The Dy. CIT, Vijayawada V. M/s. Usha Cardiac Cintre Ltd, Vijayawada

ITA 463/VIZ/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3828 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 23-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D J P ANAND
• Keywords: Unexplained cash credit; Source of fund; Onus to prove
• Section: 143(3); 68

Judgement Text

ITA NO.463 /VIZAG/2016 M/S. USHA CARDIAC CENTRE LIMITED, VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . .. . . . . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.463/VIZAG/2016 ( / ASSESSMENT YEAR: 2012-13) DCIT, CIRCLE - 2(1), VIJAYAWADA M/S. USHA CARDIAC CENTRE LIMITED VIJAYAWADA (PAN NO.AAACU2711R) ( ' / APPELLANT) ( ()' / RESPONDENT) C.O. NO.28/VIZAG/2017 ./I.T.A.NO.463/VIZAG/2016 ( / ASSESSMENT YEAR: 2012-13) M/S. USHA CARDIAC CENTRE LIMITED VIJAYAWADA DCIT, CIRCLE - 2(1), VIJAYAWADA ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI D.J.P. ANAND, DR / RESPONDENT BY : SHRI G.V.N. HARI, AR / DATE OF HEARING : 04.04.2018 / DATE OF PRONOUNCEMENT : 0 6.04.2018 ITA NO.463 /VIZAG/2016 M/S. USHA CARDIAC CENTRE LIMITED, VIJAYAWADA 2 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST ORDER OF THE CIT(A) VIDE ITA NO.50/CIT(A)/VJA/2015-16 DATED 30.8 .2016 FOR THE ASSESSMENT YEAR 2012-13. THE REVENUE HAS RAISED FO LLOWINGS GROUNDS OF APPEAL: 1. THE LD. CIT(A) ERRED BOTH IN LAW AND ON THE FACTS O F THE CASE. 2. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF ` 1,16,50,000/- MADE TOWARDS UNPROVED CASH CREDITS U/S 68 OF THE ACT WIT HOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO PROVE THE CASH CREDITS AS GENUINE. 3. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT T HAT THE LOAN CREDITORS HAVE MADE CASH DEPOSITS IN THEIR BANK ACC OUNTS JUST BEFORE THE DATE OF THE LOANS ADVANCED TO THE ASSESSEE COMP ANY AND THE ASSESSEE DID NOT COOPERATE WITH THE DEPARTMENT AT T HE TIME OF ASSESSMENT PROCEEDINGS IN SUCH INVESTIGATION. 4. THE LD. CIT(A) OUGHT NOT TO HAVE ALLOWED THE FRESH EVIDENCE WITHOUT CALLING FOR THE REMAND REPORT FROM THE A.O. UNDER R ULE 46A OF THE IT RULES. 5. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF H EARING. 2. GROUND NOS.1 & 2 ARE GENERAL IN NATURE. THE SAM E ARE NOT PRESSED, THEREFORE, DISMISSED AS NOT PRESSED. THE FACTS ARE IN BRIEF THAT THE ASSESSEE IS A COMPANY FILED ITS RETURN OF INCOM E ADMITTING TOTAL INCOME OF ` 23,57,250/-. THE RETURN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY, ASSESSMENT IS COMPLETED AFTER FOLLOWI NG THE DUE PROCEDURE U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT'). ITA NO.463 /VIZAG/2016 M/S. USHA CARDIAC CENTRE LIMITED, VIJAYAWADA 3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A. O. HAS NOTED IN RESPECT OF UNEXPLAINED UNSECURED LOANS AS UNDER: 4.1 DURING THE COURSE OF CASE-HEARING ON 20.2.2015, THE A.R. OF THE ASSESSEE WAS REQUIRED TO FURNISH SOURCES FOR TH E CASH DEPOSITS INTO THEIR RESPECTIVE BANK ACCOUNTS, EXACTLY BEFORE THE DATES ON WHICH THE UNSECURED LOANS WERE EXTENDED TO THE ASSESSEE COMPA NY OF THE FOLLOWING PERSONS TOWARDS THEIR UNSECURED LOANS TO THE ASSESS EE-COMPANY DURING THE YEAR UNDER CONSIDERATION. SL.NO. NAME OF THE ALLEGED UNSECURED CREDITOR AMOUNT RS. 1. SMT. POSANI SESHAMMA 13,00,000 2. SMT. MADALA PADMAVATHI 1,03,50,000 TOTAL 1,16,50,000 4.2 THE AR COULD NOT FURNISH ANY DETAILS/MATERIAL I N SUPPORT OF THE ABOVE ALLEGED UNSECURED LOANS, DURING THE COURS E OF HEARING ON 20.2.2015, IT WAS PROPOSED TO TREAT THE UNSECURED L OANS IN THE NAMES OF BOTH THE ABOVE PERSONS TOTALING TO ` 1,16,50,000/- AS UNEXPLAINED CASH CREDITS AND TO BRING THEM TO TAX IN THE HANDS OF TH E ASSESSEE COMPANY. HOWEVER, THE AR DID NOT HAVE ANY OBJECTIONS FOR THE SAID PROPOSAL. THUS, THE ASSESSEE HAS GROSSLY FAILED TO STAND THE TEST O F (1) IDENTITY (2) CREDITWORTHINESS AND (3) GENUINENESS OF THE TRANSAC TIONS IN RESPECT OF THE ABOVE TWO UNSECURED LOANS AS IT DID NOT FILE ANY MA TERIAL WHATSOEVER TO STAND THE TEST OF THE ABOVE THREE PARAMETERS. THIS MANIFESTS THE FACT THAT THESE TWO ALLEGED UNSECURED LOANS FOR A VALUE TOTAL ING TO ` 1,16,50,000/- ARE SQUARED UP ONES SOURCED OUT OF THE UNACCOUNTED FUNDS OF THE ASSESSEE COMPANY. HENCE, THE ENTIRE UNPROVED CASH CREDITS (ALLEGED UNSECURED LOANS) IN THE NAMES OF THE ABOVE TWO PERS ONS TOTALING TO ` 1,16,50,000/- ARE HEREBY DISALLOWED U/S 68 OF THE I NCOME TAX ACT, 1961 AND BROUGHT TO TAX AS THE ASSESSEES INCOME FROM O THER SOURCES. THE AR WAS COMMUNICATED THIS AND WAS GIVEN AN OPPORTUNITY TO FILE OBJECTIONS OF ANY. HOWEVER, NO OBJECTIONS WERE FILED. 3. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE HA S FILED THE ASSESSMENT ORDERS FOR THE ASSESSMENT YEARS 2010-11 , 2011-12 & 2012- 13 IN THE CASE OF SMT. POSANI SESHAMMA AND ALSO IN THE CASE OF SMT. MADALA PADMAVATHI AND SUBMITTED THAT THE ASSESSEE H AS PROVED IDENTITY OF THE CREDITORS AND CREDITWORTHINESS AND GENUINENE SS OF THE ITA NO.463 /VIZAG/2016 M/S. USHA CARDIAC CENTRE LIMITED, VIJAYAWADA 4 TRANSACTIONS. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE AND ALSO THE RETURNS FILED BY THE CREDITOR S DATED 19.12.2015 SUBSEQUENT TO THE COMPLETION OF THE ASSESSMENT IN T HE CASE OF THE ASSESSEE DATED 30.3.2015, DELETED THE ADDITION MADE BY THE A.O. 4. ON BEING AGGRIEVED, REVENUE CARRIED MATTER IN AP PEAL BEFORE THE TRIBUNAL. THE LD. D.R. HAS SUBMITTED THAT BEFORE T HE A.O., THE ASSESSEE HAS NOT FILED DETAILS SUCH AS IDENTITY OF THE PARTI ES AND CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS AND THEREFORE U RGED THAT THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION MA DE BY THE A.O. BASED ON THE RETURNS FILED BY THE CREDITORS DATED 19.12.2 015 SUBSEQUENT TO THE COMPLETION OF THE ASSESSMENT IS NOT CORRECT AND THE VERY SAME DETAILS ARE NOT AVAILABLE WITH THE ASSESSING OFFICER. THE ACTION OF THE LD. CIT(A) IS A CLEAR VIOLATION OF RULE 46A OF THE ACT. IT IS FURTHER SUBMITTED THAT THE A.O. HAS POINTED OUT IN THE ASSESSMENT ORDER TH AT BEFORE ADVANCING AMOUNTS TO THE ASSESSEE, THERE ARE CASH DEPOSITS IN THE ACCOUNTS OF THE LOAN CREDITORS I.E. SMT. P. SESHAMMA AND SMT. M. PA DMAVATHI. THIS ASPECT WAS NOT ADDRESSED BY THE CIT(A) AT ALL. IT IS ALSO SUBMITTED THAT THE RETURNS FILED BY THE LOAN CREDITORS SUBSEQUENT TO THE ASSESSMENT IS ONLY AFTER THOUGHT AND IT CANNOT BE ACCEPTED. HE P RAYED THAT ADDITION MADE BY THE A.O. MAY BE SUSTAINED. ITA NO.463 /VIZAG/2016 M/S. USHA CARDIAC CENTRE LIMITED, VIJAYAWADA 5 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS SUBMITTED THAT THE ASSESSEE HAS PROVED THE IDENTITY, CREDITWO RTHINESS AND GENUINENESS OF THE PARTIES AND THEREFORE, THE A.O. IS NOT JUSTIFIED IN MAKING THE ADDITION. THE LD. CIT(A0 BY CONSIDERING THE RETURNS FILED BY THE LOAN CREDITORS ADDITION WAS DELETED. THEREFORE , THE ORDER PASSED BY THE CIT(A) MAY BE UPHELD. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. IN THIS CASE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. HAS NOTICED THAT THE ASSESSEE HAS BORROWED AMOUNTS FROM SMT. P. SESHAMMA OF ` 13 LAKHS AND FROM SMT. M. PADMAVATHI OF ` 1,03,50,000/-. THE A.O. ASKED THE COUNSEL FOR THE ASSESSEE TO PRODUCE THE D ETAILS OF SMT. P. SESHAMMA AND SMT. M. PADMAVATHI. THE ASSESSEES CO UNSEL HAS NOT FILED ANY DETAILS BEFORE THE A.O. THE A.O. HAS ALS O ASKED THE ASSESSEE TO FURNISH THE SOURCES OF CASH DEPOSITS IN RESPECT OF BANK ACCOUNTS OF THE UNSECURED CREDITORS BEFORE THE DATE ON WHICH LO ANS WERE EXTENDED TO ASSESSEE COMPANY. BEFORE THE A.O., ASSESSEE HAS NOT FILED ANY DETAILS AND ALSO NOT EXPLAINED THE SOURCES FOR THE UNSECURED LOANS GIVEN TO THE ASSESSEE COMPANY. THEREFORE, THE A.O. HAS T REATED THE AMOUNT OF ` 1,16,15,000/- AS UNACCOUNTED FUNDS OF THE ASSESSEE COMPANY RECEIVED THROUGH ALLEGED UNSECURED CREDITORS NAMELY SMT. P. SESHAMMA ITA NO.463 /VIZAG/2016 M/S. USHA CARDIAC CENTRE LIMITED, VIJAYAWADA 6 AND SMT. M. PADMAVATHI, ACCORDINGLY, ADDITION WAS M ADE U/S 68 OF THE ACT BY TREATING IT AS INCOME FROM OTHER SOURCES. 7. ON APPEAL, THE LD. CIT(A) HAS CONSIDERED THE RET URNS FILED BY THE LOAN CREDITORS NAMELY SMT. P. SESHAMMA AND SMT. M. PADMAVATHI DATED 19.12.2015 SUBSEQUENT TO THE COMPLETION OF THE ASSE SSMENT ORDER AND THE LD. CIT(A) CAME TO THE CONCLUSION THAT IDENTITY , CREDITWORTHINESS AND GENUINENESS OF THE PARTIES IS PROVED. WHEN THE ASSE SSEE IS HAVING SUFFICIENT SOURCE OF FUNDS AND ITS CREDITWORTHINESS IS NOT DOUBTED AND TRANSACTION IS ALSO GENUINE, WHAT PREVENTED THE ASS ESSEE TO PRODUCE THE DETAILS BEFORE DETAILS BEFORE THE A.O. IS NEITHER E XPLAINED BEFORE THE CIT(A) NOR BEFORE US. THE A.O. DURING THE COURSE O F ASSESSMENT PROCEEDINGS HAS GIVEN AMPLE TIME FROM 24.11.2014 TO 26.3.2015 I.E. NEAR ABOUT 4 MONTHS TIME AVAILABLE TO THE ASSESSEE TO PRODUCE THE DETAILS. THE ASSESSEE NEITHER PRODUCED THE DETAILS BEFORE THE A.O. NOR EXPLAINED BEFORE THE A.O. THAT THESE TRANSACTIONS A RE GENUINE TRANSACTIONS. WHEN THE A.O. HAS ASKED THE ASSESSEE TO PRODUCE THESE RELEVANT DETAILS, HE HAS NOT GIVEN ANY EXPLANATION AND SIMPLY KEPT SILENT. EVEN BEFORE CIT(A) ALSO WHY HE WAS NOT ABLE TO FILE THE DETAILS HAS NOT BEEN EXPLAINED. UNDER THESE FACTS AND CIRCUMSTANCE S OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN CONSIDERING THE RETU RNS FILED BY THE CREDITORS SUBSEQUENT TO THE COMPLETION OF ASSESSMENT ORDER. THAT APART, THE LD. ITA NO.463 /VIZAG/2016 M/S. USHA CARDIAC CENTRE LIMITED, VIJAYAWADA 7 CIT(A) WITHOUT CALLING FOR THE REMAND REPORT SIMPLY ACCEPTED THE EXPLANATION GIVEN BY THE ASSESSEE AND DELETED THE A DDITION IS CLEAR VIOLATION OF RULE 46A OF THE ACT. FURTHER, THE CIT (A) GAVE A FINDING THAT THE ASSESSEE HAS RECEIVED PAYMENT THROUGH BANK TO B ANK METHOD OF RTGS. THEREFORE, HE IS OF THE OPINION THAT THE EXI STENCE OF BOTH THE CREDITORS IS BEYOND DOUBT AND HE IS ALSO OF THE OPI NION THAT THE ASSESSEE HAS DISCHARGED THE BURDEN OF PROOF. WE FIND THAT WH EN THE A.O. HAS ASKED THE ASSESSEES COUNSEL TO FILE THE DETAILS OF THE LOAN CREDITORS AND BANK STATEMENTS, PARTICULARLY BEFORE THE DATE OF EX TENDING LOAN TO THE ASSESSEE, NO SUCH DETAILS WERE FILED BEFORE THE A.O . SIMPLY BECAUSE AMOUNT RECEIVED THROUGH BANKING CHANNELS CANNOT BE SAID THAT THE TRANSACTION IS GENUINE TRANSACTION UNLESS IDENTITY AND CREDITWORTHINESS OF THE PARTIES AND GENUINENESS OF THE TRANSACTION IS P ROVED. IN THIS CASE, THE ASSESSEE HAS NOT PROVED THE IDENTITY, CREDITWOR THINESS OF THE CREDITORS AND EVEN GENUINENESS OF THE TRANSACTIONS. IN OUR OPINION, THE ASSESSEE FAILED TO DISCHARGE BURDEN CAST UPON HIM B Y FILING NECESSARY EVIDENCE BEFORE THE ASSESSING OFFICER. THEREFORE, UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, IN VIEW OF OUR DISCUSSIO N ABOVE, THE A.O. RIGHTLY DISALLOWED AMOUNTS BORROWED FROM THE LOAN C REDITORS U/S 68 OF THE ACT AND THE SAME IS ADDED IN THE HANDS OF THE A SSESSEE AS AN INCOME FROM OTHER SOURCES. IN VIEW OF THE ABOVE, W E REVERSE THE ORDER ITA NO.463 /VIZAG/2016 M/S. USHA CARDIAC CENTRE LIMITED, VIJAYAWADA 8 PASSED BY THE LD. CIT(A) AND THIS GROUND OF APPEAL RAISED BY THE REVENUE IS ALLOWED. 8. HENCE, THE APPEAL FILED BY THE REVENUE IS ALLOWE D. 9. IN VIEW OF OUR DECISION ABOVE, GROUND NO.3 IS ME RELY ACADEMIC AND NO ADJUDICATION IS REQUIRED AND GROUND NO.4 WHI CH IS ALREADY CONSIDERED AND THEREFORE, NO SEPARATE ADJUDICATION IS REQUIRED. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED. C.O.28/VIZAG/2017: 11. THERE IS A DELAY IN FILING THE CROSS OBJECTION BUT NO CONDONATION PETITION IS FILED BY THE ASSESSEE. THEREFORE, THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 6 TH APR18. SD/- SD/- ( . .. . . . . . ' ) ( . ) (D.S. SUNDER SINGH) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER # /VISAKHAPATNAM: ' /DATED : 06.04.2018 VG/SPS ITA NO.463 /VIZAG/2016 M/S. USHA CARDIAC CENTRE LIMITED, VIJAYAWADA 9 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE DCIT, CIRCLE-2(1), VIJAYAWAD A 2. / THE RESPONDENT M/S. USHA CARDIAC CENTRE LIMITE D, D.NO.39-2-11, PITCHAIAH ST., LABBIPET, VIJAYAWADA 3. + / THE CIT, VIJAYAWADA 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM