The ITO, Srikakulam V. Tankala Suresh, Srikakulam

ITA 5/VIZ/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6782 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 10-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D J P ANAND
• Assessee Lawyers: S V SATYANARAYANA
• Keywords: Business income; Revised return
• Section: 69

Judgement Text

ITA NO.5/VIZAG/2017 TANKALA SURESH, SRIKAKULAM 1 , , 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.5/VIZAG/2017 ( / ASSESSMENT YEAR: 2011-12) ITO, WARD - 1 SRIKAKULAM TANKALA SURESH, SRIKAKULAM [PAN NO. ABSPT267 7H ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI D.J.P. ANAND, D R / RESPONDENT BY : SHRI S.V. SATYANARAYANA, AR / DATE OF HEARING : 08.08.2017 / DATE OF PRONOUNCEMENT : 1 8.08.2017 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2 {CIT(A)}, VI SAKHAPATNAM VIDE ITA NO.424/2015-16/CIT(A)-2/W-1/SKLM/2016-17 DATED 20.10.2016 FOR THE ASSESSMENT YEAR 2011-12. ITA NO.5/VIZAG/2017 TANKALA SURESH, SRIKAKULAM 2 2. ALL THE GROUNDS OF THIS APPEAL ARE RELATED TO TH E CREDITS IN THE BANK ACCOUNT. THE A.O. FOUND THAT THE ASSESSEE HAD A SA VINGS BANK ACCOUNT BEARING NO.11152404011 WITH STATE BANK OF INDIA AND THERE WERE DEPOSITS TO THE TUNE OF ` 53,63,617/- AND THE SAID BANK ACCOUNT WAS NOT DISCLOSED TO THE INCOME TAX DEPARTMENT IN THEIR RET URN. THEREFORE, THE A.O. ASKED THE ASSESSEE AS TO WHY THE ENTIRE DEPOSI TS MADE IN THE BANK ACCOUNT SHOULD NOT BE TREATED AS UNEXPLAINED INCOME U/S 69 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE AC T'). THE ASSESSEE EXPLAINED THAT THE TOTAL CREDITS IN THE BANK ACCOUN T WERE AT ` 61,87,823/- AND THE ASSESSEE WAS ENGAGED IN THE BUS INESS OF PURCHASE AND SALE OF STEEL UTENSILS AND ARTICLES. THE BUSIN ESS WAS DONE THROUGH VARIOUS HAWKERS OF RURAL AREAS IN SRIKAKULAM AND NE IGHBOURING DISTRICTS. THE MATERIAL WAS SUPPLIED TO THE HAWKERS ON COMMISS ION BASIS AS THE HAWKERS HAD NO FINANCIAL CAPACITY TO PURCHASE THE G OODS. ON SALE OF THE MATERIAL THE HAWKERS DEPOSITED THE SALE PROCEEDS IN THE BANK ACCOUNT AFTER DEDUCTING THEIR COMMISSION. THEREFORE, THE A SSESSEE SUBMITTED BEFORE THE A.O. THAT THE ENTIRE DEPOSITS MADE IN TH E BANK ACCOUNT REPRESENTED THE SALES AND AGREED TO ADMIT THE ADDIT IONAL INCOME @ 8% ON THE SALES. NOT CONVINCED WITH THE EXPLANATION O F THE ASSESSEE, THE A.O. TAXED THE ENTIRE CREDITS AS UNEXPLAINED DEPOSI TS AND BROUGHT TO TAX. ITA NO.5/VIZAG/2017 TANKALA SURESH, SRIKAKULAM 3 3. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) AFTER VERI FICATION OF THE BANK ACCOUNT NOTICED THAT MOST OF THE DEPOSITS WERE IN T HE RANGE OF ` 20,000/- TO ` 25,000/- AND THE NAMES OF THE DEPOSITORS WERE ALSO MENTIONED THEREIN. THERE WERE REGULAR CASH DEPOSIT S AND WITHDRAWALS. THE PERIODICAL DEPOSITS AND WITHDRAWALS AND THE MAN NER IN WHICH THE AMOUNTS DEPOSITED ALONG WITH THE NAMES GIVES A CLEA R INDICATION THAT THE DEPOSITS WERE MADE OUT OF THE BUSINESS TRANSACT IONS. THEREFORE, THE LD. CIT(A) DELETED THE ADDITION AND DIRECTED THE A. O. TO RESTRICT THE ADDITION TO THE TUNE OF ` 4,95,027/- REPRESENTING THE PROFIT @ 8% ON THE TOTAL DEPOSITS. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REV ENUE IS IN APPEAL BEFORE US. APPEARING FOR THE REVENUE, THE LD. D.R. ARGUED THAT THE ASSESSEE HAD NOT DISCLOSED THE BANK ACCOUNT IN THE ORIGINAL RETURN OF INCOME AND DURING THE RE-ASSESSMENT PROCEEDINGS ALS O THE ASSESSEE HAS NOT DECLARED THE SAID BANK ACCOUNT TO THE REVENUE. THERE WAS NO DOCUMENTARY PROOF TO SHOW THAT THE DEPOSITS WERE MA DE IN THE UNDISCLOSED BANK ACCOUNT REPRESENTED THE TURNOVER O F THE ASSESSEE. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO ESTAB LISH THE EXISTENCE OF THE PERSONS IN WHOSE NAMES THE DEPOSITS WERE MAD E IN THE BANK ACCOUNT. IN THE ABSENCE OF ANY VERIFIABLE EVIDENCE WITH REGARD TO THE ITA NO.5/VIZAG/2017 TANKALA SURESH, SRIKAKULAM 4 PERSONS AND CONCERNS TO WHOM THE PAYMENTS WERE SAID TO HAVE BEEN MADE, THE LD. CIT(A) IS NOT CORRECT IN HOLDING THAT THE DEPOSITS MADE IN THE BANK ACCOUNT WERE RELATED TO THE SALES. THE LD . D.R. ARGUED THAT THE A.O. HAS RIGHTLY BROUGHT TO TAX THE ENTIRE DEPO SITS, WHICH REQUIRED TO BE CONFIRMED. 5. ON THE OTHER HAND, THE LD. A.R. RELIED ON THE OR DER OF THE LD. CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE BANK ACCOUNT OF THE ASSESSEE WITH STATE BANK OF IND IA BEARING NO.11152404011 WAS NOT DISCLOSED TO THE REVENUE. T HERE WERE CREDITS IN THE BANK ACCOUNT TO THE TUNE OF ` 61,87,823/-. THE LD. CIT(A) HAS OBSERVED THAT THE DEPOSITS WERE MADE IN THE RANGE O F ` 20,000/- TO ` 25,000/- IN THE BANK ACCOUNT WITH THE NAMES OF THE PERSONS AND THE ASSESSEE HAS WITHDRAWN THE ABOVE AMOUNT IMMEDIATELY FROM THE BANK ACCOUNT. THE ASSESSEE IS ENGAGED IN THE BUSINESS O F PURCHASE AND SALE OF STEEL UTENSILS AND ARTICLES AS STATED BY HIM AND SUPPLIED THE UTENSILS AND ARTICLES TO THE LOCAL HAWKERS ON COMMISSION BAS IS IN THE PLACES OF SRIKAKULAM AND NEIGHBOURING DISTRICTS. THESE HAWKE RS AFTER SELLING THE PRODUCTS DEPOSITED THE SALE PROCEEDS IN THE BANK AC COUNT, WHICH WERE WITHDRAWN BY THE ASSESSEE AND RE-USED FOR CIRCULATI ON. THE LD. CIT(A) ITA NO.5/VIZAG/2017 TANKALA SURESH, SRIKAKULAM 5 HAS GIVEN A FINDING THAT THE MANNER IN WHICH THE B ANK ACCOUNT WAS CONDUCTED CLEARLY SHOWS THAT THE DEPOSITS RELATED T O THE TURNOVER OF THE BUSINESS. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT THE RELEVANT PARA NO.4.3 OF THE LD. CIT(A)S ORDER, WHI CH READS AS UNDER: 4.3 I HAVE CONSIDERED THE SUBMISSIONS AND DETAILS F ILED. IT IS SEEN THAT THE ASSESSEE HAD FILED HIS RETURN OF INCOME ON 09.1 1.2011, WHEREIN HE HAD DECLARED INCOME FROM BUSINESS OF RS.2,20,775/- AND AFTER CLAIMING DEDUCTION UNDER CHAPTER VI A OF RS.29,331/- RETURNED A TOTAL INCOME OF RS.1,91,440/-. THE AO HAD ISSUED NOTICE U/S.148 ON 19.08.2014, IN RESPONSE TO WHICH THE ASSESSEE HAD STATED THAT THE ORIGINAL RETURN MAY BE TREATED AS FILED IN RESPONSE TO SUCH NOTICE. SUBSEQ UENTLY, A SURVEY WAS CONDUCTED ON 19.09.2014 AND IT WAS NOTED THAT THE A SSESSEE HAD NOT DECLARED A BANK ACCOUNT MAINTAINED WITH SBI. THEREAF TER, THE ASSESSEE FILED A REVISED RETURN OF INCOME ON 06.04.2015, WHE REIN HE HAD OFFERED ADDITIONAL INCOME OF RS.4,95,027/- IN REGARD TO THE TRANSACTIONS IN HIS UNDECLARED BANK ACCOUNT. IT WAS STATED THAT THE SAI D ADDITIONAL INCOME WAS OFFERED BY 7ESTIMATING THE INCOME AT 8% OF THE TOTAL CREDITS IN THE UNDECLARED BANK ACCOUNT OF RS.61,87,823/-. IT WAS RE PRESENTED THAT THE CREDITS IN THE SAID BANK ACCOUNT REPRESENT BUSINESS RECEIPTS FROM THE SALE OF UTENSILS IN ORISSA AND OTHER PLACES. HOWEVER, TH E AO DID NOT ACCEPT THE SAID EXPLANATION NOR THE ADDITIONAL INCOME OFFERED, BUT ASSESSED THE ENTIRE CREDITS AS THE ASSESSEE'S UNEXPLAINED INCOME AND MADE THE IMPUGNED ADDITION OF RS.61,87,823/-. THE ISSUE TO B E RESOLVED IS WHETHER THE ASSESSMENT OF ENTIRE CREDITS AS UNEXPLAINED INC OME IS JUSTIFIED. IN THIS CONTEXT, I HAVE PERUSED THE STATEMENT OF THE UNDECLA RED BANK ACCOUNT, AND IT IS NOTED THAT MOST OF THE DEPOSITS ARE IN TH E RANGE OF RS.20,000/- TO RS00/- AND THE NAMES OF THE DEPOSITORS ARE ALSO MEN TIONED THEREIN. THERE WERE REGULAR CASH DEPOSITS AND CASH WITHDRAWALS. TH E PERIODICAL DEPOSITS AND WITHDRAWALS, THE MANNER AND AMOUNTS DEPOSITED A LONG WITH NAMES AND ALL GIVE A CLEAR INDICATION THAT THE DEPOSITS W ERE MADE OUT OF THE PROCEEDS OF HIS BUSINESS TRANSACTIONS. I ALSO FIND T HAT THE ADDITIONAL INCOME DISCLOSED OF RS.4,95,027/- IN REGARD TO THES E CREDITS TO BE REASONABLE. THEREFORE THE AO IS DIRECTED TO RESTRIC T THE ADDITION TO RS.4,95,027/- AS AGAINST THE IMPUGNED ADDITION OF R S.61,87,823/-. THE AO IS ALSO DIRECTED TO GIVE CREDIT TO THE TAXES PAID B Y THE ASSESSEE IN HIS REVISED RETURN. 7. FROM THE ORDER OF THE LD. CIT(A) AND THE CONDUCT OF THE ASSESSEE AND THE MANNER IN WHICH THE ACCOUNT IS OPERATED, WE AGREE WITH THE FINDING OF LD. CIT(A) THAT THE DEPOSITS MADE IN THE BANK ACCOUNT ITA NO.5/VIZAG/2017 TANKALA SURESH, SRIKAKULAM 6 APPEARS TO BE SALE PROCEEDS. NO OTHER EVIDENCE WAS BROUGHT BY THE REVENUE EVIDENCING THAT THE DEPOSITS ARE RELATED TO THE UNEXPLAINED SOURCES EVEN AFTER CONDUCTING THE SURVEY IN THE PRE MISES OF THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS UPHELD. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 18 TH AUG17. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 18.08.2017 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO, WARD-1, SRIKAKULAM 2. / THE RESPONDENT TANKALA SURESH, PROP: SRI VENKA TESWARA METAL INDUSTRIES, IDA, KUSALAPURAM, SRIKAKULAM. 3. + / THE CIT-2, VISAKHAPATNAM 4. + ( ) / THE CIT (A)-2, VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM