Laxminarayan Vyas, Hyd, Hyderabad V. ITO, Ward-7(2), Hyd, Hyderabad

ITA 1387/HYD/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2373 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-03-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 11-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G S S GOPINATH
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained cash credit; Business income; Period of limitation; Additional evidence
• Section: 142(1); 234B; 148; 144

Judgement Text

ITA NO 1387 OF 2015 LAXMINARAYAN VYAS HYDERABAD PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1387/HYD/2015 (ASSESSMENT YEAR: 2005-06) SRI LAXMINARAYAN VYAS HYDERABAD PAN: AEVPV 3701 N VS INCOME TAX OFFICER WARD 7(2) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO FOR REVENUE : SHRI G.S.S. GOPINATH, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y2005-06. IN TH IS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF T HE CIT (A)-3 HYDERABAD, DATED 29.10.2015. THE ASSESSEE HAS RAISE D THE FOLLOWING GROUNDS OF APPEAL: 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 ADDITION OF RS.54,95,260/- MADE BY THE ASSESSING OFFICER WITHOUT CONSIDERING THE FAC T THAT THE SAID DEPOSITS WERE MADE BY M/S MAHAVIR ISPATH PVT. LTD., FOR ISSUE OF CHEQUES IN FAVOUR OF TATA METALLICS PVT. LTD., SHREE SHAKTHI, ESSPAARPAK, ETC., 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT SRI RAM PRSAD DATE OF HEARING : 21.06.2017 DATE OF PRONOUNCEMENT : 30.06.2017 ITA NO 1387 OF 2015 LAXMINARAYAN VYAS HYDERABAD PAGE 2 OF 7 AGARWAL ON BEHALF OF MAHAVIR ISPATH PVT. LTD. CONFIRMED THE FACT THAT THE AMOUNTS DEPOSITED BELONGS TO ITS BUSINESS AND ALSO STATED THAT SUCH DEPOSITS WERE MADE FOR PURCHASE OF DEMAND DRAFTS IN FAVOUR OF CONCERNS SELLING IRON & STEEL. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT THE APPELLANT IS ONLY A PRIEST IN A TEMPLE DERIVING MEAGER INCOME AND CANNOT DERIVE SUCH A HUGE AMOUNT OF RS.54,95,260/-. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING ACTION OF THE ASSESSING OFFICER IN CHARGING INTEREST U/S 234A OF RS.9,64,883/- AND U/S 234B OFRS.17,47,712/-. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, HAD MADE CASH DEPOSITS TO THE TUNE OF R S.54,90,100/- IN HIS BANK A/C WITH THE AGRASEN COOP. URBAN BANK L TD DURING FINANCIAL YEAR 2004-05. THEREFORE, A NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE ON 25.05.2008 CALLING FOR THE RETURN O F INCOME. HOWEVER, THE ASSESSEE DID NOT FILE THE RETURN OF IN COME NOR DID HE FURNISH THE INFORMATION REGARDING THE CASH DEPOSIT. THE AO THEREFORE, TREATED THE CASH DEPOSITS OF RS.54,90,10 0 AS UNEXPLAINED CASH CREDITS AND BROUGHT IT TO TAX IN T HE ORDER U/S 144 DATED 17.12.2009. ON APPEAL TO THE ITAT, THE TR IBUNAL HAS SET ASIDE THE MATTER AND RESTORED THE ISSUE TO THE FILE OF THE AO TO DECIDE THE SAME IN ACCORDANCE WITH THE LAW AFTER PR OVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 3. IN COMPLIANCE WITH THE DIRECTIONS OF THE ITAT, T HE AO ISSUED A NOTICE DATED 9.11.2012 U/S 142(1) OF THE A CT REQUESTING THE ASSESSEE TO FURNISH THE SOURCES FOR THE CASH DE POSITS. ITA NO 1387 OF 2015 LAXMINARAYAN VYAS HYDERABAD PAGE 3 OF 7 HOWEVER, THE ASSESSEE DID NOT APPEAR NOR DID HE FUR NISH THE NECESSARY DETAILS ON THE SAID DATE OR ON SUBSEQUENT DATES OF HEARING. AFTER AFFORDING SUFFICIENT OPPORTUNITY TO THE ASSESSEE AND AS THE ASSESSEE DID NOT COMPLY WITH THE NOTICES, TH E AO TREATED THE ENTIRE DEPOSITS OF RS.54,95,258 AS UNEXPLAINED CASH CREDITS IN THE BANK A/C AND THE ASSESSED THE INCOME OF THE ASS ESSEE. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT (A) AND ALSO FILED THE AFFIDAVIT OF ONE SHRI RA M PRASAD AGARWAL, DATED 8.1.2015 WHEREIN IT IS STATED THAT T HE CASH DEPOSITS WERE MADE IN THE ASSESSEES BANK A/C BY M/ S. MAHAVIR ISPAT PRIVATE LTD AND NOT BY THE ASSESSEE. IT WAS S UBMITTED BY THE ASSESSEE THAT SHRI RAM PRASAD AGARWAL DID NOT COOPE RATE WITH THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND ONLY CONSEQUENT TO ITAT DIRECTIONS, THE ASSESSEE COULD CONTACT HIM AND HE HAS GIVEN AN AFFIDAVIT THAT HE HAD DEPOSITED THE CASH I NTO THE ASSESSEES BANK A/C AND ISSUED CHEQUES IN FAVOUR OF VARIOUS PARTIES, AS THE AFFIDAVIT WAS AN ADDITIONAL EVIDENC E. THE CIT (A) THEREFORE, CALLED FOR THE REMAND REPORT FROM THE AO . THE AO SUBMITTED THE REMAND REPORT STATING THAT HE HAD ISS UED SEVERAL NOTICES AND SUMMONS TO SHRI RAM PRASAD AGARWAL TO P RODUCE CASH BOOK OF THE COMPANY TO EXAMINE THE AVAILABILIT Y OF CASH FOR MAKING CASH DEPOSITS INTO THE ASSESSEES BANK A/C A ND THAT THOUGH SHRI RAM PRASAD AGARWAL APPEARED BEFORE THE AO, HE DID NOT SUBMIT ANY EVIDENCE REGARDING THE SOURCES FOR C ASH DEPOSIT. CONSIDERING THAT THE ASSESSEE HAS NOT FILED ANY EVI DENCE IN SUPPORT OF HIS CONTENTIONS, THE CIT (A) CONFIRMED T HE ADDITION MADE BY THE AO. ITA NO 1387 OF 2015 LAXMINARAYAN VYAS HYDERABAD PAGE 4 OF 7 5. AS REGARDS THE ASSESSEES REQUEST TO ESTIMATE TH E PROFIT AT 5% OF THE RECEIPTS DEPOSITS, THE CIT (A) REJECTED THE SAME BY OBSERVING THAT THE ASSESSEE FAILED TO EXPLAIN THE S OURCES FOR THE CASH DEPOSIT. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. THE ASSESSEE HAS ALSO FILED AN APPLICATION BEFORE US DA TED NIL REQUESTING FOR ADMISSION OF ADDITIONAL EVIDENCE. IT IS SUBMITTED THAT THE ASSESSEE COULD OBTAIN THE COPY OF THE CHEQ UES ISSUED TO VARIOUS SUPPLIERS OF M/S. MAHAVIR ISPAT PRIVATE LTD ONLY, AFTER THE REMAND PROCEEDINGS AND THEREFORE, THE SAID DOCUMENT S ARE NECESSARY FOR ADJUDICATION OF THE ISSUE AND PRAYED THAT THE SAME MAY BE ADMITTED AND CONSIDERED FOR ADJUDICATION. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW STATI NG THAT THE ASSESSEE IS ONLY A PRIEST IN A TEMPLE AND HAD ALLOW ED SHRI RAM PRASAD AGARWAL TO USE HIS BANK A/C AND HAS EARNED C OMMISSION AND THE ENTIRE DEPOSITS CANNOT BE TREATED AS THE IN COME OF THE ASSESSEE. HE SUBMITTED THAT EVEN IF THE CASH DEPOSI TS ARE TO BE TREATED AS HIS BUSINESS RECEIPTS, THERE ARE PAYMENT S VIDE CHEQUES TO VARIOUS PARTIES WHO ARE ALL THE SUPPLIERS OF MAT ERIAL TO M/S. MAHAVIR ISPAT PRIVATE LTD AND THEREFORE, THE SAID P AYMENTS SHOULD BE REDUCED FROM THE CASH DEPOSITS AND INCOME THEREF ROM ONLY SHOULD BE TREATED AS ASSESSEES INCOME IF THE TRIBU NAL IS NOT INCLINED TO ADMIT THE ADDITIONAL EVIDENCE. 7. THE LEARNED DR, ON THE OTHER HAND, OPPOSED THE ADMISSION OF ADDITIONAL EVIDENCE AND SUBMITTED THAT THE ASSESSEE HAD TAKEN A PLEA OF THE CASH DEPOSITS FROM M/S. MAH AVIR ISPAT ITA NO 1387 OF 2015 LAXMINARAYAN VYAS HYDERABAD PAGE 5 OF 7 PRIVATE LTD ONLY DURING THE PROCEEDINGS BEFORE THE AO CONSEQUENT TO DIRECTIONS OF INCOME TAX APPELLATE TRIBUNAL, THA T TOO AFTER THE EXPIRY OF THE PERIOD OF LIMITATION FOR TAKING ANY A CTION IN THE CASE OF M/S. MAHAVIR ISPAT PRIVATE LTD. HE SUBMITTED THA T THE ASSESSEE HAS FAILED TO SUBSTANTIATE HIS CLAIM THAT THE CASH DEPOSITS ARE MADE BY MR. RAM PRASAD AGARWAL AND THAT THE PAYMENT S WERE FOR PURCHASE OF MATERIAL BY M/S. MAHAVIR ISPAT PRIVATE LTD. THUS ACCORDING TO HIM, THE ASSESSEE HAS FAILED TO SUBSTA NTIATE ITS CLAIM AND EXPLAIN THE SOURCES OF THE CASH DEPOSITS AND BY ADMITTING THE ADDITIONAL EVIDENCE AND SETTING ASIDE THE ISSUE TO THE AO, THE INTEREST OF THE REVENUE WOULD BE JEOPARDIZED. HE TH EREFORE, PRAYED THAT THE ADDITION BE CONFIRMED. 8. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS TAKEN A PL EA THAT THE DEPOSITS PERTAIN TO M/S. MAHAVIR ISPAT PRIVATE LTD ONLY AFTER THE MATTER HAS BEEN REMANDED TO THE AO FOR CONSIDERATIO N BY THE ITAT AND HAS ALSO FILED THE AFFIDAVIT OF SHRI RAM P RASAD AGARWAL ONLY BEFORE THE CIT (A). THE TRIBUNAL HAS PASSED TH E ORDER IN THE YEAR 2012 WHILE THE CIT (A) HAS PASSED THE ORDER IN THE YEAR 2015. IN THIS PERIOD OF 3 YEARS, THE ASSESSEE HAS NOT FUR NISHED ANY EVIDENCE IN SUPPORT OF HIS CONTENTION AND IT IS ONL Y BEFORE US THAT THE ASSESSEE IS FILING THE DOCUMENTS TO DEMONSTRATE THAT THE PAYMENTS ARE MEANT FOR SUPPLIERS OF MATERIAL TO M/S . MAHAVIR ISPAT PRIVATE LTD. ON GOING THROUGH THE MATERIAL, W E ARE NOT SATISFIED THAT THEY ARE SUFFICIENT TO PROVE THAT TH E CASH DEPOSITS ARE FROM SHRI RAM PRASAD AGARWAL. EVEN IF THESE DO CUMENTS ARE ADMITTED, IT ONLY GOES TO PROVE THAT THE PAYMENTS A RE MADE BY ACCOUNT PAYEE CHEQUES, BUT IT IS NOT KNOWN WHETHER THEY ARE THE ITA NO 1387 OF 2015 LAXMINARAYAN VYAS HYDERABAD PAGE 6 OF 7 SUPPLIERS OF MATERIAL TO M/S. MAHAVIR ISPAT PRIVATE LTD AS THE BOOKS OF ACCOUNT OF M/S. MAHAVIR ISPAT PRIVATE LTD ARE NOT PRODUCED EITHER BEFORE THE AUTHORITIES BELOW OR BEF ORE US. THEREFORE, WE ARE OF THE OPINION THAT NO PURPOSE WO ULD BE SERVED BY ADMITTING AND REMANDING THE ISSUE TO THE FILE OF THE AO AT THIS BELATED STAGE. 9. HOWEVER, WE ARE AGREE WITH THE LEARNED COUNSEL F OR THE ASSESSEE THAT THE ENTIRE DEPOSITS CANNOT BE TREATED AS THE INCOME OF THE ASSESSEE. THERE ARE DEPOSITS AND IMMEDIATE P AYMENTS AS WELL, THOUGH THE PURPOSE OF THE PAYMENT IS NOT CLEA R. EVEN IF THE ASSESSEE IS PRESUMED TO BE CARRYING ON BUSINESS AND THE CASH DEPOSITS ARE OUT OF ITS GROSS RECEIPTS, THE ENTIRE DEPOSITS CANNOT BE TREATED AS INCOME OF THE ASSESSEE. THEREFORE, REASO NABLE ESTIMATION OF INCOME IS CALLED FOR. SINCE THERE IS NO MATERIAL ON RECORD TO ESTIMATE THE INCOME AND THE ASSESSEE ITSE LF HAD PRAYED FOR ESTIMATION OF INCOME AT 5% OF THE TOTAL DEPOSITS BEFORE THE CIT (A), WE DEEM IT FIT AND PROPER TO ESTIMATE THE NET PROFIT AT 20% OF THE DEPOSITS. IN THIS VIEW OF THE MATTER, THE ASSES SEE GETS PARTIAL RELIEF AND THE ASSESSEES APPEAL IS TREATED AS PART LY ALLOWED. 10. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 30 TH JUNE, 2017. VINODAN/SPS ITA NO 1387 OF 2015 LAXMINARAYAN VYAS HYDERABAD PAGE 7 OF 7 COPY TO: 1 SHRI S.RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYA'S E LEGANCE, 3-6- 643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500029 2 INCOME TAX OFFICER WARD 7(2) INCOME TAX TOWERS, A C GUARDS, HYDERABAD 3 CIT (A)-3 HYDERABAD 4 PR. CIT 3 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER