Racham Reddy Chandra Sekhar Reddy , Anantapur V. Income Tax Officer, Ward-2, Anantapur

ITA 1280/Hyd/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3629 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2015-2016
• Appeal Filed On: 14-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M.H. NAIK
• Keywords: Business income; Set aside
• Section: 143(3); 201; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A - SMC BENCH : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO. 1280 /HYD./201 9 ASSESSMENT YEAR: 20 15 - 16 SH. RACHAM REDDY CHANDRA SEKHAR REDDY VS. ITO, WARD 2 C/O KATRAPATI & ASSOCIATES REVENUE COLONY 1 - 1 - 298/2/B/3, 1 ST FLOOR RANGASWAMY NAGAR ASHOK NAGAR ANANTAPURAM 515004 HYDERABAD 500 020 PAN: AFSPC5713M (APPELLANT) (RESPONDENT) FOR ASSESSE : S H. K.A. SAI PRASAD, A.R. FOR REVENUE : S H. M.H.NAIK, D.R. DATE OF HEARING : 31 / 1 0/19 DATE OF PRONOUNCEMENT : 11/11/ 19 O R D E R THIS IS ASSESSEES APPEAL FOR A.Y. 201 5 - 16 AGAINST THE ORDER OF THE LD.CIT(A) , KURNOOL DATED 14.06. 201 9 . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, DERIV ING INCOME FROM RETAIL TRADE OF CEMENT AND PAINTS, FILED HIS RETURN OF INCOME FOR THE AY 2015 - 16 ON 28.03.2017 DULY ADMITTING INCOME OF RS.2,80,000/ - . DURING ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT , THE ASSESSEE WAS ASKED TO FILE CERTAIN DETAILS WITH REGARD TO CASH DEPOSITS . HOWEVER, THE ASSESSEE DID NOT FILE THE RELEVANT DE TAILS AND, THEREFORE, THE AO TREATED THE CASH DEPOSITS TO THE TUNE OF RS.1,92,50,900/ - AS THE TURNOVER OF THE ASSESSEE AND ESTIMATED THE PROFIT @ 8% WHICH WORKED OUT TO RS.15,40,072/ - . AGGRIEVED, THE A SSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) , WHO CONFIRMED THE ORDER OF AO AND THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL . ITA NO. 1280/HYD./2019 AY 2015 - 16 SH. RACHAMREDDY CHANDRA SEKHAR REDDY VS. ITO, WARD(2), ANANTAPUR 2 3. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE BUSINESS WAS INITIALLY CARRIED ON BY ASSESSEES WIFE WHO EXPIRED ON 30.11.2013 AND IT TOOK SOME TIME FOR ASSES SEE TO OBTAIN LICENSE IN HIS NAME AND, THEREFORE, HE HAD MADE DEPOSITS OF THE TURNOVER INTO HIS BANK ACCOUNT TILL SUCH PERIOD. HE, THEREFORE, CLAIMED THAT CASH DEPOSITS ARE NOTHING BUT TURNOVER OF BUSINESS OF ASSESSEE. FURTHER , HE SUBMITTED THAT IN THE C EMENT BUSINESS , THE NE T OF PROFIT CAN ONLY BE 1 TO 2 % AS HELD BY THE TRIBUNAL IN SIMILAR CASES AND ASSESSEE HAD ALSO REPORTED 1% OF THE TOTAL TURNOVER OF THE ASSESSEE IN EARLIER AS WELL AS THE RELEVANT A.Y. HE PRAYED THAT SIMILAR DIRECTION OF ESTIMAT ING INCOME OF NET PROFIT AT 1.5% OF THE TOTAL TURNOVER BE GIVEN TO THE ASSESSEE. HE ALSO FILED COPIES OF RETURNS OF INCOME FILED BY ASSESSEES WIFE FOR EARLIER AYS WHEREIN INCOME WAS OFFERED AT 1% OF THE TOTAL TURNOVER. 4. LD.DR HOWEVER , OPPOSED THE ESTIM ATION OF INCOME AT 1.5% AS CLAIMED BY THE ASSESSEE. 5. HAVING REGARD TO NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE AND PARTICULARLY ASSESSEES WIFE AND ALSO HAVING REGARD TO THE FACT THAT SHE HAD ALLEGEDLY OFFERED INCOME AT 1% OF THE TOTAL TURNOV ER IN EARLIER AY S WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT, I AM OF THE OPINION THAT THE INCOME CAN BE ESTIMATED AT 1.5% OF THE TOTAL TURNOVER AS HELD BY ME IN THE CASE OF SRI DAMERLA PITCHAIAH IN ITA NO.447/HYD/2016 FOR AY 2011 - 12 ORDER DT. 30.11.2016. HOWEVER, ONLY FOR THE PURPOSE OF VERIFICATION ABOUT THE RATE AT WHICH INCOME HAS BEEN OFFERED BY THE ASSESSEE IN THE EARLIER YEARS, THE ASSESSMENT IS SET ASIDE TO THE FILE OF THE A.O. AND IF THE NET INCOME OFFERED BY THE ASSESSEE IN THE EARLIER A.YS WAS MORE THAN 1% OF THE TOTAL TURNOVER, ONLY THEN , THE INCOME IN THE RELEVANT A.Y. SHALL ALSO BE ESTIMATED AT SUCH HIGHER RATE. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 11 TH NOVEMBER, 2019. SD/ - (P MADHAVI DEVI) JUDICIAL MEMBER DATED: 11 TH NOV EMBER, 2019. *GMV ITA NO. 1280/HYD./2019 AY 2015 - 16 SH. RACHAMREDDY CHANDRA SEKHAR REDDY VS. ITO, WARD(2), ANANTAPUR 3 COPY FORWARDED TO: 1. SRI RACHAM REDDY CHANDRA SEKHAR REDDY, C/O KATRAPATI & ASSOCIATES, 1 - 1 - 298/2/B/3, 1 ST FLOOR, ASHOK NAGAR, HYDERABAD 500 020 2. ITO, WARD 2, ANANTAPUR . 3. CIT(A), KURNOOL 4. PR.CIT, KURNOOL . 4. D.R. ITAT HYDERABAD 5. GUARD FILE // C O P Y // ITA NO. 1280/HYD./2019 AY 2015 - 16 SH. RACHAMREDDY CHANDRA SEKHAR REDDY VS. ITO, WARD(2), ANANTAPUR 4 1. DRAFT DICTATED ON 31 / 10 /19 2. DRAFT PLACED BEFORE THE AUTHOR 01/11/19 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO SRPS 6. KEPT FOR PRONOUNCEMENT 7. FILE SENT TO BENCH CLERK