Bairi Dasharatham, Karimnagar, Hyderabad V. ITO, Ward-2, Karimnagar, Karimnagar

ITA 895/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6096 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 15-06-2016
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: D SATYANARAYANA
• Keywords: Reopening of assessment; Business income; Peak credit; Difference of opinion; Assessment record; Reason to believe; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 895/HYD/2016 ASSESSMENT YEAR: 2005-06 BAIRI DASHARATHAM, KARIMNAGAR [PAN: AIPPB6064L] VS INCOME TAX OFFICER, WARD-2, KARIMNAGAR (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI D. SATYANARAYANA, AR FOR REVENUE : SHRI K.J. RAO, DR DATE OF HEARING : 08-03-2017 DATE OF PRONOUNCEMENT : 15-03-2017 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-2, HYDERABAD D ATED 30-03-2016, CONFIRMING THE ACTION OF THE ASSESSING OF FICER (AO) IN BRINGING TO TAX THE PEAK CREDIT OF RS. 3,41,000/-. 2. BRIEFLY STATED, ASSESSEE IS A TRADER IN TRACTOR SPARE PARTS. ON RETAIL SALES OF SPARE PARTS OF RS. 5,60,000/-, HE ESTI MATED THE INCOME AT 5%, BUT OFFERED AN INCOME OF RS. 60,000/- AS A BUSINESS INCOME. ASSESSEE HAD INCOME FROM OTHER SOURCES OF VERY SMALL AMOUNTS OF INTEREST AND COMMISSION INCOME. HE FILED R ETURN OF INCOME OF RS. 98,454/-. AO HAS ISSUED A NOTICE U/S. 148 ON 04-07-2008 IN ORDER TO EXAMINE THE CASH DEPOSITS MADE WITH I.T.A. NO. 895/HYD/2016 BAIRI DASHARATHAM :- 2 - : UNION BANK OF INDIA, KAMALAPUR BRANCH, KARIMNAGAR D IST. ON CONSIDERING ASSESSEES EXPLANATION, THE SAID ASSESSME NT WAS COMPLETED VIDE THE ORDER DT. 09-02-2009, WHEREIN THE A O ACCEPTED ASSESSEES EXPLANATION THAT THE DEPOSITS IN THE BANK ACC OUNT WERE AMOUNTS REALIZED ON SALES WHICH WERE PERIODICALLY DE POSITED IN THE SAID SAVINGS BANK ACCOUNT. AO COMPLETED THE ASSESSME NT BY MAKING A ROUND-SUM ADDITION OF RS. 5,000/- AFTER RECO RDING THE FOLLOWING IN THE ASSESSMENT ORDER: DURING THE COURSE OF ASSESSMENT THE ASSESSEE WAS ASKED TO PROVIDE THE DETAILS OF THE SOURCES FOR THE CASH DEP OSITS TO THE TUNE OF RS. 10,31,100/- MADE INTO THE BANK ACCOUNT HELD WITH UN ION BANK OF INDIA, KAMALAPUR BRANCH, KARIMNAGAR DIST., BEARING A/C NO. 5684. THE ASSESSEES AR SUBMITTED THAT AS HE IS THE PROP. OF THE FIRM THE AMOUNT REALIZED ON SALES WERE PERIODICALLY DEPOSITED IN HI S SAVINGS BANK A/C. THE ASSESSEE FURTHER STATED THAT AMOUNTS RECEIVED T OWARDS SALES ARE AGGREGATED EVERY MONTH AND AS AND WHEN THEY BECOME BULK AMOUNTS HE USED TO DEPOSIT THE SAME IN HIS SAVINGS BANK ACCOUN T ONLY. 2.1. SUBSEQUENTLY, AO WAS OF THE VIEW THAT INSTEAD OF MA KING ROUND-SUM DISALLOWANCE OF RS. 5,000/-, PEAK CREDITS OUT OF THE DEPOSITS TO AN EXTENT OF RS. 3,21,100/- SHOULD HAVE BE EN ASSESSED AND AS THERE WAS ESCAPEMENT OF INCOME, HE WAS OF THE O PINION THAT THERE IS SUFFICIENT REASON TO BELIEVE THAT INCOME CHARGE ABLE TO TAX HAS ESCAPED INCOME FOR THE AY. 2005-06. THE CASE WAS AGAIN REOPENED BY ISSUING NOTICE U/S. 148 ON 12-12-2011 W ITH PRIOR APPROVAL OF CIT-2, HYDERABAD. IN THE CONSEQUENTIAL PROCEEDINGS, THE AO DETERMINED THE PEAK CREDIT AT RS. 3,41,000/- AND HAS BROUGHT THE SAME TO TAX, IN ADDITION TO THE ORIGINALLY ASSESSED INCOME OF RS. 1,03,000/-. I.T.A. NO. 895/HYD/2016 BAIRI DASHARATHAM :- 3 - : 3. ASSESSEE IS AGGRIEVED AND HAS RAISED THE OBJECTION S BEFORE THE CIT(A). LD.CIT(A) HOWEVER, DID NOT ACCEPT ASSESSEES CONTENTIONS AND DISMISSED THE APPEAL. HENCE THE PRESENT APPEAL. ASSESSEE HAS RAISED THE FOLLOWING THREE GROUNDS: 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AP PELLANT DID NOT PROVIDE ANY EVIDENCE REBUTTING THE CONCLUSIONS DRAWN BY THE ASSESSING OFFICER WITHOUT CONSIDERING THE FACT THAT DETAILED WRITTEN SUBMISSIONS WERE FILED ON 03.02.2016 BEFORE THE HON'BLE CIT(A). THE LEARN ED CIT(A) OUGHT TO HAVE CONSIDERED THE EVIDENCES SUBMITTED ALONGWITH THE WR ITTEN SUBMISSIONS AND PASSED A REASONED ORDER. 3. INITIATION OF PROCEEDINGS U/S. 147 BY THE ASSESS ING OFFICER ARE NOT VALID AND THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE ASSESSMENT IS BAD IN LAW. THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED T HAT THE BANK ACCOUNT WITH UNION BANK OF INDIA IS SHOWN IN THE STATEMENT OF AFFAIRS OF THE APPELLANT AND, THEREFORE, NO ADDITION IS CALLED FOR . 4. THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE INCOME FROM BUSINESS WAS ARRIVED AT ON ESTIMATE BASIS AND THE DEPOSITS MADE ARE FROM OUT OF THE BUSINESS RECEIPTS AND, THEREFOR E, OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION MADE. GROUND NOS. 1 & 5 ARE GENERAL IN NATURE. 4. LD. COUNSEL SUBMITTED THAT THE ASSESSMENT WAS REOPENED AFTER FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR A ND THAT THERE IS NO FAILURE ON THE PART OF ASSESSEE TO FURNISH NECE SSARY INFORMATION SO AS INITIATE THE PROCEEDINGS U/S. 147. THE PROVISO TO SECTION 147 IS APPLICABLE. IT WAS ALSO SUBMITTED THAT AO ORIGINALLY COMPLETED THE ASSESSMENT U/S. 148 ITSELF AND AFTER DUE EXAMINATION OF THE CASH DEPOSITS IN THE BANK ACCOUNT, PARTICULARLY OF THE UNION BANK OF INDIA, KAMALAPUR BRANCH, KARIMN AGAR DIST. HAS ACCEPTED THE EXPLANATION AND COMPLETED THE ASSESSMENT. THEREFORE, REOPENING OF ASSESSMENT ON THE VERY SAME F ACTS IS BAD IN LAW. HE ALSO SUBMITTED THAT ON MERITS, THERE IS NO C ASE AS I.T.A. NO. 895/HYD/2016 BAIRI DASHARATHAM :- 4 - : ASSESSEE HAS ALREADY OFFERED HIGHER INCOME THAN THE T URNOVER, AS ASSESSEE IS A SMALL TRADER AND REFERRED TO THE COMPUTAT ION OF INCOME WHEREIN ASSESSEE HAS ADMITTED 5% U/S. 44AF TUR NOVER OF RS. 5,60,000/- WHICH WORKED OUT TO RS. 28,000/-, BUT DECLARED INCOME AT RS. 60,000/- CONSIDERING THAT ASSESSEE IS A RETAIL SELLER AND HAS NOT MAINTAINED BOOKS OF ACCOUNT. 5. LD.DR, HOWEVER, RELIED ON THE ORDERS OF THE AUTHORI TIES. 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE DOCUMENTS PLACED ON RECORD AND THE ASSESSMENT RECORD FURNISHED BY THE DR. AS FAR AS THE ISSUE OF 147 IS CONCERNED , THERE MAY BE MERIT IN ASSESSEES CONTENTIONS THAT THE PROVISIONS ARE NOT ATTRACTED AS THE NOTICE WAS ISSUED AFTER FOUR YEARS AND THERE IS NO FAILURE ON THE PART OF ASSESSEE TO DISCLOSE THE INFORMA TION. BUT, THE GROUND CANNOT BE CONSIDERED AS THE SAME WAS NOT AGITAT ED BEFORE THE AO OR BEFORE THE CIT(A). EVEN IN THIS APPEAL, AS SESSEE HAS NOT RAISED THE GROUND ON REOPENING AS AN ADDITIONAL GROUN D BUT MENTIONED AS GROUND NO. 3 IN THE REGULAR GROUNDS RAI SED. WHEN POINTED OUT, LD. COUNSEL FAIRLY ADMITTED THAT THEY HAVE N OT AGITATED THE ISSUE BEFORE THE REVENUE AUTHORITIES BUT RAISED THE G ROUND IN APPEAL AS A MAIN GROUND. SINCE THE ISSUE DOES NOT AR ISE OUT OF THE ORDERS OF THE AUTHORITIES, I AM OF THE VIEW THAT ADJUDIC ATING THE ISSUE DOES NOT ARISE, AS THE GROUND WAS NOT RAISED PRO PERLY AND IT REQUIRES EXAMINATION OF FACTS. THE SATISFACTION RECOR DED WAS NOT PLACED ON RECORD. IN VIEW THAT, GROUND NO. 3 PERTAIN ING TO INITIATION OF PROCEEDINGS U/S. 147 IS DISMISSED. I.T.A. NO. 895/HYD/2016 BAIRI DASHARATHAM :- 5 - : 6.1. COMING TO THE ISSUE OF ADDITION MADE BY THE AO, I AM OF THE OPINION THAT THE AO CANNOT MAKE THE ADDITION. FIRST OF AL L, THE AO WHO COMPLETED THE ASSESSMENT ON 09-02-2009 HAS CLEARL Y STATED IN THE BODY OF THE ORDER THAT AS PER THE ANNUAL INFORMATIO N RETURN [AIR] DATA RECEIVED BY THIS OFFICE, SHRI B. DASHARATH AM HAS MADE CASH DEPOSITS OF RS. 10,31,100/- DURING THE FY. 2004 -05 RELEVANT TO THE AY. 2005-06 IN THE BANK HELD WITH UNION BANK O F INDIA, KAMALAPUR BRANCH, KARIMNAGAR DIST. FOR THAT REASON NOTICE U/S. 148 WAS ISSUED ON 04-07-2008 AND THE ASSESSMENT HAS BEEN COMPLETED, AFTER DUE VERIFICATION OF THE CASH DEPOSI TS MADE IN THE BANK ACCOUNT. AS EXTRACTED IN PARA 2, ASSESSEES EXPL ANATION WAS ACCEPTED BY THE AO. THEREFORE, REOPENING ON THE VERY SAME ISSUE ON THE VERY SAME DETAILS OF CASH DEPOSITS BY THE SAME O FFICER IN THE RE-ASSESSMENT PROCEEDINGS, AGAIN U/S. 147 IS NOTHING BUT CHANGE OF OPINION AND REVIEW OF THE EARLIER ORDER, WHICH IS NOT PERMITTED UNLESS ANY SUPERVISORY AUTHORITY INTERVENES. IN VIEW OF THAT SINCE IN THE FIRST ASSESSMENT ORDER COMPLETED U/S. 147, THE SOURCE OF DEPOSITS HAVING BEEN EXAMINED, ON THE VERY SAME ISSUE THE SECOND OFFICER IS PRECLUDED IN REVIEWING THE SAME AND MAKI NG THE ADDITION IN A DIFFERENT MANNER. IN VIEW OF THAT, THE ADDITION OF PEAK CREDIT IN THE BANK ACCOUNT CANNOT BE SUSTAINED. NOT ONLY THAT, ASSESSEE HAS ALREADY OFFERED HIGHER INCOME ESTIMATING THE INCOM E AT 5% U/S 44AF. THE DEPOSITS IN BANK ACCOUNT WERE WITHIN THE TUR NOVER DISCLOSED BY ASSESSEE. THEREFORE, IT CANNOT BE STATED THAT THE DEPOSITS IN THE BANK ACCOUNT ARE NOT UNACCOUNTED AMOUNTS . SINCE ASSESSEES INCOMES WERE ACCEPTED U/S 44AF, AFTER DUE EXAMINATION OF ASSESSEES CASH DEPOSITS IN THE FIRST ASSESSMENT COM PLETED U/S. 143(3) R.W.S. 148 VIDE ORDER DT. 09-02-2009, THE ADDI TION MADE IN THE SECOND ASSESSMENT ORDER IS NOT SUSTAINABLE. IN VI EW OF THAT, I I.T.A. NO. 895/HYD/2016 BAIRI DASHARATHAM :- 6 - : HAVE NO HESITATION IN DELETING THE AMOUNT WHILE ALLOWIN G ASSESSEES GROUND NOS. 2 & 4. AO IS DIRECTED TO DELETE THE AMOU NT. 7. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 15 TH MARCH, 2017 TNMM COPY TO : 1. BAIRI DASHARATHAM, KARIMNAGAR. C/O. SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO. 9, HIMAYAT NAGAR, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-2, NEAR BUS STAND, KARIMNAGAR. 3. COMMISSIONER OF INCOME TAX(APPEALS)-2, HYDERABAD . 4. THE PR. COMMISSIONER OF INCOME TAX-2, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.