M. Shiv Kumar, Hyderabad, Hyderabad V. ITO, Ward-8(2), Hyderabad, Hyderabad

ITA 331/HYD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2230 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-12-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 24-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GE E TINDERMANN
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained cash credit; Additional evidence
• Section: 44AD; 80C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 331 /HYD/2017 ASSESSMENT YEAR: 2009 - 2010 SRI M. SHIV KUMAR, H.NO. 1 - 47, NEAR COLLEGE ROAD, SHAMSHABAD, HYDERABAD. [PAN: AJRPM 7308 K ] VS INCOME TAX OFFICER, WARD - 8(2), HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A.V. RAGHURAM FOR REVENUE : MS. GE E TINDERMANN, DR DATE OF HEARING : 28 - 12 - 2017 DATE OF PRONOUNCEMENT : 28 - 1 2 - 2017 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT(A) - 10, HYDERABAD FOR THE ASSESSMENT YEAR 2009 - 2010. 2. THE ISSUE IN THIS APPEAL IS WITH REFERENCE TO THE ADDITION OF RS. 26,07,570/ - BEING CASH DEPOSITS IN SAVINGS BANK ACCOUNT REJECTING THE ASSESSEES CONTEN TION THAT THESE ARE SALE PROCEEDS OF THE BUSINESS. ASSESSEE IS THE PROPRIETOR OF M/S. BHAVANI TRADERS, DEALING IN RICE ON THE LICENCE ISSUED BY THE GRAM PANCHAYAT AND OPERATES IN SHAMSHABAD MARKET. HE PURCHASES FROM THE FARMERS WHO BRING PADDY / RICE AND SELLS THEM MOSTLY IN CASH. ASSESSEE FILED RETURN OF INCOME FOR THE YEAR DISCLOSING TURNOVER OF RS. 11,83,600/ - AND PROFIT AT RS. 1,75,000/ - AT PROFIT RATIO OF 14.78% . DURING THE SCRUTINY PROCEEDINGS , ASSESSEE REVISED THE COMPUTATION ADMITTING TURNOVER O F R S. 35,85,355/ - AND PROFIT AT RS. 2,50,000/ - AT THE RATE OF (6.97%). A.O. WHILE ACCEPTING THE 2 REVISED PROFIT OF RS. 2,50,000/ - , FURTHER ADDED THE AMOUNT OF RS. 26,07,570/ - BEING THE DEPOSITS IN BANK ACCOUNT AS UNEXPLAINED INCOME, REJECTING THE ASSESSE ES CONTENTION THAT THESE ARE SALE PROCEEDS. 3. BEFORE THE CIT(A), ASSESSEE FILED CERTAIN CONFIRMATION S AND ADDITIONAL EVIDENCE WHICH W ERE REMANDED TO A.O. FOR ENQUIRY. A.O. IN THE REMAND REPORT ADMITTED THAT ASSESSEE IS IN THE BUSINESS BUT, SINCE SALES A RE MADE IN CASH, HE COULD NOT VERIFY THE SALES. THE MAJOR PURCHASES FROM MR. K. SHIVA KUMAR WERE VERIFIED AND FOUND TO BE GENUINE. HE GAVE THE REMAND REPORT TO LD. CIT(A) WHICH WAS EXTRACTED IN PARA 5 OF THE LD. CIT(A) ORDER. 4. EVEN THOUGH THE PURCHASES WERE FOUND GENUINE, ON THE REASON THAT ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE DEPOSITS IN BANK ACCOUNT AND DISCREPANCIES IN NAMES OF FARMERS AND TURNOVER REPORTED, LD. CIT(A) DISMISSED THE APPEAL. 5. IT WAS THE SUBMISSION THAT ASSESSEE IS A SMALL TRADER AND HAS DONE BUSINESS IN SHAMSHABAD MARKET IN CASH. DUE TO INEFFICIENCY OF THE ACCOUNTANT, THE SALES ARE NOT CORRECTLY REPORTED. REFERRING TO THE ORDER OF THE A.O. AND REMAND REPORT IT WAS SUBMITTED THAT ASSESSEE COULD SUBSTAN TIATE THE PURCHASES, BUT THE SALES COULD NOT BE SUBSTANTIATED AS IT WAS IN CASH. REFERRING TO THE NATURE OF BANK DEPOSITS IT WAS SUBMITTED THAT THE Y ARE OF THE SALE PROCEEDS AND NOT CASH CREDITS. LD COUNSEL ADMITTED FOR ESTIMATION OF INCOME ON THE TURNOV ER UNDER THE PROVISIONS OF SECTION 44AD OR EVEN AT 14.78% , ORIGINALLY ADMITTED BY ASSESSEE ON A LESSER TURNOVER. 6. LD. DR HOWEVER SUBMITTED THAT THE ASSESSEE HAS NOT MAINTAINED BOOKS AND NO EVIDENCE WAS FURNISHED REGARDING SALE PROCEEDS. THE ORDER OF CIT (A) WAS RELIED. 3 7. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE DOCUMENTS PLACED ON RECORD. THERE IS NO DOUBT THAT ASSESSEE IS INVOLVED IN RICE TRADING. THE REMAND REPORT OF THE A.O. DO IN D I C A T E THAT THE ASSESSEE HAS PURCHASED RICE AND TRADED THEM. AS SEEN FROM THE BANK STATEMENT, THE DEPOSITS ARE MOSTLY IN ODD AMOUNTS LIKE RS. 30,700/ - ; RS. 35,600/ - ; RS. 74,000/ - ; RS. 41,505/ - ETC., WHICH INDICATE THAT THEY ARE NOT CASH CREDITS BUT SALE PROCEEDS. CONSIDERING THAT ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNT PROPERLY AND BEING A SMALL TRADER, I AM OF THE OPINION THAT ON THE BASIS OF THE DOCUMENTS PLACED ON RECORD AND REMAND REPORT, IT CAN BE CONCLUDED THAT THE DEPOSITS IN BANK ACCOUNT ARE SALE PROCEEDS OF THE RICE BUSINESS AND SAME CANNOT BE BROUGHT TO TAX AS UNEXPLAINED CASH CREDITS. 7.1. IT IS INTERESTING TO NOTE THAT A.O HAS ACCEPTED THE REVISED TURNOVER AND REVISED PROFIT OFFERED A S THE COMPUTATION S T A R T S FROM THE REVISED INCOME OFFERED. THEREFORE, IT IS NOT PROPER TO ACCEPT THE REV ISED TURNOVER AND FURTHER MAKE ADDITION OF SAME DEPOSITS AS CASH CREDITS. 7.2. CONSIDERING THE ABOVE, I DELETE THE ADDITION OF CASH CREDIT. HOWEVER, THE ASSESSEES REVISED COMPUTATION HAS REDUCED THE PROFIT RATIO . CONSIDERING THAT THE LD COUNSEL HAS OFFE RED THE PROFIT RATIO AT 14.78% ORIGINALLY OFFERED, I DIRECT THE A.O. TO ESTIMATE THE PROFIT AT 14.78% ON THE REVISED TURNOVER AS INCOME FROM BUSINESS . OTHER DEDUCTIONS CLAIMED U/S 80C SHOULD BE ALLOWED ON THE REVISED INCOME ESTIMATED. ORDERED ACCORDINGLY. 8. IN THE RESULT, APPEAL IS ALLOWED PARTLY. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DECEMBER, 2017. S D / - (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED: 28 TH DECEMBER , 2017 4 OKK, SR.PS COPY TO 1. K.VASANTKUMAR, A.V. RAGHU RAM, P. VINOD & M. NEELIMA DEVI, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD - 1. 2. INCOME TAX OFFICER, WARD - 8(2), SIGNATURE TOWERS, OPP. BOTANICAL GARDENS, KONDAPUR, HYDERABAD 500 0084. 3. CIT(A) - 10 , HYDERABAD. 4. CHIEF COMMISS IONER (IT) (SZ) , HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE