The ACIT, Circle-1, Kakinada v. M/s Vensa Biotek Ltd., Samalkot

ITA 373/VIZ/2005 | 2001-2002
Pronouncement Date: 17-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 37325314 RSA 2005
Bench Visakhapatnam
Appeal Number ITA 373/VIZ/2005
Duration Of Justice 5 year(s) 7 month(s) 8 day(s)
Appellant The ACIT, Circle-1, Kakinada
Respondent M/s Vensa Biotek Ltd., Samalkot
Appeal Type Income Tax Appeal
Pronouncement Date 17-03-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 17-03-2011
Date Of Final Hearing 15-03-2011
Next Hearing Date 15-03-2011
Assessment Year 2001-2002
Appeal Filed On 09-08-2005
Judgment Text
ITA 369 & 373 OF 05 VENSA BIOTEK LTD G RAGAMPET IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO. 369 /VIZAG/ 20 05 ASSESSMENT YEAR : 2001 - 02 VENSA BIOTEK LTD G. RAGAMPET EAST GODAVARI DIST. VS. DCIT CIRCLE - 1 KAKINADA (APPELLANT) (RESPONDENT) PAN NO.AAACV 7380B ITA NO.373/VIZAG/2005 ASSESSMENT YEAR :2001 - 02 ACIT CIRCLE - 1 KAKINADA VS. VENSA BIOTEK LTD G. RAGAMPET EAST GODAVARI DIST. (APPELLANT) ( RESPONDENT) APPELLANT BY: SHRI C. SUBRAHMANYAM CA RESPONDENT BY: SHRI TH.L. PETER CIT(DR) ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER:- THESE CROSS APPEALS ARE PREFERRED BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE ORDER OF THE CIT(A) PERTAINING TO THE ASSESSMENT YEAR 2001-02. SINCE THESE APPEALS WERE HEARD TOGETHER T HESE ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. WE HOWEVER PR EFER TO ADJUDICATE THESE APPEALS ONE AFTER THE OTHER. ITA NO.369 OF 2005: 2. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) ON A SOLITARY GROUND THAT CIT(A) SHOULD HAVE DELETED THE ENTIRE DISALLOWANCE OF RS.5 LAKHS MADE IN THE ASSESSMENT T OWARDS THE UNVERIFIABLE EXPENDITURE IN THE PURCHASE OF TAPIOCA GIVING RELIE F ONLY RS.2 50 000/- I.E. 50% OF THE AMOUNT DISALLOWED BY THE A.O. AS THE EXP ENDITURE VERIFIABLE AND FULLY VOUCHED. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND WE FIND THAT ASSESSEE HAS CLAIMED EXPENDITURE FOR PURCHASE OF RAW MATERIAL CONSUMED D URING THE YEAR AT ITA 369 & 373 OF 05 VENSA BIOTEK LTD G RAGAMPET 2 RS.21 02 72 925/-. THE TOTAL COST OF TAPIOCA INCLU DED IN THE CONSUMPTION OF RAW MATERIAL IS RS.5 07 97 000/-. ON VERIFICATION OF THE DETAILS FOR PURCHASE OF THIS TAPIOCA IT WAS FOUND THAT THE ASSESSEE HAD MADE PURCHASES OF SUBSTANTIAL PORTION OF THIS TAPIOCA FROM UNREGISTER ED DEALERS MOST RYOTS AND THE BALANCE OUTSTANDING PAYABLE TO THIS RYOTS FOR P URCHASE OF TAPIOCA AS ON 31.3.2001 WAS RS.3 67 36 801/-. WHEN THE A.R. HAS BEEN ASKED TO FILE CONFIRMATIONS FROM THE SUPPLIERS OF TAPIOCA TO THE ASSESSEE COMPANY THEIR AGRICULTURAL LAND HOLDINGS AND THE QUANTITY OF TAPI OCA RAISED IN THEIR LANDS AND CONFIRMATION ABOUT THE PAYMENT OF MONEY BY THOSE RY OTS. THE A.R. SUBMITTED THAT IT IS NOT POSSIBLE TO FURNISH ANY CO NFIRMATION LETTERS SINCE THEY ARE LARGE IN NUMBERS. HE HOWEVER SUBMITTED LIST O F THOSE RYOTS AMOUNT OUTSTANDING AS ON 31.3.2001 AND THE DATE AND MODE O F PAYMENT. BUT ON VERIFICATION OF THE DETAILS FURNISHED IT WAS NOTIC ED THAT THE ENTIRE AMOUNT OF RS.3 67 36 801/- WAS PAID IN CASH ONLY WITH FEW EXC EPTIONS WHICH WAS PAID IN CHEQUE. EVEN THE PAYMENT MADE IN CHEQUE IS ALSO NO T VERIFIABLE WHETHER IT WAS A CROSSED CHEQUE OR A BEARER CHEQUE. THE ASSES SEE ALSO COULD NOT FURNISH THE DETAILS OF QUANTITY OF TAPIOCA SUPPLIED BY EACH RYOTS. SINCE THE PURCHASES WERE NOT PROPERLY VERIFIED THE A.O. MADE A DISALLOWANCE OF 1% OF THE TOTAL EXPENDITURE BEING UNVERIFIABLE AND TOTAL AMOUNT WAS WORKED OUT AT RS.5 LAKHS. AGAINST THIS ADDITION ASSESSEE PREFER RED AN APPEAL BEFORE THE CIT(A) AND CIT(A) BEING PARTLY CONVINCED WITH THE E XPLANATION OF THE ASSESSEE RESTRICTED THE DISALLOWANCE TO RS.2.5 LAKH S. 4. THE ASSESSEE STILL AGGRIEVED AND HAS PREFERRED A N APPEAL BEFORE THE TRIBUNAL. BUT COULD NOT FILE THE COMPLETE DETAILS OF THESE PURCHASES OF TAPIOCAS. DURING THE COURSE OF HEARING HE HAS HOW EVER AGREED THAT COMPLETE DETAILS OF THESE RYOTS FROM WHOM PURCHASES WERE MADE COULD NOT BE FILED. SINCE THE TOTAL PURCHASES ARE NOT VERIFI ABLE THE A.O. HAS RIGHTLY ESTIMATED THE DISALLOWANCE WHICH WAS FURTHER REDUCE D BY THE CIT(A). THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE CIT(A) AND WE CONFIRM THE SAME. ACCORDINGLY THE ASSESSEES APPE AL IS DISMISSED. ITA 369 & 373 OF 05 VENSA BIOTEK LTD G RAGAMPET 3 ITA 373 OF 2005: 5. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) ON A SOLITARY GROUND THAT CIT(A) HAS ERRED IN DELET ING THE ADDITION OF RS.42 50 000/- MADE TOWARDS UNEXPLAINED CREDITS U/S 68 OF THE ACT THOUGH VARIOUS GROUNDS ARE RAISED BY THE REVENUE IN MEMORA NDUM OF APPEAL. 6. THE FACTS BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE HAS INTRODUCED A SUBSTANTIAL AMOUNT OF CREDITS IN ITS B OOKS OF ACCOUNTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF FRESH DEPOSITS ACCEPTED DURING THE YEARS WITH FULL POSTAL ADDRESS OF THE DEPOSITORS AND CONFIRMATORY LETTERS FROM THEM. IN RESPONSE THERETO ASSESSEE HAS FILED THE LIST OF FRESH DEPOSITS RECEI VED DURING THE YEAR BUT COULD NOT FURNISH THE CONFIRMATORY LETTERS FROM ANY ONE O F THE DEPOSITORS INSPITE OF REPEATED OPPORTUNITIES PROVIDED TO IT. TOTAL NUMBE R OF PERSONS FROM WHOM THE DEPOSITS WERE RECEIVED ARE 237 AND WHEN THE ASS ESSEE HAS BEEN ASKED TO FURNISH THE CONFIRMATORY LETTERS AND THE SOURCE OF IMMEDIATE PROXIMITY OF FUNDS OF THESE DEPOSITS THE ASSESSEE EXPRESSED HIS INABILITY TO PRODUCE THE CONFIRMATION LETTERS. THE A.O. ACCORDINGLY TREATED THE ENTIRE CASH CREDIT AS UNEXPLAINED AND MADE THE ADDITION OF RS.79 13 000/- U/S 68 OF THE ACT AS UNEXPLAINED CASH CREDIT. THE CORRESPONDING INTERES T THEREON @ 15% AT RS.6 72 360/- WAS ALSO DISALLOWED. 7. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A) AND FILED THE CONFIRMATION LETTERS OF SOME OF THE DEPOSITORS. TH E CIT(A) CALLED A REMAND REPORT FROM THE ASSESSING OFFICERS ON THE ADDITIONA L EVIDENCE FILED BEFORE HIM. DURING THE REMAND PROCEEDINGS ASSESSING OFFICER HA S ASKED THE ASSESSEE TO FURNISH THE CONFIRMATION LETTERS AND OTHER RELEVANT EVIDENCE WITH REGARD TO THE SOURCE OF DEPOSITS. ASSESSEE WAS ALSO ASKED TO PRODUCE THE CREDITORS FOR THEIR EXAMINATIONS. ASSESSEE HAS PRODUCED SOME OF THE CREDITORS FOR EXAMINATION BEFORE THE ASSESSING OFFICER AND THEY H AVE ADMITTED THE DEPOSITS WITH THE ASSESSEES. CONFIRMATION LETTERS WERE ALSO FILED WITH RESPECT TO THE MOST OF THE CREDITORS. AFTER VERIFICATION OF THE D ETAILS FURNISHED BY THE ASSESSEE CASH CREDITS NUMBERING 79 AMOUNTING TO RS .36 63 000/- AS LISTED IN TABLE NO.1 ARE TREATED AS EXPLAINED FOR THE REASONS STATED THEREIN. THE OTHER ITA 369 & 373 OF 05 VENSA BIOTEK LTD G RAGAMPET 4 CREDITS NUMBERING 158 APPEARING IN THE NAMES OF VAR IOUS PERSONS ARE TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AS LIS TED IN TABLE NO.2 3 4 5 & 6. THE REMAINING CREDITS WHICH HAVE BEEN TREATED AS UN EXPLAINED AT RS.42 50 000/- ARE GIVEN IN TABLE NOS.2 3 4 5 & 6 A S UNDER: TABLE NO.2 TABLE NO.3 TABLE NO.4 TABLE NO.5 TABLE NO.6 CONSISTS OF 40 CREDITS TOTALING TO RS.11 02 000/- RELATES TO THE CREDITS WHERE CREDITORS HAVE BEEN PRODUCED. CONSISTS OF 74 CREDITS TOTALING TO RS.20 98 000/- RELATES TO THE CREDITS WHERE CREDITORS HAVE NOT PRODUCED BUT CONFIRMATION LETTERS ALONG WITH NECESSARY EVIDENCE PRODUCED AND THE ASSESSING OFFICER HAS NOT INSISTED FOR THE PRESENCE OF THESE CREDITS. CONSISTS OF 16 CREDITS TOTALING TO RS.2 11 000/- RELATES TO THE CREDITS WHERE NO EVIDENCE IS FURNISHED. CONSIST S OF 8 CREDITS TOTALING TO RS.1 80 000/- WHERE THE SOURCE IS SAID TO BE WITHDRAWAL FROM VENSA BENEFIT FUND AND DEPOSITED WITH THE APPELLANT COMPANY. CONSISTS OF 20 CREDITS TOTALING TO RS.6 60 000/- RELATES TO THE CREDITS WHERE NO CONFIRMATION LETTERS WERE FILED BUT THE APPELLANT HAS FILED ONLY THE DEPOSIT APPLICATIONS. 8. THE CIT(A) EXAMINED THE EXPLANATIONS OF THE ASSE SSEE WITH REGARD TO THESE CASH CREDITS CATEGORIZED IN 5 CATEGORIES IN T HE AFORESAID TABLE AND BEING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEES H E HAS DELETED THE ENTIRE ADDITION OF RS.42 50 000/-. 9. NOW THE REVENUE IS IN APPEAL BEFORE US AGAINST T HE ENTIRE DELETION MADE BY THE CIT(A). DURING THE COURSE OF HEARING O F THE APPEAL THE LD. D.R. WAS QUITE CRITICAL WITH RESPECT TO THE ALLOWANCE OF CASH CREDIT MENTIONED IN TABLE NOS.4&6 IN WHICH NO DOCUMENTARY EVIDENCE EITH ER IN THE FORM OF CONFIRMATIONS OR OTHER EVIDENCE TO PROVE THE SOURCE OF DEPOSITS WERE FILED BEFORE THE ASSESSING OFFICER IN REMAND PROCEEDINGS. WITH REGARD TO CASH CREDITS IN TABLE NO.4 NO EVIDENCE WAS FILED EITHER IN THE FORM OF CONFIRMATIONS OR THE DEPOSIT APPLICATIONS. WITH REGARD TO THE OT HER DEPOSITS THE LD. D.R. HAS CONTENDED THAT THESE CREDITS ARE NOT PROPERLY V ERIFIED BY THE CIT(A) ITA 369 & 373 OF 05 VENSA BIOTEK LTD G RAGAMPET 5 THEREFORE MATTER MAY BE SENT BACK TO THE FILE OF T HE A.O. FOR FURTHER VERIFICATION. 10. THE LD. COUNSEL FOR THE ASSESSEES ON THE OTHER HAND HAS CONTENDED THAT THE CREDITORS MENTIONED IN TABLE NO.2 RELATING TO DEPOSITS OF RS.11 02 000/- THE ASSESSEE HAS PRODUCED THEM BEFO RE THE A.O. AND THEY HAVE ACCEPTED THE DEPOSITS WITH THE ASSESSEES DURIN G THE COURSE OF EXAMINATION AND WITH REGARD TO THE OTHER 74 CREDITO RS MENTIONED IN TABLE NO.3 RELATING TO DEPOSITS OF RS.20 98 000/- ASSESSE E HAS FILED THE CONFIRMATION LETTERS AND OTHER NECESSARY EVIDENCE AND THEIR PRES ENCE WAS NOT INSISTED BY THE ASSESSING OFFICER. THEREFORE THEY WERE NOT PRO DUCED FOR EXAMINATION. WITH REGARD TO THE DEPOSITS MENTIONED IN TABLE NO.5 OF RS.1 80 000/- IT WAS STATED BEFORE THE A.O. THAT THESE DEPOSITS WERE MAD E OUT OF THE WITHDRAWAL FROM THE VENSA BENEFIT FUND AND THIS CONTENTION OF THE ASSESSEE WAS NOT REBUTTED BY THE REVENUE. WITH REGARD TO THE DEPOSI TS MENTIONED IN TABLE NO.4 & 6 THE LD. COUNSEL FOR THE ASSESSEE HOWEVER HAS AGREED THAT THEY CAN BE SENT BACK TO THE ASSESSING OFFICER FOR FURTHER V ERIFICATION. 11. IT WAS ALSO CONTENDED BY THE LD. COUNSEL FOR TH E ASSESSEES THAT ASSESSEE HAS NOTIFIED THE DEPOSIT SCHEME IN THE REL EVANT FINANCIAL YEAR AND THE DEPOSITS WERE MADE IN RESPONSE TO THE DEPOSIT S CHEMES. AT THE TIME OF DEPOSIT THE ASSESSEE WAS REQUIRED TO TAKE THE DETA ILS OF THE DEPOSITORS AND HE WAS NOT REQUIRED UNDER ANY OF THE ACT TO MAKE A VERIFICATION REGARDING THE SOURCE OF THE DEPOSITS. THEREFORE WITHOUT VERIFYI NG THE SOURCE OF DEPOSITS ASSESSEE RECORDED THEIR DEPOSITS IN BOOKS OF ACCOUN TS AND PAID THE INTEREST WHEN IT BECOMES DUE. NOW THE ASSESSEE COMPANY IS C LOSED AND THE ENTIRE DEPOSITS HAVE ALREADY BEEN REFUNDED TO THE CONCERNE D CREDITORS. 12. HAVING CAREFULLY EXAMINED THE IMPUGNED ISSUE IN THE LIGHT OF RIVAL SUBMISSIONS WE FIND THAT ADMITTEDLY THESE DEPOSITS WERE MADE WITH THE ASSESSEES IN PURSUANCE TO THE DEPOSIT SCHEMES LAUNC HED DURING THE YEAR. OUT OF TOTAL DISALLOWANCE OF RS.79 13 000/- THE AS SESSING OFFICER HAS ACCEPTED THE DEPOSIT OF 36 63 000/- IN THE REMAND P ROCEEDINGS. THEREFORE THE DISPUTE BEFORE THE CIT(A) WAS ONLY LEFT OUT WIT H REGARD TO THE ITA 369 & 373 OF 05 VENSA BIOTEK LTD G RAGAMPET 6 DISALLOWANCE OF RS.42 50 000/-. OUT OF THIS AMOUNT ASSESSEE HAS PRODUCED THE 40 CREDITORS RELATING TO CREDITS OF RS.11 02 00 0/- AND THESE CREDITORS HAVE ACCEPTED THE DEPOSITS WITH THE ASSESSEES THEREFORE WE ARE OF THE VIEW THAT ASSESSEE HAS DISCHARGED ITS PRIMARY ONUS TO PROVE T HE CASH CREDITS. THEREFORE IN THIS REGARD WE ARE OF THE VIEW THAT NO ADDITION IS CALLED FOR AND WE APPROVE THE ORDER OF THE CIT(A). 13. WITH REGARD TO THE 74 CREDITORS APPEARING IN TA BLE NO.3 RELATING TO DEPOSITS OF RS.20 98 000/- ASSESSEE HAS FURNISHED THE CONFIRMATION LETTERS ALONG WITH THE NECESSARY EVIDENCE AND THE PRESENCE WAS NOT INSISTED BY THE ASSESSING OFFICER. THEREFORE THE ASSESSEE HAS DIS CHARGED THE ONUS OF PROVING THE CASH CREDITS. SINCE NO CONTRARY EVIDEN CE WAS BROUGHT OUT BY THE REVENUE TO DISBELIEVE THE VERSION OF THE ASSESSEE NO ADDITION IS CALLED FOR IN THIS REGARD AND WE THEREFORE AGREE WITH THE ORDER O F THE CIT(A). 14. WITH REGARD TO THE DEPOSIT OF RS.1 80 000/- MEN TIONED AGAINST THE TABLE NO.5 IT WAS EXPLAINED THAT THESE DEPOSITS WE RE OUT OF WITH DRAWAL FROM VENSA BENEFIT FUND DEPOSITED WITH THE ASSESSEE COMP ANY. NOTHING CONTRARY TO THESE FACTS WERE BROUGHT OUT ON RECORD THEREFOR E NO DISALLOWANCE CAN BE MADE IN THIS REGARD. WITH REGARD TO THE 16 CREDITO RS APPEARING IN TABLE NO.4 RELATING TO DEPOSITS OF RS.2 11 000/- NOTHING WAS PRODUCED BY THE ASSESSEES BEFORE THE ASSESSING OFFICER. MOREOVER NO DOCUMEN TARY EVIDENCE IS PLACED BEFORE US IN SUPPORT OF THIS CASH CREDITS. THEREFO RE WE ARE OF THE VIEW THAT NO PURPOSE WOULD BE SERVED BY SENDING THIS ISSUE BA CK TO THE ASSESSING OFFICER FOR VERIFICATION. SINCE THE CIT(A) HAS DEL ETED THESE ADDITIONS WITHOUT VERIFYING THESE FACTS WE DO NOT AGREE WITH HIS VIE W AND WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) IN THIS REGARD AND RE STORE THAT OF THE A.O. 15. WITH REGARD TO THE CREDITS OF RS.6 60 000/- REL ATING TO 20 CREDITORS APPEARING IN TABLE NO.6 WE FIND THAT THE ASSESSEE HAS FILED THE DEPOSIT APPLICATIONS BUT CONFIRMATIONS WERE NOT FILED. THE LD. D.R. HAS CONTENDED THAT IN THE DEPOSIT APPLICATIONS THE COMPLETE ADDR ESSES OF THE DEPOSITORS WERE NOT GIVEN THEREFORE THE CIT(A) HAS WRONGLY A LLOWED THESE CASH CREDITS. WHEREAS THE LD. COUNSEL FOR THE ASSESSEE HAS CONTE NDED OTHERWISE AND HAS ITA 369 & 373 OF 05 VENSA BIOTEK LTD G RAGAMPET 7 SUBMITTED THAT IN ALL DEPOSIT APPLICATIONS ADDRESSE S WERE GIVEN THEREFORE THE ASSESSEE MAY BE GIVEN ONE MORE OPPORTUNITY EITHER T O FURNISH CONFIRMATION LETTERS OF THESE CREDITORS AND IF THE ASSESSING OFF ICER HAS ANY DOUBT HE MAY SUMMON THESE CREDITORS AND VERIFY THE CORRECT FACTS . SINCE IT IS NOT CLEAR WHETHER THE COMPLETE ADDRESSES OF THE DEPOSITORS WE RE GIVEN IN THE DEPOSIT APPLICATIONS WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE A.O. WITH A DIRECTION TO RE-ADJUDIC ATE THIS ISSUE AFRESH AND EXAMINE THE DEPOSIT APPLICATIONS. IF THE ADDRESSES ARE GIVEN IN THESE APPLICATIONS THE ASSESSEE MAY BE ASKED TO FURNISH THE CONFIRMATION LETTERS AND OTHER EVIDENCE TO PROVE THE GENUINENESS OF THE CASH CREDITS. IF THE ADDRESSES ARE NOT GIVEN IN THESE DEPOSIT APPLICATIO NS THE SAID DEPOSITS MAY BE TREATED AS UNEXPLAINED CASH CREDITS. ACCORDINGL Y THIS ISSUE IS TO BE RE- EXAMINED BY THE A.O. 16. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISMISSED AND THAT OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 17.3.2011 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) AC COUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 17 TH MARCH 2011 COPY TO 1 M/S. VENSA BIOTEK LIMITED P.B. NO.18 SAMALKOT - 533 440 (E.G. DIST.) 2 THE DCIT CIRCLE - 1 KAKINADA 3 THE ACIT CIRCLE - 1 KAKINADA 3 THE CI T RAJAHMUNDRY 4 THE CIT (A) RAJAHMUNDRY 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM