Srinivas Chigurla, Secunderabad V. Income Tax Officer, Ward-10(1), Hyderabad

ITA 530/Hyd/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1642 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 27-11-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 20-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KOMALI KRISHNA
• Keywords: Peak credit
• Section: 143(3); 142(1); 234B; 201; 143(2); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD SMC - A BENCH : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO. 530 /HYD./201 8 ASSESSMENT YEAR: 20 14 - 15 SRI SRINIVAS CHIGURLA VS. ITO, WARD 10 (1) HYDERABAD. HYDERABAD. PAN: A RYPC2549R (APPELLANT) (RESPONDENT) FOR ASSESSE E : S MT. S. SANDHYA, A.R. FOR REVENUE : S MT. KOMALI KRISHNA, D.R. DATE OF HEARING : 27 / 11 /19 DATE OF PRONOUNCEMENT : 06 / 1 2 /19 O R D E R THIS IS ASSESSEES APPEAL FOR A.Y. 201 4 - 15 AGAINST THE ORDER OF THE LD.CIT(A) - 6 , HYDERABAD DATED 27.12.2017 . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AN INDIVIDUAL , ENGAGED IN THE BUSINESS OF TRADING IN VEGETABLES, FILED HIS RETURN OF INCOME FOR AY 2014 - 15 ON 13.3.2015 DECLARING TOTAL INCOME OF RS.3,15,940/ - . DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE I.T. ACT, 1961 (THE ACT) , THE ASSESSING OFFICER ISSUED NOTICES TO THE ASSESSEE U/S 143(2) AND 142(1) OF THE ACT. IN RESPONSE TO THE SAME, THE ASSESSEES AUTHORISED REPRESENTATIVE APPEARED AND FURNISHED HIS BA N K ACCOUNT STATEMENT. THOUGH HE WAS ALSO ASKED TO FURNISH THE SOURCES FOR CASH DEPOSITS INTO THE BANK ACCOUNT, NO INFORMATION WAS FILED, DUE TO WHICH THE ASSESSMENT WAS COMPLETED EX - PARTE U/S 144 OF THE ACT. THE AO OBSERVED THAT THERE WERE TOTAL CREDITS OF RS.1,33,83,969/ - INCLUDING CASH DEPOSITS TO THE TUNE OF RS.80,06,140/ - , OUT OF WHICH THE ASSESSEE HAD DECLARED A TURNOVER OF RS.46,78,210/ - . THE AO, THEREFORE, TREATED THE BALANCE TURNOVER OF RS.87,05,759/ - (RS.1,33,83.969 ITA NO. 530 /HYD./201 8 AY 201 4 - 15 S RI NIVAS CHIGURLA VS. ITO, WARD 10 (1), HYDERABAD 2 46,78,210) AS UNDISCLOSED TURNOVER AND INCOME THEREON WAS ESTIMATED AT 8% WHICH CAME OUT TO RS.6,96,461/ - AND BROUGHT THE SAME TO TAX. 2.1. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), S TATING THAT HE WAS NOT GIVEN PROPER OPPORTUNITY BEFORE THE AO. THE CIT(A) HOWEVER, REJECTED THE CONTENTION S OF ASSESSEE AND PROCEEDED TO CONSIDER THE APPEAL ON MERITS. BEFORE THE CIT(A) , THE ASSESSEE HAS STATED THAT HE IS INTO TRADING BUSINESS I.E. PURCHASE AND SALE OF VEGETABLES AND ALSO S ELLS THE VEGETABLES ON BEHALF OF THE AGRICULTURISTS AT AMC MARKET, BOWENPALLY. IT WAS SUBMITTED THAT THE UNDECLARED TURNOVER WAS FROM SUCH SALES AND INCOME SHOULD BE ESTIMATED THERE ON . HOWEVER, THE CIT(A) OBSERVED THAT THE ASSESSEE HAS NOT FURNISHED ANY DETAILS WITH REGARD TO BIFURCATION OF THE TURNOVER . AS REGARDS TH E ASSESSEES PRAYER TO BRING ONLY PEAK CREDIT TO TAX, CIT(A) HELD THAT THE ASSESSEE HAS FAILED TO IDENTIFY THE SPECIFIC CASH WITHDRAWALS AND CORRESPONDING CASH DEPOSITS MADE ALONG WITH THE E XPLANATION FOR NON - UTILISATION OF CASH DEPOSITS. THE CIT(A) FURTHER OBSERVED THAT ASSESSEE HIMSELF HAS OFFERED NET PROFIT @ 7.43% ON THE REPORTED SALES OF RS.46,78,210/ - . T HEREFORE , THE CIT(A) DIRECTED THE AO TO ADOPT THE SAME NET PROFIT AT 7.43% ON ENTIRE TURNOVER BOTH DISCLOSED AND UNDISCLOSED. 2.2. AGAINST THIS ORDER OF CIT(A) , THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL. 1. THE ORDER OF LD.CIT(A) IS ERRONEOUS TO THE EXTENT IT IS PREJUDICIAL TO THE APPELLANT. 2. THE LD.CIT(A) ERRED IN CONFIRMING T HE ACTION OF AO IN COMPLETING THE ASSESSMENT EX - PARTE WITHOUT PROVIDING PROPER OPPORTUNITY TO THE APPELLANT. 3. THE LD.CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT PROPER OPPORTUNITY WAS NOT PROVIDED TO THE APPELLANT BEFORE COMPLETING THE ASSESSMENT EX - PA RTE U/S 144 OF THE ACT. 4. THE LD.CIT(A) ERRED IN DETERMINING THE TURNOVER OF THE APPELLANT AT RS.87,05,759/ - AND IN CONFIRMING THE ESTIMATE OF THE PROFIT @ 7.43%. 5. THE LD.CIT(A) ERRED IN CONFIRMING CHARGING OF INTEREST U/S 234A AND U/S 234B OF THE ACT. ITA NO. 530 /HYD./201 8 AY 201 4 - 15 S RI NIVAS CHIGURLA VS. ITO, WARD 10 (1), HYDERABAD 3 6. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 3. LD.COUNSEL FOR THE ASSESSEE SMT.S.SANDHYA , WHILE REITERATING THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE CIT(A), SUBMITTED THAT THE ASSESSEE WAS INTO THE BUSINESS OF SELLING OF VEGETA BLES BOTH FROM THE DEALERS AS WELL AS FARMERS AND, THEREFORE, THE PROFIT ON THE SALE OF VEGETABLES ON COMMISSION BASIS IS MUCH LESSER AND CANNOT BE ADOPTED AT A UNIFORM RATE OF 7.43%. 3.1 . THE LD.DR , HOWEVER , SUPPORTED THE ORDER OF CIT(A) AND DREW OUR ATTENTION TO ASSESSEES NOTE WHICH IS REPRODUCED AT PARA 8. 6 OF CIT(A)S ORDER. SHE SUBMITTED THAT THE ASSESSEE HAVING FAILED TO BIFURCATE THE TURNOVER BETWEEN THE SALES OF VEGETABLES ON BEHALF OF THE AGRICULTURISTS AND ON BEHALF OF OTHER DEALERS, THE AO AS WELL AS THE CIT(A) HAVE NO OTHER OPTION BUT TO ADOPT THE SAME RATE OF NET PROFIT TO TURNOVER. 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIAL PLACED ON RECORD, I FIND THAT THE ASSESSEE HIMSELF HAD CONTENDED BEFORE THE AO THAT HIS TRADING ACTIVITIES ARE TO BE BIFURCATED INTO TWO CATEGORIES I.E. SELLING VEGETABLES ON BEHALF OF FARMERS AND ON BEHALF OF DEALERS AND RETAILERS. THE CIT(A) SEEMS TO HAVE MIS - READ THE NOTE GIVEN BY THE ASSESSEE AS HE HAS RECORDED THAT THE ASSESSEE HAS NOT STATED THAT HE HAS SOLD VEGETABLES ON BEHALF OF FARMERS. THE ASSESSEE IN HIS NOTE HAS MENTIONED FARMERS WHO ARE ALSO KNOWN AS AGRICULTURISTS . HOWEVER, I ALSO FIND THAT THE ASSESSEE HAS FAILED TO BIFURCATE THE SALES AND ALSO IN ESTIMATING OF PROFIT FROM SUCH SALES. THEREFORE, I DO NOT FIND ANY DISCREPANCY IN CIT(A)S ADOPTING THE SAME RATE OF NET PROFIT DECLARED BY ASSESSEE ON THE DECLARED TURNOVER TO THE UNDISCLOSED TURNOVER AS WELL . HOWEVER, I AM OF THE OPINION, THAT IN THE PECULIAR CIRCUMSTANCES OF THE CASE, THE NET PROFIT CAN BE REDUCED TO DO JUSTICE TO THE ASSESSEE. THEREFORE, I DIRECT THE AO TO ADOPT 6.5% AS NET PROFIT ON THE ENTIRE TURNOVER OF THE ASSESSEE. ITA NO. 530 /HYD./201 8 AY 201 4 - 15 S RI NIVAS CHIGURLA VS. ITO, WARD 10 (1), HYDERABAD 4 HOWEVER , I MAKE IT CLEAR THAT THIS FINDING SHALL BE EFFECTIVE ONLY FOR THE RELEVANT A.Y. AND CANNOT BE ADOPTED AS PRECEDENT FOR ANY OTHER A. Y. 5. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 06 TH DECEMBER, 2019. SD/ - (P MADHAVI DEVI) JUDICIAL MEMBER DATED: THE 06 TH DECEMBER, 2019. *GMV COPY FORWARDED TO: 1. SRI SRINIVAS CHIGURLA , SHOP NO.B - 47, AMC MARKET YARD, BOWENPALLY, SECUNDERABAD. 2. ITO, WARD 10(1), HYDERABAD 3. JCIT, RANGE 10, HYDERABAD 4. THE PR.CIT - 6 , HYDERABAD 5 . D.R. ITAT HYDERABAD 6 . GUARD FILE // C O P Y // ITA NO. 530 /HYD./201 8 AY 201 4 - 15 S RI NIVAS CHIGURLA VS. ITO, WARD 10 (1), HYDERABAD 5 1. DRAFT DICTATED ON 02/12/19 2. DRAFT PLACED BEFORE THE AUTHOR 02/12/19 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO SRPS 06/12/19 6. KEPT FOR PRONOUNCEMENT 06/12/19 7. FILE SENT TO BENCH CLERK