Sandhya Textiles, Secunderabad, Hyderabad V. ITO, Ward-10(2), Hyderabad, Hyderabad

ITA 97/HYD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2207 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 19-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M NARMADA
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Unexplained cash credit; Additional evidence
• Section: 143(3); 68

Judgement Text

9IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 97/HYD/2017 ASSESSMENT YEAR: 2009-10 M/S. SANDHYA TEXTILES, SECUNDERABAD. PAN ABKFS9402K VS. INCOME TAX OFFICER, WARD- 10(2), HYDERABAD. (APPLICANT) (RESPONDENT) ASSESSEE BY : SHRI K.A. SAI PRASAD REVENUE BY : SMT M. NARMADA DATE OF HEARING : 21-12-2017 DATE OF PRONOUNCEMENT : 29-12-2017 ORDER PER P. MADHAVI DEVI, J.M.: THIS IS ASSESSEE APPEAL FOR THE A.Y 2009-10, AGAINST THE ORDER OF THE CIT(A)-6, HYDERABAD DATED 10-10-2016. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A PARTNERSHIP FIRM, ENGAGED IN THE BUSINESS OF WHOLESALE DEALER IN SAREES, FILED ITS RETURN OF INCOME FOR THE A.Y 2009- 10 ON 24-09-2009 ELECTRONICALLY, ADMITTING AN INCOME OF RS. 1,00,180/-. DURING THE ASSESSMENT PROCEEDINGS 143(3) OF THE IT ACT, THE A.O PERUSED THE BALANCE SHEET OF THE ASSESSEE AND FOUND THAT THERE ARE HUGE CREDITORS TOTALING TO RS. 4.82 CRORES OUTSTANDING AS ON 31-03-2009. THE 2 ITA .NO.97/HYD/2017, M/S SANDHYA TEXTILES, SECUNDERABAD, ASSESSEE WAS THEREFORE ASKED TO SUBMIT CONFIRMATIONS FROM THE CREDITORS WHERE THE CREDIT BALANCES ARE MORE THAN RS. 1 LAKH. HOWEVER, THE ASSESSEE COULD NOT PRODUCE THE CONFIRMATIONS FROM ALL THE CREDITORS. THE TOTAL OF UNCONFIRMED CREDITORS WERE TO THE TUNE OF RS. 1.59 CRORES. AS REGARDS THESE CREDITORS, THE A.R OF THE ASSESSEE WAS ASKED TO FILL THE LEDGER ACCOUNTS IN SUPPORT OF PAYMENTS IN SUBSEQUENT YEARS. THE ASSESSEE SUBMITTED THE LEDGER ACCOUNTS WITH REGARD TO THESE CREDITORS. 3. ON VERIFICATION OF THE LEDGER ACCOUNT, THE A.O OBSERVED THAT WITH REGARD TO THE SOME OF THE CREDITORS, THERE NO TRANSFERS DURING THE YEAR AND THE OPENING CREDIT BALANCE AS ON 01-04-2008 IS EQUAL TO CLOSING CREDIT BALANCE AS ON 31-03-2009. FURTHER, FROM THE LEDGER ACCOUNTS OF THE OTHER CREDITORS, THE A.O OBSERVED THAT IN SUBSEQUENT YEARS, IN SOME CASES, PAYMENTS ARE MADE IN CASH TO THE TUNE OF RS. 6,85,815/-. THE A.O OBSERVED THAT THE ASSESSEE COULD NOT PRODUCE CONFIRMATIONS WITH REGARD TO THE ASSESSEES CREDITORS IN WHOSE CASES THE PAYMENTS WERE SHOWN AS PAID IN CASH IN SUBSEQUENT YEARS. THEREFORE HE TREATED BOTH THE CONTENTIONS OF THESE PERSONS AS 3 ITA .NO.97/HYD/2017, M/S SANDHYA TEXTILES, SECUNDERABAD, UNEXPLAINED CREDITORS AND ADDED THE AMOUNT TO THE RETURNED INCOME OF THE ASSESSEE. 4. THUS, THE TOTAL ADDITION AS UNEXPLAINED CREDITORS WAS RS. 13,54,330/-. THE A.O ALSO MADE A FURTHER ADDITION OF RS. 1,69,100/- TOWARDS CREDITORS WHERE THE PAYMENTS IN CASH EXCEEDED RS. 20,000/- U/S 40A(III) OF THE IT ACT. AGAINST THESE ADDITIONS, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ADDITION OF RS. 13,54,330/-, BUT WITH REGARD TO THE ADDITION U/S 40A(III) OF THE IT ACT, HE SET ASIDE THE ISSUE TO THE FILE OF THE A.O. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ONLY AGAINST THE CONFIRMATION OF ADDITION OF RS. 13,54,330/-. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS REGARDS THE FIRST CATEGORY OF CREDITORS WHERE THE OPENING BALANCE AND THE CLOSING BALANCE ARE THE SAME, DENOTING THAT THERE WERE NO TRANSACTIONS DURING THE YEAR, AS RIGHTLY OBSERVED BY THE A.O IN HIS REMAND REPORT, NO ADDITION CAN BE MADE. IN SUPPORT OF HIS CONTENTIONS, HE PLACED RELIANCE ON THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S SURAJ LEATHERS IN ITA NO. 305 OF 2016 DATED 22-04-2016. WITH REGARD TO THE SECOND CATEGORY OF CREDITORS, HE SUBMITTED A PAPER BOOK DEMONSTRATING THAT 4 ITA .NO.97/HYD/2017, M/S SANDHYA TEXTILES, SECUNDERABAD, TOO EACH OF THE CREDITORS, THE ASSESSEE HAS PAID THE DUE AMOUNT DURING THE YEAR VIDE CHEQUES AND THE SAME IS REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE AS WELL AS THE LEDGER ACCOUNTS OF THE RELEVANT PARTIES. HE SUBMITTED THAT THE FIGURES TAKEN BY THE A.O ARE NOT TALLYING IN THE LEDGER ACCOUNT OF THE ASSESSEE WHICH ARE SUPPORTED BY BANK STATEMENT OF THE ASSESSEE. HE THEREFORE PRAYED THAT THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE A.O FOR VERIFICATION OF THESE DETAILS. 6. THE LD. DR, HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE DETAILS NOW BEING FILED BY THE ASSESSEE WERE NOT FILED BEFORE THE A.O AND THEREFORE THE ADDITIONAL EVIDENCE BEING FILED NOW, AT THIS STAGE, SHOULD NOT BE ADMITTED. 7. THE LD. COUNSEL FOR THE ASSESSEE, IN REBUTTAL, SUBMITTED THAT THESE DOCUMENTS WERE PART OF THE LEDGER ACCOUNTS AND WERE PRODUCED BEFORE THE A.O BUT THE SAME WAS NOT PROPERLY APPRECIATED BY THE A.O. 8. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT AS REGARDS THE FIRST CATEGORY OF CREDITORS, WHERE THERE ARE NO TRANSACTIONS DURING THE RELEVANT ASSESSMENT YEAR AS IS EVIDENT FROM THE 5 ITA .NO.97/HYD/2017, M/S SANDHYA TEXTILES, SECUNDERABAD, BOOKS OF ACCOUNTS AND THE OPENING AND THE CLOSING BALANCE OF THE RESPECTIVE CREDITORS, THERE CAN BE NO ADDITION TOWARDS UNEXPLAINED CREDITORS. AS REGARDS SECOND CATEGORY OF CREDITORS, WE FIND THAT THE LEDGER ACCOUNTS FILED BY THE ASSESSEE NEED RE-VERIFICATION. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO REMAND BOTH ISSUES TO THE FILE OF THE A.O WITH A DIRECTION THAT IF THE OPENING AND CLOSING BALANCE OF THE CREDITORS IS THE SAME DURING THE RELEVANT ASSESSMENT YEAR, THEN NO ADDITION U/S 68 OF THE IT ACT SHALL BE MADE AND THE A.O SHALL VERIFY THE CLOSING BALANCES OF THE OTHER CREDITORS WHERE THE CONFIRMATIONS HAVE NOT BEEN FILED AND IF THE PAYMENTS ARE SUPPORTED BY THE PAYMENTS THROUGH BANKS, THEN THE NO ADDITIONS CAN BE MADE TO SUCH EXTENT. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 29 TH DECEMBER, 2017. SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 29 TH DECEMBER, 2017. 6 ITA .NO.97/HYD/2017, M/S SANDHYA TEXTILES, SECUNDERABAD, KRK 1) M/S SANDHYA TEXTILES, C/O CH. PARTHASARATHY & CO., 1- 1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO. 1, ASHOKNAGAR, HYDERABAD 500 020. 2) ITO, WARD-10(2), HYDERABAD. 3) CIT(A) -6, HYDERABAD 4) THE PCIT 6, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE.