ITO Ward-8(2), Hyderabad V. Smt. Sailaja Vampaluri, R.R.Dist

ITA 1060/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66431 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 01-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 1060/HYD/2011 A.Y. 2007-08 THE INCOME TAX OFFICER WARD-8(2) HYDERABAD VS. SMT. SAILAJA VEMPALURI RAJENDRANAGAR R.R. DISTRICT, AP APPELLANT RESPONDENT APPELLANT BY: SMT. VIDISHA KALRA RESPONDENT BY: NONE DATE OF HEARING: 01 . 11 .2012 DATE OF PRONOUNCEMENT: 07.11.2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A), VIJAYAWADA DATED 30.3.2011 FOR A.Y. 200 7-08. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE AMOUNT ADDED UNDER THE HEAD OF UNEXPLAINED CREDITS/DEPOSITS IS A BUSINESS INCOME AND DIRECTED TO ADOPT THE RATE OF PERCENTAGE @ 36% ON ADDITIONAL AMOUNT WHICH IS NOT SHOWN BY THE ASSESSEE. 2. THE LEARNED CIT(A) HAS ALSO ERRED IN HOLDING THAT T HE AMOUNTS DEPOSITED IN THE BANK ACCOUNT ARE NOTHING BUT THE BUSINESS INCOME WITHOUT HAVING ANY EVIDENCE IN THE POSSESSION OF THE CIT(A) BECAUSE IT IS IMMATERIAL WHETHER IT IS FROM BUSINESS OR FROM ANY OTHER SOURCES, AS ONCE IT IS NOT SHOWN THE ENTIRE AMOUNT SHOULD BE TREATED AS UNACCOUNTED AND UNEXPLAINED. 3. THE CIT(A) HAS FAILED TO APPRECIATE THE EFFORTS MAD E BY THE ASSESSING OFFICER WHILE ARRIVING THE ADDITIO NAL INCOME OF RS. 76,49,575 AS THIS IS MORE THAN THE RETURNED INCOME, HENCE NO RELIEF CAN BE GRANTED. I.T.A. NO. 1060/HYD/2011 SMT. SAILAJA VEMPALURI ==================== 2 3. BRIEF FACTS OF THE ISSUE ARE THAT AS AGAINST THE RE TURNED INCOME OF RS. 5,34,017 THE ASSESSEE WAS ASSESSED ON AN INCOME OF RS. 81,83,592. AN ADDITION OF RS. 76,49,575 U/S. 6 9 OF THE ACT REPRESENTING THE UNEXPLAINED DEPOSITS IN THE BANK A CCOUNT OF THE ASSESSEE MADE IN THE ASSESSMENT ORDER IS THE SUBJEC T MATTER OF THIS APPEAL. THE ASSESSING OFFICER OBSERVED THAT T HE ASSESSEE HAD MADE HUGE DEPOSITS IN HER BANK ACCOUNT DURING THE Y EAR AND REQUIRED THE ASSESSEE TO EXPLAIN THE SOURCES FOR SU CH DEPOSITS. IT WAS EXPLAINED THAT THE DEPOSITS IN THE BANK ACCOUNT ALSO INCLUDED THE RECEIPTS OF RS. 16,47,801 BELONGING TO HER HUSB AND SRI V. BHASKAR AS IT WAS A JOINT BANK ACCOUNT. IT WAS FUR THER EXPLAINED THAT THE CASH DEPOSITS OF RS. 33,37,000 WERE OUT OF THE WITHDRAWALS MADE EARLIER FROM THE SAME ACCOUNT. A FURTHER SUM OF RS. 29,94,990 WAS CLAIMED TO HAVE BEEN RECEIVED FROM HER CUSTOMERS FOR PURCHASE OF OPEN PLOTS WHICH WAS SUBS EQUENTLY RETURNED AS THE DEALS COULD NOT BE FINALISED. THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE AND AFTER OBSERVING THAT THERE WAS NO COMPLIANCE TO THE SUMMONS ISSUED ON 27 .11.2009 TO BOTH THE ASSESSEE AND HER HUSBAND FOR APPEARANCE ON 9.12.2009 CONCLUDED THAT THE DEPOSITS IN THE BANK ACCOUNT WER E UNEXPLAINED IN TERMS OF SECTION 69 OF THE ACT AND CONSEQUENTLY AN ADDITION OF RS. 76,49,575 WAS MADE AFTER REDUCING THE ADMITTED RECEIPTS IN THE RETURN OF INCOME AND THE WRONG ENTRY CLAIMED TO HAVE BEEN POSTED IN THE BANK ACCOUNT. 4. ON APPEAL, THE CIT(A) OBSERVED THAT AN AMOUNT OF RS . 16,47,801 IS TO BE EXCLUDED OUT OF RS. 76,49,575 AD DITION MADE BY THE ASSESSING OFFICER. FURTHER HE OBSERVED THAT ON THE BALANCE OF RS. 60,01,774 IS TO BE CONSIDERED AS BUSINESS RECEI PT AND PROFIT AT RS. 36% HAS TO BE CONSIDERED AS INCOME FROM THIS UN EXPLAINED RECEIPT. AGAINST THIS, THE REVENUE IS IN APPEAL BE FORE US. NONE APPEARED FOR THE ASSESSEE. WE HAVE HEARD THE LEARN ED DR. SECTION 69 OF THE ACT READS AS FOLLOWS: I.T.A. NO. 1060/HYD/2011 SMT. SAILAJA VEMPALURI ==================== 3 SECTION 69 : WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE O F INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION O F THE ASSESSING OFFICER, SATISFACTORY, THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. 5. IN VIEW OF THE ABOVE PROVISIONS OF SECTION 69 WHEN THE ASSESSEE OFFERS NO EXPLANATION REGARDING THE NATURE AND SOURCE OF INVESTMENT, THE WHOLE VALUE OF THE INVESTMENT IS TO BE CONSIDERED AS INCOME OF THE ASSESSEE. THERE IS NO QUESTION OF ESTIMATING THE PROFIT ELEMENT FROM THE UNRECORDED TRANSACTIONS U/S . 69 OF THE ACT. THERE IS NO QUESTION OF GIVING ANY DEDUCTION TOWARDS ANY EXPENDITURE. IN THE PRESENT CASE THE ASSESSEE IS N OT ABLE TO FURNISH ANY EXPLANATION RELATING TO INVESTMENT WHIC H IS NOT RECORDED IN THE BOOKS OF ACCOUNT. BEING SO, THE VA LUE OF UNEXPLAINED INVESTMENT HAS TO BE TREATED AS INCOME OF THE FINANCIAL YEAR IN QUESTION AS THE EXPLANATION FURNI SHED BY THE ASSESSEE IS NOT RELIABLE. BEING SO, IT CANNOT BE S AID THAT THE DEPARTMENT HAD ANY FURTHER BURDEN TO PROVE THAT THI S WAS AN INCOME OF THE ASSESSEE. BEING SO, WE DIRECT THE AS SESSING OFFICER TO CONSIDER THE ENTIRE UNEXPLAINED INVESTMENT AS IN COME OF THE ASSESSEE INSTEAD OF ESTIMATING 36% AS PROFIT FROM U NEXPLAINED INVESTMENT. 6. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH NOVEMBER, 2012. SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 7 TH NOVEMBER, 2012 I.T.A. NO. 1060/HYD/2011 SMT. SAILAJA VEMPALURI ==================== 4 COPY FORWARDED TO: 1. THE INCOME TAX OFFICER, WAD - 8(2), 8 TH FLOOR, D - BLOCK, ROOM NO. 847, IT TOWERS, AC GUARDS, NEAR MASAB TANK , HYDERABAD. 2. SMT. SAILAJA VEMPALURI, FLAT NO. 23018, HYDERGUDA, RAJENDRANAGAR, R.R. DISTRICT. 3. THE CIT(A), VIJAYAWADA. 4. THE CIT - II, HYDERABAD. 5. THE DR B BENCH, ITAT, HYDERABAD. TPRAO