Rajini Kolla, Hyderabad V. Income Tax Officer, Ward-6(3), Hyderabad

ITA 231/Hyd/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4370 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-10-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 02-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M NARMADA
• Assessee Lawyers: Y V BHANU NARAYAN RAO
• Keywords: Corroborative evidences
• Section: 147; 144

Judgement Text

ITA NO 231 OF 2018 K RAJINI HYDERABAD PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.231/HYD/2018 (ASSESSMENT YEAR: 2013-14) SMT. RAJINI KOLLA HYDERABAD PAN: APCPK5049N VS INCOME TAX OFFICER WARD 6(3) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI Y.V. BHANUNARAYAN RAO FOR REVENUE : SMT.M. NARMADA, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2013-14 AGAIN ST THE ORDER OF THE CIT (A)-6, HYDERABAD, DATED 30.11. 2017. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) IS ERRONEOUS. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ESTIMATING PROFIT @23.77%. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT CONSIDERING ESTIMATED PROFIT @8% AND W HICH IS GENERALLY ALLOWED PRACTICE WHEN BOOKS OF ACCOUNTS A RE NOT MAINTAINED BY THE ASSESSEE. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE ESTIMATED PROFIT @8% O F TURNOVER INSTEAD OF 23.77% WHEN BOOKS OF ACCOUNTS A RE NOT MAINTAINED. DATE OF HEARING : 23.10.2018 DATE OF PRONOUNCEMENT : 31.10.2018 ITA NO 231 OF 2018 K RAJINI HYDERABAD PAGE 2 OF 4 5. YOUR ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS AND HAS OFFERED PROFIT ON ESTIMATED BASIS. IN CASE OF BOOKS OF ACCOUNTS ARE NOT MAINTAINED AND TH E TURNOVER IS BELOW THE THRESHOLD LIMIT OF RS. 1,00,0 0,000/- AND WHEN THERE WAS A DIFFERENCE BETWEEN GROSS RECEI PTS AS SHOWN IN THE ITR AND DEPOSITS INTO THE BANK AND COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE PROFIT MARGIN @8% OF TOTAL TURNOVER. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CALCULATING THE PROFIT MARGIN AS PER PROPO RTIONATE TURNOVER METHOD INSTEAD OF 8%. 7. ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, ENGAGED IN THE BUSINESS OF RUNNING A LA DIES HOSTEL, HAS FILED HER RETURN OF INCOME FOR THE A.Y 2013-14 ON 1 0.03.2015 ADMITTING INCOME OF RS.2,94,450/-. AS PER THE INFOR MATION AVAILABLE WITH THE AO, THE ASSESSEE HAD MADE CASH D EPOSITS OF RS.57,95,900 IN HER SAVINGS BANK A/C WHEREAS IN THE RETURN OF INCOME FILED, SHE ADMITTED RECEIPTS TO THE EXTENT O F RS.21,45,650 ONLY AND A NET PROFIT OF RS.5,10,000. THEREFORE, TH E AO WAS OF THE OPINION THAT THE ASSESSEE HAS SHORT ADMITTED RECEIP TS TO THE EXTENT OF RS.36,50,250 AND CORRESPONDING NET PROFIT AT RS.8,67,299 WHICH THE AO CONSIDERED AS A PROFIT FRO M THE HOSTEL BUSINESS. THEREFORE, HE REOPENED THE ASSESSMENT U/S 147 OF THE ACT. 3. DURING THE RE-ASSESSMENT PROCEEDINGS, THE ASSESS EE EXPLAINED THE SOURCES FOR THE CASH DEPOSITS AS GOLD LOAN, RECEIPTS FROM HOSTEL BUSINESS WHICH INCLUDES ADVANCES RECEIV ED FROM THE HOSTEL INMATES ETC., BUT THE ASSESSEE FAILED TO PRO DUCE THE DETAILS SUCH AS WHEN THE GOLD LOAN WAS SANCTIONED, AMOUNT O F LOAN ITA NO 231 OF 2018 K RAJINI HYDERABAD PAGE 3 OF 4 AVAILED WITH SUPPORTING EVIDENCES ETC., THEREFORE, THE AO DISBELIEVED THE ASSESSEES CONTENTION OF GOLD LOAN. HE CONSIDERED THE SOURCE TO BE THE RECEIPTS FROM HOSTEL BUSINESS AND COMPLETED THE ASSESSMENT EX-PARTE U/S 144 OF THE ACT AND MADE AN ADDITION OF RS.15,67,409 TO THE RETURNED INCOME OF THE ASSES SEE. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO. THE CIT (A) ALSO CON SIDERED THE RETURNED INCOME OF THE ASSESSEE TO HOLD THAT THE AS SESSEE HAS OFFERED INCOME AT 23.77% OF THE TOTAL TURNOVER ADMI TTED BY HER. APPLYING THE SAME RATIO, HE UPHELD THE ASSESSMENT O RDER ON THE GROUND THAT THE UNDISCLOSED TURNOVER ALSO HAS TO BE TAXED ON THE SAME RATE OF PROFIT ADMITTED BY THE ASSESSEE I.E. @ 23.77%. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE CIT (A) THAT THE INCOME FROM THE UNEXPLAINED CASH DEPOSITS INTO HER BANK A/C @ 8%, W HILE THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS OFFERED TH E TOTAL RECEIPTS FROM THE LADIES HOSTEL, LESS EXPENSES AT RS.5,10,00 0. ACCORDING TO THE ASSESSEE, SHE HAS OFFERED THE INCOME ON ESTIMAT E BASIS. SINCE THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUN T, THE PROFIT SHOULD BE ESTIMATED AT 8% OF THE UNEXPLAINED DEPOSI TS AND NOT AT 23.77% OFFERED BY THE ASSESSEE ON ESTIMATE BASIS. W E FIND THAT BOTH THE ASSESSMENT ORDER AS WELL AS THE CIT (A)S ORDERS ARE PASSED EX-PARTE THE ASSESSEE. ON GOING THROUGH THE DOCUMENTS ITA NO 231 OF 2018 K RAJINI HYDERABAD PAGE 4 OF 4 FILED BY THE ASSESSEE, WE FIND THAT THE TOTAL TURNO VER OF THE ASSESSEE DID NOT EXCEED RS.1.00 CRORE, THEREFORE, W E ARE OF THE OPINION THAT THE CIT (A) OUGHT TO HAVE ADOPTED THE PROFIT FROM THE UNEXPLAINED CASH DEPOSITS AT 8% AND OUGHT NOT TO HA VE ATTRIBUTED THE PROFIT DECLARED BY THE ASSESSEE TO THE ENTIRE R ECEIPTS. WE THEREFORE, DIRECT THE AO TO ESTIMATE THE PROFIT FRO M THE UNEXPLAINED CASH DEPOSITS ONLY AT 8%. 6. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2018. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 31 ST OCTOBER, 2018. VINODAN/SPS COPY TO: 1 SMT. RAJINI KOLLA, H.NO.7-2-1765, FLAT NO.107, AA KRUTHI NILAYAM, CZECH COLONY, SANATH NAGAR, HYDERABAD 500018 2 INCOME TAX OFFICER, WARD 6(3) HYDERABAD 3 CIT (A)-6 HYDERABAD 4 PR. CIT 6 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER