Income Tax Appellate Tribunal - Hyderabad
Govind Prasad Chandak, Hyd, Hyderabad vs Ito, Ward-6(2), Hyderabad, Hyderabad on 27 September, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "A", HYDERABAD
BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER
AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER
ITA No. 1041/Hyd/2016
Assessment Year: 2007-08
Govind Prasad Chandak, Vs. Income-tax Officer,
Hyderabad. Ward - 6(2), Hyderabad.
PAN - ABFPC6739E
(Appellant) (Respondent)
Assessee by : Shri S. Rama Rao
Revenue by : Smt. Suman Malik
Date of hearing : 03-08-2017
Date of pronouncement : 27-09-2017
ORDER
PER S. RIFAUR RAHMAN, A.M.:
This appeal filed by the assessee is directed against the order of the learned Commissioner of Income-tax(A) - 9, Hyderabad, dated 28-03-2016 for AY 2007-08.
2. On perusal of record, we find that the assessee filed this appeal before us with a delay of 23 days. In this connection, assessee filed a petition requesting for condonation of the said delay wherein it was stated that at the relevant point of time, he became sick and to this effect a medical certificate is enclosed to the said petition. He also filed an affidavit affirming the reasons mentioned in the condonation petition. He, therefore, requested to condone the said delay and admit the appeal for adjudication. As the assessee was prevented by sufficient cause in not filing the appeal within the stipulated time, we condone the said delay and admit the appeal for hearing and adjudication.
2 ITA No. 1041/H/16Govind Prasad Chandak
3. Briefly, the facts of the case are that the assessee is an individual and his sources of income are from business, house property and capital gain. The assessee mainly deals with retail trading of fertilizers and Girvi business. For the AY 2007-08, he filed return of income on 13/10/2007 declaring a total income of Rs. 14,02,810/-, which was processed u/s 143(1) and later on the case was converted to scrutiny and assessment was completed u/s 143(3) of the Act on 16/12/2009 determining the total income of the assessee at Rs. 16,72,980/- by making the following additions:
1. Addition of Rs. 1,81,530/- u/s 68 of the Act on account of unexplained cash credits.
2. Addition of Rs. 88,820/- u/s 40(a)(ia) of the Act for non deduction of TDS.
4. On appeal, the CIT(A), deleted the addition of Rs. 88,820/- made u/s 40(a)(ia) and sustained the addition of Rs. 1,81,530/- made u/s 68 of the Act. Therefore, the subject matter of appeal is against the addition of Rs. 1,81,530/- made u/s 68 of the Act.
5. The facts relating to addition of Rs. 1,81,530/- are that during the course of assessment proceedings, AO examined the loans taken by the assessee of Rs. 1,81,350/-, which were actually advances taken from agriculturists towards fertilizers. AO was not satisfied with the confirmation letters produced by the assessee and hence, treated these amounts as unexplained cash credit u/s 68 of the Act.
6. Before the CIT(A), the assessee submitted that the said amount was received towards advance against supply of fertilizers, for which letters of confirmation were filed before the Assessing Officer and the amounts were repaid at the time of sale of fertilizers. The details of the amounts paid were also mentioned. Further he submitted that he is carrying on the business activity at Sankarapalli, Medal District and the agriculturists around the area pay the cost of fertilizers in 3 ITA No. 1041/H/16 Govind Prasad Chandak advance so as to enable them to get the supplies of fertilizers without any problem. In the process, the assessee during the year under consideration, received the said amount towards advance. Some of the amounts were repaid during the year and the persons have confirmed the fact that they paid the amounts as advances. He therefore, submitted that the Assessing Officer was not justified in rejecting the letters of confirmation and in making addition.
7. After considering the submissions of assessee, CIT(A) observed that the assessee's contentions are not acceptable, as the Assessing Officer has already examined the confirmation letters produced during the assessment proceedings and analyzed the circumstances under which the addition was made. Further he observed that it was seen from the assessment order that most of the loans which have been taken are repaid by the assessee and what has not been repaid is still available with the assessee and hence inference was drawn that these loans have not been taken for the purpose of purchase of fertilizers. He observed that as correctly opined by the Assessing Officer it is very unlikely that the farmers keep their money with the assessee for such a long time for the purpose of buying fertilizers. Further, he observed that it is also unlikely that they take back their money without buying fertilizers which is the reason why the advances had been given and as noted by the AO the assessee has not produced these parties for verification before the Assessing Officer and as such these amounts remain unsubstantiated. He observed that even during the appellate proceedings, no further evidence has been produced by the assessee in support of his contentions. In view of the above observations, the CIT(A) confirmed the addition of Rs. 1,81,350/- made by the AO u/s. 68.
8. Aggrieved by the order of the CIT(A), the assessee is in appeal before us raising the following grounds of appeal:
4 ITA No. 1041/H/16Govind Prasad Chandak "1. The order of CIT(A) is erroneous to the extent it is prejudicial to the appellant.
2. The CIT(A) erred in confirming the addition of Rs. 1,81,350/-
made by the AO u/s 68 of the IT Act."
9. Considered the rival submissions and material facts on record. The assessee has already received advances from farmers towards supply of fertilizers. The assessee has filed confirmation letters but did not produce any farmers before AO to substantiate the genuineness of the transaction. Even before us, the assessee has submitted letters of confirmation submitted before the AO and ledger extract of fertilizer sales. The amount disallowed was Rs. 1,81,350/- but the letter of confirmation submitted was confirming the amount which was settled prior to March'07 and only two confirmations which relate to the loans outstanding in the list of sundry creditors. The ledger extracts confirm the advances received and subsequent sale of fertilizers, but, it does not carry any closing balance of dues. These are not proper evidences to be considered in the present appeal. We are in agreement with the findings of CIT(A) that small farmers will not deposit amount in advance to procure fertilizers. We have noticed that the duration time of the transaction from advance receipt to sale of fertilizers in the ledger submitted before us are one month. No farmer will leave his/her hard earned money with the other person. Accordingly, we uphold the order of the CIT(A) and ground raised by the assessee on this count is dismissed.
10. In the result, appeal of the assessee is dismissed.
Pronounced in the open court on 27 th September, 2017.
Sd/- Sd/-
(P. MADHAVI DEVI) (S. RIFAUR RAHMAN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated: 27 th September, 2017.
Kv
5
ITA No. 1041/H/16
Govind Prasad Chandak
Copy to:-
1) Shri Govind Prasad Chandak, C/o Sri S. Rama Rao, Advocate, Flat No. 102, Shriya's Elegance, 3-6-643, Street No. 9, Himayat Nagar, Hyderabad - 500 029
2) ITO, Circle - 6(2), IT Towers, AC Guards, Hyderabad.
3) CIT(A) - 9, Hyderabad 4 Pr. CIT - 6, Hyderabad
5) The Departmental Representative, I.T.A.T., Hyderabad.
6) Guard File