Chada Sudhakar Reddy, Hyderabad V. Income Tax Officer, Ward-2, Warangal

ITA 460/HYD/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6484 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 18-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: P BALAKRISHNA
• Keywords: Unexplained cash credit; Income from undisclosed sources
• Section: 143(3); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA.NO.460/HYD/2014 ASSESSMENT YEAR 2008-2009 MR. CHADA SUDHAKAR REDDY, HYDERABAD- 500057. PAN AGVPC0642F VS. THE INCOME TAX OFFICER WARD-2, AAYAKAR BHAVAN, WARANGAL. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. P. BALAKRISHNA FOR REVENUE : MR. B. KURMI NAIDU DATE OF HEARING : 07.06.2016 DATE OF PRONOUNCEMENT : 15 .06.2016 ORDER THIS IS ASSESSEES APPEAL FOR THE A.Y. 2008-09. IN THIS APPEAL THE ASSESSEE IS AGGRIEVED BY THE ORD ER OF THE CIT(A) IN CONFIRMING THE ADDITIONS MADE BY THE A.O. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, WHO IS ENGAGED IN THE BUSINESS OF SCREE N PRINTING, FILED HIS RETURN OF INCOME FOR THE A.Y. 2 008-09 ON 23.06.2008 BY DECLARING NET INCOME FROM BUSINESS AT RS.1,38,110. DURING THE ASSESSMENT PROCEEDINGS UNDE R SECTION 143(3) OF THE ACT, THE ASSESSEE WAS ISSUED NOTICE TO APPEAR BUT SINCE THE ASSESSEE FAILED TO APPEAR A ND SUBSTANTIATE HIS CLAIM, THE A.O. PROCEEDED TO COMPL ETE THE ASSESSMENT UNDER SECTION 144 OF THE I.T. ACT. A.O. OBSERVED THAT THE ASSESSEE IS HOLDING BANK ACCOUNT WITH ING VYSYA BANK, UPPAL BRANCH WHEREIN CASH DEPOSITS OF 2 ITA.NO.460/HYD/2014 MR. CHADA SUDHAKAR REDDY, HYDERABAD. RS.20,03,030 WERE MADE. SINCE THE ASSESSEE COULD NO T FURNISH THE EXPLANATION CALLED FOR WITH REGARD TO T HE SOURCE OF THE CASH DEPOSITS IN THE BANK ACCOUNT. TH E A.O. HELD THAT THE DEPOSITS MADE IN ING VYSYA BANK ARE UNEXPLAINED CASH CREDITS. FURTHER, THE A.O. ALSO OB SERVED THAT THE ASSESSEE HAS SHOWN AN ADDITION TO BUILDING AT RS.5,00,000. SINCE THE ASSESSEE FAILED TO APPEAR AN D FURNISH INFORMATION REGARDING THE SOURCE IN CONNECT ION WITH THE SAID EXPENDITURE/RENOVATION OF THE BUILDIN G, THE A.O. TREATED THE SUM OF RS.5 LAKHS AS UNACCOUNTED INCOME OF THE ASSESSEE. FURTHER, HE ALSO OBSERVED T HAT THE ASSESSEE HAS SHOWN INCOME OF RS.25,000 FROM AGRICUL TURE AND SINCE THE ASSESSEE FAILED TO FURNISH INFORMATIO N WITH REGARD TO SUCH CLAIM, HE TREATED THE SUM OF RS.25,0 00 AS INCOME FROM OTHER SOURCES. 3. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) AND ALSO FILED RELEVANT DETAILS BEFORE H IM. THE LD. CIT(A) CALLED FOR A REMAND REPORT ON THE EVIDEN CE FILED BY THE ASSESSEE. DURING THE REMAND PROCEEDINGS, THE A.O. ACCEPTED THE SOURCE OF CASH DEPOSITS OF A SUM OF RS.4,90,000 AS WITHDRAWALS FROM THE ASSESSEES SB ACCOUNT MAINTAINED WITH ICICI BANK. FURTHER, A SUM OF RS.1,80,300 WAS ALSO ACCEPTED AS THERE IS A MATCHIN G SOURCE OF A WITHDRAWAL. HOWEVER, HE DID NOT ACCEPT THE SOURCE FOR THE DEPOSITS TO THE EXTENT OF RS.13,50,0 00. ON THE BASIS OF THE REMAND REPORT, THE CIT(A) CAME TO THE CONCLUSION THAT THE RELIEF IS TO BE RESTRICTED TO RS.5,13,200. LD. CIT(A) ACCORDINGLY, GRANTED PARTIA L RELIEF 3 ITA.NO.460/HYD/2014 MR. CHADA SUDHAKAR REDDY, HYDERABAD. TO THE ASSESSEE AND CONFIRMED THE ADDITION OF RS.13,50,000. HE ALSO ACCEPTED THE AGRICULTURAL INC OME OFFERED BY THE ASSESSEE. AS REGARDS THE ADDITION OF RS.5 LAKHS, THE LD. CIT(A) CONFIRMED THE SAID ADDITION H OLDING THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE FOR THE SAME. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS MAINTAINING TWO BANK ACCOUNTS, ONE WITH ICICI BANK AND THE OTHER WITH ING VYSYA BANK. HE SUBMITTED THAT HIS SON WAS AN NRI AND WAS DEPOSITIN G FUNDS IN ASSESSEES ICICI BANK A/C WHICH HE HAS WITHDRAWN AND SOME OF THE AMOUNTS HAVE BEEN DEPOSIT ED INTO ING VYSYA BANK WHICH HAVE BEEN ACCEPTED BY THE CIT(A). WITH REGARD TO BALANCE OF RS.15,30,000, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E HAD WITHDRAWN THE SUMS FROM THE ICICI BANK WITH AN INTENTION TO BUY A PROPERTY AND RETAINED THE SUMS W ITH HIM AND SINCE THE ASSESSEE COULD NOT INVEST THE MON IES, SOME OF THE AMOUNTS HAVE BEEN GIVEN TO CLOSE FRIEND S AND RELATIVES AS HAND LOANS FOR SHORT PERIOD AND AFTER THEIR REPAYMENT, THE SUMS HAVE BEEN DEPOSITED INTO ING VY SYA BANK. HE SUBMITTED THAT THE ASSESSEE HAD FILED ALL THE RELEVANT DETAILS BEFORE THE A.O. DURING THE REMAND PROCEEDINGS AND THE CIT(A) HAD CALLED FOR TWO REMAN D REPORTS, BUT AFTER CONSIDERING THE FIRST REMAND REP ORT ALONE HAS REJECTED THE ASSESSEES CONTENTIONS. THUS , ACCORDING TO HIM, THE CIT(A) HAS COMMITTED AN ERROR IN 4 ITA.NO.460/HYD/2014 MR. CHADA SUDHAKAR REDDY, HYDERABAD. NOT CONSIDERING ASSESSEES OBJECTIONS TO THE REMAND REPORT AND NOT CALLING FOR ANY OBJECTIONS ON THE SECOND RE MAND REPORT ALSO. AS REGARDS THE SUM OF RS. 5 LAKHS WHIC H HAS BEEN INVESTED IN RENOVATION OF THE BUILDING, THE LD . COUNSEL FOR THE ASSESSEE, EXPLAINED THE SOURCE AS T HE DEPOSITS MADE BY HIS SON INTO HIS ICICI BANK A/C. HE HAS ALSO DRAWN MY ATTENTION TO THE REMAND REPORT DATED 27.02.2012 AND ALSO SECOND REMAND REPORT DATED 31.01.2013. 4. THE LD. D.R. ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, I FIND THAT ASSESSEE HAS NOT AP PEARED AND HAS NOT FILED ANY EVIDENCE BEFORE THE A.O. DURI NG THE ASSESSMENT PROCEEDINGS DUE TO WHICH THE A.O. HAD TO COMPLETE THE ASSESSMENT UNDER SECTION 144 OF THE AC T. I ALSO FIND THAT IT IS ONLY BEFORE THE CIT(A) THAT TH E ASSESSEE HAS EXPLAINED SOURCE OF THE CASH DEPOSITS AS WELL A S SOURCE FOR RENOVATION OF THE BUILDING. FOR BOTH THE ABOVE INVESTMENTS, THE ASSESSEE HAD EXPLAINED DEPOSITS MA DE BY HIS SON AS THE SOURCE. THE CIT(A) HOWEVER, OBSER VED THAT THE WITHDRAWALS FROM THE ICICI BANK ARE NOT CORRESPONDING WITH THE DEPOSITS MADE INTO THE ING V YSYA BANK IN ENTIRETY. WHERE THERE IS A CO-RELATION BETW EEN HE DEPOSITS AND WITHDRAWALS, THE ADDITIONS HAVE BEEN DELETED. HOWEVER, AS REGARDS THE BALANCE AMOUNTS, T HE ASSESSEE HAD EXPLAINED THAT THE WITHDRAWALS FROM IC ICI 5 ITA.NO.460/HYD/2014 MR. CHADA SUDHAKAR REDDY, HYDERABAD. BANK HAVE BEEN ADVANCED TO VARIOUS PERSONS AND AFTE R SOME TIME, WHEN THE SAID AMOUNTS HAVE BEEN RECOVERE D, THE SAME HAS BEEN DEPOSITED INTO ING VYSYA BANK ACCOUNT. THE A.O. HAS NOT ACCEPTED THE CONTENTIONS OF THE ASSESSEE IN REMAND REPORT. IN THE SECOND REMAND REP ORT DATED 31.01.2013, THE A.O. HAS GIVEN DETAILED REASO NS AS TO WHY HE HAS NOT ACCEPTING THE CONTENTION OF THE ASSESSEE. HOWEVER, THERE IS NOTHING ON RECORD TO SH OW THAT THE CIT(A) HAD CALLED FOR A REPLY FROM THE ASS ESSEE ON THE SECOND REMAND REPORT. IN THE ORDER OF THE CIT(A ), THERE IS A REFERENCE TO THE FINDINGS OF THE A.O. IN THE S ECOND REMAND REPORT BUT THERE IS NO REFERENCE TO THE REMA ND REPORT AS IT IS. IN VIEW OF THE SAME, I AM OF THE O PINION THAT THE CIT(A) HAS NOT FOLLOWED PRINCIPLES OF NATU RAL JUSTICE BY AFFORDING AN OPPORTUNITY TO THE ASSESSEE TO REBUT THE FINDINGS OF THE A.O. IN THE SECOND REMAND REPORT DATED 31.01.2013. IN VIEW OF THE SAME, WE DEEM IT F IT AND PROPER TO REMAND BOTH THE ADDITIONS TO THE FILE OF THE CIT(A) WITH A DIRECTION TO GIVE THE ASSESSEE AN OPP ORTUNITY TO REBUT THE FINDINGS OF THE ITO IN THE REMAND REPO RT DATED 31.01.2013 AND THEREAFTER, ADJUDICATE THE ISS UE IN ACCORDANCE WITH LAW. 6. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6 ITA.NO.460/HYD/2014 MR. CHADA SUDHAKAR REDDY, HYDERABAD. ORDER PRONOUNCED IN THE OPEN COURT ON 15.06.20 16. SD/- (SMT. P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 15 TH JUNE, 2016 VBP/- COPY TO : 1. MR. CHADA SUDHAKAR REDDY, C/O. MR. V. SATYANARAYANA RAO, D.NO.10-3-335 (2/3RT), VIJAYANAGAR COLONY, HYDERABAD 500 057. 2. THE INCOME TAX OFFICER, WARD - 2, AAYAKAR BHAVAN, WARANGAL. 3. CIT(A) - VI, HYDERABAD. 4. CIT - 5/6 , HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE