Ajju Chakaradher, Visakhapatnam V. The ITO, Visakhapatnam

ITA 352/VIZ/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3810 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 19-07-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V APPALA RAJU
• Keywords: Peak credit; Additional evidence; TDS
• Section: 44AD

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 352 /VIZ/ 201 6 ( / ASSESSMENT YEAR: 20 09 - 1 0 ) AJJU CHAKRADHAR D.NO.2 - 10 - 13 MINI(PO) STUDIO ROAD VISAKHAPATNAM [PAN : A GLPC9710C ] VS. ITO WARD - 5(1) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI , AR / RESPONDENT BY : SHRI V.APPALA RAJU , DR / DATE OF HEARING : 2 5 . 04. 201 8 / DATE OF PRONOUNCEMENT : 04 . 0 5 .201 8 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX ( APPEALS) [CIT(A)] - 2 , GUNTUR VIDE ITA NO. 164/2011 - 12 DATED 12 . 05 .201 6 FOR THE ASSESSMENT YEAR 20 09 - 1 0 . 2 ITA NO . 352 /VIZ/201 6 AJJU CHAKRADHAR, VISAKHAPATNAM 2. THE ASSESSSEE IS CARRYING ON REAL ESTATE BUSINESS. FOR THE ASSESSMENT YEAR 2009 - 10, THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 2,06,320/ - . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER(AO) FOUND THAT THE ASSESSEE HAS MADE CASH DEPOSITS OF RS.8,75,000/ - FOR WHICH THE SOURCE WAS NOT EXPLAINED BY THE ASSESSEE. HENCE , THE AO MADE THE ADDITION OF RS.8,75,000/ - . 3. AGGRI EVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND ARGUED THAT THE CASH DEPOSITS OF RS.8,75,000/ - W ERE RELATED TO THE CONTRACT WORKS AND REQUESTED TO ESTIMATE THE INCOME @8% U/S 44AD OF I.T.ACT. HOWEVER, THE ASSESSEE DID NOT FU RNISH ANY EVIDENCE TO PROVE THAT HE HAS UNDERTAKEN THE CONTRACT WORKS AND NO TAX WAS DEDUCTED AT SOURCE . B EFORE THE CIT(A) , T HE ASSESSEE FILED LETTERS FROM THE FOLLOWING PERSONS STATING THAT THE ASSESSEE HAD RECEIVED THE SUMS FOR UNDERTAKING THE CONTRACT WORKS. - RS.1.8 LAKHS RECEIVED FROM R.BHASKAR RAO TOWARDS CONTRACT RECEIPTS. - RS.1.25 LAKHS RECEIVED FROM K.SRINIVASA RAO TOWARDS CONTRACT RECEIPTS. - RS.2.1 LAKHS RECEIVED FROM KANAKA RAJU TOWARDS CONTRACT RECEIPTS. - RS.2.1 LAKHS RECEIVED FROM SRIKANT TOWARDS CONTRACT RECEIPTS. - RS.1.5 LAKHS RECEIVED FRO M MAHESWAR RAO TOWARDS CONTRACT RECEIPTS. TOTAL RS.8.75 LAKHS 3 ITA NO . 352 /VIZ/201 6 AJJU CHAKRADHAR, VISAKHAPATNAM 3 . 1. THE CIT(A) FORWARDED THE LETTERS SUBMITTED BY THE ASSESSEE TO THE AO AND REQUESTED HIM CAUSE ENQUIRIES AND SUB MIT THE REMAND REPORT. THE AO ISSUED SUMMONS TO ALL THE CONTRACTEES, BUT THERE WAS NO COMPLIANCE FROM THE CONTRACTEES. HENCE, T HE AO SUBMITTED THE REMAND REPORT REQUESTING THE CIT(A) TO CONFIRM THE ADDITION AND TO REJECT THE ADDITIONAL EVIDENCE. THE LD.C IT(A) OBSERVED CERTAIN MISMATCHES WITH REGARD TO THE NATURE OF BUSINESS AND APPLICATION OF SECTION 44AD IN THE RETURN OF INCOME AND VIEWED THAT INCONSISTENT STANDS TAKEN BY THE ASSESSEE WITH REGARD TO THE NATURE OF BUSINESS AND NON RESPONSE FROM THE CREDITORS AT THE TIME OF REMAND PROCEEDINGS SHOWS THAT THE CONTENTION OF THE ASSESSEE THAT THE BANK DEPOSITS WERE RELATED TO CONTRACT WORKS WAS TO BE DISBELIEVED. HOWEVER, CONSIDERING THE SUBMISSION OF THE ASSESSEE FOR TELESCOPING CASH DEPOSITS , THE LD. C IT(A) DIRECTED THE AO TO MAKE THE ADDITION OF PEAK CREDIT AMOUNTING TO RS.6,95,250/ - AND ALLOWED THE APPEAL OF THE ASSESSEE PARTLY. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT ( A ) , THE ASSESSEE IS IN APPEAL BEFORE US. DURING THE APPEAL HEARING, THE LD.AR ST RONGLY ARGUED THAT THE SUM OF RS.8,75,000/ - WAS CONTRACT RECEIPTS, HENCE REQUESTED TO ESTIMATE THE INCOME @8% OF CONTRACT RECEIPTS. 4 ITA NO . 352 /VIZ/201 6 AJJU CHAKRADHAR, VISAKHAPATNAM 5. ON THE OTHER HAND, THE LD.DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THOUGH THE ASSESSEE CLAIMED THAT THE SUM OF RS.8,75,000/ - W AS CONTRACT RECEIPTS AND REQUESTED FOR ESTIMATION OF INCOME, I T IS EVIDENT FROM THE STATEMENT OF COMPUTATION OF INCOME THAT THE ASSESSEE HAS ADMITTED N ET PRO FIT FROM REAL ESTATE TRANSACTION, NET INCOME FROM COMMISSION RECEIVED WHICH PROV ES THAT THE ASSESSEE HAS MAINTAINED THE BOOKS OF ACCOUNTS. THE ASSESSEE HAS COMPLETELY OMITTED THE CASH DEPOSITS MADE IN THE LAKSHMI VILAS B ANK FROM TAXATION AND BANK ACCOUNT SHOWS THE WITHDRAWL S FOR PAYMENTS TO STEEL CITY SECURITIES, KAPIL CHIT FUNDS, LIC OF INDIA, UKKUNAGAR CHITS ETC. , BUT NOT FOR ANY CONTRACT WORKS. DURING THE ASSESSMENT PROCEEDINGS BEFORE THE AO OR BEFORE THE CIT(A), THE ASSESSEE FAILED TO FURNISH ANY EVID ENCE TO SHOW THAT THE CASH DEPOSITS MADE IN THE LAKSHMI VILAS BANK IN QUESTION REPRESENT THE CONTRACT RECEIPTS. NO TDS WAS MADE AS RIGHTLY OBSERVED BY THE LD. CIT(A) AND N O DETAILS OF THE CONTRACT WORK CARRIED OUT BY THE ASSESSEE WITH REGARD TO THE NATURE OF CONTRACT, NATURE OF WORK DONE , MATERIAL PURCHASED, PAYMENTS MADE, LOCATION OF THE WORK ETC. WERE FURNISHED BY THE ASSESSEE. THE ASSESSEE ALSO DID NOT SUBMIT ANY 5 ITA NO . 352 /VIZ/201 6 AJJU CHAKRADHAR, VISAKHAPATNAM EVIDENCE FROM THE LOCAL MUNICIPALITY WITH REGARD TO THE NATURE OF PROFESSION CARRIED ON BY THE ASSESSEE. NO EVIDENCE WHATSOEVER HAS BEEN FURNISHED BY THE ASSESSEE TO ESTABLISH THAT THE CASH DEPOSITS IN QUESTION WERE CONTRACT RECEIPTS. HENCE, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE DEPOSITS WERE RELATED TO CONTRACT WORKS AND TO ESTIMATE THE NET PROFIT ON THE DEPOSITS. THE AO HAS RIGHTLY ASSESSED THE CASH DEPOSITS AS UNEXPLAINED DEPOSITS AND THE CIT(A) HAS RIGHTLY DIRECTED THE AO TO TAX THE PEAK CREDITS AS INCOME. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF T HE LD. CIT(A) AND THE SAME IS UPHELD. THE APPEAL OF THE ASSESSEE IS DISMISSED . 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 4 TH MAY , 20 1 8 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 04 .0 5 .2018 L.RAMA, SPS 6 ITA NO . 352 /VIZ/201 6 AJJU CHAKRADHAR, VISAKHAPATNAM / COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT - AJJU CHAKRADHAR , D.NO.2 - 10 - 13 , MINI(PO) STUDIO ROAD , VISAKHAPATNAM 2 . / THE ITO, WARD - 5(1), VISAKHAPATNAM 3 . THE PR. COMMISSIONER OF INCOME TAX - 2 VI SAKHAPATNAM 4. THE COMMISSIONER OF INCOME - TAX(APPEALS) - 2 , GUNTUR, CAMP : VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6. / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM