Srimukha Precision Products, CHENNAI V. ACIT, CHENNAI

ITA 426/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4063 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 13-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 20-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M KARUNAKARAN
• Keywords: Unexplained cash credit; Additional evidence
• Section: 143(3); 142(1); 68

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . , BEFORE SHRI SANJAY ARORA , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , J UDICIAL MEMBER ./ I.T.A.NO. 4 26/MDS/2017 / ASSESSMENT YEAR :20 12 - 13 M/S. SRIMUKHA PRECISION PRODUCTS, PLOT NO. 51, AMBATTUR INDUSTRIAL ESTATE, CHENNAI 600 058. [PAN: A AAFS1929A ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX , NON C ORPORATE CIRCLE 7(1), CHENNAI 34. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI M. KARUNAKARAN, ADVOCATE / RESPONDENT BY : SHRI GURUBASHYAM , JCIT / DATE OF HEARING : 2 1 . 0 6 .201 7 / DATE OF P RONOUNCEMENT : 10 . 0 7 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE EX - PARTE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) 7 , CHENNAI , DATED 07 . 0 2 .201 7 RELEVANT TO THE ASSESSMENT YEAR 20 12 - 13. 2. AGAINST THE EX - PARTE ORDERS OF THE AUTHORITIES BELOW TOWARDS ADDITION OF .1,08,34,746/ - AS UNEXPLAINED UNSECURED LOANS AND AN ESTIMATED INTEREST AT .10,87,792/ - TOTALLING IN AL L .1,21,35,000/ - , BY FILING PETITION FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 29 OF THE ITAT RULES, 1963, THE LD. ITA NO . 426 /M/ 1 7 2 COUNSEL FOR THE ASSESSEE HAS PLEADED FOR ADMISSION OF THE EVIDENCES, WHICH WERE NOT FILED BEFORE THE AUTHORITIES BELOW DUE COMPELLING REASONS, THE AUDITOR HAS OUT OF STATION FOR PUTTING HIS APPEARANCE BEFORE THE LD. CIT(A) ON 07.02.2017. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING OF INDUSTRIAL TOOLS AN FILED ITS RETURN OF INCOME ON 28.09.2013 ADMITTIN G A TOTAL INCOME OF .1,17,51,896/ - . THE RETURN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ISSUED NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] DATED 08.08.2013. NOTICE UNDER SECTION 142(1) OF THE ACT WAS ISSUED ON 26.05.2014. THEREAFTER, T HE ASSESSEE WAS GIVEN VARIOUS OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE FROM 29.10.2013 TO 30.01.2015 AND FINAL OPPORTUNITY WAS GIVEN ON 09.02.2015. DESPITE SUFFICIENT OPPORTUNITIES WERE GIVEN TO THE ASSESSEE, THE ASSESSEE HAS NOT APPEARED AND FILED DET AILS AS CALLED FOR. ACCORDINGLY, BASED ON THE MATERIALS AVAILABLE ON RECORD, THE ASSESSING OFFICER HAS PROCEEDED TO CONCLUDE THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON 19.03.2015 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT .2,38,86,896/ - BY MAKING ADDITION TOWARDS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE ACT ALONG WITH INTEREST COMPONENT AT .1,21,35,000/ - . 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) . DESPITE SUFFICIENT OPPORTUNITIES GIVEN BY THE LD. CIT(A) BY POSTING THE ITA NO . 426 /M/ 1 7 3 APPEALS ON VARIOUS DATES FROM 22.08.2016 TO 07.02.2017, NEITHER THE ASSESSEE HAS APPEARED AND FILED THE DETAILS BEFORE THE LD. CIT(A) NOR FILED ANY DOCUMENTARY EVIDENCES TO SUBSTANTIATE ITS CLAIM, BY CONSIDERING THE FACTS AND CIRC UMSTANCES OF THE CASE, THE LD. CIT(A) CONFIRMED THE ADDITION MADE IN THE ASSESSMENT ORDER. 5. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AND FILED THE ADDITIONAL EVIDENCES UNDER RULE 29 OF THE ITAT RULES AND PLEADED FOR ITS ADMISS ION. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. ADMITTEDLY, THE ASSESSEE HAS NOT FILED ANY DETAILS OR EXPLANATION IN SUPPORT OF ITS CLAIM TOWARDS CREDITS APPEARED IN ITS BOOKS OF ACCOUNT EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD. CIT(A). BASED THE MATERIALS AVAILABLE ON RECORD, THE ASSESSING OFFICER WAS COMPELLED TO CONCLUDE THE ASSESSMENT BY MAKING ADDITION TOWARDS UNEXPLAINED CREDITS TO THE EXTENT OF .108.35 LAKHS AND ALSO CALCULATED INTEREST PORTION OF .13.00 LAKHS AND DISALLOWED TOTAL AMOUNT OF .121.35 LAKHS, WHICH WAS CONFIRMED BY THE LD. CIT(A). BEFORE US, BY FILING LEDGER ACCOUNT, BANK STATEMENT, ETC., THE LD. COUNSEL FOR THE ASSESSEE AND PRAYE D THAT THE ASSESSEE MAY BE GIVEN ONE MORE OPPORTUNITY TO FILE THE SAME BEFORE THE ASSESSING OFFICER TO MEET THE ENDS OF JUSTICE. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE REMIT THE MATTER BACK TO THE FILE OF THE ITA NO . 426 /M/ 1 7 4 ASSESSING OFFICER TO DECIDE THE ISSUE AFRE SH IN ACCORDANCE WITH LAW AFTER VERIFYING THE DETAILS AS MAY BE FILED BY THE ASSESSEE. SINCE THE ASSESSEE WAS IN DEFAULT IN NOT COMPLYING TO THE STATUTORY NOTICES ISSUED UNDER THE INCOME TAX ACT, BY THE ASSESSING OFFICER AS WELL AS LD. CIT(A) AND FIL ED THE COMPLETE DETAILS BEFORE THE AUTHORITIES BELOW, WE ORDER THE ASSESSEE TO REMIT .25,000/ - [RUPEES TWENTY FIVE THOUSAND ONLY] TO THE PRIME MINISTER S RELIEF FUND AND FILE THE CHALLAN/RECEIPT THEREON BEFORE THE ASSESSING OFFICER AND FILE COMPLETE DETAI LS IN RESPECT OF THE UNSECURED LOANS/UNEXPLAINED CREDITS FOR VERIFICATION. MOREOVER, THE ASSESSEE IS DIRECTED THAT IT SHOULD NOT TAKE ADJOURNMENT EXCEPT FOR JUST CAUSE. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7 . WE MAY, BEFORE PARTING WITH THIS ORDER, CLARIFY THAT IN SOME CASES, THE AMOUNT/S, AS EXPLAINED TO US, HAS BEEN TRANSFERRED FROM THE CREDITORS ACCOUNT [UNDER THE HEAD TRADE CREDITOR ] TO HIS LOAN ACCOUNT, CONTENDING THAT THERE IS, THEREFORE, NO FRESH C REDIT DURING THE YEAR. IN OUR VIEW, IN - AS - MUCH AS THERE IS A CHANGE IN THE NATURE OF THE CREDIT, THE FACT OF THE TRANSFER SHALL NOT BE, BY ITSELF, CONCLUSIVE OF THE MATTER, AND SHALL REQUIRE BEING PROVED U/S. 68. A TRADE CREDIT IS RECOVERABLE DURING THE CU RRENCY OF THE TRADE CYCLE, AND MAY WELL BE FINANCED FROM TRADE CREDITS [OF THE CREDITOR]. A LOAN, ON THE OTHER HAND, REMOVES THE AMOUNT FROM THE CREDITOR S WORKING CAPITAL, SO THAT IT HAS BEEN FINANCED ON THE LONG (INDEFINITE) TERM BASIS, I.E., HAS CAPACIT Y ITA NO . 426 /M/ 1 7 5 IMPLICATION. IN FACT, THERE WOULD BE CONCERN AS TO GENUINENESS AS WELL. AN AMOUNT FORMING PART OF THE WORKING CAPITAL, GENERATING REVENUE, WOULD NOT ORDINARILY BE CONVERTED INTO A LOAN, WHICH APPEARS TO BE WITHOUT INTEREST, AND (REVENUE) IS IN ANY CASE N OT AT PAR WITH THE REVENUE BEING GENERATED, BESIDES BEING SUBJECT TO A HIGHER FINANCIAL RISK. IN OTHER WORDS, EVEN THOUGH THE IDENTITY IS PROVED FOR SUCH CREDITS, THERE COULD BE CONCERNS AS TO GENUINENESS AND CAPACITY. THE ASSESSING OFFICER SHALL, ACCORDIN GLY, EXAMINE THE TRANSACTION/S ON THE ANVIL OF SECTION 68 AND DECIDE ON MERITS, ISSUING DEFINITE FINDINGS OF FACT. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 10 TH JU LY , 201 7 AT CHENN AI. SD/ - SD/ - ( SANJAY ARORA ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 10 . 0 7 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / C IT , 5. / DR & 6. / GF.