ITO, Ward-1, Hyderabad V. Sri Karunakar Reddy Palla, Nalgonda District

ITA 241/HYD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2931 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PHANI RAJU
• Section: 69

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRIB. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHR I SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.241/HYD/2013 ASSESSMENT YEAR 2009-10 ITO, WARD-1, NALGONDA. VS SRI KARUNAKAR REDDY PALLA, NALGONDA DISTRICT. PAN: AGUPP4429N {APPELLANT) (RESPONDENT) APPELLANT BY : SRI PHANI RAJU RESPONDENT BY NONE DATE OF HEARING : 22-5-2013 DATE OF PRONOUNCEMENT : 31- 5-2013 ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER. THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST T HE ORDER DATED 1-11-2012 OF CIT (A)-VI, HYDERABAD PASSED IN APPEAL NO.0484/11 -12/CIT (A)-VI PERTAINING TO THE ASSESSMENT YEAR 2009-10. 2. THE SOLE GRIEVANCE OF THE REVENUE IN THE PRESENT APPEAL IS WITH REGARD TO THE DIRECTION OF THE CIT (A) TO THE ASSESSING OFFICER T O DETERMINE THE NET PROFIT AT THE RATE OF 5% OF THE PURCHASES AND STOCK PUT FOR SALE DURING THE YEAR. 3. AT THE TIME OF HEARING, DESPITE SERVICE OF NOTIC E, NONE APPEARED ON BEHALF OF THE ASSESSEE-RESPONDENT AND NOT EVEN A PETITION FOR ADJOURNMENT WAS RECEIVED FROM THE ASSESSEE. HENCE, WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PROCEED TO DISPOSE OF THE APPEAL EX PARTE QUA THE ASSESSEE ON MERITS. 2 4. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENT ATIVE AND PERUSED THE MATERIAL ON RECORD IN THE LIGHT OF THE IMPUGNED ORD ER OF THE CIT (A). WE FIND THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL IS SQUAREL Y COVERED BY THE CONSISTENT VIEW TAKEN BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN SIMILAR MATTERS WHEREIN THE TRIBUNAL HAS HELD THAT INCOME OF THE ASSESSEE IN TH IS PARTICULAR LINE OF BUSINESS OF LIQUOR HAS TO BE ESTIMATED AT 5% ON PURCHASE OF STO CK PUT FOR SALE. IN FACT, RELYING UPON ONE OF SUCH ORDER PASSED BY THE TRIBUNAL IN TH E CASE OF M/S AMARAVATI WINE SHOP (ITA NO.1196/HYD/2011 DATED 8-6-2012), THE CIT (A) HAS DIRECTED THE ASSESSING OFFICER TO DETERMINE THE NET PROFIT AT TH E RATE OF 5% OF STOCK PUT FOR SALE DURING THE YEAR. SINCE THE IMPUGNED ORDER OF THE C IT (A) IS IN CONSONANCE WITH THE CONSISTENT VIEW TAKEN BY THE CO-ORDINATE BENCH OF T HIS TRIBUNAL IN SIMILAR MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CI T (A). ACCORDINGLY, WE UPHOLD THE SAME BY REJECTING THE GROUNDS OF APPEAL RAISED BY T HE DEPARTMENT. 5. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 31-05-2013 . SD/- (B. RAMAKOTAIAH) SD/- (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 31 ST MAY, 2013. COPY FORWARDED TO: 1. INCOME-TAX OFFICER, WARD-1, NALGONDA. 2. SRI KARUNAKAR REDDY PALLA, H.NO.19-126, MAIN ROAD, D EVARAKONDA VILLAGE, NALGONDA. 3. CIT (A)-VI, HYDERABAD. 4. CIT CONCERNED, HYDERABAD. 5. THE DR, ITAT, HYDERABAD JMR* 3 ITA NO.1749/HYD/2012 X. THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINS T THE ORDER DATED 26-9-2012 OF CIT (A)-VI, HYDERABAD PASSED IN APPEAL NO.0642/2011-12 PERTAINING TO THE ASSESSMENT YEAR 2 009-10. 2. THE DEPARTMENT HAS RAISED THE FOLLOWING EFFECTIV E GROUND BEFORE US:- THE LD CIT (A) OUGHT NOT TO HAVE ALLOWED RELIEF TO THE ASSESSEE THOUGH THE ASSESSEE HAS NOT SUBSTANTIATED THE SOURC ES FOR THE CREDITS/DEPOSITS MADE INTO THE BANK ACCOUNT WITH CORROBORATIVE DOCUMENTARY EVIDENCE. 4 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVI DUAL FILED ITS RETURN OF INCOME ON 25-11-2009 FOR THE ASSESSMENT Y EAR UNDER DISPUTE DECLARING A TOTAL INCOME OF RS.2,61,250/- A ND AGRICULTURAL INCOME OF RS.72,630/-. ASSESSEES CASE WAS SELECT ED FOR SCRUTINY ASSESSMENT. IN COURSE OF SCRUTINY ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER ON EXAMINING THE ASSESSEES BANK ACCOUNT WITH ICICI BANK LTD., SECUNDERABAD BRANCH NOTICED CASH D EPOSITS AS WELL AS OTHER DEPOSITS MADE INTO THE BANK ACCOUNT. WHEN THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE TRANSACTI ON-WISE DETAILS OF THE DEPOSITS, THE ASSESSEE SUBMITTED THAT OUT OF T HE TOTAL CASH DEPOSIT OF RS.21,34,500/- IN HIS BANK ACCOUNT, HE H AD TAKEN LOAN OF RS.10 LAKHS FROM SRI P. NAGESWARA RAO FOR HIS PERSO NAL PURPOSE TO HELP HIS AUNT FOR HER SURGERY. DUE TO UNAVOIDABLE CIRCUMSTANCES, THE SURGERY WAS POSTPONED AND THE SAME WAS DEPOSITE D IN THE BANK IN THE FORM OF CASH. THE ASSESSEE AGAIN IN THE MON TH OF MAY, 2008 WITHDREW AN AMOUNT OF RS.4,91,500/- FOR HIS PERSON AL PURPOSE AND AGAIN RE-DEPOSITED IN THE BANK IN THE FORM OF CASH IN AUGUST, 2008. THE ASSESSEE FURTHER EXPLAINED THAT HE WAS OWNING S OME LAND AT GANDAMGUDA AND WILLING TO START SOME CONSTRUCTION A CTIVITY AND TOOK A LOAN OF RS.5 LAKHS, FROM MR. RAJEEV AURANGABADKAR IN DECEMBER, 2008. HE WITHDREW RS.4 LATHS FROM HIS ACCOUNT FOR THIS PURPOSE AND THE CONSTRUCTION ACTIVITY COULD NOT COMMENCE AND HE RE-DEPOSITED THE SAME IN MARCH, 2008. THE ASSESSING OFFICER HAS ACCEPTED THE ASSESSEES EXPLANATION TO THE EXTENT OF DEPOSIT OF RS.9.9 LAKHS. HOWEVER, SO FAR AS BALANCE OF RS.11,44,500/- IS CON CERNED, THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE AS SESSEE AND TREATING IT AS UNEXPLAINED INCOME, ADDED THE SAME U /S 69 OF THE ACT. BEING AGGRIEVED OF THE ADDITION MADE BY THE ASSESSI NG OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A). 5 4. THE CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND EXAMINING THE MATERIALS ON RECORD DELETED THE A DDITION BY OBSERVING AS UNDER:- 4.1. THESE DEPOSITS CAN BE CATEGORISED AND EXAMINE D IN THREE GROUPS ON THE BASIS OF THE EXPLANATION OF THE ASSES SEE. THE FIRST GROUP OF DEPOSITS ARE AS FOLLOWS: DATE AMOUNT (RS. ) 30-4-2008 20,000 25-8-2008 3,00,000 26-8-2008 50,000 08-09-2008 1,50,000 24-09-2008 12,500 11-12-2008 1,00,000 23-12-2008 12,000 29-01-2009 1,00,000 18-03-2009 4,00,000 THE ASSESSEE HAS SUBMITTED THAT THESE AMOUNTS HAD B EEN DEPOSITED OUT OF THE CASH WITHDRAWAL OF RS.4,90,000 ON 27-5- 2008 WHICH HAD BEEN WITHDRAWN FOR HTE MEDICAL TREAT MENT OF THE ASSESSES AUNT)./ THE ASSESSING OFFICER HAS NOT ACCEPTED THIS EXPLANATION STATING THAT THE SUM OF RS.4,90,00 0 HAD BEEN USED FOR REPAYMENT OF LOAN TO SRI P. NAGESWARA RAO. IT IS SEEN FROM THE ENTRIES IN THE BANK ACCOUNT AND THE ASSESS EE S EXPLANATION THAT THE REPAYMENT HAS TAKEN PLACE SUBS EQUENTLY, I.E., ON 27-8-2008 AND ON 11-9-2008. BEFORE THIS, THE ASSESSEE HAD MADE A SELF WITHDRAWAL; OF RS.4,91,500 ON 31-5- 2008. HOWEVER, AS PER THE ASSESSEE, THIS AMOUNT WAS EVENT UALLY NOT UTILISED AND WAS RE-DEPOSITED ON THE DATES MENTIONE D ABOVE. THE ASSESSING OFFICER HAS IGNORED THIS WITHDRAWAL O F RS.4,91,500 IN HIS ORDER WITHOUT GIVING ANY JUSTIFI CATION. I FIND THAT THE ASSESSEES EXPLANATION IS REASONABLE AND D ESERVES ACCEPTANCE. 4.2. THE SECOND GROUP OF DEPOSITS CONSISTS OF THE FOLLOWING:- DATE AMOUNT 6 29-1-2009 RS.1,00,000 18-3-2009 RS.4,00,000 THE ASSESSEE SUBMITTED THAT HE HAD BORROWED A SUM O F RS.6 LAKHS FROM SRI RAJEEV AURANGABADKAR FOR THE PURPOSE OF DEVELOPMENT OF LAND AT GANDHAMGUDA VILLAGE. THE BO RROWALS ARE NOT DISPUTED BY THE ASSESSING OFFICER. THE ASS ESSEE FURTHER SUBMITTED THAT HE HAD PAID ADVANCES TO SRI M.V. BHA DRA RAO (CONTRACTOR FOR ELECTRICAL WORKS) AND SRI G. SHANKE R (CONTRACATOR FOR CIVIL WORKS). SINCE THE PROJECT DID NOT MATERIALISE, THE ASSESSEE RECOVERED THE ADVANCES FR OM THE TWO PERSONS AND THE DEPOSITS WERE MADE OUT OF THESE AMO UNTS. THE FACT THAT PAYMENTS WERE MADE TO THESE TWO PERSO NS IS BORNE OUT FO THE BANK DETAILS EXTRACTED IN THE ASSE SSMENT ORDER. THE SUBSEQUENT DEPOSITS ALSO TALLY EXACTLY WITH THE SUBSEQUENT DISPUTED DEPOSITS. THE ASSESSEE S EXPL ANATION, THEREFORE, IS LOGICAL AND REASONABLE. THE ASSESSIN G OFFICER HAS NOT CONSIDERED THIS EXPLANATION OF THE ASSESSEE AND PRESUMED THAT THESE DEPOSITS HAD BEEN MADE OUT OF HIS INCOME . 4.3. THE THIRD SET OF DEPOSITS ARE AS FOLLOWS: - DATE AMOUNT (RS.) 30-4-2008 20,000 24-9-2008 12,500 11-12-2008 1,00,000 23-12-2008 12,000 THE ASSESSEE SUBMITTED THAT THE DEPOSITS HAD BEEN M ADE OUT OF HIS INCOME FOR THE CURRENT YEAR AND THE SAVINGS FRO M THE EARLIER YEARS. THE ASSESSING OFFICER DID NOT ACCEPT THIS E XPLANATION SINCE THE ASSESSEE HAD NOT FURNISHED ANY INVOICES/V OUCHERS FOR THE CONSULTATION FEES, RENTAL INCOME AND AGRICULTUR AL INCOME SO AS TO ESTABLISH THE NEXUS BETWEEN THE DEPOSITS AND THE INCOME. THE FACT REMAINS THAT THE ASSESSEE HAD RETURNED AN INCOME OF RS.2,61,250/- AND AGRICULTURAL INCOME OF RS.72,630/ - WHICH HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN HIS O RDER. THESE AMOUNTS, WHICH REFLECT THE NET INCOME OF THE ASSESS EE, WOULD THEMSELVES BE SUFFICIENT TO EXPLAIN THE DEPOSITS OF RS.1,44,500/-. IT WOULD ALSO BE SAFE AND LOGICAL T O PRESUME THAT THE DEPOSITS WERE MADE OUT OF THE GROSS RECEIP TS OF THE ASSESSEE WHICH NATURALLY WOULD BE MORE THAN THE RET URNED 7 (AND NET) INCOME. THE EXPLANATION OF THE ASSESSEE I S, THEREFORE, ACCEPTED AS REASONABLE. 5. WE HAVE HEARD SUBMISSIONS OF THE PARTIES AND PER USED THE MATERIAL ON RECORD. OUT OF THE TOTAL CASH DEPOSIT OF RS.21,34,500/- IN THE BANK ACCOUNT, THE ASSESSING OFFICER HAD ACC EPTED ASSESSEES EXPLANATION FOR THE CASH DEPOSIT OF RS.9.9 LAKHS. SO FAR AS THE BALANCE AMOUNT OF RS.11,44,500/- TREATED BY THE ASS ESSING OFFICER AS UNEXPLAINED DEPOSIT AS WOULD BE EVIDENT FROM THE ORDER OF THE CIT (A) QUOTED HEREINBEFORE. THE ASSESSEE HAS SUFF ICIENTLY DISCHARGED THE ONUS OF PROVING THE SAID DEPOSITS IN TO THE BANK ACCOUNT. THE PATTERN OF DEPOSITS AND WITHDRAWALS M ADE IN THE BANK ACCOUNT WHICH ARE REPRODUCED BY THE ASSESSING OFFIC ER IN PAGE-2 OF ASSESSMENT ORDER DOES NOT ESTABLISH THE FACT THAT T HE DEPOSITS MADE OF A TOTAL AMOUNT OF RS.5 LAKH ON 25-8-2008, 26-8-2 008 AND ON 8-9- 2008 ARE OUT OF THE WITHDRAWALS OF RS.4,91,000/- MA DE ON 27-5- 2008. SIMILARLY, THE ASSESSEES EXPLANATION WITH R EGARD TO THE DEPOSITS OF RS.1 LAKH AND RS.4 LAKH RESPECTIVELY ON 29-1-2009 AND ON 18-3-2009 ARE ACCEPTABLE IN VIEW OF THE FACT THE A SSESSING OFFICER HAS NOT DISPUTED THE FACT OF BORROWALS OF RS.5 LAKH S MADE FROM MR. RAJEEV AURANGABADKAR ON 12-12-2008. SIMILARLY, AS SESSEES EXPLANATION WITH REGARD TO TOTAL DEPOSITS OF RS.1,4 4,500/- ON DIFFERENT DATES AS MENTIONED IN PARA 4.3 OF THE CI T (A)S ORDER ALSO CANNOT BE REJECTED CONSIDERING THE NEXUS BETWEEN T HE DEPOSITS AND THE INCOME AND ALSO THE FACT THAT THE ASSESSEE HAD SHOWN INCOME OF RS.2,61,250/- AND AGRICULTURAL INCOME OF RS.72,630/ - WHICH HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER. CONSIDERING THE TOTALITY OF FACTS AND THE CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT (A) IN DELETING THE ADDITIO NS MADE BY THE 8 ASSESSING OFFICER AS THE ASSESSEE HAS SATISFACTORIL Y EXPLAINED THE SOURCE OF SUCH DEPOSITS. IN AFORESAID VIEW OF THE M ATTER, WE CONFIRM THE ORDER OF THE CIT (A) AND DISMISS THE GROUNDS RA ISED BY THE DEPARTMENT. 6. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T STANDS DISMISSED. ITA NO. 241 OF 2013 THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST T HE ORDER DATED 1-11-2012 OF CIT (A)-VI, HYDERABAD PASSED IN APPEAL NO.0484/11-12/CIT(A)-VI PERTAINING TO THE ASSESSMEN T YEAR 2009- 10. X. THE SOLE GRIEVANCE OF THE REVENUE IN THE PRESENT APPEAL IS WITH REGARD TO THE DIRECTION OF THE CIT (A) TO THE ASSE SSING OFFICER TO DETERMINE THE NET PROFIT AT THE RATE OF 5% OF THE P URCHASES AND STOCK PUT FOR SALE DURING THE YEAR. X. AT THE TIME OF HEARING, DESPITE SERVICE OF NOTIC E, NONE APPEARED ON BEHALF OF THE ASSESSEE-RESPONDENT AND NOT EVEN A PETITION FOR ADJOURNMENT WAS RECEIVED FROM THE ASSESSEE. HENCE, WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PROCEED ED TO DISPOSE OF THE APPEAL EX PARTE ON MERITS. X. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENT ATIVE AND PERUSED THE MATERIAL ON RECORD IN THE LIGHT OF THE IMPUGNED ORDER OF 9 THE CIT (A). WE FIND THAT THE ISSUE INVOLVED IN TH E PRESENT APPEAL IS SQUARELY COVERED BY THE CONSISTENT VIEW TAKEN BY TH E CO-ORDINATE BENCH OF THIS TRIBUNAL IN SIMILAR MATTERS WHEREIN T HE TRIBUNAL HAS HELD THAT INCOME OF THE ASSESSEE IN THIS PARTICULA R LINE OF BUSINESS OF LIQUOR HAS TO BE ESTIMATED AT 5% ON PURCHASE OF STO CK PUT FOR SALE. IN FACT, RELYING UPON ONE OF SUCH ORDER PASSED BY T HE TRIBUNAL IN THE CASE OF M/S AMARAVATI WINE SHOP (ITA NO.1196/HYD/20 11 DATED 8- 6-2012), THE CIT (A) HAS DIRECTED THE ASSESSING OFF ICER TO DETERMINE THE NET PROFIT AT THE RATE OF 5% OF STOCK PUT FOR S ALE DURING THE YEAR. SINCE THE IMPUGNED ORDER OF THE CIT (A) IS IN CONSO NANCE WITH THE CONSISTENT VIEW TAKEN BY THE CO-ORDINATE BENCH OF T HIS TRIBUNAL IN SIMILAR MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT (A). ACCORDINGLY, WE UPHOLD THE SAME BY REJECTING THE GROUNDS OF APPEAL RAISED BY THE DEPARTMENT. X. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISM ISSED. 10