Income Tax Officer, Ward-3(2), Hyderabad V. Silpa Infratech Limited , Hyderabad

ITA 984/Hyd/2019

AI Insights

The case involves the Income Tax Officer, Ward-3(2), Hyderabad as the appellant and M/s. Silpa Infratech Limited as the respondent. The dispute arose from the assessment year 2013-14, where the Assessing Officer added an amount of Rs. 2,36,67,397 as unexplained cash credit under section 68 of the Income Tax Act, 1961. The CIT(A) reversed this addition after finding that the assessee had provided sufficient evidence and confirmation letters from the creditors, which the Assessing Officer had ignored. The Revenue appealed against the CIT(A)'s decision, but the Tribunal upheld the CIT(A)'s order, emphasizing the need to adhere to the principles of natural justice.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133351 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 06-09-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 10-06-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 68; 133(6)

Judgement Text

आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “B”, HYDERABAD BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER आ.अपी.सं / ITA No. 984/Hyd/2019 (निर्धारण वर्ा / Assessment Year: 2013-14) Income Tax Officer, Ward-3(2), Hyderabad Vs. M/s. Silpa Infratech Limited, Hyderabad [PAN No. AALCS4085R] अपीलधर्थी / Appellant प्रत्‍यर्थी / Respondent निर्धाररती द्वधरध/Assessee by: Shri A. Srinivas, AR रधजस्‍व द्वधरध/Revenue by: Ms. Sheetal Sarin, DR सुिवधई की तधरीख/Date of hearing: 07/09/2023 घोर्णध की तधरीख/Pronouncement on: 20/09/2023 आदेश / ORDER PER K. NARASIMHA CHARY, JM: Aggrieved by the order dated 15/03/2019 passed by the learned Commissioner of Income Tax (Appeals)-3, Hyderabad (“Ld. CIT(A)”), in the case of Silpa Infratech Limited (“the assessee”) for the assessment year 2013-14, Revenue preferred this appeal. ITA No. 984/Hyd/2019 Page 2 of 7 2. Assessee is engaged in the business of real estate under contract for works. It filed the return of income for the assessment year 2013-14 on 30/09/2013 declaring a total income of Rs. 16,33,090/-. On a perusal of the Balance Sheet, learned Assessing Officer found that there are unsecured loans introduced during the year under consideration. Assessee furnished all the books of accounts and also the details of loan creditors and confirmation letters. As per the Balance Sheet there is an amount of Rs. 4,62,60,897/-under the head of long term borrowings towards unsecured loans and according to the learned Assessing Officer the assessee could not explain the sources for an amount of Rs. 2,36,67,397/- out of this Rs. 4,62,60,897/-. Learned Assessing Officer recorded that no particulars to verify the identity of the creator, creditworthiness and genuineness of the transaction were furnished. Learned Assessing Officer, therefore, with a view to verify the genuineness of the transactions, issued notices under section 133(6) of the Income Tax Act, 1961 (for short “the Act”) to the persons as per the list enclosed to the information furnished by the assessee. Some of such notice is issued and served and on being informed, the assessee furnished the replies from such persons. After considering such material and going through the confirmation letters, the learned Assessing Officer completed the assessment, adding this Rs. 2,36,67,397/- under section 68 of the Act, insofar as this appeal is concerned. 3. In appeal, learned CIT(A) on an appraisal of the material available before him in the assessment folder, found that during the course of assessment proceedings, assessee filed confirmation letters from all the parties, including the one relevant for the addition of Rs. 2,36,67,397/-, ITA No. 984/Hyd/2019 Page 3 of 7 learned Assessing Officer accepted some and disbelieved others. But in spite of receipt of confirmation is directly by him, learned Assessing Officer added the sum of Rs. 2,36,67,397/- under section 68 of the Act. 4. Learned CIT(A) found that the sum of Rs. 2,36,67,397/- pertains to Aditya Construction Company India Pvt. Ltd, Ekta Builders, Raghavender Reddy, Ram Reddy and Ravinder Reddy. In respect of Aditya Constructions Company, with reference to the material available before him, learned CIT(A) found that the assessee received a sum of Rs. 50 lakhs from them in the financial year 31/03/2012 and an amount of Rs. 1,66,30,167/-was received in the financial year 31/03/2013 and after adjustment for works contracts and other expenditure a sum of Rs. 46,67,397/- was remaining, is outstanding in the books of accounts, but the learned Assessing Officer added the said amount. Record before the learned CIT(A) revealed that the learned Assessing Officer directly written to the Aditya Constructions and obtained the letters wherein all the details were incorporated, but without taking cognizance of such details the learned Assessing Officer made the addition. 5. In respect of Ekta Prime Builders, assessee received a sum of Rs. 1 crore and in spite of the assessee submitting the same to the learned Assessing Officer, the learned Assessing Officer directly written to the Ekta Prime Builders and obtained the confirmation, but in spite of the same this amount is added. 6. Likewise, in respect of Raghavender Reddy, Ram Reddy and Ravinder Reddy also in spite of the assessee submitting before the learned ITA No. 984/Hyd/2019 Page 4 of 7 Assessing Officer, during the assessment proceedings, that he received the amounts from such persons, learned Assessing Officer directly written the letters to such persons and obtained the confirmation letters wherein all the details including the PAN number and where the return of income was filed etc., were mentioned. In view of the same, learned CIT(A) recorded, as a matter of fact on verification of record, that the learned Assessing Officer did not take cognizance of such confirmation letters directly obtained by him by way of issuance of notice under section 133(6) of the Act. Learned CIT(A), on the basis of the facts established by record, directed the learned Assessing Officer to delete the sum of Rs. 2,36,67,397/-. 7. Aggrieved thereby, Revenue preferred this appeal stating that while accepting the additional information filed by the assessee, the learned CIT(A) failed to treat the same as per the provisions of Rule 46A of the Income Tax Rules1962 (“the Rules”) and committed an error in deleting the addition. 8. Learned AR submitted that the learned CIT(A) did not consider any new material in his order, and as a matter of fact the learned CIT(A) recorded that during the course of assessment proceedings, the assessee filed the confirmation letters of all the parties, learned Assessing Officer accepted some and disbelieved some, but in spite of the fact that he received the confirmation letters directly from the parties, without bringing them to the notice of the assessee, made the additions. Learned AR also brought to our notice that the learned Assessing Officer did not take cognizance of the details furnished by the parties, responding directly ITA No. 984/Hyd/2019 Page 5 of 7 to the notices issued by the learned Assessing Officer under section 133(6) of the Act. 9. We have gone through the record in the light of the submissions made on either side. A perusal of the impugned order clearly makes it out that the learned CIT(A) has meticulously gone through the details available on record in respect of these amounts constituting the addition of Rs. 2,36,67,397/- and found that though the learned Assessing Officer received all these confirmations from the relevant persons, the learned Assessing Officer failed to put the said fact to the notice of the assessee and thereby violated the principles of natural justice. He discussed the case of all these persons in detail and reached a conclusion that though the assessee furnished all the details of the persons to explain the amount of Rs. 2,36,67,397/-, the learned Assessing Officer did not blindly believe the same, but directly wrote letters to such persons under section 133(6) of the Act, obtained the confirmation letters containing all the details, but without calling the attention of the assessee to such details, without taking cognizance of such letters, made the addition that too in violation of the principles of natural justice. 10. Revenue did not bring any fact contrary to the findings of the learned CIT(A) to our notice, nor any material is produced to discredit such findings. Impugned order does not indicate that the learned CIT(A) relied upon any material that was newly furnished by the assessee during the first appellate proceedings. All the letters issued under section 133(6) of the Act and the replies with the details now form part of record and on a careful perusal, we are of the considered opinion that the factual findings ITA No. 984/Hyd/2019 Page 6 of 7 of the learned CIT(A) do not suffer any illegality or irregularity and do not warrant any interference. We, therefore, do not find any merit in the grounds of appeal and accordingly dismiss the same. 11. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on this the 20 th day of September, 2023. Sd/- Sd/- (RAMA KANTA PANDA) (K. NARASIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER Hyderabad, Dated: 20/09/2023 TNMM ITA No. 984/Hyd/2019 Page 7 of 7 Copy forwarded to: 1. Income Tax Officer, Ward-3(2), Hyderabad. 2. M/s. Silpa Infratech Limited, Plot No. 1175, Road No. 56, Jubilee Hills, Hyderabad. 3. Pr.CIT-3, Hyderabad. 4. DR, ITAT, Hyderabad. 5. GUARD FILE TRUE COPY ASSISTANT REGISTRAR ITAT, HYDERABAD