THE ITO, Rajahmundry V. Danduboyina Ravi, Dowlaiswaram

ITA 194/VIZ/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6420 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 19-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R S NARAYAN
• Assessee Lawyers: N O N E
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Earning of tax free income; Source of fund
• Section: 69C; 143(3); 68

Judgement Text

ITA NO.194/VIZAG/2015 SRI DANDUBOYINA RAVI, DOWELESWARAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.194/VIZAG/2015 ( / ASSESSMENT YEAR: 2010-11) ITO, WARD - 1(1), RAJAHMUNDRY SRI DANDUBOYINA RAVI, DOWELESWARAM [PAN NO. AZ XPS3563L ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI S.R.S. NARAYAN, DR / RESPONDENT BY : N O N E / DATE OF HEARING : 21.03.2 017 / DATE OF PRONOUNCEMENT : 28.03.2017 / O R D E R PER SHRI MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST ORDER OF THE CIT(A), RAJAHMUNDRY DATED 11.3.2015 AND IT PERTAINS TO THE ASSESSMENT YEAR 2010-11. ITA NO.194/VIZAG/2015 SRI DANDUBOYINA RAVI, DOWELESWARAM 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 ON 6.10.2011 DECLARING TOTAL INCOME OF ` 5,61,913/- CONSISTING OF INCOME FROM NURSERIES, LANDSCAPING CONTRACT AND FROM HIRE OF VE HICLES. DURING THE ASSESSMENT PROCEEDINGS, THERE WAS NO RESPONSE FROM THE ASSESSEE TO THE VARIOUS NOTICES ISSUED BY THE A.O. THEREFORE, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT US/ 143(3) R.W.S 144A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') AND DET ERMINED TOTAL INCOME OF ` 1,03,12,508/-. THE ASSESSING OFFICER NOTED THAT T HE ASSESSEE HAS CLAIMED INCOME TO THE TUNE OF ` 7,76,409/- AS EXEMPT U/S 10(1) OF THE ACT. THE A.O. MADE CERTAIN ENQUIRIES AS TO THE CLA IM OF AGRICULTURAL INCOME AND NOTED THAT THE ASSESSEE HAS ENGAGED IN P URCHASE AND SALE OF PLANTS AND THEREFORE, TOOK A VIEW THAT THE SAID INCOME IS ASSESSABLE AS BUSINESS INCOME. THE A.O. FURTHER NOTED THAT TH E ASSESSEE HAS SHOWN GROSS RECEIPT FROM LANDSCAPING CONTRACT OF ` 1,27,84,405/- AND HIRE CHARGES OF ` 7,35,000/-. THE A.O. FURTHER NOTED THAT THE ASSES SEE HAD CLAIMED LABOUR CHARGES AT ` 52,47,180/- AND MATERIAL EXPENSES OF ` 66,47,375/-, HOWEVER, FAILED TO PROVE THE EXPENDITU RE WITH NECESSARY BILLS AND VOUCHERS AND ACCORDINGLY DISALLOWED AN AM OUNT OF 29,73,639/- AND ADDED TO THE TOTAL INCOME. THE ASSESSING OFFIC ER ALSO DISALLOWED EXPENDITURE CLAIMED TOWARDS CAR MAINTENANCE, SALARY AND MISCELLANEOUS ITA NO.194/VIZAG/2015 SRI DANDUBOYINA RAVI, DOWELESWARAM 3 EXPENSES TO THE TUNE OF ` 1,95,275/-. BESIDES, THE A.O. ALSO NOTED THAT THE ASSESSEE HAS MADE INVESTMENT IN IMMOVABLE PROPE RTIES TO THE TUNE OF ` 34,42,083/- AND THE SOURCES FOR INVESTMENT WAS NOT EXPLAINED. ACCORDINGLY, MADE ADDITIONS OF ` 34,42,083/- AND ADDED TO THE TOTAL INCOME. SIMILARLY, THE A.O. NOTED THAT THE ASSESSE E HAS MADE CASH DEPOSITS OF ` 18,04,900/- IN SAVINGS BANK ACCOUNT WITH ICICI BAN K AND AS THE SOURCE WERE NOT EXPLAINED, THE SAME WAS ADDE D TO THE TOTAL INCOME U/S 68 OF THE ACT. FURTHER, AN AMOUNT OF ` 6,69,909/- WAS ADDED U/S 69C OF THE ACT. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE NEITHER APPEARED NOR FURNISHED ANY DETAILS. THEREFORE, THE CIT(A) PROCEEDED TO DISPOSE OF THE APPEAL EX-PARTE IN THE ABSENCE OF AS SESSEE AND PARTLY ALLOWED APPEAL FILED BY THE ASSESSEE. THE CIT(A) U PHELD THE ADDITIONS MADE BY THE A.O. TOWARDS AGRICULTURAL INCOME OF ` 7,76,409/- CLAIMED AS EXEMPT U/S 10(1) OF THE ACT. IN SO FAR AS INCOME F ROM LANDSCAPING AND HIRING OF VEHICLES, INSTEAD OF DISALLOWANCE MADE BY THE A.O. TOWARDS CERTAIN EXPENSES, DIRECTED THE A.O. TO ESTIMATE INC OME AT 20% OF GROSS RECEIPTS OF ` 1,27,84,405/- IN THE CASE OF LANDSCAPING AND NET PR OFIT OF 5% IN THE CASE OF HIRE CHARGES OF ` 7,35,000/-. SIMILARLY, AS REGARDS ITA NO.194/VIZAG/2015 SRI DANDUBOYINA RAVI, DOWELESWARAM 4 ADDITIONS TOWARDS UNEXPLAINED INVESTMENT IN IMMOVAB LE PROPERTIES, THE CIT(A) DIRECTED THE A.O. TO DELETE THE ADDITIONS AS THE INCOME FROM THE BUSINESS HAS BEEN DETERMINED ON ESTIMATION BASIS. AS REGARDS ADDITIONS TOWARDS CASH DEPOSITS IN BANK ACCOUNT AND PAYMENT M ADE THROUGH CREDIT CARDS, THE CIT(A) OBSERVED THAT THE ASSESSIN G OFFICER HAS NOT MADE ANY ENQUIRY OF DEPOSITS IN THE ACCOUNTS AND AL SO THE POSSIBILITY OF RECEIPTS FROM THE BUSINESS ACTIVITIES REPRESENTING THE IMPUGNED DEPOSITS INTO THE BANK ACCOUNT. THE CIT(A) FURTHER OBSERVED THAT A BEST JUDGEMENT ASSESSMENT CANNOT BE A TOTAL GUESS WORK. IT HAS TO TAKE CONSIDERATION OF MATERIALS AVAILABLE ON RECORD. TH EREFORE, CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, DI RECTED THE A.O. TO DELETE ADDITIONS MADE TOWARDS UNEXPLAINED CREDITS I N BANK ACCOUNTS AND PAYMENTS MADE THROUGH CREDIT CARDS. AGGRIEVED BY T HE CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFORE US. 4. NONE APPEARED FOR THE ASSESSEE. WE HAVE HEARD LD . D.R. AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE A.O . HAS PASSED BEST JUDGEMENT ASSESSMENT AND MADE CERTAIN ADDITIONS TOW ARDS DISALLOWANCE OF EXPENDITURE, EXEMPT INCOME, ADDITIONS TOWARDS UN EXPLAINED INVESTMENT IN IMMOVABLE PROPERTIES AND ADDITIONS TO WARDS CASH DEPOSITS INTO SAVINGS BANK ACCOUNT AND PAYMENT MADE THROUGH CREDIT CARDS. THE ITA NO.194/VIZAG/2015 SRI DANDUBOYINA RAVI, DOWELESWARAM 5 CIT(A) DIRECTED THE A.O. TO ESTIMATE INCOME FROM LA NDSCAPING BUSINESS AND HIRE CHARGES INSTEAD OF DISALLOWING CERTAIN EXP ENDITURE ON ADHOC BASIS. THE CIT(A) HAS DIRECTED THE A.O. TO ESTIMA TE NET PROFIT OF 20% FROM LANDSCAPING BUSINESS AND 5% FROM VEHICLE HIRE BUSINESS. IN SO FAR AS OTHER ADDITIONS TOWARDS UNEXPLAINED INVESTMENT I N IMMOVABLE PROPERTIES AND UNEXPLAINED CREDITS IN SAVINGS BANK ACCOUNT AND EXPENDITURE INCURRED THROUGH CREDIT CARDS, THE CIT( A) OBSERVED THAT WHEN A BEST JUDGEMENT ASSESSMENT IS MADE THE A.O. C ANNOT MAKE ADDITIONS ON PURE GUESS WORK. THE A.O. HAS TO TAKE CONSIDERATION OF ALL THE MATERIALS AVAILABLE ON RECORD BEFORE MAKING ADD ITIONS. WE FIND THAT THE A.O. HAS MADE ADDITIONS ON ADHOC BASIS TOWARDS EXPENDITURE AND ALSO MADE ADDITIONS TOWARDS UNEXPLAINED INVESTMENT IN PROPERTIES WITHOUT ANY ENQUIRIES WITH REGARD TO THE SOURCES OF INCOME. THE A.O. ALSO FAILED TO APPLY HIS MIND BEFORE MAKING BEST JU DGEMENT ASSESSMENT TO MAKE ADDITIONS TOWARDS UNEXPLAINED INVESTMENT IN THE PROPERTIES, IGNORING THE FACT THAT THE ASSESSEE IS HAVING SOURC E OF INCOME IN THE FORM OF BUSINESS INCOME. THEREFORE, WE ARE OF THE VIEW THAT THE CIT(A) IS RIGHT IN DIRECTING THE A.O. TO ESTIMATE INCOME F ROM BUSINESS AND DELETION OF ADDITIONS MADE TOWARDS UNEXPLAINED INVE STMENT IN PROPERTIES AND CREDITS FOUND IN BANK ACCOUNT. WE DO NOT FIND ANY INFIRMITY IN THE ITA NO.194/VIZAG/2015 SRI DANDUBOYINA RAVI, DOWELESWARAM 6 ORDER OF THE CIT(A), HENCE, WE INCLINED TO UPHOLD C IT(A) ORDER AND DISMISS THE APPEAL FILED BY THE REVENUE. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28 TH MAR17. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 28.03.2017 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO, WARD-1(1), RAJAHMUNDRY 2. / THE RESPONDENT SRI DANDUBOYINA RAVI, 18-215/9, HIMAGIRI NURSERIES, DOWELESWARAM, E.G. DISTRICT. 3. + / THE CIT, RAJAHMUNDRY 4. + ( ) / THE CIT (A), RAJAHMUNDRY 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM