Income Tax Appellate Tribunal - Hyderabad
Renu Agarwal, Hyd, Hyderabad vs Ito, Ward-5(2), Hyd, Hyderabad on 10 November, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "B" (SMC), HYDERABAD
BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
I.T.A. No. 1288/HYD/2015
Assessment Year: 2009-10
Smt. Renu Agarwal, Income Tax Officer,
HYDERABAD Vs Ward-5(2),
[PAN: ADQPA5249J] HYDERABAD
(Appellant) (Respondent)
For Assessee : Shri Ajay Gandhi, AR
For Revenue : Shri H. Phani Raju, DR
Date of Hearing : 08-11-2017
Date of Pronouncement : 10-11-2017
ORDER
This is an appeal by assessee against the order of the Commissioner of Income Tax (Appeals)-4, Hyderabad, dated 08-09-2015, for the AY. 2009-10.
2. Assessee has raised the following grounds:
"1) That the assessing Officer erred in making addition of Rs 46,93,270/-
arbitrarily, ignoring the fact that all the information called for were submitted regularly along with documentary evidences.
2) Assessing Officer has initiated reassessment proceedings by asking for evidences on the basis of material existing at the time of original Assessment and very well explained with evidences.
3) That the Order passed by the assessing Officer was against the principles of natural justice, equity, & good conscience.
I.T.A. No. 1288/Hyd/2015 :- 2 -:
4) That the order passed by the Assessing Officer is in contravention to the well settled principles of Law.
5) That the Assessing Officer has ignored the facts presented before himself and available on record since original hearing, which was submitted by us at different points of time during the original hearing earlier.
6) That the Assessing Officer has passed the order with pre-conceived mind and ignoring the facts available before himself and the discussion we had with him.
7) The Assessing officer ought to have considered the fact that the original assessment was completed U/s 143(3).
8) Assessing Officer has ignored the fact that why a person will receive the amount from different locations, if that is not business. There are various businesses which doesn't require any V AT Registration or other things.
9) Even if he does not get any registration in VAT, does the deposit pattern does not show that any business activity is being under taken. If a person's bank account shows that deposits are made at local place of his residence then it may raise doubt that whether business was done or not but in instant case deposits were made at various locations of erstwhile Andhra Pradesh, giving ample proof that some business activity was done.
10) Even if the Assessing Officer was so Particular about addition then he should have considered after withdrawals made during the year. Thus addition made in the way was unwarranted.
11) Any other ground with the permission of the chair".
3. Briefly stated, assessee is engaged in the business of retail trade under trade name of Renu Agarwal Boutique and filed return of income on 24-07-2009 for the AY. 2009-10 declaring total income of Rs. 1,76,092/-. Originally the assessment was completed u/s. 143(3) of the Income Tax Act [Act] by determining the income at Rs. 6,66,415/-. This assessment order was subject matter of revision by CIT under Sec.263 which was accepted by assessee.
I.T.A. No. 1288/Hyd/2015 :- 3 -:
AO completed the assessment u/s. 143(3) r.w.s. 263 by making addition of Rs. 46,93,270/- on account of deposits made in the bank account which was not explained and thereby assessing the income at Rs. 48,83,020/-.
4. Aggrieved, assessee preferred an appeal before the Ld.CIT(A) which was dismissed. Para 4 of the CIT(A) order is as under:
"4. I have carefully considered the facts of the case, Assessment order and submissions of the appellant. The Assessing Officer after examining the case concluded that there is no necessary evidence produced to prove the business in Nuts and Bolts. It is a fact that Rs. 46,93,270/- deposited in the bank account come from various persons on various dates and from various places. The copies of VAT Returns, purchase bills, sales bills etc., were not furnished before the Assessing Officer. During the course of appeal proceedings also, the appellant claimed the same that the receipts are from Nuts and Bolts but failed to produce any evidence. On verification also it was found that Rs. 46,93,270/- deposited in various banks on various dates and at various places. The appellant has not disclosed this amount as turnover in Nuts and Bolts and failed to disclose profit also unless the Assessing Officer taxed originally. The appellant has not disclosed any income during the earlier assessment years nor for later assessment years. All these facts proves that the appellant received this amount of Rs. 46,93,270/from unknown sources which the appellant not willing to disclose. Thereby there is no reason to interfere with the Assessing Officer and the addition made by the Assessing Officer of Rs. 46,93,270/- is confirmed. Hence, all the grounds of appeal are dismissed".
5. Referring to the above, it was the submission of Ld. Counsel that the assessee has done business of nuts and bolts and was not a dealer. It was contended that the deposits were made in the bank account at various places like Guntur, Kothapeta, Chitradurga, Karimnagar, Nanded and Visakhapatnam etc., and these are withdrawn immediately for supply of goods. Referring to the bank statement, the Ld. Counsel referred to the pattern of I.T.A. No. 1288/Hyd/2015 :- 4 -:
deposits and withdrawals to submit that these are trade credits and AO has initially accepted the turnover and estimated 10% profit. It was further submitted that the order u/s. 263 by the CIT, setting aside the original assessment was not challenged. Ld. Counsel further expressed inability to furnish any evidence of business but submitted that there are withdrawals and deposits, so the peak of credits at Rs. 10,34,321/- as on 14-08-2008 may be considered for addition, as the account indicates about very less balance at the beginning and end of the year.
6. Ld.DR, however, relied on the order of the authorities.
7. I have considered the rival contentions and perused the documents placed on record. It is admitted that assessee has no evidence at present that she had done business in nuts and Bolts as claimed. But originally, AO accepted the deposits as turnover and estimated profit at 10%. That order was set aside by the Ld.CIT(A) which was not contested. In the absence of any evidence of business, the deposits cannot be considered as business turnover. At the same time, I am of the opinion that the entire deposits cannot be taken as unaccounted income as there are frequent deposits at various places and these are withdrawn by way of ATM periodically. Therefore, the withdrawals can be a source for later deposits. In the absence of any evidence of investments by assessee, the contention that peak credit can be taxed by netting the withdrawals can be accepted. As seen from the bank statement, the peak of balance as on 10-08-2008 was at Rs. 10,34,321/-. That amount was withdrawn later and end of the year balance was only Rs. 5,065/-. Thus, I am of the opinion that I.T.A. No. 1288/Hyd/2015 :- 5 -:
the addition can be restricted to Rs. 10,34,321/- accepting ground No. 10. Other grounds are rejected. AO is directed to modify the order accordingly.
8. In the result, appeal of assessee is partly allowed.
Order pronounced in the open court on 10th November, 2017 Sd/-
(B. RAMAKOTAIAH) ACCOUNTANT MEMBER Hyderabad, Dated 10th November, 2017 TNMM Copy to :
1. Smt. Renu Agarwal, C/o. Brij Gopal Gilada & Co., 5-9-191, 302, 3rd Floor, Brindavan Commercial Complex, Chirag Ali Lane, Abids, Hyderabad.
2. The Income Tax Officer, Ward-5(2), Hyderabad.
3. CIT (Appeals)-4, Hyderabad.
4. Pr.CIT-4, Hyderabad.
5. D.R. ITAT, Hyderabad.
6. Guard File.