Income Tax Appellate Tribunal - Hyderabad
Dr.G.Ram Reddy,, Hyderabad vs Assessee on 1 April, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "B", HYDERABAD
BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA No. 370/Hyd/2014
Assessment Year: 2009-10
Dr. G. Ram Reddy, Hyderabad. vs. Income Tax Officer, Ward -
9(2), Hyderabad
PAN - AECPG4927J
(Appellant) (Respondent)
Assessee by : Shri K.C. Devdas
Revenue by : Shri D. Sudhakar Rao
Date of hearing 23-03-2015
Date of pronouncement 01-04-2015
O RDE R
PER SAKTIJIT DEY, J.M.:
This appeal by assessee is directed against the order dated 15/01/2014 passed by ld. CIT-VI, Hyderabad for the AY 2009-10.
2. Briefly the facts are, assessee an individual is a Doctor by profession. For the AY under consideration, assessee filed his return of income on 29/09/2009 declaring total income of Rs. 4,69,550. During the assessment proceeding, on verification of the bank statements, AO found that assessee has made cash deposits in SB A/c held with Syndicate Bank, Andhra Bank and Indian Overseas Bank. When AO called upon assessee to explain the source of cash deposits maintained in the said bank accounts, it was submitted by assessee that most of the cash deposits pertained to agricultural income of HUF and amounts received from his wife. In support of such contention, assessee submitted copies of agricultural land 2 ITA No. 370 /Hyd/2014 Dr. G. Ram Reddy holding passbooks, copy of certificate issued by Jeevaka Khandasari Sugar Mills towards sale of sugar cane and copy of partition of HUF. AO after considering the submissions of assessee and materials on record was of the view that most of the cash deposits must be towards professional receipts. He noted that total deposits in the bank accounts amounted to Rs. 55,69,724. As assessee has shown professional receipts of Rs. 18,16,064, AO treated the balance cash deposits of Rs. 37,53,660 as undisclosed professional receipts of assessee and proceeded to estimate profit on such receipts at 10% to which as mentioned by AO, assessee agreed. Accordingly, total income was determined at Rs. 8,78,116.
3. Ld. CIT in exercise of power u/s 263 called for assessment record of assessee for the year under consideration and after examining the same was of the view that assessment order passed is erroneous and prejudicial to the interests of revenue as AO without properly examining the source of such deposits has estimated the profit at 10%. Accordingly, he issued the show cause notice to assessee to explain as to why assessment order shall not be set aside. In reply to the show cause notice, it was submitted by assessee that deposits into bank accounts were out of agricultural income of HUF and wife's income. In support of such contention, assessee submitted, copies of income-tax returns filed by HUF and assessee's wife Smt. G. Sashi Rekha. Assessee also submitted copies of agricultural passbooks, partition/settlement deed, etc. to substantiate its claim that the deposits were out of agricultural income of HUF. Ld. CIT after verifying the evidences submitted by assessee observed that the returns of income filed by HUF as well as other documents were submitted by assessee for the first time during the revision proceeding. AO has never called for nor examined these evidences. He, therefore, opined that AO has not applied his mind as a result of which assessment order passed has become erroneous 3 ITA No. 370 /Hyd/2014 Dr. G. Ram Reddy and prejudicial to the interests of revenue. Having held so, ld. CIT set aside the assessment order with the following directions:
"Accordingly, the assessment order of the AO for the AY 2009- 10 is set aside with a direction to verify the deposits made in his bank account with reference to the HUF funds in support of the return of income filed and also verify whether the facts narrated by the assessee with regard to the agricultural income are correct or not, as per law, after providing reasonable opportunity to the assessee."
4. Ld. AR more or less reiterating the submissions made before the revisional authority submitted before us, in course of assessment proceeding assessee has furnished all necessary evidences in support of his claim that cash deposits made into Savings bank accounts were out of agricultural income of HUF and income of assessee's wife. In this context, he drew our attention to assessee's reply submitted before AO in response to the query made by him, a copy of which is at page 46 of paper book. Ld. AR also referred to the income-tax returns filed by HUF showing substantial agricultural income and also returns of income filed by assessee's wife Smt. G. Sashi Rekha to demonstrate that the cash deposits made into the SB accounts were out of such agricultural income of HUF and income of assessee's wife. Thus, it was submitted by assessee that when AO has enquired into the matter and after proper application of mind to the facts and materials on record has treated the cash deposits made into the bank as professional receipts without disproving assessee's claim of agricultural income, then, exercise of power u/s 263 is not valid on the allegation that AO has not applied his mind. In support of such contention, ld. AR relied upon the following decisions:
1. CIT Vs. Green World Corporation, 314 ITR 81 (SC)
2. Malabar Industries Co. Ld. Vs. CIT, 243 ITR 83 (SC)
3. CIT Vs. Hindusthan Marketing & Advertising Co. Ltd., 341 ITR 180
4.CIT Vs. Anil Kumar Sharma, 335 ITR 83 (Del.) 4 ITA No. 370 /Hyd/2014 Dr. G. Ram Reddy
5. CIT Vs. Honda Siel Power Products, 333 ITR 547 (Del.)
6. CIT Vs. Giridhar Lal, 258 ITR 331 (Raj.)
7. CIT Vs. Arvind Jewellers, 259 ITR 502 (Gau.)
8. CIT Vs. Gabriel India Ltd., 203 ITR 108 (Bom.)
9. CIT Vs. Development Credit Bank Ltd. 323 ITR 206 (Bom.)
10. Spectra Shares & Scrips (P) Ltd. Vs. CIT, 354 ITR 35 (AP).
5. Ld. DR, on the other hand, submitted before us, AO even after having knowledge that assessee had made substantial cash deposits in the Savings bank accounts has not conducted any enquiry or investigation to find out the source of such cash deposits. He submitted, without making any enquiry AO has formed an opinion that cash deposits made into the bank account were professional receipts of assessee and proceeded to estimate income @ 10%. Ld. DR submitted, when assessee has not submitted any evidence to explain the source of cash deposits, AO was not correct in concluding that cash deposits represent his professional receipts. Ld. DR submitted, only in course of revision proceeding, assessee has submitted evidences like copies of returns filed by HUF and assessee's wife, documents relating to earning of agricultural income, which were never produced nor examined by AO. Therefore, having passed assessment order without examining the source of cash deposits, the order passed is erroneous and prejudicial to the interests of revenue.
6. We have considered the submissions of the parties and perused the orders of revenue authorities as well as other materials on record. We have also applied our mind to the decisions cited before us. There is no dispute to the fact that cash deposits were found to have been made in different bank accounts standing in the name of assessee. Further, as it appears from the assessment order, in course of assessment proceeding while explaining the source of such cash deposits, assessee did explain that such cash deposits have been made out of agricultural income earned by HUF and income earned by 5 ITA No. 370 /Hyd/2014 Dr. G. Ram Reddy assessee's wife. It also appears from the assessment order, in support of such claim assessee has submitted certain documents like agricultural passbook, certificate issued by Jeevaka Khandasari Sugar Mills towards sale of sugar cane and copy of partition of HUF. Ld. AR has also asserted before us in addition to the evidences mentioned in the assessment order, assessee has also furnished copies of the returns filed by HUF as well as assessee's wife. However, as can be seen, ld. CIT has observed that returns filed by HUF and assessee's wife were furnished for the first time in course of revision proceeding. Without entering into the controversy, whether returns of HUF and assessee's wife submitted before AO or not, it is relevant to note that during the assessment proceeding AO did enquire into the source of cash deposits into SB accounts and assessee also furnished explanation with certain documentary evidences to show that the cash deposits were out of agricultural income earned by HUF and income of assessee's wife. It is also relevant to observe, it appears from the assessment order AO has more or less not accepted assessee's claim of agricultural income, and has treated the entire cash deposits to be undisclosed receipts of assessee from profession only. Therefore, when AO has treated the entire cash deposits made into the savings bank accounts as assessee's undisclosed professional receipts and rejected assessee's claim of agricultural income of HUF, then, the observation of ld. CIT that AO has not applied his mind or enquired into the matter with regard to the source of deposits, in our view, is totally irrelevant and unfounded. In the aforesaid facts and circumstances, it cannot be said that either there is no enquiry by AO or non-application of mind. In the aforesaid facts and circumstances, exercise of power u/s 263 of the Act is not valid as assessment order cannot be held to be erroneous in so far as it is prejudicial to the interests of revenue. Accordingly, we set aside the impugned order of ld. CIT and restore the order of the AO.
6 ITA No. 370 /Hyd/2014Dr. G. Ram Reddy
7. In the result, assessee's appeal is allowed.
Pronounced in the open court on 1 st April, 2015.
Sd/- Sd/-
(B. RAMAKOTAIAH) (SAKTIJIT DEY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad, Dated: 1 st April, 2015
kv
Copy to:-
1) Dr. G. Ram Reddy, 17-1-383/30, Vinay Nagar Colony, Saidabad, Hyderabad.
2) ITO, Ward - 9(2), Aayakar Bhavan, Basheerbagh, Hyderabad 3 CIT-VI, , Hyderabad
4) Addl. CIT, Range - 9, Hyderabad
5) The Departmental Representative, I.T.A.T., Hyderabad.