Younus Mohd, Secunderabad V. Income Tax Officer, Ward-6(3), Hyderabad

ITA 1660/HYD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69754 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 07-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T H VIJAY LAKSHMI
• Assessee Lawyers: P PRASAD
• Keywords: Rejection of books of accounts; Gift; Depreciation; Additional evidence
• Section: 69C; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.1660/HYD/2012 ASSESSMENT YEAR 2009-10. SRI YOUNUS MOHD. -V- INCOME- TAX OFFICER, LTD., SECUNDERABAD. WARD-6(3), HYDERABAD. PAN: AEFPM7545D (APPELLANT) (RESPONDENT) APPELLANT BY SHRI P. PRASAD RESPONDENT BY SHRI T.H.VIJAY LAKSHMI DATE OF HEARING 20-08-2013 DATE OF PRONOUNCEMENT 20-08-2013 ORDER PER SAKTIJIT DEY, J.M: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER DATED 31-8-2012 OF CIT (A)-IV, HYDERABAD PASS ED IN ITA NO.603/ITO-6(3)/CIT(A)-IV/2011-12 PERTAINING TO ASS ESSMENT YEAR 2009-10. 2. GROUND NOS. 1 AND 4 ARE GENERAL IN NATURE AND HE NCE NO ADJUDICATION IS REQUIRED. 3. IN GROUND NO.2, THE ASSESSEE HAS CHALLENGED THE ADDITION OF AN AMOUNT OF RS.10 LAKHS AS UNEXPLAINED INCOME. 4. BRIEFLY THE FACTS RELATING TO THE ISSUE IN DISP UTE ARE THE ASSESSEE IS AN INDIVIDUAL. FOR THE IMPUGNED ASSESS MENT YEAR, THE 2 ITA NO.1660 OF 2012 YOUNUS MOHD., HYD. ASSESSEE FILED ITS RETURN OF INCOME ON 15-2-2010 DE CLARING A TOTAL INCOME OF RS.7,18,100/- BESIDES AGRICULTURAL INCOME OF RS.1,20,000/-. THE ASSESSEES CASE WAS SELECTED FO R SCRUTINY ASSESSMENT. IN COURSE OF ASSESSMENT PROCEEDINGS, T HOUGH THE ASSESSING OFFICER ISSUED NOTICES U/S 143(2) AND 142 (1) OF THE ACT CALLING UPON THE ASSESSEE TO PRODUCE HIS BOOKS OF A CCOUNTS AND TO FURNISH OTHER INFORMATION AS CALLED FOR, THE ASS ESSEE DID NOT PRODUCE THE SAME IN SPITE OF AVAILING A NUMBER OF O PPORTUNITIES. AS THE ASSESSMENT WAS GETTING TIME BARRED, THE ASSE SSING OFFICER THEREFORE PROCEEDED TO COMPLETE THE ASSESSMENT ON T HE BASIS OF INFORMATION AVAILABLE ON RECORD. THE ASSESSING OFF ICER WHILE EXAMINING THE BALANCE-SHEET FILED BY THE ASSESSEE A LONG WITH RETURN OF INCOME NOTICED THAT THE ASSESSEE HAS CRED ITED AN AMOUNT OF RS. 10 LAKHS TO HIS CAPITAL ACCOUNT SHOWI NG IT AS CASH FROM SALE OF AGRICULTURAL LAND. WHEN THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO FURNISH THE DETAILS AND EVIDEN CES IN RESPECT OF LAND HOLDING AND SALE PROCEEDS, THE ASSESSEE IN LETTER DATED 13-2-2011 SUBMITTED THAT HE HELD 15 ACRES OF AGRICU LTURAL LAND JOINTLY WITH HIS BROTHER AND HIS BROTHER HAD PAID R S. 10 LAKH TOWARDS CONSIDERATION FOR HAVING RELINQUISHED HIS S HARE IN THE LAND TO HIS BROTHER. SINCE THE ASSESSEE DID NOT FI LE ANY EVIDENCE OR DETAILS IN RESPECT OF THE LAND HOLDINGS OR ANY C ONFIRMATION FROM HIS BROTHER TO SUBSTANTIATE SUCH CLAIM, THE ASSESSI NG OFFICER TREATED THE AMOUNT OF RS.10 LAKH AS UNEXPLAINED INC OME OF THE ASSESSEE AND ADDED IT TO THE TOTAL INCOME OF THE AS SESSEE. THE ASSESSEE BEING AGGRIEVED OF SUCH ADDITION PREFERRED AN APPEAL BEFORE THE CIT (A). 5. ON APPEAL, THE CIT (A) ALSO SUSTAINED THE ADDITI ON BY OBSERVING AS UNDER:- 3 ITA NO.1660 OF 2012 YOUNUS MOHD., HYD. I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE APPELLANT. IT IS SEEN THAT THE AMOUNT OF RS.10,00,000/- HAD BEEN SHOWN AS RECEIVED IN CASH. THE APPELLANT HAD HIMSELF ADMITTED IN HIS CAPITAL ACCO UNT THAT THIS WAS THE CASH RECEIVED FROM SALE OF AGRICULTUR AL LAND. SUBSEQUENTLY, IT WAS CLAIMED THAT THE AMOUNT WAS RE CEIVED FROM HIS BROTHER ONLY FOR RELINQUISHING HIS SHARE IN THE LAND IN FAVOUR OF HIS BROTHER, THE APPELLANT, AT NO STAGE, COULD FILE ANY EVIDENCE REGARDING SUCH SALE IT C OULD NOT BE PROVED THAT THE LAND WAS REGISTERED BY HIM IN FA VOUR OF HIS BROTHER AT THAT TIME OR EVEN LATER. NOR COULD THE APPELLANT EXPLAIN THE SOURCES OF THE AMOUNT OF RS.10,00,000/- CONTENTEDLY INVESTED BY HIS BROTHER FOR HIS CREDITWORTHINESS BY FURNISHING HIS INCOME TAX PARTI CULARS ETC. THE MODE OF KEEPING OF THE AMOUNT OF RS.10,00 ,000/- IN CASH BY HIM WAS ALSO NOT EXPLAINED. UNDER THE CIRCUMSTANCES, IT IS CLEAR THAT THE CONTENTION OF T HE APPELLANT IS NOT BACKED BY ANY EVIDENCE AND EVEN TH E SO CALLED AFFIDAVIT FROM HIS BROTHER WAS ONLY A SELF S ERVING ONE. FINDING NO INFIRMITY IN THE ACTION OF THE ASS ESSING OFFICER, THEREFORE, THE ADDITION OF RS.10,00,000/- IS UPHELD AND GROUND NO.2 IS DECIDED AGAINST THE APPELLANT. 6. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE AS SESSEE REITERATING THE STAND TAKEN BEFORE THE FIRST APPELL ATE AUTHORITY SUBMITTED BEFORE US THAT THE ASSESSEE HAD RELINQUIS HED HIS RIGHTS OVER THE AGRICULTURAL LAND IN FAVOUR OF HIS BROTHER AND IN RETURN OF WHICH HE RECEIVED AN AMOUNT OF RS.10 LAKH FROM HIS BROTHER MOHD. ISAQ ALI. IN SUPPORT OF SUCH CONTENTION, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE HAD SUBM ITTED AN AFFIDAVIT AND MEMORANDUM OF FAMILY SETTLEMENT CLAI MED TO HAVE BEEN MADE BY THE ASSESSEES FATHER DURING HIS LIFE TIME AT THE 4 ITA NO.1660 OF 2012 YOUNUS MOHD., HYD. TIME HIS DEATH AND SOME OTHER DOCUMENT ALONG WITH A PETITION FOR ADMITTING THEM AS ADDITIONAL EVIDENCES. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY SUPPORTING THE ORDERS OF THE REVENUE AUTHORITIES SUBMITTED THAT THE ASSESSEE HAVING FAILED TO PROVE OWNERSHIP RIGHTS OVER THE PROPERTY OR RELINQUISHMENT IN FAVOU R OF HIS BROTHER, THE CLAIM OF THE ASSESSEE CANNOT BE ACCEPT ED. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIAL ON RECORD. ON PERUSAL OF THE O RDER OF THE REVENUE AUTHORITIES, IT IS VERY MUCH CLEAR THAT THE ASSESSEE HAS NOT SUBMITTED ANY DETAILS OR EVIDENCES TO SUBSTANTI ATE ITS CLAIM OF OWNERSHIP OVER THE AGRICULTURAL LAND AND SUBSEQUENT RELINQUISHMENT OF HIS RIGHT OVER THE SAID AGRICULTU RAL LAND IN FAVOUR OF HIS BROTHER FOR CONSIDERATION OF RS. 10 L AKH. NO EVIDENCE WORTH ITS NAME HAS ALSO BEEN PRODUCED BEFO RE US BY THE ASSESSEE TO DEMONSTRATE THAT THE ASSESSEE HAD THE O WNERSHIP ON THE SO-CALLED AGRICULTURAL LAND, THE RIGHT OF WHICH WAS STATED TO HAVE BEEN RELINQUISHED BY HIM IN FAVOUR OF HIS BROT HER FOR CONSIDERATION OF RS.10 LAKHS. WHEN THE ASSESSEE HAS FAILED TO PROVE HIS OWNERSHIP OVER THE AGRICULTURAL LAND IN Q UESTION, HE CERTAINLY COULD NOT HAVE RELINQUISHED HIS RIGHTS OV ER THE SAID PROPERTY IN FAVOUR OF HIS BROTHER FOR A CONSIDERATI ON OF RS.10 LAKH WHEN THE OWNERSHIP OF THE SAID PROPERTY WAS NOT VES TED WITH HIM. THAT APART THE SO CALLED RELINQUISHMENT OF RIGHT HA S NOT BEEN EVIDENCED BY ANY REGISTERED DOCUMENT. TO SUBSTANTIA TE HIS CLAIM, THE ASSESSEE HAS ONLY RELIED UPON THE AFFIDAVIT FI LED BY HIM AND OF HIS BROTHER AND SO CALLED DEED OF GIFT EXECUTED STATED TO HAVE BEEN BY HIS FATHER DURING HIS LIFE TIME. 9. HOWEVER, IN THE ABSENCE OF ANY REGISTERED DOCU MENT OR CONTEMPORANEOUS EVIDENCE TO ESTABLISH EITHER THE O WNERSHIP OF 5 ITA NO.1660 OF 2012 YOUNUS MOHD., HYD. THE ASSESSEE OVER THE AGRICULTURAL LAND OR SUBSEQUE NT RELINQUISHMENT OF RIGHT THE SO CALLED EVIDENCES SUB MITTED BY THE ASSESSEE IN THE FORM OF AFFIDAVITS ARE ONLY SELF S ERVING DOCUMENTS AND DO NOT IN ANY MANNER ESTABLISH OWNERSHIP RIGHT OF THE ASSESSEE OVER THE AGRICULTURAL LAND. WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE REVENUE AUTHORITIES I N TREATING THE AMOUNT OF RS.10 LAKH AS UNEXPLAINED INCOME OF THE A SSESSEE IN THE PARTICULAR CIRCUMSTANCES OF THE CASE. SO FAR A S ALTERNATIVE CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE THAT WHILE ESTIMATING THE PROFIT AFTER REJ ECTION OF BOOKS OF ACCOUNTS, NO SEPARATE ADDITION CAN BE MADE, WE H OLD THAT SUCH CONTENTION IS NOT ACCEPTABLE. EVEN WHEN THE BOOKS OF ACCOUNTS ARE REJECTED AND PROFIT IS ESTIMATED ADDITIONS U/S 68 OR SIMILAR OTHER PROVISIONS AS CONTAINED IN SECTIONS 69 TO 69C CAN BE MADE. IN THIS CONTEXT, WE RELY UPON THE DECISION OF THE C O-ORDINATE BENCH IN CASE OF ACIT VS. MIR MAZKARUDDIN (22 ITR ( TRIB) 314 WHEREIN THE CO-ORDINATE BENCH OF THIS TRIBUNAL AFTE R FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN CIT V S. MADURI RAJAIAH GARI KISTAIAH (120 ITR 294) AND THE DECISION OF HON BLE SUPREME COURT IN CIT VS. DEVI PRASAD VISWANATH (72 ITR 194) HELD THAT ADDITIONS U/S 68 CAN BE MADE IN A CASE WHERE BOOKS OF ACCOUNTS WERE REJECTED AND PROFIT HAS BEEN ESTIMATED. IN AFO RESAID VIEW OF THE MATTER, WE UPHOLD THE ORDER OF THE CIT (A) ON T HIS ISSUE AND DISMISS THE GROUND RAISED BY THE ASSESSEE. 10. IN GROUND NO.3, THE ASSESSEE HAS CHALLENGED THE ESTIMATION OF INCOME AND REJECTION OF CLAIM OF DEPRECIATION. 11. BRIEFLY THE FACTS ARE, DURING THE ASSESSMENT PR OCEEDINGS, THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS AND OTHE R RELEVANT INFORMATION AS WERE CALLED FOR BY THE ASSESSING OFF ICER. THE ASSESSING OFFICER THEREFORE PROCEEDED TO ESTIMATE THE PROFIT ON 6 ITA NO.1660 OF 2012 YOUNUS MOHD., HYD. THE BASIS OF MATERIALS AVAILABLE ON RECORD AFTER RE JECTING THE BOOKS OF ACCOUNTS. ON EXAMINING THE AUDIT REPORT AN D TRADING ACCOUNT, THE ASSESSING OFFICER NOTICED THAT DURING THE YEAR UNDER DISPUTE, THE ASSESSEE HAD CARRIED OUT THE BUSINESS OF TRANSPORT, JOB WORKS AND ALSO TRADING IN BLASTING MATERIALS AN D AMMONIUM NITRATE. HE THEREFORE PROCEEDED TO ESTIMATE THE PR OFIT IN RESPECT OF THE AFORESAID BUSINESS ACTIVITIES AS UNDER:- BHARAT ENTERPRISES PATEL MINING SERVICES TOTAL % OF ESTIMATION PROFIT SALES 3,89,050 24,13,0875 2,45,19,925 5% 12,25,996 MINING CHARGES 1,24,65,900 1,52,60,300 2,77,26,200 6% 16,63,572 JOB WORK 22,69,100 1,25,02,600 1,47,71,700 10% 14,77,170 TOTAL PROFIT 43,66,738 THE ASSESSEE BEING AGGRIEVED OF SUCH ESTIMATION OF INCOME PREFERRED AN APPEAL BEFORE THE CIT (A). 12. IN COURSE OF HEARING OF APPEAL, IT WAS CONTEND ED BY THE ASSESSES THAT THE ASSESSING OFFICER MADE AN UNREAS ONABLY HIGH ESTIMATION OF INCOME AND HE AVERRED THAT THE ASSESS EE COULD NOT FURNISH THE REQUIRED INFORMATION AS HIS RECORDS, VO UCHERS ETC., HAD BEEN KEPT AT VARIOUS SITES AND COULD NOT BE MOB ILISED WITHIN A SHORT TIME. IT WAS SUBMITTED THAT THE ASSESSING OFF ICER HAD ESTIMATED THE INCOME IN ARBITRARY MANNER BY ADOPTIN G UNREASONABLY HIGH PERCENTAGE COMPARED TO THE PROBAB LE INCOME IN THE ASSESSEES LINE OF BUSINESS WHICH IS VERY LO W DUE TO HIGH COMPETITION AND LOW DEMAND FOR CONTRACT WORKS. THE CIT (A) HOWEVER REJECTED SUCH CONTENTION OF THE ASSESSEE AN D UPHELD THE REJECTION OF BOOKS OF ACCOUNTS AND ESTIMATION OF PR OFIT MADE BY THE ASSESSING OFFICER. HOWEVER, SO FAR AS JOB WORK IS CONCERNED, THE CIT (A) FOLLOWING THE DECISION OF INCOME-TAX AP PELLATE 7 ITA NO.1660 OF 2012 YOUNUS MOHD., HYD. TRIBUNALS INDORE BENCH IN CASE OF M/S. ARIHANT BU ILDERS, DEVELOPERS & INVESTORS PVT. LTD. VS. ACIT (106 ITD 10) DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE PROFIT AT THE RATE OF 8% INSTEAD OF 10%. THE CIT (A) HOWEVER FURTHER HELD T HAT IN VIEW OF THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COUR T IN CASE OF M/S INDWELL CONSTRUCTIONS (232 ITR 776), NO FURTHER DEDUCTIONS/DISALLOWANCE SHALL BE MADE AFTER ESTIMAT ING THE PROFIT AT 8%. 13. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE A SSESSEE HAS FILED AFFIDAVIT OF THE ASSESSEE BEFORE US STATING T HE REASONS FOR NOT BEING ABLE TO SUBMIT THE BOOKS OF ACCOUNTS AND OTHER INFORMATION CALLED FOR BY THE ASSESSING OFFICER. I T HAS BEEN STATED IN THE SAID AFFIDAVIT THAT AS THE ASSESSEE S FATHER WAS NOT WELL FOR QUITE SOME TIME AND THE ASSESSEE WAS ATTEN DING HIM, HE WAS NOT ABLE TO PRODUCE BOOKS OF ACCOUNTS AND OTHER INFORMATION AS CALLED FOR. IT WAS SUBMITTED BY THE LEARNED AUT HORISED REPRESENTATIVE FOR THE ASSESSEE THAT GIVEN AN OPPO RTUNITY, THE ASSESSEE WILL SUBMIT HIS BOOKS OF ACCOUNTS AND OTH ER INFORMATION CALLED FOR BY THE ASSESSING OFFICER AND IF THE ASS ESEE WOULD BE ABLE TO SATISFY THE ASSESSING OFFICER WITH REGARD TO THE CORRECTNESS OF THE BOOKS OF ACCOUNTS THEN IN SUCH E VENTUALITY ESTIMATION OF INCOME MAY NOT BE NECESSARY. 14. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY SUPPORTING THE ORDER OF THE CIT (A) SUBMITTED THAT IN SPITE OF AVAILING SEVERAL OPPORTUNITIES, THE AS SESSEE DID NOT PRODUCE EITHER BOOKS OF ACCOUNTS OR ANY OTHER EVIDE NCES, THE ESTIMATION OF PROFIT WAS PROPER. IT WAS FURTHER SU BMITTED THAT ONCE THE PROFIT IS ESTIMATED BY REJECTING THE BOOKS OF ACCOUNTS, NO FURTHER DEDUCTIONS TOWARDS DEPRECIATION CAN BE A LLOWED IN VIEW 8 ITA NO.1660 OF 2012 YOUNUS MOHD., HYD. OF THE DECISION OF THE HONBLE AP HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS (SUPRA). 15. WE HAVE CONSIDERED SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IT IS A FACT ON RECORD THA T THE ASSESSEE IN SPITE OF SUFFICIENT OPPORTUNITY BEING GRANTED NEIT HER PRODUCED THE BOOKS OF ACCOUNTS NOR THE INFORMATION CALLED FOR BY THE ASSESSING OFFICER WHICH COMPELLED THE ASSESSING OFFICER TO RE SORT TO ESTIMATION OF PROFIT BY ADOPTING DIFFERENT RATES AS MENTIONED IN THE ASSESSMENT ORDER. THEREFORE, IN OUR VIEW, THE ASSESSING OFFICER CANNOT BE BLAMED FOR HAVING INVOKED THE PR OVISIONS OF SECTION 145(3) AND ESTIMATING THE PROFIT. HOWEVER, ON PERUSAL OF THE DOCUMENTS PRODUCED BEFORE US, IT IS SEEN THAT D URING THE YEAR UNDER DISPUTE THE ASSESSEES ACCOUNTS WERE AUDITED AND AUDIT REPORT BY THE AUDITOR IN PRESCRIBED FORM HAS BEEN S UBMITTED ALONG WITH RETURN. THIS FACT INDICATES THAT THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNTS. THEREFORE, CONSIDERING THE REASO NS SHOWN FOR NOT PRODUCING THE BOOKS OF ACCOUNTS BEFORE THE ASSE SSING OFFICER, WE ARE INCLINED TO GRANT ONE MORE OPPORTUNITY TO TH E ASSESSEE TO PRODUCE ITS BOOKS OF ACCOUNTS AND OTHER INFORMATIO N CALLED FOR BY THE ASSESSING OFFICER BY REMITTING THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. WE FURTHER MAKE IT CLEAR TH AT IT IS OPEN FOR THE ASSESSING OFFICER TO CALL UPON THE ASSESSEE TO FURNISH SUCH OTHER INFORMATION AND DETAILS AS MAY BE REQUIRED TO PROVE THE ENTRIES MADE IN THE BOOKS OF ACCOUNTS. IF UPON EXA MINATION OF BOOKS OF ACCOUNTS AND OTHER INFORMATION CALLED UPON , THE ASSESSING OFFICER IS NOT SATISFIED WITH THE GENUINE NESS OF THE BOOKS OF ACCOUNTS OR IN THE EVENT THE ASSESSEE FAIL S TO PRODUCE THE BOOKS OF ACCOUNTS AND OTHER INFORMATION AND DET AILS CALLED FOR THEN THE ASSESSING OFFICER WILL BE AT LIBERTY TO TA KE HIS OWN DECISION IN THE MATTER ON THE BASIS OF THE MATERIAL S AVAILABLE ON 9 ITA NO.1660 OF 2012 YOUNUS MOHD., HYD. RECORD AND IN ACCORDANCE WITH LAW. THE ASSESSING O FFICER OF COURSE SHALL AFFORD A REASONABLE OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. 16. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 20-8-2013. SD/- ( CHANDRA POOJARI) ACCOUNTANT MEMBER SD/- (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 20 TH AUGUST, 2013 COPY TO:- 1) M/S. SHARMA & SASTRY, CAS, JEERA, M.G. ROAD, SECUNDERABAD. 2) ITO, WARD-6(3), IT TOWERS, HYDERABAD. 3) CIT (A)IV, HYDERABAD. 4) CIT CONCERNED, HYDERABAD. 5.THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERA BAD. JMR* 10 ITA NO.1660 OF 2012 YOUNUS MOHD., HYD. *