Income Tax Appellate Tribunal - Hyderabad
Pawan Kumar Goyal, Hyderabad vs Assessee on 17 September, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH 'A', HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER and
SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA No. 900/Hyd/2013
Assessment year 2009-10
Sri Pawan Kumar Goyal vs. The Income Tax Officer
Warangal Ward-1
PAN: AFZPG2987C Warangal
Appellant Respondent
Appellant by: Sri Ravi Sheshagiri Rao
Respondent by: Sri R. Laxman
Date of hearing: 17.09.2013
Date of pronouncement: 17.09.2013
ORDER
PER CHANDRA POOJARI, AM:
This appeal by the assessee is directed against the order of the CIT(A)-VI, Hyderabad dated 29.3.2013 for assessment year 2009-10.
2. The assessee raised the following grounds of appeal:
1. The order of the learned CIT(A) is erroneous to the extent it is prejudicial to the appellant.
2. The learned CIT(A) erred holding that the deposits made into the bank account aggregating to Rs.
1,52,81,943/- represent the business turnover of the appellant and further erred in estimating the income at 20% of the said amount of Rs. 1,52,81,945/-.
3. The learned CIT(A) erred in confirming levy of interest u/s. 234A, 234B and 234C of the IT Act.
3. Brief facts of the issue are that the assessee, an individual shown to have engaged in the business of trading in seeds and during the course of the scrutiny proceedings, the AO found and observed that the assessee maintained bank account with Punjab National Bank and Oriental Bank of Commerce at Warangal, and were not disclosed 2 ITA No. 900/Hyd/2013 Sri Pawan Kumar Goyal ================== in the books of account. The total cash credits into the said bank accounts were quantified at Rs. 1,18,87,481/-, with an amount of Rs. 45,53,670/- deposited in to Punjab National Bank account and Rs. 73,33,811/- into Oriental Bank of Commerce account. The said amounts were treated as unexplained credits, while completing the assessment ex-parte, as the assessee failed to attend and explain the sources for such deposits, in reference to the statutory notices issued, and the total income was determined at Rs. 1,20,30,960/-. The appeal is mainly against such addition.
4. Before the CIT(A), though the assessee raised as many as 6 grounds of appeal, the same are mainly against completion of assessment u/s. 144 and for making addition of Rs. 1,18,87,481/-, on account of treating the entire deposits as the income of the assessee. The assessee's contention against passing the order u/s. 144 was that the AO erred in passing such order. However, while continuing the submissions, the assessee did not elaborate on the issue.
5. The CIT(A) observed that the assessee was given adequate opportunities including the show-cause notice for explaining the sources for the deposits into bank account, apart from the other relevant information associated with the scrutiny proceedings. The CIT(A) further observed that the gist of opportunities were enumerated in assessment order, and as such the order of AO in completing the assessment proceedings u/s. 144 of IT Act, in absence of response/compliance to the notices, is justified. Accordingly, the CIT(A) dismissed the ground u/s. 144 of the Act.
6. The CIT(A) also observed that while finalising the scrutiny proceedings, the AO observed that the assessee maintained two accounts with Oriental Bank of Commerce (A/c. No. 9912151003334) and Punjab National Bank (A/c. No. 0468000100504893) which were not disclosed in the books. It was further observed that an amount of Rs. 45,53,670/- and Rs. 73,33,881/- were deposited as cash into the 3 ITA No. 900/Hyd/2013 Sri Pawan Kumar Goyal ================== Oriental Bank of Commerce and Punjab National Bank, respectively. Since the bank accounts are not disclosed and in spite of repeated notices the assessee did not comply and explain the sources for such deposits, the AO treated the amounts of deposits as unexplained income of the assessee for the year under reference, to the extent of Rs. 1,18,87,481/-.
7. The assessee objected to treating the deposits of Rs. 1,18,87,841/-, as unexplained income. While confirming the amounts as deposits into the two bank accounts at Oriental Bank of Commerce (Rs. 45.53 lakhs) and Punjab National Bank (Rs. 73.33 lakhs), the assessee submitted that the said deposits are not recorded in books of account as they relate to other petty traders in the similar business, who deposited the amounts into the bank account opened by the assessee and further submitted that there were withdrawals from the deposits made, as such the gross receipts should not have been added by the AO and only peak credits could have been added, which worked out to Rs. 4,41,867/- (on 12.02.2009) in case of Oriental Bank of Commerce account and Rs. 2,40,252/-, for Punjab National Bank account (on 11.04.2008).
8. In light of the submissions of the assessee on the above lines, which constituted additional information, the same was referred to the AO by the CIT(A), for further verification of the claims and submission of report. The AO submitted the report vide letter dated 21.03.2013 to the CIT(A), where it has been observed that only submissions are the additional information and the statements of both the bank accounts were examined at the time of scrutiny assessments. However, while refusing to look into the issue of looking the receipts as trading receipts of other parties in same trade, on which he received commission, the AO had confirmed the peak credits at Rs. 4,41,867/- as on 12.02.2009 in case of Oriental Bank of Commerce account and Rs. 2,40,252/-, as on 11.04. 2008 in case of Punjab National Bank account.
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9. The CIT(A) gone through the observations of the AO in the assessment order and in Remand Report, along with the submissions of the assessee. As could be seen from the facts of the case that accounts with Oriental Bank of Commerce and Punjab National Bank at Warangal were opened and managed by the assessee and have come to the notice of the AO, which were not disclosed in books. The total aggregate deposits in cash and cheques were quantified at Rs. 1,18,87,481, with an amount of Rs. 45,53,670/-, shown in Oriental Bank of Commerce account and Rs. 73,33,811/- in Punjab National Bank account. While narrating in assessment order, it was mentioned as deposits by cash, whereas it was mentioned as deposits by cash and cheques, in the tabular format indicated in assessment order. Further, the aggregate amounts of deposits into such account has revealed the deposits at Rs. 49,77,699/- for PNB and Rs. 1,03,64,246/- in OBC account, as per the bank account statements furnished during the appellate proceedings. These variations are neither pointed out by the AO in remand report nor explained by the assessee, in his submissions, except indicating tile variations in the amounts. Thus, the amounts of deposits are on increase in OBC (Rs. 1,03,64,246/- as against Rs. 45,53,670/-), it was decreased in PNB Account (Rs. 49,77,699/- as against Rs. 73,33,811/-); as per the statements furnished as against the amounts as adopted by the AO in assessment order. Accordingly, the correct amounts of deposits into the bank account are taken at Rs. 1,52,81,945/- (Rs. 49,77,629/-· for PNB account and Rs. 1,03,01,246/- tor Oriental Bank of Commerce account which represent the unaccounted turnover/receipts reflected in the said bank accounts.
10. The CIT(A) observed that though the assessee argued that the other parties in same trade deposited their trade receipts in bank accounts, opened by assessee, it was not substantiated in any format. It is a fact that there are certain deposits and withdrawals by clearing by instrument of cheques, and will not help the assessee, with no support to such theory. Further, the theory of peak credit may not 5 ITA No. 900/Hyd/2013 Sri Pawan Kumar Goyal ================== reflect the correct picture of the profit earned outside the books, where certain transactions were also carried out by cheques, apart from cash. Hence, it was accepted by the assessee that the deposits into the two bank accounts represent the trade receipts of the assessee, on which profits may be estimated, as an alternate method of working out the profit on the basis of peak credits. However, no basis or rate of profit was indicated by appellant to work out the profits related to the unaccounted trade receipts or turnover, achieved by assessee which has been worked out at Rs. 1,52,81,945/, on the basis of statement of bank accounts furnished, as indicated.
11. The CIT(A) observed that where the books are not reliable, estimation has to be resorted, but on reasonable basis, and by taking all facts into consideration. In this case, neither the assessee has furnished the details to indicate the profits available to him, in the books of account, since commission alone was offered in P&L account, as income. Accordingly, the profit of the assessee estimated at 20% on tile gross receipts of Rs. 1,52,81,945/- as deposited into the two bank accounts which were not reflected through books and this percentage appears reasonable, since all the overheads and expenses were already meted out through bocks. Accordingly, the AO is directed to estimate the profits for the assessee at 20% on the amounts cf Rs. 1,52,81,945/-, in addition to the regular income admitted. to compute the total taxable income of the assessee, as against the addition of Rs. 1,18,87,481 made by AO in assessment order. Accordingly, the CIT(A) allowed the assessee's appeal partly. Aggrieved, the assessee is in appeal before us.
12. According to the AR the income of the assessee is to be estimated at 4% as the assessee is in the business of trading in seeds.
13. On the other hand, the learned DR submitted that the order of the CIT(A) is to be confirmed.
6 ITA No. 900/Hyd/2013Sri Pawan Kumar Goyal ==================
14. We have heard both the parties and perused the material on record. In our opinion, the assessee has not actively participated in the assessment proceedings. The CIT(A) estimated the income of the assessee at 20% of the gross receipts deposited in two bank accounts. In our opinion, it is appropriate to remit the issue back to the file of the Assessing Officer with a direction to the assessee to substantiate his claim and prove that the assessee accounted the turnover in his books of account. Accordingly, the entire issue is remitted to the file of the Assessing Officer for de novo assessment. Needless to say that the assessee shall be given adequate opportunity of hearing.
15. In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 17th September, 2013.
Sd/- Sd/-
(SAKTIJIT DEY) (CHANDRA POOJARI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated the 17th September, 2013
Copy forwarded to:
1. Sri Pawan Kumar Goyal, c/o. Sri S. Rama Rao, Advocate, Flat No. 102, Shriya's Elegance, H. No. 3-6-643, St. No. 9, Himayathnagar, Hyderabad-500 029.
2. The Income Tax Officer, Ward-1, Warangal
3. The CIT(A)-VI, Hyderabad.
4. The CIT-VI, Hyderabad.
5. The DR - "A" Bench, ITAT, Hyderabad.
Tprao