Chilukurthi Veeraiah Chowdary Khammam Hyderabad v. Ito Ward 2 Khammam Khammam

In The Income Tax Appellate Tribunal Hyderabad Benches B Smc Hyderabad Before Shri B Ramakotaiah Accountant Member I T A No 753 Hyd 2015 Assessment Year 2010 11 Sri Chilukurthi Veeraiah Chowdary Hyderabad Pan Afkpc 5678 P Vs Income Tax Officer Ward 2 Khammam Appellant Respondent For Assessee Shri A V Raghu Ram Ar For Revenue Ms K J Divya Dr Date Of Hearing 07 12 2017 Date Of Pronouncement 20 12 2017 O R D E R This Is An Appeal By Assessee Against The Order Of Th E Commissioner Of Income Tax Appeals Vii Hyderabad Dated 30 04 2015 For The Ay 2010 11 The Grounds Raised By Assessee Are As Under 2 The Ao Ought Not Have Added An Amount Of Rs 28 05 420 As Unexplained Investments Of The Assessee Ignoring T He Explanation Of Sources For The Same 3 The Appellate Commissioner Ought Not To Have Con Firmed The Order Of The Ao On Amount Of Addition Of Rs 28 05 420 And Ought Not To Have Dismissed The Appeal Of The Assessee Ground Nos 1 4 Are General In Nature 2 Briefly Stated Assessee Is An Individual Deriving Income From Salary House Property And Other Sources He Filed His Return Of I T A No 753 Hyd 2015 2 Income On 14 10 2010 Declaring Total Income Of Rs 3 89 000 The Assessing Officer Ao Completed The Assessment U S 143 3 Of The Income Tax Act Act By Making The Addition Of Rs 28 05 420 Towards Unexplained Investment Being Peak Deposits In Bank Account And Determined The Total Income Of Rs 31 94 42 0 3 Before The Ld Cit A It Was Explained As Under 5 1 During Appeal Proceedings The Appellant Submi Tted That He Has I Opening Balance Of Around Rs 10 Lakhs Being His Accumulated Savings Over Past Five Years For Which Returns Of I Ncome Have Been Duly Filed Ii Past Agricultural Income Of Rs 6 Lakhs Earned In The Huf Capacity Iii Agricultural Income Of Rs 2 40 000 Of His Wife For The Last Five Years Iv Sale Of Agricultural Land Of Rs 5 89 000 V Gifts Of Rs 11 Lakhs Received From His Relatives And Vi Rs 86 00 0 From Other Sources All Aggregating To Rs 36 17 834 From This Aggreg Ate Figure The Appellant Reduced Rs 6 50 Lakhs Towards His House H Old Expenses For Five Years And Claimed That He Has Explainable Sources F Or The Amount Of Rs 29 Lakhs Treated As Unexplained By The Assessing Officer In Support Of The Above The Appellant Has Filed I Copies Of St Atements Of Total Income For The Past Five Years Wherein The Agricultural I Ncome Of Huf Was Also Shown Separately Ii Copies Of Two Sale Deeds Of Agricultural Lands And Iii Affidavits From Three Relative Donors Along W Ith Their Pattadar Passbooks It Is The Claim Of The Appellant That He Has Explainable Sources For The Cash Credits Appearing In His Bank Account And Consequently The Investment Made By Him In M S Smc 4 Ld Cit A Dismissed The Contentions Stating As Under 5 2 I Have Gone Through The Assessment Order Writ Ten Submissions And The Material Filed By The Appellant In Support Of H Is Claims Before Deciding The Issue It Is In Place To Refer To The Dates And Amounts Of Cash Credits Appearing In The Bank Account Of The Appellant Th E Appellant Opened An Sb Account With M S Axis Bank On 09 03 2009 And Th E Major Cash Credits Made During The Year Are As Under 14 09 2009 Rs 13 00 000 15 09 2009 Rs 15 00 000 19 10 2009 Rs 9 90 000 5 3 Now Coming To The Explanation Of The Appellant That He Is In Receipt Of Rs 5 90 000 Being Sale Consideration Of Agricultu Ral Lands It Is Seen That I T A No 753 Hyd 2015 3 The Agricultural Lands Were Sold On 13 03 2008 Rs 3 76 000 And On 30 04 2008 Rs 2 13 000 As Rightly Pointed Out By The Assessing Officer The Gap Of Receipt Of The Above Sale Consideration And Deposit Of Cash In Bank Account Was Rot Explained By The Appellant It Is Simply Referring To The Sale Of Lands The Appellant Is Trying To Linku P The Sources For The Cash Deposits Made After 17 Months 5 4 The Next Source Explained By The Appellant Is T He Past Savings Out Of Admitted Incomes And Admitted Agricultural Income I N The Huf Status However No Evidences For Proving The Nexus Between The Past Savings And The Cash Deposits Made On Three Dates During Th E Year Were Furnished It Is Only Referring To The Admitted Inc Omes And Some Agricultural Income Admitted In Huf Capacity Of Las T Five Years The Appellant Is Trying To Explain The Sources Of Cash Deposit Made During The Year Admittedly The Appellant Is A Chemistry Lect Urer And Is Admitting Salary Income Including Tuition Incomes Over The Pa St 5 Years No Iota Of Evidence Or Any Whisper Of Explanation Was Furnishe D By The Appellant Explaining How He Had Kept The Money For All These Five Years In These Circumstances It Is Hard To Believe That All The P Ast 5 Years Savings Were Clubbed Together And Deposited In The Bank On Three Different Dates Within A Period Of 35 Days 5 5 The Next Major Source Explained For The Credits Is The Gifts Received From Three Relatives Though The Appellant Produced Confirmations In This Regard But Has Miserably Failed Here Also To Fill In The Gap Between The Date Of Receipt Of Cash Gifts And The Cash Deposits Made In The Bank As Per The Gift Deeds Filed The Appellant Received Rs 8 Lakhs On 04 06 2009 From Two Relatives And Rs 3 Lakhs On 05 06 2009 Fro M His Aunt However The Credits In The Bank Account Are Made In The Mon Ths Of September And October 2009 And The Deposits Made Also Are Not Ma Tching With The Amounts Claimed As Gifts Apart From The Gap Brough T Above What All The Appellant Furnished In Support Of Sources In The Ha Nds Of Relatives Is The Pattadar Passbooks Evidencing Agricultural Land Hol Dings The Extent Of Land Holdings In The Name Of Above Three Persons Is Ac 10 10 Ac 6 00 And Ac 7 51 And No Evidences In Support Of Earning Agri Cultural Income From The Above Lands Were Furnished 5 6 As Could Be Seen From The Above Discussion The Appellant Made Some Vague Claims For Explaining The Sources For The Cas H Credits In The Bank Account And Has Not Furnished Any Cogent Evidences The Capital Account With An Opening Balance Of Around Rs 18 Lakhs Was B Rought Out Only During The Year And Even The Form In Which This Cap Ital Was Held By The Appellant During The Period Was Not Explained Anywh Ere As Regards The Claim Of The Appellant That The Total Of The Past S Avings Including The Current Incomes Should Be Considered And Deficit Sh Ould Be Arrived It Is Seen That The Appellant Has Not Furnished Any Reaso Nable Evidences For Holding Cash Of Around Rs 18 Lakhs At The Beginning Of The Year As I T A No 753 Hyd 2015 4 Regards The Current Sources It Can Be Seen That T He Assessing Officer Has Adopted The Peak Cash Credit Method A Method Which Takes Care Of The Total Debits And Credits Appearing In The Bank Acco Unt Therefore No Interference Is Warranted On The Method Adopted By The Assessing Officer 5 7 A Perusal Of The Axis Bank Account Show That A Total Amount Of Rs 28 Lakhs Was Deposited By The Appellant In Cash On 14 Th 15 Th Of September 2009 And The Same Was Paid To M S Smc Through Chequ E On 15 09 2009 Itself Further An Amount Of Rs 9 90 000 Was Dep Osited In Rash On 19 10 2009 And The Very Next Day I E On 20 10 200 9 An Amount Of Rs 9 60 000 Was Paid To M S Smc Through Cheque G Oing By The Above Cash Credits And The Payments Made It Is Clear Tha T The Appellant Has Brought In Cash From Unexplained Sources And Made Investments In M S Smc Through Cheques When The Sources For These Inv Estments Were Questioned By The Assessing Officer The Appellant Brought In The Theory Of Past Savings Agricultural Income Sale Of Agricult Ural Lands And Gifts Without Any Cogent Evidences 5 8 As The Appellant Has Not Produced Any Plausible Evidence For The Cash Credits Made In His Bank Account And Went On Making Vague Claims Of Cash Balance And Without Filling In The Gaps Betwee N The Date Of Purported Receipts And Cash Deposits In The Bank Account I F Ind No Infirmity With The Action Of The Assessing Officer In Arriving At The Peak Credit Of Rs 28 05 420 And Accordingly The Addition So Mad E Is Confirmed 5 It Was The Contention Of Ld Counsel That Assessee Is Not A Government Employee But Private Employee Giving Chemis Try Tuitions And Basically Agro Based He Submitted That As Sessee Has Agricultural Incomes Which Are Declared And Also So Ld Lands In Earlier Years Regarding The Contention That Assessee Had Not Deposited The Amounts In Bank It Was Submitted That The Pl Ace From Which Assessee Hails Is A Remote Part Of Khamma M District And The Ao As Well As The Cit A Accepted That Assessee Has Opened The Bank Account Only On 09 03 2009 And Assess Ee Is Transacting In Cash Only All Along Only For The Purp Ose Of Investment In A Company The Account Was Opened And Cas H Available Including Amount Of Gifts Were Deposited In The Said Bank Account It Was Submitted That Assessee Will Produce Th E Parties Who Gave Gifts To Him If Given An Opportunity As Su Fficient I T A No 753 Hyd 2015 5 Opportunity Was Not Given By Ao During The Assessment Proceedings 6 Ld Dr However Submitted That It Was Illogical To Ha Ve That Much Cash And Deposit In Bank Account And The Discrep Ancy In In Dates Was Not Explained There Is No Reasonable Expl Anation For The Gap In Gifts And Subsequent Deposits The Dr Relied On The Order Of Ld Cit A 7 I Have Considered The Rival Contentions And Explana Tions On Record It Is An Admitted Fact That Assessee Opened The B Ank Account On 09 03 2009 Only And Subsequently Deposited Cash To Issue Cheque Dds To The Said Company For Investment It Is Also True That Assessee Has Agricultural Lands And Agricult Ural Income Including Amounts Received On Sale Of Agricultural L Ands Which Are Verifiable From The Returns Of Earlier Years Thus The Source Of Agricultural Income Cannot Be Denied Just Because As Sessee Had Not Deposited The Same In Bank Account Considering The Small Town From Which Assessee Hails And The Fact That He Is From Agricultural Family The Objections Of Ao And Cit A That These Moneys Are Not Deposited In Bank And There Was A Gap C An Be Rejected Thus The Explanation For Agricultural Inc Ome And Sale Proceeds Being A Source As Explained Before The Cit A Can Be Accepted Ao Is Directed Accordingly 7 1 Then The Issue Of Gifts Of Rs 11 Lakhs Assess Ee Explained That An Amount Of Rs 11 Lakhs Was Gifts From Three Perso Ns They Could Not Be Produced Before Ao For Verification Ld Cit A Could Have Got Them Examined Before Deciding The Issue Agai Nst I T A No 753 Hyd 2015 6 Assessee I Am Of The View That The Sources Of Gifts Ca N Be Examined By Ao By Giving Opportunity To Assessee To Produce The Persons Before Ao Or Adducing Evidence Which Can Be Verifie D Got Verified By Ao Therefore Verification Of Source For Gifts O F Rs 11 Lakhs Is Restored To The File Of Ao For Fresh Examination Needl Ess To Say That Assessee Should Be Given Due Opportunity In The P Roceedings To That Extent Order Of Ao Cit A Is Set Aside And Ad Dition Of Rs 11 Lakhs Is Restored To The File Of Ao For Necessary Action The Grounds Are Allowed Accordingly 8 In The Result Appeal Of Assessee Is Treated As Par Tly Allowed For Statistical Purposes Order Pronounced In The Open Court On 20 Th December 2017 Sd B Ramakotaiah Accountant Member Hyderabad Dated 20 Th December 2017 Tnmm I T A No 753 Hyd 2015 7 Copy To 1 Sri Chilukurthi Veeraiah Chowdary C O K Vasan T Kumar A V Raghu Ram P Vinod M Neelima Devi Advocates 610 Babukhan Estate Basheerbagh Hyderabad 2 The Income Tax Officer Ward 2 Khammam 3 Cit Appeals Vii Hyderabad 4 Cit Vii Hyderabad 5 D R Itat Hyderabad 6 Guard File