Dr Kada Venkata Ramana, Kakinada V. The DCIT, Circle-1, Kakinada

ITA 405/VIZ/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2732 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-10-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 13-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T L PETER
• Keywords: Unexplained cash credit; Additional evidence
• Section: 68; 263

Judgement Text

ITA NO.405 OF 2010 KADA VENKATA RAMANA KAKINADA PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.405/VIZAG/2010 ASSESSMENT YEAR: 2007-08 DR. KADA VENKATA RAMANA, KAKINADA VS. DY.COMMISSIONER OF INCOME TAX, CIRCLE-1, KAKINADA (APPELLANT) PAN NO: AGOPK 2325 G (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI T.L. PETER, DR ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 1-6-2010 PASSED BY LEARNED CIT RAJAHMUNDRY UNDER SE CTION 263 OF THE ACT FOR THE ASSESSMENT YEAR 2007-08. THE ASSESSEE IS AS SAILING THE DECISION OF THE LEARNED CIT IN DIRECTING THE ASSESSING OFFICER TO TREAT THE CASH CREDITS OF RS.5,45,000/- AS THE INCOME OF THE ASSESSEE UNDER S ECTION 68 OF THE ACT. 2. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT OF THE YEAR UNDER CONSIDERATION IN THE HANDS OF THE ASSESSEE ON 25-9-2009 BY PASSING A CRY PTIC ORDER. THE LEARNED CIT INITIATED THE REVISION PROCEEDING UNDER SECTION 263 OF THE ACT BY CALLING FOR DETAILS FROM THE ASSESSEE ON VARIOUS ISSUES. TH E ASSESSEE FURNISHED THE DETAILS SO CALLED FOR AND THE LEARNED CIT DROPPED T HE PROCEEDINGS IN RESPECT OF ALL ISSUES EXCEPT THAT RELATING TO CASH CREDIT. ITA NO.405 OF 2010 KADA VENKATA RAMANA KAKINADA PAGE 2 OF 4 2.1 THE FACTS RELATING TO THE ISSUE OF CASH CREDIT IS STATED IN BRIEF. THE ASSESSEE HAD TAKEN FRESH LOANS TO THE TUNE OF RS.11 ,34,888/- DURING THE INSTANT YEAR. THE LEARNED CIT CALLED FOR THE DETAI LS OF CASH CREDITS. BEFORE THE LEARNED CIT, THE ASSESSEE FILED CONFIRMATION LE TTERS IN RESPECT OF LOANS AGGREGATING TO RS.5,89,888/- AND BASED ON THOSE DET AILS, THE LEARNED CIT ACCEPTED THE CASH CREDITS AS GENUINE. HOWEVER IN R ESPECT OF THE FOLLOWING TWO LOANS, THE ASSESSEE COULD NOT FILE ANY CONFIRMA TION LETTER. A) SHRI B. RAJAGOPAL RS. 45,000/- B) SHRI P. SRINIVASA BABU RS.5,00,000/- HENCE THE LEARNED CIT DIRECTED THE ASSESSING OFFICE R TO BRING TO TAX THE ABOVE CITED AMOUNT OF RS.5,45,000/- AS UNEXPLAINED CASH CREDITS UNDER SECTION 68 OF THE ACT. AGGRIEVED BY THIS DIRECTION , THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE PARTIES AND ALSO PERUSED THE R ECORD. BEFORE US, THE ASSESSEE HAS FILED A PETITION FOR ADMISSION OF ADDITIONAL EVIDENCES CONSISTING OF CONFIRMATION LETTERS OBTAINED FROM TH E TWO PERSONS MENTIONED ABOVE. IT WAS ALSO STATED THAT THESE LETTERS COULD NOT BE FILED BEFORE THE LEARNED CIT FOR WANT OF SUFFICIENT TIME. 3.1 THERE IS NO DISPUTE WITH REGARD TO THE LEGA L PROPOSITION THAT THE LEARNED CIT IS ENTITLED TO REVISE THE ASSESSMENT OR DER IN CASE OF FAILURE ON THE PART OF THE ASSESSING OFFICER TO CARRY OUT NECE SSARY INQUIRIES. THERE IS ALSO NO DISPUTE WITH REGARD TO THE FACT THAT THE AS SESSING OFFICER, IN THE INSTANT CASE, DID NOT MAKE ANY ENQUIRY IN RESPECT O F FRESH LOANS OBTAINED BY THE ASSESSEE VIS--VIS SECTION 68 OF THE ACT. HENCE THE LEARNED CIT HAS CALLED FOR NECESSARY DETAILS IN THE REVISION PROCEE DINGS. THE LEARNED CIT HAS ALSO ACCEPTED THE LOANS AS GENUINE, IN RESPECT OF WHICH CONFIRMATION LETTERS AND OTHER DETAILS WERE FILED BY THE ASSESSE E. ACCORDING TO THE ASSESSEE, HE COULD NOT FILE THE CONFIRMATION LETTER S IN RESPECT OF THE ABOVE SAID TWO ITEMS DUE TO PAUCITY OF TIME. NOW WE HAVE TO SEE WHETHER THE ITA NO.405 OF 2010 KADA VENKATA RAMANA KAKINADA PAGE 3 OF 4 LEARNED CIT IS CORRECT IN DIRECTING THE ASSESSING O FFICER TO MAKE ADDITION OF IMPUGNED CASH CREDITS IN RESPECT OF WHICH NO DETAIL S WERE FILED FOR WANT OF TIME. 3.2 IT IS WELL SETTLED PROPOSITION THAT THE LEARNED CIT CANNOT IMPOSE HIS VIEWS ON THE ASSESSING OFFICER IN THE MATTER OF ASS ESSMENT. IN THIS REGARD, IT IS PERTINENT TO EXTRACT THE FOLLOWING OBSERVATIO NS OF HON'BLE SUPREME COURT IN THE CASE OF CIT V GREEN WORLD CORPORATION (2009) (314 ITR 81) AT PAGE 110. ..NO DOUBT IN TERMS OF THE CIRCULAR LETTER ISSUE D BY THE CENTRAL BOARD OF DIRECT TAXES, THE COMMISSIONER OR FOR THAT MATTER ANY OTHER HIGHER AUTHORITY MAY HAVE SUPERVIS ORY JURISDICTION BUT IT IS DIFFICULT TO CONCEIVE THAT EVEN THE MERIT OF THE DECISION SHALL BE DISCUSSED AND THE SA ME SHALL BE RENDERED AT THE INSTANCE OF THE HIGHER AUTHORITY WHO, AS NOTICED HEREINBEFORE, IS A SUPERVISORY AUTHORITY. IT IS ONE THING TO SAY THAT WHILE MAKING THE ORDERS OF ASSESSMENT THE ASSESSING OFFIC ER SHALL BE BOUND BY THE STATUTORY CIRCULARS ISSUED BY THE C ENTRAL BOARD OF DIRECT TAXES BUT IT IS ANOTHER THING TO SA Y THAT THE ASSESSING AUTHORITY EXERCISING QUASI-JUDICIAL FUNCT ION KEEPING IN VIEW THE SCHEME CONTAINED IN THE ACT, WOULD LOSE ITS INDEPENDENCE TO PASS AN INDEPENDENT ORDER OF ASSESS MENT. FURTHER, AT PAGE 112, IT WAS OBSERVED AS UNDER: WHEN A STATUTE PROVIDES FOR DIFFERENT HIERARCHIES PROVIDING FOR FORUMS IN RELATION TO PASSING OF AN ORDER AS AL SO APPELLATE OR ORIGINAL ORDER, BY NO STRETCH OF IMAGINATION CAN A HIGHER AUTHORITY INTERFERE WITH THE INDEPENDENCE WHICH IS THE BASIC FEATURE OF ANY STATUTORY SCHEME INVOLVING ADJUDICATORY PROCESS 3.3 IN THE INSTANT CASE THE LEARNED CIT HAS DIR ECTED THE ASSESSING OFFICER TO MAKE ADDITION UNDER SECTION 68 OF THE AC T IN RESPECT OF THE ABOVE CITED TWO LOANS SINCE THE ASSESSEE DID NOT FILE CON FIRMATION LETTERS BEFORE HIM. SUCH A DIRECTION, IN OUR VIEW, IS NOT IN ACC ORDANCE WITH THE LAW, AS IT RESULTS IN INTERFERING WITH THE QUASI JUDICIAL FUNC TION OF THE ASSESSING OFFICER. ITA NO.405 OF 2010 KADA VENKATA RAMANA KAKINADA PAGE 4 OF 4 IN OUR VIEW, THE RIGHT COURSE OF ACTION FOR LEARNED CIT SHOULD HAVE BEEN TO DIRECT THE ASSESSING OFFICER TO MAKE NECESSARY INQU IRIES IN RESPECT OF THE TWO LOANS AS PER THE REQUIREMENTS OF SECTION 68 AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW. IN THAT CASE, THE ASSESSING OFFICER WOULD BE IN A POSITION TO DISCHARGE THE QUASI JUDIC IAL FUNCTION ENTRUST UP ON HIM UNDER THE ACT. IN VIEW OF THE ABOVE, WE MODIFY T HE ORDER OF THE LEARNED CIT AND DIRECT THE ASSESSING OFFICER TO EXAMINE THE TWO LOANS UNDER SECTION 68 OF THE ACT AND TAKE APPROPRIATE DECISIONS IN ACC ORDANCE WITH THE LAW. THE ORDER OF THE LEARNED CIT IS MODIFIED ACCORDINGL Y. 5 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREAT ED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER, 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 25-10-2010. COPY TO 1 DR. KADA VENKATA RAMANA, D.NO.12-8-4, OPP: TOWN H ALL, KAKINADA 2 THE DY.COMMISSIONER OF INCOME TAX CIRCLE-I, KAKINAD A 3 THE CIT RAJAHMUNDRY 4 THE DR, ITAT, VISAKHAPATNAM. 5 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM