Narayansingh Rajpurohit , Warangal V. Income Tax Officer, Ward-3, Hyderabad

ITA 23/Hyd/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2143 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-06-2021
• Assessment Year: 2007-2008
• Appeal Filed On: 06-01-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M MAHIDHAR
• Keywords: Unexplained investment; Business income
• Section: 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD SMC BENCH : HYDERABAD (THROUGH VIDEO CONFERENC E ) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO. 23 /HYD./20 2 0 ASSESSMENT YEAR: 20 07 - 08 SRI NARAYAN SINGH RAJPUROHIT V S. ITO, WARD (3) WARANGAL WARANGAL [ PAN: AIKPR9278F ] (APPELLANT) (RESPONDENT) FOR ASSESSEE : SRI KUMAR PAL TATED , A .R. FOR REVENUE : SRI M. MAHIDHAR, D.R. DATE OF HEARING : 23 / 0 6 /202 1 DATE OF PRONOUNCEMENT 28 / 06 /202 1 O R D E R THIS IS ASSESSEES APPEAL FOR AY 20 07 - 08 AGAINST THE ORDER OF THE CIT(A) - 10 , HYDERABAD DATED 2 2.11.2019 . 2 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE INDIVIDUAL FILED HIS RETURN OF INCOME FOR THE A.Y. 20 07 - 08 ON 03.01.2008 ADMITTING INCOME FROM OTH ER SOURCES OF RS. 97,500 / - . DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 , THE A.O. OBSERVED THAT THE ASSESSEE HAS MADE CASH DEPOSITS TO THE EXTENT OF RS.26,59,343/ - IN HIS BANK ACCOUNT MAINTAINED WITH AXIS BANK. THE A.O. ASKE D THE ASSESSEE TO EXPLAIN THE SOURCES, BUT ASSESSEE COULD NOT EXPLAIN THE SOURCES FOR THE DEPOSITS AND ALSO DID NOT PRODUCE ANY EVIDENCE IN SUPPORT OF HIS CONTENTIONS. THE AO , THEREFORE WORKED OUT PEAK OF THE CASH CREDITS AT RS.1 6,40, 717/ - AND TREATED IT AS UNEXPLAINED INVESTMENTS U/S 6 9 OF THE I.T.ACT, 1961 AND BROUGHT IT TO TAX. ITA NO. 23 /HYD/ 2020 AY 20 07 - 08 SRI NARAYAN SINGH RAJPUROHIT . 2 3 . AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE AO AND ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL. 1. THE APPELLATE ORDER PASSED BY CIT (APPEALS) - 1 0, HYDERABAD CONFIRMING THE ADDITION OF RS.16,40,717/ - MADE U/S. 69 OF I.T. ACT IS AGAINST THE FACTS OF THE CASE AND PROVISIONS OF INCOME TAX ACT , 1961. [RS. 5,28,983/ - ] 2 . THE CIT ( APPEALS ) ERRED ON FACTS AND IN LAW IN SUSTAINING THE ADDITION OF RS. RS.16, 40,717/ - U/S.69 ALLEGED TO BE THE PEAK AMOUNT OF CASH DEPOSITS IN AXIS BANK MADE ON SERIES OF DATES. [RS. 5,28,983/ - ] 3 . APPELLATE ORDER WAS PASSED AFTER ALMOST 6 MONTHS M ECHANICALLY SUSTAINING THE ADDITIONS PRACTICALLY NOT CONSIDERING THE WRITTEN SUBMISSIONS. 4 . A.O AND CIT ( APPEALS ) OUGHT TO HAVE SEEN THAT THE BANK STATEMENT CLEARLY STATED THE IDENTIFICATION OF CHEQUES GIVEN TO SUPPLIERS ESTABLISHING THE BUSINESS. 5 . THE APPELLATE THEREFORE, PRAYS IN THE VIEW OF ABOVE AN D DETAILED GROUNDS TO BE URGED AT THE TIME OF HEARING , HONORABLE ITAT MAY BE PLEASED TO DELETE THE ADDITION OF RS. 16, 40,717/ - 4 . ON PERUSAL OF THE MATERIAL ON RECORD, I FIND THAT BEFORE THE CIT(A) , THE ASSESSEE HA D APPEARED AND SUBMITTED THAT THESE CASH DEPOSITS ARE OUT OF HIS TURNOVER FROM TAILORING BUSINESS AND ALSO FILED SOME EVIDENCE REGARDING PURCHASE OF MATERIAL OF SUCH BUSINESS. THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO AND THE AO HAS REPORTED THAT EXCEPT FOR A FEW PURCHASE BILLS PRODUCED BY ASSESSEE RELEVANT TO F.Y 2005 - 06, THERE IS NO OTHER MATERIAL PRODUCED BY ASSESSEE TO ESTABLISH THE LINK BETWEEN CASH DEPOSITS IN BANK ACCOUNTS WITH SALES / BUSINESS. THEREFORE HE CONFIRMED THE ORDER OF THE A.O. 5 . I FIND THAT THE AO IN THE REMAND REPORT HAS ACCEPTED THAT THERE WERE FEW PURCHASE BILLS FOR TAILORING MATERIAL AND, THEREFORE, ASSESSEES CONTENTION OF CARRYING ON TAILORING BUSINESS CANNOT BE RULED OUT TOTALLY. IT WAS FURTHER SUBM ITTED BY LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING THAT THIS IS THE FIRST YEAR WHEN THE ASSESSEE HAD FILED HIS RETURN OF INCOME AND IN THE SUBSEQUENT YEARS , THE ASSESSEE HAS OFFERED INCOME FROM THE BUSINESS OF ITA NO. 23 /HYD/ 2020 AY 20 07 - 08 SRI NARAYAN SINGH RAJPUROHIT . 3 TAILORING WHICH HAS BEEN ACCE PTED BY THE A.O. AND, THEREFORE, CASH DEPOSITS SHOULD BE CONSIDERED AS BUSINESS INCOME OF THE ASSESSE AND INCOME ESTIMATED THEREO N . 6 . LD.DR WAS ALSO HEARD. 7 . SINCE THERE IS SOME RELATIONSHIP ESTABLISHED BETWEEN THE PURCHASE BILLS OF THE ASSESSEE AND THE ALLEGED TAILORING BUSINESS OF THE ASSESSEE AND TO SET AT REST THIS ISSUE, I AM INCLINED TO ACCEPT THE CASH DEPOSITS OF THE ASSESSEE AS HIS BUSINESS RECEIPTS AN D AS THE ASSESSEE H A S DECLARED 5% OF THE TURNOVER AS INCOME OF THE ASSESSEE U/S 4 4 AF OF THE I.T.ACT, 1961, I DIRECT THE AO TO ESTIMATE 5% OF THE CASH DEPOSITS ALSO AS BUSINESS INCOME OF THE ASSESSEE AND BRING IT TO TAX. BOTH THE LEARNED COUNSEL FOR A SSESSEE AS WELL AS LD.DR AGREED FOR THIS ADDITION. ASSESSEES APPEAL IS ACCORDINGLY TREATED AS PARTLY ALLOWED. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28 /0 6 / 202 1 . SD/ - (P. MADHAVI DEVI) JUDICIAL MEMBER DATED: 28 TH JUNE , 2021 GMV COPY OF ORDER FORWARDED TO: 1. SRI NARAYANSINGH RAJPUROHIT, 12 - 6 - 55, S.V.N. ROAD, WARANGAL , TELANGANA. 2. ITO, WARD 3, WARANGAL . 3. CIT(A) - 10, HYDERABAD 4. PR.CIT - 3, HYDERABAD . 5 . CCIT (IT) (SZ) BENGALURU . 6. D.R. ITAT HYDERABAD 7 . GUARD FILE