M/s. Chitravati Agro Farms Pvt.Ltd., Secunderabad V. ACIT,(OSD), CR-1, Hyderabad

ITA 994/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66307 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 22-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K GNANAPRAKASH
• Keywords: Unexplained cash credit; Opportunity of being heard
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.994/HYD/2012. ASSESSMENT YEAR: 2007-08. M/S. CHITRAVATI AGRO FARMS PVT. LTD. YOUSUFGUDA, HYDERABAD. APPELLANT PAN: AACCC 1396 C - V/S.- ACIT (OSD), CENTRAL RANGE, HYDERABAD. RESPONDENT DEPARTMENT BY : SHRI K. GNANA PRAKASH ASSESSEE BY : SHRI K.C. DEVDAS DATE OF HEARING 03-10-2012 DATE OF PRONOUNCEMENT 05 10-2012 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 4- 102010 OF CIT (A)-VII, HYDERABAD PASSED IN APPEAL NO. 537/TR/DCIT CC- 8/9/CIT (A)-VII/10-11 AND I IT PERTAINS TO THE ASSESSMEN T YEAR 2007-08. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LEARNED . CIT (A)-VII, HYDERABAD IN SUSTAINING THE ADDITION OF RS.2,50,00,000 IS UNSUSTAINABLE BOT H ON FACTS AND IN LAW. ITA NO.994 OF 2012 CHIRAVATI AGRO FARMS 2 2. THE LEARNED CIT (A) FAILED TO NOTE THAT THE SUM OF RS.2,50,00,000 REPRESENTED THE AMOUNTS RECEIVED FROM M/S MAYTAS HI LL COUNTRY (PVT.) LTD., WHICH WAS ASSESSED TO TAX IN THE SAME CIRCLE. 3. THE LEARNED. CIT (A) FAILED TO NOTE THAT THE APPELL ANT WAS PREVENTED BY REASONABLE AND SUFFICIENT CAUSES IN NOT SUBMITTI NG THE DETAILS AS ITS BOOKS OF ACCOUNTS WERE UNDER INVESTIGATION BY CBI AUTHORITIES. 4. ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT TH E TIME OF HEARING. 3. BRIEFLY THE FACTS ARE THE ASSESSEE IS A PRIVATE LIMITED COMPANY. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETUR N OF INCOME ON 20- 10-2007 DECLARING INCOME AT NIL. INITIALLY, THE RETU RN WAS PROCESSED UNDER SEC. 143(1) OF THE ACT. SUBSEQUENTLY, SCRUTINY ASSESSMENT PROCEEDING WAS INITIATED BY ISSUING NOTICE U/S 143(2) OF THE ACT. IN RESPONSE TO THE NOTICE THOUGH THE ASSESSEE APPEARED BEFORE THE ASSESSING OFFICER, BUT HE SOUGHT TIME FOR PRODUCING THE BOOKS OF ACCOUNTS AND OTHER RECORD S ON THE PLEA THAT THEY HAVE BEEN SEIZED BY THE CBI AND SAME ARE IN THEI R CUSTODY. THE ASSESSING OFFICER AFTER ADJOURNING THE HEARING FOR FEW OCASIONS FINALLY COMPLETED THE ASSESSMENT ON 24-12-2009 WITHOUT GRANTING ANY FURTHER TIME TO THE ASSESSEE FOR PRODUCTION OF BOOKS OF ACCOUNTS. THE A SSESSING OFFICER WHILE EXAMINING THE BALANCE-SHEET OF THE ASSESSEE FOUND A N INCREASE IN CURRENT LIABILITIES TO THE TUNE OF RS.2,50,00,006/-. IN RESPONSE TO THE ASSESSING OFFICER S QUERY REGARDING THE IDENTITY OF THE CREDITOR, THE ASSESSEE FILED A WRITTEN COMPLIANCE ALONG WITH A STATEMENT SHOW ING THE DETAILS OF CURRENT LIABILITIES WHEREIN IT WAS MENTIONED THAT THE INCREASE OF CURRENT LIABILITY TO THE EXTENT OF RS.2.50 CRORES IS ON ACCOUNT O F M/S MAYTAS HILL COUNTY PRIVATE LIMITED . THOUGH THE ASSESSEE IN HIS L ETTER MENTIONED ABOUT SUBMISSION OF A CONFIRMATION ISSUED BY THE SAID CREDITOR, T HE ASSESSING OFFICER HOWEVER OBSERVING THAT THERE IS NO CONFIRMATION WITH R EGARD TO THE AMOUNT OF RS.2.50 CRORES, THE SAME HAS TO BE TREATED AS UNEXPLAINE D CASH CREDIT U/S 68 ITA NO.994 OF 2012 CHIRAVATI AGRO FARMS 3 OF THE ACT AND ADDED IT TO THE TOTAL INCOME. THE ASSESSEE BEING AGGRIEVED OF THE ASSESSMENT ORDER PASSED FILED AN APPEAL BEFORE THE CIT (A). 4. BEFORE THE CIT (A), THE ASSESSEE CONTENDED THAT IT COU LD NOT PRODUCE THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS SINCE THEY WERE SEIZED BY THE CBI AND THE SAME WERE IN THEIR CUSTODY. IT WAS FURTH ER CONTENDED THAT THE AMOUNT OF RS.2.50 CRORES WAS RECEIVED FROM M/S. MAYTAS HI LL COUNTY PRIVATE LIMITED. IN THIS REGARD, THE ASSESSEE ALSO PRODUCED BEFOR E THE CIT (A) THE CONFIRMATION LETTER OF M/S. MAYTAS HILL COUNTY PRIVATE LIMITED., AND ALSO THE LEDGER ACCOUNT OF THE SAME COMPANY AND BANK ACCOUNT STATEM ENT COPY. THE CIT (A) HOWEVER REJECTED THE CONTENTION OF THE ASSESSEE A ND DISMISSED THE APPEAL BY OBSERVING IN THE FOLLOWING MANNER: THE SUBMISSIONS MADE BY THE AUTHORIZED REPRESENTATI VE HAVE BEEN CONSIDERED AND THE OBSERVATIONS OF THE ASSESSING OF FICER HAVE ALSO PERUSED. HAVING VERIFIED THE FACTS AND CIRCUMSTANCE S OF THE CASE IT APPEARS TO ME THAT THE ASSESSING OFFICER HAS RIGHTL Y ADDED THE UNEXPLAINED LIABILITIES IN THE ABSENCE OF SATISFACT ORY EXPLANATION. HENCE, THIS GROUND OF APPEAL IS ALSO DISMISSED. 5. THE LEARNED AR SUBMITTED BEFORE US THAT THE CIT (A ) WAS NOT AT ALL JUSTIFIED IN SUSTAINING THE ADDITION OF RS.2.50 CRORES U /S 68 OF THE ACT IGNORING THE EVIDENCES PRODUCED BEFORE HIM. THE LEARNED AR REF ERRING TO THE CONFIRMATION LETTER ISSUED BY M/S. MAYTAS HILL COUNTY PR IVATE LIMITED AND THE LEDGER ACCOUNT OF M/S. MAYTAS HILL COUNTY PRIVATE LIMIT ED AND BANK STATEMENT WHICH WERE SUBMITTED IN THE PAPER BOOK CONTENDED THAT THE AFORESAID DOCUMENTS CLEARLY ESTABLISH THE IDENTITY AND CREDITWORTHI NESS OF THAE CREDITOR AND GENUINENESS OF THE TRANSACTION. THE LEARNED AR DR AWING OUR ATTENTION TO THE WRITTEN SUBMISSIONS FILED BEFORE THE CIT (A) CONTEN DED THAT THOUGH ALL ITA NO.994 OF 2012 CHIRAVATI AGRO FARMS 4 THE EVIDENCES WITH REGARD TO THE AMOUNT OF RS.RS.2.50 CR ORES WAS SUBMITTED BEFORE THE CIT (A), THE CIT (A) HAS COMPLETELY IGNORE D THE EVIDENCES PRODUCED BEFORE HIM AND PASSED THE ORDER SUSTAINING THE ADDITION MADE BY THE ASSESSING OFFICER. THE LEARNED AR FURTHER SUBMITTED THAT THE AUTHORITIES BELOW SHOULD ALSO HAVE APPRECIATED THE FACT THAT THE ASSE SSEE WAS PREVENTED FROM PRODUCING THE BOOKS OF ACCOUNTS BEFORE THE ASSESSING O FFICER AS THE SAME WERE UNDER THE CUSTODY OF CBI. THE LEARNED AR SUB MITTED THAT UNDER SIMILAR CIRCUMSTANCES IN OTHER GROUP CASES, THE INCOME-TAX A PPELLATE TRIBUNAL HAS REMITTED THE MATTERS BACK TO THE ASSESSING OFFICER FOR REFRAMING THE ASSESSMENT AFRESH. THE LEARNED AR CONTENDED THAT SINCE AL L OTHER GROUP CASES HAVE BEEN REMITTED TO THE ASSESSING OFFICER, THIS MATT ER ALSO REQUIRES TO BE REMITTED BACK TO THE ASSESSING OFFICER. IN THIS REG ARD, THE LEARNED AR SUBMITTED THE ORDERS OF THE CO-ORDINATE BENCH PASSED IN T HE GROUP CASES IN ITA NOS. 809/HYD/2011 AND OTHERS IN CASES OF KANCHENJUNGA GREENLANDS AND OTHERS DATED 28-3-2012 AND IN ITA NO.703/HYD/2011 IN THE CASE OF M/S SWARNAMUKHI GREENFIELDS PVT. LIMITED DATED 4-11-2011 AND IN ITA NO. 743/HYD/2011 AND OTHERS IN THE CASE OF M/S UTTARASHADA BI O-TECH PVT. LTD., HYDERABAD AND OTHERS DATED 5-8-2011. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SU PPORTED THE ORDER OF THE CIT (A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS IS REVEALED FROM THE ASSESSMENT ORDER, THE AS SESSING OFFICER HAS ADDED THE AMOUNT OF RS.2.50 CRORES STATED TO HAVE BEEN RECEIVED FROM M/S. MAYTAS HILL COUNTY PRIVATE LIMITED BY OBSERVING THAT IN ABSENCE OF CONFIRMATION , THE AMOUNT OF CREDIT APPEARING IN THE BOOKS OF ACCOUNTS CANNOT BE ACCEPTED. THE CIT (A) HAS ALSO SUSTAINED THE ADDITION IN A CRYPTIC ORDER BY SIMPLY OBSERVING THAT THE ASSESSING OFFICER HAS RIGHTLY ADDED UNEXPLAINED ITA NO.994 OF 2012 CHIRAVATI AGRO FARMS 5 LIABILITIES IN THE ABSENCE OF SATISFACTORY EXPLANATION. IT IS THE CONTENTION OF THE LEARNED AR THAT CONFIRMATION LETTER FROM THE CRE DITOR ALONG WITH OTHER EVIDENCES LIKE LEDGER ACCOUNT OF THE CREDITOR AND THE BA NK ACCOUNT STATEMENTS WERE PRODUCED BEFORE THE ASSESSING OFFICER AS WEL L AS THE CIT (A). WE FIND FROM THE CONFIRMATION LETTER THAT IT D ISCLOSES THE PAN NUMBER OF THE CREDITOR ALSO. THE LEDGER ACCOUNT AND THE BANK ACCOU NT STATEMENT ALSO REFLECT SUCH RECEIPTS. THEREFORE, THE MINIMUM, THE REV ENUE AUTHORITIES COULD HAVE DONE IS TO CONDUCT AN ENQUIRY TO FIND OUT THE G ENUINENESS OF THE CLAIM. THIS WOULD NOT HAVE BEEN DIFFICULT SINCE THE ASSESSEE HAS D ISCLOSED THE IDENTITY OF THE CREDITOR BY FURNISHING THE CONFIRMATIO N WHEREIN THE PAN NUMBER OF THE CREDIT HAS ALSO BEEN MENTIONED. THE C IT ( A) AS WELL AS ASSESSING OFFICER WERE NOT JUSTIFIED IN TOTALLY IGNORING THE EVIDENCES PRODUCED BEFORE THEM AND STRAIGHTAWAY PROCEEDING TO M AKE THE ADDITION. THE ORDER PASSED BY THE CIT (A) IS ALSO A NON SPEAKING O NE AND BEREFT OF ANY REASON. IT IS ALSO A FACT THAT THE BOOKS OF ACCOUNTS WE RE SEIZED BY THE CBI AND WERE UNDER THEIR CUSTODY. THIS PREVENTED THE ASSESS EE FROM PRODUCING THE SAME BEFORE THE ASSESSING OFFICER. WE FIND FROM THE ORDERS OF THE CO- ORDINATE BENCH (SUPRA) PRODUCED BEFORE US THAT UNDER SI MILAR CIRCUMSTANCES AND IN CASE OF THE ASSESSEES OF SAME GROUP OF COMPANIES, THI S BENCH HAS RESTORED THE MATTER BACK TO THE ASSESSING OFFICER FOR REFR AMING THE ASSESSMENT AFRESH. TAKING NOTE OF THE DECISIONS OF THE IN COME-TAX APPELLATE TRIBUNAL (SUPRA) AND ALSO CONSIDERING THE FACT THAT NEIT HER THE CIT (A) NOR THE ASSESSING OFFICER HAS MADE ANY ENQUIRY BEFORE ADDING THE AMOUNT OF RS.2.50 CRORES AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT, WE DEE M IT PROPER TO RESTORE THE MATTER BACK TO THE ASSESSING OFFICER FOR REFRA MING THE ASSESSMENT AFTER CONDUCTING NECESSARY ENQUIRY. THE ASSESSING OFFICER SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BE FORE FINALIZING THE PROCEEDINGS. ITA NO.994 OF 2012 CHIRAVATI AGRO FARMS 6 8. IN VIEW OF OUR ABOVE DIRECTION, THE GROUND TAKEN BY THE ASSESSEE WITH REGARD TO LEVY OF INTEREST U/S 234B/C OF THE ACT HAS BE COME INFRUCTUOUS AND ACCORDINGLY THE SAME IS NOT ADJUDICATED UPON. 8. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 5-10-2012. SD/- SD/- (SANJAY ARORA) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED/- THE 5 TH OCTOBER, 2012 COPY FORWARDED TO: 1. M/S. SEKHAR & CO., CAS, 133/4, RPROAD, SECUNDERABAD. 2. 3. 4 ITO (OSD), CENTRAL RANGE-I, HYDERABAD. COMMISSIONER OF INCOME-TAX(APPEALS)-VII, HYDERABAD. COMMISSIONER OF INCOME-TAX , HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. JMR *