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V. Venkateswara Rao Versus Income-tax Officer, Ward 9 (1) , Hyderabad

2016 (4) TMI 1042 - ITAT HYDERABAD

Determination of income - assessee is a commission agent derived income from real estate activities - Held that:- From the record, it is clear that no commission agent or even the person dealing with the real estate can earn @ 25% as income from the business. On careful evaluation of the return of income, assessee had offered to tax 25% as net income from the commission earned from real estate activities and not from gross receipts. First we need to arrive what will be the income earned from the .....

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of assessee and his wife. In principle, there is movement of funds in the bank account of assessee as well as joint account. We are of the view that we need to determine the reasonable of income from the real estate i.e. the line of business activities of the assessee. In our view, AO should estimate the income of the assessee after evaluation of the business of the assessee and similar business in the real estate. Such percentage can be adopted to determine the gross income of the assessee and .....

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R S. RIFAUR RAHMAN, A.M.: This appeal is preferred by the assessee against the order of the learned Commissioner of Income-tax(Appeals), Vijayawada, dated 07/10/2014 for AY 2007-08. 2. On perusal of record, we find that this appeal was filed before the Tribunal with a delay of 24 days. The assessee filed a petition requesting for condonation of delay. In the petition, he stated that the reasons for the delay in filing the appeal were beyond his control as his mother aged 80 was suffering from Ca .....

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admit the appeal for hearing and adjudication. 3. Briefly the facts of the case are that the assessee, a commission agent, filed his return of income for the AY 2007-08 admitting total income of ₹ 2,32,206/-. The case was taken up for scrutiny. During the course of scrutiny proceedings, the bank accounts of the assessee were verified. In one account bearing NO.030401503633 maintained in assessee's name with ICICI Bank, the AO noticed that the total deposits were at ₹ 1,10,35,116 .....

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include sale proceeds payable to the land lords as well as commission receivable by the assessee. Hence, he submitted to AO to accept the income offered by him. However, the Assessing Officer has not accepted the assessee's explanation for the following reasons: (i) Out of the total deposits of ₹ 1,10,35,116/-, reconciliation towards reversal/double entries was made for an amount of ₹ 38,25,324/- and the balance was not explained except stating that these amounts have been given .....

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92/- as gross receipts of the assessee and income at 25% was estimated. 3.1 In respect of account in ICICI Bank bearing account NO.030401502265 which assessee jointly held with his wife and son, the deposits were worked out at ₹ 79,61,107/- by the AO. The AO noted that the Assessee has given the same explanation for this amount also. AO further stated that out of these transactions certain transactions were relatable to his wife and she had already filed her return of income for A.Y.2007-0 .....

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nterest income of ₹ 37,937/- and the not the entire amount of ₹ 1,22,965/-, the difference of ₹ 85,028/- was added to the income of the assessee. 4. Aggrieved, the assessee preferred an appeal before the CIT(A). The assessee filed written submissions before the CIT(A), which were extracted by the CIT(A) from pages 4 to 8 of his order. The assessee also filed a petition for admission of certain additional evidence under Rule 46A of the Income Tax Rules, 1962. The CIT(A) called f .....

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nly. Hence, the assessee's claim that the deposits in the bank account include sale consideration received from the companies which again paid to land lords, is not acceptable. (ii) The assessee failed to furnish the details of lands sold, pattadar pass books, sale consideration, commission received and other evidence in support of his claim of acting as mediator, and receipt of commission. Pattadar pass books in respect of Sri D.Pentaiah, D.Jangamaiah, R.Balaraj and Yousuf Khan of Dandu Mil .....

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the alleged co-agents cannot go to prove that the amounts are meant for payment to landlords. Further, affidavits do not contain the details of land purchased, sale consideration and the details of persons to whom the payments were to be made, names and addresses of the sellers etc., The assessee furnished documentary evidence in two cases involving an amount of ₹ 2,93,500/- only and there is no documentary evidence for the balance amount to show that it was paid to the land lords. Hence, .....

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e Assessing Officer, the AddI.CIT, Range-9, Hyderabad denied to give relief of ₹ 2,93,500/- as observed by the Assessing Officer for the reason that as per the sale deed furnished by the assessee, the assessee has no role in the sale transactions made by the vendor & vendee. He further observed that the Assessing Officer has already allowed credit for ₹ 18,42,126/- for the commission received from Jana Chaitanya Housing Ltd." therefore, credit for the balance TDS amount of & .....

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y of the remand report to the assessee to furnish his explanation, and the assessee replied vide letter dated 29/8/2013. The reply of the assessee was extracted by the CIT(A) in his order from pages 10 to 12. 4.3 After considering the submissions of the assessee as well as the remand report of AO and reply of the assessee against remand report, the CIT(A) partly allowed the assessee s appeal by observing as under: 5. I have carefully gone through the order of the Assessing Officer, the submissio .....

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chasing companies. He argued that the deposits in the bank accounts include sale consideration received from the buyers which were later on paid to the land lords. However, the assessee failed to furnish before the Assessing Officer and also before the undersigned, the details of lands sold, pattadar pass books, sale consideration, commission received and other evidence in support of his claim of acting as mediator and receipt of sale consideration and commission. Further, as per the letter give .....

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dence to the assessee's arguments. In such circumstances, I am of the view that the assessee failed to explain the deposits in the bank account satisfactorily and accordingly adopting the peak balance in the bank accounts of the assessee as unexplained cash deposits u/s.69 of the Act would be more appropriate in this case. The relevant extract of the assessee's submissions dated 12/11/2013, in this regard, are as under: As submitted earlier, even the peak amount of the receipts amounted .....

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r of CIT(A), the assessee is in appeal before us raising the following grounds of appeal: 1) The order of the learned CIT (A) is erroneous to the extent it is prejudicial to the assessee. 2) The learned CIT (A) erred in directing the Assessing Officer to tax an amount of ₹ 25,22,408/ - u/s 69 of the I.T. Act. 3) The learned CIT(A) ought to have seen that the peak balance was only ₹ 47,60,881/- of which the opening balance was ₹ 22,28,473/-. The learned CIT(A) ought to have cons .....

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vities. As a part of business strategy, assessee locates the purchasers and sellers, sometimes collects the amount from the purchasers and deposits the same with the seller. In such an event, the estimation of income @ 25% of the receipts is not justified. He submitted that AO had arrived the receipts at ₹ 72,09,792/- with one bank account and ₹ 48,21,120/- with another joint account with the Assessee s wife and son. The aggregate amount of receipts is ₹ 1,20,30,912/-. From the .....

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ome relating to assessee s wife was ₹ 18,42,126/- and assessee s income at ₹ 11,73,896/-. The aggregate of the amounts belonging to assessee s wife also to be considered. This aspect was completely over looked by the AO. 8. Ld. DR submitted that as per the return of income submitted by the assessee (refer page 2 of paper book), assessee himself accepted 25% of income and AO computed the taxable income as per return of income. He also relied on the order of the CIT(A) and assessment o .....

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