RAHIMAN BABA SHAIK,KURNOOL V. ITO., WARD-1, KURNOOL

ITA 179/HYD/2025

AI Insights

The case involves Rahiman Baba Shaik, an individual from Kurnool, who appealed against the order of the CIT(A)-National Faceless Appeal Centre concerning the assessment year 2018-2019. The Income Tax Department had reopened his case based on information from the INSIGHT portal, indicating unassessed income. The Assessing Officer, after not receiving satisfactory documentary evidence from the assessee, assessed his income significantly higher than declared. The CIT(A) upheld this assessment, leading to the appeal before the Tribunal. The Tribunal found that while the GST turnover was substantiated, the VAT turnover and other claims lacked sufficient evidence and thus required further examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23072 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SM-B
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHNU PRIYA
• Assessee Lawyers: MV PRASAD
• Keywords: Set aside; Corroborative evidences; Competent authority; Presumptive income

Judgement Text

" 1 ITA.No.179/Hyd./2025 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “SM-B” BENCH : HYDERABAD BEFORE SHRI MANJUNATHA G, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA.No.179/Hyd/2025 Assessment Year 2018-2019 Rahiman Baba Shaik, KURNOOL PAN HARPS5433K vs. The Income Tax Officer, Ward-1, Kurnool. (Appellant) (Respondent) For Assessee : CA M V Prasad For Revenue : MS. Vishnu Priya, Sr. AR Date of Hearing : 03.03.2025 Date of Pronouncement : 03.03.2025 ORDER PER MANJUNATHA G, A.M. : This appeal has been filed by the assessee against the order dated 09.12.2024 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC”], relating to assessment year 2018-2019. 2. Facts of the case, in brief, are that the assessee is an individual and has not filed his return of income for the impugned assessment year 2018-2019. The Department has 2 ITA.No.179/Hyd./2025 received information from the INSIGHT portal that income chargeable to tax in the case of the assessee has escaped assessment i.e., interest other than interest on securities of Rs.96,385/- cash deposits in current account of Rs.1,57,52,000/- and cash withdrawals of RS.2,12,000/-. Therefore, the Assessing Officer reopened the case of the assessee and called for necessary information by issuing notice dated 12.04.2022 u/sec.148 of the Act, after taking necessary approval from the Competent Authority. In response to the said notice, the assessee filed his return of income on 11.05.2022 declaring presumptive income of Rs.6,86,691/- u/sec.44AD of the Act, gross turnover of Rs.85,83,629/- and claimed deduction u/sec.80C of the Act at Rs.1,50,000/- in his return of income. The Assessing Officer issued statutory notices u/sec.142(1) of the Act calling for specific information i.e., bank statements, deduction claimed under Chapter-VIA, audit report, source of cash deposit and interest received during the year. Since the assessee has not furnished any documentary evidence in support of his claim, the Assessing Officer determined the 3 ITA.No.179/Hyd./2025 total income of the assessee at Rs.45,21,062/- vide order dated 26.02.2024 passed u/sec.147 r.w.s.144B of the Act. 3. On being aggrieved, the assessee carried the matter in appeal before the learned CIT(A). and has submitted reconcile sheet pertains to total bank credits for the F.Y. 2017-2018, total turnover [without GST] from July, 2017 to March, 2018, total turnover [before GST Registration] from April, 2017 to June, 2017. However, the learned CIT(A) has not satisfied with the explanation offered by the assessee and confirmed the order of the Assessing Officer. 4. Aggrieved by the Order of the learned CIT(A), the assessee carried the matter in appeal before the Tribunal and has raised the following grounds : 1. The learned CIT (Appeals) is erred in facts and law while passing the order. 2. The Learned CIT(Appeals) is not justified in confirming the assessment made by the Assessing Officer made u/s.147 r.w.s.144B of the I.T. Act. 4 ITA.No.179/Hyd./2025 3. The Learned CIT(Appeals) is not justified in confirming the addition made of Rs.4,86,293/- by estimating the income @8% on the turnover of Rs.60,78,672/- without considering the admission of Income made by the appellant. 4. The Learned CIT(Appeals) is not justified in confirming the addition made of Rs.39,85,739/- by treating the difference between total credit entries in the bank account and total turnover admitted as unexplained money u/s.69A of the I.T. Act. 5. The Learned CIT(Appeals) would have appreciated that the case was selected for scrutiny on specific purpose of verification of sources for the cash deposits and cash withdrawals made but however made addition on other Issues accepting the cash deposits. Thus the Assessing Officer travelled beyond his jurisdiction while making the additions without obtaining the permission from Principal Commissioner of Income Tax. 6. The CIT(A) ought to have considered the submissions made by the appellant before dismissing the appeal on 5 ITA.No.179/Hyd./2025 the pretext that the appellant has failed to justify the transactions made during the year. The CIT(A) ought to have accorded a further opportunity for submission of justification of the transactions made by the appellant. 7. Any other legal and factual ground that may be urged at the time of hearing of the Appeal.” 5. During the course of hearing Learned Counsel for the Assessee submitted that the learned CIT(A) has not justified by estimating the income @ 8% on the turnover of Rs.60,78,672/- by confirming the addition made by the Assessing Officer at Rs.4,86,293/- without considering the admission of income made by the assessee. He drew attention of the Bench in confirming the addition made by the Assessing Officer of Rs.39,85,739/- by treating the difference between total credit entries in the bank account and total turnover admitted as unexplained money u/sec.69A of the Act. Learned Counsel for the Assessee also submitted that though the case has been selected for limited scrutiny of verification of sources for the cash deposits and cash withdrawals made, however, the learned 6 ITA.No.179/Hyd./2025 Assessing Officer has made addition on other issues without prior permission from Pr. CIT. The Learned Counsel for the Assessee submitted that sufficient opportunity has not been provided by both the lower authorities and therefore, the orders passed by the lower authorities are not in accordance with law and pleaded that the impugned additions made by Assessing Officer and sustained by the learned CIT(A) should be deleted in the interest of justice. 6. The Learned DR on the other hand vehemently relied on the orders of the authorities below. He submitted that the assessee did not furnish any reply regarding the total credit entries amounting to Rs.1,00,64,411/- and only attached GST registration certificate and Form GSTR-3B from July 2017 to March 2018 and not submitted any details with respect to calculation of turnover as mentioned in income tax return to substantiate his claim of presumptive income u/sec.44AD of the Act. He submitted that even during the course of appellate proceedings before the learned CIT(A), the assessee had only filed a reconcile sheet without any documentary evidences to substantiate 7 ITA.No.179/Hyd./2025 his claim. In absence of the documentary evidences, the learned CIT(A) has confirmed the order of the Assessing Officer. He accordingly submitted that the order of the learned CIT(A) is in accordance with law and the same should be confirmed by the Tribunal in the interest of justice. 7. We have heard both the parties and perused the material on record and the orders of the authorities below. There is no dispute with regard to the fact that there are credits including cash deposit of Rs.1,00,64,411/- in the bank account of the assessee. The assessee has explained source for cash deposited out of sales turnover declared from his business of dealing in Continental Tyres by filing relevant GST Registration Certificate and Form GSTR-3B between the period July, 2017 to March, 2018 and as per the details filed by the assessee, the total turnover from his business was at Rs.60,78,672/-. The assessee further explained that he was into the business of dealing in tyres right from April, 2017 to June, 2017 under VAT Registration and total turnover from his business for 03 months was at 8 ITA.No.179/Hyd./2025 Rs.25,04,957/-. The assessee has filed re-conciliation explaining the source for cash deposit and argued that his gross turnover from business including taxes containing at Rs.102,68,747/- which is more than the amount of credits in bank account. The Assessing Officer accepted the claim of business turnover which is supported by GST return for Rs.60,78,672/- and for this turnover estimated 8% profit. In so far as balance amount of Rs.39,85,739/- the Assessing Officer did not accept the explanation of assessee and has made addition u/sec.69A of the Act as unaccounted money and brought to tax. 8. We have given our thoughtful consideration to the arguments of the Learned Counsel for the Assessee in light of additions made by the Assessing Officer towards amount of credits in bank account as unexplained money u/sec.69A of the Act. We find that although the assessee claimed that he was into the business of trading in Tyres right from April, 2017 to June, 2017 and declared turnover of Rs.25,04,957/-, but, relevant evidence including VAT returns filed by the assessee with the Department has not 9 ITA.No.179/Hyd./2025 been furnished before us. Further the assessee filed reconciliation explaining source of cash deposited in the Bank and as per the assessee the net taxable turnover for the year i.e., from April, 2017 to March, 2018 was at Rs.85,83,629/- and tax component [CGST and SGST] was at Rs.16,85,118/-. If we consider the net turnover and tax component [Rs.85,83,629 + Rs.16,85,118/-], the total invoice value comes to Rs.1,02,68,747/- which is in excess of total credits appearing in bank account as computed by the Assessing Officer which was at Rs.1,00,64,411/-. There is no dispute with regard to the GST turnover which is supported by relevant GST returns filed by the assessee. In so far as VAT turnover claimed by the assessee, no evidence has been filed including relevant VAT Registration from the concerned authorities. According to the reconciliation furnished by the assessee, his gross turnover from business is in excess of credits appearing in bank account, but, the fact remains that in respect of VAT turnover and CGST/SGST, since no supporting evidence has been placed before us, we are of the considered view that these issues 10 ITA.No.179/Hyd./2025 needs to go back to the file of Assessing Officer for further verification. Thus, we set aside the order of the learned CIT(A) on this issue and restore these twin issues back to the file of Assessing Officer and also direct the Assessing Officer to re-examine the claim of the assessee in light of any supporting evidence including VAT returns for the period April to June 2017 to prove turnover amounting to Rs.25,04,957/- and balance of credit entries amounting to Rs.39,85,739/- totalling to Rs.64,90,696/- that may be filed by the assessee to prove his case. In case, assessee is able to prove turnover as claimed for the month of April, 2017 to June 2017 as well as the balance of credit entries claimed by the assessee, the Assessing Officer may verify the above claims and decide the issues in accordance with law. Accordingly, the grounds raised by the assessee are allowed for statistical purposes. 9. In the result, appeal of the assessee is allowed for statistical purposes. 11 ITA.No.179/Hyd./2025 Order pronounced in the open Court on 03.03.2025. Sd/- Sd/- [K. NARASIMHA CHARY] [MANJUNATHA G] JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated 03rd March, 2025 VBP Copy to 1. Rahiman Baba Shaik, Kurnool, C/o. CA MV Prasad, D.No.60-7-13, Ground Floor, Siddhartha Nagar, 4th Lane, Vijayawada. 2. The Income Tax Officer, Ward-1, Kurnool 3. The CIT (A), Vijayawada 4. The Pr. CIT, Vijayawada. 5. The DR ITAT “SM-B” Bench, Hyderabad 6. Guard File //By Order// //True Copy// Sr. Private Secretary : ITAT : Hyderabad Benches, Hyderabad. "