CH. Narasimha Rao, Hyderabad V. Income Tax Officer, Ward -6(1), Hyderabad

ITA 1496/HYD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2899 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 28-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: RAMA MURTHY T
• Keywords: Unexplained cash credit; Rejection of books of accounts; Opportunity of being heard
• Section: 244A; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.1496/HYD/2012 ASST. YEAR 2009-10 CH. NARASIMHA RAO, HYDERABAD. PAN:AFKPC 4334E VS ITO, WARD-6(1), HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SRI RAMA MURTHY , T. RESPONDENT BY : SRI M.H. NAIK DATE OF HEARING : 28-3-2013 DATE OF PRONOUNCEMENT : 22-5-2013. ORDER PER SAKTIJIT DEY,JUDICIAL MEMBER. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 31-5-2012 OF CIT (A)-VI, HYDERABAD PERTAINING TO THE ASSESSMENT YEAR 2009-10. WE FIND THAT THIS APPEAL IS TIME BARRED BY 10 DAYS. THE ASSESSEE HAS SUBMITTED HIS EXPLANATION FOR FILING THE APPEAL LATE BY 10 DAYS B EFORE US. AFTER GOING THROUGH THE SUBMISSION MADE BY THE ASSESSEE I N THIS REGARD, WE ARE INCLINED TO CONDONE THE SAID DELAY AND ADMIT THE APPEAL FOR DISPOSAL. ITA NO.1496 OF 2012 SRI CH. NARASIMHA RAO, HYD.. ================== 2 2. THE ASSESSEE HAS RAISED SEVEN GROUNDS IN THIS APPEAL. GROUND NOS. 1, 6, 7 ARE GENERAL IN NATURE AND THEY DO NOT REQUIRE ANY ADJUDICATION. 3. GROUND NOS. 2, 3 AND 4 RELATE TO THE ISSUE OF AD DITION OF AN AMOUNT OF RS.22,71,208 MADE U/S 68 OF THE ACT. 4. BRIEFLY THE FACTS RELATING TO THE ISSUE IN DISPU TE ARE, THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM THE BUSINESS OF RUNNING A WINE SHOP. FOR THE YEAR UNDER DISPUTE, T HE ASSESSEE FILED HIS RETURN OF INCOME ON 30-9-2009 DECLARING A TOTAL INCOME OF RS.2,02,650/-. IN THE COURSE OF SCRUTINY ASSES SMENT PROCEEDINGS, THE ASSESSING OFFICER WHILE EXAMINING THE BOOKS OF ACCOUNT NOTED THAT THE ASSESSEE HAD NOT DISCLOSED H IS ACCOUNT WITH UCO BANK AS ALSO CREDITS AND TRANSACTIONS THER EIN AND THEREFORE, THE ASSESSING OFFICER ISSUED SUMMONS U/S 131 TO THE ASSESSEE. A STATEMENT WAS RECORDED FROM THE ASSESS EE WHEN HE APPEARED IN PURSUANCE TO THE SUMMONS ISSUED U/S 131 OF THE ACT. THE ASSESSEE ADMITTED IN THE STATEMENT RECOR DED FROM HIM THAT HE WAS HOLDING A BANK ACCOUNT IN UCO BANK ALSO. ON THE BASIS OF THE STATEMENT RECORDED THE ASSESSING O FFICER NOTED THAT THE TRANSACTIONS MADE IN THE BANK ACCOUNT AND THE CREDITS THEREIN HAVE NOT BEEN REFLECTED IN THE BOOKS OF ACC OUNT AND THE ACCOUNT WITH UCO BANK HAS NOT REFLECTED IN THE BAL ANCE-SHEET FILED BY THE ASSESSEE. FROM THE ABOVE FACTS, THE A SSESSING OFFICER CAME TO THE CONCLUSION THAT THE ASSESSEE HA D CONCEALED THE PARTICULARS IN RESPECT OF HIS TRANSACTIONS WITH THE BANK AND ALSO THE CREDITS THEREIN. THE ASSESSING OFFICER TH EREFORE TREATED THE TOTAL CREDITS IN THE UCO BANK ACCOUNT AMOUNTING TO RS.22,71,208/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE. FURT HER, SO FAR AS ITA NO.1496 OF 2012 SRI CH. NARASIMHA RAO, HYD.. ================== 3 THE PROFIT DECLARED IN THE BUSINESS OF WINE SHOP IS CONCERNED, THE ASSESSING OFFICER DID NOT ACCEPT THE BOOK RESUL TS TO BE RELIABLE AS THE PROFIT DECLARED WAS TOO LOW. HE TH EREFORE PROPOSED TO ESTIMATE THE INCOME TO WHICH THE ASSESS EE AGREED AND ACCORDINGLY THE NET PROFIT FROM WINE BUSINESS WAS ESTIMATED AT 4% ON SALES. THE ASSESSEE BEING AGGR IEVED OF THE ASSESSMENT ORDER PASSED, PREFERRED AN APPEAL BEFORE THE CIT (A). 5. SO FAR AS ESTIMATE OF PROFIT AT 4% IS CONCERNED , THE CIT (A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAS AGREED FOR SUCH ESTIMATION A T 4%. SO FAR AS ADDITION U/S 68 OF THE ACT IS CONCERNED, THE CIT (A) SUSTAINED THE ADDITION BY OBSERVING THAT THE ASSESSEE HAD NOT DISCLOSED THE UCO BANK ACCOUNT IN THE BALANCE-SHEET NOR THE ENTRIES/TRANSACTIONS MADE THEREIN WERE INCLUDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. HE FURTHER HELD THAT TH E ASSESSEE COULD NOT DEMONSTRATE THAT THE PURCHASES OUT OF THE CREDITS IN THE SAID BANK ACCOUNT WERE INCLUDED IN THE TOTAL TU RNOVER RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. HE THEREFORE REJECTED THE CONTENTION OF THE ASSESSEE THAT THE IN COME HAVING BEEN ESTIMATED BY REJECTING THE BOOKS OF ACCOUNT FU RTHER ADDITION U/S 68 CANNOT BE MADE. THE CIT (A) HELD T HAT THE TRANSACTIONS IN THE BANK ACCOUNT HAVING NOT BEEN EX PLAINED OR REFLECTED IN THE BOOKS OF ACCOUNTS THEY HAVE TO BE CONSIDERED FOR THE PURPOSE OF INCOME-TAX OVER AND ABOVE REGUL AR BOOKS OF ACCOUNTS WHICH WERE REJECTED AND IN RESPECT OF WHIC H ESTIMATION OF INCOME WAS MADE. THE CIT (A) FURTHER INFERRED T HAT THE ASSESSEE HAVING NOT FURNISHED ANY EVIDENCE TO SUBST ANTIATE THAT THE CREDITS IN THE BANK ACCOUNTS WERE OUT OF SALE P ROCEEDS OF LIQUOR BUSINESS, THE CREDITS IN THE BANK ACCOUNTS R EMAINED ITA NO.1496 OF 2012 SRI CH. NARASIMHA RAO, HYD.. ================== 4 UNEXPLAINED. HE THEREFORE SUSTAINED ADDITION OF RS .22,71,208 MADE U/S 68 OF THE ACT. 6. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE AS SESSEE ORALLY AS WELL AS THROUGH HIS WRITTEN SUBMISSIONS S UBMITTED BEFORE US THAT THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNTS FOR THE BUSINESS CONSISTING THE PERSONAL BANK ACCOU NT ALONG WITH BANK ACCOUNT OPENED AND OPERATED FOR THE WINE BUSI NESS AND BOTH THE BANK ACCOUNTS FORM PART OF THE BOOKS OF AC COUNTS OF THE ASSESSEE. THE FINAL ACCOUNTS FOR THE YEAR ENDI NG 31-3-2009 ARE DRAWN IN THE BOOKS OF ACCOUNTS AND THE FINAL ST ATEMENT DULY AUDITED ARE ALSO IN AGREEMENT WITH THE BOOKS OF ACC OUNTS MAINTAINED BY THE ASSESSEE. HE FURTHER SUBMITTED T HAT THE BOOK OF ACCOUNTS MAINTAINED BY THE ASSESSEE CONTAINS BOT H THE BANK ACCOUNTS ALONG WITH OTHER LEDGER ACCOUNTS AND CASH BOOK. THE ENTRIES REFLECTED IN THE UCO BANK ACCOUNTS ARE PROP ERLY RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. SO FAR AS THE ALLEGATION OF THE ASSESSING OFFICER THAT THE CLOSING BALANCE O F THE UCO BANK WAS NOT REFLECTED IN THE BALANCE-SHEET OF THE ASSESSEE, IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAD NOT PR OPERLY VERIFIED THE FIGURE OF CLOSING BALANCE AS THE ASSES SEE WHILE DRAWING THE BALANCE-SHEET AS AT 31-3-2009 HAS CLUBB ED THE BALANCE OF UCO BANK ACCOUNT WITH THE CASH BALANCE A VAILABLE AS AT 31-3-2009. THE LEARNED AUTHORISED REPRESENTATI VE FOR THE ASSESSEE SUBMITTED THAT THE CIT (A) AS WELL AS THE ASSESSING OFFICER WITHOUT PROPERLY VERIFYING THE BOOKS OF ACC OUNTS HAS CONCLUDED THAT THE BANK ACCOUNTS HAVE NOT BEEN REFL ECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IN THIS CONTEXT, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE UCO BANK ACCOUNT AT PAGE 156 OF THE PAPER BOOK IN THE BOOKS OF THE ASSESSEE AND ALSO ACCOUNT COPIES SUBMITTED IN THE P APER BOOK. ITA NO.1496 OF 2012 SRI CH. NARASIMHA RAO, HYD.. ================== 5 IN SUM AND SUBSTANCE, THE LEARNED AUTHORISED REPRES ENTATIVE FOR THE ASSESSEE SUBMITTED THAT NEITHER THE CIT (A) NOR THE ASSESSING OFFICER HAS PROPERLY VERIFIED THE FACTS A ND MATERIALS PLACED BEFORE THEM. THE LEARNED AUTHORISED REPRESE NTATIVE FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSING O FFICER HAVING REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED INCOME , NO SEPARATE ADDITION CAN BE MADE U/S 68 OF THE ACT. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUPPORTING THE ORDERS OF THE REVENUE AUTHORIT IES SUBMITTED THAT THE ASSESSEE HAVING FAILED TO EXPLAI N THE ENTRIES IN THE BANK ACCOUNT AND RECONCILE THEM WITH THE BOO KS OF ACCOUNTS, THE ADDITION MADE WAS JUSTIFIED. 8. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES, IT IS CLEAR THAT THE ADDITION U/S 68 HAS BEEN MADE ON THE FINDING THAT THE ASSESSEE HAS NOT DISCLOSED THE BANK ACCOUN T NOR REFLECTED THE ENTRIES MADE IN THE BOOKS OF ACCOUNTS MAINTAINED BY HIM. SO FAR AS LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEES CONTENTION THAT NO SEPARATE ADDITION U/S 68 CAN BE MADE IN CASE OF ESTIMATION OF INCOME BY REJECTING T HE BOOKS OF ACCOUNTS IS CONCERNED, WE ARE UNABLE TO ACCEPT THE SAME. EVEN IN A CASE OF ESTIMATION OF INCOME SEPARATE ADDITION U/S 68 IS PERMISSIBLE THIS VIEW IS SUPPORTED BY THE DECISION OF THE CO- ORDINATE BENCH IN CASE OF ACIT VS. MIR MAZKARUDDIN (22 ITR (TRIB) 314). HOWEVER, IT IS THE FURTHER CONTENTION OF THE ASSESSEE THAT NOT ONLY THE BANK ACCOUNT FORM PART OF THE BOO KS OF ACCOUNTS BUT THE CREDITS MADE IN THE BANK ACCOUNT A RE ALSO REFLECTED IN THE BOOKS OF ACCOUNTS MAINTAINED BY TH E ASSESSEE AND THE FINAL AUDITED ACCOUNTS HAVE BEEN PREPARED A FTER ITA NO.1496 OF 2012 SRI CH. NARASIMHA RAO, HYD.. ================== 6 CONSIDERING THE BANK ACCOUNTS WHICH FORMS PART OF T HE BOOKS OF ACCOUNTS AND FINANCIAL STATEMENTS AND ALSO ARE IN A GREEMENT WITH THE BOOKS OF ACCOUNTS. IT IS THE FURTHER CONT ENTION OF THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE THAT THE REVENUE AUTHORITIES HAVE NOT PROPERLY VERIFIED THE BOOKS OF ACCOUNTS AD SOLELY ON THE BASIS OF THE STATEMENT RE CORDED U/S 131 OF THE ACT FROM THE ASSESSEE HAD MADE THE ADDIT ION U/S 68 OF THE ACT. AFTER CONSIDERING THE SUBMISSIONS OF T HE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE AND PERU SING THE DOCUMENTS SUBMITTED IN THE PAPER BOOK, WE ARE OF TH E VIEW THAT THE ASSESSEE DESERVES ONE MORE OPPORTUNITY TO EXPLA IN BEFORE THE ASSESSING OFFICER THAT THE CREDIT ENTRIES IN TH E BANK ACCOUNT HAVE BEEN REFLECTED IN THE BOOKS OF ACCOUNTS AND TH E AUDITED FINANCIAL STATEMENTS HAVE BEEN PREPARED ON THE BASI S OF SUCH ENTRIES MADE IN THE BOOKS OF ACCOUNTS. ON THE AFORE SAID VIEW OF THE MATTER, WE REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WHO SHALL VERIFY THE ASSESSEES CLAIM BY PR OPERLY EXAMINING THE BOOKS OF ACCOUNTS VIS A VIS THE BANK ACCOUNT AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. IF THE ASSESSEE IS ABLE TO RECONCILE THE CREDIT ENTRIES MADE IN THE BANK ACCOUNT WITH THE BOOKS OF ACCOUNTS , THEN NO ADDITION CAN BE MADE U/S 68 OF THE ACT. 9. SINCE WE HAVE REMITTED THE ISSUE ARISING OUT OF GROUND NOS.2,3 AND 4 IN THIS APPEAL ON ACCOUNT OF ADDITION MADE U/S 68 OF THE ACT TO THE FILE OF THE ASSESSING OFFICER, TH E ISSUE RAISED IN GROUND NO.5 RELATING TO INTEREST CHARGED U/S 244A AND 234D OF THE ACT, BEING CONSEQUENTIAL IN NATURE, DO NOT REQU IRE ANY ADJUDICATION AT THIS STAGE. ITA NO.1496 OF 2012 SRI CH. NARASIMHA RAO, HYD.. ================== 7 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER WAS PRONOUNCED IN THE OPEN COURT ON22 -05-201 3. SD/- (CHANDRA POOJARI) SD/- (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 22 ND MAY, 2013. JMR* COPY FORWARDED TO: 1. SRI CH. NARASIMHAR RAO, 101, SUBHAM APARTMENTS, 6 -3- 787, BESIDE RBI QUARTERS, AMEERPET, HYDERABAD. 2. INCOME-TAX OFFICER, WARD-6(1), HYDERABAD. 3. CIT (A)-IV, HYDERABAD. 4. CIT CONCERNED, HYDERABAD. 5. THE DR, ITAT, HYDERABAD ITA NO.1496 OF 2012 SRI CH. NARASIMHA RAO, HYD.. ================== 8