Asst.CIT., Circle-1, Warangal V. M/s K K Enterprises Grain Market, Warangal

ITA 609/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69924 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K V CHALAMAIAH
• Keywords: Unexplained cash credit; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 609/HYD/2013 ASSESSMENT YEAR: 2009-10 ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 1, WARANGAL. VS. M/S K.K. ENTERPRISES GRAIN MARKET, WARANGAL. PAN AABFK9419Q APPELLANT RESPONDENT APPELLANT BY: SMT. K. HARITHA RESPONDENT BY: SRI K.V. CHALAMAIAH DATE OF HEARING: 13.11.2013 DATE OF PRONOUNCEMENT: 13.11.2013 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A), HYDERABAD, DATED 31.01.2013 FOR THE ASSESSMENT YEAR 2009-10. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF CIT(A) IS ERRONEOUS IN LAW AND FACTS O F THE CASE AND IN THE CIRCUMSTANCES OF THE CASE. 2. WHETHER THE CIT(A) WAS CORRECT IN TREATING THE CREDITORS AS GENUINE WHEN THE GENUINENESS OF THE CREDITORS WAS TO BE CONFIRMED ? 3. THE CIT(A) ERRED IN FACTS AND IN LAW IN TREATING THE AMOUNT OF RS. 30,454/- AS UNEXPLAINED CREDITS OUT O F TOTAL AMOUNT OF RS. 1,05,33,211/- IN THE HANDS OF T HE ASSESSEE. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE FIRM IS ENGAGED IN COMMISSION BUSINESS IN CHILLIES AND RETU RN OF INCOME WAS FILED ADMITTING TOTAL INCOME OF RS. 8,52 ,040/-. THE ASSESSING OFFICER HAD MADE AN ADDITION OF RS. 1,05, 33,211/- TREATING THE SUNDRY CREDITORS AS UNEXPLAINED, HOLDI NG THAT THE ITA NO. 609/HYD/2013 M/S K.K. ENTERPRISES GRAIN MARKET ============================= 2 ASSESSEE FAILED TO FURNISH THE CONFIRMATIONS FROM C REDITORS AND WHERE CONFIRMATION WERE FURNISHED, THE AMOUNTS WERE NOT RECONCILED. 4. TO VERIFY THE VERACITY OF THE CLAIM OF ASSESSEE IN RESPECT OF SUNDRY CREDITORS, THE ASSESSING OFFICER DURING T HE COURSE OF ASSESSMENT PROCEEDINGS HAD ISSUED SUMMONS/LETTERS T O THE SUNDRY CREDITORS, CALLING FOR CONFIRMATION LETTERS, FOR WHICH, SOME OF THE SUNDRY CREDITORS HAVE NOT REPLIED AND I N SOME CASES THERE WERE DIFFERENCES IN THE AMOUNTS CONFIRM ED BY THE SUNDRY CREDITORS AND AS PER THE CLAIM OF THE ASSESS EE. IN RESPECT OF SOME OF THE SUNDRY CREDITORS, THE ASSESS EE HIMSELF HAD FILED CONFIRMATION LETTERS OBTAINED FROM THE SU NDRY CREDITORS, WHICH THE ASSESSING OFFICER DID NOT CONS IDER. THUS, THE ASSESSING OFFICER HAD DISALLOWED AN AMOUNT OF R S. 1,05,32,211/- REPRESENTING UNVERIFIED CREDIT BALANC ES AGAINST THE NAMES OF THE SUNDRY CREDITORS AS CLAIMED BY THE ASSESSEE AND ADDED TO THE INCOME RETURNED, AS UNDISCLOSED IN COME OF THE ASSESSEE. 5. ON APPEAL, BEFORE THE CIT(A), IT WAS STATED THAT OUT OF THE TOTAL 97 CREDITORS INVOLVING RS. 11.10 CRORES, CREDITS APPEARING IN THE CASES OF 18 CREDITORS WERE CONSIDE RED BY THE ASSESSING OFFICER, FOR DETAILED EXAMINATION. FURTHE R, IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAD ADDED THE BROUGHT FORWARD BALANCE OF EARLIER YEAR IN SOME CASES AND A T ANOTHER INSTANCE HAD DISALLOWED THE CLEARED BALANCE. IT WAS CONTENDED THAT THE ASSESSING OFFICER HAD REJECTED SOME OF THE CONFIRMATION LETTERS FILED DURING THE ASSESSMENT PR OCEEDINGS, DOUBTING THE AUTHENTICITY OF SUNDRY CREDITORS. IT W AS POINTED OUT THAT THE MULTIPLE TRANSACTIONS INVOLVED IN SOME OF THE ACCOUNTS WERE RUNNING INTO CRORES OF RUPEES AND THE ASSESSEE CANNOT BE SAID TO BE INDULGING IN CLAIMING EXCESSIV E ITA NO. 609/HYD/2013 M/S K.K. ENTERPRISES GRAIN MARKET ============================= 3 EXPENDITURE TO REDUCE THE TAX LIABILITY AND HENCE T HERE IS NO JUSTIFICATION FOR DISALLOWING THE PALTRY RECONCILED AMOUNTS IN THESE ACCOUNTS. IT WAS SUBMITTED THAT IN RESPECT OF THREE OF THE SUNDRY CREDITORS I.E. 1. SRI ALI MOHAMMAD (RS. 1,40 ,000), 2. M/S PIYUSH KUMAR KIRIT KUMAR & CO. (RS. 12,85,438/- ) AND 3. M/S BHAGYALAXMI ENTERPRISES (RS. 32,350/-) THE CONF IRMATION LETTERS WERE FILED BEFORE THE ASSESSING OFFICER DUR ING THE ASSESSMENT PROCEEDINGS ITSELF BUT WERE NOT CONSIDER ED AND HENCE, PLEADED THAT THE SAME BE CONSIDERED. 6. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT OUT OF RS. 1,05,33,211/- REP RESENTING THE UNEXPLAINED CREDITS FROM THE BALANCES OF SUNDRY CREDITORS, AN AMOUNT OF RS. 90,44,969/- REPRESENT THE OLD BALA NCES CARRIED FORWARD FROM EARLIER YEAR, RS. 30,454/- BEI NG THE DIFFERENCE OF THE AMOUNTS AS CONFIRMED BY PARTIES A ND THE BALANCE AMOUNT OF RS. 14,57,788/- REPRESENT THE AMO UNTS AGAINST THE NAMES OF CREDITORS WHOSE CONFIRMATIONS WERE NOT ACCEPTED BY THE ASSESSING OFFICER, SINCE THEY WERE FILED BY ASSESSEE, WHICH WERE REFERRED BACK TO THE ASSESSING OFFICER FOR HIS COMMENTS. AFTER REFERRING THE MATTER BACK T O THE ASSESSING OFFICER IN RESPECT OF 1. SRI ALI MOHAMMAD (RS. 1,40,000), 2. M/S PIYUSH KUMAR KIRIT KUMAR & CO. (R S. 12,85,438/-) AND 3. M/S BHAGYALAXMI ENTERPRISES (RS . 32,350/- ), THE CIT(A) DELETED THE ENTIRE ADDITION EXCEPT RS . 30,454/- REPRESENT THE UNEXPLAINED CREDITS IN THE HANDS OF T HE ASSESSEE. 7. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECO RD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BEL OW. THE ITA NO. 609/HYD/2013 M/S K.K. ENTERPRISES GRAIN MARKET ============================= 4 CIT(A) DELETED AN AMOUNT OF RS. 90,44,969/- ON THE REASON THAT THE SAID AMOUNT REPRESENTS THE OLD BALANCES, W HICH WERE CARRIED FORWARD AS OPENING BALANCES IN THE NAMES OF THE CREDITORS, THEREFORE, THE SAME CANNOT BE TREATED AS CREDITS MADE DURING THE YEAR AND MORE OVER, THEY ARE CLAIME D TO HAVE BEEN EXPLAINED THROUGH CONFIRMATIONS. THE CONTENTI ON OF THE LEARNED DR IN THIS CONTEXT IS THAT THE CIT(A) HAS N OT ASKED THE ASSESSING OFFICER TO EXAMINE WHETHER THE SAME REPRE SENT FOR EARLIER YEARS AND BEING SO, IT IS NOT PROPER TO DEL ETE THE ADDITION BY THE CIT(A) UNILATERALLY. HOWEVER, THE L EARNED DR AGREED THAT THE ASSESSING OFFICER HAS NOT PROPERLY EXAMINED THE SUNDRY CREDITORS BEFORE MAKING THE ADDITION AT THE TIME OF ASSESSMENT PROCEEDINGS. HE, THEREFORE, PLEADED TO R EMIT THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINATION. AFTER CONSIDERING THE ISSUE AND CONSIDERING THE REQ UEST OF THE LEARNED DR, IT IS OBSERVED THAT THE ASSESSEE HAS NO T PLACED NECESSARY RECORDS BEFORE THE ASSESSING OFFICER AT T HE TIME OF ASSESSMENT AND ALSO THE CIT(A) HAS NOT ASKED THE AS SESSING OFFICER TO EXAMINE WHETHER, AS CLAIMED BY THE ASSES SEE, CARRIED FORWARD OPENING BALANCES OF EARLIER YEARS ARE THERE IN THE SUNDRY CREDITORS, WHILE DECIDING THE ISSUE, AS HE LIMITED HIS EXAMINATION ONLY IN RESPECT OF 1. SRI ALI MOHAM MAD (RS. 1,40,000), 2. M/S PIYUSH KUMAR KIRIT KUMAR & CO.(RS . 12,85,438/-) AND 3.M/S BHAGYALAXMI ENTERPRISES (RS. 32,350/- ). BEING SO, IT IS APPROPRIATE TO REMIT THE ENTIRE ISSUE IN DISPUTE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONS IDERATION AND DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER PROVID ING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THE ASSESSEE IS DIRECTED TO SUBMIT THE NECESSARY RECORD S BEFORE THE ASSESSING OFFICER IN SUPPORT OF ITS CLAIM. ITA NO. 609/HYD/2013 M/S K.K. ENTERPRISES GRAIN MARKET ============================= 5 9. IN THE RESULT, APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH NOVEMBER, 2013 SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 13 TH NOVEMBER, 2013 KV COPY FORWARDED TO: 1. ACIT, CIRCLE 1, WARANGAL. 2. M/S K.K. ENTERPRISES, H.NO. 8-3-163, GROUND FLOO R, SRI KRISHNA COLONY, WARANGAL. 3. THE CIT(A)-VI, HYDERABAD. 4. THE CIT-VI, HYDERABAD 4. THE DR ITAT, HYDERABAD