ACIT, Central Circle-2(2), Hyderabad V. Devender Rao Gorukanti, Hyderabad

ITA 439/Hyd/2022

AI Insights

The case revolves around the addition of Rs. 5,08,98,100 by the AO under section 69C read with section 115BBE, following a search operation on the Yashoda group, which allegedly uncovered unaccounted cash receipts/payments. The assessee, Shri G. Devender Rao, argued that these transactions were part of his real-estate business, for which he had already paid advance tax. The CIT(A) agreed with the assessee, leading to the deletion of the addition, a decision which was upheld by the ITAT Bangalore Bench. The court emphasized that the real-estate business income, being disclosed and taxed, does not fall under the ambit of sections 68 to 69D, and thus section 115BBE cannot be invoked.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113048 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 19-03-2023
• Assessment Year: 2021-2022
• Appeal Filed On: 11-09-2022
• Other Referred Cases: Kanpur Organics Pvt. Ltd Vs DCIT, Principal Commissioner of Income Tax Vs Bajargan Traders, PClT vs Deccan Jewellera P.Ltd, Shivam Developers Vs PCIT, Babulal K. Daga Vs CIT, Gujarat, Gandhi Ram Vs PCIT, Chandigarh, Lakshmi Hospital Vs CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Business income
• Section: 68

Judgement Text

13 Devender Rao Gorukanti iii. ITAT Bangalore Bench in the case of Ragavs Diagnostic & Research Centre Pvt. Ltd. Vs ACIT vide ITA No.423/Bang/2022, order dated 09.09.2022. iv. ITAT Lucknow Bench in the case of Kanpur Organics Pvt. Ltd Vs DCIT reported in 78 ITR (Trib.) 120 v. Hon’ble Rajasthan High court in the case of Principal Commissioner of Income Tax Vs Bajargan Traders C/o. Kalani & Co. CA, Jaipur, vide D.B.I.T.A No.258/2017,order dated 12.09.2017 vi. Hon’ble AP High Court in the case of PClT vs Deccan Jewellera P.Ltd, Deccan Tobacco Company, DTE Exports P.Ltd, reported in 438 ITR 131 (AP) vii. ITAT Surath Bench in the case of Shivam Developers Vs PCIT, 100 reported in ITR (Trib) 29. viii. Hon’ble Gujarat High Court in the case of Babulal K. Daga Vs CIT, Gujarat reported in 387 ITR 114(Guj) ix. ITAT Chandigarh Bench in the case of Gandhi Ram Vs PCIT, Chandigarh vide ITA 121/Chd/2021 order dated 04.08.2022 x. Hon’ble Kerala High Court in the case of Lakshmi Hospital Vs CIT, reported in 347 ITR 367 12. We have heard the rival arguments made by both the sides, perused the orders of the AO and the ld.CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case made addition of Rs. 5,08,98,100/- u/s.69C r.w.s. 115BBE on the ground that certain loose sheets were found and seized during the course of search operation conducted in the case of Yashoda group on 22.12.2022 which represent cash receipts/payments of Rs. 5,08,98,100/- and the assessee could not explain the source of the above expenses. We find the ld.CIT(A) deleted the addition made by the AO, the reasons of which have already been reproduced in the preceding paragraph. We do not find any infirmity in the order of the ld.CIT(A) on this issue. We find the AO in the instant case at para 3.4 of the order has mentioned that Yashoda group, apart from providing health care services, has invested in real-estate through number of legal 14 Devender Rao Gorukanti entities who are regularly filing returns of income. Further, the assessee during the course of search proceedings, in his statement recorded u/s. 132(4) has stated that he has earned business income from real-estate. We find Shri Bommanagiri Jaipal, Shri Circoori Prabhakar and Shri Srinivas Telugu have filed their affidavits individually before the AO stating that the assessee Shri G. Devender Rao is into real-estate business since past 10 years and was involved in the real-estate settlements deals for purchase and sale of lands situated at Velimela, Vikrabad, Sangaraddy etc. We find the AO thereafter, has not conducted any further enquiry to disprove the various evidences filed by the assessee during the course of assessment proceedings as well as before the DDIT(Inv.). Further, the assessee has paid advance tax thereon prior to the date of search. Therefore, under these circumstances, once the assessee has proved the initial burden that he is engaged into real-estate business and has earned income from such real-estate, therefore, without making any further enquiry to disprove the various evidences filed before him, the AO could not have treated the amount of Rs. 5,08,98,100/- as unexplained expenditure. In our opinion, the provisions of section 115BBE are applicable when the source of income is not disclosed or source of expenditure is not disclosed. However, in the instant case, the assessee has disclosed the income after considering the expenditure and had paid advance tax thereon prior to the search. No new fact has surfaced during the course of search since the assessee has paid advance tax on such business activity prior to the date of search. Therefore, we find merit in the argument of ld.counsel for the assessee that the real-estate business income does not fall in the ambit of sections 68 to 69D and therefore, the provisions of section 115BBE cannot be invoked. The various decisions relied on by the ld.counsel for the assessee also supports his case.