RAKESH REDDY KESHANNA,HYDERABAD vs. INCOME TAX OFFICER, WARD-4(1), HYDERABAD

Brief facts of the case are that looking at the deposits made by the assessee in the bank accounts to the tune of Rs. 20 lakhs during the demonetization period, the learned Assessing Officer sought the assessee to explain the source of deposits, but observing that the assessee could not furnish any information as to his business activities and the source of deposits, added the entire Rs. 20 lakhs to the income of the assessee.

Aggrieved, assessee preferred appeal before the learned CIT(A), and pleaded that the deposit of Rs. 20 lakhs represent Rs. 15 lakhs deposited on 24/11/2016 with HDFC Bank, Patamata Branch, Hyderabad and Rs. 5 lakhs deposited on 07/08/2017 with ICICI Bank, S.D. Road, Secunderabad. Assessee accordingly submitted that the deposit of Rs. 5 lakhs on 07/08/2017 cannot be considered for assessment of income for the assessment year 2017-18 and the same has to be deleted. In respect of the balance of Rs. 15 lakhs, he submitted that Rs. 5 lakhs each was given to him by his father and grand fathers (both paternal and maternal).

Learned CIT(A) did not accept the contentions of the assessee on the ground that no supporting and convincing evidence is produced by the assessee in support of his contentions.

It is submitted on behalf of the assessee that to the notice issued under section 133(6) of the Act, the assessee furnished all the relevant record to support the identity and creditworthiness of the donors and also the genuineness of the transaction in view of the close relationship. According to him, the learned Assessing Officer did not mention the date of deposit of Rs. 5 lakhs which is beyond the assessment year in question and no finding is given as to why the gift by the father is not accepted.

Per contra, learned DR submitted that the assessee did not produce any evidence whatsoever in support of his contentions or to prove the gifts.

He submitted that in the absence of any evidence, the authorities are justified in making/upholding the addition.

I have gone through the record in the light of the submissions made on either side. In the submissions before the learned CIT(A), the assessee specifically stated that out of Rs. 20 lakhs, a sum of Rs. 5 lakhs was deposited on 07/08/2017 with ICICI Bank and such a deposit cannot be said to have been made during the previous year relevant for the assessment year 2017-18. This aspect missed the attention of both the authorities. Hence, the addition of Rs. 5 lakhs on that count has to be deleted.

Now, coming to the balance Rs. 15 lakhs to the notice issued under section 133(6) of the Act, the father of the assessee by name Shri Narayana Reddy filed the confirmation letters supported by land revenue record etc., which are not considered by the learned Assessing Officer. Insofar as the father of the assessee is concerned, he is alive and filed the confirmation letter and affidavits with supporting evidence as to the agricultural income. There is no reason not to believe the same. Hence, I accept the gift of Rs. 5 lakhs given by the father of the assessee and learned Assessing Officer is directed to delete the addition to the extent of such Rs. 5 lakhs also.

In respect of the balance Rs. 10 lakhs, said to have been donated by the grandfathers, both paternal and maternal, and given by their sons, I agree with the learned AR that the affidavits and other material require further verification at the end of the learned Assessing Officer. Accordingly, the matter is restored to the file of learned Assessing Officer for fresh verification of the material produced by the assessee in respect of the gift of Rs. 5 lakhs each by the grandfathers. Grounds of appeal are treated as allowed in part for statistical purposes.

In the result, appeal of the assessee is treated as partly allowed for statistical purposes. Order pronounced in the open court on this the 26th day of December, 2023.