Vuppala Raj Kumar, Siddipet, Hyderabad V. ITO, Ward-1, Siddipet, Hyderabad

ITA 1207/HYD/2016

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5399 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2009-2010
• Appeal Filed On: 14-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANJALA SAHU
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Deemed to accrue or arise in india; Condonation of delay; Set aside
• Section: 143(3); 143(2); 68; 263; 63

Judgement Text

ITA NO 1207 OF 2016 VUPPALA RAJ KUMAR SIDDIPET PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.1207/HYD/2016 ASSESSMENT YEAR: 2009-10 SRI VUPPALA RAJ KUMAR, SIDDIPET PAN:ACCPV3280D VS. INCOME TAX OFFICER WARD-1 SIDDIPET (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI K.C DEVDAS REVENUE BY : SMT. ANJALA SAHU, DR DATE OF HEARING: 28/04/2021 DATE OF PRONOUNCEMENT: 05/05/2021 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2009-10 AGAIN ST THE ORDER OF THE CIT-7, HYDERABAD, DATED 25.01.2016 U/S 263 OF THE I.T.ACT. AT THE OUTSET, IT IS NOTICED THAT THER E IS A DELAY OF 165 DAYS IN FILING OF THE APPEAL BEFORE THE TRIBUNAL AN D THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY S TATING AS UNDER: BEFORE THE INCOME-TAX APPELLATE TRIBUNAL: -BENCH : HYDERABAD I.T.A.NO. A.Y. 2009-10 VUPPALA RAJ KUMAR HON'BLE PR.CIT-7, NO.7-3-60, OLD GUNJ, HYDERABAD SIDDIPET APPELLANT RESPONDENT PETITION PRAYING FOR CONDONATION OF DELAY: I, VUPPALA RAJKUMAR SON OF SRI V.SHEKARAM, AGED ABO UT 57 YEARS RESIDENT OF NO.7-3-60, OLD GUNJ, SIDDIPET, DO SOLEMNLY AFFIRM AND STATE AS UNDER:- ITA NO 1207 OF 2016 VUPPALA RAJ KUMAR SIDDIPET PAGE 2 OF 7 THE ASSESSEE IS AN INDIVIDUAL. THE ASSESSEE IS CARR YING ON BUSINESS IN KIRANA & GENERAL ITEMS. FOR THE ASST. Y EAR 2009- 10 THE ASSESSEE FILED RETURN OF INCOME ON 08.09.201 0 DECLARING TOTAL INCOME OF RS.1,60,400/-. THE CASE W AS TAKEN UP FOR SCRUTINY IN THE LIGHT OF INFORMATION THAT TH ERE WERE CASH DEPOSITS TO THE TUNE OF RS.33,44,984/- IN ING VYSYA BANK LTD, SIDDIPET. FURTHER, DEVELOPMENTS IN THE CASE ARE SUB MITTED HEREUNDER IN CHRONOLOGICAL ORDER: A. THE SCRUTINY ASSESSMENT WAS COMPLETED VIDE ORDER DATED 29.11.2011 ESTIMATING THE BUSINESS INCOME AT 5% ON TURNOVER OF RS.37,09,685/- WHICH INCLUDES THE SAID BANK DEPO SITS. THUS, THE TOTAL INCOME WAS DETERMINED AT RS.2,07,96 1/- WHICH INCLUDES BANK INTEREST OF RS.3,931/-. B. THE ORDER UJS.143(3) WAS SUBJECTED TO REVISION U /S.263 OF THE IT ACT BY THE HON'BLE CIT-3, HYDERABAD. THE HON 'BLE CIT SET ASIDE THE ASSESSMENT ORDER VIDE ORDER U/S.263 D ATED 30.01.2014. C. THE ASSESSING OFFICER COMPLETED THE SET ASIDE AS SESSMENT VIDE ORDER U/S.143(3) RWS 263 OF THE IT ACT DATED 2 7.10.2014 ESTIMATING THE INCOME AT 12% ON BANK DEPOSITS. THUS , HE COMPUTED THE TOTAL INCOME AT RS. 4,15,670/-. D. THE SAID ORDER WAS AGAIN SUBJECT MATTER OF PROCE EDINGS U/S.263 OF THE IT ACT. THE HON'BLE PRINCIPLE CIT -7 , HYDERABAD SET ASIDE THE ASSESSMENT WITH A DIRECTION TO BRING TO TAX AN AMOUNT OF RS.27,09,685/- AS UNEXPLAINED CASH CREDIT U/S.68 OF THE IT ACT. E. THE ASSESSING OFFICER PROCEEDED TO FINALIZE THE SET ASIDE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER FINAL IZED THE ASSESSMENT PROCEEDINGS UJS.144 RWS 263 OF THE IT AC T DATED 01.06.2016 BY INCLUDING THE AMOUNT OF RS.27,09,685/ - BY OBSERVING THAT THERE WAS NO EXPLANATION FROM THE AS SESSEE FOR THE SHOW CAUSE NOTICE ISSUED. IN FACT, THE ASSESSMENT ORDER WAS RECEIVED BY A CLE RK IN AUDITOR'S OFFICE WHO WAS ATTENDING THE INCOME TAX M ATTERS. HE LEFT SERVICE WITHOUT ANY PRIOR NOTICE OR WITHOUT HA NDING OVER THE PAPERS. THE NEW CLERK WHO JOINTED IN THE MONTH OF SEPTEMBER 2016 BROUGHT ALL PENDING PAPERS TO THE NO TICE OF THE AUDITOR WHO ADVISED THE ASSESSEE TO FILE APPEAL AGA INST THE SAID ORDER IMMEDIATELY. THUS, THE DELAY OCCURRED IN FILING OF THE PRESENT APPEAL AGAINST THE ORDER OF THE HON'BLE CIT-7 DATED 25.01.2016. DUE TO ABOVE DETAILED CIRCUMSTANCES, THE DELAY OCCU RRED IN FILING OF THE APPEAL BEFORE THE HON'BLE ITAT, HYDER ABAD. THUS, THE APPEAL WAS FILED ON 14-09-2016 WITH A DELAY OF 234 DAYS. THE DELAY IS QUITE UNINTENTIONAL AND INADVERTENT DU E TO CIRCUMSTANCES BEYOND THE APPELLANT'S CONTROL. IT IS THEREFORE ITA NO 1207 OF 2016 VUPPALA RAJ KUMAR SIDDIPET PAGE 3 OF 7 PRAYED THAT THE DELAY MAY PLEASE BE CONDONED AND TH E APPEAL BE ADMITTED. WHAT IS STATED ABOVE IS TRUE AND CORRECT TO THE BES T OF MY KNOWLEDGE AND BELIEF. SIGNED AT HYDERABAD ON THIS_25 TH DAY OF APRIL, 2017. SD/- DEPONENT 2. THE LEARNED DR, HOWEVER, OPPOSED THE CONDONATION OF DELAY AND FILED HIS OBJECTION IN WRITING STATING TH AT THE ASSESSEE WAS IN RECEIPT OF THE ASSESSMENT ORDER AS WELL AS S UBSEQUENT NOTICE U/S 143(2) OF THE ACT, DATED 22.2.2016 AND S HOW CAUSE NOTICE DATED 6.5.2016 ETC., AND THEREFORE, THE REAS ONS GIVEN BY THE ASSESSEE ARE NOT ACCEPTABLE. 3. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE F ACTS MENTIONED IN THE CONDONATION PETITION, WE ARE SATIS FIED THAT THE DELAY IS NOT WILLFUL OR WANTON AS THE ASSESSEE DOES NOT STAND TO GAIN BY NOT FILING THE APPEAL IN TIME. THEREFORE, T HE DELAY IS CONDONED. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IN DIVIDUAL, ENGAGED IN THE BUSINESS OF SALE OF WASHING POWDER, CIGARETTES, SOAPS ETC., FILED HIS RETURN OF INCOME FOR THE A.Y 2009-10 ON 8.9.2009 ADMITTING DEEMED INCOME OF RS.1,60,400/-. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143( 3) OF THE ACT ON 29.11.2011 ESTIMATING THE NET PROFIT @ 5.5% OF T HE TURNOVER OF RS.37,09,685/- AND INTEREST OF RS.3,931/- RECEIVED FROM ING VYSYA BANK LTD. 5. THEREAFTER, THE CIT PERUSED THE ASSESSMENT RECOR DS U/S 263 OF THE ACT, AND DIRECTED THE ASSESSING OFFI CER TO ENQUIRE INTO THE SOURCES OF THE CASH DEPOSITS INTO THE ASSE SSEES BANK A/C ITA NO 1207 OF 2016 VUPPALA RAJ KUMAR SIDDIPET PAGE 4 OF 7 AND TO COMPLETE THE ASSESSMENT AFTER CAUSING FULL V ERIFICATION. IN THE CONSEQUENT REMAND PROCEEDINGS, THE ASSESSING OF FICER ASKED THE ASSESSEE TO FURNISH THE SOURCES OF THE CASH DEP OSITS. THE ASSESSEE COULD NOT FURNISH THE SAME AND THEREFORE, THE ASSESSING OFFICER VIDE ORDER U/S 143 R.W.S. 263 OF THE ACT DA TED 27.10.2014 ESTIMATED THE NET PROFIT AT 12% OF THE CASH DEPOSIT S OF RS.34,31,180/- AND BROUGHT IT TO TAX. 6. THE CIT AGAIN ASSUMED JURISDICTION U/S 263 OF TH E ACT AND VIDE ORDERS DATED 27.2.2015 DIRECTED THE ASSESS ING OFFICER TO BRING TO TAX AN AMOUNT OF RS.27,09,685/- AS UNEXPLA INED CASH CREDIT U/S 68 OF THE I.T. ACT AND THEREAFTER, THE A SSESSING OFFICER PASSED THE CONSEQUENTIAL ORDER DATED 1.6.2016 BRING ING A SUM OF RS.27,09,685/- TO TAX U/S 68 OF THE ACT. AGGRIEVED, THE ASSESSEE IS IN APPEAL AGAINST THE SECOND ORDER OF THE CIT U/S 2 63 DATED 31.5.2016 BY RAISING THE FOLLOWING GROUNDS OF APPEA L: 1. THE ORDER OF THE HON'BLE PR. CIT-7, HYDERABAD U /S 263 OF THE IT ACT IS ERRONEOUS IN LAW AS WELL AS FACTS OF THE CASE. 2. THE HON'BLE CIT -7 OUGHT TO HAVE OBSERVED THAT T HE ORDER U/S.143(3) RWS 263 OF THE IT ACT DATED 27.10. 2014 WAS PASSED AFTER TAKING INTO CONSIDERATION THE BANK DEPOSITS APPEARING IN THE BANK ACCOUNT AND THEREFOR E THE SAID ORDER CANNOT BE HELD AS ERRONEOUS IN LAW AND PREJUDICIAL TO THE INTEREST OF REVENUE. 3. THE HON'BLE CIT-7 OUGHT TO HAVE NOTICED THAT THE ORIGINAL SCRUTINY ASSESSMENT ORDER DATED 29.11. 20 11 WAS SUBJECTED TO 263 OF THE IT ACT AND THEREFORE THE CONSEQUENTIAL ORDER U/S.143(3) RWS 263 OF THE IT AC T CANNOT BE SUBJECT MATTER OF REVISION U/S 263 IN RES PECT OF SAME BANK DEPOSITS. 4. THE CONCLUSION OF THE HON'BLE CIT THAT PART OF T HE BANK DEPOSITS AS UNEXPLAINED INVESTMENT, ESPECIALLY WHEN THE ASSESSING OFFICERS TREATED THEM AS BUSINESS RECEIPT S IN THE ASSESSMENT U/S.143(3) AS WELL AS 144 RWS 263 OF THE IT ACT, IS IMPROPER AND LIABLE TO BE DELETED. ITA NO 1207 OF 2016 VUPPALA RAJ KUMAR SIDDIPET PAGE 5 OF 7 5. ANY OTHER GROUND WILL BE RAISED AT THE TIME OF H EARING. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE FIRST ASSESSMENT ORDER WAS PASSED U/S 143(3) OF THE ACT AND THEREAFTER, CONSEQUENT TO THE REVISION ORDER U/S 26 3 OF THE ACT DATED 30.01.2014, THE ASSESSING OFFICER CALLED FOR THE DETAILS FROM THE ASSESSEE AND SINCE THE ASSESSEE SUBMITTED THAT HE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNT AND EXPRESSED HIS INABILITY TO EXPLAIN THE SOURCES OF THE CASH DEPOSITS, THE ASSES SING OFFICER DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143 (3) OF THE I.T. ACT ESTIMATED THE INCOME AT 12% OF THE TOTAL TURNOVER/DEPOSITS OF RS.34,31,180/-. THE LEARNED CO UNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER DURIN G THE CONSEQUENTIAL ASSESSMENT PROCEEDINGS U/S 143(3) R.W .S. 263 OF THE I.T. ACT, HAD MADE INQUIRIES AS DIRECTED BY THE CIT U/S 263 AND HAS ACCORDINGLY TAKEN A VIEW OF TREATING THE DE POSITS AS ASSESSEES TURNOVER AND ESTIMATING THE PROFIT ON TH E TURNOVER AT 12% SINCE THE ASSESSEE COULD NOT SUBMIT ANY DETAILS . THEREFORE, ACCORDING TO HIM, THE ASSESSING OFFICER HAS ACCEPTE D ONE OF THE POSSIBLE VIEWS AND THUS THE ASSESSMENT ORDER WAS NO T ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THEREFORE, SUCH AN ASSESSMENT ORDER CANNOT AGAIN BE SUBJECT TO REVI SION U/S 263 OF THE ACT. IN SUPPORT OF THIS CONTENTION, THE LEAR NED COUNSEL FOR THE ASSESSEE PLACED RELIANCE UPON VARIOUS CASE LAW. HE HAS ALSO DRAWN OUR ATTENTION TO THE BANK STATEMENT FOR THE P ERIOD 1.4.2007 TO 24.10.2010 (PAPER BOOK PAGES 4 TO 14) T O DEMONSTRATE THAT ALL HIS BUSINESS RECEIPTS WERE DEPOSITED INTO THE BANK AND THEREFORE, ALL THE DEPOSITS HAVE TO BE CONSIDERED T HE TURNOVER OF THE ASSESSEE AND PROFITS CAN BE ESTIMATED THEREON A S DONE BY THE ASSESSING OFFICER. ITA NO 1207 OF 2016 VUPPALA RAJ KUMAR SIDDIPET PAGE 6 OF 7 8. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T THE ASSESSING OFFICER HAS NOT FOLLOWED THE DIRECTIONS O F THE CIT TO VERIFY THE SOURCES OF THE CASH DEPOSITS AND THEREFO RE, THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO T HE INTERESTS OF THE REVENUE AND THEREFORE, ENTIRE CASH DEPOSITS WERE DIRECTED TO BE BROUGHT TO TAX. THEREFORE, ACCORDING TO HIM, THE ORDER OF THE CIT U/S 263 DATED 25.1.2016 SHOULD BE CONFIRMED. 9. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT UNDISPUTEDLY, THE ASSESSMEN T OF THE ASSESSEE WAS COMPLETED U/S 143(3) OF THE ACT AND TH EREAFTER, IT WAS REVISED U/S 263 OF THE ACT. THE CIT (A) HAD DIR ECTED THE ASSESSING OFFICER TO VERIFY THE SOURCES OF THE CASH DEPOSITS AND IN THE CONSEQUENTIAL PROCEEDINGS, THE ASSESSING OFFICE R HAD REQUIRED THE ASSESSEE TO EXPLAIN THE SOURCES FOR THE CASH DE POSITS. IT WAS ONLY ON ACCOUNT OF THE ASSESSEES INABILITY TO PROD UCE ANY EVIDENCE IN SUPPORT OF THE CASH DEPOSITS THAT THE A SSESSING OFFICER HAS PROCEEDED TO TREAT THE TOTAL OF THE CASH DEPOSI TS ALSO AS THE TURNOVER OF THE ASSESSEE AND ESTIMATE THE INCOME TH EREON AT 12% AS AGAINST 5.5% INITIALLY DONE BY THE ASSESSING OFF ICER. IT IS, THEREFORE, CLEAR THAT THE ASSESSING OFFICER HAS FOL LOWED THE DIRECTIONS OF THE CIT TO VERIFY THE SOURCES OF THE CASH DEPOSITS AND THEREAFTER, ON THE INABILITY OF THE ASSESSEE TO EXP LAIN THE SAME, THE ASSESSING OFFICER HAS ADOPTED ONE OF THE POSSIBLE V IEWS I.E., TO TREAT THE CASH DEPOSITS AS BUSINESS RECEIPTS AND TO ESTIMATE THE INCOME AT A PERCENTAGE OF THE CASH DEPOSITS OR TO M AKE AN ADDITION OF THE ENTIRE DEPOSITS U/S 68 OF THE ACT. THE ASSESSING OFFICER HAS DEEMED IT FIT AND PROPER TO TREAT THE C ASH DEPOSITS AS THE BUSINESS RECEIPTS OF THE ASSESSEE AND TO ESTIMA TE THE INCOME THEREON AT 12%. THEREFORE, IT CANNOT BE SAID THAT T HE ASSESSMENT ITA NO 1207 OF 2016 VUPPALA RAJ KUMAR SIDDIPET PAGE 7 OF 7 ORDER U/S 143(3) R.W.S. 263 DATED 27.10.2014 IS ERR ONEOUS. BY NOT BRINGING TO TAX THE ENTIRE CASH DEPOSITS U/S 68 OF THE ACT, THE ASSESSMENT ORDER MAY BE SAID TO HAVE BEEN PREJUDICI AL TO THE INTEREST OF THE REVENUE. BUT, FOR A VALID REVISION, BOTH THE CONDITIONS I.E. THE ASSESSMENT ORDER BEING ERRONEOU S AND ALSO BEING PREJUDICIAL TO THE INTEREST OF THE REVENUE AR E TO BE SATISFIED. SINCE THE CONDITIONS ARE NOT SATISFIED, WE DEEM IT FIT AND PROPER TO SET ASIDE THE ORDER U/S 263 OF THE ACT, DATED 25.01 .2016. ACCORDINGLY, THE ORDER U/S 263 IS SET ASIDE AND THE ASSESSEES APPEAL IS ALLOWED. 10. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MAY, 2021. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 5 TH MAY, 2021. VINODAN/SPS ]COPY TO: S.NO ADDRESS ES 1 SRI VUPPALA RAJ KUMAR C/O B. NARSING RAO & CO. C. A, PLOT NO.554, ROAD NO.92, JUBILEE HILLS, HYDERABAD 500096 2 INCOME TAX OFFICER WARD - 1 SIDDIPET 3 CIT - 7, HYDERABAD 4 PR. CIT -7, HYDERABAD 5 DR, ITAT HYDERABAD BENCHES 6 GUARD FILE BY ORDER