Bisheswar Sharma, Hyderabad V. Income Tax Officer, Hyderabad

ITA 1241/HYD/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0345 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 27-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 30-08-2013
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: S RAMA RAO
• Keywords: Business income; Peak credit; Additional evidence
• Section: 44AD; 80C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 1241/HYD/2013 ASSESSMENT YEAR: 2009-10 SRI BISHESWAR SHARMA, HYDERABAD [PAN: AJEPS4456R] VS INCOME TAX OFFICER, WARD-6(3) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S . RAMA RAO, A R FOR REVENUE : SHRI RAJAT MITRA , D R DATE OF HEARING : 1 9 - 0 3 - 201 5 DATE OF PRONOUNCEMENT : 17 - 04 - 2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN ASSESSEE'S APPEAL FILED AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-IV, HYDERABAD D ATED 11-06-2013. ASSESSEE IS AGGRIEVED ON ADDITION OF CASH DEPOSITS IN BANK ACCOUNT WHICH ARE STATED TO BE BUSINESS RECEIPTS. ASSESSEE IS ALSO AGGRIEVED ON DISBELIEVING THE AGRICULTURAL INCOME ADMITTED OF RS .1,20,000/-. EVENTHOUGH, ASSESSEE HAS RAISED A GROUND WITH REFER ENCE TO ADDITION OF RS.61,380/- MADE BY ASSESSING OFFICER [AO] TOWARDS INTEREST OF FDS, THE SAME WAS NOT PRESSED. I.T.A. NO. 1241/HYD/2013 BISHESWAR SHARMA :- 2 -: 2. BRIEFLY STATED, ASSESSEE IS ENGAGED IN THE BUSIN ESS OF FABRICATION OF FURNITURE AND WALL FITTINGS AND ALSO A PARTNER IN A FIRM IN SIMILAR LINE OF BUSINESS. ASSESSEE FILED HIS RETURN OF INCOME ADMI TTING GROSS TOTAL INCOME OF RS.4,22,214/-. IN VIEW OF THE AIR DATA R ECEIVED THAT ASSESSEE HAS DEPOSITED VARIOUS AMOUNTS IN ORIENTAL BANK OF C OMMERCE AND STATE BANK OF BIKANER & JAIPUR, THE CASE WAS SELECTED FOR SCRUTINY AND IN THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKE D TO EXPLAIN THE DEPOSITS VIDE LETTER DT.23-12-2011. ASSESSEE SUBMIT TED AN UN-AUDITED P&L A/C AND BALANCE SHEET FOR THE BUSINESS OF FABRI CATION OF CUSTOMIZED FURNITURE AND WALL FITTINGS AND STATED THAT THE SOU RCE OF DEPOSITS IN THE BANK ACCOUNT ARE THOSE RECEIPTS AND WITHDRAWALS AR E FOR THE BUSINESS OF FABRICATION. HE FURTHER STATED THAT UN-AUDITED P&L A/C INDICATE THE PROFIT OF RS.3,44,500/- WHICH WAS MORE THAN 8% ON T HE GROSS RECEIPTS OF RS.37,62,006/- AND REQUESTED TO ADOPT THE ABOVE AMO UNT. AO HOWEVER, DID NOT ACCEPT ON THE CONTENTION THAT THE TURNOVER EXCEEDS LIMITS SPECIFIED UNDER INCOME TAX ACT [ACT] AND IS NOT COV ERED BY THE PROVISIONS OF SECTION 44AD (SIC). THEREFORE, HE ESTIMATED PEA K CREDIT OF THE CASH DEPOSITS WHICH WORKED OUT TO RS.18,52,900/-. FURTHE R, CHEQUE DEPOSITS TOTALING TO RS.4,22,477/- WERE ALSO TAKEN AS UN-EXP LAINED INVESTMENT IN BANK ACCOUNT (SIC). ON THE REASON THAT ASSESSEE HAS NOT FURNISHED ANY PROOF OF OWNERSHIP OR AGRICULTURAL ACTIVITY, THE IN COME EARNED AT RS.1,20,000/- DECLARED BY ASSESSEE WAS TREATED AS ' INCOME FROM OTHER SOURCES'. IN ADDITION, AO ALSO ADDED AN AMOUNT OF RS.61,380/- AS FDR INTEREST AND ALSO BANK INTEREST OF RS.14,239/- ON W HICH THERE IS NO DISPUTE. AO ALSO DISALLOWED PART OF THE CLAIM OF 8 0C OF RS.27,042/- ON THE REASON THAT INTEREST ON MORTGAGE WAS NOT ALLOWA BLE AS DEDUCTION U/S. 80C. EVEN THOUGH ASSESSEE CLAIMED VARIOUS AMO UNTS AND RESTRICTED THE CLAIM TO RS.1 LAKH UNDER THE PROVISI ONS OF SECTION 80C, AO THOUGHT TO DISALLOW THE ENTIRE AMOUNT AND ADDED TO THE TOTAL INCOME LIKE A DEDUCTION U/S. 37(1). IN FACT EVEN GROSS TO TAL INCOME RETURNED AT I.T.A. NO. 1241/HYD/2013 BISHESWAR SHARMA :- 3 -: RS.4,22,214/- WAS TAKEN AS TOTAL INCOME THEREBY, A N AMOUNT OF RS.1 LAKH WAS ADDITIONALLY BROUGHT TO TAX IN THE ASSESSM ENT ORDER. 3. ASSESSEE CONTESTED VARIOUS ADDITIONS BEFORE THE CIT(A) BUT LD.CIT(A) CONFIRMED THE ACTION OF THE AO IN MAKING THE CASH DEPOSITS AND CHEQUE DEPOSITS AS UN-EXPLAINED AND ALSO DISMIS SED OTHER GROUNDS RAISED BY ASSESSEE. CIT(A) REJECTED ALL THE CONTEN TIONS AND DISMISSED THE APPEAL. 4. BEFORE US, LD. COUNSEL FILED A PAPER BOOK CONTAI NING 147 PAGES WITH A PRAYER TO ADMIT ADDITIONAL EVIDENCE WITH REF ERENCE TO LAND- HOLDING. IT WAS SUBMITTED THAT ASSESSEE IN THE BUS INESS OF FABRICATION AND HAS MIGRATED FROM BIHAR TO HYDERABAD. IT WAS S UBMITTED THAT HE WAS ALSO A PARTNER IN M/S. SHARMA FURNITURE WITH HI S BROTHER AND MOST OF THE DEPOSITS ARE THE BUSINESS RECEIPTS. IN ADDIT ION TO THE PARTNERSHIP ACTIVITY, ASSESSEE ALSO HAS PROPRIETARY JOB WORK BU SINESS. FURTHER, ASSESSEE ALSO RECEIVES RENT WHICH WAS DEPOSITED BY WAY OF CHEQUES IN THE BANK ACCOUNT. WITH REFERENCE TO AGRICULTURAL INCOM E, ASSESSEE OWNS PROPERTIES IN BIHAR AND THEREFORE COULD NOT FURNISH THE EVIDENCE IMMEDIATELY BEFORE THE CIT(A), THEREFORE, FILED AD DITIONAL EVIDENCE. IT WAS SUBMITTED THAT BOTH AO AND CIT(A) HAS NOT CONSI DERED ASSESSEE'S SUBMISSIONS AND THEREFORE, HAS NO OBJECTION IF THE MATTERS WERE SET ASIDE TO AO FOR FRESH EXAMINATION. LD.DR WHILE ADMITTING THAT THERE ARE CERTAIN MISTAKES IN THE ORDER HOWEVER, SUPPORTED TH E CIT(A)'S ORDER. 5. WE HAVE CONSIDERED THE ISSUE AND PERUSED THE PAP ER BOOK PLACED ON RECORD. AS PER THE RETURN OF INCOME FURNISHED B Y ASSESSEE, ASSESSEE HAS IN FACT SHOWN SHARE OF PROFIT FROM M/S. SHARMA FURNITURE, REMUNERATION FROM THE FIRM ALONG WITH INTEREST AND RENTS RECEIVED FROM M/S.RELIANCE COMMUNICATIONS LTD., ON WHICH THERE WA S TDS AND ALSO I.T.A. NO. 1241/HYD/2013 BISHESWAR SHARMA :- 4 -: ESTIMATED JOB WORKS IN CARPENTRY ON WHICH INCOME OF RS.62,450/- WAS OFFERED BY ASSESSEE. OUT OF THE GROSS TOTAL INCOME OF RS. 4,22,214/- ASSESSEE CLAIMED DEDUCTION OF RS.1 LAKH U/S. 80C AN D OFFERED TAXABLE INCOME AT RS.3,22,214/-. AS SEEN FROM THE ASSESSME NT ORDER, AO TOOK THE GROSS TOTAL INCOME AS DECLARED TOTAL INCOME AND STARTED THE COMPUTATION FROM THE ABOVE AMOUNT. IN ADDITION, EV EN THOUGH ASSESSEE WAS EXPLAINING THAT THE DEPOSITS WERE FROM THE PROP RIETARY BUSINESS OF CARPENTING AND OFFERED INCOME OF RS.3,44,500/- ON G ROSS RECEIPTS OF RS.37,62,006/-, AO SIMPLY IGNORED THE OFFERED INCO ME AND ACCEPTED ONLY RS.62,450/- STATED IN THE RETURN OF INCOME. A O ALSO WRONGLY CONSIDERED THAT THE TURNOVER OF RS.37,62,006/- WAS EXCEEDING THE LIMITS PROVIDED UNDER SEC 44AD OF INCOME TAX ACT. WE ARE UNABLE TO UNDERSTAND THE LOGIC OF THE AO AS THE TURNOVER FOR SMALL BUSINESSES IS FIXED AT RS.40 LAKHS AND ASSESSEE'S TURNOVER IS LES S THAN THAT. REGARDING THE CHEQUE PAYMENTS, ASSESSEE EXPLAINED T HAT THEY PERTAIN TO RENT RECEIPTS, AGRICULTURAL INCOME AND OTHER TRANSF ERS FROM THE FIRM. THIS EXPLANATION WAS ALSO NOT EVEN EXAMINED BY THE AO AND ADDED AS UN-EXPLAINED INVESTMENT IN BANK ACCOUNT. HOW THE T RANSFERS INTO THE BANK ACCOUNT CAN BE CONSIDERED THE UN-EXPLAINED INV ESTMENT IS NOT EXPLAINED BY THE AO. UNFORTUNATELY, IN SPITE OF FU RNISHING NECESSARY CLARIFICATION BEFORE THE CIT(A), THE CIT(A) ALSO IG NORED THE SAME. ASSESSEE IN THE PAPER BOOK ALSO FILED EVIDENCE OF O WNING AGRICULTURAL LAND TO EXPLAIN THE SOURCE OF AGRICULTURAL INCOME. ASSESSEE ALSO HAD CERTAIN SHARE TRANSACTIONS AND FORM 26AS WAS FILED . AS SEEN FROM THE ASSESSMENT ORDER, NONE OF THESE ACTIVITIES WERE EXA MINED BY THE AO. JUST BECAUSE AIR INFORMATION WAS RECEIVED THAT THER E WERE DEPOSITS IN THE BANK ACCOUNT, WITHOUT EXAMINING THE NATURE OF R ECEIPTS, THE AO TOOK THE PEAK CREDIT WHICH IN OUR VIEW IS NOT CORRECT. IT IS ASSESSEE'S EXPLANATION THAT THESE ARE BUSINESS RECEIPTS AND HE HAS MORE PROFIT THAN WHAT WAS DECLARED IN THE RETURN OF INCOME. EVEN PR OTECTIVELY ALSO THE I.T.A. NO. 1241/HYD/2013 BISHESWAR SHARMA :- 5 -: OFFERED INCOME WAS NOT ACCEPTED BY THE AO. LEAVE A LONE THESE OBVIOUS ERRORS, WHEN ASSESSEE CLAIMED A TOTAL OF RS.1,17,41 4/- AS DEDUCTION U/S. 80C OUT OF WHICH INTEREST ON MORTGAGE OF HOUSE WAS CLAIMED AT RS.27,042/-, INSTEAD OF RESTRICTING THE CLAIM U/S. 80C TO THE ACTUAL OTHER AMOUNTS CLAIMED IN THE RETURN, AO SIMPLY ADD ED THE ABOVE AMOUNT TO THE GROSS TOTAL INCOME, THEREBY COMMITTIN G ANOTHER MISTAKE. AS SEEN FROM THE ABOVE ORDER OF AO, THERE IS NO RHY ME OR REASON IN MAKING THE ADDITIONS. JUST BECAUSE THE SAME WAS C ONFIRMED BY THE CIT(A), WE ARE NOT IN A POSITION TO ACCEPT THE ORD ERS OF THE AUTHORITIES. SINCE ASSESSMENT OF ASSESSEE WAS NOT DONE IN CORREC T PERSPECTIVE AND ASSESSEE HAS FILED ADDITIONAL EVIDENCE IN SUPPORT O F AGRICULTURAL INCOME, WE ARE OF THE OPINION THAT ORDER OF THE AO AND CIT( A) ARE TO BE SET ASIDE WITH A DIRECTION TO AO TO DO THE ASSESSMENT AFTER D UE EXAMINATION OF THE ISSUES PROPERLY, ACCORDING TO THE PROVISIONS OF LAW . WITH THESE DIRECTIONS, THE ORDERS OF THE AUTHORITIES ARE SET A SIDE AND ASSESSMENT IS RESTORED TO THE FILE OF AO FOR FRESH CONSIDERATION. ASSESSEE SHOULD BE GIVEN DUE OPPORTUNITY AND HIS SUBMISSIONS SHOULD BE CONSIDERED. 6. ASSESSEE'S GROUNDS ARE ACCORDINGLY ALLOWED FOR S TATISTICAL PURPOSES. IN THE RESULT APPEAL IS ALLOWED FOR STATI STICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 17 TH APRIL, 2015. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD, DATED 17 TH APRIL, 2015 TNMM I.T.A. NO. 1241/HYD/2013 BISHESWAR SHARMA :- 6 -: COPY TO : 1. SRI BISHESWAR SHARMA, C/O. SRI S. RAMA RAO, ADVOCAT E, FLAT NO.102, SHRIYA'S ELEGANCE, H.NO.3-6-643, ST.NO.9, HIMAYATNAGAR, HYDERABAD. 2. INCOME TAX OFFICER, WARD-6(3), HYDERABAD. 3. CIT(APPEALS)-IV, HYDERABAD 4. CIT-III, HYDERABAD 5. D.R. ITAT, HYDERABAD