The ITO, Ward-1, Srikakulam V. Sri Ch V S Ranganayakulu, Rajam

ITA 79/VIZ/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6910 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 09-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Assessee Lawyers: C V S MURTHY
• Keywords: Additional evidence

Judgement Text

ITA NOS 78 TO 81 OF 2010 CH VENKATESWARA RAO & OTHE RS PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 78 /VIZAG/ 20 10 ASSESSMENT YEAR: 200 6 - 0 7 ITO WARD - 1, SRIKAKULAM VS. CH. VENKATESWARA RAO, RAJAM (APPELLANT) (RESPONDENT) PAN NO:AACHC 0329 J ITA NO.79/VIZAG/2010 ASSESSMENT YEAR:2006 - 07 ITO WARD - 1, SRIKAKULAM VS. CH. V.S. RANGANAYAKULU RAJAM (APPELLANT) (RESPONDENT) PAN NO:AAYPC 4848 E ITA NO.80/VIZAG/2010 ASSESSMENT YEAR:2006 - 07 ITO WARD - 1, SRIKAKULAM VS. CH. V. JAGANNADHA SWAMY RAJAM (APPELLANT) (RESPONDENT) PAN NO:ADIPC 2609 N ITA NO.81/VIZAG/2010 ASSESSMENT YEAR:2006 - 07 ITO WARD - 2, SRIKAKULAM VS. CH. V. RAMBABU RAJAM RAJAM (APPELLANT) (RESPONDENT) PAN NO:AAYPC 4854 A ASSESSEE BY: SHRI C.V.S. MURTHY, CA DEPARTMENT BY: SHRI D.S.SUNDER SINGH, SR.DR ITA NOS 78 TO 81 OF 2010 CH VENKATESWARA RAO & OTHE RS PAGE 2 OF 5 ORDER PER SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER THESE APPEALS ARE PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT (A) DELETING THE PENALTY LEVIED U/S 271D OF THE I.T . ACT. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS, THESE WERE HEARD TOGETHE R AND ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. 2. IN ALL THESE APPEALS THE FACTS ARE ALMOST IDENTI CAL EXCEPT DIFFERENCE IN QUANTUM OF ADVANCES/LOAN RECEIVED BY THE ASSESSES. ALL THE ASSESSES ARE DIRECTORS IN THE COMPANY KNOWN AS SITARAMA JUTE & T WINE MILLS PVT. LTD. ALL THESE DIRECTORS HAVE TAKEN ADVANCES FROM THE COMPAN Y FOR PURCHASE OF JUTE FROM THE FARMERS ON BEHALF OF THE COMPANY. HOWEVER, THE PURCHASES COULD NOT BE MATERIALIZED AND THE MONEY WAS RETURNED TO THE C OMPANY BY CHEQUE. SINCE THE AMOUNT WAS RECEIVED BY THE ASSESSES IN CASH, TH E ASSESSING OFFICER HAS LEVIED PENALTY U/S 271D FOR VIOLATION OF PROVISIONS OF SEC.269SS OF THE ACT. THE ASSESSES PLEADED THAT THEY HAVE NOT TAKEN LOAN OR D EPOSITS. THEREFORE, THE PROVISIONS OF SEC.271D CANNOT BE INVOKED. THE CONTE NTION OF THE ASSESSES WERE REJECTED BY THE ASSESSING OFFICER ON THE GROUND THA T THE AMOUNT RECEIVED BY THE ASSESSES WERE CLAIMED TO BE THE ADVANCES FOR PURCHA SE OF JUTE FROM THE FARMERS ON BEHALF OF THE COMPANY BUT THE JUTE WAS NEVER PUR CHASED AND THE MONEY WAS RETURNED THROUGH CHEQUES. THEREFORE THE AMOUNT RECE IVED BY THE ASSESSEE WAS PURE LOAN AND NOT AN ADVANCE. THE ASSESSING OFFICER ACCORDINGLY LEVIED THE PENALTY U/S 271D FOR VIOLATION OF PROVISIONS OF SEC TION 269SS OF THE IT ACT. 3. THE ASSESSES PREFERRED APPEALS BEFORE THE CIT ( A) AND STRONGLY PLEADED THAT THE AMOUNT RECEIVED BY THE ASSESSES WERE ADVAN CES FOR PURCHASE OF JUTE FROM THE FARMERS. BEFORE THE CIT (A) THEY HAVE ALSO FILED THE COPY ACCOUNT OF THE INDIVIDUALS AND THE CONFIRMATION LETTERS OF THE FAR MERS. THE CIT (A) WITHOUT VERIFYING THE ADDITIONAL EVIDENCES HAS ACCEPTED THE CONTENTIONS OF THE ASSESSES AND DELETED THE PENALTY AFTER HAVING OBSERVED THAT THE AMOUNT WAS NOT UTILIZED ITA NOS 78 TO 81 OF 2010 CH VENKATESWARA RAO & OTHE RS PAGE 3 OF 5 BY THE ASSESSES FOR THEIR PERSONAL PURPOSES BUT IT WAS UTILIZED ONLY FOR THE PURPOSE OF BUSINESS BY GIVING ADVANCES TO FARMERS F OR SUPPLY OF RAW JUTE TO THE COMPANY. 4. THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE T RIBUNAL WITH THE SUBMISSIONS THAT IN ALL THESE CASES A SUBSTANTIAL A MOUNT OF RS.30.00 LAKHS WAS GIVEN TO THE DIRECTORS OF THE COMPANY UNDER THE GAR B OF ADVANCES FOR PURCHASE OF JUTE FROM THE FARMERS BUT IN FACT NO JUTE WAS EV ER PURCHASED BY THE DIRECTORS AND THE ENTIRE MONEY WAS RETURNED TO THE COMPANY BY CHEQUES. THE ASSESSES HAS GIVEN A COLOUR OF THE LOAN AMOUNT TO BE IN ADVA NCES FOR PURCHASE OF JUTE ONLY TO GET OUT OF THE CLUTCHES OF THE PROVISIONS O F SEC.269SS OF THE IT ACT. WHEREAS THIS AMOUNT WAS GIVEN AS LOAN TO THESE DIRE CTORS WHICH WERE RETURNED BACK THROUGH CHEQUE AFTER A CERTAIN PERIOD. THE LD DEPARTMENTAL REPRESENTATIVE FURTHER CONTENDED THAT THE CONFIRMATION OF THE FARM ERS AND THE COPIES OF THE ACCOUNTS WERE FILED FIRST TIME BEFORE THE CIT (A) A ND THE CIT (A) WITHOUT CONFRONTING THE SAME TO THE ASSESSING OFFICER HAS A DMITTED THE SAME AND DELETED THE PENALTY HAVING ACCEPTED THE CONTENTIONS OF THE ASSESSES. THEREFORE THE ADMISSION OF THESE ADDITIONAL EVIDENCES IS IN G ROSS VIOLATION OF THE PROVISIONS OF RULE 46A OF THE IT RULES. SINCE THE LOAN WAS GIV EN TO THE ASSESSES BY THE COMPANY IN CASH, THE ASSESSING OFFICER HAS RIGHTLY LEVIED THE PENALTY U/S 271D FOR VIOLATION OF PROVISIONS OF SEC.269SS OF THE IT ACT. 5. THE LD COUNSEL FOR THE ASSESSES REITERATED ITS C ONTENTION AS RAISED BEFORE THE CIT (A). THE LD COUNSEL FOR THE ASSESSES FURTHE R CONTENDED THAT THE ASSESSES HAS TAKEN ADVANCES FROM THE COMPANY FOR PURCHASE OF JUTE FROM THE FARMERS. SINCE THE PURCHASES WERE NOT MATERIALIZED THE ADVAN CES WERE RETURNED BACK TO THE COMPANY THROUGH CHEQUES. 6. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CA REFUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT UNDIS PUTEDLY A SUBSTANTIAL AMOUNT OF RS.30.00 LAKHS WAS GIVEN TO THE ASSESSES WHO ARE TH E DIRECTORS OF THE COMPANY, ITA NOS 78 TO 81 OF 2010 CH VENKATESWARA RAO & OTHE RS PAGE 4 OF 5 BY THE COMPANY. THOUGH IT WAS CLAIMED THAT IT WAS G IVEN AS AN ADVANCE TO PURCHASE THE RAW JUTE FROM THE FARMERS, BUT NO EVID ENCE WAS PLACED BEFORE US. SOME CONFIRMATIONS LETTERS WERE FILED BEFORE THE CI T (A) AND THE CIT (A) HAS ACCEPTED THE ADDITIONAL EVIDENCES WHILE DELETING TH E PENALTIES, WHEREAS AS PER PROVISIONS OF RULE 46A OF THE I.T. RULES. THE LD CI T (A) WAS REQUIRED TO CONFRONT THE ADDITIONAL EVIDENCES BEFORE THE ASSESSING OFFIC ER BEFORE ADMITTING THE SAME. BEFORE THE ASSESSING OFFICER THE ASSESSES HAVE NOT FILED ALL THESE EVIDENCES. THEREFORE, THE ASSESSING OFFICER HAD NO OCCASION TO EXAMINE THE STAND TAKEN BY THE ASSESSES THAT THE AMOUNT RECEIVED BY THE ASSESS ES WERE ONLY THE ADVANCES TO PURCHASE RAW JUTE FROM THE FARMERS. SINCE THE AD DITIONAL EVIDENCES WAS NOT PROPERLY EXAMINED BY THE ASSESSING OFFICER, WE ARE OF THE VIEW THAT THE MATTER MAY BE SENT BACK TO THE ASSESSING OFFICER FOR READJ UDICATION OF THE IMPUGNED ISSUE AFTER MAKING NECESSARY VERIFICATION OR EXAMIN ATION OF THE CONCERNED FARMERS, WHETHER THEY HAVE RECEIVED ANY ADVANCES FO R SALE OF JUTE FROM THE DIRECTORS OF THE COMPANY, I.E THE ASSESSES. ACCORDI NGLY WE SET ASIDE THE ORDER OF THE CIT (A) AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTIONS TO READJUDICATE THE IMPUGNED ISSUE A FTER MAKING NECESSARY VERIFICATION AND EXAMINATION OF THE EVIDENCES AND T HE FARMERS TO WHOM THE ADVANCES WERE GIVEN BY THE ASSESSES. 7. IN THE RESULT THE APPEALS OF THE REVENUE ARE ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 2/6/2011. SD/- SD/- (BR BASKARAN) (SUNIL K UMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PVV/SPS VISAKHAPATNAM, DATE: 2 ND JUNE, 2011. ITA NOS 78 TO 81 OF 2010 CH VENKATESWARA RAO & OTHE RS PAGE 5 OF 5 COPY TO 1 SHRI CH. VENKATESWARA RAO, OPP: LIC BUILDING, SRIKA KULAM ROAD, RAJAM, SRIKAKULAM 2 SHRI C.V. JAGANNADH SWAMY, OPP: LIC BUILDING, SRIKA KULAM ROAD, RAJAM, SRIKAKULAM 3 4 MR. CH. V.S. RANGANAYAKULU, OPP: LIC BUILDING, SRIK AKUL AM ROAD, RAJAM, SRIKAKULAM SHRI CH. V. RAMBABU, OPP: LIC BUILDING, SRIKAKULAM ROAD, RAJAM, SRIKAKULAM 5 6 THE ITO WARD - 2(1 ), SRIKAKULAM THE ITO WARD-2, SRIKAKULAM 7 8 THE CIT 2, VISAKHAPATNAM THE CIT(A), VISAKHAPATNAM 9 THE DR, ITAT, VISAKHAPATNAM. 10 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM