ITO, Ward-9(3), Hyderabad V. Shri Rajendran Alagerswamy, Hyderabad

ITA 1529/HYD/2013

• Counselvise Citation: 152922514 RSA 2013
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 19-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Keywords: Unexplained investment; Business income; Assessment record
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1529/HYD/2013 ASSESSMENT YEAR 2009-10 THE INCOME TAX OFFICER WARD-9(3) HYDERABAD VS SRI RAJENDRAN ALAGERSWAMY HYDERABAD PAN: ABQPA4237N APPLICANT RESPONDENT APPELLANT BY: SRI RAMAKRISHNA BANDI RESPONDENT BY: NONE DATE OF HEARING: 10.11.2014 DATE OF PRONOUNCEMENT: 26.11.2014 ORDER PER ASHA VIJAYARAGHAVAN, JM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VI, HYDERABAD DATED 23.08.2013 FOR A.Y. 2009-10. 2. THE ASSESSEE IS AN INDIVIDUAL AND SHOWN TO HAVE ENG AGED IN THE BUSINESS OF BITUMEN TRANSPORT CONTRACT, FILED R ETURN OF INCOME FOR THE AY 2009-10 ADMITTING AN INCOME OF RS. 3,76,269/ -. IN VIEW OF THE NON-COMPLIANCE TO THE HEARING NOTICES ISSUED, THE A O COMPLETED THE ASSESSMENT U/S. 144, BY BRINGING THE TOTAL CASH DEP OSITS FOUND IN THE SAVINGS BANK ACCOUNT OF THE ASSESSEE, TO TAX. THE MAIN ISSUE INVOLVED IS THE TREATMENT OF CASH DEPOSITS IN TO BANK ACCOUN T AS AN UNEXPLAINED INVESTMENT VIDE THE EX-PARTE ORDER U/S. 144 OF IT ACT, 1961. 3. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDING S, IT WAS OBSERVED BY THE AO THAT THERE ARE CASH DEPOSITS TO THE EXTENT OF RS. 23,55,500/-, IN TO THE BANK ACCOUNT MAINTAINED BY ASSESSEE AND 2 ITA NO. 1529/HYD/2013 SRI RAJENDRAN ALAGERSWAMY ===================== SINCE THE SOURCES FOR THE SAME WAS NOT EXPLAINED, T HE AMOUNT WAS TREATED AS UNEXPLAINED INVESTMENT IN THE HANDS OF T HE ASSESSEE FOR THE YEAR UNDER REFERENCE. THE ASSESSMENT WAS COMPLE TED U/S. 144 SINCE THERE WAS NO COMPLIANCE TO THE NOTICES ISSUED AND THE ENTIRE DEPOSITS WAS TREATED AS UNEXPLAINED INVESTMENT AND THEREBY AS UNEXPLAINED INCOME OF THE ASSESSEE, FOR THE YEAR UN DER REFERENCE. 4. BEFORE THE CIT(A) THE ASSESSEE OBJECTED TO SUCH ADD ITION AND IT HAS BEEN SUBMITTED THAT THE AO PROCEEDED TO COMP LETE THE ASSESSMENT U/S, 144, WITHOUT PROVIDING OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE SOURCES. IT WAS ALSO CONTENDED THAT THE AO OUGHT TO HAVE CONSIDERED THE FACT THAT THE ASSESSEE CARRIED ON TH E BUSINESS OF TRANSPORT AND THE TRANSACTIONS IN THE BANK ACCOUNT REPRESENT TURNOVER OF THE ASSESSEE. 5. THE CIT(A) AFTER PERUSING THE ASSESSMENT RECORD OBS ERVED THAT TOTAL CONTRACT RECEIPT OF RS. 33,60,860 WAS SHOWN T O HAVE BEEN RECEIVED FROM TWO PARTIES VIZ., (1) M/S. TRANSTROY INDIA (LTD.) AMOUNTING TO RS. 16,43,029 AND SRI LAKSHMI METAL IN DUSTRIES & CONSTRUCTION AMOUNTING TO RS. 7,90,655 ON WHICH TDS WAS MADE. THE CIT(A) FURTHER OBSERVED THAT THE AMOUNTS OF CON TRACT RECEIPTS, THUS SHOWN AS PER THE TDS CERTIFICATES AS CLAIMED I N RETURN OF INCOME, WORKED OUT TO RS. 24,33,684, LEAVING A BALANCE OF R S. 9,27,176 (RS. 33,60,860 RS. 24,33,684), REPRESENTING THE CONTRA CT RECEIPTS FROM THE UNRECOGNISED PARTIES PRESUMABLY IN CASH. 6. THE CIT(A) POINTED OUT THAT THE AMOUNT OF RS. 9,27, 176 THAT REPRESENTED THE RECEIPTS FROM UNIDENTIFIED PARTIES, WHICH NEEDS TO BE GIVEN CREDIT AGAINST THE AMOUNT OF CASH DEPOSITS OF RS. 23,55,500 AND THUS THE BALANCE OF THE SAID AMOUNTS OF CASH DEPOSI TS TO THE EXTENT OF RS. 14,28,324 (RS. 23,55,500 RS. 9,27,176), PRESU MED TO REPRESENT THE CONTRACT RECEIPTS NOT ACCOUNTED BY THE ASSESSEE, ON WHICH THE NET PROFIT NEEDS TO BE ARRIVED BY ESTIMATION. THE CIT( A) FURTHER HELD THAT THE NET PROFIT FOR THE YEAR WAS SHOWN AT 12.66 % (RS. 4,25,650 ON 3 ITA NO. 1529/HYD/2013 SRI RAJENDRAN ALAGERSWAMY ===================== RS. 33,60,860) AND THUS BASED ON SUCH INFORMATION, IT IS REASONABLE TO ESTIMATE THE PROFIT AT 15% ON THE NET UNACCOUNTED C ONTRACT RECEIPTS OF RS. 14,28,324. THE CIT(A) DIRECTED THE ASSESSIN G OFFICER TO RECOMPUTE THE ADDITIONAL INCOME EARNED BY THE ASSES SEE ON THE UNACCOUNTED CONTRACT RECEIPTS OF RS. 14,28,324, THA T WERE BROUGHT INTO THE BOOKS (BANK) THROUGH CASH DEPOSITS BUT NOT TAKEN INTO BOOKS, BY ESTIMATING THE PROFIT AT 15%, AS AGAINST TREATING OF ENTIRE CASH DEPOSITS OF RS. 23,55,500 INTO THE BANK ACCOUN T, AS UNEXPLAINED INVESTMENT. ACCORDINGLY, THIS GROUND OF APPEAL WAS TREATED AS PARTLY ALLOWED. 7. AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEFORE US AN D HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1) THE ORDER OF THE CIT(A) IS ERRONEOUS ON THE FACTS O F THE CASE. 2) THE CIT(A) OUGHT TO HAVE UPHELD THE AMOUNT AS UNEXPLAINED INCOME, DEPOSITED IN THE SAVING BANK ACCOUNT IN THE ABSENCE OF WORK CONTRACT OR TDS CERTIFICATE. 3) THE CIT(A) OUGHT NOT TO HAVE GIVEN CREDIT OF RS. 9,27,176 AS A BUSINESS RECEIPTS, AGAINST THE AMOUNT OF CASH DEPOSITS OF RS. 23,55,500 WITHOUT ANY PROOF . 8. WE HAVE HEARD BOTH THE PARTIES. 9. THE CIT(A) HAS GIVEN CREDIT FOR RS. 9,27,176 TAKING THE AMOUNT AS BUSINESS RECEIPT AND HAS REDUCED THE AMOUNT OF C ASH DEPOSITS TO THAT EXTENT. THE GRIEVANCE OF THE DEPARTMENT IS TH AT THERE IS NO SUFFICIENT PROOF. IN THESE CIRCUMSTANCES, WE SET A SIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO REDO THE ASSESSMEN T DE NOVO AFTER VERIFYING THE TDS CERTIFICATES. THE ASSESSING OFFI CER SHAL ENSURE THAT EVIDENCES ARE PRODUCED BY THE ASSESSEE TO SHOW THAT SOME OF THE CASH DEPOSITS ARE ACTUALLY BUSINESS RECEIPTS AND AFTER B EING SATISFIED BY THE ASSESSEE'S SUBSTANTIATION OF HIS CLAIM, THE ASSESSI NG OFFICER SHALL PASS AN ORDER AFRESH TAKING INTO CONSIDERATION THE CIT(A)'S DIRECTION ON THE ISSUE WITH REFERENCE TO ESTIMATION OF PROFIT MADE B Y THE ASSESSEE. 4 ITA NO. 1529/HYD/2013 SRI RAJENDRAN ALAGERSWAMY ===================== 10. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 26 TH NOVEMBER, 2014 SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD, DATED THE 26 TH NOVEMBER, 2014 TPRAO COPY TO: 1. THE INCOME TAX OFFICER, WARD - 9(3), BLOCK NO. 2D, INCOME TAX TOWERS, AC GUARDS, HYDERABAD-4. 2. SRI RAJENDRAN ALAGARSWAMY, 11 - 13 - 1034/1, VASAVI COLONY, ROAD NO. 11, KOTHAPET, HYDERABAD. 3. THE CIT(A) - V I, HYDERABAD. 4. THE CIT - VI , HYDERABAD. 5. THE DR, A - BENCH, ITAT, HYDERABAD.