Smt. Pooja Agarwal, Hyderabad V. ITO, Ward-8(2), Hyderabad

ITA 244/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69779 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 28-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R LAXMAN
• Assessee Lawyers: B SHANTI KUMAR
• Section: 131; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.244/HYD/2013 ASSESSMENT YEAR 2009-2010 SMT. POOJA AGARWAL HYDERABAD. PAN AGEPP3602K VS. ITO, WARD 8 (2) HYDERABAD APP EL LANT RESPONDENT APPELLANT BY : SHRI B.SHANTIKUMAR (AR) RESPONDENT BY : SHRI R.LAXMAN (DR) DATE OF HEARING : 12.09.2013 DATE OF PRONOUNCEMENT : 12.09.2013 ORDER PER SAKTIJIT DEY, J.M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-III, HYDERABAD DATED 24 TH DECEMBER, 2012 FOR THE ASSESSMENT YEAR 2009-10. THE ASSESSEE IN TOTAL HAS R AISED 4 EFFECTIVE GROUNDS. THE MAIN ISSUE WHICH IS RAISED I N GROUNDS NO. 1 AND 2 RELATES TO ADDITION OF AN AMOUNT OF RS.26,9 7,000/- UNDER SECTION 69 OF THE ACT REJECTING ASSESSEES EXPLANATION WITH REGARD TO THE SOURCE THEREOF. GROUNDS NO. 3 AND 4 ARE OFFS HOOTS OF THE AFORESAID MAIN ISSUE RAISED IN GROUNDS NO. 1 AND 2. 2. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVID UAL. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED TH E RETURN OF INCOME ON 17.09.2009 DECLARING INCOME OF RS.4,88,98 9/- STATED TO BE DERIVED FROM HOUSE PROPERTY, BUSINESS AND OTHE R SOURCES. IN COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER WHILE EXAMINING ASSESSEES BANK ACCOUNT MAINT AINED WITH CANARA BANK, SECUNDERABAD BRANCH, NOTICED THAT THE ASSESSEE 2 DURING THE YEAR HAD DEPOSITED RS.26,97,000/- INTO TH E BANK ACCOUNT. WHEN THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO EXPLAIN WHY THE DEPOSITS MADE IN THE BANK ACCOUNT SHA LL NOT BE ADDED AS UNEXPLAINED DEPOSIT, THE ASSESSEE IN HER RE PLY EXPLAINED THAT THE AMOUNT OF RS.26,97,000/- WAS NOT DEPOSITED IN A SINGLE DAY IN THE BANK ACCOUNT BUT IT IS THE TO TAL CASH DEPOSIT OF THE ENTIRE YEAR. IT WAS SUBMITTED THAT SO URCE OF EACH CASH DEPOSIT HAS BEEN SHOWN IN THE BOOKS OF ACCOUNT AND THE MAIN SOURCE OF CASH RECEIPTS ARE RENTAL INCOME AND CASH SALES FROM PROPRIETARY BUSINESS M/S. NITIKA TRADERS. 3. THE ASSESSING OFFICER HOWEVER WAS NOT CONVINCED WITH THE EXPLANATION SUBMITTED BY THE ASSESSEE. HE NOTICED THA T THE ASSESSEE HAD INTRODUCED THE CASH, STATED TO BE FROM RENTAL AND BUSINESS, ONLY IN THE MONTH OF SEPTEMBER. THE SALE B ILLS PRODUCED DO NOT HAVE ADDRESS OF THE PARTIES. THE EN TIRE SALES WERE MADE IN DURING 1 ST OF SEPTEMBER, 2008 TO 11.09.2008 AND THE ENTIRE PURCHASED GOODS WERE SOLD ON THE SAME DA TE ITSELF. HE FURTHER OBSERVED THAT THERE IS NO DETAILS OF TRANSP ORT AND CARRIAGE OF THE MATERIALS. HE NOTED THAT FOR ASCERTAINING TH E GENUINENESS OF THE EXPLANATION WHEN SUMMONS WERE ISSUED UNDER SE CTION 131 OF THE ACT REQUIRING HER PRESENCE, THE ASSESSEE DID NOT APPEAR. THE ASSESSING OFFICER THEREFORE CONCLUDED T HAT ASSESSEES EXPLANATION CANNOT BE ACCEPTED AND ADDED THE AMOUNT OF RS.26,97,000/- UNDER SECTION 69 OF THE ACT. 4. THE ASSESSING OFFICER ALSO REJECTED ASSESSEES CLA IM OF RENTAL INCOME OF RS.5,28,000/- BY HOLDING THAT THE A SSESSEE SINCE HAS NOT APPEARED IN RESPONSE TO SUMMONS UNDER SECTION 131 AND NOT FILED ANY CONFIRMATIONS THE INCOME SHOWN HAS TO BE TREATED AS FROM UNEXPLAINED SOURCES AND ACCORDINGLY, DISALLOWED THE STANDARD DEDUCTION CLAIMED UNDER SECTION 24 OF THE ACT FOR AN AMOUNT OF RS.1,58,400/-. 3 5. THE ASSESSEE PREFERRED AN APPEAL AGAINST THE ASS ESSMENT ORDER BEFORE THE CIT(A). BEFORE THE CIT(A) THE ASSE SSEE EXPLAINED THE SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNT AS UNDER : (A) CASH GENERATED FROM RENTAL INCOME RS. 5,28, 000 (B) CASH GENERATED FROM CLOTH TRADING RS. 16,02,2 61 (C) CASH WITHDRAWALS FROM BANK A/C. & DEPOSITS RS. 5,85,000 (D) OUT OF CASH BALANCES RS. 18,431 ------------------ RS.27,33,692/- ------------------- 6. IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT THE CONCLUSION DRAWN BY THE ASSESSING OFFICER IS ONLY AN ASSUMPTIONS AS THE ASSESSEE HAS PURCHASED TRANSACTI ON WITH M/S. SHAKTI TRADERS THROUGH INVOICES RAISED BY M/S. SHAKTI TRADERS AND THE CONSIDERATION WAS PAID THROUGH CHEQ UES. IT WAS SUBMITTED THAT WHEN THE PROPRIETOR OF M/S. SHAKTI T RADERS WAS SUMMONED, HE APPEARED BEFORE THE ASSESSING OFFICER AND CONFIRMED OF HAVING SOLD THE GOODS. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER ALSO WITHOUT VALID REASONS TR EATED THE RENTAL INCOME AS INCOME FROM UNEXPLAINED SOURCES. 7. THE CIT(A) ALSO DID NOT ACCEPT THE CONTENTIONS O F THE ASSESSEE FOR THE REASON THAT ASSESSEE HAD NEVER CON DUCTED ANY BUSINESS EITHER BEFORE OR AFTER THESE TRANSACTIONS. NO RETURN OF INCOME INDICATING BUSINESS OF CLOTH WAS EVER FILED. THE ASSESSEE HAS NOT PROVIDED ANY DETAILS REGARDING HER BUSINESS LIKE TRANSPORTATION CHARGES INCURRED, WHERE THE STOCKS W ERE KEPT, NUMBER OF EMPLOYEES AND THEIR DETAILS, THE IDENTITY O F THE PURCHASERS, ADMINISTRATIVE EXPENSES INCURRED ETC. FU RTHER ALL THE INVOICES ARE SELF MADE AND DO NOT CONTAIN SIGNATURE OF THE PURCHASERS IN TOKEN OF THEIR HAVING RECEIVED THE GO ODS. THE INVOICES DO NOT SHOW IDENTITY OF THE PURCHASER, NO D ETAILS OF THE QUALITY OF CLOTH, NO DETAILS OF DISPATCH OR DESTINAT ION. HE, THEREFORE, CONCLUDED THAT IN THE ABSENCE OF ANY DETA ILS THE 4 INVOICES AND CASH ACCOUNTS ARE ONLY SELF-SERVING DOC UMENTS. THE CIT(A) THEREFORE, CONFIRMED THE ADDITION MADE BY TH E ASSESSING OFFICER. THE CIT(A) ALSO CONFIRMED THE DISALLOWANCE OF DEDUCTION CLAIMED U/S. 24 OF THE ACT IN ABSENCE OF ANY EVIDENC E SUBMITTED REGARDING EARNING OF RENTAL INCOME. 8. THE LEARNED A.R. REITERATED BEFORE US THE SAME A RGUMENTS AS WERE MADE BEFORE THE CIT(A) AND ASSESSING OFFICE R. IT WAS SUBMITTED THAT THE ASSESSEE DID CARRY ON THE BUSINES S OF TRADING IN CLOTH. IT WAS SUBMITTED THAT THE TRADING IN CLOT H WAS ONLY AN ONE TIME ACTIVITY CARRIED ON BY THE ASSESSEE. IT WAS SUBMITTED THAT SELLER OF GOODS TO THE ASSESSEE HAS NOT ONLY CO NFIRMED THE TRANSACTIONS BUT PAYMENTS WERE ALSO MADE IN CHEQUE. HENCE, THERE IS NO REASON TO DOUBT THE GENUINENESS OF THE ACTIVITY CARRIED ON BY THE ASSESSEE. HE FURTHER SUBMITTED THA T THE ASSESSEE HAVING SUFFICIENTLY AND SATISFACTORILY EXPLAI NED THE SOURCE OF DEPOSITS IN THE BANK ACCOUNT, NO ADDITION SHOULD HAVE BEEN MADE. SO FAR AS THE RENTAL INCOME IS CONCERNED , THE LEARNED A.R. SUBMITTED THAT THE ASSESSEE HAVING ACTUALLY GIV EN THE HOUSE PROPERTY ON RENT, THERE IS NO REASON TO DISALLOW DED UCTION CLAIMED UNDER SECTION 24 OF THE ACT. 9. THE LEARNED D.R. ON THE OTHER HAND, STRONGLY SUPP ORTING THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ASSE SSEE HAVING FAILED TO SATISFACTORILY PROVE THE SOURCE OF DEPOSIT S THE ADDITION IS JUSTIFIED. 10. WE HAVE HEARD SUBMISSIONS OF THE PARTIES AND PE RUSED THE MATERIALS ON RECORD. ON A READING OF THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE CIT(A), IT BECOMES ABSOLUTELY CL EAR THAT THE ASSESSEE HAS NOT BEEN ABLE TO SATISFACTORILY EXPLAIN THE SOURCE OF DEPOSITS IN THE BANK ACCOUNT BY ADDUCING PROPER EVI DENCE. THE CLAIM OF CARRYING ON THE BUSINESS ACTIVITY HAS ALSO BEEN PROVED TO BE HOLLOW. EVEN BEFORE US ALSO THE ASSESSEE HAS NOT BEEN ABLE TO 5 SUBMIT ANY CLINCHING EVIDENCE TO PROVE THAT THE ASSE SSEE WAS ACTUALLY CARRYING ON THE TEXTILE GOODS. COPIES OF FEW PURCHASE INVOICES IN NO WAY ESTABLISHES THE FACT OF CARRYING O N BUSINESS. THE ASSESSEE COULD NOT PRODUCE EITHER SALES TAX REGI STRATION CERTIFICATE OR ANY OTHER AUTHENTIC EVIDENCE TO PROVE THE CARRYING ON OF BUSINESS BY HER. IN THESE CIRCUMSTANCES, THE REVENUE AUTHORITIES CANNOT BE BLAMED FOR COMING TO THEIR CO NCLUSION. SAME IS ALSO THE CASE WITH THE RENTAL INCOME. THE A SSESSEE HAS NOT PRODUCED ANY EVIDENCE IN SUPPORT OF EARNING OF RENTAL INCOME. NO RENT AGREEMENT OR RENT RECEIPT HAS BEEN SUBMITTED. THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF THE T ENANT ALSO. IN THESE CIRCUMSTANCES, THERE CANNOT BE ANY SHRED OF DO UBT THAT THE ASSESSEE HAS CLAIMED INCOME FROM BUSINESS AS WELL A S RENT ONLY TO EXPLAIN AWAY THE CASH DEPOSITS MADE IN THE BANK A CCOUNT. IN SUCH VIEW OF THE MATTER, THE DEPOSITS MADE INTO THE BANK ACCOUNT REMAIN UNEXPLAINED. HENCE, THE ADDITION MADE OF AN AMOUNT OF RS.26,97,000/- HAS TO BE SUSTAINED. HOWEVER, THE CO NTENTION OF THE LEARNED A.R. THAT THE RENTAL INCOME HAVING BEEN DEPOSITED IN THE BANK ACCOUNT FORMS PART OF THE TOTAL ADDITION O F RS.26,97,000/- MADE ON THAT ACCOUNT, HENCE, NO SEPA RATE ADDITION OF THE SAID INCOME CAN BE MADE DESERVES TO BE CONSIDERED. IT IS SEEN FROM THE COMPUTATION OF INCO ME FILED ALONG WITH THE RETURN THAT THE ASSESSEE HAS DISCLOSED REN TAL INCOME OF RS.5,28,000/-. WHILE EXPLAINING SOURCE OF DEPOSITS I N THE BANK ACCOUNT, THE ASSESSEE HAD EXPLAINED THAT THE RENTAL INCOME OF RS.5,28,000/- ALSO FORMS PART OF SUCH DEPOSIT. OFCO URSE, THE ASSESSING OFFICER HAD DISBELIEVED ASSESSEES EXPLANAT ION WITH REGARD TO RENTAL INCOME AND TREATED IT AS INCOME FR OM UNEXPLAINED SOURCES. BUT AT THE SAME TIME, THERE IS NO OTHER MATERIAL BROUGHT ON RECORD TO INDICATE THAT THE ASS ESSEE HAS EARNED INCOME OVER AND ABOVE THE DEPOSITS MADE INTO THE BANK ACCOUNT. IN AFORESAID VIEW OF THE MATTER, ASSESSEES EXPLANATION THAT THE AMOUNT OF RS.5,28,000/- FORMS PART OF THE DEPOSITS 6 MADE INTO THE BANK ACCOUNT CANNOT BE DISBELIEVED. W E, THEREFORE, DIRECT THE ASSESSING OFFICER TO REDUCE THE AMOUNT O F RS.5,28,000/- FROM THE INCOME DETERMINED. 11. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON: 12. 09.2013 SD/- SD/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD DATE 12 TH SEPTEMBER, 2013. VBP/- COPY TO 1. SMT. POOJA AGARWAL, 3 - 4 - 174/AF/90, AMBIENCE FORT, ATTAPUR, HYDERABAD. PAN AGEPP3602K 2. ITO, WARD 8 (2), HYDERABAD 3. CIT(A) - III, HYDERABAD. 4. CIT - II , HYDERABAD 5. DR , ITAT, HYDERABAD A BENCH , HYDERABAD.