Thallam Venkata Narasimhulu, Kadapa V. Income Tax officer,Ward-2, Kadapa

ITA 1426/Hyd/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3898 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2016-2017
• Appeal Filed On: 16-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: K.K. GUPTA
• Section: 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER I.T.A. NO. 1426/HYD/2019 ASSESSMENT YEAR: 2016-17 THALLAM VENKATA NARASIMHULU, KADAPA [PAN: AABHT6821M] VS INCOME TAX OFFICER, WARD-2, KADAPA (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.K. GUPTA, AR FOR REVENUE : SHRI RAJAT MITRA, DR DATE OF HEARING : 19-11-2019 DATE OF PRONOUNCEMENT : 27-11-2019 O R D E R PER SMT. P. MADHAVI DEVI, J.M. : THIS IS ASSESSEES APPEAL FOR THE AY.2016-17, DIREC TED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-KURNOOL, DATED 02-08-2019. 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE, AN INDIVIDUAL, DERIVING INCOME FROM THE BUSINESS OF MON EY LENDING, FILED HIS RETURN OF INCOME FOR THE AY.2016-1 7 ON 20-06-2017, DECLARING HIS INCOME AT RS.2,78,110/-. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY THROUG H CASS WITH A REASON WHETHER THE CASH DEPOSITS MADE DURING DEMONETIZATION PERIOD HAS BEEN MADE FROM DISCLOSED SOURCES?. ITA NO. 1426/HYD/2019 :- 2 -: HENCE, A NOTICE U/S.143(2) OF THE INCOME TAX ACT [ACT] WAS ISSUED AND THE ASSESSMENT PROCEEDINGS U/S.143(3) OF THE ACT WERE INITIATED. THE ASSESSEE WAS REQUIRED TO FURNISH COPIES OF THE BANK ACCOUNTS, LIST OF SUNDRY DEBTORS AND OTHER RELE VANT DOCUMENTS. ASSESSEE FILED THE SAME AND ON VERIFICATIO N OF THE SAME, THE ASSESSING OFFICER (AO) NOTICED THAT THE ASSESS EE HAS SHOWN CASH ON HAND AT RS.5,07,181/- IN THE BALANCE SH EET AS ON 31-03-2016. IN ORDER TO VERIFY THE CLAIM OF THE ASS ESSEE, CASH IN HAND SHOWN IN THE PREVIOUS ASSESSMENT YEARS ALSO WAS COMPARED ALONG WITH THE DATES OF FILING THE RETURNS OF I NCOME. THE DETAILS ARE AS UNDER: S.NO FINANCIAL YEAR ENDING CASH ON HAND ADMITTED IN RS. DATE OF RETURN OF INCOME FILED FOR THE RELEVANT ASSESSMENT YEAR 1 31 - 03 - 2014 1,04,127 05 - 03 - 2016 2 31 - 03 - 2015 5,01,039 03 - 03 - 2017 3 31 - 03 - 2016 5,07,181 20 - 06 - 2017 2.1. THE AO OBSERVED THAT THE ASSESSEE HAS INCREASED C ASH IN HAND FROM RS.1,04,127/- AS ON 31-03-2014 TO RS.5,01, 039/- AS ON 31-03-2015 AND ALSO THAT THE RETURN OF INCOME WA S FILED FOR THE AY.2015-16 ON 03-03-2017 AND FOR THE AY.2016- 17. THE CASH ON HAND WAS SHOWN AT RS.5,07,181/- AND THE R ETURN OF INCOME WAS FILED ON 20-06-2017. HE ALSO NOTICED TH AT DURING THE DEMONETIZATION PERIOD, THE ASSESSEE HAS DEPOSITED CA SH TO THE EXTENT OF RS.10,30,000/- AND THAT IN ORDER TO COVER U P THE CASH BALANCE, THE ASSESSEE HAS INCREASED CASH BALAN CE AS ON 31-03-2015 TO RS.5,01,039/- SUDDENLY AND ACCORDINGLY FILED HIS RETURNS OF INCOME FOR THE AYS.2015-16 AND 2016-1 7, MUCH ITA NO. 1426/HYD/2019 :- 3 -: LATER THAN THE DUE DATE AND AFTER DEMONETIZATION, THE AO THEREFORE REQUIRED THE ASSESSEE TO FURNISH DETAILS WITH REGARD TO CASH BALANCE OF RS.5,07,181/- AS ON 31-03-2016. SINCE THE ASSESSEE DID NOT FILE ANY DETAILS OTHER THAN NAMES AND PLACES OF THE DEBTORS, FROM WHOM HE HAS ALLEGEDLY REALIZED TH E AMOUNTS, THE AO HELD THAT THE ASSESSEE HAS FAILED TO EX PLAIN THE SOURCES FOR THE CASH ON HAND OF RS.5,07,181/- AS ON 31-03-2016. ACCORDINGLY, THE AO BROUGHT IT TO TAX. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE CIT(A), WHO CONFIRMED THE ORDER OF THE AO AND THE ASSE SSEE IS IN SECOND APPEAL BEFORE US. 4. LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESS EE IS IN THE BUSINESS OF MONEY LENDING AND HAD SUNDRY D EBTORS IN THE EARLIER ASSESSMENT YEARS, FROM WHOM HE HAS REALIZ ED MONEY AND IN THE RETURNS OF INCOME FOR THE AY.2015-16 , THE ASSESSEE HAS SHOWN THE CLOSING BALANCE OF CASH ON HA ND AT RS.5,01,039/-. WHEN THE CLOSING BALANCE OF THE EARLIE R YEAR HAS BEEN ACCEPTED BY THE AO, WITHOUT MAKING ANY DISALLOWANCE, THEN THE SAME SHOULD BE ACCEPTED AS THE OPENING CASH BALANCE AND ADDITION OF THE CASH ON HAND AS ON 31-03-2016 CANNOT BE MADE IN THE AY.2016-17. HE HAS FILED BEFORE US THE CASH FLOW STATEMENT FOR THE FYS.2014-15 AN D ALSO 2015-16 TO DEMONSTRATE THAT THERE WAS A CLOSING BAL ANCE OF CASH OF RS.5,01,038/- AS ON 31-03-2015 AND THUS, THE CASH ON HAND AS ON 31-03-2016 IS EXPLAINED. ITA NO. 1426/HYD/2019 :- 4 -: 5. LD.DR, ON THE OTHER HAND, SUBMITTED THAT THE RETURN OF INCOME FOR THE EARLIER ASSESSMENT YEAR HAS ALSO BEEN FILED AFTER THE DEMONETIZATION PERIOD AND IN ORDER TO COVER UP THE CASH DEPOSITS POST DEMONETIZATION PERIOD, THE ASSESSEE HAS INCREASED THE CASH IN HAND AS ON 31-03-2015. THERE FORE, THE SAME SHOULD NOT BE ACCEPTED. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE IS ENGAGED IN THE BU SINESS OF MONEY LENDING AND THEREFORE ASSESSEE CANNOT BE EXPECTE D TO BE WITHOUT ANY CASH IN HAND AT THE END OF THE RELEVANT ASSESSMENT YEAR. THE ASSESSEE HAS BEEN SHOWING CLOSI NG BALANCE OF CASH IN HAND EVEN FOR THE EARLIER ASSESSM ENT YEARS AND AS EVIDENT FROM THE ASSESSMENT ORDER, THE CASH IN HAND ADMITTED IN THE FINANCIAL YEAR ENDING 31-03-2014 WAS RS.1,04,127/- AND AS ON 31-01-2015 IT WAS RS.5,07,18 1/-. AS SEEN FROM THE BOOKS OF ACCOUNT, THE ASSESSEE HAD SUND RY DEBTORS OF RS.24,39,100/- AND CASH IN HAND OF RS.5,0 1,038/- AS ON 31-03-2015 AND THE ASSESSEE HAS OFFERED THE NET INCOME OF RS.2,89,394/- FOR THE RELEVANT ASSESSMENT YEAR. TH E RETURNED INCOME OF THE ASSESSEE HAS BEEN ACCEPTED BY TH E DEPARTMENT AS THE RETURN WAS NOT PICKED UP FOR SCRUTINY. FOR THE AY.2016-17, THE ASSESSEE HAS ADOPTED THE CLOSING CA SH IN HAND OF FY.2014-15 AS THE OPENING BALANCE OF THE FY.2 015-16 AND HAVING ADVANCED RS.4 LAKHS AS LOANS DURING THE FY.2015- 16, THE SUNDRY DEBTORS WERE SHOWN AT RS.28,39,100/- I N THE BALANCE SHEET ENDED 31 ST MARCH, 2015. THE CASH FLOW STATEMENT THUS DEMONSTRATES THE SOURCES OF THE FUNDS WITH TH E ASSESSEE. THUS, THE CASH IN HAND OF RS.5,07,182/- AS ON ITA NO. 1426/HYD/2019 :- 5 -: 31-03-2016 CANNOT BE DOUBTED MERELY BECAUSE OF DEPOS ITS INTO THE ASSESSEES BANK ACCOUNT DURING THE DEMONETIZATION PERIOD. IN VIEW OF THE SAME, WE ALLOW THE ASSESSEES APPEAL AND THE ADDITION OF RS.5,07,181/- MADE BY THE AO, CONFIRM ED BY THE LD.CIT(A) IS DELETED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2019 SD/- SD/- ( A. MOHAN ALANKAMONY ) ( P. MADHAVI DEVI ) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 27-11-2019 TNMM ITA NO. 1426/HYD/2019 :- 6 -: COPY TO : 1. SRI THALLAM VENKATA NARASIMHULU, KADAPA C/O.K.K.GUPTA, FCA, CHARTERED ACCOUNTANTS, 3464, DUNDOO VIHAR, R.P.ROAD, SECUNDERABAD. 2. THE INCOME TAX OFFICER, WARD-2, KADAPA. 3. CIT(APPEALS)-KURNOOL. 4. THE PR.CIT-KURNOOL. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.