INCOME TAX OFFICER, WARD-7(2), HYDERABAD vs. GAYATRI DEVI , HYDERABAD

Brief facts of the case are that the assessee individual, carrying on business in iron & steel, in the name of M/s. Prahladrai Mohanlal, filed her return of income for the A.Y 2013- 14 on 16.9.2013 declaring an income of Rs.7,70,780/-. The case was selected for scrutiny under CASS and during the assessment proceedings u/s 143(2) of the Act, the Assessing Officer required the assessee to furnish certain details, particularly the copy of the assessee’s a/c No.13143 in Bank of India, Kacheguda Branch standing in the name of Prahladrai Mohanlal operated by the assessee and also the copies of assessee’s having A/cs with SBI, PBD, Hyderabad Main Branch. During the assessment Page 1 of 4 proceedings, the Assessing Officer noticed that the assessee has issued a cheque No.043982 for a sum of Rs.1,78,35,387/- in favour of M/s. Mahalakshmi Profiles Pvt Ltd on 30.03.2013 and the same was taken into account and the balance was struck off as on 31.03.2013. He further noticed that there was another cheque in the name of Mahalakshmi Profiles Pvt. Ltd, a family concern of the assessee being cheque. No.043964 dated 30.03.2013 for the sum of Rs.1,78,35,387/-.He observed that the first cheque was not encashed by the creditor at any time and that the 2nd cheque was encashed by the company and in the reconciliation statement, the assessee has shown receipt of Rs.1,78,64,102/- on 30.03.2013 from M/s. MPL Cement & Sponge Pvt. Ltd. Therefore, he treated the sum of Rs.1,78,35,387/- as a receipt and adjusted in the account. He therefore, treated it as deemed income and brought it to tax.

Aggrieved, the assessee preferred an appeal before the CIT (A) stating that the assessee has made the payments to M/s. MPL Cements & Sponge (P) Ltd and there was no receipt of any money from MPL Cements (P) Ltd. He submitted that cheque bearing No.049364 dated 30.03.2013 for Rs.1,78,35,387/- was misplaced by the said company and therefore, it was cancelled and a fresh cheque bearing No.049382 was issued in lieu thereof, and the same was encashed and debited to the assessee’s Bank A/c. Therefore, it was submitted that there was no receipt of money from MPL Cements (P) Ltd. The CIT (A) has taken the said contention into consideration and has held that the sum mentioned in a cheque which was never encashed cannot be treated as income of the assessee. Thus, the appeal of the assessee was allowed by the CIT (A) and the Revenue is in appeal before the Tribunal by raising the following grounds of appeal: 1) The learned CIT (A) erred both in law and on facts of the case. 2) On the facts and circumstances of the case and in law, the learned CIT (A) erred in the allowing the appeal without hearing the Assessing Officer. 3) On the facts and circumstances of the case and in law, the learned CIT (A) erred in the allowing the appeal without following the due procedure laid under Rule 46A. 4) Any other grounds that may be urged at the hearing of the appeal”.

Having gone through the material on record, we find that the learned CIT (A) has verified the Bank A/c and found that out of two cheques issued, only one was encashed and it was a payment and not a receipt by the assessee. Therefore, we see no reason to interfere with the order of the CIT (A). Further, we do not find any violation of the provisions of Rule 46A by the CIT (A). In view of the same, the appeal of the Revenue is dismissed.

In the result, Revenue’s appeal is dismissed.