DCIT, Hyderabad V. Sri S.Venkat Reddy, Hyderabad

ITA 974/HYD/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6093 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 12-01-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 30-06-2010
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Keywords: Rejection of books of accounts; Agreed addition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH ES B , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 974 /H YD /201 0 ASSESSMENT YEAR: 20 0 6 - 07 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 11(1) , HY DERABAD VS SRI S. VENKAT REDDY, BALANAGAR, HYDERABAD [PAN: A LAPS4009A ] (APPELLANT) (RESPONDENT) FOR REVENUE : S HRI M.H. NAIK , DR FOR ASSESSEE : SHRI K.C. DEVDAS , AR DATE OF HEARING : 12 - 0 1 - 201 6 DATE OF PRONOUNCEMENT : 20 - 0 1 - 201 6 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS REVENUE S APPEAL AGAINST THE ORDER OF THE COM MISSIONER OF INCOME TAX ( APPEALS ) - V I , HYDERABAD , DATED 16 - 0 4 - 201 0 . ORIGINALLY, THIS APPEAL WAS DISPOSED - OFF BY AN ORDER DT. 09 - 11 - 2012 AL ONG WITH ANOTHER APPEAL OF SHRI K. PRABHAKAR REDDY IN ITA NO. 97 5 /HYD/2010. REVENUE HAS PREFERRED AM APPLICATION U/S254(2) AS GROUND NO. 6 RAISED BY THEM WAS NOT DISPOSED OFF. ACCORDINGLY, VIDE ORDER DT. 28 - 08 - 2015, THE MISCELLANEOUS APPLICATION WAS ALL OWED AND THE APPEAL WAS POSTED I.T.A. NO. 974 / HYD / 201 0 SRI S. VENKAT REDDY : - 2 - : FOR LIMITED PURPOSE OF DECIDING GROUND NO. 6 RAISED BY THE DEPARTMENT IN THE APPEAL UNDER REFERENCE. 2. REVENUE HAS RAISED GROUND NO. 6 WHICH IS AS UNDER: 6. THE HON'BLE CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICE R TO ACCEPT THE BOOK RESULTS, WHEN THE ASSESSEE HIMSELF HAS GIVEN HIS CONSENT FOR ADDITION ON ACCOUNT OF THE DIFFERENCE BETWEEN THE PROFIT DECLARED AND 6% OF GROSS HIRE INCOME IS AGREEABLE TO HIM. 3. FAC TS LEADING TO THE ISSUE IS THAT ASSESSEE IS I N THE TRANSPORT BUSINESS PROVIDING CARS AND VEHICLES ON HIRE. ASSESSING OFFICER (AO) EXAMINED THE CASH BOOK AND BANK STATEMENTS AND OTHER DETAILS AND FOUND THAT THERE ARE DISCREPANCIES IN ACCOUNTING THE CASH WITHDRAWALS FROM THE BANK. ASSESSEE EXPLAINED THAT THER E WERE MISTAKES IN ENTERING THE AMOUNTS, BUT IT DOES NOT RESULT IN ANY CASH NEGATIVITY DURING THE PERIOD FOR THE YEAR. WHILE ACCEPTING THAT THERE IS NO NEGATIVE CASH BALANCE EVEN AFTER ADJUSTMENTS, AO WAS OF THE OPINION THAT MISTAKES OF THIS NATU RE IN AUDITED BOOKS OF ACCOUNT CAST A DOUBT OF CORRECTNESS. THEREFORE, HE CONCLUDED THAT BOOKS OF ACCOUNT DOES NOT REFLECT THE CORRECT POSITION OF THE PROFIT AND HENCE, REJECTED. HE RESORTED TO ESTIMATION AT 6% OF THE TOTAL RECEIPTS ON THE TOTAL HI RE CHA RGES DECLARED AT RS. 4,23,64,806/ - . THEREAFTER, HE SUBSTITUTED INCOME OF RS. 21,45,828/ - AS AGAINST THE RETURNED BU SINESS PROFIT OF RS. 14,37,555/ - . AO REC ORDS THAT IN A REPLY, ASSESSEE HA S AGREED FOR ADDITION OF THE DIFFERENCE BETWEEN PROFIT DECLARED AN D 6% OF GROSS HIRE CHARGES . AS THERE ARE MANY OTHER ISSUES ON WHICH ASSESSEE IS AGGRIEVED, APPEA L WAS PREFERRED TO THE CIT(A) AND ONE OF THE GROUNDS RAISED IS THE ESTIMATION OF INCOME AS WELL. LD. CIT(A) NOTED THAT ASSESSEE HAS SUBMITTED TH AT IT WAS NOT AN AGREED ADDITION AND ESTIMATE OF I.T.A. NO. 974 / HYD / 201 0 SRI S. VENKAT REDDY : - 3 - : INCOME WAS UN - WARRANTED (PARA 5.0). LD. CIT(A) NOTED THAT ASSESSEE MAINTAINED BOOKS OF ACCOUNTS AS IN THE PAST AND SAME SYSTEM OF ACCOUNTING HAS BEEN FOLLOWED AND ORDERS IN EARLIER YEARS HAVE BEEN FILED TO SUPPORT THAT B OOK RESULTS HAVE BEEN ACCEPTED IN THE PAST. 4 . LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS HAS DIRECTED THE AO TO ACCEPT THE BOOK RESULTS STATING AS UNDER: 5.3 I HAVE DULY CONSIDERED THE SUBMISSIONS AND ALSO THE SCRUTINY ASSESSMENTS OF THE PAST YEA RS. THE RESULTS HAVE BEEN ACCEPTED IN THE PAST. SINCE THE ASSESSING OFFICER COULD NOT MAKE OUT A PROPER CASE FOR REJECTION OF BOOKS OF ACCOUNTS AND ESTIMATION OF PROFIT AT 6% OF THE HIRE CHARGES, THE ADDITION MADE ON THIS COUNT IS NOT LEGALLY TENABLE AND THERE IS NO REASON TO DEVIATE FROM THE BOOK RESULTS DECLARED BY THE APPELLANT. THEREFORE, I DIRECT THE ASSESSING OFFICER TO ACCEPT THE BOOK RESULTS. ACCORDINGLY, THE ADDITION IS DELETED. 5 . LD. DR SUBMITTED THAT ASSESSEE VIDE HIS LETTER DT. 20 - 12 - 2008 (PLACED AT PG.12 OF THE PAPER BOOK) AGREED FOR THE ADDITION AND SHOULD NOT HAVE WITHDRAWN THE SAME BEFORE THE CIT(A). LD. COUNSEL HOWEVER, SUBMITTED THAT THERE IS NO ACCEPTANCE BY ASSESSEE, BECAUSE IT WAS A N INDUCED ONE AND RELIED ON THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. EVEREST KENTO CYLINDERS LTD [ 378 ITR 57 ] (BOM) TO SUBMIT THAT ASSESSEE COULD NOT BE BOUND FOR DISALLOWANCE AGREED BEFORE AO. 6 . WE HAVE CONSIDERED THE SUBMISSIONS AND PERUSED THE ORDE R S OF THE AO AND CIT(A ). AS CAN BE SEEN FROM THE ORDER OF THE AO, THE ONLY REASON FOR REJECTING THE BOOKS OF ACCOUNTS IS THE SO CALLED DISCREPANCIES IN ACCOUNTING THE CASH WITHDRAWALS FROM THE BANK. AO LISTS ONLY THREE INSTANCES ON WHICH THERE WE RE DISCREPANCIES. WHEN ASKED, ASSESSEE EXPLAINED THAT THESE WERE NOTED WRONGLY, I.T.A. NO. 974 / HYD / 201 0 SRI S. VENKAT REDDY : - 4 - : BUT THERE IS NO NEGATIVE CASH BALANCE ARISING OUT OF THESE ENTRIES BEING POSTED EARLIER THAN THE ACTUAL WITHDRAWALS. AS SEEN FROM THE ORDER ALSO, NO ADDITION OF DE FICIENT CASH WAS MADE. THEREFORE, THESE MISTAKES COULD BE GENUINE MISTAKES IN POSTING THE ENTRIES. THAT DOES NOT GIVE RAISE TO A SITUATION WHERE BOOKS OF ACCOUNTS CAN BE REJECTED. NOT ONLY THAT, REVENUE DID NOT COUNTER THE FACT THAT BOOK RESULTS IN EARLIER YEARS HAVE BEEN ACCEPTED BY THE AOS IN SCRUTINY AS NOTED BY THE LD. CIT(A) . IN VIEW OF THIS, EVEN THOUGH ASSESSEE SEEMS TO HAVE ACCEPTED THE DIFFERENCE OF AMOUNT, WE ARE OF THE OPINION THAT IT IS NOT BINDING WHEN ASSESSEE CHALLENGE S THE SAME BEFORE THE CIT(A). SINCE CIT(A) HAS EXAMINED T HE FACTS AND DIRECTED THE AO TO ACCEPT THE BOOK RESULTS, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDERS OF THE CIT(A). GROUND NO. 6 IS ACCORDINGLY REJECTED. 7. IN THE RESULT , APPEAL OF REVENUE IS CONSIDERED PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JANUARY , 201 6 SD/ - SD/ - (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 20 TH JANUARY , 201 6 TNMM I.T.A. NO. 974 / HYD / 201 0 SRI S. VENKAT REDDY : - 5 - : COPY TO : 1. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 11(1) , D BLOCK, 5 TH FLOOR, I.T. TOWERS, HYDERABAD. 2 . SRI S. VENKAT REDDY, A9 & A10, AIE, MAIN ROAD, BALANAGAR, HYDERABAD. 3 . CIT (APPEALS) - V I , HYDERABAD. 4. CIT - V , HYDERABAD. 5 . D.R. ITAT, HYDERABAD . 6 . GUARD FILE.