Gaddipati Madhusudhana Rao, Guntur V. The Income Tax Officer, Ward-1(1), Guntur

ITA 458/VIZ/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2850 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 10-09-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Gift; Salary income; Set aside
• Section: 68; 69; 201; 69A; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 458 / VIZ /201 8 (ASST. YEAR : 20 15 - 16 ) GADDIPATI MADHUSUDHANA RAO, FLAT NO.5, YOGESH ENCLAVE, FIRST LINE, RAJENDRA NAGAR , GUNTUR. V S . IT O , WARD - 1(1), GUNTUR . PAN NO. ACJPG 0747 P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SMT. SUMAN MALIK SR. DR DATE OF HEARING : 03 / 0 6 /201 9 . DATE OF PRONOUNCEMENT : 07 / 0 6 /201 9 . O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1 , GUNTUR , DATED 28 /0 6 /201 8 FOR THE ASSESSMENT YEAR 20 15 - 16 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT ASSESSEE IS AN EMPLOYEE IN BHARAT SANCHAR NIGAM LIMITED (BSNL) . D URING THE PREVIOUS YEAR RELEVANT TO THE A SSESSMENT Y EAR , THE ASSESSING OFFICER OBSERVED THAT THERE WERE CASH DEPOSITS MADE INTO ASSESSEES BANK ACCOUNT I.E. CANARA BANK A/C. NO. 2492101001395 AND ICICI BANK 2 ITA NO. 458/VIZ/2018 ( GADDIPATI MADHUSUDHANA RAO ) A/C NO.630701071042 FOR AN AMOUNT OF RS. 23,97,000/ - . THE ASSESSING OFFICER CALLED FOR EXPLANATION FROM THE A SSESSEE WITH REGARD TO THE SOURCE OF CASH DEPOSITS AND SATISFIED WITH THE SOURCE TO THE EXTENT OF RS. 1 3,7 5 ,000/ - AND B ROUGHT TO TAX THE BALANCE AMOUNT OF RS. 10,22,000/ - RELATING TO THE ADVANCES RECEIVED FROM HIS WIFE SMT. G. LAKSHMI BHAVANI OF RS. 5.50 LAKHS AND SRI KODALI MURALI MOHAN OF RS. 5.00 LAKHS . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED CONFIRMATION LETTERS FROM BOTH THE PARTIES . IN RESPECT OF SMT. G. LAKSHMI BHAVANI, SHE EXPLAINED THE SOURCE WAS HER STREEDHAN AND SRI KODALI MURALI MOHAN EXPLAINED THE SOURCE WAS FROM HIS SAVINGS , OUT OF AGRICULTURAL INCOME AND SALARY BUT NOT PRODUCE D ANY EVIDENCE TO SUBSTANTIATE THE SOURCE S RECEIVED BY THE ASSESSEE . T HEREFORE, THE ASSESSING OFFICER HAS MADE THE ADDITION OF RS. 10 ,22,900/ - UNDER SECTION 68 OF THE ACT A FTER SCRUTINISING THE CONFIRMATIONS FURNISHED BY THE ASSESSEE. 3 . AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE WENT ON APPEAL BEFORE THE LD. CIT(A) AND CHALLENGED THE VALIDITY OF ADDITION MADE UNDER SECTION 68 OF THE ACT AS WELL AS ON MERITS. THE LD.CIT(A) CONFIRM ED THE ACTION OF THE ASSESSING OFFICER UNDER SECTION 69A OF THE ACT. THE LD. CIT(A) FURTHER OBSER V ED THAT THERE WAS NO NEXUS BETWEEN THE AMOUNT CLAIMED TO HAVE BEEN RECEIVED 3 ITA NO. 458/VIZ/2018 ( GADDIPATI MADHUSUDHANA RAO ) FROM THE RELATIVES AND THE DEPOSITS MADE INTO THE BANK ACCOUNTS. FURTHER VIEWED THAT WHEN THE FACTS ESTABLISHED THAT THERE IS NO NEXUS, THERE IS NO NECESSITY FOR EXAMINING THE THIRD PARTY AND ACCORDINGLY UPHELD THE ADDITIONS MADE BY THE ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE ASSESSEE. 4 . AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. THE ASSESSEE CHALLENGED THE ORDER OF THE LD. CIT(A) BOTH ON TECHNICAL AS WELL AS ON MERITS . TECHNICALLY , THE ASSESSEE CHALLENGED THE ORDER OF THE ASSESSING OFFICER ON THE GROUND THAT THE ADDITIONS COULD NOT HAVE BEEN MADE UNDER SECTION 68 OR 69 OF THE ACT IN GROUND NO.3 . DURING THE APPEAL HEARING, THE LD.AR HAS NOT PRESSED THIS GROUND HENCE, GROUND NO.3 IS DISMISSED AS NOT PRESSED. THE REMAINING GROUNDS ARE RELATING TO THE MERITS OF THE ADDITIONS MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS.10,22 ,900/ - AS UNEXPLAINED DEPOSITS IN THE BANK ACCOUNT. THE ADDITION OF RS. 10,22,900/ - CONSIST OF LOAN RECEIVED FROM SMT. LAKSHMI BHAVANI FOR RS. 5.00 LAKHS AND THE GIFT RECEIVED FROM SRI KODALI MURALI MOHAN FOR RS. 5.00 LAKHS AND THE SAME ARE DISCUSSED SEPARATELY AS UNDER. 5. WITH REGARD TO THE LOAN OF RS. 5.00 LAKHS, D URING THE APPEAL HEARING , LD.AR SUBMITTED THAT THE ASSESSEE HAS RECEIVED A SUM OF RS. 5.00 LAKHS FROM H IS WIFE SMT. G. LAKSHMI BHAVANI, FOR WHICH 4 ITA NO. 458/VIZ/2018 ( GADDIPATI MADHUSUDHANA RAO ) CONFIRMATION LETTER ENCLOSED AND PLACED IN PAPER BOOK AT PAGE NO. 21 AND ARGUED TH A T SINCE THE LENDER HAS GIVEN CONFIRMATION LETTER, THERE IS NO NEED TO MAKE THE ADDITION IN THE HANDS OF THE ASSESSEE, HENCE, ARGUED THAT THE ADDITION MAY BE DELETED . 6 . ON THE OTHER HAND, LD. DEPARTMENTAL REPRESEN TATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD . WE HAVE GONE THROUGH THE CONFIRMATION LETTER PLACED IN THE PAPER BOOK AT PAGE NO.21. THE CREDITOR SUBMITTED THAT THE AMOUNT WAS GIVEN OUT OF HER STREEDHAN RECEIVED FROM HER FATHER . SHE STATED TO HAVE RECEIVED AS SUM OF RS. 50,000/ - IN 1992 AT THE TIME OF HER MARRIAGE , WHICH WAS GIVEN AS HAND LOANS AND SOMETIMES FOR INTEREST FROM TIME TO TIME AND ACCUMULATED THE SAID AMOUNT TO THE EXTENT OF RS. 5.50 LAKHS AND GIVEN LOAN TO HER HUSBAND IN APRIL, 2014 , NO EVIDENCE WAS FURNISHED BY THE ASSESSEE EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD.CIT(A) OR BEFORE THE TRIBUNA L TO ESTABLISH THAT SH E HAD RECEIVED STREEDHAN OF RS. 50,000/ - AND GIVEN THE SAME AS HAND LOANS TO THE VARIOUS PERSONS . T HE CREDITOR IS NOT AN INCOME - TAX ASSESSEE. NO DETAILS SUCH AS NAMES AND ADDRESS ES OF THE PERSONS TO WHOM THE HAND LOANS WERE GIVEN, DATE OF LENDING, INTEREST RECEIVED AND THE DATE OF REPAYMENT ETC. W E RE FILED. THE LETTER FILED BY THE 5 ITA NO. 458/VIZ/2018 ( GADDIPATI MADHUSUDHANA RAO ) CREDITOR IS A GENERAL LETTER WITHOUT FURNISHING SPECIFIC INFORMATION, SUCH AS THE DATE OF RECEIPT OF STREEDHAN AND THE CASH FLOW TILL APRIL, 2014 . THEREFORE, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE LOAN RECEIVED FROM SMT. G.LAKSHMI BHAVANI AS A GENUINE . THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE SOURCE, HENCE, WE DO NOT FIND ANY INFIRMITY IN T HE ORDER OF THE LD. CIT(A) AND THE SAME IS UPHELD. THE ASSESSEES APPEAL ON THIS ISSUE IS DISMISSED. 8 . THE N EXT LOAN WAS RS. 5.00 LAKHS FROM SRI KODALI MURALI MOHAN . THE LD. AR AT THE TIME OF HEARING SUBMITTED THAT THE CREDITOR WAS HAVING AN AGRICULTURAL INCOME AS WELL AS SALARY INCOME OF RS.24,800/ - P.M. AND THE CREDITOR IS HAVING AGRICULTURAL INCOME OF RS. 2.50 LAKHS P.A. IT WAS FURTHER STATED TH A T SAVING S WERE KEPT WITH HER MOTHER SMT. K.GIRIJA KUMARI W/O LATE K . RAMA MOHANA RAO AND OUT OF THE ABOVE AGRICULTURAL INCOME AND SAVINGS , HE HAS GIVEN GIFT OF RS. 5.00 LAKHS TO HIS BROTHER ON 15/02/2015. SINCE THE CREDITOR IS STATED TO BE HAVING SALARY INCOME AS WELL AS AGRICULTURAL INCOME, LD.AR ARGUED THAT THERE IS NO REASON TO DISBELIEVE THE SOURCE SINCE THE ASSESSEE HAS PROVED THE IDENTITY AND EXPLAINED THE SOURCE. THE LD. CIT(A) OUGHT TO HAVE DELETED THE ADDITION AND ARGUED THAT THE ORDER OF THE LD. CIT(A) HAS TO BE SET ASIDE AND TO DELETE TH E ADDITION MADE BY THE ASSESSING OFFICER. 6 ITA NO. 458/VIZ/2018 ( GADDIPATI MADHUSUDHANA RAO ) 9 . PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND ARGUED TH A T THE ADDITION SHOULD BE CONFIRMED AND NO INTERFERENCE IS CALLED FOR. 10 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL PL A CED ON RECORD. 1 1 . IN THE INSTANT CASE, THE ASSESSEE HAS FURNISHED THE CONFIRMATION LETTER AND ALSO EVIDENCE FOR AGRICULTURAL LAND HOLDINGS . THE ASSESSING OFFICER SIMPLY SCRUTINIZED THE CONFIRMATION LETTER AND MADE THE ADDITION INSTEAD OF EXAMIN IN G THE DONOR. SINCE THE ASSESSEE PRIMA - FACIE HAS FURNISHED THE EVIDENCE FOR AGRICULTURAL LAND HOLDINGS AND ALSO EXPLAINED IN THE CONFIRMATION LETTER THAT CREDITOR WAS HAVING SALARY INCOME AND AGRICULTURAL INCOME , TH E ASSESSING OFFICER REQUIRED TO EXAMINE THE SOURCE IN DETAIL IN THE HANDS OF THE DONOR BEFORE MAKING THE ADDITION. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE SHOULD BE REM ITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE CREDI TWORTHINESS AND GENUINE NE SS OF THE SOURCE OF GIFT AND DECIDE THE ISSUE ON MERITS . IN CASE, THERE IS NO SOURCE FOR THE DONOR, THE SAME IS REQUIRED TO BE TAXED IN THE HANDS OF THE DONOR A L S O , SINCE , THE DONOR HAS FILED CONFIRMATION LETTER AND EXPLAIN ED T H E S O U R C E . ACCORDINGLY, THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE ISSUE AFRESH AND DECIDE THE 7 ITA NO. 458/VIZ/2018 ( GADDIPATI MADHUSUDHANA RAO ) SAME ON MERITS. THE ASSESSING OFFICER MUST GIVE REASONABLE OPPORTUNITY TO THE ASSESSEE BEFORE CONCLUDING THE PROCEEDINGS. THE AP P EAL OF THE ASSESSEE ON THIS ISSUE IS ALLOWED FOR STATISTICAL PURPOSE. 11 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON TH IS 0 7 T H DAY OF JUNE , 201 9 . S D / - S D / - (V. DURGA RAO) ( D.S. SUNDER SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 0 7 T H JUNE , 201 9 . VR/ - COPY TO: 1. THE ASSESSEE GADDIPATI MADHUSUDHANA RAO, FLAT NO.5, YOGESH ENCLAVE, FIRST LINE, RAJENDRA NAGAR, GUNTUR. 2. THE REVENUE ITO, WARD - 1(1), GUNTUR. 3. THE PR. CIT , GUNTUR. 4. THE CIT(A) - 1, GUNTUR. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.