Kommuru Narasimha Rao(HUF), Vijayawada V. The Income Tax Officer, Ward-2(2), Vijayawada

ITA 48/VIZ/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6740 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-04-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 12-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA VILLURI
• Section: 143(3); 142(1); 250; 143(2); 69A

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम “SMC” पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER आयकर अपील सं./I.T.A.No.48/Viz/2024 (ननधधारण वर्ा / Assessment Year : 2017-18) Kommuru Narasimha Rao (HUF) D.No.29-28-21, Dasari Vari Street Suryaraopet Vijayawada [PAN : AALHK1984Q] Vs. Income Tax Officer Ward-2(2) Vijayawada (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : Shri C.Subrahmanyam, AR प्रत्यधथी की ओर से / Respondent by : Dr.Aparna Villuri, DR सुनवधई की तधरीख / Date of Hearing : 04.04.2024 घोर्णध की तधरीख/Date of Pronouncement : 31.05.2024 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 (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi in DIN & Order No. ITBA/NFAC/S/250/2023-24/1059111202(1) dated 27.12.2023, arising out of order passed u/s 143(3) of the Income Tax Act, 1961 (in short ‘Act’) dated 29.12.2019 for the Assessment Year (A.Y.) 2017-18. 2 I.T.A. No.48/Viz/2024, A.Y.2017-18 Kommuru Narasimha Rao (HUF), Vijayawada 2. Brief facts of the case are that the assessee HUF filed its return income, admitting total income of Rs.7,20,600/-. Subsequently, the case was selected for limited scrutiny on the reasons of “cash deposit during demonetization period” and statutory notice u/s 143(2) and 142(1) of the Act were issued and served on the assessee. After verification of the information furnished by the assessee in response to the notices, the Assessing Officer (AO) completed the assessment and passed order u/s 143(3) dated 29.12.2019, assessing the income of the assessee at Rs.22,20,600/- by disallowing an amount of Rs.15,00,000/- towards cash loans given to various persons realised during the period of demonetization. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) sustained the addition made by the AO and dismissed the appeal of the assessee. 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 under the facts and circumstance of the case the order passed u/s 143(3) of the IT Act dt : 29/12/2019 that was upheld by Ld.CIT(A) vide order u/s 250 of the IT Act dt.27/12/2023 is contrary to the facts of the case and provisions of law. 3 I.T.A. No.48/Viz/2024, A.Y.2017-18 Kommuru Narasimha Rao (HUF), Vijayawada 2. The Ld.CIT(A) failed to appreciate that the cash deposits in the bank account of Rs.15 lacs, were emanating from the realizations of loans given earlier and when all the evidences in this regard produced before AO and as well as CIT(A), the explanation of the assessee in this regard could not have been brushed aside by the lower authorities. 3. The Ld.CIT(A) ought to have taken into cognizance that when AO has accepted the sources for the loans given could not have disbelieved the realizations of funds from these borrowers, which were explained as source for the deposit in the bank account. 4. The Ld.CIT(A) failed to take note that the loans that were given in the previous years, which was the source for the deposits made in the bank account, assessee received and realized interest on these loans which were offered to tax, therefore, the related loans pertaining to these cannot be disbelieved when such interest suffered to tax. 5. For these and other reasons that are to be urged at the time of hearing the case the Hon’ble ITAT may delete the addition in the interest of justice and fair play. 5. It was the submission of the assessee that the AO made addition u/s 69A of the Act, amounting to Rs.15,00,000/-, holding that the source for cash deposits of Rs.15,00,000/- was not explained properly out of the cash deposits of Rs.1.3 crores and the AO has accepted the source for Rs.1.15 crores only. It was the submission of the assessee that the amount of Rs.15,00,000/- was disbursed as hand loans to the debtors in November 2014, subsequently, the loans were repaid with interest by October 2016 and the interest income was also offered to tax by the assessee under ‘income from other sources’. The assessee has filed confirmation from the debtors and also submitted the same before the AO, but, AO held that out 4 I.T.A. No.48/Viz/2024, A.Y.2017-18 Kommuru Narasimha Rao (HUF), Vijayawada of the cash deposits of Rs.1.3 crores, the assessee has not explained the cash deposits to the tune of Rs.15,00,000/- and arbitrarily disallowed the amount of Rs.15,00,000/-. He, therefore, pleaded to set aside the order passed by the Ld.CIT(A) and allow the appeal of the assessee. 6. On the other hand, the Ld.DR(CIT) held that the assessee has failed to properly explain the source for cash deposits to the tune of Rs.15,00,000/-, therefore, the Ld.AO as well as the Ld.CIT(A) has rightly made and sustained the addition u/s 69A of the Act. Hence, the order passed by the Ld.CIT(A) is to be upheld. 7. We have heard both the parties and perused the material available on record. It is undisputed fact that the assessee has made cash deposits of Rs.1.3 crores, but according to the revenue, the assessee has explained cash deposits to the tune of Rs.1.15 cr only, but not properly explained the cash deposits of Rs.15,00,000/-. On this aspect, the contention of the assessee is that he has lent an amount of Rs.15,00,000/- as hand loans to various persons in 2014 and they repaid the amount along with interest by October 2016, which was deposited in the bank account and confirmation letters from the debtors were also filed. The assessee also offered interest income for the impugned assessment year. I have also 5 I.T.A. No.48/Viz/2024, A.Y.2017-18 Kommuru Narasimha Rao (HUF), Vijayawada perused the confirmation letters and it is undisputed fact that the assessee has offered the interest income. However, the AO has not summoned any of the debtors to examine the genuineness of the parties, but he simply made disallowance of Rs.15,00,000/-. Hence, I am of the view that it is a fit case to set aside the assessment order passed by the AO and remit back the matter to the file of AO to examine the genuineness of the confirmation letters filed by the assessee and also to examine, whether, the assessee has shown the amount Rs.15,00,000/- as loans disbursed by him to the persons who gave confirmation letters for the A.Y.2015-16. Accordingly, the appeal of the assessee is allowed for statistical purpose. 8. In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 31 st May, 2024. Sd/- (द ु व्वूरु आर.एल रेड्डी) (DUVVURU RL REDDY) न्याधयक सदस्य/JUDICIAL MEMBER Dated : 31.05.2024 L.Rama, SPS 6 I.T.A. No.48/Viz/2024, A.Y.2017-18 Kommuru Narasimha Rao (HUF), Vijayawada आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Kommuru Narasimha Rao (HUF), D.No.29-28- 21, Dasari Vari Street, Suryaraopet, Vijayawada 2. रधजस्व/The Revenue – The Income Tax Officer, Ward-2(2), CR Buildings, 1 st Floor Annex, MG Road, Vijayawada 3. The Principal Commissioner of Income Tax, Vijayawada 4. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम / DR,ITAT, Visakhapatnam 5..गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam