SHRI MOHAMED IYUB, CHENNAI V. ITO NON CORP WARD 3 (3), CHENNAI

ITA 423/CHNY/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9265 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 05-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R ANITHA IRS
• Assessee Lawyers: K G RAGHUNATH ADV
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , , [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ] ./I.T.A. NO.423/CHNY/2018 ! / ASSESSMENT YEAR : 20104-2015. SHRI. MOHAMED IYUB, PROP. CAPITAL INVESTMENT & HOLDING CO., NO.298, YUSSOF- RAJA TOWER, PETERS ROAD, CHENNAI 600 086. [PAN AAFPI 0112G] VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 3(3) CHENNAI ( / APPELLANT) ( /RESPONDENT) '# $ % / APPELLANT BY : SHRI. K.G. RAGHUNATH, ADV. &' '# $ % /RESPONDENT BY : MS. R. ANITHA, IRS, JCIT. ( ) $ * /DATE OF HEARING : 18-12-2019 +,! $ * /DATE OF PRONOUNCEMENT : 09-01-2020 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S)-4, CHENNAI (CIT(A) FOR SHORT) DATED 27.10.2017 FOR THE ASSES SMENT YEAR (AY) 2014-2015. ITA NO. 423/CHNY/2018 :- 2 -: 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APP EAL. 1. THE ORDER PASSED BY THE LEARNED ASSESSING OFFI CER, FOR THE ASSESSMENT YEAR 2014-15 , IS CONTRARY TO LAW, EVIDE NCE AND FACTS AND IS ARBITRARY. 2. THE LEARNED ASSESSING OFFICER, HAD ERRED IN NOT COMPREHENDING THE NATURE OF THE BUSINESS OF THE APPELLANT AND THE NATURE OF THE TRANSACTIONS, AND THAT THE INABILITY OF THE APPELLA NT TO PRODUCE THE SUNDRY CREDITORS FOR CROSS EXAMINATION WAS SOLELY O N ACCOUNT OF THE PENDING LITIGATIONS, AND THE LEARNED ASSESSING OFFI CER, HAD THUS ERRONEOUSLY CONCLUDED THAT THE REPAYABLE SECURITY D EPOSITS OUTSTANDING IN THE BOOKS OF THE APPELLANT, ARE UNPR OVED IN RESPECT OF GENUINENESS AND CREDITWORTHINESS, AND HAD MADE THE ADDITIONS U/S 68 OF THE INCOME TAX ACT, 1961 AMOUNTING TO RS.1,56 ,20,000/-, 3. THE LEARNED ASSESSING OFFICER, HAD ERRONEOUSLY I NVOKED THE PROVISIONS OF SECTION 68, ON THE SECURITY DEPOSIT O F RS. 1,56,20,000/- , ACCEPTED BY THE APPELLANT DURING THE COURSE OF BU SINESS TRANSACTIONS, AND WITHOUT CONSIDERING ALL THE RELEV ANT DOCUMENTARY EVIDENCES AND ALL THE EXPLANATIONS PROVIDED, DURING THE COURSE OF THE ASSESSMENT. 4. THE LEARNED COMMISSIONER OF INCOME TAX-APPEALS , FAILED TO COMPREHEND AND APPRECIATE THE BINDING NATURE OF THE DECISIONS OF THE VARIOUS HONBLE HIGH COURTS AND HONBLE TRIBUNAL ON THE SAME ISSUE ON HAND AND VARIOUS ASSOCIATED ASPECTS THEREO F. 5. IN VIEW OF THE ABOVE AND IN VIEW OF THE FURTHER GROUNDS THAT MAY BE ADVANCED, AS THE CIRCUMSTANCES MAY WARRANT , IN THE INTEREST OF DELIVERANCE OF JUSTICE, DURING THE COURSE OF HEARIN GS , IT IS PRAYED THAT THE HONOURABLE TRIBUNAL MAY BE PLEASED TO GRANT SUI TABLE RELIEF AFTER CONSIDERING ALL THE EVIDENCES AND EXPLANATIONS THAT THE APPELLANT COULD PRODUCE BEFORE THE HONOURABLE TRIBUNAL DURING THE COURSE OF HEARING ON THE APPEALS, ON THE ISSUES RAISED IN THE ASSESSMENT ORDER & THE APPELLATE ORDER CONCERNED. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL DERIVING INCOME UNDE R THE HEAD BUSINESS. THE RETURN OF INCOME FOR THE AY 20 14-15 WAS FILED ON 30.07.2014 DISCLOSING TOTAL INCOME OF RS.89,74,130 /- AND THE SAME ITA NO. 423/CHNY/2018 :- 3 -: WAS REVISED ON 31.07.2014 AT TOTAL INCOME OF RS.88, 59,130/-. THE CASE WAS SELECTED UNDER LIMITED SCRUTINY CATEGORY IN ORDER TO VERIFY LARGE INCREASE IN SUNDRY CREDITORS AND THE ASSESSMENT WAS COMPLETED BY THE INCOME TAX OFFICER, NON CORPORATE WARD 3(3), CHENNA I (HEREINAFTER REFERRED AS ASSESSING OFFICER) VIDE ORDER DATED 30. 12.2016 PASSED U/S.143(3) OF THE ACT AT TOTAL INCOME OF RS.2,44,79 ,130/-. WHILE DOING SO, THE ASSESSING OFFICER MADE ADDITION OF RS.1,56, 20,000/- TREATING THE FOLLOWING CREDITS STANDING IN THE NAMES OF TH E FOLLOWING PERSONS AS UNEXPLAINED CREDIT U/S.68 OF THE ACT. (I) HANUMAN PRASAD (PAN ABCPH 1055K) RS.1,00,00,000/ - (II) J. ELANGO (PROP. CONCEPTTS) (PAN AAHPE 8131H) RS.50,00,000/ - (III) JUDE THOMAS (FAITH FOUNDATION) RS.6,20,000/ - RS.1,56,20,000/- 4. THE FACTUAL BACKGROUND OF THE ISSUE IS AS UNDER: - DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A SSESSING OFFICER HAD CALLED UPON THE ASSESSEE TO PRODUCE DE TAILS OF SUNDRY CREDITORS STANDING IN THE BOOKS OF THE ASSESSEE. A SSESSEE HAD FILED PARTY WISE DETAILS OF SUNDRY CREDITORS. BASED ON TH IS INFORMATION FILED BY THE ASSESSEE, THE ASSESSING OFFICER HAD ISSUED S UMMONS TO THREE INDIVIDUALS NAMELY SHRI. HANUMAN PRASAD, SHRI. J. ELANGO AND SHRI. JUDE THOMAS, WHICH WERE RETURNED UNSERVED BY THE PO STAL AUTHORITIES. THEREUPON, ASSESSING OFFICER HAD CALLED UPON THE A SSESSEE TO ITA NO. 423/CHNY/2018 :- 4 -: PRODUCE THOSE PARTIES FOR EXAMINATION BEFORE HIM. H OWEVER, ASSESSEE COULD NOT PRODUCE THE SUNDRY CREDITORS FOR VERIFICA TION BUT FILED DETAILS AS TO HOW THESE DEBTS/CREDITS HAD ARISEN. ASSESSE E FURTHER SUBMITTED COPIES OF LEGAL NOTICE ISSUED TO ONE OF THE PARTIES NAMELY SHRI. HANUMAN PRASAD AND CRIMINAL COMPLAINT FILED AGAINST ANOTHER PARTY SHRI. J.ELANGO. BASED ON THESE INFORMATION S, THE ASSESSING OFFICER WAS OF THE OPINION THAT CREDITS WERE NOT G ENUINE AND ACCORDINGLY MADE AN ADDITION OF RS.1,56,20,000/- A S UNEXPLAINED CASH CREDITS. 5. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE THE LD.CIT(A), WHO VIDE IMPUGNED ORDER CONFIRMED THE ADDITION BY H OLDING THAT ASSESSEE HAD FAILED TO SUBSTANTIATE THE GENUINENES S, CREDITWORTHINESS AND IDENTITY OF THE SUNDRY CREDITORS. 6. BEING AGGRIEVED, THE APPELLANT IS IN APPEAL BEFO RE US IN THE PRESENT APPEAL. IT IS SUBMITTED THAT ASSESSEE HAD RECEIVED SECURITY DEPOSITS FROM THREE PARTIES. NAMES, ADDRESS, PHONE NUMBERS, COPIES OF LEDGER ACCOUNTS AND CONFIRMATION LETTERS FROM TH E SAID PARTIES WERE FILED BEFORE ASSESSMENT PROCEEDINGS AND ASSESSEE CO ULD NOT PRODUCE THOSE CREDITORS BEFORE THE ASSESSING OFFICER FOR CR OSS EXAMINATION AS ASSESSEE WAS NOT AWARE OF THE WHEREABOUTS OF THOS E PARTIES. SUBSEQUENTLY, ASSESSEE HAD FILED COPIES OF FIRST I NFORMATION REPORT ITA NO. 423/CHNY/2018 :- 5 -: FILED AGAINST SHRI. HANUMAN PRASAD AND SHRI. J.EL ANGO PLACED AT PAGES 17 TO 20 OF THE PAPER BOOK. AS REGARDS TO SHRI. JUDE THOMAS, IT IS SUBMITTED THAT THE CREDIT REPRESENTS OPENING BALANCE AND HENCE NO ADDITION CAN BE MADE IN THE CURRENT ASSESSMENT Y EAR. 7. ON THE OTHER HAND, THE LD. SR. DEPARTMENTAL REPR ESENTATIVE PLACED RELIANCE ON THE ORDERS OF LOWER AUTHORITIES. 8. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT APPEAL RELATES T O AN ADDITION MADE U/S.68 OF THE ACT. ADMITTEDLY, OUT OF THREE CREDIT S, ONE CREDITOR NAMELY SHRI. JUDE THOMAS, REPRESENTS OPENING BALANCE AND IT IS SETTLED PROPOSITION OF LAW THAT ADDITION SHOULD BE MADE U/ S.68 OF THE ACT IN THE YEAR IN WHICH THE CREDIT IS FIRST INTRODUCED I N THE BOOKS AS HELD BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. USHA STUD AGRICULTURAL FARM LTD, 301 ITR 384 . AS REGARDS TO THE BALANCE TWO CREDITS MADE BY THE ASSESSING OFFICER ON THE GROUND THAT PARTIES WERE NOT PRODUCED BEFORE HIM FOR CROSS EXAMINATION. ASSESSEE HAD MAD E ALL POSSIBLE EFFORTS TO PRODUCE THE CREDITORS BEFORE THE ASSESSI NG OFFICER AND ALSO FILED COPIES OF FIR FILED AGAINST THEM. THESE FA CTS WERE BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER BY THE ASSESSEE . ADMITTEDLY, THESE CREDITS WERE RECEIVED THROUGH BANKING CHANNEL. N AMES, ADDRESS, PHONE NUMBERS, DETAILS OF PAYMENT RECEIVED WERE FU RNISHED BY THE ITA NO. 423/CHNY/2018 :- 6 -: ASSESSEE TO THE ASSESSING OFFICER. IN THE CIRCUMST ANCES, THE ASSESSING OFFICER SHOULD HAVE INVOKED STATUTORY POWERS VESTED WITH HIM TO TRACE THE WHEREABOUTS OF THE SUNDRY CREDITORS. THE ASSE SSEE HAD DISCHARGED THE ONUS TO THE EXTENT POSSIBLE AND HENC E ADDITION CANNOT BE MADE MERELY BECAUSE SUNDRY CREDITORS WERE NOT P RODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. IN THE CIRCU MSTANCES, WE ARE OF THE OPINION THAT THE ASSESSING OFFICER SHOULD NOT HAVE MADE ADDITION KEEPING IN VIEW THAT ASSESSEE HAD DISCHARGED THE O NUS TO THE EXTENT POSSIBLE. THEREFORE, WE DIRECT THE ASSESSING OFFI CER TO DELETE THE ADDITION OF RS.1,56,20,000/-. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON 9TH DAY OF JANUARY, 2020 AT C HENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER - ) / CHENNAI . / DATED:9 TH JANUARY, 2020 KV $ &*01 21!* / COPY TO: 1 . '# / APPELLANT 3. ( 3* () / CIT(A) 5. 16 &*7 / DR 2. &' '# / RESPONDENT 4. ( 3* / CIT 6. 8 9) / GF