Sri Syed Burhanuddin,, Hyderabad vs Department Of Income Tax

Income Tax Officer Ward 6(3), V/s. Shri Syed Burhanuddin, Hyderabad Hyderabad (PAN - BDYPS 4653 P)

(Appellant) (Respondent)

Appellant by : Shri Ramakrishna Bandi DR

Respondent by : Shri P.Vinod, AR Date of Hearing 7.4.2015 Date of Pronouncement 10.4.2015

ORDER

Per P.M.Jagtap, Accountant Member :

This appeal is preferred by the Revenue against the order of the learned Commissioner of Income-tax(Appeals) IV, Hyderabad dated 10.1.2014, whereby she deleted the addition of Rs.19,41,880 made by the Assessing Officer on account of unexplained deposits found to be made in the bank accounts of the assessee.

2. Assessee in the present case is an individual, who filed his return of income for the year under consideration on 1.9.2009 declaring total income of Rs.3,25,090. As per the AAR information received by the Assessing Officer, the assessee had deposited cash amounting to Rs.26,42,400 in ICICI Bank Ltd., Banjara Hills Branch, Hyderabad and Rs.10,01,000 in SBH Gun Foundry Branch, Hyderabad. During the course of assessment proceedings, the assessee therefore, was required by the Assessing Officer to explain the sources of these cash deposits found to be made in his bank 2 ITA No.649/Hyd/2014 Shri Syed Burhanuddin, Hyderabad

account. The assessee however, did not comply with this requirement of the Assessing Officer in spite of sufficient opportunities afforded in this regard. The Assessing Officer therefore, was left with no option but to complete the assessment ex-parte to the best of his judgment under S.144 of the Act. In the assessment so completed vide order dated 20.12.2011, he worked out the peak cash credit of both the bank accounts of the assessee at Rs.18,70,880 and also found certain transfer credits appearing in the said bank accounts totaling to Rs.71,000. Accordingly, the total credit amount of Rs.19,41,880 appearing in the bank accounts of the assessee was treated by the Assessing Officer as unexplained and addition to that extent was made by him to the total income of the assessee.

3. Against the order passed by the Assessing Officer under S.144, 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 that the assessee, is an individual engaged in undertaking civil contracts and in the return of income filed for the year under consideration, total income of Rs.3,25,000 was declared by him on a turnover of Rs.26,70,850 It was explained that the deposits found to be made in the bank accounts of the assessee were from the receipts of his business, but the Assessing Officer failed to appreciate the same. This explanation of the assessee was found logical and reasonable by the learned CIT(A). According to her, total turnover of the assessee of Rs.26,70,830 was also considerably more than the peak of the deposit arrived at by the Assessing Officer at Rs.19,41,880 She held that the peak credits in the bank accounts of the assessee thus were duly explained and directed the Assessing Officer to delete the addition made on this issue. Aggrieved by the order of the 3 ITA No.649/Hyd/2014 Shri Syed Burhanuddin, Hyderabad

learned CIT(A), Revenue has preferred this appeal before the Tribunal on the following grounds-

"1. The learned CIT(A) erred in law and on facts of the case.

2. The Hon'ble CIT(A) ought to have sustained the addition of peak credit in the banks as the assessee failed to produce any evidence in support of his claim that these were business receipts.

3 The Hon'ble CIT(A) ought to have appreciated the fact that the total cash deposits which were claimed as business receipts were exceeding the total turnover.

4. Any other ground(s)that may be urged at the time of hearing."

4. We have heard the arguments of both the sides and also perused the relevant material on record. As rightly submitted by the Learned Departmental Representative, the explanation of the assessee of having made the cash deposits in his bank account out of business receipts is accepted by the learned CIT(A), without verifying the relevant documentary evidence and without giving any opportunity to the Assessing Officer to verify the same. As further submitted by the Learned Departmental Representative, the turnover of the civil contracting business of the assessee was only Rs.26,30,850, whereas the deposits found to be made in cash in his bank account were to the tune of Rs.36,43,400. Keeping in view all these relevant aspects of the matter, as pointed out by the Learned Departmental Representative, and also the fact that the assessment in the case of the assessee was completed by the Assessing Officer ex-parte under S.144 due to non-compliance of the assessee, we are of the view that the learned CIT(A) ought to have given an opportunity to the Assessing Officer to verify the explanation of the assessee that the deposits found to be made in 4 ITA No.649/Hyd/2014 Shri Syed Burhanuddin, Hyderabad

his bank account were out of the receipts of the assessee from civil contracting business, before accepting the same. In that view of the matter, we set aside the impugned order of the learned CIT(A) on this issue and restore the matter to the file of the Assessing Officer for deciding the same afresh, after verifying the explanation of the assessee that the deposits found to be made in his bank accounts were out of the receipts from civil contracting business. The Assessing Officer shall afford sufficient opportunity of being heard to the assessee and the assessee shall extend all the possible cooperation to the Assessing Officer to decide this issue in the set aside proceedings expeditiously.

5. In the result, appeal of the Revenue is treated as allowed for statistical purposes.

Order pronounced in the court on 10th April, 2015

Sd/- Sd/-

(Saktijit Dey) (P.M.Jagtap) Judicial Member Accountant Member

Dt/- 10th April, 2015

Copy forwarded to:

1. Shri Syed Burhanuddin, 8-2-686/C/E/5, Burhan Manzil, Minister Colony, Road No.12, Banjara Hill, Hyderabad

2. Income Tax Officer Ward 6(3), Hyderabad

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

4. Commissioner of Income-tax III, Hyderabad

5. Departmental Representative, ITAT, Hyderabad.

B.V.S