ITO, Ward-1, Kadapa, Kadapa V. Peram Shyyam Sunder Reddy, Kadapa, Kadapa

ITA 791/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2328 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 27-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANJALA SAHU
• Keywords: Unexplained cash credit; Business income
• Section: 44AD; 37(1); 69; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A: HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.791/HYD/2016 (ASSESSMENT YEAR 2010-2011) INCOME TAX OFFICER, WARD-1, KADAPA. VS. SRI PERAM SHYAM SUNDER REDDY, D.NO.7-336-44, BHAGYANAGAR COLONY, KADAPA. (APPELLANT) (RESPONDENT) FOR ASSESSEE: NONE FOR REVENUE : SMT. ANJALA SAHU, DR DATE OF HEARING : 05.07 .2017 DATE OF PRONOUNCEMENT : .07 .2017 ORDER PER S. RIAFAR RAHMAN, A .M. THIS APPEAL FILED BY THE REVENUE ON 27.05.2016 IS A GAINST THE ORDER OF THE CIT (A)-KURNOOL, DATED 09.03.2016 FOR THE AS SESSMENT YEAR 2010- 2011. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH AT THE ASSESSEE, AN INDIVIDUAL, IS AN INSURANCE AGENT AND DERIVES INCOM E THROUGH INSURANCE COMMISSION. ASSESSEE FILED THE RETURN OF INCOME DE CLARING THE TOTAL INCOME OF RS. 56,270/-. ASSESSMENT WAS COMPLETED U/S 143( 3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 23,25,298/-, WHICH INCLUDES ADDITION OF RS. 56,80,400/- U/S 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED CREDITS. DURING THE ASSESSMENT PROCEEDINGS, A.O. NOTICED THA T THE ASSESSEE DEPOSITED CERTAIN AMOUNTS, TOTALLING TO RS. 56,80,4 00/-, IN HIS BANK ACCOUNT WITH ING VYSYA BANK, KADAPA AND SOUGHT FOR EXPLANAT ION AND CONFIRMATION FROM THE PARTIES RELATED THEREOF. IN THIS REGARD, ASSESSEE FILED REPLY VIDE HIS LETTER DATED 18.12.2012 AND ALSO THE CONFIRMATI ON, LETTER DATED 2 ITA NO. 791/HYD/16 SRI PERAM SHYAMA SUNDER REDDY 13.12.2012. NOT SATISFIED WITH THE SAID EXPLANATIO N OF THE ASSESSEE, A.O. PROCEEDED TO MAKE THE ABOVE ADDITION TREATING THE S AME AS UNEXPLAINED CREDITS. 3. AGGRIEVED WITH THE SAID ORDER OF THE A.O., ASSE SSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE CIT (A), ASSES SEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. AND SUBMITTED THAT THE ENTRIES IN THE ASSESSEES BANK ACCOUNT ARE FULLY EXPLAINED THROUGH THE LETTER DATED 18.12.2012 AND THE CONFIRMATION LETTER DATED 13.12. 2012, FROM M/S. RAM NARAYAN & CO. THEREFORE, THE ADDITION MADE BY THE A.O. U/S 69 OF THE ACT IS UNWARRANTED, UNCALLED FOR AND THEREFORE, THE SAM E MAY BE DELETED. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E AS WELL AS THE ASSESSEES CONSENT FOR TREATING THE ENTIRE DEPOSITS IN DISPUTE AS BUSINESS RECEIPTS AND TO ADMIT THE INCOME @ 8% ON THE GROSS DEPOSITS U/S 44AD OF THE ACT AND ALSO THE REMAND REPORT FROM THE A.O., D ATED 3.11.2015, CIT (A) PARTLY ALLOWED THE APPEAL AND DIRECTED THE AO TO AD OPT THE RATE OF 8% ON THE GROSS RECEIPTS OF RS. 56,80,400/- AND RECALCULA TE THE TAX THEREON. 6. AGGRIEVED WITH THE ORDER OF THE CIT (A), REVENUE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 56,80, 400/- ON ACCOUNT OF THE DEPOSITS IN THE ING VYSYA BANK SB ACCOUNT MA DE BY THE ASSESSING OFFICER, U/S 68 OF THE ACT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) ERRED IN NOT FINDING THE COMPLETE FACTS ON T HE RECORD AS PER WHICH THE DEPOSITS RECEIVED INTO THE ASESSEES BANK ACCOUNT THROUGH BANK TRANSFER WERE RS. 44.93 LAKHS AND THERE WERE C ASH DEPOSITS TO THE EXTENT OF RS. 21,79,400/- WHICH WERE NOT AT ALL EXPLAINED BY THE ASSESSEE. 3. WITHOUT PREJUDICE TO THE AFORESAID GROUNDS, THE LD. CIT(A) ERRED IN DIRECTING THE A.O. TO TAX ONLY 8% OF RS. 56,80,400/ - AS PROFIT FROM THE UNDISCLOSED BUSINESS RECEIPTS, IGNORING THE FAC T THAT THE ASSESSEE HAS FAILED TO PROVE HIS EXPENDITURE / DISB URSEMENT, IN 3 ITA NO. 791/HYD/16 SRI PERAM SHYAMA SUNDER REDDY CONTRAVENTION OF THE PROVISIONS OF SECTION 37(1) AN D SECTION 40(A)(IA) OF THE ACT. 7. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE TO REPRESENT HIS CASE IN SPITE OF SERVICE OF NOTICE TH ROUGH THE LD. DR. THEREFORE, WE PROCEED TO DISPOSE OF THE APPEAL AFTE R HEARING THE LD. DR AND ON MERITS OF THE CASE. 8. BEFORE US, LD. DR SUBMITTED THAT THE DEPOSITS RECEIVED INTO THE ASSESSEES BANK ACCOUNT THROUGH BANK TRANSFER WERE RS. 44.93 LAKHS AND THERE WERE CASH DEPOSITS TO THE EXTENT OF RS. 21.79 LAKHS, WHICH WERE NOT AT ALL EXPLAINED BY THE ASSESSEE. HE, THEREFORE, C ONTENDED THAT THE DIRECTION GIVEN BY THE CIT (A) TO COMPUTE TAX ONLY @ 8% OF RS .56,80,400/- AS PROFIT FROM THE UNDISCLOSED BUSINESS RECEIPTS IS NOT PROPE R AND THE ORDER OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO IS RESTO RED. 9. CONSIDERED THE SUBMISSIONS OF THE LD. DR AND PER USED THE MATERIAL FACTS ON RECORD AS WELL AS THE ORDERS OF THE REVENU E AUTHORITIES. THE CIT(A) DIRECTED THE AO TO ADOPT THE RATE OF 8% ON THE GROS S RECEIPTS OF RS. 56,80,400/- AND RECALCULATE THE TAX THEREON, BY OBS ERVING AS UNDER: 6.4. I HAVE EXAMINED THE ABOVE SUBMISSIONS OF THE A .O. AND ALSO I HAVE GONE THROUGH THE NO OBJECTION LETTER FILED BY THE A PPELLANT FOR TREATING THE ENTIRE DEPOSITS IN THE SAID BANK ACCOUNT AS BUSINES S RECEIPTS AND TO ADMIT THE INCOME AT 8% ON THE GROSS DEPOSITS U/S 44AD OF THE I.T. ACT. 6.5. ON THE BASIS OF THE EXPLAINED NATURE OF THE CR EDITS INTO THE ACCOUNT, I HOLD THAT THE ABOVE RECEIPTS ARE SUFFICIENTLY SOU RCED AND EXPLAINED BY THE APPELLANT TO HAVE FLOWN INTO HIS ACCOUNT FROM THE S OURCES SPECIFIED. THE FACT THAT THESE FUNDS WERE UTILISED / ROUTED THROUG H THE APPELLANTS BANK ACCOUNT GIVES IT A CHARACTER OF UNACCOUNTED TURNOVE R OR UNREPORTED TURNOVER. THE SOURCE OF THE SOURCE FOR SUCH CREDITS IS MATTER OF ENQUIRY AT THE END WHERE THESE CREDITS EMANATED AND THE A.O. OUGHT TO HAVE CONVEYED THE SAME TO THE JURISDICTIONAL ASSESSING OFFICERS OVER THOSE PERSONS WHO TRANSMITTED THE SUMS TO THE APPELLANT TO FUND OUT A NY UNACCOUNTED NATURE OF THE FUNDS IN THEIR HANDS. TO TREAT THE DEPOSITS AS UNACCOUNTED IN THE HANDS OF THE APPELLANT AS RESORTED TO BY THE A.O. I S BAD IN LAW. AT THE MOST THE A.O. OUGHT TO HAVE TREATED THE SAME AS UNACCOUN TED TURNOVER OF THE APPELLANT AND LEVIED TAX AT THE AGREEMENT WITH THE CONTENTION OF THE APPELLANT THAT THESE CREDITS INTO THE ACCOUNT HAVE BEEN SOURCED FROM THE ENTITIES WHICH HAVE BEEN EXAMINED BY THE A.O. AND R EPORTED IN THE REMAND REPORT SUBMITTED. 4 ITA NO. 791/HYD/16 SRI PERAM SHYAMA SUNDER REDDY FROM THE ABOVE, IT IS CLEAR THAT THE CIT (A) DISCUS SED THE ISSUE AT LENGTH AND PROPERLY DIRECTED THE A.O. TO ADOPT THE RATE OF 8% ON THE GROSS RECEIPTS OF RS. 56,80,400/- AND RECALCULATE THE TAX THEREON. CONSIDERING THE SAME, WE ARE OF THE VIEW THAT THE DECISION TAKEN BY THE C IT (A) IS FAIR AND REASONABLE AND DOES NOT CALL FOR ANY INTERFERENCE. WE, THEREFORE, UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUNDS RA ISED BY THE REVENUE. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH JULY, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIAFAR RAHMAN) JUDICIAL MEMBER ACOUNTANT MEMBER HYDERABAD, DATED: 26 TH JULY, 2017 OKK, SR.PS COPY TO 1. SRI PERAM SHYAM SUNDER REDDY,D.NO.7 - 336 - 44, BHAGYANAGAR COLONY, KADAPA. 2. INCOME TAX OFFICER,WARD - 1, KADAPA. 3. CIT (A), KURNOOL. 4. PR. CIT, KURNOOL 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE