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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI N.K.CHOUDHRY, HON’BLE & SHRI D.S. SUNDER SINGH, HON’BLE
आयकर अपीलीय अधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री एन के चौिरी,न्याधयक सदस्य एिं श्री धड.एस .सुन्दर धसंह, लेखा सदस्य के समक्ष BEFORE SHRI N.K.CHOUDHRY, HON’BLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./I.T.A.No.464/Viz/2019 (निर्धारण वर्ा/Assessment Year: 2014-15) Sri K.Lakshmi Narayana Vs. Income Tax Officer D.No.40-7-10A, Donka Road Ward-2(2) Mogalrajpuram Vijayawada Vijayawada [PAN : AAJHK5298R] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : Shri C.Subrahmanyam, AR प्रत्यधथी की ओर से / Respondent by : Smt.Suman Malik, DR सुिवधई की तधरीख / Date of Hearing : 10.03.2021 घोर्णध की तधरीख/Date of Pronouncement : 26 .03.2021 आदेश /O R D E R Per D.S.Sunder Singh, Accountant Member : Condonation of Delay : This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-2, Guntur in ITA No.372/GNT/CIT(A)-2/2016-17 dated19.03.2019 for the Assessment Year (A.Y.)2014-15 with the delay of 36 days. The assessee has filed petition for condonation of delay stating that the delay was due to the sickness of
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authorized representative. We have heard both the parties and since the delay was due to illness of the Ld.A.R and having no malafide intention, we condone the delay and admit the appeal.
The assessee has raised the following grounds in his appeal : In respect of addition of Rs.5,00,000/- 1. The learned Commissioner of Income Tax(Appeals) has erred both in facts and law in sustaining the addition without considering the fact that the family member's agricultural incomes were deposited in to the account of assessee as he is looking after those affairs. In respect of addition of Rs.30,75,000/- 2. The learned Commissioner of Income Tax(Appeals).has erred both in facts and law in sustaining the addition without considering the submissions of assessee and the payee of the amounts though the payer of amount has confirmed the payment made to assessee on 28.12.2013. In respect of addition of Rs.6,75,000/- 3. The learned Commissioner of Income Tax(Appeals) has erred in sustaining the addition both on facts and law without considering the submissions of assessee and the payee of the amounts though the payer of amount has confirmed the payment made to assessee on 13.01.2014. The learned commissioner of Income-Tax (Appeals) has erred 4. in sustaining the additions of Rs.30,75,000/- (as specified in Ground No.2) & Rs. 6,75,000/- (as specified in Ground No.4) by holding that the correction to the original sale deed is an afterthought though the appellant has been claiming an error in the original sale deed in the assessment proceedings and appeal proceedings Any other ground that may be urged at the time of hearing. 5.
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It is prayed that the additions may be deleted and relief be 6. granted.
2.1. During the appeal hearing, the Ld.AR has raised the additional ground as follows and filed petition for admission of additional ground. The Assessing officer committed error in invoking the provisions of section 68 of the IT Act while making the addition pertaining to alleged unexplained cash deposits in bank account in as much as sec.68 has limited scope and applies to cases relating to unexplained cash-credits recorded in the books of accounts.
Ground No.5 and 6 are general in nature which do not require specific adjudication.
Ground No.1 is related to the addition of Rs.5,00,000/- sustained by the Ld.CIT(A). Brief facts of the case are that during the assessment proceedings, the Assessing Officer (AO) found that there was cash deposit of Rs.5,00,000/- on 13.07.2013 in the assessee’s bank account with State Bank of India. The AO requested the assessee to explain the sources of cash deposits and the assessee explained that the cash deposits were made out of agricultural income in respect of mango garden of 16 acres belonging to the assessee and his family members. In respect of agricultural holdings of the assessee and his family members, the assessee produced pattadar passbooks, as per which the assessee along with family members owned
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more than 16 acres of agricultural land. The assessee also explained to AO that the entire agricultural operations were looked after by him and furnished the details of land as under :
Name of the Pattadar pass Extent Village land holder book no. Acres Sri / Ms. Boravancha 359040 K.Venkata Ramana 3.32 Nuzvidu Murthy Boravancha 359041 K.Lakshminarayana 3.52 Nuzvidu Boravancha 359042 T.Janaki 2.06 Nuzvidu Boravancha 359043 K.Rahda Krishna 2.81 Nuzvidu Murthy Boravancha 359070 K.Subba Lakshmi 3.45 Nuzvidu 15.16 Elaprolu, 500631 K.Lakshmi 1.53 Ibrahimpatnam Narayana Elaprolu, 500632 K.Venkata Ramana 1.75 Ibrahimpatnam Murthy 3.28
4.1. The AO did not believe the sources of agricultural income in the absence of corroborative evidence and viewed that though the amount was deposited on 13.07.2013, the assessee has not transferred back the amounts to the respective family members. Therefore, the AO was not convinced with the explanation of the assessee and treated the entire cash
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deposit as unexplained credit and accordingly brought to tax u/s 68 r.w.s. 115BBE of the Income Tax Act, 1961 (in short ‘Act’).
Against the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) confirmed the addition made by the AO.
Against the order of the Ld.CIT(A), the assessee is in appeal before us. During the appeal hearing, the Ld.AR submitted that the assessee along with family members owned 16 acres of agricultural land, wherein the mango garden was grown. The sale proceeds of mango crop were deposited in the bank account of the assessee. All the family members are joint family and the entire agricultural operations were looked after by him. As and when the sale proceeds are received, the assessee deposits the sale proceeds in his bank account and meet the expenditure. The AO also did not suspect the agricultural receipts from mango garden, but merely with a suspicion that the assessee cannot deposit the entire sale proceeds in his account and because of reason that the assessee did not transfer the sale proceeds to the respective family members accounts made the addition, which is on assumption and presumption of the AO. The Ld.AR submitted that since the assessee takes care of the entire agricultural operations of the family members in joint family, there is no reason to
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suspect the source of the cash deposit. The Ld.AR further argued that the AO has not examined the family members, in spite of furnishing the details. Therefore, without examining the family members, suspecting the deposit of sale proceeds in his account and treating the same as unexplained cash credit is unjustified, hence, requested to set aside the orders of the lower authorities and delete the addition.
On the other hand, the Ld.DR relied on the orders of the lower authorities.
We have heard both the parties and perused the material placed on record. In this case, the assessee submitted before the AO, that the assessee is looking after the entire agricultural operations and managing the agricultural operations, which was not disputed by the AO. There is no dispute that the assessee along with his family members own more than 16 acres of agricultural land, where the mango crop was grown . The AO also did not dispute that 16 acres of agricultural land yield the crop worth Rs.5,00,000/-. The AO did not examine the family members with regard to deposit of sale proceeds of mango garden in his account, though assessee had furnished the details of land owned along with pattadar passbooks copies of which are furnished in page No.3 of the paper book. The assessee
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had explained the source of deposits of cash and the AO did not discharge the burden by examining the family members. Since the assessee stated that he looks after the entire agricultural operations which is common in joint families, we, do not find any reason to suspect the source of cash deposits in the bank account and the same stands explained, hence, we set aside the orders of the lower authorities and delete the addition made by the AO. Assessee’s appeal on this ground is allowed.
Ground No.2 and 3 are related to the addition of Rs.30,75,000/- and Rs.6,75,000/- aggregating to Rs.37,50,000/- deposited in the bank account. The assessee has deposited the sum of Rs.30,75,000/- in the bank account on 28.12.2013 and Rs.6,75,000/- on 13.01.2014. When the AO asked the assessee to explain the source of cash deposit, the assessee explained that the source was on account of sale proceeds of the land admeasuring 235.55 sq.yds which was also offered for long term capital gains. The AO examined the sale deed and found that there was a mismatch of dates of payment and dates of deposit in the bank account as per the sale deed. The assessee explained that he had received the sum of Rs.30,75,000/- on 26.12.2013 which was deposited in the bank on 28.12.2013. The AO examined the bank account of the vendor and found that there were withdrawals in the
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bank account from 26.06.2013 ranging from Rs.1,00,000/- to Rs.15,00,000/- as under : Self cash Date withdrawal Rs. 26.6.2013 9,00,000 4.7.2013 3,28,000 18.7.2013 1,20,000 22.7.2013 4,00,000 23.7.2013 9,60,000 14.9.2013 1,00,000 26.11.2013 1,00,000 27.11.2013 5,00,000 26.12.2013 15,00,000
Since the vendor had withdrawn the sums in small amounts and no source to make payment of Rs.30,75,000/- on 26.12.2013, the AO disbelieved the receipt of advance on 26.12.2013 and hence made the addition.
9.1. Similarly, the AO made the addition of Rs.6,75,000/- deposited on 13/01/2014 which was also mismatched with the sale deed. According to the AO, since, the sale deed was registered on 01/02/2014 and there was a mention in the sale deed regarding the payment at the same time, he was under the impression that the deposit made in the bank account before the
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date of registration was from unexplained sources and hence brought to tax u/s 68 of the Act.
The assessee went on appeal before the CIT(A) and filed confirmation from the vendor as well as rectification deed which was forwarded to the AO by the Ld.CIT(A) for his comments. The AO submitted remand report stating that it was an afterthought. The Ld.CIT(A) agreed with the AO and confirmed the addition made by the AO.
During the appeal hearing, the Ld.AR argued that the assessee has sold the land situated at Survey No.172/2B,Plot No.37 Part, Patamata, Vijayawada to Shri Ch.Ramana Babu, who is residing in USA, for a consideration of Rs.49,47,000/- and received the advance of Rs.30,75,000/- on 26.12.2013 and Rs.6,75,000/- on 01.01.2014 and the said land was registered on 01.02.2014. There was a mistake in the registered sale deed with regard to mention of dates which was subsequently rectified by corrigendum on 23.02.2018 with correct dates of payment of advances to the assessee. The assessee has furnished the confirmation letter, sale deed and correction deed from the vendor and also admitted capital gains in the return of income. The Ld.AR argued that merely because, there was some mistake in the sale deed, which was later rectified the same cannot be
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treated as an afterthought and put the assessee in disadvantage. Since the assessee has furnished all the evidences with regard to cash deposits and the sources, the Ld.AR argued that the assessee has explained sources, hence, requested to set aside the orders of the lower authorities and allow the appeal of the assessee.
On the other hand, the Ld.DR relied on the orders of the lower authorities.
We have heard both the parties and perused the material placed on record. The AO made the addition of Rs.30,75,000/- and Rs.6,75,000/-, aggregating to Rs.37,50,000/- which was deposited in the bank account and brought to tax as unexplained cash credit as addition u/s 68 r.w.s.115BBE of the Act. The AO found mismatch of dates mentioned in the sale deed and withdrawals made by the vendor from his bank account and disbelieved the payment to the assessee and accordingly made the addition. In the instant case, the vendor has confirmed the payment of Rs.37,50,000/- on various dates and also filed rectification deed before the Ld.CIT(A). The AO and the Ld.CIT(A) were of the view that it was an afterthought. However, the rectification deed was registered before the SRO which is a valid piece of evidence. The AO landed in a wrong confusion
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without considering the rectification deed. In the rectified deed, the vendor has clearly mentioned that a sum of Rs.30,75,000/- was paid on 26.12.2013 and Rs.6,75,000/- was paid on 13.1.2014 and the balance amount was paid on date of registration. The total sum paid by the vendor to the assessee was Rs.49,47,000/- for sale of land. The AO did not examine the vendor and made the addition brushing aside the explanation offered by the assessee. Since, the assessee has admitted the total sale consideration for capital gains and paid the taxes and furnished the evidence with regard to receipt of the amount by confirmation as well as rectification deed, we find no reason to disbelieve the contention of the assessee that a sum of Rs.30,75,000/- was paid to the assessee on 26.12.2013 and Rs.6,75,000/- was paid on 01.01.2014. In the instant case, though the assessee has discharged his burden, the AO did not make any enquiry and bring evidence to controvert the submission of the assessee. Therefore, we set aside the orders of the lower authorities and delete the addition made by the AO and allow the appeal of the assessee.
The assessee has raised legal ground with regard to making the addition u/s 68 as invalid. Since, we have deleted the addition made by the
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AO and allowed the appeal of the assessee on merits, we consider it is not necessary to adjudicate this ground.
In the result, appeal of the assessee is allowed. Order pronounced in the open court on 26th March, 2021.
Sd/- Sd/- (एन के चौिरी ) (धड.एस .सुन्दर धसंह) (N.K.CHOUDHRY) (D.S.SUNDER SINGH) न्याधयक सदस्य / JUDICIAL MEMBER लेखा सदस्य /ACCOUNTANT MEMBER Dated : 26 .03.2021 L.Rama, SPS आदेश की प्रतितिति अग्रेतषि/ Copy of the order forwarded to:- 1. तिर्धाररिी/ The Assessee– Sri K.Lakshmi Narayana, D.No.40-7-10A, Donka Road, Mogalrajpuram, Vijayawada 2. रधजस्व/The Revenue – Income Tax Officer, Ward-2(2), Vijayawada 3. The Pr.Commissioner of Income Tax , Vijayawada 4. The Commissioner of Income Tax (Appeals)-2, Guntur 5. तवभधगीय प्रतितितर्, आयकर अिीिीय अतर्करण, तवशधखधिटणम/DR, ITAT, Visakhapatnam 6.गधर्ाफ़धईि / Guard file आदेशधिुसधर / BY ORDER // True Copy //
Sr. Private Secretary ITAT, Visakhapatnam