Maragoni Satyanarayana Goud , Hyderabad V. Income Tax Officer, Ward-9(1), Hyderabad

ITA 1616/Hyd/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0770 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 04-07-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 01-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KOMALI KRISHNA
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Unexplained expenditure; Additional evidence
• Section: 69C; 143(3); 143(1)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.1616/HYD/2018 ASSESSMENT YEAR: 2014 - 15 SRI MARAGONI SATYANARAYANA GOUD, HYDERABAD. PAN: APPPM 4729 J VS. ITO, WARD - 9(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI P. MURALI MOHAN RAO REVENUE BY: SMT. KOMALI KRISHNA, DR DATE OF HEARING: 04/07/2019 DATE OF PRONOUNCEMENT: 21 /0 8 /2019 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) - 7, HYDERABAD DATED 05/07/2018 IN APPEAL NO. 0251/CIT(A)/ - 7/2017 - 18 PASSED U/S. 143(3) R.W.S 250(6) OF THE ACT FOR THE ASSESSMENT YEAR 2014 - 15. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL HOWEVER THE CRUXES OF THE ISSUES ARE THAT: - (I) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD ESTIMATED THE INCOME OF THE ASSESSEE @ 5% ON SALE OF 2 GOLD AMOUNTING TO RS. 29, 87,305/ - WHICH WAS PURCHASED FROM M/S. MANAPPURAM FINANCE LIMITED IN PUBLIC AUCTION. (II) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD MADE ADDITION OF RS. 1,28,17,370/ - TOWARDS UNEXPLAINED EXPENDITURE U/S. 69C OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM BUSINESS FILED HIS RETURN OF INCOME FOR THE AY 2014 - 15 ON 9/1/2015 DECLARING HIS INCOME AT RS. 5,12,870/ - . INITIALLY, THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT AND THEREAFTER THE CASE WAS TAKEN UP FOR SCRUTINY WHEREIN THE LD. AO MADE ADDITION OF RS. 29,87,305/ - BY ESTIMATING T HE PROFIT OF THE ASSESSEE @ 5% ON THE TURNOVER WITH RESPECT TO TRA DING IN GOLD AND FURTHER MADE ADDITION OF RS. 1,28,17,370/ - TOWARDS UNEXPLAINED SOURCE FOR THE PURCHASE OF GOLD BASED ON PEAK PAYMENT. 4. THE ASSESSEE HAD DECLARED HIS TURNOVER IN HIS RETUR N OF INCOME A S RS. 60,34,420/ - AND INCOME FROM HIS BUSINESS RS. 5,12,870/ - AND HAD ALSO CLAIMED CREDIT FOR TCS OF RS. 6,03,442/ - BEING THE AMOUNT COLLECTED FROM HIM BY M/S. MANAPPURAM FINANCE LIMITED TOWARDS THE TOTAL PAYMENT RECEIVED FROM HIM OF RS. 5,97, 46,091/ - FOR THE PURCHASE OF GOLD IN THE PUBLIC AUCTION . ON QUERY, THE ASSESSEE HAD EXPLAINED THAT HE WAS IN THE BUSINESS OF RUNNING TIFFIN CENTRE AND ALSO TRADING IN GOLD PURCHASED FROM M/S. MANAPPURAM FINANCE LIMITED IN PUBLIC AUCTION. 3 IT WAS FURTHER S UBMITTED THAT THE MARGIN EARNED BY THE ASSESSEE WITH RESPECT TO THE PURCHASE OF GOLD FROM M/S. MANAPPURAM FINANCE LIMITED IN THE PUBLIC AUCTION AND THE SALE OF THE SAME WAS ONLY 0.5% ON THE TURNOVER. ON FURTHER EXAMINING THE ISSUE, IT WAS REVEALED THAT THE ASSESSEE HAD NOT MAINTAINED PROPER RECORDS FOR THE PURCHASE AND SALE OF GOLD. THE ASSESSES CONTENTION WAS THAT , HE PARTICIPATE D IN THE PUBLIC AUCTION AND PURCHASE GOLD WITH HIS OWN CAPITAL OF APP ROXIMATELY RS. 25,27,268/ - ALONG WITH THE CASH RECEIVED FROM VARIOUS OTHER PERSONS WHO COULD NOT PARTICIPATE IN THE AUCTION , AND FROM THE SALE / TRANSFER OF THE GOLD PURCHASED IN THE AUCTION EARN ED A BARE MARGIN OF 0.5% ON THE TURNOVER. THE ASSESSEE HAD A LSO STATED THAT HE DOES NOT REMEMBER THE NAMES AND ADDRESS OF THE PERSONS FROM WHOM HE HAD RECEIVED THE ADVANCES BECAUSE THE ADVANCES WERE RECEIVED AT THE AUCTION SITE AND THE TRANSACTIONS WERE COMPLETED THEN AND THERE BY HANDING OVER THE GOLD PURCHASED. I T WAS FURTHER LEARNED FROM M/S. MANAPPURAM FINANCE LIMITED THAT IN THE CASE OF THE ASSESSEE THE ENTIRE BID AMOUNT WAS PAID IN ONE LUMP SUM ON THE DATE OF THE AUCTION ITSELF. 5. FROM THE ABOVE INFORMATION GATHERED, THE LD . AO OPINED THAT THE MARGIN OF PR OFIT OF 0.5% STATED TO HAVE BEEN EARNED BY THE ASSESSEE IS TOO LOW AND HENCE ESTIMATED THE PROFIT @ 5% OF THE TURNOVER AMOUNTING TO RS. 29,87,305/ - AND ADDED TO THE INCOME OF THE ASSESSEE SINCE THE ASSESSEE COULD NOT PROVIDE ANY EVIDENCE TO PROVE HIS STAND . FURTHER, 4 THE LD. AO WORKED OUT THE PEAK PAYMENT FOR PURCHASE OF GOLD AT RS. 1,28,17,370/ - AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE AS THE ASSESSEE COULD NOT EXPLAIN THE SOURCE FOR THE PURCHASE OF GOLD. 6. WHEN THE MATTER TRAVELLED BEFORE THE LD. CIT (A), THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. AO BY AGREEING WITH HIS VIEW. 7. BEFORE US, THE LD. AR FOR THE FIRST TIME SUBMITTED A PAPER BOOK CONTAINING 1 TO 1 55 PAGES BEING THE CONFIRMATION LETTER S ALONG WITH PAN NO., RECEIVED FROM VA RIOUS PARTIES STATING THAT THEY HAD ADVANCED CERTAIN AMOUNT TO THE ASSESSE E. THE LD. AR THEREAFTER VEHEMENTLY ARGUED STATING THAT THE LD. AO AS WELL AS THE LD. CIT (A) HAS HASTILY COME TO THE DECISION DISBELIEVING THE EXPLANATION OFFERED BY THE ASSESSEE WI TH RESPECT TO THE SOURCE FOR THE PURCHASE OF GOLD . THE LD . AR FURTHER PLEADED THAT SINCE THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE BEFORE THE BENCH THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE AO FOR FRESH CONSIDERATION. THE LD . DR ON THE OTHER HAN D PLEADED FOR CONFIRMING THE ORDERS OF THE LD. REVENUE AUTHORITIES. 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE, IT IS APPARENT THAT THE ASSESSEE HAS SUBMITTED BEFORE THE LD. AO (Q. NO. 17, PAGE 5 OF THE ASSESSMENT ORDER) THAT THE ASSESSEE DID NOT REMEMBER THE NAMES AND ADDRESS OF THE PERSONS FROM WHOM HE HAS RECEIVED THE ADVANCES AT THE 5 TIME OF THE AUCTION. IT IS ALSO ACCEPTED BY THE ASSESSEE THAT THE TRANSACTIONS WERE COMPLETED ON T HE AUCTION SPOT AS THE GOLD WAS HANDED OVER TO THE PERSONS WHO HAD PAID ADVANCE TO THE ASSESSEE. IN THIS SITUATION WE WONDER AS TO HOW THE ASSESSEE HAS NOW REMEMBERED THE NAMES AND ADDRESS OF ALL THE INDIVIDUALS WITH WHOM HE HAD BUSINESS TRANSACTIONS AND WAS SUCCESSFUL IN OBTAINING THE CONFIRMATION LETTERS FROM THE VARIOUS PARTIES FROM WHOM HE HAS PURPORTED TO HAVE RECEIVED ADVANCES FOR PURCHASE OF GOLD. HOWEVER CONSIDERING THE PRAYER OF THE ASSESSEE/LD. AR , IN THE INTEREST OF JUSTICE WE HEREBY REMIT THE ENTIRE MATTER BACK TO THE FILE OF THE LD. AO FOR FRESH CONSIDERATION AS THE ASSESSEE HAS FURNISHED ADDITIONAL EVIDENCE ( FOR ESTABLISHING HIS SOURCE FOR PURCHASE OF GOLD WHICH MAY ALSO EXPLAIN THE MARGIN OF PROFIT EARNED ) BEFORE THE BENCH AT THE TIME OF HE ARING THOUGH SUCH EXERCISE ADOPTED BY THE ASSESSEE IS NOT APPRECIABLE . 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 21 ST AUGUST , 2019. SD/ - SD/ - (P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 21 ST AUGUST , 2019 OKK COPY TO: - 6 1) SRI MARAGONI SATYANARAYANA GOUD, C/O. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD. 2) ITO, WARD - 9(1), HYDERABAD. 3) THE CIT(A) - 7, HYDERABAD 4) THE PR. CIT - 7, HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE