Venkata Pavan Kumar Gunuputi, Bhimavaram V. ACIT Central Circle -2, Rajahmundary

ITA 51/VIZ/2022

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The case involves Venkata Pavan Kumar Gunuputi, an individual engaged in the business of commission on IKP Transportation and also deriving income from home tuitions, who appealed against the order of the CIT(A) confirming an addition made by the AO regarding unexplained investment in immovable properties. The AO had made the addition based on seized material during a search operation under section 132 of the Income Tax Act, 1961, and subsequent assessments. The CIT(A) partially relieved the assessee by deleting the addition related to undisclosed receipts but sustained the addition concerning the unexplained investment in property. The Tribunal, after considering the nature of the assessee's business and his income sources, decided in favor of the assessee, allowing the appeal and deleting the addition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128567 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-02-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 29-03-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 132; 143(3); 142(1); 153A; 143(1); 143(2); 153C

Judgement Text

आयकर अपीलȣयअͬधकरण, ͪवशाखापटणम पीठ, ͪवशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM Įी दुåवूǽ आर एल रेɬडी, ÛयाǓयक सदèय एवं Įी एस बालाकृçणन, लेखा सदèय के सम¢ BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./ I.T.A. No.51/Viz/2022 (Ǔनधा[रण वष[ / Assessment Year :2016-17) Venkata Pavan Kumar Gunuputi, Bhimavaram. PAN:BSRPG 1889 F Vs. Asst. Commissioner of Income Tax, Central Circle-2, Rajahmundry. (अपीलाथȸ/ Appellant) (Ĥ×यथȸ/ Respondent) अपीलाथȸ कȧ ओर से/ Appellant by : Sri K. Siva Ram Kuamr, CA Ĥ×याथȸ कȧ ओर से / Respondent by : Sri MN Murthy Naik, CIT-DR सुनवाई कȧ तारȣख / Date of Hearing : 23/02/2023 घोषणा कȧ तारȣख/Date of Pronouncement : 28/02/2023 O R D E R PER S. BALAKRISHNAN, Accountant Member : This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-3, Visakhapatnam [CIT(A)] in appeal No. 560/2019-20/10787/CIT(A)-3/VSP/2021- 22, dated 24/09/2021 arising out of the order passed U/s. 143(3) r.w.s 153C of Income Tax Act, 1961 [the Act] for the AY 2016-17. 2 2. Briefly stated the facts of the case are that the assessee is an individual engaged in the business of commission on IKP Transportation filed his return of income admitting a total income of Rs. 3,36,220/- for the AY 2015-16 on 17/2/2018. Initially the return was processed U/s. 143(1) of the Act accepting the return filed by the assessee. A search & seizure operation u/s. 132 of the Act was conducted on 2/11/2017 in the case of Sri Gunuputi Lakshmayya & Others group of cases and found some incriminating material. Subsequently, an order u/s. 127 of the Act for centralization of the cases was passed by the Principal Commissioner of Income Tax, Rajahmundry vide order in F.No. 62/Juris/Pr. CIT/RJY/2017-18, dated 13/3/2018 notifying the assessee’s case to Central Circle-2, Rajahmundry. Considering the seized material found during the search, a notice u/s. 153C r.w.s 153A was issued on 21/3/2019 and the same was served on the assessee on 29/03/2019. In response the assessee filed return of income on 11/5/2019 admitting a total income of Rs. 3,36,220/-. A notice U/s. 143(2) was issued on 7/5/2019 and served on the assessee on 11/5/2019. A detailed questionnaire u/s. 142(1) of the Act dated 11/6/2019 was issued and served on the assessee on the same date. In response the assessee filed reply on 14/11/2019. Thereafter, questionnaire 3 calling for certain information / show cause notice were issued on 9/9/2019; 18/10/2019; 30/11/2019 and 13/12/2019 and served on the assessee. In response, the assessee’s Authorized Representative appeared before the Ld.AO and furnished the relevant information called for by the Ld.AO. After duly considering and examining the various information furnished by the assessee, the Ld. AO completed the assessment on 27/12/2019 and passed assessment order U/s. 143(3) r.w.s 153C of the Act where in the Ld. AO made certain additions viz., (i) addition of Rs. 2,41,980/- U/s. 69 r.w.s 115BBE of the Act on account of unexplained investment in immovable properties and (ii) Addition of Rs. 5,95,596/- on account of income from undisclosed receipts and determined the assessed income at Rs. 11,73,796/- against the returned income of Rs. 3,36,220/-. Aggrieved by the order of the Ld. AO, the assessee went on appeal before the Ld. CIT(A). On appeal, the Ld. CIT(A) considered the submissions made by the assessee and granted part relief to the extent of Rs.5,95,596/- on account of income from undisclosed receipts and sustained the addition of Rs. 2,41,980/- made by the Ld.AO on account of unexplained investment in immovable properties. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. 4 3. The assessee has raised three grounds in its appeal however, the crux of the issue is: “The Ld. CIT(A) has erred in confirming the addition of Rs. 2,41,980/- made by the Ld. AO on account of unexplained investment in purchase of property.” 4. Before us, the Ld. AR submitted that the assessee during the assessment proceedings the assessee was asked to explain the sources for acquisition of land of 25 cents at Gollakonderu and the assessee has replied that the investment was made out of the income derived from home tuitions in the relevant AY and also the saving accumulated from the earlier years as well as the income from transportation business with AP State Civil Supplies Corporation. The Ld. AR further submitted that as per the IT Act, there was no any mandatory provision to maintain money in the bank account before purchase of property. The Ld. AR further submitted that the assessee is regularly filing his return of income disclosing around Rs. 2 lakhs to Rs. 5 lakhs. Without considering these facts, the Ld. Revenue Authorities rejected the explanation given by the assessee and made the addition. Therefore, the Ld. AR pleaded that the addition made by the Ld. AO and confirmed by the Ld. CIT(A) may be deleted. Per contra, 5 the Ld. DR relied on the orders of the Ld. Revenue Authorities and supported the decision taken by them. 5. We have heard both the parties and perused the orders material available on record the orders of the Ld. Revenue Authorities. It is a fact that the assessee is deriving income from home tuitions and also engaged in the business of commission on transport business. The assessee has filed the return of income indicating the sources of income which was accepted by the Department and not disputed by the Ld. AO. In these circumstances, we cannot accept the Ld. Revenue Authorities view that the assessee’s bank account does not show any credits before the date of purchase of property and the assessee did not maintain books of account. In our considered view, as explained by the assessee there is every possibility of accumulation of monies to the extent of disputed amount of Rs. 2,41,980/- considering the assessee’s nature of business and his earnings through home tuitions. Therefore, we find merit in the argument of the Ld. AR and accordingly, we set-aside the orders of the Ld. Revenue Authorities on this issue and delete the addition made by the Ld. AO and confirmed by the Ld. CIT(A). Thus, the grounds raised by the assessee are allowed. 6 6. In the result, appeal filed by the assessee is allowed. Pronounced in the open Court on the 28 th February, 2023. Sd/- Sd/- (दुåवूǽ आर.एल रेɬडी) (एस बालाकृçणन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) ÛयाǓयकसदèय/JUDICIAL MEMBER लेखा सदèय/ACCOUNTANT MEMBER Dated :28.02.2023 OKK - SPS आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the order forwarded to:- 1. Ǔनधा[ǐरती/ The Assessee – Venkata Pavan Kumar Gunuputi,19-9- 3/3, Bank Colony, Near Water Tank, Bhimavaram -534201, W.G. District, Andhra Pradesh. 2. राजèव/The Revenue – Asst. Commissioner of Income Tax, Central Circle-2, Rajahmundry, EG District, Andhra Pradesh. 3. The Principal Commissioner of Income Tax (Central), Visakhapatnam. 4. आयकर आयुÈत (अपील)/ The Commissioner of Income Tax (Appeals)-3, Visakhapatnam. 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, ͪवशाखापटणम/ DR, ITAT, Visakhapatnam 6. गाड[ फ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam