ITO, Ward -1, Sanga Reddy V. Mohd. Abdul Jaleel, Sangareddy, Sanga Reddy

ITA 1029/HYD/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2430 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 06-08-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained cash credit; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1029/HYD/2015 AND C.O. NO. 57/HYD/2015 ASSESSMENT YEAR : 2009-10 INCOME TAX OFFICER, WARD 1, SANGAREDDY MOHD. ABDUL JALEEL, SANGAREDDY. PAN AEFPJ 9737G (ASSESSEE) (RESPONDENT/CROSS OBJECTOR) REVENUE BY SMT. N. SWAPNA ASSESSEE BY SHRI S. RAMA RAO DATE OF HEARING 14-06-2017 DATE OF PRONOUNCEMENT 16-06-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST ORDER DATED 15/07/2015 OF CIT(A) -2, HYDERABAD FOR THE A SSESSMENT YEAR 2009-10, WHEREIN THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE ID CIT(A) IS CORRECT IN DELETING THE ADDITION OF RS. 1 4,65,000/- WITHOUT ANY SUPPORTING EVIDENCE AS REGARDS THE SOUR CE OF THE CASH DEPOSITS MADE IN TO THE BANK ACCOUNT? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE ID CIT(A) IS CORRECT IN DELETING THE ADDITION OF RS. 1 ,23,81,790/- BEING PROFIT @ 28.7% ESTIMATED BY THE AO ON THE DEP OSIT OF RS. 4,31,27,000/- INTO THE OD ACCOUNT TREATING THE SAME AS UNDISCLOSED TURNOVER, ON THE BASIS OF SUBMISSION OF THE ASSESSEE WITHOUT ANY SUPPORTING EVIDENCE? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD CIT(A) IS CORRECT IN DIRECTION THE AO TO ESTIMATE T HE NP@1% ON 2 ITA NO. 1029H/15 & CO NO. 57/HYD/2015 MOHD. ABDUL JALEEL, SANGAREDDY THE DEPOSITS INTO THE OD ACCOUNT, TREATING THE SAME AS RECEIPT FROM AGENCY BUSINESS WITHOUT ANY SUPPORTING EVIDENC E? 2. THE ASSESSEE ALSO FILED C.O. AGAINST THE ORDER OF THE CIT(A) WHEREIN HE HAS RAISED THE FOLLOWING GROUNDS: 1. THE CIT(A) ERRED IN DETERMINING THE INCOME AT 1% OF THE TURNOVER RELATING TO HINDUSTAN UNILEVER. 2. THE CIT(A) OUGHT TO HAVE SEEN THAT THE NET PROFI T WAS JUST 0.39% OF THE SALE PRICE AND, THEREFORE, SHOULD NOT HAVE ADOPTED A RATE OF 1%. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE FILED HIS RETURN OF INCOME ON 30/09/2009 ADMITTING AN INCOME OF RS. 3,97,600/- WHEREAS THE AO DETERMINED THE TOTAL INCO ME AT RS. 1,42,44,390/-. ACCORDING TO AO, THERE WERE DEPOSITS IN TO THE ANDHRA BANK, SANGAREDDY TO AN EXTENT OF RS. 15,51,000/- OU T OF WHICH THE ASSESSEE COULD NOT EXPLAIN THE SOURCES OF RS. 14,65 ,000/-. 3.1 BESIDES THE ABOVE, THE AO FOUND THAT THERE IS A NOTHER BANK ACCOUNT WITH STATE BANK OF INDIA, SANGAREDDY MAINTA INED BY THE ASSESSEE. ACCORDING TO THE AO, THE UNEXPLAINED CRED ITS IN THE ABOVE SAID BANK ACCOUNT AMOUNTED TO RS. 4,31,27,100/- AND WORKED OUT THE PROFIT FROM THE BUSINESS AT 28.7%. THE AO TREATED T HE ABOVE CREDITS AS THE TURNOVER OF THE ASSESSEE AND MADE AN ADDITIO N OF RS. 1,23,81,790/- TOWARDS PROFIT. THE AO BY MAKING THE ABOVE TWO ADDITIONS ARRIVED AT A TOTAL INCOME OF RS. 1,42,44, 390/-. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT(A) AND FILED WRITTEN SUBMISSI ONS BEFORE THE CIT(A), WHICH WERE EXTRACTED BY THE CIT(A) AT PAGES 2 TO 4 IN HIS ORDER. 5. AS REGARDS UNEXPLAINED CREDITS IN THE BANK ACCOU NT, THE ASSESSEE SUBMITTED THAT THE DEPOSITS INTO THE ANDH RA BANK REPRESENT THE TURNOVER IN THE KIRANA BUSINESS DONE BY THE ASS ESSEE IT IS 3 ITA NO. 1029H/15 & CO NO. 57/HYD/2015 MOHD. ABDUL JALEEL, SANGAREDDY MENTIONED BY THE ASSESSEE THAT HE CARRIED ON THREE DIFFERENT ACTIVITIES AS FOLLOWS: A) SUPPLY OF DIET TO COMMUNITY HEALTH CENTRE, SADAS IVAPET, APVVP, SANGAREDDY; B) RUNNING A GENERAL STORE I.E. SELLING OF KIRANA I TEMS; AND . C) ACTING AS AN AGENT OF HINDUSTAN UNILEVER (HUL). 5.1 IN SO FAR AS ANDHRA BANK DEPOSITS ARE CONCERNED , THE ASSESSEE SUBMITTED THAT THE SAID DEPOSITS WERE AGAINST THE T URNOVER IN KIRANA BUSINESS. IT IS FOUND THAT THE SALES IN KIRANA BUSI NESS AMOUNTED TO RS. 27,74,930/- AND ALSO FOUND THAT THERE IS A TURN OVER OF RS. 25,01,837/- ON ACCOUNT OF SUPPLY OF DIET. IT WAS AL SO SUBMITTED BY THE ASSESSEE THAT HE CLOSED THE RETAIL BUSINESS ACT IVITY AND SOLD THE CLOSING STOCK AND DEPOSITED THE SAME INTO THE BANK ACCOUNT. IT IS THE CONTENTION OF THE ASSESSEE THAT AROUND JULY, 2008, HE CLOSED THE RETAIL BUSINESS AND STARTED THE AGENCY WITH HUL. TH EREFORE, THE ASSESSEE SUBMITTED THAT THE DEPOSITS INTO THE BANK ACCOUNT CANNOT SEPARATELY BE ADDED AS THEY FORM PART OF THE TURNOV ER OF THE ASSESSEE. 5.2 THE CIT(A) HELD THAT CONSIDERING THE FACTS, IS SUES AND CIRCUMSTANCES OF THE CASE AND THE SUBMISSIONS OF AS SESSEE, THE DEPOSITS MADE INTO THE BANK ACCOUNT WERE TREATED AS EXPLAINED AND DELETED THE ADDITION OF RS.14,65,000/-. 5.3 LD. CIT(A) OBSERVED WITH REGARD TO ESTIMATION O F PROFIT ON THE SUPPRESSED TURNOVER, IT WAS SUBMITTED BEFORE HIM TH AT THERE WERE DEPOSITS IN THE STATE BANK OF INDIA, SANGAREDDY AND DEPOSITS TO AN EXTENT OF RS. 4,84,03,867/- WERE MADE DURING THE YE AR. THE ASSESSING OFFICER ACCEPTED THE FACT THAT THE DEPOSI TS ARE FROM THE ACTIVITY OF PURCHASE AND SALE. THE ASSESSING OFFICE R TRIED TO ADOPT THE 4 ITA NO. 1029H/15 & CO NO. 57/HYD/2015 MOHD. ABDUL JALEEL, SANGAREDDY GROSS PROFIT OF 28.7% FROM THE KIRANA BUSINESS. THE EXPLANATION OF THE ASSESSEE IS THAT EVEN FROM KIRANA BUSINESS HE D ID NOT DERIVE SO MUCH OF INCOME. THE ASSESSEE SUBMITTED THAT FROM KI RANA BUSINESS HE DERIVED A GROSS PROFIT OF RS. 4,00,623/- AS AGAINST THE GROSS SALES OF RS. 27,74,930/- WHICH GIVES A RATE OF 14.4%. IT WAS ALSO SUBMITTED THAT THE SAID RATE CANNOT BE ADOPTED FOR THE AGENCY BUSINESS. THE ASSESSEE IN APPEAL REFERRED THE RATES AT WHICH THE GOODS ARE SUPPLIED BY HUL AND THE MAXIMUM PRICE AT WHICH IT CAN BE SOL D. THE PROFIT ELEMENT INCLUDES THE RETAILER'S PROFIT. IF THE RETA INER'S PROFIT IS ALSO EXCLUDED, THE AVERAGE PROFIT WOULD BE ABOUT 0.39%. 5.4 CONSIDERING THE FACTS, ISSUES AND CIRCUMSTANCE S OF THE CASE AND THE SUBMISSIONS OF ASSESSEE, THE CIT(A) OBSERVE D THAT THE RATE OF 28.7% ADOPTED BY THE ASSESSING OFFICER IS NOT CORRE CT, AS THE ASSESSEE IS IN THE BUSINESS OF SUPPLY OF GOODS AS A N AGENT ON BEHALF OF HUL AND THE RATES FOR THE ARTICLES SUPPLIED BY T HEM ARE FIXED; BASED ON SUCH RATES, THE PROFIT IS WORKED TO ABOUT 0.4%. HOWEVER, CONSIDERING THE FACT THAT THE ASSESSEE DID NOT MAIN TAIN THE BOOKS OF ACCOUNT AND OTHER RECORD, THE CIT(A) WAS OF THE VIE W THAT NET PROFIT RATE OF 1% IS SUFFICIENT AND MEETS THE ENDS OF JUST ICES. HE, THEREFORE, DIRECTED THE AO TO RECOMPUTE THE INCOME BY CONSIDER ING THE NET PROFIT AT THE RATE OF 1% ON THE AMOUNT OF RS .4,31, 27,100/- WHICH WORKS OUT TO RS. 4,31,271/-. 6. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US AND THE ASSESSEE FILED A C.O. AGAINST THE ACTION OF THE CIT(A) IN DIRECTING THE AO TO DETERMINE THE INCOME AT 1% OF THE TURNOVER RELATING TO HINDUSTAN UNILEVER. 7. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. IT IS OBSERVED THAT THE CIT(A) REL YING ON THE MATERIAL SUBMITTED BY THE ASSESSEE BEFORE HIM, DECIDED THE I SSUES. BEFORE US, 5 ITA NO. 1029H/15 & CO NO. 57/HYD/2015 MOHD. ABDUL JALEEL, SANGAREDDY THE ASSESSEE HAS FILED PAPER BOOK WHICH CONTAINS TH E INFORMATION SUBMITTED BEFORE THE CIT(A) AS WELL AS THE AO. ON P ERUSAL OF RECORD, WE FIND THAT THE ASSESSEE HAS NOT PROPERLY FILED RE LEVANT INFORMATION BEFORE THE AO, PARTICULARLY, THE TRANSACTIONS WITH HUL. THE AO, THEREFORE, WAS NOT IN A POSITION TO PROPERLY APPREC IATE THE CLAIM OF THE ASSESSEE. THUS, WE ARE OF THE CONSIDERED OPINION TH AT TO MEET THE ENDS OF JUSTICE, THE MATTER UNDER CONSIDERATION NE EDS TO BE REMITTED BACK TO THE FILE OF THE AO. THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE ISSUES IN DISPUTE TO THE FIL E OF THE AO WITH A DIRECTION TO VERIFY THE INFORMATION SUBMITTED BY TH E ASSESSEE AND DECIDE THE ISSUES IN ACCORDANCE WITH LAW, TO DETER MINE THE ACTUAL PROFIT EARNED BY THE ASSESSEE IN THE TRANSACTION WI TH HUL AS AGENT AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE IN THE MATTER. 8. AS WE HAVE SET ASIDE THE ORDER OF THE CIT(A) AND REMITTED THE FILE BACK TO THE FILE OF THE AO, THE C.O. RAISED BY THE ASSESSEE BECOMES INFRUCTUOUS. 9. IN THE RESULT, APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES AND THE CO FILED BY THE ASSESS EE IS DISMISSED AS INFRUCTUOUS. PRONOUNCED IN THE OPEN COURT ON 16 TH JUNE, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER AC COUNTANT MEMBER HYDERABAD, DATED: 16 TH JUNE, 2017 KV 6 ITA NO. 1029H/15 & CO NO. 57/HYD/2015 MOHD. ABDUL JALEEL, SANGAREDDY COPY TO:- 1) ITO, WARD 1, SANGAREDDY 2) SHRI MOHD. ABDUL JALEEL, C/O SHRI MOHD. ABDUL JA LEE, H. NO. 6-1-9, UPPAR BAZAR, SANGAREDDY, MEDAK DISTRICT. 3) CIT(A) 2, HYDERABAD. 4) THE PR. CIT- 2, HYDERABAD 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDER ABAD. 6) GUARD FILE