Lahari Chethireddy, Secunderabad V. Income Tax Officer, Ward-15(1), Hyderabad

ITA 2209/Hyd/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8231 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 12-07-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 22-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V APARNA
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Additional evidence; Assessment record; TDS; Set aside
• Section: 142(1); 144

Judgement Text

IN T HE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 2209 /HYD/201 7 ASSESSMENT YEAR: 20 1 4 - 15 LAHARI CHETHIREDDY, SECUNDERABAD. PAN ANBPC 2963 Q VS. INCOME - TAX OFFICER, WARD 15 ( 1 ) , HYDERABAD. ( APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI K. A. SAI PRASAD REVENUE BY : S MT. V. APARNA DATE OF HEARING : 1 2 / 0 7 /201 9 DATE OF PRONOUNCEMENT : 17 / 0 7 / 201 9 O R D E R PER S . RIFAUR RAHMAN , A .M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) 7, HYDERABAD, DATED 01/09/2017 FOR AY 2014 - 15. 2. BRIEFLY THE FACTS OF THE CASE ARE, ASSESSEE DERIVING INCOME FROM RETAIL BUSINESS, FILED H ER RETURN OF INCOME ON 13/08/2015 ADMITTING TOTAL INCOME OF RS. 2,27,959/ - AFTER CLAIMING DEDUCTION UNDER CHAPTER VIA OF THE INCOME - TAX ACT, 1961 ( IN SHORT THE ACT). SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY, NOTICE U/S 143(2) OF THE AC T WAS ISSUED AND SERVED ON THE ASSESSEE. SUBSEQUENTLY, NOTICE U/S 142(1) WAS ALSO ISSUED AND SERVED ON THE ASSESSEE. SINCE THERE WAS NO RESPONSE FROM THE ASSESSEE TO THE SAID NOTICES, FINAL NOTICE U/S 142(1) OF THE ACT WAS ISSUED CALLING FOR INFORMATION AN D PROPOSED TO MAKE ADDITION BASED ON THE DEPOSITS IN THE BANK AS WELL AS BASED ON THE PROFIT DECLARED IN HER RETURN OF INCOME AND AGAINST THIS NOTICE ALSO, THERE WAS NO RESPONSE FROM THE ASSESSEE. THUS, THE AO COMPLETED THE ASSESSMENT U/S 144 OF THE ACT. 2 ITA NO. 2209 /HYD/1 7 LAHARI CHETHIREDDY, SECBAD. 3 . AGGRIEVED WITH THE ABOVE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND FILED THE FOLLOWING WRITTEN SUBMISSION BEFORE THE CIT(A), WHICH ARE REPRODUCED BELOW: 'THE APPELLANT, IN INDIVIDUAL, ALREADY RUNNING CONSULTANCY BUSINESS RELATE D TO RENTAL AGENT, REAL ESTATE AGENT AND OTHER ONLINE SERVICES LIKE ONLINE PAYMENTS ETC ., DURING THE YEAR SHE OBTAINED LICENSE FROM M/S. O XY GEN SERVICES INDIA PVT. LTD AS A MONEY TRANSFER AGENT OF M/S. O XY GEN SERVICES INDIA PVT. LTD. THE APPELLANT COLLECTS CASH FROM VARIOUS RETAILERS (NORMALLY SHOPS) OF THE AREA ALLOTTED TO HER AND DEPOSITS SUCH CASH IN HER BANK ACCOUNT AND SUBSEQUENTLY TRANSFERS TO T - T/S. OX Y GEN SERVICES INDIA PVT LTD. THE APPELLANT GETS COMMISSION ON TRANSFERS MADE TO M/S . O XY GEN SERVICES INDIA PVT. LTD, APART FROM COMMISSION ON OTHER BUSINESS ACTIVITY. THE DEPOSITS IN THE BANK ARE NOTHING BUT COLLECTIONS MADE ON BEHALF OF M/S. O XY GEN SERVICES INDIA PVT. LTD. THE APPELLANT FILED HER RETURN OF INCOME ADMITTING A TOTAL INCOME OF RS.3,27,9 50 WHICH INCLUDES COMMISSION INCOME FROM M/S.OX Y GEN SERVICES INDIA PVT. LTD OF RS. '14,236 AND ON TDS WAS DEDUCTED BY THE COMPANY . DURING THE YEAR UNDER CONSIDERATION THE APPELLANT RE C EIVED COMMISSION OF RS. 14,236/ - FROM M/ S. OX Y GEN SERVICES PVT. LTD AND THE COMMISSION FOR THE TRANSACTION IS 0.4% ON TOTAL BUSINESS MADE ON BEHALF OF M/S . OX Y GEN SERVICES INDIA PVT LTD. SINCE HUSBAND IS ALSO AN AGENT OF M/S. O XY GEN SERVICES PVT LTD BUSINESS AND BALANCE DEPOSITS ARE RELATED TO HER HUSBAND AND HE IS FILING RETURN OF INCOME REGULARLY. MOREOVER IT'S A JOINT ACCOUNT OF APPEL L ANT AND HER SPOUSE AND INTERNAL TRANSFERS ARE MADE BETWEEN THEM. THUS, THE DEPOSITS IN HIS BANK ACCOUNTS WERE OUT OF CASH RECEIVED FROM VARIOUS CUSTOMERS MADE DURING THE YEAR AND CASH DEPOS ITS ARE RELATED TO M/S. O XY GEN SERVICES INDIA PVT LTD AND WHICH IS NOT ABLE TO DISTINGUISH BETWEEN APPELLANT AND HER SPOUSE. AS SEEN FROM THE ABOVE THE APPELLANT AND APPELLANT SPOUSE ACT AS COMMISSION AGENTS OF M/S. O XY GEN SERVICES INDIA PVT. LTD AND THE NONE/ IN THE BANK E/C BELONGS TO M/S. O XY GEN SERVICES PVT LTD AND T HIS S A JOINT ACCOUNT AND AMOUNTS ARE TRANSFERRED TO M/S. OX Y GEN SERVICES PVT LTD PERIODICALLY. B ASED ON ABOVE FACTS AND CIRCUMSTANCES OF THE CASE IT IS PRAYED THAT THE HO N BLE COMMISSIONE R OF INCOME TAX (APPEALS) BE PLEASED TO DELETE THE ADDITION MADE BY ASSESSING OFFICER.' 3 ITA NO. 2209 /HYD/1 7 LAHARI CHETHIREDDY, SECBAD. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING THAT ASSESSEE HAS NOT SUBSTANTIATED HER CLAIM MADE IN I TS SUBMISSION AND THERE WAS NO CONFIRMATION FROM M/S OXYGEN SERVICES INDIA PVT. LTD. FOR THE TRANSACTION REFLECTED IN THE BANK ACCOUNT. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IS NOT JUSTIFIED , IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DISMISSING THE APPEAL. 2.1 THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE CONCLUSION OF THE ASSESSING OFFICER THAT THE TOTAL DEPOSITS OF RS. 1,22,95,595/ - ARE HER TURNOVER , I GNORING THE CONTENTIONS OF THE APPELLANT THAT: (I) THE APPELLANT IS AN AGENT OF OXYGEN INDIA PVT. LTD., AND THE AMOUNTS DEPOSITED BY HER IN THE JOINT ACCOUNT (ALONG WITH HER HUSBAND) REPRESENTED THE CASH COLLECTED BY HER ON BEHALF OF THE SAID COMPANY FRO M THE VARIOUS SHOPS ALLOTTED TO HER, AND THESE AMOUNTS WERE IMMEDIATELY TRANSFERRED TO THE O X Y GEN INDIA PVT. LTD. (II) THE APPELLANT'S HUSBAND, WHO IS ALSO AN AGENT OF THE SAME COMPANY, DEPOSITED IN THE SAME BANK ACCOUNT THE AMOUNTS COLLECTED BY HIM ON BE HALF OF THE COMPANY FROM THE VARIOUS SHOPS ALLOTTED TO HIM AND THESE AMOUNTS WERE IMMEDIATELY TRANSFERRED TO THE SAID COMPANY. (III) THE RATE OF COMMISSION WAS ONLY 0.4% ON THE COLLECTIONS MADE BY THE APPELLANT AS AGENT AND SUCH COMMISSION RECEIVED BY HER WAS RS.14 , 236/ - AS REFLECTED IN THE FORM 26AS , A COPY OF WHICH WAS FILED BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS). (IV) THE APPELLANT S HUSBAND FILED HIS INCOME TAX RETURN OFFERING COMMISSION RECEIVED BY HIM. 2.2 THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE RATE OF NET PROFIT ESTIMATED AT 34.36% BY THE ASSESSING OFFICER ON THE TOTAL AMOUNT OF DEPOSITS, IGNORING THE CONTENTION OF THE APPELLANT THAT THE RATE OF COMMISSION IN THIS BUSINESS IS ONLY 0.4% OF THE COLLECTIONS MADE BY HER. 4 ITA NO. 2209 /HYD/1 7 LAHARI CHETHIREDDY, SECBAD. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND AND SUBSTITUTE ANY OF THE GROUNDS DURING THE COURSE OF HEARING. 6. BEFORE US, LD. AR OF THE ASSESSEE SUBMITTED THAT THE CIT(A) CAME TO THE CONCLUSION THAT ASSESSEE HAS NOT FILED ANY DOCUMENT OR SUBSTANTIATED HER CLAIM BEFORE HIM, WHEREAS, HE BROUGHT TO OUR NOTICE AT PAGE 1 OF PAPER BOO K , WHICH WAS SUBMITTED BEFORE THE CIT(A), AS PER WHICH, ASSESSEE HAS MADE WRITTEN SUBMISSION ALONG WITH ENCLOSURES THAT ASSESSEE HAS FILED INCOME TAX RETURN ALONG WITH 26AS, COPY OF BANK STATEMENT, INCOME TAX RETURNS ALONG WITH 26AS OF SRI CHETHI REDDY JAYA NT REDDY (ASSESSEES HUSBAND) AND SAMPLE COMMISSION STATEMENT OF ASSESSEES HUSBAND. HE SUBMITTED THAT ALL THE SAID INFORMATION WAS FILED BEFORE THE CIT(A), HOWEVER, CIT(A) HAS NOT CONSIDERED THIS INFORMATION. FURTHER, LD. AR REQUESTED THE BENCH TO ADMIT T HE ADDITIONAL EVIDENCE IN SUPPORT OF THE CLAIM THAT ASSESSEE HAS COLLECTED FUNDS ON BEHALF OF M/S OXYGEN SERVICES INDIA PVT. LTD. AND THESE TRANSACTIONS WERE CARRIED OUT BY THE ASSESSEE ON BEHALF OF M/S OXYGEN SERVICES INDIA PVT. LTD. ALONG WITH HER HUSBA ND. HE BROUGHT TO OUR NOTICE THAT IN THE SUBSEQUENT AY I.E. AY 2015 - 16, AO HAS ACCEPTED THE CONTENTION OF THE ASSESSEES HUSBAND AND COMPLETED THE ASSESSMENT. A COPY OF THE RELEVANT ASSESSMENT RECORD AND RETURN OF INCOME FILED BEFORE US AS ADDITIONAL EVID ENCE. FURTHER, HE SUBMITTED THAT IN ASSESSEES CASE FOR AY 2016 - 17, AO HAS ALSO ACCEPTED THE CONTENTION OF THE ASSESSEE AND TREATED THE ABOVE TRANSACTION AS COMMISSION . FURTHER, HE BROUGHT TO OUR NOTICE THE ACCOUNT, IN WHICH, AO FOUND THAT THE DEPOSITS WER E JOINT ACCOUNT MAINTAINED BY ASSESSEE AND HER HUSBAND. ALL THESE INFORMATIONS WERE RELEVANT, WHICH PROVE THAT ASSESSEES CONTENTION OF RECEIVING ONLY COMMISSION O F 0.4% FOR COLLECTION OF FUNDS ON BEHALF OF THE COMPANY M/S OXYGEN SERVICES INDIA PVT. LTD. HE PRAYED THAT THE ADDITION MAY BE DELETED SINCE ALL THE INFORMATIONS WERE MADE AVAILABLE BEFORE THE CIT(A) AND NOW THE SAME ARE PLACED ON RECORD. 7. LD. DR, ON THE OTHER HAND, RELIED ON THE ORDER OF CIT(A) AND SUBMITTED THAT IN THE SUBSEQUENT AY, AO MIGHT HAVE ACCEPTED THE 5 ITA NO. 2209 /HYD/1 7 LAHARI CHETHIREDDY, SECBAD. CONTENTION OF THE ASSESSEE, AS THE FACTS MAY BE DIFFERENT IN THOSE AYS. 8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS FACT THAT ASSESSEE HAS RECEIVED HUGE DEPOSITS FROM THE CLIENT AND DEPOSITED IN HER ACCO UNT AND SUBSEQUENTLY, ALL THESE AMOUNTS WERE REMITTED TO M/S OXYGEN SERVICES INDIA PVT. LTD. AND THIS INFORMATION IS APPARENT ON BANK STATEMENT, WHICH IS SUBMITTED BEFORE TAX AUTHORITIES. SINCE ASSESSEE WAS NOT ABLE TO APPEAR BEFORE AO AND HAS NOT SUBSTANT IATED THE ABOVE TRANSACTION, AO HAS COMPLETED THE ASSESSMENT U/S 144 OF THE ACT. HOWEVER, THE ASSESSEE IN THE APPELLATE PROCEEDINGS, SUBMITTED ALL THE RELEVANT INFORMATION AND IT APPEARS THAT ALL THE INFORMATION WAS FILED BY THE ASSESSEE BEFORE CIT(A), AS PER THE INFORMATION BROUGHT ON RECORD BY THE ASSESSEE. IT IS ALSO PERTINENT TO NOTE THAT IN THE SIMILAR FACTUAL BACKGROUND, AO HAS ACCEPTED THIS TRANSACTION AS CARRIED OUT ON BEHALF OF M/S OXYGEN SERVICES INDIA PVT. LTD. AND ACCORDINGLY, ASSESSMENTS WERE COMPLETED FOR THE SUBSEQUENT AYS IN THE CASE OF THE ASSESSEE AS WELL AS IN THE CASE OF HER HUSBAND. FROM THE RECORD, SUBMITTED BEFORE US, IT IS CLEAR THAT ASSESSEE HAS MAINTAINED BANK ACCOUNT ALONG WITH HER HUSBAND AND BOTH HAVE OPERATED THE BANK ACCOUNT A ND MAJORITY OF THE DEPOSITS WERE MADE AND SUBSEQUENTLY, THE SAME WERE REMITTED BACK TO M/S OXYGEN SERVICES PVT. LTD. FROM THE RECORD SUBMITTED BEFORE US, ASSESSEE HAS BROUGHT ON RECORD RETAIL OUTLET MANAGEMENT UNIT AGREEMENT ENTERED INTO BY THE ASSESSEE S HUSBAND AND M/S OXYGEN SERVICES INDIA PVT. LTD. ON 31/08/2010 AND THE SAME WAS PLACED IN PAPER BOOK AT PAGE 52 TO 60. ALL THESE INFORMATIONS SUBMITTED BEFORE US PROVES THAT ASSESSEE AND HER HUSBAND W ERE COLLECTING DEPOSITS ON BEHALF OF M/S OXYGEN SERVI CES INDIA PVT. LTD. A ND COLLECTING COMMISSION @ 0.4%. FURTHER, ASSESSEE ALONG WITH HER HUSBAND MAINTAINED JOINT ACCOUNT AND THE SAME WAS UTILIZED TO REMIT THESE FUNDS TO M/S OXYGEN SERVICES INDIA PVT. LTD. AND ASSESSEE & HER HUSBAND WERE EARNING COMMISSI ON JOINTLY. FURTHER, ASSESSEE HAS ALSO BROUGHT ON RECORD COPY OF 26AS, 6 ITA NO. 2209 /HYD/1 7 LAHARI CHETHIREDDY, SECBAD. AS PER WHICH, SHE IS EARNING COMMISSION INCOME FROM THE ABOVE COMPANY, WHICH IS PLACED AT PAGE 45 OF THE PAPER BOOK. IT CLEARLY INDICATES THAT ASSESSEE WAS ONLY DOING SERVICES ON BEHALF OF M/S OXYGEN SERVICES INDIA PVT. LTD. FOR A REMUNERATION OF 0.4% AS COMMISSION. THERE FORE , THE ASSESSMENT COMPLETED BY THE AO BASED ON THE ASSUMPTION IS NOT PROPER AND ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(A) AND ADDITION MADE ON THIS ACCOUNT, IS H EREBY DELETED. 8.1 REMITTING THE ISSUE IN THIS CASE BACK TO THE FILE OF AO IS NOT WARRANTED FOR THE REASON THAT, THOUGH, THE AO MADE THE ASSESSMENT U/S 144 WHEN THE ASSESSEE DID NOT APPEAR AND NOT FILED THE REQUIRED INFORMATION BEFORE HIM, AS THE ASSESSEE SUBSTANTIATED HER CLAIM THAT SHE IS ONLY RECEIVING COMMISSION INCOME BY FILING ALL THE RELEVANT INFORMATION BEFORE THE CIT(A) AS WELL AS BEFORE US. EVEN, THE AO IN HER CASE AS WELL AS IN HER HUSBANDS CASE IN THE SUBSEQUENT AYS, ACCEPTED THAT THE CASH TRAN SACTION BELONGS TO M/S OXYGEN SERVICES INDIA PVT. LTD. COPIES OF ASSESSMENTS MADE BY THE AO ARE ON RECORD. HENCE, THE AO CANNOT TAKE A DIFFERENT STAND IN THIS AY ON SIMILAR ISSUE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE O PEN COURT ON 17 TH JULY , 201 9 . SD/ - SD/ - ( P. MADHAVI DEVI ) (S . RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 17 TH JULY , 201 9 KV C OPY TO: - 1) LAHARI CHETHIREDDY, C/O CH. PARTHASARATHY & CO., 1 - 1 - 298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO. 1, ASHOKNAGAR, HYDERABAD 500 020. 2) ITO, WARD 15 ( 1 ) , 5 TH FLOOR, INCOME TAX TOWERS, AC GUARDS, HYDERABAD . 3) CIT(A) 7, HYDERABAD. 4) PR. CIT - 7 , HYD. 5 ) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6 ) GUARD FILE