ACIT, Cir-9(1), Hyderabad V. M/s. Sri C. Amarnath, Hyderabad

ITA 886/HYD/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2801 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 10-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAYA MAHESWARI
• Assessee Lawyers: S K PISSAY
• Keywords: Unexplained cash credit; Search and seizure; Peak credit
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.8 86/HYD/11 ASST. YE AR 2003-04 ACIT, CIR-9(1), HYDERABAD. V/S. SRI C. AMARNATH, HYDERABAD. PAN ACXPC 7281-L (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. MAYA MAHESWARI RESPONDENT BY : SRI S.K. PISSAY DATE OF HEARING 04 - 04 - 2013 DATE OF PRONOUNCEMENT 04-04-2013 . O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF CIT (A), VIJAYAWADA DATED 28-2-2011 PASSED IN APPEAL NO. 208/CIT(A)/TR/VJA/10-11 PERTAINING TO THE ASSESSMENT YE AR 2003-04. 2. THE DEPARTMENT HAS FILED THE APPEAL ON THE FOLLOW ING EFFECTIVE GROUNDS:- 1. THE LEARNED CIT (A) ERRED IN DISTINGUISHING THE FAC T THAT ADVANCES TO FARMERS OUTSIDE BOOKS OF ACCOUNTS AND UNEXPLAINED CREDITS (CASH CREDITS) IN BOOKS OF ACC OUNTS ARE TWO DIFFERENT ASPECTS AND IN BOTH THE CASES, AS SESSEE IS UNDER OBLIGATION TO EXPLAIN THE SOURCES FOR MONE Y. ITA NO. 886 OF 2011 SRI C. AMARNATH, HYD. 2 2. THE CIT (A) ERRED IN SETTING OFF UNEXPLAINED C REDITS (PEAK CREDITS) IN THE BOOKS OF ACCOUNTS AGAINST ADVANCE S TO FARMERS OUTSIDE BOOKS OF ACCOUNTS EVEN THROUGH THE RE WAS NO EXPLAINABLE SOURCE FOR ASSESSEE. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL CA RRYING ON BUSINESS AS COMMISSION AGENT. CONSEQUENT UPON A SEARCH AND SEIZURE OPERATION AN ASSESSMENT ORDER FOR THE IMPUGNED ASSESSMENT Y EAR WAS PASSED U/S 143(3) ON 31-3-2006. THE ASSESSEE CHALLENGED HE ASSESSMENT ORDER IN APPEAL BEFORE THE CIT (A). 4. THE CIT (A) WHILE DECIDING THE APPEAL OF THE ASSESSEE VIDE ORDER DATED 14-9-2007 ENHANCED THE INCOME BY RS.49,45,000/- AND DIRECTED THE ASSESSING OFFICER TO VERIFY THE PEAK CREDITS ASSESSED FOR THE ASSESSMENT YEARS 1999-2000 TO 2003-04 AND SET OFF THE SAME AGAINST THE AMOUNT OF 49,45,000/- BEING ADVANCES GIVEN TO FAR MERS ON 31-3- 2003 AND SUBJECT THE BALANCE AMOUNT TO TAX IN THE ASSESSME NT YEAR 2003-04. THE ASSESSING OFFICER WHILE GIVING EFFECT TO T HE DIRECTIONS OF THE CIT (A) IN HIS ORDER DATED 15-11-2007 SET OFF THE PEAK OF CASH CREDIT OF RS.31,41,600/- AVAILABLE FOR THE ASSESSMENT YEA RS 1999-2000 TO 2003-04 AND ADDED THE BALANCE AMOUNT OF RS.18,03, 400/- TO THE INCOME OF THE ASSESSEE. THE AFORESAID CONSEQUENTIAL ORDER WAS SERVED ON THE ASSESSEE ON 23-11-2007. HOWEVER, ON 14-3-2008 AN ORDER U/S 154 DATED 15-11-2007 WAS SERVED ON THE ASSESSEE WHEREIN THE ASSESSING OFFICER RECTIFIED THE CONSEQUENTIAL ORDER DATED 1 5-11-2007 BY WITHDRAWING THE SET OFF OF RS.31,40,600/- BY HOLDING THAT NO PEAK CREDITS WERE AVAILABLE FOR SET OFF AGAINST THE ADVANCES G IVEN OUTSIDE THE BOOKS OF ACCOUNT. ITA NO. 886 OF 2011 SRI C. AMARNATH, HYD. 3 5. THE ASSESSEE CHALLENGED THE ORDER U/S 154 OF THE ACT BE FORE THE CIT (A). IN COURSE OF HEARING OF THE APPEAL, THE ASSE SSEE CONTENDED BEFORE THE CIT (A) THAT IDENTICAL ISSUE IN CASE OF THE A SSESSEES WIFE FOR THE SAME ASSESSMENT YEAR 2003-04 WAS SUBJECT MATTER OF APP EAL BEFORE THE CIT (A)-VI, HYDERABAD AND THE CIT (A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY ANNULLING THE ORDER PASSED U/S 154 OF THE ACT AND HAS DIRECTED THE ASSESSING OFFICER TO ALLOW SET OFF OF PEAK OF CASH CREDIT AGAINST THE UNACCOUNTED ADVANCES TO FARMERS GI VEN ON 31- 3-2003. THE CIT (A) FOLLOWING THE ORDER PASSED BY T HE FIRST APPELLATE AUTHORITY IN THE CASE OF THE ASSESSEES WIFE HELD THAT THE ASSESSEE IS ENTITLED TO SET OFF OF THE PEAK OF CASH CREDITS OF RS.31, 41,600 FROM THE UNACCOUNTED ADVANCES OF RS.49,45,000/- GIVEN TO THE FARM ERS AND DIRECTED THE ASSESSING OFFICER TO BRING TO TAX THE BALANCE AMOUNT OF RS.18,03,400/- 6. BEING AGGRIEVED OF THE AFORESAID ORDER OF THE CIT (A), THE DEPARTMENT IS IN APPEAL BEFORE US. 7. WE HAVE HEARD SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY SIMILAR DISPUTE REGAR DING SET OFF OF PEAK OF CASH CREDITS AGAINST UNACCOUNTED ADVANCES TO FARMER S ALSO AROSE IN CASE OF THE ASSESSEES WIFE FOR THE IMPUGNED ASSESSM ENT YEAR. IN ASSESSEES WIFE CASE ALSO, THE ASSESSING OFFICER BY VI RTUE OF AN ORDER PASSED U/S 154 OF THE ACT WITHDREW THE SET OFF OF PEAK OF CASH CREDITS ALLOWED IN THE CONSEQUENTIAL ORDER PASSED BY HIM IN PURSUANCE TO THE ORDER OF THE CIT (A). THE CIT (A) HOWEVER AL LOWED THE APPEAL FILED BY THE ASSESSEES WIFE SMT C. PRABHAVATHI BY DIRECT ING THE ASSESSING OFFICER TO ALLOW SET OFF OF PEAK OF CASH CREDITS AG AINST THE UNACCOUNTED ADVANCES GIVEN TO THE FARMERS ON 31-3-2003. AGAINST ITA NO. 886 OF 2011 SRI C. AMARNATH, HYD. 4 THE AFORESAID ORDER OF THE CIT (A), THE DEPARTMENT W ENT IN APPEAL BEFORE THE INCOME-TAX APPELLATE TRIBUNAL, HYDERABAD B ENCH. THE CO- ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.404/HYD/2011 DATED 23-11- 2012 UPHELD THE ORDER OF THE CIT (A) BY HOLDING IN THE FOLLOWING MANNER:- 14 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECO RD. FROM THE RECORDS, IT IS CLEAR THAT THE CIT (A) IN H IS ORDER DATED 14-9-2007, IN THE FIRST ROUND OF APPEAL, HAD CLEARL Y GIVEN A DIRECTION TO ADJUST AGAINST THE ADDITION OF RS.30,4 5,000/-, PEAK CASH CREDIT WHICH WAS ALSO AVAILABLE OUTSIDE THE BO OKS OF ACCOUNT AND ASSESSED TO TAX ONCE IT WAS RECORDED IN THE BOOKS OF ACCOUNT. THE DIRECTIONS OF THE CIT (A) ARE CLEA R. HE HAS DIRECTED THAT THE PEAK CREDIT TAXED IN THE EARLIER YEARS SHOULD BE REDUCED FROM THE ADDITION OF UNEXPLAINED ADVANCES O F RS.30,45,000/-. THERE IS NO AMBIGUITY IN IT. WHIL E GIVING EFFECT TO THE ORDER OF THE CIT (A), THE ASSESSING OFFICER TO SIT ON JUDGMENT OVER THE CORRECTNESS OF THE DIRECTIONS EIT HER IN ADDING THE ADVANCES OR IN DIRECTING THE DEDUCTION OF THE P EAK CREDIT ADDED IN THE EARLIER YEARS. MUCH LESS IN AN ORDER OF RECTIFICATION OF THE ORDER GIVING EFFECT TO THE ORDER OF THE CIT (A). WE AGREE WITH THE CONCLUSION OF THE CIT (A) AND DISMISS THE REVENUES APPEAL. 8. IN THIS CASE ALSO, THE FACTS ARE MATERIALLY SIMILAR T O THE FACTS INVOLVED IN CASE OF SMT. C. PRABHAVATHI IN ITA NO.40 4/HYD/2011 (SUPRA). IN FACT, THE CIT (A) HAS FOLLOWED THE ORD ER PASSED BY THE FIRST APPELLATE AUTHORITY IN CASE OF ASSESSEES WIFE SMT. C. PRA BHAVATHI. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO ACCEPTS THIS FACT UAL POSITION. IN AFORESAID VIEW OF THE MATTER, WE FOLLOW THE ORDER PASSED BY THE CO- ORDINATE BENCH IN CASE OF C. PRABHAVATHI (SUPRA) AND UPHOLD THE ORDER ITA NO. 886 OF 2011 SRI C. AMARNATH, HYD. 5 OF THE CIT (A) ON THIS ISSUE. HENCE, THE GROUNDS RAISED BY THE DEPARTMENT ARE DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 4 TH APRIL, 2013. SD/-/- SD/-/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/- 4 TH APRIL, 2013. COPY FORWARDED TO: 1. ACIT, CIR-9(1), HYDERABAD. 2. 3. 4. SRI C. AMARNATH, PROP. M/S AMARNATH FRUIT COMPANY, NEW FRUIT MARKET, GADDIANNARAM, HYDERABAD. CIT (A), VIJAYAWADA. CIT CONCERNED 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. JMR *