Sri Gottimukkala Keshava Rao, Hyderabad V. ITO, Ward-2, Warangal

ITA 1088/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82586 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 23-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.1088/HYD/13 : ASSESSMENT YEAR 2009 - 10 SHRI GOTTIMUKKALA KEHSAVA RAO, NA KK ALAGUTTA, HANAMKONDA (PAN - AGLPH 4550 A) V/S. INCOME TAX OFFICER, WARD 2, WARANGAL (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.V.RAGHURAM RESPONDENT BY : SHRI RAJAT MITRA DR DATE OF HEARING 17 . 11 .2014 DATE OF PRONOUNCEMENT 28.11.2014 O R D E R PER SAKTIJIT DEY , JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) VI, HYDERABAD DATED 14.5.2013 FOR THE ASSESSMENT YEAR 2009 - 10. 2. THE ONLY EFFECTIVE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO AN ADDITION OF RS.20,80,874 MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) ON ACCOUNT OF UNEXPLAINED DEPOSITS IN ICICI BANK. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE, AN INDI V I D UAL INVOLVED IN THE BUSINESS OF RUNNING A BAR AND RESTAURANT AT WARANGAL, FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 DECLARING AN INCOME OF RS.4,63,180. DURING THE COU R SE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER BY A LETTER I TA NO. 1 0 88 /H YD/20 1 3 SHRI GOTTIMUKKALA KEHSAVA RAO, NAKK ALAGUTTA, HANAMKONDA 2 ADDRESSED TO AP BEVERAGES CORPORATION, CALLED FOR THE R ET AIL LEDG E R I NFORMATION AND THE DETAILS O F PAYMENTS RECEIVED FROM THE ASSESSEE. ON GOING THROUGH THE DETAILS RECEIVED IN RESPONSE, THE ASSESSING OFFICER NOTICED TH AT THE ASSESSEE HAS OBTAINED DEMAND DRAFTS FROM VARIOUS BANKS. IT WAS ALSO NOTICED THAT WHIL E MOST O F THE DD S WERE PU R CH AS ED FROM S Y N D I C ATE B ANK, SOME DDS WERE ALSO PU R CHA S ED FROM ICICI BANK. A LETTER WAS ADDRESSED TO THE BRANCH MANAGER, ICICI BANK TO ST ATE WHETHER THE ASSESSEE HAS PU R CHASED ANY DDS FROM ANY ACCOUNT MAINTAINED AT THE BRANCH. ON GOING THROUGH THE COPY O F THE BANK ACCOUNT STATEMENT FURNI S H E D BY THE BR A NCH MANAGER OF ICICI BANK, IT WAS NOTICED THAT THE ASSESSEE OPERATED CURRENT ACCOUNT WITH ICICI BANK, WA RANGAL B RANCH , B E ARING NO.02105000958, REFLECTING TOTAL CREDITS MA D E THEREIN OF RS.20,80,874. SIN C E THE CREDITS INTO THE SAID BANK ACCOUNT WERE NO T OFFERED FOR TAX PU R POSE, AND SINCE THE ASSESSEE COULD NOT OFFER PROPER EXPLANATION FOR THE SAME, THE SA ID AMOUNT W AS TREATED AS U N EXPLAIN E D CREDIT AND WAS ADDED TO THE INCOME RETURNED. WHILE DOING SO, THE ASSESSING OFFICER ALSO REJECTED THE PL E A OF THE ASSESSEE THAT INCOME MAY BE ESTIMATED ON SUCH CREDITS, WHICH W E RE NOTHING BUT UNACCOUNTED SALES, HOL D IN G THAT THE ASSESSEE HAS ALREADY DEBITED THE COMPLETE EXPENDITURE TO THE PROFIT & LOSS ACCOUNT. APART FROM THIS ADDITION OF RS.20,80,874, THE ASSESSING OFFICER MADE ONE MORE ADDITI ON OF RS.14,44,763 ALSO ON ACCOUNT OF UNEXPLAINED CREDITS FOUND IN THE ACCOUNT FO THE ASSESSEE WITH HDFC BANK ACCOUNT, COMPLETED THE ASSESSMENT ON A TOTAL INCOME FOR S.39,88,820, VIDE ORDER OF ASSESSMENT DATED 30.12.2011, PASSED UNDER S.143(3) OF THE AC T. 4. ON APPEAL BEFORE THE CIT(A) WITH REFERENCE TO THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.20,80,874 ON THE GROUND OF UNEXPLAINED CREDITS IN THE ACCOUNT OF THE ASSESSEE WITH I TA NO. 1 0 88 /H YD/20 1 3 SHRI GOTTIMUKKALA KEHSAVA RAO, NAKK ALAGUTTA, HANAMKONDA 3 ICICI BANK LTD. , IT WAS CONTENDED BY THE ASSESSEE THAT THE SAME SH OULD BE TREATED AS UNACCOUNTED SALES AND ONLY A PERCENTAGE OF THE SAME SHOULD BE TAKEN AS PROFIT, FOR BEING ASSESSED TO TAX., THE CIT(A), HOWEVER, NOT AGREEING WITH THE CONTENTIONS OF THE ASSESSEE ON THIS ASPECT, SUSTAINED THE ADDITION MADE IN ITS ENTIRETY IN THE FOLLOWING MANNER - 5.3 PERUSED THE SUB M I S SION O F TH E APPELLANT AND OBSERVATION S OF THE AO . THE FACTS OF THE CA S E ARE THAT THE APPELLANT MAINTAINED BANK ACCOUNTS WITH I CICI BANK AND H DFC BANKS, WARANGAL, WHOSE CREDITS WERE NO T CON S I D ERED FOR, WH IL E COMPUTING THE P R O F ITS OF THE BU S IN E SS, WHILE CL A I M ING ALL THE EXPENSES, INCLU D IN G TH E AMOUNTS FLOWN FROM THE SAID BANK ACCOUNTS. IN THIS REGARD, I T IS LEA R NT TO OBSERVE THAT THE TOTAL CREDITS INTO ICICI BANK ACCOUNT, AS REFERRED ABOVE, ARE THE S A LES MA D E THROUGH C RE D IT CARDS, WHICH W E RE NO T TAKEN INTO BOOKS O F ACCOUNT OR FOR COMPUTING THE PROFITS, WHILE THE AMOUNTS PAID FOR MA K IN G PAYMENTS TO APBCL AND OTHERS ARE TREATED AS EXPENSES. THI S MEANS THAT WHILE THE CREDITS A R E IGNORED, THE CLAI M ABLE DEBITS W E RE CL A IM E D AS EXPENSES. THIS MAKES CLEAR THAT THE GROSS RECEIPTS/CREDITS, INTO THE BANK ACCOUNT, RECORDED AS CREDIT CARD SALES, ASSUME THE ROLE OF NET INCOME. THE CA S E LAW RELIED UPON BY THE APPELLANT, THUS IS DISTINGUISHABLE ON FACTS, WHERE BOTH THE REC EIPTS AND PAYM E N T S ARE NO T ACCOUNTED, LEADING TO THE ESTIMATION OF PROFITS. UNDER TH E CIR C UM S TANCES, WH E RE THE R E CEIP T S ARE NO T ACCOUN T ED, WITH ALL THE EXPEN SE S STOOD CLAIMED, THE WHOL E O F TH E CREDITS/RECEIPTS IN BANK ACCOUNT, REPR E SENT THE INCOME O F THE APPELLANT. HENCE, THERE IS NO BASIS FOR CLAIM O F TH E APP E LLAN T FOR ESTIMATING THE P R O FI TS ON THE UNACCOUNTED RECEIPTS/SALES. ACCOR D INGLY, THE DECISION OF THE ASSESSING OFFICER IN TR E ATING THE ENTIRE CRE D ITS INTO BANK AC C OUN T , AS INCOME O F THE APPELLA NT, I S UPHELD. THIS GROUND O F APPEAL I S T H US TREATED AS DISMISSED. AS FOR THE OTHER ADDITION OF RS.14,44,763 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CREDITS WITH HDFC BANK LTD. , THE CIT(A) SUSTAINED THE SAME ONLY TO THE EXTENT OF RS.6,84 ,763, OBSERVING THAT THE CREDITS INCLUDED A CREDIT OF RS.7,60,000 RECEIVED THROUGH BANKING CHANNEL AND FROM A KNOWN SOURCE, BEING ANOTHER CONCERN, BY NAME M/S. VISHAL WINES, AND IT WAS ALSO SHOWN TO HAVE I TA NO. 1 0 88 /H YD/20 1 3 SHRI GOTTIMUKKALA KEHSAVA RAO, NAKK ALAGUTTA, HANAMKONDA 4 BEEN ASSESSED BY THE ASSESSING OFFICER. THE CIT(A), THUS , PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED BY THE ACTION OF THE CIT(A) IN SUSTAINING THE ENTIRE AD D ITION OF RS. .20,80,874 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CREDITS IN THE ACCOUNT OF THE ASSESSEE WITH ICICI BANK, ASSESSEE PREFERRED THIS SECOND APPEAL BEFORE US. 6. LEARNED AUTHORISED REPRESENTATIVE, WHILE ADMITTING THE FACT THAT CREDITS APPEARING IN THE ACCOUNT WITH ICICI BANK REPRESENTS RECEIPTS FROM SALES WHICH WERE NEITHER ACCOUNTED FOR NOR SHOWN AS INCO ME, BUT AT THE SAME TIME, HE SUBMITTED THAT ENTIRE RECEIPTS CANNOT BE TREATED AS INCOME OF THE ASSESSEE. IT WAS SUBMITTED THAT PROFIT MAY BE REASONABLY ESTIMATED ON SUCH RECEIPTS. IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON A DECISION OF THE HON'BLE GU JARAT HIGH COURT IN THE CASE OF DCIT V/S. PANNA CORPORATION (2012)74 DTR 89. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT WHILE THE ASSESSEE HAS CONSIDERED THE WITHDRAWALS FROM THE BANK ACCOUNT AS EXPENDITURE AND CLAIMED DEDUCTION, HE HAS N OT CONSIDERED THE RECEIPTS. HENCE, AS THE ASSESSEE HAS ALREADY ACCOUNTED FOR THE EXPENDITURE, THERE IS NO REASON FOR ALLOWING FURTHER DEDUCTION TOWARDS EXPENDITURE FROM THE RECEIPTS APPEARING IN THE BANK ACCOUNT. 8. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. THERE IS NO DISPUTE TO THE FACT THAT CREDITS APPEARING IN THE ICICI BANK ACCOUNT ARE RECEIPTS FROM SALE OF LIQUOR, BUT THEY HAVE BEEN NEITHER ACCOUNTED FOR NOR OFFERED AS IN C OM E, W H E REAS, AS OB S ERVED BY I TA NO. 1 0 88 /H YD/20 1 3 SHRI GOTTIMUKKALA KEHSAVA RAO, NAKK ALAGUTTA, HANAMKONDA 5 LEARNED CIT(A), ASSESSEE HAS CONSIDERED THE OUTGOINGS FROM TH E SAID BANK ACCOUNT AS EXPENDITURE. IT I S ALSO A FA C T THAT ASSESSEES PROFIT HAS NO T B E EN ESTIM A TED BY ASSESSING OFFICER BY REJECTING THE BOOKS O F ACCOUNT. IN FACT, THE ASSESSING OFFICER HAS ACCEPTED THE PROFIT DECLARED BY THE ASSESSEE . TH E REFORE, WHEN THE ASSESSING OFFICER HAS ACCEPTED THE BOOKS RE S ULTS WHICH TAK E S CARE OF THE EXPENDITURE INCURRED BY ASSESSEE, NO FURTHER DEDUCTION TOWARDS EXPENDITURE CAN B E ALLOWED ON TH E UNDISCLOSED RECEIPTS BY ESTIMATING PROFIT THEREON. IN SO FAR AS THE DECISION RELIED UPON BY LEARNED AUTHORISED REPRESENTATIVE, ON CAREFUL EXAMIN A TION, WE FIND IT TO BE FACTUALLY DISTINGUISHABLE, HENCE WILL NOT APPLY TO THE FACTS OF THE PR E SEN T CA S E. IN TH E AFORE S AID VIEW OF THE MA T TER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 9. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 28.11.2014 SD/ - SD/ - ( B.RAMAKOTAIAH ) ( SAKTIJIT DEY ) ACCOUNTANT MEMBER JUDICIAL M EMBER DT/ - 28 TH NOVEMBER, 2014 COPY FORWARDED TO: 1. SHRI GOTTIMUKKALA KEHSAVA RAO (NA KK ALAGUTTA, HANAMKONDA) C/O. SHRI K.VASANT KUMAR, A.V. RAGHU RAM & P.VINOD, ADVOCATES, FLAT NO.610, 6TH FLOOR, BABUKHAN ESTATE, BASHEERBAGH,HYDERABAD - 1 2 . INCOME TAX OFFICER WARD 2 , WARANGAL 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) V I , HYDERABAD COMMISSIONER OF INCOME - TAX V, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S