Pradeep Kumar Agarwal, Hyderabad, Hyderabad V. ITO, Ward-7(4), Hyderabad, Hyderabad

ITA 111/HYD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2714 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-08-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 23-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Unexplained investment
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A. NO. 111/HYD/2017 ASSESSMENT YEAR: 2009-10 SRI PRADEEP KUMAR AGARWAL, HYDERABAD [PAN: ADRPA2777N] VS THE INCOME TAX OFFICER, WARD-7(4), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.A. SAI PRASAD, AR FOR REVENUE : SHRI A.G.V. PRASAD, DR DATE OF HEARING : 08-08-2017 DATE OF PRONOUNCEMENT : 08-08-2017 O R D E R PER CHANDRA POOJARI, A.M. : THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, HYDERABAD. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL WITH REGAR D TO SUSTAINING THE ADDITION OF RS. 3 LAKHS U/S. 69C OF TH E INCOME TAX ACT [ACT]. 1. THE ORDER OF THE LEARNED FIRST APPELLATE AUTHOR ITY CONFIRMING THE ADDITION MADE U/S. 69C OF THE I.T. ACT IS NOT CORRE CT EITHER IN LAW OR ON FACT AND IN BOTH. 2. THE LEARNED FIRST APPELLATE AUTHORITY IS NOT JUS TIFIED IN CONFIRMING THE ADDITION OF RS. 3,00,000 MADE BY THE ASSESSING OFFI CER U/S. 69C OF THE I.T. ACT. ITA NO. 111/HYD/17 SRI PRADEEP KUMAR AGARWAL :- 2 - : 3. THE LEARNED FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THE FACT THAT THE WITHDRAWALS AS PER CASH FLOW STATEMENT ARE SUFF ICIENT FOR MAKING ADVANCE TO PURCHASE PROPERTY NOT DISPUTED IN THE RE MAND REPORT SUBMITTED BY THE ASSESSING OFFICER. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE ABOVE GROUNDS. 2. THE FACTS OF THE CASE ARE THAT ASSESSEE IS A PROPRI ETOR OF M/S. PARTH ENTERPRISES DOING BUSINESS IN CONTRACTS. HE FILE D RETURN OF INCOME FOR THE AY. 2009-10 ON 10-02-2010 ADMITTING IN COME OF RS. 2,28,170/-. THE ASSESSEE MADE THE FOLLOWING INVESTMENTS FOR PURCHA SE OF FLAT AT MUMBAI: F.Y. AMOUNT (RS) 2006-07 5,00,000 2007-08 9,50,000 2008-09 3,00,000 TOTAL 17,50,000 3. WHEN THE ASSESSING OFFICER (AO) ENQUIRED INTO SOU RCES, IT WAS EXPLAINED THAT THE SOURCES WERE WITHDRAWALS FROM PROPR IETARY CONCERN, M/S.PARTH ENTERPRISES. THE AO ASKED THE ASSE SSEE TO PRODUCE THE BOOKS OF ACCOUNTS OF PROPRIETARY CONCERN TO EXAMINE THE WITHDRAWALS. HOWEVER THE ASSESSEE COULD NOT PRODUCE THE SAME AS NO BOOKS OF ACCOUNTS WERE MAINTAINED. IN THE RETURN OF INCOME ALSO ALL RELEVANT COLUMNS OF BALANCE SHEET AND P&L AC COUNT WERE KEPT BLANK AS NO BOOKS WERE MAINTAINED. THEREFORE THE AO MADE ADDITION OF RS.3 LAKHS AS UNEXPLAINED INVESTMENT. ITA NO. 111/HYD/17 SRI PRADEEP KUMAR AGARWAL :- 3 - : 4. DURING THE COURSE OF FIRST APPELLATE PROCEEDINGS THE ASSESSEE SUBMITTED THE CASH FLOW STATEMENT FOR F.Y.2005-06 TO F.Y. 2008-09. HE ALSO SUBMITTED RETURN OF INCOME, COMPUTATION, P&L AC COUNT, BALANCE-SHEET BOTH IN INDIVIDUAL AND IN HUF STATUS. SI NCE THIS INFORMATION WAS NOT SUBMITTED DURING THE ASSESSMENT PROCEEDINGS, THE SAME WAS SENT TO AO WITH A REQUEST TO EXAMINE THE SAME AND CALL FOR ANY FURTHER INFORMATION, AS DEE MED FIT AND TO SEND THE REMAND REPORT. 5. THE AO IN HIS REMAND REPORT DATED 30-08-2016 STATE D AS UNDER: THE ASSESSEE EXPLAINED THE SOURCE FOR THE ADVANCE OF RS.3 LAKHS BY WAY OF DRAWING CASH FLOW STATEMENTS FROM THE FIN ANCIAL YEAR 2004-05. IN ALL THE YEARS, THE ASSESSEE DEBITED VERY LOW AMO UNTS TOWARDS DOMESTIC EXPENSES. IN THE ASSESSMENT YEAR UNDER CONSIDERATIO N, THE ASSESSING OFFICER HAS MADE ADDITION OF RS.1 LAKH TOWARDS LOW DOMESTIC EXPENSES AND THE ASSESSEE HAS NOT CONTESTED AGAINST THIS ISS UE. THOUGH THE ASSESSEE EXPLAINED THE SOURCES THROUGH CASH FLOW ST ATEMENTS, DRAWINGS DEBITED TO CASH FLOW STATEMENT ARE VERY LOW. 6. THE ASSESSEE IN HIS REPLY TO REMAND REPORT DATED NIL RECEIVED IN THIS OFFICE ON 18-10-2016 STATED THAT HE HAS WITHDRAWN AN AMOUNT OF RS.67,500/- AND HIS SPOUSE HAS WITHDRAWN R S. 57,274/- DURING THE YEAR, THE RESIDENTIAL ACCOMMODATION IS PROVIDED BY THE COMPANY, THEREFORE, THE WITHDRAWALS ARE SUFFICIENT FOR FAMILY OF FOUR MEMBERS. 7. THE ASSESSEE ALSO FILED CASH FLOW STATEMENT FOR THE AYS. 2005- 06, 2006-07, 2007-08 & 2008-09 EXPLAINING THE ADVANC E FOR PROPERTY ON RS. 3 LAKHS. HOWEVER, THE CASH FLOW STATE MENT WAS NOT ACCEPTED BY THE CIT(A) ON THE REASON THAT ASSESSEE H AS SHOWN LOW DRAWINGS AS SUCH CASH FLOW STATEMENT WAS NOT REFLE CTING TRUE ITA NO. 111/HYD/17 SRI PRADEEP KUMAR AGARWAL :- 4 - : POSITION OF THE ASSESSEES INVESTMENT AND CONFIRMING T HE ADDITION OF RS. 3 LAKHS. AGAINST THIS ORDER OF CIT(A), ASSES SEE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE VARIOUS YEARS CASH FLOW STATEMENT REPRODUCED BY THE CIT(A) I N HIS ORDER. FOR THE PURPOSE OF BETTER UNDERSTANDING, THE CASH FLOW STATEMENT FOR THE AY. 2008-09 IS REPRODUCED HERE UNDER: PARTICULARS AMOUNT PARTICULARS AMOUNT 1/4/2008 TO OPENING BALANCE 2,29,286.00 TO WITHDRAWALS FROM PARTH ENTERPRISES 2,30,500.00 BY DRAWINGS 67,500.00 TO RENT 24,000.00 BY ADVANCE FOR PROPERTY 3,00,000.00 BY LIP 1,10,000.00 31/3/2008 BY CLOSING BALANCE 6,286.00 4,83,786.00 4,83,786.00 8.1. IN THE ABOVE CASH FLOW STATEMENT, ASSESSEE PROPERL Y EXPLAINED THE ADVANCE OF RS. 3 LAKHS. THE CIT(A) IS NOT IN A P OSITION TO GIVE DUE CREDIT TO THE CASH FLOW STATEMENT ON THE REASON THAT THE DRAWINGS SHOWN BY THE ASSESSEE WAS VERY LOW WHICH IS AT RS. 67,500/- FOR THE AY. 2008-09. 8.2. AS SEEN FROM THE ASSESSMENT ORDER, THERE WAS A SE PARATE ADDITION TOWARDS LOW DRAWINGS AT RS. 1 LAKH WAS MADE. THE CIT(A) NOT CONSIDERING THE CASH FLOW STATEMENT FILED BY ASSES SEE ON THE ABOVE REASON IS NOT PROPER. THE CIT(A) IS HAVING NO MATERIAL TO SAY ITA NO. 111/HYD/17 SRI PRADEEP KUMAR AGARWAL :- 5 - : THAT THE CASH FLOW STATEMENT FILED BY ASSESSEE IS WRONG. HENCE, IT IS NOT PROPER TO CIT(A) TO SUMMARILY REJECT THE SAME. IN OUR OPINION, THE ASSESSEE HAS DULY EXPLAINED THE ADVANCE OF RS. 3 LAKHS GIVEN FOR PROPERTY IN THE ABOVE CASH FLOW STATE MENT. WE DO NOT FIND ANY REASON TO SUSTAIN THE ADDITION. ACCORDING LY, WE ARE INCLINED TO DELETE THE ADDITION OF RS. 3 LAKHS SUSTAINE D BY THE CIT(A). 9. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH AUGUST, 2017 SD/- SD/- (P. MADHAVI DEVI) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 8 TH AUGUST, 2017 TNMM COPY TO : 1. SRI PRADEEP KUMAR AGARWAL, C/O. CH. PARTHASARATH Y & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO. 1, ASHOK NAGAR, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-7(4), HYDERABAD. 3. CIT (APPEALS)-3, HYDERABAD. 4. PR.CIT-3, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.