The ITO, Narasaraopeta V. Ragothu Balashowraiah, Narasaraopeta

ITA 224/VIZ/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3881 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 19-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C DAS
• Keywords: Unexplained investment; Gift; Salary income; Source of fund
• Section: 69

Judgement Text

ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . .. . . . . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.224/VIZAG/2017 ( / ASSESSMENT YEAR: 2013-14) ITO, WARD - 1 NARASARAOPET NAGOTHU BALASHOWRAIAH NARASARAOPET [P AN NO. APSPN0856Q ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI K.C. DAS, DR / RESPONDENT BY : SHRI G.V.N. HARI, AR / DATE OF HEARING : 12.04.2018 / DATE OF PRONOUNCEMENT : 2 5.04.2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1 {CIT(A)}, GU NTUR VIDE ITA NO.12/2016-17/CIT(A-1)/GNT DATED 23.2.2017 FOR THE ASSESSMENT YEAR 2013-14. ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 2 2. GROUND NOS.1 & 4 ARE GENERAL IN NATURE, WHICH DO ES NOT REQUIRE SPECIFIC ADJUDICATION. 3. GROUND NO.2 IS RELATED TO THE ADDITION OF ` 1,23,13,627/- UNDER THE HEAD UNEXPLAINED INVESTMENT. THE ASSESSEE FILED RE TURN OF INCOME DECLARING TOTAL INCOME OF ` 2,73,710/- ON 30.7.2014 AND ALSO AGRICULTURAL INCOME OF ` 4,45,166/-. THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. FOUND TH AT THE ASSESSEE ALONG WITH 3 OF HIS SONS INVESTED IN ACQUIRING THE PROPERTY OF M/S. NAGOTHU INNAIAH FUNCTION PLAZA FOR A CONSIDERATION OF ` 1,90,00,000/- ON 29.10.2012 IN THE HANDS OF PARTNERSHIP FIRM. THE S ALE DEED WAS REGISTERED BY DOCUMENT NO.16189 OF 2012 DATED 29/10 /2012 FROM Y. SESHAGIRI RAO AND 3 OTHERS IN THE NAME OF M/S. NAGO THU INNAIAH FUNCTION PLAZA A PARTNERSHIP FIRM REPRESENTED BY IT S MANAGING PARTNER MR. N. BALASHOWRAIAH WITH OTHER THREE PARTNERS. TH E A.O. ASKED FOR THE SOURCES OF INVESTMENT OF ` 84,73,715/-, CAPITAL ACCOUNT BALANCES OF THE PARTNERS AND THE ASSESSEE REPLIED EXPLAINING THE SO URCES BUT THE A.O. OBSERVED FROM THE RETURN OF INCOME FILED BY M/S. N AGOTHU INNAIAH FUNCTION PLAZA AS ON 31.10.2013 THAT ALL THE COLUM NS OF RETURN OF INCOME OF THE PARTNERSHIP SUCH AS PARTNERS CAPITAL , LOAN FUNDS, FIXED LOANS AND INVESTMENTS WERE FILLED WITH ZERO. THERE FORE, THE A.O. VIEWED THAT ENTIRE OUTSTANDING CAPITAL BALANCES OF THE PAR TNERS IN THE CAPITAL ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 3 ACCOUNTS AMOUNTING TO ` 84,73,515/- WAS RELATED TO THE ASSESSEE AND ACCORDINGLY MADE THE ADDITION OF ` 84,73,515/- IN THE HANDS OF THE ASSESSEE. 3.1 SIMILARLY, THERE WERE UNSECURED LOANS SHOW N IN THE CASE OF PARTNERSHIP FIRM M/S. NAGOTHU INNAIAH FUNCTION PLAZ A AMOUNTING TO ` 38,40,123/-. THE ASSESSEE FILED EXPLANATION WITH R EGARD TO THE SOURCE OF UNSECURED LOANS BUT THE A.O. NOT BEING SATISFIED WI TH THE EXPLANATION BROUGHT TO TAX THE ENTIRE UNSECURED LOANS IN THE H ANDS OF THE ASSESSEE AMOUNTING TO ` 38,40,123/-. THUS THE AGGREGATE ADDITION MADE BY THE A.O. WAS ` 1,23,13,672/-. 4. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A). THE LD. CIT(A) OBSERVED THAT AL L THE PARTNERS OF THE FIRM ARE ASSESSED TO TAXES AND THEIR NET INCOME FOR THE PERIOD FROM 2006-7 TO 2013-14 WAS AS UNDER: N. BALASOWRAIAH ` 39,21,705/- NAGOTHU KISHORE BABU ` 47,16,427/- NAGOTHU MARIYA DASU ` 27,17,751/- NAGOTHU KIRAN SUNDAR RAJU ` 23,51,489/- SIMILARLY, THE CIT(A) EXAMINED THE YEAR WISE CAPIT AL DETAILS OF EACH PARTNER FROM THE FINANCIAL YEAR ENDING 31.3.2006 TO 31.3.2013 IN THE ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 4 CASE OF ALL THE PARTNERS AND OBSERVED THAT THE PART NERS ARE HAVING SUFFICIENT SOURCES FOR INVESTMENT OF CAPITAL AND T HERE IS NO REASON TO MAKE THE ADDITION IN THE HANDS OF THE ASSESSEE. AC CORDINGLY, DELETED THE ADDITION MADE BY THE A.O. FOR READY REFERENCE, WE EXTRACT RELEVANT PART OF THE ORDER OF THE CIT(A) WHICH READS AS UNDE R: I HAVE GONE THROUGH FACTS OF THE CASE, CONTENTS OF THE ASSESSMENT ORDER, WRITTEN SUBMISSIONS OF THE ASSESSEE. THIS GR OUND OF APPEAL IS REVOLVES IN AND AROUND OF THE FUNCTION PLAZA PURCHASED BY TH E ASSESSEE ON 29.10.2012 FOR CONSIDERATION OF RS.2,06,17,423/- FOR SOURCE FO R THIS THE ASSESSEE HAS TAKEN RS.1,77,00,000/- LOAN FROM INDIAN BANK AND RS .16.70 LAKSH OUT OF THE SALE OF AGRICULTURAL LANDS AT RAVIPADU AND RS.7,88, 737/- AS SALE CONSIDERATION OF VACANT SITE IN NARASARAOPET. THE A.O MADE THE ADDITION OF RS.84,73,515/- WHICH I NCLUDES RS.44,80,878/-, IN THE NAME OF HIS ELDER SON AT RS. 13,05,878/-, IN THE NAME OF SECOND SON AT RS.13,80,878/- AND IN THE NAME OF YOU NGER SON AT RS.13,05,878/- ON THE PLEA THAT ASSESSEE HAS NOT PR ODUCED THE PROPER SOURCE. BUT THE ASSESSEE'S CONTENTION IS THAT THE MAJOR SOU RCE FOR PURCHASE OF THIS FUNCTION PLAZA IS LOAN FROM INDIAN BANK, SALE PROCE EDS OF THE AGRICULTURAL LAND AND SALE PROCEEDS OF THE VACANT SITE, FOR THE REMAI NING AMOUNT CONTRIBUTED BY THE PARTNERS. ASSESSEE AND HIS CHILDREN FORMED A PA RTNERSHIP FIRM WITH EQUAL SHARES AND THE FIRM HAS CONTRIBUTED TO RS.40,00,000 /- AS A ADVANCE TO PURCHASE THE YERRAMSETTY FUNCTION PLAZA. SUBSEQUENT LY THE PARTNERS CONTRIBUTED RS.13,00,000/EACH AND THE SAME WAS DEPO SITED IN THE BANK AND PAID TO THE SELLER AND SOURCES FOR THIS PARTNER SHA RE OF RS.13,08,878/- IS NOTHING BUT A COLLECTION FROM AND LOAN TAKEN ON PLE DGE OF GOLD. THE ASSESSEE AND HIS THREE SONS HAS FILED THE RETURN OF INCOME F OR A.Y. 2010-11 ONWARDS AND ALL THE TRANSACTIONS WERE DULY REFLECTED IN THE BOOKS OF ACCOUNT. IN VIEW OF THE DETAILED DISCUSSION OF THE FACTS, TH E A.O'S CONTENTION IS THAT RS.84,72,505/- SHOWN AS CAPITAL OF THE ASSESSEE IN THE ABSENCE OF PROPER VALID AND EVIDENTIARY MATERIAL NOT JUSTIFIABLE. THE CONTENTION OF THE A.O IS AN AMOUNT OF RS.38,40, 112/- SHOWN AS AMOUNT TAKEN FROM UNSECURED LOAN AND ENTIRE AMOUNT OF RS.5 2,50,000/- FROM HIS SONS, TOTALING TO RS.1,72,63,627/- TREATING AS UNACCOUNTE D INCOME. BUT THE CONTENTION OF THE ASSESSEE IS THAT THE INVE STMENTS IN PLAZA ARE TOTAL INVESTMENTS AND SOURCE FOR PURCHASE OF FUNCTI ON PLAZA IS TOTAL RS.2,06,17,423/- OUT OF THAT THE ASSESSEE HAS TAKEN LOAN FROM INDIAN BANK TO THE EXTENT OF RS.1,07,00,000/AND THE ADVANCE GIV EN BY THE PARTNERS OF THE FIRM NAMELY N. BALASOWRAIAH, N. MARIYA KISHORE BABU, N. MARIAY DASU ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 5 AND M. KIRAN SUNDAR RAJU TO THE EXTENT OF RS.40,00, 000/AND ALL THE PARTNERS ARE CONTRIBUTED RS.10,00,000/- TO THE FIRM NAMELY N AGOTHU INNAH FUNCTION PLAZA. THE ABSTRACT OF INCOME AND EXPENDITURE OF N. BALASOWRAIAH AND HIS FAMILY MEMBERS HAS GIVEN IN PAGE NO.24 OF THE SECON D PAPER BOOK. SO THE MAIN SOURCE IS INCOME FROM AGRICULTURE, SALE OF AGR ICULTURAL LANDS, INTEREST RECEIVED FROM DEBTORS AND INTEREST RECEIVED FROM BA NK. HENCE, THE ADDITION MADE BY THE A.O ON ACCOUNT OF NON-FURNISH OF THE CO MPLETE DETAILS CAPITAL N. BALA SHOWRAIAH RS.44,80,878 N. KIRAN SUNDAR RAJ RS. 13,05,878 N. KISHORE BABU RS. 13,05,878 N. MARIA DAS RS. 13,80,78/- RS.84,73,15/- SECURED LOANS RS. 1,04,36,225/- INDIAN BANK LOAN UNSECURED LOANS A.V. BHASKAR RS.4,00,111 BALAMURALI KRISHNA RS. 1,00,000 DOUTHU SIVAPRASAD RS.2,00,000 HABIB ASHA SHAIK RS. 1,50,000 JAYADURGA CHANDRA RS.50,000 KONEDANA VAMISKRISHNA RS. 1,50,000 MRS. GHANTASALA RS.2,00,000 N JAYA CHANDRA RS.2,00,000 N. SOWARAMMA RS.2,40,000 TIRUMALA REDDY RS.10,50,001 VEERA BRAHMAIAH RS.3,00,000 VENKAIAH NANDIGAM RS.7,00,00 0 RS. 38,40,112/ - TOTAL INVESTMENTS RS.2,27,49,852/ - FOR ALL UNSECURED LOANS CONFIRMATION LETTERS WERE F ILED IN THE CASE OF A.V. BHASKAR, BALA MURALI KIRSHNA, DOUTHU SIVAPRASAD, AB HIB BASHA, J. DURGA CHANDRA, SRI VAMSI KRISHNA, GHANTASALA LAKSHMO, N. JAYA CHAN DRA, N. SOWRAMMA, TIRUMALA REDDY, VEERA BHRAMAIAH, VENAKATAIAH NANDIGAM. TAKING INTO CONSIDERATION OF THE TOTALITY OF THE FA CTS, CIRCUMSTANCES THAT THE ASSESSEE BALASHOWRAIAH ALONG WITH HIS THREE SONS HA S MADE INVESTMENTS IN PURCHASE OF TWO PROPERTIES NAMELY 1) PROPERTY IS THREE STORED (2.36 SQUARE YARDS) RES IDENTIAL BUILDING LOCATED IN RAMIREDDYPET, NARASARAOPET AND THE BUILDING WAS PUR CHASED IN THE YEAR 05.05.2012 FOR THE TOTAL CONSIDERATION OF RS.55,16, 000/- THE SOURCES FOR THIS GIFTS BY HIS THREE SONS AND DAUGHTER-IN-LAW OUT OF LOVE AND AFFECTION AND ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 6 EACH CONTRIBUTED NAGOTHU MARIYA KISHORE BABU RS.15, 00,000/-, N. MARIYADAS AT RS.10,00,000/-, N. KIRAN SUNDARA RAJU RS.27,50,0 00/- AND NAGOTHU MOUNIKA AT RS.41,800/- RESPECTIVELY AND THE ASSESSE E SONS HAS THE AGRICULTURAL INCOME OF NAME LAND AGRICULTURAL INCOME GIFT N. BALASHOWRAIAH 10.75 RS. 15,32,856 N. KISHORE BABU 20.18 RS.12,33,350 15,00,000/ - N. MARIYADAS 19.60 RS. 13,14,800 10,00,000/- N. KIRAN SUNDRAJU 15.82 RS. 10,79,350 27,50,000/- N. MOUNIKA --- --- 41,800/- TOTAL 66.35 RS.51,60,356/ - 52,91,800/ - THE NAGOTHU INNAH FUNCTION PLAZA IS A PARTNERSHIP F IRM CONSISTS OF FOUR PARTNERS NAMELY N. BALASHOWRAIAH , N. KISHORE BABU, N. MARIYADAS, N. KIRAN SUNDRAJU, WITH EQUAL SHARING RATIO AND THAT PLAZA H AS PURCHASED BY THE FIRM FOR TOTAL CONSIDERATION OF RS.2,06,17,423/- DT. 29.10.2 012, SOURCE HAS FOLLOWS. 1. LOAN FROM INDIAN BANK AT RS. 1,07,00,000/-, 2. PARTNERS CAPITAL TOTAL AT RS .84,73,515/- N. BALASHOWRAIAH AT RS.44,80,878/- N. KIRAN SUNDARA RAJU RS.13,05,878/- N. KISHORE BABU AT RS.13,05,878/- N. MARIYADAS AT RS.13,80,878/- 3. UNSECURED LOANS RS. 38,40,112/- REGARDING THE UNSECURED LOANS CONFIRMATION LETTERS WERE FILED, EXPLAINING THE SOURCES, GENUINENESS OF THE TRANSACTION AND LON G LOANS WERE TAKEN THROUGH INDIAN BANK. ALL THE PARTNERS OF THE FIRM A RE IT ASSESSEE AND REGULARLY FILING ROL FROM A.Y. 2010-11 AND MAIN SOURCES FOR A LL THE INVESTMENTS IN TWO PROPERTIES ARE NOTHING BUT A ACCUMULATED AGRICULTUR AL INCOME, AGRICULTURAL AND SALARY INCOME IN THE CASE OF ELDER SON OF BALASHOWA RAIAH NAMELY NAGOTHU KISHORE BABU. ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 7 HON'BLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS P.K. NOORJAHAN 103 TAXMAN 382 IT WAS HELD THAT ASSESSEE S EXPLANATION THAT INVESTMENT MADE IN PURCHASE OF LAND CAME FROM HER STEP-FATHER WAS NOT FOUND SATISFACTORY BY ASSESSING OFFICER WHO MAD E ADDITION AS INCOME FROM OTHER SOURCES - WHETHER, IF CONSIDERED IN TRUE PERS PECTIVE WORD 'MAY' USED IN SECTION 69 CANNOT BE READ AS 'SHALL' - HELD, YES - WHETHER SECTION 69 CONFERS A DISCRETION ON ASSESSING OFFICER IN MATTER OF TREATI NG SOURCES OF INVESTMENT WHICH HAS NOT BEEN SATISFACTORILY EXPLAINED BY ASSE SSEE AS INCOME OF ASSESSEE AND HE IS NOT OBLIGED TO TREAT SUCH SOURCE OF INVES TMENT AS ASSESSEE'S INCOME IN EACH AND EVERY SUCH CASE - HELD, YES - WHETHER T RIBUNAL HAVING HELD THAT DISCRETION HAD NOT BEEN PROPERLY EXERCISED BY ASSES SING OFFICER IN TAKING INTO ACCOUNT CIRCUMSTANCES IN WHICH ASSESSEE, A YOUNG GI RL OF 20 YEARS, WAS PLACED, AND HAVING FOUND THAT SOURCES OF INVESTMENT COULD NOT BE TREATED AS HER INCOME, AND HIGH COURT HAVING AGREED, THERE COU LD BE NO ERROR IN THE ABOVE FINDINGS - HELD, YES. HON'BLE SUPREME COURT OF INDIA IN THE CASE OF CIT V S. BHARATH ENGINEERING AND CONSTRUCTION CO., 83 ITR 187 IT WAS HELD THAT SECTION 68, READ WITH SECTION 256 OF THE INCOME-TAX ACT, 1961 ( CORRESPONDING TO SECTION 66 OF THE INDIAN INCOME-TAX ACT, 1922) - CASH CREDI TS - TRIBUNAL HELD THAT THOUGH ASSESSEE'S EXPLANATION IN RESPECT OF CASH CR EDIT ENTRIES FOUND IN THEIR ACCOUNTS WAS NOT TRUE, THOSE ENTRIES COULD NOT REPR ESENT INCOME OR PROFITS OF ASSESSEE-COMPANY AS THEY WERE ALL MADE VERY SOON AF TER COMPANY COMMENCED ITS ACTIVITIES OF CONSTRUCTION BUSINESS - REVENUE'S REFERENCE APPLICATION WERE REJECTED BY TRIBUNAL AS WELL AS HI GH COURT - WHETHER WHAT INFERENCE SHOULD BE DRAWN FROM FACTS PROVED, WAS A QUESTION OF FACT AND TRIBUNAL'S FINDING ON THAT QUESTION WAS FINAL - HEL D, YES - WHETHER, THEREFORE, HIGH COURT WAS JUSTIFIED IN REJECTING REVENUE'S REF ERENCE APPLICATION - HELD, YES. HON'BLE GUJARATH HIGH COURT IN THE CASE OF RUPCHAND MANOJ KUMAR VS. CIT 235 ITR 461 IT WAS HELD THAT CONSIDERING THE FA CTS AND CIRCUMSTANCE OF THE CASE, IN OUR VIEW, THE ASSESSEE SATISFACTORILY DISCHARGED THE PRIMARY ONUS WHICH LAY ON HIM TO PROVE THE NATURE AND SOURCES OF THE CREDIT. THERE CANNOT BE ANY INFERENCE UNDER THE LAW THAT THE CONFIRMATOR Y LETTER GIVEN BY THE ASSESSEE ARE BOGUS. LEARNED COUNSEL FOR THE REVENUE HAS RELIED ON A DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. PRECISION FINANCE PVT., LTD., (1994) 208 ITR 465. THE FACTS OF THE CA SE WERE ALTOGETHER DIFFERENT AS IN THAT CASE THE A.O HAD CONDUCTED ENQUIRIES THR OUGH THE INSPECTOR; BUT IN THE INSTANT CASE, NO ENQUIRES WERE MADE BY THE REVENUE. IN VIEW OF THE DETAILED DISCUSSIONS OF THE FACTS, C IRCUMSTANCES AND COURT JUDGMENTS AS THE ONLY AND MAJOR SOURCE OF INCOME IS AGRICULTURAL INCOME AND OUT OF THE AGRICULTURAL INCOME ONLY THE PROPERTIES WERE ACQUIRED BY THE PARTNERS, MOSTLY ACCUMULATED AGRICULTURAL INCOME. S O, THE ADDITION MADE BY THE A.O ON ACCOUNT OF GIFTS, INVESTMENTS, CREDITORS AND UNSECURED LOANS FOR FUNCTION PLAZA AND THREE STORED RESIDENTIAL BUILDIN G IS NOT TENABLE. HENCE, THE ADDITION MADE BY THE A.O IS DELETED AND ASSESSEE'S GROUND OF APPEAL IS ALLOWED. ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 8 5. SIMILARLY, IN THE CASE OF UNSECURED LOANS, THE C IT(A) OBSERVED THAT THE ASSESSEE HAS FURNISHED CONFIRMATIONS AND THE IN COME TAX ASSESSMENT DETAILS BEFORE THE A.O. THEREFORE, HELD THAT THERE IS NO CASE TO MAKE THE ADDITION IN THE HANDS OF THE ASSESSEE. APART FROM THE FURNISHING CONFIRMATION LETTER THE ASSESSEE ALSO FU RNISHED THE LEDGER ACCOUNT COPY, IN SOME CASES AADHAR CARD EVIDENCE AN D IN SOME CASES THE AMOUNT WAS TRANSFERRED THROUGH BANK. THEREFORE , THE ADDITION MADE BY THE A.O. WAS DELETED BY THE CIT(A) HOLDING THAT THERE IS NO CASE TO MAKE THE ADDITION. 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. APPEARING FOR THE REVENUE, THE LD. D.R. ARGUED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE ALONG WIT H HIS 3 SONS PURCHASED FUNCTION PLAZA FOR A CONSIDERATION OF ` 2.06 CRORES OUT OF WHICH ` 84,73,315/- WAS OUTSTANDING UNDER THE HEAD PARNERS CAPITAL ACCOUNTS AS UNDER: N. BALA SHOWRAIAH ` 44,80,878.75 N. KIRAN SUNDAR RAJ ` 13,05,878.75 N. KISHORE BABU ` 13,05,878.75 N. MARIA DAS ` 13,80,878.75 ` 84,73,515/- 7. SIMILARLY, THERE WERE UNSECURED LOANS OF ` 38,40,112/- WHICH WERE OUTSTANDING IN THE CASE OF PARTNERSHIP FIRM. THE A .O. HAS ISSUED SEVERAL NOTICES AND LETTERS TO THE ASSESSEE BUT THE ASSESSE E DID NOT RESPOND TO ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 9 THE NOTICES. IN THE RETURN OF INCOME OF THE PARTNER SHIP FIRM, ALL THE COLUMNS RELATING TO INVESTMENTS, LOANS AND THE PART NERS ETC.. WERE FILLED WITH ZERO. THEREFORE, THERE IS NO EVIDENCE OR THE EXPLANATION TO SUBSTANTIATE THE SOURCES OF INVESTMENT IN THE HANDS OF THE PARTNERSHIP FIRM, THEREFORE, THE LD. D.R. ARGUED THAT THE A.O. HAS RIGHTLY MADE THE ADDITION IN THE HANDS OF THE ASSESSEE, HENCE, REQUE STED TO CONFIRM THE ORDER OF THE A.O. SIMILARLY, THE LD. D.R. ARGUED THAT THE ASSESSEE DID NOT PRODUCE THE CREDITOR AND DEBTOR FOR VERIFICATIO N AND EVEN FULL DETAILS LIKE NAME AND ADDRESS, ETC. WERE NEITHER FURNISHED BY THE ASSESSEE NOR BY THE A.R. SINCE SUFFICIENT OPPORTUNITIES WERE GI VEN AND THE ASSESSEE FAILED TO PRODUCE THE REQUISITE EVIDENCE, THE LD. D .R. OF THE OPINION THAT THE A.O. HAS RIGHTLY MADE THE ADDITION, WHICH REQUI RED TO BE CONFIRMED. 8. ON THE OTHER HAND, THE LD. A.R. SUBMITTED THAT M /S. NAGOTHU INNAIAH FUNCTION PLAZA IS A PARTNERSHIP FIRM WHICH IS ASSESSED SEPARATELY UNDER THE INCOME TAX ACT. THE ASSESSEE IS MANAGING PARTNER OF THE FIRM ALONG WITH 3 OF HIS SONS MR. N. KIRAN SUNDAR R AJ, N.KISHORE BABU AND N. MARIA DAS. THE OUTSTANDING IN THE PARTNERSH IP FIRM UNDER THE HEAD CAPITAL ACCOUNTS IS AS FOLLOWS: N. BALA SHOWRAIAH ` 44,80,878.75 N. KIRAN SUNDAR RAJ ` 13,05,878.75 N. KISHORE BABU ` 13,05,878.75 N. MARIA DAS ` 13,80,878.75 ` 84,73,515/- ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 10 9. ALL THE PARTNERS AND THE PARTNERSHIP FIRM ARE AS SESSED TO TAX AND FILED THEIR RETURNS OF INCOME. AS PER THE DETAILS FURNISHED BEFORE THE CIT(A), THE SOURCES OF INCOME AND THE TOTAL INCOME OF THE ASSESSEE FOR THE PERIOD FROM 2006-07 TO 2013-14 IS AS UNDER: N. BALA SHOWRAIAH ` 45,52,205/- N. KISHORE BABU ` 66,14,166/- N. MARIA DAS ` 31,99,751/- N. KIRAN SUNDAR RAJ ` 28,37,691/- 10. THE CIT(A) HAS ANALYZED YEAR WISE INCOME OF ALL THE PARTNERS AND OBSERVED THAT ALL THE PARTNERS ARE HAVING SUBSTANTI AL INCOME TO SUPPORT THE CONTRIBUTION OF THE CAPITAL IN THE PARTNERSHIP FIRM. APART FROM THE ABOVE THE PARTNERS HAVE DISPOSED OF THEIR AGRICULTU RAL LANDS, REALIZED THE ADVANCES GIVEN BY THEM AND TAKEN LOANS AND POOLED T HE FUNDS FOR INVESTING IN PARTNERSHIP FIRM. M/S. NAGOTHU INNAIA H FUNCTION PLAZA A PARTNERSHIP FIRM WHICH IS ASSESSED SEPARATELY TO TA X. THE PARTNERS HAVE INTRODUCED THE CAPITAL AND MADE INVESTMENTS FROM TH EIR OWN SOURCES AND FILED THE RETURNS OF INCOME. THE ASSESSEES INV ESTMENT OF CAPITAL CONTRIBUTION WAS OF ` 44,80,878/- AND THE ASSESSEES SOURCE OF INVESTMENT WAS PROPERLY EXPLAINED IN HIS RETURN. T HE PARTNERSHIP FIRM IS MAINTAINING THE BOOKS OF ACCOUNTS SEPARATELY AND AS SESSED TO TAX INDEPENDENTLY, HENCE THE A.O. IS NOT PERMITTED TO TREAT THE CAPITAL CONTRIBUTION MADE BY OTHER PARTNERS IN THE HANDS OF THE ASSESSEE. SINCE ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 11 THE PARTNERSHIP FIRM IS DIFFERENT AND THE PARTNERS ARE DIFFERENT IF THE CAPITAL CONTRIBUTION WAS NOT PROPERLY EXPLAINED BY OTHER PARTNERS, THE SAME SHOULD BE TAXED IN THE HANDS OF THE RESPECTIVE PARTNER BUT NOT IN THE ASSESSEES HANDS. THEREFORE, THE ASSESSEE HAS VEHEMENTLY OPPOSED THE ADDITION. MERELY BECAUSE IN FORM NO.ITR 5 THE RETURN OF INCOME OF THE FIRM THE COLUMNS OF PARTNERS, MEMBERS CAPITAL, LOANS FUNDS, FIXED ASSETS, INVESTMENTS, LOANS AND ADVANCES, ETC. WERE FILLED WITH ZERO, THE AO CANNOT ASSESSE ALL THE INVESTMENTS IN THE HANDS OF THE ASSESSEE. THE ASSESSEE ARGUED THAT THE A.OS ACTION IN MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE RELATING TO PARTNERS CAPITAL IS ILLOGICAL AND BEYOND THE COMPREHENSION AND VISION OF ANY COMMON MAN, HEN CE REQUIRED TO BE DELETED. WITH REGARD TO THE UNSECURED LOANS, THE LD. AR ARGUED THAT UNSECURED LOANS ARE PERTAINING TO THE PARTNERSHIP F IRM OF M/S. NAGOTHU INNAIAH FUNCTION PLAZA, THE SAME ARE RECORDED IN TH E BOOKS OF THE PARTNERSHIP FIRM BUT NOT IN THE BOOKS OF THE ASSESS EE. THE ASSESSEE HAS FURNISHED THE NECESSARY EVIDENCE, SUCH AS CONFIRMAT ION LETTER, AADHAR CARD, PAN NO., ETC. AND THE LOANS WERE OBTAINED THR OUGH BANK CHEQUES. SINCE THE PARTNERSHIP FIRM IS SEPARATELY ASSESSED T O TAX AND THE ASSESSEE IS SEPARATELY ASSESSED TO TAX BY ANY STRETCH OF IMA GINATION, THE UNSECURED LOANS APPEARING IN THE FIRMS BALANCE SHE ET CANNOT BE ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 12 CONSIDERED AS AN INCOME IN ONE OF THE PARTNERS WHIC H IS SHARED BY ALL THE PARTNERS OF THE FIRM. IT CAN BE OBSERVED FROM THE ORDER OF THE CIT(A) THAT THE ASSESSEE HAS FURNISHED THE CONFIRMA TION LETTERS EXPLAINING THE SOURCES OF UNSECURED LOANS, ESTABLIS HING IDENTITY AND CREDITWORTHINESS. THEREFORE, THE LD. A.R. ARGUED T HAT THE ADDITION MADE BY THE ASSESSING OFFICER IN THE HANDS OF THE ASSESSEE IS HIGHLY UNREASONABLE AND ILLOGICAL. HENCE, REQUESTED TO DE LETE THE SAME. 11. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ASSESSEE IS AN INDIVIDUAL FILED HIS RETURN OF INCOM E ADMITTING TOTAL INCOME OF ` 2,73,710/- AND AGRICULTURAL INCOME OF ` 4,55,166/-. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR T HE ASSESSEE ALONG WITH HIS 3 SONS ACQUIRED THE PROPERTY OF A FUNCTION PLAZA KNOWN AS M/S NAGOTHU INNAIAH FUNCTION PLAZA IN THE CAPACITY OF P ARTNERSHIP FIRM. THE ASSESSEE ALONG WITH HIS SONS ENTERED INTO PARTNERSH IP FIRM ON 14 TH DAY OF JUNE, 2012 IN THE NAME AND STYLE OF M/S. NAGOTHU IN NAIAH FUNCTION PLAZA. THE ASSESSEE HAS FILED THE PARTNERSHIP DEED VIDE PAGE NOS.64 TO 67 OF THE PAPER BOOK EVIDENCING THE EXISTENCE OF TH E PARTNERSHIP FIRM. AS PER THE PARTNERSHIP DEED, THE FOLLOWING ARE EQUA L PARTNERS: ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 13 N. BALA SHOWRAIAH N. KISHORE BABU N. MARIA DAS N. KIRAN SUNDAR RAJ 12. M/S NAGOTHU INNAIAH FUNCTION PLAZA WAS PURCHAS ED FOR A CONSIDERATION OF ` 1.90 CRORES AND TOTAL INVESTMENT WORKS OUT TO ` 2.06 CRORES. AS AT THE END OF THE FINANCIAL YEAR 2013, THE CAPITAL ACCOUNT BALANCES OF THE PARTNERS IS AS UNDER: N. BALA SHOWRAIAH ` 44,80,878.75 N. KIRAN SUNDAR RAJ ` 13,05,878.75 N. KISHORE BABU ` 13,05,878.75 N. MARIA DAS ` 13,80,878.75 ` 84,73,515/- 13. THE CAPITAL ACCOUNT SHOWS AGGREGATE BALANCE OF ` 84,73,515/-, OUT OF WHICH, THE ASSESSEES CAPITAL ACCOUNT OUTSTANDIN G IS ` 44,80,878/-. THE ASSESSEE HAS SUBMITTED THE BALANCE SHEET IN PAG E NO.6 OF THE PAPER BOOK AS PER WHICH THE INVESTMENT OF THE ASSESSEE IN M/S NAGOTHU INNAIAH FUNCTION PLAZA WAS AT ` 44,80,878/-. IN THE BALANCE SHEET, THE ASSESSEE HAS EXPLAINED THE SOURCES, WHICH WAS NOT D ISPUTED BY THE A.O., IN THE ASSESSMENT ORDER EXCEPT THE GIFTS RECE IVED, WHICH IS DISCUSSED SEPARATELY. THEREFORE, THE INVESTMENT MA DE BY THE ASSESSEE IN THE M/S NAGOTHU INNAIAH FUNCTION PLAZA WHICH IS APPEARING IN THE CAPITAL ACCOUNT AMOUNTING ` 44,80,878/- STANDS EXPLAINED. ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 14 13.1 THE AO MADE THE ADDITION OF RS. 84,73,515/- RELATING TO CONTRIBUTION OF CAPITAL MADE BY ALL THE 4 PARTNERS IN THE PARTNERSHIP FIRM. THE PARTNERS AND THE PARTNERSHIP FIRM ARE DIF FERENT ENTITIES AND SEPARATELY ASSESSED TO TAX. BOTH THE PARTNERS AND T HE PARTNERSHIP FIRM HAVE ACCORDINGLY FILED THEIR RETURNS AND PAID TAXES . THE CREDITS ARE APPEARING IN THE BOOKS OF THE PARTNERSHIP FIRM AND THE PARTNERS HAVE MADE THE INVESTMENTS IN THE PARTNERSHIP FIRM. THE A.O. HAS NOT MADE OUT A CASE THAT THE ASSESSEE HAS MADE THE INVESTMEN TS ON BEHALF OF 3 SONS FROM THE UNEXPLAINED SOURCES OF THE ASSESSEE. AS PER THE CASH FLOW STATEMENT COMPILED BY THE LD. CIT(A) IN HIS OR DER, ALL THE PARTNERS ARE HAVING SUFFICIENT SOURCES AND GENERATING THE SU BSTANTIAL INCOME. SINCE THE ASSESSEES CAPITAL INVESTMENT IS IN THE P ARTNERSHIP FIRM IS PROPERLY EXPLAINED, THE A.O. IS NOT PERMITTED TO MA KE THE INVESTMENT MADE BY THE OTHER PARTNERS IN THE PARTNERSHIP FIRM AS INCOME IN THE HANDS OF THE ASSESSEE. IF THE SOURCE FOR CAPITAL I S NOT EXPLAINED BY ANY OF THE PARTNER , THE SAME REQUIRED TO BE TAXED EITH ER IN THE HANDS OF THE PARTNERSHIP FIRM OR IN THE HANDS OF THE RESPECTIVE PARTNER BUT NOT IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, ADDITION MADE BY THE A.O. IN THE HANDS OF THE ASSESSEE WITH REGARD TO THE INVESTMENT IN CAPITAL OF THE FIRM IS BAD IN LAW AND THE SAME IS UNSUSTAINABLE. HENCE, WE UPHOLD THE ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 15 ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL OF T HE REVENUE ON THIS GROUND. 14. THE NEXT ISSUE IN GROUND NO.2 IS UNSECUR ED LOANS APPEARING IN THE BALANCE SHEET OF THE PARTNERSHIP FIRM M/S. NAGO THU INNAIAH FUNCTION PLAZA AMOUNTING TO ` 38,40,112/-, WHICH WAS BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE BY THE A.O. AS PER THE LD.CI T(A) ORDER, THE ASSESSEE HAS FURNISHED THE CONFIRMATIONS LETTERS FR OM THE CREDITORS. THE LD. A.R. ESTABLISHED THAT THE UNSECURED LOANS APPE ARING IN THE PARTNERSHIP FIRM ARE RELATED TO THE PARTNERSHIP AN D THE FIRM IS SEPARATELY ASSESSED TO TAX AND THE SOURCES WERE EXP LAINED IN THE BOOKS OF THE PARTNERSHIP FIRM. SINCE THE PARTNERSHIP FIR M AND THE ASSESSEE ARE SEPARATELY ASSESSED TO TAX, THE SAME CANNOT BE ASSE SSED IN THE HANDS OF THE ASSESSEE. FURTHER, THE CIT(A) ALSO EXAMINED T HE SOURCES OF INVESTMENTS MADE BY THE ASSESSEE AND THE PARTNERS I N PARTNERSHIP FIRM M/S NAGOTHU INNAIAH FUNCTION PLAZA. THE UNSECURED LOANS ARE APPEARING IN THE BOOKS OF THE PARTNERSHIP FIRM BUT NOT IN THE BOOKS OF THE ASSESSEE. THE ONLY INVESTMENT MADE BY THE ASSESSEE IS CONTRIBUTION TO CAPITAL WHICH WAS EXPLAINED IN HIS HANDS. IF THE SO URCES OF UNSECURED LOANS ARE UNEXPLAINED, THE ADDITION SHOULD BE MADE IN THE HANDS OF THE PARTNERSHIP FIRM BUT NOT IN THE HANDS OF THE ASSESS EE. THE ASSESSING OFFICER HAS NOT ESTABLISHED THAT THE UNSECURED LOAN S WERE INTRODUCED BY ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 16 THE ASSESSEE IN THE PARTNERSHIP FIRM HIS UNEXPLAINE D SOURCE OF INCOME. MAKING ADDITION OF UNSECURED LOANS RELATING TO THE PARTNERSHIP FIRM IN THE HANDS OF THE ASSESSEE IS BAD IN LAW AND UNSUSTA INABLE. HENCE WE UP HOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APP EAL OF THE REVENUE ON THIS GROUND. 15. THE GROUND NO.3 IS RELATED TO THE ADDITION MAD E BY THE AO ON ACCOUNT OF GIFTS RECEIVED BY THE ASSESSEE FROM T HE FAMILY MEMBERS. THE A.O. MADE ADDITION OF ` 52,50,000- GIFTS RECEIVED BY THE ASSESSEE FROM HIS SONS. THE A.O. OBSERVED THAT THE ASSESSEE HAD RECEIVED GIFTS OF ` 52,50,000/- FROM HIS 3 SONS AS UNDER: SL.NO. NAME OF THE DONOR AMOUNT OF GIFT (IN RS.) DT. OF GIFT MODE OF RECEIPT 1 NAGOTHU MARIYA KISHORE BABU 15,00,000/- 05.05.2012 CASH 2 NAGOTHU MARIYA DAS 10,00,000/- 05.05.2012 CASH 3 NAGOTHU KIRAN SUNDARA RAJU 27,50,000/- 05.05.2012 CASH 4 NAGOTHU MOUNIKA 41,800/- 07.09.2012 CASH TOTAL 52,91,800/- 16. THE A.O. FURTHER OBSERVED THAT CASH WAS SAID TO BE RECEIVED IMMEDIATELY BEFORE THE GIFTS WERE GIVEN BY SONS TO THE ASSESSEE. THE SONS OF THE ASSESSEE HAVE RECEIVED THE CASH FROM TH E DEBTORS AS REALIZATION ON 1.5.2012 IN THE CASE OF MARIA DAS AN D N.M.K. BABU AND IN THE CASE OF N.K.S. RAJU ON 4.4.2012 AND THE SAME WA S GIVEN AS A GIFT ON 5.5.2012. THE DATES OF REALIZATION OF DEBTS IS AS UNDER: ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 17 S.NO. NAME OF THE DEBTOR DATE OF CREDIT AMOUNT (IN RS.) 1. N. JAN BABU, RAVIPADU 01.05.2012 2,50,000/- 2. N. SOURAMMA, RAVIPADU 01.05.2012 1,50,000/- 3. P. SAGAR BABU, TUKARAMPALEM 01.05.2012 2,00,000/- 4. NIDAMANURI SATEESH, RAVIPADU 01.05.2012 2,50,000/- 5. D. SAGAR, TALLACHERUVU 01.05.2012 2,00,000/- 6. G. BHARATH, PALAPADU 01.05.2012 1,50,000/- TOTAL 12,00,000/- GIFT GIVEN TO FATHER ON 5.5.2012 - ` 10,00,000/- 2. NAGOTHU MARIA KISHORE BABU: S.NO. NAME OF THE DEBTOR DATE OF CREDIT AMOUNT (IN RS.) 1. SALANDRA SRINU 01.05.2012 4,50,000/- 2. SURIGANI SRINU 01.05.2012 2,50,000/- 3. BRAHMAIAH 01.05.2012 4,00,000/- 4. VAKKALAGADDA NAGARAJU 01.05.2012 3,50,000/- 5. SRINIVAS 01.05.2012 1,00,000/- TOTAL 15,50,000/- GIFT GIVEN TO FATHER ON 5.5.2012 - ` 15,00,000/- 3. NAGOTHU KIRAN SUNDAR RAJU: S.NO. NAME OF THE DEBTOR DATE OF CREDIT AMOUNT (IN RS.) 1. N. MILKI RAJU 04.04.2012 4,00,000/- 2. LURDU RAJU 04.04.2012 4,00,000/- 3. P. PRAKASH BABU 04.04.2012 4,50,000/- 4. P. PRAKASA RAO 04.04.2012 4,50,000/- 5. G. SUBBA REDDY 04.04.2012 3,00,000/- 6. SK. SUBANI 04.04.2012 3,00,000/- 7. P. PRATAP 04.04.2012 3,00,000/- 8. P. ANTHONE SOURI BABU 04.04.2012 5,20,000/- TOTAL 31,20,000/- GIFT GIVEN TO FATHER ON 05.05.2012 - ` 27,50,000/- 17. SINCE THE DONORS HAVE RECEIVED THE CASH AS REAL IZATION FROM THE DEBTORS BEFORE GIVING THE GIFT TO HIS FATHER THE AO SUSPECTED THE SOURCES OF GIFTS AND BROUGHT TO TAX IN THE HANDS OF THE ASS ESSEE. ACCORDING TO ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 18 THE ASSESSING OFFICER, REALIZATION OF DEBTORS IS AN AFTERTHOUGHT AND THE GIFTS RECEIVED BY THE ASSESSEE WAS FROM HIS OWN SOU RCES. 18. AGGRIEVED BY THE ORDER OF THE A.O. THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) OBSERVED THAT THE GIFTS RECEIVED BY THE ASSESSEE FROM HIS THREE SONS AND DAUGHTER IN L AW NAGABOTHU MOUNIKA WERE PROPERLY EXPLAINED AND ACCORDINGLY THE ADDITION WAS DELETED. 19. AGGRIEVED BY THE ORDER OF THE A.O., THE REVENUE IS IN APPEAL BEFORE US. 20. DURING THE APPEAL HEARING, THE LD. D.R. VEHEMEN TLY ARGUED THAT THE ASSESSEE HAD RECEIVED GIFTS FROM HIS 3 SONS AND DAUGHTER IN LAW N. MOUNIKA, THE SOURCES OF WHICH IS HIGHLY SUSPICIOUS. IN THE CASE OF MARIA DAS AND KISHORE BABU, IT WAS SUBMITTED THAT THEY HA VE COLLECTED THE OUTSTANDING DEBTORS ON 1.5.2012 FROM ALL THE DEBTOR S IN CASH FOR GIVING GIFTS TO HIS FATHER AND THE SAME IS UNRELIABLE. SI MILARLY, IN THE CASE OF N.K.S. RAJU, HE HAS COLLECTED THE DUES FROM THE DE BTORS ON 4.4.2012 AND GIVEN A GIFT ON 05/05/2012 WHICH IS ALSO UNREAL IABLE, THEREFORE, ARGUED THAT THE SOURCE OF GIFT IN THE HANDS OF THE ASSESSEE REMAIN UNEXPLAINED AND THERE IS NO EVIDENCE FOR HUGE AGRI CULTURAL INCOME AND REALIZATION OF DEBTS. THE LD. DR FURTHER STATED THA T NO EVIDENCE WAS ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 19 PRODUCED BY THE ASSESSEE WITH REGARD TO THE REALIZA TION OF DEBTORS, THEREFORE, ARGUED THAT THE GIFTS RECEIVED BY THE AS SESSEE ARE BOGUS AND THE A.O. HAS RIGHTLY MADE THE ADDITION AND REQUESTE D TO CONFIRM THE ADDITION MADE BY THE A.O. 21. ON THE OTHER HAND, THE LD. A.R. ARGUED THAT TH E ASSESSEE AS WELL AS HIS SONS ARE NOT LITERATES THEY ARE FROM AG RICULTURAL FAMILY. THEY DO NOT HAVE INCOME TAX KNOWLEDGE AND THEY ARE DERIV ING AGRICULTURAL INCOME AND THE SURPLUS AMOUNTS WERE USED FOR GIVING LOANS. SINCE THE ASSESSEE AND HIS SONS DECIDED TO FORM PARTNERSHIP F IRM FOR PURCHASE OF M/S NAGOTHU INNAIAH FUNCTION PLAZA, THEY HAVE REALI ZED THE DEBTORS AND GIVEN IT TO HIS FATHER AS A GIFT TO MEET THE FINANC IAL REQUIREMENTS FOR PURCHASE OF M/S. NAGOTHU INNAIAH FUNCTION PLAZA. TH EY HAVE GIVEN AFFIDAVITS CONFIRMING THE GIFTS WITH A CLEAR ADDRES S AND INCOME TAX ASSESSMENT PARTICULARS TO THE A.O. AND ALL OF THEM ARE ASSESSED TO TAX. IN CASE THE A.O. SUSPECTED THE SOURCE IN THE HANDS OF THE DONOR I.E. SONS, THE ADDITION SHOULD BE MADE BY THE A.O. IN TH E HANDS OF THE DONORS(SONS) BUT NOT IN THE HANDS OF THE ASSESSEE. THE ASSESSEE HAS DISCHARGED THE BURDEN BY PLACING EVIDENCES IN THE F ORM OF AFFIDAVITS. FURTHER AS PER THE CASH FLOW STATEMENT FILED BY THE ASSESSEE, ALL THE DONORS ARE HAVING SUFFICIENT SOURCES AS EXPLAINED I N THE CIT(A) ORDER. IN ADDITION THE ASSESSEE HAS EXPLAINED COMPLETE SOU RCES FOR ACQUIRING ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 20 THE FUNCTION PLAZA AT THE TIME OF ASSESSMENT AS WE LL AS BEFORE THE LD.CIT(A). THE CIT(A) HAVING SATISFIED THE SOURCES FOR INVESTMENT IN THE PARTNERSHIP FIRM HAS DELETED THE ADDITION. IN ANY CASE, SINCE THE GIFTS WERE GIVEN BY THE DONORS, WHO ARE ASSESSED TO TAX, THE SAME SHOULD NOT BE ASSESSED IN THE HANDS OF THE ASSESSEE. THE A.O. WITHOUT MAKING ANY VERIFICATION OF THE DONORS AND SOURCES SIMPLY MADE THE ADDITION WHICH IS HIGHLY ILLOGICAL AND ARGUED THAT THE SAME SHOULD BE DELETED. 22. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THIS CASE, THE ASSESSEE HAS RECEIVED THE GIFTS OF ` 52,50,000/- AS UNDER: SL.NO. NAME OF THE DONOR AMOUNT OF GIFT (IN RS.) DT. OF GIFT MODE OF RECEIPT 1 NAGOTHU MARIYA KISHORE BABU 15,00,000/- 05.05.2012 CASH 2 NAGOTHU MARIYA DAS 10,00,000/- 05.05.2012 CASH 3 NAGOTHU KIRAN SUNDARA RAJU 27,50,000/- 05.05.2012 CASH 4 NAGOTHU MOUNIKA 41,800/- 07.09.2012 CASH TOTAL 52,91,800/- 23. ALL THE DONORS ARE HAVING AGRICULTURAL INCOME AND THEY ARE ALSO ASSESSED TO TAX. THEY ARE HAVING SUFFICIENT S OURCES FOR MAKING GIFTS FROM AGRICULTURAL INCOME AS DISCUSSED IN THE LD.CIT (A) ORDER . THEY HAVE GIVEN THE AFFIDAVITS BEFORE THE A.O. CONFIRMING THE GIFTS GIVEN AND THE ASSESSEE HAS ALSO PLACED COPIES OF AFFIDAVITS IN TH E PAPER BOOK IN PAGE ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 21 NOS.40 TO 49. IN THE AFFIDAVITS GIVEN BY THE DONOR S, THEY HAVE CLEARLY GIVEN THE INCOME TAX ASSESSMENT PARTICULARS WITH PA N NO. SINCE ALL OF THEM ARE ASSESSED TO TAX AND THE CIT(A) HAS DISCUSS ED THE SOURCES OF ACCUMULATION OF INCOME, WE DO NOT SEE ANY REASON TO SUSPECT THE GENUINENESS OF THE GIFTS RECEIVED BY THE ASSESSEE. IN CASE THE A.O. IS OF THE OPINION THAT THE SOURCES OF GIFTS ARE UNEXPLAIN ED THE SAME SHOULD BE BROUGHT TO TAX IN THE HANDS OF THE DONORS BUT NOT I N THE HANDS OF THE ASSESSEE. ONCE THE SOURCE IS EXPLAINED BY THE ASSE SSEE, THE BURDEN SHIFTS ON REVENUE TO DISPROVE THE EVIDENCE FURNISHE D BY THE ASSESSEE. IN THE INSTANT CASE, THOUGH THE ASSESSEE FURNISHED THE AFFIDAVITS, THE REVENUE DID NOT SHIFT THE BURDEN TO THE ASSESSEE BY DISPROVING THE GENUINENESS OF THE GIFTS. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) AND THE SAME IS UPHELD. THIS GROUND OF APPEAL IS DISMISSED. 24. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25 TH APR18. SD/- SD/- ( . ) ( . .. . . . . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 25.04.2018 VG/SPS ITA NO.224 /VIZAG/2017 NAGOTHU BALASHOWRAIAH, NARASARAOPET 22 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO, WARD-1, GUNTUR 2. / THE RESPONDENT NAGOTHU BALASHOWRAIAH, D.NO.3-2 51/2, RAVIPADU (VILLAGE & POST), NARASARAOPET (MANDAL), GUNTUR DIS T., ANDHRA PRADESH 3. + / THE PRINCIPAL CIT, GUNTUR 4. + ( ) / THE CIT (A), GUNTUR 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM