KOSURU SARATCHANDRA GOPIKRISHNA , VISAKHAPATNAM V. INCOME TAX OFFICER, WARD-4(3), VISAKHAPATNAM

ITA 101/VIZ/2023

AI Insights

The case revolves around the appeal by Kosuru Sarathchandra Gopikrishna against the order of the Commissioner of Income Tax (Appeals) which upheld the addition of Rs.10,09,752 to the assessee's income, estimated at 8% of the cash deposits/credits in his bank account. The assessee was involved in collecting payments for services like electricity and telephone bills on behalf of the State Government of Andhra Pradesh and received a commission for these services. The Assessing Officer (AO) had doubts about the ownership of the agency during the relevant assessment year and estimated the income based on the cash deposits. The Tribunal, after examining the certificates and sale letter submitted by the assessee, concluded that the amounts in question were not the assessee's income but were collected for government services.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135950 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-06-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 23-03-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(2)

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम “एसएमसी”पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER आयकर अपील सं./I.T.A.No.101/Viz/2023 (ननधधारण वर्ा / Assessment Year : 2017-18) Kosuru Sarathchandra Gopikrishna D.No.16-370/1 SKML Nagar, Arilova Colony Visakhapatnam [PAN : BTBPK1506Q] Vs. Income Tax Officer Ward-4(3) Visakhapatnam (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : Shri G.V.N.Hari, AR प्रत्यधथी की ओर से / Respondent by : Shri O.N.Hari Prasada Rao, DR सुनवधई की तधरीख / Date of Hearing : 19.06.2023 घोर्णध की तधरीख/Date of Pronouncement : 17.07.2023 आदेश /O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi vide DIN & Order No.ITBA/NFAC/S/250/2022-23/1049786366(1) dated 15.02.2023, arising out of assessment order passed u/s 271 of the Income Tax Act, 1961 (in short ‘Act’) dated 06.12.2019 for the Assessment Year (A.Y.) 2017-18. 2 I.T.A. No.101/Viz/2023, A.Y.2017-18 Kosuru Sarathchandra Gopikrishna, Visakhapatnam 2. Brief facts of the case are that the assessee, an individual was the owner of USDP-VZLS Mee Seva, under which he collects payments from various customers with regard to electricity bills, telephone bills, govt. school fees on behalf of State Government of Andhra Pradesh. The collected amount is deposited in his bank account and transferred to AP State Govt. online and the assessee gets commission on the receipts collected for various services. The assessee filed his return of income, admitting taxable income of Rs.2,46,710/- under the head ‘income from business’ and ‘income from other sources’. The case was selected for limited scrutiny for the reason “cash deposit during the year”. The assessee during the course of assessment proceedings filed APT online certificate, valid from 09.05.2018 to 08.05.2019, issued by the AP Online to Smt. Veera Veni Nainala, Visakhapatnam and also filed sale letter executed on 19.04.2016 by Smt. Veera Veni Nainala in favour of the assessee. The Assessing Officer (AO) held that it is not ascertainable from the sale letter executed by Smt.Veera Veni Nainala on 19.04.2016 as to how it could be possible for Smt.Veera Veni Nainala to sell the agency to the assessee on 19.04.2016, when she herself was given a certificate by APT online for the period 09.05.2018 to 08.05.2019. The AO held that the assessee cannot be held to be the owner of the agency for the A.Y.2017- 3 I.T.A. No.101/Viz/2023, A.Y.2017-18 Kosuru Sarathchandra Gopikrishna, Visakhapatnam 18, but observed from the bank statement filed by the assessee that some of the transactions appearing therein related to payments from the bank account. Thus, in view of the ambiguity noticed in the case of the ownership of the agency and taking into consideration, the case has been selected under CASS for examining the cash deposits, the AO estimated the income at 8% on the aggregate cash deposits / credits of Rs.1,26,21,900/-, which works out to Rs.10,09,752/- and the same was brought to tax. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) upheld the order passed by the AO and dismissed the appeal of the assessee. 4. Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal : 1. The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case. 2. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs.10,07,752/- made by the assessing officer towards income estimated @8% of the cash deposits / credits in the bank account. 3. Any other grounds may be urged at the time of hearing. 4 I.T.A. No.101/Viz/2023, A.Y.2017-18 Kosuru Sarathchandra Gopikrishna, Visakhapatnam 5. Ground No.1 and 3 are general in nature, which do not require specific adjudicaton. 6. Ground No.2 is related to addition of Rs.10,07,752/- made by the AO towards income estimated @8% of the cash deposits / credits in the bank account. At the outset, the Ld.AR submitted that the assessee filed a certificate by APT online for the period 18.05.2015 to 17.05.2016 and 19.05.2016 to 18.05.2017 before the Ld.CIT(A) and also filed sale letter dated 19.04.2016 executed in favour of the assessee. But, the Ld.CIT(A), without examining the same upheld the addition made by the AO, which is against law. He, therefore, pleaded to quash the order passed by the Ld.CIT(A) and allow the appeal of the assessee. 7. Per contra, the Ld.DR submitted that the AO has rightly made addition as there is ambiguity in the ownership of USDP VZLS Mee Seva during the impugned assessment year and the Ld.CIT(A) has correctly upheld the addition made by the AO. He, therefore, pleaded to uphold the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee. 8. I have heard both the parties and perused the material available on record. It is undisputed fact that USDP VZLS Mee Seva was sold in favour of the assessee by Smt. Nainala Veera Veni on 19.04.2016 as evident from 5 I.T.A. No.101/Viz/2023, A.Y.2017-18 Kosuru Sarathchandra Gopikrishna, Visakhapatnam the paper book filed. I have gone through the APT online certificates, sale letter executed filed before the Ld.CIT(A) and the reply filed by the assessee in response to the notice issued and served u/s 143(2) of the Act by the department. On careful examination of the same, I find that the assessee had taken sub contract from Smt.Veera Veni Nainala till the date of execution of sale i.e. 19.04.2016 in favour of the assessee. I also find that the assessee had deposited the amount collected in his bank account for rendering various services viz. electricity bills, telephone bills, water bills and other revenue services, which in turn was transferred by way of RTGS to Govt. of Andhra Pradesh for which he derived commission. The revenue could not controvert the fact that the amount collected and deposited in his bank account was not his income, but it was the amount collected for various services rendered and for deposting into the account of Govt. of Andhra Pradesh. I find force in the argument of the Ld.AR and I therefore set aside the order passed by the Ld.CIT(A) and allow the appeal of the assessee. 9. In the result, appeal of the assessee is allowed. 6 I.T.A. No.101/Viz/2023, A.Y.2017-18 Kosuru Sarathchandra Gopikrishna, Visakhapatnam Order pronounced in the open court on 17 th July, 2023. Sd/- (द ु व्वूरु आर.एल रेड्डी) (DUVVURU RL REDDY) न्याधयक सदस्य/JUDICIAL MEMBER Dated : 17.07.2023 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Kosuru Sarathchandra Gopikrishna, D.No.16- 370/1, SKML Nagar, Arilova Colony, Visakhapatnam 2. रधजस्व/The Revenue – The Income Tax Officer, Ward-4(3), Visakhapatnam 3. The Principal Commissioner of Income Tax, Visakhapatnam 4. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम / DR,ITAT, Visakhapatnam 5..गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam