Sri Achan Srihari,, Hyderabad vs Assessee

Income Tax Officer Ward 6(1), V/s. Shri Achan Srihari, Hyderabad Hyderabad (PAN - AJPPA 6675 H )

(Appellant) (Respondent)

Cross objection No.18/Hyd/2014 (in ITA No.1405/Hyd/13) : Assessment year 2009-10

Shri Achan Srihari, Hyderabad V/s. Income Tax Officer Ward 6(1), Hyderabad (PAN - AJPPA 6675 H )

(Cross obejctor) (Appellant in Appeal)

Appellant by : Shri Rajat Mitra, DR

Respondent by : Shri P.Balakrishna

Date of Hearing 25.2.2015 Date of Pronouncement 26.2.2015

ORDER

Per P.M.Jagtap, Accountant Member :

This appeal is preferred by the Revenue against the order of the learned CIT(A) IV, Hyderabad dated 16.8.2013, whereby she deleted the addition of Rs.31,42,000 made by the Assessing Officer and directed the Assessing Officer to estimate the income of the assessee by applying a net profit rate of 1.15% of the turnover, and it is being disposed of alongwith the cross objection filed by the assessee being CO No.18/Hyd/2014, which merely supports the order of the learned CIT(A).

2 ITA No.1405/Hyd/2013 & CO therein Shri Achan Srihari, Hyderabad

2. The assessee in the present case is an individual, who is engaged in the business of providing temporary funds to the VISA students. The return of income for the year under consideration was filed by him on 26.11.2009 declaring a total income of Rs.2,66,700. As per the AIR information received by the Assessing Officer, the assessee was maintaining a bank account with ICICI Bank reflecting several cash transactions. During the course assessment proceedings, the assessee, therefore, was called upon by the Assessing Officer to furnish the details of the bank account maintained with ICICI Bank. In reply, it was submitted by the assessee that he is having only two bank accounts with Royal Bank of Scotland and Union Bank of India and no account was maintained with ICICI Bank. Further enquiries made by the Assessing Officer, however, revealed that the assessee was maintaining an account bearing No.000801543335 with ICICI Bank, Khairatabad Branch, reflecting several cash transactions, the peak credit of which was Rs.31,42,400. The Assessing Officer therefore, required the assessee to offer his explanation in the matter, and since no such explanation was offered by the assessee, an addition of Rs.31,42,400 was made by the Assessing Officer to the total income of the assessee on account of peak credit in the bank account with ICICI Bank, in the assessment completed under S.143(3) vide order dated 30.11.2011.

3. Against the order of the Assessing Officer passed under S.143(3), an appeal was preferred by the assessee before the learned CIT(A). During the course of appellate proceedings before the learned CIT(A), it was submitted by the assessee that the bank account with the ICICI Bank having been already closed in June, 2009, the existence of the bank account was denied during the course of assessment proceedings. It was also submitted by the assessee that the transactions reflected in the said bank account 3 ITA No.1405/Hyd/2013 & CO therein Shri Achan Srihari, Hyderabad

related to his business of providing temporary loans to the VISA students and the same were duly reflected in the turnover of the assessee's business amounting to Rs.3,12,92,175. It was contended that a profit of Rs.3,04,700 at the rate of 0.97% of the said turnover was already offered by the assessee in the return of income and since the total credits of Rs.2,58,27,200 reflected in the ICICI Bank account were already included in the total turnover of Rs.3,12,92,175, no addition on account of the transactions reflected in the ICICI Bank account was separately called for. The learned CIT(A) found merit in the contentions of the assessee on this issue, and directed the Assessing Officer to estimate the income of the assessee at 1.15% of the total turnover including the turnover reflected in the ICICI Bank account. Aggrieved by the order of the learned CIT(A), Revenue has preferred this appeal before the Tribunal.

4. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that the assessee during the course of assessment proceedings had denied before the Assessing Officer of having any bank account with the ICICI Bank. On enquiry made by the Assessing Officer, it was however, revealed that a bank account with ICICI Bank Khairatabad was being maintained by the assessee reflecting various cash transactions during the year under consideration with peak credit of Rs.31,42,400 as worked out by the Assessing Officer. When this position was confronted by the Assessing Officer to the assessee, the latter failed to offer any explanation and the Assessing Officer was left with no option, but to add the amount of peak credit to the total income of the assessee. During the course of hearing before the learned CIT(A), the assessee, however, accepted the existence of the bank account with ICICI Bank in his name and explained that the transactions reflected therein were 4 ITA No.1405/Hyd/2013 & CO therein Shri Achan Srihari, Hyderabad

nothing but the regular transactions relating to his business of providing temporary loans to VISA students. He also explained that the total credits reflected in the said bank account amounting to Rs.2,58,27,200 were already included in the turnover of Rs.3,12,92,175 on which income of Rs.3,04,700 coming to a net profit of 0.97% was offered in the return of income. As rightly contended by the Learned Departmental Representative, this explanation of the assessee was accepted by the learned CIT(A) without verifying the same from the books of account or other relevant record. She also did not give any opportunity to the Assessing Officer to verify the same in spite of the fact that the existence of bank account with ICICI Bank was denied by the assessee during the course of assessment proceedings, and the explanation as regards the transactions reflected in the said bank account as offered before the learned CIT(A), was not offered before the Assessing Officer during the course of assessment proceedings despite sufficient opportunity given by the Assessing Officer.

5. At the time of hearing before us, the Learned Departmental Representative has filed a copy of the income and expenditure account of the assessee for the year under consideration, which shows that the gross receipts as declared by the assessee were only Rs.9,08,650. He has also filed a copy of the Balance Sheet of the assessee as on 31.3.2009, which showed the total bank balance of Rs.5,825 only, whereas the account of the assessee with ICICI Bank was having a balance of Rs.17,873 as on 31.3.2009. Having regard to all these facts of the case, we find merit in the contention of the Learned Departmental Representative that the matter should be sent back to the Assessing Officer for deciding the same afresh after verifying the explanation of the assessee from the relevant records. Even the learned counsel for 5 ITA No.1405/Hyd/2013 & CO therein Shri Achan Srihari, Hyderabad

the assessee at the time of hearing before us has not been able to raise any material contention to object to the same. We therefore, set aside the impugned order of the learned CIT(A) and restore the matter to the file of the Assessing Officer for deciding the same afresh, after verifying the explanation of the assessee as regards the transactions reflected in the ICICI Bank account. Needless to observe that the Assessing Officer shall afford sufficient opportunity of being heard to the assessee before deciding the issue.

6. The cross objection filed by the assessee only supports the impugned order of the learned CIT(A), and since the same has been set aside by us, the cross objection of the assessee is treated as dismissed.

7. In the result, appeal of the Revenue is treated as allowed for statistical purposes and the cross objection of the assessee is dismissed.

Order pronounced in the court on 26th February, 2015

Sd/- Sd/-

(Asha Vijayaraghavan) (P.M.Jagtap) Judicial Member Accountant Member

Dt/- 26th February, 2015 \

Copy forwarded to:

1. Shri Achan Srihari, 6-3-661/4/2, Plot No.74, Sangeet Nagar, Somajiguda, Hyderabad

2. Income Tax Officer Ward 6(1), Hyderabad

3. Commissioner of Income-tax(Appeals) IV Hyderabad

4. Commissioner of Income-tax III , Hyderabad

5. Departmental Representative, ITAT, Hyderabad. B.V.S