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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
अपीलधथी की ओर से/ Appellant by : Shri C.Subrahmanyam, AR प्रत्यधथी की ओर से / Respondent by : Shri M.N.Murthy Naik, CIT(DR) सुनवधई की तधरीख / Date of Hearing : 23.05.2022 घोर्णध की तधरीख/Date of Pronouncement : 19.08.2022 O R D E R
Per Shri Duvvuru RL Reddy, Judicial Member :
1. This appeal is filed by the wife and legal heir of the assessee against the order of the Principal Commissioner of Income Tax [in short, “Pr.CIT”]- 1, Visakhapatnam in F.No.Pr.CIT-1/VSP/263/2018--19 dated 25.03.2019 for the Assessment Year (A.Y.) 2014-15.
Brief facts of the case are that the assessee is an individual engaged in legal profession, filed his return of income for the A.Y.2014-15 on Venkata Trinadh Bandi, Visakhapatnam 02.11.2015 admitting total income of Rs.2,18,600/-. The case was selected for scrutiny under CASS for verification of large value of deposits in co- operative bank and low other source income in the return of income, compared to very high aggregate deposits as per UCB Data. Subsequently, the assessment was completed u/s 143(3) of the Income Tax Act, 1961 (in short ‘Act’) on 28.11.2016 by assessing the total income at Rs.3,12,070/-. During the course of assessment proceedings, the Assessing Officer(AO) observed that the assessee had made cash deposits aggregating to Rs.11,68,400/- in his account No.104610025040447 held with Andhra Bank, MVP Colony, Visakhapatnam. When the AO asked the assessee to furnish the sources for the aforesaid deposits, the assessee filed a letter on 25.11.2016, stating that the said deposits were made by him out of his professional receipts during the year under consideration and the same were not disclosed while filing the return of income for the A.Y.2014-15. The assessee agreed to offer income @8% on the same and the AO accepted the explanation rendered by the assessee. Accordingly, the AO completed the assessment by making an addition of Rs.93,470/- being 8% of the above cash deposits.
The case was taken up by the Ld.Pr.CIT u/s 263. The Ld.Pr.CIT observed that the assessee during the assessment proceedings admitted
Venkata Trinadh Bandi, Visakhapatnam professional receipts amounting to Rs.4,55,800/- and arrived at net profit of Rs.3,18,600/- (being 69.89%) of the receipts), after claiming the expenditure relatable to his professional receipts of the year. It is therefore obvious that the assessee had already claimed all the expenditure in relation to his professional receipts while admitting the net profit of 3,18,600/- in the return of income. The Ld.Pr.CIT observed that the entire undisclosed cash deposits of Rs.11,68,000/- should have been treated as unexplained investment u/s 69 of the Act, instead of 8% of the receipts and taxed @30% as contemplated u/s 115BBE of the Act. The Ld.Pr.CIT further observed that even if the AO resorted to estimation of the profit on the said receipts, the same should have been estimated @ 69.89%, being the percentage of profit offered by the assessee as per the P&L account and in the return of income. Therefore, held that the assessment order dated 28.11.2016 passed u/s 143(3) is erroneous and prejudicial to the interest of the revenue and proposed for revision u/s 263. Accordingly, issued show cause notice dated 02.04.2018 to the assessee as to why the assessment order u/s 143(3) of the Act dated 28.11.2016 should not be revised. In response to the notice, the assessee filed a letter dated 01.05.2018 along with statement of loan account maintained with The Visakhapatnam Co-op Bank Ltd. in the name of his mother Smt.Bandi Savitri. While explaining the Venkata Trinadh Bandi, Visakhapatnam source of cash deposits in his bank account, the assessee stated that he had obtained mortgage loan of Rs.15,00,000/- by mortgaging the property held in the name of his mother with the Visakhapatnam Co-op Bank. The assessee stated that the loan amount was withdrawn on 03.04.2014 (correct date of withdrawal is 30.09.2013) for the purpose of doing some business. As the same was not materialized, the loan amount was deposited in the bank account. During the assessment proceedings the assessee had accepted the said receipts as his professional receipts and admitted net profit of 8% thereon in order to avoid any further litigation with the department. The Ld.Pr.CIT observed that the assessee before the AO in respect of cash deposits, submitted initially, that he had taken loan from his wife and uncle aggregating to Rs.9,00,000/- for a specific purpose, but as the same was not materialised, the assessee deposited the amount back in the Andhra Bank. The Ld.Pr.CIT further observed that later on, the assessee changed his mind and filed a letter dated 25.11.2016 during the assessment proceedings, that the deposits of Rs.11,68,400/- made in his personal savings bank account maintained with Andhra Bank were his professional receipts and agreed to offer 8% income of these receipts. However, during the present proceedings before the Ld.Pr.CIT, the assessee again changed his stand by retracting from his earlier version and stated that the source
Venkata Trinadh Bandi, Visakhapatnam for the deposit to the extent of Rs.9,51,000/- was the mortgage loan raised by his mother and stated that the same was not his professional receipts, which was not submitted before the AO. The Ld.Pr.CIT observed that different versions of the assessee at different times regarding sources of cash deposits in Andhra Bank account clearly indicate that undisclosed professional receipts were deposited by the assessee in his bank account as admitted during the assessment proceedings and amount to the extent of Rs.9,51,000/- was transferred to another account stated to be belonging to his uncle. Therefore, the Ld.Pr.CIT observed that the entire amount of deposits ought to have been considered as unexplained money u/s 69 of the Act instead of 8% of the receipts and taxed @30% as contemplated u/s 115BBE of the Act. The Ld.Pr.CIT observed that the order passed by the AO dated 28.11.2016 is erroneous and prejudicial to the interest of revenue and directed the AO to treat the cash deposits of Rs.11,68,400/- as unexplained investment u/s 69 of the Act including the addition of Rs.93,470/- already made in the assessment order and re-compute the total income by passing a consequential order.
On being aggrieved, the assessee preferred an appeal before the Tribunal and raised the following grounds :
Venkata Trinadh Bandi, Visakhapatnam
That under the facts and circumstances of the case the orders passed u/s 263 of the I.T.Act is erroneous both on facts and as well as in law.
2. The learned Pr.Commissioner of Income Tax (in short “Pr.CIT”) has wrongly assumed jurisdiction when the facts of the case does not warrant invoking provisions of section 263 of the I.T.Act. 3. The learned Pr.CIT ought to have known that the orders passed by the Assessing Officer (in short “AO” u/s 143(3) of the I.T.Act, which order was subjected to revision, is neither erroneous nor prejudicial to the interest of the revenue, therefore, the order passed u/s 263 of the I.T.Act cannot stand the test of judicial scrutiny. 4. The disputed issue pertaining to deposits in bank as it was already considered by the AO in his assessment order, therefore, under such circumstances invoking powers u/s 263 of the I.T.Act to revisit the same issue and directing the AO to treat the deposits as falling within the scope of sec.115BBE of the I.T.Act is not permitted under the law. 5. Under the facts and circumstances of the case the learned Pr.CIT is not correct in directing the AO to consider the deposits in bank as liable for tax u/s 115BBE of the I.T.Act. 6. For these and other reasons that are to be urged at the time of hearing of the appeal the appellant prays that the order passed by the learned Pr.CIT is erroneous both on facts as well as in law, therefore, the same needs to be set aside in the interest of justice.
All the grounds of appeal are related to the order passed by the Ld.Pr.CIT u/s 263 of the Act. The Ld.Counsel for the assessee submitted that the Ld.Pr.CIT has wrongly assumed jurisdiction by passing an order u/s 263 and directed the AO to treat the deposits within the scope of Venkata Trinadh Bandi, Visakhapatnam sec.115BBE of the Act is bad in law. Thus, pleaded that the order passed by the Ld.Pr.CIT be set aside, delete the addition made by the AO and allow the appeal of the assessee.
6. Per contra, the Ld.DR relied on the order of the Ld.Pr.CIT and requested to uphold the order of the Ld.Pr.CIT and dismiss the grounds raised by the assessee.
We have heard both the parties and perused the orders of the authorities below. It is evident from the records that during the assessment proceedings, the assessee had initially agreed to offer income @8% on the cash deposits of Rs.11,68,400/-. The Ld.Pr.CIT observed that later on, the assessee retracted his statements for three times and changed his version at every stage of appellate proceedings. The Ld.Pr.CIT further observed that the assessee had claimed expenditure relatable to his professional receipts of the relevant year and arrived at net profit of Rs.3,18,600/-. Hence, the Ld.Pr.CIT opined that the entire undisclosed cash deposits of Rs.11,68,000/- should have been treated as unexplained investment u/s 69 of the Act and taxed @30% as contemplated u/s 115BBE of the Act instead of 8% of the receipts and treated the order of the AO as erroneous and prejudicial to the interest of the revenue. The Ld.Pr.CIT has directed the AO
Venkata Trinadh Bandi, Visakhapatnam to recompute the total income by passing a consequential order. Hence, we do not find any infirmity in the order passed u/s 263. Hence, the grounds raised by the assessee’s legal representative are hereby dismissed.
In the result, appeal of the assessee is dismissed.
Order Pronounced in open Court on 19th August, 2022.
Sd/- Sd/- (एस बालाकृष्णन) (दुव्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयकसदस्य/JUDICIAL MEMBER Dated : 19.08.2022 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Smt.Venkata Lakshmi Bandi, (wife & legal heir of Late Sri Venkata Trinadh Bandi), No.MIG-2/78, Sector-6, MVP Colony, Visakhapatnam 2. रधजस्व/The Revenue – Income Tax Officer, Ward-3(1), Visakhapatnam 3. प्रधान आयकर आयुक्त / The Principal Commissioner of Income Tax-1, Visakhapatnam 4. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम/ DR,ITAT, Visakhapatnam 5.गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam