J.Haritha Reddy, Hyderabad, Hyderabad V. ITO, Ward-12(1), Hyderabad, Hyderabad

ITA 117/HYD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2272 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 04-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO
• Keywords: Deemed to accrue or arise in india

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 117/HYD/2015 ASSESSMENT YEAR: 2010-11 MRS. J. HARITHA REDDY, HYDERABAD [PAN: AFKPJ9383A] VS INCOME TAX OFFICER, WARD-12(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO, AR FOR REVENUE : SHRI A.G.V. PRASAD, DR DATE OF HEARING : 18-12-2017 DATE OF PRONOUNCEMENT : 22-12-2017 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-I, HYDERABAD, DATED 20-11-2014. THE RETURN WAS FILED BY THE GPA HOLDER SHRI J. SANJEEVA REDDY, FATHER OF THE ASSESSEE. THE APPEALS WERE ALSO ATTENDED BY HIM AND THE PRESENT APPEAL IS ALSO FILED BY THE GPA HOLDER ON BEHALF OF ASSESSEE, WHO IS STATED TO HAVE BE EN ABROAD. THE ISSUE IN THIS APPEAL IS WITH REFERENCE TO CASH DEP OSITS MADE IN ICICI BANK. 2. BRIEFLY STATED, ASSESSEE FILED RETURN OF INCOME OF RS. 3,16,969/-, BUT COULD NOT RESPOND TO VARIOUS NOTICES I SSUED BY THE ASSESSING OFFICER (AO) IN THE SCRUTINY PROCEEDINGS. AO MADE CERTAIN ADDITIONS AND DETERMINED TOTAL INCOME AT RS. 41, 61,030/-. IN THE APPEALS BEFORE THE LD.CIT(A), ASSESSEE FURNISH ED VARIOUS I.T.A. NO. 117/HYD/2015 :- 2 - : DETAILS AND CONTESTED THE ADDITIONS MADE IN THE EX-PARTE ORDER. ON REMAND, LD.CIT(A) EXAMINED THE FACTS AND CONSIDERED TH E SUBMISSIONS AND DELETED CERTAIN ADDITIONS. ONE SUCH ADDITION IS THE ADDITION OF RS. 35,80,000/- BEING DEEMED INCOME O F CASH DEPOSITS IN VARIOUS BANK ACCOUNTS. THE DETAILS AND THE DECISION OF THE CIT(A) ARE AS UNDER: 9.1. THE ASSESSING OFFICER NOTICED THAT THERE WERE DEPOSITS IN ASSESSEE'S BANK ACCOUNTS AS UNDER: CASH DEPOSITS IN ICICI BANK RS. 22,95,000 OTHER DEPOSITS IN ICICI BANK RS. 11,35,000 DEPOSITS IN HDFC BANK RS. 1,50,000 RS. 35,80,000 9.2. AS THE ASSESSEE COULD NOT EXPLAIN THE SOURCES FOR SUCH DEPOSITS, THE TOTAL AMOUNTING TO RS.35,80,000/- WAS CONSIDERED AS INCOME OF THE ASSESSEE. DURING THE APPEAL PROCEEDINGS THE ENTIRE INFORMATION SUBMITTED BY THE APPELLANT WAS REMANDED TO THE ASSESSING OFFI CER AND THE ASSESSING OFFICER SUBMITTED HIS REMAND REPORT ON 28 .10.2014. A COPY OF THE REMAND REPORT WAS GIVEN TO THE APPELLANT FOR HI S OBJECTIONS/COMMENTS, IF ANY. THE AUTHORIZED REPRESE NTATIVE SUBMITTED HIS REPLY ON 19.11.2014. CONSIDERING THE RELEVANT DETAI LS MENTIONED IN ASSESSMENT ORDER, REMAND REPORT AND THE WRITTEN SUB MISSIONS MADE BY THE APPELLANT, THE DETAILS PERTAINING TO THE ISSUE OF CASH DEPOSITS ARE SUMMARIZED AS UNDER: CASH DEPOSITS IN ICICI BANK: DATE AMOUNT 20.04.2009 RS. 49,000 22.04.2009 RS. 49,000 24.04.2009 RS. 2,000 20.07.2009 RS. 5,00,000 24.07.2009 RS. 5,00,000 29.07.2009 RS. 5,00,000 30.07.2009 RS. 5,00,000 28.01.2010 RS. 1,45,000 11.03.2010 RS. 6,50,000 TOTAL RS. 28,95,000 I.T.A. NO. 117/HYD/2015 :- 3 - : HDFC BANK, SANJEEV REDDY NAGAR, HYDERABAD: THERE ARE NO CASH DEPOSITS IN THIS ACCOUNT. EXCEPT THE CASH DEPOSITS OF RS.28,95,000/- IN LCICL BANK ACCOUNT, REST OF THE ADDITIONS MADE BY THE ASSESSING OFFICER WERE TR ANSFER ENTRIES OR CHEQUE DEPOSITS IN ICICI AND HDFC BANKS. THE ASSESS ING OFFICER IN HIS REMAND REPORT HELD THAT THE APPELLANT SATISFACTORIL Y EXPLAINED THE SOURCES FOR THESE TRANSFER ENTRIES/CHEQUE DEPOSITS. THEREFORE, WHAT IS TO BE EXPLAINED IS THE SOURCE FOR CASH DEPOSITS OF RS. 28,95,000/-. THE APPELLANT HAD DRAWN CASH FLOW STATEMENT WHICH BEGIN S WITH CASH ON HAND OF RS.2,99,664/-. THE SOURCE FOR CASH ON HAND WAS NOT EXPLAINED AND SUCH CASH ON HAND WAS NOT SUPPORTED BY ANY IMME DIATE WITHDRAWALS FROM HER ACCOUNT OR FROM ANY OTHER SOUR CE. THE SOURCES FOR CASH DEPOSITS OF RS.28,95,000/- APPEARING IN ICICI BANK ACCOUNT WERE EXPLAINED BY THE APPELLANT AS UNDER: DATE OF CASH DEPOSIT AMOUNT OF CASH DEPOSIT SOURCES OF THE DEPOSIT 20.02.2009 49,000 AMOUNT DEPOSITED FROM CASH BALANCE 21.04.2009 49,000 AMOUNT DEPOSITED FROM CASH BALANCE 24.04.2009 2,000 AMOUNT DEPOSITED FROM CASH BALANCE 20.07.2009 5,00,000 AMOUNT RECEIVED FROM SRI J. VENKAT REDDY RS. 6,00,000/- (ADVANCE RETURN FROM AGRICULTURAL LAND) 24.07.2009 5,00,000 ADVANCE AMOUNT RECEIVED FOR BUILDING RS. 4,00,000/- & RS. 1,00,000/- FROM SRI J. VENKAT REDDY 29.07.2009 5,00,000 AMOUNT RECEIVED FROM SRI J. SRINIVAS REDDY RS. 6,00,000/- (ADVANCE RETURN FROM AGRICULTURAL LAND) 30.07.2009 5,00,000 ADVANCE AMOUNT RECEIVED FOR BUILDING RS. 3,00,000/- & RS. 1,00,000/- FROM SRI J. SRINIVAS REDDY AND CASH BALANCE 28.01.2010 1,45,000 AMOUNT RECEIVED FROM BUILDING RENT 11.03.2010 6,50,000 AMOUNT RECEIVED FROM BUILDING RENT OF RS. 4,55,000/- 28,95,000 THE CASH FLOW STATEMENT OF THE APPELLANT STARTS WIT H CASH ON HAND OF RS.2,99,664/-. THE SOURCES FOR SUCH CASH ON HAND WA S NOT SUPPORTED BY ANY CORROBORATIVE EVIDENCE. FOR THE DEPOSIT MADE OF RS.5,00,000/- EACH ON 20.07 .2009 AND 29.07.2009, IT WAS EXPLAINED BY THE APPELLANT THAT SHE HAD PAID AN AMOUNT OF RS.6,00,000/- TO SRI J.VENKAT REDDY AND A NOTHER AMOUNT OF RS.6,00,000/- TO SRI J.SRINIVAS REDDY FOR PURCHASE OF LAND. HOWEVER, THE I.T.A. NO. 117/HYD/2015 :- 4 - : DEAL DID NOT GO THROUGH AND EACH OF THEM HAVE RETUR NED BACK RS.5,00,000/-. BOTH THE PERSONS SRI J.VENKAT REDDY AND SRI J.SRINIVAS REDDYHAD FILED CONFIRMATION LETTERS. HOWEVER, THE A PPELLANT COULD NOT PRODUCE ANY AGREEMENT COPY ENTERED TO PURCHASE THE LAND. THE APPELLANT ALSO DID NOT GIVE THE SPECIFIC DATES ON WHICH THE P AYMENTS WERE MADE TO SRI J.VENKAT REDDY AND SRI J.SRINIVAS REDDY AND THE SOURCES FOR THE SAME. MOREOVER, ALL THE TRANSACTIONS ARE IN CASH. I T APPEARS THAT SRI J.VENKAT REDDY AND SRI J.SRINIVAS REDDY ARE RELATED TO THE APPELLANT AND HAD GIVEN THE CONFIRMATION AS PER HER REQUEST. SUCH CONFIRMATIONS ARE NOT SUPPORTED BY ANY EVIDENCE WHATSOEVER. WITH REFERENCE TO DEPOSIT OF RS.5,00,000/- ON 24.07 .2009, THIS AMOUNT WAS CLAIMED TO HAVE BEEN RECEIVED FROM SRI J .VENKAT REDDY AS AN ADVANCE FOR PURCHASE OF BUILDING. AS PER THE INFORM ATION ON RECORD, SRI J.VENKAT REDDY OWNS 3 ACRES OF LAND FOR WHICH A COP Y OF PATTADAR PASS BOOK WAS FILED. NEITHER SRI J.VENKAT REDDY HAS CRED ITWORTHINESS TO LEND THE AMOUNT OF RS.5,00,000/- TO THE APPELLANT NOR TH ERE IS ANY CORROBORATIVE EVIDENCE. THERE IS NO AGREEMENT FOR P URCHASE OF BUILDING BY SRI J.VENKAT REDDY AND THE APPELLANT. ON 30.07.2009 THERE IS A CASH DEPOSIT OF RS.5,00,00 0/- IN ICICI BANK ACCOUNT. IT WAS STATED THAT RS. 4,00,000/- WAS THE ADVANCE PAID BY SRI J.SRINIVAS REDDY FOR PURCHASE OF BUILDING. ONCE AGAIN, THERE IS NO AGREEMENT FOR PURCHASE OF BUILDING BY SRI J.SRINIVA S REDDY AND THE APPELLANT AND THE CLAIM OF THE APPELLANT IS NOT SUP PORTED BY ANY EVIDENCE. IN SUMMARY, OUT OF RS.28,95,000/-, THE ASSESSING OF FICER IS DIRECTED TO GIVE CREDIT FOR THE RENT RECEIVED OF RS.6,00,000 /- AND BALANCE AMOUNT OF RS.22,95,000/- STANDS UNEXPLAINED. THE APPELLANT'S CLAIM STATING THAT THE MONEY WAS RECEIVED FROM SRI J.VENKAT REDDY/ SRI J.S RINIVAS REDDY/OUT OF CASH BALANCE ON HAND, IS TOTALLY UNSUPPORTED BY ANY CORROBORATIVE EVIDENCE AND THEREFORE, CANNOT BE ACCEPTED. IT IS A LSO PERTINENT TO MENTION THAT WHILE GOING THROUGH THE BANK ACCOUNT OF THE AP PELLANT, THE FOLLOWING CASH DEPOSITS FOR OTHER YEARS WERE FOUND AS UNDER: HDFC BANK, SANJEEV REDDY NAGAR, HYDERABAD A/C.NO.06 421050110106 DATE AMOUNT 03.11.2008 RS. 1,50,000 03.11.2008 RS. 50,000 29.12.2008 RS. 1,00,000 23.01.2009 RS. 4,00,000 IN VIEW OF THE ABOVE DISCUSSION AS APPELLANT FAILED TO SATISFACTORILY EXPLAIN THE SOURCES FOR CASH DEPOSITS OF RS.22,95,0 00/-, THE ADDITION MADE BY THE ASSESSING OFFICER TO THAT EXTENT IS SUS TAINED. I.T.A. NO. 117/HYD/2015 :- 5 - : ASSESSEE IS AGGRIEVED ON PARTIAL CONFIRMATION OF THE A DDITION. 3. IT WAS THE SUBMISSION OF LD. COUNSEL THAT ASSESSEE HAS FILED THE CASH FLOW STATEMENT STARTING FROM 01-04-2008, WHERE AS ASSESSMENT YEAR INVOLVED IS AY. 2010-11. THE OPENING CASH BALANCE OBSERVED BY THE CIT(A) AS NOT VERIFIABLE, IS IN FACT BASED ON THE RETURNS OF EARLIER YEARS AND THERE WAS CASH BALAN CE WITH ASSESSEE AS ON 01-04-08. WITH REFERENCE TO VARIOUS PAYMENTS FOR CONSTRUCTION OF BUILDINGS IT WAS SUBMITTED THAT THERE WAS NO DISPUTE. IT WAS POINTED OUT THAT ASSESSEE HAS ADVANCED A N AMOUNT OF RS. 6 LAKHS TO SHRI J. VENKAT REDDY ON 30-10-2008 AND ANOTHER AMOUNT OF RS. 6 LAKHS TO J. SRINIVAS REDDY ON 31-12- 2008, OUT OF THE CASH BALANCES AVAILABLE WITH ASSESSEE BEING WITHD RAWALS FROM THE BANK ACCOUNTS AND THESE AMOUNTS WERE ADVANCED FO R THE PURPOSE OF PURCHASE OF AGRICULTURAL LAND IN THE VIL LAGE AND WERE RETURNED ON 30-06-2009 AND 25-07-2009 BY THOSE PEOPL E. IF THESE AMOUNTS WERE NOT ACCEPTABLE, AS RECEIVABLE FROM SHRI J . VENKAT REDDY OR SHRI J. SRINIVAS REDDY AS OPINED BY THE LD. CIT(A), THEN, ASSESSEE WOULD BE LEFT WITH CASH BALANCES IN THE CASH FLOW STATEMENT. SINCE ASSESSEE HAS ADVANCED AMOUNT AND THOS E PEOPLE RETURNED THE AMOUNTS, THESE WERE DULY REFLECTED IN THE CASH FLOW STATEMENT AND ON THAT BASIS, THERE WAS SUFFICIENT AMOUNT TO BE DEPOSITED IN THE BANK ACCOUNT. IT WAS FURTHER SUBMITTED THAT BALANCE OF DEPOSITS WERE ALSO REFLECTED IN THE CASH F LOW STATEMENT AND THERE WAS NO UNACCOUNTED AMOUNT TO BE CONSIDERED AS INCOME. AN AMOUNT OF RS. 7 LAKHS WAS ALSO ADVANCE S GIVEN EARLIER WHICH WAS RECEIVED BACK ACCORDINGLY SINCE TH E CASH FLOW STATEMENT HAS NOT BEEN DISPROVED, ASSESSEES CONTENTION SHOULD BE ACCEPTED. I.T.A. NO. 117/HYD/2015 :- 6 - : 4. LD.DR, HOWEVER, RELIED ON THE ORDERS OF CIT(A) A ND SUBMITTED THAT THERE IS A DIFFERENCE IN THE STATEMENT GIVEN TO THE A O THAT THE AMOUNTS ARE ADVANCED FROM ASSESSEES HUSBAND AND THE STATEMENT GIVEN TO CIT(A) THAT THE AMOUNTS ARE RECEIVED FROM OTHER S. THEREFORE, THE STATEMENT SHOULD NOT BE ACCEPTED AS GENUI NE. 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE CASH FLOW STATEMENT PLACED IN THE PAPER BOOK. IT IS TRUE THAT A SSESSEE HAS FURNISHED CASH FLOW STATEMENT FROM 01-04-2008 TILL 31-03-2010 TO EXPLAIN VARIOUS WITHDRAWALS IN THE BAN K AND EXPENDITURES. THE OPENING CASH BALANCE OF RS. 2,99,6 64/- CONSIDERED BY THE CIT(A) DOES NOT PERTAIN TO THE YEAR UN DER CONSIDERATION. THIS IS THE BALANCE IN EARLIER YEAR. REMAND REPORT OF THE AO HAS NOT BEEN MENTIONED BY THE CIT(A) IN THE OR DER. NEITHER THE ASSESSEE ALSO PLACED THE COPY OF REMAND RE PORT ON RECORD. ASSESSEE HAS FILED A CASH FLOW STATEMENT AND J USTIFIED THE DEPOSITS IN BANK ACCOUNTS. MOST OF THE AMOUNTS STATED TO HAVE BEEN RECEIVED ARE ADVANCES MADE OUT OF THE WITHDRAWAL S MADE IN EARLIER YEARS. THIS ASPECT HAS NOT BEEN CONSIDERED BY THE LD.CIT(A). EVEN THOUGH, LD.CIT(A) REJECTED THE CONTENTIONS THAT THE CREDITWORTHINESS OF THOSE PEOPLE HAVE NOT BEEN PROVED , THESE ARE NOT CASH CREDITS BY THEM BUT RETURN OF ADVANCES GIVEN TO THEM EARLIER. IF THOSE TRANSACTIONS ARE TO BE DISBELIEVED, THEN, ADVANCES TO THAT EXTENT WOULD BE AVAILABLE IN CASH BALANCE WITH A SSESSEE. SINCE THE VERIFICATION OF CASH FLOW STATEMENT BY AO IS NOT ON RECORD, I AM OF THE OPINION THAT AO CAN VERIFY THE WI THDRAWALS OF CASH IN EARLIER YEAR AND IF THOSE ARE NOT FULLY UTILIS ED FOR CONSTRUCTION PAYMENTS OF THE BUILDING, BEING CONSTRUCTED THEN, ASSESSEES CONTENTIONS THAT THESE ARE ADVANCES GIVEN E ARLIER AND I.T.A. NO. 117/HYD/2015 :- 7 - : RETURNED DURING THE YEAR SHOULD BE ACCEPTED. FOR THI S LIMITED PURPOSE, THE ISSUE IS RESTORED TO THE FILE OF AO TO EXAM INE THE CASH FLOW STATEMENT AND DECIDE ON THE BASIS OF THE FACTS AS AV AILABLE. 6. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DECEMBER, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 22 ND DECEMBER, 2017 TNMM I.T.A. NO. 117/HYD/2015 :- 8 - : COPY TO : 1. MRS. J. HARITHA REDDY, C/O. SRI S. RAMA RAO, ADV OCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO . 9, HIMAYAT NAGAR, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-12(1), HYDERABAD. 3. CIT (APPEALS)-I, HYDERABAD. 4. CIT-I, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.