Income Tax Officer, Ward-9(4), Hyderabad V. Sri P Janga Reddy, Hyderabad

ITA 454/HYD/2014

• Counselvise Citation: 45422514 RSA 2014
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 26-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 14-03-2014
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: M CHANDRAMOULESWARA RAO
• Keywords: Business income
• Section: 142(1); 131; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 454/HYD/2014 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER, WARD-9(4), HYDERABAD VS SRI P. JANGA REDDY, HYDERABAD [PAN: AHOPP4343E] (APPELLANT) (RESPONDENT) FOR REVENUE : S HRI B. KURMI NAIDU , DR FOR ASSESSEE : S HRI M. CHANDRAMOULESWARA RAO, AR DATE OF HEARING : 2 6 - 11 - 201 5 DATE OF PRONOUNCEMENT : 27 - 11 - 2015 O R D E R PER SAKTIJIT DEY, J.M. : THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 20-11-2013 OF THE LD. COMMISSIONER OF INCOME TAX (A PPEALS)-VI, HYDERABAD FOR THE AY. 2009-10. 2. THE DEPARTMENT IS AGGRIEVED WITH THE DECISION OF THE FIRST APPELLATE AUTHORITY (FAA) IN DELETING THE ADDITION OF RS. 23,40,000/- AND DIRECTING THE ASSESSING OFFICER (AO ) TO ESTIMATE PROFIT @ 25% ON AN AMOUNT OF RS. 21,12,500/- CREDIT ED TO THE BANK ACCOUNT. I.T.A. NO. 454/HYD/2014 SRI P. JANGA REDDY :- 2 -: 3. BRIEFLY THE FACTS ARE, ASSESSEE IS AN INDIVIDUAL . FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, ASSESSEE FILED HIS RETURN OF INCOME ON 16-02-2010 DECLARING TOTAL INCOME OF RS. 10,96,760/-. AS OBSERVED BY THE AO, IN SPITE OF ISSUANCE OF NOTI CE U/S. 143(2) AND 142(1) OF THE INCOME TAX ACT [ACT], FROM TIME T O TIME, THERE WAS NO RESPONSE FROM THE ASSESSEE. FURTHER, THOUGH SUMMONS U/S. 131 WAS ISSUED, BUT STILL THE ASSESSEE DID NOT RESPOND. DUE TO NON-COMPLIANCE OF THE ASSESSEE, AO FINDING NO OT HER ALTERNATIVE, PROCEEDED TO COMPLETE THE ASSESSMENT EX-PARTE U/S. 144 OF THE ACT. ON THE BASIS OF INFORMATION AVAILABLE ON RECORD, TH E AO FOUND THAT DURING THE RELEVANT PREVIOUS YEAR, ASSESSEE HAD MAD E CASH DEPOSIT OF RS. 23,40,000/- IN HIS SAVINGS BANK A/C. SINCE, THE ASSESSEE DID NOT EXPLAIN THE SOURCE OF SUCH CASH DEPOSITS IN THE BANK ACCOUNT, AO TREATING THEM AS UNEXPLAINED INVESTMEN T, ADDED THE AMOUNT TO THE INCOME OF THE ASSESSEE. BEING AGGRIE VED OF SUCH ADDITION, ASSESSEE PREFERRED AN APPEAL BEFORE THE C IT(A). IN COURSE OF HEARING OF APPEAL, IT WAS SUBMITTED BY THE ASSES SEE THAT OUT OF THE CASH DEPOSITS IN THE BANK ACCOUNT, AN AMOUNT OF RS. 7,99,001/- WAS FROM AGRICULTURAL INCOME AND THE BALANCE AMOUNT IS OUT OF EARLIER WITHDRAWALS AND UNACCOUNTE D RECEIPTS FROM SPARE PARTS BUSINESS. LD. CIT(A) ON THE BASIS OF THE SUBMISSIONS MADE, CALLED FOR A REMAND REPORT AND AF TER CONSIDERING THE SAME WAS OF THE VIEW THAT OUT OF TH E CASH DEPOSITS OF RS. 23,40,000/-, RS. 2,27,500/- IS EXPLAINED THR OUGH RECEIPT OF AGRICULTURAL INCOME. AS FAR AS THE BALANCE AMOUNT O F RS. 21,12,500/- IS CONCERNED, LD. CIT(A) HELD THAT SUCH DEPOSITS REPRESENT THE UNACCOUNTED BUSINESS RECEIPTS OF THE ASSESSEE. HOWEVER, HE WAS OF THE VIEW THAT ONLY THE PROFIT EL EMENT ON SUCH RECEIPT FIXED AT 25% OF THE RECEIPT CAN BE TREATED AS TAXABLE INCOME OF THE ASSESSEE. HE DIRECTED THE AO ACCORD INGLY. I.T.A. NO. 454/HYD/2014 SRI P. JANGA REDDY :- 3 -: 4. LD. DR SUBMITTED BEFORE US, THE FINDING OF THE C IT(A) IS CONTRADICTORY AND WITHOUT ANY BASIS. HE SUBMITTED, WHEN THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO SHOW THAT HE HAS SPARE PARTS BUSINESS, THE CASH DEPOSITS IN THE BANK ACCOU NT CANNOT BE TREATED AS RECEIPT FROM SUCH BUSINESS. LD. DR REFE RRING TO THE TDS DETAILS OF THE ASSESSEE SUBMITTED THAT THE INCOME D ECLARED BY THE ASSESSEE IS FROM CONTRACT BUSINESS AND NOT FROM SPA RE PARTS BUSINESS. THEREFORE, ASSESSEES CLAIM THAT HE WAS CARRYING ON SPARE PARTS BUSINESS IS TOTALLY UN-BELIEVABLE. 5. THE LD. AR ON THE OTHER HAND STRONGLY RELYING UP ON THE DECISION OF THE CIT(A) SUBMITTED THAT AS THE CASH D EPOSITS IN THE BANK ACCOUNT ARE FROM SPARE PARTS BUSINESS, THE CIT (A) WAS JUSTIFIED IN ESTIMATING THE PROFIT @ 25% OF THE REC EIPTS. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD. IT IS ADMITTED PO SITION THAT THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF IN COME PERTAINS TO CONTRACT BUSINESS AND NOT SPARE PARTS BUSINESS. ON LY BEFORE THE CIT(A), THE ASSESSEE TOOK THE PLEA THAT THE CASH DE POSITS IN THE BANK ACCOUNT REPRESENT UNACCOUNTED RECEIPT FROM SPA RE PARTS BUSINESS. HOWEVER, NO SUBSTANTIVE EVIDENCE HAS BEE N PRODUCED BY THE ASSESSEE TO ESTABLISH THE FACT THAT HE IN FACT WAS CARRYING ON ANY SPARE PARTS BUSINESS. THE FINDING OF THE CIT(A) IS ALSO CONTRADICTORY. THOUGH, HE HAS OBSERVED THAT THERE IS NO EVIDENCE TO INDICATE THAT THE ASSESSEE HAS CARRIED OUT SPARE PARTS BUSINESS, AT THE SAME BREATH, HE HAS OBSERVED THAT THE DEPOSI TS IN THE BANK ACCOUNT ARE FROM UNACCOUNTED BUSINESS RECEIPTS EVEN THE SO CALLED AGRICULTURAL INCOME GIVEN CREDIT BY CIT(A), WAS NOT REFLECTED IN ASSESSMENT ORDER. THE COMPUTATION OF INCOME WAS NO T PLACED ON I.T.A. NO. 454/HYD/2014 SRI P. JANGA REDDY :- 4 -: RECORD. IN OUR VIEW, SUCH FINDING OF THE CIT(A) I S NOT BASED ON ANY COGENT EVIDENCE/MATERIAL BROUGHT ON RECORD AND IS A N IMAGINARY ONE. THEREFORE, WE ARE NOT ABLE TO SUBSCRIBE TO TH E VIEW EXPRESSED BY THE CIT(A). IN THE AFORESAID FACTS AND CIRCUMST ANCES, WE SET ASIDE THE IMPUGNED ORDER OF LD. CIT(A) AND REMIT TH E MATTER BACK TO THE FILE OF AO FOR DENOVO ASSESSMENT AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE SOURCE OF CASH DEPOS ITS MADE TO THE BANK ACCOUNT. 7. IN THE RESULT, DEPARTMENTAL APPEAL IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2015. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL ME MBER HYDERABAD, DATED 27 TH NOVEMBER, 2015. TNMM COPY TO : 1. INCOME TAX OFFICER, WARD-9(4), 2 ND FLOOR, D BLOCK, I.T. TOWERS, A.C. GUARDS, MASAB TANK, HYDERABAD. 2. SRI P. JANGA REDDY, PLOT NO. 13, ROAD NO. 1, ARU NODAYA COLONY, OPP: BHAGYALATHA HOSPITAL, HYDERABAD. 3. CIT(APPEALS)-VI, HYDERABAD. 4. CIT-VI, HYDERABAD. 5. D.R. ITAT, HYDERABAD . 6. GUARD FILE.