Renu Agarwal, Hyd, Hyderabad V. ITO, Ward-5(2), Hyd, Hyderabad

ITA 1288/HYD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2401 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 12-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H PHANI RAJU
• Assessee Lawyers: AJAY GANDHI
• Keywords: Income from undisclosed sources; Principle of natural justice; Peak credit
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1288/HYD/2015 ASSESSMENT YEAR: 2009-10 SMT. RENU AGARWAL, HYDERABAD [PAN: ADQPA5249J] VS INCOME TAX OFFICER, WARD-5(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI AJAY GANDHI, AR FOR REVENUE : SHRI H. PHANI RAJU, DR DATE OF HEARING : 08-11-2017 DATE OF PRONOUNCEMENT : 10-11-2017 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-4, HYDERABAD, DATED 08-09-2015, FOR THE AY. 2009-10. 2. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1) THAT THE ASSESSING OFFICER ERRED IN MAKING ADDI TION OF RS 46,93,270/- ARBITRARILY, IGNORING THE FACT THAT ALL THE INFORMA TION CALLED FOR WERE SUBMITTED REGULARLY ALONG WITH DOCUMENTARY EVIDENCE S. 2) ASSESSING OFFICER HAS INITIATED REASSESSMENT PRO CEEDINGS BY ASKING FOR EVIDENCES ON THE BASIS OF MATERIAL EXISTING AT THE TIME OF ORIGINAL ASSESSMENT AND VERY WELL EXPLAINED WITH EVIDENCES. 3) THAT THE ORDER PASSED BY THE ASSESSING OFFICER W AS AGAINST THE PRINCIPLES OF NATURAL JUSTICE, EQUITY, & GOOD CONSC IENCE. I.T.A. NO. 1288/HYD/2015 :- 2 - : 4) THAT THE ORDER PASSED BY THE ASSESSING OFFICER I S IN CONTRAVENTION TO THE WELL SETTLED PRINCIPLES OF LAW. 5) THAT THE ASSESSING OFFICER HAS IGNORED THE FACTS PRESENTED BEFORE HIMSELF AND AVAILABLE ON RECORD SINCE ORIGINAL HEAR ING, WHICH WAS SUBMITTED BY US AT DIFFERENT POINTS OF TIME DURING THE ORIGINAL HEARING EARLIER. 6) THAT THE ASSESSING OFFICER HAS PASSED THE ORDER WITH PRE-CONCEIVED MIND AND IGNORING THE FACTS AVAILABLE BEFORE HIMSEL F AND THE DISCUSSION WE HAD WITH HIM. 7) THE ASSESSING OFFICER OUGHT TO HAVE CONSIDERED T HE FACT THAT THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3). 8) ASSESSING OFFICER HAS IGNORED THE FACT THAT WHY A PERSON WILL RECEIVE THE AMOUNT FROM DIFFERENT LOCATIONS, IF THAT IS NOT BUSINESS. THERE ARE VARIOUS BUSINESSES WHICH DOESN'T REQUIRE ANY V AT R EGISTRATION OR OTHER THINGS. 9) EVEN IF HE DOES NOT GET ANY REGISTRATION IN VAT, DOES THE DEPOSIT PATTERN DOES NOT SHOW THAT ANY BUSINESS ACTIVITY IS BEING U NDER TAKEN. IF A PERSON'S BANK ACCOUNT SHOWS THAT DEPOSITS ARE MADE AT LOCAL PLACE OF HIS RESIDENCE THEN IT MAY RAISE DOUBT THAT WHETHER BUSI NESS WAS DONE OR NOT BUT IN INSTANT CASE DEPOSITS WERE MADE AT VARIOUS L OCATIONS OF ERSTWHILE ANDHRA PRADESH, GIVING AMPLE PROOF THAT SOME BUSINE SS ACTIVITY WAS DONE. 10) EVEN IF THE ASSESSING OFFICER WAS SO PARTICULAR ABOUT ADDITION THEN HE SHOULD HAVE CONSIDERED AFTER WITHDRAWALS MADE DURIN G THE YEAR. THUS ADDITION MADE IN THE WAY WAS UNWARRANTED. 11) ANY OTHER GROUND WITH THE PERMISSION OF THE CHA IR. 3. BRIEFLY STATED, ASSESSEE IS ENGAGED IN THE BUSINESS OF RETAIL TRADE UNDER TRADE NAME OF RENU AGARWAL BOUTIQUE AND F ILED RETURN OF INCOME ON 24-07-2009 FOR THE AY. 2009-10 DECLARIN G TOTAL INCOME OF RS. 1,76,092/-. ORIGINALLY THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE INCOME TAX ACT [ACT] BY DETERMININ G THE INCOME AT RS. 6,66,415/-. THIS ASSESSMENT ORDER WAS SUBJECT MATTER OF REVISION BY CIT UNDER SEC.263 WHICH WAS ACCEPTED BY ASSESSEE. I.T.A. NO. 1288/HYD/2015 :- 3 - : AO COMPLETED THE ASSESSMENT U/S. 143(3) R.W.S. 263 BY MAKING ADDITION OF RS. 46,93,270/- ON ACCOUNT OF DEPOSITS MA DE IN THE BANK ACCOUNT WHICH WAS NOT EXPLAINED AND THEREBY ASSES SING THE INCOME AT RS. 48,83,020/-. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD.CIT(A) WHICH WAS DISMISSED. PARA 4 OF THE CIT(A) ORDER IS AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT. THE ASSESSI NG OFFICER AFTER EXAMINING THE CASE CONCLUDED THAT THERE IS NO NECES SARY EVIDENCE PRODUCED TO PROVE THE BUSINESS IN NUTS AND BOLTS. I T IS A FACT THAT RS. 46,93,270/- DEPOSITED IN THE BANK ACCOUNT COME FROM VARIOUS PERSONS ON VARIOUS DATES AND FROM VARIOUS PLACES. THE COPIES O F VAT RETURNS, PURCHASE BILLS, SALES BILLS ETC., WERE NOT FURNISHE D BEFORE THE ASSESSING OFFICER. DURING THE COURSE OF APPEAL PROCEEDINGS AL SO, THE APPELLANT CLAIMED THE SAME THAT THE RECEIPTS ARE FROM NUTS AN D BOLTS BUT FAILED TO PRODUCE ANY EVIDENCE. ON VERIFICATION ALSO IT WAS F OUND THAT RS. 46,93,270/- DEPOSITED IN VARIOUS BANKS ON VARIOUS D ATES AND AT VARIOUS PLACES. THE APPELLANT HAS NOT DISCLOSED THIS AMOUNT AS TURNOVER IN NUTS AND BOLTS AND FAILED TO DISCLOSE PROFIT ALSO UNLESS THE ASSESSING OFFICER TAXED ORIGINALLY. THE APPELLANT HAS NOT DISCLOSED A NY INCOME DURING THE EARLIER ASSESSMENT YEARS NOR FOR LATER ASSESSMENT Y EARS. ALL THESE FACTS PROVES THAT THE APPELLANT RECEIVED THIS AMOUNT OF R S. 46,93,270/FROM UNKNOWN SOURCES WHICH THE APPELLANT NOT WILLING TO DISCLOSE. THEREBY THERE IS NO REASON TO INTERFERE WITH THE ASSESSING OFFICER AND THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 46,93,270/- IS CONFIRMED. HENCE, ALL THE GROUNDS OF APPEAL ARE DISMISSED. 5. REFERRING TO THE ABOVE, IT WAS THE SUBMISSION OF LD . COUNSEL THAT THE ASSESSEE HAS DONE BUSINESS OF NUTS AND BOLTS AND WAS NOT A DEALER. IT WAS CONTENDED THAT THE DEPOSITS WERE MADE I N THE BANK ACCOUNT AT VARIOUS PLACES LIKE GUNTUR, KOTHAPETA, CHITRADURGA, KARIMNAGAR, NANDED AND VISAKHAPATNAM ETC ., AND THESE ARE WITHDRAWN IMMEDIATELY FOR SUPPLY OF GOODS. REFERRING TO THE BANK STATEMENT, THE LD. COUNSEL REFERRED TO THE PATTER N OF I.T.A. NO. 1288/HYD/2015 :- 4 - : DEPOSITS AND WITHDRAWALS TO SUBMIT THAT THESE ARE TRADE CR EDITS AND AO HAS INITIALLY ACCEPTED THE TURNOVER AND ESTIMAT ED 10% PROFIT. IT WAS FURTHER SUBMITTED THAT THE ORDER U/S. 263 BY THE CIT, SETTING ASIDE THE ORIGINAL ASSESSMENT WAS NOT CHALLENGED . LD. COUNSEL FURTHER EXPRESSED INABILITY TO FURNISH ANY EV IDENCE OF BUSINESS BUT SUBMITTED THAT THERE ARE WITHDRAWALS AND DEPO SITS, SO THE PEAK OF CREDITS AT RS. 10,34,321/- AS ON 14-0 8-2008 MAY BE CONSIDERED FOR ADDITION, AS THE ACCOUNT INDICATES ABOUT VERY LESS BALANCE AT THE BEGINNING AND END OF THE YEAR. 6. LD.DR, HOWEVER, RELIED ON THE ORDER OF THE AUTHORITI ES. 7. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE DOCUMENTS PLACED ON RECORD. IT IS ADMITTED THAT ASSESSEE HAS NO EVIDENCE AT PRESENT THAT SHE HAD DONE BUSINESS IN NUTS AND BOLTS AS CLAIMED. BUT ORIGINALLY, AO ACCEPTED THE DEPOSITS AS TURNOVER AND ESTIMATED PROFIT AT 10%. THAT ORDER WAS SET ASIDE B Y THE LD.CIT(A) WHICH WAS NOT CONTESTED. IN THE ABSENCE OF ANY EVIDENCE OF BUSINESS, THE DEPOSITS CANNOT BE CONSIDERED AS BU SINESS TURNOVER. AT THE SAME TIME, I AM OF THE OPINION THAT THE ENTIRE DEPOSITS CANNOT BE TAKEN AS UNACCOUNTED INCOME AS THERE ARE FREQUENT DEPOSITS AT VARIOUS PLACES AND THESE ARE WITHDR AWN BY WAY OF ATM PERIODICALLY. THEREFORE, THE WITHDRAWALS C AN BE A SOURCE FOR LATER DEPOSITS. IN THE ABSENCE OF ANY EVI DENCE OF INVESTMENTS BY ASSESSEE, THE CONTENTION THAT PEAK CREDIT C AN BE TAXED BY NETTING THE WITHDRAWALS CAN BE ACCEPTED. AS SE EN FROM THE BANK STATEMENT, THE PEAK OF BALANCE AS ON 10-08-200 8 WAS AT RS. 10,34,321/-. THAT AMOUNT WAS WITHDRAWN LATER AND END OF THE YEAR BALANCE WAS ONLY RS. 5,065/-. THUS, I AM OF T HE OPINION THAT I.T.A. NO. 1288/HYD/2015 :- 5 - : THE ADDITION CAN BE RESTRICTED TO RS. 10,34,321/- ACCEPTING GROUND NO. 10. OTHER GROUNDS ARE REJECTED. AO IS DIRECTED TO MODIFY THE ORDER ACCORDINGLY. 8. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH NOVEMBER, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 10 TH NOVEMBER, 2017 TNMM COPY TO : 1. SMT. RENU AGARWAL, C/O. BRIJ GOPAL GILADA & CO., 5-9-191, 302, 3 RD FLOOR, BRINDAVAN COMMERCIAL COMPLEX, CHIRAG ALI LANE, ABIDS, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-5(2), HYDERABAD. 3. CIT (APPEALS)-4, HYDERABAD. 4. PR.CIT-4, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.