Income Tax Officer , Ward-9(1), Hyderabad V. Sri Kunchara Kondal Rao, Plot No. 11, Hyderabad

ITA 1466/HYD/2013

• Counselvise Citation: 146622514 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 04-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SHANTHI KUMAR
• Assessee Lawyers: RAMAKRISHNA BANDI
• Keywords: Business income; Corroborative evidences
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1466/HYD/2013 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER, WARD 9(1), HYDERABAD. VS. SRI KUNCHARA KONDAL RAO, HYDERABAD PAN AKZPK 3015C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAMAKRISHNA BANDI REVENUE BY : SHRI B. SHANTHI KUMAR DATE OF HEARING 11-03-2015 DATE OF PRONOUNCEMENT 20-03-2015 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORD ER DATED 29/07/2013 PASSED BY LD. CIT(A)-VI, HYDERABAD FOR A .Y. 2009-10. 2. THE EFFECTIVE GROUNDS RAISED BY THE DEPARTMENT A RE AS UNDER: 2. THE LD. CIT(A) ERRED IN TREATING THE CONTRACT RE CEIPTS TO THE EXTENT OF RS. 25,12,650, WHICH ARE EXPLAINED TO BE THE BUSINESS RECEIPTS AS THE SOURCE OF CASH DEPOSITS, FOR WHICH THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE IN SUPPORT THAT THE R ECEIPTS ADMITTED WERE ONLY THE DEPOSITS MADE INTO THE BANK ACCOUNT. 3. THE CIT(A) ERRED IN ACCEPTING THE AMOUNT OF RS. 8,50,000 WHICH WAS SHOWN AS THE ADVANCES FROM THE PROSPECTIV E PARTIES ONLY ON THE BASIS OF AFFIDAVITS, WHEREAS, THE THREE PERSONS ARE LOWLY PAID GOVT. EMPLOYEES AND DO NOT HAVE CREDIT W ORTHINESS TO ADVANCE SUCH CASH. 3. AS CAN BE SEEN FROM THE GROUNDS RAISED, DEPARTME NT IS AGGRIEVED WITH THE DECISION OF THE LD. CIT(A) IN DE LETING ADDITION TO 2 ITA NO. 1466/HYD/2013 SRI KUNCHARA KONDAL RAO THE EXTENT OF RS. 33,62,650 OUT OF THE TOTAL ADDITI ON OF RS. 36,66,000 MADE BY AO. 4. BRIEFLY STATED, ASSESSEE AN INDIVIDUAL IS ENGAGE D IN THE BUSINESS OF CIVIL CONTRACT WORK. FOR THE AY UNDER CONSIDERATION, ASSESSEE FILED HIS RETURN OF INCOME ON 28/05/09 DEC LARING TOTAL INCOME OF RS. 1,96,659. AS NOTED BY AO IN THE ASSESSMENT O RDER, IN SPITE OF NOTICES ISSUED U/S 143(2) AND 142(1) ON SEVERAL OCC ASIONS, ASSESSEE DID NOT APPEAR. AS A RESULT, AO FINALLY ISSUED A LE TTER ON 17/11/2011 CALLING UPON ASSESSEE TO EXPLAIN THE SOURCE OF CASH DEPOSITS MADE INTO THE BANK ACCOUNT AS REVEALED FROM THE AIR INFO RMATIONS. IN RESPONSE TO THE SAID LETTER, THOUGH, ASSESSEE APPEA RED BEFORE AO ON 29/11/11 AND SUBSEQUENTLY, ASSESSEES AR ALSO APPEA RED AND FURNISHED THE BANK ACCOUNT STATEMENT, BUT, AS ALLEG ED BY AO, THE SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNT WERE NO T FURNISHED IN SPITE OF SEVERAL OPPORTUNITIES BEING GIVEN TO ASSES SEE. THEREFORE, AO PROCEEDED TO COMPLETE THE ASSESSMENT EX-PARTE U/S 1 44 ON THE BASIS OF INFORMATIONS AVAILABLE ON RECORD. AO OBSERVED TH AT IN ABSENCE OF ANY DETAILS AND EXPLANATION FURNISHED BY ASSESSEE E XPLAINING THE SOURCE OF CASH DEPOSITS, ENTIRE CASH DEPOSITS OF RS . 36,66,000 HAVE TO BE TREATED AS UNEXPLAINED INCOME OF ASSESSEE. A CCORDINGLY, WHILE COMPLETING THE ASSESSMENT, AO ADDED THE SAID AMOUNT TO THE INCOME RETURNED. BEING AGGRIEVED OF SUCH ADDITION, ASSESSE E PREFERRED APPEAL BEFORE LD. CIT(A). 5. IN COURSE OF APPEAL HEARING, IT WAS SUBMITTED BY ASSESSEE THAT HE ONLY UNDERTAKES WORK OF CONSTRUCTION OF RESIDENT IAL HOUSES ON CONTRACT BASIS OVER PLOTS OWNED BY INDIVIDUALS. IT WAS SUBMITTED, IN THIS PROCESS PLOT OWNERS USED TO ADVANCE MONIES TO ASSESSEE AND ASSESSEE UNDERTAKES CONSTRUCTION OF WORK BY EMPLOYI NG LABOURERS AND PURCHASING CONSTRUCTION MATERIALS. EXPLAINING T HE SOURCE OF CASH DEPOSITS TO THE BANK ACCOUNT, IT WAS SUBMITTED BY A SSESSEE THAT THE DEPOSITS ARE ONLY ADVANCES RECEIVED FROM THE PLOT O WNERS TOWARDS CONSTRUCTION WORK. IT WAS SUBMITTED, OUT OF THE TOT AL CASH DEPOSITS OF 3 ITA NO. 1466/HYD/2013 SRI KUNCHARA KONDAL RAO RS. 36,66,000, ASSESSEE HAD ALREADY DISCLOSED AMOUN T OF RS. 25,06,650 AS CONTRACT RECEIPTS IN THE P&L A/C. IT W AS SUBMITTED, AN AMOUNT OF RS. 8,50,000 BEING THE ADVANCE RECEIVED F ROM THREE PLOT OWNERS WERE SUBSEQUENTLY RETURNED TO THEM AS THEY E XPRESSED THEIR INTENTION TO GET THE WORK DONE THROUGH OTHERS. AS F AR AS THE REMAINING AMOUNT OF RS. 3,03,500 IS CONCERNED, IT WAS SUBMITT ED BY ASSESSEE, THEY REPRESENT OTHER RECEIPTS. IN SUPPORT OF SUCH C ONTENTION, ASSESSEE ALSO FURNISHED SWORN AFFIDAVITS OF PERSONS TO WHOM ADVANCES WERE RETURNED. IT WAS ALSO SUBMITTED BY ASSESSEE THAT NE CESSARY INFORMATION COULD NOT BE SUBMITTED BEFORE AO AS ASS ESSMENT WAS COMPLETED U/S 144. ON THE BASIS OF THE SUBMISSIONS MADE BY ASSESSEE AS WELL AS EVIDENCE PRODUCED BEFORE HIM, L D. CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. AS OBSERVED BY LD. CIT(A) IN HIS ORDER, AO IN HIS REPORT, THOUGH, AGREED THAT ASSESS EE HAS OBTAINED CONFIRMATIONS FROM THE PERSONS TO WHOM AMOUNTS WERE CLAIMED TO HAVE BEEN RETURNED, BUT, HE ALSO OBSERVED THAT THOU GH AMOUNTS WERE DEPOSITED IN CASH BUT WERE NEVER WITHDRAWN IN CASH AND ASSESSEE HAS ALSO FAILED TO PRODUCE DOCUMENTARY EVIDENCE FOR PAYMENTS MADE TOWARDS CONSTRUCTION MATERIAL PURCHASED AND LABOUR CHARGES. AO OBSERVED, ASSESSEE COULD NOT PROVE THAT THE CASH DE POSITS IN BANK ACCOUNT ACTUALLY REPRESENT THE GROSS RECEIPTS FROM CONTRACT BUSINESS. AS FAR AS THE AMOUNT OF RS. 8,50,000 RECEIVED FROM THREE PERSONS WHICH SUBSEQUENTLY WAS CLAIMED TO HAVE BEEN RETURNE D, AO OBSERVED THAT THOUGH THE SAID PERSONS APPEARED BEFORE HIM AN D CONFIRMED OF HAVING ADVANCED THE MONEY TO ASSESSEE, BUT, THEIR C LAIM CANNOT BE ACCEPTED IN ABSENCE OF SUPPORTING EVIDENCE. 6. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AS WELL AS THE REPORT SUBMITTED BY AO IN THE CONTEXT O F FACTS AND MATERIALS ON RECORD, OBSERVED THAT AS FAR AS THE AM OUNT OF RS. 8,50,000 REPRESENTING ADVANCES RECEIVED BY ASSESSEE FROM PROSPECTIVE CLIENTS IS CONCERNED, NOT ONLY THE SAID PERSONS HAVE CONFIRMED OF ADVANCING MONEY TO ASSESSEE BY FILING AFFIDAVIT BUT THEY 4 ITA NO. 1466/HYD/2013 SRI KUNCHARA KONDAL RAO ALSO APPEARED BEFORE AO AND IN THEIR SWORN STATEMEN T ADMITTED OF HAVING ADVANCED THE MONEY TO ASSESSEE. AS FAR AS TH E AMOUNT OF RS. 25,12,650 CLAIMED TO HAVE BEEN DEPOSITED INTO THE B ANK ACCOUNT OUT OF GROSS CONTRACT RECEIPTS, LD. CIT(A) OBSERVED THA T APART FROM HAVING CERTAIN RESERVATIONS, AO COULD NOT PROVE SUBSTANTIV ELY THAT THE AMOUNT OF RS. 25,12,650 DEPOSITED INTO BANK ACCOUNT WAS NOT OUT OF GROSS CONTRACT RECEIPTS. IN THIS CONTEXT, LD. CIT(A ) OBSERVED THAT ASSESSEE HAD BEEN FILING RETURNS OF INCOME SHOWING CONTRACT RECEIPTS WHICH HAVE BEEN ACCEPTED BY THE DEPARTMENT. FURTHE R, ALL ALONG ASSESSEES INCOME HAS BEEN SHOWN ON ESTIMATE BASIS IN ABSENCE OF BOOKS OF ACCOUNT. IN THESE CIRCUMSTANCES, ASSESSEE S CLAIM THAT THE AMOUNT OF RS. 25,12,650 IS TOWARDS GROSS CONTRACT RECEIPTS CANNOT BE DISBELIEVED. ACCORDINGLY, LD. CIT(A) CONCLUDED THAT OUT OF THE TOTAL CASH DEPOSITS OF RS. 36,66,000, AN AMOUNT OF RS. 33 ,62,650 WERE EXPLAINED. ACCORDINGLY, HE SUSTAINED THE ADDITION F OR AN AMOUNT OF RS. 3,03,650. BEING AGGRIEVED, DEPARTMENT IS BEFORE US. 7. WE HAVE HEARD THE ARGUMENTS OF LD. DR AS WELL AS LD. AR ON THIS ISSUE. IT IS TO BE SEEN THAT WHILE COMPLETING ASSESSMENT U/S 144 OF THE ACT, AO ADDED THE ENTIRE CASH DEPOSITS IN TH E BANK ACCOUNT AMOUNTING TO RS. 36,66,000 AS UNEXPLAINED INCOME OF ASSESSEE ON THE PRETEXT THAT ASSESSEE COULD NOT EXPLAIN THE SOU RCE OF SUCH DEPOSITS. HOWEVER, BEFORE LD. CIT(A), ASSESSEE HAS EXPLAINED THE SOURCE OF CASH DEPOSITS OF RS. 36,66,000 AS UNDER: 1. GROSS CONTRACT RECEIPTS RS. 25,12,650 2. ADVANCES RECEIVED FROM THREE PERSONS RETURNED SUBSEQUENTLY RS. 8,50,000 3. MISCELLANEOUS RECEIPTS RS. 3,03,650 FURTHER, AS COULD BE SEEN FROM THE MATERIALS ON REC ORD, AS FAR AS THE AMOUNT OF RS. 8,50,000 CLAIMED TO BE ADVANCES RECE IVED FROM THREE PERSONS, NAMELY, SMT. PRABHAVATI, SHRI CHANDRASEKHA R AND SRI YADAIAH, WHICH SUBSEQUENTLY ASSESSEE CLAIMED TO HAVE RETURNE D, THERE IS NO DISPUTE TO THE FACT THAT ASSESSEE NOT O NLY FILED AFFIDAVITS OF 5 ITA NO. 1466/HYD/2013 SRI KUNCHARA KONDAL RAO THE CONCERNED PERSONS CONFIRMING THE ADVANCING OF T HE AMOUNT OF RS. 8,50,000, DURING REMAND ALSO, AO SUMMONED THESE PER SONS AND EXAMINED THEM ON OATH AND IN THEIR DEPOSITION THE S AID PERSONS CATEGORICALLY ADMITTED OF HAVING ADVANCED THE AMOUN T OF RS. 8,50,000 TO ASSESSEE AND SUBSEQUENTLY GOT BACK THEIR MONEY. THEREFORE, WHEN THE PERSON CONCERNED HAVE ADMITTED OF HAVING ADVANC ED MONEY TO ASSESSEE, WHICH WAS SUBSEQUENTLY RETURNED BACK TO T HEM AND THERE IS NO EVIDENCE WITH THE AO TO DISPROVE SUCH CLAIM, MER ELY ON PRESUMPTION AND SURMISES, THE EVIDENCE BROUGHT ON R ECORD CANNOT BE OVERLOOKED/IGNORED. THEREFORE, AS FAR AS THE AMOUNT OF RS. 8,50,000 IS CONCERNED, THE SOURCE OF SUCH DEPOSIT HAVING BEE N EXPLAINED THERE CANNOT BE ANY ADDITION OF THAT AMOUNT. AS FAR AS TH E BALANCE AMOUNT OF RS. 25,12,650 IS CONCERNED, AO HAS RAISED A DOUB T THAT THERE IS NO EVIDENCE THAT ASSESSEE IS ENGAGED IN CONTRACT BUSIN ESS. HOWEVER, THE RETURNS FILED BY ASSESSEE, WHICH WERE EXAMINED BY LD. CIT(A) CLEARLY ESTABLISH THE CLAIM OF ASSESSEE. MOREOVER, THERE IS NO DISPUTE TO THE FACT THAT IN THE RETURNS OF INCOME ASSESSEE HAS DISCLOSED THE GROSS CONTRACT RECEIPTS OF RS. 25,12,650. THEREFORE , ASSESSEES EXPLANATION THAT THE SAID AMOUNT RECEIVED IN CASH F ROM THE PLOT OWNERS WERE DEPOSITED IN THE BANK ACCOUNT CANNOT BE BRUSHED ASIDE WITHOUT BRINGING ANY MATERIAL ON RECORD TO PROVE AS SESSEES CLAIM TO BE FALSE. IN THESE CIRCUMSTANCES, IN OUR VIEW, LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 33,62,650 AS EVIDEN CES BROUGHT ON RECORD BY ASSESSEE CLEARLY PROVED THE SOURCE OF SUC H DEPOSITS IN THE BANK ACCOUNT. IN THE AFORESAID VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A), WHICH IS ACCO RDINGLY UPHELD. GROUNDS RAISED ARE THEREFORE DISMISSED. 6 ITA NO. 1466/HYD/2013 SRI KUNCHARA KONDAL RAO 8. IN THE RESULT, DEPARTMENTS APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 20 TH MARCH, 2015. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 20 TH MARCH, 2015 KV COPY TO:- 1) ITO, WARD 9(1), BLOCK NO. 2D , INCOME-TAX TOWERS, AC GUARDS, HYDERABAD 500 004. 2) SIR KUNCHARA KONDAL RAO, PLOT NO. 11, KAMALA NA GAR, VANASTHALIPURAM, HYDERABAD 3) CIT(A)-VI, HYDERABAD 4) CIT-VI, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.