M.Narasinga Rao, Visakhapatnam V. THE ITO, Ward - 4(2), Visakhapatnam

ITA 623/VIZ/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6528 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 17-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M N M NAIK
• Assessee Lawyers: A ARUNA
• Keywords: Unexplained cash credit
• Section: 131; 68

Judgement Text

1 ITA NO. 623/VIZ/2013 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER ITA NO. 623 / VIZ /201 3 (ASST. YEAR : 20 09 - 1 0 ) SRI MALLA NARASINGA RAO, D.NO. 20 - 227, KOTHAPALEM, GOPALAPATNAM, VISAKHAPATNAM. VS. IT O , WARD - 4(2), VISAKHAPATNAM. PAN NO. AAFRPM 7209 P (APPELLANT) (RESPONDENT) ASSESSEE BY : SMT . A. ARUNA ADVOCATE . DEPARTMENT BY : SHRI M.N.M. NAIK SR. DR DATE OF HEARING : 06 / 0 2 /201 7 . DATE OF PRONOUNCEMENT : 1 0 / 02 /201 7 . O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), VISAKHAPATNAM , DATED 2 9 /08/2013 FOR THE ASSESSMENT YEAR 2009 - 10 . 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS AN INDIVIDUAL CARRYING ON BUSINESS OF CIVIL CONTRACT WORKS, FILED HIS RETURN OF INCOME ADMITTING TOTAL INCOME OF 8,93,560/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER HAS NOTE D THAT THE ASSESSEE OBTAINED UNSECURED LOANS AMOUNTING TO 32,29,000/ - FROM VARIOUS PERSONS . THE ASSESSING OFFICER ASKED THE ASSESSEE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE PARTIES AND ALSO GENUINENESS OF THE TRANSACTIONS. BEFORE THE ASSESSING OFFICER , THE ASSESSEE FILED 2 ITA NO. 623/VIZ/2013 CONFIRMATION LETTERS RELATING TO ALL THE PARTIES . H OWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE CONFIRMATION LETTERS AND ASKED THE ASSESSEE TO PRODUCE ALL THE CREDITORS BEFORE HIM. THE ASSESSEE ONLY PRODU CED 08 CREDITORS , OUT OF 18 PERSONS . THE ASSESSING OFFICER AFTER EXAMINING ALL THE CREDITORS OBSERVED THAT THE ASSESSEE FAIL E D TO PROVE UNSECURED LOANS WITH CORROBORATIVE EVIDENCE. THEREFORE, HE TREATED THE ENTIRE AMOUNT OF 32,29,000/ - AS UNEXPLAINED CASH CREDITS UNDER SECTION 68 OF THE ACT, A CCORDINGLY , THE ASSESSMENT WAS COMPLETED. 3. BEING AGGRIEVED, T HE ASSESSEE CARRIED THE MATTER BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) HAS CONSIDERED THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE , BELIEVED THAT 08 CREDIT ORS , WHO APPEARED BEFORE THE ASSESSING OFFICER WAS TREATED AS A GENUINE TRANSACTION S . ACCORDINGLY , THE AMOUNT RELATING TO 08 P ERSONS OF 16,50,000/ - WAS DELETED AND REMAINING BALANCE OF 15,79,000/ - RELATING TO TEN CREDITORS WAS CONFIRMED BY OBSERVING THAT THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. 4 . ON BEING AGGRIEVED, ASSESSEE CARRIED MATTER IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AGAINST THE ADDITION OF 15,79,000/ - . 5 . LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE FILED CONFIRMATION LETTERS FROM TEN PERSONS . W HEN , HE REQUESTED THE CREDITORS TO APPEAR BEFORE THE ASSESSING OFFICER , THEY REFUSED TO APPEAR BEFORE THE ASSESSING OFFICER , HENCE , ASSESSEE WAS UNABLE TO PRODUCE 3 ITA NO. 623/VIZ/2013 THE CREDITORS BEFORE THE ASSESSING OFFICER. THEREF ORE, THE ASSESSING OFFICER OUGHT NOT TO HAVE ADDED THE AMOUNT OF 15,79 ,000/ - RELATING TO 10 CREDITORS, W HEN THE ASSESSEE FILED CONFIRMATION LETTERS BEFORE THE ASSESSING OFFICER. HE ALSO SUBMITTED THAT THE ASSESSING OFFICER OUGHT TO HAVE BEEN ISSUED NOTICE UNDER SECTION 131 TO ALL THE CREDITORS, WHO WERE NOT RESPONDED TO THE REQUEST OF THE ASSESSEE. 6 . ON THE OTHER HAND , LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER HAS GIVEN VARIOUS OPPORTUNI TI ES TO THE ASSESSEE, BUT HE FAI LED TO FILE ANY REPLY. THEREFORE, THE ASSESSING OFFICER TREATED THE AMOUNT OF 15,79,000/ - AS UNEXPLAINED CASH CREDITS AND ADDED THE SAME IN THE HANDS OF THE ASSESSEE. 7 . I HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW . 8 . THE ONLY ISSUE BEFORE ME FOR CONSIDERATION IS THAT THE AMOUNT BORROWED BY THE ASSESSEE OF 15,79,000/ - HAS TO BE ADDED IN THE HANDS OF THE ASSESSEE ARE NOT. WHEN THE ASSESSING OFFICER ASKED THE ASSESSEE T O PRODUCE THE DETAILS OF THE LOAN CREDITORS, THE ASSESSEE FILED CONFIRMATION LETTERS FROM TEN LOAN CREDITORS. WHEN THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE CREDITORS BEFORE HIM, HE FAILED TO DO SO . AGAIN, THE ASSESSING OFFICER ISSUED A SHO W - CAUSE NOTICE TO THE ASSESSEE ON 05/12/2011 TO PRODUCE THE LOAN CREDITORS. THE ASSESSEE HAS NOT RESPONDED. THE ASSESSING OFFICER AGAIN ISSUED NOTICE FOR THE SAME PURPOSE ON 12/12/2011 , NO RESPONSE FROM THE ASSESSEE. UNDER THOSE FACTS AND CIRCUMSTANCES OF THE CASE , THE ASSESSING OFFICER ADDED 4 ITA NO. 623/VIZ/2013 THE AMOUNT BORROWED BY THE ASSESSEE FROM CREDITORS AS UNEXPLAINED CASH CREDITS IN THE HANDS OF THE ASSESSEE. I FIND THAT WHEN THE ASSESSING OFFICER ASKED THE ASSESSEE SPECIFICALLY , TO PRODUCE THE LOAN CREDITORS WHY HE WAS UN ABLE TO PRODUCE AND WHAT WERE THE STEPS TAKEN BY THE ASSESSEE , HE OUGHT TO HAVE BEEN EXPLAINED BEFORE THE ASSESSING OFFICER. EVEN OTHERWISE, ONCE THE ASSESSEE HAS FILED THE CONFIRMATION LETTERS, THE ASSESSING OFFICER COULD HAVE TO ISSUE NOTICE U NDER SECTION 131 OF THE ACT DIRECTING THE LOAN CREDITORS TO APPEAR BEFORE HIM. I FIND THAT BOTH THE SIDES FAILED TO DISCHARGE THEIR ONUS CASTED UPON THEM. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE , I FIND THAT ONE MORE OPPORTUNITY SHOULD BE GIVEN TO THE ASSESSEE TO SUBSTANTIATE HIS CASE BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER ALSO TO EXERCISE HIS POWERS TO ISSUE NOTICE UNDER SECTION 131 OF THE ACT. IN VIEW OF THE ABOVE, I SET ASIDE THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND DIRECT THE ASSESSING OFFICER TO CONSIDER THE CASE OF THE ASSESSEE AFRESH AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 0 T H DAY OF FEBRUARY , 201 7 . S D / - ( V. DURGA RAO ) JUDICIAL MEMBER DATED : 1 0 T H FEBRUARY , 201 7 . VR/ - 5 ITA NO. 623/VIZ/2013 COPY TO: 1 . THE ASSESSEE. SRI MALLA NARASINGA RAO, D.NO. 20 - 227, KOTHAPALEM, GOPALAPATNAM, VISAKHAPATNAM. 2 . THE REVENUE. IT O , WARD - 4(2), VISAKHAPATNAM. 3 . THE CIT - 2, VISAKHAPATNAM. 4 . THE CIT(A) , VISAKHAPATNAM. 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR , I.T.A.T., VISAKHAPATNAM