Sri Surakshita Homes, Hyderabad V. ITO, Ward 11(2), Hyderabad

ITA 544/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77934 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 17-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANJALA SAHU
• Assessee Lawyers: S RAMA RAO
• Keywords: Business income; Reasonable cause; Condonation of delay
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA. NO.544/HYD/2013 ASSESSMENT YEAR 2009-2010 SRI SURAKSHITA HOMES HYDERABAD PAN ABFFS-1769-L VS. DCIT, CIRCLE 3(3) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE MR. S. RAMA RAO FOR REVENUE MS. ANJALA SAHU DATE OF HEARING 04.06.2014 DATE OF PRONOUNCEMENT 06.06.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS IS AN ASSESSEES APPEAL AGAINST THE ORDER OF THE CIT(A)-VI, HYDERABAD DATED 17.12.2012 CONTESTIN G THE DETERMINATION OF GROSS BUSINESS RECEIPTS AT RS.1.34 CRORES AND ALSO ESTIMATING THE INCOME AT 12.5% OF THE GROSS RE CEIPTS. ASSESSEE RAISED 4 GROUNDS. GROUND NOS. 1 AND 4 ARE GENERAL IN NATURE AND THEREFORE, NEED NOT BE ADJUDICATED. GROU ND NOS. 2 AND 3 ARE INTER-RELATED. 2. WE HAVE HEARD THE LEARNED COUNSEL AND LEARNED D.R. IN DETAIL AND PERUSED THE PAPER BOOK CONTAININ G 19 PAGES. 3. CONDONATION OF DELAY : THE APPEAL IS FILED WITH A DELAY OF 16 DAYS. EVEN THOUGH THE CONDONATIO N PETITION WAS NOT FILED ALONG WITH THE APPEAL MEMO, THE SAME WAS FILED IN THE COURSE OF HEARING SEEKING CONDONATION BY FIL ING AN AFFIDAVIT. IT WAS EXPLAINED THAT DUE TO ILLNESS OF THE MANAGING 2 ITA.NO.544/HYD/2013 SRI SURAKSHITA HOMES, HYDERABAD PARTNER THE APPEAL PAPERS COULD NOT BE PREPARED IN TIME AND THAT THERE WAS DELAY OF 16 DAYS. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PERUSING THE REASONS GIVEN IN THE P ETITION, WE ARE OF THE OPINION THAT THERE IS REASONABLE CAUSE F OR CONDONING THE DELAY OF 16 DAYS. THEREFORE, THE APPEAL IS ADMI TTED. 4. ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED IN T HE BUSINESS OF REAL ESTATE. IT HAS NOT FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION AND THEREFORE, A NOTICE UN DER SECTION 142(1) HAS BEEN ISSUED TO THE ASSESSEE CALLING FOR RETURN OF INCOME. AS THERE IS NO RESPONSE, VARIOUS NOTICES WE RE ISSUED INCLUDING SUMMONS UNDER SECTION 131OF THE IT ACT 19 61. AS THERE WAS NO COMPLIANCE, ASSESSMENT HAS BEEN COMPLE TED EX- PARTE UNDER SECTION 144 OF THE I.T. ACT. THE A.O. O BTAINED BANK STATEMENT FROM ICICI BANK, SYNDICATE BANK, DCB BANK AND ALLAHABAD BANK AND NOTICED THAT ASSESSEE HAS DEPOSI TS IN THE BANK ACCOUNTS TO AN EXTENT OF RS.1,34,24,696/-. IN THE ABSENCE OF ANY INFORMATION SUBMITTED BY THE ASSESSE E NOR PRODUCTION OF BOOKS, THE TOTAL BANK DEPOSITS WERE T REATED AS GROSS RECEIPTS AND NET PROFIT WAS ESTIMATED AT 15%, THEREBY ASSESSING THE TOTAL INCOME AT RS.20,13,704/-. 5. BEFORE THE LD. CIT(A), ASSESSEE SUBMITTED THAT IT HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS BUT OBJECT ED TO THE QUANTIFICATION OF THE RECEIPTS AND ESTIMATION OF PR OFIT AT 15%. IT WAS THE CONTENTION THAT ASSESSEE HAD WITHDRAWN CASH TO THE EXTENT OF RS.46,50,000/- FROM ICICI BANK WHICH WERE SOURCED FOR THE DEPOSITS IN SYNDICATE BANK. THEREFORE, TO T HAT EXTENT, THE SAME CANNOT BE TREATED AS BUSINESS RECEIPTS. FU RTHER, IT WAS SUBMITTED THAT DEPOSITS IN ALLAHABAD BANK, VIVE K NAGAR BRANCH, HYDERABAD PERTAIN TO PERIOD PRIOR TO 29.03. 2008 AND THEREFORE, THE TOTAL DEPOSITS TO THE EXTENT OF RS.4 8,78,480/- 3 ITA.NO.544/HYD/2013 SRI SURAKSHITA HOMES, HYDERABAD DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATION. L D. CIT(A) EXAMINED THE FIRST CONTENTION WITH REFERENCE TO THE SOURCE OF CASH WITHDRAWALS AND GAVE A FINDING THAT THERE WERE NO CASH RECEIPTS/DEPOSITS IN SYNDICATE BANK AND ALL THE DEP OSITS WERE BY WAY OF TRANSFER/CLEARING, BUT NOT BY CASH. THERE FORE, WITHDRAWAL FROM ICICI BANK DOES NOT HELP THE DEPOSI TS IN SYNDICATE BANK. WITH REFERENCE TO THE ARGUMENT THAT THE DEPOSITS IN ALLAHABAD BANK DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATION, HOWEVER HAS MISSED THE ATTENTION OF THE LD. CIT(A) AND THERE IS NO DISCUSSION ON THAT ISSUE. HE CONFIRMED THE TURNOVER AS QUANTIFIED BY THE A.O. 6. WITH REFERENCE TO THE ESTIMATION OF INCOME, CONSIDERING THE FACT THAT ASSESSEE HAS NOT FURNISHE D ANY INFORMATION WITH REFERENCE TO PAST PROFITS AND DEPE NDING ON THE NATURE OF THE BUSINESS, LD. CIT(A) REDUCED THE ESTIMATION TO 12.5% AND GAVE PARTIAL RELIEF TO THE ESTIMATION OF INCOME. ASSESSEE AGGRIEVED ON BOTH THE COUNTS. 7. IT WAS THE CONTENTION OF THE LD. COUNSEL THAT T HE DEPOSITS IN ALLAHABAD BANK TO AN EXTENT OF RS.48,78 ,480/- PERTAIN TO THE PERIOD PRIOR TO 31.03.2008 RELEVANT UP TO A.Y. 2008-09 AND NOT TO THE IMPUGNED A.Y. 2009-2010. WIT H REFERENCE TO THE SOURCE OF DEPOSITS IN SYNDICATE BA NK BEING WITHDRAWALS FROM ICICI BANK, HE REITERATED THE SAME SUBMISSIONS MADE BEFORE THE LD. CIT(A). WITH REFERE NCE TO ESTIMATION OF INCOME, HE SUBMITTED THAT ASSESSEE BE ING IN REAL ESTATE BUSINESS, REASONABLE ESTIMATION OF 8% IS APP ROPRIATE. 8. LEARNED D.R. HOWEVER, REITERATED THE FINDINGS O F THE A.O. AND LD. CIT(A) AND SUBMITTED THAT THERE IS NO MISTAKE IN THE ORDERS OF THE AUTHORITIES AND BOTH THE TURNO VER AND ESTIMATION ARE BASED ON THE FACTS ON RECORD. 4 ITA.NO.544/HYD/2013 SRI SURAKSHITA HOMES, HYDERABAD 9. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE DETAILS PLACED ON RECORD. AS FAR AS THE INCLUSION O F TURNOVER FROM ALLAHABAD BANK IN THE GROSS TURNOVER FOR THE Y EAR IS CONCERNED, THE ACCOUNT COPY PLACED AT PAGE-5 OF THE PAPER BOOK DO INDICATE THAT DEPOSITS ARE MADE FROM 08.11. 2006 TO 29.03.2008. THE CLOSING BALANCE AS ON 29.03.2008 IS THE BALANCE AVAILABLE UP TO 29.12.2008 AS WELL. THIS IN DICATES THAT PRIMA FACIE THIS PART OF TURNOVER TAKEN INTO THE TO TAL TURNOVER OF THE ASSESSEE ON THE BASIS OF THE BANK DEPOSITS M AY NOT PERTAIN TO THE YEAR UNDER CONSIDERATION. HOWEVER, T HIS ASPECT WAS NOT EXAMINED BY THE LD. CIT(A) AND ALSO NOT RAI SED BEFORE THE A.O. AS THERE WAS NO COMPLIANCE TO VARIOUS NOTI CES BEFORE THE A.O. IN VIEW OF THIS, WE ARE OF THE CONSIDERED OPINION THAT THIS ASPECT REQUIRE EXAMINATION BY THE A.O. WHO IS DIRECTED TO EXAMINE THE INFORMATION AVAILABLE ON RECORD AND EXC LUDE THE AMOUNT OF RS.48,78,480/- IF IT IS INDEED PERTAINS T O PERIOD PRIOR TO 31.03.2008. THE CONTENTIONS TO THIS EXTENT ON THE TURNOVER IS THEREFORE, RESTORED TO THE FILE OF THE A.O. FOR DUE VERIFICATION AND NECESSARY ACTION. 10. COMING TO THE OTHER CONTENTION THAT THE DEPOSI TS IN SYNDICATE BANK ARE SOURCED FROM WITHDRAWALS FROM ICICI BANK, IT IS WORTH MENTIONING THE FINDINGS OF THE LD . CIT(A) AT PARA 7.2 OF HIS ORDER AS UNDER : 7.2. . . . . . . FURTHER, THE ARGUMENT OF THE APPELLANT THAT AN AMOUNT OF RS.46,50,000 REPRESENTING THE CAS H WITHDRAWALS FROM ICICI BANK, RE-DEPOSITED INTO SYND ICATE BANK, FOR CORRECT QUANTIFICATION OF THE DEPOSITS/GR OSS RECEIPTS, IS EXAMINED. IT WAS THE ARGUMENT OF THE A PPELLANT THAT SAID AMOUNTS WITHDRAWN FROM ONE BANK WERE AVAI LABLE FOR DEPOSITING INTO ANOTHER BANK, WHICH WILL EXPLAI N THE PART OF THE DEPOSITS SHOWN AS GROSS RECEIPTS, BUT ONLY D UPLICATION OF THE SAME RECEIPTS. HOWEVER, ON FACTS, SUCH EXPLA NATION IS FOUND TO BE NOT ACCEPTABLE AS THE CASH WITHDRAWALS FROM THE ICICI BANK NOT EXPLAINING THE DEPOSITS INTO SYNDICA TE BANK, 5 ITA.NO.544/HYD/2013 SRI SURAKSHITA HOMES, HYDERABAD SINCE SUCH DEPOSITS INTO SYNDICATE BANK ARE BY TRANSFER/CLEARING BUT NOT BY CASH, AS WITHDRAWN FRO M ICICI BANK, AS COULD BE SEEN FROM THE ENTRIES INTO BOTH C URRENT AS WELL AS LOAN ACCOUNTS MAINTAINED WITH SYNDICATE BAN K. HENCE, THE EXPLANATION OFFERED TO EXPLAIN THE DUPLI CATION OF TURNOVER/RECEIPTS TO THE EXTENT OF RS.46,50,000/- T HROUGH THE CASH WITHDRAWALS MADE FROM ICICI BANK, FALLS FLAT. 10.1. WE HAVE ALSO EXAMINED THE STATEMENTS PLACED ON RECORD AND NOTICED THAT THERE WERE NO CASH DEPOSITS IN SYNDICATE BANK. THEREFORE, ASSESSEES CONTENTION TH AT ICICI BANK WITHDRAWALS BEING SOURCE FOR DEPOSITS IN SYNDI CATE BANK CANNOT BE ACCEPTED. THESE WITHDRAWALS MAY BE FOR TH E PURPOSE OF BUSINESS AND SINCE ESTIMATION WAS DONE ON THE BA SIS OF THE RECEIPTS ONLY, THE WITHDRAWALS CANNOT BE GIVEN CRED I. THE FINDINGS OF THE LD. CIT(A) ON THIS ARE AFFIRMED AND ASSESSEES CONTENTIONS ON THIS ARE REJECTED. GROUND NO.2 PERTA IN TO GROSS BUSINESS RECEIPTS ARE PARTLY ALLOWED FOR STATISTICA L PURPOSES. 11. COMING TO GROUND NO.3 ON ESTIMATION OF INCOME, AS BRIEFLY STATED EARLIER, A.O. ESTIMATED THE INCOM E AT 15% WHEREAS, LD. CIT(A) REDUCED IT TO 12.5%. HIS FINDIN GS IN PARA 7.4 ARE AS UNDER : 7.4. THE APPELLANT FIRM IS ENGAGED IN THE BUSINESS OF REAL ESTATE AND IS CONTINUED FOR FEW YEARS INCLUDIN G THE IMMEDIATELY PRECEDING YEARS. HOWEVER, NO SUCH INDIC ATION AS TO THE PERCENTAGE OF THE PROFITS AS ADOPTED FOR THE EARLIER YEARS, BROUGHT ON THE RECORD, EITHER BY THE APPELLA NT OR THE A.O. UNDER THE CIRCUMSTANCES, IT MAY BE PERTINENT T O REFER TO THE RATIOS OF JUDICIAL DECISIONS ON THE SUBJECT MAT TER, WHERE THE PROFITS ARE PUT IN THE RANGE OF 8 TO 12.5%, ON THE GROSS RECEIPTS, DEPENDING ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. THE CASE UNDER REFERENCE ALSO FALLS IN THE CA TEGORY OF REAL ESTATE BUSINESS, WHICH ARE SUBJECT TO THE DECI SIONS ON SIMILAR RATIO. HENCE, BASED ON THE FACTS OF THE PRE SENT CASE, WHERE NO BOOKS OF ACCOUNT WERE MAINTAINED OR NO REASONABLE EXPLANATION WAS OFFERED, THE PROFIT AT T HE RATE OF 12.5% MAY MEET THE JUSTICE AT BOTH THE ENDS. BASED ON THE 6 ITA.NO.544/HYD/2013 SRI SURAKSHITA HOMES, HYDERABAD FACTS OF THE CASE, I AM OF THE CONSIDERED OPINION T HAT THE PROFITS OF THE APPELLANT, DESERVED TO BE ESTIMATED AT 12.5% ON THE TURNOVER OF RS.1,34,24,696/-, AS QUANTIFIED. ACCORDINGLY, THE A.O. IS DIRECTED TO WORKOUT THE PR OFIT @ 12.5% ON THE GROSS RECEIPTS OF RS.1,34,24,696/- AND RECOMPUTED THE INCOME. 12. CONSIDERING THE FACT THAT ASSESSEE CHOOSE NOT TO MAINTAIN BOOKS OF ACCOUNTS NOR FURNISHED ANY RETURN OF INCOME INSPITE OF VARIOUS NOTICES ISSUED, WE ARE OF THE OPINION THAT LD. CIT(A) IS VERY CONSIDERATE IN ESTIMATING T HE INCOME AT 12.5%. THEREFORE, WE FIND NO REASON TO INTERFERE WI TH THE ORDER OF THE LD. CIT(A) AND THE ESTIMATION AT 12.5% IS CO NFIRMED ON THE FACTS OF THE CASE. ACCORDINGLY, GROUND NO.3 IS REJECTED. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE COURT ON 06.06.2014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 06 TH JUNE, 2014. VBP/- COPY TO 1. SRI SURAKSHITA HOMES, 7-148, NAGENDRANAGAR COLON Y, STREET NO.1, HABSIGUDA, HYDERABAD. C/O. SRI S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, 3-6-643, STREET NO.9, HIMAYAT NAGAR, HYDERABAD 500 029. 2. INCOME TAX OFFICER, WARD 11(2), HYDERABAD. 3. CIT(A)-VI, HYDERABAD. 4. CIT-V, HYDERABAD 5. D.R. ITAT, A BENCH, HYDERABAD.