SUMON TECHNOLOGIES PRIVATE LIMITED, HYDERABAD,HYDERABAD vs. DCIT, CIRCLE-3(2), HYDERABAD, HYDERABAD

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH “A-SMC”, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA No.1695/Hyd/2016 Assessment Year: 2004-05 Sumon Technologies Private vs. Dy. CIT, Limited, Circle-3(2), Hyderabad. Hyderabad. PAN- AADCS4186P (Appellant) (Respondent) Assessee by : None Revenue by : Shri B. Suresh Babu Date of hearing : 25-04-2018 Date of pronouncement : 27-04-2018 ORDER PER SHRI B. RAMAKOTAIAH, AM: This is an appeal by Assessee against the order of CIT(A)-10, Hyderabad dated 11.05.2016. Assessee is aggrieved on the addition of Rs. 6,50,000/- being share application money and unsecured loans. 2. Briefly stated facts are that during the assessment proceedings, A.O noticed that Assessee company received share application money from Shri V. Amarnath, Director of the company. In-turn shri V. Amarnath has received loan from one M/s Impact Materials Ltd., of Rs. 2,00,000/- and Shri Jayakar Rs. 3,00,000/-. A.O also records that Assessee also received unsecured loans from Shri Rajeswar Rao to an extent of Rs. 1,00,000/- and Shri Visveshwar Rao Rs. 50,000/-. As Assessee failed to furnish details and

2 ITA Nos. 1695/Hyd/2016 Sumon Technologies Pvt Lted., Hyderabad. confirmations called for, the share application money of Rs. 5,00,000/- and unsecured loans of Rs. 1,50,000/- totaling to Rs. 6,50,000/- was brought to tax and the same was reduced from the returned loss.

“7.4 In the written submissions dated 03.03.2008 copies of receipts for various amounts were filed to show that the amounts were repaid to Shri A.Jayakar. The assessee did not file any petition for admission of these evidences during the course of these proceedings as per Rule 46A of the Act. The receipts did not suggest that the loan was taken from Shri A. Jayakar by the assessee or Shri V. amaranth. The assessee has to prove that amounts were taken from Shri Jayakar and Impact Metals Ltd., and the same was invested as share application money with the company. The legal notice dated 17.09.2003 issued on behalf of the Impact Metals Ltd, did not show that date of borrowal and terms of the payments. Similarly, the MOU with Shri Jayakar is dated 28.01.2003 and the amount mentioned there is Rs. 3,00,000/-. The MOU did not suggest payment of any installments and the loan period is mentioned as 5 years and the second party is at liberty to demand in writing for payment after two years and the receipts filed along with letter dated 03.03.2008 are dated during the period 22.03.2005 to 16.05.2006. Thus, the dates also did not tally. 7.5 The assessee was given an opportunity to file confirmed letters by the A.O and Shri V. Amarnath, Director of the assessee company appeared before the A.O and expressed his inability to file confirmation letters from the parties. It is also seen that the assessee filed the documents before the CIT(A) and it is not known whether the same were available with the A.O at the time of making the assessment and the assessee did not file any petition for admission of these evidences. In view of these circumstances, the evidence filed is not to be considered since the assessee failed to furnish any evidence before the A.O or during the course of these proceedings. No relief to be granted to the

3 ITA Nos. 1695/Hyd/2016 Sumon Technologies Pvt Lted., Hyderabad. assessee as the genuineness of the transactions has not been proved. Therefore, the addition made by the A.O is hereby confirmed and this ground of appeal is dismissed.

4 ITA Nos. 1695/Hyd/2016 Sumon Technologies Pvt Lted., Hyderabad. Impact Materials Ltd., and Shri A. Jayakar. As seen from the extract in para 7.1 of the CIT(A)’s order, there is no dispute that these amounts are received by Shri V. Amarnath, Chief promoter of the company in his hands who in-turn invested in the company. Therefore the addition of Rs. 5,00,000/- in the hands of Assessee company is not correct and the necessary enquiry should have been completed in the hands of shri V. Amarnath who has a separate status from Assessee company. A.O could not enquire the source of the source and thereby the order by A.O and CIT(A) on this issue is not correct. 7. Apart from that Assessee also stated it furnished confirmation letters for the unsecured loans received. As seen from the letter of A.O dated 18.01.2016 extracted in para 7.2 of the order, A.O has asked Assessee to produce these parties of which the Director expressed his inability. In that case, A.O can as well issue notices to assessee including summons to verify the facts, instead of that, A.O reported that Assessee-Director has not complied with the requirements. It is also surprising to see that Ld.CIT(A) rejected the additional evidence furnished before him on the reason that Assessee has not made any petition for admission of these evidences. As seen from the para 4.1 of Ld. CIT(A)’s order, the submissions were sent A.O and A.O has submitted a remand report. Unless the additional evidence was admitted, there is no need to send the same to A.O. It gives an impression that predecessor officer has admitted the additional evidence and sent for remand report. In those circumstances, it is not understandable how the

5 ITA Nos. 1695/Hyd/2016 Sumon Technologies Pvt Lted., Hyderabad. present incumbent CIT(A) can reject the very same confirmation letters at a later stage to say that the additional evidence cannot be admitted as there is no petition for admission. Neither the A.O nor CIT(A) proceeded in the matter as per the law and rules. I am of the opinion that the entire matter is to be set aside to the file of A.O to examine afresh, after giving due opportunity to Assessee. I order accordingly. In this circumstances, the grounds of Assessee are allowed for statistical purposes. 8. In the result Assessee’s appeal is allowed for statistical purposes.

Pronounced in the open court on 27th April, 2018.

Sd/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER

Hyderabad, Dated:27th April, 2018. KRK 1) Sumon Technologies Pvt Ltd., 204, Santhoshima Complex, RTC’X’ Road, Musheerabad, Hyderabad- 20 2) DCIT, Circle-3(2), Hyderabad. 3) CIT(A) -10, Hyderabad. 4) The Pr.CIT-3 Hyderabad. 5) The Departmental Representative, I.T.A.T., Hyderabad. 6) Guard File