Income Tax Officer, Ward-2(2), Hyderabad v. Genesis Crop Sciences (India) Private Limited , Hyderabad

ITA 240/Hyd/2019 | 2012-2013
Pronouncement Date: 03-05-2021 | Result: Dismissed

Appeal Details

RSA Number 24022514 RSA 2019
Assessee PAN AACCG7207N
Bench Hyderabad
Appeal Number ITA 240/Hyd/2019
Duration Of Justice 2 year(s) 2 month(s) 8 day(s)
Appellant Income Tax Officer, Ward-2(2), Hyderabad
Respondent Genesis Crop Sciences (India) Private Limited , Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 03-05-2021
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB-A
Tribunal Order Date 03-05-2021
Last Hearing Date 17-02-2021
First Hearing Date 17-02-2021
Assessment Year 2012-2013
Appeal Filed On 25-02-2019
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO. 240/HYD/ 2019 A.Y. 2012 - 13 INCOME TAX OFFICER WARD - 2(2) HYDERABAD. VS. GENESIS CROP SCIENCES (INDIA) PVT LIMITED HYDERABAD. PAN: AACCG 7207 N (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI K.A. SAI PRASAD REVENUE BY: SRI SUNIL KUMAR PANDEY DATE OF HEARING: 17/02/2021 DATE OF PRONOUNCEMENT: 03 /0 5 /2021 ORDER PER A. MOHAN ALANKAMONY AM.: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) - 9 HYDERABAD IN APPEAL NO. 10021/CIT(A) - 9/HYD /2017 - 18 DATED 12/11/2018 PASSED U/S. 143(3) R.W.S 250(6) OF THE ACT FOR THE A.Y. 2012 - 13. 2. THE REVENUE HAS RAISED THREE GROUNDS IN ITS APPEAL HOWEVER THE CRUX OF THE ISSUE IS THAT: - THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION MADE BY THE LD. A O FOR RS. 4 42 69 513/ - INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF PR ODUCING PARENTAL SEED AND DEVELOPING THE SAME THROUGH SEVERAL AGRICU LTURISTS AND THEREAFTER MARK ETING THE SAME THROUGH ITS SISTER COMPANY M/S. SATYA AGRI BIOTECH PRIVATE LIMITED ACROSS THE COUNTRY. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY 2012 - 13 ON 30/09/2012 ADMITTING INCOME OF RS. 6 35 085/ - . THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 28/03/2015 WHEREIN THE LD. AO MADE ADDITION OF RS. 4 42 69 513/ - INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT BECAUSE THE ASSESSEE C O ULD NOT ESTABLISH THE GENUINENESS OF ITS SUNDRY CREDITORS . ON APPEAL LD.CIT(A) DELETED THE ADDITION. 4. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE LD. AO THAT THE ASSESSEE HAD DISCLOSED THE NAMES OF SIX PERSONS AS ITS SUN DRY CREDITORS AND THE AGGREGATE OF THE SUNDRY CREDITORS STOOD AT RS. 4 42 69 513/ - . FROM THE PARTICULARS OF THE SUNDRY CREDITORS FURNISHED BY THE ASSESSEE THE LD. AO SENT LETTERS TO ALL OF THEM CALLING FOR THE DETAILS OF THE TRANSACTION TRANSACTED WITH THE ASSESSEE . WITH RESPECT TO THE LETTER SENT TO SHRI P. MADHUSUDANA RAO NUZIVEEDU (SUNDRY CREDITOR FOR RS. 91 59 655 / - ) AND SHRI K. KONDALA RAO MYLAVARAM (SUNDRY CREDITOR FOR RS. 45 55 353/ - ) THE LETTERS WERE RETURNED AS UNSERVED BY THE POSTAL AUTHORITIES. WITH RESPECT TO THE OTHER SUNDRY CREDITORS VIZ. (I) K. SWAMULU (SUNDRY CREDITOR FOR RS. 3 1 10 63 950/ - ; (II) SRI K. GANGARAJU (SUNDRY CREDITOR FOR RS. 25 19 000/ - ); (III) SRI L. NAGESH (SU NDRY CREDITOR FOR RS. 25 14 160/ - ) AND (IV) SRI K. SATYANARAYANA (SUNDRY CREDITOR FOR RS. 1 44 57 395/ - ) THE LETTERS WERE SERVED BY THE REVENUE HOWEVER THEY DID NOT RESPOND . THE ASSESSEE ALSO COULD NOT PRODUCE ANY OF THE SUNDRY CREDITOR BEFORE THE LD.AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS . S INCE THE ASSESSEE AND ITS CREDITORS DID NOT CO - OPERATE BEFORE THE LD. AO TO ESTABLISH THE GENUINENESS OF THEIR TRANSACTION THE LD.AO INVOKED THE PROVISIONS OF SECTION 68 OF THE ACT AND MADE ADDITION IN THE HANDS OF THE ASSESSEE WITH RESPECT TO THE AGGREGATE AMOUNT OF RS. 4 42 69 513/ - STANDING TO THE CREDIT OF THE SUNDRY CREDITORS. 5. ON APPEAL THE ASSESSEE HAD MADE THE FOLLOWING SUBMISSIONS BEFORE THE LD. CIT (A). 5.1 IT IS SUBMITTED THAT THE LEARNED ASSESSING OFFICER DID ACCEPT THE BOOK RESULTS PURCHASES AND SALES. THUS THERE IS NO DISPUTE ABOUT THE GENUINENESS OF THE PURCHASES. THE CREDITORS WERE PAID IN THE SUBSEQUENT YEARS THROUGH BANKING CHANNELS DETAILS OF W HICH WERE ALSO FURNISHED BEFORE THE LEARNED ASSESSING OFFICER. 5.2 IT IS A WELL - SETTLED PROPOSITION THAT PROVISIONS OF SECTION 68 WOULD NOT BE ATTRACTED IN CASES OF CREDIT PURCHASES. IN THIS CONNECTION KIND ATTENTION OF THE HON'BLE COMMISSIONER OF INCOM E TAX(APPEALS) IS INVITED TO THE FOLLOWING DECISIONS OF VARIOUS JUDICIAL AUTHORITIES. I. COMMISSIONER OF INCOME - TAX AGRA V. PANCHAM DASS JAIN(2006] 156 TAXMAN 507 (ALL. HC) SECTION 68 OF THE INCOME - TAX ACT 1961 CASH CREDITS ASSESSMENT YEAR 1976 - 77 AS SESSEE WAS A DEALER IN IRON GOODS AND AGRICULTURAL IMPLEMENTS ITO WHILE FRAMING ASSESSMENT OF ASSESSEE FOR RELEVANT ASSESSMENT YEAR FOUND CERTAIN DEPOSITS APPEARING IN BOOKS OF ACCOUNT OF ASSESSEE IN NAME OF TWO PERSONS AND THEREFORE ASKED ASSESSEE TO EX PLAIN NATURE AND SOURCE OF VARIOUS DEPOSITS AS 4 ASSESSEE WAS NOT ABLE TO GIVE SATISFACTORY EXPLANATION WITH REGARD TO NATURE AND SOURCE OF AFORESAID DEPOSITS ITO MADE ADDITION UNDER SECTION 68 TRIBUNAL HOWEVER RECORDED A CATEGORICAL FINDING OF FACT BASED ON APPRECIATION OF MATERIALS AND EVIDENCE ON RECORD THAT SAID AMOUNT: REPRESENTED PURCHASES MADE BY ASSESSEE ON CREDIT; THEREFORE IT HELD THAT PROVISIONS OF SECTION 68 WOULD NOT BE ATTRACTED IN SUCH CASES AND. ACCORDINGLY IT DELETED ADDITIONS - WHETHER ON FACTS TRIBUNAL WAS JUSTIFIED IN DELETING ADDITIONS HELD YES ITO VS. STANDARD LEATHER (P) LTD. KOLKATA 76 TAXMANN.COM 109/162 LTD 285 ITAT KOLKATA. SECTION 68. READ WITH SECTION 133 OF THE INCOME - TAX ACT. 1961 CASH CREDIT (SUNDRY CREDITORS) ASSES SMENT YEAR 2010 - 11 ASSESSING OFFICER ISSUED NOTICE TO SUNDRY CREDITORS WHICH COULD NOT BE SERVED ON THEM HE HELD THEM AS NON - EXISTING BOGUS SUNDRY CREDITORS AND MADE ADDITION TO ASSESSEE'S INCOME CORRESPONDING PURCHASES WERE ADMITTED AND PAYMENTS MADE TO M ANY SUNDRY CREDITORS CONTINUING FROM EARLIER YEARS WERE ACCEPTED BY ASSESSING OFFICER WHICH MEANT GENUINITY OF PAYMENTS TO THESE CREDITORS WHETHER SUNDRY CREDITORS COULD NOT BE TREATED AS BOGUS SUNDRY CREDITORS AND AMOUNT STANDING AGAINST THEM COULD NOT BE ADDED TO INCOME OF ASSESSEE HELD YES III. INCOME - TAX OFFICER V. SMT. UMADEVI THIMMAIAH* (49 TAXMANN.COM 496 (BANGALORE TRIB.) SECTION 68 OR THE INCOME - TAX ACT 1961 CASH CREDIT TRADE CREDITS) ASST. YEAR 2008 - 09 - ALL CREDITS WAS TRADE CREDITS AND NONE OF SAID CREDITS WAS CASH CREDIT - MOREOVER WE HAD PRODUCED LEDGER DETAILS OF TRADE CREDITORS AS WELL AS CONFIRMATORY LETTER FROM MAJOR TRADE CREDITORS WHETHER IN VIEW OF AFORESAID IMPUGNED ORDER OF COMMISSIONER (APPEAL) WAS TO BE UPHELD HELD YES. 5.3 FURTHER KIND ATTENTION OF THE HON'BLE COMMISSIONER OF INCOME TAX(APPEALS) IS INVITED TO THE OBSERVATION OF THE FOLLOWING OBSERVAT ION AT PARA 7 ITS ORDER OF THE JURISDICTIONAL INCOME TAX APPELLATE TRIBUNAL HYDERABAD IN THE CASE OF ITO SANGAREDDY VS. ANN STONES HYDERABAD (ITA NO.26/HYD/2015) DATED 08 - 07 - 2015: ...AT THE OUTSET IT NEEDS TO BE OBSERVED THAT SUNDRY CREDITORS SIN CE REPRESENT PURCHASES MADE BY ASSESSEE ARE IN THE NATURE OF TRADE CREDITS HENCE COULD NOT HAVE BEEN TREATED AS CASH CREDITS AND SUBJECTED TO ADDITION U/ S 68 OF THE ACT... ' 5.4 KEEPING IN VIEW THE FACTS OF THE CASE AND THE VARIOUS JUDICIAL PROPOSITIO NS SUBMITTED ABOVE IT IS PRAYED THAT THE HON'BLE COMMISSIONER OF INCOME TAX(APPEALS) BE PLEASED TO DIRECT THE LEARNED ASSESSING OFFICER TO DELETE THE ADDITION OF RS.4 42 69 513/ - . 5 6 . CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE LD. CIT (A) CALLED FOR A REMAND REPORT FROM THE LD. AO . IN RESPONSE THE LD. AO IN HIS REMAND REPORT STATED AS UNDER: - THE ASSESSEE A PRIVATE LIMITED COMPANY HAS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012 - 13 ON 30 - 09 - 2012 DECLARING AN INCOME OF RS. 6 35 085/ - . THIS CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE 1.T. ACT ON 28 - 03 - 2015 ASSESSING THE TOTAL INCOME AT RS. 4 49 04 600/ - . WHILE COMPLETING THE ASSESSMENT AN AMOUNT OF RS. 4 42 69 513/ - WAS ADDED ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/ S 68 OF THE I T. ACT. DURING THE RELEVANT ASSESSMENT YEAR THE ASSESSEE INTRODU CED SIX SUNDRY CREDITORS FOR AN AMOUNT OF RS. 4 42 69 513/ - IN ITS BOOKS OF ACCOUNTS. ON VERIFICATION IT WAS FOUND THAT THESE SUNDRY CREDITORS ARE NOT GENUINE. HENCE THE ASSESSEE WAS REQUESTED TO PRODUCE THE ABOVE PERSONS FOR EXAMINATION. SINCE THE ASSES SEE COULD NOT PRODUCE THEM THE ASSESSMENT WAS COMPLETED BY ADDING THE OUTSTANDING AMOUNTS IN THE NAMES OF THE ABOVE SUNDRY CREDITORS AS UNEXPLAINED CASH CREDITS U/ S 68 OF THE IT. ACT IN THE HANDS OF THE ASSESSEE. AGGRIEVED THE ASSESSEE HAS FILED AN APP EAL. SUBSEQUENTLY THE CIT(A) HAS DIRECTED TO SUBMIT A REMAND REPORT ON THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE THE CIT(A). THE ASSESSEE WAS REQUESTED BY A LETTER DATED 23 - 10 - 2017 TO PRODUCE THE ADDITIONAL EVIDENCE FILED BEFORE THE CIT(A). T HERE WAS NO RESPONSE FROM THE ASSESSEE. HOWEVER SRI M. SREEKRISHNA TAX CONSULTANT SAID TO BE THE ASSESSEE'S AR APPEARED ON 15 - 02 - 2018. HE PRODUCED THREE SUNDRY TRADE CREDITORS FOR EXAMINATION. HE WAS REQUESTED TO PRODUCE THE BALANCE SUNDRY CREDITORS FO R EXAMINATION AND THE CASE WAS POSTED FOR HEARING ON 22 - 02 - 2018. HOWEVER THERE WAS NO COMPLIANCE FROM THE ASSESSEE ON THAT DATE. SUBSEQUENTLY A LETTER WAS ISSUED TO THE ASSESSEE ON 12 - 03 - 2018 TO PRODUCE THE BALANCE SUNDRY CREDITORS - FOR EXAMINATION. IT W AS MADE CLEAR TO THE ASSESSEE THAT THIS IS THE FINAL OPPORTUNITY TO PRESENT ITS CASE FAILING WHICH THE CASE WILL BE DECIDED AS PER THE MATERIAL AVAILABLE ON RECORD. HOWEVER THERE WAS NO COMPLIANCE FROM THE ASSESSEE TO THIS LETTER ALSO. IN VIEW OF THIS T HE REMAND REPORT IS SUBMITTED AS UNDER. THE ONLY ISSUE IN APPEAL IS THE GENUINENESS OR VERACITY OF THE SUNDRY TRADE CREDITORS NUMBERING SIX FOR A TOTAL AMOUNT OF RS. 4 42 69 513. THE DETAILS ARE AS UNDER. SL NO. NAME OF THE SUNDRY CREDITOR AMOUNT IN RS . 1. P. MADFHUSUDANA RAO 91 59 655 2. K. SWAMULU 1 10 63 950 3. K. SATYANARAYANA 1 44 57 395 4. K. KONDAL RAO 45 55 353 5. K. GANGARAJU 25 14 160 6. L. NAGESH 25 14 160 TOTAL 4 42 69 513 6 DURING THE COURSE OF REMAND PROCEEDINGS THE ASSESSEE WAS REQUESTED TO PRODUCE THE SUNDRY TRADE CREDITORS FOR VERIFICATION BY LETTERS AND HEARINGS AS DISCUSSED ABOVE. HOWEVER THE ASSESSEE COULD NOT PRODUCE THREE SUNDRY CREDITORS FOR EXAMINATION NAMELY SRI P. MADHUSUDHANA RAO SRI K. SWAMULU AND SRI K. SATYANARAYANA EVEN AFTER GIVING SUFFICIENT OPPORTUNITIES TO PRODUCE THEM. HENCE IT CAN BE CONCLUDED THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE ABOVE THREE SUNDRY CREDITORS AMOUNTING TO RS. 3 46 81 000 AND THE APP EAL OF THE ASSESSEE MAY NOT BE ENTERTAINED IN THIS REGARD. REGARDING THE BALANCE THREE SUNDRY CREDITORS NAMELY SRI K. KONDALA RAO SRI K. GANGARAJU AND SRI L. NAGESH THE ASSESSEE PRODUCED THEM FOR EXAMINATION. SUMMONS U/ S 131 WERE ISSUED TO THEM AND ST ATEMENTS WERE RECORDED FROM THEM. ALL THE ABOVE THREE CONFIRMED THAT THEY HAVE SOLD THEIR AGRICULTURAL PRODUCE IN THE FORM OF COTTON SEEDS TO THE ASSESSEE AND THE SALE AMOUNT IS OUTSTANDING AS ON 31 - 0..3 - 2012. ALL THE THREE ARE FARMERS AND CLAIMED TO HAVE LAND HOLDINGS OF ABOUT' 4 TO 6~ ACRES. HOWEVER THEY COULD NOT PRODUCE ANY EVIDENCE REGARDING LAND HOLDINGS IN THEIR NAMES OR THEIR FAMILY MEMBERS' NAMES. ALL OF THEM STATED THAT THEY ALONG WITH SOME OTHERS CULTIVATED COTTON SEEDS IN THEIR RESPECTIVE LANDS AND SOLD THE PRODUCE TO THE ASSESSEE COMPANY. THEY FURTHER STATED THAT THERE WAS NO WRITTEN AGREEMENT EXCEPT ORAL AGREEMENT BETWEEN THEM AND THE ASSESSEE COMPANY FOR CULTIVATION OF SEEDS. IT IS NOT KNOWN WHY THE ASSESSEE COMPANY HAS MADE ORAL AGREEMENT WITH THE ABOVE THREE ONLY WHEN ACTUALLY THERE WERE 18 CULTIVATORS FOR PURCHASE OF SEED. FURTHER THEY COULD ONLY GIVE THE NAMES OF OTHER CO - CULTIVATORS. THERE WERE NO AGREEMENTS BETWEEN THE SUNDRY CREDITORS AND CO - CULTIVATORS. THEY COULD NOT STATE WHETHER THE CO - CULTIVATORS HAVE LAND HOLDINGS IN THEIR NAMES OR TAKEN LAND ON LEASE. ALSO THEY COULD NOT PRODUCE ANY SALE BILLS OF SEEDS FOR VERIFICATION. EXCEPT STATING THAT THEY HAVE CULTIVATED COTTON SEEDS AND SOLD TO THE ASSESSEE THEY COULD NOT FURNISH AN Y EVIDENCE THAT THEY HAVE INDEED CULTIVATED SEEDS AND SOLD THEM TO THE ASSESSEE. IN THE ABSENCE OF ANY VERIFIABLE EVIDENCE THE SUNDRY CREDITORS ARE TREATED AS NOT GENUINE AND THE APPEAL OF THE ASSESSEE MAY NOT BE ENTERTAINED IN THIS REGARD. THE COPIES OF STATEMENTS ARE ENCLOSED HEREWITH FOR READY REFERENCE)' SUBMITTED FOR THE KIND CONSIDERATION OF THE COMMISSIONER OF INCOME TAX (APPEALS). 7 . THEREAFTER THE LD. CIT (A) OBTAINED REJOINDER FROM THE ASSESSEE WHICH IS EXTRACTED HEREIN BELOW FOR REFERENCE: - 'THE APPELLANT HAS BEEN DIRECTED TO SUBMIT A REPLY/ REJOINDER ON THE REMAND REPORT DT. 20 - 3 - 2018 OF THE LEARNED ASSESSING OFFICER. 2. THE LE ARNED ASSESSING OFFICER WAS REQUIRED BY THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) WAS DIRECTED 'TO EXAMINE THE 7 CREDITS ONCE AGAIN KEEPING IN VIEW OF THE CORRECTNESS OF PURCHASES / SALES MADE BY THE ASSESSEE' AND A COPY OF THE WRITTEN SUBMISSIONS MAD E BY THE APPELLANT WAS ALSO FORWARDED TO THE LEARNED ASSESSING OFFICER. 3. THE LEARNED ASSESSING OFFICER REQUIRED THE APPELLANT TO PRODUCE THE SIX CREDITORS AND THE APPELLANT PRODUCED THREE CREDITORS WHO WERE EXAMINED U/ S 131 AND THEIR STATEMENTS WERE ENCLOSED TO THE REMAND REPORT. THE OTHER THREE CREDITORS COULD NOT BE PRODUCED BECAUSE OF THEIR NON AVAILABILITY. 4. IN THEIR STATEMENTS THE CREDITORS WHO WERE PRESENT BEFORE THE LEARNED ASSESSING OFFICER CLEARLY CONFIRMED THAT THE PURCHASES WERE MADE BY THE APPELLANT FROM THEM. IT WAS CLEARLY MENTIONED BY THEM THAT THE PARENTAL SEED WAS SUPPLIED BY THE APPELLANT A ND THE TOTAL QUANTITY PRODUCED HAD TO BE SOLD TO THE APPELLANT ONLY. IT WAS ALSO STATED THAT THE PURCHASE CONSIDERATION WAS DUE TO BE PAID AS ON 31 - 032012 AND WAS PAID LATER THROUGH BANKING CHANNELS. THE FACTS RELATING TO THE OTHER PURCHASE CREDITORS WHO COULD NOT BE PRODUCED BEFORE THE PRESENT ASSESSING OFFICER IN CONNECTION WITH REMAND REPORT ARE EXACTLY IDENTICAL. THE PAYMENTS TO THEM WERE ALSO THROUGH BANK CHANNELS. 5.1 THE MODE OF THE APPELLANT'S BUSINESS WAS EXPLAINED IN PARA 2 OF OUR WRITTEN SUBM ISSIONS. FOR EASY REFERENCE THE RELEVANT PARA IS REPRODUCED BELOW: 'DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL THE APPELLANT UNDERTOOK PRODUCTION OF SEEDS MOSTLY REFUGIA NON - BT COTTON HYBRID SEED THROUGH VARIOUS AGRICULTURIS TS BY SUPPLYING THE PARENTAL SEED DEVELOPED BY THE APPELLANT. THE PRODUCTION WAS UNDER THE DIRECT SUPERVISION AND INSPECTION BY THE APPELLANT. THE PRODUCED REFUGIA NON - B'T COTTON HYBRID SEED WAS SOLD TO SATYA AGRI BIOTECH PVT. LTD. (SISTER CONCERN) WHO MAINLY MARKETED THE BT COTTON HYBRID SEED HAVING SUB - LICENSE FROM MAHYCO MONSANTO BIOTECH PVT. LTD. FOR BOLLGARD TECHNOLOGY (PATENTED BT COTTON HYBRID SEED) AND PERMISSION FOR SALE ACROSS ALL THE STATES IN THE COUNTRY. IT IS MANDATORY TO SUPPLY THE REFUG IA NO N - BT HYBRID COTTON SEED OF 120 GMS. ALONG WITH 450 GMS OF BT COTTON HYBRID SEED SINCE IT IS ESSENTIAL FOR FARMING OF NON BT COTTON AROUND THE BT COTTON FIELD AS PER THE GUIDELINES OF GOVT. OF INDIA MINISTRY OF SCIENCE AND TECHNOLOGY DEPARTMENT OF BIOTECHNOLOGY GENETIC ENGINEERING APPRAISAL COMMITTEE (GEAC). 2 FURTHER THE PRODUCTION OF THE REFUGIA NON - BT COTTON HYBRID SEED WAS UNDERTAKEN BY THE APPELLANT ON A SPECIFIC PURCHASE ORDER AND SUCH SEED HAS NO OPEN MARKET. 5.3 THE QUANTITATIVE DETA ILS OF THE PURCHASES FROM THE AGRICULTURISTS AND SALES WERE FULLY MAINTAINED IN THE BOOKS OF ACCOUNTS WHICH WERE PRODUCED BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT. THE DETAILS OF PURCHASES WERE ALSO FURNISHED IN THE WRITTEN SUBMISSIONS AND T HE CONSIDERATION WAS PAID THROUGH BANKING CHANNELS. THE PURCHASES AND SALES WERE ACCEPTED BY THE LEARNED ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT. THE PRESENT ASSESSING OFFICER ALSO DID NOT DISPUTE QUANTUM OF THE PURCHASES AND SALES. THE LEARNED A SSESSING OFFICER IS NOT ABSOLUTELY JUSTIFIED IN STATING IN HIS REMAND REPORT THAT 8 'EXCEPT STATING THAT THEY HAVE CULTIVATED COTTON SEEDS AND SOLD TO THE ASSESSEE THEY COULD NOT FURNISH ANY EVIDENCE THAT THEY HAVE INDEED CULTIVATED SEEDS AND SOLD THEM TO T HE ASSESSEE .. '. IT IS SUBMITTED THAT THE LEARNED ASSESSING OFFICER IN THE FACTS AND CIRCUMSTANCES OF THE CASE IS NOT JUSTIFIED TO STATE IN THE REMAND REPORT THAT ' .... THEY COULD NOT FURNISH ANY EVIDENCE THAT THEY HAVE INDEED CULTIVATED SEEDS AND SOLD THEM TO THE ASSESSEE.'. IT IS NOT CLEAR AS TO WHAT KIND OF EVIDENCE DID THE LEARNED ASSESSING OFFICER REQUIRE/ EXPECT TO PROVE THAT THE AGRICULTURISTS CULTIVATED THE SEED AND SOLD TO THE APPELLANT CONSIDERING THE FACTS THAT: (I) THE NATURE OF THE TRANS ACTION BETWEEN THE AGRICULTURISTS AND THE APPELLANT I. E A) THE PARENT SEED WHICH WAS DEVELOPED BY THE APPELLANT WAS SUPPLIED TO THE AGRICULTURISTS FOR CULTIVATION ON A CLEAR UNDERSTANDING THAT THE PRODUCED SEED WAS TO BE HANDED OVER BACK TO THE APPELLANT. THE PARENT SEED IS NOT AVAILABLE FREELY IN THE MARKET FOR THE AGRICULTURISTS. (B) THE PRODUCTION WAS UNDER THE DIRECT SUPERVISION AND INSPECTION BY THE APPELLANT; (C) THE SEED PRODUCED BY THE AGRICULTURIST WAS MAINLY REFUGIA NON - BT COTTON HYBRID AND IT IS NOT A FREE MARKETABLE SEED. AS PER THEIR AGREEMENT THE REFUGIA NON - BT SEED SHOULD BE SUPPLIED TO THE APPELLANT ONLY. (II) THE APPELLANT TESTED THE SEED IN ITS PROCESSING UNIT AS PER THE CENTRAL SEED STANDARDS AND THEN SOLD THE SAME SEED TO ITS SISTER CONCERN WHO HAD ORDERED FOR THE SUPPLY OF REFUQIA N ON - BT HYBRID COTTON SEED. (III)THE APPELLANT'S SISTER CONCERN SATYA AGRI BIOTECH PVT. LTD. SOLD AWAY THE REFUQIA BT. COTTON SEED IMMEDIATELY ALONG WITH BT. COTTON HYBRID SEED AS PER THE GUIDELINES OF GOVT. OF INDIA AS EXPLAINED IN THE WRITTEN SUBMIS SIONS ALREADY FILED. 6. IT IS SUBMITTED THAT THE APPELLANT WITHOUT PURCHASE OF THE REFUGIA NON - BT. COTTON SEED COULD NOT HAVE PROCESSED AND SOLD THEM TO ITS SISTER CONCERN. IT IS A FACT THAT THE PARENTAL SEED BOTH MALE AND FEMALE WAS NOT AVAILABLE IN THE OPEN MARKET FOR ANY AGRICULTURALISTS IN THE OPEN MARKET. WITHOUT SUPPLY OF THIS PARENTAL SEED AGRICULTURISTS COULD NOT HAVE CULTIVATED THE REFUGIA NON - BT. COTTON SEED. 7. IT IS FURTHER SUBMITTED THAT THE PURCHASE CREDITORS WERE NOT PAID DURING THE PREVIOUS YEAR AND THE CREDITS EXISTED IN THE BALANCE SHEET. THE LIABILITY EXISTED AS ON THE LAST DAY OF THE PREVIOUS YEAR. IN THESE CIRCUMSTANCES IT IS SUBMITTED THE AMOUNT OF RS.4 42 65 6851REPRESENTING THESE PURCHASE CREDITS SHOULD NOT HAVE BEEN ADD ED BY THE LEARNED ASSESSING OFFICER AS HELD BY THE INCOME TAX APPELLATE TRIBUNAL KOLKATA IN THE CASE OF ITO VS. SADANANDA SINGHA (49 TAXMANN.COM 3231 151 I TD 714). COPY OF THIS DECISION IS ENCLOSED. 8. IT IS SUBMITTED THAT THE APPELLANT'S CONTENTION IS THAT THE PURCHASE CREDITS CANNOT BE ADDED ESPECIALLY WHEN THE QUANTUM OF PURCHASES AND SALES ARE ACCEPTED AND NOT DISPUTED BY THE ASSESSING OFFICER. SEVERAL 9 DECISIONS HAVE BEEN CITED BY THE APPELLANT IN THE ORIGINAL WRITTEN SUBMISSIONS. THE LEARNED ASSESS ING OFFICER DID NOT DISPUTE THIS ISSUE AT ALL. 9. IN THESE CIRCUMSTANCES IT IS PRAYED THAT THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) BE PLEASED TO DIRECT THE LEARNED ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 4 42 65 685/ - REPRESENTING THE SE PURCHASE CREDITS. 10. IT IS FURTHER SUBMITTED THAT THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) BE PLEASED IF FOUND NECESSARY TO REQUIRE THE APPELLANT OR ITS REPRESENTATIVES TO EXPLAIN THE FACTS IN A PERSONAL HEARING. 8 . AFTER EXAMINING THE S UBMISSION AND REJOINDER OF THE ASSESSEE AND THE REMAND REPORT OF THE LD.AO THE LD CIT (A) DELETED THE ADDITION MADE BY THE LD. AO FOR THE FOLLOWING REASONS: - 1. THE SUNDRY CREDITORS WERE REPAID BY THE ASSESSEE IN THE SUBSEQUENT YEARS. THEREFORE THE GENUINENESS OF THE CREDITORS IS PROVED. 2. THE ASSESSEE HAS PRODUCED BEFORE THE LD.AO THREE OUT OF THE SIX SUNDRY CREDITORS DURING THE REMAND PROCEEDINGS. 3. THE ASSESSING OFFICER HAS RECORDED STATEMENTS FROM THE THREE SUNDRY CREDITORS JUSTIFYING THE TRANSACTIONS MADE WITH THE ASSESSEE . 4. THE THREE SUNDRY CREDITORS WHO APPEARED BEFORE THE LD. AO HAD SUBMITTED THEIR BANK ACCOUNTS FOR VERIFICATION. 5. THEREFORE THE IDENT ITY CAPACITY AND GENUINENESS OF THE SUNDRY CREDITORS ARE ESTABLISHED. 6. THE ASSESSING OFFICER HAS NOT COMMENTED IN HIS REMAND REPORT WITH RESPECT TO THE CORRECTNESS OF THE PURCHASES AND 10 SALES MADE BY THE ASSESSEE THOUGHT THE CIT(A) HAD DIRECTED THE LD.AO TO DO SO. 7. FOR THE ABOVE STATED REASON THE LD. AO HAS NOT DOUBTED THE SALE / PURCHASES MADE BY THE SUNDRY CREDITORS FROM THE ASSESSEE . 8. THE ASSESSEE HAS SUBMITTED ITS LEDGER ACCOUNT COPY AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTION WHEREIN ALL THE TRANSACTIONS ARE MADE BY RTGS / NEFT / CHEQUE . 9. RELIANCE WAS ALSO PLACED IN THE DECISION OF THE KOLKATA BENCH OF THE TRIBUNAL IN ITA NO. 1881/KOL/2009 IN THE CASE SHRI SADANANDA SINGH VS. ITO WD - 1 HALDIA FOR THE AY 2006 - 07. 9 . BEFORE US T HE LD. DR VEHEMENTLY ARGUED THAT THE GENUINENESS OF THE SUNDRY CREDITORS WAS NOT ESTABLISHED EVEN BEFORE THE LD. AO IN THE REMAND PROCEEDINGS. IT WAS THEREFORE SUBMITTED THAT THE ORDER OF THE LD. CIT (A) DOES NOT HAVE ANY MERIT . H ENCE IT WAS PLEADED THAT THE ORDER OF THE LD. AO MAY BE REINSTATED. THE LD. AR ON THE OTHER HAND RELIED ON THE ORDER OF THE LD. CIT (A) AND PRAYED FOR CONFIRMING THE SAME. 10 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE IT IS APPARENT THAT THE SUNDRY CREDITORS ARE FARMERS WHO HAD CARRIED OUT CERTAIN JOB WORK WI TH 11 RESPECT TO PROCESSING OF SEEDS MEANT FOR AGRICULTURAL PURPOSE. THEREFORE T HESE TRANSACTIONS ARE NOT CASH CREDIT S BUT IT IS WITH RESPECT TO EITHER PURCHASE OF SEEDS/PROCESSED SEEDS FROM THE FARMERS OR WITH RESPECT TO PROCESSING CHARGES OF THE SEEDS BY THE FARMERS . IT IS ALSO EVIDENT THAT THE SUNDRY CREDITORS ( SIX FARMERS ) HAD ALSO TAKEN THE HELP OF VARIOUS OTHER FARM ERS TO CARRY OUT THESE ACTIVITIES . THE LD. CIT (A) AFTER CONSIDERING ALL THESE ASPECTS AND OBTAINING A REMAND REPORT FROM THE LD. AO HAS DELETED THE ADDITION FOR THE REASONS STATED IN PARA 8 HEREIN ABOVE. IT IS ALSO APPARENT THAT THE ASSESSEE HAS PRODUCED THREE SUNDRY CREDITORS BEFORE THE LD. AO AND ALSO PRODUCED THE BANK ACCOUNTS OF THE SUNDRY CREDITORS FOR VERIFICATION. THE LD. AO HAS NOT MADE ANY NEGATIVE REMARKS WITH RESPECT TO THE BANK ACCOUNTS PRODUCED BY THE SUNDRY CREDITORS. THE ASSESSEE HAVE ALSO PAID THE ENTIRE OUTSTANDING BALANCE OF THE SUNDRY CREDITORS SUBSEQUENTLY AND THERE IS NO NEGATIVE FINDING BY THE LD.AO ON TH AT REGARD. FURTHER THERE IS NO NEGATIVE FINDING BY THE LD.AO THAT THE ASSESSEE HAD NOT MADE PURCHASES FROM THE FARMERS. THE LD. DR A LSO COULD NOT CONTROVERT TO THE FINDINGS OF THE LD.CIT(A) WITH COGENT EVIDENCE. THEREFORE K EEPING IN VIEW OF THE SE FACTS AND CIRCUMSTANCES OF THE CASE W E DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ELABORATE FINDING OF THE LD. CIT (A) ON THE ISSUE. A CCORDINGLY W E HEREBY SUSTAIN THE ORDER OF THE LD. CIT (A). 1 1 . IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. 12 PRONOUNCED IN THE OPEN COURT ON THE 0 3 RD MAY 2021. SD/ - SD/ - (P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD DATED: 03 RD MAY 2021. OKK COPY TO: - 1. M/S. GENESIS CROP SCIENCES (INDIA) PRIVATE LIMITED H.NO. 11 - 13 - 624/3 403 BHAVANA TOWERS ROAD NO.3 HARIPURI COLONY RAMAKRISHNAPURAM HYDERABAD - 500035. 2. INCOME TAX OFFICER WARD - 2(2) R.NO.507 5 TH FLOOR SIGNATURE TOWERS OPPOSITE BOTANICAL GARDEN KONDAPUR - 500084. 3. THE CIT (A) - 9 HYDERABAD. 4. THE PRINCIPAL COMMISSIONER OF INCOME TAX - 2 HYDERABAD. 5. THE DR ITAT HYDERABAD. 6. GUARD FILE