ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, HYDERABAD vs. PENDELA BHARATI DEVI, NELLORE

Date of Hearing : 19/04/2021 Date of Pronouncement : 23/06/2021 O R D E R PER S.S. GODARA, J.M. This Revenue’s appeal for A.Y. 2015-16 arises against the CIT(A)-3 Visakhapatnam’s order dated 27.07.2020 passed in case no.521/2019-20 involving proceedings u/s 143(3) r.w.s. 153C of the Income Tax Act, 1961 [for short ‘the Act’].

Heard both the parties. Case file perused.

The delay of 03 days in filing of the present appeal is condoned on account of assessee’s no objection.

Pendela Bharathi Devi, Nellore

“9. CIT(A) decision: Ground no: 1 relates to the entire addition of Rs.1,76,00,000/- made by the Assessing Officer treating the same as unexplained investment in purchase of the property, in the appellant's hands: I have carefully considered the facts of the case, the assessment order made by the Assessing Officer and submissions made by the Authorized Representative of the appellant. The issue to decide is whether the Assessing Officer is correct in making an addition of Rs.1, 79 ,67 ,080/- towards the unexplained investment made by the appellant in acquisition of a property, is correct or not. During the course of asessment proceedings, the Assessing Officer noticed from the seized material relating to the appellant that the appellant along with her husband late Sri Pendela Surendra purchased a property for a total consideration of Rs,44,00,000/- wherein the appellant's contribution was Rs. 22,00,000/- and her husband late Sri Pendela Surendra purchased half share of a property with the appellant and three more properties in his own name for a total consideration of Rs. 1,54,00,000/- during the F.Y.2014-15 relevant to the A.Y.2015-16. The Assessing Officer came to a conclusion that the seized material mentioned at page Nos.1 to 8 marked as MSVK/PROPERTY DOCUMENTS/5 belongs to the appellant. The appellant was asked to complete details like cash flow statement for purchase of property to verify the actual payment made on 18-12-2019. In response, the appellant filed cash flow statement and statement of affairs and balance sheet. Since the appellant failed to furnish details with concrete evidences for purchase of property to the tune of Rs. 1,76,00,000/- , the same is added to the income of the appellant as unexplained investment in purchase of property. 9.1) During the course of appellate proceedings, the Authorized Representative of the appellant contended that as mentioned in the facts of the Case, the property mentioned at Sl.no:01 of the statement extracted above, valued at Rs.44,00,000/- was acquired jointly by the appellant and her late husband Shri Pendela Surendra. Thus, the appellant's share of Rs.22,00,000/- should have been considered in the her. The other three properties mentioned at sl.nos. 02, 03 and 04, the aggregate value of which comes to Rs.l,32,00,000/- was acquired by the appellant’s late husbabd Shri Pendela Surendra , as these 2 Pendela Bharathi Devi, Nellore properties were exclusively acquired by the latter. The sources for investment made by the appellant and her late husband are explained in their returns of income filed by them for the assessment year 2015-16. The appellant filed copies of returns of income for the A. Y .2015-16 with relevant financial statements like balance sheet etc. in her case and in her husband's case wherein the above investments were exhibited. It is seen from the documents filed, the appellant's husband Shri Pendela surendra died on 25.04.2015 as per the copy of death certificate of her husband filed. Thus, it is clear that the appellant's husband Shri Pendela Surendra was alive during the entire financial year 2014-15 relevant to the A. Y. 2015-16. It is also seen that Shri Pendela Surendra was assessed separately in respect of income earned by him. I do not understand how the Assessing Officer proceeded to add the investment of Rs.1,54,00,000/- relating to Shri Pendela Surendra in the hands of the appellant treating the same as her unexplained investment u/s 69 of the I.T.Act,1961, when separate and Individual returns of income for the A. Y . 2015-16 were filed in the name of Shri Pendela Surendra. The impugned addition of Rs.1,54,00,000/- relating to late Shri Pendela Surendra should not have been made in the hands of the appellant even as Legal Representative (LR) of late Shri Pendela Surendra. The Investment of Rs.21,00000/- made by the appellant was also considered as unexplained investment u/s 69 of the Act thereby taking the total unexplained investment added in the hands of the appellant to Rs.l,76,00,000/- (Rs. 1,32,00,000/- + Rs.22,00,000/-). Since, the appellant's husband Shri Pendela Surendra was alive during the entire financial year 2014-15 relevant to assessment year 2015-16 and since separate and individual return of income for the A.Y.2015-16 was filed in the name of Shri Pendela Surendra, the proper course of action left to the Assessing Officer is to make an assessment making the deceased’s wife Smt Pendela Bharathi Devi ie. The appellant as LR of late Sri Pendela Surendra wherein the issue of investment of Rs, 1,54,00,000/- made by Shri Pendela Surendra should have been considered. For these reasons, I hold that the Assessing Officer is not at all justified in considering the investment of Rs.1.54,00,000- made by (late) Shri Pendela Surendra in the hands of the appellant after his demise. The Assessing Officer is directed to consider this issue in the hands. (late) Shri Pendela Surendra as per the relevant provisions of the I. T. Act and as per my decision given in this order. 10) CIT(A) Decision against Ground no:02 regarding addition of Rs.22,00,000/~ in the appellant's hands towards the value of her half share: After considering the appellant’s submissions and the documents filed by her, I have come to the conclusion that Assessing Officer's action in making the addition of Rs.22,00,000/- representing the value of half share of the property valued at Rs.44,00,000/- acquired by the appellant along with her late husband is not warranted, as the sources for the said investment are explained Pendela Bharathi Devi, Nellore properly by way of filing copy of return of income, for the A.Y.2015-16, balance sheet as at 31.03.2015 wherein the above investment was exhibited. The appellant also filed Tax Audit report. On the face of these submissions, it cannot be said that the sources for acquisition of the property by the appellant stands ‘unexplained’. Accordingly, the addition of Rs.22,00,000/- is deleted.

11.) CIT (A) Decision against Ground no.03 against making addition towards the investment made by appellant's late husband Shri Pendela Surendra when he is separately assessed to tax. I have covered this issue in paragraph 9 of this order and accordingly, the Assessing Officer is directed to delete the addition of Rs.1,54,00,000/- pertaining to the investment made by appellant's late husband Shri pendela Surendra from the hands of the appellant as the same is to be considered in the hands of smt. P Bharathi Devi, as Legal Representative(LR) of late Shri Pendela Surendra for the A.Y.2015-16 as per the decision taken in the paragraph 06 against on the addition made on account of investment of Rs.1,54,00,000/-

2.1. It is sufficiently clear from a perusal of the foregoing lower appellate discussion that the CIT(A) has accepted the assessee’s contentions inter alia that the impugned sum involved an amount of Rs. 1,54,00,000/- had been invested by her husband than herself and therefore, the same ought not have been taxed in his hands only. It further transpires regarding the balance sum of Rs. 22,00,000/- that the assessee has sufficiently explained sources thereof by filing return for A.Y 2015-16 along with balance sheet and other supportive evidences. Thus, lower appellate findings deciding the issue in assessee’s favour has nowhere been rebutted from the department side. We Pendela Bharathi Devi, Nellore thus see no merit in Revenue’s instant sole substantive ground. The same stands rejected accordingly.

This Revenue’s appeal is dismissed. Order pronounced in Open Court on 23/06/2021.