Dy. Commissioner of Income Tax, Circle-2(1), Hyderabad v. Kalanikethan Fashions Private Limited, , Hyderabad

ITA 1073/Hyd/2017 | 2013-2014
Pronouncement Date: 16-03-2021 | Result: Dismissed

Appeal Details

RSA Number 107322514 RSA 2017
Assessee PAN AACCK7146G
Bench Hyderabad
Appeal Number ITA 1073/Hyd/2017
Duration Of Justice 3 year(s) 8 month(s) 23 day(s)
Appellant Dy. Commissioner of Income Tax, Circle-2(1), Hyderabad
Respondent Kalanikethan Fashions Private Limited, , Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 16-03-2021
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB-A
Tribunal Order Date 16-03-2021
Date Of Final Hearing 09-02-2021
Next Hearing Date 09-02-2021
Last Hearing Date 01-10-2019
First Hearing Date 04-10-2018
Assessment Year 2013-2014
Appeal Filed On 23-06-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI SATBEER SINGH GODARA JUDICIAL MEMBER S.NO. ITA NO. AY APPELLANT RESPONDENT 1 779/H/2017 2013 - 14 KALANIKETHAN FASHIONS PVT. LTD. HYDERABAD. PAN AACCK 7146G DY. COMMISSIONER OF INCOME - TAX C IRCLE 2(1) HYDERABAD. 2 1073/H/2017 2013 - 14 DY. COMMISSIONER OF INCOME - TAX CIRCLE 2(1) HYDERABAD. KALANIKETHAN FASHIONS PVT. LTD. HYDERABAD. PAN AACCK 7146G 3 144/H/2019 2013 - 14 V. RAJENDRA KUMAR HYDERABAD. PAN ABIPV 2940 B DY. COMMISSIONER OF INCOME - TAX CIRCLE 2(1) HYDERABAD. ASSESSEE BY : SHRI K.C. DEVDAS REVENUE BY : SHRI SUNIL KUMAR PANDEY DATE OF HEARING: 09 /0 2 /2021 DATE OF PRONOUNCEMENT: 16 / 0 3 /2021 O R D E R PER S.S. GODARA J.M. : THIS BATCH OF THREE CASES PERTAINS TO M/S KALANIKETHAN FASHIONS PVT. LTD AND V. RAJENDRA KUMAR. FORMER ASSESSEE HEREIN AS WELL AS THE R EVENUE HAVE FAILED THEIR CROSS APPEALS ITA NO. 779 AND 1073/H/2017 AGAINST THE C I T(A) - 2 HYDERABAD S ORDER DATED 31 / 0 3 /201 7 ITA NO. 779 /HYD/1 7 KALANIKETHAN FASHIONS PVT. LTD. AND OTHER HYD. : - 2 - : PASSED IN CASE NO. 0411/2015 - 16 . LATTER ASSESSEES APPEAL ITA NO. 144/HYD/2019 IS DIRECTED AGAINST THE CIT(A) 8 HYDERABADS ORDER DATED 1 ST NOVEMBER 2017 PASSED IN CASE NO. 0224/CIT(A) - 8/HYD/2016 - 17 . RELEVANT PROCEEDINGS IN ALL THESE CASES ARE U/S 143(3) OF THE INCOME TAX ACT 1961 ; IN SHORT THE ACT . HEARD BOTH THE ASSESSEE AS WELL AS DEPARTMENT . C ASE FILES PERUSED. 2. WE FIRST OF ALL COME TO FORMER ASSESSEES APPEAL 779/HYD/2017 RAISING THREE SUBSTANTIVE GROUNDS CHALLENGING CORRECTNESS OF B OTH LOWER AUTHORITIES ACTION INTER - ALIA DISALLOWING TRAVELLING AND CONVEYANCE EXPENSES OF RS. 76 91 349/ - AND RS. 16 57 047/ - TO THE EXTENT OF 15%; COMING TO RS. 11 53 702/ - AND RS. 2 48 557/ - FOLLOWED BY ADVERTISEMENT EXPENSES OF RS. 1 31 127/ - ; RESPECTIVELY. IT IS NOT IN DISPUTE THAT BOTH THE LOWER AUTHORITIES HAVE ACCEPTED THE FORMER TWO HEADS OF EXPENSES TO THE EXTENT OF 85% IN PRINCIPLE SINCE TH EY HAVE PROCEEDED TO DISALLOW 15% OF THE REMAINING COMPONENT ONLY. WE NOTICE THAT NEITHER ASSESSEE HAS BEEN ABLE TO ESTABLISH THESE TWIN HEADS OF EXPENSES BY ITA NO. 779 /HYD/1 7 KALANIKETHAN FASHIONS PVT. LTD. AND OTHER HYD. : - 3 - : FILING NOT ONLY THE CORRESPONDING DETAILS BUT ALSO THE REASON TO HAVE BEEN INCURRED WHOLLY AND EXC LUSIVELY FOR THE PURPOSE OF BUSINESS U/S 37 OF THE ACT NOR THE LEARNED DR COULD REBUT THE FACT THESE EXPENSES STAND ACCEPTED TO THE EXTENT OF 85%. WE THEREFORE DEEM IT FIT AND PROPER IN THIS TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE THAT A LUMPSUM D ISALLOWANCE OF 8% NOT ONLY IN THE FORMER TWO BUT ALSO UNDER THE LAST HEAD OF ADVERTISEMENT EXPENSES WOULD BE JUST AND PROPER TO MEET THE ENDS OF JUSTICE. THE SAME SHALL NOT BE TREATED AS PRECEDENT IN ANY OTHER ASSESSMENT YEAR . IT IS MADE CLEAR THAT ALTHOUGH THE ASSESSEE HAS PLACED ON RECORD ITS SUPPORTIVE EVIDENCE TO SUBMIT THAT THE CORRESPONDING PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNEL AS WELL AS TDS DEDUCTED THEREUPON UNDER THE LAST HEAD THE VERY FACTUAL POSITION CO NTINUED ALONG WITH THE FORMER TWO HEADS BEFORE US. WE THUS DIRECT THE ASSESSING OFFICER TO FRAME NECESSARY COMPUTATION DISALLOWING 8% COMPONENT ONLY IN IN ASSESSEES INSTANT THREE SUBSTANTIVE GROUNDS. NECESSARY COMPUTATION TO FOLLOW. ITA NO. 779 /HYD/1 7 KALANIKETHAN FASHIONS PVT. LTD. AND OTHER HYD. : - 4 - : THE A SSESSEES APPEA L 779/HYD/2017 IS PARTLY ALLOWED IN ABOVE TERMS. 4. THE R EVENUE CROSS APPEAL 1073/H/2017 SEEK S TO REVIVE SECTION 68 UNEXPLAINED CASH CREDITS ADDITION OF RS. 1 79 25 000/ - . ON PERUSAL OF THE ASSESSMENT ORDER WE NOTICE THAT ASSESSEE HAD CLAIMED A SUM OF RS . 1 59 25 000/ - TO HAVE BEEN BROUGHT IN BY ITS DIRECTOR SHRI V. RAJENDRA KUMAR /LATTER ASSESSEE HEREIN; WHO IN TURN STATED THAT ITS SOURCE WAS 16 PARTIES INVOLVING VARYING SUMS OF MONEY. THE REMAINING 20 LAKHS AMOUNT WAS STATED TO HAVE COME FROM FOUR OTHE R PARTIES. THE A SSESSEE FAILED TO FILE CONFIRMATION(S) IN ALL THESE CASES . T HE ASSESSING OFFICER S ASSESSMENT ORDER DATED 28/03/2016 MADE SUBSTANTIVE ADDITION IN ASSESSEES HAND S AND TO THE EXTENT OF RS. 159 00 000/ - ON PROTECTIVE BASIS IN SHRI V. RAJENDRA KUMARS CASE WHICH FORMS SUBJECT MATTER OF ADJUDICATION IN THE LATTERS APPEAL 144/HYD/2019 BEFORE US. 5. THE ABOVE FACTS WERE DISCUSSED BY THE ASSESSING OFFICER IN HIS REMAND RE PORT IN PARA 6.2 OF CIT(A)S ORDER. ON THE BASIS OF THESE EVIDENCES THE CIT(A) HAS HELD THE ITA NO. 779 /HYD/1 7 KALANIKETHAN FASHIONS PVT. LTD. AND OTHER HYD. : - 5 - : ASSESSEE COU LD EXPLAIN IDENTITY GENUINENESS AND CREDITWORTHINESS OF ITS INVESTOR PARTIES. WE ALSO DEEM IT FIT AND PROPER AT THIS STAGE TO DEAL WITH LATTERS ASSES SEE APPEAL ITA 144/HYD/2019 WHEREIN ASSESSING OFFICER HA D MADE PROTECTIVE ADDITION AND THE CIT(A) HAS DISMISSED HIS APPEAL ON THE GROUND THAT HE HAD MADE SUBSTANTIVE ADDITION IN FORMER ASSESSEES APPEAL (S). 6. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION T O RIVAL PLEADINGS REGARDING THE UNEXPLAINED CASH CREDIT ADDITION. FIRST OF ALL WE ADJUDICATE RS. 20 LAKHS AMOUNT COMING FROM FOUR PARTIES (SUPRA) . IT IS NOT IN DISPUTE THAT ASSESSEE HAD NOT ONLY FILED CONFIRMATIONS/DETAILS IN THE COURSE OF ASSESSMENT BU T ALSO IT HAD PROVED ITS CASE BEFORE THE CIT(A) BY WAY OF ADDITIONAL SUBMISSIONS AS WELL AS IN REMAND PROCEEDIN GS. THE ASSESSING OFFICERS REMAND REPORT HAS NOT GIVEN ANY ADVERSE COMMENT QUA THIS AMOUNT OF RS. 20 LAKHS. WE THUS HOLD THAT CIT(A) HAS RIGHTLY DELETED THE SAME IN HIS LOWER APPELLATE ORDER. ITA NO. 779 /HYD/1 7 KALANIKETHAN FASHIONS PVT. LTD. AND OTHER HYD. : - 6 - : 6.1 THIS LEA VES US WITH THE BALANCE ADDITION COMPONENT OF RS. 1 59 00 000/ - FOR MING SUBSTANTIVE ADDITION IN THE FORMER ASSESSEES AND PROTECTIVE ADDITION IN LATTER ASSESSEES CASE. WE FIND THAT LATTER ASS ESSEE IS DIRECTOR OF THE FORMER ONE. HE HAD EXPLAINED THE SOURCE THEREOF TO 16 RELATED PARTIES WHICH HAVE NOWHERE BEEN EXAMINED OR VERIFIED TILL DATE . M EANING THEREBY THAT CIT(A) HAS NOT EVEN ADJUDICATED LATTER ASSESSEES APPEAL ON THE GROUND THAT SUBSTANTIVE ADDITION IN FORMER ASSESSEES ALREADY STANDS DELETED. WE F AIL TO EXPRESS OUR AGREEMENT WITH THE CIT(A) SOLE REASON IN VIEW OF THE CLINCHING FACT THA T NEITHER INVESTOR NOR THE THIRD PARTIES CONCERN ED COULD EXPLAIN THE IDENTITY GENUINENESS AND CREDITWORTHINESS ON PROTECTIVE BASIS . MORE SO IN VIEW OF THE FACT THAT THE LATTER ASSESSEE/FORMERS MANAGING DIRECTOR HAS BEEN PRESSING FOR HIS APPEAL THROUGH OUT. WE THUS SEE NO REASON TO SUSTAIN THE CIT(A)S ORDER FO RMING SUBJECT MATTER OF ADJUDICATION IN ITA 144/HYD/2019 . T HAT BEING THE CASE WE DISMISS REVEN UE S APPEAL 1073/HYD/2017 IN FORMER ASSESSEES CASE AND LATTER ASSESSEE S ITA 144/ H YD/2019 IS ALLOWED FOR ITA NO. 779 /HYD/1 7 KALANIKETHAN FASHIONS PVT. LTD. AND OTHER HYD. : - 7 - : STATISTICAL PURPOSES SO AS TO ENABLE THE CIT(A) TO EXAMINE HIS CASE ON MERITS. WE WISH TO MAKE IT CLEAR THAT IF THE IMPUGNED ADDITION IN FORMER ASSESSEES CASE SHALL NOT SURVIVE IN ANY WAY IN VIEW OF THE FINAL OUTCOME IN LATTER ASSESSEES/ITS DIRECTORS APPEAL ITA 144/HYD/2019. THIS IS FOR THE REASON THAT IF THE SAID DIRECTOR SUCCESSFULLY PROVES IDENTITY GENUINENESS AND CREDITWORTHINESS OF THE CORRESPONDING INVESTORS THE VERY EXPLANATION SHALL APPLY MUTATIS MUTANDIS IN THE FORMER ASSESSEES SHARE APPLICATION AS WELL INVITING NO ADDITI ON. AND IF THE IMPUGNED SECTION 68 ADDITION IS RESTRICTED IN LATTERS CASE THE VERY SUM WOULD NOT ATTRACT DOUBLE ADDITION IN FORMER HANDS AS WELL. WE THUS DECLINE REVENUES APPEAL ITA 1073/HYD/2017 AND ACCEPT LATTER ASSESSEES APPEAL ITA 144/HYD/2019 FO R STATISTICAL PURPOSES. THIS LATTER ASSESSEE OR HIS AUTHORIZED REPRESENTATIVE SHALL APPEAR BEFORE THE CIT(A) ON OR BEFORE 31 ST JULY 2021 IN CONSEQUENTIAL PROCEEDINGS TO BE FOLLOWED BY THREE EFFECTIVE OPPORTUNITIES ; AT HIS OWN RISK AND RESPONSIBILITY. ITA NO. 779 /HYD/1 7 KALANIKETHAN FASHIONS PVT. LTD. AND OTHER HYD. : - 8 - : 7. TO SUM UP FORMER ASSESSEES APPEAL ITA 779/HYD/2017 IS PARTLY ALLOWED REVENUES CROSS APPEAL 1073/H6YD/2017 IS DISMISSED AND LATTER ASSESSEES APPEAL ITA 144/HYD/2019 IS ALLOWED FOR STATISTICAL PURPOSES. ORDERED ACCORDINGLY. A COPY OF THIS COMMON ORDER SHALL BE PLACED IN THE RESPECTIVE CASE FILES. PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH 2021 . SD/ - SD/ - (A. MOHAN ALANKAMONY ) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDE RABAD DATED : 16 TH MARCH 20 2 1 . K V C OPY TO : 1 2 KALANIKETHAN FASHIONS P. LTD. SHRI V. RAJENDRA KUMAR C/O C. VISWANATH CHERUVU & ASSOCIATES CAS 1 - 3 - 176/4/C/15 GANDHI NAGAR HYDERABAD 500 080 3 DC IT CIRCLE 2 (1) SIGNATURE TOWERS HYDERABAD. 4 C I T(A) - 2 HYDERABAD. 5 PR. CIT - 2 HYDERABAD 6 ITAT DR HYDERABAD. 7 GUARD FILE.