V Venkateswara Rao, Hyderabad V. ITO, Ward-9(1), Hyderabad, Hyderabad

ITA 94/HYD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5993 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-03-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 23-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: S RAMA RAO
• Keywords: Peak credit; Additional evidence; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 94/HYD/2015 ASSESSMENT YEAR: 2007-08 V. VENKATESWARA RAO, HYDERABAD PAN ACYPV VS. INCOME-TAX OFFICER, WARD 9(1), HYDERABAD (ASSESSEE) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SHRI B. KURMI NAIDU DATE OF HEARING 03-03-2016 DATE OF PRONOUNCEMENT 16-03-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS), VI JAYAWADA, DATED 07/10/2014 FOR AY 2007-08. 2. ON PERUSAL OF RECORD, WE FIND THAT THIS APPEAL W AS FILED BEFORE THE TRIBUNAL WITH A DELAY OF 24 DAYS. THE ASSESSEE FILED A PETITION REQUESTING FOR CONDONATION OF DELAY. IN THE PETITI ON, HE STATED THAT THE REASONS FOR THE DELAY IN FILING THE APPEAL WERE BEY OND HIS CONTROL AS HIS MOTHER AGED 80 WAS SUFFERING FROM CANCER AND FO R MOTHERS TREATMENT, HE WENT TO GUNTUR DURING THE RELEVANT PE RIOD. THEREFORE, WHEN THE ORDER OF CIT(A) WAS RECEIVED AT HIS HYDERA BAD RESIDENCE, HE WAS IN GUNTUR FOR THE SAID CAUSE AND, THEREFORE, DELAY OCCURRED IN FILING THE APPEAL BEFORE THE TRIBUNAL. AFTER CONSID ERING THE 2 ITA NO. 94 /HYD/2015 V. VENKATESWARA RAO SUBMISSIONS OF THE ASSESSEE, WE ARE OF THE VIEW THA T THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FOR NOT FILING TH E APPEAL BEFORE THE TRIBUNAL WITHIN THE STIPULATED PERIOD. ACCORDINGLY, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING AND ADJUDICA TION. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE, A COMMISSION AGENT, FILED HIS RETURN OF INCOME FOR TH E AY 2007-08 ADMITTING TOTAL INCOME OF RS. 2,32,206/-. THE CASE WAS TAKEN UP FOR SCRUTINY. DURING THE COURSE OF SCRUTINY PROCEEDINGS , THE BANK ACCOUNTS OF THE ASSESSEE WERE VERIFIED. IN ONE ACCO UNT BEARING NO.030401503633 MAINTAINED IN ASSESSEE'S NAME WITH ICICI BANK, THE AO NOTICED THAT THE TOTAL DEPOSITS WERE AT RS.1 ,10,35,116/-. THE ASSESSEE EXPLAINED THAT HE HAD BEEN ACTING AS AN AG ENT FOR JANA CHAITANYA HOUSING LTD., SUCHIR INDIA AND CHALAPATI ESTATES AND APART FROM THAT HE WAS ALSO ACTED AS A MEDIATOR BETWEEN L AND LORDS AND INTENDED PURCHASERS. THE ASSESSEE HAD EXPLAINED THA T ON SALE OF PROPERTIES, HE COLLECTS THE SALE PROCEEDS FROM THE COMPANIES THROUGH CHEQUES AND DEPOSIT THEM IN HIS BANK ACCOUNT, WITHD RAW FROM IT THROUGH CHEQUES AND MADE PAYMENT TO THE SELLERS. HE STATED THAT THE PAYMENTS MADE BY THE COMPANIES INCLUDE SALE PROCEED S PAYABLE TO THE LAND LORDS AS WELL AS COMMISSION RECEIVABLE BY THE ASSESSEE. HENCE, HE SUBMITTED TO AO TO ACCEPT THE INCOME OFFE RED BY HIM. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE ASSESSEE'S EXPLANATION FOR THE FOLLOWING REASONS: (I) OUT OF THE TOTAL DEPOSITS OF RS.1,10,35,116/-, RECONCILIATION TOWARDS REVERSAL/DOUBLE ENTRIES WAS MADE FOR AN AMO UNT OF RS.38,25,324/- AND THE BALANCE WAS NOT EXPLAINED EX CEPT STATING THAT THESE AMOUNTS HAVE BEEN GIVEN TO LAND LORDS. (II) NO DOCUMENTARY' EVIDENCE PRODUCED ABOUT HIS S TATUS AS MEDIATOR, POWER TO RECEIVE/MAKE PAYMENTS OF BEHALF OF COMPANY/ LANDLORDS. 3 ITA NO. 94 /HYD/2015 V. VENKATESWARA RAO (III) THERE IS NO BASIS AS HOW THE COMPANY/ LANDLO RDS ACCEPTED TO GIVE/TAKE MONEY TO/FROM THE ASSESSEE WITHOUT AN Y GUARANTEE FOR THE TRANSACTION. (IV) NO PROOF WAS PRODUCED FOR RECEIPT OF COMMISSI ON FROM THE THREE COMPANIES. (V) THE DETAILS OF PURCHASERS/ SELLERS ARE NOT KNO WN. ACCORDINGLY, THE AO HAS TAKEN THE BALANCE DEPOSIT O F RS.72,09,792/- AS GROSS RECEIPTS OF THE ASSESSEE AND INCOME AT 25% WAS ESTIMATED. 3.1 IN RESPECT OF ACCOUNT IN ICICI BANK BEARING ACC OUNT NO.030401502265 WHICH ASSESSEE JOINTLY HELD WITH HI S WIFE AND SON, THE DEPOSITS WERE WORKED OUT AT RS 79,61,107/- BY T HE AO. THE AO NOTED THAT THE ASSESSEE HAS GIVEN THE SAME EXPLANA TION FOR THIS AMOUNT ALSO. AO FURTHER STATED THAT OUT OF THESE TR ANSACTIONS CERTAIN TRANSACTIONS WERE RELATABLE TO HIS WIFE AND SHE HAD ALREADY FILED HER RETURN OF INCOME FOR A.Y.2007-08. OUT OF THE TOTAL DEPOSITS OF RS.79,61,107/-, THE ASSESSING OFFICER ACCEPTED THE ASSESSEE'S EXPLANATION FOR RS.18,42, 126/- ONLY. AFTER REDUCIN G THIS AMOUNT, THE AMOUNT OF GROSS RECEIPTS OF RS.11 ,73,896/- ADMITTE D BY THE ASSESSEE IN HIS RETURN OF INCOME AND THE INTEREST INCOME OF RS.1,22,965/- SHOWN IN THE BANK ACCOUNT, THE BALANCE OF RS.48,21, 120/- WAS TAKEN AS GROSS RECEIPTS AND INCOME AT 25% IS ESTIMATED ON THESE RECEIPTS. FURTHER, AS THE ASSESSEE HAS OFFERED INTEREST INCOM E OF RS.37,937/- AND THE NOT THE ENTIRE AMOUNT OF RS.1,22,965/-, THE DIFFERENCE OF RS.85,028/- WAS ADDED TO THE INCOME OF THE ASSESSEE . 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A). THE ASSESSEE FILED WRITTEN SUBMISSIONS BEFORE THE C IT(A), WHICH WERE EXTRACTED BY THE CIT(A) FROM PAGES 4 TO 8 OF HIS OR DER. THE ASSESSEE ALSO FILED A PETITION FOR ADMISSION OF CERTAIN ADDI TIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES, 1962. THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO ON THE WRITTEN SUBMISSION S AS WELL AS ON 4 ITA NO. 94 /HYD/2015 V. VENKATESWARA RAO ADDITIONAL EVIDENCES FILED BY THE ASSESSEE. THE AO FILED REMAND REPORT ON 05/08/2013 WHEREIN THE COMMENTS OF THE AO ARE AS FOLLOWS: I) A LETTER WAS ADDRESSED TO M/S JANA CHAITANYA H OUSING LTD., GUNTUR TO VERIFY THE ASSESSEES CLAIM THAT HE RECEI VED PAYMENTS FROM THE COMPANIES ON BEHALF OF SELLERS OF LAND AND DISBURSED THE AMOUNT TO THEM. IN REPLY, THE COMPANY HAS CLARI FIED THAT THE SALE CONSIDERATION WAS PAID TO LAND LORDS ONLY. HEN CE, THE ASSESSEE'S CLAIM THAT THE DEPOSITS IN THE BANK ACCO UNT INCLUDE SALE CONSIDERATION RECEIVED FROM THE COMPANIES WHIC H AGAIN PAID TO LAND LORDS, IS NOT ACCEPTABLE. (II) THE ASSESSEE FAILED TO FURNISH THE DETAILS OF LANDS SOLD, PATTADAR PASS BOOKS, SALE CONSIDERATION, COMMISSION RECEIVED AND OTHER EVIDENCE IN SUPPORT OF HIS CLAIM OF ACTIN G AS MEDIATOR, AND RECEIPT OF COMMISSION. PATTADAR PASS BOOKS IN R ESPECT OF SRI D.PENTAIAH, D.JANGAMAIAH, R.BALARAJ AND YOUSUF KHAN OF DANDU MILLARAM VILLAGE WERE ONLY FILED. THE ASSESSE E DID NOT FILE ANY EVIDENCE TO SHOW THAT HE ACTED AS A MEDIAT OR BY WAY OF AGREEMENT OR LETTER OF AUTHORITY TO RECEIVE/ MAKE P AYMENTS. III) IN RESPECT OF ACCOMMODATION CHEQUES FOR RS.35 ,38,294/- BEING ALLEGED AMOUNTS RECEIVED FROM THREE CO-AGENTS , FOR PAYMENT TO LAND LORDS, THE ASSESSEE FURNISHED ONLY AFFIDAVITS FROM ALLEGED CO-AGENTS AND NO SUPPORTING EVIDENCE S UCH AS THE DETAILS OF SALE TRANSACTION ETC., WAS FILED. SIMPLY FILING OF AFFIDAVITS FROM THE ALLEGED CO-AGENTS CANNOT GO TO PROVE THAT THE AMOUNTS ARE MEANT FOR PAYMENT TO LANDLORDS. FURTHER , AFFIDAVITS DO NOT CONTAIN THE DETAILS OF LAND PURCHASED, SALE CONSIDERATION AND THE DETAILS OF PERSONS TO WHOM THE PAYMENTS WER E TO BE MADE, NAMES AND ADDRESSES OF THE SELLERS ETC., THE ASSESSEE FURNISHED DOCUMENTARY EVIDENCE IN TWO CASES INVOLVI NG AN AMOUNT OF RS.2,93,500/- ONLY AND THERE IS NO DOCUME NTARY EVIDENCE FOR THE BALANCE AMOUNT TO SHOW THAT IT WAS PAID TO THE 5 ITA NO. 94 /HYD/2015 V. VENKATESWARA RAO LAND LORDS. HENCE, RELIEF TO THE EXTENT OF RS.2,93, 500/- MAY BE ALLOWED. (IV) IN RESPECT OF JOINT ACCOUNT, RELIEF TO THE EX TENT OF RS.59,20,329/- MAY BE ALLOWED TOWARDS GROSS COMMISS ION RECEIVED OF RS.19,51 ,612/- FROM JANA CHAITANYA HOU SING LTD, RS.16,92,250/- FROM RATNA HOUSING(P) LTD AND RS.5,0 1,876!- FROM M/S.CHALAPATHI ESTATE (P) LTD., BY THE ASSESSE E'S WIFE AND RS.17,74,591/- TOWARDS SWEEPING REVERSE ENTRIES IN THE BANK ACCOUNT. 4.1 IN HIS COMMENTS ON THE REMAND REPORT OF THE ASS ESSING OFFICER, THE ADDI.CIT, RANGE-9, HYDERABAD DENIED TO GIVE REL IEF OF RS.2,93,500/- AS OBSERVED BY THE ASSESSING OFFICER FOR THE REASON THAT AS PER THE SALE DEED FURNISHED BY THE ASSESSEE , THE ASSESSEE HAS NO ROLE IN THE SALE TRANSACTIONS MADE BY THE VE NDOR & VENDEE. HE FURTHER OBSERVED THAT THE ASSESSING OFFICER HAS ALR EADY ALLOWED CREDIT FOR RS.18,42,126/- FOR THE COMMISSION RECEIVED FROM JANA CHAITANYA HOUSING LTD.' THEREFORE, CREDIT FOR THE BALANCE TDS AMOUNT OF RS.1 ,06,486/- IS TO BE ALLOWED NOW. CREDIT FOR COMMISSI ON OF RS.5,01 ,876/- RECEIVED FROM M/S.CHALAPATHI ESTATES P LTD., . IS NOT ALLOWABLE AS THERE IS NO CREDIT IN THE BANK ACCOUNT RELATING TO THIS ISSUE. CREDIT FOR SWEEPING AND REVERSES ENTRIES ARE ALLOWABLE TO THE EXTENT OF RS.3,00,000/- ONLY AND RS.14,70,000/- AND 4,591/- W ERE SHOWN AS 'REV SWEEP FROM' AND IT IS NOT KNOWN THAT FROM WHIC H ACCOUNT, THE REVERSE SWEEP ENTRIES HAVE COME. 4.2 THE CIT(A) HAS SUPPLIED COPY OF THE REMAND REPO RT TO THE ASSESSEE TO FURNISH HIS EXPLANATION, AND THE ASSESS EE REPLIED VIDE LETTER DATED 29/8/2013. THE REPLY OF THE ASSESSEE W AS EXTRACTED BY THE CIT(A) IN HIS ORDER FROM PAGES 10 TO 12. 4.3 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE AS WELL AS THE REMAND REPORT OF AO AND REPLY OF THE ASSESSEE A GAINST REMAND 6 ITA NO. 94 /HYD/2015 V. VENKATESWARA RAO REPORT, THE CIT(A) PARTLY ALLOWED THE ASSESSEES AP PEAL BY OBSERVING AS UNDER: 5. I HAVE CAREFULLY GONE THROUGH THE ORDER OF THE ASSESSING OFFICER, THE SUBMISSIONS MADE BY THE ASSESSEE, THE REMAND REPORT OF THE ASSESSING OFFICER AND ASSESSEE'S REPL Y ON THE COMMENTS OF THE AO AND EVERY OTHER MATERIAL AVAILAB LE ON RECORD. IN THIS CASE, INCOME WAS ESTIMATED AT 25% O F THE TOTAL DEPOSITS IN THE ASSESSEE'S BANK ACCOUNTS AS THE ASS ESSEE FAILED TO PROPERLY EXPLAIN THE SAME. THE ASSESSEE H AS VEHEMENTLY ARGUED THAT HE IS DERIVING COMMISSION IN COME FROM REAL ESTATE ACTIVITIES BY ACTING AS A MEDIATOR IN R EAL ESTATE TRANSACTIONS BETWEEN THE LANDLORDS AND PURCHASING C OMPANIES. HE ARGUED THAT THE DEPOSITS IN THE BANK ACCOUNTS IN CLUDE SALE CONSIDERATION RECEIVED FROM THE BUYERS WHICH WERE L ATER ON PAID TO THE LAND LORDS. HOWEVER, THE ASSESSEE FAILED TO FURNISH BEFORE THE ASSESSING OFFICER AND ALSO BEFORE THE UNDERSIGN ED, THE DETAILS OF LANDS SOLD, PATTADAR PASS BOOKS, SALE CO NSIDERATION, COMMISSION RECEIVED AND OTHER EVIDENCE IN SUPPORT O F HIS CLAIM OF ACTING AS MEDIATOR AND RECEIPT OF SALE CONSIDERA TION AND COMMISSION. FURTHER, AS PER THE LETTER GIVEN BY M/S . JANA CHAITANYA HOUSING LTD, GUNTUR, THE COMPANY HAS CLAR IFIED THAT THE SALE CONSIDERATION WAS PAID TO LAND LORDS ONLY AND NOT TO THE ASSESSEE. HENCE, THE ASSESSEE'S CLAIM THAT THE DEPO SITS IN THE BANK ACCOUNT INCLUDE SALE CONSIDERATION RECEIVED FR OM THE COMPANIES WHICH AGAIN PAID TO LAND LORDS, IS ALSO N OT PROVED BEYOND DOUBT. FURTHER, IT IS ALSO NOT POSSIBLE TO V ERIFY THESE CLAIMS WITH BOOKS OF ACCOUNT, AS THE ASSESSEE HAD N OT MAINTAINED THEM. HENCE, IT IS NOT POSSIBLE TO GIVE CREDENCE TO THE ASSESSEE'S ARGUMENTS. IN SUCH CIRCUMSTANCES, I AM OF THE VIEW THAT THE ASSESSEE FAILED TO EXPLAIN THE DEPOSI TS IN THE BANK ACCOUNT SATISFACTORILY AND ACCORDINGLY ADOPTING THE PEAK BALANCE IN THE BANK ACCOUNTS OF THE ASSESSEE AS UN EXPLAINED CASH DEPOSITS U/S.69 OF THE ACT WOULD BE MORE APPRO PRIATE IN THIS CASE. THE RELEVANT EXTRACT OF THE ASSESSEE'S S UBMISSIONS DATED 12/11/2013, IN THIS REGARD, ARE AS UNDER: AS SUBMITTED EARLIER, EVEN THE PEAK AMOUNT OF TH E RECEIPTS AMOUNTED TO RS. 47,50,881/- AND THE OPEN ING BALANCE WAS RS. 22,28,473/-. THE NET PEAK WOULD B E RS. 25,22,408/-. 5.1 ON VERIFICATION OF THE CONSOLIDATED STATEMENT OF BANK ACCOUNTS, IT IS NOTICED THAT THERE WAS PEAK BALANC E OF RS.47,60,881/- ON 20/10/2006 AND THE OPENING BALAN CE AS ON 1/4/2006 WAS RS.22,28,473/- AND THE NET PEAK WAS RS.25,22,408/-. THE AO IS DIRECTED TO TAX THIS AMO UNT OF RS.25,22,408/- AS UNEXPLAINED CASH DEPOSITS U/S.69 OF THE ACT. 7 ITA NO. 94 /HYD/2015 V. VENKATESWARA RAO 5. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE I S IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) THE ORDER OF THE LEARNED CIT (A) IS ERRONEOUS T O THE EXTENT IT IS PREJUDICIAL TO THE ASSESSEE. 2) THE LEARNED CIT (A) ERRED IN DIRECTING THE ASSE SSING OFFICER TO TAX AN AMOUNT OF RS.25,22,408/ - U/S 69 OF THE I.T. ACT. 3) THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THE PEAK BALANCE WAS ONLY RS. 47,60,881/- OF WHICH THE OPEN ING BALANCE WAS RS.22,28,473/-. THE LEARNED CIT(A) OUGHT TO HA VE CONSIDERED THE EXPLANATION AND HELD THAT EVEN THE BALANCE OF THE DEPOSIT IS PROPERLY EXPLAINED. 4) THE LEARNED CIT (A) OUGHT TO HAVE DELETED THE A DDITION MADE BY ESTIMATING THE INCOME AT 25% OF THE DEPOSITS. 5) THE LEARNED CIT (A) OUGHT TO HAVE SEEN THAT THE ASSESSING OFFICER MERELY ESTIMATED THE INCOME AT 25% OF THE DEPOSITS MADE IN THE BANK ACCOUNT WITHOUT CONSIDERING THE F ACT THAT THE DEPOSITS WERE PROPERLY EXPLAINED. 6. LD. AR SUBMITTED THAT ASSESSEE IS A COMMISSION A GENT IN THE REAL ESTATE ACTIVITIES. AS A PART OF BUSINESS STRAT EGY, ASSESSEE LOCATES THE PURCHASERS AND SELLERS, SOMETIMES COLLECTS THE AMOUNT FROM THE PURCHASERS AND DEPOSITS THE SAME WITH THE SELLER. I N SUCH AN EVENT, THE ESTIMATION OF INCOME @ 25% OF THE RECEIPTS IS N OT JUSTIFIED. HE SUBMITTED THAT AO HAD ARRIVED THE RECEIPTS AT RS. 7 2,09,792/- WITH ONE BANK ACCOUNT AND RS. 48,21,120/- WITH ANOTHER JOINT ACCOUNT WITH THE ASSESSEES WIFE AND SON. THE AGGREGATE AMOUNT OF RE CEIPTS IS RS. 1,20,30,912/-. FROM THE ABOVE RECEIPTS, THE ASSESS EE HAD ALREADY OFFERED RS. 11,73,896/- AS COMMISSION INCOME, WHICH IS ABOUT 9.5%. HENCE, THE AO WAS NOT JUSTIFIED IN ESTIMATING THE C OMMISSION @ 25% OF THE RECEIPTS. THEREFORE, THE COMMISSION INCOME O FFERED BY THE ASSESSEE IS QUITE REASONABLE. 7. ALTERNATIVELY, LD. AR ALSO SUBMITTED THAT THE PE AK AMOUNT OF RECEIPTS AMOUNTED TO RS. 47,50,881/- AND THE OPENIN G BALANCE WAS RS. 22,28,473/-. THE NET PEAK WOULD BE RS. 25,22,40 8/-. THE AO ACCEPTED THAT THE INCOME RELATING TO ASSESSEES WIF E WAS RS. 18,42,126/- AND ASSESSEES INCOME AT RS. 11,73,896/ -. THE AGGREGATE 8 ITA NO. 94 /HYD/2015 V. VENKATESWARA RAO OF THE AMOUNTS BELONGING TO ASSESSEES WIFE ALSO TO BE CONSIDERED. THIS ASPECT WAS COMPLETELY OVER LOOKED BY THE AO. 8. LD. DR SUBMITTED THAT AS PER THE RETURN OF INCOM E SUBMITTED BY THE ASSESSEE (REFER PAGE 2 OF PAPER BOOK), ASSESSEE HIMSELF ACCEPTED 25% OF INCOME AND AO COMPUTED THE TAXABLE INCOME AS PER RETURN OF INCOME. HE ALSO RELIED ON THE ORDER OF TH E CIT(A) AND ASSESSMENT ORDER. 9. CONSIDERING THE SUBMISSIONS OF BOTH THE COUNSEL S AND MATERIAL FACTS ON RECORD, IT IS OBSERVED THAT AS PER THE REC ORDS, THE ASSESSEE IS A COMMISSION AGENT DERIVED INCOME FROM REAL ESTATE ACTIVITIES. FROM THE RECORD, IT IS CLEAR THAT NO COMMISSION AGENT OR EVEN THE PERSON DEALING WITH THE REAL ESTATE CAN EARN @ 25% AS INCO ME FROM THE BUSINESS. ON CAREFUL EVALUATION OF THE RETURN OF IN COME, ASSESSEE HAD OFFERED TO TAX 25% AS NET INCOME FROM THE COMMISSIO N EARNED FROM REAL ESTATE ACTIVITIES AND NOT FROM GROSS RECEIPTS. FIRST WE NEED TO ARRIVE WHAT WILL BE THE INCOME EARNED FROM THE REAL ESTATE BUSINESS AS COMMISSION. AO HAS TREATED 25% AS COMMISSION, WHICH CANNOT BE PROPER IN THE NORMAL COURSE OF BUSINESS. MOREOVER, THE ASSESSEE HAS USED THE JOINT ACCOUNT TO CARRY OUT THE BUSINESS, A CTIVITIES OF ACCEPTING MONEY FROM PURCHASERS AND PAYING TO THE S ELLERS AND THE NET BALANCE SHOWN AS COMMISSION INCOME. THE SIMILAR BUSINESS ACTIVITIES WERE ALSO CARRIED BY HIS WIFE, WHO HAS S HOWN COMMISSION INCOME. WE ARE NOT IN A POSITION TO ALLOCATE THE FU NDS MOVEMENTS IN BUSINESS ACTIVITIES OF ASSESSEE AND HIS WIFE. IN PR INCIPLE, THERE IS MOVEMENT OF FUNDS IN THE BANK ACCOUNT OF ASSESSEE A S WELL AS JOINT ACCOUNT. WE ARE OF THE VIEW THAT WE NEED TO DETERMI NE THE REASONABLE OF INCOME FROM THE REAL ESTATE I.E. THE LINE OF BUS INESS ACTIVITIES OF THE ASSESSEE. IN OUR VIEW, AO SHOULD ESTIMATE THE INCOM E OF THE ASSESSEE AFTER EVALUATION OF THE BUSINESS OF THE AS SESSEE AND SIMILAR BUSINESS IN THE REAL ESTATE. SUCH PERCENTAGE CAN BE ADOPTED TO DETERMINE THE GROSS INCOME OF THE ASSESSEE AND ARRI VE AT NET TAXABLE 9 ITA NO. 94 /HYD/2015 V. VENKATESWARA RAO INCOME @ 25% OF THE GROSS INCOME BY GIVING PROPER O PPORTUNITY OF BEING HEARD TO ASSESSEE. 9.1 ACCORDINGLY, WE DIRECT THE AO TO ARRIVE THE NET INCOME ALONG WITH THE OTHER DECLARED INCOME AS TAXABLE INCOME. IN THE RESULT, GROUND NOS. 4 & 5 ARE ALLOWED FOR STATISTICAL PURPO SES. 10. THE OTHER GROUNDS 2 & 3 ARE NOT PRESSED, BUT, S UBMITTED AS ALTERNATE GROUNDS ARE DISMISSED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH, 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 16 TH MARCH, 2016 KV COPY TO:- 1) V. VENKATESWARA RAO, C/O SRI S. RAMA RAO, ADVOC ATE, FLAT NO. 102, SHRIYAS ELEGANCE, H. NO. 3-6-643 , ST. NO. 9, HIMAYAT NAGAR, HYDERABAD 500 029 2) ITO, WARD 9(1), INCOME-TAX TOWERS, AC GUARDS, HYD. 3 CIT(A), VIJAYAWADA 4) CIT-VI, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 10 ITA NO. 94 /HYD/2015 V. VENKATESWARA RAO S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER