Vinay Kumar Konda , Hyderabad V. Income Tax Officer ,Ward -8(2), Hyderabad

ITA 533/Hyd/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9037 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 21-12-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATHIYA SIVAPRAKASAM
• Keywords: Unexplained investment; Gift
• Section: 68; 143(3); 143(2); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “SMC”, HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER ITA No.533/Hyd/2021 Assessment Year: 2017-18 Shri Vinay Kumar Konda, Hyderabad. PAN : AJNPK8150F. The Income Tax Officer, Ward -8(2), Hyderabad. (Appellants) (Respondent) Assessee by: Shri A.V. Raghuram. Revenue by : Shri Sathiya Sivaprakasam Date of hearing: 02/02/2022 Date of order: 10/02/2022 O R D E R This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) Delhi, dt.15.12.2021 for the Assessment Year 2017-18. 2. The only grievance in the appeal of the assessee is that the learned CIT (A) erred in sustaining the addition of Rs.5,96,194/- as unexplained money u/s 69A of the Act. 3. Briefly the facts are that the assessee, individual, deriving income from house property and other sources, filed his return of income on 13.03.2018 declaring income of Rs.2,22,700/-. The assessment was completed u/s 143(3) of the Act on 09.12.2019 determining the income of the assessee at Rs.8,58,895/-. While completing the assessment, ITA No.533/Hyd/2021 2 Assessing Officer made addition of Rs.6,36,194/- being the cash deposits in bank account as an unexplained investment u/s 69A of the Act. The Assessing Officer received information that the assessee made cash deposits in his bank account during demonetization period from 09.11.2016 to 31.12.2016 amounting to Rs.6,36,194/-. The observation of the learned Assessing Officer is that the assessee has been asked to file information about these deposits but the assessee failed to respond to the notice. Therefore, in the absence of any response or explanation by the assessee, the Assessing Officer treated amount of Rs.6,36,194/- as an unexplained investment u/s 69A of the Act and the same was added to the total income of the assessee. 4. The assessee preferred an appeal before the Ld.CIT (A) and in the course of appellate proceedings the assessee furnished details in respect of these cash deposits stating that these deposits were made in his bank account by taking gifts from mother, brother, sister and brothers-in-law for purchase of property. The details of gifts taken by the assessee and deposited into the bank account were given as under. Chandra Shekar Yapuram (Brother Inlaw) – Rs.1,90,000 cash Sunil Yapuram (Brother Inlaw) - Rs.2,00,000 cash Rajashekar Cheemala (Brother) - Rs.1,00,000 cash Swati Yapuram (Sister) - Rs.1,00,000 cash Aruna Konda (Mother) - Rs. 40,000 cheque ITA No.533/Hyd/2021 3 5. The assessee in course of appellate proceedings furnished confirmations from all these relatives who have duly confirmed that they have given gifts to the assessee. The learned CIT (A,) however, accepted the gift received by the assessee from his mother amounting to Rs.40,000/- which was given by way of cheque and the rest of the gifts of Rs.5,90,000/- was treated as unexplained money of the assessee and accordingly sustained the addition to that extant. 6. The learned counsel for the assessee referring to page 7 of the Paper Book submitted that the details of the cash transactions obtained from relatives have been informed to the Assessing Officer in the course of assessment proceedings. Therefore, he submits that the contention of the Assessing Officer that the assessee did not reply to the notices is not correct. The learned counsel for the assessee further referred to page 4 of the learned CIT (A) order wherein the ld.CIT (A) extracted the submissions of the assessee filed before him, submitted that the details of the cash receipts received from relatives have been duly furnished along with the PAN numbers. The learned counsel for the assessee referring to page Nos. 2 to 6, submits that all the relatives have confirmed that they have given cash gifts except mother, who has given the gift by way of cheque. The learned counsel for the assessee submits that in view of the confirmations given by the relatives who are nothing but brother, sister, brothers-in-law, who are all within the family and close relatives, the ITA No.533/Hyd/2021 4 genuineness of the transactions cannot be doubted. The relatives have confirmed by way of confirmation letters that they have given gifts to the assessee. The learned counsel for the assessee referring to pages 14 and 16 of the Paper Book which are bank statements submits that the assessee has purchased property from Akruthi Builders and has parted with the money of Rs.5,00,000/- by way of two cheque transactions on 21.12.2016 amounting to Rs.2,50,000/- each and this fact is not disputed by the Revenue. Therefore, the learned counsel for the assessee submits that the genuineness of the transactions, identity of the persons, who are closely related to the assessee and the creditworthiness of the persons have been established and proved by the assessee beyond doubt and therefore, there is no justification in treating these gifts as unexplained money by the Assessing Officer under section 69A of the Act. 7. The Ld. AR further submits that before the Ld.CIT (A) complete information is filed in the form of confirmation letters and the cash gifts are received from close relatives who fall within the definition of term “relative” as defined in section 56(2)(v) of the Act and therefore the Ld CIT (A) could not have brushed aside the said evidence for flimsy reasons. Referring to bank statements filed in paper book at pages 14 to 16 it is pointed out from entries that the money received by the Assessee from the relatives was utilised as payment for purchase of an asset. The Ld. AR ITA No.533/Hyd/2021 5 submits that on the facts of the present case, the Assessee satisfied the requirement of section 69A of the Act by establishing the nature and source of money deposited in the bank account. The Ld. Counsel further submitted that the Ld. CIT (A) has not properly appreciated the nature of addition made by the AO and went on to examine the case from the perspective of section 68 of the Act. The Ld. AR also submitted that the Ld CIT (A) was not correct in holding that the person who gave the amount did not have creditworthiness. 8. The Ld.AR relying on the judgement of the Hon’ble Telangana & Andhra Pradesh High Court in the case of Pendurthi Chandrasekhar Vs. DCIT (2019) 407 ITR 179, submitted that in case of gifts received from close quarters who fall within the definition of “relative” as defined u/s 56(2)(v) of the Act, the occasion to give gift need not have be examined The Ld. AR therefore submitted that the finding of the Ld. CIT(A) that the purpose of gift is not mentioned in the confirmation letters is incorrect. On the requirement of section 69A of the Act with regard to the nature and source of money, the Ld.AR submitted the nature of money is cash gift from relatives and the source is also from relatives. The Ld.AR submits that the Ld. CIT (A) except doubting the creditworthiness of the relatives did not chose to examine the authenticity of the confirmation letters. Therefore it is submitted that the addition sustained by the Ld. CIT (A) deserves to be deleted. ITA No.533/Hyd/2021 6 9. On the other hand, ld. D.R. submitted that the confirmations of these relatives were filed only before the ld CIT (A) and not before the Assessing Officer. The ld. D.R. also referring to the submissions made by the assessee in the Paper Book about the cash transactions stated that it was informed by the assessee that the cash transactions were taken as loans and not gifts. The Ld. DR submitted that the Assessee was not able to explain the money deposited in his bank account with evidence and did not file any information before the AO. In reply, the learned counsel for the assessee submitted that the information about the cash transactions were uploaded via e-proceedings before the Assessing Officer giving transaction details in one of the transaction, it was mistakenly mentioned as loan and in all other transactions it was clearly mentioned as gifts received in cash. 10. Heard the rival contentions and perused the orders of the lower authorities. The observation of the Assessing Officer that the assessee has not responded to the notices to explain the cash deposits seems to be not correct as the assessee in fact in response to notice u/s 143(2) of the Act furnished the details of the cash transactions before the Assessing Officer in the course of assessment proceedings. It is the case of the Assessee that the cash gifts were received to purchase of an asset. In support of his case, Assessee filed part information before AO and the balance information in the form of confirmation letters before the ITA No.533/Hyd/2021 7 Ld.CIT (A). The AO rejected the case of the Assessee on the ground that Assessee did not explain the requirement of section 69A of the Act and accordingly treated the cash deposit as unexplained money. The Ld.CIT (A) having regard to the information available before him chose to examine the evidence himself. As can be seen from appellate order the Ld. CIT (A) essentially doubted the creditworthiness of the persons who gave cash gifts to the Assessee and felt that this exercise of filing confirmation letters is an afterthought. The observation of the ld. CIT (A) in sustaining the action of the Assessing Officer in treating the cash deposits as unexplained investment was that in case of the persons who gave gifts to the assessee was that they are earning very less salary and after meeting the household expenses, there will be only a meager savings and not enough to part with the money to the assessee. The findings of the ld. CIT (A) appears to be totally on presumptions and assumptions that these cash deposits are loans. The confirmations of all the relatives of the Assessee i.e., mother, brother, sister, and brothers-in-law clearly show that they have given cash gifts to the assessee and they are not loan transactions. It is not disputed that the assessee had purchased property from Akruthi Builders by making payment through two cheques consisting of Rs.2,50,000/- each on 21.12.2016. The Ld. CIT (A) failed to appreciate that the donor Sri Chandra Shekar is working as Asst. Manager with ICICI Bank drawing ITA No.533/Hyd/2021 8 monthly salary of about Rs.60,000/-, Sri Sunil Yapuram is working with M/s Jone Lang Lasalle drawing monthly of about of Rs.40,000/-, Sri Rajashekar Cheemala is working with IAC Automotive, Pune drawing salary of Rs.1.5 lakhs per month and Smt. Swati Yapuram who gave one lakh to his brother who is the Assessee had reason to bail out in buying a property. 11. Therefore going by the above factual gamut and keeping in view of the decision of Hon’ble Telangana and Andhra Pradesh High Court in the case of Pendurthi Chandrasekhar Vs. DCIT (supra), what needs to be examined in the present case is whether the Assessee has satisfied the requirement of section 69A of the Act, which is invoked by the Assessing Officer. The requirement of section 69A of the Act is that an assessee has to explain the nature and source of money, bullion etc., to the satisfaction of the AO, and the said satisfaction should be objective. In the present case the Assessee in the form of confirmation letters was able to demonstrate that the nature and source of money. The Assessee established that the money is gifted from close relatives and the source is again from the close relatives i.e., brother, sister and brother inlaw. 12. In view of the above, I hold that the assessee has explained the cash deposits made in his bank account satisfactorily and therefore, the cash gifts obtained by the Assessee from brother, sister and brother in ITA No.533/Hyd/2021 9 laws for purchase of property cannot be treated as unexplained investment u/s 69A of the Act. I direct the AO to delete the addition of Rs.5,90,000/- made u/s 69A of the Act. 13. Coming to the balance amount of Rs.6,194/- it is observed from the break-up given in the statement by the assessee, it appears that this amount represents only the interest income credited by the bank into the Assessee account. The interest income credited by the bank cannot be treated as unexplained investment of the Assessee. I direct the AO to delete this interest income also and compute the tax payable by the Assessee accordingly. 14. In the result, the appeal of the assessee is allowed. Sd/- (C.N. PRASAD) JUDICIAL MEMBER. Dated: 10.02.2022 TYNM/sps Copy to: S.No Addresses 1 Shri Vinay Kumar Konda, Flat No.401, 4 th Floor, Fortune Nest, Nallaganda, Serilingampally, Hyderabad – 500019. 2 The Income Tax Officer, Ward – 8(2), Hyderabad. 3 Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. 4 DR, ITAT Hyderabad Benches 5 Guard File By Order