M/s Incor Infrastructure (P) Limited, Hyderabad V. ACIT., Circle-2(1), Hyderabad, Hyderabad

ITA 67/HYD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98446 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 13-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SATYANARAYANA MURTHY
• Assessee Lawyers: RAJAT MITRA
• Keywords: Unexplained cash credit; Additional evidence
• Section: 147; 68; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 67/HYD/2016 ASSESSMENT YEAR: 2006-07 M/S INCOR INFRASTRUCTURE (P) LTD., HYDERABAD. PAN AACCG 4684K VS. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 2(1), HYDERABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI B. SATYANARAYANA MURTHY ASSESSEE BY : SHRI RAJAT MITRA D ATE OF HEARING 11-08-2015 DATE OF PRONOUNCEMENT 26-08-2015 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST ORDER DATED 16/10/2014 OF LD. COMMISSIONER OF INCOME-TAX( A)-I II, HYDERABAD FOR AY 2006-07. 2. ASSESSEE IS AGGRIEVED WITH THE ADDITIONS MADE BY AO AND CONFIRMED BY CIT(A) FOR AMOUNT OF RS. 58,88,184 U/S 68 OF THE ACT AND AN AMOUNT OF RS. 54,28,000 U/S 69 OF THE ACT. 3. BRIEFLY THE FACTS ARE, ASSESSEE A COMPANY IS EN GAGED IN THE BUSINESS OF CONSTRUCTION AND INFRASTRUCTURE DEVELOP MENT. FOR THE AY UNDER CONSIDERATION, ASSESSEE FILED ITS RETURN OF I NCOME ON 30/03/2007 DECLARING TOTAL INCOME OF RS. NIL. SUBSE QUENTLY, ON THE BASIS OF INFORMATION FOUND AS A RESULT OF SURVEY TH AT ASSESSEE HAD PURCHASED 628 SQ.YDS OF LAND AT GOPANPALLI VILLAGE FOR A TOTAL 2 ITA NO. 67 /HYD/2015 M/S INCOR INFRASTRUCTURE (P) LTD. CONSIDERATION OF RS. 81,28,000 OUT OF WHICH AN AMOU NT OF RS. 15 LAKH WAS PAID THROUGH CHEQUE, WHEREAS, ASSESSEE HAS ONLY ADMITTED TOTAL CONSIDERATION OF RS. 15 LAKHS IN ITS BOOKS, AO REOP ENED ASSESSMENT U/S 147 OF THE ACT AND ISSUED A NOTICE U/S 148 TO A SSESSEE ON 21/07/10. IN RESPONSE TO THE SAID NOTICE, ASSESSEE REQUESTED AO TO TREAT THE RETURN OF INCOME ALREADY FILED AS A RETUR N IN RESPONSE TO THE NOTICE U/S 148. IN COURSE OF ASSESSMENT PROCEEDING, AO NOTICING THAT ASSESSEE HAS SHOWN CREDITS IN THE BOOKS OF ACCOUNT TO THE TUNE OF RS. 7,43,82,947, CALLED UPON ASSESSEE TO FURNISH DETAIL S OF THE CREDITORS ALONG WITH CONFIRMATIONS DISCLOSING THEIR IDENTITY, GENUINENESS AND CREDITWORTHINESS. AS STATED BY AO, IN RESPONSE TO T HE QUERY RAISED, ASSESSEE FURNISHED LIST OF LOAN CREDITORS ALONG WIT H CONFIRMATIONS. HOWEVER, ON VERIFICATION OF THE DETAILS FURNISHED, AO FOUND THAT THE FOLLOWING CREDITS WERE NOT SUPPORTED WITH CONFIRMAT IONS: 1. SHRI GANESH MEKALA RS. 25,03,684 2. G. SRINIVASA RS. 14,00,000 3. RADHAKRISHNA MANGA RS. 19,84,500 RS. 58,88,184 =========== AS THE CREDITS WERE NOT SUPPORTED BY ANY CONFIRMATI ON FROM THE CREDITORS, AO TREATED THE CREDITS AMOUNTING TO RS. 58,88,184 AS UNEXPLAINED CREDIT U/S 68 OF THE ACT AND ADDED IT B ACK TO THE INCOME OF ASSESSEE. FURTHER, AO FROM THE INFORMATION AVAIL ABLE ON RECORD, NOTICED THAT ASSESSEE HAD PURCHASED LAND FROM SHRI K. SRIRAMI REDDY FOR A TOTAL CONSIDERATION OF RS. 81,28,000, OUT OF WHICH AN AMOUNT OF RS. 54,28,000 WAS PAID IN CASH. WHEN ASKED TO EXPLA IN, IT WAS STATED BY ASSESSEE THAT THE AMOUNT OF RS. 54,28,000 WAS PA ID BY SHRI ANAND REDDY ON BEHALF OF THE COMPANY. AO, HOWEVER, NOTED THAT ON VERIFICATION, IT WAS FOUND THAT SAME AMOUNT HAS NO T BEEN REFLECTED IN THE BOOKS OF ACCOUNT OF ASSESSEE. THEREFORE, TREATI NG THE AMOUNT OF RS. 54,28,000 PAID TOWARDS SALE CONSIDERATION AS IN VESTMENT OUTSIDE THE BOOKS, AO CONSIDERED IT AS UNEXPLAINED INVESTME NT U/S 69 OF THE ACT AND ADDED BACK TO THE INCOME OF ASSESSEE. BEING AGGRIEVED OF 3 ITA NO. 67 /HYD/2015 M/S INCOR INFRASTRUCTURE (P) LTD. SUCH ADDITIONS MADE BY AO, ASSESSEE PREFERRED APPEA L BEFORE LD. CIT(A). 4. IN COURSE OF HEARING OF APPEAL BEFORE LD. CIT(A) , ASSESSEE SUBMITTED CONFIRMATION LETTERS FROM THREE CREDITORS FOR CREDITS AMOUNTING TO RS. 58,81,184, WHICH COULD NOT BE FILE D BEFORE AO. EVEN IN RESPECT OF INVESTMENT IN PURCHASE OF LAND, ASSE SSEE SUBMITTED CONFIRMATION OF SHRI ANAND REDDY, WHO IS ONE OF THE DIRECTOR OF THE COMPANY. LD. CIT(A), HOWEVER, OPINED THAT CONFIRMAT ION LETTERS SUBMITTED BY ASSESSEE BEING DEVOID OF RELEVANT DETA ILS, COULD NOT STAND RIGORS OF SECTION 68 OF THE ACT. HE OBSERVED THAT ONUS IS ON ASSESSEE TO ESTABLISH THE CREDITS, INVESTMENTS APPE ARING IN THE BOOKS OF ACCOUNT. ALLEGING THAT ASSESSEE FAILED TO ESTABL ISH THE SAME, ADDITIONS MADE BY AO WERE CONFIRMED BY LD. CIT(A). 5. LD. AR SUBMITTED BEFORE US, THOUGH ASSESSEE COUL D NOT SUBMIT THE CONFIRMATION LETTERS RELATING TO THREE CREDITOR S FOR THE CREDIT AMOUNT OF RS. 58,88,184 FOR THE REASON FACT THAT TW O OF THE CREDITORS ARE NON-RESIDENTS AND THEY HAVE REMITTED MONEY FROM OUTSIDE THE COUNTRY, BUT, AT THE FIRST APPELLATE STAGE, ASSESSE E DID PRODUCE CONFIRMATION LETTERS OF THE SAID CREDITORS ALONG WI TH OTHER EVIDENCES TO ESTABLISH THE GENUINENESS OF THE CREDITS. AS FAR AS THE INVESTMENTS IN LAND IS CONCERNED, LD. AR SUBMITTED, ONE OF THE DIR ECTOR OF THE COMPANY SHRI ANAND REDDY, WHO ADVANCED MONEY ON BEH ALF OF THE COMPANY HAS ALSO CONFIRMED OF HAVING ADVANCED MONEY AND THE CONFIRMATION LETTER WAS SUBMITTED BEFORE LD. CIT(A) . THUS, IT WAS SUBMITTED BY LD. AR, WITHOUT PROPERLY EXAMINING THE AUTHENTICITY OF THE CONFIRMATION LETTERS, LD. CIT(A) HAS BRUSHED TH EM ASIDE WHILE CONFIRMING ADDITIONS MADE BY AO. LD. AR SUBMITTED, AS EVIDENCES PRODUCED BY ASSESSEE HAVE NOT BEEN PROPERLY EXAMINE D BY LD. CIT(A), LET THE SAME BE VERIFIED BY AO. 6. LD. DR, ON THE OTHER HAND, SUBMITTED, CONFIRMATI ON LETTERS FURNISHED BY ASSESSEE IN RESPECT OF NON-RESIDENT CR EDITORS DO NOT CONTAIN NECESSARY DETAILS, HENCE, THE GENUINENESS O F THE SAME 4 ITA NO. 67 /HYD/2015 M/S INCOR INFRASTRUCTURE (P) LTD. CANNOT BE ESTABLISHED. HOWEVER, LD. DR HAS NO OBJE CTION IF ISSUE RELATING TO THE ADDITIONS MADE BY AO ARE REMITTED B ACK FOR REEXAMINATION ON THE BASIS OF EVIDENCES SUBMITTED B Y ASSESSEE. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD. AO ADDED THE AMOUNT OF RS . 58,88,184 U/S 68 OF THE ACT ONLY FOR THE REASON THAT ASSESSEE FAI LED TO SUBMIT CONFIRMATION LETTERS FROM THE CONCERNED CREDITORS. SIMILARLY, ADDITION OF RS. 54,28,000 WAS ALSO MADE DISBELIEVING ASSESSE ES CLAIM THAT THE AMOUNT WAS INVESTED BY ONE OF THE DIRECTOR SHRI ANAND REDDY ON BEHALF OF COMPANY. HOWEVER, AS COULD BE SEEN FROM T HE MATERIALS ON RECORD, BEFORE LD. CIT(A), ASSESSEE DID PRODUCE CON FIRMATION LETTERS FROM THREE CREDITORS CONFIRMING THE ADVANCES MADE T O ASSESSEE. FURTHER, ASSESSEE ALSO FURNISHED CONFIRMATION LETTE R FROM DIRECTOR SHRI ANAND REDDY CONFIRMING THAT HE HAS PAID AN AMOUNT O F RS. 54,28,000 ON BEHALF OF THE COMPANY TOWARDS PURCHASE OF LAND. LD. CIT(A) WITHOUT PROPERLY VERIFYING THE AUTHENTICITY OF THE ASSESSEES CLAIM BY WAY OF ADDITIONAL EVIDENCE EITHER BY EXAMINING HIMS ELF OR GETTING IT VERIFIED THROUGH AO HAS BRUSHED THEM ASIDE BY MAKIN G GENERAL OBSERVATION. IN OUR VIEW, THE EVIDENCES SUBMITTED BY ASSESSEE HAVE TO BE EXAMINED BY MAKING PROPER ENQUIRY BEFORE REJE CTING THEM. ASSESSEE MUST BE GIVEN OPPORTUNITY TO ESTABLISH THE FACT THAT STATEMENT MADE IN CONFIRMATION LETTERS ARE CORRECT AND THE AMOUNTS ACTUALLY REPRESENT GENUINE CREDITS RECEIVED BY ASSE SSEE. AS ADDITIONAL EVIDENCES PRODUCED BY ASSESSEE HAVE NOT BEEN PROPERTY VERIFIED BY LD. CIT(A), EITHER BY HIMSELF OR THROUG H AO, WE CONSIDER IT PROPER TO SET ASIDE THE IMPUGNED ORDER OF LD. CIT(A ) AND REMIT THE MATTER BACK TO THE FILE OF AO FOR CONSIDERING THE I SSUE RELATING TO ADDITIONS MADE U/S 68 AS WELL AS U/S 69 AFTER EXAMI NING THE ADDITIONAL EVIDENCES SUBMITTED BY ASSESSEE. IT IS OPEN FOR AO TO MAKE FURTHER ENQUIRY, IF DEEMED NECESSARY, TO ASCERTAIN AUTHENTI CITY OF ASSESSEES CLAIM. AO MUST AFFORD REASONABLE OPPORTUNITY OF BEI NG HEARD TO ASSESSEE TO EXPLAIN THE CREDITS AND INVESTMENTS MAD E BY IT. ONLY 5 ITA NO. 67 /HYD/2015 M/S INCOR INFRASTRUCTURE (P) LTD. AFTER CONSIDERING THE EVIDENCES SUBMITTED BY ASSESS EE, AO HAS TO DECIDE THE ISSUE WITH A REASONED ORDER AND IN ACCOR DANCE WITH LAW. 8. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN ON 26 TH AUGUST, 2015. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 26 TH AUGUST, 2015 KV COPY TO:- 1) M/S INCOR INFRASTRUCTURE (P) LTD., C/O VENUGOP AL & CHENOY, CAS., 4-1-889/16/2, TILAK ROAD, HYDERABAD 500 001. 2) ACIT, CIRCLE 2(1), HYDERABAD. 3 CIT(A)-III, HYDERABAD 4) CIT-II, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.