Makam Subhadra, Kurnool, Hyderabad V. ITO, Ward-2, Kurnool, Kurnool

ITA 754/HYD/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2541 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-02-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Opportunity of being heard; Principle of natural justice; Peak credit
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A SMC BENCH: HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA. NO.754/HYD/2017 ASSESSMENT YEAR: 2009 - 2010 MAKAM SUBHADRA, KURNOOL. PAN: AUZPS 8748 N VS. ITO, WARD - 2, KURNOOL. (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI K.A. SAI PRASAD FOR REVENUE : SMT. SUMAN MALIK, DR DATE OF HEARING : 21.02.2018 DATE OF PRONOUNCEMENT : 21.02.2018 ORDER PER D. MANMOHAN , VP. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE EX - PARTE ORDER PASSED BY LD. CIT(A), KURNOOL FOR THE A.Y. 2009 - 10. 2. AT THE OUTSET, IT MAY BE NOTICED THAT THE ASSESSEE HAS NEITHER APPEARED BEFORE THE A.O. NOR APPEARED BEFORE THE LD. CIT(A) , I N RESPONSE TO THE NOTICES ISSUED FROM TIME TO TIME . T HOUGH AT THE F IRST INSTANCE THE ASSESSEE APPEARED BEFORE THE A.O. AND IN RESPONSE TO THE NOTICES ISSUED BY THE LD. CIT(A) REQUESTS WERE MADE SEEKING ADJOURNMENT , NO FURTHER DETAILS WERE FILED AT ANY STAGE OF THE PROCEEDINGS. 3. FACTS IN SHORT ARE THAT THE ASSESSEE IS E NGAGED IN THE BUSINESS OF MONEY LENDING AND ADMITTED TAXABLE INCOME OF RS. 1,60,000/ - IN THIS YEAR. THOUGH THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT, IT WAS LATER ON REOPENED BY ISSUING A NOTICE U/S 143(2) OF THE ACT WHEREIN THE A.O. CALLED UPON THE ASSESSEE TO EXPLAIN THE SOURCES OF DEPOSITS MADE IN THE BANK ACCOUNTS. SINCE THE ASSESSEE DID NOT COMPLY 2 TO THE NOTICES, THE INCOME OF THE ASSESSEE WAS COMPUTED BY ADOPTING PEAK CREDIT AS THE UNEXPLAINED INCOME OF THE ASSESSEE. ACCORDINGLY, A N ADDITION OF RS. 8,97,440/ - WAS MADE U/S 68 OF THE ACT. FOR THE SAME REASONS, LD. CIT(A) AFFIRMED THE ACTION OF THE ASSESSING OFFICER. 4. BEFORE THE TRIBUNAL THE ASSESSEE FILED A PAPER BOOK BY CERTIFYING THAT THE MATER IAL PAPERS FILED BEFORE THE TRIBUNAL ARE AVAILABLE BEFORE THE ASSESSING OFFICER. IN FACT THE PAPER BOOK CONTAINS COPY OF THE RETURN OF INCOME FILED FOR THE AYS 2008 - 09 & 2009 - 10 AND THE BANK STATEMENTS , WHICH ARE TAKEN INTO CONSIDERATION BY THE A.O. LD . COU NSEL FOR THE ASSESSEE SUBMITS THAT IN RESPECT OF IMMEDIATELY PRECEDING YEAR I.E., 2008 - 09, THE ASSESSEE ADMITTED TOTAL INCOME OF RS. 1,35,000/ - AND THE TOTAL SUNDRY DEBTORS WERE TO THE TUNE OF ONLY RS. 6,76,000/ - . THE SAME WAS ACCEPTED BY THE A.O. IN RES PECT OF THE NEX T ASSESSMENT YEAR THE FIGURE SHOWN AGAINST THE SUNDRY DEBTORS WAS ONLY RS. 7,80,000/ - AND NO OTHER INVESTMENT WAS MADE BY THE ASSESSEE WHEREAS THE ASSESSING OFFICER SOUGHT TO MAKE AN ADDITION OF RS. 8,97,440/ - OVERLOOKING THE FACT THAT EVEN IN A BEST JUDGMENT ASSESSMENT REASONABLE ADDITION HAS TO BE MADE AND THE ADDITION SHOULD NOT BE ARBITRARY. THE HONBLE SUPREME COURT IN THE CASE OF STATE OF KERALA VS. C. VELUKUTTY (60 ITR 239) OBSERVED THAT THE JUDGMENT IS A FACULTY TO DECIDE MATTERS WI TH WISDOM AND IT DOES NOT DEPEND UPON ARBITRARY CAPRICE OF A JUDGE. THOUGH THERE IS AN ELEMENT OF GUESS WORK IN A BEST JUDGMENT ASSESSMENT, IT MUST BE AN HONEST GUESS WORK AND THE ASSESSMENT MUST NOT BE ARBITRARY AND IT SHOULD HAVE REASONABLE NEXUS TO THE AVAILABLE MATERIAL. LD COUNSEL FOR THE ASSESSEE THEREAFTER REFERRED TO THE BANK STATEMENTS , WHICH WERE TAKEN INTO CONSIDERATION BY THE ASSESSING OFFICER , TO HIGHLIGHT THAT THE PEAK CREDIT WAS WORKED OUT BY TAKING TWO BANK ACCOUNTS FOUND IN THE NAME OF TH E ASSESSEE. THE FIRST ONE WAS IN HER INDIVIDUAL NAME AND THE CASH DEPOSITS WERE LESS THAN RS. 1 LAKH AND THE OTHER ACCOUNT WAS A JOINT ACCOUNT , WHEREIN HER HUSBAND IS ALSO 3 A SIGNATORY / AUTHORISED TO DEPOSIT OR WITHDRAW. IT WAS STATED THAT HER HUSBAND OB TAINED RETIREMENT BENEFITS TO THE TUNE OF RS. 19 LAKHS, OUT OF WHICH SOME AMOUNT WAS DEPOSITED IN THE JOINT ACCOUNT BUT THE ASSESSING OFFICER BLINDLY TOOK INTO CONSIDERATION ALL THE CREDITS FROM BOTH THE BANK ACCOUNTS FOR THE PURPOSE OF ARRIVING AT PEAK CA SH CREDIT WHICH IS AGAINST THE CONCEPT OF BEST JUDGMENT ASSESSMENT . LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS PREPARED TO PROVE HER CASE PROVIDED ONE MORE OPPORTUNITY IS GIVEN BEFORE THE ASSESSING OFFICER. IT WAS ALSO SUBMITTED THAT TH E ASSESSEE HAS MADE DILIGENT EFFORTS TO APPEAR BEFORE THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) AND IN FACT ENGAGED A COUNSEL, WHO APPEARED AND SOUGHT FURTHER TIME TO FILE THE MATERIAL PAPERS BUT, IN THE MEANTIME, THE ASSESSMENT WAS COMPLETED U/S 144 OF THE ACT AND THE LD. CIT(A) PASSED AN EX - PARTE ORDER. THERE FORE , IN THE INTEREST OF NATURAL JUSTICE, HE REQUESTED FOR ONE MORE OPPORTUNITY. 5. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, OBJECTED TO THE REQUEST MADE BY THE ASSESSEE. SHE C ONTENDED THAT NO SPECIFIC GROUND WAS RAISED WITH REGARD TO JOINT BANK ACCOUNT AND AT BOTH THE PLACES ASSESSEE DID NOT APPEA R THEREBY LEAVING NO OTHER OPTION TO THE ASSESSING OFFICER EXCEPT TO TAKE BOTH THE ACCOUNTS INTO CONSIDERATION FOR THE PURPOSE OF ARR IVING AT THE PEAK CASH CREDIT. SHE THUS STRONGLY SUPPORT THE ORDERS PASSED BY THE TAX AUTHORITIES. 6 . I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE, IN THE LIGHT OF THE DECISION OF THE APEX COURT CITED ABOVE, I AM OF THE OPINION THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT IN ACCORDANCE WITH LAW AND THE MANDATE PRESCRIBED U/S 144 OF THE ACT . N OWHERE A.O. SPECIFIED ABOUT THE JOINT BANK ACCOUNT , TO ENABLE THE SUPERIOR FORUM TO UNDERSTAND WHETHER HE HAS APPLIED HIS MIND TO THAT ASPECT ALSO ; HE 4 MERELY CHOSE TO CONSIDER THE ENTI RE INCOME IN THE HANDS OF THE ASSESSEE. UNDER THESE CIRCUMSTANCES, IN THE INTEREST OF SUBSTANTIAL JUSTICE, I DEEM IT FAIR AND REASONABLE TO GIVE ONE MORE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. SINCE THE ASSESSEE DID NOT APPEAR AT ANY STAGE, IN THE PE CULIAR CIRCUMSTANCES OF THE CASE, I DIRECT THE ASSESSEE TO PRESENT HER CASE BY END OF MARCH 2018 BEFORE THE ASSESSING OFFICER. 7 . LD COUNSEL FOR THE ASSESSEE ADMITTED BEFORE THE BENCH THAT THE ASSESSEE WOULD APPEAR BEFORE THE ASSESSING OFFICER ON THE DA TE S OF HEARING FIXED BY THE ASSESSING OFFICER FROM TIME TO TIME AND WILL ASSIST THE ASSESSING OFFICER TO COME TO A PROPER CONCLUSION WITH REGARD TO CASH CREDIT . I DIRECT THE ASSESSING OFFICER TO COMPLETE THE PROCEEDINGS WITHIN THREE MONTHS I.E., BY END OF JUNE 2018. NEEDLESS TO OBSERVE THAT IF THE ASSESSEE DOES NOT COOPERATE WITH THE ASSESSING OFFICER, HE WILL BE LEFT WITH NO OTHER OPTION EXCEPT TO MAKE A SUITABLE ADDITION, IN THE CIRCUMSTANCES OF THE CASE. WITH THESE OBSERVATIONS, THE APPEAL FILED BY TH E ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 21 ST FEBRUARY, 2018. S D / - (D. MANMOHAN) VICE PRESIDENT HYDERABAD, DATED: 21 ST FEBRUA RY, 2018. OKK, SR.PS COPY TO 1. MAKAM SUBHADRA, D.NO.2 - 304, PETA OSMANIA COLLEGE, KURNOOL. 2. INCOME TAX OFFICER, WARD - 2, KURNOOL. 3. CIT (A), KURNOOL. 4. PR. COMMISSIONER OF INCOME TAX, KURNOOL. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE