ITO Vs Sadhanakari Khaja Rahmathulla (ITAT Hyderabad)
ITAT Hyderabad held that other than being an agriculturist, the assessee was license holder of retail sale of IMFL. However, the said fact was not verified by CIT(A). Accordingly, held that case has not been properly adjudicated by CIT(A).
Facts-
During the course of assessment proceedings, AO noted that other being an agriculturist, the assessee is also a licence holder for retail sale of IMFL. Going through the bank transactions of the assessee, AO concluded that the transactions are not for agricultural operations and the assessee had either carried out unknown business or utilized the bank transactions to evade legitimate tax payable. In view of the above, the AO made addition of Rs. 2,41,18,080/- to the total income of the assessee and completed the assessment determining the total income at Rs. 2,42,84,080/-.
Post remand report, AO deleted addition of Rs. 2,16,54,600/- and sustained addition of Rs. 24,63,480/-. Being aggrieved by the relief granted by CIT(A), the revenue as well as the assessee are in appeal before the Tribunal.
Conclusion-
Merely because certain persons have stated that the deposits appearing in the bank account of the assessee belong to them and confirmed the same through affidavits, but the same in our opinion are merely self serving documents which cannot be relied upon especially when the assessee himself was a license holder of retail sale of IMFL and this fact has not been verified by the ld.CIT(A). In our opinion the case has not been properly adjudicated by the ld.CIT(A) in the way the same should have been adjudicated.
There is absolutely no discussion about the liquor business of the assessee by the ld.CIT(A) in his order. If the assessee is a retail trader of IMFL, it is not understood why some other persons will deposit cash into the bank account of the assessee.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
These are cross appeals. The first one is filed by the revenue and the second one is filed by the assessee and are directed against the order dated 19.07.2016 of Learned Commissioner of Income tax (Appeals), Kurnool relating to AY 2010-11. For the sake of convenience, these were heard together and are being disposed-of by this common order.
2. Facts of the case, in brief, are that the ITO (Intelligence), Tirupati had forwarded information about the assessee that the department has in its possession information to the effect that the assessee deposited Rs.2,53,18,080 in cash in the Andhra Pragathi Grameena Bank, Porumamilla. In response to query letter issued by the ITO (Intelligence), Tirupati, the assessee’s AR filed a letter according to which the assessee was a farmer looking after the agricultural lands of his father and all the amounts found deposited are either out of agriculture or belonging to some other agriculturists. In this background the ITO (Intelligence) Tirupati addressed a letter to the ITO Ward-2 Proddatur for examination of the case and further investigation for probable escapement of taxes. From the data available, the AO noticed that the assessee has not filed his ROI for the AY under consideration. Therefore, a notice u/s.148 was issued and served on the assessee.
3. In response to the notice issued u/s. 148, the assessee filed his return of income on 02.08.2013 disclosing total income of Rs.1,66,000/-. The AO issued statutory notices u/s. 143(2) & 142(1). However there was no compliance to the statutory notices issued by the AO for which the AO proceeded to complete the assessment u/s. 144 of the I.T.Act. The AO deputed his Inspector to examine and report regarding the contention of the assessee before the ITO(Intelligence) Tirupati where in the assessee had stated that the entire credits found deposited in the bank account are out of agricultural receipts and some farmers have utilized the bank account of the assessee for securing their money. The Inspector reported that 11 farmers had furnished written confirmations that they have utilized the bank account of the assessee for securing their money and such total amount comes to Rs.11,00,000/-
4. During the course of assessment proceedings, the AO noted that out of the total deposit of Rs. 2.53 crores an amount of Rs. 11 lacs are prima facie established to be belonging to persons other than the assessee. However, the nature of crops grown, extent of land cultivated, marketing of the crops/yield, mode of receipt, persons/concerns to whom the crops were sold remain unexplained. He further noted that assessee is also a licence holder for retail sale of IMFL during the FY 2010-11 relevant to the AY 2011-12 which strengthens the stand that the assessee is not a pure agriculturist. He further noted from the bank statement that the assessee has transferred amounts to IBDDS on various dates, purchased DDs, issued cheques, etc. as per the following details.
