IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE SUDDALA CHALAPATHI RAO ITTA No.4 OF 2010

10.12.2025 Between:

M/s Raghava Ratna Poultry Farm, 7^th Floor,Raghava Ratna Towers, Abids, Hyderabad.

…Appellant A N D Assistant Commissioner of Income Tax, Circle-3(4), Hyderabad.

…Respondent JUDGMENT : (per Hon’ble Sri Justice P.Sam Koshy)

Heard Mr. Prudhviraj Mattapally, learned counsel representing Mr. K.Raji Reddy, learned counsel for the appellant, and Ms. B.Swapna, learned Senior Standing Counsel for the Income Tax Department for the respondent. Perused the record.

2. The instant appeal is one which has been filed by the assessee assailing the order passed by the Income Tax Appellate Tribunal ‘A’ Bench, Hyderabad in I.T.A.No.508/Hyd/03 for the assessment year 1998-99.

3. The point of issue involved in this appeal is pertaining to the credit advance received by the appellant for the assessment year 1998-99 in respect of the financial year 1997-98. The credit advance was of Rs.5 lakhs of one lakh each from 5 different individuals whose names are reflected in paragraph 3 of the order of the ITAT. For ready reference, the details are reproduced hereunder:

4. According to the appellant, against the said credit advances, the sale of goods occurred in the subsequent year i.e., for the financial year 1998-99 of the assessment year 1999-2000. This, according to the appellant, was accepted by the department and he has been subjected to tax against the said sale. He further contends that the department not accepting the credit advances received by the appellant for the assessment year 1998-99 leads to payment of double tax and that the department’s only reluctance in accepting the same was on the identity, creditworthiness and genuineness of the transaction. He further submits that the appellant in fact had produced documentary proof in respect of the advances that it has received against the aforesaid 5 individuals which was not accepted by the department, who insisted upon the persons who has paid the advance to be produced before the authorities so far as establishing their identity is concerned. At this juncture, the learned counsel for the appellant submits that in fact immediately after the assessment order was passed, the appellant has submitted his revised data on 29.01.2001 which till date has not been processed by the department. He further contends that as regards the sale made to the 5 individuals from whom the credit advance has been received has been duly accepted by the department for the subsequent year sale made for the year 1998-99 and which has been reflected in the returns for the assessment year 1999-2000. According to the appellant, if the department is itself accepting the sale made to these 5 individuals for the subsequent year, they could not have doubted the genuineness and creditworthiness of these 5 persons in respect of the credit advances received for the previous year.

5. Perusal of the record would show that in fact in paragraph 6 of the impugned order itself the Tribunal had reserved the liberty to the appellant for approaching the authorities by making necessary claim in accordance with law. We do not have any material to know whether the appellant has availed this liberty or not. Nonetheless, what strikes the mind of this Bench is the fact that if against the credit advances received by the appellant during the assessment year 1998-99 and against the same if the sale of goods for the subsequent year has been accepted upon their filing the returns to the department, it needs to be re-considered by the department to ascertain as to how if the genuineness and creditworthiness of these persons who have made the credit advances for the previous years have