ITO, Ward-7(2), Hyderabad V. Sri Khoday Narsing Rao, Hyderabad

ITA 1223/HYD/2012

• Counselvise Citation: 122322514 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 09-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R LAXMAN
• Assessee Lawyers: TEJPRAKASH TOSHIWAL
• Section: 143(3); 68

Judgement Text

1 ITA.NO.1223/HYD/2012 SHRI KODAY NARSING RAO, HYDERABAD IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.1223/HYD/2012 ASSESSMENT YEAR 2008-2009 THE INCOME TAX OFFICER, WARD 7(2), HYDERABAD. VS. SHRI KODAY NARSING RAO HYDERABAD PAN AFYPR3222C (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI R. LAXMAN FOR RESPONDENT : SHRI TEJPRAKASH TOSHIWAL) DATE OF HEARING : 09.10.2013 DATE OF PRONOUNCEMENT :18.10.2013 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-VI, DATED 15.05.2012 FOR THE ASSESSMENT YEAR 2008-2009. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 21.09.2009 ADMITTING TOTAL INCOME AT RS.1,28,560/-. THE ASSESSMENT WAS COMPLET ED BY THE ASSESSING OFFICER UNDER SECTION 143(3) MAKING THE FOLLOWING A DDITIONS TO THE INCOME RETURNED AND ARRIVING AT THE ASSESSABLE INCOME AT R S.37,97,536/-. 1. UN EXPLAINED INCOME U/S.68 RS.34,94,900/ - 2. INTEREST FROM SB ACCOUNT RS. 57,177/ - 3. ACCRUED/EARNED INTEREST ON FDRS RS. 16,899/ - 4. DRAWINGS RS. 1,00,000/ - 2 ITA.NO.1223/HYD/2012 SHRI KODAY NARSING RAO, HYDERABAD 3. THE ASSESSEE IS RUNNING RETAIL TRADE BUSINESS I N READYMADE GARMENTS AND HAS RETURNED INCOME UNDER SECTION 44AF OF THE ACT. AS PER THE RETURN OF INCOME, THE TURNOVER OF THE ASSESSEE WAS AT RS.14,55,109/- WHEREAS THE ASSESSEE HAD MADE CASH DEPOSITS AT RS.4 9,50,000/- IN HIS TWO BANK ACCOUNTS ONE AT ANDHRA BANK, CHANDANAGAR AND O THER IS AT A.P.MAHESH COOPERATIVE URBAN BANK LIMITED, SERILING AMPALLY, HYDERABAD. 4. BEFORE THE ASSESSING OFFICER, THE ASSESSEE SUBM ITTED AS FOLLOWS : I DEPOSITED IN THE BANK RS.49,50,000/- ON VARIOUS DATES, BUT WHEREAS WITHDRAWAL OF THE BANK IS RS.88,72,900/-.....I SUBMIT THAT DURING THE FINANCI AL YEAR RETAIL SALES IS RS.14,55,109/- AND OUT OF WHIC H I DEPOSITED CASH OF RS.34,94,900/- AND WITHDRAWN CASH WHICH IS DULY ACCOUNTED IN MY BOOKS OF ACCOUNTS AND WILL NOT FORM PART UNDER SECTION 68 OF INCOME TAX A CT. 5. THE CIT(A) HELD THAT THE ASSESSEE HAS FILED RET URN AS PER THE PROVISIONS OF SECTION 44AF AND HAS SUBMITTED THE BO OKS OF ACCOUNTS MAINTAINED BY HIM FOR THE VERIFICATION BEFORE THE AS SESSING OFFICER. THE ASSESSEE CLAIMED THAT THE DEPOSITS WERE MADE OUT OF THE CASH WITHDRAWALS FROM THE SAME BANK ACCOUNTS WHICH HAS ALSO BEEN REC ORDED IN THE BOOKS OF ACCOUNTS. THE CIT(A) OBSERVED THAT THIS CLAIM HAS N OT BEEN REBUTTED BY THE ASSESSING OFFICER. THE CIT(A) FURTHER HELD THAT THE ASSESSEE HAD PRODUCED THE CASH BOOK AND LEDGER BEFORE THE CIT(A) WHICH RE CORDED WITHDRAWALS AND REDEPOSIT INTO THE BANK ACCOUNT. THE CIT(A) OBSERVE D THAT IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT THESE DEPOSITS ARE MADE OU T OF THE UNDISCLOSED SOURCES, THE ASSESSEES CLAIM IS TO BE ACCEPTED AND ALLOWED THE ASSESSEES APPEAL ON THIS GROUND. 6. WITH RESPECT TO THE ADDITION OF RS.57,177/- BEI NG INTEREST FROM BANK ACCOUNTS MADE BY ASSESSING OFFICER, THE ASSESSE E HAS CLAIMED THAT THIS INTEREST RECEIPT FORMED PART OF THE BUSINESS T RANSACTIONS AND THEREFORE, 3 ITA.NO.1223/HYD/2012 SHRI KODAY NARSING RAO, HYDERABAD PART OF HIS RETURNED INCOME. THE CIT(A) HAS ACCEPTE D THE ASSESSEES REASONING AND DELETED THE ADDITION. 7. WITH RESPECT TO THE ADDITION OF RS.16,899/- MAD E BY ASSESSING OFFICER RECEIVED AS INTEREST ON FDRS IN THE NAMES O F VARIOUS FAMILY MEMBERS AND CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE, T HE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT THE FDRS BELONG TO VARIOUS F AMILY MEMBERS AND ON MATURITY THE PROCEEDS HAVE BEEN CREDITED TO THE ACCO UNT OF THE ASSESSEE SINCE THE OTHER FAMILY MEMBERS DID NOT HAVE THEIR OW N BANK ACCOUNT. THE CIT(A) AFTER PERUSING THE ACCOUNT STATEMENTS FILED BY THE ASSESSEE HELD THAT THERE IS NOTHING ON RECORD TO SHOW THAT THE FDRS TH EMSELVES WERE BENAMI AND ACTUALLY BELONGED TO THE ASSESSEE AND THEREFORE, ACCEPTED THE EXPLANATION OF THE ASSESSEE AND DELETED THE ADDITIO N. 8. WITH RESPECT TO RS.1 LAKH TOWARDS PERIODICAL DR AWINGS FOR HOUSE HOLD EXPENSES MADE BY ASSESSING OFFICER THE ASSESSEE S DRAWINGS AS PER HIS BALANCE SHEET WAS RS.24,281/- AND THE ASSESSING OFF ICER ESTIMATED THE EXPENSES TO BE AT RS.10,000/- PER MONTH. IT WAS SUBM ITTED BEFORE THE CIT(A) BY THE ASSESSEE THAT HIS WIFE WAS AN INCOME TAX ASSES SEE AND ALL THE THREE SONS OF THE ASSESSEE WERE WORKING AND EARNING INCOM E. BEING SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE, THE LEARNED CI T(A) ALLOWED THE ASSESSEES APPEAL ON THIS GROUND. 9. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US AN D HAS RAISED FOLLOWING GROUNDS. 1. THE ORDER OF THE HONBLE CIT(A) IS ERRONEOUS IN FACTS AND IN LAW. 2. THE CIT(A) OUGHT TO HAVE UPHELD THE ADDITION OF RS.34,94,900/- AND RS.57,17/- REPRESENTING UNEXPLAINED CASH DEPOSITS AND UNDISCLOSED INTEREST INCOME. 3. THE CIT(A) OUGHT TO HAVE SET ASIDE THE ISSUE TO T HE FILE OF A.O. 4. THE CIT(A) OUGHT TO HAVE AFFORDED AN OPPORTUNITY TO THE A.O. TO CROSS-EXAMINE THE ISSUES. 4 ITA.NO.1223/HYD/2012 SHRI KODAY NARSING RAO, HYDERABAD 5. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 10. AS COULD BE SEEN FROM THE ABOVE GROUNDS, GROUND S NO.1 AND 5 ARE GENERAL IN NATURE AND THEREFORE, IT NEEDS NO ADJUDIC ATION. 11. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSE SSEE, SHRI TEJPRAKASH TOSHNIWAL, SUBMITTED COPY OF THE REPLY TO THE INCOME TAX OFFICER, WARD-7 (2) WHEREIN WITH RESPECT TO THE QUERY TOWARDS DEPOSI T, THE ASSESSEE HAD SUBMITTED THAT DURING THE FINANCIAL YEAR RETAIL SALE S, WAS RS.14,55,109/- AND OUT OF WHICH, HE HAD DEPOSITED CASH OF RS.34,94 ,900/- AND WITHDRAWN CASH WHICH IS DULY ACCOUNTED IN THE BOOKS OF ACCOUNT S THE ASSESSEE FURNISHED THE SUMMARY OF DEPOSITS AND WITHDRAWALS. OPENING CASH BALANCE R S. 3,82,194/ - CASH WITHDRAWAL FROM ANDHRA BANK RS. 20,62,900/ - CASH WITHDRAWAL FROM MAHESH BANK RS. 68,10,000/ - CASH DEPOSITED IN ANDHRA BANK RS. 24,95,000/ - CASH DEPOSITED IN MAHESH BANK RS. 25,10,000/ - 12. THE LEARNED COUNSEL FURTHER SUBMITTED THAT THE DEPOSITS OF THE ASSESSEE ARE LESS THAN CASH WITHDRAWAL FROM THE BAN K. FURTHER, HIS DAY-TO- DAY DEPOSITS AND WITHDRAWALS ARE ALREADY REFLECTED IN HIS BOOKS OF ACCOUNTS. THEREFORE, THE ASSESSEE REQUESTED THE ASSESSING OFF ICER TO DROP THE PROPOSED ADDITION AS THE ENTIRE TRANSACTIONS ARE ACCOUNTED I N BOOKS OF ACCOUNTS. 13. BEFORE THE ASSESSING OFFICER, WITH REGARD TO Q UERY TOWARDS INTEREST, THE ASSESSEE SUBMITTED AS FOLLOWS : WITH REFERENCE TO YOUR QUERY TOWARDS INTEREST, I A LREADY ACCOUNTED IN THE BOOKS OF ACCOUNTS WHOSE DETAILS WERE FURNISH ED TO YOU ON 16.12.2010, I HEREBY FURNISH THE DETAILS OF INTERES T RECEIVED AND INTEREST PAID AS UNDER : INTEREST RECEIVED ON FIXED DEPOSIT RS. 16,899/- INTEREST RECEIVED ON SB A/C. WITH MAHESH BANK RS. 52,115/- 5 ITA.NO.1223/HYD/2012 SHRI KODAY NARSING RAO, HYDERABAD WITH ANDHRA BANK RS. 4,212/- TOTAL RS. 73,226/- INTEREST PAID DETAILS : INTEREST PAID TO D.SAMITHA RS. 15,041/- S. PADMA RS. 16,244/- B. MEENA RS. 13,236/- K. NAVEENA RS. 15,643/- K. RAHUL RS. 13,250/- TOTAL RS. 73,414/- 3. FIXED DEPOSITS CREDITED IN AP MAHESH CO-OP URBA N BANK LIMITED WAS OF RS.8,25,000/- AND INTEREST RECEIVED THEREON IS RS.16,899/-, I SUBMIT THAT THE FIXED DEPOSITS PE RTAINS TO MY FAMILY MEMBERS, CREDITED IN MY BANK ACCOUNT AS T HE FAMILY MEMBERS DID NOT HAVE THE BANK ACCOUNT IN THE AP MAHESH CO-OP URBAN BANK LIMITED, THUS THE ENTIRE FI XED DEPOSITS CREDITED IN MY ACCOUNT DO NOT REPRESENT MI NE. I ALREADY ACCOUNTED INTEREST RECEIVED ON FIXED DEPOSI TS, THE BALANCE FIXED DEPOSITS PERTAINS TO MY FAMILY MEMBER S, I HEREBY ENCLOSE THE LIST OF HOLDERS OF FIXED DEPOSIT S ALONG WITH THEIR NAME AND BANK STATEMENT WHICH WILL CRYST AL CLEAR THE NAME OF HOLDER OF FIXED DEPOSITS. AS I WITHDRAW N MONEY FOR MY BUSINESS PURPOSE AND I HAVE THE BANK ACCOUNT IN AP MAHESH CO-OP URBAN BANK LIMITED, THE AMOUNT IS CRED ITED TO MY ACCOUNT, I HAVE ALREADY ACCOUNTED LOANS WHOSE DE TAILS ARE ALREADY BORNE IN THE BOOKS OF ACCOUNTS. I HAVE ALREADY PROVIDED COPY OF BANK STATEMENT, WHEREIN IT IS CATE GORICALLY MENTION IN WHOSE NAME THE FIXED DEPOSIT IS AND I HE REBY ENCLOSED THE DETAILED WORKING. HENCE, RS.57,177/- C REDITED TOWARDS INTEREST FROM BANK NEED NOT BE GIVEN UNILAT ERAL ADDITION AND THE AMOUNT BORROWED HAS TO BE TAKEN IN TO ACCOUNT WHILE PAYING THE INTEREST. 14. WE HAVE PERUSED THE SUMMARY OF DEPOSITS AND WIT HDRAWALS AND THE ENTIRE TRANSACTIONS WHICH ARE ACCOUNTED IN THE BOOKS OF ACCOUNTS. 6 ITA.NO.1223/HYD/2012 SHRI KODAY NARSING RAO, HYDERABAD HENCE, WE CONFIRM THE ORDER OF THE CIT(A) IN HOLDIN G THAT THE ASSESSING OFFICER WAS WRONG IN ADDING RS.34,94,900/- TO THE R ETURNED INCOME UNDER SECTION 68 OF THE I.T. ACT. HENCE, GROUND NO.2 RAIS ED BY REVENUE AGAINST DELETION OF RS.34,94,891/- AS UNDISCLOSED INCOME UN DER SECTION 68 OF THE I.T. ACT, 1961 IS DISMISSED. 15. FURTHER, THE ASSESSEE HAS ALSO FURNISHED THE DETAILS OF INTEREST RECEIVED AND INTEREST PAID AND THE CLAIM THAT THE I NTEREST RECEIVED FORMS PART OF THE BUSINESS TRANSACTION AND HENCE, PART OF HIS RETURNED INCOME. WE ALSO CONFIRM THE ORDER OF THE CIT(A) IN DELETING THE AMO UNT OF RS.57,177/- TOWARDS INTEREST WHICH IS ADDED TO THE INCOME OF TH E ASSESSEE. HENCE, GROUND NO.2 RAISED BY THE REVENUE AGAINST DELETION O F RS.57,177/- AS UNDISCLOSED INTEREST INCOME IS ALSO DISMISSED. 16. GROUNDS NO. 3 AND 4 RAISED BY THE DEPARTMENT AR E THAT THE CIT(A) OUGHT TO HAVE SET ASIDE THE ISSUE TO THE FIL E OF THE ASSESSING OFFICER SHOULD HAVE AFFORDED AN OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE ISSUES. AS HELD EARLIER, THE ENTIRE TRANSACTIONS OF THE ASSESSEE WERE ACCOUNTED IN THE BOOKS OF ACCOUNTS AND PRODUCED BEF ORE THE ASSESSING OFFICER WHICH HAS BEEN BROUGHT OUT CLEARLY IN THE RE PLY DATED 24.12.2010 GIVEN BY THE ASSESSEE TO THE INCOME TAX OFFICER. THE ASSESSEE HS SUBMITTED THE BOOKS OF ACCOUNTS, CASH BOOK, BANK ACCOUNT, SAL ES REGISTER, PURCHASE REGISTER AND LEDGER FOR PERUSAL OF THE ASSESSING OF FICER ON 12.10.2010. FURTHER, ALL RELEVANT INFORMATION AND DOCUMENTS WER E SUBMITTED ON 16.12.2010 FOR PERUSAL AND VERIFICATION INCLUDING T HE CASH FLOW STATEMENT OF ALL TRANSACTIONS WITH BANKS BY THE ASSESSEE TO THE A SSESSING OFFICER, WARD 7 (2). HENCE, NO PURPOSE WOULD BE SERVED BY SETTING AS IDE THE ISSUES AND WE ALSO OBSERVE THAT THE CIT(A) DOES NOT HAVE THE POWE R TO SET ASIDE ANY ISSUE TO THE FILE OF ASSESSING OFFICER. ACCORDINGLY, WE DI SMISS THE GROUNDS NO. 3 AND 4 OF THE REVENUE. 17. IN THE RESULT, APPEAL OF THE REVENUE IS DISMIS SED. 7 ITA.NO.1223/HYD/2012 SHRI KODAY NARSING RAO, HYDERABAD ORDER PRONOUNCED IN THE OPEN COURT ON 18.1 0.2013. SD/- SD/- (B.RAMAKOTAIAH) (SMT. ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBE R HYDERABAD, DATE 18.10.2013 VBP/- COPY TO : 1. THE INCOME TAX OFFICER, WARD 7 (2), 23ND FLOOR, B - BLOCK, I.T. TOWERS, A.C. GUARDS, HYDERABAD. 2. SHRI KHODAY NARSING RAO, 13 - 2 - 784, RAHIMPURA, PURANPOOL, HYDERABAD. 3. CIT(A) - V I , 6A, I.T. TOWERS, A.C. GUARDS, HYDERABAD - 004 . 4. CIT - V I, HYDE RABAD 5. D.R. ITAT A BENCH, HYDERABAD.