ITO, Ward 7(2), Hyderabad V. Vijay Kumar Bhati, Secunderabad

CO 6/HYD/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7400 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 15-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.1884/HYD/2011 : ASSESSMENT YEAR 2008- 09 INCOME - TAX OFFICER, WARD - 7(2), HYDERABAD V/S SHRI VIJAY KUMAR BHATI, HYDERABAD ( PAN - AGTPB 3580 B ) (APPELLANT) (RESPONDENT) CROSS-OBJECTION NO.6/HYD/2012- (IN ITA NO.1884/HYD/2011) : ASSESS MENT YEAR 2008-09 SHRI VIJ AY KUMAR BHATI, HYDERABAD ( PAN - AGTPB 3580 B ) V/S INCOME - TAX OFFICER, WARD - 7(2), HYDERABAD (CROSS-OBJECTOR) (RESPONDENT) REVENUE BY : SHRI K.VISWANATHAM ASSESSEE B Y : NONE DATE OF HEARING 11.6.2012 DATE OF PRONOUNCEMENT 15.6.2 012 O R D E R PER D.KARUNAKARA RAO, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE AND CROSS-OBJECT ION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMM ISSIONER OF INCOME- TAX(APPEALS)-VI, HYDERABAD DATED 29.8.2011 FOR THE ASSESSMENT YEAR 2008-09. 2. AT THE OUTSET, IT IS RELEVANT TO MENTION THAT N ONE APPEARED ON BEHALF OF THE ASSESSEE, AT THE TIME OF HEARING ON T HESE MATTERS DESPITE ISSUE OF NOTICE TO THE ASSESSEE. NOT EVEN AN ADJOUR NMENT PETITION HAS BEEN RECEIVED FROM THE ASSESSEE. HENCE, WE HEARD T HESE MATTERS EX- PARTE QUA THE ASSESSEE- AND PROCEED TO DISPOSE OFF THE SAME ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. ITA NO.1884/HYD/2011 & CO 6/HYD/2012 SHRI VIJAY KUMAR BHATI, HYDERABAD 2 3. EFFECTIVE GROUNDS RAISED BY THE REVENUE READ AS UNDER- 1. THE CIT(A)S ORDER IS NOT ACCEPTABLE BOTH IN FA CTS AND IN LAW. 2. THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.18,88,609. THE CIT(A) COULD HAVE TREATED RS.18,8 8,609 AS UNACCOUNTED SALES SINCE SALE PROCEEDS APPEARS TO HAVE BEEN DEPOSITED IN BANK ACCOUNTS. THE A.O. HAS MADE THE ADDITION OF DIFFERENCE OF SALES PROCEEDS DEPOSITED IN BANK ACCOUNTS AND SALES DISCLOSED IN RETURNS. 3. THE CIT(A) COULD HAVE DIRECTED THE A.O. TO ESTIM ATE PROFITS ON SAID UNDISCLOSED SALES. 4. .. BY THE GROUNDS RAISED IN HIS CROSS-OBJECTION, THE A SSESSEE MERELY SUPPORTS THE ORDER OF THE CIT(A), IN THE LIGHT OF T HE ABOVE GROUNDS OF THE REVENUE IN ITS APPEAL. 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E IS A RETAIL TRADER IN KIRANA AND GENERAL GOODS ITEMS. ASSESSEE FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 18.6.2008, ADMIT TING TOTAL INCOME OF RS.1,33,040. AS AGAINST THIS, THE ASSESSING OFFICE R MADE THE FOLLOWING ADDITIONS/DISALLOWANCES AND COMPLETED THE ASSESSMEN T ON A TOTAL INCOME OF RS.24,13,154, VIDE ORDER OF ASSESSMENT DATED 27 .12.2010 PASSED UNDER S.143(3) OF THE ACT. (A) UNDISCLOSED INCOME U/S. 68 RS.18,88,609 (B) UNDISCLOSED CASH BALANCE RS. 3,37,720 (C) DRAWINGS RS. 60,000 (D) CLOSING BALANCE RS. 13,440 (E) INTEREST FROM BANK RS. 189 5. ON APPEAL, THE CIT(A) DELETED THE ADDITIONS LIS TED AT (A) TO (D) ABOVE, AND ALLOWED THE APPEAL OF THE ASSESSEE, VIDE IMPUGNED ORDER DATED 29.8.2011. ITA NO.1884/HYD/2011 & CO 6/HYD/2012 SHRI VIJAY KUMAR BHATI, HYDERABAD 3 6. AGGRIEVED BY THE ABOVE ORDER OF THE CIT(A), REV ENUE IS IN APPEAL BEFORE US. 7. DURING THE PROCEEDINGS BEFORE US, THE LEARNED D EPARTMENTAL REPRESENTATIVE, REITERATING THE GROUNDS RAISED IN T HIS APPEAL, STRONGLY SUPPORTED THE CONCLUSIONS DRAWN BY THE ASSESSING OF FICER SHOULD BE UPHELD. 8. WE HEARD THE LEARNED DEPARTMENTAL REPRESENTATI VE AND PERUSED THE IMPUGNED ORDERS OF THE REVENUE AUTHORIT IES AND OTHER MATERIAL AVAILABLE ON RECORD. THE IMPUGNED ADDITIO N OF RS.18,88,609 UNDER S.68 OF THE ACT HAS BEEN MADE BY THE ASSESSIN G OFFICER, BASED ON THE CASH CREDITS AS PER THE BANK STATEMENTS, OBSERV ING AS FOLLOWS- WHEN THE ASSESSEE DID NOT MAINTAIN THE BOOKS OF ACCOUNT, HOW THE SALES OF RS.4,80,240/0- WAS SHOWN IN THE P&L AC COUNT. IN THE ABSENCE OF THE REAL SALES OF RS.23,68,849/- THE DEC LARED NET PROFIT AND CASH BALANCE SHOWN IN THE BALANCE SHEET ARE NOT JUSTIFIABLE AND ACCEPTED. THEREFORE THE CREDITS IN THE BANK STA TEMENT OF (23,68,849-4,80,240) RS.18,88,609 ARE TREATED AS UN DISCLOSED INCOME, WHICH WAS NOT ACCOUNTED BY THE ASSESSEE. TH EREFORE, I ADD RS.18,88,609 TO THE RETURN INCOME U/S. 68 OF TH E ITA ACT AS UNDISCLOSED INCOME. ASSESSEE MAINLY CONTENDED BEFORE THE CIT(A) THAT H E BEING A RETAIL TRADER, WAS COVERED BY S.44AF AND SINCE HIS TURNOVE R WAS LESS THAN RS.40 LAKHS, HE WAS NOT OBLIGED UNDER THE ACT TO MAINTAIN BOOKS OF ACCOUNT U/S. 44AA. IT WAS SUBMITTED THAT ASSESSEE MADE THE DE POSITS WITH THE BANK FROM OUT OF HIS SALE PROCEEDS. HE ALSO SUBMITTED T HAT THE TURNOVER OF THE ASSESSEE COULD BE ASCERTAINED EITHER ON THE BASIS O F THE COMPUTATION OF INCOME FILED; OR THE PROFIT AND LOSS ACCOUNT FILED OR THE AGGREGATE OF THE DEPOSITS IN HIS BANK ACCOUNT. CONSIDERING THESE SU BMISSIONS OF THE ASSESSEE, THE CIT(A) DELETED THE IMPUGNED ADDITION OF RS.18,88,609 IN THE FOLLOWING MANNER- ITA NO.1884/HYD/2011 & CO 6/HYD/2012 SHRI VIJAY KUMAR BHATI, HYDERABAD 4 5.2 I HAVE CONSIDERED THE MATERIAL ON RECORD AND THE SUBMISSIONS OF THE ASSESSEE. THERE IS NO DISPUTE TH AT THE ASSESSEE IS A RETAIL KIRANA TRADER. THERE IS NO EVIDENCE ON RECORD THAT HIS TURNOVER IS MORE THAN RS. FORTY LAKHS. CONSEQUENTL Y, HE FALLS WITHIN THE PURVIEW OF SEEC.44AF. IT IS ALSO A FACT THAT THE AO HAS REFUSED TO LAY ANY CREDENCE TO THE TURNOVER REPORTE D IN THE P&L ACCOUNT. THAT LEAVES THE OTHER TWO DATA ON WHOSE BA SIS THE TURNOVER CAN BE ESTIMATED. THE ASSESSEE HAS ADMITTE D A PROFIT OF RS.1,52,880 FROM HIS BUSINESS. APPLYING THE PRINCIP LE LAID DOWN IN SEC.44AF, THE TURNOVER COM ES TO RS.30,57,600 WHICH IS CONSIDERABLY MORE THAN THE DEPOSITS OF RS.23,68,849 IN THE BANK ACCOUNTS. FURTHER, A PERUSAL OF THE BANK STATEMENT SHOWS THAT THE DEPOSITS HAVE BEEN MADE GENERALLY IN SMALL TRANCHES OF RS.10,000 TO RS.40,000 AT PERIODIC INTERVALS SPREAD THROUGHOU T THE YEAR AND THE WITHDRAWALS ARE EITHER FOR PAYM ENT TO KIRANA WHOLESALERS OR ATM WITHDRAWALS. IT IS, THEREFORE, REASONABLE TO P RESUME THAT THE BANK DEPOSITS ARE MADE OUT OF THE SALE PROCEEDS FRO M THE BUSINESS. THE ADDITION OF RS.18,88,609 U/S. 68 IS, THEREFORE, DELETED. REVENUE DESIRES THAT THE SAID AGGREGATE SUM OF RS.1 8,88,609/0 IS UNEXPLAINED CREDITS AGAINST THE ASSESSEES STAND TH AT THE SAID SUM IS THE TOTAL OF SMALL AMOUNTS CREDITED IN THE BANK ACCOUNT AND THE SOURCES FOR THE SAME ARE THE SALE PROCEEDS GENERATED OUT OF TH E KIRANA BUSINESS OF THE ASSESSEE. REVENUE COULD NOT DEMONSTRATE THAT TH E SOURCE FOR THESE CREDITS IS NOT BUSINESS OF THE ASSESSEE AND SOMETHI NG /SOMEONE ELSE. IT IS A TRITE LAW THAT THE ONUS IS ON THE REVENUE WHEN AN ALLEGATION IS MADE AGAINST THE ASSESSEE AND WHEN THE ASSESSEE DISCHARG ED THE INITIAL ONUS. IN THE ABSENCE OF ANYTHING TO THE CONTRARY BROUGHT ON RECORD BY THE REVENUE, WE FIND NO INFIRMITY IN THE ABOVE REASONIN G GIVEN BY THE CIT(A). WE ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A) IN TH IS BEHALF, AND DISMISS THE GROUNDS OF THE REVENUE IN THIS APPEAL. REVENUE S APPEAL IS CONSEQUENTLY DISMISSED. 9. AS FAR AS THE CROSS OBJECTION OF THE ASSESSEE I S CONCERNED, AS ALREADY NOTED ABOVE, THE GROUNDS RAISED THEREIN MER ELY SUPPORT THE ORDER OF THE CIT(A), AND AS SUCH THE SAME IS REDUNDANT AN D DOES NOT CALL FOR ANY SEPARATE ADJUDICATION. ACCORDINGLY, CROSS OBJE CTION OF THE ASSESSEE, BEING REDUNDANT, IS ALSO DISMISSED. ITA NO.1884/HYD/2011 & CO 6/HYD/2012 SHRI VIJAY KUMAR BHATI, HYDERABAD 5 10. IN THE RESULT, REVENUES APPEAL AS WELL AS THE CROSS-OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 15.6.2012 SD/- SD/- (SAKTIJIT DEY) ( D.KARUNAKARA RAO) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/- 15 TH JUNE, 2012 COPY FORWARDED TO: 1. 2. 3 SHRI VIJ AY KUMAR BHATI, 14 - 4 - 122. BEGUM BAZAR, HYDERABAD - -500 012 INCOME-TAX OFFICER WARD 7(2), HYDERABAD COMMISSIONER OF INCOME - TAX(APPEALS) VI HYDERABAD 4. COMMISSIONER OF INCOME-TAX V, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD B.V.S.