Rameshwar Rao Gurrapu, Hyderabad V. Income Tax Officer, Ward-3, Hyderabad

ITA 12/Hyd/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0753 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Assessment Year: 2013-2014
• Appeal Filed On: 03-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO
• Keywords: Business income; Principle of natural justice
• Section: 143(3); 142(1); 143(1); 201; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES : BENCH A HYDERABAD (THROUGH VIDEO CONFERENCE ) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 1 2 /HYD/2018 A.Y. 201 3 - 14 SHRI RA MESHWAR RAO GURRAPU WARANGAL [PAN: A CAPG3231B ] VS. ITO, WARD 3 WARANGAL ( APPELLANT) (RESPONDENT) ASSESSEE BY: S HRI S. RAMA RAO, ADV. REVENUE BY : SRI SUNIL KUMAR PANDEY, DR DATE OF HEARING: 2 7 /01/2021 DATE OF PRONOUNCEMENT: 17/ 02/2021 ORDER PER BENCH THIS ASSESSEES APPEAL FOR A.Y.201 3 - 14 ARISES FROM COMMISSIONER OF INCOME TAX (APPEALS) - 3 [CIT(A)], HYDERABADS ORDER DATED 20.11.2017 PASSED IN CASE NO. 0 109 / ITO - W - 3/WGL/C IT(A) - 3/2016 - 17 INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 [IN SHORT THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. ITA NO. 12/HYD./18 AY 2013 - 14 RAMESHWAR RAO GURRAPU 2 2. THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE RAISED IN THE INSTANT APPEAL CHALLENGES THE CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION TREATING CASH DEPOSITS OF RS.63,48 , 900/ - AS UNEXPLAINED IN THE COURSE OF ASSESSMENT AND UPHELD IN CIT(A)S ORDER. BOTH THE LEARNED R EP RESENTATIVES TOOK US TO CIT(A)S DETAILED DISCUSSION READING AS FOLLOWS. II) THE APPELLANT, TRADER IN THE BUSINESS OF SAREES, FILED THE RETURN OF INCOME ELECTRONICALLY FOR THE A.Y. 2013 - 14 ADMITTING TOTAL INCOME OF RS.2,10,850/ - ON 30.03.2015. THE AS SESSMENT WAS COMPLETED U/S 143(3) BY ESTIMATING THE TOTAL INCOME OF RS.66,34,750/ - . III) AGGRIEVED BY THE ABOVE, THE APPELLANT IS IN APPEAL WITH THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED ASSESSING OFFICER ERRED IN MAKING THE FOLLOWING TWO ADDITIONS WHILE COMPLETING THE ASSESSMENT FOR A. Y.201 3 - 14, AS THE SAME IS BAD IN LAW AND ON THE FACTS O F THE CASE. A) RS. 63,48,900/ - ALLEGING THAT THE CASH DEPOSITS IN THE BANK ACCOUNT TO THIS EXTENT WERE NOT EXPLAINED TO THE SATISFACTION OF ASSE SSING OFFICER. B) RS. 75000 / - CLAIM UNDER THE PROVISIONS OF CHAPTER VIA OF THE INCOME TAX ACT, 1961 WAS NOT SUBSTANTIATED BY ADDUCING PROPER EVIDENCES. 2. THE ASSESSING OFFICER OUGHT TO HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND THERE BY OUGHT NOT TO HAVE MADE THE ADDITIONS ON ACCOUNT OF THE CREDITS APPEARING THE BANK STATEMENT BY ALLEGING THAT THE SAME WERE NOT EXPLAINED TO THE SATISFACTION OF LEARNED A O . 3. THE ASSESSING OFFICER OUGHT TO HAVE GIVEN PROPER OPPORTUNITY TO PRODUCE PROO FS OF CLAIMS MADE UNDER CHAPTER VI A OF THE INCOME TAX ACT, 1961. 4. IN VIEW OF ALL THESE AND OTHER GROUNDS WHICH MAY BE PLEADED DURING THE HEARING OF APPEAL, THE APPEAL MAY KINDLY BE ALLOWED AND JUSTICE RENDERED. IV) THE APPELLANT ALSO FILED STATEMENT OF FACTS ALONG WITH GROUNDS OF APPEAL. 1. THE APPELLANT IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME FOR THE A. Y. 2013 - 14 ON 30 - 03 - 2015 BY DISCLOSED AN INCOME OF RS.2, 10,850/ - . 2. THE SAME HAS BEEN PROCESSED U/S 143(1) ON 10.03.2015 RESULTING IN A DEMAND OF RS. NIL. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS . ACCORDINGLY, NOTICES U/S 143(3) & 142(1) WERE ISSUED. THOUGH THE ITA NO. 12/HYD./18 AY 2013 - 14 RAMESHWAR RAO GURRAPU 3 APPELLANT FILED THE DETAILS, THE ASSESSMENT WAS COMPLETED AFTER MAKING THE FOLLOWING ADDITIONS. A) RS. 63,48, 900/ - ALLEGING THAT THE CASH DEPOSITS IN THE BANK ACCOUNT TO THIS EXTENT WERE NOT EXPLAINED TO THE SATISFACTION OF ASSESSING OFFICER. B) RS. 75000/ - CLAIM UNDER THE PROVISIONS OF CHAPTER VIA OF THE INCOME TAX ACT, 1961 WAS NOT SUBSTANTIATE D BY ADDUCING PROPER EVIDENCES 3. THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD EXPLAINED THE DETAILS OF THE SOURCES FOR ALL THE DEPOSITS THAT HAVE APPEARED. IN THE BANK ACCOUNTS. THE LEARNED ASSESS ING OFFICER IGNORING THE SUBMISSIONS OF THE APPELLANT ADDED THE ABOVE REFERRED TO TWO ADDITIONS TERMING THAT THEY REMAINED UNEXPLAINED OR UNSUBSTANTIATED. 4. A GGRIEVED BY THIS ACTION OF THE ASSESSING OFFICER, YOUR APPELLANT PREFERS TH IS APPEAL. V). THE FINDINGS OF ASSESSMENT ORDER OF ASS ESSING OFFICER ARE EXTRACTED BELOW: - 5. IN RESPONSE TO NOTICES ISSUED, ASSESSEE AND HIS AUTHORIZED REPRESENTATIVE, SRI V. ANJANEYA PRASAD, ITP APPEARED. DURING THE SCRUTINY PROCEEDINGS, THE ASSESSEE WAS ASKED TO GIVE DETAILS OF SOURCES OF CASH DEPOSITS IN THE BANK ACCOUNTS TO THE TUNE OF RS. 63,48,900/ - AND ALSO TO GIVE DOCUMENTARY EVIDENCE OF CLAIM OF RS. 75,000/ - UNDER CHAPTER VIA. IN SPITE OF SEVERAL OPPORTUNITIES GIVEN, THERE WAS NO RESPONSE FROM THE ASSESSEE. TIE ASSESSEE NEITHER APPEARED NOR FILED ANY INFORMATION. KEEPING IN VIEW THE PRI NCIPLES OF NATURAL JUSTICE, A FINAL OPPORTUNITY - CUM - SHOW CAUSE NOTICE DATED 11.03.2016 WAS ISSUED TO THE ASSESSEE AND THE CASE WAS POSTED FOR HEARING TO 21.03.2016. THE ASSESSEE AS USUAL NEITHER APPEARED NOR FURNISHED ANY INFORMATION CALLED FOR. 6. ON 2 9.03.2016, ONE LETTER (WITH NO ENCLOSURES) FROM THE ASSESSEE WAS RECEIVED IN INWARD COUNTER. IN THE LETTER, THE ASSESSEE SUBMITTED THAT TURNOVER FROM SUSHMITHA GARDEN IS AT RS. 6,50,000/, TURNOVER OF SMT. RAJANI GURRAPU ( ASSESSEE'S WIFE) IS RS. 24,00,000/ - , SALE PROCEEDS OF ASSESSEE'S MOTHER, SMT. BHAGYA LAXMI G. TO FACILITATE PURCHASES ON HER BEHALF IS RS.22,00,000/ - , CASH WITHDRAWALS RE - DEPOSITED INTO BANK ACCOUNTS IS RS. 11,00,000/ - . THE ASSESSEE'S CONTENTION COULD HAVE BEEN RELIED UPON, HAD THE ASSES SEE FURNISHED ALL THE RELEVANT DOCUMENTARY EVIDENCE IN SUPPORT OF HIS SUBMISSION. LAST DATE OF HEARING AS PER THE RECORDS IS ON 29.12.2015, AND BY THE TIME, THE ITA NO. 12/HYD./18 AY 2013 - 14 RAMESHWAR RAO GURRAPU 4 ASSESSEE HAD BEEN REQUESTED TO FURNISH THE DETAILS OF SOURCES OF CASH DEPOSITS. HAD THE ABOVE M ENTIONED FACTS BEEN THE ACTUAL SOURCES, THE ASSESSEE WOULD NOT HAVE WAITED TILL 29.03.2016 FOR SUBMISSION OF HIS 'STORY'. IN THE ABSENCE OF RELEVANT DOCUMENTARY EVIDENCE, CASH DEPOSITS OF RS.63,48,900/ - IS TREATED AS UNEXPLAINED. U/S 68 OF THE ACT AND AD DED BACK TO THE RETURN INCOME. 5. APART FROM THE CASH DEPOSITS, THERE ARE CHEQUE DEPOSITS OF RS. 29,24,300/ - IN THE BANK ACCOUNTS OF THE ASSESSEE. FROM THE PERUSAL OF THE COMPUTATION SHEET SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE TUM OVER ADMITTED BY THE ASSESSEE IS AT RS. 27,64,000/ - , WHICH CAN BE TALLIED WITH THE CHEQUE DEPOSITS. AS SUCH, THE ASSESSEE CANNOT CLAIM THE CASH DEPOSITS TO BE OUT OF SALE PROCEEDS. 6. FURTHER, THE ASSESSEE W AS ASKED TO FURNISH THE DOCUMENTA RY EVIDENCE FOR THE CLAIM OF RS. 75,000/ - UNDER CHAPTER VIA. THE ASSESSEE FAILED TO SUBSTANTIATE HIS CLAIM WITH ANY DOCUMENTARY EVIDENCE. HENCE, RS.75,000/ALSO STANDS UNEXPLAINED U/ S. 68 OF THE ACT AND ADDED BACK TO THE RETURN INCOME. VI) DURING THE COU RSE OF APPEAL PROCEEDINGS, THE FOLLOWING WRITTEN SUBMISSIONS HAVE BEEN FILED. THE PRESENT APPEAL IS FOR THE ASSESSMENT YEAR 201 3 - 14. THE APPELLANT IS AN INDIVIDUAL AND IS A TRADER IN THE BUSINESS OF SAREES. HE FILED THE RETURN OF INCOME ON 30.03.2015 ADMITTING AN INCOME OF RS.2,10,850/ - WHICH CONSISTS OF INCOME FROM PROPERTY OF RS. 73,850/ - AND INCOME FROM BUSINESS OF RS. 2,12,000/ - . THE APPELLANT CONSIDERED THE RECEIPTS FROM SUSHMITHA GA RDENS AT RS.6,50,000/ - AND ESTIMATED THE PROFIT AT 8%. HE ESTIMA TED THE TU RN - OVER FROM THE CLOTH STORE AT RS. 20,00,000/ - AND ESTIMATED THE PROFIT AT 8% WHICH WORKED OUT TO RS. 1,60,000/ - . THE AGGREGATE OF RS.2, 12,000/WAS ADMITTED IN THE RETURN OF INCOME FILED AS INCOME FROM BUSINESS. THE APPELLANT MAINTAINED BANK ACCOUNTS WITH KOTAK MAHINDRA BANK AND STATE BANK OF HYDERABAD AND WITH KOTAK MAHINDRA BANK IN THE JOINT NAMES OF THE APPELLANT AND HIS WIFE. ACCORDING TO THE AO, THE DEPOSITS INTO THE SAID BANK ACCOUNTS ARE NOT EXPLAINED. THE ASSESSING OFFICER ADDED RS. 63,48,900/ - ON THE GROUND THAT SUCH DEPOSITS MADE INTO THE BANK ACCOUNTS ARE NOT PROPERLY EXPLAINED. THE APPELLANT HUMBLY SUBMITS THAT ONE ACCOUNT RELATES TO THE JOINT ACCOUNT OF THE APPELLANT WITH HIS WIFE WHO IS ALSO CARRYING ON BUSINESS IN SAREES. THE TURNOVER REPORTED BY HER IN HER RETURN OF INCOME WAS RS.24 LAKHS. THE ASSESSEE'S MOTHER ALSO IS CARRYI NG BUSINESS ACTIVITY IN SAREES. SHE FILED RETURN OF INCOME ADMITTING TURNOVER OF RS. 32,77,105/ - . THE AGGREGATE OF TURNOVER WORKS OUT TO RS . 83,27,100/ - . THE SAID AMOUNT IS AVAILABLE FOR DEPOSIT. BESIDES, THERE WAS OPENING BANK BALANCE OF RS. 6,45, 904/ - . THE COPIES OF THE ITA NO. 12/HYD./18 AY 2013 - 14 RAMESHWAR RAO GURRAPU 5 BANK ACCOUNTS ARE SUBMITTED FOR PERUSAL. COPIES OF THE RETURNS OF INCOME ARE ALSO SUBMITTED. THE ASSESSING OFFICER WITHOUT OBTAINING THE FACTS, CONSIDERED THE AGGREGATE OF THE DEPOSITS MADE FOR APPLICATION OF THE PROVISIONS U/ S 69 OF TH E 1. T. ACT. IN THIS REGARD, THE APPELLANT HUMBLY SUBMITS THAT THE AMOUNT OF RS.26 ,50,000/ - REPRESENT THE BUSINESS RECEIPTS ON WHICH THE INCOME WAS ADMITTED. THEREFORE, SUCH AMOUNT SHOULD NOT HAVE BEEN TAKEN INTO CONSIDERATION. IT IS FURTHER SUBMITTED T HAT THE BALANCE OF THE AMOUNTS ARE FROM THE BUSINESS ACTIVITY OF THE APPELLANT'S WIFE AND MOTHER. EVEN IF SUCH AMOUNTS WERE TO BE CONSIDERED, THE ASSESSING OFFICER OUGHT TO HAVE TAKEN INTO ACCOUNT ONLY THE PROFIT PERCENTAGE FROM SUCH RECEIPTS AS THE DEPOSI TS ARE FROM THE BUSINESS ACTIVITIES OF THE APPELLANT, HIS WIFE AND MOTHER. IN THE ALTERNATE, THE ASSESSING OFFICER SHOULD HAVE ARRIVED AT THE PEAK AMOUNT; DEDUCTED THE OPENING BALANCE, THE AMOUNT PROPERLY EXPLAINED AND ADDED THE BALANCE AS THE UNEXPLAINE D SOURCE. INSTEAD, THE ASSESSING OFFICER ADDED THE AGGREGATE OF THE AMOUNTS WHICH IS NOT CORRECT. THE APPELLANT, THEREFORE, SUBMITS THAT THE ADDITION MAY KINDLY BE DELETED OR THE ASSESSING OFFICER MAY BE DIRECTED TO ESTIMATE THE PROFIT AT 8% OF SUCH DEPOSI TS MADE OR ADOPT THE PEAK AMOUNT FOR THE PURPOSE OF MAKING ADDITION. VII) GROUND NO.4 IN APPEAL IS GENERAL IN NATURE AND DOES NOT CALL FOR ADJUDICATION. VIII) GROUND NOS. 1(A) AND 2 IN APPEAL RELATES TO ADDITION OF CASH DEPOSITS. FACTS OF THE CASE, GROUNDS OF APPEAL AND ASSESSMENT ORDER WERE PERUSED . THE SUB MISSIONS FILED BY THE APPELLANT IN TAPPAL IN THE APPEAL PROCEEDINGS WERE SEEN. THE APPELLANT HAD CLAIMED THAT BANK ACCOUNTS WITH KOTAK MAHINDRA BANK AND STATE BANK OF HYDERABAD WERE JOINTS IN THE NAME OF THE APPELLANT AND HIS WIFE. THE APPELLANT SUBMITTED ONE ACCOUNT RELATED TO THE JOINT ACCOUNT OF THE APPELLANT WITH HIS WIFE WHO IS ALSO CARRYING A BUSINESS OF SAREES. THE APPELLANT IS SUBMITTED THAT THE TURNOVER IN HIS WIFE'S RETURN OF INCO ME WAS RS. 24,00,000/ - . HOWEVER, NO DOCUMENTARY EVIDENCE WAS FURNISHED REGARDING THE CLAIM. NEITHER THE APPELLANT'S WIFE PAN NO. NOR ASSESSMENT PARTICULARS AND BANK ACCOUNTS DETAILS WERE FURNISHED BY THE APPELLANT. SIMILARLY, THE APPELLANT CLAIMED THAT HIS MOTHER WAS ALSO CARRYING A BUSINESS ACTIVITY IN SAREES. HOWEVER, HERE ALSO NO DOCUMENTARY EVIDENCE WAS FURNISHED REGARDING THE CLAIM. IT IS PERTINENT TO MENTION THAT THE APPELLANT FILED THE WRITTEN SUBMISSIONS ON 16.11.2017 STATING THAT COPIES OF RETURNS W ERE ALSO SUBMITTED. HOWEVER, IT IS SEEN THAT NO COPIES OF APPELLANT'S WIFE'S RETURN OR THE APPELLANT'S MOTHER'S RETURN WERE FILED. FROM THE ASSESSMENT ORDER, IT IS SEEN THAT THE APPELLANT DID ITA NO. 12/HYD./18 AY 2013 - 14 RAMESHWAR RAO GURRAPU 6 NOT APPEAR NOR FURNISH REQUISITE INFORMATION. SIMILARLY IN APPEA L, THE APPELLANT DID NOT FURNISH RELEVANT DETAILS. KEEPING IN VIEW THE FACTS, ISSUES AND CIRCUMSTANCES, GROUNDS NOS.1(A) AND 2 IN APPEAL ARE DISMISSED. 3. LEARNED COUNSEL HAS RAISED ASSESSEES SOLITARY GRIEVANCE THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS MAKING THE IMPUGNED ADDITION ADDING GROSS AMOUNT OF BANK DEPOSITS AS UNEXPLAINED DESPITE THE FACT THAT HE HAS SUFFICIENTLY PROVED THE SUM TO HAVE UTILISED IN BUSINESS CARRI ED ALONG WITH HIS MOTHER AND WIFE. MR. RAMA RAO REITERATED THE FACT THAT BOTH THE FAMILY MEM BERS HAVE ALSO DECLARED THEIR INCOME(S) AS BUSINESS INCOME AND, THEREFORE, ASSESSEE IS VERY MUCH ENTITLED FOR DELETING THE IMPUGNED ADDITION. LEARNED COUNSEL LA STLY TOOK US TO ASSESSEES BANK STATEMENT IN HIS PAPER BOOK RUNNING INTO 33 PAGES THAT THE IMPUGNED DEPOSITS HAVE BEEN FOLLOWED BY CORRESPONDING WITHDRAWALS AS WELL SO AS TO PROVE THAT THESE ARE BUSINESS RECEIPTS ONLY. 3.1. LEARNED D.R. STRONGLY SUPPORTED THE IMPUGNED ADDITION AS PER CIT(A)S DISCUSSION. 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE FOREGOING ISSUE OF UNEXPLAINED DEPOSITS MADE IN BOTH LOWER AUTHORITIES ORDERS. WE FIND NO FORCE IN ASSESSEES EXPLANATION IN ENTIRETY. THE FACT REM AINS NEITHER HE HAS SUBMITTED ALL DETAILS OF HIS FAMILY MEMBERS BUSINESS (ES) NOR HAS HE DENIED THE FACT THAT THE ABOVE BANK ACCOUNT IS MAINTAINED IN HIS SOLE NAME ONLY . C OMING TO THE POINT THAT THESE DEPOSITS ARE IN BUSINESS NATURE ONLY, THE ASSESSEE HAS FAILED TO PROVE EVEN A SINGLE BUSINESS RECEIPT IN THE CORRESPONDING SPAN OF TIME IN THE RELEVANT PREVIOUS YEAR . WE THUS FIND NO REASON TO REVERSE THE IMPUGNED ADDITION . 5. MR.RAO NEXT ARGUED THAT EVEN IF IMPUGNED ADDITION IS TO BE CONFIRMED IN PRINCI PLE, THE SAME MUST BE RESTRICTED TO PEAK AMOUNT ONLY GOING BY THE ASSESSEES BANK STATEMENTS IN PAGES 7 AND 8 OF THE PAPER BOOK . T HIS CLINCHING FACT HAS GONE UNREBUTTED FROM THE R EVENUES SIDE SINCE ASSESSEES PAPER BOOK ; TAKE FOR INSTANCE PAGES 7 TO 12 , HAS ALSO SEEN MULTIPLE NUMBER OF ITA NO. 12/HYD./18 AY 2013 - 14 RAMESHWAR RAO GURRAPU 7 WITHDRAWALS WHICH SUFFICIENTLY HIGHLIGHT THE FACT THAT THE IMPUGNED DEPOSITS ARE AN ADMIXTURE OF CREDIT AS WELL AS DEBIT ENTRIES. WE THEREFORE DIRECT THE A SSESSING O FFICER TO RESTRICT T HE ADDITION AMOUNT TO PEAK AMOUNT AS PER ASSESSEES BANK ACCOUNT S. IT IS FURTHER PLEADED THAT THE AMOUNT WAS PART OF CLOSING BALANCE AS ON 31.3.2011 AND OPENING BALANCE AS ON 01.04.2012 SHALL ALSO BE EXCLUDED FROM IMPUGNED ADDITION AS PER H ONBL E BOMBAY H IGH C OURT S JUDGEMENT IN IVAN SINGH VS. ACIT DATED 14.02.2020 HOLDS THAT THE STATUTORY EXPRESSION PREVIOUS YEAR INCORPORATED IN SEC.68 OF THE ACT HAS TO BE TAKEN AS THE RELEVANT PREVIOUS YEAR IN ISSUE ONLY. WE THUS DIRECT THE A SSESSING OF FICER TO FINALISE THE CONSEQUENTIAL COMPUTATION IN FOREGOING TERMS. 6. THIS AS SESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES IN ABOVE TERMS. ORDER PRONOUNCED IN OPEN COURT ON 17 /02/2021. SD/ - SD/ - (L.P. SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 17 TH FEBRUARY, 2021. * GMV COPY OF THE ORDER FORWARDED TO: 1. SR I RAMESHWAR RAO GURRAPU, 3 - 8, MAIN ROAD, DHARMASAGAR, WARANGAL 2. ITO, WARD 3, WARANGAL 3. ACIT, WARANGAL RANGE , WARANGAL 4. CIT(A) - 3, HYDERABAD 5. PR.CIT - 3 , HYDERABAD 6. DR, ITAT, HYDERABAD. 7. GUARD FILE.