SIDDESHWAR AITHA,WARANGAL vs. INCOME TAX OFFICER, WARD-3, WARANGAL

PDF · subscribers
ITA 2063/HYD/2018Status: DisposedITAT Hyderabad12 June 2019AY 2014-154 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) should have provided further opportunity to the assessee to argue the case on merits. The appeal was remitted back to the CIT(A) for a fresh decision after providing an opportunity.

What were the facts?

The assessee failed to offer interest income and could not substantiate the source of large cash deposits in bank accounts. The CIT(A) dismissed the appeal due to non-compliance by the assessee.

What were the issues?

Whether the CIT(A) erred in dismissing the appeal without providing an opportunity to the assessee to argue the case on merits. Whether the additions made by the AO towards unexplained cash credits are sustainable.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCH ‘B, HYDERABAD

Before: SMT. P. MADHAVI DEVI & SHRI S. RIFAUR RAHMAN

For Appellant: Shri S. Rama Rao
For Respondent: Smt. V. Aparna
Hearing: 03/06/2019Pronounced: 12/06/2019

PER S. RIFAUR RAHMAN, AM: This appeal filed by the assessee is directed against the order of CIT(A) – 3, Hyderabad, dated, 10/07/2018 for AY 2014-15.

2.

Brief facts of the case are, the assessee, an individual, derives income from commission and brokerage, filed his return of income for the AY 2014-15 on 20/01/2015 declaring total income of Rs. 2,31,670/-. Subsequently, the case was selected for scrutiny and notice u/s 143(2) was issued. The AR of the assessee filed the required information in response to the said notice.

2.1 During the scrutiny proceedings, on examination of the bank account statement of SBH and Andhra Bank details, the AO found that the assessee did not offer interest income of Rs. 25,370/-. When asked the assessee to explain, the

2 I.T.A. No. 2063/Hyd/18 Siddeshwar Aitha, Warangal

assessee replied that it happened due to omission at the time of filing of return of income and agreed for the addition.

2.2 Further, the AO found that the assessee had deposited cash amount of Rs. 28,71,200/- and Rs. 23,61,500/- respectively. On examination of computation statement submitted, it was found that the assessee had shown gross receipts of Rs. 31,68,740/- and incurred expenditure to the tune of Rs. 28,99,380/- and after meeting the expenditure, the assessee had offered net income of Rs. 2,69,370/-.

2.3 The AO asked the asessessee to substantiate his sources of income. It was Stated that the money received from selling of clothes and the sale proceeds was deposited in the bank account. The assessee's AR was confronted and asked why the business transaction has made in SB Account and what is the need for withdrawal frequently and simultaneously deposits the amount. The assessee's AR replied that the assessee was not aware of the consequence of the business transaction in SB A/c and inadvertently he had made transactions. In fact, all the deposits are nothing but receipts from selling of clothes. However, the assessee could neither establish the correct source of income nor explain the frequent withdrawal and deposit the amount in the bank. Therefore, AO held that the assessee failed to correlate the withdrawal and deposit of money and hence, the assessee's version is not acceptable. In the absence of the correct source of cash deposit, the AO adopted peak cash credit method to arrive the assessee’s taxable income. Accordingly, peak cash credit amounts arrived at Rs. 17,71,800/- from SBH A/c and Rs. 16,04,000/- from Andhra Bank A/c was added to the returned income of the assessee towards unexplained cash credits u/s 68 of the Act.

3 I.T.A. No. 2063/Hyd/18 Siddeshwar Aitha, Warangal

3.

Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A). Since there was no compliance from the assessee to the notices issued by the CIT(A), the CIT(A) dismissed the appeal of the assessee.

4.

Aggrieved by the order of CIT(A), the assessee is in appeal before us raising the following grounds of appeal:

1.

The order of the Ld. CIT(A) is erroneous both on facts and law. 2. The Ld. CIT(A) ought to have provided further opportunity before the appeal is decided. 3. The Ld. CIT(A) erred in confirming the addition made by the Assessing Officer of Rs. 33,75,800/- representing the aggregate of the deposits made by the appellant. The Ld. CIT(A) ought to have considered the fact that the appellant is in the business of old four wheelers and that the income from such activity is already admitted in the return of income. 4. The Ld. CIT(A) ought to have provided opportunity before coming to the conclusion that there is no explainable source for the deposits made into the bank account. 5. Any other ground / grounds that may be urged at the time of hearing.” 5. Considered the rival submissions and perused the material on record. We notice that CIT(A) has given several opportunities to the assessee and since there was no response, he has dismissed the appeal without deciding the appeal on merit. Before us, ld. AR submits that CIT(A) should have given one more opportunity before deciding the issue and assessee has no opportunity to represent the case on merit and prayed for one more opportunity. To meet the ends of justice, we are inclined to remit this issue back to the file of

4 I.T.A. No. 2063/Hyd/18 Siddeshwar Aitha, Warangal

CIT(A) with a direction to provide one more opportunity to the assessee to argue his case on merits and thereafter decide the issues in accordance with law. The assessee is directed to comply with the notices of the CIT(A) and represent before him.

6.

In the result, appeal of the assessee is treated as allowed for statistical purposes. Pronounced in the open court on 12th June, 2019.

Sd/- Sd/- (P. MADHAVI DEVI) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, dated 12th June, 2019. kv

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →