Tirandasu Jagannadam , Nalgonda V. Income Tax Officer, Ward-1, Suryapet

ITA 919/Hyd/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7076 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 16-10-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 10-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R S ARVINDAKSHAN
• Keywords: Business income
• Section: 44AD; 142(1); 143(1); 143(2); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A - SMC , HYDERABAD BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 919 /HYD/20 18 ASSESSMENT YEAR: 20 14 - 15 TIRANDASU JAGANNADAM, BANGARIGADDA, CHOUTUPPAL, NALGONDA, TELANGANA - 508252. PAN: AHBPJ 1191 M VS. INCOME TAX OFFICER, WARD - 1, SURYAPET. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI MOHD. AFZAL, AR REVENUE BY: SRI R.S. ARVINDAKSHAN, DR DATE OF HEARING: 16/10/2019 DATE OF PRONOUNCEMENT: 18 /10/2019 ORDER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) - 8, HYDERABAD IN APPEAL NO. 10373/CIT(A) - 8/HYD/2017 - 18, DATED 22/3/2018 PASSED U/S. 144 R.W.S 250(6) OF THE ACT FOR THE ASSESSMENT YEAR 2014 - 15. 2. THE ASSESSEE HAS RAISED FOUR GROUNDS IN HIS APPEAL HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LD. CIT (A) HAS ERRED IN ESTIMATING THE PROFIT OF THE ASSESSEE @ 8% OF THE TURNOVER FOR THE RELEVANT ASSESSMENT YEAR WHEN THE LD. AO HAS ESTIMATED THE INCOME OF THE ASSESSEE @ 5% IN THE SUBSEQUENT A SSESSMENT YEAR 2015 - 16. 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN STEEL UNDER THE NAME AND STYLE OF MEGHANA STEELS FILED HIS RETURN OF INCOME FOR THE AY 2014 - 15 ON 19/9/2014 DECLARING TOTAL IN COME OF RS. 3,05,560/ - . INITIALLY, THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT AND SUBSEQUENTLY THE CASE WAS TAKEN UP FOR SCRUTINY UNDER CASS AND FINALLY ASSESSMENT WAS COMPLETED U/S. 144 OF THE ACT WHEREIN THE LD. AO ESTIMATED THE BUSINESS PROFIT OF THE ASSESSEE AT 10% OF THE AMOUNT DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR WHICH WORKED OUT TO RS. 8,35,200/ - . 4. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSEE DID NOT APPEAR BEFORE THE LD. AO IN - SPITE OF SEVERAL NOTICES ISSUED AND SERVED ON THE ASSESSEE U/S. 142(1) AND 143(2) OF THE ACT. THEREFORE, THE LD. AO WAS FORCED TO COMPLETE THE ASSESSMENT U/S. 144 OF THE ACT WHEREIN HE ESTIMATED THE BUSINESS PROFIT OF THE ASSESSEE @ 10% OF THE AMOUNT DEPOSITED IN T HE BANK ACCOUNTS OF THE ASSESSEE WHICH WORKED OUT TO RS. 8,35,200/ - . BEFORE THE LD. CIT (A) THE LD. AR SUBMITTED THAT THE VERY SAME AO WHO ASSESSED THE INCOME OF THE ASSESSEE HAD ALSO ASSESSED THE INCOME OF THE ASSESSEE FOR THE AY 2015 - 16 BY ESTIMATING TH E PROFIT @ 5% OF THE CASH DEPOSIT IN THE BANK ACCOUNTS OF THE ASSESSEE AND HENCE THE SAME RATE OF BUSINESS PROFIT MAY BE ADOPTED FOR THE RELEVANT AY ALSO. HOWEVER, THE LD. CIT (A) REJECTED THE SUBMISSION OF THE 3 ASSESSEE BUT, GRANTED MARGINAL RELIEF TO THE ASSESSEE AND ESTIMATED THE INCOME AT 8% OF THE TURNOVER BY OBSERVING AS FOLLOWS: - 5. I HAVE CONSIDERED THE ISSUE AND SUBMISSIONS MADE BY THE AR. NO BASIS HAS BEEN GIVEN BY THE AO TO ESTIMATE THE PROFIT @ 10% IN THE YEAR UNDER CONSIDERATION. ADMITTEDLY , THE APPELLANT IS IN RETAIL BUSINESS OF CEMENT AND STEEL. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAVING REGARD TO THE PROVISIONS OF SECTION 44AD, I AM OF THE OPINION THAT ENDS OF JUSTICE WOULD BE MET IF THE PROFIT IS ESTIMATED AT 8% OF THE TURNOVER OF THE APPELLANT. THE AO IS DIRECTED TO ADOPT 8% PROFIT ON THE CASH DEPOSITS IN THE BANK ACCOUNTS. AS REGARDS THE CONTENTION OF THE AR THAT THE DISCOUNT RECEIVED FROM K.C.P CEMENT AND J.S.W CEMENT AMOUNTING TO RS. 5,22,419/ - SHOULD NOT HAVE BEEN ADDED AFTER ESTIMATING BUSINESS PROFITS OF THE APPELLANT, I AM OF THE CONSIDERED VIEW THAT DISCOUNTS ON THE PURCHASES MADE ON CEMENT AND STEEL COULD NOT HAVE BEEN ADDED SEPARATELY SINCE THEY REDUCED THE COST OF PURCHASES AND THE PROFIT WAS ESTIMATED @ 8% OF THE SALES TURNOVER. THE ADDITION OF DISCOUNT RECEIVED OF RS. 5,22,419/ - IS ACCORDINGLY DELETED. THUS GROUND NO.2 OF APPEAL IS DISMISSED AND GROUNDS NO. 3,4 & 5 ARE PARTLY ALLOWED 5 LD. AR BEFORE US REITERATED HIS ARGUMENTS MADE BEFORE THE LD. CIT (A) AND PLEADED THAT THE BUSINESS INCOME OF THE ASSESSEE MAY BE ESTIMATED @ 5% OF THE AMOUNT DEPOSITED IN THE BANK ACCOUNTS OF THE ASSESSEE AS ESTIMATED BY THE LD. AO FOR THE SUBSEQUENT ASSESSMENT YEAR. ON THE OTHER HAND, LD. DR REQUESTED FOR CONFIRMING THE ORDER FOR THE LD. CIT (A). 6. I HAVE HEARD THE RIVAL SUBMISSION AND CAREFULLY PERUSED THE MATERIALS ON RECORD. CONSIDERING THE FACTS OF THE CASE, WE FIND MERIT IN THE ORDER OF THE LD. CIT (A). IT IS APPARENT THAT THE ASSESSEE HAS NOT MAINTAINED HIS B OOKS OF ACCOUNT. IN SUCH SITUATION, SECTION 44AD OF THE ACT, STIPULATES THAT THE INCOME CAN BE ASSESSED ON PRESUMPTIVE BASIS BY ESTIMATING @ 8% OF THE TURNOVER . IF THE ASSESSEE CLAIMS THAT 4 THE INCOME EARNED IS LESS THAN THE RATE OF PROFIT STIPULATED U/S. 44AD OF THE ACT THEN, IT IS MANDATORY FOR HIM TO MAINTAINING BOOKS OF ACCOUNT S AND GET THE SAME DULY AUDITED AS PER THE PROVISIONS OF THE ACT . IN THE C A SE OF THE ASSESSEE, IT IS EVIDENT THAT H E HAS NOT MAINTAINED HIS BOOKS OF ACCOUNT S . IN THIS SITUATION, THE LD. CIT ( A) HAS JUDICIOUSLY ESTIMATED THE PROFIT OF THE ASSESSEE @ 8% OF THE TURNOVER BEING THE AMOUNT DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE . HENCE, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF THE LD. CIT (A). 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 18 TH OCTOBER, 2019. SD/ - ( A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER HYDERABAD, DATED: 18 TH OCTOBER , 2019 OKK COPY TO: - 1) TIRANDASU JAGANNADAM C/O. MOHD. AFZAL, ADVOCATE, 11 - 5 - 465, SHERONS RESIDENCY, FLAT NO. 402, CRIMINAL COURT ROAD, RED HILLS, HYDERABAD - 500 004. 2) THE INCOME TAX OFFICER, WARD - 1, SURYAPET. 3) THE CIT(A) - 8 , HYDERABAD 4) THE PR. CIT - 8 , HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE