Baron Metals Limited , Hyderabad V. Income Tax Officer, Ward-1(3), Hyderabad

ITA 85/Hyd/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4009 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2014-2015
• Appeal Filed On: 25-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S SANT
• Assessee Lawyers: P MURALI MOHANA RAO
• Keywords: Unexplained cash credit; Unexplained investment; Opportunity of being heard; Application of stay
• Section: 143(3)

Judgement Text

ITA NO 85 OF 2019 AND SA 241 OF 2019 BARON METALS L TD HYDERABAD. PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B SMC BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.85/HYD/2019 & SA NO.241/HYD/2019 ASSESSMENT YEAR: 2014-15 M/S. BARON METALS LTD, HYDERABAD PAN:AACCB8752B VS. INCOME TAX OFFICER WARD 1(3) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI P. MURALI MOHANA RAO REVENUE BY : SRI A.S. SANT, DR DATE OF HEARING: 04/11/2019 DATE OF PRONOUNCEMENT: 11/11/2019 ORDER THIS IS ASSESSEES APPEAL FOR THE A.Y 2014-15 AGAIN ST THE ORDER OF THE CIT (A)-1, HYDERABAD, DATED 23.08. 2018. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS THE ADDITION OF RS .5.00 LAKHS MADE BY THE AO TOWARDS UNEXPLAINED INVESTMENT BY WAY OF CASH DEPOSITS INTO THE BANK A/C OF THE ASSESSEE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, ENGAGED IN THE BUSINESS OF MANUFACTURING OF BASIC I RON AND STEEL PRODUCTS, FILED ITS RETURN OF INCOME FOR THE A.Y 20 14-15 ON 22.11.2014 ADMITTING AN INCOME OF RS.20,000/-. DURI NG THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE A O OBSERVED FROM THE BANK STATEMENT OF THE ASSESSEE THAT, CASH OF RS.5.00 LAKHS WAS DEPOSITED ON 7.4.2013. WHEN THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF SUCH CASH DEPOSIT, THE ASS ESSEE SUBMITTED THAT IT WAS DEPOSITED BY M/S. KUMARS MET TALLURGICAL ITA NO 85 OF 2019 AND SA 241 OF 2019 BARON METALS L TD HYDERABAD. PAGE 2 OF 6 CORPORATION LTD TO OBTAIN DEMAND DRAFT IN FAVOUR OF THE CTO FOR THE SAME VALUE ON THE SAME DAY. THE AO OBSERVED FRO M THE BANK STATEMENT THAT 5 DEMAND DRAFTS OF RS.1.00 LAKHS EAC H GOT CANCELLED ON 13.4.2013 AND ALSO THAT A CHEQUE WAS I SSUED IN FAVOUR OF MRS. ISHITA AGGARWAL FOR RS.5.00 LAKHS WH ICH WAS CLEARED ON 13.04.2013. TAKING NOTE OF THE FACT THAT THOUGH THE CASH WAS DEPOSITED BY M/S. KUMARS METTALLURGICAL C ORPORATION LTD FOR TAKING THE DEMAND DRAFT, THE AO HAS NOTED T HAT THE DD WAS NOT RETURNED TO THEM BUT INSTEAD HAS BEEN TRANS FERRED TO MRS. ISHITA AGARWAL ON THE VERY SAME DAY ON WHICH T HE DD WAS CANCELLED. THE AO, THEREFORE, ASKED THE ASSESSEE TO ADDUCE EVIDENCE IN SUPPORT OF THE ABOVE CLAIM OF CASH ALLE GEDLY GIVEN BY M/S. KUMARS METTALLURGICAL CORPORATION LTD. SINCE THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE AND DID NOT APPEAR B EFORE THE AO, THEREAFTER THE AO TREATED THE SUM OF RS.5.00 LAKHS AS UNEXPLAINED CASH DEPOSIT AND BROUGHT IT TO TAX. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO AND THE A SSESSEE IS IN SECOND APPEAL BEFORE US BY RAISING THE FOLLOWING GR OUNDS OF APPEAL: 1. THE LD. COMMISSIONER. OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS 'THE LD. CIT(A)] ERRED BOTH ON FACTS AND IN LAW IN DISMISSING THE APPEAL OF THE AP PELLANT AGAINST THE ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT'], DT. 28.12.2 016 PASSED BY THE ITO, WARD-1(3), HYDERABAD [HEREINAFTE R REFERRED TO AS THE 'ASSESSING OFFICER/ AO'] 2. THE LD. CIT (A) ERRED IN DISMISSING THE APPEAL O F THE APPELLANT ON THE ISSUE OF ADDITION OF RS. 5,00,000 MADE BY THE AO TOWARDS UNEXPLAINED INVESTMENT BY WAY OF CAS H DEPOSIT IN BANK ACCOUNT WITHOUT APPRECIATING THE FA CTS OF THE CASE AND MERELY STATING THAT THE CONFIRMATION SUBMITTED RS. 1,50,000 BY THE APPELLANT IS NOT CORR ECT AND ITA NO 85 OF 2019 AND SA 241 OF 2019 BARON METALS L TD HYDERABAD. PAGE 3 OF 6 CREDITWORTHINESS OF M/S KUMAR'S METALLURGICAL CORPO RATION LIMITED WAS NOT PROVED. 3. THE LD. CIT (A) ERRED IN DISMISSING THE APPEAL O F THE APPELLANT ON THE ISSUE OF ADDITION MADE BY THE AO TOWARDS UNEXPLAINED INVESTMENT BY WAY OF CASH DEPOS IT IN BANK ACCOUNT, WITHOUT AFFORDING REASONABLE OPPOR TUNITY OF BEING HEARD. 4. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FAC T THAT THE AO ERRED IN MAKING AN ADDITION TOWARDS UNEXPLAI NED INVESTMENT WITHOUT AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE APPELLANT. 5. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE INFORMATION AND THE EVIDENCE SUBMITTED BY THE APPEL LANT AND ALLOWED THE APPEAL. 6. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE FA CT THAT THE AO ERRED IN MAKING ADDITION TOWARDS UNEXPLAINED INVESTMENT, WITHOUT MAKING ANY INDEPENDENT ENQUIRIE S OF HIS OWN AND GATHER EVIDENCE IN SUPPORT OF HIS CONTE NTIONS. 7. THE LD. CIT (A) ERRED IN UPHOLDING THE ADDITION MADE BY THE AO TOWARDS UNEXPLAINED INVESTMENT, BY REJECTING THE INFORMATION AND THE EVIDENCE FURNISHED BY THE APPEL LANT WITHOUT EVEN CONDUCTING ANY ENQUIRIES TO PROVE THEM TO BE BOGUS. 8. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE CASH DEPOSITED DOES NOT BELONG TO THE APPELLANT AND THE SAME WAS DEPOSITED BY M/ S. KUMAR METALLURGICAL CORPORATION LIMITED FOR THE PURPOSE OF OBTAINING DE MAND DRAFTS IN FAVOUR OF THE COMMERCIAL TAX OFFICER SINC E THERE WAS PROBLEM WITH ITS BANK ACCOUNT AND ACCORDINGLY T HE DDS WERE OBTAINED BY THE APPELLANT. 9. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE FA CT THAT THE APPELLANT PROVED THE IDENTITY AND CREDITWORTHIN ESS OF THE PERSON WHO HAD DEPOSITED CASH INTO THE BANK ACC OUNT OF THE APPELLANT AND ALSO PROVED GENUINENESS OF THE TRANSACTION ALONG WITH SUPPORTING DOCUMENTS. 10. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE F ACT THAT THE A.O MADE ADDITION TOWARDS UNEXPLAINED INVESTMEN T, WITHOUT ANY MATERIAL PROOF ON HAND IN SUPPORT OF HI S CONTENTIONS AND THE LD. CIT (A) FURTHER ERRED IN UP HOLDING SUCH ADDITION. 11. THE APPELLANT MAY ADD OR ALTER OR AMEND OR MODI FY OR SUBSTITUTE OR DELETE AND OR RESCIND ALL OR ANY OF T HE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. ITA NO 85 OF 2019 AND SA 241 OF 2019 BARON METALS L TD HYDERABAD. PAGE 4 OF 6 4. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITT ED BEFORE US THE CONFIRMATION FROM M/S KUMAR'S METALLU RGICAL CORPORATION LIMITED FOR THE DEPOSIT OF THE SUM OF R S.5.00 LAKHS AND ALSO THE I.T. RETURNS OF THE SAID COMPANY. HE A LSO SUBMITTED THAT IT IS NOT DISPUTED THAT THE ASSESSEE HAD TAKEN 5 DDS IN FAVOUR OF THE CTO ON BEHALF OF M/S KUMAR'S METALLUR GICAL CORPORATION LIMITED AND ON CANCELLATION OF THE DDS ON THE DIRECTION OF M/S KUMAR'S METALLURGICAL CORPORATION LIMITED ONLY, THE ASSESSEE HAS TRANSFERRED THE AMOUNT BY WAY OF C HEQUE TO MRS. ISHITA AGARWAL. HE SUBMITTED THAT NEITHER THE AO NO R THE CIT (A) HAVE CONSIDERED THIS CONTENTION OF THE ASSESSEE AND HAVE SUMMARILY REJECTED THE ASSESSEES CLAIM. HE, THEREF ORE, PRAYED FOR SETTING ASIDE OF THE ASSESSMENT ORDER. 5. THE LEARNED DR, HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE H AS ONLY MADE A CLAIM WITHOUT ANY SUBSTANTIAL EVIDENCE AND THEREF ORE, THE ASSESSMENT ORDER IS TO BE UPHELD. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I AM OF THE OPINION THAT THE ASSESSEE HA S ALL ALONG BEEN TAKING A STAND THAT THE SUM OF RS.5.00 LAKHS IS DEP OSITED BY M/S KUMAR'S METALLURGICAL CORPORATION LIMITED FOR TAKIN G OUT DDS AS THEY ARE FACING PROBLEM OF CASH LIQUIDITY AND ALSO IN DEALING WITH THEIR BANK A/C. THIS FACT HAS NOT BEEN DISPUTED BY ANY OF THE AUTHORITIES BELOW. HOWEVER, THE ASSESSEE HAS TRANSF ERRED THE SAID SUM TO MRS. ISHITA AGARWAL INSTEAD OF RETURNING IT TO M/S KUMAR'S METALLURGICAL CORPORATION LIMITED, WHICH HAS CREATE D DOUBTS IN THE MINDS OF THE AO AND THE CIT (A) ABOUT THE GENUI NENESS OF THE ASSESSEES CLAIM. THE ASSESSEE HAS ALSO NOT FILED A NY EVIDENCE IN ITA NO 85 OF 2019 AND SA 241 OF 2019 BARON METALS L TD HYDERABAD. PAGE 5 OF 6 SUPPORT OF THIS CONTENTION. THEREFORE, I AM INCLINE D TO REMAND THE ISSUE TO THE FILE OF THE AO FOR THE LIMITED PURPOSE OF VERIFYING THE CLAIM OF THE ASSESSEE THAT THERE EXISTED ANY LIABIL ITY OF THE ASSESSEE TO THE EXTENT OF RS.5.00 LAKHS AND THAT TH E TRANSFER OF THE SUM OF RS.5.00 LAKHS TO MRS. ISHITA AGARWAL WAS AT THE REQUEST OF M/S KUMAR'S METALLURGICAL CORPORATION LI MITED, AND IF IT IS FOUND TO BE CORRECT, THEN NO ADDITION TOWARDS THE UNEXPLAINED CASH CREDIT OF RS.5.00 LAKHS SHALL BE M ADE. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 8. SINCE THE APPEAL ITSELF HAS BEEN HEARD AND IS DI SPOSED OF BY WAY OF AN ORDER TODAY, THE STAY APPLICATION F ILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH NOVEMBER, 2019. SD/- HYDERABAD, DATED 11 TH NOVEMBER, 2019. VINODAN/SPS (P. MADHAVI DEVI) JUDICIAL MEMBER ITA NO 85 OF 2019 AND SA 241 OF 2019 BARON METALS L TD HYDERABAD. PAGE 6 OF 6 COPY TO: 1 M/S.BARON METALS LTD C/O P MURALI & CO. C.A, 6-3- 655/2/3 SOMAJIGUDA, HYDERABAD 500082 2 ITO WARD 1(3) 7 TH FLOOR, B BLOCK IT TOWERS, AC GUARDS, MASAB TANK, HYDERABAD 500004 3 CIT (A)-1 HYDERABAD 4 PR. CIT 1 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER