ITO, Ward-7(3), Hyd, Hyderabad V. V. Arundhati, Hyd, Hyderabad

ITA 1267/HYD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98852 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 04-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Keywords: Principle of natural justice
• Section: 142(1); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1267/HYD/2015 ASSESSMENT YEAR : 2005-06 THE INCOME TAX OFFICER, WARD-7(3), HYDERABAD VS SMT. V. ARUNDHATI, HYDERABAD [PAN: AFKPV1316B] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI M . SITARAM , DR FOR ASSESSEE : NONE DATE OF HEARING : 04 - 1 2 - 201 5 DATE OF PRONOUNCEMENT : 23 - 1 2 - 2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS A REVENUES APPEAL AGAINST THE ORDERS OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-3, HYDERABAD D ATED 26-08-2015. REVENUE IS AGGRIEVED ON THE DELETION O F ADDITION U/S. 68 OF THE INCOME TAX ACT [ACT] OF RS. 13,93,967/- M ADE BY THE ASSESSING OFFICER (AO). 2. WHEN THE CASE WAS POSTED FOR HEARING, NONE APPEA RED ON BEHALF OF ASSESSEE. THEREFORE, THE ARGUMENTS OF TH E LD. DR WERE TAKEN ON RECORD AND THE APPEAL IS DECIDED EX-PARTE RESPONDENT. I.T.A. NO. 1267/HYD/2015 SMT. V. ARUNDHATI :- 2 -: 3. THE REVENUE HAS RAISED FIVE GROUNDS, OUT OF WHIC H GROUND NOS. 1 & 5 ARE GENERAL IN NATURE. GROUND NOS. 2 & 3 PERTAIN TO THE ISSUE OF ADDITION U/S. 68 OF THE ACT OF RS. 13,93,9 67/- AND GROUND NO. 4 PERTAINS TO THE DECISION OF THE CIT(A) THAT T HE RE-ASSESSMENT COMPLETED WAS BAD IN LAW. 4. BRIEFLY, STATED, ASSESSEE IS A TRADER IN SECOND HAND HARDWARE ITEMS. ORIGINALLY, SHE HAS NOT FILED RETURN OF INC OME FOR AY. 2005- 06. A NOTICE U/S. 142(1) WAS ISSUED ON 31-03-2007 AND SCRUTINY ASSESSMENT WAS COMPLETED ON 31-12-2007 BY MAKING AN ADDITION OF RS. 13,93,970/- TOWARDS CASH DEPOSITS IN CORPORA TION BANK. THIS INFORMATION WAS BASED ON AIR INFORMATION RECEI VED. ON FIRST APPEAL, LD. CIT(A) IN THE ORDER DT. 24-12-2009 ANNU LLED THE ASSESSMENT, AS THE NOTICE U/S. 142(1) WAS TIME BARR ED. ASSESSEE HOWEVER, FILED RETURN OF INCOME OF RS. 96,060/- ON TURNOVER OF RS. 13,72,250/- ADMITTING 7% PROFIT U/S. 44AF OF THE AC T. AO ISSUED A NOTICE U/S. 148 ON 07-04-2010 AFTER RECORDING REASO NS FOR INITIATION OF PROCEEDINGS U/S. 147. ASSESSEE VIDE LETTER DT. 24-06- 2010 ASKED FOR REASON FOR RE-OPENING THE ASSESSMENT . ASSESSEE ALSO REQUESTED THE AO TO TREAT THE RETURN FILED ON 24-12-2007 AS RETURN FILED IN RESPONSE TO NOTICE U/S. 148. AO AG AIN COMPLETED THE ASSESSMENT MAKING THE ADDITION OF RS. 13,93,967 /- TOWARDS CASH DEPOSITS IN THE SB A/C OF CORPORATION BANK, HY DERABAD. IN MAKING THE ADDITION, THE AO RECORDS THAT ASSESSEE W AS ASKED TO PRODUCE THE PURCHASE BILLS, SALE BILLS IN EVIDENCE THAT ASSESSEE HAS REALLY AFFECTED THE SAID HARDWARE BUSINESS. HE ALS O GIVES A FINDING THAT ASSESSEE HAS MADE PURCHASES MOSTLY FROM M/S. C .S. WIRES P. LTD. FROM THE BANK STATEMENT, IT CAN ALSO BE SEEN THAT FOR EVERY TRANSACTION, ASSESSEE MADE PAYMENT THROUGH CHEQUE O N A PARTICULAR DAY, SHE INTRODUCED CASH DEPOSITS ALMOST OF THE SIMILAR I.T.A. NO. 1267/HYD/2015 SMT. V. ARUNDHATI :- 3 -: AMOUNT OF PAYMENT ON THE SAME DAY OR A DAY BEFORE. SINCE ASSESSEES EXPLANATION THAT THESE ARE BUSINESS TRAN SACTIONS WAS NOT ACCEPTED BY THE AO, THE DEPOSITS IN THE BANK AC COUNT TOTALING TO RS. 13,93,967/- WERE TREATED AS INCOME FROM UNDI SCLOSED SOURCES AND BROUGHT TO TAX U/S. 68 OF THE ACT. ASS ESSEE CONTENDED BEFORE THE CIT(A) THAT THESE WERE ALL SALE AMOUNTS DEPOSITED TO HONOR THE PURCHASES WHICH ARE PAID BY WAY OF CHEQUE S AND THERE WERE NO UNEXPLAINED CASH DEPOSITS, THEY BEING DAY T O DAY SALE PROCEEDS. LD. CIT(A) ACCEPTED THE CONTENTIONS AND ALLOWED THE APPEAL OF ASSESSEE BY STATING AS UNDER: 4. THE INFORMATION ON RECORD IS CAREFULLY CONSIDE RED. THE ASSESSING OFFICER CLEARLY RECORDED THAT THE PAYMENT S WERE MADE TOWARDS PURCHASES TO M/S. C.S. WIRES P LTD. ALL TH ESE PAYMENTS WERE MADE THROUGH BANK. IF THE ASSESSEE MAKES PURC HASES, THEN THERE HAS TO BE CORRESPONDING SALES. FURTHER THE A SSESSEE MAKES PURCHASES, THEN THERE HAS TO BE CORRESPONDING SALES . FURTHER THE ASSESSEE DECLARED GROSS TURNOVER OF RS. 13,72,250/- ON WHICH HE DECLARED INCOME OF RS. 96,060/- IN ACCORDANCE WITH PROVISIONS OF 44AF. THEREFORE THE CASH CREDITS MENTIONED IN CORP ORATION BANK A/C WERE CONSIDERED BY THE ASSESSEE AS HIS SALES. THEREFORE THERE IS NO MERIT IN THE ADDITION MADE BY ASSESSING OFFIC ER OF RS. 13,93,967/-. FURTHER, NOT PROVIDING THE REASONS FO R REOPENING ITSELF IS A FATAL ERROR COMMITTED BY THE ASSESSING OFFICER . IT IS PERTINENT TO MENTION THAT THE HON'BLE SUPREME COURT IN CASE OF G .K.N. DRIVESHAFT (2003 259 ITR 19 HELD THAT THE REASSESSMENT COMPLET ED WITHOUT PROVIDING THE REASONS FOR REOPENING TO THE ASSESSEE THEREBY DENYING OPPORTUNITY TO THE ASSESSEE TO STATE HIS OBJECTIONS AGAINST SUCH REOPENING IS AGAINST PRINCIPLES OF NATURAL JUSTICE, THEREFORE THE REASSESSMENT CANNOT BE HELD TO BE VALID. IN VIEW O F THE ABOVE DISCUSSION THE ADDITION MADE BY ASSESSING OFFICER I S DELETED. 5. AFTER CONSIDERING THE CONTENTIONS OF THE LD. DR, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE WELL REASONED ORDER OF THE LD. CIT(A). NOTHING WAS BROUGHT ON RECORD IN SUPPORT O F THE GROUNDS RAISED BY THE REVENUE. IN FACT THE AO HIMSELF GIVE S A FINDING THAT ASSESSEE HAS PURCHASED STEEL FROM M/S. C.S. WIRES P . LTD. AND THE I.T.A. NO. 1267/HYD/2015 SMT. V. ARUNDHATI :- 4 -: PAYMENTS WERE MADE BY WAY OF CHEQUES. ON A DAY OR BEFORE THE DAY IN ORDER TO HONOR CHEQUES, ASSESSEE HAS DEPOSIT ED CASH. LD. CIT(A) WAS OF THE OPINION THAT THESE AMOUNT PERTAIN S TO SALE PROCEEDS. ASSESSEE HAS NOT MAINTAINED BY BOOKS OF ACCOUNT AND DECLARED INCOME OF RS. 96,060/- IN ACCORDANCE WITH THE PROVISIONS OF SECTION 44AF. SINCE ASSESSEE IS HAVING SMALL TU RNOVER, WE ALSO DO NOT FIND ANY REASON TO TREAT THE DEPOSITS AS UN EXPLAINED INCOME OF ASSESSEE. THE ORDER OF CIT(A) IS ACCORD INGLY CONFIRMED AND THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER, 2015 SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBE R HYDERABAD, DATED 23 RD DECEMBER, 2015 TNMM I.T.A. NO. 1267/HYD/2015 SMT. V. ARUNDHATI :- 5 -: COPY TO : 1. THE INCOME TAX OFFICER, WARD-7(3), 2 ND FLOOR, B-BLOCK, I NCOME T AX TOWERS, HYDERABAD. 2. SMT. V. ARUNDHATI, 15-8-432-436, FEELKHANA, HYDERABAD. PRESENTLY RESIDING AT FLAT NO. G-3 BLOCK , H.NO. 3-4-780, BARKATPURA, HYDERABAD. 3. CIT (APPEALS)-3, HYDERABAD. 4. THE PR. CIT-3, HYDERABAD. 5 . D.R. ITAT, HYDERABAD. 6 . GUARD FILE.