RAVI KUMAR POLIMETLA,KHAMMAM V. INCOME TAX OFFICER, WARD-1, KHAMMAM

ITA 1090/HYD/2024

AI Insights

Ravi Kumar Polimetla, the assessee, appealed against the orders of the Income Tax Officer, Ward-1, Khammam, and the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, concerning the assessment year 2013-14. The primary contention was the incorrect addition of cash deposits and misclassification of bank credits as turnover, leading to an inflated assessment of income. The Tribunal noted that the AO did not adequately consider the reconciliation statement provided by the assessee, which explained the nature of the bank credits and the internal transfers between the assessee's accounts. The Tribunal found that the AO and the CIT(A) had not provided sufficient opportunity for the assessee to present his case, thus violating the principles of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 29044 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2013-2014
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M. NARMADA
• Assessee Lawyers: Y V BHANU NARAYAN RAO
• Keywords: Set aside

Judgement Text

" आयकर अपीलीय अधिकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आ.अपी.सं /ITA No.1090/Hyd/2024 (निर्धारण वर्ा/Assessment Year:2013-14) Ravi Kumar Polimetla, Khammam. PAN:AJOPP3457F Vs. Income Tax Officer, Ward-1, Khammam. (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri Y V Bhanu Narayan Rao, C.A. रधजस् व द्वधरध/Revenue by: Ms. M. Narmada, CIT-DR सुिवधई की तधरीख/Date of hearing: 04/02/2025 घोर्णध की तधरीख/Pronouncement: 10/03/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. : This appeal is filed by Ravi Kumar Polimetla (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), dated 14.08.2024 for the A.Y. 2013-14. 2. The assessee has raised the following grounds : ITA No.1090/Hyd/2024 2 ITA No.1090/Hyd/2024 3 3. The brief facts of the case are that, the assessee is an individual, filed his original Return of Income (“ROI”) for A.Y. 2013-14 on 13.11.2023 declaring total income at Rs.9,51,810/-. Subsequently, the case of the assessee was reopened u/s.147 of the Act and notice u/s.148 of the Act was issued on 30.03.2021. During the assessment proceedings, the assessee failed to comply to the notices of Ld. AO. Consequently, the Ld. AO issued final Show Cause Notice (“SCN”) to the assessee on 25.03.2022 asking the assessee to file reply by 28.03.2022. In response to the final SCN, the assessee filed his reply before the Ld. AO. From the available record, the Ld. AO found that, there was a total credit of Rs.27,87,56,395/- in the bank account of the assessee including cash deposit of Rs.4,23,51,296/-. The Ld. AO was not convinced with the submission of the assessee and accordingly, added the cash deposit of Rs.4,23,51,296/- u/s.69A of the Act in the hands of the assessee. Further, on the balance credit found in bank account of Rs.23,64,05,099/- (i.e. excluding ITA No.1090/Hyd/2024 4 the cash deposit from the total credit in bank) the Ld. AO added 8% of Rs.23,64,05,099/- in the hands of the assessee. Finally, allowing the deduction under Chapter VIA of Rs.1 lakh, the Ld. AO computed the total income at Rs.6,11,63,704/- and completed the assessment u/s.147 r.w.s. 144B of the Act on 30.03.2022. 4. Aggrieved with the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). However, before the Ld. CIT(A) also the assessee could not respond to the notice issued by the Ld. CIT(A). Consequently, the Ld. CIT(A) dismissed the appeal of the assessee. 5. Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us. The Learned Authorised Representative (“Ld. AR”) submitted that, the assessee had filed ROI by showing a net profit of Rs.10,51,808/- on business turn over of Rs.1,48,53,281/-. However, the Ld. AO calculated the net profit @ 8% on a turn over of Rs.23,64,05,099/- i.e. amount of total credit in the bank account excluding amount of cash deposit. The Ld. AR invited our attention to reconciliation statement placed at page no.1 of paper book no. 3 and submitted that, the assessee had filed a reconciliation statement before the Ld. AO explaining the total credit of Rs.27,87,56,395/- in the bank account. The main components of bank credits, as explained in the said reconciliation statement was that, the credits were found in the bank statement due to internal transfer from one bank to other bank of the assessee. However, without considering the reason stated in the said reconciliation statement, the Ld. AO treated all the credits in the bank account excluding the cash deposit, as turn over of the assessee and calculated the net profit @ 8% on the said turn over. Further, the Ld. AO added the total cash deposit as income u/s.69A of the Act without considering the reconciliation statement, where the cash deposit has been ITA No.1090/Hyd/2024 5 reconciled. The Ld. AO, without providing any opportunity to the assessee, has made the said addition. The Ld. CIT(A) also did not provide adequate opportunity before dismissing the appeal of the assessee. The Ld. AR also invited our attention to bank statements, placed at page nos. 5,6, 21 and 25 of paper book no. 2, as sample to demonstrate that the amount had been transferred from one bank to another bank of the assessee. Finally, the Ld. AR submitted that, the order has been passed by the Ld. AO without properly verifying their submission and without providing any opportunity. Hence, by consolidating all their grounds, the Ld. AR requested before the bench to provide one more opportunity to the assessee to prosecute their case on merits before the Ld. AO. 6. Per contra, the Ld. DR objected for providing any further opportunity to the assessee and she submitted that, adequate opportunity has already been provided by the revenue authorities. Further, the Ld. DR invited our attention to Form No.26AS, placed at page no.4 of paper book no. 2 and submitted that the assessee has received Rs.1,60,000/- from Bisco Bioscience Private Limited on 04.04.2012, which has not been considered by the assessee in their turn over disclosed in the ROI. Finally, the Ld. DR submitted that, the assessee has not disclosed their true turnover in their ROI and prayed to uphold the order of revenue authorities. 7. We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. We have gone through the reconciliation statement placed at page no.1 of paper book no.3, which is to the following effect : ITA No.1090/Hyd/2024 6 7.1 On perusal of above, we found that, the assessee has stated that amount of Rs.22,25,87,167/- are deposited in bank on account of transfer of funds from companies and internal transfer from one bank account to other bank account of the assessee. The assessee has also explained the details of other credits also. However, we found from the order of Ld. AO that, the Ld. AO neither considered the reconciliation statement nor called any explanation from the assessee and treated the total credit in the bank account (reducing ITA No.1090/Hyd/2024 7 cash deposit) as turnover of the assessee and calculated the income of the assessee @ 8% on the said turnover. Further, the nature of transaction from the companies has also not been examined by the Ld. AO. We have also gone through the bank statements placed at page nos.21 & 5 of paper book no. 2 and found that two deposits of Rs.50 lakhs each in Axis Bank A/c. No.910030045671444 was transferred from another bank account of the assessee with Axis Bank bearing A/c. No.910010032731027 on 16.04.2012. We have also gone through the bank statements placed at page nos.6 & 25 of the paper book no. 2 and found that another two deposits of Rs.50 lakhs each in Axis Bank A/c. No.910030045671444 was transferred from another bank account of the assessee with Axis Bank bearing A/c. No.910010032731027 on 23.04.2012 and 25.04.2012 respectively. Hence, it cannot be denied that there are internal bank transfer from one bank account to another bank account of the assessee, however the source of deposit or credit in the other bank account is required to be verified. The AO failed to verify this information during the assessment process. Further, as submitted by the Ld. DR that, an amount of Rs.1,50,000/- received by the assessee from Bisco Bioscience Private Limited on 04.04.2012 has not been considered by the assessee in his disclosed turnover in ROI, the same is also required to be verified at the end of the Ld. AO. Therefore, considering the facts of the case and the principle of natural justice, we are of the opinion that a fresh adjudication is required in the case of the assessee. Therefore, we set aside the issue to the file of Ld. AO with a direction to adjudicate afresh as per law after providing an opportunity of being heard to the assessee. The assessee is also directed to co-operate with the Ld. AO by filing all the necessary evidences called by the Ld. AO without seeking any adjournment. Accordingly, the grounds of the assessee are answered. ITA No.1090/Hyd/2024 8 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 10th March, 2025. Sd/- Sd/- (VIJAY PAL RAO) (MADHUSUDAN SAWDIA) VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad. Dated: 10.03.2025. * Reddy gp Copy of the Order forwarded to : 1. Ravi Kumar Polimetla, H.No.4-198, Opp. Old Petrol Bunk, Main Road, Sathupally-507303 Telangana. 2. ITO, Ward-1, Khammam. 3. Pr. CIT, Hyderabad. 4. DR, ITAT, Hyderabad. 5. Guard File. BY ORDER, "