ON SECTOR AL POWER CONSUMPTION TRENDS IS ALSO NOT SUSTAINABLE. 6. LEARNED DEPARTMENTAL REPRESENTATIVE LASTLY SUBMITTED THAT THE ASSESSEES AUTHORISED PERSON HAD DULY ADMITTED THE IMPUGNED SUPPRESSED TURNOVER IN THE SEARCH STATEMENT. W E DO NOT FIND ANY SUCH ADMISSION FROM THE ASSESSEES SIDE SINCE ALL ITS AUTHORISED PERSONS HAD DONE WAS TO ESTIMATE THE CORRESPONDING POWER SECTOR CONSUMPTION TRENDS THAN AN YTHING ELSE. BE THAT AS IT MAY, THE CBDTS TWIN CIRCULARS DT.1 0-03- 2003 AND 18-12-2014 HAVE MADE IT CLEAR THAT SUCH ADMIS SIONS OR CONFESSIONAL STATEMENTS MADE DURING THE COURSE OF A SEARCH OR SURVEY; AS THE CASE MAY BE, DO NOT HOLD ANY SIGNIF ICANCE IN ABSENCE OF CONTEMPORANEOUS SUPPORTIVE EVIDENCE. WE CONCLUDE IN ALL THESE FACTS THAT BOTH THE LOWER AUTHORITIE S HAVE ERRED IN LAW AND ON FACTS IN MAKING THE IMPUGNED IDEN TICAL ADDITION OF SUPPRESSED TURNOVER OF RS.12,29,20,136/- IN LEAD AY.2010-11 AND VARYING SUMS IN ALL REMAINING ASSESS MENT YEARS. THE SAME STANDS DELETED IN ALL APPEALS. 7. NEXT COMES THE SECOND ISSUE ON MERITS REGARDING CORRECTNESS OF SECTION 40A(3) DISALLOWANCE OF RS.8,32 ,282/- IN M/S.K.B.ROLLING MILLS PRIVATE LIMITED (GROUP CASES) :- 6 -: AY.2010-11 MADE BY THE LEARNED LOWER AUTHORITIES ON THE GROUND THAT THE ASSESSEE HAD DELIBERATELY REDUCED THE CORRESPONDING PAYMENT INSTANCES LESS THAN THE PRESCRIBE D LIMIT; AS THE CASE MAY BE AS PER ITS AUTHORISED PERSON S STATEMENT (SUPRA). 8. LEARNED DEPARTMENTAL REPRESENTATIVE HAS PLACED RELI ANCE ON THE ASSESSEES AUTHORISED PERSONS SEARCH STATEMENT TO THIS EFFECT AS WELL. WE NOTICE THAT THE ASSESSEE APPEARS TO H AVE MADE TRIP-WISE PAYMENTS ONLY THAN THOSE INVOLVING THE TRANSPORT INVOICES ON WHOLE-SUM BASIS. THIS IS ALSO N OT THE REVENUES CASE THAT ALL OF THESE INVOICES ARE WELL BE YOND THE SPECIFIED LIMIT OF THE CASH PAYMENT IN THE RELEVANT PRE VIOUS YEAR. WE THEREFORE HOLD THAT THE IMPUGNED ADDITION BAS ED ON MERE SEARCH STATEMENT WHICH GOES AGAINST THE RECORD, IS NOT SUSTAINABLE. THE SAME IS DIRECTED TO THE DELETED IN A LL THE APPEALS. 9. WE ARE NOW LEFT WITH SECTION 68 ADDITION OF RS.3,75,75,971/- WHICH REPRESENTS THE ASSESSEES COM MISSION INCOME TREATED AS BOGUS UN-EXPLAINED CASH CREDITS IN B OTH THE LOWER PROCEEDINGS. THERE IS HARDLY ANY DISPUTE THAT THE ASSESSEE HAD CLAIMED TO HAVE RECEIVED THE IMPUGNED S UM(S) FROM MUMBAI BASED COMPANY M/S.BENZO CHEM INDUSTRIES PVT. LTD., THROUGH BANKING CHANNELS ALONG WITH CORRESPONDI NG TDS DEDUCTION AS WELL. LEARNED LOWER AUTHORITIES HOLD THAT THE SAME IS IN THE NATURE OF ACCOMMODATION ENTRY ONLY SIN CE THE CORRESPONDING ENTITY(IES) HAD NOT SUPPORTED ITS EXPLAN ATION OF HAVING ARRANGED THE MARKETING AND SALES FOR THE PAYER ENTITY. M/S.K.B.ROLLING MILLS PRIVATE LIMITED (GROUP CASES) :- 7 -: LEARNED DEPARTMENTAL REPRESENTATIVE SOUGHT TO CLARIFY THAT THE ASSESSEES AUTHORISED PERSONS STATEMENT COULD NOT THROW LIGHT ON THE PLACE(S) OF THESE ENTITY(IES) AS WELL. WE DECLINE THE REVENUES INSTANT LAST ADJUSTMENT AS WELL SIN CE NOT ONLY ALL THE IMPUGNED COMMISSION PAYMENTS HAVE BEEN SUBJECTED TO TDS BY THE CONCERNED PAYER M/S.BENZO CHEM INDUSTRIES PVT. LTD. BUT ALSO IT HAS COME ON RECORD THAT L ATTER; ON ITS OWN, HAD VERY WELL CONFIRMED BEFORE THE ASSESS ING OFFICER QUA SALES & MARKETING ARRANGEMENT WITH THE TAXPAYER VIDE LETTER DT.24-11-2015. WE FURTHER MAKE IT CLEAR THAT TH E ASSESSING OFFICER HEREIN DID NOT UNDERTAKE ANY FURTHE R CONFIRMATION FROM THE PAYERS SIDE SINCE HE HAS ADOPTE D THE ABOVE STATED TECHNICAL REASONING TO TREAT THE ASSESSEES COMMISSION INCOME AS UN-EXPLAINED CASH CREDITS. W E THEREFORE HOLD THAT THE SAME DESERVES TO BE DELETED. WE ORDER ACCORDINGLY. SAME ORDER TO FOLLOW IN ALL THE REMAINING ASSESSMENT YEARS AS WELL. 10. ALL THESE ASSESSEES APPEALS ARE ALLOWED IN ABOV E TERMS. A COPY OF THIS COMMON ORDER BE PLACED IN THE RESPECTI VE CASE FILES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH SEPTEMBER, 2021 SD/- S D/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 24-09-2021 TNMM M/S.K.B.ROLLING MILLS PRIVATE LIMITED (GROUP CASES) :- 8 -: COPY TO : 1.M/S.K.B.ROLLING MILLS PRIVATE LIMITED, C/O. P.MUR ALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, SOMAJIGUDA , HYDERABAD. 2.THE ASST.COMMISSIONER OF INCOME TAX, CENTRAL CIRC LE-3(1), HYDERABAD. 3.CIT(APPEALS)-11, HYDERABAD. 4.PR.CIT-CENTRAL, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.