D. Sampath Kumar, Hyd, Hyderabad V. ITO, Ward-9(1), Hyd, Hyderabad

ITA 95/HYD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2445 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GITENDER MANN
• Assessee Lawyers: B SHANTHI KUMAR
• Keywords: Unexplained cash credit
• Section: 68; 69; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 198/HYD/2016 ASSESSMENT YEAR: 2009-10 INCOME-TAX OFFICER, WARD 9(1), HYDERABAD. VS. SAMPATH KUMAR DESHAGONI, HYDERABAD. PAN AJXPD 7967M (APPELLANT) (RESPONDENT) ITA NO. 95/HYD/2016 ASSESSMENT YEAR: 2009-10 SAMPATH KUMAR DESHAGONI, HYDERABAD. PAN AJXPD 7967M VS. INCOME-TAX OFFICER, WARD 9(1), HYDERABAD. PAN AJXPD 7967 M (APPELLANT) (RESPONDENT) REVENUE BY : SMT. GITENDER MANN ASSESSEE BY : SHRI B. SHANTHI KUMAR DATE OF HEARING 13/02/2018 DATE OF PRONOUNCEMENT 28/02/2018 O R D E R PER S. RIFAUR RAHMAN, A.M.: THESE CROSS APPEALS FILED BY REVENUE AND ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 27 TH NOVEMBER, 2015 PASSED BY CIT(A) 7, HYDERABAD, FOR AY 2009-10. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 ON 22.09.2009 AD MITTING TOTAL 2 ITA NOS. 198 & 95 /HYD/2016 D. SAMPATH KUMAR, HYD. INCOME OF RS.1,64,660/-. THE SAME WAS TAKEN UP FOR SCRUTINY. THERE WAS NO RESPONSE FROM THE ASSESSEE TO VARIOUS NOTICE S ISSUED. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 144 OF THE ACT ASSESSING TOTAL INCOME AT RS.70,59,510/-. THE ASSES SEE WAS FOUND MAINTAINING AN ACCOUNT WITH AXIS BANK, TARNAKA BRAN CH IN WHICH HE MADE CASH DEPOSITS OF RS.68,94,850/-, IN THE ACCOUN T DURING THE YEAR. IN THE ABSENCE OF ANY EXPLANATION, THE ABOVE DEPOSI TS WERE TREATED AS UNEXPLAINED AND ADDITION WAS MADE U/S 69 OF THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 3. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS DEALING IN USED CARS AND SUBMITTED COPIES OF STATEMENT OF ACCOUNT OF THE BANK ACCOUNT WITH AXN BANK, PROFIT & LOSS ACCOUNT, BALANCE SHEET FOR THE RELEVA NT PERIOD. SINCE THE ABOVE DOCUMENTS WERE NOT SUBMITTED BEFORE ASSES SING OFFICER, A REMAND REPORT WAS CALLED FOR BY THE CIT(A) FROM THE AO. THE AO FILED HIS REMAND REPORT, WHICH WAS EXTRACTED BY THE CIT(A ) AT PAGE 3 OF HIS ORDER. WHEN A COPY OF THE REMAND REPORT WAS FORWARD ED TO THE ASSESSEE, THE ASSESSEE FILED HIS SUBMISSIONS, WHICH WERE EXTRACTED AT PAGE 4 OF THE CIT(A)S ORDER. AFTER EXAMINING T HE REMAND REPORT AND SUBMISSIONS OF THE ASSESSEE, THE CIT(A) SUMMARI ZED THE SAME AS UNDER: I) THE ASSESSEE HAS NO EVIDENCES/DETAILS WITH REGA RD TO HIS BUSINESS AND THE EXPLANATION GIVEN REGARDING CASH D EPOSITS IN THE BANK ACCOUNT MAINTAINED BY HIM; II) THE TOTAL CREDITS IN THE BANK ACCOUNT INCLUDING THE CASH DEPOSITS OF RS.68,94,850/- DURING THE YEAR WAS RS.7 8,92,030/-; III) THE ASSESSEE HAS NO EXPLANATION TO OFFER REGAR DING THE BALANCE IN THE BANK ACCOUNT AT THE END OF THE YEAR VIS-A-VIS THE BANK BALANCE SHOWN IN THE BALANCE SHEET; IV) IN VIEW OF THE ABSENCE OF ANY EXPLANATION, THE ASSESSEE CONFESSED THAT ALL THE IMPUGNED TRANSACTIONS IN THE BANK REPRESENT THE BUSINESS TURNOVER; 3 ITA NOS. 198 & 95 /HYD/2016 D. SAMPATH KUMAR, HYD. 3.1 CONSIDERING THE FACTUAL MATRIX AS ABOVE, THE CI T(A) HELD AS UNDER: I) THE TURNOVER OF THE APPELLANT IS TO BE TAKEN AS RS.78,92,030/- AS AGAINST THE TURNOVER OF RS.35,58,845/- REFLECTED IN THE P&L ACCOUNT. ON THE BALANCE TURNOVER WHICH IS NOT REFLE CTED IN P&L ACCOUNT AMOUNTING TO RS.43,33,185/- THE INCOME IS E STIMATED @ 20%. THE INCOME IS ESTIMATED AT @ 20% AS THE EXPENS ES ARE ALREADY CLAIMED BY THE APPELLANT. THE ADDITION ON T HIS ACCOUNT IS RS.8.55.637/- II) THE DIFFERENCE IN THE BALANCE IN THE BANK ACCOU NT BETWEEN THE ACTUAL BALANCE AND THE BALANCE AS SHOWN IN THE BOOKS OF ACCOUNT BY THE APPELLANT, TO BE TREATED AS UNEXPLAI NED CREDIT AND THE SAME IS TO BE ASSESSED AS INCOME. THE ADDIT ION ON THIS ACCOUNT IS RS.13,95,042/- ; III) THE INTEREST ON BANK ACCOUNT RECEIVED OF RS.14 ,685/- IS TO BE ASSESSED ON INCOME FROM OTHER SOURCES; 4. AGGRIEVED BY THE ORDER OF CIT(A) BOTH THE ASSESS EE AND REVENUE ARE IN APPEAL BEFORE US. 5. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: (1) THE LEARNED CIT(A) ERRED IN DIRECTING TO TAKE T HE TOTAL DEPOSITS IN THE BANK ACCOUNT OF RS. 78,92,030/- AS THE TURNOVER OF THE ASSESSEE EVEN WHEN NO NEXUS COULD BE ESTABLI SHED BY THE ASSESSEE TO THE SAID DEPOSITS AND HIS BUSINESS. (2) THE LEARNED C1T(A) ERRED IN DIRECTING FOR ESTIM ATION OF PROFIT @ 20% ON THE DIFFERENCE OF RS.43,33,185(RS.78,92,03 0/- BEING CASH DEPOSITS IN BANK ACCOUNT MINUS RS.35,58,845/- REFLECTED AS TURNOVER IN THE PROFIT AND LOSS ACCOUNT) IN THE ABSENCE OF ANY NEXUS ESTABLISHED BY THE ASSESSEE BETWEEN THE DEPOS ITS IN BANK ACCOUNT AND HIS BUSINESS. (3) THE LEARNED C1T(A) OUGHT NOT TO HAVE RESTRICTED THE INCOME @ 20% OF DEPOSITS WITHOUT CONSIDERING THE PROVISION S OF SECTION 68 OF THE I.T. ACT AS PER WHICH THE ENTIRE AMOUNT OF RS. 43,33,185/- CONSTITUTES THE UNEXPLAINED CASH CREDIT S OF THE ASSESSEE. 4 ITA NOS. 198 & 95 /HYD/2016 D. SAMPATH KUMAR, HYD. 5.1 GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. CIT(APPEALS) ERRED BOTH IN LAW AND ON FACTS IN E STIMATING THE COMMISSION INCOME @ 20% OF TURNOVER IN SECOND-HAND CARS BUSINESS RESULTING IN ADDITION OF RS.8,66,637/- AND IN HOLDING THAT AN AMOUNT OF RS.13,95,042/- IS TO BE TREATED A S UNEXPLAINED CREDIT. 2. CIT(APPEALS) IS NOT JUSTIFIED IN ESTIMATING COMM ISSION INCOME @ 20% OF TURNOVER RESULTING IN ADDITION OF RS.8,66, 637/- WHICH IS ON HIGH SIDE CONSIDERING THAT THE APPELLANT IS E ARNING SUCH COMMISSION BY FACILITATING SALE AND PURCHASE OF USE D CARS. 3. CIT(APPEALS) ERRED IN HOLDING THAT THE ACTUAL BA NK BALANCE OF RS.13,95,042/- IS NOT SHOWN IN THE BOOKS OF ACCOUNT DISREGARDING APPELLANT'S SUBMISSION THAT THIS AMOUN T IS GIVEN TO APPELLANT BY PROSPECTIVE BUYERS AS ADVANCES TO CAR OWNERS AND AS PER PRACTICE PREVALENT IN MARKET, SUCH ADVANCES ARE IN THE CUSTODY OF AGENTS TILL DEALS ARE FINALIZED. 4. CIT(APPEALS) ERRED IN TREATING THE BANK BALANCE OF RS.13,95,042/- AS UNEXPLAINED CREDIT ON THE GROUND THAT THE SAME IS NOT SHOWN IN BOOKS OF ACCOUNT EVEN THOUGH T HE BOOKS WERE REJECTED AND INCOME ESTIMATED @ 20%. 5. APPELLANT PRAYS FOR DELETION OF ADDITIONS OF RS. 8,66,637/- AND RS.13,95,042/-. 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 5.2 THE ASSESSEE HAS FILED A PETITION FOR ADMISSION THE FOLLOWING ADDITIONAL GROUND OF APPEAL UNDER RULE 29 OF THE AC T: 1. THE CIT(APPEALS), HAVING SUSTAINED ADDITIONS OF (1) RS.8,66,637/- TOWARDS COMMISSION INCOME ESTIMATED @ 20% AND (2) RS.13,95,042/- BEING DIFFERENCE IN THE BOOK S OF A/C AND ACTUAL BANK BALANCE, OUGHT TO HAVE ACCORDED THE BEN EFIT OF TELESCOPING THE COMMISSION INCOME AGAINST EXCESS BA NK BALANCE AT THE YEAR-END. 6. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT SIMILAR ISSUE CAME UP FOR CONS IDERATION BEFORE THE SMC-A BENCH FOR AY 2011-12 IN ASSESSEES OWN CA SE ITA NO. 96/HYD/2016 ORDER DATED 15 TH JULY, 2016) WHEREIN THE BENCH HAS HELD AS UNDER: 5 ITA NOS. 198 & 95 /HYD/2016 D. SAMPATH KUMAR, HYD. 12. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE RECORD. IT IS WELL SETTLED THAT EVEN WH ERE INCOME IS ESTIMATED BY THE ASSESSING OFFICER, STATUTORY ALLOW ANCES OR DISALLOWANCES SHOULD BE CONSIDERED INDEPENDENTLY. I N THE INSTANT CASE, THERE IS A DIFFERENCE BETWEEN THE ACT UAL BANK BALANCE AND THE BALANCE SHOWN BY THE ASSESSEE IN WH ICH EVENT ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTIO N 68 OF THE ACT VIS-A-VIS THE DIFFERENTIAL AMOUNT IS JUSTIFIED AND I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS AC COUNT. HOWEVER, AS REGARDS THE COMMISSION INCOME ON DIFFER ENTIAL TURNOVER, I AM OF THE OPINION THAT THE ESTIMATION O F COMMISSION AT 20% OF THE TURNOVER IS ON THE HIGH SIDE CONSIDER ING THE FACT THAT THE ASSESSEE IS IN THE BUSINESS OF PURCHASE AN D SALE OF CARS AS COMMISSION AGENT/AS A FACILITATOR. I DEEM I T FAIR AND REASONABLE TO ESTIMATE THE INCOME AT 15% OF THE DIS PUTED TURNOVER WHICH WOULD MEET THE ENDS OF JUSTICE. I OR DER ACCORDINGLY. 6.1 AS THE ISSUES IN THE AY CONSIDERATION ARE IDENT ICAL, FOLLOWING THE SAID DECISION, WE MODIFY THE ORDER OF THE CIT(A ) AS FAR AS ESTIMATION OF INCOME IS CONCERNED BY RESTRICTING TH E ESTIMATION AT 15% AS AGAINST 20% OF THE TURNOVER, MADE BY THE CIT(A). THEREFORE, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED AND THE GROUNDS RAISED BY THE ASSESSEE WITH REGARD TO ESTIMATION OF INCOME ARE PARTLY ALLOWED. 6.2 AS FAR AS THE ADDITION OF RS. 13,95,042/- BEING DIFFERENCE IN THE BOOKS OF ACCOUNT AND ACTUAL BALANCE IS CONCERNED, T HE SUBMISSION OF THE AR OF THE ASSESSEE IS THAT THE BENEFIT OF TELES COPING THE COMMISSION INCOME AGAINST EXCESS BANK BALANCE AT TH E YEAR END MAY BE GIVEN. WE NOTICED FROM THE RECORD THAT AO HAS MA DE THE ADDITION BASED ON THE DEPOSITS IN THE BANK WHILE THE SAME WA S TREATED AS TURNOVER BY THE LD. CIT(A). ACCORDINGLY, IT WAS EST IMATED AT 20%. FURTHER, LD. CIT(A) HAS MADE ANOTHER ADDITION OF RS . 13,95,042/- FOR THE DIFFERENCE IN THE ACTUAL BALANCE IN THE BANK AC COUNT AND BALANCE SHOWN IN THE BOOKS OF ACCOUNT. WE FIND IT STRANGE, BECAUSE, ALL THE DEPOSITS IN THE BANK ARE TREATED AS BUSINESS RECEIP T AND CONSIDERED FOR ESTIMATION. THE WHOLE TRANSACTIONS IN THE BANK ACCOUNT ARE ALREADY CONSIDERED FOR MAKING ADDITION/ESTIMATION. THERE CANNOT BE 6 ITA NOS. 198 & 95 /HYD/2016 D. SAMPATH KUMAR, HYD. ANY FURTHER ADDITION WITH REGARD TO DIFFERENCE IN B ANK BALANCE. THEREFORE, ADDITION MADE BY LD. CIT(A) ON THE ACCOU NT OF DIFFERENCE IN ACTUAL BANK BALANCE AND BALANCE DECLARED IN THE RET URN OF INCOME IS DELETED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2018. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 28 TH FEBRUARY, 2018 KV COPY TO:- 1) SHRI D. SAMPATH KUMAR, C/O B. SHANTHI KUMAR, AD VOCATE, 111, TARAMANDAL COMPLEX, 5-9-13, SAIFABAD, HYDERABA D. 2) ITO, WARD 9(1), 2-D, INCOME TAX TOWERS, AC GUA RDS, HYD. 3) CIT(A) 7, HYDERABAD. 4)PR. CIT 7, HYD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE