The Income Tax Officer, Ward-1(1), Visakhapatnam V. Tatiparti Satyanarayana, Visakhapatnam

ITA 76/VIZ/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 6745 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 30-03-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 69; 143(3); 69A

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM (through web-based video conferencing platform) श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य एिं श्री एस बालाकृ ष्णन, लेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./I.T.A.No.76/Viz/2021 (ननधधारण वर्ा / Assessment Year : 2017-18) Income Tax Officer Ward-1(1) Visakhapatnam Vs. Sri Tatiparti Satyanarayana D.No.25-8-9 and 10 Sri Satyanarayana Gold Complex, Main Road Visakhapatnam [PAN : AGGPT5353F] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) CO No.42/Viz/2014 (Arising out of ITA No.76/Viz/2021) (ननधधारण वर्ा / Assessment Year : 2017-18) Sri Tatiparti Satyanarayana D.No.25-8-9 and 10 Sri Satyanarayana Gold Complex, Main Road, Visakhapatnam [PAN : AGGPT5353F] Vs. Income Tax Officer Ward-1(1) Visakhapatnam अपीलधथी की ओर से/ Appellant by : Shri G.V.N.Hari, AR प्रत्यधथी की ओर से / Respondent by : Shri S.P.G.Mudaliar, DR सुनवधई की तधरीख / Date of Hearing : 22.02.2022 घोर्णध की तधरीख/Date of Pronouncement : 16 .03.2022 आदेश /O R D E R Per Shri Balakrishnan S, Accountant Member This appeal is filed by the revenue against the order of Commissioner of Income Tax (Appeals) [CIT(A)], Visakhapatnam in ITA 2 I.T.A. No.76/Viz/2021 & CO No.42/Viz/2021 A.Y.2017-18 Tatiparti Satyanarayana, Visakhapatnam No.10605/2019-20/CIT(A)-1/VSP/2020-21 dated 14.09.2020 u/s 143(3) of the Income Tax Act, 1961 (in short ‘Act’) for the Assessment Year (A.Y.) 2017-18 and the cross objections are filed by the assessee. The revenue raised the following grounds of appeal : 1. The order of the ld. CIT (A) is erroneous both on facts and in law. 2. The Ld.CIT (A) erred in holding that section 69 does not apply to sale of shares when it is resulting in increase of capital of the assessee in the form of exempted income which is nothing but explained investment. 3. The Ld. CIT (A) erred in accepting the cash sales shown by the assessee dafter 08/11/2016 in demonetised currency when the business of the assessee is not among persons permitted to accept demonetised cash after 08/11/2016. 4. Without prejudice to what is said above, CIT (A) erred in not holding that cash sales undertaken in demonetised cash after 08/11/2016 are illegal and liable to be treated as unexplained money as per the provisions of section 69A of the Income Tax Act. 5. The CIT (A) erred in allowing additional evidence filed by the assessee in the form of documents / paper book, when the same were not produced before the Assessing Officer, without providing opportunity to the Assessing Officer to examine and, if necessary, rebut the additional evidence to submit. 6. The Ld. CIT(A) ought to have referred the evidence produced by the assessee in the form of paper book to the Assessing Officer as per Rule 46A of the Income Tax Rules. 7. Under the facts and circumstances of the case, it is prayed to set aside the appellate order of CIT(A) and provide an opportunity to the Assessing Officer to examine the evidence submitted before the CIT (A). 8. The appellant craves leave to add or delete or amend or substitute any ground of appeal before and / or at the time of hearing of appeal. 3 I.T.A. No.76/Viz/2021 & CO No.42/Viz/2021 A.Y.2017-18 Tatiparti Satyanarayana, Visakhapatnam 9. For these and other grounds that may be urged at the time of appeal hearing, it is prayed that these above additions made on relevant disallowances be restored.” 2. Brief facts of the case are that the assessee is an individual engaged in the business of civil construction and jewellery. The assessee filed his return of income for the A.Y.2017-18 on 07.11.2017 admitting total income of Rs.13,62,040/-. The case was taken up for scrutiny and statutory notices were issued to the assessee. In response to the notice, the assessee has not responded properly and in the absence of detailed reply, the AO assessed the total income of the assessee at Rs.1,51,26,623/-. 3. Aggrieved by the order of the AO, the assessee filed appeal before the CIT(A). The Ld.CIT(A) considering the evidences produced by the assessee deleted the additions made by the AO. 4. Aggrieved by the order of the Ld.CIT(A), the revenue is in appeal before us. The Ld.DR referred to page No.5, para No.6.1.2 of the order of the Ld.CIT(A) stating that the documents were not submitted by the assessee and the AO has not verified the authenticity of the claim made by the assessee. The Ld.DR also referred to para No.6.3. in page No.6 of the CIT(A) order and stated that the Ld.CIT(A) relied on the details submitted by the assessee with respect of sale during demonetisation period. The 4 I.T.A. No.76/Viz/2021 & CO No.42/Viz/2021 A.Y.2017-18 Tatiparti Satyanarayana, Visakhapatnam Ld.DR also argued that none of the documents are produced before the AO for his consideration. 5. On the contrary, the Ld.AR stated that unexplained investment cannot be invoked u/s 69 of the Act. The Ld.AR also argued that section 69 can be invoked only when the investments which are not recorded in the books of accounts. The Ld.AR demonstrated that the investment was captured in the books of accounts and disclosed in the balance sheet of the assessee. The Ld.AR also stated that the income has been disclosed in the computation of income and the necessary taxes have been discharged by the assessee. 6. With respect to Ground No.2, we have heard both the parties and perused the material placed on record. We find force in the argument of the Ld.AR that section 69 cannot be invoked when the assessee has disclosed investment in the books of accounts and in the computation of income which was offered for taxation. In this aspect, we concur with the findings of the Ld.CIT(A) and uphold the same. 7. With respect to Ground No.3 and 4, the Ld.DR argued that the assessee has shown cash sales subsequent to the demonetisation date, wherein, specified bank notes are treated as illegal. The Ld.DR argued that 5 I.T.A. No.76/Viz/2021 & CO No.42/Viz/2021 A.Y.2017-18 Tatiparti Satyanarayana, Visakhapatnam the sales and cash deposited in the bank are liable to be treated as unexplained money u/s 69 of the Act. 8. On the other hand, the Ld.AR argued that since the assessee had cash balance as on the date of demonetisation i.e. on 10.11.2016, provisions of section 69A cannot be applied. 9. We have heard both the parties and perused all the documents on record. We find that there was sufficient cash balance with the assessee as detailed in page No.30 of the paper book. The Specified Bank Notes (Cessation of Liabilities) Act, 2017, defines “appointed day” vide Section 2(1)(a). As per Section 2(1)(a), “appointed day” means the 31 st Day of December 2016. Section 5 of the Specified Bank Notes (Cessation of Liabilities) Act, 2017 also deals with prohibition on holding, transferring or receiving specified bank notes. Section 5 states that “On and from the appointed day, no person shall knowingly or voluntarily, hold, transfer or receive any specified bank note”. We therefore, find that the specified bank notes can be measured in monetary terms since the guarantee of the Central Government and the liability of Reserve Bank of India does not cease to exist till 31.12.2016. In view of the above, the contention of the Ld.DR, treating the receipt of SBNs from cash sales as illegal and thereby 6 I.T.A. No.76/Viz/2021 & CO No.42/Viz/2021 A.Y.2017-18 Tatiparti Satyanarayana, Visakhapatnam invoking the provisions of section 69A is not valid in law. Therefore, we dismiss this ground of the Revenue. 10. With respect to Ground No.5, 6 and 7, the Ld.DR cited the provisions of Rule 46A of I.T.Rules and argued that the Ld.CIT(A) erred in allowing additional evidence filed by the assessee which was not produced before the AO and no opportunity was being provided to the AO to examine the same. The Ld.DR also relied on the following case laws : (i) Hon’ble High Court of Gauhati in the case of Commissioner of Income Tax Vs. Ranjit Kumar Choudhary dated 09.10.2006 (ii) Hon’ble ITAT, Delhi order in the case of Asst.Commissioner of Income Tax, New Delhi Vs. Shri Ramit Vohra, New Delhi dated 19.09.2019 (iii) Hon’ble High Curt of Gujrat in the case of N.B.Surti Family Trust Vs. Commissioner of Income Tax 11. Per contra the Ld.AR argued that the income was disclosed in the return of income. The assessee has produced before the Ld.CIT(A) only documents to substantiate the claim of assessee. The Ld.AR also argued that no additional evidence were adduced before the Ld.CIT(A). 12. We find from the Assessment Order that the AO has provided various opportunities to the assessee to explain the details of share transactions and provide documents in support of his claim, wherein, the 7 I.T.A. No.76/Viz/2021 & CO No.42/Viz/2021 A.Y.2017-18 Tatiparti Satyanarayana, Visakhapatnam assessee failed to produce any cogent evidence and information in support of his claim. However, the assessee produced documents before the Ld.CIT(A). That being the position, the Ld.CIT(A) must have remitted the matter back to AO for examination by applying the provisions of Rule 46A. However we find merit in the argument of the Ld.AR, that no additional evidence produced before the Ld.CIT(A) which was not disclosed in the return of income filed by the assessee. 13. In the present case, it is noted that the Ld.CIT(A) has only verified the authenticity of the claim made by the assessee in the return of income, and we find that there is no requirement by the Ld.CIT(A) to remit the matter back to AO for examination. In view of the above findings, the grounds raised by the Revenue are dismissed. 14. The assessee filed cross objections which are supportive in nature. Since the appeal of the revenue is dismissed, the cross objections of the assessee becomes infructuous. 15. In the result, the appeal of the revenue and the cross objections of the assessee are dismissed. 8 I.T.A. No.76/Viz/2021 & CO No.42/Viz/2021 A.Y.2017-18 Tatiparti Satyanarayana, Visakhapatnam Order pronounced in the open court on 16 th March, 2022. Sd/- Sd/- (द ु व्वूरु आर.एल रेड्डी) (एस बालाकृ ष्णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) न्याधयकसदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER Dated : 16 .03.2022 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. रधजस्व/The Revenue – Income Tax Officer, Ward-1(1), Visakhapatnam 2. ननधधाऩरती/ The Assessee– Sri Tatiparti Satyanarayana, D.No.25-8-9 and 10, Sri Satyanarayana Gold Complex, Main Road, Visakhapatnam 3. The Principal Commissioner of Income Tax-1, Visakhapatnam 4. आयकर आयुक्त (अपील)/ The Commissioner of Income Tax (Appeals)-1, Visakhapatnam 5. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम/ DR,ITAT, Visakhapatnam 6.गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam