Sri. V. S. Venkatesh, Ramanagara V. The Income Tax Officer, Ward- 1, Ramanagar

ITA 2267/BANG/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2450 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 28-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H GURUSWAMY
• Keywords: Business income; Opportunity of being heard; Peak credit; Set aside
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, C BENCH : BANGALORE BEFORE SHRI B.R BASKARAN , ACCOUNTANT MEMBER ITA NO.2267/BANG/2019 ASSESSMENT YEAR : 2015-16 V.S VENKATESH PUTTADASU STREET, J.C EXTENSION, KANAKAPURA TALUK, RAMANAGARA DISTRICT-562 117. PAN AQRPV 4055 B VS. THE INCOME-TAX OFFICER, WARD-1, RAMNAGAR. APPELLANT RESPONDENT APPELLANT BY : SHRI H GURUSWAMY, I.T.P RESPONDENT BY : SHRI GANESH R GHALE, ADVOCATE STANDING COUNSEL TO D EPT. DATE OF HEARING : 28.11.2019 DATE OF PRONOUNCEMENT : 03.12.2019 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING T HE ORDER DATED 11-09-2019 PASSED BY LD CIT(A)-3, BENGA LURU AND IT RELATES TO THE ASSESSMENT YEAR 2015-16. THE ASSESS EE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE ADDI TION OF RS.26.28 LAKHS, BEING PEAK CREDIT OF CASH DEPOSITS MADE IN B ANK ACCOUNT OF THE ASSESSEE. 2. THE FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD MAINTAINED THREE BANK ACCOUNTS, ONE EACH WITH ANDHR A BANK, STATE BANK OF INDIA AND IDBI BANK. AS PER AIR INFORMATI ON, THE ASSESSEE ITA NO.2267 /BANG/2019 PAGE 2 OF 6 HAS DEPOSITED CASH INTO THESE BANK ACCOUNTS TO THE TUNE OF RS.47,06,700/-, RS.21,000/- AND RS.10,46,700/- RESP ECTIVELY. THE ASSESSEE IS A COMMISSION AGENT AND TRADER IN AGRICU LTURAL PRODUCE. HE HAD FILED HIS RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.2,67,460/-. WHEN THE CASH DEPOSITS MADE BY THE ASSESSEE WAS BROUGHT TO THE NOTICE OF THE ASSESSEE, HE SUBMITTED THAT THEY REPRESENTED HIS BUSINESS RECEIPTS AND ACCORDINGLY O FFERED INCOME @ 8% OF THE AGGREGATE AMOUNT OF DEPOSITS U/S 44AD OF THE ACT. THE AO ANALYSED THE BUSINESS RESULTS AND CAME TO THE CO NCLUSION THAT THE ABOVE DEPOSITS COULD NOT BE THE BUSINESS RECEIP TS OF THE ASSESSEE. ACCORDINGLY HE PROPOSED TO ASSESS PEAK C REDIT BALANCE OF RS.26,28,222/- AS INCOME OF THE ASSESSEE. 3. BEFORE THE AO, THE ASSESSEE CLAIMED THAT HIS FATHER HAD AGREED TO SELL AGRICULTURAL LANDS TO TWO PERSONS NAMED PAR AMESH AND CHANDRU. IT WAS FURTHER SUBMITTED THAT THE FATHER OF THE ASSESSEE HAD RECEIVED ADVANCE FROM THEM AND THE SAID ADVANCE WAS GIVEN TO THE ASSESSEE. THE AO CALLED FOR CONFIRMATIONS AND THE CREDIT WORTHINESS OF THE PROPOSED BUYERS. HE WAS NOT SATI SFIED WITH THEIR CAPACITY TO PURCHASE LANDS AND ACCORDINGLY REJECTED THE SAID CLAIM. ACCORDINGLY HE COMPLETED THE ASSESSMENT BY MAKING A DDITION OF RS.26,28,222/-. 4, BEFORE LD CIT(A), THE ASSESSEE SUBMITTED THA T HE HAS DEPOSITED A SUM OF RS.8,62,500/- BY WAY OF CHEQUE AND THE SAM E WAS CONSIDERED AS CASH DEPOSIT. HE SUBMITTED THAT THE ABOVE SAID SUM REPRESENTED SALE PROCEEDS OF LAND SOLD BY HIM. HE FURTHER REITERATED HIS STAND THAT THE FATHER OF THE ASSESSEE HAS ALSO GIVEN MONEY TO ITA NO.2267 /BANG/2019 PAGE 3 OF 6 HIM, WHICH WAS RECEIVED FROM PARAMESH AND CHANDRU B Y WAY OF ADVANCES. THE LD CIT(A) WAS NOT CONVINCED WITH THE CONTENTIONS OF THE ASSESSEE AND ACCORDINGLY DISMISSED THE APPEAL O F THE ASSESSEE. 5. THE LD A.R SUBMITTED THAT THE RECEIPTS CLA IMED BY THE ASSESSEE, VIZ., SALE VALUE OF RS.8,62,500/- AND ADV ANCES RECEIVED FROM PARAMESH AND CHANDRU, REPRESENTS AMOUNT RECEIV ED BY WAY OF SALE PROCEEDS/ADVANCE AGAINST SALE AGREEMENT. HE S UBMITTED THAT THESE RECEIPTS ARE SUPPORTED BY SALE DEED AND SALE AGREEMENT. HE SUBMITTED THAT THE TAX AUTHORITIES HAVE REJECTED TH E ABOVE SAID CLAIMS ONLY FOR THE REASON THAT THE ASSESSEE HAS NO T PROVED THE CREDIT WORTHINESS OF THE BUYERS OF LAND. HE SUBMIT TED THAT THE ASSESSEE HAS RECEIVED THESE AMOUNTS AS CONSIDERATIO N OF SALE OF LAND AND HENCE THE REQUIREMENT OF PROVING CREDIT WO RTHINESS DOES NOT ARISE. HE FURTHER SUBMITTED THAT THE AO HAS RE JECTED THE CONFIRMATION LETTERS FURNISHED BY PARAMESH AND CHAN DRU WITHOUT EXAMINING THEM. ACCORDINGLY HE SUBMITTED THAT THE TAX AUTHORITIES ARE NOT JUSTIFIED IN NOT GIVING CREDIT TO THE ABOVE SAID RECEIPTS. 6. ON THE CONTRARY, THE LD D.R SUBMITTED THAT T HE ASSESSEE HAS NOT PROVED THE CREDIT WORTHINESS OF THE ALLEGED PAY ERS OF MONEY. 7. I HAVE HEARD RIVAL CONTENTIONS AND PERUSED T HE RECORD. IT IS THE CONTENTION OF THE ASSESSEE THAT HE HAS RECEIVED MONEYS ON SALE OF AGRICULTURAL LAND BY WAY OF CHEQUE AND MONEYS FR OM HIS FATHER BY WAY OF CASH. HIS FATHER, IN TURN, HAS CLAIMED T O HAVE RECEIVED MONEY AS ADVANCE AGAINST SALE OF AGRICULTURAL LAND. ACCORDING TO LD A.R, THESE RECEIPTS ARE SUPPORTED BY SALE DEED/S ALE AGREEMENTS. ITA NO.2267 /BANG/2019 PAGE 4 OF 6 WHEN IT WAS SPECIFICALLY ASKED AS TO WHETHER THE LA NDS WERE SUBSEQUENTLY SOLD TO PARAMESH AND CHANDRU BY THE FA THER OF THE ASSESSEE, THE LD A.R SUBMITTED THAT THE POSSESSION OF LAND HAS ALREADY BEEN GIVEN. HE FURTHER SUBMITTED THAT THE SAME MAY BE PROVED ON THE BASIS OF REVENUE RECORDS. HE ALSO PR AYED THAT THE AO SHOULD HAVE ALLOWED OPPORTUNITY TO EXPLAIN THIS CLA IM FURTHER. 8. IN RESPECT OF RECEIPT OF RS.8,25,000/- REFE RRED ABOVE, THE ASSESSEES CLAIM IS THAT THE SAME IS RECEIVED BY WA Y OF CHEQUE ON SALE OF LAND ON 05-02-2015. IF IT IS CORRECT, THEN THE ABOVE SAID RECEIPT NEED NOT BE INCLUDED WHILE WORKING OUT PEAK CREDIT BALANCE. HOWEVER IT IS NOT CLEAR AS TO WHETHER THE AO HAS IN CLUDED THE ABOVE SAID AMOUNT WHILE WORKING OUT PEAK CREDIT BALANCE. IF IT IS INCLUDED, THEN THE CLAIM OF RECEIPT OF RS.8,25,000/ - BY WAY OF CHEQUE ON SALE OF LAND NEEDS TO BE VERIFIED. ACCOR DINGLY I RESTORE THIS ISSUE TO THE FILE OF THE AO. 9. WITH REGARD TO THE CLAIM OF RECEIPT OF MONEY BY WAY OF CASH FROM THE FATHER OF THE ASSESSEE, I AM OF THE VIEW T HAT THE SAID CLAIM ALSO REQUIRES FRESH EXAMINATION, AS THE ASSESSEE CL AIMS THAT THE WAS RECEIVED AGAINST SALE AGREEMENT. ACCORDINGLY I RESTORE THIS ISSUE ALSO TO THE FILE OF THE AO. 10. IN VIEW OF THE ABOVE, I SET ASIDE THE ORDER PASSED BY LD CIT(A) AND RESTORE THE ISSUES TO THE FILE OF THE AO TO EXA MINE IT AFRESH BY EXAMINING THE ABOVE SAID CLAIMS OF THE ASSESSEE. A FTER AFFORDING ITA NO.2267 /BANG/2019 PAGE 5 OF 6 ADEQUATE OPPORTUNITY OF BEING HEARD, THE AO MAY TAK E APPROPRIATE DECISION IN ACCORDANCE WITH LAW. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD DECEMBER, 2019. SD/- (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, THE 3 RD DECEMBER, 2019. /VMS/ COPY TO: 1. APPELLANT (S) / CROSS OBJECTOR(S) 2. RESPONDENT(S) 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE ITA NO.2267 /BANG/2019 PAGE 6 OF 6 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DICTATION NOTE ENCLOSED DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. .. 14. DICTATION NOTE ENCLOSED