Narsimharaju Kanumuri, Visakhapatnam V. The Deputy Commissioner of Income Tax, Circle-3(1), Visakhapatnam

CO 40/VIZ/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6805 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-09-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 14-06-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B SATYANARAYANA RAJU
• Keywords: Gift; Source of fund
• Section: 69C; 56(2); 133A; 201; 143(2); 69A; 139(4)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM , . . , BEFORE SHRI N.K.CHOUDHRY, HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HONBLE ACCOUNTANT MEMBER ./ I.T. A.NO. 63 /VIZ/20 21 ( / A SSESSMENT Y EAR : 20 1 7 - 18 ) DY.COMMISSIONER OF INCOME TAX CIRCLE - 3(1) VISAKHAPATNAM VS. KANUMURI NARASIMHARAJU 50 - 1 - 23/46, FLAT NO.202 KSR COMPLEX, C - BLOCK OPP.RYTU BAZAAR SEETHAMMADHARA VISAKHAPATNAM [PAN : AERPK2717F] ( / APPELLANT) ( / RESPONDENT) CROSS OBJECTION NO. 40/VIZ/2021 (ARISING OUT OF I.T. A.NO. 63 /VIZ/20 21 ) ( / A SSESSMENT Y EAR : 201 7 - 18 ) KANUMURI NARASIMHARAJU 50 - 1 - 23/46, FLAT NO.202 KSR COMPLEX, C - BLOCK OPP.RYTU BAZAAR SEETHAMMADHARA VISAKHAPATNAM [PAN : AERPK2717F] VS. DY.COMMISSIONER OF INCOME TAX CIRCLE - 3(1) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) /REVENUE BY : S HRI B.SATYANARAYANA RAJU, DR / ASSESSEE BY : SHRI G.V.N.HARI, AR / DATE OF HEARING : 16.08 .2021 / DATE OF PRONOUNCEMENT : 08 .0 9 .2021 2 ITA NO. 63 /VIZ/20 21 AND CO NO. 40 /VIZ/20 21 , A.Y.20 1 7 - 18 KANUMURI NARASIMHARAJU, VISAKHAPATNAM / O R D E R P ER BENCH : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 1, VISAKHAPATNAM IN ITA NO.10404/2019 - 20/CIT(A) - 1/VSP/2020 - 21 DATED 18.09.2020 FOR THE ASSESSMENT YEAR (A.Y.) 2017 - 18 AND CROSS OBJECTIONS ARE FILED BY THE ASSESSEE. 2. ALL THE GROUNDS OF APPEAL OF THE REVENUE ARE RELATED TO THE DELETION OF ADDITION MADE BY THE ASSESSING OFFICER (AO) U/S 69A R.W.S.115BBE OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). BRI EF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM HOUSE PROPERTY AND OTHER SOURCES APART FROM AGRICULTURAL INCOME. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S 143(2) WAS ISSUED ON 28.09.2018. THE AO RECEIVE D INFORMATION FROM INVESTIGATION WING AS PER WHICH THE ASSESSEE IS MANAGING PARTNER OF M/S KASYAP HOME NEEDS AND HAS PURCHASED 4500 SQ.YARDS OF LAND AT ANADAPURAM FROM SHRI NALLA MADHUSUDHAN REDDY VIDE REGISTERED SALE DEED NO.2955/2016 DATED 17.06.2016 FOR A CONSIDERATION OF RS.56,26,500 AND PAID ON - MONEY TO THE EXTENT OF RS.4,16,36,100/ - IN CASH OVER AND ABOVE THE SALE CONSIDERATION MENTIONED IN THE REGISTERED SALE DEED AND AGREED TO DISCLOSE THE SAME AS ADDITIONAL INCOME. HOWEVER, 3 ITA NO. 63 /VIZ/20 21 AND CO NO. 40 /VIZ/20 21 , A.Y.20 1 7 - 18 KANUMURI NARASIMHARAJU, VISAKHAPATNAM SUBSEQUENTLY AFTER SUR VEY, THE ASSESSEE FILED THE RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.4,31,56,197/ - WHICH INCLUDES THE ADDITIONAL INCOME DECLARED IN SURVEY . BY THE TIME SURVEY WAS CONDUCTED, THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME FOR THE A.Y.2017 - 18 AND IN TH E RETURN FILED SUBSEQUENTLY , THE ASSESSEE HA S ADMITTED THE SUM OF RS.4,17,00,000/ - TOWARDS GIFTS RECEIVED FROM NEAR AND DEAR AND OFFERED THE SAME TO TAX U/S 56(2)(VII)(A) OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE AO REQUESTED THE ASSESSEE TO FUR NISH THE DETAILS OF GIF T S RECEIVED ALONG WITH CONFIRMATION LETTERS AND THE ASSESSEE FILED THE DETAILS AND EXPLAINED THAT ON ATTAINING THE AGE OF 60 YEARS HE CELEBRATED THE SHASHTI POORTHY FUNCTION IN THE MONTH OF APRIL 2016 AND RECEIVED THE GIFTS WORTH R S.4.17 CRORES IN MONETARY / NON MONETARY TERMS AND HE CONVERTED THE NON CASH GIFTS INTO CASH AND MADE THE INVESTMENT FOR PURCHASE OF LAND. THE GIFTS RECEIVED BY THE ASSESSEE WERE OFFERED FOR TAX U/S 56(2)(VII)(A) OF THE ACT. THEREFORE, REQUESTED TO ACCEPT THE RETURN A ND COMPLETE THE ASSESSMENT. SINCE, T HE ASSESSEE HAS NOT FURNISHED THE CONFIRMATION LETTERS ALONG WITH EVIDENCES TO PROVE THE IDENTITY OF THE PERSONS AND GENUINENESS OF THE TRANSACTIONS , THE AO TAXED THE ENTIRE SUM OF RS.4,17,00 ,00 0/ - U/S 69A O F THE ACT. 3. AGAINST THE ORDER OF THE AO THE ASSESSEE WENT ON APPEAL BEFORE THE LD.CIT(A) AND THE LD.CIT(A) DELETED THE ADDITION MADE BY THE AO, HOLDING 4 ITA NO. 63 /VIZ/20 21 AND CO NO. 40 /VIZ/20 21 , A.Y.20 1 7 - 18 KANUMURI NARASIMHARAJU, VISAKHAPATNAM THAT TH E RE IS NO CASE FOR MAKING THE ADDITION U/S 69A SINCE THE ASSESSEE HAS RECORDED THE SOURCE IN THE BOOKS OF ACCOUNTS AND ADMITTED THE INCOME IN THE RETURNS FILED BY HIM. FOR THE SAKE OF CLARITY, WE EXTRACT RELEVANT PART OF THE ORDER OF THE LD.CIT(A) IN PARA NO.4.1.8 AS UNDER . 4.1.8. I HAVE CAREFULLY CONSIDERED THE ISSUE AND FACTS OF THE CASE. THERE IS NO DISPUTE OF THE FACT THAT THE APPELLANT HAD OWNED UP THE PAYMENT OF CASH TO THE SELLER. IT IS ALSO NOT IN DISPUTE THAT SUCH AMOUNTS HAVE COME TO HIM IN THE FORM OF GIFTS WHICH WAS DUL Y DISCLOSED IN THE BOOKS. THIS INFORMATION WAS FILED BEFORE DDIT(INV) ALONG WITH FINAL ACCOUNT. THEREFORE, THERE IS NO DISPUTE REGARDING THE NATURE AND SOURCE OF GIFT. IT IS ALSO A FACT THAT THE INCOME WAS BROUGHT TO TAX U/S 56(2) OF THE ACT AND PAID RELEV ANT TAXES. THE DDIT (INV) HAS NOT DRAWN ANY ADVERSE CONCLUSION ON THE EXPLANATION. IT IS SEEN THAT THE SOURCE OF FUNDS ARE NEITHER LOAN NOR ADVANCE , HENCE THE RIGORS OF SECTION 69A OF THE ACT WILL COME INTO OPERATION. BE THAT AS IT MAY, THE APPELLANT HAD FURNISHED THE NAMES AND ADDRESSES OF THE DONORS WITH WHOM THE ASSESSING OFFICER HAS NOT CAUSED ANY ENQUIRY. IN THE ABSENCE OF SUCH ENQUIRY, SECTION 69A OF THE ACT CANT BE INVOKED. IT IS ALSO A FACT THAT THE GIFTS ARE SUFFERED TAX AT 30% IN THE HANDS OF APPELLANT. (I) THE APPELLANT OFFERED THE INCOME U/S 56(2) IN HIS RETURN OF INCOME AND NOT UNDER SECTION 69A, SECTION 69B, SECTION 69C AND SECTION 69D OF THE ACT. (II) NO ADDITIONAL INCOME HAS BEEN DETERMINED BY THE ASSESSING OFFICER OTHER THAN THE INCOME WHICH IS VOLUNTARILY DECLARED BY THE APPELLANT IN HIS RETURN OF INCOME FILED U/S 139(4) OF THE ACT. SO, IN THIS CASE THERE IS NO QUESTION OF INVOKING SECTION 115BBE OF THE ACT. ON OVERALL CONSIDERATION OF FACTS AND CIRCUMSTANCES, THE APPELLANT HAD REASONA BLY EXPLAINED THE SOURCES OF GIFTS. ACCORDINGLY, THERE IS NO SCOPE FOR INVOKING SECTION 69A OF THE ACT. 4 . AGAINST WHICH THE DEPARTMENT IS IN APPEAL BEFORE THIS TRIBUNAL. 5 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN TH E INSTANT CASE, THE AO ASSESSED THE SUM OF RS.4,17,00,000/ - U/S 69A OF THE ACT DESPITE THE FACT THAT THE ASSESSEE HA S ADMITTED THE SAME AS INCOME IN THE RETURN OF INCOME U/S 56(2)(VIIA) OF THE ACT . THE AO EXTRACTED SECTION 69A IN PAGE NO.6 OF THE ASSESSME NT ORDER AS PER WHICH, IN ANY 5 ITA NO. 63 /VIZ/20 21 AND CO NO. 40 /VIZ/20 21 , A.Y.20 1 7 - 18 KANUMURI NARASIMHARAJU, VISAKHAPATNAM FINANCIAL YEAR, THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE AND SUCH MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE IS NOT RECORDED IN THE BOOKS OF ACC OUNT, IF ANY MAINTAINED BY HIM AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE ACQUISITION, THE SAME MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. IN THE INSTANT CASE, THE ASSESSEE HA S PURCHASED A PIECE OF LAND FOR WHICH THE SOURCE WAS EXPLAINED AS GIFTS, PARTLY AND PARTLY THE AMOUNT WAS PAID THROUGH CHEQUES. THUS, THE GIFTS WERE RECORDED IN THE BOOKS OF ACCOUNTS AND ALSO OFFERED TO TAX U/S 56(2)(VII)(A) OF THE ACT. THE ASSESSEE ALSO FURNISHED THE DETAILS TO THE DDIT/ AO, WITH NAMES AND ADDRESSES OF THE PERSONS FROM WHOM THE GIFTS WERE RECEIVED VIDE LETTER DATED 30.03.2018 . T HE ASSESSEE FURNISHED THE DETAILS BEFORE THE AO ALSO VIDE LETTER DATED 11.12.2019. NEITHER THE DDIT NOR THE AO FOUND ANY DEFICIENCY IN THE INFORMATION SUBMITTED BY THE ASSESSEE AND HAS NOT CAUSED ANY ENQUIRIES . SINCE, THE ASSESSEE HAS ALREADY EXPLAINED THE SOURCE AS GIFTS AND OFFERED THE SAME TO TAX U/S 56(2)(VII)(A), WHICH WAS NOT BEI NG DISPROVED BY THE AO, THE CREDITS MADE IN THE BOOKS OF ACCOUNTS STANDS EXPLAINED AND THERE IS NO CASE FOR INVOCATION OF SECTION 69A OF THE ACT. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER 6 ITA NO. 63 /VIZ/20 21 AND CO NO. 40 /VIZ/20 21 , A.Y.20 1 7 - 18 KANUMURI NARASIMHARAJU, VISAKHAPATNAM OF THE LD.CIT(A) AND THE SAME IS UPHELD. THE APP EAL OF THE REVENUE IS DISMISSED. 6 . THE ASSESSEE FILED CROSS OBJECTIONS. GROUND NO.1 IS SUPPORTING THE ORDER OF THE LD.CIT(A). SINCE, WE HAVE UPHELD THE ORDER OF THE LD.CIT(A) AND DISMISSED THE APPEAL OF THE REVENUE, THE GROUND RAISED BY THE ASSESSEE BEC OMES INFRUCTUOUS, HENCE, DISMISSED. 7 . GROUND NO.2 IS RELATED TO THE VALIDITY OF CONVERSION OF CASE SELECTED FOR SCRUTINY UNDER CASS AS COMPLETE SCRUTINY IN VIOLATION OF CBDT GUIDELINES. THE ASSESSEE IS CHALLENGING THE VALIDITY OF ISSUE OF NOTICE U/S 143( 2) AND CONVERTING THE CASE INTO COMPLETE SCRUTINY AGAINST THE GUIDELINES ISSUED BY THE CBDT. ACCORDING TO THE ASSESSEE, THE AO OUGHT NOT TO HAVE SELECTED THE CASE FOR SCRUTINY AT ALL SINCE, THE SURVEY U/S 133A WAS CONDUCTED IN THE CASE OF M/S KASYAP HOME NEEDS BUT NOT IN ASSESSEES THE CASE. 8 . WE HAVE HEARD THE RIVAL CONTENTIONS AND WE ARE OF THE VIEW THAT THIS GROUND DOES NOT NEED ADJUDICATION SINCE, WE HAVE DISMISSED THE APPEAL OF THE REVENUE ON MERITS. T HE ASSESSEE IS FREE TO TAKE UP THIS GROUND, IN C ASE, THE DEPARTMENT SUCCEEDS ON MERITS IN THE HONBLE HIGH COURT. THE CROSS OBJECTION RAISED BY THE ASSESSEE STANDS DISMISSED. 7 ITA NO. 63 /VIZ/20 21 AND CO NO. 40 /VIZ/20 21 , A.Y.20 1 7 - 18 KANUMURI NARASIMHARAJU, VISAKHAPATNAM 9. IN THE RESULT APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH SEPTEMBER , 2021. SD/ - SD/ - ( ) ( . . ) (N.K.CHOUDHRY) (D.S.SUNDER SINGH) / JUDICIAL MEMBER / ACCOUNTANT MEMBER DATED : 08 .0 9 .2021 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO : - 1 . / THE REVENUE - DY.COMMISSIONER OF INCOME TAX, CIRCLE - 3(1) , VISAKHAPATNAM 2 . / THE ASSESSEE SHRI KANUMURI NARASIMHARAJU, 50 - 1 - 23/46, FLAT NO.202, KSR COMPLEX, C - BLOCK, OPP.RYTU BAZAAR, SEETHAMMADHARA , VISAKHAPATNAM 3. THE PR. COMMISSIONER OF INCOME TAX - 1, VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 , VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM