Cheeti Laxman Rao, Hyderabad V. Income Tax Officer, Ward-15(1), Hyderabad

ITA 436/Hyd/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1299 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 13-03-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 01-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D J PRABHAKAR ANAND
• Assessee Lawyers: T CHAITANYA KUMAR
• Keywords: Gift
• Section: 44AD; 80C; 143(3)

Judgement Text

ITA NOS 436 OF 2018 CHEETI LAXMAN RAO SECUNDERABAD. PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B SMC BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NOS. 436/HYD/2018 (ASSESSMENT YEAR: 2013-14) SHRI CHEETI LAXMAN RAO SECUNDERABAD PAN;AEAPC7046Q VS INCOME TAX OFFICER WARD 15(1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI T. CHAITANYA KUMAR FOR REVENUE : SHRI D.J.PRABHAKAR ANAND O R D E R THIS IS ASSESSEES APPEAL FOR THE A.Y 2013-14 AGAIN ST THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT A ND CONFIRMED BY THE CIT (A)-7 HYDERABAD DATED 23.11.2017. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL AND A CONTRACTOR DOING EARTH WORK CONTRA CTS, FILED HIS RETURN OF INCOME FOR THE A.Y 2013-14 ADMITTING TOTA L INCOME OF RS.4,02,480/-. DUE TO SELECTION UNDER CASS, THE CAS E WAS SELECTED FOR SCRUTINY AND THE AO REQUIRED THE ASSES SEE TO FURNISH DETAILS REGARDING THE ASSESSEES INCOME. 3. THE ASSESSEE FURNISHED THE DETAILS AND ON VERIFI CATION OF THE SAME, THE AO OBSERVED THAT THE ASSESSEE HAD ADMITTED INCOME FROM MACHINERY WORK AT RS.5.00 LAKHS AND AGR ICULTURAL DATE OF HEARING : 13.03.2019 DATE OF PRONOUNCEMENT: 15.03.2019 ITA NOS 436 OF 2018 CHEETI LAXMAN RAO SECUNDERABAD. PAGE 2 OF 5 INCOME OF RS.1.50 LAKHS. FROM THE ITS DATA, IT WAS LEARNT THE ASSESSEE HAS MADE CASH DEPOSITS OF RS.80,33,050/- I N HIS SAVINGS BANK A/CS HELD BY HIM WITH SBH AND AXIS BANK. THE A SSESSEE WAS THEREFORE, ASKED TO EXPLAIN THE SOURCES OF CASH DEPOSITS AND THE BASIS FOR OFFERING THE INCOME OF RS.5.00 LAKHS. IN RESPONSE THERETO, THE ASSESSEE, VIDE LETTER DATED 21.03.2016 , EXPLAINED THAT HE IS PETTY CONTRACTOR DOING EARTH WORK CONTRACT WI TH MACHINERY AND THAT HE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT AND HAD DECLARED THE NET INCOME ON ESTIMATION BASIS. THE AS SESSEE ALSO SUBMITTED THAT HE HAS DEPOSITED AN AMOUNT OF RS.1,8 7,18,837/- IN HIS FOUR BANK ACCOUNTS WHICH INCLUDES PETTY CONT RACT GROSS RECEIPTS OF RS.95,21,854 ON WHICH HE ADMITTED THE N ET INCOME OF RS.5.00 LAKHS AT 5%. HE EXPLAINED TO THE CASH DEPOS ITS TO THE EXTENT OF RS.25,88,130/- AS BELONGING TO HIS WIFE S MT. CH. RAJITHA WHO IS ENGAGED IN THE HANDLOOM CLOTH BUSINESS AND H AD DECLARED A NET INCOME OF RS.1,90,000/- IN HER RETURN OF INCO ME. IT WAS ALSO SUBMITTED THAT SHE HAS INCOME FROM AGRICULTURAL LAN D WHICH WAS GIFTED TO HER BY HER FATHER AND THAT SHE DOES NOT H AVE ANY BANK A/C IN HER NAME AND HENCE HAS DEPOSITED THE SAME IN TO ASSESSEES BANK A/C. THE ASSESSEE ALSO EXPLAINED TH AT OTHER DEPOSITS WERE MADE OUT OF WITHDRAWALS AND THAT HE H AS RECEIVED RS.4.00 LAKHS FROM M/S. OMEGA IMPEX AND RS.13,00,00 0/- FROM M/S GAVI CONSTRUCTIONS AS HAND LOANS AND RS.3.00 LA KHS FROM AXIS BANK AS GOLD LOAN AND RS.4,74,185/-WAS RECEIVE D FROM HIS SON IN USA, AND RS.4,23,649/- WAS FROM CANCELLATION OF DD MADE FOR ACQUIRING LIQUOR SHIPS AND RS.4,23,649/- FROM R EDEMPTION OF SHORT TERM DEPOSIT. THE AO, HOWEVER, WAS NOT CONVIN CED WITH THE ASSESSEES CONTENTION. HE HELD THAT THE ASSESSEE IS REQUIRED TO MAINTAIN BOOKS OF ACCOUNT AND SINCE HE FAILED TO DO SO, THE ITA NOS 436 OF 2018 CHEETI LAXMAN RAO SECUNDERABAD. PAGE 3 OF 5 PROVISION OF SECTION 44AD ARE APPLICABLE AND THE NE T PROFIT IS TO BE ESTIMATED AT 8% OF THE TOTAL GROSS RECEIPTS. THEREF ORE, HE ESTIMATED THE INCOME AT 8% OF THE RECEIPTS. 4. THEREAFTER, HE PROCEEDED TO CONSIDER THE SOURCES FOR DEPOSITS AND AS REGARDS THE CASH DEPOSITS BELONGING TO THE ASSESSEES WIFE, THE AO VERIFIED THE RECORD AND FOU ND THAT SHE IS HAVING A BANK A/C IN HER NAME AND THAT SEVERAL TRAN SACTIONS ALSO WERE MADE FROM THE SAID A/C. THEREFORE, HE TREATED THE SAID SUM ALSO AS THE INCOME OF THE ASSESSEE. SIMILARLY, HE D ID NOT ACCEPT THE ASSESSEES CONTENTION ON THE AGRICULTURAL INCOM E OF THE ASSESSEES AND ALSO LOANS TAKEN FROM M/S. OMEGA IMP EX AND M/S.GAVI CONSTRUCTIONS. HE ALSO DID NOT ACCEPT THE AMOUNT RECEIVED ALLEGEDLY FROM HIS SON STAYING IN USA. THE REFORE, HE ARRIVED AT THE TOTAL TURNOVER OF THE ASSESSEE AT RS .1,72,87,696/- AND ESTIMATED THE INCOME AT 8% OF THE SAME AND BROU GHT IT TO TAX. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO AND THE ASSESSEE IS I N SECOND APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS O F APPEAL: 1. THE AO AND THE CIT (A) ERRED BOTH ON FACTS AND UNDER LAW IN THE ASSESSEES CASE. 2. THE AO AND THE CIT (A) OUGHT TO HAVE TREATED RS.47,62,315 (RS.25,88,130 + RS.13,00,000 _ RS.4,00,000 + RS.4,74,185) AS ASSESSEES ADDITIONAL CONTRACT RECEIPTS. 3. THE AO AND THE CIT (A) OUGHT TO HAVE ACCEPTED T HE RETURNED NET PROFIT RATE OF 5% OF CONTRACT RECEIPTS , INSTEAD OF 8% ADOPTED BY THE AO AND CONFIRMED BY THE CIT (A ). 4. THE AO AND THE CIT (A) OUGHT TO HAVE ALLOWED THE CLAIM OF DEDUCTION U/S 80C OF THE I.T. ACT, 1961 PR EFERRED BY THE ASSESSEE. ITA NOS 436 OF 2018 CHEETI LAXMAN RAO SECUNDERABAD. PAGE 4 OF 5 5. ANY OTHER GROUND OF GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF APPEAL. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE IS NOT THE MAIN CONTRACTOR BUT A SUB-C ONTRACTOR DOING ONLY EARTH WORK AND THEREFORE, AS HELD BY THE COORDINATE BENCHES OF THE TRIBUNAL IN A NUMBER OF CASES, THE I NCOME SHOULD BE ESTIMATED AT 5% FROM THE GROSS RECEIPTS. FURTHER , HE ALSO REITERATED THE SUBMISSIONS OF THE ASSESSEE BEFORE T HE LOWER AUTHORITIES EXPLAINING THE SOURCES FOR CASH DEPOSIT S INTO HIS BANK A/C. 6. THE LEARNED DR, HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT THE ASSESSEE HAS NOT MAINTAI NED ANY BOOKS OF ACCOUNT BUT EVIDENTLY THE ASSESSEE IS INTO THE B USINESS OF DOING EARTH WORK CONTRACTS BY USING MACHINERY. THEREFORE, EVIDENTLY HE IS NOT THE MAIN CONTRACTOR BUT IS A SUB-CONTRACTOR. AS HELD BY THE COORDINATE BENCHES OF THIS TRIBUNAL IN A NUMBER OF CASES, THE INCOME FROM THE SUB CONTRACT WORK IS TO BE ESTIMATE D AT 5% OF THE GROSS RECEIPTS. THE AO IS THEREFORE, DIRECTED TO ES TIMATE THE NET PROFIT AT 5% OF THE GROSS RECEIPTS. 8. NEXT COME THE QUESTION AS TO WHAT SHOULD BE THE GROSS RECEIPTS. ACCORDING TO THE ASSESSEE, HIS TOTAL INCO ME IS RS.95,21,854/-. SINCE THE AO HAS TREATED THE CASH D EPOSITS ALSO ITA NOS 436 OF 2018 CHEETI LAXMAN RAO SECUNDERABAD. PAGE 5 OF 5 AS GROSS RECEIPTS OF THE ASSESSEE, THE GROSS RECEIP TS HAVE BEEN ARRIVED AT RS.1,72,87,696/-. THE ASSESSEE HAD NOT B EEN ABLE TO EXPLAIN THE SOURCES ALONG WITH ANY EVIDENCE BEFORE THE CIT (A) OR BEFORE THIS TRIBUNAL. THEREFORE, I AM NOT INCLINED TO DISTURB THE FINDINGS OF THE AO ON THIS ISSUE AND THEREFORE, THE PROFIT IS ALSO TO BE ESTIMATED AT 3% OF SUCH GROSS RECEIPTS. THE ASSE SSEES GROUND OF APPEAL NO.3 ON THE TURNOVER IS REJECTED. 9. AS REGARDS GROUND OF APPEAL NO.4, I FIND THAT TH OUGH, THE AO HAS MENTIONED THAT HE HAS DISALLOWED THE DED UCTION U/S 80C, HE HAS NOT MADE ANY ADDITION IN THE COMPUTATIO N OF INCOME. THEREFORE, THIS GROUND NEEDS NO ADJUDICATION AND IT IS ACCORDINGLY REJECTED. 10. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH, 2019. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 15 TH MARCH, 2019. VINODAN/SPS COPY TO: 1 SHRI T. CHAITANYA KUMAR, ADVOCATE, FLAT NO.102, G OWRI APARTMENTS, UDRU LANE, HIMAYATNAGAR, HYDERABAD 2 ITO WARD 15(1) HYDERABAD 3 CIT (A)-7 HYDERABAD 4 PR. CIT 7 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER