Dr.G.Ram Reddy, Hyderabad V. Income Tax Officer, Ward 9(2), Hyderabad

ITA 370/HYD/2014

• Counselvise Citation: 37022514 RSA 2014
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Keywords: Revision of order; Assessment record
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 370/HYD/2014 ASSESSMENT YEAR: 2009-10 DR. G. RAM REDDY, HYDERABAD. PAN AECPG4927J VS. INCOME TAX OFFICER, WARD 9(2), HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.C. DEVDAS REVENUE BY : SHRI D. SUDHAKAR RAO DATE OF HEARING 23-03-2015 DATE OF PRONOUNCEMENT 01-04-2015 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE OR DER DATED 15/01/2014 PASSED BY LD. CIT-VI, HYDERABAD FOR THE AY 2009-10. 2. BRIEFLY THE FACTS ARE, ASSESSEE AN INDIVIDUAL IS A DOCTOR BY PROFESSION. FOR THE AY UNDER CONSIDERATION, ASSESSE E FILED HIS RETURN OF INCOME ON 29/09/2009 DECLARING TOTAL INCOME OF R S. 4,69,550. DURING THE ASSESSMENT PROCEEDING, ON VERIFICATION O F THE BANK STATEMENTS, AO FOUND THAT ASSESSEE HAS MADE CASH DE POSITS IN SB A/C HELD WITH SYNDICATE BANK, ANDHRA BANK AND INDIA N OVERSEAS BANK. WHEN AO CALLED UPON ASSESSEE TO EXPLAIN THE S OURCE OF CASH DEPOSITS MAINTAINED IN THE SAID BANK ACCOUNTS, IT W AS SUBMITTED BY ASSESSEE THAT MOST OF THE CASH DEPOSITS PERTAINED T O AGRICULTURAL INCOME OF HUF AND AMOUNTS RECEIVED FROM HIS WIFE. I N SUPPORT OF SUCH CONTENTION, ASSESSEE SUBMITTED COPIES OF AGRIC ULTURAL LAND 2 ITA NO. 370 /HYD/2014 DR. G. RAM REDDY HOLDING PASSBOOKS, COPY OF CERTIFICATE ISSUED BY JE EVAKA KHANDASARI SUGAR MILLS TOWARDS SALE OF SUGAR CANE AND COPY OF PARTITION OF HUF. AO AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AN D MATERIALS ON RECORD WAS OF THE VIEW THAT MOST OF THE CASH DEPOSI TS MUST BE TOWARDS PROFESSIONAL RECEIPTS. HE NOTED THAT TOTAL DEPOSITS IN THE BANK ACCOUNTS AMOUNTED TO RS. 55,69,724. AS ASSESSEE HAS SHOWN PROFESSIONAL RECEIPTS OF RS. 18,16,064, AO TREATED THE BALANCE CASH DEPOSITS OF RS. 37,53,660 AS UNDISCLOSED PROFESSION AL RECEIPTS OF ASSESSEE AND PROCEEDED TO ESTIMATE PROFIT ON SUCH R ECEIPTS AT 10% TO WHICH AS MENTIONED BY AO, ASSESSEE AGREED. ACCORDIN GLY, TOTAL INCOME WAS DETERMINED AT RS. 8,78,116. 3. LD. CIT IN EXERCISE OF POWER U/S 263 CALLED FOR ASSESSMENT RECORD OF ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND AFTER EXAMINING THE SAME WAS OF THE VIEW THAT ASSESSMENT ORDER PASSED IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE AS AO WITHOUT PROPERLY EXAMINING THE SOURCE OF SUCH DEPOSITS HAS ESTIMATED THE PROFIT AT 10%. ACCORDINGLY, HE ISSUED THE SHOW CAUS E NOTICE TO ASSESSEE TO EXPLAIN AS TO WHY ASSESSMENT ORDER SHAL L NOT BE SET ASIDE. IN REPLY TO THE SHOW CAUSE NOTICE, IT WAS S UBMITTED BY ASSESSEE THAT DEPOSITS INTO BANK ACCOUNTS WERE OUT OF AGRICULTURAL INCOME OF HUF AND WIFES INCOME. IN SUPPORT OF SUCH CONTENTION, ASSESSEE SUBMITTED, COPIES OF INCOME-TAX RETURNS FI LED BY HUF AND ASSESSEES WIFE SMT. G. SASHI REKHA. ASSESSEE ALSO SUBMITTED COPIES OF AGRICULTURAL PASSBOOKS, PARTITION/SETTLEM ENT DEED, ETC. TO SUBSTANTIATE ITS CLAIM THAT THE DEPOSITS WERE OUT O F AGRICULTURAL INCOME OF HUF. LD. CIT AFTER VERIFYING THE EVIDENCES SUBMI TTED BY ASSESSEE OBSERVED THAT THE RETURNS OF INCOME FILED BY HUF AS WELL AS OTHER DOCUMENTS WERE SUBMITTED BY ASSESSEE FOR THE FIRST TIME DURING THE REVISION PROCEEDING. AO HAS NEVER CALLED FOR NOR EX AMINED THESE EVIDENCES. HE, THEREFORE, OPINED THAT AO HAS NOT AP PLIED HIS MIND AS A RESULT OF WHICH ASSESSMENT ORDER PASSED HAS BECOM E ERRONEOUS 3 ITA NO. 370 /HYD/2014 DR. G. RAM REDDY AND PREJUDICIAL TO THE INTERESTS OF REVENUE. HAVING HELD SO, LD. CIT SET ASIDE THE ASSESSMENT ORDER WITH THE FOLLOWING DIREC TIONS: ACCORDINGLY, THE ASSESSMENT ORDER OF THE AO FOR THE AY 2009- 10 IS SET ASIDE WITH A DIRECTION TO VERIFY THE DEPO SITS MADE IN HIS BANK ACCOUNT WITH REFERENCE TO THE HUF FUNDS IN SUPPORT OF THE RETURN OF INCOME FILED AND ALSO VERIFY WHETHER THE FACTS NARRATED BY THE ASSESSEE WITH REGARD TO THE AGRICUL TURAL INCOME ARE CORRECT OR NOT, AS PER LAW, AFTER PROVIDING REA SONABLE OPPORTUNITY TO THE ASSESSEE. 4. LD. AR MORE OR LESS REITERATING THE SUBMISSIONS MADE BEFORE THE REVISIONAL AUTHORITY SUBMITTED BEFORE US, IN CO URSE OF ASSESSMENT PROCEEDING ASSESSEE HAS FURNISHED ALL NECESSARY EVI DENCES IN SUPPORT OF HIS CLAIM THAT CASH DEPOSITS MADE INTO S AVINGS BANK ACCOUNTS WERE OUT OF AGRICULTURAL INCOME OF HUF AND INCOME OF ASSESSEES WIFE. IN THIS CONTEXT, HE DREW OUR ATTEN TION TO ASSESSEES REPLY SUBMITTED BEFORE AO IN RESPONSE TO THE QUERY MADE BY HIM, A COPY OF WHICH IS AT PAGE 46 OF PAPER BOOK. LD. AR A LSO REFERRED TO THE INCOME-TAX RETURNS FILED BY HUF SHOWING SUBSTANTIAL AGRICULTURAL INCOME AND ALSO RETURNS OF INCOME FILED BY ASSESSEE S WIFE SMT. G. SASHI REKHA TO DEMONSTRATE THAT THE CASH DEPOSITS M ADE INTO THE SB ACCOUNTS WERE OUT OF SUCH AGRICULTURAL INCOME OF HU F AND INCOME OF ASSESSEES WIFE. THUS, IT WAS SUBMITTED BY ASSESSEE THAT WHEN AO HAS ENQUIRED INTO THE MATTER AND AFTER PROPER APPLI CATION OF MIND TO THE FACTS AND MATERIALS ON RECORD HAS TREATED THE C ASH DEPOSITS MADE INTO THE BANK AS PROFESSIONAL RECEIPTS WITHOUT DISP ROVING ASSESSEES CLAIM OF AGRICULTURAL INCOME, THEN, EXERCISE OF POW ER U/S 263 IS NOT VALID ON THE ALLEGATION THAT AO HAS NOT APPLIED HIS MIND. IN SUPPORT OF SUCH CONTENTION, LD. AR RELIED UPON THE FOLLOWING D ECISIONS: 1. CIT VS. GREEN WORLD CORPORATION, 314 ITR 81 (SC ) 2. MALABAR INDUSTRIES CO. LD. VS. CIT, 243 ITR 83 (SC) 3. CIT VS. HINDUSTHAN MARKETING & ADVERTISING CO. L TD., 341 ITR 180 4.CIT VS. ANIL KUMAR SHARMA, 335 ITR 83 (DEL.) 4 ITA NO. 370 /HYD/2014 DR. G. RAM REDDY 5. CIT VS. HONDA SIEL POWER PRODUCTS, 333 ITR 547 ( DEL.) 6. CIT VS. GIRIDHAR LAL, 258 ITR 331 (RAJ.) 7. CIT VS. ARVIND JEWELLERS, 259 ITR 502 (GAU.) 8. CIT VS. GABRIEL INDIA LTD., 203 ITR 108 (BOM.) 9. CIT VS. DEVELOPMENT CREDIT BANK LTD. 323 ITR 20 6 (BOM.) 10. SPECTRA SHARES & SCRIPS (P) LTD. VS. CIT, 354 I TR 35 (AP). 5. LD. DR, ON THE OTHER HAND, SUBMITTED BEFORE US, AO EVEN AFTER HAVING KNOWLEDGE THAT ASSESSEE HAD MADE SUBSTANTIAL CASH DEPOSITS IN THE SAVINGS BANK ACCOUNTS HAS NOT CONDUCTED ANY ENQUIRY OR INVESTIGATION TO FIND OUT THE SOURCE OF SUCH CASH D EPOSITS. HE SUBMITTED, WITHOUT MAKING ANY ENQUIRY AO HAS FORMED AN OPINION THAT CASH DEPOSITS MADE INTO THE BANK ACCOUNT WERE PROFE SSIONAL RECEIPTS OF ASSESSEE AND PROCEEDED TO ESTIMATE INCOME @ 10%. LD. DR SUBMITTED, WHEN ASSESSEE HAS NOT SUBMITTED ANY EVID ENCE TO EXPLAIN THE SOURCE OF CASH DEPOSITS, AO WAS NOT CORRECT IN CONCLUDING THAT CASH DEPOSITS REPRESENT HIS PROFESSIONAL RECEIPTS. LD. DR SUBMITTED, ONLY IN COURSE OF REVISION PROCEEDING, ASSESSEE HAS SUBMITTED EVIDENCES LIKE COPIES OF RETURNS FILED BY HUF AND A SSESSEES WIFE, DOCUMENTS RELATING TO EARNING OF AGRICULTURAL INCOM E, WHICH WERE NEVER PRODUCED NOR EXAMINED BY AO. THEREFORE, HAVIN G PASSED ASSESSMENT ORDER WITHOUT EXAMINING THE SOURCE OF CA SH DEPOSITS, THE ORDER PASSED IS ERRONEOUS AND PREJUDICIAL TO THE IN TERESTS OF REVENUE. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. WE HAVE ALSO APPLIED OUR MIND TO THE DECISIONS CITE D BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT CASH DEPOSITS WERE F OUND TO HAVE BEEN MADE IN DIFFERENT BANK ACCOUNTS STANDING IN THE NAM E OF ASSESSEE. FURTHER, AS IT APPEARS FROM THE ASSESSMENT ORDER, I N COURSE OF ASSESSMENT PROCEEDING WHILE EXPLAINING THE SOURCE O F SUCH CASH DEPOSITS, ASSESSEE DID EXPLAIN THAT SUCH CASH DEPOS ITS HAVE BEEN MADE OUT OF AGRICULTURAL INCOME EARNED BY HUF AND I NCOME EARNED BY 5 ITA NO. 370 /HYD/2014 DR. G. RAM REDDY ASSESSEES WIFE. IT ALSO APPEARS FROM THE ASSESSMEN T ORDER, IN SUPPORT OF SUCH CLAIM ASSESSEE HAS SUBMITTED CERTAI N DOCUMENTS LIKE AGRICULTURAL PASSBOOK, CERTIFICATE ISSUED BY JEEVAK A KHANDASARI SUGAR MILLS TOWARDS SALE OF SUGAR CANE AND COPY OF PARTITION OF HUF. LD. AR HAS ALSO ASSERTED BEFORE US IN ADDITION TO T HE EVIDENCES MENTIONED IN THE ASSESSMENT ORDER, ASSESSEE HAS ALS O FURNISHED COPIES OF THE RETURNS FILED BY HUF AS WELL AS ASSES SEES WIFE. HOWEVER, AS CAN BE SEEN, LD. CIT HAS OBSERVED THAT RETURNS FILED BY HUF AND ASSESSEES WIFE WERE FURNISHED FOR THE FIRS T TIME IN COURSE OF REVISION PROCEEDING. WITHOUT ENTERING INTO THE CONT ROVERSY, WHETHER RETURNS OF HUF AND ASSESSEES WIFE SUBMITTED BEFORE AO OR NOT, IT IS RELEVANT TO NOTE THAT DURING THE ASSESSMENT PROCEED ING AO DID ENQUIRE INTO THE SOURCE OF CASH DEPOSITS INTO SB AC COUNTS AND ASSESSEE ALSO FURNISHED EXPLANATION WITH CERTAIN DO CUMENTARY EVIDENCES TO SHOW THAT THE CASH DEPOSITS WERE OUT O F AGRICULTURAL INCOME EARNED BY HUF AND INCOME OF ASSESSEES WIFE. IT IS ALSO RELEVANT TO OBSERVE, IT APPEARS FROM THE ASSESSMENT ORDER AO HAS MORE OR LESS NOT ACCEPTED ASSESSEES CLAIM OF AGRIC ULTURAL INCOME, AND HAS TREATED THE ENTIRE CASH DEPOSITS TO BE UNDI SCLOSED RECEIPTS OF ASSESSEE FROM PROFESSION ONLY. THEREFORE, WHEN AO H AS TREATED THE ENTIRE CASH DEPOSITS MADE INTO THE SAVINGS BANK ACC OUNTS AS ASSESSEES UNDISCLOSED PROFESSIONAL RECEIPTS AND RE JECTED ASSESSEES CLAIM OF AGRICULTURAL INCOME OF HUF, THEN, THE OBSE RVATION OF LD. CIT THAT AO HAS NOT APPLIED HIS MIND OR ENQUIRED INTO T HE MATTER WITH REGARD TO THE SOURCE OF DEPOSITS, IN OUR VIEW, IS T OTALLY IRRELEVANT AND UNFOUNDED. IN THE AFORESAID FACTS AND CIRCUMSTANCES , IT CANNOT BE SAID THAT EITHER THERE IS NO ENQUIRY BY AO OR NON-A PPLICATION OF MIND. IN THE AFORESAID FACTS AND CIRCUMSTANCES, EXERCISE OF POWER U/S 263 OF THE ACT IS NOT VALID AS ASSESSMENT ORDER CANNOT BE HELD TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF REVENUE. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER OF LD. CIT AND RESTORE THE ORDER OF THE AO. 6 ITA NO. 370 /HYD/2014 DR. G. RAM REDDY 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 1 ST APRIL, 2015. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 1 ST APRIL, 2015 KV COPY TO:- 1) DR. G. RAM REDDY, 17-1-383/30, VINAY NAGAR COLO NY, SAIDABAD, HYDERABAD. 2) ITO, WARD 9(2), AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 3 CIT-VI, , HYDERABAD 4) ADDL. CIT, RANGE - 9, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.