Venkatesh Soutoor , Tirupati V. Income Tax Officer, Ward-2(2), Tirupati

ITA 1378/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7123 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-04-2021
• Assessment Year: 2015-2016
• Appeal Filed On: 05-09-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KANIKA AGARWAL
• Keywords: Unexplained cash credit; Gift; Business income
• Section: 147; 148; 44AD; 142(1); 234B; 133(6); 143(2)

Judgement Text

ITA NO 1378 OF 2019 VEN KATESH SOUTOOR TIRUPATI PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD SMC BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1378/HYD/2019 ASSESSMENT YEAR: 2015-16 SRI VENKATESH SOUTOOR TIRUPATI PAN:DDMPS5269B VS. INCOME TAX OFFICER WARD 2(2) TIRUPATI (APPELLANT) (RESPONDENT) ASSESSEE BY: SMT. S. SANDHYA REVENUE BY : SRI KANIKA AGARWAL,DR DATE OF HEARING: 06/04/2021 DATE OF PRONOUNCEMENT: 08/04/2021 ORDER THIS IS ASSESSEES APPEAL FOR THE A.Y 2015-16 AGAIN ST THE ORDER OF THE CIT (A)-TIRUPATI, DATED 12.06.2019 . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. ON VERIFICATION OF THE INFORMATION AVAI LABLE WITH THE DEPARTMENT UNDER NMS DATA, IT WAS FOUND THAT DURING THE FINANCIAL YEAR 2014-15 RELEVANT TO THE A.Y 2015-16, THE ASSESSEE HAS DEPOSITED CASH AGGREGATING TO RS.24,74,400/- IN HIS A/C WITH ANDHRA BANK, MAIN BRANCH, TIRUPATI AND THAT HE HAS NOT FILED HIS RETURN OF INCOME FOR THE SAID YEAR. THEREFORE, THE ASSESSING OFFICER ISSUED A NOTICE U/S 148 ON 22.3.2018, IN RESPONSE T O WHICH THE ASSESSEE E-FILED HIS RETURN OF INCOME DATED 4.12.20 18 ADMITTING AN INCOME OF RS.1,92,050/-. 3. THE ASSESSING OFFICER OBSERVED THAT THIS IS THE FIRST YEAR OF FILING OF RETURNS BY THE ASSESSEE AND THERE FORE, NOTICES U/S ITA NO 1378 OF 2019 VEN KATESH SOUTOOR TIRUPATI PAGE 2 OF 8 143(2) AND 142(1) ALONG WITH QUESTIONNAIRE WERE ISS UED TO THE ASSESSEE TO FURNISH THE INFORMATION WITH REGARD TO THE SOURCES OF CASH DEPOSITS ALONG WITH NECESSARY EVIDENCE. 4. IN RESPONSE TO THE NOTICES ISSUED, THE ASSESSEE FURNISHED INFORMATION STATING THAT HE IS A GOLDSMIT H PROCURING OLD GOLD ORNAMENTS THROUGH AUCTION SALES FROM ANDHRA BA NK AND OTHER CUSTOMERS AND ALSO SELLING THEM (AFTER MELTIN G) AND THAT HE IS NOT A REGISTERED DEALER UNDER VAT. THE ASSESSEE ALSO EXPLAINED THAT IN ADDITION TO THE ABOVE, THE SOURCES FOR THE TOTAL CREDITS WERE ALSO OUT OF HIS PAST SAVINGS, HAND LOANS, MARRIAGE GIFTS AND BUSINESS RECEIPTS ADMITTED U/S 44AD OF THE ACT. THE DETAILS OF THE SOURCES FOR CASH DEPOSITS GIVEN BY THE ASSESSEE ARE AS UNDER: 1) SALE PROCEEDS RS.15,92,000 2) ANTICIPATORY WITHDRAWALS (TOWARDS OLD GOLD PURCHASES) RS,10,54,081 3) PAST SAVINGS, HAND LOANS, INTEREST RECEIPTS AND MARRIAGE GIFTS RS. 6,71,819 4) TRANSFERRED FROM RAMESH, BROTHER (GIFT ON A/C OF MARRIAGE) RS. 2,70,000 TOTAL RS,35,87,900 5. THE ASSESSING OFFICER HAD ALSO REQUESTED THE ASS ESSEE TO FURNISH CASH FLOW STATEMENT EXPLAINING THE SOURC ES FOR THE CASH DEPOSITS IN HIS BANK A/C, BUT THE ASSESSEE DID NOT FURNISH THE SAME. THE ASSESSING OFFICER OBSERVED THAT THE TOTAL CASH DEPOSITS MADE BY THE ASSESSEE INTO BANK A/C AND ALSO THROUGH CASH DEPOSITING MACHINE UNDER BNADP (BULK NOTE ACCEPTOR DEPOSITS) ARE OF RS.35,87,900/- AND NOT RS.24,74,400/- AS PER THE NMS DATA/AIR INFORMATION. THEREAFTER, THE ASSESSING OFF ICER EXAMINED THE SOURCES FOR THE CASH DEPOSITS OF RS.35,87,000/- . THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD CL AIMED TO HAVE ITA NO 1378 OF 2019 VEN KATESH SOUTOOR TIRUPATI PAGE 3 OF 8 PROCURED OLD GOLD ORNAMENTS WORTH RS.10,94,220/- TH ROUGH AUCTION SALES FROM ANDHRA BANK ON THE FOLLOWING DAT ES: DATE OF PURCHASE AMOUNT (RS.) 17/03/2015 5,94,241 26/02/2015 44,326 28/11/2014 92,103 08/05/2014 2,52,906 5/5/2014 1,45,644 6. IT WAS ALSO SUBMITTED THAT THE OLD GOLD ORNAMENT S OF WORTH RS.3,70,420/- WERE ALSO PROCURED FROM OTHER C USTOMERS AND THAT THE SAID GOLD WAS SOLD FOR A CONSIDERATION OF RS.15,92,000/- AND OFFERED TO TAX U/S 44AD OF THE A CT. BUT SINCE THE ASSESSEE DID NOT FURNISH ANY DOCUMENTARY EVIDEN CE IN SUPPORT OF HIS CLAIM OF PURCHASE OF OLD GOLD AS WEL L AS SALE OF GOLD ORNAMENTS, THE ASSESSING OFFICER ISSUED A LETTER DA TED 18.12.2018 TO THE ANDHRA BANK, MAIN BRANCH, TIRUPATI IN WHICH THE ASSESSEE IS HOLDING THE ABOVE A/C. CALLING FOR INFORMATION U /S 133(6) OF THE ACT. IN RESPONSE TO THE SAID LETTER, ON 27.12.2018, THE CHIEF BRANCH MANAGER REPLIED THAT THEIR BRANCH HAS NOT DO NE ANY AUCTION OF GOLD ORNAMENTS ON THE ABOVE DATES. THERE FORE, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE A SSESSEE HAS NOT PURCHASED ANY OLD GOLD ORNAMENTS THROUGH AUCTIO N FROM ANDHRA BANK AND THEREFORE, THE QUESTION OF SALE OF GOLD ALSO DOES NOT ARISE. IN VIEW OF THE REPLY FROM ANDHRA BANK AN D IN THE ABSENCE OF DOCUMENTARY EVIDENCE, THE CLAIM OF DECLA RATION U/S 44AD OF RS.15,92,000/- WAS NOT ACCEPTED AND AFTER R EDUCING THE BUSINESS INCOME, ADMITTED BY THE ASSESSEE AN AMOUNT OF (RS.1,27,360/- MINUS RS.15,92,000/-) A SUM OF RS.1 4,64,640/- WAS TREATED AS UNEXPLAINED CASH CREDIT AND BROUGHT TO TAX. ITA NO 1378 OF 2019 VEN KATESH SOUTOOR TIRUPATI PAGE 4 OF 8 7. FURTHER, THE ASSESSEE HAD ALSO CLAIMED THAT THER E WERE A TOTAL CASH WITHDRAWALS OF RS.10,54,081/- AND THAT THIS WAS ALSO ONE OF THE SOURCE FOR CASH DEPOSITS. ON VERIFICATIO N OF THE SAME, THE ASSESSING OFFICER FOUND THAT THERE WERE SEVERAL ATM WITHDRAWALS RANGING FROM RS.1000/- TO RS.15,000/- A GGREGATING TO RS.2,93,500/- AND OTHER CHEQUE WITHDRAWALS OF RS .7,60,581/- IN THE YEAR UNDER CONSIDERATION. HE OBSERVED THAT T HE ATM WITHDRAWALS ARE USUALLY FOR THE PURPOSE OF DAY TO D AY EXPENSES BUT NOT FOR RE-DEPOSITING IN THE SAME A/C. THEREFO RE, HE DID NOT ACCEPT A SUM OF RS.2,93,500/- AS SOURCE FOR THE CAS H DEPOSITS AND ACCORDINGLY BROUGHT IT TO TAX. 8. THE ASSESSEE HAD ALSO STATED THAT HE HAS RECEIVE D A GIFT OF RS.2,70,000/- FROM HIS BROTHER ON A/C OF HI S MARRIAGE FOR WHICH HE HAS FILED CONFIRMATION LETTER AND THE GIFT DEED AND THE TRANSACTION WAS DONE THROUGH BANKING CHANNEL. THE A SSESSEE HAS STATED THAT HE HAS RECEIVED MARRIAGE GIFTS FROM OTH ERS TOTALING TO RS.5,79,419/-. AFTER ENQUIRY CONDUCTED THROUGH ITI OF THE OFFICE, IT WAS FOUND THAT THE ASSESSEE STATED TO HAVE RECEI VED CASH GIFTS FROM 105 PERSONS AND CASH RANGING FROM RS.501/- TO RS.1,00,001/- FOR WHICH THE ASSESSEE HAS PROVIDED A LIST OF DONORS AND CLAIMED THAT THESE ARE ALSO THE SOURCES FOR THE CASH DEPOSITS DURING THE YEAR. THE ASSESSING OFFICER, HOWEVER, DI D NOT ACCEPT THE ENTIRE CASH GIFTS AND HE HAS ACCEPTED ONLY 1/3 RD OF THE CASH GIFTS AND THE BALANCE OF RS.3,86279/- WAS TREATED A S UNEXPLAINED CASH CREDIT. AS REGARDS GIFT OF RS.2,70,00/- FROM H IS BROTHER, THE ASSESSING OFFICER OBSERVED THAT THE TRANSACTION WAS DONE THROUGH BANKING CHANNEL. HE THEREFORE, DID NOT ACCEPT IT AS A SOURCE FOR THE CASH DEPOSITS AND ACCORDINGLY BROUGHT IT TO TAX . THUS, THE ITA NO 1378 OF 2019 VEN KATESH SOUTOOR TIRUPATI PAGE 5 OF 8 TOTAL OF THE ADDITIONS MADE TOWARDS UNEXPLAINED CAS H CREDITS WAS RS.24,14,419/-. 9. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT (A) BUT THE CIT (A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER AND AGAINST THE SAID ORDER OF THE CIT (A), THE ASSE SSEE IS IN APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEA L: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN INITIATING THE PROCEEDINGS U/S 147 OF THE I.T ACT. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.14,64,640/- MADE BY THE ASSESSING OFFICER DISBELIEVING THE SOURCE FO R THE DEPOSITS MADE INTO THE BANK. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE EXPLANATION THAT THE AMOUNT WAS RECEIVED ON SALE OF OLD GOLD ORNAMENTS A ND THAT THE AMOUNT WAS PROPERLY EXPLAINED. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THAT THE DEPOSITS TO AN EX TENT OF RS.2,93,500/- ARE FROM OUT OF THE WITHDRAWALS BY TH E APPELLANT AND SHOULD HAVE CONSIDERED THE SAME AS A SOURCE AVAILABLE. 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THAT THE GIFT RECEIVED FRO M BROTHER OF THE APPELLANT SRI S. RAMESH OF RS.2,70,0 00/- IS GENUINE AND SHOULD NOT HAVE BEEN ADDED BY THE ASSESSING OFFICER. 7. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN DISBELIEVING THE GIFTS RECEIVED BY THE APPELLANT AT THE TIME OF MARRIAGE TO THE EXTENT OF RS.3,86,279/ - OU T OF RS.5,79,419/- AND THAT THE SAID GIFTS ARE AVAILABLE FOR THE APPELLANT. 8. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING LEVY OF INTEREST U/S 234A OF RS.7,461/- AND U/S 234B OF RS.3,35,745/-. 9. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. ITA NO 1378 OF 2019 VEN KATESH SOUTOOR TIRUPATI PAGE 6 OF 8 10. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS NOT PRESSIN G GROUND NO.2 AND IT IS ACCORDINGLY REJECTED. 11. AS REGARDS THE OTHER GROUNDS OF APPEAL, THEY AR E ALL AGAINST THE ADDITIONS MADE BY THE ASSESSING OFFICER DISBELIEVING THE SOURCES OF THE CASH DEPOSITS MADE INTO THE ASSE SSEES BANK A/C WITH ANDHRA BANK, MAIN BRANCH, TIRUPATI. THERE IS NO DISPUTE THAT THE ASSESSEE IS A GOLDSMITH AND ALSO T HAT HE HAS NEVER FILED ANY RETURN OF INCOME IN THE EARLIER YEA RS. FURTHER, THE TOTAL OF THE CASH DEPOSITS MADE INTO ASSESSEES BAN K A/C ARE OF RS.35,87,900/-. IT IS THE CASE OF THE ASSESSEE THAT THE ASSESSEE USED TO PAY THE LOAN AMOUNT OF THE PEOPLE WHO HAVE TAKEN GOLD LOANS FROM THE BANK, FOR RELEASE OF GOLD, AND THERE AFTER, HE SELLS THE SAID GOLD ORNAMENTS AND THE SALE CONSIDERATION IS DEPOSITED INTO HIS BANK A/C IN CASH. HOWEVER, THE ASSESSING O FFICER HAS RECORDED THAT THE ASSESSEE HAS STATED THAT HE HAS P URCHASED THE GOLD FROM THE ANDHRA BANK AUCTION AND THEREFORE, TH E ASSESSING OFFICER HAS ISSUED A LETTER TO THE ANDHRA BANK, MAI N BRANCH, TIRUPATI IN RESPONSE TO WHICH THE CHIEF BRANCH MANA GER HAS STATED THAT THEY HAVE NOT DONE ANY AUCTION OF OLD G OLD ON THE DATES GIVEN BY THE ASSESSEE. COPY OF THE LETTER FIL ED BY THE ASSESSEE IS NOT BEFORE THE TRIBUNAL. HOWEVER, FROM THE RECITAL OF THE AVERMENTS OF THE ASSESSEE IN THE ASSESSMENT ORD ER, IT IS SEEN THAT THE ASSESSEE IS STATED TO HAVE PROCURED OLD GO LD THROUGH AUCTION SALES FROM ANDHRA BANK AND OTHER CUSTOMERS AS WELL. THEREFORE, THE ENTIRE PROCUREMENT OF GOLD ORNAMENTS IS NOT ONLY THROUGH AUCTION FROM BANK, BUT THEY ARE FROM OTHER CUSTOMERS AS WELL. THE LEARNED COUNSEL FOR THE ASSESSEE HAS FILE D BEFORE THIS TRIBUNAL, THE COPY OF THE BANK A/C OF THE ASSESSEE AS WELL AS THE ITA NO 1378 OF 2019 VEN KATESH SOUTOOR TIRUPATI PAGE 7 OF 8 CUSTOMERS FROM WHOM THE ASSESSEE HAS ALLEGEDLY PURC HASED THE GOLD AND ALSO THE CONFIRMATION LETTERS STATING THAT THE ASSESSEE HAS PAID THE LOAN AMOUNT AND AFTER RELEASE OF GOLD, THE SAID GOLD WAS SOLD AND THE SALE CONSIDERATION WAS GIVEN TO TH E ASSESSEE IN CASH. NONE OF THESE LETTERS WERE CONSIDERED AND VER IFIED BY THE ASSESSING OFFICER AND HE HAS ACCORDINGLY DISALLOWED THE ENTIRE SUM OF RS.15,92,000/-. IN MY OPINION, IF THE ASSES SEE IS ABLE TO PROVE THE TRANSFER OF MONEY FROM THE ASSESSEES BAN K A/C TO THE BANK A/C OF THE CUSTOMERS AND IF THE SAID GOLD LOAN IS REPAID ON THE SAME DATE, THEN TAKING THE CONFIRMATION FROM TH E PARTIES INTO CONSIDERATION, THE SALE CONSIDERATION OF THOSE TRAN SACTIONS SHOULD BE ACCEPTED AS SOURCE FOR CASH DEPOSITS. THEREFORE, I DEEM IT FIT AND PROPER TO REMAND THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY THE BANK A/C OF THE ASSE SSEE AND ALSO OF THE OTHER PARTIES AND RECONSIDER THE ISSUE IN ACCOR DANCE WITH LAW. 12. AS REGARDS THE CASH WITHDRAWALS AND THE MARRIAG E GIFTS FROM OTHERS AND GIFT FROM HIS BROTHER AS SOUR CES FOR THE BALANCE OF CASH DEPOSIT IS CONCERNED, I FIND THAT T HE ASSESSING OFFICER HAS HELD THE ATM WITHDRAWALS AND ALSO 2/3 RD OF THE GIFTS AT THE TIME OF MARRIAGE AS SOURCES FOR REDEPOSITS INTO THE BANK A/C AS UNBELIEVABLE. IN MY OPINION, THE ENTIRE ATM WITH DRAWALS MAY NOT HAVE BEEN USED FOR DAY TO DAY EXPENSES AND SOME OF THEM MIGHT HAVE BEEN UTILIZED FOR MAKING THE DEPOSITS IN TO HIS BANK A/C. THEREFORE, I AM INCLINED TO ACCEPT 50% OF THE SAME AS SOURCE FOR CASH DEPOSITS. THE ASSESSEE GETS RELIEF ACCORD INGLY. 13. SIMILARLY, THE MARRIAGE GIFTS FROM OTHERS ALSO, I AM INCLINED TO ACCEPT 50% OF THE SAME AS AGAINST 1/3 RD OF THE CASH GIFTS ACCEPTED BY THE ASSESSING OFFICER. THEREFORE, 50% OF THE TOTAL ITA NO 1378 OF 2019 VEN KATESH SOUTOOR TIRUPATI PAGE 8 OF 8 AMOUNT OF RS.5,79,419/- IS ACCEPTED AS SOURCE FOR C ASH DEPOSITS. AS REGARDS GIFT ON ACCOUNT OF MARRIAGE FROM HIS BRO THER, I FIND THAT THE TRANSACTION HAS BEEN DONE THROUGH BANKING CHANN EL AND THEREFORE, IT CANNOT BE CONSIDERED AS A SOURCE FOR CASH DEPOSITS. THEREFORE, GROUND RELATING TO THIS ADDITION IS REJE CTED. 14. IN THE RESULT, ASSESSEE GETS PARTIAL RELIEF AS DISCUSSED ABOVE AND THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH APRIL, 2021. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 8 TH APRIL, 2021. VINODAN/SPS COPY TO: S.NO ADDRESSES 1 SRI VENKATESH SOUTOOR, D.NO.17-3-173, POOLA STREE T, TIRUPATI 517501 2 INCOME TAX OFFICER WARD 2(2) TIRUPATI 3 CIT (A) - TIRUPATI 4 PR. CIT - TIRUPATI 5 DR, ITAT HYDERABAD BENCHES 6 GUARD FILE BY ORDER