ACIT Vs Vijayasai Lakshmi Srinivasa Cotton Mills (ITAT Visakhapatnam)
Revenue had filed four separate appeals against the common orders of CIT(A), deleting protective additions made in reassessment proceedings for the assessees – Vijayasai Lakshmi Srinivasa Cotton Mills, Madhusudhana Venkata Subba Rao Potti, Potti Kumara Naga Venkata Sai Chakravarthy & Shivani Cotton Industries Pvt Ltd., all of Guntur. These additions had originated from a common search conducted in the case of Jaya Balajee Real Media Pvt Ltd (JBRMPL), a film-production company, which had deposited about ₹ 40 crore in old currency notes during the demonetisation period.
According to the Department, statements recorded during the JBRMPL search referred to certain “advances” allegedly received from the above cotton concerns & their partners. On that basis, AO reopened each case u/s 147 for A.Y. 2016-17, claiming that unexplained advances had been made to JBRMPL in F.Y. 2015-16. In the absence of seized documentary evidence, he nevertheless made additions of ₹ 2.15 crore, ₹ 5.20 crore, ₹ 4.50 crore & ₹ 2 crore respectively, describing them as protective additions u/s 69, while asserting that the “substantive” addition had been made in JBRMPL’s own assessment.
When Assessees appealed, CIT(A) found that the substantive addition had already been confirmed in JBRMPL’s case for A.Y. 2017-18 & hence protective additions for A.Y. 2016-17 could not survive. Accordingly, he deleted all the additions.
