DCIT, Hyderabad v. M/s Boddam Mallesh Chit Fund Pvt. Ltd., Hyderabad

ITA 597/HYD/2010 | 2005-2006
Pronouncement Date: 30-07-2010 | Result: Dismissed

Appeal Details

RSA Number 59722514 RSA 2010
Assessee PAN AABCB7368L
Bench Hyderabad
Appeal Number ITA 597/HYD/2010
Duration Of Justice 3 month(s) 6 day(s)
Appellant DCIT, Hyderabad
Respondent M/s Boddam Mallesh Chit Fund Pvt. Ltd., Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-07-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 30-07-2010
Date Of Final Hearing 27-07-2010
Next Hearing Date 27-07-2010
Assessment Year 2005-2006
Appeal Filed On 23-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A' HYDERABAD BEFORE SHRI N.R.S. GANESAN AND SHRI CHANDRA POOJARI ACCOUNTANT MEMEBR ITA NO.596/HYD/10 : ASSTT. YE AR 2004-05 ITA NO.597/HYD/10 : ASSTT. YE AR 2005-06 ITA NO.598/HYD/10 : ASSTT. YE AR 2006-07 DY. COMMISSIONER OF INCOME- TAX CIRCLE 6 HYDERABAD V/S. M/S. BODDAM MALLESH CHIT FUND P. LTD. HYDERABAD. ( PAN AABCB 7368 L) (RESPONDENT) APPELLANT BY : SHRI AMLAN TRIPATHY RESPONDENT BY : SHRI A.V.RAGHURAM O R D E R PER CHANDRA POOJARI ACCOUNTANT MEMBER: THESE THREE APPEALS OF THE REVENUE ARE DIRECTED AGAI NST A COMMON ORDER OF THE CIT(A) I HYDERABAD DATED 18.2.20 10 FOR THE ASSESSMENT YEARS 2004-05 TO 2006-07. SINCE FACTS OF THE CA SE AND ISSUES INVOLVED ARE COMMON THESE APPEALS ARE BEING DISPO SED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. GROUNDS OF APPEAL OF THE REVENUE COMMON IN ALL THESE APPEALS READ AS UNDER- '1. THE CIT(A) ERRED IN DELETING THE ADDITIONS MADE TOWARDS UNDISCLOSED INCOME OF FOREMAN COMMISSION FOR THE AS SESSMENT YEARS 2004-05 2005-06 AND 2006-07 2. THE CIT(A) HAS NOT CONSIDERED THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH WHEREIN THE UNDISCLOSED CHITS AMOUNT WERE MENTIONED IN THE SLIPS FOUND. 3. UNACCOUNTED CHITS WHICH ARE NOT RECORDED IN THE BOO KS OF ACCOUNT WERE CONFIRMED BY ONE OF THE EMPLOYEES OF T HE ASSESSEE COMPANY AND ALSO CONFIRMED BY SHRI P.BALRA J WHO HAS CONTRIBUTED CHIT OF RS.5 00 000. ' ITA NO596-598./HYD/10 M/S. BODDAM MALLESH CHIT FUND P. LTD. HYD. . 2 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF RUNNING CHITS. A SEARCH AND SEIZURE OPERATION U/S. 132 WAS CONDUCTED IN THE RESIDENT IAL PREMISES OF ONE B.MALLESH YADV CHAIRMAN OF THE ASSESSEE COMPANY. SIMULTANEOUSLY SURVEY U/S. 133A WAS CONDUCTED IN THE BU SINESS PREMISES OF THE ASSESSEE ON 4.8.2005. IN RESPONSE TO TH E NOTICES ISSUED UNDER S.153C THE ASSESSEE FILED RETURNS OF INCOME. DURING THE COURSE OF SURVEY AT ASSESSEE'S PREMISES CERTAIN BOOKS OF ACCOUNT AND DOCUMENTS WERE IMPOUNDED. A STATEMENT WAS RECORDED FORM ONE K.RAMESH CLERK-CUM-ASSISTANT ACCOUNTANT OF THE ASSESSEE COMPANY . WHEN CONFRONTED WITH THE LOOSE SHEETS AND BUNDLE NO.38 FOUND DURING THE COURSE OF SURVEY WHEREIN CERTAIN CHIT TRANSACTIONS WERE NOTED HE CONFIRMED THAT THE THREE SHEETS RELATE TO CHITS SUBSCRIBE D BY P.BALRAJ SRIMAN PRABHAKAR AND PREM SAGAR FOR CHIT VALUE OF R S.5 00 000 RS.2 50 000 AND RS.10 00 000 RESPECTIVELY WHICH WERE N OT RECORDED IN THE BOOKS OF ACCOUNT. DURING THE COURSE OF SURVEY SWOR N DEPOSITION OF P.BALRAJ WAS ALSO RECORDED WHEN ASKED TO GIVE THE DETAILS OF CHITS SUBSCRIBED WITH B.MALLESH YADAV BALRAJ STATED THAT HE S UBSCRIBED TO TWO CHITS WITH MALLESH YADAV OF RS.1 50 000 AND RS.5 00 000. BASED ON THE STATEMENT RECORDED FROM K.RAMESH AND P.BALRAJ THE ASSESSING OFFICER CONCLUDED THAT THREE CHITS OF VALUE RS.5 00 000 RS.2 50 000 AND RS.10 00 000 WERE ORGANIZED BY THE ASSESSEE OUTSIDE T HE BOOKS OF ACCOUNT. THE TENURE OF THESE CHITS WAS 25 MONTHS. THE ASSE SSING OFFICER ON THAT BASIS WORKED OUT THE INCOME OF THE ASSESSE E BEING FOREMAN COMMISSION AT 5% AND TREATED THE SAME AS UNDISCL OSED FOREMAN COMMISSION FOR THE ASSESSMENT YEARS 2004-05 2005-0 6 AND 2006-07. HE ACCORDINGLY ADDED AN AMOUNT OF RS.87 500 FOR THE ASSESSMENT YEAR 2004-05; AND FURTHER AMOUNTS OF RS.10 0 0 000 EACH FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07. THE ASSESSING OFFICER ITA NO596-598./HYD/10 M/S. BODDAM MALLESH CHIT FUND P. LTD. HYD. . 3 WITH THESE ADDITIONS COMPLETED THE ASSESSMENTS ON TOTAL INCOMES OF RS.1 42 780 FOR THE ASSESSMENT YEAR 2004-05; OF RS.10. 79 570 FOR THE ASSESSMENT YEAR 2005-06 AND OF RS.10 20 170 FOR T HE ASSESSMENT YEAR 2006-07 VIDE ORDERS OF ASSESSMENT PASSED UND ER S.153C READ WITH S.143(3) OF THE ACT FOR THESE YEARS. 4 IN THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE C IT(A) ASSESSEE QUESTIONED NOT ONLY THE ADDITIONS MADE IN THE A SSESSMENTS ON MERIT BUT ALSO THE VERY INITIATION OF THE PROCEED INGS UNDER S.153C. THE CIT(A) THEREFORE CALLED FOR A REMAND REPORT FRO M THE ASSESSING OFFICER IN THE LIGHT OF THE SUBMISSIONS OF THE ASSESSEE. T AKING INTO CONSIDERATION THE REMAND REPORT OF THE ASSESSING OFFICER I N RESPONSE THERETO AND THE SUBMISSIONS OF THE ASSESSEE BEFORE HIM THE CIT(A) HELD IN THE FIRST PLACE THAT JUST BECAUSE THE NAME OF TH E ASSESSEE COMPANY IS APPEARING IN THE STATE BANK SLIPS IT IS NO T JUSTIFIED FOR THE REVENUE AUTHORITIES TO INITIATE ACTION UNDER S.153C W ITHOUT ANY CONCRETE FINDING OR BASIS THAT THE CHITS FOR WHICH CHEQUES HAVE BEEN ISSUED OR UNACCOUNTED ARE RUN OUTSIDE THE BOOKS OF ACCOUNT . HE ALSO NOTED IN THIS BEHALF THAT THERE IS NO DISCUSSION WHATSO EVER IN THE ASSESSMENT ORDER ABOUT THE EXISTENCE OF THE SEIZED MATERI AL OR THE ENQUIRY CONDUCTED IN RESPECT OF THE TRANSACTION RECORDED I N THE SEIZED MATERIAL. EVEN ON MERITS THE CIT(A) CONCLUDED THAT THE ESTIMATION AND ADDITION MADE ON ACCOUNT OF THE FOREMAN'S COMMISSION IN THE HANDS OF THE ASSESSEE FOR THE ASSESSMENT YEARS UNDER CONSIDERA TION IS NOT JUSTIFIED. THE CIT(A) ACCORDINGLY DIRECTED THE ASSE SSING OFFICER TO DELETE THE ADDITIONS MADE IN THE IMPUGNED ASSESSMENTS FR AMED AND ALLOWED THE APPEALS OF THE ASSESSEE FOR THE YEARS UNDER APPEAL. 5. AGGRIEVED BY THE ORDER OF THE CIT(A) ASSESSEE IS IN SECOND APPEAL BEFORE US FOR ALL THE THREE YEARS. ITA NO596-598./HYD/10 M/S. BODDAM MALLESH CHIT FUND P. LTD. HYD. . 4 6. LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUP PORTING THE ORDERS OF THE ASSESSING OFFICER SUBMITTED THAT THE CI T(A) IS NOT JUSTIFIED IN DELETING THE ADDITION ON ACCOUNT OF FORE MAN'S COMMISSION MADE BY THE ASSESSING OFFICER SINCE IT IS CLEARLY ESTABLISHE D BY THE MATERIAL AVAILABLE ON RECORD THAT THE ASSESSEE HAS RUN TH E CHITS IN QUESTION OUTSIDE THE BOOKS OF ACCOUNT. 7. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER H AND REITERATING THE CONTENTIONS URGED BEFORE THE LOWER AU THORITIES STRONGLY SUPPORTED THE IMPUGNED ORDER OF THE CIT(A). HE ALSO P LACED RELIANCE ON THE ORDER OF THE TRIBUNAL DATED 31.7.2009 IN THE CASES OF ACIT/DCIT CENTRAL CIRCLE 5 HYDERABAD V/S. M/S. PLATNIA PROPERTIES & PROJECTS LTD. HYDERABAD (ITA NO.1622 1623 573 TO 57 6/HYD/2008) FOR THE ASSESSMENT YEARS 2002-03 2004-05 1999-2000 TO 20001-02 AND 2003-04 RESPECTIVELY) AND FILED A COPY THEREOF B EFORE US. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ASSESSING OFFICER INITIATED THE PROCEEDINGS BASED ON T HE STATE BANK'S SLIPS FOUND FROM THE RESIDENTIAL PREMISES OF B.MA LLESH YADAV DIRECTOR OF THE ASSESSEE COMPANY. THE CIT(A) HAS GIVEN ELABORATE REASONING IN PARA 4.1 OF THE IMPUGNED ORDER FOR CONCLU DING THAT THE REVENUE IS NOT JUSTIFIED IN INITIATING THE ACTION UND ER S.153A OF THE ACT. HE WAS OF THE VIEW THAT THOUGH THE ASSESSEE'S NAME DO ES APPEAR IN THE SLIPS THE ISSUE THAT NEEDS TO BE ANSWERED IS WHET HER THE SEIZED MATERIAL CAN FORM SUFFICIENT AND REASONABLE BASIS FOR T HE INITIATION OF ACTION UNDER S.153A READ WITH S.153C. ACCORDING TO HI M THE SLIPS ONLY INDICATE ISSUE OF CERTAIN CHEQUES BY MALLESH YADAV M AHESH JADAV ETC. TO THE ASSESSEE COMPANY WHEREAS NEITHER THE ASSESSMENT RECORDS NOR THE ASSESSMENT ORDER INDICATE THAT THE AMOUN TS RECORDED ITA NO596-598./HYD/10 M/S. BODDAM MALLESH CHIT FUND P. LTD. HYD. . 5 IN THE SLIPS ARE UNRECORDED TRANSACTIONS OR UNDISCLOSED INCOM E OF THE ASSESSEE COMPANY AND IF THE ASSESSING OFFICER'S CONTENTION I S ACCEPTED TO BE CORRECT THEN ACTION UNDER S.153C/153A I S ALSO REQUIRED TO BE TAKEN IN RESPECT OF OTHER CONCERNS OR PER SONS APPEARING IN THOSE SLIPS. HE FURTHER FOUND THAT THERE IS NO DISCUSS ION WHATSOEVER IN THE ASSESSMENT ORDER ABOUT THE EXISTENCE OF THE SEIZED MATERIAL OR ANY ENQUIRY CONDUCTED IN RESPECT OF THE TRANSACTIONS RECOR DED IN THE SAID SEIZED MATERIAL. EVEN ON MERITS THE CIT(A) HAS GIVEN SOUND AND VALID REASONS FOR DELETING THE ADDITIONS MADE BY THE A SSESSING OFFICER. HE NOTED THAT THE ASSESSMENT RECORDS DO NOT SHOW THAT ANY E NQUIRY HAS BEEN CONDUCTED BY THE ASSESSING OFFICER WITH THE REGIST RAR OF CHITS IN RESPECT OF ALLEGED UNRECORDED CHITS RUN BY THE ASSESSEE CO MPANY. HE ALSO NOTED FROM THE ASSESSMENT ORDER THAT THE ASSESSING O FFICER OBSERVED THAT THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDI NGS HAD SUBMITTED THAT HE HAD NO OCCASION TO CROSS EXAMINE P .BALARAJ AS TO HOW HE STARTED CONTRIBUTING TO THE CHITS WHICH WER E NOT RECODED BY THE ASSESSEE COMPANY. HE NOTED THAT THE ASSESSING OFFICER HAS TAKEN A STAND THAT THE ASSESSEE'S EXPLANATION CANNOT BE ACCEPTED F OR THE REASON THAT PART OF THE STATEMENT OF THE EMPLOYEE RA MESH WAS ACCEPTED BY MALLESH YADAV REGARDING RENTAL RECEIPTS W HILE THE OTHER PART IS DENIED. THIS STAND OF THE ASSESSING OFFICER WAS F OUND TO BE UNTENABLE BY THE CIT(A) SINCE THE ASSESSEE HAS NOT ACCEPTED ANY STATEMENT OF RAMESH WHEREAS MALLESH YADAV WHO IS THE OWNER OF THE BUILDING MIGHT HAVE ACCEPTED THE STATEMENT WITH REGAR D TO RENTAL RECEIPTS IN HIS INDIVIDUAL CAPACITY. WE FIND THAT THE EMPLOYEES STATEMENT AND THE LOOSE SLIPS FOUND DURING THE SEARCH IS N O DOUBT RELEVANT PIECE OF EVIDENCE TO BE CONSIDERED ALONGWITH O THER EVIDENCE BUT ITS VALUE WILL ALWAYS DEPEND ON THE CIRCUMSTANCES OF E ACH CASE. CONSIDERING TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE WE DO NOT ITA NO596-598./HYD/10 M/S. BODDAM MALLESH CHIT FUND P. LTD. HYD. . 6 FIND ANY INFIRMITY IN THE REASONING GIVEN BY THE CIT (A) IN THE IMPUGNED ON MERITS. 9. IN THE RESULT APPEALS OF THE REVENUE ARE DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 30.7.2010 SD/- SD/- N.R.S. GANESAN (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/- 30 TH JULY 2010 COPY FORWARDED TO: 1. M/S. BODDAM MALLESH CHIT FUND P. LTD. 8-3-897/4 NAGARJUNA COLONY AMEERPET HYDERABAD. 2. DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-6 HYDERABAD. 3. COMMISSIONER OF INCOME-TAX(APPEALS)-I HYDERABAD. 4. COMMISSIONER OF INCOME-TAX I HYDERABAD 5. THE DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD. B.V.S .