Sri Angadi Srinivasa Rao, D.No. 26-31-144, Guntur V. THE ITO, Ward - 1(1), Guntur, Guntur

ITA 322/VIZ/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6743 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 10-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R S NARAYAN
• Section: 142(1); 144

Judgement Text

ITA NO.322/VIZAG/2012 ANGADI SRINIVASA RAO, GUNTUR 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER ./I.T.A.NO.322/VIZAG/2012 ( / ASSESSMENT YEAR: 2008-09) ANGADI SRINIVASA RAO GUNTUR ITO, WARD - 1(1), GUNTUR [PAN NO. AEOPA6988D ] ( / APPELLANT) ( ! / RESPONDENT) / APPELLANT BY : SHRI G.V.N. H ARI, AR / RESPONDENT BY : SHRI S.R.S. NARAYAN, DR / DATE OF HEARING : 22.06.2017 / DATE OF PRONOUNCEMENT : 07.09.2017 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE CIT(A), GUNTUR DATED 24.11.2011 FOR THE ASSESSMENT YEAR 2008-09. 2. GROUND NOS.1,2 & 3 ARE NOT PRESSED AND THE SAME ARE DISMISSED AS NOT PRESSED. GROUND NOS.4, 5 & 6 RAISED BY THE ASSESSEE ARE RELATING TO ESTIMATION OF INCOME, DISALLOWANCE OF EXPENSES, ADDITION IN RESPECT OF INADEQUATE PERSONAL EXPENSES. DURING THE COURSE OF THE ASSESSMENT ITA NO.322/VIZAG/2012 ANGADI SRINIVASA RAO, GUNTUR 2 PROCEEDINGS, THE A.O. HAS OBSERVED THAT THE ASSESSE E IS AN INDIVIDUAL DERIVING INCOME FROM TRADING IN CHILLIES AND WORKIN G CHARGES. THE ASSESSEE HAD FILED A RETURN OF INCOME BY DECLARING TOTAL INCOME OF ` 2,03,726/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) & 142(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') WERE ISSUED TO THE ASSESSEE. THE A.O. HAS ALSO GIVEN SUFFICIENT OPPORTUNITIES TO THE ASSESSEE FOR HEARIN G, HOWEVER, THE ASSESSEE HAS NOT APPEARED BEFORE THE A.O. THE ASSE SSEE HAS NOT FILED BOOKS OF ACCOUNTS AND NO EVIDENCE TO SUPPORT THE RE TURN FILED BY HIM. ACCORDINGLY, A.O. HAS COMPLETED EX-PARTE ASSESSMENT U/S 144 OF THE ACT. IN THE ASSESSMENT ORDER, THE A.O. HAS FURTHER OBSERVED THAT IT IS SEEN FROM THE ACCOUNTS COPY OF THE ASSESSEE THAT HE HAS MADE A SALES TO THE TUNE OF ` 3,19,71,278/-. THE A.O. BY CONSIDERING THE TRADIN G RESULTS OF OTHER TRADERS IN THE SIMILAR LINE OF BUS INESS, HE HAS FOUND THAT THE PROFIT MARGIN IS BETWEEN 2 TO 4% OF THE TURNOVE R. THEREFORE, THE A.O. BY CONSIDERING THE OTHER TRADERS IN THE SIMILA R LINE OF BUSINESS, THE PROFIT IS ESTIMATED AT 2% OF THE TOTAL TURNOVER, WH ICH WORKS OUT TO ` 6,39,425/- AND THE SAME IS ADDED TO THE TOTAL INCOM E OF THE ASSESSEE. IN SO FAR AS EXPENSES CLAIMED BY THE ASSESSEE, THE A.O. HAS OBSERVED THAT THE ASSESSEE HAS CLAIMED VARIOUS EXPENSES OF ` 24,38,455/-. IN THE ABSENCE OF ANY EVIDENCE IN SUPPORT OF THE ABOVE EXP ENDITURE, THE ITA NO.322/VIZAG/2012 ANGADI SRINIVASA RAO, GUNTUR 3 EXPENDITURE CONSIDERED TO BE ON HIGHER SIDE, ACCORD INGLY, HE HAS DISALLOWED 20% OF THE EXPENSES CLAIMED BY THE ASSES SEE, WHICH WORKS OUT TO ` 4,87,691/- AND SAME IS ADDED TO THE TOTAL INCOME O F THE ASSESSEE. IN SO FAR AS INADEQUATE PERSONAL DRAWING S IS CONCERNED, IN THE ASSESSMENT ORDER, THE A.O. HAS OBSERVED THAT IT IS SEEN FROM THE CAPITAL ACCOUNT FILED ALONG WITH RETURN OF INCOME, THE DRAWINGS MADE BY THE ASSESSEE FOR MEETING PERSONAL EXPENSES WERE ` 1,58,391/-, OUT OF THIS THE ASSESSEE PAID LIC PREMIUM OF ` 25,272/-, WHICH HAS REDUCED HIS NET DRAWINGS TO ` 1,37,119/-. BY CONSIDERING THE PREVAILING COST OF LIVING THE DRAWINGS MADE BY THE ASSESSEE FOR MEETING HIS D OMESTIC EXPENSES TREATED AS INADEQUATE, IT IS HELD THAT THE ASSESSEE HAS MADE A PART OF HIS PERSONAL EXPENSES OUT OF INCOME FROM UNEXPLAINED SO URCES, THE DRAWINGS ARE REASONABLY FIXED AT ` 2 LAKHS AND THE DIFFERENCE OF ` 66,881/- IS ADDED TO THE TOTAL INCOME OF THE ASSESS EE. 3. ASSESSEE CARRIED MATTER IN APPEAL BEFORE THE CIT (A). THE LD. CIT(A) POSTED THE APPEAL FOR SEVERAL TIMES. NO ONE APPEARED. FINALLY IN RESPONSE TO THE NOTICE OF HEARING ON 21.11.2011, TH E ASSESSEE FILED A WRITTEN SUBMISSION ALONG WITH LETTER REQUESTING TO DISPOSE OF THE APPEAL ON MERITS. THE LD. CIT(A) BY CONSIDERING THE WRITT EN SUBMISSIONS OF THE ASSESSEE, THE APPEAL FILED BY THE ASSESSEE IS DISPO SED. SO FAR AS DISALLOWANCE OF EXPENSES ARE CONCERNED, THE LD. CIT (A) OBSERVED THAT ITA NO.322/VIZAG/2012 ANGADI SRINIVASA RAO, GUNTUR 4 THE A.O. HAS MADE DISALLOWANCE OF 20% OF THE EXPEN DITURE CLAIMED BY THE ASSESSEE ON ITEMS LIKE FREIGHT, GUNNIES, HAMALI AND MACHINERY REPAIRS FOR WANT OF EVIDENCE SUCH AS DETAILS, BILLS , VOUCHERS, ETC. ASSESSEE HAS NOT FILED ANY DETAILS BEFORE THE A.O. AND EVEN BEFORE ME, ASSESSEE CHOSE TO FURNISH WRITTEN SUBMISSIONS. THE ASSESSEE HAS ONLY FILED LEDGER ACCOUNT COPIES WHICH WOULD NOT MEET TH E REQUIREMENT; BUT EVIDENCES WERE REQUIRED TO BE PRODUCED. WITH THE A BOVE OBSERVATION, CIT(A) CONFIRMED THE ORDER OF THE A.O. 4. IN SO FAR AS INADEQUATE DRAWINGS ARE CONCERNED, THE A.O. HAS OBSERVED THAT THE ASSESSEE RESIDES IN HIS OWN RESID ENCE, EXPENSES FOR FOOD, MEDICINES, DRESS, SCHOOL FEE, ETC. FOR 4 PERS ONS, IN MY CONSIDERED OPINION, IS SMALL AND INADEQUATE. HAVING REGARD TO THE VARIOUS FACTORS MENTIONED ABOVE, I AM OF THE OPINION THAT AN AMOUNT OF ` 16,000/- PER MONTH FOR 4 PERSONS IS ADEQUATE, THUS THE ANNUAL A MOUNT BEING ` 1,92,000/-, WHEREAS THE A.O. HAS TAKEN SUCH EXPENDI TURE TO BE AT ` 2 LAKHS, WHILE THE AMOUNT SHOWN IN THE BOOKS WAS ` 1,37,119/-. THUS, THE ADDITION IS UPHELD TO THE EXTENT OF ` 54,881/- INSTEAD OF ` 66,881/-, WHEREIN THE ASSESSEE IS GRANTED RELIEF TO THE EXTEN T OF ` 12,000/-. ITA NO.322/VIZAG/2012 ANGADI SRINIVASA RAO, GUNTUR 5 5. AGGRIEVED BY THE ORDER OF LD. CIT(A), LD. COUNSE L FOR THE ASSESSEE HAS SUBMITTED THAT ONCE AN ESTIMATION IS MADE, NO E XPENDITURE HAS TO BE DISALLOWED AS PER THE DECISION OF THE HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS LIMITED VS. CI T (2012) 232 ITR 776 AND SUBMITTED THAT THE ORDER PASSED BY THE CIT(A) B Y CONFIRMING THE ORDER OF THE A.O. IN RESPECT OF DISALLOWANCE OF EXP ENDITURE AND INADEQUATE SELF DRAWINGS IS CONTRARY TO THE DECISIO N OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF INDWELL CO NSTRUCTED LIMITED VS. CIT (SUPRA) AND SUBMITTED THAT THE SAME MAY BE DELE TED. 6. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORT ED THE ORDER PASSED BY THE AUTHORITIES BELOW. 7. I HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE A.O. HAS GIVEN AS MANY AS OPPORTUNITIES TO THE ASSESSEE TO SUBSTANTIATE HIS CASE BEFORE HIM. HOWEVER, THE ASSESSEE NEITHER APP EARED BEFORE THE A.O. NOR FILED ANY BOOKS OF ACCOUNTS OR ANY DETAILS IN RESPECT OF THE BUSINESS CARRIED OUT BY THE ASSESSEE AND ALSO VARIO US EXPENSES CLAIMED BY HIM. THE A.O. ON THE BASIS OF MATERIAL AVAILABL E AS PER THE RETURN FILED BY THE ASSESSEE, ASSESSMENT IS COMPLETED U/S 144 OF THE ACT. EVEN THE LD. CIT(A) HAS GIVEN AS MANY AS OPPORTUNITIES T O THE ASSESSEE, ITA NO.322/VIZAG/2012 ANGADI SRINIVASA RAO, GUNTUR 6 HOWEVER, THE ASSESSEE HAS APPEARED ON 22.11.2011 AN D FILED A WRITTEN SUBMISSION REQUESTING HIM TO DISPOSE OF THE APPEAL ON MERITS. THE LD. CIT(A) IN HIS ORDER, CATEGORICALLY OBSERVED THAT TH E ASSESSEE HAS NOT FILED ANY EVIDENCE EXCEPT PRODUCING SOME LEDGER EXT RACTS IN RESPECT OF THE EXPENSES CLAIMED BY THE ASSESSEE. HE HAS ALSO OBSERVED THAT ONLY BASING ON LEDGER EXTRACTS, NO EXPENDITURE CAN BE AL LOWED AND THEREFORE CONFIRMED THE ORDER OF THE A.O. BY CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, IN THE INTEREST OF JUSTI CE, THE ENTIRE ISSUES HAS TO GO BACK TO THE A.O. TO DECIDE THE CASE BASED ON THE BOOKS OF ACCOUNTS AND RELEVANT EVIDENCES. THEREFORE, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND SEND IT BACK TO THE A. O. TO ADJUDICATE THIS ISSUE DE-NOVO IN ACCORDANCE WITH LAW. 8. IN SO FAR ADDITION MADE BY THE A.O. IN RESPECT O F ` 21,00,383/- IS CONCERNED, THE A.O. HAS OBSERVED THAT, IT IS SEEN F ROM THE ASSESSEES BALANCE SHEET THAT THE ASSESSEE IS SHOWING LIABILIT Y TO THE EXTENT OF ` 21,00,383/- AS CASH CREDITORS IN THE NAME OF ASSESS EES RELATIVES AND HIS ACCOUNTANT, ETC. IN THE ABSENCE OF ANY EVIDENCE TO PROVE THAT THESE LIABILITIES ARE GENUINE, THE SAME ARE TREATED AS AS SESSEES INCOME AND ACCORDINGLY ADDITION WAS MADE. ON APPEAL, LD. CIT( A) SUSTAINED ` 9,20,383/- BY CONSIDERING THE WRITTEN SUBMISSIONS F ILED BY THE ASSESSEE. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUB MITTED THAT BEFORE ITA NO.322/VIZAG/2012 ANGADI SRINIVASA RAO, GUNTUR 7 THE A.O., NO DETAILS ARE FILED. EVEN BEFORE THE CI T(A), ONLY WRITTEN SUBMISSIONS ARE FILED. NO CORRECT FACTS ARE COMING OUT AND SUBMITTED THAT THE ISSUE MAY BE REMITTED BACK TO THE A.O. FOR DE-NOVO CONSIDERATION. 9. ON THE OTHER HAND, THE LD. D.R. HAS NOT RAISED A NY OBJECTION. 10. IN VIEW OF THE REQUEST MADE BY BOTH THE PARTIES , WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND DIRECT THE A.O. TO DECIDE THIS ISSUE DE-NOVO IN ACCORDANCE WITH LAW, AFTER GIVING SUFFIC IENT OPPORTUNITY TO THE ASSESSEE. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 7 TH SEPT17. SD/- ( . ) (V. DURGA RAO) /JUDICIAL MEMBER # /VISAKHAPATNAM: ' /DATED : 07.09.2017 VG/SPS ITA NO.322/VIZAG/2012 ANGADI SRINIVASA RAO, GUNTUR 8 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT ANGADI SRINIVASA RAO, D.NO.26-31 -144, 5 TH LANE, A.T. AGRAHARAM, GUNTUR 2. / THE RESPONDENT THE ITO, WARD-1(1), GUNTUR 3. + / THE CIT, GUNTUR 4. + ( ) / THE CIT (A), GUNTUR 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM