Sri. B. Dinesh Kumar, Hyderabad V. ITO,Ward 9(3), Hyderabad

ITA 420/HYD/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2484 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 16-08-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 12-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M NARMADA
• Assessee Lawyers: T CHAITANYA KUMAR
• Keywords: Opportunity of being heard; Peak credit; Reasonable cause; Non compliance
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO. 420/HYD/2014 ASSESSMENT YEAR: 2009 - 2010 SRI B. DINESH KUMAR, H.NO . 2 - 4 - 1046/S2, FLAT NO. S2, SAMATHAPURI COLONY, NEW NAGOLE, HYDERABAD. PAN: AHIPB 9958 M VS. ITO - 9(3), RANGE - 9, IT TOWERS, AC GUARDS, MASAB TANK, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI T. CHAITANYA KUMAR REVENUE BY: SMT. M. NARMADA, DR DATE OF HEARING: 16.08.2018 DATE OF PRONOUNCEMENT: 29 .08.2018 ORDER PER INTURI RAMA RAO, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - V, HYDERABAD DATED 20.11.2013 FOR THE ASSESSMENT YEAR 2009 - 10. THE APPELLANT RAISED THE FOLLOWING GROUNDS OF APPEAL: - A. THE O RDER OF THE COM MISSIONER A P PEALS IS VOID, ARBITRARY AND ILLEGAL AND LIABLE TO BE SET ASIDE AS INCORRECT AND UNSUSTAINABLE AS THE SAME IS CONTRARY TO THE L EGAL PROVISIONS ON THE FOLLOWING GROUNDS, WHICH ARE WITHOUT PREJUDICE TO EACH OTHER. B. THE ASSESSING OFFICER AND T HE COMMISSIONER APPEALS DESPITE OF HAVING THE DETAILS OF THE ASSESSEES PROFIT AND LOSS ACCOUNT & BALANCE SHEET FOR THE PERIOD APRIL 2008 TO MARCH 2009 ON RECORD HAVE NOT CONSIDERED THE SAME AND ACTED I GNORING THE PRINCIPLES OF NATURAL J USTICE. 2 C. THE ASS ESSING OFFICER OUGHT TO HAVE EXERCISED THE DESCRIPTION JUDICIOUSLY INSTEAD OF COMPLETING THE ASSESSMENT IN A ROUTINE MANNER FOR STATISTICAL PURPOSES. D. THE ASSESSEE SUBMITS THAT THE PRINCIP L E BUSINESS IS TO PROCURE RICE FROM FARMERS AND TO SELL LOCALLY TO THE DEALERS IN THE MARKET THEREBY EARNING COMMISSION INCOME AS HIS LIVELIHOOD. DURING THE COURSE HE HAS TAKEN HAND LOANS FROM THE AGRICULTURISTS FOR THE PURPOSE OF HIS BUSINESS THROUGH FEW OF HIS KNOWN SOURCES AND THE SAME IS CREDITED IN THE ICICI BANK ACCOUNT. THUS THE CREDITS OF RS.51 ,58,6501 - IS REPRESENTING ONLY INTEREST FREE LOANS & NORMAL HAND LOANS IN CASH BUT NOT INCOME EARNED DURING THE COURSE OF THE BUSINESS ACTIVITIES. M OREOVER THE ASSESSEE HAS PAID RS. 22,83,332/ - AS REPAYMENTS DURING THE SA ME YEAR WITH IN A VERY SHORT SPAN OF TIME. THE DETAILS OF NAMES, ADDRESSES AND THE STATEMENT OF LOANS TAKEN FROM THEM IS GIVEN AS ANNEXURE - I. E. IT IS SUBMITTED THAT WHILE CONSIDERING THE BEST JUDGEMENT ASSESSMENT U/S 144 OF THE INCOME TAX ACT THE ASSES SING OFFICER MUST NOT ACT VINDICTIVELY OR CAPRICIOUSLY OR WITH A VIEW TO PUNISH THE ASSESSEE FOR NON COMPLIANCE. IN COMMISSIONER OF SALES TAX, MADHYA PRADESH V. H.M. ESUFALI H.M. ABDULALI 1973 TAXPUB(DT) 0477 (SC) : (1973) 090 ITR 0271 THE HON'BLE SUPREME COURT HAS OBSERVED THAT 'THE LAW RELATING TO 'BEST JUDGMENT' ASSESSMENT IS THE SAME BOTH IN THE CASE OF INCOME - TAX ASSESSMENT AS WELL AS IN THE CASE OF SALES TAX ASSESSMENT. THE SCOPE OF 'BEST JUDGMENT' ASSESSMENT UNDER THE INCOME - TAX LAW CAME UP FOR CONS IDERATION BEFORE THE JUDICIAL COMMITTEE AS EARLY AS 1937 IN COMMISSIONER OF INCOME - TAX V. LAXMINARAIN BADRIDAS. THEREIN LORD RUSSELL OF KILLOWEN, SPEAKING FOR THE JUDICIAL COMMITTEE, OBSERVED: THE OFFICER IS TO MAKE AN ASSESSMENT TO THE BEST OF HIS JUDGME NT AGAINST A PERSON WHO IS IN DEFAULT AS REGARDS SUPPLYING INFORMATION. HE MUST NOT ACT DISHONESTLY OR VINDICTIVELY OR CAPRICIOUSLY BECAUSE HE MUST EXERCISE JUDGMENT IN THE MATTER. HE MUST MAKE WHAT HE HONESTLY BELIEVE TO BE A FAIR ESTIMATE OF THE PROPER F IGURE OF ASSESSMENT, AND FOR THIS PURPOSE HE MUST, THEIR LORDSHIPS THINK, BE ABLE TO TAKE INTO CONSIDERATION LOCAL KNOWLEDGE AND REPUTE IN REGARD TO THE ASSESSEES CIRCUMSTANCES, AND HIS OWN KNOWLEDGE OF PREVIOUS RETURNS BY AND ASSESSMENTS OF THE ASSESSEE, AND ALL OTHER MATTERS WHICH HE THINKS WILL ASSIST HIM IN ARRIVING AT A FAIR AND PROPER ESTIMATE; AND THOUGH THERE MUST NECESSARILY BE GUESS - WORK IN THE MATTER IT MUST BE HONEST GUESS - WORK. IN THAT SENSE, TOO, THE ASSESSMENTS MUST BE TO SOME EXTENT ARBITRAR Y.' F. THE ASSESSEE DURING THE COURSE OF THE PROCEEDING BEFORE THE COMMISSIONER APPEALS HAS SUBMITTED THAT IN THE SIMILAR CASE OF PAWAN KUMAR V ITO HON'BLE DELHI TRIBUNAL HAS ARRIVED ON TAXING ON THE PEAK CREDITS THEREBY GIVING RELIEF TO THE ASSESSEE. [ 2013 ] 38 TAXMANN 41 (DELHI TRIBUNAL) . THE CASE FACTS ARE VERY MUCH SIMILAR TO THE PRESENT CASE BUT THE COMMISSIONER APPEALS DID NOT CONSIDER THE FACT AS THE ASSESSEE FAILED TO FURNISH DETAILS TO THE ITO AND THUS WITHOUT GIVING AN OPPORTUNITY TO PROVE TH E CORRECTNESS OF THE TRANSACTIONS HAVE P ASSED THE ORDER UNILATERALLY. G . THEREFORE AS REITERATED IN THE ABOVE PARAS FROM A TO F THE APPELLANT HUMBLY PRAYS BEFORE THIS TRIBUNAL TO CONSIDER THE TAX 3 ONLY ON PEAK CREDITS AND TO SET ASIDE THE ORDER OF COMMISSIONER APPEALS. H. IT IS ALSO SUBMITTED THAT DUE TO STIFF COMPETITION AND ADVERSE MARKET SITUATIONS THE BUSINESS OF THE ASSESSEE IS NOT RUNNING WELL TO MEET HIS WORKING CAPITAL NEEDS. THERE IS A CA SH CRUNCH AFFECTING THE BUSINESS OF THE ASSESSEE. FURTHER, ASSESSEE ALSO STOPPED THE BUSINESS OF RUNNING TAXI ON HIRE DUE TO FREQUENT REPAIR EXPENSES ON CARS. FURTHER, THE ASSESSEE IS NOW PAYING EMI OF RS. 25,309/ - PER MONTH TOWARDS HOUSING LOAN TAKEN FROM INDIA BULLS HOUSING FINANCE LIMITED AND RS. 12,144/ - TOWARDS PERSONAL LOAN TAKEN FROM BARCLAYS FINANCE TOWARDS HIS WIFE'S MEDICAL EXPENDITURE. THEREFORE IT IS HUMBLY PRAYED BEFORE THE HON'BLE TRIBUNAL THAT IN VIEW OF THE FINANCIAL BOTTLENECKS A LENIENT VI EW MAY BE CONSIDERED. I. THE APPELLANT APART FROM FINANCIAL CONSTRAINTS IS ALSO SUFFERING FROM HYPER TENSION AND THE WIFE OF THE APPELLANT IS SUFFERING FROM MIGRANE. THE HEALTH CONDITIONS OF THE ASSESSEE REQUIRE REGULAR MEDICAL CHECKUPS FOR MAINTENANCE. IT IS SUBMITTED THAT THE ASSESSEE IS ALSO INCURRING HUGE EXPENDITURE ON THE MEDICALS OF SELF AND WIFE. J. THE APPELLANT ALSO SUBMITS BEFORE THIS HONBLE TRIBUNAL THAT THE INCOME TAX DEPT OFFICIALS ARE ALSO FREQUENTLY CALLING ON HIS MOBILE NUMBER IN THE G UISE OF SEEKING FURTHER INFORMATION ON THE RETURN OF INCOME AND THEREBY DISTURBING THE MENTAL PEACE AND HAPPINESS. K. APPELLANT ALSO REQUESTS THE HONBLE TRIBUNAL MAY CONSIDER SUCH ADDITIONAL SUBMISSIONS AS IS DEEMED FIT IN THE CASE AT THE TIME ARGUMENT. 2. BRIEFLY, THE FACTS OF THE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. THE RETURN OF INCOME FOR THE A.Y. 2009 - 10 WAS FILED ON 08.03.2010 DECLARING TOTAL INCOME OF RS. 1,78,437/ - . AGAINST THE SAID RETURN OF INCOME, THE CASE WAS SELECTED FOR SCRUTINY ASS ESSMENT UNDER CASS (ITO, WARD - 9(3), HYDERABAD) AND ASSESSMENT WAS COMPLETED U/S 144 OF THE ACT VIDE ORDER DATED 17.12.2011 AT A TOTAL INCOME OF RS. 53,37,087/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED THAT THE APPELL ANT MADE CASH DEPOSITS OF RS. 51,58,650/ - IN THE SAVINGS BANK ACCOUNT HELD WITH ICICI BANK , D ESPITE G RANTING SEVERAL OPPORTUNITIES TO THE APPELLANT TO EXPLAIN THE SOURCES FOR CASH DEPOSITS MADE, THE APPELLANT HAD FAILED TO OFFER ANY EXPLANATION IN SUPPORT OF THE SOURCES FOR CASH DEPOSITS. THEREFORE, THE ASSESSING OFFICER MADE AN ADDITION OF RS. 51,58,650/ - U/S 6 9 OF THE ACT UNDER EX - PARTE ASSESSMENT U/S 144 OF THE ACT. 4 3. BEING AGGRIEVED, AN APPEAL WAS FILED BEFORE THE LD. CIT(A) WHO VIDE IMPUGNED ORDER HAD DISMISSED THE APPEAL SINCE NONE APPEARED ON BEHALF OF THE ASSESSEE EXCEPT FILING WRITTEN SUBMISSIONS WHEREIN THE ASSESSEE RELIED UPON THE DECISION OF THE ITAT, DELHI BENCH IN THE CASE OF PAWAN KUMAR VS. ITO, WARD - 1 IN SUPPORT OF THE CONTENTIONS THAT ADDITION IF AT ALL TO BE MADE SHOULD BE CONFI NED TO THE AMOUNT OF PEAK CREDIT . BEING AGGRIEVED WITH THE S AID DECISION OF THE CIT(A), ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 4. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT APPELLANT WAS ENGAGED IN THE BUSINESS OF TRADING THE RICE AND THE CASH DEPOSITS WERE MADE OUT OF THE RECEIPTS FROM TRADING IN RICE. IT WAS FURTHER SUBMITTED THAT THIS EXPLANATION COULD NOT BE FILED BEFORE THE LOWER AUTHORITIES ON ACCOUNT OF LAXITY ON THE PART OF THE PERSON WHO WAS AUTHORISED TO REPRESENT THE MATTER. THEREFORE, IT IS PRAYED THAT IN THE INTEREST OF JUSTICE THE MATTER MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ASSESSMENT. 5. ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY OPPOSED FOR REMAND OF THE CASE TO THE ASSESSING OFFICER AS THE APPELLANT HAD FAILED TO APPEAR BEFORE THE LOWE R AUTHORITIES WITHOUT ANY REASONABLE CAUSE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE NOTICED THAT THE ASSESSMENT ORDER AS WELL AS THE CIT (A)S ORDER WERE PASSED EX - PARTE . HOWEVER, THE APPELLANT HAD FILED THE RETURN OF INCOME VOLUNTARILY DISCLOSING TOTAL INCOME OF RS. 1,78,437/ - . THE ASSESSMENT ORDER IS SILENT ABOUT THE NATURE OF THE ACTIVITIES UNDERTAKEN BY THE APPELLANT. IT IS P R O BA BLE THAT THE CASH DEPOSITS MIGHT HAVE BEEN 5 MADE OUT OF THE RECEIPTS FROM THE BUSINE SS ACTIVITIES OF THE APPELLANT. THOUGH THE CONDUCT OF THE APPELLANT BEFORE THE LOWER AUTHORITIES NEEDS TO BE DEPRECATED BUT KEEPING IN VIEW THAT ASSESSEE CANNOT BE PENALISED ON THE LETHARGIC ATTITUDE OF THE COUNSEL , AND I N THE INTEREST OF JUSTICE , THE MATTER REQUIRES TO BE REMANDED BACK TO THE FILE OF THE A.O. FOR DENOVO ASSESSMENT AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LAW. ACCORDINGLY, GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED FOR ST ATISTICAL PURPOSES. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 29 TH AUGUST, 2018 . SD/ - SD/ - (P. MADHAVI DEVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 29 TH AUGUST, 2018 OKK COPY TO: - 1) SRI S. ARUN KUMAR, ADVOCATE, NO.418, 4 TH FLOOR, KUBERA TOWERS, NARAYANAGUDA, HYDERABAD - 500029. 2) ITO - WARD 9(3), RANGE 9, IT TOWERS, AC GUARDS, MASAB TANK, HYDERABAD. 3) THE CIT(A) - V, HYDERABAD 4) THE PR. CIT - V, HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE