SRI LAKSHMI DURGA DISTRIBUTORS,VIJAYAWADA (URBAN) V. INCOME TAX OFFICER, WARD 3(1), , VIJAYAWADA

ITA 236/VIZ/2024

AI Insights

The case involves Sri Lakshmi Durga Distributors, a partnership firm engaged in trading Fast Moving Consumer Goods (FMCG), which did not file its income tax return for the assessment year 2017-18. The Assessing Officer discovered substantial deposits in the firm's bank accounts, including Specified Bank Notes (SBNs), and assessed the income ex-parte under Section 144 of the Income Tax Act, 1961. The firm appealed to the Commissioner of Income Tax (Appeals), which was dismissed due to non-appearance of the assessee. The Tribunal found discrepancies in the Assessing Officer's calculations and the lack of basis for the income estimation at 8%, leading to a partial allowance of the appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 469592 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Next Hearing Date: 07-11-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 25-05-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA VILLURI
• Assessee Lawyers: NO REPRESENTATION
• Section: 144; 142(1); 69A

Judgement Text

"आयकर अपीलȣयअͬधकरण, ͪवशाखापटणम SMC पीठ, ͪवशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM Įी क े नरͧसàहा चारȣ, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER आयकर अपील सं./ I.T.A. No.236/Viz/2024 (Ǔनधा[रण वष[ / Assessment Year : 2017-18) Sri Lakshmi Durga Distributors, 23-10-14, PurushoƩam Street, Lakshminagar, S.O., Vijayawada (Urban), Krishna District, Andhra Pradesh-520011. PAN: ADCFS7219Q Vs. Income Tax Officer, Ward-3(1), C.R. Building, 1st Floor Annex, MG Road, Vijayawada, Krishna District, Andhra Pradesh-520002. (अपीलाथȸ/ Appellant) (Ĥ×यथȸ/ Respondent) Ǔनधा[ǐरती ɮवारा/ Assessee by: No Representation (Sri ASRSS Siva Prasad, AR) राजè व ɮवारा/ Revenue by: Dr. Aparna Villuri, Sr. AR सुनवाई कȧ तारȣख/ Date of hearing: 07/11/2024 घोषणा कȧ तारȣख/ Pronouncement on: 12/ 11/2024 O R D E R PER K. NARASIMHA CHARY, Judicial Member : Aggrieved by the order dated 28/08/2023 passed by the learned Commissioner of Income Tax (Appeals), NaƟonal Faceless Appeal Centre, Delhi (“learned CIT(A)”), in the case of Sri Lakshmi Durga Distributors (“the 2 assessee”) for the assessment year 2017-18, the assessee preferred this appeal. 2. Briefly stated the facts of the case as culled out from the records are that the assessee, being a partnership firm, was trading in Fast Moving Consumer Goods(FMCG). The assessee did not file its return of income for the AY: 2017-18, but the learned Assessing Officer [“learned AO”] found certain deposits in the bank accounts held by the assessee. According to the learned AO, the total deposits were to the tune of Rs. 1,42,90,855/- out of which a sum of Rs. 9,47,000/- was in Specified Bank Notes [“SBNs”]. The learned Assessing Officer issued noƟce U/s. 142(1) of the Income Tax Act, 1961 [“the Act”] and stated that the assessee did not respond to any of the noƟces and therefore, the learned Assessing Officer proceeded to assess the income of the assessee ex-parte. In the order dated 28/12/2019 passed U/s. 144 of the Act, the learned Assessing Officer noted that the total turnover of the assessee as per the VAT returns was Rs. 1,38,10,152/- of which the learned Assessing Officer esƟmated the income @ 8% and thereby reached a sum of Rs. 11,04,812/- and added the same to the total income of the assessee. So also, the learned Assessing Officer added a sum of Rs. 9,47,000/- which was deposited in SBNs. 3. Aggrieved, the assessee preferred an appeal before the learned CIT(A)-NFAC. But, according to the learned CIT(A)-NFAC, there were no reasons to interfere with the order passed by the learned Assessing Officer inasmuch as the assessee failed to appear and put forth its case, and the material on record holds good to support the findings of the learned Assessing Officer only. The learned CIT(A)-NFAC accordingly confirmed the addiƟon made by the learned Assessing Officer U/s. 69A of the Act and dismissed the appeal. 3 4. Therefore, the assessee preferred this appeal staƟng that esƟmaƟon @ 8% on the turnover was huge and treaƟng the cash of Rs. 9,47,000/- as unexplained money is also unreasonable. 5. Before me, it is the submission of the Revenue that the assessee failed to appear and put forth its case before both the learned Revenue AuthoriƟes and also the assessee failed to conduct its appeal diligently. Therefore, the learned DR prayed to dismiss the appeal of the assessee. 6. I have gone through the record in the light of the submissions made on either side. In the Assessment Order, the learned Assessing Officer noted that the total deposits made in the bank accounts of the assessee were to the tune of Rs. 1,42,90,855/- and the VAT returns show that the total turnover of the assessee @ Rs. 1,38,10,152/-. While esƟmaƟng the income @ 8% on Rs. 1,38,10,152/-, the learned Assessing Officer failed to consider the cash deposits subsumed in the turnover of Rs. 1,38,43,855/- . If I go by the logic of the learned Assessing Officer and esƟmate has to be made on the total turnover, what is leŌ aŌer reducing the total deposits by the turnover is only Rs. 4,80,703/- and not Rs. 9,47,000/- because the learned Assessing Officer accepted the turnover of the assessee @ Rs. 1,38,10,152/-. I, therefore, direct the learned Assessing Officer to delete a sum of Rs. 4,66,297/- which is included in the turnover. 7. Coming to the esƟmate @ 8%, there is no material on record to support the same and the learned Assessing Officer did not refer to any figures to show that in the line of business of the assessee, the income is @ 8%. Taking judicial noƟce of the maƩer, I am of the considered view that esƟmate @ 4% will meet the ends of jusƟce. I, therefore, direct the learned Assessing Officer to esƟmate the income of the assessee @ 4% on Rs. 1,38,10,152/-. Grounds are answered accordingly. 4 8. In the result, appeal of the assessee is allowed in part in the above terms. Pronounced in the open Court on 12th November, 2024. Sd/- (K. NARASIMHA CHARY) JUDICIAL MEMBER Dated :12/11/2024 OKK - SPS आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the order forwarded to:- 1. Ǔनधा[ǐरती/ The Assessee – Sri Lakshmi Durga Distributors, 23-10- 14, PurushoƩam Street, Lakshminagar, S.O., Vijayawada (Urban), Krishna District, Andhra Pradesh. 2. राजèव/The Revenue – Income Tax Officer, Ward-3(1),C.R. Building, 1st Floor Annex, MG Road, Krishna District, Andhra Pradesh. 3. The Principal Commissioner of Income Tax, 4. आयकर आयुÈत (अपील)/ The Commissioner of Income Tax 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, ͪवशाखापटणम/ DR, ITAT, Visakhapatnam 6. गाड[ फ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam "