THE DICT, Hyderabad v. M/s Rasuan Exports Pvt Ltd.,, Hyderabad

ITA 1185/HYD/2009 | 2005-2006
Pronouncement Date: 30-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 118522514 RSA 2009
Assessee PAN AABCR0773P
Bench Hyderabad
Appeal Number ITA 1185/HYD/2009
Duration Of Justice 4 month(s) 19 day(s)
Appellant THE DICT, Hyderabad
Respondent M/s Rasuan Exports Pvt Ltd.,, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 30-04-2010
Date Of Final Hearing 28-04-2010
Next Hearing Date 28-04-2010
Assessment Year 2005-2006
Appeal Filed On 11-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI N.R.S. GANESAN JUDICIAL MEMBER AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.1185/H/2009 A.Y. 2005-06 DY. CIT CIRCLE 3 (1) HYDERABAD VS M/S RASUN EXPORTS (P) LTD. HYDERABAD (AABCR 0773 P) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI H. PHANI RAJU DR RESPONDENT BY: NONE O R D E R PER CHANDRA POOJARI ACCOUNTANT MEMBER THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGA INST THE ORDER PASSED BY THE CIT(A) -TIRUPATHI DATED 11/9/200 9 AND PERTAINS TO THE ASSESSMENT YEAR 2005-06. 2. IN SPITE OF GIVING A NOTICE OF HEARING TO THE A SSESSEE THROUGH THE DEPARTMENTAL REPRESENTATIVE FIXING THE CASE FOR HE ARING ON 28.4.2010 NONE APPEARED ON BEHALF OF THE ASSESSEE. WE ARE OF THE OPINION THAT THE ASSESSEE IS NOT INTERESTED TO PROSECUTE I TS CASE AND HENCE WE DECIDED TO ADJUDICATE THE ISSUE AFTER HEARING T HE DEPARTMENTAL REPRESENTATIVE. 3. THE FIRST GROUND IN THE REVENUE APPEAL IS THAT : THE CIT(A) ERRED IN RELYING ON MERE IDENTITY OF THE INVESTOR AND FAILED TO ESTABLISH THAT THE FUNDS WERE INDEED RECEIVED FR OM THAT INVESTOR WITH THE SUPPORT OF BANK STATEMENTS. 2 2 4. BRIEF FACTS OF THE CASE ARE THAT A SUM OF RS.10 LA KHS WAS INTRODUCED AS SHARE CAPITAL IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IN THE NAME OF LATE SMT. K. CHANDRAKANTAMMA. SINCE SHE WAS EXPIRED BY THE TIME THE ASSESSMENTS WERE TAKEN UP HER SON SHRI K. R AVINDRA REDDY HAS FILED A CONFIRMATION LETTER SIGNED ON HER BE HALF. IT WAS EXPLAINED TO THE ASSESSING OFFICER THAT SHE OWNED LARGE A MOUNT OF AGRICULTURAL LAND AND THE GIFTS FROM HER SONS WHO ARE SE TTLED IN ABROAD ON THE EVENTS OF THEIR VISIT TO INDIA WHICH WAS ADVA NCED TO THE COMPANY. BUT NO EVIDENCE SHOWING HER OWNERSHIP OF LAND AND RECEI PT OF GIFTS FROM HER SONS ABROAD IS FURNISHED WAS GIVEN SOURCES. IN THE AB SENCE OF SUCH MATERIAL EVIDENCE AN AMOUNT OF RS. 10 LAKHS WAS TREAT ED AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. ON APPEAL THE CIT (A) OBSERVED THAT SINCE THE PERSON WHO HAS MADE INVESTMENT WAS EXPIR ED AND NOTHING ELSE WOULD BE REQUIRED SINCE THE IDENTITY OF T HE CREDITOR WAS PROVED THE CIT(A) DELETED THE ADDITION. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE DEPARTMENTAL REPRESENTATIVE WHO WAS RELIED ON THE ORDER OF THIS TRIBUNAL IN THE CASE OF D HINGRA GLOBAL CREDENCE (P) LTD. (1 ITR TRIBUNAL 529 ). ADMITTEDLY THE ASSESSEE IS A PRIVATE LIMITED COMPANY WHICH CANNOT MAKE AN INVITATIO N FOR ISSUE OF SHARES TO THE PUBLIC AND IT WAS PROHIBITED FOR MAKING I NVITATION TO THE PUBLIC TO SUBSCRIBE FOR ANY SHARES IN THE COMPANY. THIS PR OVISION IS CONTAINED IN SEC.3 OF THE COMPANIES ACT 1956 WHEREBY SU B CLAUSE (III) SUB CLAUSE (1) OF SEC.3 DEFINES PRIVATE COMPANY. TH E PRIMARY DOCUMENT TO HOLD THAT THE AMOUNT WAS RECEIVED BY WAY OF SHARE APPLICATION ITSELF IS MISSING I.E. ALLOTMENT OF SHARES NOT AT ALL PRODUCED BY THE ASSESSEE TO GIVE DETAILS OF PAN AND ADDRESS OF THE ASSESSEE. AS SUCH THE OBSERVATION OF THE HONBLE SUPREME COURT WHIL E DECIDING THE SPECIAL LEAVE PETITION IN THE CASE OF M/S LOVELY EXPORTS (2009) (319 ITR 5 ST.) CANNOT BE CONSIDERED TO BE LAW DECIDED WHICH HAS A BINDING 3 3 PRECEDENCE UNDER ARTICLE 141 OF THE CONSTITUTION OF IN DIA. SUCH OBSERVATIONS ARE TRUE ON THE FACT OF THE RESPECTIVE CASE A ND CANNOT BE APPLIED ACROSS THE BOARD EVEN WHEN THE FACTS IN OTHER CASE S ARE ALL TOGETHER DIFFERENT. ONE HAS TO SEE THE SURROUNDING CI RCUMSTANCES WHILE DECIDING THE ISSUE LIKE THIS AS OBSERVED BY THE SUPREME COURT IN THE CASE OF SMT. SUMATI DAYAL VS. CIT (214 ITR 801) (SC) AND CIT VS. DURGA PRASAD MORE (82 ITR 540) (SC). THE LEGAL HEIR OF THE INVESTORS NOT AT ALL BROUGHT ON RECORD THE DETAILS REGARDING THE CREDIT WORTHINESS OF THE INVESTORS. ONLY THE AFFIDAVIT FILED BY HIM CAN NOT DISCHARGE THE BURDEN CAST UPON THE ASSESSEE. WE ARE NOT IN A POSITION T O ACCEPT THE PROPOSITION THAT THE IMPUGNED INVESTMENT IS EXPLAINED WITHIN THE MEANING OF SEC.68 OF THE IT ACT. THE FULL BENCH OF D ELHI HIGH COURT IN THE CASE OF CIT VS. SOPHIA FINANCE LTD. (205 ITR 98) (D EL.) HELD THAT THE PROVISIONS OF SEC. 68 SHALL EQUALLY APPLY EVEN IN THE CASE OF AMOUNT SAID TO BE RECEIVED TOWARDS SHARE CAPITAL. IN THE PRESENT CASE THE ASSESSEE FAILED TO PROVE EVEN THE CREDIT WORTHINESS OF THE TRAN SACTIONS OF THE INVESTORS AND HENCE ADDITION IS TO BE SUSTAINED. THIS G ROUND TAKEN BY THE REVENUE IS ALLOWED. 4. THE NEXT GROUNDS ARE: 3. THE DELETION OF ADDITION MADE BY WAY OF DISALLO WANCE U/S 40(A) (IA) IN RESPECTOF TDS PAYABLE OF RS.1 71 902/ AND RS.17 641.89 PS. BASED ON SOME ACCOUNT OF P. TIRUPULA (PT)/P. TIRUPATI IS NOT BASED ON MATERIAL ON THE RECORD OF THE ASSESSING OFFICER. 4. THE ASSESSEE HAS ITSELF ADMITTED THAT THE SAID PAYMENTS PERTAIN TO HANDLING CHARGES AND DO NOT ATTRACT TDS. THE ASSES SEE HAS NOT REFERRED TO ANY OPENING BALANCES IN ITS REMAND SUBM ISSIONS. THEREFORE THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE O N THE GROUND THAT THE AMOUNTS WERE OPENING BALANCE. 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT TDS MADE ON C&F AT RS.11 950/- AND TDS ON TRANSPORT EXPENSES AT RS.2 12 569/- WERE NOT REMITTED TO THE CEN TRAL GOVERNMENT 4 4 ACCOUNT WITHIN THE DUE DATE MENTIONED. SEC.40(A) (IA) CALLS FOR DISALLOWANCE OF THE TOTAL AMOUNT PAID IN CASE THE ASSESSE E NOT MADE TDS PAYMENT ON A PARTICULAR PAYMENT WITHIN DUE DATE. HENCE THE ASSESSING OFFICER ARRIVED TOTAL AMOUNT OF EXPENDITURE AT ATTRIBUTABLE TO THIS TDS AMOUNT AT RS.1 10 05 833/-. ON APPEAL THE CIT(A) OBSERVED THAT THOUGH THE ASSESSEE SHOWED IT HAS TDS PAYABLE EITHER IT IS NOT ACTUALLY TDS PAYABLE OR IT IS OPENING BALANCE OF THE T DS. AS SUCH THERE CANNOT BE ANY DISALLOWANCE. AGAINST THIS REVENUE IS IN A PPEAL BEFORE US. 6. WE HAVE HEARD THE DEPARTMENTAL REPRESENTATIVE ON THIS ISSUE. THE CIT(A) WHILE DELETING ADDITION OBSERVED TH AT THERE IS ONE PERSON SHRI C.P. TIRUPULA (PT)/P. TIRUPATHI WHO WAS R ENDERED TRANSPORT SERVICES PRIOR TO THE PREVIOUS YEAR AND AS ON 1.4.2004. THERE IS A BROUGHT FORWARD BALANCE OF RS.6 06 463.85PS. IN THIS A CCOUNT ON 31.3.2005 A DEBIT ENTRY WAS MADE TOWARDS TDS PAYABLE ON TRANSPORT FOR AN AMOUNT OF RS.1 71 902/-. ON THE OTHER HAND THER E IS AN OPENING BALANCE AS ON 1.4.2004 AT RS.17 641.89 PS REFLECTED IN T HE TDS PAYABLE- TRANSPORT ACCOUNT. THE DEBIT ENTRY AT RS.1 7 1 902/- IS TAKEN AS CREDIT INTO TDS PAYABLE ACCOUNT MAKING A TOTAL OF RS.1 89 543.89 PS. DESPITE THE VERY FACT THAT THE ACCOUNT OF PT IS SHOWI NG RS.6.06 LAKHS AS AN OPENING BALANCE THE ASSESSING OFFICER DID NO T DELVE INTO THE REASON AND GENESIS OF DEBITING TDS PAYABLE FOR AN AMOU NT OF RS.1.72 LAKHS WHICH WORKS OUT TO 28.34% WHICH IS NOT A STATUTORIL Y SPECIFIED RATE ON ANY TDS. THIS SHOULD HAVE RAISED THE CURIOSITY O N DEBITING SUCH A QUANTUM OF TDS FOR FURTHER PROBING THAT TOO ON THE OPENING BALANCE. THE AR HAS FAILED IN BRINGING BEFORE THE ASSESSING OFFICE R AS TO WHAT IS THE TDS PAYABLE ON THE B/F BALANCE OF PT OF RS.1 17 9 02/- IT IS EXPLAINED BEFORE HIM THAT THIS IS ACTUALLY ON ACCOUNTANT S DEVIL WHICH COULD NOT BE RECTIFIED WHILE FINALIZING THE BALANCE SHE ET AND HAS GONE UNNOTICED. THE AR ALSO FILED A LETTER BEFORE THE CIT (A) TO THIS EFFECT. 5 5 OBVIOUSLY THE BLAME HAS GONE TO THE ACCOUNTANT. HOWEVER IT NEEDS TO BE STATED HERE THAT THOUGH THIS IS A MISTAKE IN THE HAN DS OF PT TOWARDS TDS PAYABLE IS NOT ACTUALLY TDS MADE NOR IT IS OF NO S IGNIFICANCE AND THE DISALLOWANCE IS ALSO NOT CALLED FOR. MOREOVER THERE C ANNOT BE TDS ON OPENING BALANCE AS SUCH THE CIT(A) DELETED THE ADDITION . 6.1. THE CIT(A) FURTHER STATED THAT OTHER ITEM IS RS.11 950/- REPRESENTING OPENING BALANCE OF TDS PAYABLE WHICH ALSO CANNOT BE SUBJECTED TO 40(A) (IA) DISALLOWANCE SINCE IT IS OPENING B ALANCE AND HENCE IT IS DELETED. SO IT IS THE CASE WITH OPENING BAL ANCE IN THE HEADS TDS PAYABLE TRANSPORT A/C AS IN ITEM (B) ABOVE. HE NCE NO DISALLOWANCE IS CALLED FOR ON THIS AMOUNT TOO. 6.2 IN OUR OPINION WHEN THESE FACTS ARE BROUGHT O N RECORD BY THE ASSESSEE HE SHOULD HAVE BEEN GIVEN OPPORTUNITY TO THE ASSESSING OFFICER TO COMMENT THE SAME BY PROCURING THE REMAND REP ORT. IN THE PRESENT CASE THE CIT(A) HAS DECIDED THE ISSUE WITHOUT GI VING AN OPPORTUNITY TO THE ASSESSING OFFICER WHICH IS NOT CORRECT. HE NCE IN THE INTEREST OF JUSTICE WE SET ASIDE THIS ISSUE TO THE FILE OF ASSESSING OFFICER TO EXAMINE AFRESH IN THE LIGHT OF THE PROVISIONS OF SECT ION 40(A) (IA). THIS GROUND TAKEN BY THE REVENUE IS PARTLY ALLOWED. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 30 : 4.2010 SD/- SD/- N.R.S. GANESAN CHANDRA POOJARI JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 30 TH APRIL 2010 6 6 COPY FORWARDED TO: 1. DY. CIT CIRCLE 3(1) 7 TH FLOOR IT TOWER HYDERABAD 2. M/S RASUN EXPORTS (P) LTD. 6-3-351/2 ND FLOOR RD.NO.1 BANJARA HILLS HYDERABAD 3. CIT(A) TIRUPATHI AND CIT(A) HYDERABAD. 4. CIT HYDERABAD 5. THE D.R. ITAT HYDERABAD. NP