Jampala Ramesh Reddy , Proddatur V. Income Tax Officer, Ward-1, Proddatur

ITA 797/Hyd/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 8835 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 14-11-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 01-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: E N HANGAL
• Assessee Lawyers: A C GANGAIAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES SMC, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A. NO. 797/HYD/2018 ASSESSMENT YEAR: 2012-13 JAMPALA RAMESH REDDY, PRODDATUR [PAN: AJRPR1697J] VS INCOME TAX OFFICER, WARD-1, PRODDATUR (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A.C.GANGAIAH, AR FOR REVENUE : SMT. E.N.HANGAL, DR DATE OF HEARING : 14-11-2019 DATE OF PRONOUNCEMENT : 22-11-2019 O R D E R THIS APPEAL FILED BY THE ASSESSEE FOR THE AY.2012-13 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCO ME TAX (APPEALS)KURNOOL, DATED 19-02-2018. 2. BRIEF FACTS OF THE CASE ARE THAT, ASSESSEE, AN INDIV IDUAL, FILED HIS RETURN OF INCOME FOR THE AY.2012-13 ELECTRON ICALLY ON 31-03-2013, DISCLOSING A TOTAL INCOME OF RS.12,67,650 /- DERIVED FROM INTEREST, REMUNERATION AND COMMISSIONS. T HE SAID RETURN WAS SELECTED FOR SCRUTINY BY CASS FOR THE REASON LARGE INCREASE OF UNSECURED LOANS . THEREFORE, NOTICE U/S.143(2) OF THE INCOME TAX ACT [ACT] WAS ISSUED AND SERVED ON THE ASSESSEE. HOWEVER, NONE APPEARED FOR THE ASSE SSEE AND THEREFORE, ASSESSMENT WAS COMPLETED U/S.144 OF THE ACT, BRINGING THE UN-SECURED LOANS OF RS.12 LAKHS TO TAX. ITA NO. 797/HYD/2018 :- 2 -: 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE CIT(A), STATING THAT THE ASSESSING OFFICER (AO) HAD MAD E THE ADDITION OF RS.12 LAKHS, THOUGH HE WAS SATISFIED IN RE SPECT OF THREE OUT OF FOUR CREDITORS. IT WAS SUBMITTED THAT THERE I S AN INCREASE OF CREDIT IN SUPPORT OF ASSESSEES HUF ACCOU NT FROM RS.26,09,689/- TO RS.40,22,399/- IN THE CONCERNED PRE VIOUS YEAR AND THE RELEVANT INFORMATION WAS PICKED UP FROM TH E RETURNS FILED FOR ASSESSEES-HUF. IT WAS SUBMITTED THAT THE AO WAS SATISFIED WITH THE FINANCIAL POSITION OF THE HUF W ITH REGARD TO RENT MONEY AND THERE IS AN ENTRY OF SUNDRY DEBTORS O F RS.12 LAKHS IN THE BALANCE SHEET OF HUF. THE AO FELT THAT THE MONEY OF ASSESSEE IS ROUTED THROUGH ASSESSEES-HUF AN D THE AMOUNT OF RS.12 LAKHS IS CONCEALED INCOME. IT WAS FUR THER SUBMITTED THAT THE AO HAD ISSUED NOTICE TO THE ASSESSEE S-HUF TO EXPLAIN THE DEPOSITS MADE INTO BANK ACCOUNT OF THE HUF TO THE EXTENT OF RS.9,85,000/- AND THE ASSESSEE HAD SUBMITTE D REPLY AND THEREAFTER NO ACTION WAS TAKEN AND THEREFOR E, THE ADDITION CANNOT BE MADE IN THE HANDS OF ASSESSEE. THE LD.CIT(A), HOWEVER, HELD THAT THE ASSESSEE HAS NOT DIS CHARGED HIS BURDEN OF PROVING THAT THE TRANSACTION BETWEEN THE ASSESSEE AND HIS HUF IS GENUINE AND THAT THE CREDITWOR THINESS OF LENDER-HUF IS PROVED. THEREFORE, HE GRANTED PARTI AL RELIEF AND CONFIRMED THE ADDITION TO THE EXTENT OF RS.9,85,000/- ONLY. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL BEFORE TH E TRIBUNAL, BY RAISING THE FOLLOWING GROUND(S): 1. THE ADDITION RS.9,85,000/- CONFIRMED BY THE CIT (A) EVEN AFTER PROVING, GENUINE TRANSACTION AND IDENTITY OF CREDIT OR IS TO BE QUASHED. ITA NO. 797/HYD/2018 :- 3 -: 4. LD.COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISS IONS MADE BEFORE THE AUTHORITIES THAT THE ASSESSEE-INDIVIDUAL HAD BORROWED A SUM OF RS.12 LAKHS FROM HIS HUF AND IT I S ALSO TRANSFERRED THROUGH BANKING CHANNELS. HE HAS FILED B EFORE US THE COPIES OF THE NOTICE ISSUED BY THE AO TO THE ASSESSEE S-HUF DT.13-10-2014, REQUIRING THE ASSESSEE TO EXPLAIN THE DEPOSIT OF RS.9,85,000/- ON 02-04-2011. HE HAS ALSO REFERRED TO THE REPLY OF THE ASSESSEE DT.22-11-2014 ALONG WITH THE COPIES OF THE CASH BOOK AND THE LEDGER ACCOUNT, EXPLAINING THE SOUR CES FOR THE DEPOSIT. HE SUBMITTED THAT THEREAFTER, NO ACTION WAS TA KEN IN THE CASE OF HUF, THEREFORE, IT IS TO BE DEEMED THAT THE AO HAS ACCEPTED THE EXPLANATION OF THE ASSESSEE-HUF REGA RDING THE SOURCES OF THE DEPOSIT. HE SUBMITTED THAT THE AO HAVIN G ACCEPTED THE SOURCES OF THE DEPOSITS IN THE HANDS OF TH E HUF, THE CREDITWORTHINESS OF THE HUF IS DEEMED TO HAVE BEEN ACCEPTED. IT IS THEREFORE SUBMITTED THAT THE SAME AMOUNT CANNOT BE TREATED AS UN-EXPLAINED CASH IN THE HANDS OF THE ASSESSEE-INDIVIDUAL. HE THEREFORE PRAYED THAT THE ADD ITION OF RS.9,85,000/- CONFIRMED BY THE CIT(A) BE DELETED. 5. LD.DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF TH E AUTHORITIES BELOW AND HAS FILED THE REPORT OF THE AO I. E., ITO WARD-1, PRODDATUR, DT.16-07-2019, STATING THAT THE ASSESSE E HAS BEEN FILING HIS RETURNS OF INCOME IN HUF CAPACIT Y W.E.F. AY.2011-12 TO AY.2018-19 AND ONLY FOR THE AY.2012-13, THE RETURN OF INCOME IN HUF STATUS WAS FILED ON 01-04-201 3 BELATEDLY AND THE SAME WAS PROCESSED BY THE CPC, BENGA LURU ON 14-05-2013 AND THAT NO SCRUTINY ASSESSMENT WAS DONE IN THAT CASE FOR THE AY.2012-13 IN THE HUF STATUS. ITA NO. 797/HYD/2018 :- 4 -: 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERI AL ON RECORD, I FIND THAT THE HUF HAS FILED ITS RETURN OF INCOME FOR THE AY.2012-13 AND THE CPC, BENGALURU HAS PROCESSED TH E RETURN ALSO ON 14-05-2013. IT IS NOT KNOWN UNDER WHICH PROVISIONS OR PROCEEDINGS, THE AO HAS ISSUED NOTICE D T.13-10- 2014, REQUIRING THE ASSESSEE TO EXPLAIN THE SOURCES F OR THE DEPOSITS IN CASH TO THE ASSESSEE IN HUF STATUS. ASSES SEE HAS ALSO FILED REPLY AND THE ACKNOWLEDGMENT OF THE ITO, WA RD-I, PRODDATUR IS ALSO AVAILABLE ON THE SAID COPY. I FIND THAT AFTER THAT DATE, NO ACTION HAS BEEN TAKEN BY THE ITO, PRODDATUR AND THEREFORE IT IS TO BE DEEMED THAT THE AO/ITO WAS SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE-HUF. ONCE THE A O OF THE ASSESSEE-HUF HAS ACCEPTED THE SOURCE FOR THE DEPOS ITS MADE INTO ITS ACCOUNTS, THE CREDITWORTHINESS OF THE HUF HAS BEEN ACCEPTED BY THE ITO AND THEREFORE, THE SAME CANNOT BE DOUBTED IN THE HANDS OF THE INDIVIDUAL. IN VIEW OF THE SAME, I AM INCLINED TO DELETE THE ADDITION OF RS.9,85,000/-, C ONFIRMED BY THE LD.CIT(A). THE GROUND RAISED BY ASSESSEE IN T HIS REGARD IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND NOVEMBER, 2019 SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED: 22-11-2019 TNMM ITA NO. 797/HYD/2018 :- 5 -: COPY TO : 1. SHRI JAMPALA RAMESH REDDY, 49 HIGH, APHB COLONY, KORAPADU ROAD, PRODDATUR. 2. INCOME TAX OFFICER, WARD-1, PRODDATUR. 3. CIT(APPEALS)-KURNOOL. 4. PR.CIT-KURNOOL. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.