ITO, Ward-1, Madanapalle V. Sri M.R. Sudhakar Babu, Madhira

ITA 673/HYD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98393 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 18-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: S RAMA RAO
• Section: 68; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B : HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.673/HYD/2011 ASSESSMENT YEAR 2006-2007 THE INCOME TAX OFFICER, WARD-1, MADANAPALLE. VS. MR. M.R. SUDHAKAR BABU, D.NO.1-475, OPP. GOVT. HOSPITAL, MADANAPALLE. (APPELLANT) (RESPONDENT) FOR REVENUE : MR. K.J. RAO FOR ASSESSEE : MR. S. RAMA RAO DATE OF HEARING : 0 4 .0 8 .2015 DATE OF PRONOUNCEMENT : 12 .0 8 .2015 ORDER PER P.M. JAGTAP, A.M. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), GUNTUR DATED 03.02.2011 WHEREBY HE DELETED TWO ADDITIONS OF RS.36,59,000 AND RS.35,36,000 MADE BY THE A.O. TO T HE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 68 BY TR EATING THE OPENING CURRENT CAPITAL ACCOUNT BALANCE AND FUR THER CREDITS APPEARING IN THE SAID ACCOUNT AS UNEXPLAINE D CASH CREDITS. 2. THE ASSESSEE IN THE PRESENT CASE IS A HUF WHICH IS CARRYING ON THE BUSINESS AS CONTRACTOR. TH E RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS 2 ITA.NO.673/HYD/2011 MR. M.R. SUDHAKAR BABU, MADANAPALLE FILED BY IT ON 20.03.2008 DECLARING TOTAL INCOME OF RS.4,95,000. AS NOTICED BY THE A.O. FROM THE BALANC E SHEET FILED BY THE ASSESSEE ALONG WITH THE SAID RET URN, OPENING CREDIT BALANCE OF RS.36,59,000 WAS APPEARIN G IN ASSESSEES CURRENT ACCOUNT AS ON 01.04.2005. SINCE NO SATISFACTORY EXPLANATION WAS OFFERED BY THE ASSESSE E IN RESPECT OF THE SOURCE OF THE SAID AMOUNT, THE OPENI NG CREDIT BALANCE IN ASSESSEES CURRENT ACCOUNT WAS TR EATED BY THE A.O. AS UNEXPLAINED AND THE SAME WAS ADDED B Y HIM TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECTI ON 68. IN THE CURRENT ACCOUNT OF THE ASSESSEE, FURTHER CRE DITS AGGREGATING TO RS.35,36,000 WERE APPEARING REPRESEN TING CASH INTRODUCED DURING THE YEAR UNDER CONSIDERATION . SINCE THESE CASH CREDITS COULD NOT BE EXPLAINED BY THE A.O. TO THE SATISFACTION OF THE A.O. IN TERMS OF SE CTION 68, THE AMOUNT OF SUCH CASH CREDITS WAS ALSO ADDED BY T HE A.O. TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECT ION 68 IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VI DE ORDER DATED 17.12.2008. 3. AGAINST THE ORDER PASSED BY THE A.O. UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSE SSEE BEFORE THE LD. CIT(A) CHALLENGING, INTER ALIA , BOTH ADDITIONS OF RS.36,59,000 AND RS.35,36,000 MADE BY THE A.O. UNDER SECTION 68 ON ACCOUNT OF UNEXPLAINED CASH CRE DITS. AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AND THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(A) FOUND MERIT IN THE CONTENTION RAISED ON BEHA LF OF THE ASSESSEE THAT THE OPENING CREDIT BALANCE IN THE 3 ITA.NO.673/HYD/2011 MR. M.R. SUDHAKAR BABU, MADANAPALLE CURRENT ACCOUNT COULD NOT BE ADDED UNDER SECTION 68 IN THE YEAR UNDER CONSIDERATION AS THE SAME DID NOT REPRESENT CASH CREDITS OF THE SAID YEAR. HE ACCORDI NGLY DELETED THE ADDITION OF RS.36,59,000 MADE BY THE A. O. UNDER SECTION 68. 4. AS REGARDS THE OTHER AMOUNT OF RS.35,36,000 ADDED BY THE A.O. TO THE TOTAL INCOME OF THE ASSESS EE UNDER SECTION 68 TREATING THE CREDITS APPEARING IN THE CURRENT ACCOUNT OF THE ASSESSEE AS UNEXPLAINED, THE LD. CIT(A) HELD THAT THE ASSESSEE HAVING RETURNED BACK THE SAID AMOUNTS TAKEN AS ADVANCES DURING THE YEAR UNDE R CONSIDERATION ITSELF, THE ADDITION MADE BY THE A.O. UNDER SECTION 68 COULD NOT BE SUSTAINED. ACCORDINGLY, HE DELETED THE ADDITION OF RS.35,36,000 MADE BY THE A.O. UNDER SECTION 68. AGGRIEVED BY THE ORDER OF THE LD. CIT(A ) GIVING THIS RELIEF TO THE ASSESSEE, THE REVENUE HAS PREFER RED THIS APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON REC ORD. THERE IS NO DISPUTE THAT THE AMOUNT OF RS.36,59,000 ADDED BY THE A.O. TO THE TOTAL INCOME OF THE ASSESS EE UNDER SECTION 68 REPRESENTED OPENING CREDIT BALANCE OF THE CURRENT ACCOUNT OF THE ASSESSEE AND THE SAME THEREFORE COULD NOT BE REGARDED AS CASH CREDIT APPE ARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR THE YEA R UNDER CONSIDERATION, AS RIGHTLY HELD BY THE LD. CIT(A). W E THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE 4 ITA.NO.673/HYD/2011 MR. M.R. SUDHAKAR BABU, MADANAPALLE LD. CIT(A) DELETING THE ADDITION OF RS.36,59,000 MA DE BY THE A.O. UNDER SECTION 68 AS THE SAID AMOUNT DID NO T REPRESENT CASH CREDIT APPEARING IN THE BOOKS OF ACC OUNT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AS ENVISAGED BY THE PROVISIONS OF SECTION 68. 6. AS REGARDS THE SECOND ADDITION OF RS.35,36,000 MADE BY THE A.O. UNDER SECTION 68 ON ACCOUNT OF CREDITS APPEARING IN THE CURRENT ACCOUNT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, WE HOWEV ER, DO NOT FIND OURSELVES IN AGREEMENT WITH THE LD. CIT(A) THAT THE SAID CREDITS REPRESENTING ADVANCES HAVING BEEN REPAID BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION ITSELF, THE ADDITION MADE BY THE A.O. UNDER SECTION 68 COUL D NOT BE SUSTAINED. AS RIGHTLY CONTENDED BY THE LEARNED D .R., THIS ASPECT OF REPAYMENT OF ADVANCES IS NOT RELEVAN T FOR THE PURPOSE OF APPLICABILITY OF SECTION 68 AND ONCE THE ADVANCES TAKEN BY THE ASSESSEE DURING THE YEAR UNDE R CONSIDERATION ADMITTEDLY REPRESENTED CASH CREDITS A S ENVISAGED IN SECTION 68, THE ONUS IS ON THE ASSESSE E TO EXPLAIN THE SAME IN TERMS OF SECTION 68 BY ESTABLIS HING THE IDENTITY AS WELL AS CAPACITY OF THE CONCERNED C REDITORS AS WELL AS THE GENUINENESS OF THE RELEVANT TRANSACT ION. IN THE PRESENT CASE, IT APPEARS THAT THE LD. CIT(A) HA S OVERLOOKED THIS WELL SETTLED POSITION. WHEN THIS PO SITION WAS CONFRONTED TO THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US, HE HAS SUBMITTED THAT TH E ASSESSEE IS IN A POSITION TO EXPLAIN THE RELEVANT C ASH CREDITS IN TERMS OF SECTION 68 AND URGED THAT ONE M ORE 5 ITA.NO.673/HYD/2011 MR. M.R. SUDHAKAR BABU, MADANAPALLE OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE FOR THIS P URPOSE. SINCE THE LEARNED D.R. HAS NO OBJECTION IN THIS REG ARD, WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) ON T HIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE A.O . FOR GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE TO EXPL AIN THE RELEVANT CASH CREDITS REPRESENTING ADVANCES TAKEN B Y THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IN TER MS OF SECTION 68. 7. IN THE RESULT, APPEAL OF THE DEPARTMENT IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12.0 8.2015. SD/- SD/- (SAKTIJIT DEY) (P.M. JAGTAP) JUDICIAL MEMBER ACOUNTANT MEMBER HYDERABAD, DATED 12 TH AUGUST, 2015 VBP/- COPY TO : 1. THE INCOME TAX OFFICER, WARD - 1 , MADANAPALLE. 2. MR. M.R. SUDHAKAR BABU, D.NO.1 - 475, OPP. GOVT. HOSPITAL, MADANAPALLE. 3. CIT(A), GUNTUR. 4 . CIT, TIRUPATHI. 5 . D.R. ITAT B BENCH, HYDERABAD. 6 . GUARD FILE