ITO, Ward-16(2), Hyderabad, Hyderabad V. Nadella Estates Ltd., Hyd, Hyderabad

MA 11/HYD/2016

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 4048 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 12-01-2016
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Unexplained cash credit
• Section: 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER M.A. NO. 11/HYD/2016 ( ARISING OUT OF ITA NO. 01 /HYD/201 2 ) ASSESSMENT YEAR : 200 3 - 0 4 INCOME TAX OFFICER, WARD - 16(2), HYDERABAD (APPLICANT) VS M/S. NADELLA ESTATES LIMITED, HYDERABAD [PAN: A ABCN5682M ] (RESPONDENT) FOR REVENUE : SHRI B. KURMI NAIDU , DR FOR ASSESSEE : SHRI K.A. SAI PRASAD , AR DATE OF HEARING : 19 - 0 2 - 201 6 DATE OF PRO NOUNCEMENT : 04 - 03 - 2016 O R D E R PER B. RAMAKOTAIAH , A .M. : AN APPLICATION U/S. 254(2) OF THE INCOME TAX ACT [ACT] WAS PREFERRED BY THE REVENUE AGAINST THE ORDER OF ITAT IN ITA NO. 01/HYD/2012 DT. 29 - 07 - 2015. THE COMMON ORDER OF ITAT IS FOR AYS . 2003 - 04 AND 2006 - 07 IN ITA NO. 01 & 02/HYD/2012 IN WHICH THE ITAT HAS ELABORATELY DISCUSSED THE CREDITWORTHINESS OF VARIOUS SHARE APPLICATION MONEY CREDITORS IN AY. 2006 - 07 AND DECIDED NOT ONLY FOR THAT YEAR, BUT ALSO FOR AY. 2003 - 04 AS UNDER: 2 M.A. NO. 1 1/HYD/2016 M/S. NADELLA ESTATES LTD., 20. T HE ONLY ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS WITH REGARD TO THE ADDITION OF RS. 55,80,000 REPRESENTING SHARE APPLICATION MONEY. 21. T HE FACTS RELATING TO THIS ADDITION ARE MATERIALLY SAME TO THE SIMILAR ISSUES RAISED IN GROUND NO. 1 OF ITA NO. 2/HYD /2012 (SUPRA), THEREFORE, FOLLOWING OUR DECISION THEREIN, WE DELETE THE ADDITION MADE BY AO. 22. IN THE RESULT, THIS APPEAL IS ALLOWED. 2. REVENUE HAS PREFER RED THE PRESENT APPLICATION STATING AS UNDER: MISCELLANEOUS PETITION U/S 254(2) OF THE INCOME TAX ACT, 1961 IN THIS CASE, DURING THE COURSE OF SURVEY CONDUCTED ON 11 - 09 - 2008 IT WAS NOTICED THAT SHARE APPL I CAT I ON MONEY WAS INTRODUCED IN THE FY 2002 - 03 AND AS THE ASSESSEE HAS NOT FILED RETURN OF INC OME FOR THE AY 2003 - 04, NOTICE U/S 148 WAS ISSUED. IN RESPONSE, THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY 2003 - 04 ON 13 - 10 - 2008 ADMITTING 'NIL' INCOME. THE ASSESSING OFFICER MADE AN ADDITION OF RS. 55.80 LAKHS TREATING THE SHARE APPLICATION MONEY AS UNEXPLAINED CASH CREDITS U/S 68 OF THE IT ACT. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OFFERED BY THE ASSESSEE REGARDING GENUINENESS OF THE TRANSACTION AND CREDIT WORTHINESS OF INDIVIDUAL INVESTORS AS BROADLY DETAILED BELOW. S.N O. PARA NO. DETAILS OF INVESTORS AMOUNTS (RS) 1 PARA NO. 5.2 (10) 10 PERSONS CLAIMING AS AGRICULTURIST 21,00,000 2 PARA NO. 5.3 (11) EMPLOYEES OF THE ASSESSEE COMPANY 17,00,000 3 PARA NO. 6(2) AS DISCUSSED 2 PERSONS FILED CONFIRMATION LETTERS WITH SOURC ES OF INVESTMENTS. AO FOUND THAT THERE IS NO EXCESS BETWEEN THE SOURCES OF RETIREMENT FUNDS BEING INVESTED IN SHARE APPLICATION MONEY. 6,00,000 3 M.A. NO. 1 1/HYD/2016 M/S. NADELLA ESTATES LTD., 4 PARA 7(5) CONFIRMATIONS SUBMITTED BY 5 INVESTORS WERE FOUND BY AO THAT THEY DO NOT HAVE MUCH MEANS TO INVEST AS ALL OF THEM ARE RUNNING CANTEEN, KIRANA SHOP AND NOT FILING ANY RETURNS OF INCOME. 8,50,000 5 PARA NO. 8(3) IN 3 CASES, NO CONFIRMATION LETTER FURNISHED 3,30,000 TOTAL 55,80,000 THE HON'BLE ITAT DELETED THE ADDITION VIDE COMMON ORDER PASSED FOR A.Y. 2006 - 07 & 2003 - 04 STATING THAT FACTS IN THE CASE OF IMPUGNED YEAR WAS SIMILAR TO THE A.Y. 2006 - 07. IT IS SEEN THAT IN A.Y. 2006 - 07, THE AO HAD TREATED TOTAL SHARE APPLICATION MONEY OF RS. 25 LAKHS AS UNEXPLAINED CASH CREDITS WHICH WAS STATED TO HAVE RECEIVED FROM AGRICULTURISTS. THESE AGRICULTURISTS HAD FILED CONFIRMATION LETTERS STATING SOURCE OUT OF SALE OF AGRICULTURE PRODUCE BEING TOMATOES THROUGH COMMISSION AGENTS WHO DENIED SUCH SALE. ACCORDINGLY, AO TREATED THE ENTIRE AMOUNT AS UNEXPLAINED CASH CREDITS. IN APPEAL HON'BLE ITAT FOUND THAT THE AGRICULTURISTS ALSO HAD PADDY CULTIVATION AND THE AO HAD ONLY ENQUIRED ABOUT TOMATO SALE AND HAD NOT BROUGHT OUT ANY MATERIAL IN REGARD TO DISPROVE THE SHARE APPLICANTS' CLAIM THAT THEY HAD AGRICULTURAL LAND HOLDINGS OR WERE ENGAGED IN AGRICULTURAL ACTIVITY. ACCORDINGLY, IT DELETED THE ADDITION. HOWEVER, IN THE CURRENT YEAR THE FACTS ARE NOT ENTIRELY SIMILAR. THE ADDITION MADE WAS RS. 55.8 LAKHS OUT OF WHICH RS.21 LAKHS WERE STATED TO HAVE COME FROM 11 AGRICULTURISTS AND THE REMAINING RS. 24.8 LAKHS FROM NON - AGRICULTURISTS MOSTLY BEING PRESENT OR EX - EMPLOYEES OF THE ASSESSEE COMPANY. FURTHER, IN THREE CASES NO CONFIRMATION LETTERS WERE FILED UNLIKE ALL CASES IN EARLIER YEAR. THE ASSESSEE HAS NOT FULLY DECLARED THE CORRECT AND TRUE FACTS BEFORE THE HON'BLE ITAT LEADING TO THIS MISTAKE OF DELETING THE EXTRA ADDITION OF R S .55.8 LAKHS IN THE CURRENT YEAR HOLDING THAT THE FACTS WERE SIMILAR AS IN AY 2006 - 07. SINCE IT IS A MISTAKE APPARENT FROM RECORD, THIS MISCELLANEOUS APPLICATION IS FILED BEFORE HON'BLE ITAT POINTING OUT FACTUAL MISTAKE SO THAT TH E ENTIRE ISSUE OF DELETION OF RS.55.8 LAKHS MAY BE ADJUDICATED ON THE GROUNDS THAT FACTS IN TWO YEARS ARE NOT SAME OR SIMILAR. 4 M.A. NO. 1 1/HYD/2016 M/S. NADELLA ESTATES LTD., IN VIEW OF THE ABOVE, IT IS URGED THAT HON'BLE ITAT MAY ALLOW MISCELLANEOUS PETITION FOR THE ASSESSMENT YEAR 2003 - 04 AND DECIDE THE ISSUE . 3. AFTER CONSIDERING THE DETAILED ARGUMENTS OF LD. DR AND SUBMISSIONS OF LD. COUNSEL , WE DO NOT SEE ANY MERIT IN THIS APPLICATION. IN BOTH THE YEARS, THE ISSUE IS ENQUIRY OF CREDITORS WHO INVESTED IN SHARE APPLICATION MONEY. IN BOTH THE Y EARS, ASSESSEE HAS PRODUCED THE CREDITORS FOR EXAMINATION SUBSTANTIALLY. IT SO HAPPENED THAT IN AY. 2006 - 07, ALL OF THEM ARE AGRICULTURISTS, BUT IN THIS YEAR, AS SUBMITTED IN THE APPLICATION, MAJORITY OF THEM ARE AGRICULTURISTS OR EMPLOYEES. ASSESSEE NOT ONLY DURING THE ASSESSMENT PROCEEDINGS BUT ALSO DURING THE REMAND PROCEEDINGS HAS SUBSTANTIALLY COMPLIED WITH PRODUCING THE PERSONS BEFORE AO. IN FACT, THE WRITTEN SUBMISSION BEFORE LD. CIT(A) PLACE D IN PAPER BOOK AT PAGE 178 - 183, DO CONFIRM THAT DETAILS OF ALL SHARE HOLDERS WERE FILED WITH REASONS. IN THE REMAND PROCEEDINGS, ASSESSEE VIDE LETTER DT. 02 - 08 - 2011 HAS OBJECTED TO THE OBSERVATION OF AO THAT ASSESSEE FILED A LETTER EXPRESSING INABILITY TO PRODUCE THE INVESTORS AND CONTINUED NON - COOPERATION. IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT ONLY ONE OPPORTUNITY WAS GIVEN ON 20 - 06 - 2011 WHICH WAS VERY SHORT NOTICE HAVING REGARD TO THE NUMBER OF PEOPLE TO BE PRODUCED FOR EXAMINATION. ASSESSEE SOUGHT FURTHER TIME, BUT, LD. CIT(A) DECIDED THE ISSUE AGAI NST. WE FIND THAT THE ASSESSEE HAS SUBSTA N T IALLY COMPLIED WITH REQUIREMENT OF PRODUCING THE PERSONS AND AO HAS SIMPLY DISBELIEVED THE CONTENTS , WITHOUT ANY ENQUIRY. WITH REFERENCE TO TH RE E CREDITORS WHO HAVE NOT CONFIRMED, O NE PERSON SHRI VEN KATESWARA RA O (RS. 80,000/ - ) HAD DIED AND ASSESSEE SUBMITTED THAT HIS SON V.K. CHOUDARY WILL DEPOSE ON HIS BEHALF. OTHER TWO CREDITORS INVOLVING RS. 2.50 LAKH, COULD NOT BE 5 M.A. NO. 1 1/HYD/2016 M/S. NADELLA ESTATES LTD., TRA CED AS THEY MOVED OUT OF MADANAPALLE AND ASSESSEE WANTED TIME TO FURNISH CONFIRMATIONS. . 4 . CONSIDERING THE FACTS ON RECORD AND ORDER OF CIT(A), THE BENCH SEEMS TO HAVE FELT THAT THE FAC TS RELATING TO THE ADDITION ARE MATERIALLY SAME, THE FINDING OF WHICH IS CORRECT AS CAN BE SEEN FROM THE RECORD. IN VIEW OF THIS, WE ARE OF THE OPINION THAT TH ERE IS NO MERIT IN THE APPLICATION. T HE SAME IS REJECTED. 5. IN THE RESULT, MISCELLANEOUS APPLICATION IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH MARCH , 201 6 SD/ - SD/ - (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 04 TH MARCH, 2016 TNMM COPY TO : 1. INCOME TAX OFFICER, WARD - 16(2), HYDERABAD. 2 . M/S. NADELLA ESTATES LIMITED, 101, UDAYA TULA SI APARTMENTS, ANANDANAGAR COLONY, KHAIRATABAD, HYDERABAD. 3 . CIT(A) - V , HYDERABAD. 4 . CIT - I V , HYDERABAD. 5 . D.R. ITAT, HYDERABAD. 6. GUARD FILE