Income Tax Appellate Tribunal - Hyderabad
Mediga Ashok Kumar, , Secunderabad vs Assessee on 29 December, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "B" : HYDERABAD
BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
AND
SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA.No.1674/Hyd/2013
Assessment Year 2005-2006
Mediga Ashok Kumar, The Income Tax Officer,
Suryapet, vs. Ward-1,
PAN AAIHM7634L Suryapet.
(Appellant) (Respondent)
For Assessee : Mr. M.V. Anil Kumar
For Revenue : Mr. Rajat Mitra
Date of Hearing : 10.12.2014
Date of Pronouncement : 29.12.2014
ORDER
PER B. RAMAKOTAIAH, A.M.
This is an assessee's appeal against the order of Ld. CIT(A)-XVIII, Mumbai having concurrent jurisdiction of Ld. CIT(A)-VI, Hyderabad dated 13.09.2013 for the A.Y. 2005-06. The issue in this appeal is with reference to addition of an amount of Rs.10,45,120.
2. Consequent to the receipt of annual information report, A.O. has come to notice that assessee has made deposits of Rs.10,45,120 in the bank account maintained with M/s. Sudha Coop. Urban Bank Ltd. Assessee filed return of income admitting income of Rs.1,00,300 estimating income at 5% of turnover of Rs.20,06,000 in the cloth business in the status of HUF. A.O. asked the assessee to submit the source of deposits which the assessee has not responded within the time given by Assessing Officer. A.O. by recording that the case is 2 getting time barred by limitation by 31.12.2007, passed the order on 24.12.2007 making addition of Rs.10,45,120 as income under section 68 of the I.T. Act.
3. Before the Ld. CIT(A), assessee contended that assessee is a small businessman having turnover of less than Rs. 40 lakhs and so has computed the income as per the provisions of section 44AF estimating income at 5% on the turnover. Since, he has not maintained the books of accounts, question of addition under section 68 cannot be made as was done by A.O. by relying on the decision of the Bombay High Court in the case of CIT vs. Bhaichand N. Gandhi (1982) 11 Taxman 59 and Coordinate Bench decision in the case of ITO vs. Kamal Kumar Mishra (2013) 33 taxmann.com 610 (Lucknow-Trib.). Ld. CIT(A), however, noticed that assessee was given opportunities to explain the source of the deposits and since the assessee failed to furnish the evidence to prove the source of cash deposit, he analysed the issue under legal provisions. While accepting that provisions of section 68 are not applicable as assessee has not maintained books of accounts, Ld. CIT(A) was of the opinion that provisions of section 69 are applicable and relying on the decision of Coordinate Bench of Bangalore Tribunal in the case of P.V. Rajendar vs. ITO 57 TTJ 159, he changed the section under which addition was made and confirmed the amount stating that assessee has failed to submit any evidence to prove the source of cash deposits in the bank account. Assessee is aggrieved.
4. After considering the rival contentions and perusing the paper book placed on record, we are of the opinion that there is no need to make any addition in 3 assessee's case. As seen from the submissions on the record, assessee is running a retail cloth business in the name and style of A-Star Silks at Suryapet and the total turnover was at Rs.20,06,000. The bank account maintained by assessee is for the purpose of business but in the joint name of assessee and assessee's wife. It was the explanation of assessee that the cash deposits made are business receipts and there are regular withdrawals for the purpose of business during the year. Therefore, separate addition of the deposits cannot be made.
5. As can be seen from the order of Assessing Officer, A.O. has issued only one notice under section 143(2) and 142(1) posting the case on 24.12.2007. A.O. records the following in the order :
"In response to notice issued under section 143(2) and 143(1), assessee's Authorised Representative Mr. S. Ramakrishna, Income Tax Practitioner appeared on 24.12.2007 and thereafter, seeking number of adjournments repeatedly without disclosing the requisite information called for vide notice under section 142(1).
As seen from the date of order, the order was completed on 24.12.2007 itself. We are unable to understand how the income tax practitioner who appeared on 24.12.2007 could seek repeated adjournments when the assessment order itself was completed on the same day. Therefore, the observation of the Ld. CIT(A) that A.O. gave number of opportunities to assessee cannot be accepted.
6. Be that as it may, assessee has not maintained books of accounts. Therefore, assessee's explanation that deposits in the bank account are out of proceeds of business cannot be brushed aside. Since the deposits in the bank 4 account are less than the turnover shown by assessee, a presumption can be drawn accepting assessee's explanation that the deposits are nothing but business receipts. Since the provisions of section 44AF are invoked in the case, we are of the opinion that separate addition of deposits as unexplained credits cannot be approved. In view of this, assessee's grounds are allowed. A.O. is directed to accept the income returned as such. Ground of the assessee is allowed.
7. In the result, appeal of assessee is allowed.
Order pronounced in the open Court on 29.12.2014.
Sd/- Sd/- (SAKTIJIT DEY) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated 29th December, 2014 VBP/- Copy to 1. Mr. Mediga Ashok Kumar, Suryapet,
C/o. M. Anandam & Co., Chartered Accountants, 7-A, Surya Towers, S.P. Road, Secunderabad - 3.
2. Income Tax Officer, Ward-1, Suryapet
3. CIT(A)-18, Mumbai
4. CIT(A)-VI, Hyderabad
5. CIT-5/6, Hyderabad
6. D.R. ITAT "B" Bench, Hyderabad.