ITAT Hyderabad Sustains 8% Profit Estimation on Total Bank Credits of ₹3,82,44,128 — Yaganti Sunkar Vs ITO

Case Overview

The Income Tax Appellate Tribunal, Hyderabad Bench, in the matter of Yaganti Sunkar Vs ITO, dismissed the appeal filed by the assessee for Assessment Year 2016-17, affirming the addition of ₹30,59,530/- computed at 8% of total bank credits treated as business turnover. The Tribunal's decision rested on the assessee's consistent failure to produce credible, corroborative documentary evidence before any of the three adjudicating forums — the Assessing Officer, the Commissioner of Income Tax (Appeals), NFAC, and finally the Tribunal itself.

Essential Facts of the Case

The assessee in this matter is an individual who did not file any return of income for Assessment Year 2016-17. The department gathered intelligence indicating that the assessee had made cash deposits amounting to ₹80,30,500/- in a bank account maintained with State Bank of Hyderabad during the relevant financial year.

Since no return had been voluntarily filed, the Assessing Officer initiated reassessment proceedings by issuing a notice under Section 148 of the Income-tax Act, 1961 dated 13.03.2023, reopening the case under Section 147.

Responding to the notice, the assessee filed a belated return declaring:

• Gross commission receipts: ₹5,48,000/-
• Net income: ₹4,82,637/-

However, during the course of reassessment, the Assessing Officer discovered significantly larger deposits and credits in the assessee's bank account, far exceeding what was declared:

The Assessing Officer called upon the assessee to satisfactorily explain the source of these deposits and credits.

The Assessee's Explanation and Business Claim

The assessee, in response to the show cause notice, explained that he was engaged in the business of supplying poultry feed to poultry farmers on a commission/brokerage basis. His submissions before the Assessing Officer can be summarised as follows:

• He acted as an intermediary between various feed-supplying companies and poultry farmers.
• Companies supplied poultry feed through him, for which he received commission.
• The large cash deposits in the bank account represented sale proceeds collected from farmers on behalf of these companies.
• He furnished a list of cash receipts, some handwritten sale bills from companies to poultry farmers, and certain commission-related documents.

The assessee explained that the total credits of approximately ₹3,82,33,866/- in the bank account were attributable to this brokerage arrangement.

Revenue's Findings — Why the Explanation Was Rejected

The Assessing Officer was not persuaded by the assessee's submissions and recorded specific, point-wise deficiencies in the evidence produced. These are extracted from the assessment order as follows: