Srinivas Vallakati , Hyderabad v. Income Tax Officer, Ward-1, Siddipet

ITA 227/Hyd/2020 | 2011-2012
Pronouncement Date: 16-03-2021 | Result: Partly Allowed

Appeal Details

RSA Number 22722514 RSA 2020
Assessee PAN ADJPV3938N
Bench Hyderabad
Appeal Number ITA 227/Hyd/2020
Duration Of Justice 1 year(s) 22 day(s)
Appellant Srinivas Vallakati , Hyderabad
Respondent Income Tax Officer, Ward-1, Siddipet
Appeal Type Income Tax Appeal
Pronouncement Date 16-03-2021
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 16-03-2021
Date Of Final Hearing 04-02-2021
Next Hearing Date 04-02-2021
Last Hearing Date 02-02-2021
First Hearing Date 28-01-2021
Assessment Year 2011-2012
Appeal Filed On 24-02-2020
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES SMC : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI SATBEER SINGH GODARA JUDICIAL MEMBER IT A NO . 227 /H/20 20 ASSESSMENT YEAR: 20 1 1 - 1 2 SRINIVAS VALLAKATI HYDERABAD. PAN A DJPV 3938 N VS. INCOME - TAX OFFICER WARD 1 SIDDIPET (APPELLANT S ) (RESPONDENT) ASSESSEE BY : SHRI K.A. SAI PRASAD REVENUE BY : SHRI BALA KRISHNA DATE OF HEARING: 04 /0 2 /2021 DATE OF PRONOUNCEMENT: 16 / 0 3 /2021 O R D E R PER S.S. GODARA J.M . : TH IS ASSESSEES APPEAL FOR AY 20 1 1 - 1 2 IS DIRECTED AGAINST THE C I T(A) - 7 HYDERABAD S ORDER DATED 11 / 12 /201 9 PASSED IN CASE NO. 016 8 / CIT(A) - 7 /HYD/201 8 - 1 9 INVOLVING PROCEEDINGS U/S 143(3) RWS 147 OF THE INCOME TAX ACT 1961 ; IN SHORT THE ACT . HEARD BOTH THE PARTIES C ASE FILE PERUSED. I TA NO. 227 / HYD/ 2020 SRINIVAS V. HYD. : - 2 - : 2. IT TRANSPIRES DURING THE COURSE OF HEARING THAT BOTH THE LOWER AUTHOR ITIES HA VE MADE SECTION 69 ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDITURE AMOUNTING TO RS. 38 37 680/ - IN ASSESSEES HANDS THEREBY QUOTING HIS FAILURE TO PROVE THE SOURCE THEREOF IN THE COURSE OF ASSESSMENT AS WELL AS IN THE LOWER APPELLATE PROCEEDINGS. THE CIT(A) HA S DISCUSSED THE ENTIRE ISSUE AS UNDER: 5.1 THE ONLY ISSUE INVOLVED IN THIS APPEAL IS ADDITION MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 69C TO THE TUNE OF RS.38 37 680/ - . DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED AS FOLLOWS: ON VERIFICATION OF THE INFORMATION AVAIL ABLE ON RECORD THE INFORMATION FILED BY THE ASSESSEE AND THAT GATHERED IT IS NOTICED THAT DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE MADE TH E FOLL OWING PAYMENTS IN RESPECT OF THE CREDIT CARDS HELD BY HIM. SL. NO. PARTICULARS AGGREGATE CREDIT CARD PAYMENTS MADE DURING THE FY 2010 - 11 (RS.) 1. CITI BANK CREDIT 14 89 000/ - 2. SBI CREDIT CARD 2 05 730/ - 3. HDFC BANK CREDIT 3 00 400/ - 4 ICICI BANK CREDIT 8 61 750 / - 5 AXIS BANK CREDIT 9 80 800/ - TOTAL 38 37 680/ - I TA NO. 227 / HYD/ 2020 SRINIVAS V. HYD. : - 3 - : 3.1 AS DISCUSSED ABOVE THE ASSESSEE HAS SHOWN TOTAL INCOME OF RS. 1.67.240/ - ONLY FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WHEREAS THE CREDIT CARDS PAYMENTS DURING THE YEAR AGGREGATED TO RS.38 37 680/ - . THE EXPENDITURE INCURRED BY THE ASSESSEE DURING THE YEAR IS NOT COMMENSURATE WITH THE INCOME REPORTED. THE ASSESSEE HAS BEEN REQUIRED TO EXPLAIN SOURCES FOR THE EXPENDITURE INCURRED TOWARDS CREDIT CARDS PAYMENTS. IN ORDER TO VERIFY THE ACCUMULATED SOURCES OF INCOME OF THE ASSESSEE THE RETURNS OF INCOME FILED FOR THE EARLIER ASSESSMENT YEARS HAVE ALSO BEEN VERIFIED WHICH SHOWED THE FOLLOWING INCOMES REPORTED FOR THE ASSESSMENT YEARS 2008 - 09 TO 2010 - 11 ASSESSMENT YEAR INCOME RETURNED (RS.) 2008 - 09 1 27 480/ - 2009 - 10 1 63 020/ - 2010 - 11 1 72 970/ - TOTAL 4 63 470/ - 3.2 FROM THE ABOVE IT IS CLEAR THAT THE INCOMES REPORTED BY THE ASSESSEE ARE BARELY SUFFICIENT TO MEET HIS REQUIREMENTS AND IT CANNOT BE CLAIMED THAT THE CREDIT CARDS PAYMENTS HAVE BEEN MADE OUT OF THE AC CUMULATED INCOMES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEN THE ASSESSEE HAS BEEN REQUIRED TO EXPLAIN SOURCES FOR THE CREDIT CARDS PAYMENTS MADE THE ASSESSEE RATHER THAN EXPLAINING THE SOURCES HARPED UPON THE SHORT CLAIM OF MISUSE OF CREDIT CARD S BY SHRI R.RAVINDER. THE FACT OF MISUSE OF CREDIT CARDS ALSO COULD NOT BE ESTABLISHED WITH ANY DOCUMENTARY EVIDENCE IN THE FORM OF COMP L AINT LO DGED WITH THE PO L ICE AUTHORITIES AND THE BANKERS. COPY OF THE INSOLVENCY PETITION FILED BY SHRI R.RAVINDER CAN IN NO WA Y COME TO THE RESCUE OF THE ASSESSEE AND THE SOURCES FOR THE CREDIT CARD PAYMENTS REMAINED UNEXPLAINED. THE ASSESSEE'S CLAIM THAT THE CREDIT CARD PAYMENTS HAV E ALSO BEEN MADE BY SHRI I TA NO. 227 / HYD/ 2020 SRINIVAS V. HYD. : - 4 - : R.RAVINDER IS WITHOUT ANY BASIS AND IS DEVOID OF MERIT. AS THE ASSESSEE COULD NOT EXPLAIN SOURCES FOR THE CREDIT CARDS PAYMENTS HE HAS COME UP WITH THE NOVEL IDEA OF MISUSE OF CREDIT CARDS BY SHRI R. RAVINDER AND IT IS ONLY AN AFT ER - THOUGH TO DO AWAY WITH TAXATION. IF SUCH A CLAIM OF THE ASSESSEE IS ENTERTAINED THE IMPACT OF THE PROVISIONS WILL COME TO A NULLITY. 3.3 IN THE LIGHT OF THE FACTS DISCUSSED ABOVE IT CAN BE CONCLUSIVE LY SAID THAT THE AGGREGATE CREDIT CARDS PAYMENTS M ADE BY THE ASSESSEE DURING THE YEAR AT RS. 3 8 37 680/ - CONSTITUTED UNEXPLAINED EXPENDITURE AND THE SAME IS DEEMED AS ASSESSEE'S INCOME WITHIN THE MEANING OF THE PROVISIONS OF SECTION 69C OF THE INCOME TAX ACT 1961. ACCORDINGLY AN AMOUNT OF RS.38 37 680/ - IS ADDED TO THE TOTAL INCOME OF THE A SSESSEE TOWARDS UNEXPLAINED EXPENDITURE U/S. 69C OF THE INCOME TAX ACT 1961 5.2 DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT HAD FILED THE FOLLOWING WRITTEN SUBMISSIONS: 'THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT AN INDIVIDUAL ENGAGED IN THE BUSINESS OT.CEBLE TV NETWORK - END HEVINQ SALARY INCOME TOO FILED ON 30.03.2013 HIS RETURN OF INCOME FOR ASST. YEAR 2011 - 12 ADMITTING A TOTAL INCOME OF RS. 1 67 240/ - . IN THE A SSESSMENT PROCEEDINGS U/S 143(3) R.W.S.147 THE APPELLANT WAS ASKED TO EXPLAIN THE SOURCES FOR THE PAYMENTS TO THE CREDIT CARDS TO THE EXTENT OF RS.38 37 680/ - . THE APPELLANT CLAIMED THAT ONE OF HIS FRIENDS SRI. R.RAVINDER USED THESE CREDIT CARDS FOR HIS BUSINESS AND THAT THE PAYMENTS THEREIN WERE ALSO MADE BY SRI RAVINDER ONLY. IT WAS ALSO CLAIMED THAT SAID RAVINDER ON ACCOUNT OF LOSSES IN HIS BUSINESS FILED INSOLVENCY PETITION WHICH CLEARLY SHOWED THE MONEY OWED TO THE APPELLANT ON ACCOUNT OF MISUSE. I TA NO. 227 / HYD/ 2020 SRINIVAS V. HYD. : - 5 - : NOT ACCEPTING THE CLAIMS OF THE APPELLANT THE ASSESSING OFFICER TREATED THE ENTIRE PAYMENT AS UNEXPLAINED AND MADE THE ADDITION OF RS.38 37 680/ - U/S 69C OF THE INCOME TAX ACT. IN THIS APPEAL IT IS HUMBLY SUBMITTED THAT THE APPELLANT HAS OBTAINED CREDI T CARDS FROM VARIOUS WORKS TO. ENHANCE THE CIBIL/CRISIL RATING FOR OBTAINING LOANS FOR: CONSTRUCTION OF HOUSE. AS CLAIMED BEFORE THE ASSESSING OFFICER ONE OF HIS FRIENDS USED THE SAID CARDS TO PURCHASE - GOLD ARTICLES FROM VARIOUS JEWELLERY SHOPS AND MADE P AYMENTS THEREIN AFTER SELLING THE SAID ARTICLES. IN A NUT SHELL THE CREDIT CARDS WERE USED FOR PURCHASE OF GOLD ITEMS AND THE REPAYMENTS ARE PROCEEDS ON SALE OF SAID ITEMS. THE SAID SINCE HE INCURRED LOSSES VANISHED. THE EVIDENCES FILED BEFORE THE ASSESSIN G OFFICER IN THE FORM OF HIS INSOLVENCY PETITION DULY REFLECTS THE AMOUNTS PAYABLE TO THE APPELLANT. COPY OF SAID INSOLVENCY PAPER ENCLOSED. COPY OF THE CREDIT CARD STATEMENTS ARE PLACED AT PAGES 21TO49 OF PAPER BOOK. AS CAN BE SEEN FROM THE SAID CREDIT CARD STATEMENTS THE CARD WERE S WIPED WITH JEWELLERY SHOPS ARE A) RISHAB JEWELLERS (B) DINESH JEWELLERS (C) TOTARAMMURALI& SONS. THERE ARE NOTHING BUT THE JEWELLERY PURCHASED FROM THEM. THE SAID JEWEWLLERY WAS SOLD AND THE COLLECTIONS WERE DEPOSITED TO PAY CARD OUTSTANDING BALANCES. THIS CLEARLY ESTABLISHES THE FACT THAT THE TRANSACTIONS IN THE CREDIT CARD INDICATE JEWELLERY RETAIL BUSINESS. IT IS THE CLAIM OF THE APPELLANT THAT THE SAID TRANSACTIONS RELATE ABSOLUTELY TO HIS FRIED R. RAVINDER. SINCE THE APPELLANT IS NOT IN A POSITION TO PRODUCE RAVINDER TO SUPPORT THIS CLAIM IT IS NOW PRAYED THAT THE HON'BLE COMMISSIONER OF INCOME TAX BE PLEASED TO TREAT THE SAID TRANSACTIONS AS APPELLANTS BUSINESS I TA NO. 227 / HYD/ 2020 SRINIVAS V. HYD. : - 6 - : TRANSACTIONS. THE CREDITS TO THE CREDIT CARDS AMOUNTING IN ALL THE RS.38 37 680/ - MAY BE TREATED AS APPELLANTS RETAIL JEWELLERY BUSINESS TURN OVER. ' 6 . I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE ASSESSING OFFICER ADDED AN AMOUNT OF RS. 38 37 680/ - AS UNEXPLAINED EXPENDITURE. ON PERUSAL OF THE BANK ACCOUNT I FIND THAT THE CASH DEPOSITS WERE UTILIZED FOR PURCHASE OF JEWELLERY AND EXPENSES FOR MAKING PAYMENTS TO MADHU PHOTO STUDIO. THE CONTENTION OF THE APPELLANT THAT THE SOURCES OF THE CASH DEPOSITS WAS OUT OF THE SALE OF JEWELLERY IS NOT SUPPORTED BY ANY EVIDENCE. THE CONTENTION OF THE APPELLANT THAT TRANSACTIONS PERTA I N TO JEWELLERY BUSINESS IS NOT ACCEPTABLE AS THE CLAIM WAS MADE WITH OUT ANY EVIDENCE. ACTUALLY THE EXPENSES FOR PURCHASE OF JEWELLERY AND FOR MAKING OTHER EXPENSES WAS FOR THE PERSONAL PURPOSE ONLY. THEREFORE THE PLEA OF THE APPELLANT TO ESTIMATE THE NET PROFIT AT 3 TO 4% IS REJECTED. HENCE I CONFIRM THE ADDITION MADE BY THE ASSESSING OFFICER U/S. 69C OF THE IT ACT. 3. LEARNED COUNSELS ONLY ARGUMENT DURING THE COURSE OF HEARING IS THAT THE RELEVANT EVIDENCE ON RECORD SUFFICIENTLY INDICATES THE ASSESSEES CREDIT CARD(S) TO HAVE BEEN UTILIZED IN JEWELRY BUSINESS AND THEREFORE ONLY THE INCOME COMPONENT THERE IN DESERVES TO BE ADDED IN TAXPAYERS HANDS. I FIND NO MERIT IN THE FOREGOING PLEA IN ENTIRETY. I DEEM IT PROPER TO OBSERVE HERE T HAT THERE IS NOT EVEN A SINGLE DOCUMENTARY EVIDENCE OF ASSESSEE CARRYING OUT I TA NO. 227 / HYD/ 2020 SRINIVAS V. HYD. : - 7 - : JEWELRY BUSINESS. MR. SAI PRASAD IS EQUALLY FAIR IN MAKING IT CLEAR THAT THIS ASSESSEE IS IN CABLE NETWORK BUSINESS IN ALL THESE YEARS. I THUS FIND NO REASON TO INTERFERE WITH T HE LOWER AUTHORITIES DECISION IN MAKING THE IMPUGNED ADDITION AND THE SAME IS CONFIRMED IN PRINCIPLE. 4. NEXT COMES YET ANOTHER EQUALLY IMPORTANT ASPECT OF QUANTIFICATION OF IMPUGNED ADDITION. LEARNED DR COULD NOT REBUT THE FACT THAT NEITHER THE ASSESSING OFFICER NOR THE CIT(A) HAS CONSIDERED ASSESSEES CASH IN HAND AND DAY TODAY RECEIPTS IN THE ABOVE BUSINESS. I THEREFORE DEEM IT PROPER IN THESE PECULIAR FACT AND CIRCUMSTANCES THAT A LUMPSUM RELIEF OF RS. 5 LAKHS OUT OF RS. 38 37 680/ - WOULD MEET THE ENDS OF JUSTICE. ORDERED ACCORDINGLY. THE IMPUGNED ADDITION IS NOW RESTRICTED TO RS. 33 37 680/ - ONLY. NECESSARY COMPUTATION TO FOLLOW AS PER LAW. I MADE IT CLEAR THAT THE INSTANT ESTIMATION SHALL NOT BE TREATED AS PRECEDENT IN ANY OTHER CASE. I TA NO. 227 / HYD/ 2020 SRINIVAS V. HYD. : - 8 - : 5. THIS A SSESSEES APPEAL IS PARTLY ALLOWED IN ABOVE TERMS. PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH 2021 . SD/ - (S.S. GODARA) JUDICIAL MEMBER HYDE RABAD DATED : 16 TH MARCH 20 2 1 . K V C OPY TO : 1 SHRI SRINIVAS VALLAKATI C/O KATRAPATHI & ASSOCIATES 1 - 1 - 298/2/B/3 1 ST FLOOR ASHOK NAGAR HYDERABAD 500 020 2 ITO WARD 1 8 - 1 - 44 4 TH FLOOR KRISHNA REDDY CHAMBERS HYDERABAD ROAD SIDDIPET 502 103 3 C I T(A) - 7 HYDERABAD 4 PR. CIT 7 HYDERABAD 5 ITAT DR HYDERABAD. 6 GUARD FILE.