Naga Kavitha Munduru, Hyderabad V. Income Tax Officer, Ward-9(1), Hyderabad

ITA 06/Hyd/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8432 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 19-02-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 02-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T CHAITANYA KUMAR
• Section: 143(3); 143(1); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A - SMC, HYDERABAD BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.06/HYD/2018 ASSESSMENT YEAR:2013 - 14 SMT. NAGA KAVITHA MUNDURU, HYDERABAD. PAN: AKUPM 5709 N VS. INCOME TAX OFFICER, WARD - 9(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI T. CHAITANYA KUMAR REVENUE BY: SRI SUNIL KUMAR PANDEY, DR DATE OF HEARING: 19/02/2020 DATE OF PRONOUNCEMENT: 08/07/2020 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A) - 7, HYDERABAD IN APPEAL NO. 161/CIT(A) - 7/2015 - 16, DATED 4/8/2007 PASSED U/S. 143(3) R.W.S 250(6) OF THE ACT FOR THE AY 2013 - 14. 2. THERE I S A DELAY OF 3 DAYS IN FILING THE APPEAL. T HE ASSESSEE HAS FILED AN AFFIDAVIT STATING THAT THE DELAY HAS OCCURRED BECAUSE THE ASSESSEE WA S O U T OF STATIO N AND THE REFORE, HE W AS UNABLE TO SIGN THE REQUISITE DOCUMENTS. IT WAS THEREFORE PLEADED THAT THE DELAY OF 3 DAYS IN FI LING THE APPEAL MAY BE CONDONED. CONSIDERIN G THE FACT THAT THE DELAY 2 IS ONLY FOR A FEW DAYS IN FILING THE APPEAL, I HEREBY CONDON E THE DELAY IN FILI NG THE APPEAL AND PROCEED TO HE AR THE APPEAL ON MERITS. 3 . THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HER APPEAL HO WEVER THE CRUX OF THE ISSUE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE LD. AO WHO HAD TREATED THE AMOUNT OF RS. 15,97,257/ - (SIC) RS. 15,95,257/ - AS UNEXPLAINED INCOME OF THE ASSESSEE. 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSEE IS THE PROPRIETRIX OF M/S. SREE BIO FUELS, ENGAGED IN THE BUSINESS OF MANUFACTURING BIO - FUEL PRODUCTS FOR GENERATING POWER FROM PROCESSING OF BIODEGRADABLE WASTE. THE ASSESSEE FILED HER RETURN OF INCOME FOR THE RELEVANT AY 2013 - 14 ON 31/3/2014 ADMITT ING TOTAL INCOME OF RS. 1,74,700/ - AFTER CLAIMING DEDUCTION U/S. 80JJA FOR RS. 10,23,051/ - . INITIALLY THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE ACT ON 30/07/2014, AND THEREAFTER THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY AND THE ASSESS MENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 3/8/2015 WHEREIN THE LD. AO TREATED THE AMOUNT OF RS. 15,95,257/ - AS THE UNEXPLAINED INCOME OF THE ASSESSEE BEING THE UNEXPLAINED AMOUNT EMBEDDED IN THE OPENING CAPITAL BALANCE OF THE ASSESSEE. ON APPEAL, THE LD . CIT (A) CONFIRMED THE ORDER OF THE LD. AO BY AGREEING WITH HIS VIEW. 3 5 . DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS , THE LD. AO DIRECTED THE ASSESSEE TO FURNISH THE SOURCE FOR THE OPENING CAPITAL BALANCE OF RS. 28,46,574/ - . THE ASSESSEE PRODUC ED THE DETAILS OF HER INCOME AS WELL AS HER HUSBANDS INCOME FOR THE PERIOD 2002 - 03 TO 2011 - 12 WHICH AGGREGATES TO RS. 27,32,686/ - IN THE CASE OF HER HUSBAND MR. M. SRINIVASA RAO AND RS. 15,43,233/ - IN HER CASE. THUS, THE AGGREGATE OF INCOME WITH RESPECT T O BOTH THE PARTIES WORKS OUT TO RS. 42,75,919/ - . AFTER DEDUCTING THE DRAWINGS , THE ASSESSEE WORKED OUT THE BALANCE AMOUNT AVAILABLE FOR INVESTMENT IN HER BUSINESS AS RS. 30,79,204/ - . ON FURTHER VERIFICATION OF THE DETAILS SUBMITTED BY THE ASSESSEE, THE LD. AO OPINED THAT THE AMOUNT OF RS. 20,60,517/ - CAN BE HELD TO BE IN THE POSSESSION OF THE ASSESSEE AS ON 1/4/2012. THE LD. AO FURTHER GRANTING A RELIEF OF RS. 2,32,630/ - AND ARRIVED AT THE UNEXPLAINED OPENING CAPITAL BALANCE OF THE ASSESSEE AT RS. 15,95,2 57/ - {28,46,574/ - [(RS. 30,79,204 - RS. 20,60,517) + RS. 2,32,630]} AND ADDED THE SAME AS THE UNEXPLAINED INCOME IN THE HANDS OF THE ASSESSEE. 6 . ON APPEAL THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. AO BY OBSERVING AS UNDER: - 6. IN THE PERSONAL CAPITAL ACCOUNT OF THE APPELLANT, THE APPELLANT COULD EXPLAIN THE AMOUNT OF RS. 12,51,317/ - OUT OF THE OPENING BALANCE. NO EVIDENCE WAS FILED TO PROVE THE BALANCE DIFFERENCE OF RS. 15,95,257/ - OUT OF THE OPENING BALANCE OF RS. 28,46,574/ - IN THE CAPITAL ACCOUNT OF THE APPELLANT. THE CLAIM OF PAST SAVINGS LYING WITH THE PARENTS, IN LAWS, RELATIVES AND FRIENDS WAS NOT SUBSTANTIATED EITHER BEFORE UNDERSIGNED OR 4 BEFORE THE AO. MERE EXPLANATION THAT SAID AMOUNT FORMS PART OF OPENING BALANCE IS NOT AC CEPTABLE IN THE ABSENCE OF DOCUMENTARY EVIDENCE. THE CLAIM OF THE APPELLANT THAT THE PREVIOUS BALANCE SHEET AND CASH FLOW STATEMENT WERE SUBMITTED IN THE APPEAL PROCEEDINGS IS FACTUALLY INCORRECT. THE SUBMISSION OF COPY OF CAPITAL ACCOUNT AND BALANCE SHE ET FOR THE FY 2012 - 13 IS NOT SUPPORTED BY ANY OTHER EVIDENCE. NO DETAILS WERE SUBMITTED IN RESPECT OF THE EARLIER YEARS. MOREOVER, THE INCOME STATEMENT FILED BY MR. M. SRINIVASA RAO & MRS. M. KAVITA FROM FY 2002 - 03 ONWARDS CANNOT BE REFLECTED IN THE CAPI TAL ACCOUNT OF ONE PERSON I.E., MRS. M. KAVITA. EACH CAPITAL ACCOUNT REFLECTING THE INCOMES IS DIFFERENT. SUCH INCOMES, IF ANY, CANNOT BE COMBINED IN A SINGLE CAPITAL ACCOUNT OF APPELLANT TO EXPLAIN THE SOURCE OF SO - CALLED OPENING CAPITAL ACCOUNT. THE RA TIO OF THE DECISIONS CITED BY THE AR OF THE APPELLANT ARE NOT APPLICABLE TO THE FACTS OF THE CASE. THE FACTS OF THE PRESENT CASE ARE DIFFERENT. HENCE, I CONFIRM THE ADDITION MADE BY THE ASSESSING OFFICER. 7 . BEFORE ME THE LD. AR SUBMITTED THAT THE AS SESSEES FAMILY IS RESOURCEFUL BECAUSE BOTH THE ASSESSEE AND HER SPOUSE ARE EARNING INCOME AGAINST WHICH THE TAXES ARE PAID. FURTHER, THE LD AR ARGUED STATING THAT THE LD. AO HIMSELF HAS ACCEPTED THE ASSESSEE TO BE IN POSSESSION OF RS. 20,60,517 AS ON 1/4 /2012 BASED ON THE MATERIALS PRODUCED BEFORE HIM. IT WAS FURTHER ARGUED THAT THE LD AO HAS NOT CONSIDERED THE GOLD LOAN RECEIVED BY THE ASSESSEE AND THE AMOUNT RECEIVED FROM HER IN - LAWS ON SALE OF PROPERTY OF RS. 3 LAKHS AND RS. 5 LAKHS RESPECTIVELY. IT WA S THEREFORE PLEADED THAT THE ADDITION MADE BY THE LD. AO FOR RS. 15,95,257/ - MAY BE DELETED. THE LD. DR ON THE OTHER HAND VEHEMENTLY ARGUED IN SUPPORT OF THE ORDERS OF THE LD. REVENUE AUTHORITIES. 8 . I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUS ED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE IT IS APPARENT THAT THE ASSESSEE AND HER SPOUSE ARE EARNING SUFFI CIENT INCOME AGAINST WHICH 5 TAX IS PAID . THE ASSESSEE HAS ALSO REASONABLY WORKED OUT THE DETAILS OF THE BALANCE AMOUNT AVAILABLE WITH HER FOR INVESTMENT IN THE IND USTRY FOR RS. 30,79,204/ - . THE LD. AO AS WELL AS THE LD. CIT (A) IS ALSO CONVINCED WITH THE RESPECT TO THE AVAILABLE FUND WITH THE ASSESSEE AS ON 1/4/2012 FOR RS. 20,60,517/ - . KEEPING IN VIEW OF THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED VIEW THAT THE DETAILED COMPUTATION FURNISHED BY THE ASSESSEE JUSTIFYING HER AVAILABLE CASH BALANCE FOR INVESTMENT IN THE INDUSTRY FOR RS. 30,79,204/ - CANNOT BE SIMPLY BRUSHED ASIDE. THEREFORE, IN THE INTEREST OF JUSTICE, AND TO AVOID UNNECESSARY PROTR ACTED LITIGATION, I HEREBY DIRECT THE LD. AO TO DELETE THE ADDITION OF RS. 15,95,257/ - MADE IN THE HANDS OF THE ASSESSEE WHICH WAS FURTHER SUSTAINED BY THE LD. CIT (A). 9 . BEFORE PARTING, IT IS WORTHWHILE TO MENTION THAT THIS ORDER IS PRONOUNCED AFTER 90 DAYS OF HEARING THE APPEAL, WHICH IS THOUGH AGAINST THE USUAL NORMS, I FIND IT APPROPRIATE, TAKING INTO CONSIDERATION OF THE EXTRA - ORDINARY SITUATION IN THE LIGHT OF THE LOCK - DOWN DUE TO COVID - 19 PANDEMIC. WHILE DOING SO, I HAVE RELIED IN THE DECISION OF M UMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. JSW LTD. IN ITA NO.6264/M/2018 AND 6103/M/2018 FOR AY 2013 - 14 ORDER DATED 14TH MAY 2020. 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 6 PRONOUNCED IN THE OPEN COURT ON 08 TH JULY, 2020. SD/ - ( A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER HYDERABAD, DATED: 08 TH JULY, 2020. OKK COPY TO: - 1) SMT. NAGA KAVITHA MUNDURU, H.NO. 4 - 12 - 58/7, PLOT NO.9/W, ARUNODAYA NAGAR, BHAGYALATHA COLONY, VANASTHALIPURAM, HYDERABAD 500 070. 2) INCOME TAX OFFICER, WARD - 9(1), HYDERABAD. 3) THE CIT (A) - 7, HYDERABAD. 4) THE PR. CIT - 7, HYDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE