Mohammed Zaheeruddin, Hyd, Hyderabad V. ITO, Ward - 12(4), Hyderabad, Hyderabad

ITA 306/HYD/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6348 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 25-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BABU
• Assessee Lawyers: S RAMA RAO
• Keywords: Peak credit; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 306/HYD/2015 ASSESSMENT YEAR: 2010-11 MOHAMMED ZAHEERUDDIN, HYDERABAD. PAN AAEPZ 4531B VS. INCOME-TAX OFFICER, WARD 12(4), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SHRI K.E. SUNIL BABU DATE OF HEARING 27-07-2016 DATE OF PRONOUNCEMENT 05-08-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - 1, HYDE RABAD FOR AY 2010-11. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS A SALARIED EMPLOYEE OF RAYALASEEMA CONCRETE SLEEPERS PVT. LTD. , SECUNDERABAD. FOR THE AY 2010-11 THE ASSESSEE ADMIT TED TAXABLE INCOME OF RS. 2,88,880/-. THE AO DETERMINED THE INC OME OF THE ASSESSEE IN SCRUTINY ASSESSMENT AT RS. 60,12,360/- BY MAKING THE FOLLOWING ADDITIONS: 1. UNEXPLAINED CASH DEPOSITS OF RS. 56,96,000 2. HRA CLAIMED U/S 10 DENIED OF RS. 27,480/-. 2.1 AS PER THE AIR INFORMATION RECEIVED, THE AO NOT ICED THAT THE ASSESSEE HAD MADE CASH DEPOSITS IN TO HIS SAVINGS B ANK ACCOUNT 2 ITA NO. 306/H/15 MOHD. ZAHEERUDDIN MAINTAINED WITH ICICI BANK, GADDIANNARAM, HYDERABAD TO THE TUNE OF RS. 56,96,000/- DURING THE FY 2009-10 RELEVANT TO A Y 2010-11. WHEN THE AO ASKED THE ASSESSEE TO EXPLAIN THE SOURCES FO R THESE CASH DEPOSITS ALONG WITH DOCUMENTARY EVIDENCES, THE ASSE SSEE DID NOT RESPOND WITH PROPER EXPLANATION/DOCUMENTARY EVIDENC E EXCEPT FILING SIMPLE LETTERS, DATED 27/02/13, 18/03/2013 AND 19/0 3/2013 STATING THAT THE SB A/C IN WHICH THE CASH DEPOSITS WERE MAD E WAS OPERATED BY HIS BROTHER, MR. MOHAMMED NOORUDDIN AND THE AMOU NTS/CASH DEPOSITED WERE FROM HIS BUSINESS OF ARRANGING VISAS TO VARIOUS COUNTRIES. THE ASSESSEE FILED COPIES OF ACKNOWLEDGM ENTS, ALONG WITH COMPUTATION OF TOTAL INCOME, IN TOKEN OF FILING OF RETURNS BY HIS BROTHER. SINCE THE COPIES OF DOCUMENTS FILED BY THE ASSESSEE DID NOT CONTAIN ANY COPIES OF FINAL ACCOUNTS ON THE BASIS O F WHICH INCOME OF HIS BROTHER WAS ARRIVED AT, THE ASSESSEE WAS ASKED TO FURNISH THE SAME FOR VERIFICATION IN SUPPORT OF HIS CLAIMS. SIN CE THE ASSESSEE FAILED TO FURNISH ANY OTHER DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIMS, AND IN ABSENCE OF PROPER/SATISFACTORY EXPL ANATION BY THE ASSESSEE TOWARDS THE CASH DEPOSITS IN HIS SB A/C, T HE AO TREATED THE ENTIRE CASH DEPOSIT AMOUNT OF RS. 56,96,000/- AS HI S UNEXPLAINED SOURCES INCOME AND THE SAME WAS ADDED TO THE INCOME RETURNED. 2.2 AS REGARDS THE ASSESSEES CLAIM OF DEDUCTION OF RS. 27,480/- U/S 10 TOWARDS HRA, SINCE THE ASSESSEE COULD NOT SU BSTANTIATE HIS CLAIM WITH DOCUMENTARY EVIDENCE, THE SAID AMOUNT WA S ADDED TO THE ASSESSEES INCOME. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A). 4. THE CIT(A) CONFIRMED THE ORDER OF THE AO BY OBSE RVING AS UNDER: E) THERE ARE NO BOOKS OF ACCOUNTS MAINTAINED BY MR. MOHD. NOORUDDIN. THEREFORE, THERE CANNOT BE ANY BASIS FOR THE COMPUTATION OF INCOME AND INCOME TAX RETURN FILED B Y HIM FOR A.Y. 2010-11. 3 ITA NO. 306/H/15 MOHD. ZAHEERUDDIN F) IT IS NOT UNDERSTOOD WHY MR.MOHD. NOORUDDIN WAS USING HIS BROTHER'S ACCOUNT (THE APPELLANT) WHEN MR.NOORUDDIN HAS ACCOUNT IN HIS NAME AS EVIDENT FROM EARLIER ASSESSMENT ORDE RS. THAT TOO WHEN THE ADDITIONS WERE MADE IN EARLIER YEARS ON AC COUNT OF CASH DEPOSITS. G) IT WAS EXPLAINED THAT MR.MOHD. NOORUDDIN WANTED TO HELP HIS BROTHER (THE APPELLANT) SO THAT THE APPELLANT COULD OBTAIN SOME LOANS FOR PURCHASING THE FLAT. IT WAS FURTHER EXPLA INED THAT THE APPELLANT HAD TO SHOW SOME TRANSACTIONS IN HIS ACCO UNT IN ORDER TO OBTAIN HOUSING LOAN. THIS REASON GIVEN IS TOTALL Y UNCONVINCING AS MR.MOHD. NOORUDDIN WAS DOING THE SAME TRANSACTIO N IN APPELLANT'S ACCOUNT EVEN FOR EARLIER YEARS ALSO. FU RTHER, THE APPELLANT PURCHASED FLAT ON 04.03.2010. COPY OF THE SALE DEED WAS SUBMITTED. ACCORDING TO THIS DEED, CHEQUE NO.66 2579 DATED 02.03.2010 DRAWN ON DEVELOPMENT CREDIT BANK, DILSUK HNAGAR, FOR THE AMOUNT OF RS.9,07,500/- WAS GIVEN. HOWEVER, VERIFICATION OF THE BANK ACCOUNT SHOWS THAT THE SOURCES FOR THE PAYMENT OF RS.9,07,500/WERE, IMMEDIATE CASH DEPOSITS MADE AND NOT ANY LOAN OBTAINED FROM ANY SOURCE. H) DURING THE COURSE OF APPEAL PROCEEDINGS, WHEN TH E AUTHORIZED REPRESENTATIVE WAS ASKED TO PRODUCE ANY THREE STUDE NTS FOR WHOM FINANCES WERE PROVIDED, IT WAS STATED THAT, IT WAS NOT POSSIBLE TO PRODUCE THE STUDENTS. HOWEVER, HE PRODU CED BANK ACCOUNTS OF 3 PERSONS FOR WHOM HE ARRANGED FUNDS. H OW APPELLANT COULD PRODUCE BANK ACCOUNTS WHEN HE COULD NOT PRODUCE THE INDIVIDUALS IS NOT UNDERSTOOD. L) DURING THE COURSE OF APPEAL PROCEEDINGS THE AUTH ORIZED REPRESENTATIVE SUBMITTED THAT HE HAS NO OBJECTION I F THE INCOME IS ESTIMATED OR THE PEAK CREDIT IS CONSIDERED AS IN THE CASE OF EARLIER YEARS. HOWEVER, SUCH REQUEST OF THE AUTHORI ZED REPRESENTATIVE CANNOT BE CONSIDERED FOR THE REASONS THAT THERE IS NO EVIDENCE THAT THE DEPOSITS WERE OUT OF SRI MO HAMMED ZAHEERUDDIN, HYD. L TAKING TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, IT APPEARS THAT THE APPELLANT HAS NOT COME OUT WITH TH E FULL TRUTH EITHER DURING THE ASSESSMENT PROCEEDINGS OR DURING THE APPELLATE PROCEEDINGS. THERE IS NO EVIDENCE ON RECORD TO PROV E THAT, THE CASH WITHDRAWAL AND CASH DEPOSITS WERE USED FOR THE PURPOSE OF PROVIDING FINANCE TO THE STUDENTS/TO THE PERSONS TO ENABLE THEM TO OBTAIN VISAS FOR GOING ABROAD. NO SATISFACTORY E XPLANATION WAS GIVEN AS TO WHY THE APPELLANT LET HIS BROTHER TO US E HIS ACCOUNT. A COPY OF THE BANK ACCOUNT OF THE APPELLANT, MR. MO HD. ZAHEERUDDIN WITH ICICI BANK WAS SUBMITTED IN WHICH HIS SALARY WAS CREDITED. EVEN IN THIS ACCOUNT ALSO, THERE WERE FREQUENT CASH DEPOSITS, HOWEVER, THESE ARE SMALLER AMOUNTS. THERE FORE, IN VIEW OF THE ABOVE DISCUSSION, AS NO SATISFACTORY EXPLANA TION WAS 4 ITA NO. 306/H/15 MOHD. ZAHEERUDDIN SUBMITTED FOR THE CASH DEPOSITS MADE IN APPELLANT'S ACCOUNT, THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.56,96, 000/- IS CONFIRMED TOWARDS UNEXPLAINED CASH DEPOSITS IN APPE LLANT'S BANK ACCOUNT. 4.1 AS REGARDS THE ADDITION OF RS. 27,480/-, THE CI T(A) DIRECTED THE AO TO ALLOW THE CLAIM IF THE ASSESSEE PRODUCES EVID ENCE ON THIS ISSUE. 5. AGGRIEVED WITH THE ORDER OF THE CIT(A), THE ASSE SSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF A PPEAL: 1. THE HON'BLE CIT(A) IS NOT JUSTIFIED IN: A. APPRECIATING THE FACT THAT THE TRANSACTIONS BELO NG TO THE ASSESSEE'S BROTHER ONE MR. NOORUDDIN, INSPITE OF PR ODUCING ALL THE RELEVANT SUPPORTING MATERIAL. B. STATING THAT THE ASSESSEE HAS NOT COME OUT WITH FULL TRUTH, WHEN THE ASSESSEE AND HIS BROTHER BOTH APPEARED AND BOTH CONFIRMED THE TRANSACTIONS BELONGING TO WHOM. C. NOT OBSERVING THE FACT THAT THE CREDITS IN THE B ANK ACCOUNT EMANATED FROM THE WITHDRAWALS ITSELF. THE ASSESSEE REQUESTED FOR ADDITION OF INCOME, IF ANY, EITHER ON THE BASIS OF PEAK CREDIT OR ESTIMATING THE INCOME AT 8% OF TOTAL DEPOSITS AS WAS DONE IN THE ASSESSEE'S BROTHER'S ASSESSMENT/S OF EARLIER YE ARS U/S. 143(3), COPIES OF WHICH WERE PRODUCED BEFORE THE CI T(A). D. STATING THAT THE ASSESSEE'S BROTHER HAS NOT MAIN TAINED ANY BOOKS OF ACCOUNT, WHILE SOME LEDGER EXTRACTS WERE P RODUCED IN RELATION TO WITHDRAWALS AND DEPOSITS IN BANK ACCOUN T PERTAINING TO THE BORROWERS OF ASSESSEE'S BROTHER. E. IN STATING THAT THE ASSESSEE COULD NOT PRODUCE A T LEAST THREE PERSONS WHO HAVE TAKEN MONEY FROM THE ASSESSEE'S BR OTHER. IT IS FACT THAT IT IS A ONE TIME AFFAIR AND NO CONTINUING RELATIONSHIP EXISTS WITH THE BORROWERS. IT IS WITH THE PERSONAL RAPPORT WITH THE BANKER/S, THE ASSESSEE'S BROTHER COULD GET THE BANK STATEMENT/S OF BORROWERS OF THAT TIME FROM THE BANK. THIS TOO W AS MIS INTERPRETED BY THE CIT(A) STATING THAT WHILE THE BA NK ACCOUNTS COULD BE OBTAINED, WHY NOT THE PERSONS? 2. THE HON'BLE CIT(A) MUST HAVE OBSERVED THAT, FROM THE SOURCES OF INCOME(SALARY) FOR THE ASSESSEE, WHICH DOES NOT APPEAR TO BE DENIED BY ANY AUTHORITY, IT NOT POSSIBLE TO MAINTAI N SUCH A BANK ACCOUNT. 5 ITA NO. 306/H/15 MOHD. ZAHEERUDDIN 3. THE HON'BLE CIT(A) MUST HAVE APPRECIATED THE FAC T THAT EVEN THE PURCHASE OF FLAT WAS FUNDED BY HIS BROTHER IN T HE YEAR, WHICH WAS SMALL AMOUNT OF ABOUT RS. 9.07 LAKHS. THE ASSES SEE AND HIS BROTHER WERE FILING THEIR RETURNS FOR VERY LONG YEA RS AND THE AMOUNT SPENT WAS OUT OF THE SOURCES. 4. THE ASSESSEE PRAYS FOR DELETION OF ADDITIONS MAD E ON THE BASIS OF ABOVE GROUNDS AND ANY OTHER GROUND OR GROU NDS THAT MAY BE URGED AT THE TIME OF HEARING. 6. LD. AR SUBMITTED THAT THE SAID BANK ACCOUNT WAS OPERATED BY HIS BROTHER, WHICH WAS CONFIRMED BY HIS BROTHER BEF ORE THE AO. IN CLEAR TERMS AOS BROTHER WAS DEALING WITH ARRANGING EDUCATION LOAN TO STUDENTS. HE SUBMITTED THAT ASSESSEE HAS FACILITATE D HIS BROTHER TO OPERATE HIS BANK ACCOUNT, THE INCOME MAY BE ARRIVED AT 8% ON DEPOSITS ON PRESUMPTION BASIS. 7. LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF AO AND CIT(A) AND SUBMITTED THAT THE INCOME MAY BE ESTIMAT ED @ 12%. 8. CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PE RUSED THE MATERIAL FACTS ON RECORD AS WELL AS THE ORDERS OF R EVENUE AUTHORITIES. THE FACT IS THAT THE ASSESSEE BEING A SALARIED EMPL OYEE, ALLOWED HIS BROTHER TO OPERATE HIS BANK ACCOUNT TO RUN HIS BUSI NESS. THE SAME WAS CONFIRMED BY HIS BROTHER BEFORE THE AO. IN OUR CONSIDERED VIEW, WE WILL HAVE TWO WAYS TO ADDRESS THE CURRENT ISSUE. EITHER TO ASSESS THE INCOME IN THE HANDS OF ASSESSEES BROTHER OR AS SESS THE INCOME IN THE HANDS OF ASSESSEE ON PRESUMPTIVE BASIS. THE ASSESSMENT IN THE HANDS OF ASSESSEES BROTHER MAY NOT FEASIBLE CO NSIDERING THE FACT THAT ALL THE TRANSACTIONS DONE IN THE ASSESSEES BA NK ACCOUNT. IT WILL PUT THE AO IN DIFFCULT SITUATION. THE EASIEST WAY I S TO ASSESS THE INCOME IN THE HANDS OF THE ASSESSEE ON PRESUMPTIVE BASIS. WE FIND IT REASONABLE AND APPROPRIATE TO CHARGE AT 8% OF THE D EPOSITS AS HIS INCOME. ACCORDINGLY, WE DIRECT THE AO TO ESTIMATE THE INCOME OF THE ASSESSEE AT 8% OF THE TOTAL DEPOSIT AMOUNTS AS DONE IN THE CASE OF ASSESSEES BROTHER. 6 ITA NO. 306/H/15 MOHD. ZAHEERUDDIN 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 5 TH AUGUST, 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 5 TH AUGUST, 2016 KV COPY TO:- 1) MOHD. ZAHEERUDDIN, C/O B. NAGESH, CA, 2-2-1144/ 1/B, POST OFFICE LANE, NEW NALLAKUNTA, HYDERABAD 5 00 044. 2) ITO, WARD 12(4), HYDERABAD. 3) CIT(A) - 1, HYDERABAD 4 CIT - I , HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.