DCIT, Circle-9(1), Hyderabad V. M/s. Peeshonu Marketing (P) Ltd., Suryapet

ITA 916/HYD/2012

• Counselvise Citation: 91622514 RSA 2012
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 07-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D RANGA RAO
• Keywords: Unexplained expenditure; Business income; Peak credit; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND S HRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.916/HYD/12 : ASSESSMENT YEAR 2008 - 09 ADDL COMMISSIONER OF INCOME - TAX RANGE 2, HYDERABAD V/S. M/S. PEESHONU MARKETING PVT. LTD., SURYAPET ( PAN - AACEP 4562 F ) (APPELLANT) (RESPONDENT) AND ITA NO.1011/HYD/12 : ASSESSMENT YEAR 2008 - 09 & CROSS OBJECTION NO.1 32/HYD/2012 (IN ITA NO. 916 /HYD/12) M/S. PEESHONU MARKETING PVT. LTD., SURYAPET ( PAN - AACEP 4562 F ) V/S. ADDL COMMISSIONER OF INCOME - TAX RANGE 2, HYDERABAD (APPELLANT/CROSS OBJECTOR) (RESPONDENT/APPELLANT - IN - APPEAL) APPELLANT BY : S HRI D.RANGA RAO RESPONDENT BY : SHRI SOLGY JOSE T.KOTTARAM DR DATE OF HEARING 21 .0 7 .2014 DATE OF PRONOUNCEMENT 28.08.2014 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THESE ARE CROSS APPEALS FOR THE ASSESSMENT YEAR 2008 - 09 AND T HEY ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) VI HYDERABAD DATED 19.3.2012 FOR THE ASSESSMENT YEAR 2008 - 09. IN THE APPEAL OF THE REVENUE, ASSESSEE HAS ALSO FILED CROSS - OBJECTIONS. SINCE COMMON ISSUES ARE INVOLVED, ALL THES E MATTERS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 916&1011/HYD/2012 & CO 132/H/12 M/S.PEESHONU MARKETING PVT. LTD. SURYAPET 2 2. THERE IS A DELAY OF 40 DAYS IN THE FILING OF THE APPEAL, ITA NO.1011/HYD/2012 BY THE AS SESSEE. A PETITION HAS BEEN FI L E D SEEKING CONDONATIO N OF DELAY. ON GOING THROUGH THE SAID PETITION, WE ARE SATISFIED WITH THE REASONABLENESS OF THE CAUSE FOR THE DELAY. WE ACCORDINGLY CONDONE THE DELAY AND PROCEED TO DISPOSE OF THE APPEAL ON MERITS., 3 . FA CTS OF TH E CA S E IN BRIEF ARE THAT THE ASSESSEE FI R M IS IN THE BUSINESS OF VARIOUS TYPES OF MARKETING. IT FILED IS RETURN O F IN CO M E FOR THE ASSESSMENT YEAR 2008 - 09 ON 26.4.2008 ADMI T TING TOTAL INCOM E OF RS.3,57,283. DURING THE COU R SE OF ASSESSMENT PROCEEDINGS, INFORMATION WAS CALLED FOR, INCLUDING BOO KS OF ACCOUNT, WHI C H W E RE NO T P RODUCED. TH E ASSESSING OFFICER DIRECTED THE O FFICIAL L IQUIDATOR TO HANDOVER THE INFORMATION AND BOOKS OF ACCOUNT, BUT THE SAME WERE NO T PRODUCED. IT WAS NO T I C ED THAT THE ASSESSEE WAS MAINTAINING A BANK AC C OUNT NO.62048914576 WITH SBH SURYAPET. THERE WERE HUGE CASH DEPOS I TS IN THAT BANK ACCOUNT. SIN C E THE ASSESSEE COULD NO T E X PL A IN THE CRE D ITS IN SPITE OF VARIOUS OPPORTUNITIES, AND AS MENTIONED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, SINCE THE ASSESSEE IN LETTER DA TED 20.12.2009 CONSENTED FOR THE AGREED ASSESSMENT, THE ASSESSING OFFICER TR E ATED THE CASH DEPO S ITS AS UNACCOUNTED. ACCOR D INGLY AN ADDITION OF RS .65,32,700 WAS MADE ON ACCOUNT OF PEAK UNAC C OUN T ED CREDITS. FURTHER, THE ASSESSEE CLAIMED AN EXPENDITURE OF R S .59,85,173 IN THE PROFIT & LOSS ACCOUNT. SINCE NO EVIDENCE WAS PRODUCED WITH REGARD TO THI S EXPENDITURE, THE ASSESSING OFFICER DISALLOWED THE ENTIRE AMOUNT OF RS.59,60,182. WITH TH E SE ADDITIONS, ASSESSMENT WAS COM P LETED ON A TOTAL INCOME OF R S .1,28,50,16 5, VIDE ORDER OF ASSESSMENT DATED 29.12.2010 PASSED UNDER S .143(3) OF THE AC T. 4 . ON APPEAL, THE CIT(A), IN THE FIRST PLACE, NOTED THAT THE ASSESSEE HAS NO T CHALLENGED THE ADDITION ON ACCOUNT OF PEAK CREDITS, AND SIN C E THAT WAS NO T A SUBJECT MATTER OF APPE A L, THAT ISSUE WAS TAKEN TO ITA NO. 916&1011/HYD/2012 & CO 132/H/12 M/S.PEESHONU MARKETING PVT. LTD. SURYAPET 3 HAVE BEEN SETTL E D, WHICH HAS BEEN ACCEPTED BY THE AS SESS E E . AS FOR DISALLOWANCE OF EXPENDITURE, THE CIT(A) NOTED THAT THE ASSESSING OFFICER HAS ADDED BACK THE ENTIRE AMOUNT AS UNEXPLAINED EXPENDITURE. HE OBSERVED THAT EVEN THOUGH THERE CAN BE NO DOUBT ABOUT THE FACT THAT PROPER EVIDENCE HAS NOT BEEN GIVEN BY THE ASSESSEE, HOWEVER, THERE ARE BUSINESS RECEIPTS DURING THE YEAR, WHICH HAVE BEEN DULY TAKEN INTO ACCOUNT BY THE ASSESSING OFFICER . CONSIDERING THE FACT THAT IT I S HIGHLY IMPROBABLE THAT BUSINESS RECEIPTS CAN BE EARNED WITHOUT ANY EXPENDITURE, T HE CIT(A) WAS OF THE VIEW THAT A REASONABLE AMOUNT OF EXPENDITURE HAS TO BE ALLOWED TO THE ASSESSEE. ON GROUNDS OF REASONABLENESS, HE DELETED 60% OF THE DISALLOWANCE MADE BY THE ASSESSING OFFICER, SUSTAINING THE BALANCE DISALLOWANCE OF 40% MADE BY THE ASSESSING OFFICER. 5 . AGGRIEVED BY THE ABOVE ORDER OF THE CIT(A), ASSESSEE AS WELL AS REVENUE HAVE PREFERRED THESE CROSS APPEALS BEFORE US. 6 . LET US FIRST TAKE UP THE CRO SS APPEALS FOR CONSIDERATION. THE FIRST ISSUE, WHICH IS INVOLVED IN BOTH THESE APPEALS, IS WITH REGARD TO THE DISALLOWANCE OF EXPENDITURE. WHILE THE REVENUE IS AGGRIEVED BY THE RELIEF GRANTED BY THE CIT(A), ASSESSEE IS CONTESTING THE ADDITION SUSTAINED BY THE CIT(A). 7 . WE HEARD BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS NOT COMPLIED WITH THE NOTICES ISSUED BY THE ASSESS ING OFFICER, BY FILING THE REQUISITE INFORMATION CALLED FOR ALONGWITH THE BOOKS OF ACCOUNT, TO SUBSTANTIATE THE AMOUNT OF EXPENDITURE CLAIMED BY IT EITHER AT THE ASSESSMENT STAGE OR EVEN SUBSEQUENTLY . STILL, CONSIDERING THE FACT THAT THE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE EXPENDITURE CLAIMED BY THE ASSESSEE, AND HAVI NG TAKEN COGNIZANCE OF BUSINESS RECEIPTS OF THE ASSESSEE, WHICH COULD NOT HAVE ARISEN IN THE ABSENCE OF ANY EXPENDITURE INCURRED BY THE ASSESSEE, ITA NO. 916&1011/HYD/2012 & CO 132/H/12 M/S.PEESHONU MARKETING PVT. LTD. SURYAPET 4 THE CIT(A) MADE A FAIR ESTIMATE OF THE EXPENDITURE THAT THE ASSESSEE MIGHT HAVE INCURRED, AND DELETED 60% OF T HE EXPENDITURE CLAIMED BY THE ASSESSEE AND DISALLOWED BY THE ASSESSING OFFICER. WE FIND THAT THE VIEW TAKEN BY THE CIT(A) IN THIS BEHALF IS JUST AND PROPER MORE PARTICULARLY, SINCE THERE WAS A REASONABLE CAUSE FOR NON - FURNISHING OF BOOKS AND OTHER PARTICUL ARS CALLED FOR BY THE ASSESSING OFFICER, VIZ. BOOKS OF ACCOUNTS BEING IN THE POLICE CUSTODY. WE FURTHER FIND THAT THE QUANTUM OF RELIEF GRANTED BY THE CIT(A) OUT OF THE DISALLOWANCE MADE BY THE ASSESSING OFFICER, IS ALSO REASONABLE. IN THE CIRCUMSTANCES, WE FIND NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ASPECT. IN THE CIRCUMSTANCES, WE FIND NO MERIT IN THE GROUNDS OF THE ASSESSEE AS WELL AS THE REVENUE IN THEIR APPEALS ON THIS ASPECT. THEY ARE ACCORDINGLY REJECTED. 8 . THE NEXT I SSUE INVOLVED IN THE APPEAL OF THE ASSESSEE RELATES TO ADDITION MADE ON THE BASIS OF PEAK CREDITS. 9 . WE HEARD BOTH SIDES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. THE CIT(A), OBSERVING THAT THE ASSESSEE HAS NOT CONTESTED THIS ADDITION MADE BY THE ASSESSING OFFICER, AND THUS, THE MATTER IN RELATION TO PEAK CREDIT ADDITION STOOD SETTLED, HAS NOT ADJUDICATED ON THIS ASPECT. IT IS URGED IN THE GROUNDS OF ITS APPEAL BEFORE THE TRIBUNAL THAT IT IS NO T CORRECT TO SAY THAT THE ASSESSEE HAS NO T CONT ESTED THE AD D ITION MADE ON THE BASIS OF PEAK CR E DITS, SINCE THE SYSTEM OF ADDING PEAK CREDIT HAS BEEN IN D I R ECTLY CON T ESTED AND THERE SHOULD BE A DEDUCTION FROM THE CREDITS TO THE EXT ENT OF EXPENDITURE MET. IT IS FURTHER CONTENDED THAT THERE WAS BU S IN E SS A CTIVITY AND THE ADDITION O F CREDITS IS NO T IN ORDER, SIN C E THE PUBLIC MONEY REPAYABLE HAS BEEN ADMITTED. ON GOING THROUGH THE GROUNDS OF APPEAL AND SUBMISSIONS MADE BEFORE THE CIT(A), IT APPEARS, ASSESSEE DID RAISE THE ISSUE OF ADDITION MADE ON ACCOUNT O F PEAK CREDIT OF CASH DEPOSITS IN THE BANK ACCOUNT. HOWEVER, IT APPEARS FROM THE ASSESSMENT ORDER THAT ADDITION ON ACCOUNT OF PEAK CREDIT IS ON AGREED BASIS. BE THAT AS IT MAY, ITA NO. 916&1011/HYD/2012 & CO 132/H/12 M/S.PEESHONU MARKETING PVT. LTD. SURYAPET 5 FACT REMAINS THAT THERE ARE SUBSTANTIAL AMOUNTS OF CASH DEPOSITS IN THE BANK ACCOUNT. FURTHER, IN SPITE OF SEVERAL OPPORTUNITIES BEING GRANTED BY THE ASSESSING OFFICER, ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF CASH DEPOSITS INTO THE BANK ACCOUNT. MOREOVER, BEFORE THE CIT(A) ALSO, APART FROM RAISING A GROUND AND MAKING SOM E SUBMISSIONS, THE ASSESSEE HAS NOT PROVED THE SOURCE OF CASH DEPOSITS. EVEN BEFORE US, POSITION REMAINS THE SAME. IN THE AFORESAID CIRCUMSTANCES, THE ASSESSING OFFICER, IN OUR VIEW, WAS JUSTIFIED IN CONSIDERING THE PEAK CREDIT ONLY FOR ADDITION ON ACCOU NT OF UNEXPLAINED CASH DEPOSITS. WE THEREFORE, DO NOT FIND ANY MERIT IN THE CONTENTIONS OF THE ASSESSEE ON THIS ASPECT. THEY ARE ACCORDINGLY REJECTED. 10. AS FOR THE ASSESSEES CLAIM FOR TELESCOPING THE ADDITION ON ACCOUNT OF UNACCOUNTED CASH DEPOSITS AGAINST THE ADDITION MADE ON ACCOUNT OF EXPENDITURE, THE SAME CANNOT BE ACCEPTED, AS THE ASSESSEE HAS FAILED TO ESTABLISH ANY LINK BETWEEN THEM. FURTHER, CONSIDERING THE NATURE OF THE TWO ADDITIONS, ONE BEING BY WAY OF DISALLOWANCE OF EXPENDITURE AND THE OTHER BEING PEAK CREDIT ON ACCOUNT OF HUGE AND FREQUENT DEPOSITS INTO BANK ACCOUNT, AND THUS, BOTH BEING ONLY ON ACCOUNT OF CASH OUTGOINGS TO THE ASSESSEE, WE FIND THAT NEITHER OF THESE TWO ADDITIONS COULD BE THE SOURCE FOR THE OTHER. CONSEQUENTLY, FOR T HIS REASON ALSO, ASSESSEE PLEA FOR TELESCOPING CANNOT BE ACCEPTED. WE ACCORDINGLY REJECT THE CONTENTIONS OF THE ASSESSEE ON THIS ASPECT. 11. THOUGH THE CROSS - OBJECTION OF THE ASSESSEE IS FILED IN THE APPEAL OF THE REVENUE, GROUNDS TAKEN THEREIN ME RELY REITERATE THE GROUNDS RAISED IN THE ASSESSEES APPEAL, AND AS SUCH, THE SAME IS REDUNDANT, AND ON THAT GROUND, THE CROSS - OBJECTION OF THE ASSESSEE IS REJECTED. 1 2 . IN THE RESULT, ASSESSEES APPEAL, ITA NO.1011/HYD/2012 AS WELL AS REVENUES APPEAL, ITA NO.916 / HYD/2012 , ARE DISMISSED. SO ALSO , ITA NO. 916&1011/HYD/2012 & CO 132/H/12 M/S.PEESHONU MARKETING PVT. LTD. SURYAPET 6 THE CROSS - OBJECTION OF THE ASSESSEE, BEING CO NO.132/HYD/2012 IN THE APPEAL OF THE REVENUE, BEING INFRUCTUOUS, IS ALSO REJECTED. ORDER PRONOUNCED IN THE COURT ON 28.08.2014 S D/ - SD/ - ( B.RAMAKOTAIAH ) ( SAKTIJIT DEY ) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 28 TH AUGUST, 2014 COPY FORWARDED TO: 1. M/S. PEESHONU MARKETING PVT. LTD.( SURYAPET), R 61, SRILA PARK SID E, HYDER NAGAR, MIYAPUR, HYDERABAD 500049. 2 . ADDL. COMMISSIONER OF INCOME - TAX RANGE 2, HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) V I HYDERABAD 4. COMMISSIONER OF INCOME - TAX V , HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V .S