Bommireddy Satyavardhan Reddy , Nalgonda V. Income Tax Officer, Ward-1, Suryapet

ITA 1455/Hyd/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0911 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 13-08-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 03-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Business income
• Section: 143(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD SMC BENCH : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1 455 /HYD./2018 ASSESSMENT YEAR: 20 14 - 15 SRI BOMMIREDDY SATYAVARDHAN REDDY VS. ITO, WARD - 1 C/O CH.PARTHASARATHY & CO. SURYAPET 508 213 1 - 1 - 298/2/B/3, 1 ST FLOOR SOWBHAGYA AVENUE, ST.NO.1 ASHOKNAGAR HYDERABAD 500 020 (APPELLANT) (RESPONDENT) FOR APPELLANT : SH. K.A.SAI PRA SAD , A.R. FOR RESPONDENT : SH. NILANJAN DEY, D.R. DATE OF HEARING : 13/08/19 DATE OF PRONOUNCEMENT : 28 /08/19 O R D E R THIS IS ASSESSEE S APPEAL FOR A.Y. 20 14 - 15 AGAINST ORDER OF LD.CIT(A) - 8 , HYDERABAD DATED 27.04. 2018. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DOCTOR BY PROFESSION AND IS RUNNING A HOSPITAL UNDER THE NAME SATHYA HOSPITAL. ASSESSEE FILED HIS RETURN OF INCOME FOR THE A.Y. 20 14 - 15 DECLARING NET INCOME OF RS. 1,84,320 / - . THE RETURN WAS INITIALLY PROCESSED U/S 143(1) OF THE I.T.ACT, 1961 (THE ACT) AND THEREAFTER CASE WAS SELECTED FOR SCRUTINY UNDER CASS CATEGORY. THEREFORE, NOTICE U/S 143(2) OF THE ACT WAS SER VED ON THE ASSESSEE AND ASSESSEE WAS DIRECTED TO PRO VIDE DETAILS/INFORMATION. THE ITA NO.1455/HYD/2018 AY 2014 - 15 SH. BOMMIREDDY SATYAVARDHAN REDDY, NALGONDA VS. ITO, WARD 1, SURYAPET 2 ASSESSEE FURNISHED RELEVANT INFORMATION. THE AO NOTICED THAT CASE WAS SELECTED FOR SCRUTINY UNDER CASS TO VERIFY LARGE VOLUME OF DEPOSITS IN COOPERATIVE BANKS AND THERE WAS LOW OTHER SOURCE INCOME IN THE RETURN OF INCOME AS COMPARED TO VERY HIGH AGGREGATE DEPOSITS AS PER UCB DATA. HE OBSERVED THAT ASSESSEE WAS HAVING TOTAL BANK DEPOSITS IN POCHAMPALLY COOPERATIVE URBAN BANK LTD. OF RS.14,50,000/ - . ASSESSEE FILED HIS EXP LANATIONS DATED 28. 11 .2016 , BUT THE AO OBSERVED THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE SOURCES OF THESE BANK DEPOSITS PROPERLY . THEREFORE, AO TREATED ALL BANK DEPOSITS AS BUSINESS RECEIPTS AND TREATED RS.14,50,000/ - AS INCOME OF ASSESSEE. A O, THEREFORE, MADE ADDITION OF ONLY RS.11,34,750/ - TO THE RETURN ED INCOME OF RS.3,15,250/ - TO ARRIVE AT TOTAL INCOME OF RS.14,50,000/ - AND ACCORDINGLY COMPUTED THE TAX. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT (A) WHO OBSERVED THAT CASH DEPOSITED IN THE BANK ACCOUNT CAME TO THE NOTICE OF THE DEPARTMENT ONLY ON COLLECTION OF DATA FROM THE UCBS AND FURTHER THAT THE CONTENTION OF ASSESSEE THAT SUCH CASH DEPOSITS IN THE BANK ACCOUNT ARE PROFESSIONAL RECEIPTS IS COM PLETELY ERRONEOUS AND MISP LACED . HE HELD THAT PROFESSIONAL RECEIPTS FOR THE ENTIRE YEAR WERE DEPOSITED ON ONLY 02 DAYS OF THE YEAR THAT TOO HUGE AMOUNTS OF RS.10,00,000/ - AND RS.4,00,000/ - WAS DEPOSITED BY THE ASSESSEE IS NOT ACCEPTABLE . HE, THEREFORE, DIRECTED THE AO THAT THE ENTIRE CASH DEPOSITS ARE TO BE BROUGHT TO TAX. 3. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD.COUNSEL FOR ASSESSEE SUBMITTED THAT THE AO HAS TREATED RS.14,50,000/ - AS TOTAL PROFESSIONAL RECEIPTS OF THE ASSESSEE AND THE CIT(A) HAS WRONGLY HELD THAT THESE ARE NOT ITA NO.1455/HYD/2018 AY 2014 - 15 SH. BOMMIREDDY SATYAVARDHAN REDDY, NALGONDA VS. ITO, WARD 1, SURYAPET 3 PRO F ESSIONAL RECEIPTS WITHOUT ANY EVIDENCE. HE HAS DRAWN OUR ATTENTION TO THE RETURNS OF INCOME FILED BY TH E ASSESSEE, ACCORDING TO WHICH THE NET PROFIT OFFERED BY THE ASSESSEE IS 40.80%. HE SUBMITTED THAT IT IS SETTLED POSITION THAT ENTIRE RECEIPTS CAN NOT BE TREATED AS INCOME OF THE ASSESSEE AND ONLY INCOME PORTION OF THE RECEIPTS IS TO BE BROUGHT TO TAX. HE THEREFORE PRAYED THAT NET PROFIT AS OFFERED BY ASSESSEE MAY BE ADOPTED EVEN FOR UNEXPLAINED DEPOSITS IN THE BANK ACCOUNT WHICH ARE TREATED AS PROFESSIONAL INCOME BY THE A.O. 5. LD.DR SUPPORTED ORDERS OF AUTHORITIES BELOW. 6. HAVING REGARD TO RIVAL CON TENTIONS AND MATERIAL PLACED ON RECORD, WE FIND THAT THE A.O. HAS TREATED THESE RECEIPTS AS PROFESSIONAL RECEIPTS OF ASSESSEE. LD.CIT(A) , WITHOUT ANY EVIDENCE TO THE CONTRARY , HAS HELD THAT THE INCOME CANNOT BE TREATED AS PROFESSIONAL RECEIPTS. THERE IS NO EVIDENCE THAT ASSESSEE IS DERIVING INCOME FROM ANY OTHER SOURCE/ SOURCES. THEREFORE, WE HOLD THAT THESE DEPOSITS HAVE TO BE TREATED AS PROFESSIONAL RECEIPTS OF ASSESSEE AND ONLY PROFIT ELEME NT OF THESE DEPOSITS/RECEIPTS IS TO BE BROUGHT TO TAX . THEREFORE, AO IS DIRECTED TO APPLY THE NET PROFIT OFFERED BY ASSESSEE TO THESE RECEIPTS ALSO AND COMPUTE THE TAX DEMAND ACCORDINGLY. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 28 TH AUGUST, 2019. SD/ - (P.MADHAVI DEVI) JUDICIAL MEMBER DATED: 28 TH AUGUST, 2019. *GMV ITA NO.1455/HYD/2018 AY 2014 - 15 SH. BOMMIREDDY SATYAVARDHAN REDDY, NALGONDA VS. ITO, WARD 1, SURYAPET 4 COPY FORWARDED TO: 1. SRI BOMMIREDDY SATYAVARDHAN REDDY, C/O CH.PARTHASARATHY & CO., 1 - 1 - 298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST.NO.1, ASHOKNAGAR, HYDERABAD 500 020. 2 . ITO, WARD - 1 , OPP. HIGH TECH BUS STAND, SURYAPET 508 213. 3 . CIT(A) - 8 , HYDERABAD 4. D.R. ITAT HYDERABAD 5. GUARD FILE // C O P Y // ITA NO.1455/HYD/2018 AY 2014 - 15 SH. BOMMIREDDY SATYAVARDHAN REDDY, NALGONDA VS. ITO, WARD 1, SURYAPET 5 1. DRAFT DICTATED ON 13/08/19 2. DRAFT PLACED BEFORE THE AUTHOR 22 /08/19 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