Manik Rao Auoti, Hyderabad V. Asst. Commissioner of Income Tax, Circle-7(1), Hyderabad

ITA 1606/Hyd/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0449 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-03-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 04-11-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M NARMADA
• Keywords: Tax effect; Revised return; Set aside
• Section: 143(3); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD SMC BENCH : HYDERABAD (THROUGH VIDEO CONFERENC E ) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO. 16 05 & 1606 /HYD./201 9 ASSESSMENT YEAR: 20 1 1 - 12 & 2014 - 15 SRI MANIK RAO AUOTI VS. ACIT, CIRCLE 7(1) HYDERABAD HYDERABAD PAN: A HNPA5187E (APPELLANT) (RESPONDENT) FOR ASSESSEE : SH. MOHD. AFZAL, AR. FOR REVENUE : S MT. M NARMADA, D.R. DATE OF HEARING : 04 / 03 /202 1 DATE OF PRONOUNCEMENT : 09 / 03 /202 1 O R D E R TH ESE ARE ASSESSEES APPEAL S FOR A.Y. 2011 - 12 AND 2014 - 15 AGAINST THE ORDER OF CIT(A) - 3 , HYDERABAD DATED 14 .0 6 .2019 AND 19.06.2019 RESPECTIVELY TH ESE APPEAL S W ERE TAKEN UP FOR HEARING THROUGH VIDEO CONFERENCE ON 0 4 .03.2021 AND BOTH THE PARTIES WERE HEARD. 2 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE , AN INDIVIDUAL AND A WHOLESALE FRUIT TRADER FILED HIS RETURN OF INCOME FOR A.Y. 2011 - 12 ON 30.08.2011 DECLARING TOTAL INCOME OF RS.1,80,000/ - OVER GROSS SALES OF RS . 26 , 48,253/ - . THE AO RECEIVED INFORMATION THAT THE ASSESSEE HAS MADE CASH DEPOSITS TO THE TUNE OF RS. 27,06,250/ - AND CHEQUE DEPOSITS OF RS.5,87,14 , 804/ - TOTALLING ITA NO. 16 05 & 1606 /HYD./201 9 SRI MANIK RAO AUOTI . A.Y. 20 1 1 - 12 & 2014 - 15 2 TO RS.6,14,21,504/ - INTO HIS BANK ACCOUNTS MAIN TAIN ED WITH HDFC BANK, GADDI ANNARAM BRANCH AND BANK OF BARODA, SAROORNAGAR BRANCH AS AGAINST THE GROSS RECEIPTS SHOWN IN THE RETURN OF INCOME AT RS.26,48,253/ - . THE ASSESSEE WAS THEREFORE ASKED TO EXPLAIN THE SAID DEPOSITS AND AS TO WHETHER HE HAD ACCOUNTED FOR THE ABOVE CREDITS IN HIS BOO KS OF ACCOUNTS. ASSESSEE REPLIED HE HAS NOT CONSIDERED CREDITS AND DEBITS TO HIS BANK ACCOUNT WHILE FILING THE RETURN OF INCOME AND THAT HE WOULD FILE A REVISED RETURN ADOPTING THE TOTAL CREDITS APPEARING IN THE BANK ACCOUNT AS HIS GROSS RECEIPTS B UT T HE ASSESSEE DID NOT FILE HIS REVISED RETURN. THEREFORE , AO INITIATED RE - ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 147. THE ASSESSEES REPRESENTATIVE APPEARED AND REQUESTED FOR PROVIDING A COPY OF THE BANK STATEMENT OF ASSESSEE AS THE ASSESSEE HAS INCURRE D HUGE LOSSES FOR RELEVANT A.Y. AND WAS NOT IN A POSITION TO CONTACT THE BANKERS . ACCORDINGLY , AO SUPPLIED THE COPIES OF BANK STATEMENT S TO THE ASSESSEE THROUGH E - MAIL BUT THE ASSESSEE DID NOT FILE ANY FURTHER REPLY TO THE SAID BANK STATEMENT S . THEREFO RE, AO COMPLETED THE ASSESSMENT BY ADOPTING NET PROFIT @ 2% OF THE CROSS RECEIPTS RECEIVED DURING THE F.Y. 2011 - 12 AND ACCORDINGLY ARRIVED AT NET PROFIT OF RS.12,38,421/ - AND AFTER REDUCING THE INCOME RETURNED BY ASSESSEE , THE DIFFERENCE OF RS.10,48,421/ - WAS BROUGHT TO TAX. 2.1. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) STATING THAT THE NET PROFIT AT 2% OF THE GROSS RECEIPTS OF RS.6,14,21,054/ - WAS EXCESSIVE AND PRAYED TO CONSIDER NET PROFIT AT LESS THAN 1% AS ASSESSEE INCURRED HUGE LOSSES. HOWEVER, NONE APPEARED BEFORE THE CIT(A) AND, THEREFORE, CIT(A) CONFIRMED THE ASSESSMENT ORDER AND ITA NO. 16 05 & 1606 /HYD./201 9 SRI MANIK RAO AUOTI . A.Y. 20 1 1 - 12 & 2014 - 15 3 THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL. 1. THE ORDER OF THE LD CIT(A) IS AGAINST LAW, WEIGHT OF EVID ENCE AND PROBABILITIES OF CASE. [TAX EFFECT: RS. 2,13,616/ - FOR AY 2011 - 12 ] [TAX EFFECT: RS. 3,54,421/ - FOR AY 201 4 - 15 ] 2. THE LD.CIT (A) ERRED IN CONFIRMING THE ORDER OF AO WITHOUT GIVING AN OPPORTUNITY TO ASSESSEE. [TAX EFFECT: RS. 2,13,616/ - FOR AY 2011 - 12] [TAX EFFECT: RS. 3,54,421/ - FOR AY 201 4 - 15 ] 3. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT THE AO HAS NOT APPRECIATED THAT THE FACTS AND CIRCUMSTANCES OF THE CASE BEFORE ESTIMATING THE PROFIT AT 2% OF THE TURNOVER. [TAX EFFECT: RS. 2,13,616/ - FOR AY 2011 - 12] [TAX EFFECT: RS. 3,54,421/ - FOR AY 201 4 - 15 ] 4. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR MODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL, IF IT IS CONSIDERED NECESSARY. [TAX EFFECT: RS. 2,13,616/ - FOR AY 2011 - 12] [TAX EFFECT: RS. 3,54,421/ - FOR AY 201 4 - 15 ] 3. LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THOUGH THE ASSESSEE HAS INCURRED HUGE LOSSES , THE ASSESSEE HAD ESTIMATED THE PROFIT AND HAS DECLARED AN INCOME OF RS.1,80,000/ - OVER GROSS SALES OF RS.26,48,253/ - . HE SUBMITTED THAT THERE WAS NO PROFIT EARNED BY ASSESSEE AND THEREFORE ADOPTING THE PROFIT AT 2% OF THE GROSS RECEIPTS OF BOTH CHEQUE DEPOSI TS AND CASH DEPOSITS IS EXCESSIVE. H E THEREFORE PRAYED THAT THE NET PROFIT BE ESTIMATED AT 1% OF THE GROSS RECEIPTS O R THE MATTER MAY BE SET ASIDE TO THE FILE OF CIT(A) TO GIVE HIM AN OPPORTUNITY OF HEARING. 3.1. LD.DR SUBMITTED THAT THE ASSESSEE HAD FA ILED TO REPORT THE ENTIRE GROSS RECEIPTS AND WHEN ASSESSEE WAS CONFRONTED , HE HAD PROMISED TO FILE REVISED RETURN OF INCOME BY TAKING THE BANK ITA NO. 16 05 & 1606 /HYD./201 9 SRI MANIK RAO AUOTI . A.Y. 20 1 1 - 12 & 2014 - 15 4 DEPOSITS ALSO INTO CONSIDERATION, BUT HAS FAILED TO DO SO AND THE AO HAS RIGHTLY ESTIMATED THE NET PROFIT AT 2% O F GROSS RECEIPTS. THEREFORE , ACCORDING TO HIM, REMAND TO THE CIT(A) WOULD SERVE NO PURPOSE. 4. HAVING REGARD TO RIVAL CONTENTIONS AND MATERIAL PLACED ON RECORD, I FIND THAT THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE BEFORE THE AO OR CIT( A) TO SUBMIT THAT THE NET PROFIT EARNED BY ASSESSEE WOULD BE LESS THAN 2% OF GROSS RECEIPTS. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS NOT SHOWN GROSS RECEIPTS TO THE EXTENT OF RS. 5 CRORES (APPROXIMATELY) , BUT HE HAS ONLY SHOWN THE RECEIPTS WHICH ARE ALMOST E QUIVALENT TO CASH DEPOSITS. THEREFORE , THE AO HAS RIGHTLY TREATED THE CASH DEPOSITS AS WELL AS CHEQUE DEPOSITS A S THE TURNOVER OF THE ASSESSEE. AS REGARDS ESTIMATION OF NET PROFIT , THE ASSESSEE HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THAT ITS N ET PROFIT IS LESS THAN 2% . I FIND THAT EVEN R EVENUE HAS NOT BROUGHT ON RECORD , ANY COMPARABLE CASES TO HOLD THAT REASONABLE NET PROFIT IN SUCH BUSINESS ES IS @ 2% . S INCE ASSESSEE HAS CLAIMED THAT HE HA S INCURRED HUGE LOSSES , INSTEAD OF REMITTING THE MATTER TO CIT(A), I DEEM IT FIT AND PROPER TO ESTIMATE HIS NET INCOME AT 1.5% OF GROSS RECEIPTS. THE ASSESSEE GETS RELIEF ACCORDINGLY. IN THE RESULT, BOTH APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT O N 09 /03/2021. SD - (P. MADHAVI DEVI) JUDICIAL MEMBER DATED: 09 TH MARCH, 2021 GMV ITA NO. 16 05 & 1606 /HYD./201 9 SRI MANIK RAO AUOTI . A.Y. 20 1 1 - 12 & 2014 - 15 5 COPY OF ORDER FORWARDED TO: 1. SHRI MANIK RAO AUOTI, C/O MOHD AFZAL, ADVOCATE, 402, SHERSONS RESIDENCY, 11 - 5 - 465, CRIMINAL COURT ROAD, RED HILLS, HYDERABAD 500 004 . 2. ACIT, CIRCLE 7(1), HYDERABAD . 3. ACIT, RANGE 7, HYDERABAD. 5 . CIT(A) - 3 , HYDERABAD. 6. PR.CIT - 3 , HYDERABAD 7 D.R. ITAT HYDERABAD 8 . GUARD FILE