SUDHEER CHAMARTHI, Guntur V. INCOME TAX OFFICER, WARD-1(1), Guntur

ITA 216/VIZ/2022

AI Insights

The case involves Sudheer Chamarthi, who appealed against the order of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, which confirmed an addition of Rs. 8,58,000 as unexplained cash deposits during the demonetization period. The assessee argued that the deposits were from explained sources, including cash gifts from his parents and personal savings. The Tribunal considered the assessee's regular income tax filings and the financial capabilities of his parents, who are also taxpayers, and partly granted relief by reducing the unexplained amount.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135973 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 13-09-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 31-10-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift
• Section: 69; 142(1); 143(1); 143(2); 69A

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम “एसएमसी”पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER आयकर अपील सं./I.T.A.No.216/Viz/2022 (ननधधारण वर्ा / Assessment Year :2017-18) Sudheer Chamarthi 12-17-36/1, Somuvari Street Kothapet Guntur [PAN : AXNPC8454A] Vs. Income Tax Officer Ward-1(1) Guntur (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : Shri G.V.N.Hari, AR प्रत्यधथी की ओर से / Respondent by : Shri Madhukar Aves, DR सुनवधई की तधरीख / Date of Hearing : 14.09.2023 घोर्णध की तधरीख/Date of Pronouncement : 18.10.2023 आदेश /O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeal) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi in DIN & Order No.ITBA/NFAC/S/250/2021- 22/1041354665(1) dated 23.03.2022 for the Assessment Year (A.Y.)2017-18 with the delay of 163 days. The assessee filed an affidavit, submitting that the order of the Ld.CIT(A) was uploaded in e-filing portal and it was not served physically. The assessee submitted that all his income tax matters were entrusted to a Chartered Accountant, who did 2 I.T.A. No.216/Viz/2022,A.Y.2017-18 Sudheer Chamarthi, Guntur not seem to have viewed the order of the Ld.CIT(A). The assessee further submitted that the appellate order came to his knowledge when a show cause notice for penalty under section 271AAC(1) of the Income Tax Act, 1961 (in short “Act”) dated 14.10.2022 was issued with a note appended to the said notice that the appeal filed before the CIT(A) was disposed of on 23.03.2022 granting partial relief and requiring the assessee to show cause as to why penalty under the said section should not be levied for the addition sustained by the Ld.CIT(A). The time for filing appeal before the Tribunal expired as on 22.05.2022. Not satisfied with the services of the Chartered Accountant, the assessee approached another Advocate who advised that an appeal lies against the order of the Ld.CIT(A) and accordingly, the assessee filed appeal which was delivered to the Registry of the Tribunal on 01.11.2022, causing delay of 163 days. The assessee filed a petition for condonation of delay and submitted that the reasons for the delay are beyond the control of the assessee and not intentional. The assessee did not stand benefitted by filing the appeal with the delay. He therefore prayed to condone the delay and admit the appeal for hearing. 3 I.T.A. No.216/Viz/2022,A.Y.2017-18 Sudheer Chamarthi, Guntur I have gone through the condonation petition filed by the assessee and find that there is a reasonable cause for the delay, therefore, I condone the delay and admit the appeal for hearing. 2. Brief facts of the case are that the assessee is an individual, deriving income from other sources, had filed his return of income for the A.Y.2017-18 through e-filing on 07.08.2017, declaring total income at Rs.3,01,990/-. The return of income was processed u/s 143(1) of the Act on 27.09.2017 by CPC, Bangalore. Subsequently, the case was selected for limited scrutiny under CASS with a reason to examine the issue of “Cash deposits made during demonetisation period”. Notices u/s 143(2) was issued on 21.09.2018 and further notices 142(1) dated 09.01.2019 and 10.07.2019 were issued calling for certain information. In response, the assessee furnished part of e-submissions / information, without furnishing the evidences in support of the sources for the cash deposits made during demonetization period for the F.Y.2016-17. Therefore, the AO completed the assessment and passed an order dated 03.12.2019 u/s 143(3) of the Act, treating the cash deposits as cash deposits made from the unexplained sources during the A.Y.2017-18 and made an addition of Rs.11,08,000/- u/s 69A of the Act. 4 I.T.A. No.216/Viz/2022,A.Y.2017-18 Sudheer Chamarthi, Guntur 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) held that considering the assessee as a regular income tax filer, a reasonable amount of Rs.2,50,000/- can be considered to be available in cash at home, accumulated in the hands of all the family members in few years. Hence, the Ld.CIT(A), out of cash deposit of 11,08,000/- made, partly allowed a sum of Rs.2,50,000/- as explained and treated the remaining amount of Rs.8,58,000/- as unexplained cash u/s 69 A of the Act.. 4. Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal : 1. The order of the learned Commissioner of Income-Tax (Appeals) is erroneous to the extent it is prejudicial to the appellant. 2. The learned Commissioner of Income Tax (Appeals) erred in not adjudicating the ground No.2 agitated by the appellant against completion of assessment without providing adequate opportunity. 3. The learned Commissioner of Income Tax(Appeals) erred in accepting the source for the cash deposits to the extent of 2,50,000/- out of Rs.11,08,000/- deposited by the appellant and in confirming the addition to the extent of Rs.8,58,000/- (inadvertently mentioned as Rs.9,30,000/-) made by the Assessing Officer u/s 69A of the I.T.Act. 4. The learned CIT(Appeals) ought to have observed that the appellant was in receipt of cash gifts from his parents who also confirmed the gifts made by providing the sworn affidavits and the gifts are provided out of natural love and affection as the appellant is the only son to their parents. 5 I.T.A. No.216/Viz/2022,A.Y.2017-18 Sudheer Chamarthi, Guntur 5. The learned CIT(Appeals) ought to have observed that the parents of the appellant have sufficient sources for providing cash gifts to the appellant and they are income-tax assessees filing the returns of income. 6. The observation of the learned CIT(Appeals) that whether the parents of the appellant also deposited cash in their account during demonetisation period is not a relevant factor for the facts of the appellant’s case. 7. The learned Commissioner of Income-Tax (Appeals) merely doubted the savings of the appellant without any basis when the appellant had source of earnings and capable of saving porting of the earnings. In support of his earnings the appellant is filing the returns of income. 8. The learned Commissioner of Income-Tax (Appeals) ought to have accepted the source of deposits of the entire amount of Rs.11,08,000/- considering the earnings of three persons in all i.e. both of his parents and the appellant himself. 9. Any other ground that may be urged at the time of hearing. 5. All the grounds of appeal are related to confirming the addition of Rs.8,58,000/- u/s 69A of the Act by the Ld.CIT(A). At the outset, the Ld.AR submitted that the assessee is a regular income tax filer and the source of cash deposits is out of the income of A.Y.2016-17 and 2017-18, personal savings and besides the gifts received from his father and mother, who are also regular income tax filers. The Ld.AR further submitted that the assessee has sufficient sources for the cash deposits made and therefore pleaded to set aside the order passed by the Ld.CIT(A) and delete the addition made. 6 I.T.A. No.216/Viz/2022,A.Y.2017-18 Sudheer Chamarthi, Guntur 6. Per contra, the Ld.DR relied on the order passed by the Ld.CIT(A) and submitted that the Ld.CIT(A) is justified in giving part relief to the assessee. He, therefore, pleaded to uphold the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee. 7. I have heard both the parties and perused the material available on record. The assessee is an individual, doing private computer works and his main source of income is income from other sources. It is undisputed fact that the assessee is assessed to income since the A.Y.2015-16. The assessee’s mother and father are also assessed to income tax, who filed returns of income regularly. The assessee filed paper book with copy of acknowledgement, having filed the return of income, statement of income, bank statements, confirmation letters from his parents, having received the gifts in cash. On perusal of the same, I find that the assessee has ample chances for savings and make deposits, therefore, I am inclined to give relief of Rs.1,00,000/- more in addition to the relief of Rs.2,50,000/- given by the Ld.CIT(A). I direct the AO to give relief of Rs.1,00,000/- out of Rs.8,58,000/- and confirm the addition to the extent of Rs.7,58,000/-. Accordingly, the grounds raised by the assessee are partly allowed. 8. In the result, appeal of the assessee is partly allowed. 7 I.T.A. No.216/Viz/2022,A.Y.2017-18 Sudheer Chamarthi, Guntur Order pronounced in the open court on 18 th October, 2023. Sd/- (द ु व्वूरु आर.एल रेड्डी) (DUVVURU RL REDDY) न्याधयक सदस्य/JUDICIAL MEMBER Dated : 18.10.2023 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee – Shri Sudheer Chamarthi, 12-17-36/1, Somuvari Street, Kothapet, Guntur 2. रधजस्व/The Revenue – The Income Tax Officer, Ward-1(1), Kannavarithota, Guntur 3. The Principal Commissioner of Income Tax, Visakhapatnam 4. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम / DR,ITAT, Visakhapatnam 5..गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam