Gopal Tappa, Medak, Hyderabad V. ITO, Ward-1, Sangareddy, Sanga Reddy

ITA 869/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2445 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 06-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 08-06-2016
• Court: TRIBUNAL
• Department Lawyers: RAJEEV BENJWAL
• Assessee Lawyers: S RAMA RAO
• Keywords: Peak credit; Deemed to accrue or arise in india
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A SMC, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 869/HYD/2016 ASSESSMENT YEAR: 2009-10 SHRI GOPAL TAPPA, MEDAK. PAN AEAPT8699A VS. THE INCOME TAX OFFICER, WARD-(1), SANGAREDDY. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SHRI RAJEEV BENJWAL DATE OF HEARING : 06-06-2017 DATE OF PRONOUNCEMENT : 09-06-2017 ORDER PER D. MANMOHAN, VICE PRESIDENT: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT PERTAINS TO THE A.Y. 2009-10. ADDITION OF RS. 11,70,772/- MADE BY THE A.O, PRESUMABLY U/S 69A OF THE IT ACT, HAVING BEEN CONFIRMED BY LD. CIT(A) THE ASSESSEE PREFERRED SECOND APPEAL CONTENDING, INTER-ALIA, THAT THE ADDITION OF RS. 11,70,772/- SHOULD NOT HAVE BEEN MADE INDEPENDENTLY; RATHER, THE SAME HAS TO BE TREATED AS SALES AND INCOME OUGHT TO HAVE BEEN ESTIMATED ON SUCH TURNOVER. 2. BRIEF FACTS OF THE CASE ARE AS FOLLOWS. ASSESSEE, A KIRANA MERCHANT, DECLARED TOTAL INCOME OF RS. 1,59,700/- WHICH CONSISTS OF NET PROFIT OF RS. 1,87,547/- AS PER THE 2 ITA NO. 869/HYD/2016 GOPAL TAPPA, MEDAK. PROFIT AND LOSS ACCOUNT AND INTEREST RECEIVED FROM M/S. THIRUMALA PADHMAVATHI FINANCE CORPORATION. TO ARRIVE AT THE NET PROFIT, THE ASSESSEE PREPARED TRADING AND PROFIT AND LOSS ACCOUNT AS WELL AS CAPITAL ACCOUNT AND BALANCE SHEET. IN THE SAID TRADING ACCOUNT, THE ASSESSEE DISCLOSED SALES OF RS. 7,32,632/- AND IN THE BALANCE SHEET THE AMOUNT AVAILABLE IN ING BANK WAS REFLECTED WHICH IS TO THE TUNE OF RS. 1,15,600/-. THE A.O RECEIVED INFORMATION THAT THE ASSESSEE MADE CASH DEPOSITS TO THE TUNE OF RS. 16,41,910/- IN THE SAVINGS BANK ACCOUNT WITH AXIS BANK, PATANCHERU BRANCH AND RS. 2,09,968/- WITH HDFC BANK, CHANDANAGAR BRANCH. SINCE THESE TWO BANK ACCOUNTS ARE NOT REFLECTED EITHER IN THE BALANCE SHEET OR IN THE DETAILS FURNISHED IN THE RETURN OF INCOME, THE ASSESSEE WAS CALLED UPON TO FURNISH THE SOURCE FOR MAKING THE DEPOSITS. AT THIS JUNCTURE, THE ASSESSEES STAND WAS THAT THE DEPOSITS ARE A PART OF BUSINESS TURNOVER AND IN THE ALTERNATIVE PEAK CREDITS HAVE TO BE TAKEN INTO CONSIDERATION WHICH WOULD WORK OUT TO RS. 11,70,772/- AND THE DETAILS WERE PLACED BEFORE THE A.O. 3. SINCE, THE ASSESSEE HAS OPENING STOCK OF RS. 2,00,500/- ONLY AND PURCHASES OF RS. 5,01,670/- AND THERE BEING NO OTHER EXPENDITURE INCURRED/REFLECTED EITHER IN THE TRADING ACCOUNT OR IN THE PROFIT AND LOSS ACCOUNT, OTHER THAN WHAT IS SHOWN IN THE PROFIT AND LOSS ACCOUNT, THE A.O ACCEPTED THE SALES REFLECTED IN THE BOOKS OF ACCOUNTS I.E RS. 7,32,632/- AND ACCORDINGLY, DID NOT DISTURB NET PROFIT DECLARED BY THE ASSESSEE. BUT, HAVING REGARD TO THE PROVISIONS OF SEC. 69A OF THE IT ACT, THE SOURCE OF DEPOSITS 3 ITA NO. 869/HYD/2016 GOPAL TAPPA, MEDAK. HAVING NOT BEEN EXPLAINED PROPERLY, PEAK CREDIT, WHICH WORKS OUT TO RS. 11,70,772/-, WAS ADDED AS UNEXPLAINED DEPOSIT AND ACCORDINGLY, ARRIVED AT A TOTAL INCOME OF RS. 13,30,472/-. 4. IT MAY BE NOTICED THAT THESE DEPOSITS ARE NO WAY CONNECTED TO THE PURCHASES OR SALES AND IN FACT, THE BALANCE SHEET REFERS TO ONLY ONE BANK ACCOUNT I.E ING VYSYA BANK; OTHER TWO BANK ACCOUNTS ARE PRESUMABLY NOT CONNECTED TO THE BUSINESS OF THE ASSESSEE. 5. PROVISIONS OF SEC. 69A OF THE IT ACT REFERS TO UNEXPLAINED MONEY WHEREIN IT IS STATED THAT WHERE IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND TO BE OWNER OF ANY MONEY...AND SUCH MONEY.. IS NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISITION OF THE MONEY OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE A.O, SATISFACTORY, THE MONEY.. MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. 6. A CAREFUL PERUSAL OF SEC. 69A OF THE IT ACT SHOWS THAT IT IS AN ARTIFICIAL INCOME DESIGNED TO BRING TO TAX ANY MONEY WHICH IS NOT REFLECTED IN THE BOOKS OF ACCOUNT. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT IT IS NOT RECORDED IN THE BOOKS OF ACCOUNT FURNISHED BEFORE THE A.O; ONLY WHEN THE ASSESSEE WAS CALLED UPON TO EXPLAIN THE SOURCE OF THE DEPOSITS, HE HAS COME FORWARD WITH AN EXPLANATION THAT THE SAME SHOULD BE TREATED AS PART OF THE TURNOVER, WITHOUT FURNISHING ANY DATA OF THE PURCHASES MADE AND OTHER 4 ITA NO. 869/HYD/2016 GOPAL TAPPA, MEDAK. CONNECTED DETAILS. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE THE A.O OBSERVED AS UNDER: THE REPLY FILED BY THE ASSESSEE IS PERUSED. THE ASSESSEES STAND THAT THE DEPOSITS ARE A PART OF THE BUSINESS TURNOVER CANNOT BE ACCEPTED. AS CAN BE SEEN FROM THE BANK ACCOUNT, HUGE DEPOSITS ARE MADE ON A PARTICULAR DATE, FOR EG., ON 16-09-2008 RS. 3,50,000/-, ON 18-09-2008 RS. 1,43,000/-, ON 22-09-2011 - RS. 1,30,000/-, RS. 2,00,000/- ON 20-11-2008 & RS. 2,00,000/- ON 21-11-2008. AS CAN BE SEEN FROM THE TREND OF MAKING THE DEPOSITS, BY NO STRETCH OF IMAGINATION CAN BE BE TAKEN AS THE TURNOVER OF THE ASSESSEE. IN THE ASSESSEES LINE OF BUSINESS, I.E., KIRANA STORES, THE SALES ARE ON A DAILY BASIS. IT IS NOT WITHIN THE AMBIT OF BUSINESS PRUDENCE TO KEEP CASH IN HAND AND DEPOSIT THE SAME IN BULK ON A PARTICULAR DATE. THEREFORE THE DEPOSITS MADE IN CASH IN BOTH THE SAVINGS BANK ACCOUNTS ARE TREATED AS UNEXPLAINED DEPOSITS IN THE HANDS OF THE ASSESSEE. AFTER CONSIDERING INTERMITTENT WITHDRAWALS AND REDEPOSITS IN THE SAID ACCOUNTS, THE UNEXPLAINED DEPOSITS WORK OUT TO RS. 11,70,772/- AS PER THE ANNEXURE. A COPY OF THE WORKING IS SUPPLIED TO THE ASSESSEE ALONG WITH THIS ORDER. THEREFORE THIS AMOUNT OF RS. 11,70,772/- IS ADDED TO THE INCOME RETURNED BY THE ASSESSEE AS UNEXPLAINED DEPOSITS AND BROUGHT TO TAX ACCORDINGLY. 7. THOUGH AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE CIT(A), THE LD. CIT(A) AFFIRMED THE ACTION OF THE A.O BY OBSERVING THAT LOOKING AT THE TREND OF MAKING THE DEPOSITS, BY NO STRETCH OF IMAGINATION, CAN IT BE TAKEN AS THE TURNOVER OF THE ASSESSEE. HE ALSO OBSERVED THAT IN THE ASSESSEES LINE OF BUSINESS I.E KIRANA STORES, THE SALES ARE MADE ON DAILY BASIS AND LOOKING AT THE BUSINESS PRUDENCE, THERE WOULD NOT BE CASH IN HAND OF SUCH VOLUME WHICH COULD HAVE BEEN DEPOSITED IN BULK ON A PARTICULAR 5 ITA NO. 869/HYD/2016 GOPAL TAPPA, MEDAK. DATE/DATES. SINCE, THE AFOREMENTIONED SAVINGS BANK ACCOUNTS CONTAINED UNEXPLAINED DEPOSITS, PEAK OF THE CASH DEPOSITS WAS TREATED AS INCOME OF THE ASSESSEE. 8. FURTHER AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. AS COULD BE NOTICED FROM THE GROUNDS OF APPEAL, THE CASE OF THE ASSESSEE IS THAT THE A.O HAVING ESTIMATED THE INCOME, THE DEPOSITS MADE INTO THE BANK ACCOUNT WOULD REPRESENT THE TURNOVER OF THE BUSINESS AND HENCE, THERE SHOULD NOT BE ANY ADDITION U/S 68 OF THE IT ACT. IT WAS ALSO CONTENDED THAT NO BOOKS OF ACCOUNT WERE MAINTAINED AND THE INCOME WAS ADMITTED ON ESTIMATE; IF THE TURNOVER IS DEPOSITED INTO THE BANK ACCOUNT, THERE WOULD NOT BE ANY UNEXPLAINED DEPOSIT. 9. I HAVE HEARD THE LD. COUNSEL FOR THE ASSESSEE AS WELL AS THE LD. DR IN THIS REGARD. I HAVE ALSO CAREFULLY PERUSED THE RECORD. AS COULD BE NOTICED FROM THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FILED BY THE ASSESSEE, THE INCOME DECLARED BY THE ASSESSEE FROM KIRANA BUSINESS WAS ACCEPTED BY THE A.O AND IT WAS NOT A CASE OF ESTIMATE OF INCOME. THOUGH THE ASSESSEE CLAIMS THAT THE ADDITION WAS MADE U/S 68 OF THE ACT, NEITHER THE A.O NOR THE CIT(A) REFERRED TO THE PROVISIONS OF SEC. 68 OF THE ACT. IN FACT, THE PROVISIONS OF SEC. 69A OF THE IT ACT COME INTO PLAY WHEN CASH DEPOSITS ARE FOUND OUTSIDE THE BOOKS OF ACCOUNT AND THE ONUS IS ON THE ASSESSEE TO PROVE THE SOURCE OF DEPOSITS. IN THE INSTANT CASE, NO EVIDENCE WAS FURNISHED BY THE ASSESSEE AT ANY STAGE TO PROVE THE SOURCE OF DEPOSIT OF RS. 16,16,910/- IN AXIS BANK AND 2,09,968/- IN HDFC BANK . THE A.O, IN FACT, HAD TAKEN INTO CONSIDERATION ONLY THE 6 ITA NO. 869/HYD/2016 GOPAL TAPPA, MEDAK. PEAK CREDIT FOR THE PURPOSE OF MAKING AN ADDITION. NO MATERIAL WAS PLACED ON RECORD TO SHOW THAT THE ASSESSEE PURCHASED KIRANA ITEMS OVER AND ABOVE WHAT IS DECLARED IN THE PROFIT AND LOSS ACCOUNT. UNDER THESE CIRCUMSTANCES SEC. 69A OF THE IT ACT IS APPLICABLE WITH REGARD TO ANY DEPOSITS MADE BY THE ASSESSEE; IF SOURCE THEREOF IS NOT PROVED SUCH DEPOSITS ARE TO BE TREATED AS DEEMED INCOME. IN SUCH AN EVENT, IT CANNOT BE LINKED TO THE NATURE OF BUSINESS, THE TURNOVER DECLARED BY THE ASSESSEE ETC. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE, I NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT (A) AND THEREFORE, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 09 TH JUNE, 2017. SD/- (D. MANMOHAN) VICE PRESIDENT HYDERABAD, DATED: 09 TH JUNE, 2017. KRK 1 SHRI GOPAL TAPPA C/O SRI S RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO. 9, HIMAYATNAGAR, HYDERABAD 500029 2 ITO, WARD-(1), SANGAREDDY. 3 CIT(A)-2, HYDERABAD. 4 PR. CIT-2, HYDERABAD. 5 THE DR, ITAT HYDERABAD 6 GUARD FILE