M/s Rahul Estates, Hyderabad V. The Income Tax Officer, Ward-6(4), Hyderabad

ITA 61/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69727 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 22-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SHAKIR HUSSAIN SHAIK
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained cash credit; Unexplained investment; Opportunity of being heard; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.61/HYD/2013 ASSESSMENT YEAR 2007-08. M/S. RAHUL ESTATES, -V- TH E ITO, WARD-6(4), HYDERABAD. HYDERABAD. PAN:AAJFR3711Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.V. RAGHU RAM RESPONDENT BY : DR. SHAKIR HUSSAIN SHAIK DATE OF HEARING : 05-8-2013 DATE OF PRONOUNCEMENT: 05 -8-2013 ORDER PER SAKTIJIT DEY, J.M: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 26-10-2012 OF IT(A) III, HYDERABAD PAS SED IN ITA NO.0109/ITO-6(4)/CIT(A)-III/2009-10 PERTAINING TO T HE ASSESSMENT YEAR 2007-08. 2. THE ONLY ISSUE IN THE PRESENT APPEAL IS WITH REG ARD TO THE CIT (A) CONFIRMING THE ADDITION OF RS. 23 LAKHS U/S 68 OF THE ACT BY TREATING IT AS UNEXPLAINED CREDIT STANDING IN TH E NAMES OF DIFFERENT CREDITORS. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS A PARTNE RSHIP FIRM. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30-10-2007 DECLARING A TOTAL IN COME OF RS.1,50,242/-. IN COURSE OF SCRUTINY ASSESSMENT PR OCEEDINGS, THE 2 ITA NO. 61 OF 2103 M/S. RAHUL ESTATES, HYD. ASSESSING OFFICER NOTICED THAT THE ASSESSEE FIRM WH ICH WAS INITIALLY FORMED WITH TWO PARTNERS BY PARTNERSHIP D ATED 10-8-2006 WAS RECONSTITUTED DURING THE ASSESSMENT YEAR UNDER DISPUTE BY INDUCTING FOUR NEW PARTNERS VIZ., SRI KIRAN KUMAR REDDY, K. SHANKAR REDDY, SMT. B. SWETHA AND SRI M. NARSIMHA R EDDY VIDE DEED DATED 24-3-2007. IT WAS FURTHER NOTICED BY TH E ASSESSING OFFICER THAT THE NEW PARTNER WHO JOINED THE FIRM BY VIRTUE OF THE PARTNERSHIP DEED DATED 24-3-2007 HAD INVESTED AS UN DER:- SRI KIRAN KUMAR REDDY RS. 13 L AKHS KIRAN KUMAR REDDY RS.8 LA KHS M. NARSIMHA REDDY RS.6 LA KH 5. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPL AIN THE AFORESAID CREDIT STANDING IN THE NAMES OF NEWLY IND UCTED PARTNERS. THE ASSESSEE THOUGH SUBMITTED CONFIRMA TION EXPLAINING THE SOURCE OF INVESTMENT THE ASSESSING O FFICER HOWEVER WAS NOT SATISFIED WITH THE EXPLANATION FURNISHED BY THE ASSESSEE AND TREATED THE INVESTMENT/ADVANCE MADE TO THE TUNE OF RS.9 LAKH BY KIRAN KUMAR REDDY AS UNEXPLAINED INVESTMENT U/S 68 OF THE ACT AND ADDED IT TO THE TOTAL INCOME OF THE ASS ESSEE. SIMILARLY, THE ADVANCE MADE IN CASH BY SMT. SWETHA AMOUNTING TO RS.8 LAKH AND SRI M. NARASIMHA REDDY AMOUNTING T O RS.6 LAKHS WAS ALSO TREATED AS UNEXPLAINED INVESTMENT OF THE A SSESSEE AND ADDED U/S 68 OF THE ACT AS THE ASSESSING OFFICER W AS OF THE VIEW THAT THE AFORESAID CREDITOR DID NOT HAVE THE CREDIT WORTHINESS TO ADVANCE SUCH AMOUNTS. THE ASSESSEE BEING AGGRIEVED OF THE ADDITION MADE IN THE ASSESSMENT ORDER, PREFERRED AN APPEAL BEFORE THE CIT (A). 3 ITA NO. 61 OF 2103 M/S. RAHUL ESTATES, HYD. 6. ON APPEAL, THE CIT (A) HAS SUSTAINED SUCH ADDITI ON BY CONCURRING WITH THE FINDING OF THE ASSESSING OFFICE R. 7. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE AS SESSEE AT THE OUTSET, SUBMITTED THAT IN COURSE OF HEARING BE FORE THE CIT (A) THE ASSESSEE HAS SUBMITTED CERTAIN ADDITIONAL E VIDENCE WITH REGARD TO THE AFORESAID CASH CREDITS ALONG WITH PET ITION FOR ADMISSION OF THE SAME BUT THE CIT (A) HAS SUSTAINED THE ADDITION BY COMPLETELY IGNORING THE ADDITIONAL EVIDENCE SUBM ITTED BY THE ASSESSEE. THE LEARNED AUTHORISED REPRESENTATIVE FO R THE ASSESSEE SUBMITTED THAT THE ADDITIONAL EVIDENCE SUBMITTED AR E THE BANK STATEMENTS WHICH IS VITAL PIECE OF EVIDENCE TO ESTA BLISH THE ASSESSEES CLAIM THAT CREDITOR HAD CREDITWORTHINES S TO ADVANCE THE AMOUNT. THE LEARNED AUTHORISED REPRESENTATIVE F OR THE ASSESSEE FURTHER SUBMITTED THAT ALL THE CREDITORS A RE PARTNERS OF THE FIRM AND THEY ALL ARE THE INCOME-TAX ASSESSES A ND HENCE IN THE CIRCUMSTANCES, IF AT ALL ADDITION HAS TO BE MAD E IT HAS TO BE MADE AT THE HANDS OF THE CREDITORS AND NOT AT THE H ANDS OF THE ASSESSEE. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUPPORTING THE ORDER OF THE CIT (A) SUBMITTED THAT SINCE THE ASSESSEE HAS FAILED TO PROVE ALL THE INGREDIENT S PROVING THE CASH CREDITS, THE ADDITION MADE WAS JUSTIFIED. 9. WE HAVE CONSIDERED RIVAL SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIAL ON RECORD. THE GRIEVANCE OF TH E ASSESSEE BEFORE US IS THAT THOUGH ADDITIONAL EVIDENCES WERE PRODUCED BEFORE THE CIT (A) WHICH WERE VERY MUCH CRUCIAL F OR DECIDING THE ISSUE AND THE SAME HAVE BEEN COMPLETELY IGNORED BY THE CIT (A) WHILE DECIDING HE APPEAL. ON A QUERY FROM THE BENC H, THE LEARNED 4 ITA NO. 61 OF 2103 M/S. RAHUL ESTATES, HYD. DEPARTMENTAL REPRESENTATIVE ALSO FAIRLY SUBMITTED T HAT THE ORDER OF THE CIT (A) IS SILENT ON THIS ASPECT AS TO WHETH ER THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE WAS CONSIDERED B Y THE CIT (A) OR NOT. THUS, CONSIDERING THE SUBMISSIONS OF T HE ASSESSEE AND ON CONSIDERING THE FACT THAT THE CIT (A) HAS NO T CONSIDERED THE ADDITIONAL EVIDENCE, WE THINK IT JUST AND PROPE R TO REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WHO SHAL L CONSIDER THE ISSUE AFRESH AFTER TAKING INTO ACCOUNT ALL THE FACT S AND MATERIALS ON RECORD INCLUDING THE ADDITIONAL EVIDENCE PRODUCE D BEFORE THE CIT (A) AND DECIDE THE ISSUE AFRESH. IT IS OPEN FO R THE ASSESSEE TO ADDUCE FURTHER EVIDENCE IN SUPPORT OF HIS CONTEN TION TO PROVE THE CASH CREDITS. THE ASSESSING OFFICER SHALL TAK E A DECISION AFTER CONSIDERING THE EVIDENCES PRODUCED BY HE ASSE SSEE AND AVAILABLE ON RECORD AND ALSO AFTER TAKING NOTE OF T HE SUBMISSIONS OF THE ASSESSEE IN THIS REGARD. NEEDLESS TO SAY T HE ASSESSING OFFICER SHALL AFFORD A REASONABLE OF OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ISSUE. 10. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 5-8-2013. SD/ - ( CHANDRA POOJARI) ACCOUNTANT MEMBER SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 5 TH AUGUST, 2013 5 ITA NO. 61 OF 2103 M/S. RAHUL ESTATES, HYD. COPY TO:- 1) C/O S/SRI K. VASANTKUMAR & A.V. RAGHURAM, ADVOCA TES, 610, 6 TH FLOOR, BABHUKHAN ESTATE, BASHEERBAGH, HYDERABAD. 2) THE ITO, WARD-6(4), IT TOWERS, HYDERABAD. 3)CIT (A) III, HYDERABAD. 4) CIT CONCERNED, HYDERABAD. 5.THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERA BAD. JMR*