RACHERLA CHAITANYA REDDY,HYDERABAD vs. ITO, WARD-4(4), HYDERABAD

Brief facts of the case are that, assessee filed return of income for the assessment year 2015-16 on 27/02/2017, declaring income at Rs. 3,15,660/-. Learned Assessing Officer noticed that assessee made purchases to the tune of Rs. 2,44,09,252/- from Telangana State Beverages Corporation, IMFL, Ranga Reddy District in the name of M/s. Sai Shiva Wines, Parigi and for such purpose, assessee also paid a sum of Rs. 34,00,000/- as license fee. Since the assessee did not disclose any income from the wine shop and failed to produce the evidence as to the source of money for the license fee, learned Assessing Officer added the entire license fee amount to the income of the assessee. Apart from estimating the income from the wine shop at 5% of the sales which came to Rs. 12,20,461/-.

Assessee preferred appeal before the learned CIT(A), but failed to prosecute the appeal diligently. Learned CIT(A), therefore, recorded a finding that the assessee did not file any affidavit to condone the delay and, therefore, there are no grounds to condone the delay. Learned CIT(A) further recorded that the learned Assessing Officer added the amount to the income of the assessee since the assessee did not explain the source of Rs. 34 lakhs paid towards license fee and also estimated the net profit at 5% as against 3% computed by the assessee. Since the assessee did not produce any material what-so-ever, learned CIT(A) did not feel the necessity to interfere with the findings of the learned Assessing Officer. Learned CIT(A) accordingly dismissed the appeal.

Assessee preferred this appeal before the Tribunal, stating that the principles of natural justice are violated by the authorities below by not affording sufficient opportunity to the assessee. Learned AR vehemently contended that the learned Assessing Officer erred in making addition of Rs. 34 lakhs as ‘un-explained expenditure’ and also made an error in estimating the net profit at 5% as against 3% which is prevalent in the business. Learned AR contended that the license fee was not paid in lump sum, but it was paid in instalments like the initial payment of Rs. 11 lakhs followed by the balance amount in instalments. According to him, such balance amount was paid from out of sale proceeds and, therefore, it would be incorrect to contend that all the amount of Rs. 34 lakhs was paid by the assessee from out of the un-explained source. He, therefore subits that there is no basis for the authorities to make the addition or to sustain the same. He further vehemently contended that even at the best, the payment of Rs. 11 lakhs could to be considered towards the initial license fee since according to the assessee, the balance license fee was paid in instalments from out of the sale proceeds in respect of which the assessee prayed to make estimation at 3%.

Learned DR contended that absolutely there are no grounds to interfere with the findings of the authorities below since the assessee failed to explain his contentions both before the learned Assessing Officer and also before the learned CIT(A). Learned DR further contended that even before the Tribunal also except the self-serving oral statement on behalf of the assessee, no concrete material is produced even in support of the belated contention of the assessee.

I have gone through the record in the light of the submissions made on either side. It is not the case of the assessee that he produced any evidence before the learned Assessing Officer or the learned CIT(A) and for that matter before me to support his contention that initially he made the payment of Rs. 11 lakhs towards license fee and subsequently, he went on paying the balance amount in instalments from out of the sale proceeds. The dates of payments or availability of amounts on those dates or any evidence to show the payments of any particular day are forthcoming. Notice under section 143(2) of the Act was issued to the assessee on 18/09/2017 and served on him on 26/09/2017. Till today, the assessee did not produce even a scrap of paper in support of his contentions. Six years’ time is elapsed but the assessee does not come forward with any evidence what-so-ever. In these circumstances, I see no reason to interfere with the well reasoned order of the learned CIT(A). Grounds raised by assessee are accordingly dismissed.

In the result, appeal of the assessee is dismissed.