The Income Tax Officer, Ward-3(2), Visakhapatnam V. Potluri Phanendrs Babu , Visakhapatnam

ITA 491/VIZ/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2908 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 22-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Keywords: Income from undisclosed sources; Source of fund; Set aside
• Section: 133A; 201; 13; 22; 68; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM (THROUGH WEB - BASED VIDEO CONFERENCING PLATFORM) . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER& SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ I.T. A.NO. 49 1 /VIZ/201 9 ( / A SSESSMENT Y EAR : 201 2 - 201 3 ) INCOME TAX OFFICER WARD 3(2) VISAKHAPATNAM VS. SRI POTLURI PHANENDRA BABU 1 ST FLOOR, INFINITY TOWERS, SANKARA MATHAM ROAD VISAKHAPATNAM [PAN : AGSPP7638K] ( / APPELLANT) ( / RESPONDENT) CROSS OBJECTION NO.1 32 /VIZ/2019 (ARISING OUT OF I.T.A. NO. 491 /VIZ/2019) ( / A SSESSMENT Y EAR : 201 2 - 201 3 ) SRI POTLURI PHANENDRA BABU 1 ST FLOOR, INFINITY TOWERS, SANKARA MATHAM ROAD VISAKHAPATNAM [PAN : AGSPP7638K] VS. INCOME TAX OFFICER WARD 3(2) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) /REVENUE BY : SMT. U.MINI CHANDRAN, DR / ASSESSEE BY : SHRI G.V.N.HARI, AR / DATE OF HEARING : 2 4 .0 9. 2020 / DATE OF PRONOUNCEMENT 23.11.2020 2 I.T.A. NO. 491/VIZ/2019 AND CO NO.132/VIZ/2019, A.Y.2012 - 13 SRI POTLURI PHANENDRA BABU, VISAKHAPATNAM / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : TH IS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 1 , VISAKHAPATNAM IN ITA NO. 7 5 /20 1 5 - 16 /IT O - W - 3(2), VSP/ 2019 - 20 DATED 23 .0 4 .201 9 FOR THE ASSESSMENT YEAR (A.Y.) 201 2 - 1 3 AND CROSS OBJECTIONS ARE FILED BY THE ASSESSEE. 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ADDITION DELETED BY THE CIT(A) AMOUNTING TO RS.2,00,28,550/ - OUT OF THE TOTAL ADDITION OF RS.2,27,70,750/ - . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNER OF THE FIRM MANASA, FILED THE RETURN OF INCOME DISCLOSING TOTAL INCOME OF RS.11,42,000/ - ON 30.03.2013. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) FOUND THAT THE ASSESSEE MADE CA SH DEPOSITS OF RS.1,76,28,550/ - AND MADE THE INVESTMENTS FOR PURCHASE OF CAR, INTRODUCTION OF CAPITAL IN FIRMS, EXPENDITURE INCURRED ON FOREIGN TOURS AND SOME AMOUNT W AS GIVEN TO HIS SON, SHRI P.PAVAN KUMAR AND THE TOTAL SUMS REPRESENTING CASH DEPOSITS , THE INVESTMENTS AND THE EXPENDITURE INCURRED AGGREGATED TO R S.2,27,70,550/ - , WHICH WAS BROUGHT TO TAX AS INCOME FROM UNDISCLOSED SOURCES. 3 I.T.A. NO. 491/VIZ/2019 AND CO NO.132/VIZ/2019, A.Y.2012 - 13 SRI POTLURI PHANENDRA BABU, VISAKHAPATNAM 2.1. CASH DEPOSIT OF RS.1,76,00,000/ - MADE BY THE ASSESSEE, BANK WISE ARE AS UNDER : SL.NO. NATURE OF CREDIT/DEPOSIT DATE OF DEPOSIT AMOUNT DEPOSITED RS. GROSS TOTAL SB A/C NO.501000000975 WITH HDFC 1. CASH DEPOSIT 09.07.2011 24,000 2. CASH DEPOSIT 17.01.2012 40,000 3. CASH DEPOSIT 28.03.2012 5,00,000 TOTAL 5,64,000 5,64,000 SB A/C NO.10846459231 WITH SBI 1. CASH DEPOSIT 02.06.2011 9,80,000 TOTAL 9,80,000 9,80,000 HDFC A/C NO.00501000179862 1 CASH DEPOSIT 19.05.2011 24,96,000 2 CASH DEPOSIT 26.05.2011 20,04,000 3 CASH DEPOSIT 27.05.2011 5,00,000 4 CASH DEPOSIT 14.06.2011 3,09,750 5 CASH DEPOSIT 04.07.2011 25,00,000 6 CASH DEPOSIT 05.08.2011 10,00,000 7 CASH DEPOSIT 07.09.2011 20,00,000 8 CASH DEPOSIT 08.09.2011 6,00,000 9 CASH DEPOSIT 21.09.2011 5,00,000 10 CASH DEPOSIT 22.10.2011 3,22,000 11 CASH DEPOSIT 24.10.2011 6,98,000 12 CASH DEPOSIT 28.10.2011 80,000 TOTAL 1,30,09,750 1,30,09,750 AXIS BANK A/C 911010059059097 1. CASH DEPOSIT 16.11.2011 5,000 2 CASH DEPOSIT 04.01.2012 10,800 3 CASH DEPOSIT 10.01.2012 2,000 4 CASH DEPOSIT 09.02.2012 2,000 5 CASH DEPOSIT 21.02.2012 30,00,000 TOTAL 30,19,800 30,19,800 HDFC A/C NO.00501930008445 1 CASH DEPOSIT 02.03.2012 25,000 25,000 HDFC A/C NO.00501930003653 1 CASH DEPOSIT 24.02.2011 30,000 30,000 ING VYSYA A/C 333010111867 1. CASH DEPOSIT NIL 0 0 GRAND TOTAL 1,76,28,550 4 I.T.A. NO. 491/VIZ/2019 AND CO NO.132/VIZ/2019, A.Y.2012 - 13 SRI POTLURI PHANENDRA BABU, VISAKHAPATNAM 3. AGAINST THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND SUBMITTED THAT THE ASSESSEE IS A WEALTH TAX ASSESSEE HAVING OPENING CASH BALANCE OF RS.59,76,000/ - AND MADE WITHDRAWALS FROM THE BANK ACCOUNT ON VARIOUS DATES AND HAVING SUFFICIENT SOURCE TO MEET THE CASH DEPOSITS . THE ASSESSEE ALSO EXPLAINED BEFORE THE AO AS WELL AS THE CIT(A) THAT THE SOURCE OF DEPOSIT WAS RECEIPT OF CASH FROM LATE SRI TMV PRASADA RAO, VIJAYAWADA OUT OF SALE CONSIDERATION AGREED AT RS.2.50 C RORES FOR PURCHASE OF PROPERTY I.E. 6000 SFT. OF BUILT UP AREA IN A COMMERCIAL COMPLEX BY NAME VICTORY COMPLEX, PEDA WALTAIR, VISAKHAPATNAM, JOINTLY OWNED BY SRI PHANENDRA BABU AND HIS WIFE SMT.P.LAKSHMI, WHICH WAS RECEIVED BY THE ASSESSEE DURING THE FINAN CIAL YEARS 2006 - 07, 2007 - 08 AND 2008 - 09 AND THE FUNDS WERE TRANSFERRED BY SRI PRASAD RAOS DAUGHTER MS INDIRA. THE ASSESSEE FURTHER SUBMITTED THAT THE FUNDS OF LATE SHRI TMV PRASAD RAO WERE LYING WITH THE ASSESSEE DUE TO DEATH OF SRI PRASADA RAO, WHICH W AS USED FOR MAKING DEPOSITS IN THE BANK ACCOUNT. TO SUPPORT THE CONTENTION OF THE RECEIPT OF MONEY FROM L ATE TMV PRASADA RAO, THE ASSESSEE FURNISHED CONFIRMATION FROM HIS DAUGHTER SMT.INDIRA AND ALSO COPY OF BANK ACCOUNT MAINTAINED BY LATE TMV PRASADA RAO JOIN T LY WITH HIS WIFE SMT.TUMMALA VIDYADHARI. IN THE CONFIRMATION LETTER, THE DAUGHTER OF LATE SHRI TMV PRASADA RAO HAS CONFIRMED THE PAYMENT OF RS.1.60 CRORES TO 5 I.T.A. NO. 491/VIZ/2019 AND CO NO.132/VIZ/2019, A.Y.2012 - 13 SRI POTLURI PHANENDRA BABU, VISAKHAPATNAM THE ASSESSEE . H OWEVER, T HE AO DID NOT BELIEVE THE CONTENTION OF THE ASSESSEE A ND HELD THAT IT IS AN AFTERTHOUGHT. ACCORDINGLY REJECTED THE ASSESSEES EXPLANATION AND MADE THE ADDITION. 4. AGAINST WHICH THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND ARGUED THAT THE SOURCE OF CASH DEPOSIT WAS THE AMOUNT RECEIVED FROM LATE SRI TM V PRASADA RAO AS WELL AS OPENING BALANCE WHICH IS EVIDENCED BY THE CONFIRMATION LETTER AND WEALTH TAX RETURNS, HENCE, REQUESTED TO DELETE THE ADDITION MADE BY THE AO. THE LD.CIT(A) CONSIDERED THE SUBMISSIONS AND OBSERVED THA T AS PER THE CONFIRMATION LETTER GIVEN BY SMT.Y.INDIRA, DAUGHTER OF LATE SHRI TMV PRASADA RAO, SHE CONFIRMED HAVING GIVEN THE AMOUNTS TO THE ASSESSEE TOWARDS THE ADVANCE FOR SALE OF PROPERTY. IT IS FURTHER OBSERVED THAT THERE WAS OPENING CASH BALANCE OF RS.8, 59,76,000/ - WHICH IS AVAILABLE TO THE ASSESSEE. THE LD.CIT(A) ALSO FOUND THAT WHILE TAKING THE CASH DEPOSITS AS UNDISCLOSED INCOME, THE AO DID NOT CONSIDER THE CASH WITHDRAWALS MADE FROM THE BANK WHICH IS AMOUNTING TO RS. 1,39,23,009/ - . THE TOTAL CASH AVA ILABLE TO THE ASSESSEE WORKED OUT TO RS.2 CRORES AGAINST THE CASH DEPOSITS OF RS.1,76,28,550/ - LEAVING THE BALANCE OF RS.27,42,000/ - WHICH REMAINED UNSPENT. THEREFORE, THE 6 I.T.A. NO. 491/VIZ/2019 AND CO NO.132/VIZ/2019, A.Y.2012 - 13 SRI POTLURI PHANENDRA BABU, VISAKHAPATNAM LD.CIT(A) ALLOWED RELIEF OF RS.2,00,28,550/ - CONSISTING BANK WITHDRAWALS AND THE OP ENING BALANCE AND SUSTAINED THE REMAINING ADDITION . 5. AGAINST WHICH THE DEPARTMENT IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.DR ARGUED THAT THE RECEIPT OF MONEY FROM SRI TMV PRASADA RAO IS AN AFTERTHOUGHT AND THERE IS NO EVIDE NCE AVAILABLE TO SUPPORT THE CONTENTION OF THE ASSESSEE. THEREFORE, ARGUED THAT THE CONTENTION OF THE ASSESSEE THAT HE HAS RECEIVED ON MONEY FROM LATE TMV PRASADA REDDY REQUIRED TO BE REJECTED. SIMILARLY, THE LD.DR ARGUED THAT THE CASH DEPOSITS WERE MADE IN THE BANK ACCOUNTS PRIOR TO THE DATE OF WITHDRAWALS MADE, THEREFORE, THE LD.CIT(A) ERRED IN ALLOW ING RELIEF TO THE ASSESSEE. THUS ARGUED THAT THE LD.CIT(A) ERRONEOUSLY ALLOWED RELIEF, THEREFORE, REQUESTED TO SET ASIDE THE ORDER OF THE LD.CIT(A) AND RESTO RE THE ASSESSMENT ORDER. 6. ON THE OTHER HAND, THE LD.AR ARGUED THAT THE ASSESSEES ONLY SOURCE OF INCOME WAS HOUSE PROPERTY, I.E. RENTS COLLECTED BY THE ASSESSEE, THERE WAS NO OTHER SOURCE OF INCOME. THE AO WHILE MAKING ADDITION HAS NOT TAKEN ANY SUPPOR T OF INCOME TAX PROVISIONS I.E. EITHER SECTION 68 / 69 TO MAKE THE ADDITIONS. BY NOT INVOKING THE PROVISIONS ITSELF, THE ADDITIONS MADE BY THE AO NEEDS TO BE DELETED. SINCE THE LD.CIT(A) HAS EXAMINED THE 7 I.T.A. NO. 491/VIZ/2019 AND CO NO.132/VIZ/2019, A.Y.2012 - 13 SRI POTLURI PHANENDRA BABU, VISAKHAPATNAM SOURCE OF FUNDS AND APPLICATION OF FUNDS IN DETAIL, THE LD.AR ARGUED THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD.CIT(A) AND REQUESTED TO UPHOLD THE ORDER OF THE LD.CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, THE LD.CIT(A) HAS EXAMINED T HE ISSUE IN GREAT DETAIL WITH REGARD TO AVAILABILITY OF SOURCE AND APPLICATION OF FUND AND GIVEN RELIEF OF RS.2,00,28,550/ - AND CONFIRMED THE ADDITION OF RS.27,42,000/ - . FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT PARA NO.6.2.1 TO 6.2.6 WHICH REA DS AS UNDER. 6.2.1. GROUND NO.2 : UNEXPLAINED CASH DEPOSITS / INVESTMENT / EXPENDITURE : RS.2,27,70,550 THE ASSESSING OFFICER DID NOT APPRECIATE THE ISSUE PROPERLY. HE PROCEEDED ON THE BASIS THAT THE APPELLANT SOUGHT TO EXPLAIN THESE AMOUNTS FROM OUT OF ADVANCE RECEIVED FROM SRI TMV P RASADA RAO AGAINST SALE OF PROPERTY. HOWEVER, AS PER THE CONFIRMATION TENET SUBMITTED BY THE APPELLANT AND SINT. Y.INDIRA, IT IS VERY MUCH EVIDENT THAT THE AMOUNT TOW AR DS ADVANCE AGAINST SALE OF PROPERTY WERE RECEIVED ONLY FR OM 2006 TO 2009. IT IS NOT THE CASE OF THE APPE LLAN T THAT HE HAS RECEIVED ANY ADVANCE FOR THE IMPUGNED ASSESSMENT YEAR IN RESPECT OF THE SAID TRANSACTION. HOWEVER, THE ASSESSING O FFI CER NARRATED THE FACTS RELATING TO CLAIM OF THE APPELLANT IN RESPECT OF AD VANCE RECEIVED FROM TMV PR A SADA RAO AND PROCEEDED TO EXAMINE THE SAID CLAIM ON SIMILAR LINES AS THAT OF A,Y,2007 - 08. AS SUCH, THE VERY APPROACH OF THE ASSESSING OFFICER IS FOUND TO B E ERRONEOUS. 6.2.2. HAVING SAID THAT, I HAVE EXAMINED THE BANK STATEMENTS AND THE SUBMISSIONS OF THE APPELLANT. I HAVE ALSO PERUSED THE ASSESSMENT ORDER U /S 16(3) R.W.S. 17 OF THE ACT DT.31.03.2016 FOR AY.201 1 - 12. THE TOTAL WEALTH WAS ASSESSED AT RS.4,92,36,670 INCLUDING CAS H IN HAND OF RS.59,76,000 (NET A MOUNT AFTER DEDUCTION OF RS.50,000 EXEMPT UNDER WEALTH TAX ACT, 1957). THUS. I FOUND THE CONTENTION OF THE APPELLANT THAT THERE WAS AN OPENING BALANCE OFRS.59,76,000 AS CORRECT. 6.2.3. THE NEXT CONTENTION OF THE APPELLANT I S THAT THERE WERE WITHDRAWALS IN THE BANK ACCOUNT AND THE SAME WERE IGNORED BY THE ASSESSING OFFICER WHILE ARRIVING AT 8 I.T.A. NO. 491/VIZ/2019 AND CO NO.132/VIZ/2019, A.Y.2012 - 13 SRI POTLURI PHANENDRA BABU, VISAKHAPATNAM THE AMOUNT OF UNEXPLAINED CASH DEPOSITS. THE APPELLANT WAS SUBJECTED TO SURVEY U/S 133A OF THE ACT AND ALL THE INVESTMENTS MADE BY THE AP PELLANT HAVE BEEN DULY CONSIDERED FOR THE PURPOSE OF REASSESSMENT. THEREFORE, THE CONTENTION OF THE APPELLANT THAT THE CASH WITHDRAWN FROM THE BANK ACCOUNTS IS AVAILABLE FOR REDEPOSIT MERITS ACCEPTANCE. FURTHER, THE ASSESSING OFFICER HIMSELF ADOPTED THIS APPROACH FOR THE A.Y.2013 - 14. THE DETAILS OF THE AMOUNT WITHDRAWN FROM THE BANK ARE AS UNDER : S.NO. NAME OF THE BANK ACCOUNT NUMBER DATE OF WITHDRAWAL AMOUNT RS. 1 . AXIS BANK 911010059059097 25.11.2011 100000 2 . AXIS BANK 911010059059097 25.11.2011 25000 3 . AXIS BANK 911010059059097 25.11.2011 50000 4 . AXIS BANK 911010059059097 03.12.2011 10000 5 . AXIS BANK 911010059059097 03.12.2011 1000000 6 . AXIS BANK 911010059059097 13.12.2011 500000 7 . HDFC BANK 00501000179862 11.04 .2011 278000 8 . HDFC BANK 00501000179862 09.05.2011 735000 9 . HDFC BANK 00501000179862 09.05.2011 100000 10 . HDFC BANK 00501000179862 18.07.2011 300000 11 . HDFC BANK 00501000179862 18.07.2011 150000 12 . HDFC BANK 00501000179862 19.07.2011 450000 13 . HDFC BANK 00501000179862 30.07.2011 537500 14 . HDFC BANK 00501000179862 26.08.2011 25000 15 . HDFC BANK 00501000179862 26.08.2011 500000 16 . HDFC BANK 00501000179862 20.09.2011 175000 17 . HDFC BANK 00501000179862 23.09.2011 200000 18 . HDFC BANK 00501000179862 26.09.2011 50000 19 . HDFC BANK 00501000179862 15.10.2011 26000 20 . HDFC BANK 00501000179862 15.12.2011 2000000 21 . HDFC BANK 00501000179862 15.12.2011 2000000 22 . ING VYSYA BANK 333010111867 13.12.2011 2000000 23 . ING VYSYA BANK 333010111867 14.12.2011 2000000 24 . ING VYSYA BANK 333010111867 06.01.2012 711509 TOTAL 13923009 6.2.4. INCLUDING THE OPENING CASH BALANCE OF RS.60,26,000 THE TOTAL CASH AVAILABLE IS NEAR ABOUT RS. 2 CRORES AND THUS THE ENTIRE CASH DEPOSITS IN THE BANK ACCOUNT STAND EXPLAINED. 9 I.T.A. NO. 491/VIZ/2019 AND CO NO.132/VIZ/2019, A.Y.2012 - 13 SRI POTLURI PHANENDRA BABU, VISAKHAPATNAM 6.2.5. AS REGARDS THE OTHER ADDITIONS AGGREGATING TO RS.51,42 ,000 (2277 0 55 0 - 1 762855O), IT IS THE CONTENTION OF THE APPELLANT THAT THE SAME HAVE BEEN MET OUT OF THE CASH AVAILABLE ON THE RESPECTIVE DATES. IN THE ABSENCE OF A DETAILED CASH FLOW STATEM ENT , I AM UNABLE TO ACCEPT THE CONTENTION OF THE APPELLANT IN TOTO. HOWEVER, FROM THE OVERALL CASH BALANCE OF RS,2 CRORES WORKED OUT AS ABOVE, THERE IS A BALANCE OF RS.2 CR OR ES A SUM OF RS.24,00,000 IS AVAILABLE AFTER DEDUCTING THE CASH DEPOSITS I N THE BANK AGGREGATING TO RS. 1,76,28,550. THEREFORE, THE APPELLA N T IS ENTITLED FOR RE LIEF TO THIS EXTENT. THE BALANCE ADDITION O F R S. 27 R 42,000 IS SUSTAINED. 6.2.6. THUS, OUT OF THE TOTAL ADDITION OF RS.2.27.70 ,7 50 THE APPELLANT GETS RELIEF OF RS.2,00,28,550 AND THE BALANCE ADDITION OF RS.27,42,000 IS SUSTAINED. 7.1. FROM THE ORDER OF THE LOWER AUTHORITIES, WE FIND THAT THE AO HAS TAXED THE SOURCES AND APPLICATION OF FUNDS WITHOUT GIVING ANY CREDIT TO THE AVAILABILITY OF SOURCES. THUS THE AO DID NOT APPRECIATE THE INFORMATION AVAILABLE BEFORE HIM PROPER L Y. THOUGH THE ASSESSEE HAS FURNISHED THE EVIDENCE WITH REGARD TO RECEIPT OF THE MONEY FROM LATE TMV PRASADA RAO AND GOT CONFIRMED BY THE DAUGHTER OF LATE TMV PRASADA RAO , T HE AO DID NOT DISPROVE THE STATEMENT GIVEN BY Y.INDIRA WITH PROPER EVIDENCE. IN THIS CASE, THE C ONFIRMATION LETTER WAS GIVEN BY Y.INDIRA. THE ASSESSEE SUBMITTED THAT HE HAS ENTERED INTO AGREEMENT FOR SALE OF PROPERTY CONSISTING OF 6000 SQ.FT IN VICTORY COMPLEX, PEDA WALTAIR, VISAKHAPATNAM. NEITHER THE SALE AGREEMENT WAS DISPROVED NOR THE EXISTENCE OF OWNERSHIP OF 6000 SQ.FT AT VICTORY COMPLEX WAS DISPUTED BY THE AO. THEREFORE, WE DO NOT FIND ANY REASON TO REJECT THE CONTENTION OF THE ASSESSEE THAT HE HAD RECEIVED ON MONEY FROM LATE TMV PRASADA RAO. 10 I.T.A. NO. 491/VIZ/2019 AND CO NO.132/VIZ/2019, A.Y.2012 - 13 SRI POTLURI PHANENDRA BABU, VISAKHAPATNAM 7.1.1. THE ASSESSEE IS REGULARLY ASSESSED TO WEA LTH TAX AND AS PER THE WEALTH TAX RETURNS, THERE WA S OPENING CASH BALANCE OF RS.59,76,000/ - WHICH WAS NOT DISPUTED BY THE AO. THE WEALTH TAX RETURNS ARE AVAILABLE WITH THE AO, THEREFORE, THE AVAILABILITY OF OPENING BALANCE ALSO WAS NOT DISPUTED, HENCE THE CREDIT REQUIRED TO BE GIVEN TO THE ASSESSEE, WITH REGARD TO AVAILABILITY OF OPENING BALANCE. FURTHER WHILE TAXING THE DEPOSITS OF 1,76,28,550/ - , THE AO CANNOT IGNORE THE WITHDRAWALS AND OPENING CASH BALANCE AVAILABLE TO THE ASSESSEE AND CREDIT NEEDS TO B E GIVEN TO THE SOURCE AVAILABLE FROM THE APPLICATION OF FUNDS. THOUGH THERE WAS MISMATCH IN DATES WITH REGARD TO DEPOSITS AND WITHDRAWALS, THE ENTIRE WITHDRAWALS CANNOT BE BRUSHED ASIDE . T HE AO OUGHT TO HAVE MADE CASH FLOW STATEMENT WITH OPENING CASH BALANCE, DEPOSIT AND WITHDRAWAL AND GIVE N DUE CREDIT FOR THE AVAILABLE SOURCES. INSTEAD, THE AO CHOSEN TO TAX THE ENTIRE INVESTMENTS WITHOUT GIVING CREDIT FOR THE AVAILABLE SOURCES. THEREFORE, WE DO NOT HAVE ANY HESITATION TO AGREE WITH THE VIEW OF THE L D.CIT(A) THAT THE AO DID NOT APPRECIATE THE ISSUES PROPERLY. FROM THE ABOVE DISCUSSION AND THE ORDER OF THE LD.CIT(A), IT IS CLEAR THAT THE ASSESSEE IS HAVING RS. 2 CRORES OF CASH AVAILABLE TO HIM AND DEPOSIT MADE WAS RS.1,76,28,550/ - AND STILL THERE WAS SOME MORE CASH BALANCE WHICH IS AVAILABLE TO THE ASSESSEE TO MEET THE INVESTMENTS OR EXPENSES. THEREFORE, WE HOLD THAT THE LD.CIT(A) HAS RIGHTLY ALLOWED THE 11 I.T.A. NO. 491/VIZ/2019 AND CO NO.132/VIZ/2019, A.Y.2012 - 13 SRI POTLURI PHANENDRA BABU, VISAKHAPATNAM RELIEF OF RS.2,00,28,550/ - COMPRISING OF OPENING BALANCE AND WITHDRAWALS FROM THE BANK ACCOUNT A ND CONFIRMED THE BALANCE ADDITION. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) AND THE SAME IS UPHELD. THE APPEAL OF THE REVENUE IS DISMISSED. 8. THE ASSESSEE FILED CROSS OBJECTION IN SUPPORT OF THE ORDER OF THE LD.CIT(A). SINCE THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED, THE CROSS OBJECTIONS OF THE ASSESSEE BECOME INFRUCTUOUS, HENCE DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONO UNCED IN THE OPEN COURT ON 23 RD N OVEMBER 2020. S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 23.11.2020 L.RAMA, SPS 12 I.T.A. NO. 491/VIZ/2019 AND CO NO.132/VIZ/2019, A.Y.2012 - 13 SRI POTLURI PHANENDRA BABU, VISAKHAPATNAM / COPY OF THE ORDER FORWARDED TO : - 1 . / THE REVENUE INCOME TAX OFFICER, WARD 3(2), VISAKHAPATNAM 2 . / THE ASSESSEE SRI POTLURI PHANENDRA BABU, 1 ST FLOOR, INFINITY TOWERS, SANKARA MATHAM ROAD, VISAKHAPATNAM 3. THE COMMISSIONER OF INCOME TAX - 1 , VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 , VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM