Chandra Sekhar Rao Jaginpally , Hyderabad V. Dy. Commissioner of Income Tax , Central Circle-4, Hyderabad

ITA 489/Hyd/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6801 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 17-07-2019
• Assessment Year: 2003-2004
• Appeal Filed On: 04-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: S RAMA RAO
• Keywords: Gift; Salary income; Set aside
• Section: 142(1); 153A; 143(1); 68; 132; 2

Judgement Text

IN THE INCOME TAX A PPELLATE TRIBUNAL HYDERABAD BENCH B , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO S . 489 & 490 /HYD/201 9 ASSESSMENT YEAR S : 20 03 - 04 & 2004 - 05 CHANDRA SEK HAR RAO JOGINAPALLY, HYDERABAD. PAN A DIPJ5829R VS. DY. COMMISSIONER OF I NCOME - TAX , CENTRAL CIRCLE 4, HYDERABAD. ( APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : S HRI Y.V.S.T. SAI DATE OF HEARING : 17 / 0 7 /201 9 DATE OF PRONOUNCEMENT : 24/ 0 7 / 201 9 O R D E R PER S . RIFAUR RAHMAN , A .M. : BOTH T H ESE APPEAL S FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF CIT(A) 8 , HYDERABAD , BOTH DATED 05/03/2019 FOR AY S 20 03 - 04 AND 2004 - 05. AS IDENTICAL ISSUE IS INVOLVE D IN BOTH OF THESE APPEALS, THE SAME WERE CLUBBED AND HEARD TOGETHER AND, THEREFORE, A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. 2. BRIEF FACTS OF THE CASE ARE, THE ASSESSEE , DERIVING INCOME FROM SALARY, BUSINESS AND OTHER SOURCES, ORIGINALLY FILED HIS RETURN OF INCOME FOR AY 2003 - 04 ON 13/11 /20 03 DECLARING INCOME OF RS. 3, 69 , 781, WHICH WAS PROCESSED U/S 143(1) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT) . 2.1 A SEARC H OPERATION U/S 132 OF THE ACT WAS CONDUCTED IN THIS CASE ON 6 TH NOVEMBER, 2009 ALONG WITH KAVERI GROUP OF COMPANIES. NOTICE U/S 153A OF THE ACT WAS ISSUED AND SERVED ON THE ASSESSEE. IN 2 ITA NO S . 489 & 490 /HYD/1 9 CHANDRA SEKHAR RAO JOGINAPALLY, HYD. . RESPONSE, ASSESSEE FILED HIS RETURN OF INCOME ON 15/09/2009 BY DECLAR ING THE SAME INCOME AS RETURNED IN THE ORIGINAL RETURN OF INCOME. SUBSEQUENTLY, ,NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED AND SERVED ON THE ASSESSEE. IN RESPONSE, LD. AR OF THE ASSESSEE APPEARED AND FILED REQUIRED INFORMATION. 2.2 DURING THE ASSESSMENT PROCEEDINGS, AO OBSERVED THAT ASSESSEE HAS INTRODUCED FRESH CAPITAL OF RS. 2,02,207/ - . ASSESSEE WAS ASKED TO SUBMIT THE SOURCE FOR INTRODUCTION OF FRESH FUNDS INTO THE CAPITAL. THE ASSESSEE VIDE HIS LETTER DATED 15/11/2010 STATED THAT ADDITION M ADE TO THE CAPITAL INCLUDES GIFTS RECEIVED FROM DAUGHTER AND ALSO RECEIVED FROM THE CHILDREN AGAINST THE EXPENSES INCURRED ON THEIR BEHALF IN THE EARLIER YEARS. NOT CONVINCED WITH THE ABOVE EXPLANATION OF THE ASSESSEE, THE AO MADE THE ABOVE AMOUNT OF RS. 2 ,02,207/ - AS ADDITION. 3. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT DURING FY 2002 - 03, HE VIS I TED USA ON 09/07/2002 . AT THE TIME OF LEAVING, HE WAS CARRYING USD 2000 WITH HIM, WHICH WAS SUPPORTED BY A STAMP IN HIS PASSPORT AND THE SAME WAS PURCHASED BY HIM THROUGH STANDARD CHA RTERED BANK. IN USA, ALL HIS EXPENSES WERE MET BY HIS SON AND DAUGHTER, WHO ARE STAYING IN USA. WHILE RETURNING FR O M USA, THEY HAVE GIVEN HIM FURTHER USD 2200 AND THE TOTAL USD 4200 WERE BROUGHT TO INDIA AND DEP OSITED THE SAME IN STANDARD CHARTERED BANK . HE SUBMITTED THAT THE SAID AMOUNT WAS ADDED BY THE AO TO THE INCOME RETURNED. 4.1 THE CIT(A) FORWARDED THE ABOVE INFORMATION TO THE AO AND IN HIS REMAND REPORT, AO CONFIRMED THE ABOVE FACTS SUBMITTED BY THE ASS ESSEE. HOWEVER, HE SUBMITTED THAT ASSESSEE HAS NOT FURNISHED 3 ITA NO S . 489 & 490 /HYD/1 9 CHANDRA SEKHAR RAO JOGINAPALLY, HYD. . ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE THE ABOVE ADDITION AND, HE THEREFORE, SUPPORTED THE ADDITION. 4.2 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND REMAND REPORT FROM AO AS WELL AS COUNTER COMMENTS OF THE ASSESSEE, CIT(A) CONFIRMED THE ABOVE ADDITION MADE BY THE AO. 5. AGGRIEVED WITH THE ABOVE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING ADDITION OF RS.2,02,207 / - MADE BY THE ASSESSING OFFICER U/ S 68 OF THE I. T. ACT WITHOUT CONSIDERING THE FACT THAT THE APPELLANT PROVED THE SOURCES FORT THE CASH DEPOSIT. 3) ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 6. BEFORE US, LD. AR BROUGHT TO OUR NOTICE THE FACTS OF THE CASE AND SUBMITTED THAT ALL THE RELEVANT INFORMATION WAS SUBMITTED BEFORE THE AO, BROUGHT TO OUR NOTICE THE ACCOUNT STATEMENT OF STANDARD CHARTERED BANK AND PASSPORT COPY OF THE ASSESSEE AS WELL AS CONFIRMATION LETTER FROM MR. J. SUDHEER, SON OF THE ASSESSEE, WHO IS STAYING IN USA. A S PER THE CONFIRMATION LETTER, MR. SUDHEER CONFIRMS THAT ASSESSEE HAS STAYED WITH HIM DURING HIS USA VISIT AND FURTHER CONFIRMS THAT HE HAD GIVEN HIM USD 2200 FROM HIS PERSONAL SAVINGS, WHICH HE HAS EARNED OUT OF PROFESSIONAL SERVICES. 7. LD. DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF REVENUE AUTHORITIES. 8. CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD. THERE IS NO DOUBT THAT ASSESSEE HAS DEPOSITED USD 4200 IN HIS BANK ACCOUNT AND ASSESSEES SON HAS CONFIRMED THAT ASSESSEE HAS STAYED WITH HIM AND WHATEVER THE EXPENDITURE INCURRED BY THE ASSESSEE IN 4 ITA NO S . 489 & 490 /HYD/1 9 CHANDRA SEKHAR RAO JOGINAPALLY, HYD. . USA, WAS MET BY HIS SON . FURTHER, ASSESSEES SON ALSO CONFIRMED THAT HE HAS GIVEN USD 2200 WHILE ASSESSEE WAS RETURNING TO INDIA. ASSESSEE HAS ALSO CONFIRMED BEFORE THE AO THAT HE HAS WITHDRAWN AN AMOUNT EQUIVALENT TO USD 2000 FROM HIS BANK WHILE VISITING USA. AFTER RETURNING FR O M USA HE HAS DEPOSITED USD 4200. ASSESSEE HAS DEPOSITED THIS AMOUNT IN FOREIGN CURRENCY ON 12/09/02. THEREFORE, IN OUR CONSIDERED VIEW, ASSESSEE HAS ALREADY DEMONSTRATED IDENTITY AND SOURCE OF THE DEPOSITS MADE IN HIS BANK ACCOUNT. THEREFORE, WE SET ASIDE THE ORDER OF CIT(A) AND ALLOW THE GROUNDS RAISED BY THE ASSESSEE IN THIS REGARD. 9. SIMILARLY, IN AY 2004 - 05, ASSESSEE HAS FILED HIS ORIGINAL RETURN OF INCOME ON 28/10/ 2004 DECLARING INCOME OF RS. 3,26,468/ - , WHICH WAS PROCESSED U/S 143(1) OF THE ACT. SIMILAR TO THE AY 2003 - 04, THIS AY ALSO COVERED UNDER THE SEARCH PROCEEDINGS CARRIED ON U/S 132 OF THE ACT. NOTICE U/S 153A WAS ISSUED AND SERVED ON THE ASSESSEE AND ACCORD INGLY, NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED AND SERVED ON THE ASSESSEE. IN RESPONSE, LD. AR OF THE ASSESSEE FILED THE REQUIRED INFORMATION AS CALLED FOR. 9.1 DURING THE ASSESSMENT PROCEEDINGS, AO OBSERVED THAT ASSESSEE HAS INTRODUCED RS. 9,75,000/ - AS FRESH CAPITAL IN HIS BANK ACCOUNT. WHEN ASSESSEE WAS ASKED TO SUBMIT THE SOURCE, ASSESSEE HAS STATED THAT HE HAS RECEIVED GIFT FROM HIS DAUGHTER AND OTHER CHILDREN. SINCE THE EXPLANATION GIVEN BY THE ASSESSEE WAS NOT CONVINC ING , AO TREATED TH E ABOVE AMOUNT AS UNEXPLAINED CASH U/S 68 OF THE ACT. 10. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 10.1 BEFORE THE CIT(A), ASSESSEE SUBMITTED THAT ASSESSEE HAS RECEIVED A SUM OF RS. 7 LAKHS FROM SMT. KESANI SUCHARITHA 5 ITA NO S . 489 & 490 /HYD/1 9 CHANDRA SEKHAR RAO JOGINAPALLY, HYD. . (DAUGHTER) , WHO IS A NRI STAYING IN USA AND ALSO SUBMITTED A CONFIRMATION LETTER FROM HER. ASSESSEE ALSO BROUGHT TO THE NOTICE OF CIT(A) THAT H IS DAUGHTER IS ASSESSED TO TAX UNDER PAN AJRPIK2424J AND FILED A COPY OF THE RETURN OF INCOME FILED BY HER. FOR THE BALANCE AMOUNT OF RS. 2,75,000/ - , HE SUBMITTED THAT HE HAS RECEIVED FROM M/S SEED STOCK FOUNDATION THROUGH CHEQUE NO. 292662 DATED 28/08/20 03 AND ALSO FILED CONFIRMATION LETTER FROM SEED STOCK FOUNDATION. IT WAS SUBMITTED THAT THE ASSESSEE IS A PARTNER IN THE ABOVE PARTNERSHIP FIRM. 10.2 CIT(A) HAS FORWARDED THE ABOVE DOCUMENTARY EVIDENCE TO AO AND AO SUBMITTED HIS REMAND REPORT DATED 13/07 /16, IN WHICH, HE HAS CONFIRMED THE RECEIPT OF THE ABOVE PAYMENTS FROM SMT. K. SUCHARITHA, BUT, REJECTED THE CLAIM OF THE ASSESSEE WITH THE OBSERVATION THAT HIS DAUGHTER HAS DECLARED TOTAL INCOME OF RS. 80,883/ - ONLY. THE AO, THEREFORE, COMMENTED THAT THE ASSESSEE HAS ESTABLISHED IDENTITY OF THE PARTY AND HAS NOT ESTABLISHED GENUINENESS AND CREDITWORTHINESS OF THE PARTY. WITH REGARD TO RECEIPT OF RS. 2,75,000/ - , AO HAS CONFIRMED THE RECEIPT OF THE ABOVE PAYMENT FROM THE PARTNERSHIP FIRM. HOWEVER, REJECTED THE CLAIM OF THE ASSESSEE THAT ASSESSEE HAS NOT FILED RETURN OF INCOME AND BANK STATEMENT OF THE ABOVE FIRM. 10.3 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE REMAND REPORT OF THE AO, CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. 11. AGGRI EVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING ADDITION OF RS.9,75, 000/ - MADE BY THE ASSESSING OFFICER ON THE GROUND THAT IT REPRESENTS UNEXPLAINED CASH 6 ITA NO S . 489 & 490 /HYD/1 9 CHANDRA SEKHAR RAO JOGINAPALLY, HYD. . INSPITE OF THE FACTS THAT THE APPELLANT HAS EXPLAINED THE SOURCES FOR INVESTMENT OF THE SAID AMOUNT. 3) ANY OTHER GROU ND OR GROUNDS THAT MAY BE URGE.~HE TIME RF HEARING. 12. BEFORE US, LD. AR OF THE ASSESSEE BROUGHT TO OUR NOTICE THE FACTS OF THE CASE AND BANK ACCOUNT OF SMT. K. SUCHARITHA, RETURN OF INCOME AND ALSO CONFIRMATION FROM SEED STOCK FOUNDATION FOR THE PAYMENT OF RS. 2,75,000/ - . HE SUBMITTED THAT ASSESSEE HAS RECEIVED THE ABOVE PAYMENTS FR O M HIS DAUGHTER , WHO IS NRI AND RETURN OF INCOME FILED BY HER RELATING TO THE INCOME EARNED IN INDIA. HOWEVER, HE BROUGHT TO OUR NOTICE THAT ASSESSEES DAUGHTER HAS SUFFICIENT AMOUNT IN HER NRI ACCOUNT . LD. AR ALSO SUBMITTED THAT ASSESSEE IS A PARTNER IN SEED STOCK FOUNDATION, WHO GAVE A CONFIRMATION LETTER. HE SUBMITTED THAT THE ASSESSEE HAS ALSO RECEIVED SUBSTANTIAL AMOUNT FROM SEED STOCK FOUNDATION AS INCOME, WHICH IS EXEMPT FR O M TAX. FINALLY, HE PRAYED THAT THE ADDITION S MAY BE DELETED. 13. LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF REVENUE AUTHORIT IES. 14. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE NOTICE THAT ASSESSEE HAS RECEIVED RS. 7 LAKHS FROM HIS DAUGHTER, WHO IS NRI AND AO HAS CONFIRMED THE ABOVE TRANSACTION. HOWEVER, HE REJECTED BY REFERRING TO THE RETURN OF IN COME FILED BY HER AND CAME TO THE CONCLUSION THAT THERE IS NO CREDITWORTHINESS. HOWEVER, WE NOTICE THAT SHE HAS DECLARED INCOMES RECEIVED IN INDIA AND SHE HAS NOT DECLARED ANY INCOME EARNED BY HER IN USA. HOWEVER, SHE HAS A HEALTHY BANK BALANCE IN HER NRI ACCOUNT AND THE FUNDS WHICH ASSESSEE HAS RECEIVED ARE FROM HER BANK ACCOUNT. THEREFORE, ASSESSEE HAS ALSO ESTABLISHED THE IDENTITY, SOURCE AND GENUINENESS OF THE TRANSACTION IN THIS CASE. 7 ITA NO S . 489 & 490 /HYD/1 9 CHANDRA SEKHAR RAO JOGINAPALLY, HYD. . 14.1 WITH REGARD TO RECEIPT OF RS. 2,75,000/ - FROM M/S SEED STOCK FOUNDATION, THE FIRM HAS ALREADY CONFIRMED THAT THEY HAVE MADE THE ABOVE PAYMENT AND FROM THE SAME FIRM ASSESSEE HAS RECEIVED HUGE SUM OF PROFITS AS HIS SHARE AND THEY HAVE ALSO DECLARED THEIR DETAILS. THEREFORE, IDENTITY, SOURCE AND GENUINENESS IS ALSO ES TABLISHED IN THIS CASE. IN OUR CONSIDERED VIEW, BOTH THE ADDITIONS MADE BY THE AO DESERVE TO BE DELETED. ACCORDINGLY, WE DELETE THE SAME AND ALLOW THE GROUNDS RAISED BY THE ASSESSEE. 15. IN THE RESULT, BOTH THE APPEALS UNDER CONSIDERATION ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 24 TH JULY , 201 9 . SD/ - SD/ - ( P. MADHAVI DEVI ) (S . RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 24 TH JULY , 201 9 KV C OPY TO: - 1) CHANDRA SEKHAR RAO JOGINAPALLY, 6 - 3 - 900/10, COSMOPOLITAN APARTMENTS, RAJBHAVAN ROAD, SOMAJIGUDA, HYDERABAD 500 082 2) DC IT, CENTRAL CIRCLE 4 , HYDERABAD 3) CIT(A) 8 HYDERABAD. 4) PR. CIT - 2 , HYD. 5 ) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6 ) GUARD FILE